Through this assignment we are going to analyze the Haagen Dazs® brand and the strategy that they’re adapting, in order to achieve and maintain the luxury image of this product. The interesting thing with this brand is that it belongs in one of the most valuable brands, despite the fact that it belongs in a very difficult industry for luxury brands, as the ice cream industry which is considered as a low cost industry. But Haagen Dazs, by continuing its excellent job in quality and launching of new unique flavors, is still enjoying its premium brand position as well as high price and profit margins. This story will prove us how a brand in a low price selling industry and specific target group directions can differentiate its position and build a luxury brand icon and targeting in customers that are willing to pay premium price in order to taste the world best flavors. We will also notice that too much advertising in TV, Radio is not the key marketing issue, since Haagen Dazs has been mainly developed as a luxury ice cream due to the “world of mouth” advertising. It is impressive that this brand has made its first advertising TV campaign in 1983, after almost 60 years and having already being famous for its luxurious positioning and well known as the creator of the luxury ice-cream category.
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Haagen Dazs started its history in early 1920s, thanks to the dream of the young Reuben Mattus. Mr. Mattus was working in a family business, transferring with his bicycle ice creams to their customers in the streets of Bronx in New York. This small family business was developing business in the same local way until 1960. It was then that Mr. Mattus took the big decision, supported also from his wife, to change the function of the business and targeting in further development of their products. He set up the brand name Haagen Dazs and the company begun with three basic flavors, focusing always in premium quality production. This was the reason that the ingredients were only coming from their country of physical production. Dark chocolate from Belgium, vanilla beans from Madagascar, macadamia nuts from Hawaii. In contrast with other ice cream producers, Haagen Dazs is using a high percentage of milk and cream, to create an original and more dense ice cream. “Fresh cream and egg yolk were used to give the ice creams a rich creamy flavor and fresh skimmed milk was used for the body and texture of the ice cream” http://www.icmrindia.org, (viewed 21 March 2011) .
Having reached the premium quality the product became famous very quickly, and the demand started growing due to the mouth advertising only. In the start, Haagen dazs ice creams were only placed in luxury shops in New York and after were further distributed in the southern coasts of United States. By 1973, the brand was further distributed in the entire cities of United States. The first Haagen Dazs shop has been opened in 1976, by Mr. Mattus daughter, Doris. This strategic move was resulted of a huge success and as a result Haagen dazs products were spread in all United States.
In 1983 Haagen Dazs brand was sold in Pillsbury Company and then in General Mills group, since Pillsbury was acquired from General Mills in 2001. Pillsbury was truly committed to the dream of Mr. Mattus and the ice cream remained in the same quality level with a large variety of unique flavors, spreading the variety in more than 100 flavors, including ice cream, ice cream bars, ice cream cakes, frozen yogurts, sorbets.
General Mills group is operating in a global level and has reported in 2009 $14,7 billion turnovers and net profits of $2,6 billion. (According to General Mills annual report, 2009).
2. Brand Analysis
Haagen Dazs is positioned, mainly based on its products and service differentiation. As we have referred, they are trying always to maintain the quality due to the special selected ingredients coming only from their physical country of origin. In addition the high cream density, with no excess air is offering truly unique ice cream experience. In order the quality to be ensured, the company is strictly testing daily not only the suppliers, but also all the phases of manufacturing processes. The company fulfills its brand image with a big variety produced only by the best ingredients around the world.
Its position is also based on their image differentiation following always a luxury brand strategy. There is a specific logo with golden colors and black fonts in order to pass the luxurious icon. The logo is also accompanied with the moto “made like no other®.” All the advertisements are focusing in highlighting the luxury flavors of the products and the unique exotic tastes.
2.2. Target Group
Haagen Dazs has differentiated its target group from the start of its growth. While the ice-cream industry was considered worldwide as a low price industry and mostly targeting in small ages, haagen dazs has from the start been focus on adults, who love the luxurious ice cream flavors. An important reason for taking this choice, has been their premium price strategy, since only the financially independent adults could spend more money for high quality ice creams.
The second target market, are the health conscious adults, who are interested in desserts but they prefer natural ingredients and low fat substitutes. Focusing only on these two target segments, they might have a small market potential, but the profit margins are much higher. With this differentiation Haagen dazs is “playing alone” in this interesting market field.
Haagen Dazs is segmenting in its business according to three major segments. These segments are, demographic, socio-cultural and psychographic.
Looking on demographics, the company focuses on adults who have higher income and could spend in luxuries as for example premium price ice-creams. But beside of the age, they often tend to approach couples, by relating many flavors with romance advertising and pleasure that can be earned when a couple tastes a haagen dazs dessert.
The second one is the socio-cultural segmentation. Intercultural management has been very successful by the haagen dazs marketers. Big variety of flavors can cover any need according to each country’s habits. For example, Europeans have some preferences in alcohol drinking, while Asian people have preferences in teas. Islamic countries are negative in romance images, while western populations are more enthusiastic on that.
The third segment is according to psychographic characteristics. There are many people who love luxurious brands and “need” of being members of this brand category. Usually they feel more special, different and in higher quality level than the others. These category of people are too emotionally linked to brands and since branding is mainly emotional based, this target segment is very important for Haagen Dazs. Thus, in the haagen dazs shops the company tries to train the franchisers to focus on a high quality service, behavior and keeping the products within a way that they can be always fresh and delicious.
