Ben and Jerry’s Entering into the Japanese Market

Ben and Jerry's Entering into the Japanese Market

Ben and Jerry's Homemade Inc. produces super premium ice cream, frozen yogurt, and ice cream novelties in rich and original flavors. The company sells its unique offerings In grocery stores, restaurants, and franchised Ice cream shops, and it holds about one-third of the market for its products. This global company began with only a $12,000 Investment to open Ben and Jerry's Homemade Ice cream scoop shop In a renovated gas station in downtown Burlington, Vermont, on May 5th, 1978.

From one mall shop in downtown Burlington, the company had grown to Include a chain of nearly 100 franchised shops, and a line of products sold in stores across the country. As one of the leading super premium ice cream (greater richness and density than other kinds of Ice-cream and Is therefore sold at a relatively high price) manufactures, Ben and Jerry's has to continually expand and develop to compete with other leading brands. The United States Is one of the largest exporting nations as well.

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The United States sells products to other countries because no country can roduce all of the products the people want. In 1994, Ben and Jerry's starting considering advancing into the Japan ice cream market, the second largest ice cream market in the world with sales of approximately $4,5 billion. According to the survey conducted by "What Japan Thinks," nearly 2 out of 5 Japanese eat ice cream every week. However, Japan is a great distance from the united States and it would be complicated to distribute the Items to Japan.

Japan's barriers to Imports from foreign countries were high and Ben and Jerry's were entering the Japanese ice cream market 0years atter Its competitors, such as Haagen-Dazs. According to the survey by "What Japan Thinks," the biggest factor in ice cream purchase is by flavor and taste. The Japanese consumers demand high-quality products with different flavors. The demands of the Japanese coincide directly with the product mission statement of Ben and Jerry's which is "to make, distribute and sell the finest quality all natural ice cream and euphoric concoctions with a continued commitment to Incorporating wholesome, natural ingredients. So based on the quality and flavors of Ben & Jerry's, the ompany doesn't have to change their recipes or ingredients to be popular In the Japanese ice cream market. However, In Japan ice cream is considered a snack more so than a dessert, so to be user-friendly to the Japanese, Ben and Jerry's should package their Ice cream In personal cups as well as their point-sized package. Additionally, the Japanese are very clean and conscience of sanitation, so having Individual serving would be more appealing to the Japanese people.

According to "What Japan Thinks," the most popular purchase of ice cream is a single-serving cup of ice cream. When It comes to perishable goods, supermarkets seem to be much stricter In Japan than In the west about moving on stock before it gets old. It Is very important for a product to have a good reputation, especially in Japan, and if a product Isn't good quality no one will buy the product. Ben and Jerry's should make sure that their product's are being monitored, and if the ice cream is close to perishing, they should make sure It gets thrown out, or then their reputation can be ruined.

Although shipping to Japan is not the easiest task, Ben & Jerrys is an established corporate company who has been shipping ice cream to the West Coast and to Europe in freezer containers. Ben & Jerry's needs to create an efficient supply chain, the sequence of linked activities that must be performed by various organizations to move goods from the sources of raw materials to ultimate consumers, so the company can then ship out their products smoothly.

The company then has to find the best approach to their physical distribution, or logistics. Bringing their products to Japan would require detailed and structured outbound logistics involving managing the flow of finished products and information to business buyers and ultimate consumers. Ben & Jerry's then has to choose the right transportation mode. Because Japan is overseas from their Vermont factory, the only 2 options would be water transportation, which is inexpensive but slow (about 3 weeks) or by air, which is fast but expensive.

Although Japan has barriers to foreign imports, in 948 the General Agreement of Tariffs and Trade (GATT) was formed, which was an international forum for negotiating reductions in trade restrictions. The World Trade Organization (WTO) was also established to assume the task of mediating trade disputes among nations. Japan is part of the WTO, Joining on September 10th, 1955. This will make it easier for Ben & Jerry's to advance in Japan's foreign market because there is a global mediation center. Also, there are expectations of falling tariffs on dairy products, which would be a desirable feature in selling in Japan.

Even though Haagen-Dazs had already been selling their superpremium ice cream in Japan's market, now Ben & Jerrys doesn't have to educate the Japanese market about superpremium ice cream. Haagen-Dazs's sales in Japan were about $300 million, proving there is a large Japanese ice cream market and superpremium ice cream is desirable in the country. There are many advantages and disadvantages for Ben & Jerry's to penetrate the Japanese market by relying on 7-Eleven, an international chain of convenience stores, to distribute their superpremium ice cream.

