Hagen-Dazs Consumer Behavior essay

Executive Summary

Hagen-Dazs used an advertising strategy in achieving a competitive advantage over its rivals. The advertising campaign created a consumer excitement, hence, changing their overall perceptions about the company and its product. Consequently, this helped Hagen-Dazs become a premium brand globally. The key objective of this report is to examine Hagen-Dazs UK ice cream market and the factors influencing consumer behavior. The data used in the report was obtained from the Mintel reports released earlier. It is evident that numerous factors influence consumers’ decision making concerning ice cream as a product. For instance, consumers choose to purchase ice cream depending on their disposable income. Creation of a stable brand is vital in changing consumer attitudes. Additionally, it is the role of marketers to create brand awareness through advertising to correct misconceptions that influence consumers’ decisions. Through perceptions, consumers view things in different ways hence marketers should come up appropriate strategies to correct this. The report recommends that Hagen-Dazs emphasizes advertising in order to increase its competitive advantage and increase its sales.

 

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Introduction

Hagen-Dazs was launched in the UK in 1991 through the use of one of the most successful advertising campaigns in marketing. Many national papers wrote about the company and its ice cream advertising strategy. The advertising campaign enabled Hagen-Dazs to create a substantial impact on the UK ice cream market. Initially, many ice cream manufacturers viewed the product as being only suitable for the children market. With the advertising campaign, Hagen-Dazs aimed at changing the market in order to realize change and recognize the potential of better quality products for adults. The following three years saw the company develop into a national symbol of sensuality and sexiness in the UK. Given the earlier success, the company embarked on a marketing strategy to create brand awareness and increase its UK sales in 1994.

Consequently, Hagen-Dazs continued to be admired as a pace setter in the PR industry in the UK in the late 1990s.  However, the current ice cream market environment has significantly changed due to an increase in the number of competitors. A typical example is the arrival of Ben & Jerry onto the UK market. It, thus, becomes difficult for Hagen-Dazs to undertake another successful media campaign aimed at increasing its sales. The report examines the UK ice cream market, consumer behavior and Hagen-Dazs market segmentation. Advertising campaign was vital in creation of excitement and more consumer interest. This resulted into an unstoppable momentum. Additionally, advertising created a clear brand for Hagen-Dazs and it became known globally for what it stands for.

Methods

The key data sources in the report were the Mintel reports. These reports offered important statistics on the status of the UK ice cream market. From the research undertaken, the reports used different segmentation concepts like age, sex, marital status, income, education and occupation in determining the UK ice cream market and its consumer patterns. As secondary data sources, the reports were readily available, provided much detail and cost the researcher nothing. However, the reports were limited in terms of relevancy (Kardes et al. 2010, p. 22).

Findings

In the ice cream industry, consumers consider the brand image while deciding what to purchase. To a consumer, the brand is a reflection of status and quality. Essentially, it is vital for an ice cream brand to maintain a good image that will satisfy the consumer. A brand makes consumers become loyal to given products. In terms of brand loyalty, a good number of consumers have a tendency to purchase the same brand repeatedly. As such, most of the consumers have a ready-made  decision on what to buy before actually reaching an ice cream store, hence, demonstrating the critical role of brand building. Given this, it means that new entrants onto the ice cream industry find it difficult to compete. The Mintel report says there is, however, a minority group of buyers who play a critical role in the uptake of new brands given their buying habits. More so, the presence of branded players in the ice cream industry, Hagen-Dazs included, makes the purchasing process simpler for consumers. Normally, through a promotion, a company makes it product known to consumers, hence, the need for a customer-friendly brand.

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The company needs to make its brand good so that it becomes attractive to the customer. This issue becomes more sensitive due to the fact that consumers are exposed to millions of brands daily through different media channels. As such, consumers will purchase products from a brand they are familiar with even if it’s a bit expensive compared to those offered by rivals. Similarly, it is the brand name that provides information to consumers concerning a particular product. Thus, the need for companies to develop and maintain good image brands for them to have a competitive advantage over rivals. Hagen-Dazs is a well-known brand in the ice cream industry worldwide. Currently, it is located in over 50 countries. As a brand, Hagen-Dazs product is associated with richness, intense flavor and smooth texture.

