Business Strategy: The Case of Mars Ice-Cream

Questions and answers for the case study on Mars ice cream’s distribution strategy.

1. How would you resume the strategies adopted by Mars to launch its ice cream products?

To come up with the next strategy for Mars in the launching of its ice cream products, we should first analyze the market environment for this type of product, such as its consumers, its competitors and the market penetration of Mars ice cream products. We also need to analyze Mars in terms of its past distribution strategies adopted that have succeeded or failed and the reasons behind the success or failure. We can do this by utilizing the PESTEL analysis to consider all the variables that could affect the sales of Mars ice creams and a SWOT analysis to understand Mars’ internal strengths and weaknesses, as well as the external factors that could lead to opportunities and threats for its ice cream products. We could also use Michael Porter’s 5 Forces to determine the competition and the bargaining powers of the suppliers and buyers. However, since we are only focusing on Mars’ ice cream distribution strategy at the moment, we can attain an overall picture of the barriers, challenges, and competition for Mars ice cream products by utilizing the competitive analysis of Michael Porter’s 5 Forces, as follows:

Michael Porter’s 5 Forces

Barriers to Entry & Exit

• Technological: there is a need for frozen storage and transportation of the ice-cream products are costly.

• Financial: the distribution of Mars ice cream products are costly and items need to be sold in large amounts to balance transportation costs. There are also difficulties of making up economic loads within a compact geographic area.

Potential New Competitors

• Many: there are many ice cream companies out there, but Mars can still be competitive since it uses quality ingredients such as real cream and real chocolate. • Competitors are also offering free freezers to exclusively sell their products, and small retailers have accepted them.

Customers Power of Negotiation

• High: Mars ice cream is generally more expensive than other brands, and its choices are limited. Potential Response Strategy from the Competitors to the activity of our company. • Aggressivity – Mars has failed to negotiate distribution agreements with other companies. The company has been denied access to Unilever and Nestlé freezer cabinets in many European markets.

Suppliers power of negotiation

• Medium: it depends on where the ice cream is distributed because small shop retailers will order less as they can only sell limited numbers, but more can be delivered to supermarkets and hypermarkets as they would be able to store larger amounts of ice cream.

Substitute products or services

• May Exist: the ice cream market is very competitive for Mars but at the moment, the company doesn’t sell dessert ice creams, bulk packs or children’s novelty ice creams, for which there is also demand. There are possibilities for Mars to expand its range of ice creams and combine it with its confectionary products.

Recommendations

• From the analysis conducted above, Mars can resume its next strategy to launch its ice cream products by:

1. Diversifying its ice cream products to fulfill the demands of its consumers. In doing so, it could then offer freezers to the retailers to exclusively sell its products, together with its other range of ice creams.

2. Considering alternative venues for distribution, such as what Oreos did with McDonald’s and what Hershey’s did with Burger King – create an ice cream dessert or a Mars chocolate cheesecake for example, and sell it to fast-food chains’ consumers.

3. Fulfilling the demands of all levels of Mars consumers through creating several ranges of ice cream products that would vary in ingredients, flavor, packaging design and distribution location. For example, an ice-cream range for kids aged 4 to 12 will be packed in colorful, visually attractive packages, have flavors named “icy choc mountain”, “rocky almond”, or “chocolate spaceship”, and will be sold in smaller sizes, at cheaper prices, and distributed at school cafeterias, malls, street vendors, supermarkets, and small shops. On the other hand, the high-end ice-cream range for adults aged 21 and above will be packed in sultry dark colors, with catchy words displayed like “real cream, real chocolate, real Mars”, with flavors named “chocolate seduction”, “Mars meltdown”, or “crème caramel”. It will be like a combination of Magnum and Vienna ice creams.

4. Leveraging on its already popular name brand of confectionary products by focusing the marketing of its ice cream products around the fact that it is Mars, and not just any other typical ice cream on the market. This would serve to remind its consumers of the quality and reputation of its confectionary products, and persuade them to perceive the Mars ice cream as they would perceive the Mars chocolate bar.

2. Do you think that Mars will ever make significant profits from its ice cream operations? Why? How?

Looking at the scenario and information that was provided in the text, it is unlikely that Mars will make significant profit if it continues with “business as usual”. It seems that its range of ice cream targets specific customers & does not reach all consumers such as children. Thus, in the ice cream market that is already dominated by bigger companies, which are competing aggressively, Mars would have to be more dynamic and innovative in launching its ice cream products, and should leverage on the fact that it is already well-known in terms of branding and confectionary distribution. It should also seek ways to cooperate with other non-ice cream companies such as fast food chains or diners, in order to introduce Mars ice cream in their dessert menu. Perhaps then it would have a better chance of attaining a bigger piece of the ice-cream market pie.


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Business Strategy: The Case of Mars Ice-Cream

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