The ice cream industry is growing, not only in individual countries, but also in the world. According to statistics, Haagen-Dazs had 8.1% market share in the United States in 2015. However, the market for specialty ice cream shops and local, privately owned ice cream are becoming more significant and popular in the market, whatever national or global. If Haagen-Dazs wants to enter the untapped overseas market or expand the existing overseas market, it has to consider the local cultural customs, consumption habits and relevant policies. For example, the year 2015 was a big year for frozen treat recalls industry wide and this became well known to the frozen treat consumers. As a result, ten percent of frozen treat buyers expressed concern over safety issues related to daily products in 2015 according to Mintel. In addition, Haagen-Dazs has to consider political policies even in United States. FDA is currently in the process of upgrading the requirements of the nutrition fact panel. This update will force companies like Haagen-Dazs to display nutritional information with even more clarity and honesty than ever before. Besides, people gradually began to pursue a healthy lifestyle and started to pay attention to sugar, calories, fat and healthy ingredients. Therefore, this leads to the brand which in pursuit of healthy product will become people’s consumption tendency and the first choice. Based on this, Haagen-Dazs should not only ensure the high quality of materials and the diversity of flavors, but also pay attention to the proportion of ingredients than are unhealthy or includes high calorie, such as sugar and fat (Olena Grek et al., 2019).
In order to analyze the industry and environment of Haagen-Dazs, this paper will use Porter’s five forces model to analyze its competitiveness in the market. Porter’s five forces model focuses on the bargaining power of buyers, bargaining power of suppliers, threat of new entrants, threat of substitute products or services and intensity of competitive rivalry. Haagen-Dazs is positioned as a luxury product and claims to use only high-quality natural ingredients (Mintel, 2009a). As a company, Haagen-Dazs adheres its ice cream with premium, innovative, sophisticated and luxury image. From packaging to marketing efforts, they guarantee their prestigious and exclusive image with high end sponsorships and unique flavors.
First of all, the bargaining power of buyers. In Porter’s five forces model, the buyer refers to the individual social member who purchases and uses goods and services for the purpose of personal consumption or organizations who create demand in an industry. As for the buyer power of Haagen-Dazs, it is moderate because in the market of most countries, the food retail is fragmented, which means that ice cream of Haagen-Dazs is sold to numerous buyers directly through their own shops (Chen et al., 2015). What is more, Haagen-Dazs has a luxury image, uses natural raw materials to provide a special taste which many customers cannot resist. However, many retailers have their own ice cream brands, and the ice cream market is full of products with similar tastes and ingredients. At the same time, property rights and innovation are not fully guaranteed and protected by law and government. As a result, this poses a threat to Haagen-Dazs. Because consumers are easily attracted by other alternative products, Haagen-Dazs cannot stand out and become the first choice of consumers. Moreover, it is cannot be ignored that ice cream is a seasonal product and not a significant part of food business.
Secondly, the bargaining power of suppliers. The main suppliers in ice cream industry include suppliers of raw materials and equipment, which means that Haagen-Dazs is almost dependent on its suppliers. This may have a negative influence on its business because when the cost of supply increase, then Haagen-Dazs has to rise its price as well. Other than cost, Haagen-Dazs uses all-natural ingredients, no artificial colors and egg yolks also increases supplier power.
Thirdly, threat of new entrants. Because employees in this industry do not need special training, equipment can be rented, and raw materials can be bought everywhere, so the threshold to enter the ice cream industry is very low. Even though ice cream market is occupied by several famous brands, low-end domestic ice cream brands still occupy a large market share (Hallberg, Friberg and Myhrman, 2014). Therefore, threats in this area cannot be completely ignored.
Fourthly, threat of substitute products. A threat of substitute exists when the demand for a product declines due to either lower prices of a better performing substitute product, low brand loyalty or new current trends. For the reason of price and similar flavor, Haagen-Dazs can be substituted by cheaper alternatives any time. Furthermore, because of the pursuit of healthy lifestyle, frozen yogurt that contains less fat and calorie than ice cream has become a new trend.
Finally, the intensity of competitive rivalry. At present, there is no huge difference in taste, packaging and market share among the famous ice cream brands in the market. It is difficult for Haagen-Dazs to stand out from them. Because the target customer group of Haagen-Dazs is the white-collar class, which limits the number of its consumer groups. Secondly, a large number of own-label brands target customers in the low-income class, which divides the existing market share. Hence, it seems hard for Haagen-Dazs to expand its customer base.
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