Strategy: Mars Study Case
Mars chocolate is trying to diversify their products by going into the ice cream business as they incursion in the European market. Their strategy is based in high quality and low price as well as other factors such as good relationships with clients and giving out freezers to their clients. Later on they realized this wasn’t enough to make a profit out of this business due to high distribution costs. The high competitiveness from Unilever and Nestle also impeded them to form strategic alliances with other ice cream companies because they bought them to push Mars out of these markets.
The primary problem that I see in this case is the difficulty and high cost of distribution to the retail outlets. The smaller stores that don’t bulk buy and are far away from major cities or points of distribution. Since transportation and refrigeration of the candy is a fixed cost this makes it very expensive to pay for a trip to distribute a few ice cream bars and this is the main problem. One could argue that it’s simply not profitable to make these trips and just stop selling the candy to these retailers. However this as well represents an opportunity cost for mars of loosing this market share and presence in these areas. By doing this they will be automatically giving this market share to their competitor’s Unilever or Nestle. In the case is said that Nestle follows Unilever’s strategy even when it was clearly in a weaker position than Unilever this means they are not thinking about profits right now, but of how to capture a bigger market share.
Personally I would say that I’d rather find a way of getting to this outlets by working really hard on the logistics of distribution by finding routes and deliveries that serve multiple outlets, in order to get that truck full of ice cream bars and being able to cover the distribution costs. In the case is said that there are other ice cream product brands that sell dessert ice creams, bulk packs or children´s novelty ice creams that are sold on this outlets and in the same cabinets. What I would propose is to talk with this companies and propose to them to distribute together in order to get the trucks full and decrease costs of distribution as well as splitting the cost of the cabinets with them since they are using them as well. This way in the future if Mars opens another factory in another location in Europe to make distribution cheaper it won’t face as many barriers of entry into these markets since it has already positioned their ice cream products in these regions.
Comments Off on Strategy: Mars Study Case /
04 Dec 2011
por
Javier Solano Palacios
IMSD /
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