MARS Ice Creams: Distribution strategy problems

Mars, a company that started in the confectionary business at the beginning of the 20th century, launched its first ice cream bar in 1989, when they already had an outstanding position in the European market.

The strategy the company followed to promote this new range of products was not only backed up for their know-how of the confectionary sector but for three key factors: High-quality ingredients, advertising and price. Nevertheless these strengths were not enough to guarantee the success of the launching as their strategy might not had studied deep enough one of its weakest points: Distribution.

The new chocolate ice cream bars needed frozen transportation and storage. While this supposed no difficulty dealing with some of their trade sectors, it meant high costs when it came to distribution to retail outlets due to small orders sizes and low unit cost, among others.

Rival companies such as Unilever and Nestlé had solved the storage issue offering free frozen cabinets to retailers for the exclusive use of its products. Mars strategy to face the threat of being superseded by them included freezers sales and distribution agreements with companies that were in lower positions.

The other weak point of Mars new products launching is related both to the specific kind of ice cream items they were selling and the buyer’s power. Retailers were looking for a whole range of ice cream products that could meet their clients needs and Mars couldn’t offer. As a consequence, the branded frozen cabinets were filled with products from other suppliers, losing Mars its prominent presence at the retailer’s shop.

The strategy problems Mars has had regarding its ice cream products are directly related to the logistics of distribution and storage. I believe the company could start making significant profits from these operations as far as they could invest in new factories located in strategic European towns, as nowadays the whole production comes from a single factory in France. Decentralizing the storage of frozen items so as to reduce distribution distances and costs could be another, less expensive, option.

Mars has the potential to become a leading brand in the ice cream sector due to the consolidated position the company owns in the confectionary market as well as the long-term business relationships it has with both buyers and suppliers. Designing the right strategy and taking into account the wide range of substitute products Mars already has and the relation with rivals companies, I believe the brand could success in the commercialization of ice cream products.

 


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