Haagen-Dazs Brand Ice Cream Case Study
Statement of Problem:
Recommend a strategy to introduce HD Lite – a new brand from Haagen-Dazs.
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Critical Facts:
Company:
Started as a family business in 1941
Has grown into a position of world leadership in the super-premium sector of the ice cream
market.
Haagen-Dazs was purchased by the Pillsbury Company in 1983.
The 1.9 billion super-premium ice cream market is the fastest-growing segment of the $4.1
billion ice cream market – sales doubled between 1980 and 1987
The super-premium market will continue to grow at double-digit rates through the year 2000.
Haagen-Dazs, with 41.7% share, is the leader in this market.
Haagen-Dazs brand also had the highest name recognition among all the premium ice cream
makers.
Traditionally, Haagen-Dazs allocated 5% of sales to advertising and sales promotion, with
emphasis on local radio spots and print ads in magazines that coincide with in store promotions.
Additional ads are placed in magazines and newspaper entertainment supplements during
seasons of higher ice cream purchases – mainly summer and Christmas.
Supplementing media advertising, the promotional program features couponing and sampling.
Themes in Haagen-Dazs advertising typically highlight entertainment, status, fun, and leading
the good life.
Consumer:
Yuppies:
- Young urban professionals.
- Concentrated in East Coast and West Coast states in metropolitan cities like
New York, Philadelphia, Atlanta, Chicago, San Francisco, and Los Angeles.
- Typically employed as professionals or managers and have above
average incomes.
- Generally upwardly mobile, liberal, and self-confident, and independent.
- Socially active, enjoy entertaining, and like to show off to friends and colleagues
by buying expensive things and treating themselves well.
- Looks are important and keep themselves in good physical condition.
- Occasionally go on sweet binges, consider themselves ice cream connoisseurs
and tend to choose unusual ice cream flavors.
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Married Food Lovers:
- Concentrated in suburban areas surrounding yuppie urban areas.
- High % has one or two children
- Tend to work in business and the professions, have above average incomes, are
upwardly mobile and socially active, and are interested in appearances, fitness, and selfdevelopment.
- Less liberal than yuppies, however, and more oriented toward their families than
toward themselves.
- Have respect for money, are innovators – not imitators.
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Achievers:
- Located near major cities where professionals are prevalent and have many
characteristics in common with Married Food Lovers and Yuppies.
- Mostly single, mainly male, employed in business or the professions, concerned
about nutrition, and highly status and appearance conscious.
- Income among group members is above average, but they tend to respect money.
They also have a need to impress and tend to reply on the opinions of others.
- They limit their intake for nutritional reasons. They consider themselves ice
cream connoisseurs, but all brands taste the same to them, and they won’t purchase a higherpriced brand unless there is a special occasion, such as entertaining friends.
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Product:
Haagen-Dazs positions itself as a super-premium product geared to deliver “the ultimate
experience” in taste and quality.
Was created and initially manufactured in the Bronx.
A frozen dairy mixture of milk and/or cream combined with sugars, flavorings, fruits, nuts and
other natural additives, Haagen-Dazs offers an abundance of flavors, ranging from basic vanilla
to Swiss almond chocolate.
The Haagen-Dazs tradition continues to emphasize quality and painstaking preparation over
quantity.
Most Haagen-Dazs ingredients, such as strawberries, almonds, and raisins, are purchased from a
single producer to ensure consistent quality.
Haagen-Dazs won the “Classic Ice Cream Bar” category in a taste test conducted by People
magazine, receiving the highest overall score of any of the super-premium entries.
Qualities of Haagen-Dazs ice cream noted by consumers during focus group sessions include
“fluffiness,” “density,” “foaminess,” “graininess,” and “viscosity,” all associated directly with the
product.
Another product-specific quality noted by consumers is a certain sensory “coldness” related
more to ingredients than to temperature.
Haagen-Dazs is the only super-premium ice cream brand distributed nationwide, through
supermarkets and 300 independently-owned franchise shoppes.
Adopted a competitive pricing strategy with respect to its direct super-premium competitors and
a prestigious strategy with respect to other categories of ice cream.
Demand for super premium ice creams is generally inelastic, so Haagen-Dazs has little difficulty
maintaining a price that, on average, is 75 percent higher than the price of the most expensive
regular ice cream.
The average price for a Haagen-Dazs pint is $2; ice cream bars sell for between $1 and $1.25;
and a three-bar package costs approximately $3.
The company’s costs per unit vary according to product line. The average cost per pint is $1.25.
The average cost per ice cream bar is .58 cents.
A new product line of low calorie Haagen-Dazs ice cream was in development for introduction
in the spring of 2000.
The new product would be introduced under the label HD Lite.
HD Lite offered fewer calories per serving due to differences in the concentration of milk cream,
sugar, and calorie-rich additives found in the parent brand.
The brand would be distributed in grocery chains that carried specialty grocery and produce.
Langdon could see opportunities for advertising HD Lite to one of Haagen-Dazs’s existing target
audiences that might be interested in the idea of getting premium ice cream taste without the fat
and calories associated with regular Haagen-Dazs ice cream. HD Lite would be sold by the pint at
an average price of $2.
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Competition:
Competitors in the super-premium market include Frusen Gladje – the second largest-selling
brand; Ben and Jerry’s; Steve’s brand ice creams; Alpen Zauber; and a proliferation of smaller
brands.
All the super-premium brands have higher butterfat content (15-20%) in common and less air
content than regular brands.
