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Haagen-Dazs Brand Ice Cream Case Study

Statement of Problem:
Recommend a strategy to introduce HD Lite a new brand from
Haagen-Dazs.

Critical Facts:
Company:
Started as a family business in 1941
Has grown into a position of world leadership in the super-premium sector of
the ice cream market.
Haagen-Dazs was purchased by the Pillsbury Company in 1983.
The 1.9 billion super-premium ice cream market is the fastest-growing
segment of the $4.1 billion ice cream market sales doubled between 1980
and 1987
The super-premium market will continue to grow at double-digit rates
through the year 2000.
Haagen-Dazs, with 41.7% share, is the leader in this market.
Haagen-Dazs brand also had the highest name recognition among all the
premium ice cream makers.
Traditionally, Haagen-Dazs allocated 5% of sales to advertising and sales
promotion, with emphasis on local radio spots and print ads in magazines
that coincide with in store promotions.
Additional ads are placed in magazines and newspaper entertainment
supplements during seasons of higher ice cream purchases mainly summer
and Christmas.
Supplementing media advertising, the promotional program features
couponing and sampling.
Themes in Haagen-Dazs advertising typically highlight entertainment, status,
fun, and leading the good life.
Consumer:

Yuppies:
- Young urban professionals.
- Concentrated in East Coast and West Coast states in
metropolitan cities like New York, Philadelphia, Atlanta, Chicago, San
Francisco, and Los Angeles.
- Typically employed as
professionals or managers and have above average incomes.
- Generally upwardly mobile, liberal, and self-confident, and
independent.
- Socially active, enjoy entertaining, and like to show off to
friends and colleagues by buying expensive things and treating themselves
well.
- Looks are important and keep themselves in good physical
condition.
- Occasionally go on sweet binges, consider themselves ice
cream connoisseurs and tend to choose unusual ice cream flavors.

Married Food Lovers:

- Concentrated in suburban areas surrounding yuppie urban


areas.
- High % has one or two children
- Tend to work in business and the professions, have above
average incomes, are upwardly mobile and socially active, and are interested
in appearances, fitness, and self-development.
- Less liberal than yuppies, however, and more oriented
toward their families than toward themselves.
- Have respect for money, are innovators not imitators.
-

Achievers:
- Located near major cities where professionals are prevalent
and have many characteristics in common with Married Food Lovers and
Yuppies.
- Mostly single, mainly male, employed in business or the
professions, concerned about nutrition, and highly status and appearance
conscious.
- Income among group members is above average, but they
tend to respect money. They also have a need to impress and tend to reply on
the opinions of others.
- They limit their intake for nutritional reasons. They consider
themselves ice cream connoisseurs, but all brands taste the same to them,
and they wont purchase a higher-priced brand unless there is a special
occasion, such as entertaining friends.

Product:
Haagen-Dazs positions itself as a super-premium product geared to deliver
the ultimate experience in taste and quality.
Was created and initially manufactured in the Bronx.
A frozen dairy mixture of milk and/or cream combined with sugars,
flavorings, fruits, nuts and other natural additives, Haagen-Dazs offers an
abundance of flavors, ranging from basic vanilla to Swiss almond chocolate.
The Haagen-Dazs tradition continues to emphasize quality and painstaking
preparation over quantity.
Most Haagen-Dazs ingredients, such as strawberries, almonds, and raisins,
are purchased from a single producer to ensure consistent quality.
Haagen-Dazs won the Classic Ice Cream Bar category in a taste test
conducted by People magazine, receiving the highest overall score of any of
the super-premium entries.
Qualities of Haagen-Dazs ice cream noted by consumers during focus group
sessions include fluffiness, density, foaminess, graininess, and
viscosity, all associated directly with the product.
Another product-specific quality noted by consumers is a certain sensory
coldness related more to ingredients than to temperature.
Haagen-Dazs is the only super-premium ice cream brand distributed
nationwide, through supermarkets and 300 independently-owned franchise
shoppes.

Adopted a competitive pricing strategy with respect to its direct superpremium competitors and a prestigious strategy with respect to other
categories of ice cream.
Demand for super premium ice creams is generally inelastic, so Haagen-Dazs
has little difficulty maintaining a price that, on average, is 75 percent higher
than the price of the most expensive regular ice cream.
The average price for a Haagen-Dazs pint is $2; ice cream bars sell for
between $1 and $1.25; and a three-bar package costs approximately $3.
The companys costs per unit vary according to product line. The average
cost per pint is $1.25. The average cost per ice cream bar is .58 cents.
A new product line of low calorie Haagen-Dazs ice cream was in development
for introduction in the spring of 2000.
The new product would be introduced under the label HD Lite.
HD Lite offered fewer calories per serving due to differences in the
concentration of milk cream, sugar, and calorie-rich additives found in the
parent brand.
The brand would be distributed in grocery chains that carried specialty
grocery and produce.
Langdon could see opportunities for advertising HD Lite to one of HaagenDazss existing target audiences that might be interested in the idea of
getting premium ice cream taste without the fat and calories associated with
regular Haagen-Dazs ice cream. HD Lite would be sold by the pint at an
average price of $2.
Competition:
Competitors in the super-premium market include Frusen Gladje the second
largest-selling brand; Ben and Jerrys; Steves brand ice creams; Alpen
Zauber; and a proliferation of smaller brands.
All the super-premium brands have higher butterfat content (15-20%) in
common and less air content than regular brands.
They also add unique flavor and ingredients to their ice cream such as
cookies and candy bars and contain no additives, stabilizers, or emulsifiers.
Haagen-Dazs also competes with premium regular, economy, and private
label ice cream brands such as Breyers, Blue Bell, and Pathmark brands.
Differences between these brands are being minimized with processing
innovations that allow them to be distributed nationwide without the use of
stabilizers and emulsifiers.
The frozen dessert market represents another layer of competition for
Haagen-Dazs ice cream. Major entries include frozen yogurt, sorbet, and
tofutti a tasteless, odorless flavor vehicle made from soybeans.
Haagen-Dazs has adopted a competitive pricing strategy with respect to its
direct super-premium competitors and a prestigious pricing strategy with
respect to other categories of ice cream.
Demand for super premium ice cream is generally inelastic, so Haagen-Dazs
has little difficult maintaining a price that, on average, is 75 percent higher
than the price of most expensive regular ice cream.
Market:

