Competition in the Uk Ice Cream Market

contender in the UK Ice scan Market SYNOPSIS The UK spyglass baste merchandise has undergone something of a transformation over the last fifteen years. It utilize to be dominated by Walls Ice Cream and Lyons Maid, and was perceived to be a mature and relatively dull commercialise. comforting changes to the market have occurred as a result of broad environmental changes, and the de further of refreshful competition. A demographic shift (fewer children) left drinking glass lam marketers searching for new growth plane sections they responded by developing tribute harvestings targeted at adult consumers.The market grew faster in value cost than in stack terms as the unit price increased. However, raptorial new competition, from deflower in pcticular, has brought about the demise of Lyons Maid and caused a substantial strategic rethink at Walls. Walls has tried to maintain its position in the impetus market by preventing retailers from stocking other companies product s in the freezer cabinets that are supplied by Walls. Mars has disputed this policy on legal grounds, arguing that it is anti- private-enterprise(a). LEARNING OBJECTIVES Rejuvenation of an industry, and a product, which was perceived to be mature and stable 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 extension by confectionery manufacturers, taking much-loved confectionery products and converting them into successful ice cream brands profound and regulatory action can form a key part of a marketing strategy designed to undermine the position of a key rival Application of simple breakeven analysis to a marketing problem. QUESTIONS FOR DISCUSSION 1. The case study contains examples of strategic marketing. List as umteen examples as you can find of this type of decision. 2. Imagine that you are a strategic analyst working for nuzzle SA i n Switzerland. You have been asked to get up a brief summary of competitive conditions in the UK ice cream market for the next board meeting. 3. Suppose that one board coach has argued that Nestle should sell its ice cream interest in the UK and pull from the market. Thats one strategic option.What other options does Nestle have, and how do they discriminate with a strategic withdrawal? SUGGESTED ANSWERS 1. A very wide throw up of strategic marketing decisions is mentioned in the case study. Examples include New product development and brand extension decisions by Mars Product job and brand extension decisions by all major competitors Extensive market segmentation, targeting and positioning by all competitors Response to changing consumer tastes and changing demographic conditions (for example development of premium and super-premium products targeted at adults, with consequent repositioning required) withdrawal of the Lyons Maid brand and replacement with the Nestle br and Response to changing competitive conditions, for example birdies middle Walls response to new entry competition from Mars. 2. Nestle has lost market share in the UK, and is firmly in the number three position behind Birds Eye Walls and Mars. The overall UK market showed 5. 6 per cent volume growth from 1994 to 1998, but only 3. 3 per cent value growth. because the unit value of ice cream products declined during this period, indicating a high full point of competition. two Birds Eye Walls and Mars have demonstrated huge commitment to the UK market, in terms of brand building, product development, investment in distribution channels and so on. Therefore Nestle holds a minority share in a relatively slow-development market, in which two well-entrenched competitive rivals seem determined to defend or enhance their own positions at heart the market. This situation is made rather worse by the fact that Nestle has done particularly badly (lost greatest market share) in the imp ulse sector, which is the sector with the highest profit margins, in which branded products are most successful.It is expense 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 access 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 each option should be worn-out up before a recommendation is made for the preferred strategy.An hostile assault on the UK market in order to win market share from the rivals is clearly an option that should be considered. This would probably involve hike new product development, repositioning, supported by extensive spending on advertising and promotions. Broadly speaking, a full frontal assault on a well-entrenched competitor with no obvious major weaknesses is deemed unlikely to watch but the option should be considered. It would probably make more thought to adopt a differentiation focus strategy, that is, to identify a segment of the market in which Nestle can offer some substantive differentiation to customers.The obvious segment in which Nestle has a capability 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 slightly less powerful childrens brands. However, one would have to appraise the likely profitability of a strategy targeted at children, noting in transit the adverse demographics. Nevertheless, there is evidence both that children personally have growing spending power, and that they have increasing influence on parental spending patterns (so called pester power).