Ben and Jerry's Case Analysis

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Ben & Jerry's Case Study

Company History

Ben Cohen and Jerry Greenfield founded Ben & Jerry's Homemade Ice Cream in 1978. Over the years, Ben & Jerry's evolved into a socially-oriented, independent-minded industry leader in the super-premium ice cream market. The company has had a history of donating 7.5% of its pre-tax earnings to societal and community causes. Ben and Jerry further extended their generosity by offering 75,000 shares at $10.50 per share exclusively to Vermont residents, so that they may help those who first supported the company; Ben and Jerry's wanted residents to profit from their venture as well. In addition, steady growth and a widely recognized brand name helped Ben and Jerry's obtain 45 percent of the premium ice-cream market, yet the company stock price remained stagnant at $21 a share for several years.

Key Management

Ben Cohen and Jerry Greenfield, the founders of Ben and Jerry's, gave the firm a very specific spirit. While the majority of corporate managers were under constant pressure to meet their shareholders' demands, Ben and Jerry were quite the opposite, frowning upon traditional business biases based on short-term interests and large profits. Initially, their quick business growth frightened them, as they both thought about severing ties with the fast growing company. However, what was supposed to be a threat to their ideals turned out to be a way to strengthen their campaign for social change. It was through their social ideals that they introduced "caring capitalism", a philosophy which spread throughout a host of educational, environmental and social events. The founders did not place emphasis on cash, equipment and inventories; the "tangible assets" of the firm. Instead, their focus was on "intangible assets" such as reputation, quality of life, joy, social concerns; all of which they considered to be as valuable as material assets. As a result, Ben and Jerry's developed the "Statement of Mission", which was a culmination of three distinct parts: Product Mission - based on quality, innovation and the "made in Vermont" stamp ; Social Mission – (the most meaningful mission) based on quality of life; and an Economic Mission - based on growth, shareholder value and care of employees.

Ben and Jerry's voiced participation in "the greater good" and their "Statement of Mission" ideals triggered a boost in super-premium ice cream sales, which showed that a large portion of the public was ready to pay more for the Ben and Jerry's experience.

Competitive Situation

Ben and Jerry's was able to evolve in a highly competitive market; one of their strengths was their soaring growth rate at 60% a year on average. This growth surfaced from the penetration of new geographic markets by their core competencies: their social mission; the introduction of pint-sized containers; flavor differentiation (which allows the firm to dispose of the slower moving flavors and to target higher margin products); and product quality.

In addition, the ice-cream market was ready for innovation; as this market generates extremely high profits compared to the other products sold in supermarkets. Ninety-four percent of families indulge in ice-cream because it was considered an "affordable luxury". The ice cream market has also had a history of adapting quickly to market evolutions, which was witnessed when consumers began to favor non-fat ice creams as the commercialization of frozen yogurts came about. Thus, moderately because of the regular changes of consumers' habits, innovation lies at the heart of Ben & Jerry's strategy: not only new products but also inventing new flavors, a more sophisticated distribution system (based on "direct store delivery") and new promotion programs.

In order for Ben and Jerry's to subsist in this highly competitive market, they must quickly become one of the largest ice cream makers. They should be able to accomplish this by becoming more visible on the...
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