MARKETING ANALYSIS OF YUMMY ICE-CREAM 27th April, 2015
Instructor Mr Nabil Nisar
1.0 Executive summary Yummy is basically frozen desert brand located in Lahore. Currently this company is offering different ice cream brands with different flavors and size. Their prices are somehow higher from the competitors. In their promotional tools company is using Pamphlets and posters. Company should go for better promotion of their products. They must target some cities of Sindh as well as they are currently operating in only Punjab, Baluchistan and KPK. Many factors affect unfavorably to company’s effectiveness like strikes, cultural values, technology, inflation, interest rate and legal proceedings. Company has low threat of new entrant in the market and only two strong competitor at this time (W alls and Omore). Apart from this Substitutes office cream are pudding, milk and yogurt. Yummy should focus on technology in order to make its production function efficient.
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Contents 1.0 Executive summary ................................................................................................................ 1 2.0 Introduction ............................................................................................................................. 3 3.0 Marketing Mix .......................................................................................................................... 3 3.1 Product: ................................................................................................................................ 3 3.2 Price: ..................................................................................................................................... 3 3.3 Placement: .......................................................................................................................... 3 3.4 Promotion: ............................................................................................................................ 4 4.0 Pestle analysis.......................................................................................................................... 4 4.1 Political: ................................................................................................................................ 4 4.2 Economical: ......................................................................................................................... 4 4.3 Socio cultural factor ........................................................................................................... 4 4.4 Technological factors ........................................................................................................ 5 4.5 Environmental factors ........................................................................................................ 5 4.6 Legal factors: ....................................................................................................................... 5 5.0 Porter’s five forces model ......................................................................................................
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5.1 Threats of new entrance:................................................................................................... 6 5.2 Threats of substitute goods: ............................................................................................... 6 5.3 Bargaining power of suppliers: .......................................................................................... 6
5.4 Bargaining power of customers: ....................................................................................... 6 5.5 Rivalry of competitors: ........................................................................................................ 7 6.0 Hofstede Model of Cultural Dimension ............................................................................... 7 6.1 Power distance ................................................................................................................... 7 6.2 Individualism ........................................................................................................................ 7 6.3 Masculinity ........................................................................................................................... 7 6.4 Uncertainty avoidance...................................................................................................... 8 6.5 Long term orientation......................................................................................................... 8 7.0 SWOT Analysis.......................................................................................................................... 9 8.0 Conclusion & recommendations ....................................................................................... 10 References .................................................................................................................................. 11
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2.0 Introduction In 1981, yummy ice cream was found by an army officer Mr Hamid Nawaz and then it was acquired by Mr Ijaz Ahmed in 1986. This company is registered under Companies ordinance 1948 and its registered office is located at industrial area Kot lakhpat Lahore. Company mission is to serve consumers with pure and quality ice cream regardless of any age distribution. Yummy has strong chain of competitors like walls, Omore, igloo and hico. Yummy was the first company who introduced door to door service of providing ice cream through tri cycles and also concept of ice cream parlor in Pakistan. Yummy ice cream has their own ice cream parlors in various cities of Pakistan and company's average sale is around 3 Million per day in summer. Currently this company is working is Punjab, Baluchistan and KPK.
3.0 Marketing Mix 3.1 Product: The Yummy is an ice cream manufacturer company and make ice cream in around 36 flavors. Ice cream is known as frozen desert and it required a specific environment to maintain its frozen condition. In product Yummy Ice Cream uses natural ingredients rather artificial ingredients. Famous products of Yummy are Kulfa, Fista, Crown cup, kiddy cup, super corn and many more. The main issues with the Yummy Ice Cream are lack of continuous improvement and less use of technology. It is very necessary for the Yummy to improve their products and they should introduce new flavors along with the variety of different sizes.
3.2 Price: The price is one of the utmost essential p of marketing mix. Pricing is significant because it is a remuneration to the company and must be in hand to complete the other p’s of marketing mix. The prices which Yummy set for their products are relatively higher than Walls and Omore because of its high cost of natural ingredients. In case if there are many substitutes of a product, people prefer to buy the low price products. In this environment where Yummy has the competitors like Walls and Omore, so it must reduce its prices at the level of its competitors.
