Strategic Analysis of Häagen-Dazs

Introduction

Pellicelli (2003) argued that Häagen-Dazs is an American Ice cream brand established in New York in 1961 by Polish immigrants Reuben and Rose Mattus in The Bronx. From its history, it can be said that, it started its business only with three flavours of ice cream. Häagen-Dazs, (2007), reported that in 1976, it first opened its retail store in Brooklyn NY and after that, it offered franchises in whole United States and other 54 countries with 900 shops nationwide. It is mainly owned by General Mills in US and Canada. The products are produced by Dreyer’s Grand Ice Cream, Inc., a Nestlé subsidiary, under a pre-existing license. Häagen-Dazs is a simple to provide fine and pure ingredients into the ice cream, sorbet and yogurt worldwide. It provides its services also in special occasions with personal touch. The size of the pint ice cream cartoons are minimised by 16 ounces to 14 ounces and containers in 32 ounces to 28 ounces for control the increasing costs of economy and hold the nutritious. The market shares of the Häagen-Dazs are mainly the younger market.

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The target of this essay is to review the strategic development, PEST analysis, SWOT analysis, and performance analysis of Häagen-Dazs as a market penetrator of super premium ice cream with valued services and premium price.

Background to (Häagen-Dazs) Strategy Development

Strategy Development is a formal process of continuous development and implementation of strategies taken by Häagen-Dazs. The analysis of Strategy Development is an important part of any marketing plan, with two areas:

Strategy Development Analysis  Source: Kotler, P., (2006) Marketing Management
Figure 1: Strategy Development Analysis. Source: Kotler, P., (2006) Marketing Management

For Häagen-Dazs, the main strategies of this organisation is to provide high quality with all natural ingredients to its’ potential target markets. It is also taking strategies of adding no preservatives, artificial flavours, stabilisers, additive and colouring in the finest ice cream products worldwide.

The current market situation of Häagen Dazs is not stable for the perceived premium price of the products to it’s’ customers and high level of competition increased. For these reasons, it should develop some strategies for the development of future market by implementing proper strategies and some strategies of Häagen Dazs are given below:

Strategy Development by Häagen Dazs
Figure 2: Strategy Development by Häagen Dazs

The Positive Service Attitudes with Customers is one of the major strategy developments for Häagen-Dazs. The staffs and employees want to leave good impression to its customers by adopting positive service attitudes and greeting them with good smile, when they are coming at store.

When customers are coming at store or taking the meal at café, the pleasant environment should be available to them. Suppose, the air-condition system can make comfortable environment to customers. The quality service can also make customers friendly with its staffs and encourage them in the repeat of visit customers to the café or store.

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Häagen Dazs can also take Proficient Service to Customers as another strategy development of its customers. The staff of it should be prominent and attentive in hearing from its customers. It should have to build personal relationship with it’s customers to bound them to come in store again and again.

To gain highest profit earnings among all competitors are another strategy development of management by Häagen Dazs. The target customers of it are mainly students, working adults, and residents who are living closer to the store. For that, the promotion activities should be different from it’s’ competitors, which can make fulfilment of its objective.

Implementing marketing objectives of Häagen Dazs is another important issue to consider in strategy development. The market share should be expanded to the younger market by creating different look to the café. As a niche market captured organisation, Häagen-Dazs can increase its sales by per visit and also concentrating on nutritious and low fat products to its customers. It should create focus on the healthy lifestyle and living of customers by how they spent money on quality service of its products and also others. The Häagen Dazs awareness can also be created by more promotional activities to capture the market in competitive level.

To establish the strategy development of Häagen-Dazs, first, it should have focused on PEST, SWOT and performance analysis of it, which are discussed one after one in this essay.

PEST Analysis of Häagen-Dazs

PEST is a very important analysis for every organisation and its environment, when considering in the marketing process. It can also called environmental analysis, where the marketing environment of an organisation is build up by:

Stages of PEST Analysis
Figure 3: Stages of PEST Analysis

PEST analysis is strategy framework of controlling organisation’s threats and opportunities. It can generate by brainstorming of the employees and staffs. Research and Markets (2006) mentioned that Häagen Dazs, as an organisation of premium brand of ice creams and frozen desserts, they are capturing the market for last 20 years. Their main target customers are adult market and market is captured by developing their frozen desserts in US and other areas’ trends, also with overseas business. Therefore, with the new environment, Häagen-Dazs should design PEST analysis for capturing the new market and customers, by considering the following factors:

PEST Analysis of Häagen-Dazs
Figure 4: PEST Analysis of Häagen-Dazs

Political Factors

Most of the countries are following parliamentary system of Government and every organisation under this Government should have to operate credible, stable and transparent business in region and overseas of the country. The Government also provides facilities to Häagen-Dazs, like:

