Marketing and Ice Cream

2523 WordsOct 30, 201011 Pages
Q1. How structurally attractive is the Russian ice cream market? Discuss how its industry structure can be made more attractive? (663 words) The political and financial instability had greatly impacted Russian ice cream industry. The financial crisis in 1998 and the devaluation of the ruble had greatly reduced Russian market’s consumption ability. It also increased the production cost of Russian ice cream producers who relied on external market for raw materials. The shrinkage of frozen import market heavily impacted by the financial crisis forced the wholesales entered the ice cream market, which intensified the competition in the market. Russian government’s value-added tax further decreased the profit of ice cream producers. Beside…show more content…
They would further squeeze the profit margin of producers. Therefore a lower cost would guarantee better profit margin. Since consumption in this segment had a strong seasonality, the ability to recoup the cost of extra producing capacity would be necessary to reduce the cost. Family consumption segment was relative small, but it was the most promising. Compared with impulsive consumption segment, it had less seasonality since ice cream was eaten in the warm houses in winter, which reduced the demand to producing capacity. Shelf space in the super market was crucial to succeed in this segment. To get this valuable resource, two measures should be adopted. Firstly, building a close relationship with supermarket was a necessity. This cooperation would guarantee the shelf space. A strong brand with strong customer preference would pull the demand and increase the bargaining power with supermarket. Secondly, a special package and longer quality guarantee period was necessary as well. If the products could be kept long, supermarket would have to discount the product as the deadline approaching. Café and restaurant consumption segment was the most lucrative and most demanding segment. Alignment between the products and lifestyle was the basis in this segment. A high quality product without a prestige brand could not survive in this segment. Therefore heavy investment on adverting and

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