3.3 Placement: Yummy ice cream was initiator of the door to door service of ice cream through tricycles to ensure their product availability in different corners of Punjab, KPK and Baluchistan. Apart from this yummy has their own ice cream parlors in different main cities like Capital territory (Islamabad), Punjab (Multan, Faislabad, and Lahore) NWFP (peshawer) Baluchistan (Quetta).
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Issue with placement of yummy is that they have not placed their product in Sindh. Yummy has no distribution channel like there other competitors(walls) .Yummy just sell their products through Parlors and Tricycle. So if Yummy wants to capture the market they must have the proper distribution channel like Walls and Omore. Apart from this they must target cities of sindh as well like Karachi, hyderabad and sukkur.
3.4 Promotion: Yummy uses different ways of promotion to capture the market and to increase its sales. It uses pamphlets, leaf lets, wall posting, bill boards and Pena flex. The best promotional strategy which yummy is currently using is sponsoring different events and participating in different children’s and family festival. These strategies increases the brand image of the company. Unfortunately Yummy don’t has any distribution channel to promote its products via this channel as discussed in placement. Competitors of Yummy are promoting their products very aggressively in order to catch the attention of the customer. They are providing a lot of incentives to their retailer, like they are giving special schemes to their salespersons, they are furnishing their retail shops and they are running special campaigns in different events. Yummy ice cream should run TVC commercial because TVC has wide reach of viewers among all promotion tools.
4.0 Pestle analysis 4.1 Political: In Pakistan there is always political stability. Every day we have political strikes, long marches, Bomb blasts etc. Not only this but also we have no consistency in political policies. All these factors harm this whole industry. Due to strikes and long marches roads are blocked and many shipments of yummy ice cream are jammed in traffic and they are not reached timely to their parlors. In order to avoid such factors company should make separate plants in few other cities like Peshawar, Quetta and Rahimyar khan.
4.2 Economical: We have some economic factors which affects negativel y to the consumer and ultimately they are not favorable for the organization. One of them is inflation. In this inflationary era purchasing power of customers is decreased almost every year and in the same way government is announcing increment in the prices of material used in production. Due to less purchasing power of consumers and increasing inflation rate in Pakistan companies in this industry might lose their customer base.
4.3 Socio cultural factor Education and information technology has changed the lifestyle of people, hence their preferences are also changed. Today ice cream consumers prefer good quality of ice Page 4 of 11
cream at a well located place and environment. Yummy has taken good advantage of it by opening up the YUMMY’s 36 ice cream parlor. Local community need environmental friendly products which should not harm to the society as well as to their health. To meet the customer expectation yummy is providing different 36 flavors of ice creams to provide more choices to customer because this globalization period has increased the customers’ expectations.
4.4 Technological factors Technology is growing very fast and it has reached up to the artificial intelligence. Technology could be the best way to get competitive advantage. In ice cream industry technology play better role in R&D and advancement in production process. If we look at the Yummy Ice cream then they are not well endowed with technology. They are far behind in terms of technology but their competitors have good technological resources and that’s why they are operating very smoothly. Technology reshapes the overall production system and makes it low costly. Because it replaces the manpower and produce more units of product than one normal people could make.
4.5 Environmental factors Environmental elements has very important role in the better run of the organization, As ice cream need cold environment to remain in good condition. In Pakistan we have electricity load shedding so it impacts negatively on the efficiency of organization. Different organization are following the ISO-14001 standard which is about to maintain environmental standards, like reduction of carbon emission. Yummy ice cream is not ISO14001 certified. Refrigerators which were used by different beverage and ice cream companies they were called HFC (hydrofluorocorbons) . These refrigerators were very harmful for the environment which contribute to the depletion of ozone layer. But now these refrigerators are now no more to found because it was very old technology and now they are replaced by CFC’s (chlorofluorocarbons).
4.6 Legal factors: There are many factors with respect to ice cream manufacturing in Pakistan. Like Composition rules which means ice creams must meet the following standards like it must have more than or 5% of milk fat and not less than 2.5% milk protein. We have also some other regulations related to pasteurization, sterilization, cooling and production process. So these are the legal regulation which every organization has to follow.
