The most suitable way to define the environment of the company is to present the competition in the involved industries, and to present the position of Ben and Jerry’s in the competition. Therefore, we would like categorize similar and substitute products as competitors. Afterwards, through a SWOT analysis we will further examine Ben and Jerry’s position.
Competitors
Ben and Jerry’s offer ice creams either in small boxes which can be found in numerous supermarkets and restaurants, also they operate several ice cream shops. On this basis, we collected and categorized similar kind of products as competitors.
A. Ice cream boxes
Ben and Jerry’s is not the only company to compete in the premium ice cream box segment.
Although the main strength of Ben and Jerry’s is their high brand recall among customers, there are other factors for the costumers in the industry. Recent years, supermarkets started to launch their own private labeled products, and they won a fair share of the market, as the below figure shows.
1. Figure: The ice cream market in U.S. Source: https://digitalfactoryuc3m.files.wordpress.com/2015/04/statista.png
B. Ice cream shops
Ice cream shops has their advantage in their location. Costumers are likely to make impulse purchases, and their availability can be a strong factor when making decisions.
C. Substitute products
The main traits of Ben and Jerry’s ice creams are their sweet taste, their refreshing cold temperature, and their instant consumability. In such a way, all products which either has one of Ben and Jerry’s main traits, or both of them could be considered as a competitor of the product, included but not limited to ice cream sandwiches, ice pops, cakes, chocolate bars, fruits, and other sweets.
SWOT Analysis
A. Strengths
One of Ben and Jerrys’ main strengths is their high brand recall. To demonstrate the brand presence, we would like to compare the company’s social media indicators to its direct rivals.
The figure shows that Ben and Jerry’s has a strong fanbase, and they can reach a high amount of people by their social media accounts.
To catch up with recent trends, Ben and Jerry’s has a strong emphasis on social and environmental consciousness. They indicate that all of their ingredients are from fair trade suppliers, and the packaging of the products are easy to recycle.
Ben and Jerry’s offer an alternative to people living with ingredient allergy by providing lactose-free, gluten-free variant of their products, and low-calorie variants for those who would like to lose weight.
Last but not least, the design of the products are inviting for kids, which can be a deciding factor between ice creams.
B. Weaknesses
The product can be substituted easily, and there is an intense competition in the market, which makes the market share limited.
C. Opportunities
Ben and Jerry’s sales are mostly focused on supermarket sales, while opening more ice cream cafes could lead them to open more market opportunities for them, and costumers could get to know the Ben and Jerry’s experience through a Ben and Jerry’s ice cream bar.
D. Threats
The products of Ben and Jerry’s are mostly unhealthy, while the world is moving towards to a trend which prefers healthy food and make people more health-conscious.
The product could face difficulties when it comes to food regulations.
As the SWOT analysis shows, the brand’s strengths and opportunities outweigh the weaknesses and threats, and so they stand a strong basis for potential foreign expansions.
Five Forces Model of Competition
In order to identify and assess the strength of external competitive forces on the ice cream industry we utilized a common analytical tool, Porter’s Five Forces Model of Competition, which is based on the following five factors: rivalry among competing sellers, bargaining power of buyers, bargaining power of suppliers of key inputs, substitute products and potential new entrants to the market (Thomas and Strickland, 1995). Figure 3 summarizes the competitive strength of these forces on the ice cream industry.
Rivalry Among Competing Sellers
The principal competitors in the super-premium ice cream industry are large, diversified companies with significantly greater resources than Ben & Jerry’s; the primary competitors include Dreyers and Haagen-Dazs. Rivalry can be characterized as intense, given that numerous competitors exist, the cost of switching to rival brands is low, and the sales-increasing tactics employed by Dreyers and other rivals threatens to boosts rivals’ unit volume of production (SEC Report, 1999).
Buyers
The power of buyers is relatively high because buyers are large, consisting of individual customers, grocery stores, convenience stores, and restaurants nationwide and globally. Since retailers purchase ice cream products in large quantities, this gives buyers substantial leverage over price. In addition, there are many ice cream products to choose from, so the buyers’ cost of switching to competing brands is relatively low. In order to defend against this competitive force, a company’s strategy must include strong product differentiation so that buyers are less able to switch over without incurring large costs.
Suppliers
The suppliers to the ice cream industry include dairy farmers, paper container manufacturers, and suppliers of various flavorings. Such suppliers are a moderate competitive force, given that the ice cream industry they are supplying is a major customer, there are multiple suppliers throughout the nation to choose from, and many of the suppliers’ viability is tied to the well-being of large, established companies such as Dreyers and Haagen-Dazs. Therefore, the ice cream suppliers have moderate leverage to bargain over price.
Substitute Products
Many substitutes products are available within the dessert and frozen food industry (cookies, pies, Popsicles, cake). The ease with which buyers can switch to substitute products is an indicator of the strength of this competitive force. Since substitute products are readily available and attractively priced compared to the relatively higher priced super-premium ice cream products, the competitive pressures posed by substitute products are intense. Companies that enter the super-premium market, therefore, must adopt defensive strategies that convince buyers their higher priced product has better features (i.e., quality, taste, innovative flavors) that more than make up for the difference in price.
Potential New Entrants
The barriers to entry within the ice cream industry are moderate due to the brand preferences and customer loyalty toward the larger and more established rival companies. Other obstacles to new entrants include strong brand loyalty to established firms and economic factors, such as the requirement for large sources of capital, specialized mixing facilities and manufacturing plants. In addition, the accessibility of distribution channels can be difficult for an unknown firm with little or no brand recognition. Although Ben Cohen and Jerry Greenfield successfully launched their ice cream business from a gas station with modest funding and staff, they had to initially rely on a rival company’s distribution channels (and later on independent distributors) in order to gain a stronger foothold in the market.
https://www.generalmills.com/en/Brands/ice-cream/haagen-dazs
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