Mars Ice Cream Case

Mars ice cream’s strategy:

The strategies adopted by Mars to launch its ice cream products were the following:

-They used high-quality ingredients, such as real cream and real chocolate.

-They established a new premium-price category in the market place.

-They used significant advertising support across Europe.

-They attempted to negotiate distribution agreements with companies that were in second or third position in various national markets across Europe

-They considered freezer distribution as part of its business strategy.

The first four don´t need much explication, they used high-quality ingredients and they established a new premium-price category trying to differentiate themselves of its competitors to get more customers, they used a lot of advertisements trying to be more known across Europe and they negotiated agreements with companies that were in second or third position in its markets because of the difficulty to negotiate with the first.

However, regarding to the freezer distribution, we could say that they had excellent relationships with the grocery trade which helped them to reduce freezer distribution problem, but ice cream distribution to retail outlets involves high costs because the need for frozen storage and vehicle transport, so they had to invested considerable effort in this part of the business regarding: the low unit cost of the items carried, the small drop sizes of orders to non-supermarket outlets and the related difficulty of making up economic loads within a sufficiently compact geographic area.

Future profits from its ice cream operations:

Once we have realized which are the Mars company strategies and we understand these better we can analyze them and find the reasons because of they are not going well.

In my opinion if they maintain this strategy they don´t make significant profits in the future, so we are going to identify which are the things that they are doing wrong and what they should change to make profits in the future.

There are two main strategies they aren´t doing well:

-First of all I would like to say that if you use high-quality ingredients and you establish a new premium-price category, maybe you don´t have to sell your products in typical supermarkets and you have to focus in specialized supermarkets and stores which focus on that specific market segment, so in my opinion this could be a solution and the other will be changing its strategy and selling its products in all kind of supermarkets, but not using high-quality ingredients and not establishing a new premium-price category. So Mars Ice Cream has to define its audience better and to follow one strategy or the other. They have to select better its audience or on the other hand if they decide to expand its audience and to sell its products in all kind of supermarkets, also they could diversify their products with dessert ice creams, ice creams for children or something like that.

-And the other is of course freezer distribution, as we have seen this has several problems and according to that Mars has considered that as a very important part of its business, but even on that they aren´t doing well. The goal has to be to minimize all these several problems and a solution for that could be to open new factories closer to their consumption zones, having only one factory in France this problem can´t be solve or at least is much more complicated. Also if they change its strategy of high-quality ingredients and they expand its audience, they could diversify more, expand its product offering and solve freezer distribution problems transporting more products and minimizing its costs.

Comentarios desactivados en Mars Ice Cream Case / 04 Dic 2011 por Alberto Rengel Bueno
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