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5.0 Porter’s five forces model 5.1 Threats of new entrance: A new entrant is a potential competitor which could be the threat for existing companies. But in order to enter in the market the new entrant have to consider the entry barriers which prevents from entering into the industry like capital requirement. This requires a big investment in terms of finance, HRM, technology etc. For new comers it is very difficult to differentiate their products than existing ones. For this they requires a huge R&D. In addition to this existing companies have captured big market share of this industry through attractive advertisements and emotional taglines. Beating these well established players is not easy task. From this we can conclude it will be hard for any new company to come in ice cream segment means new entrant cannot come easily in this segment.
5.2 Threats of substitute goods: Substitutes of ice cream can be like yogurt, milk, fruit and pudding etc. Yogurt is offered by nestle, but its market share is low because of ineffective distribution system. These products can give too much competition to the ice cream industry. Right now we have less usage of pudding in Pakistan because of less promotion of pudding. Ice cream industry is dominating this whole segment because of intensive advertisement. If pudding and yogurt started their effective marketing strategies then it will be serious condition for the yummy ice cream as well as walls and Omore. Currently threat is not too much high. 5.3 Bargaining power of suppliers: Bargaining power of suppliers is very crucial element to be considered in any industry as they are the main strength of the company. Milk is a basic commodity for ice cream industry so it is easily available from number of suppliers like milkmen & farmers. So suppliers are not the big issue for the yummy ice cream or for its whole industry. Pakistan is 4rth large producer of milk in world. These companies can find easily milkmen who can provide them milk. So due to its high availability and purchasing in bulk quantity by companies, it provides low bargaining power to suppliers.
5.4 Bargaining power of customers: In ice cream industry particularly yummy ice cream the bargaining power to their customers is very low. Because they don’t have such kind o f buyers who can purchase in large quantity. As discussed in placement of yummy that yummy has only it’s parlors and tricycles. So yummy has customer of base who only purchase one ice cream mostly. So they cannot put pressure on company sales. Hence we can say that bargaining power of customers is very low.
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5.5 Rivalry of competitors: Competition must be critically examined for the better future of the firm. Yummy ice cream has a very good image in the frozen products processing industry. According to Gallup Pakistan (2011) report yummy is on 2 nd number brand in ice cream industry which is mostly recalled by customers. But few major rivals do exists in the industry like Omore, Walls, Igloo, and Hicu. Competition is high in this ice cream industry. As discussed in promotion (marketing mix) yummy should run TVC commercials to gain more viewers reach because her competitors are spending too much on advertisement of their product.
6.0 Hofstede Model of Cultural Dimension This model was basically given by Professor Geert Hofstede which consists of six dimensions. This model is very much supportive for marketers to understand the culture of any country if they want to launch any brand in any country.
6.1 Power distance As Pakistan has score of 55 in power distance. But if we look at the going trend in Pakistan then people of Pakistan are not accepting any more power because we have started following the western culture. In ice cream industry there is no any firm who has dominated the whole market. Ice cream is following the low power distance they are not using push kind of strategy to just throw the ice creams in market and everyone just easily buy that one. But in our economy this industry is providing quality product to customer with choices. Yummy is providing customer quality product with 36 flavors at their parlors. We can say they are going with low power distance.
6.2 Individualism In Pakistan individualism has score of 14. It means we have more collectivism in Pakistan but due to influence of western culture Pakistani urban society is changing from collectivism to individualism. In Pakistan this trend has been emerged in urban areas especially. In rural areas mostly people use to buy products in bulk quantities (family pack products) because of their joint family structure. Urban people prefer to buy small packed products. Yummy is successfully operating as per local need they have both single packaged and family packed ice creams. For single person they have 90-100 ml ice cream and for family use they have 1.5 liter ice cream.
6.3 Masculinity Pakistan has 50 score in masculinity. Means as per this score we have equal portion of feminine and masculine people, but now feministic characters people are adapting more in our society. That’s why marketers should use emotional advertising, packaging and taglines to attract consumers. Yummy ice cream is following these cultural values. This
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thing we can analyze from their logo because they have shown three children’s who are happy to take that ice cream and they are enjoying it.
