Carvel Ice Cream

Developing the Beijing Market

Lara Doucette John MacDonnell Kevin Undershute Nancy VanOirschot

What are the problems?

Not meeting the companys expectations for ice
cream cake sales.

Carvel would like to work to increase their

brand awareness.

Internal Analysis
Strengths Stores are self-sufficient, decreasing transport costs. Successful company in the North American market, so the
expatriates living in Beijing will recognize the product as a familiarity from home.

Weaknesses Smaller advertising budget. Insufficient market data available to start. Entering a market in which translations must be done to all internal data. (ie. Computer systems, menu, etc.)

Internal Analysis
Opportunities Partnership with Chinas Ministry of Agriculture. 70% of cake sales are from middle-upper class consumers.
Carvel needs to capitalize on this and provide the entire experience that this group wants. Freezer loan programs can be beneficial if Carvel carries it out properly by placing representatives in the stores more often and making sure their freezers are stocked and running. Threats Recent entrance of Haagen-Dazs and Baskin Robbins into the Beijing premium ice cream market. Blind taste tests showed that many Chinese consumers still prefer the low-end variety of ice cream rather than premium varieties.

External Analysis
Political: 1.5 billion Little Emperors between 5 and 12 in Beijing who are
getting everything they ask for after one child policy was imposed in 1979. Chinas consumption of dairy products is on the rise, with ice cream being the leading dairy product consumed after healthcare professionals encouraged this practice. Chinas government may have laws regarding targeting products towards children, so Carvel would have to make sure they are abiding by all laws.
Economical China has seen a 75% increase in average annual base incomes in the last three years, bringing about the possibility of middleupper income workers spending more on luxuries like ice cream. Carvel is dealing with consumers who have a smaller disposable income than what the company is used to in the North American market.

External Analysis
Social Most Beijing consumers are not accustomed to buying dairy
products like ice cream, leaving an opportunity for Carvel to enter the market. Beijing produces 30+ newspapers who are reaching hundreds of thousands of people. Beijing consumers are known to be cautious about buying new products that they are not used to, due to the purchase risk involved.

Technological The ice cream industry is not influenced by technology. Any advances in technology that will benefit companies will be used industry wide not giving any advantages to a particular firm.

Consumer Segmentation Analysis

Markets Expatriates Number of People 100 000 What do they want? Familiar products of their home country Geographical Very concentrated in specific areas

Children

1.5 million

Children are open Spread out to anything as across different long as it appeals areas of the city to them

Middle Upper Class Professionals

1.5 2.3 million

High quality products

Spread out but also living in wealthier areas

4 Ps of Marketing
Price Decreasing prices to attempt to increase sales will
sacrifice Carvels quality imagine. Carvel should mainly keep their prices on par with its competitors like Haagen-Dazs and Baskin Robbins. Product Carvel should introduce Little Loves and Piece of Cake at a small cost to introduce consumers to their product and develop a loyal market that wants to keep going back. The company can scale back their menu and concentrate on only a few menu items that are performing well in the Beijing market.

4 Ps of Marketing
Place Carvel may consider closing 3 or 4 of their current locations and focus more closely on generating revenue in the remaining locations. They should conduct research before closing or opening any new stores and look into what locations were most successful and what ones were not performing as well. Carvel should attempt to open a location in the same popular shopping district that Haagen-Dazs and Baskin Robbins have already set up.

4 Ps of Marketing
Promotion Since radio and television are not viable ways of advertising, Carvel should take advantage of the 30+ daily and weekly newspapers Carvel could afford to produce 100 000 copies of the advertising leaflet for 30 000 Rmb. that could be distributed by their uniformed employees in popular shopping areas of the city and possibly be places in high end restaurants for customers to take home. They can also afford to participate in the entertainment coupon book that would reach 10 000 upper income members each year. Even if Wang could not capitalize on knowing the publications manager and purchase a placement for 2500 Rmb., Carvel could still afford the 4000 Rmb. placement.

Strategic Alternatives
1. Heavily market product toward youth aged 5-12 by
reaching them through schools, parks, childrens activities etc. because 20% of Chinas pop. Is under the age of 15.
Since there are 1.5 million children in China, we think Carvel could reach between 10% and 25% of that population. With 10% of them buying 2 cakes a year, at an average cake cost of 110 Rmb. Carvel could make 3.3 million Rmb. in revenues. With 25%, they could make up to 8.25 million Rmb.

Strategic Alternatives
2. Direct Carvels marketing at middle-upper class working professionals age 25-45 by opening stores only in high-end locations (ie. restaurants) to build exclusivity. With 1.9 million people in this market, we think Carvel could reach between 5% and 15% of their population. If 5% were to buy 2 cakes a year at an average cost of 110 Rmb. Carvel could make 2.1 million Rmb. in revenues. If 15% were to do the same, they could make 6.27 million Rmb.

Strategic Alternatives
3. Begin our marking process in Beijing with a short-term
focus on the expatriates. There are not many of them in comparison to the two other markets we could target, which suits our current marketing budget. They will recognize the brand and we will have easier sales. In the future we could expand to reach other markets.
If Carvel were able to reach 20% of this market, with each of these people buying two cakes a year at 110 Rmb. they could have revenues of 4.4 million Rmb. If they were able to reach 30%, their revenues could reach up to 6.6 million Rmb.

Recommendation
To target children between the ages of 5-12.

These Little Emperors seem to be getting everything

they want from their parents and two sets of grandparents.

New generation of youth being more educated about

cold foods and dairy products unlike their parents and other elders.

Children are easy to appeal to and are always asking

for treats and other things that are targeted towards them.