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  • Sound Provision,
  • Stable Economic policies,
  • Regulations in Environment

CPA, (2006) argued that the Government also helps in encouragement and development of workforce with new skills. It restrains the policy support in healthy living for general people. Häagen-Dazs expenses yearly a large amount of money in political expenditures for reasonable political purposes. Various political factors, which are accountable for Häagen-Dazs and affects on the business of it and these are-

 Political factors affects on Häagen-Dazs
Figure 5: Political factors affects on Häagen-Dazs

Economic Factors

Every economy has to experience regional crisis in growth of economic in the recession period of global economy system. The growth of GDP when became downward, Häagen-Dazs has weakness in crisis in economics in Indonesia, Thailand, Malaysia, Korea and Hong Kong and other regions. The competitive pressure, business demand in market, lack of business operations and growing of lower wage are seen in Häagen-Dazs. Pellicelli A C., (2003), argued that for the decreasing demand, price of Häagen-Daze’s products has reduced and consumer price index has changed. For removing these situations, Häagen-Dazs have to take some strategies by economical factors:

  • Adopting constant pricing of products
  • Dividing fixed and production costs
  • Seeking to improve sales volume
  • Considering stable tax system for all regions.

In US market, the economic conditions are not so suitable for Häagen-Dazs, with unfavourable tax-rate, unstable inflation-rate, and high exchange rate comparing with other regions and countries. So, to develop market place with stable global economy, the purchasing behaviour of customers and manufacturing process of Häagen-Dazs should be considered.

Social Factors

To manage overseas business, it has to be concerned that, social and culture of every country is different from one another. The Häagen-Dazs, operates the business across boarders are mainly rich and diverse culture oriented countries. The community people with young and trendy people are main target markets of it. But it has to face other competitors like other dairy and café shops in local and foreign brands in every country. To overcome the social issues in the market, Häagen-Dazs has to take some action plan:

Social factors taken by Häagen-Dazs in Overseas  Source: Quelch, J., (2008), Seven Tips for Managing Price Increases
Figure 6: Social factors taken by Häagen-Dazs in Overseas Source: Quelch, J., (2008), Seven Tips for Managing Price Increases

Technology Factors

The new era of internet usage worldwide is major technological development of Häagen-Dazs, for reaching millions of target customers with just one click in mouse. As an online retailer, it is also improving its business worldwide, with 500 orders daily at every shop in US market. However, some error can be happens by:

  • Failure of system
  • Miscalculations
  • Inability of staffs in internet business activities.

SWOT Analysis of Häagen-Dazs (Comparing with PEST Analysis)

SWOT analysis is the analysis of finding the organisations strengths, weakness, opportunities, and threats that the business faces in everyday operations. Three are two steps in SWOT analysis implementations:

Implementation of SWOT Analysis  Source: MCC, (1991), Directors’ Briefing, SWOT analysis
Figure 7: Implementation of SWOT Analysis Source: MCC, (1991), Directors’ Briefing, SWOT analysis

SWOT analysis is a combination of internal and external examination of facts and perceptions about Häagen-Dazs as a market penetrator, in research development. The external environments are considering the economic and social trends in changing behaviour of consumers and competitors.

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SWOT Analysis of Häagen-Dazs
Figure 8: SWOT Analysis of Häagen-Dazs

Strengths

In the Strengths part of Häagen-Dazs, it has focus on following factors:

Strengths of Häagen-Dazs  Source: Häagen-Dazs, (2009), Strategic Analysis of Häagen-Dazs
Figure 9: Strengths of Häagen-Dazs Source: Häagen-Dazs, (2009), Strategic Analysis of Häagen-Dazs
  • Häagen-Dazs, as a premium branded of ice cream products in market, is well known in the market. It also develops word of mouth communication rather than advertisement.
  • It also considers its strength to provide good ingredients in super-premium ice creams, frozen yogurts and Sorbets worldwide. They are ensuring the ingredients as natural without preservatives, artificial flavours, stabilisers, and additive. It also stores products by maintaining freshness and quality of the products.
  • As competitive advantages, Häagen-Dazs has wide range of full flavours ice cream to fat free yogurt in the market, which can easily capture the trendy to conscious customers. Häagen-Dazs café and shops are perfectly maintaining clean and hygienic environment for their customers with trained staffs.
  • Häagen-Dazs always choose its location in high accessible are with public transport system, residential area, and available food place near town and universities. Using word of mouth is major promotional tools for it to spread the standards and taste of the products in the market.

According to PEST analysis, Häagen-Dazs has favourable economic and social factors considering with the strengths of itself. With well recognition and favourable economic scales indicates the facts of Häagen-Dazs.

