Colombo Soft Yogurt

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Case 5-2 Colombo Soft-serve Frozen Yogurt 1) Colombo Yogurt Company faces competition in two different channels, namely the independent yogurt shops and impulse shops that sell other products besides yogurt. During the early 90s, Colombo’s competitive environment consists mainly of franchise operations like TCBY and Freshens. The size of these franchise companies that account for most of the independent yogurt stores pose a serious competition to Colombo and by the early 90s, the yogurt stores have added distinctive new products such as smoothies, boosters and granitas. Meanwhile, many yogurt stores that fail to innovate and introduce new products were put out of business. This puts a lot of pressure on Colombo to continue its research…show more content…
The cost of maintaining its impulse segment is too high especially after we conduct the Activity based costing analysis. It shows that the revised net income is substantially reduced with most of the increased costs originating in the Impulse segment. The company cannot afford to eliminate or reduce its focus on the impulse segment since this particular segment accounts for 80% of its sales. General Mills simply has to revamp the resources it has placed in the impulse segment. For instance, the impulse segment orders mostly in individual cases instead of full pallets which cost much less ($2.25 per case individual vs. $1 per case for full pallet order). This is mostly due to the fact that impulse stores are less likely to take risks of buying in bulks, fearing that it might be carrying too much inventory and unable to sell. My suggestion is for General Mills to increase price promotions on full pallet orders, be more aggressive in selling them and maybe reduce the number of cases in each pallet slightly from the current count of 75 cases in a pallet. Another recommendation is to reduce the merchandising costs allocated to the impulse segment. The unit cost of merchandising is very pricey at $500 and as

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