Dippin' Dots Case Analysis

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  • Topic: Ice cream, Marketing, Vending machine
  • Pages : 5 (623 words )
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  • Published : April 2, 2011
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CASE ANALYSIS – Dippin’ Dots Ice Cream

I. Key issues and problems

• Soaring operating costs and plummeting sales

• Competition from copycat products (loss of patent)

• International shipping storage problems

• Retail storage problems – convenience factor

• Lack of new growth opportunities in product lines

II. Analysis of external environment

General environment

• Technological – better storage system at retail locations,

• Economic – operating costs rising

• Sociocultural – innovations such as slab concept, independent scoop shop, etc surpassed Dippin’ Dots ice cream of the future innovation

• Legal – patent infringement lawsuit was dismissed, allowing competition to sell similar products

• Demographic – older generation still likes Dippin’ Dots, as well as introducing newer generations to the product

Industry environment

• Potential entrants – high threat due to loss of patent; product can be copied by competition and former employees

• Suppliers – high input costs to flash freeze ice cream gives suppliers medium power because of unique freezing process

• Buyers – low buyer power because they pay a high premium for the product and are more dedicated fans

• Substitutes – high power of substitutes because there are many substitutes – large variety of frozen desserts such as other ice cream brands, frozen custard, sherbets, gelato, etc.

• Industry competitors/rivalry – high rivalry from family owned businesses, full line dairies, and large international companies

Competitor environment

• There are two giants dominating U.S. ice-cream industry: Nestle and Unilever PLC of London and Rotterdam, along with about 500 small businesses

• Challenge for producers is to woo customers away from competitors and sustain a loyal fan base by continuing to innovate

III. Analysis of internal environment

Strengths

• Differentiated product

• Liquid nitrogen process

• Pallet reefers – ability to transport across country without melting

• Creative marketing strategy

• Unique venues such as amusement parks, shopping malls, water parks, fairs, and festivals

Weaknesses

• Inability to store in a conventional freezer - inconvenient

• Inability to make at home version similar to original product

• Failed joint venture with McDonalds

• Inability to expand to other markets in an effort to compete with other competitors

o Ex: when competitors came out with healthy versions of product

• Did not expand to other locations, not as easily available as competition

• Small focus group, originally designed to target 8-18 year olds

IV. Alternatives

• Expand franchise network for scoop shops – opening stores

• Expand network of franchise vending machines

• Offering more variety such as low fat options

• Expand operations into different markets – overseas

• Less of a focus strategy in an effort to capture more market segments through creation of products that appeal to all age groups

V. Analysis of alternatives

| |Pros |Cons | |Expand franchise network for scoop|Ability to reach a larger population |Increased storage costs | |shops |More available to loyal customers |High labor costs | | |Increase awareness among consumers | | |Expand network of franchise |Low labor costs |Maintenance...
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