Weaknesses

Like every business, Häagen-Dazs also faces some weakness:

Weakness of Häagen-Dazs  Source: Häagen-Dazs, (2009), Strategic Analysis of Häagen-Dazs
Figure 10: Weakness of Häagen-Dazs Source: Häagen-Dazs, (2009), Strategic Analysis of Häagen-Dazs
  • As a lack of technological advancement of freeing system, Häagen-Dazs cannot store its products up to a certain limits. The packaging of the ice creams are not actually environmentally friendly, because of using plastic caps, which can not be recyclable and against to social welfare.
  • It is not enough to promote the brands by word of mouth, which also hampers the competitive awareness of the products,
  • Sometimes consumers consider money rather than taste, in that sense; Häagen-Dazs are lack behind with high price of products. The innovation of different flavours is well known in the market, but different flavours for low fat products are not so much available in the market.
  • To maintain the perishable products to the customers, Häagen-Dazs has to face loss of products after date of expiry.

According to PEST analysis, it can be seen that, Häagen-Dazs is in lack of technological factors in storing of products and lack of social factors to capturing the market through advertisements.

Opportunities

According to Häagen-Dazs, the opportunities of its business are:

Opportunities of Häagen-Dazs  Source: Häagen-Dazs, (2009), Strategic Analysis of Häagen-Dazs
Figure 11: Opportunities of Häagen-Dazs Source: Häagen-Dazs, (2009), Strategic Analysis of Häagen-Dazs
  • Every people are now concerning of health rather than taste of the products to avoid various diseases, for this reason, Häagen-Dazs are now having opportunities of providing wide range of low fat products to the customers.
  • It is a great opportunity to expand its business, therefore the advertisement through word of mouth is not enough; it should create brand awareness through heavy advertisement of products in television, internet, magazines etc.
  • Häagen-Dazs also promoting the economical set meals, as a strategy of promoting less popular products by well-known products in the market.

After studying the opportunities of Häagen-Dazs, it can relate easily with the PEST analysis in terms of capturing social factors by awareness and strategies of it.

Threats

Threats of Häagen-Dazs can harm the position of it in the market, with:

 Threats of Häagen-Dazs  Source: Häagen-Dazs, (2009),
Figure 12: Threats of Häagen-Dazs Source: Häagen-Dazs, (2009)

In every market, competitors are serving desserts with cheaper price, definitely a major threat for Häagen-Dazs, which are Seven 11, Cold Storage, NYDC, Coffee Bean, StarBucks, A & W etc. When these competitors are serving at lower price, the consumers will choose the competitive brands. As a health conscious Government, it can cut down the consumption of desserts of people.

According to PEST analysis, the threats of Häagen-Dazs are mainly come from rivalry and political factors.

Performance Analysis

The impact of SWOT and PEST analysis implies some increasing condition in the present situation of Häagen-Dazs. Net sales, net operating profit and net earning all increased due to the convenient situation of Haggen-Dazs.

 Sales of Häagen-Dazs in US and Non-US Market  Source: General Mills, (2007), Annual Report- 2007 of General Mills
Table 1: Sales of Häagen-Dazs in US and Non-US Market Source: General Mills, (2007), Annual Report- 2007 of General Mills

From the above table, it is clear that the total sales were increased in both United States and non-united states are. As a result, the total sales were increased from 11,712 million USD to 12,442 million USD.

Profits of Häagen-Dazs in US and Non-US Market (million USD)  Source: General Mills, (2007), Annual Report- 2007 of General Mills
Table 2: Profits of Häagen-Dazs in US and Non-US Market (million USD) Source: General Mills, (2007), Annual Report- 2007 of General Mills

Here the operating profit was increased from 1958 million USD to 2,058 million USD. There was a significant increase in all the segments. From the above table, it can be noticed that the unallocated expense and restructuring, impairment and other exit costs were also increased.

Different Market Situation of Häagen-Dazs  Source: General Mills, (2007), Annual Report- 2007 of General Mills
Table 3: Different Market Situation of Häagen-Dazs Source: General Mills, (2007), Annual Report- 2007 of General Mills

The net earning, earning per share and market price of common stock all increased in the last fiscal year. Net earnings were increased from 252 million USD to 267 million USD in the first quarter. In second quarter, it was 370 million USD in 2006 and 385 in 2007. In 2006, it was 246 million USD in third quarter and in 2007, it was 268. The increasing amount for the fourth quarter rose from 222 million USD to 224 million from 2006 to 2007.

Conclusion

The strategy held by Häagen-Dazs is suitable enough with the comparison of its PEST and SWOT analysis. The political factors are quite favourable for Häagen-Dazs. The government is providing support to it. The economic factors like pricing of products, costs, sales volume and tax system also help it. The social factors and technology used also proved strategically right. Its strength, weakness, opportunity and threats are also suited properly with the strategy of Häagen-Dazs. The performance analysis shows the increase in almost all section of it. Therefore, it can be said that Häagen-Dazs is doing its business properly.

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