CARVEL ICE CREAM — DEVELOPING THE BEIJING MARKET
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In August 1998, Steven Wang, manager of business development for Beijing-based Carvel Asia Limited, was considering various ways to increase sales in the company’s flagship product category — ice cream cakes. In the one year that he had been on the job, Wang had worked at increasing the presence of the famous American brand name throughout China’s capital city. In summarizing the task before him, Wang stated: The challenge is to develop a complete marketing program for a product that is relatively new to most Chinese. Therefore, much of what we need to do involves basic education — we need to ensure that our customers and distribution partners understand who we are, what we are about and what benefits our products provide. At the same time, we have been given a very limited advertising and promotion budget, so whatever actions we take must be cost-effective. Once we put a proven program together in Beijing, we will transfer our learning to other parts of the country. CARVEL CORPORATION
In 1934, Thomas Carvel founded Carvel Corporation (Carvel) in Hartsdale, New York after he converted his mobile ice cream truck into a permanent roadside location. Originally, the company served only soft ice cream cones and milkshakes before developing other products, such as ice cream cakes. By 1998, Carvel owned and operated over 300 retail stores in the U.S., Canada, Puerto Rico and China, and had granted franchise rights to over 600 others. It had also established over 4,500 “wholesale” accounts throughout the U.S. These outlets were mainly in supermarkets, although some interstate highway restaurants and highend hotel locations had recently been developed. The company’s system-wide sales for 1997 exceeded U.S. $600 million. The products Carvel sold fell into three categories — fountain ice cream, ice cream novelties and ice cream cakes. Each retail store was completely self-sufficient, and therefore, capable of producing a myriad of soft and hard ice cream flavors, as well as the entire range of Carvel novelties and ice cream cakes. The
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fountain group consisted of soft and hard ice cream cones, milkshakes and sundaes. Carvel’s novelties were all single serving-sized products that were sold for both in-store and home consumption. The ice cream cakes category comprised a standard product line known as Carvel Classics, a premium product line known as Blue Ribbon, a specialty line of character and novelty cakes, as well as other individual types of cakes (See Exhibit 1). The Classic cakes came in six, eight and ten-inch round sizes.1 Each Classic cake was made by starting with a layer of soft vanilla ice cream as the base. A chocolate wafer biscuit was then placed on top of the base, followed...