The primary market for Haagen-Dazs ice cream comprises young adult baby
boomers between the ages of 21 and 35 who purchase three times as much
Haagen-Dazs ice cream per capita that the rest of the population.
Discretionary income of members of this group has risen sharply over the
past decade.
They are health and fitness conscious, upwardly mobile, and attracted to the
allure of all natural products.
Many members of this market treat themselves to a more upscale style of
living and self gratification.
Social class is generally perceived to be an important environmental
influence, and they tend to maintain a higher level of quality in their
purchases to maintain their class positions or achieve higher status.
Three largest sub-markets are yuppies, married food lovers and upscale
achievers.
Most of the firms marketing efforts focus on high-density states on the east
and west coasts, where more than 70% of supermarkets carry the HaagenDazs line. The entire Midwest constitutes only 20% of total sales.

Recommended Alternatives
Alternative A: Target the yuppies. The Yuppies are young urban
professional who are largely concentrated in East Coast and West Coast
states in metropolitan cities like New York, Philadelphia, Atlanta, Chicago, San
Francisco and Los Angeles. Yuppies are typically employed as professionals or
managers and have above average incomes. They are upwardly mobile,
liberal and self-confident and independent. Although they have good eating
habits, they occasionally go on sweet binges. They consider themselves ice
cream connoisseurs and tend to choose unusual ice ream flavors. The Yuppies
enjoy the finer things in life, but are health conscious, so it makes sense to
target this group with Haagen-Dazs new HD Lite product line. Outdoor
billboards, bus and subway signs and magazine print advertisements will be
the best way to reach this mobile market.
Risk: By targeting the Yuppies, we are neglecting the
other markets and missing out on the opportunity to target the Married Food
Lovers and Achievers. Also, it might be hard to get across to the Yuppies since
they are so mobile and independent.
Alternative B: Target the Married Food Lovers. The Married Food
Lovers are concentrated in suburban areas surrounding yuppie urban areas. A
high percentage of this group has one or two children. They tend to work in
business and the professions, have above average incomes, are upwardly
mobile and socially active, and are interested in appearances, fitness, and
self-development. Although they tend to indulge themselves, they also have
respect for money. They have good eating habits; love food, cooking and
entertaining and are concerned with quality. They consume ice cream
regularly and always have some on hand, even if on a diet. Married Food
Lovers want to please their families, while still maintaining their healthy
lifestyles. The HD Lite ice cream from Haagen-Dazs is a great fit for their
family because they dont have to sacrifice taste for calories.

Risk: If we just target the Married Food Lovers, we are


ignoring important market potential from Yuppies and Achievers. Children are
big influencers and they might not want a lite ice cream or might be turned
off by the lite label which will cause the buyers of the family to purchase
other brands. They are conscious about how much money they spend, so this
target might turn to cheaper alternatives. Might view ice cream as junk food
even if it is lite.
Alternative C: Target the Achievers. Achievers are located near
major cities where professionals are prevalent and have many characteristics
in common with the Yuppies and Married Food Lovers. They are mostly single,
mainly male, employed in business or the professions, concerned about
nutrition, and highly status and appearance conscious. Income among this
group is above average, but they tend to respect money. They have a need to
impress and tend to rely on the opinions of others. Achievers are all about
status, especially when entertaining their friends. What other brand of ice
cream offers the same level of status that Haagen-Dazs can provide?
Risk: Missing out on targeting the Yuppies and Married
Food Lovers if we just target the Achievers. They respect money, so they
might turn to a more affordable ice cream alternative instead of HaagenDazs. All brands taste the same to them, so they might be satisfied with the
cheaper brands and only purchase higher-priced brands on special occasions.
Recommended Alternative & Rationale:
My recommended Alternative is Alternative A. By targeting the Yuppies,
we are targeting a group that has a high income. Yuppies enjoy showing off to
friends and colleagues by providing high-end brands while entertaining. They
consider looks to be important, so they are looking for an ice cream that is
lower in calories but still tastes great. HD Lite offers fewer calories per
serving due to the differences in the concentration of milk, cream, sugar and
calorie-rich additives found in the parent brand. When Yuppies choose HD
Lite, they can be confident that they are treating their bodies well. Yet, they
arent sacrificing flavor for fewer calories. HD Lit provides the same great
taste and quality that Haagen-Dazs is known for, just without the calories and
extra fat content. By targeting a group that considers themselves ice cream
connoisseurs, HD Lite has the potential to turn these light ice ream bingers
into regular, religious consumers. The buy rate has potential to increase
drastically since Yuppies are looking for a healthy alternative to their usual ice
cream habits, while still getting the taste they love and desire.