If Ben & Jerry's sold directly to 7-Eleven creating a Joint venture or a strategic alliance, they would create a long-term partnership between two companies to undertake a major project and help each company build competitive market advantage. Because Ben & Jerry's have expanded all over the world it is a multinational corporation. If Ben & Jerry's could sell directly to 7-Eleven, it would eliminate the distribution costs. However, there would be a power struggle between the 2 major companies.

If Ben & jerry's agrees to an exclusive agreement with the massive convenience store chain, 7- Eleven would have the upper hand. Another advantage of entering the market through 7-Eleven is the immediate placement of Ben and Jerry's in over 7000 convenience stores in Japan, giving Ben; Jerrys an instant access to the market on a large scale. Yet, by doing this, Ben and Jerry's might not be able to build their own brand name and an issue with 7-Eleven would leave Ben and Jerry's without their own position in the Japanese market.

Also, 7-Eleven insisted that Ben and Jerry's ice cream be packaged in personal cups as opposed to the pint size, due to the cultural view of ice cream in Japan. This would require $2 million in equipment and different methods in packaging the ice cream, because Ben and Jerry's would have to comply wltn tnese cnanges. I ne '-Eleven approacn to Just-ln-tlme Inventory procedures would make delivery reliability key and costs would have to be minimized. Because the Japanese production is unique, Ben & Jerry's would have to be careful to not mix up the Japanese label with the regular label.

A disadvantage of relying on 7-Eleven is the asset specific investment in production equipment. Due to these changes, there would be complex logistics and production planning. Also, the pricing and profit distributions are unclear. The only clear thing was that Ben & Jerry's would be shipping from their Vermont factory. Entering the market with 7-Eleven would allow Ben & Jerry's to have control of their brand, although 7-Eleven would have a dominant position. Ben & Jerry's would have to rely on 7-Eleven promoting the brand, which 7- Eleven wasn't promising.

A major advantage is that 7-Eleven is an established corporation, so 7-Eleven has high-level executive involvement and an efficient supply chain. Ben and Jerry's would increase sales through convenience stores and would ccess the market on a large scale easily. Ken Yamada was also interested in acting as a licensee for Ben and Jerry's in Japan, overseeing marketing and distribution of its products there. Yamada would be the marketing intermediary for Ben and Jerry's, being the independent firm which will assist in the flow of goods and services from producers to end-users.

Yamada would be a good candidate because he was a well-recommended third-generation Japanese-American, so he knew the culture and how to integrate American and Japanese cultures. He also was already running the Domino's Pizza franchise in Japan. The Domino's franchise in Japan was very successful, and Domino's already delivered ice cream cups, so they had the resources to deliver Ben & Jerry's. However, part of Yamada's agreement was that he would have exclusive rights to the entire Japanese market.

This would mean that Yamada would have full control of branding and marketing efforts, making Ben and Jerry's fully dependent on the efforts of Yamada. He would have full control of the marketing and sales in Japan. Yamada would introduce Ben and Jerry's to the Japanese market from he initial steps to the large picture; starting with positioning the brand, formulating and strategically orchestrating the initial launch, and concentrating on the best marketing and distribution strategy for the long-term positioning of Ben and Jerry's in Japan.

By using Yamada to introduce Ben and Jerry's in the Japanese market, Yamada would earn royalty on all sales, but he would have full control of the Japanese market. This would give Ben and Jerry's instant expertise in a foreign market and because Yamada was already running Domino's, there was a simple entry strategy and an ongoing marketing management. Yamada was very valuable to the ice cream company. He knew frozen foods, he had an entrepreneurial spirit and marketing.

However, because Yamada would be investing his time in a marketing campaign only after reaching an agreement with Ben and Jerry's, there was no specific plan available for consideration, and Yamada would have full control and the right to change any plan. Yamada has good market knowledge and the managerial requirements, making it less demanding for Ben and Jerry's. However, he has no specific business plan and no brand control. Although Ben and Jerry's managers believe the ompany should delay entering the Japanese market because of economic problems, I think Ben and Jerry's should enter the Japanese market.

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