They also add unique flavor and ingredients to their ice cream – such as cookies and candy bars
– and contain no additives, stabilizers, or emulsifiers.
Haagen-Dazs also competes with premium regular, economy, and private label ice cream brands
such as Breyer’s, Blue Bell, and Pathmark brands. Differences between these brands are being
minimized with processing innovations that allow them to be distributed nationwide without the
use of stabilizers and emulsifiers.
The frozen dessert market represents another layer of competition for Haagen-Dazs ice cream.
Major entries include frozen yogurt, sorbet, and tofutti – a tasteless, odorless flavor vehicle made
from soybeans.
Haagen-Dazs has adopted a competitive pricing strategy with respect to its direct super-premium
competitors and a prestigious pricing strategy with respect to other categories of ice cream.
Demand for super premium ice cream is generally inelastic, so Haagen-Dazs has little difficult
maintaining a price that, on average, is 75 percent higher than the price of most expensive regular
ice cream.
Market:
The primary market for Haagen-Dazs ice cream comprises young adult baby boomers between
the ages of 21 and 35 who purchase three times as much Haagen-Dazs ice cream per capita that
the rest of the population.
Discretionary income of members of this group has risen sharply over the past decade.
They are health and fitness conscious, upwardly mobile, and attracted to the allure of “all natural
products.”
Many members of this market treat themselves to a more upscale style of living and self
gratification.
Social class is generally perceived to be an important environmental influence, and they tend to
maintain a higher level of quality in their purchases to maintain their class positions or achieve
higher status.
Three largest sub-markets are yuppies, married food lovers and upscale achievers.
Most of the firms marketing efforts focus on high-density states on the east and west coasts,
where more than 70% of supermarkets carry the Haagen-Dazs line. The entire Midwest
constitutes only 20% of total sales.
Recommended Alternatives
Alternative A: Target the yuppies. The Yuppies are young urban professional who are
largely concentrated in East Coast and West Coast states in metropolitan cities like New York,
Philadelphia, Atlanta, Chicago, San Francisco and Los Angeles. Yuppies are typically employed
as professionals or managers and have above average incomes. They are upwardly mobile, liberal
and self-confident and independent. Although they have good eating habits, they occasionally go
on sweet binges. They consider themselves ice cream connoisseurs and tend to choose unusual
ice ream flavors. The Yuppies enjoy the finer things in life, but are health conscious, so it makes
sense to target this group with Haagen-Dazs’ new HD Lite product line. Outdoor billboards, bus
and subway signs and magazine print advertisements will be the best way to reach this mobile
market.
Risk: By targeting the Yuppies, we are neglecting the other markets and
missing out on the opportunity to target the Married Food Lovers and Achievers. Also, it might
be hard to get across to the Yuppies since they are so mobile and independent.
Alternative B: Target the Married Food Lovers. The Married Food Lovers are
concentrated in suburban areas surrounding yuppie urban areas. A high percentage of this group
has one or two children. They tend to work in business and the professions, have above average
incomes, are upwardly mobile and socially active, and are interested in appearances, fitness, and
self-development. Although they tend to indulge themselves, they also have respect for money.
They have good eating habits; love food, cooking and entertaining and are concerned with
quality. They consume ice cream regularly and always have some on hand, even if on a diet.
Married Food Lovers want to please their families, while still maintaining their healthy lifestyles.
The HD Lite ice cream from Haagen-Dazs is a great fit for their family because they don’t have
to sacrifice taste for calories.
Risk: If we just target the Married Food Lovers, we are ignoring important
market potential from Yuppies and Achievers. Children are big influencers and they might not
want a lite ice cream or might be turned off by the lite label – which will cause the buyers of the
family to purchase other brands. They are conscious about how much money they spend, so this
target might turn to cheaper alternatives. Might view ice cream as junk food even if it is lite.
Alternative C: Target the Achievers. Achievers are located near major cities where
professionals are prevalent and have many characteristics in common with the Yuppies and
Married Food Lovers. They are mostly single, mainly male, employed in business or the
professions, concerned about nutrition, and highly status and appearance conscious. Income
among this group is above average, but they tend to respect money. They have a need to impress
and tend to rely on the opinions of others. Achievers are all about status, especially when
entertaining their friends. What other brand of ice cream offers the same level of status that
Haagen-Dazs can provide?
Risk: Missing out on targeting the Yuppies and Married Food Lovers if we
just target the Achievers. They respect money, so they might turn to a more affordable ice cream
alternative instead of Haagen-Dazs. All brands taste the same to them, so they might be satisfied
with the cheaper brands and only purchase higher-priced brands on special occasions.
Recommended Alternative & Rationale:
My recommended Alternative is Alternative A. By targeting the Yuppies, we are
targeting a group that has a high income. Yuppies enjoy showing off to friends and colleagues by
providing high-end brands while entertaining. They consider looks to be important, so they are
looking for an ice cream that is lower in calories but still tastes great. HD Lite offers fewer
calories per serving due to the differences in the concentration of milk, cream, sugar and calorierich additives found in the parent brand. When Yuppies choose HD Lite, they can be confident
that they are treating their bodies well. Yet, they aren’t sacrificing flavor for fewer calories. HD
Lit provides the same great taste and quality that Haagen-Dazs is known for, just without the
calories and extra fat content. By targeting a group that considers themselves ice cream
connoisseurs, HD Lite has the potential to turn these light ice ream bingers into regular, religious
consumers. The buy rate has potential to increase drastically since Yuppies are looking for a
healthy alternative to their usual ice cream habits, while still getting the taste they love and desire.