Marketing Report – Baskin-Robbins

The purpose of this report is to investigate the possible approach of a new market segment with a new offer by the American ice cream manufacturer Baskin-Robbins. 1. 2. Scope The report will refer both to the characteristics of the targeted market segment, as well as to the features of the new product that will make him accepted by the target clients.1. 3. Methodology Secondary research was used in order to build the information base necessary for the development of the present report. Various academic studies, newspaper articles, company reports and websites have been explored.In order to develop the marketing proposal, both analysis of available information, as well as creative use of observed market patterns were the other methods used in writing the paper. 1. 4. Limitations Due to limited access to well developed ice cream market studies (that might amount up to $3000) the information used as base for analysis on are rather basic. Also, the present report is limited by its word c ount of +/-2200 and is written individually. 1. 5. Assumptions It is assumed that the information found during secondary research is accurate. 1. 6. BackgroundThe present report will firstly focus on defining the targeted market segment and motivating why it should be taken into consideration. Following, the characteristics of the new product will be presented and recommendations on its introduction on the market will be given. The 4P marketing model is used in constructing the image of the new product. 2. NEW PRODUCT DEVELOPMENT 2. 1. Market segment characteristics Ice cream is a product that makes no discrimination. Everybody loves it and it can be found in more than 93% of American households (Geisler, p. 1).Historically, ice cream’s constant consumers are children, and for years they have been the main target of manufacturers (Barrette, p. 1). Households with children sum up to 34% of total ice cream consumption, as compared to the lower 20% level reached by the household without children consumption. Nevertheless, U. S. Census Bureau predicts a declining trend in youth population for the next years, which will make producers upgrade their strategies in order to start reaching more intensively the adult consumers. There are different patterns of ice cream consumption between children and adults.As commented by Marty Hogan, director of brand management, Ben & Jerry’s Homemade Inc. , South Burlington, Vt. , â€Å"parents know that children will be perfectly satisfied with a big gallon tub of air-whipped ice cream, but mom and dad are also sneaking that Ben & Jerry’s [premium and super-premium ice cream] and putting it in the back of the freezer for themselves†. Laura Hindulak, director of marketing with Pierre’s French Ice Cream Co. , Cleveland, Ohio, seems to agree with the same statement, when she ads that â€Å"the majority of [adult] consumers are looking for truly rich and indulgent premium and super premium ice cream s.[†¦] When the choice is for full-fat, regular ice cream, consumers are willing to forgo calorie-counting and enjoy the rich, great taste that the higher butterfat flavors offer† (Cook, p. 1-2). The American ice-cream market knew sales of slightly more than $21. 6 Billion in 2005 and it is forecasted to reach about $24 Billion by 2008, after it knew a 24% growth between 1998 and 2003 (Rea, p. 1). The ice cream market is led mainly by four manufacturers, summing a little over 40% of its sales. These companies are: Unilever, Ice Cream Partners USA, Dreyers Ice Cream and Blue Bell Creameries.About 18% of sales are represented by the private label products, regional and local companies summing up to the remaining 40% of sales. (Geisler, p. 2) Divided by states, California leads the way in ice cream and frozen dessert production, Indiana, Pennsylvania, Texas, Ohio, New York and Minnesota being the other leading producing states. (Geisler, p. 2) The target market segment chous ed in this paper is represented by the Hispanic young adult population, especially between 21 and 35 years. The choice of this specific segment is due to some very important demographic and consumption data:— As of July 1, 2005, the population of Hispanics within the USA is estimated at 42. 7 million (US. Census Bureau), meaning an important market in possible consumers, that is already taken seriously into account by American producers. — Hispanics are also the fastest-growing minority group in the U. S. Between July 1, 2004 and July 1, 2005 a 3. 3% growth rate has been registered within the Hispanic population by the US. Census Bureau. This offers a sure future distribution market for the products created especially to respond to their needs.— Siboney USA, a New York-based advertising agency comments that about 70% of the entire American Hispanic population resides in six states. This can make the task of better targeting and reaching the segment a lot easier. The graph hereby presents this division of Hispanics into states. — Median age of Hispanics was 27. 2 years vs. 36. 2 years for the population as a whole in 2005 (US Census Bureau), meaning: a young population opened to new products and ideas. — Hispanics tend to consume more soft ice cream compared to the other non-Hispanics: 44 vs.37% (Banerjee A, p. 1), meaning that the rate of per capita ice cream consumption within Hispanic population is higher than for non-Hispanics. Consequently, if a product will respond to the needs of this category, it would register higher sales volumes than one that would respond to the needs of non-Hispanic population. — Hispanics tend to prefer Latino flavors: as commented by Haagen-Dazs General Manager of company’s Minneapolis location, Dawn Uremovich, the â€Å"Dulce de leche† flavor is the second most popular of the company, after vanilla.