3. SWOT Analysis
Well known brand synonymous with a history of luxury, premium ice cream leader producer.
Strong market position.
Intelligent market targeting and segmentation.
High distribution cost.
Bad image of many franchise shops, non related with the brand image.
Ice cream market is growing.
Outside lunching is increasing.
Development of other markets, BRIC markets.
New trend in creams placement, i.e. cinemas, ho.re.ca.
Ben & Jerry’s competition.
Nestle integration in the premium price ice cream market.
Increase of ingredients price, oil price, distribution cost.
4. Marketing Mix
As we have referred the production of the product is based on high quality ingredients and rich creamy taste. The packaging is also important, having a specific protective cap to assure the material in each pot. The products are categorized by size, in individual cups, family caps, bars, sundae cones, and high weight packages for mass sales. (5kg, 10kg, etc). Very special flavors are often produced in limited quantities and higher prices, reminding the luxury brand strategy.
Haagen dazs is directly distributed with refrigerated vehicles to the customers. Customers might be super markets, high class shops, high class restaurants, hotels, food industry chains, i.e., pizza hut, simply burgers, movie places, i.e. cinemas, movie selling shops, other known chains, i.e. IKEA, cruise boats and finally to the haagen dazs franchise shops.
The brand is characterized of a premium price, which is excused due to the ingredients and the high taste quality. Price varies among the several flavors. Haagen dazs is still the price leader and the competition as for example Ben & Jerry’s, follows H. Dazs’ strategy.
The product is not so much advertised in mass media as are TV, radio. It is mainly advertised in printed themes. All advertisements targeting in express the product quality and the differentiation against competition. Trade marketing is more developed than other means, sponsorships and events are also usual methods. Advertising is mainly focus in haagen dazs’ credentials.
5. Evaluation of H.D. brand Strategy -Recommendations
Haagen Dazs is a very well established brand in the ice cream industry and has been successfully placed in many countries worldwide.
Focusing on the adults has been a brilliant idea, because of income advantages, high tighten-emotional relationships with brand lifestyle. This generation is much more recognizing and desire high quality, in comparison with the youngest one, who looks more as “turn around” consumers. The company should continue targeting on the adults, but they must not forget that the younger generation is also growing. It might be a good period in start searching their mind and introducing the brand value to this generation as well. Romance flavors might not be so successful, because they are mainly addressed to younger ages. So, H.D. should also start target the younger couples, but with the appropriate advertising messages through different civilizations, ethics and moralities. For example, if you want to address in younger couples, advertising should have more “sexy and funny” images, but you have to pay attention in the different moralities. Nevertheless, if the company will develop such campaign, they should take in consideration that it has to be does with a much more spread advertizing messages depending on the country.
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The company is correct based on the original ingredients and this fact has given them the premium quality awareness worldwide. But taking in consideration that the population is growing rapidly, the brand might be “prisoner” in its own choices. The demand might not be able to be covered from the existing ingredient quantities, since they are reduced a lot every day. Reducing might also create price increases and then the brand could face many difficulties in remaining in the market. It might be the ideal time to rethink again their production recipes, or invest in ingredients production worldwide, which will offer them a competitive advantage. Resources and capabilities must be planned in a better way in order to face the future with more power.
In order to develop internationally, they have to focus more in the exclusive haagen dazs shops, who are expressing the brand icon in the several markets. H.D. looks weaker in this development in international field and competition in many places is more powerful. They can train their franchisers, or establish Franchise supervisor managers and trainers. Personal relationship and selling must also be more developed in this sector of exclusive shops.
The development of the Brand internationally and premium price strategy has been enough successful, but in many countries as China, the brand is luxury, but so luxury that is placed only in too much luxury places. After a research in the web, I found a very characteristic statement of Mr. Eddie Lu, marketing manager of H.D. in Shanghai, which signifies this problem:
“In Beijing, freezers selling Haagen Dazs stand proudly in the lobbies of five star hotels. The price for a pint of Swiss vanilla: $10, compared to $3 in the U.S. However people don’t mind paying for prestige items, especially if they are foreign.”
This issue has to be serious taken under consideration, since Middle East and the BRIC countries are the most potential markets and you cannot leave them outside of your growth strategies. After my research for this assignment, I have realized that H.D. has a very small market share in many countries of Middle East. They have for example to invest more in finding flavors more suitable to these populations.
Ice cream is a very dynamic industry, which is growing every day. Haagen Dazs is at the moment the global leader in this field, but no one is certain that they can be always in this position. Time passes, lifestyle changes, leading markets are changing and this fact means that marketers of Haagen Dazs should work a lot in adjust their strategy in the new challenges that are in front of us. The brand is dominating the ice cream market for many years, but external and internal factors should be reconsidered in order to face future with success. The marketing mix of haagen dazs is really impressive and offered to the brand, the luxury image and brand equity for years. By continue being committed in their ingredients strategy, correcting things that we referred as logistics, production, resources, growth gaps, attention to intercultural ethics-morals, norms, franchising strategy improvement, Haagen Dazs can definitely continue being a golden brand and situated always ahead of competition as they have been doing for many years in the past.
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