Case Analysis: Carvel Ice Cream – Developing the Beijing Market
How to increase ice cream cake sales in a counter culture ?
What consumer to target ?
What products to focus on ?
What prices to charge for those products ?
What points of distribution would best increase cake sales ? How to support these sales through various print media options ?
Industry/ Market Analysis
The Beijing ice cream industry was made up of standard and premium products. The premium products consisted of 2% that was approximately 700 tonnes and rest was standard products manufactured by low cost producers at lower costs. The standard market was made of single serve and juice products. Earlier, local ice cream producers did not try to build brand awareness. Later foreign firms entered the market via joint ventures. They had a strong devotion toward building brand names. These foreign joint ventures were able to secure 80% of the standard ice cream market over a few years. The foreign joint ventures were able to capture the majority of the market share by using freezer loan programs. The residential freezer owners accounted for 15% of the households. The joint venture firms would loan freezers to retailers to store the ice cream in return retailers were supposed to stock only the products of the joint venture firms. The photos of company’s products, design and company’s logo displayed the brand awareness. The fact that city had a high literacy rate, it was getting aware of importance of brand value. The rise in income over few years would enable people to spend for these brands. Beijing had a good economic growth in past few years thus leading to increase the buying habits. The premium ice cream market was made up of hard ice cream and ice cream cakes. The premium ice cream market did not develop until Baskin robins entered Beijing in 1992. Later Carvel and Hagen- dazs entered the premium market to compete with Baskin robins.
Consumer Analysis (Peter Wei)
There are three important customer segments in Beijing that hold the greatest promise for increased sales. First, “Middle and Upper Class Chinese Professionals”, 70 per cent of the cake sales come from these yuppies. Thanks to the fast growing economy, more and more people who made to a high-income level. The group of these young professionals aged 25 to 45 and seeking for novel products and experiences. Second segment is so called “Little Emperors”, and about 20 per cent of the cake sales contributed by these children. In the 80’s the Chinese government started a program called “one child policy” in order to counteract the rapidly growing population. The sense of this program was that every family should only have one child. As a result of this policy, there grew up a generation of pretty spoiled children and young teenagers, who have no brothers or sisters. Parents spent up to 60 per cent of their disposable income on their children who are getting everything they want. The third segment of the ice cream market sales is “Expatriate residents”, which responsible for 10 per cent of Carvel’s sales. The third groups of potential customers are the expatriate residents who consist mainly of foreign business and embassy employees and their families. There are around 100.000 people, which are easy to reach, because of their English skills.
There are currently 1.5 million children in Beijing between the age of five and 12, and their family welling to spend average 60 per cent of their disposable income on the child. As a matter of fact, generating the interest to make these “Little Emperors” interested in the ice cream cake product become the crucial problem, in other words, Steven Wang has to attract the parents’ potential needs in buying the ice cream cake for their little emperors.
The main competitors for Carvel in the Beijing premium ice cream market were Baskin Robbins and Hagen-Dazs. It also had stiff competition...
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