â€Å"This came from our South American market, where dulce de leche is a p opular dessert† he comments. (Hall, p. 1). This might be just the needed precedent showing that products that bring that homely feeling to the Latino population, register higher sales volume within it. 2. 2. The new product 2. 2. 1. Product Based on the demographic and consumption related information presented above, we will recommend the development and introduction on the market of a Hispanic flavored ice cream – â€Å"Sabor latino†, that will for sure interest its target segment: ice cream containing a center of Latin-traditional alcohol.The ice cream base should be vanilla or chocolate – as they continue to be the two most sold flavors in the USA (Phillips, p. 1) – already flavored with the specific alcohol. Taking into consideration the most important origins of Hispanics, drinks from their respective countries should be taken into consideration: tequila (directed especially to the Mexican origin population that sums up to 64% of total Hispanic origin population in the US – see Graph above), and rum (mainly for the Puerto Rican and Cuban population).Depending on how well received by the market the product will prove to be, future flavors like Brazilian Caipirinha and Cuban Mojito might enter on the market. 2. 2. 2. Promotion Studies show that product names and advertising in Spanish are more appealing to the Hispanic population (Accetta Smith, p. 1-2). This is also the motivation for choosing the name of the brand â€Å"Sabor latino† – â€Å"Latin flavor† that would come (at least at the beginning) with the two options – tequila and rum.The regular channels of promotions should be used, with a higher focus on the regions highly inhabited by Hispanics. As well, advertising, television, in-store point-of-purchase displays should be at least bilingual. Studies show also that Hispanic TV seems to be â€Å"twice as effective and three times more efficient than general market TV at driving Hi spanic sales† (Accetta Smith, p. 1). Therefore, a focus should be established on TV promotion within Hispanic TV channels. 2. 2. 3. PriceAccordingly to US Census Bureau and own analysis, median earnings of full-time, year-round Hispanic workers was lower than for non-Hispanic workers (about 40% lower for Hispanic males and 30% lower for Hispanic women). This is one of the main reasons that it would be recommended for Baskin-Robbins to set a conveniently lower price for this product, as to make it affordable by its target market segment. Even if the product should be design as premium or super-premium, it must be taken into consideration the lower incomes of its targeted market segment, and thus fix a lower price for it, as long as total costs allow it.2. 2. 4. Placement The first destination of the product should be the six American states that concentrate 70% of the Hispanic population presented in the first graphic of the project, using the classical channels of distribution . In a second step, other states that have high percentages of Hispanic population should be reached. 3. RECOMMENDATIONS A necessary step in the introduction of â€Å"Sabor latino† will be to develop various market study and focus groups in order to decide the best concentration of alcohol both in the body of the ice cream and in its liquid center.It must be remembered that features of the product must define it as a premium or super-premium product, in order to easily reach the young adult and adult target population. As presented by the U. S. Dairy Export Council, â€Å"super-premium ice cream tends to contain 16 to 18% milk fat and low overrun (20-50% range), making it a very dense, and ultra-rich quality dessert†. A recommended future destination for the product would be the Mexican market, as well as the other Latin American countries.At is it specified in various articles, Mexico is one of the favorite importers of American ice cream. And for sure, if one product will be designed to reach to their needs, there will be no reason for a successful exporting activity of this new Baskin-Robbins brand: â€Å"Sabor Latino†. The present exports situation is described in the table below. . REFERENCE LIST 1. Terrie Hall (2005) â€Å"Haagen Dazs franchise profile†, Merger Place 2. Koppenhoefer, Katie; Pupillo, Marti (2005) â€Å"Just the facts: ice cream sales and trends†, IDFA 3.Cook, Julie, (2002) â€Å"Adult appeal†, Stagnito Publishing 4. Banerjee, A (2000-2001) â€Å"Characterization of high risk food consumption Practices among the Hispanic population†, FoodNet 5. Rea, Amy C. (2004) â€Å"Screaming for ice cream: a rapidly growing market, ice cream nevertheless faces its share of possible demons. What will be the effect of changing demographics on the frozen treat, and how will manufacturers respond? †, Prepared Foods 6. David Phillips (2002) â€Å"Frozen favorites: Twenty five favored flavors in ice cr eam – Industry Overview†, Dairy Foods7. Sarah Barrette (2004) â€Å"Ice Cream Parlor†, SBDCNet San Antonio 8. Accetta Smith, Pamela (2004) â€Å"Cultural Demand†, Dairy Foods 9. Geisler, Malinda (2006) â€Å"Dairy Products Profile†, AgMRC, Iowa State University 10. U. S. Census Bureau (2004) â€Å"Selected Summary Measures of Age and Income by Hispanic Origin and Race: ASEC, 2004† 11. U. S. Census Bureau, Current Population Survey, â€Å"2004 Annual Social and Economic Supplement† 12. â€Å"Hispanic Americans by the numbers†, by U. S. Census Bureau, Fact Monster – www. factmonster. com/spot/hhmcensus1. html