Ice Fili 5 Forces

1369 Words Mar 7th, 2014 6 Pages
Case study 3: Competitive Advantages
Ice-Fili: Ice cream market in Russia

Here is a résumé of the Five forces model of the ice cream industry in Russia:
Threat of new entrants High
Threat of substitute High
Bargaining power of supplier Low
Bargaining power of customer High
Rivalry among competitors High

“What are the potential sources of competitive advantage in the Russian ice cream market?”
How do customers buy?
- Russians consume 2.5 kg of ice cream compared to the 16 kg in the USA. This is due to a different mode of consumption. Russians consume ice cream “on the go” as a snack – Spontaneous/impulsive purchase (no in-house consumption at the beginning) o Chanel of distribution
 Kiosk: 49% of the ice cream
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Russian are more concerned about preservative than fat level. o In this case, Ice-Fili hold this competitive advantage since the company mainly use natural ingredients and do not use any preservatives or colorants (“Lakomka”). At the time of the case Ice-Fili’s ice cream are seen as a quality product which fit with the traditional recipe. At the opposite, Nestlé adds preservatives which distort the taste, but by using these ingredients, it decreases the total costs.
- Distribution Channel : o Ice-Fili’s ice cream are mainly sold through kiosks and minimarkets (80%). However Nestle also own his distribution channel.
- History : o Ice-Fili is a Russian company which implied that the company knows very well how customers behave and buy. So, the company can easily fit with the Russian demand (i.e. recipe) o Contrary to Nestlé, Ice-Fili runs its business since ages. Therefore, the company is well-known by the Russian customers.
- Research and development : o Ice-Fili produces more than 170 different product and adds 20 new products every year (diabetic ice cream). This means the company is still efficient in terms of research and development. o However, all these new products increase the fixed costs
- Marketing and communication o To enter the Russian market, Nestlé used agressive marketing and promotion. o Ice-Fili does not have such a budget to promote the brand…

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