Concepts needed: Market research, Distribution, Pricing strategy, Advertising ethics

In 1989, in a strategic decision to move into the fast food business, the British firm Grand Metropolitan bought up Pillsbury, the American owners of Burger King and other food brands. It is said that Grand Metropolitan only ‘discovered’ Haagen-Dazs after they had bought it. No time was lost, however, in developing its potential in the British market.

As a catalyst to consumer awareness of the brand, a lavishly appointed Haagen-Dazs outlet was established at London’s Leicester Square in mid-1989. Long queues quickly became the norm, despite price levels 50% higher than other ice cream parlours. This was testimony to the quality of the product and proved

that a gap existed in the market for a super-premium brand. Yet might it only be a market for lavish treats when out for the evening, or was there a wider, retail market opportunity? And if so, how could it best be exploited? These were questions for an advertising agency to answer.

After talking to several different agencies, Haagen-Dazs UK decided upon Bartle, Bogle and Hegarty (BBH), best known for the Levi 501s advertising. The agency’s brief was to help Haagen-Dazs create a new ‘gold standard’ and become the ultimate ice cream in the market. At the time a premium sector existed in which Loseley and New England were the most prestigious and expensive brands. Haagen-Dazs UK decided to open up a new super-premium sector, with ice cream priced at £2.99 per half litre. This was three to four times the price of standard dairy ice cream and 50% higher than its two closest competitors.

The first task was to provide the background research upon which long-term, strategic decisions could be based. A large-scale survey showed that the target market for premium ice cream sold through retail outlets was 25 - 44 year olds with high disposable income but without children. These became the criteria for

selecting the sample for the group discussions that followed.

These groups of six to eight men and women were prompted into discussion by each being given a half-litre tub of Haagen-Dazs Vanilla to eat as they talked. The interviewees were asked when and where they could imagine consuming the product. Usually the answer was eating it alone, as a reward or as a ‘dream-like’ compensation for a bad day or date. The big step forward came, however, as the group leader asked when they might share their Haagen-Dazs. Customers talked of sharing a spoon with their partner, feeding each other, and of ‘mellowing out1 together in front of their favourite video. Products such as Cadbury’s Flake had long portrayed themselves as a self-indulgence. Haagen-Dazs now had a unique way of advertising a food product: as a sensual pleasure to be shared.

The research provided the material for BBH’s account planner to write the creative brief. From this the creative department would be able to consider how best to advertise the product. It was decided that the brief should be met by the use of press media rather than television. For not only is television an expensive way of reaching affluent adults, it also lacks the subtlety of mood that BBH wanted. So the agency’s media department was asked to plan a campaign aimed at affluent adults in their moments of relaxation. This led to spaces being bought in the weekend colour supplements and womens’ consumer press.

Meanwhile, a parallel survey had been researching into the suitability of the American pack design within the British market. In a large-scale quantitative survey consumers found the pack significantly different to other ice-cream brands. Group discussions showed that once people tried the ice cream they could identify with the package as authentic high quality. So the company and the agency decided to leave the imported packs

HAAGEN-DAZS UK - A CLASSIC PRODUCT LAUNCH

unchanged.On Sunday July 21st 1991 the first advertisement appeared - one of four black and white photographs that juxtaposed product messages with sensual imagery, with the slogan ‘dedicated to pleasure’. The launch advertising burst lasted eight weeks and cost a little over £300,000. A further three-week campaign before Christmas took the year’s spending to £450,000.

From the start, editorial coverage of the launch was considerable. Much of it represented marvellous free public relations. Some of the newspaper reporting focused upon the ethics of advertising ice cream through sexy images. Did it exploit women? Did it meet the Advertising Standards Authority yardstick of ‘Legal, Decent, Honest and Truthful’? Whatever the answers, sales kept rising.

The financial impact of the advertising was dramatic, with sales doubling between June and July 1991. In 1991 as a whole, sales were five times their 1990 level. Haagen-Dazs went from a 2% share of the £50 million premium ice cream market in October 1990 to 22% by October 1991.

The diagram above relates the launch advertising bursts to Haagen-Dazs sales to retailers. This achievement relied not only upon the advertising, but also on offering millions of product samples. Also crucial was the distribution drive started up by the Haagen-Dazs sales team. In April 1991 Haagen-Dazs was stocked in shops selling less than 20% of London’s ice cream; by July this distribution level had risen to over 40%.

An innovative feature of the distribution strategy came from the earlier group discussions. Mentions of sharing Haagen-Dazs in front of a favourite film encouraged the sales team to supply refrigerated cabinets to Blockbuster Video. This proved so

successful that, during one week, Haagen-Dazs was second only to Terminator I as Blockbuster’s biggest money-spinner. During the sales drive, some supermarket chains had turned Haagen-Dazs down, refusing to believe that their customers would buy such an expensive product. Once the advertising campaign had started, however, the same stores phoned up asking for the product. Clearly the distribution growth was both a cause and an effect of the rising demand.

Most important of all, in judging the effectiveness of the launch marketing strategy, was that sales

and distribution not only went up but stayed up. Many products are highly sensitive to changes in marketing spending, with sales jumping up but then falling back once the advertising campaign or special offer has ended.

The marketing triumph of Haagen-Dazs was that customer loyalty built up so quickly. In America it had taken twenty years to achieve what Haagen-Dazs UK managed in two.

The Marketing Society voted Haagen-Dazs the ‘New Product of the Year’.

Sources: Biss Lancaster; Haagen-Dazs Report by Nick Kendall at BBH; Haagen-Dazs UK.

Questions

1. How important was the role of market research in, the success of Haagen-Dazs?

2. Assess the strengths and weaknesses of the price level decided on by Haagen-Dazs UK.

3. (a) Interpret the information provided by the graph within the text. (b) The graph compares sales with advertising. Ex plain what other factors should be taken into ac count before drawing conclusions about the ef fect of the advertising upon sales.

4. (a) What might be the key factors determining the level of brand loyalty enjoyed by a product? (b) What benefits could Haagen-Dazs derive from high brand loyalty?

5. Discuss whether it is ethical to promote an ice cream through sexy advertising.