Case Study No. 1
Prepared for MARK 5815 International Marketing in Asia
Due Thursday 1st September 2006
Ben & Jerry’s - Japan
1. Situation Audit
Ben & Jerry’s Homemade Inc. (hereafter known as Ben & Jerry’s) is a US-based superpremium ice cream producer established in Vermont, USA in 1978 by Ben Cohen and Jerry Greenfield. From humble beginnings the company gained popularity through their unique style and innovative flavours and product names. The exceptionally high butterfat content of their ice cream qualified their product as a superpremium ice cream, which placed the company in the same competitive market as Haagen-Dazs, the superpremium market leader in the US (accounting for 44% market share in 1997 compared to Ben & Jerry’s 2nd place rank with 34%). With company growth, Ben & Jerry’s began expanding its operations initially in the US and eventually internationally. By 1997, the company had operations in 6 international locations: Canada, Israel, Russia, United Kingdom, France and Benelux. However, the company was suffering from poor domestic and international sales and profits, with 1994 actually returning a loss in net income for the company. In response to ailing profits, Ben & Jerry’s began investigating the opportunities to be gained in entering Japan, the second largest global ice cream market (Hagen, 1999).
Corporate Mission & Objectives
Ben & Jerry’s prides itself on being a socially responsible company that respects and acknowledges its community roots. The company’s corporate mission statement is compiled from three separate but interrelated mission statements spanning product quality and integrity; achievement of financial goals and profitable growth; and social activism (Ben & Jerry’s, 2006; see Appendix A). Ben & Jerry’s takes care to adhere to these values to guide their business operations. However, one of the major concerns raised by the Ben & Jerry’s board of directors was incongruency of the company’s corporate mission to the goals of Ben & Jerry’s venture into the Japanese market. The lack of unanimous top management support needs to be addressed if the Japanese venture is to be successful.
Porter’s Five Forces Analysis
An analysis of the external market threats in Japan was performed using the Porter’s Five Forces model (Hooley et al., 2004; see Appendix B). As a result of this analysis, only two significant threats were identified: • Threat of bargaining power of buyers and
• Threat of competition within the industry
These threats will be examined in more detail in the next two sections.
The Japanese ice cream market is reported to be the second largest in the world with total annual sales of US$4.5B in 1995 (Hagen, 1999). However, as Ben & Jerry’s competes primarily in the superpremium ice cream market, and measures their success through their performance in this sector, it is important to determine the value of the superpremium ice cream sector in Japan. Table 1 below shows 1997 figures for artisan ice cream sales in Japan:
Table 1: Artisan Ice Cream Sales in Japan
|Category: |Value in 1997: |Notes: | |Volume sales (million Litres) |51 |Japan is ranked 9th in global volume sales after US, | | | |China, Italy, Russia, Germany, Canada, India & France | |Value sales (US$ million) |359 |Japan is ranked 6th in global value sales after US, | | | |Italy, Canada, Germany & Russia | |Volume sales growth (% over a 5 year |-15.0 |Japan is ranked 20th in a list headed by Thailand with| |period from 1993 to 1997)...