Ben & Jerry's Homemade ice cream Inc.
This case study comes from the second edition of Business Strategy: an introduction published in 2001. It is very readable and interesting, providing students with insights into how two entrepreneurs who set up an ice cream shop in a renovated petrol station became the names behind one of the most well-known ice cream brands around the globe. Students will find out how Ben and Jerry tackled the almighty (at the time) Pillsbury and Häagen-Dazs, how they developed a brand to distinguish them from competitors which included a focus on people and giving back to society, and how they successfully used PR to come up trumps in the ‘ice cream war’.
At the end of the case study you will find a series of questions for students to get them thinking critically about Ben & Jerry’s strategy from its humble beginnings to where it is now. The case also provides the opportunity for students to conduct research into the current state of play. They could find out how Ben & Jerry’s have further developed their brand and product offerings (they now have ice cream counters in cinemas, they offer a full selection of Fair Trade ice creams, etc.) and what competition they now face, if any.
Students will find it helpful to read chapter 20 on social responsibililty and business ethics. They could also use this longer case study as a springboard for their work on the Strategic Planning Software (SPS), to which they have free access with purchase of the textbook.
Ben Cohen and Jerry Greenfield became friends at school in the late 1960s in Burlington, Vermont in the North Eastern United States. Their reputation as the two 'odd' eccentrics at school led them to form a strong friendship that would last for many decades.
When they left school, both Ben and Jerry became 'hippies' - social drop-outs who lived an alternative and unconventional lifestyle. They both grew their hair and a beard and together with their dog, Malcolm, they moved in together as flatmates. One of the interests they shared was in food and as they discussed various ways of making a living, they concluded that the two most exciting areas of fast food at the time were bagels and ice cream.
Having established that the equipment needed to bake bagels would cost $40,000, the two men enrolled on an ice cream making correspondence course for the cost of $5 each.
In 1978, having developed some basic ice cream recipes, Ben and Jerry set up a shop in a renovated petrol station in Burlington with a capital investment of $12,000 ($4,000 of which was borrowed). From the outset, Ben and Jerry wanted to produce a premium product and the fact that it was made from 'fresh Vermont milk and cream' was stressed. The outlet was called 'Ben & Jerry's Homemade ice cream' and to give the shop a unique and welcoming character, they employed a piano player to play blues in the background.
Initially, the shop was a success amongst Burlington locals, many of whom had known the men when they were growing up. The staff that Ben and Jerry employed were encouraged to take the same 'hippiesh' view of business activity as the owners ('every day was a party'), but the major competitive advantage arose from the uniqueness of the product. Whereas the majority of ice cream products were traditionally-flavoured, Ben and Jerry introduced unusual flavours with 'chunks' to make the textures more interesting, such as fruit, chocolate, nuts, toffee and similar sweets. 'Chunky' ice cream became the prominent feature of the new organisation's image.
During the summer of 1978, customer numbers grew as the reputation of the shop and the ice cream grew. It was when the winter set in at the end of the year that the troubles began. Over the counter ice cream sales dried up and Ben and Jerry realised they would have to find other outlets for their products if they were to avoid bankruptcy.
They persuaded a number of local...
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