Their social activities also gives us view that they are focusing more on delivering emotional values to customer. We can get its evidences from the Facebook page. They sponsor different events and participate in fairs. All these factors reflects that they are trying to attract consumers through emotional values (emotion is feministic character).
6.4 Uncertainty avoidance Pakistan has 70 score on uncertainty avoidance means Pakistani people are risk aversive. They cannot easily adapt changes like new products. This dimension suggests that marketer should research well before they launch any new Product. Launching new product in Pakistan would take too much time to penetrate market. Yummy has their R&D department. Before launching new product they research on it and goes through critical product development stage.
6.5 Long term orientation Now as per Hofstede website Pakistan has score of 50. Which means we lie in both long and short term orientation. If long term orientation is high then this dimension suggest that society easily leave traditional things and go for new things. Currently in Pakistan we have more ratio of low ratio people. Here people are more culture conscious. They are highly connected with cultural values and beliefs. If we look at yummy then it is going with almost high long term orientation. Opening up system of ice cream parlors reflects new initiatives. So although it is better strategy to bring something new but yummy should also adapt traditional ways for selling ice cream like selling through retail shops.
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7.0 SWOT Analysis
Strength
Weakness
Opportunity
• Natural
• Low
• technology
ingredients • Forward integration (ice cream parlors and tricycle) • R&D deparment • Use ingredients which strenthen teeths and bones
promotion • less technology • less production capcity • low brand image • low distribution channel
• New
geogrphical segment (Sindh) • Strong Distribution channel • Effective Promotion • Efficient production
Threat • Less
market share • competitors • weather condition • electricity shortage • inflation
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8.0 Conclusion & recommendations As we have analyzed the current situation of yummy ice cream, now we can say that company has not adapted better promotional ways like TVC and Newspaper add. So company should choose these effective channels. Another issue is of the distribution channel. Company should make strong distribution channel to capture more market and also they should launch their product in Karachi, Hyderabad and Sukkur. Moreover company should also consider the price factor, they must reduce its pricing strategy. Yummy should run Mobile vans across the cities to reach to the more consumers. And make contracts company buyers like airlines, restaurants and canteens. Through these ways Yummy will see positive growth rate.
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References Companies Try Keeping Ice Cream Frozen, Emissions Down | Greenpeace . 2015. Companies Try Keeping Ice Cream Frozen, Emissions Down | Greenpeace . [ONLINE] Available at:http://www.greenpeace.org/usa/en/news-and-blogs/news/ask-and-ye-shall-receive/companies-trykeeping-ice-crea/ . [Accessed 21 April 2015]. Ice Cream Industry in Pakistan. 2015. Ice Cream Industry in Pakistan. [ONLINE] Available at: http://www.slideshare.net/JunaidInam/ice-cream-industry-in-pakistan . [Accessed 18 April 2015]. Iman Haider, 2015, pers.comm. 15 April to 25 April Internship report on yummy ice cream factory lahore.docx. 2015. Internship report on yummy ice cream factory lahore.docx . [ONLINE] Available at:https://www.scribd.com/doc/243824373/Internship-report-on-yummy-ice-cream-factory-lahore-docx . [Accessed 21 April 2015]. Ms. Naila, 2015, Pers.comm. 15 April Nestle Fruit Yougert. 2015. Nestle Fruit Yougert . [ONLINE] Available at:https://www.scribd.com/doc/36478108/Nestle-Fruit-Yougert . [Accessed 22 April 2015]. Wall's Pakistan Marketing project (Unilever). 2015. Wall's Pakistan Marketing project (Unilever). [ONLINE] Available at:http://www.slideshare.net/abdulwassay2/walls-pakistan-marketing-project . [Accessed 21 April 2015]. Yummy ice cream. 2015. Yummy ice cream. [ONLINE] Available at:http://www.slideshare.net/shahzadasuleman/yummy-ice-cream-14999310 . [Accessed 15 April 2015]. Yummy, 2015. . [ONLINE] Available at: https://www.facebook.com/pages/yummyicecream/205548305013?fref=ts . [Accessed 22 April 2015].
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