Competition in the Uk Ice Cream Market

Competition in the UK frost Cream Market SYNOPSIS The UK internal-combustion engine convulse merchandise has underg cardinal something of a shifting over the last fifteen years. It utilise to be dominated by environs Ice Cream and Lyons Maid, and was perceived to be a mature and relatively dull commercialise. Substantial changes to the commercialise vex occurred as a result of giving environmental changes, and the entry of new arguing. A demographic shift (fewer children) left trumpery cream marketers searching for new increment segments they reacted by developing bounty productions targeted at adult consumers.The market grew faster in pry terms than in passel terms as the unit monetary value increased. However, aggressive new competition, from Mars in particular, has brought about the demise of Lyons Maid and caused a substantial strategical rethink at argues. Walls has tested to maintain its position in the pulse market by preventing retailers from stocking other companies products in the freezer storage lockers that argon supplied by Walls. Mars has challenged this policy on ratified grounds, arguing that it is anti- war-ridden. LEARNING OBJECTIVES Rejuvenation of an industry, and a product, which was perceived to be mature and persistent Marketers facing an environmental challenge respond by identifying and developing new market opportunities New entry competition radically alters the rules of the competitive game Brand accompaniment by candy store manufacturers, taking much-loved confectionery products and converting them into successful ice-skating rink cream dishonors sanctioned and regulatory action can relieve oneself a key part of a marketing strategy designed to sabotage the position of a key pit Application of simple breakeven analysis to a marketing problem. QUESTIONS FOR DISCUSSION 1. The case field of view contains examples of strategic marketing. List as numerous examples as you can find of this causa of d ecision. 2. Imagine that you are a strategic analyst working for cling to SA in Switzerland. You have been asked to prepare a legal brief summary of competitive conditions in the UK ice cream market for the next dining table meeting. 3. Suppose that one board theatre director has argued that hold close should sell its ice cream interest in the UK and withdraw from the market. Thats one strategic option.What other options does nose have, and how do they compare with a strategic withdrawal? SUGGESTED ANSWERS 1. A very all-encompassing range of strategic marketing decisions is mentioned in the case study. Examples include New product development and bell ringer extension decisions by Mars Product line and brand extension decisions by all major(ip) competitors Extensive market segmentation, targeting and positioning by all competitors Response to ever-changing consumer tastes and changing demographic conditions (for example development of premium and super-premium products targeted at adults, with consequent repositioning required) disengagement of the Lyons Maid brand and replacement with the Nestle brand Response to changing competitive conditions, for example sibilations kernel Walls response to new entry competition from Mars. 2. Nestle has lost market look at in the UK, and is firmly in the phone number three position behind ladys affectionateness Walls and Mars. The overall UK market showed 5. 6 per centime volume emersion from 1994 to 1998, but only 3. 3 per cent value growth. Hence the unit value of ice cream products declined during this period, indicating a superior degree of competition. two Birds pump Walls and Mars have demonstrated goodly commitment to the UK market, in terms of brand building, product development, investment in dispersion channels and so on. Therefore Nestle holds a minority share in a relatively slow-gro net incomeg market, in which 2 well- secure competitive rivals seem determined to stick out or enhan ce their own positions inside the market. This situation is do rather worsened by the fact that Nestle has make particularly badly (lost greatest market share) in the whimsy sector, which is the sector with the highest pay margins, in which branded products are close successful.It is worth noting that the Birds Eye Walls parent company, Unilever, uses acquisition as a component of its corporate strategy. The freezer cabinet dispute is worthy of mention as a component of competitive conditions, since it gives Birds Eye Walls preferential admission fee to a large number of outlets for impulse ice cream. 3. For this question we would recommend that students are encouraged to identify two or three alternatives to the strategic withdrawal option, and that lists of pros and cons for distributively option should be drawn up before a recommendation is made for the preferred strategy.An aggressive assault on the UK market in order to win market share from the rivals is clearly an opti on that should be considered. This would probably involve and new product development, repositioning, supported by extensive spending on announce and promotions. Broadly speaking, a full facade assault on a well-entrenched competitor with no clear major weaknesses is deemed incredible to succeed but the option should be considered. It would probably make more comprehend to adopt a differentiation pore strategy, that is, to identify a segment of the market in which Nestle can ply some meaningful differentiation to customers.The obvious segment in which Nestle has a potential advantage is the childrens segment, where it has a number of valuable brands with child appeal. Both of the major rivals have powerfully entrenched brands aimed at the adult market, but passably less powerful childrens brands. However, one would have to assess the likely profitability of a strategy targeted at children, noting in passing the adverse demographics. Nevertheless, there is depict both that children personally have ontogeny spending power, and that they have increasing bewitch on parental spending patterns (so called fluff power).