Furthermore, given that the modern consumer is so health conscious, health becomes a critical issue for a marketer to consider in product manufacture. Many consumers are careful not to endanger their health through the consumption of particular products. An ice cream brand should satisfy a consumer’s health need so that consumption results into health gains rather than losses.  Affordability of the ice cream is important too. In marketing ice cream, the company should endeavor to a product that is worth a consumer’s money in terms of quantity, satisfaction and quality. Here, the quality of ice cream that is delivered to the consumers goes a long way in determining whether the customer will be interested in buying from your brand again or not. On the other hand, the consumer derives satisfaction from ice cream depending on the taste, as well as its quality. Care should be taken not to overprice products like ice cream that draws its target market majorly among the children.

A company’s setting is vital in meeting consumer needs. For instance, consumers prefer to purchase ice cream from outlets where they can comfortably sit and enjoy the product. In such case, they consider the environment where the company is located (East, Wright & Vanhuele 2013, p. 10). However, there are cases where consumers prefer take away to enjoy the product at home. Moreover, service delivery to consumers should be fast enough so as to avoid cases where customers have to wait on long queues before they are finally served. A faster service delivery saves time, thus, adds to consumer satisfaction. Consequently, a good service delivery ensures the brand has a good image.

Segmentation Analysis

According to a Mintel report (2013), whereas young adults aged between 16 to 24 years like experimenting with new flavors of ice cream, those over 65 years of age rarely do so. Normally, those over 65 years already have their favorite flavor and, hence, would not easily be swayed by new flavors coming onto the market. Nevertheless, the young adults have a favorite brand too and, hence, buy only new flavors from that brand. Here, the brand loyalty comes into play. Consequently, the attitude by young adults to enjoy new flavors from their favorite brand is important in increasing sales on new flavors introduced onto the market. This encourages flavor innovation among companies. A typical example is when Cadbury launched Hazelnut Whirl product prior to the London Olympics in 2012 to counter Hagen-Dazs new limited edition flavors already in the market by then.

Furthermore, consumers tend to switch to new brand flavors when there are promotions. Here, the Mintel report (2013), says that there are tendencies among consumers to be swayed by promotions to buy from brands on special offer. Additionally, almost three in ten consumers stock up on ice cream while there is an on-going promotion. However, an increase in promotional activities in the industry has forced some consumers to forego economizing on ice cream choices. Here, it is reported that only one in ten consumers have limited their spending on ice cream because of cost. Others have had to switch to own-label ice cream varieties given the high cost of conventional brand varieties. Production of premium varieties that are own-label ensures that while consumers are concerned of brand price, ice cream taste is not compromised. Budget-conscious consumers have been forced to reassess their spending habits while ensuring that they get value from what they purchase. This has led to a growth in the own-label segment as consumers shift their attitudes.

Current health concerns influence ice cream intake among different groups of consumers. In the Mintel report, one in five consumers has limited their ice cream intake because of health concerns. Despite this, about 9% still buy small amounts of ice cream so as to consume less of it daily. Those in the age bracket of 55 to 64 have limited their ice cream intake as they say their concern is mostly on products manufactured from high-quality ingredients. In this category of those limiting ice cream consumption is women and parents with children under five years of age given their health concerns. In positioning itself to tap onto the premium end market, Hagen-Dazs manufactures a wide range of ice cream flavors. There are those in the 500ml tubs, as well as 100ml mini tubs with numerous flavors. The limited edition flavors, launched throughout the year, include White Chocolate & Raspberry. The flavor was introduced in 2011 (Mintel 2013).

Supermarkets are the key distribution channels where consumers purchase ice cream. As such, the supermarkets are the dominant shopping destinations among many consumers. In the Mintel (2011) report titled “Food Retailing-UK”, 83% of ice cream consumers used one of the four big supermarkets in doing their shopping. Given their overall lead in the grocery sector, supermarkets became ice cream shoppers’ favorite as consumers benefit from their economies of scale in commodity pricing and the wide range of products they offer. Additionally, there has been an increase on the number of the on-the-go consumption as the consumers view it as being convenient and products are offered at lower prices compared to purchasing the same from stores. Also seen as impulse buying, the on-the-go consumption concept is mainly for those in the younger ages, as well as families. Although viewed as a form of impulse buying, the on-the-go consumption of ice cream is more favorable during hot weather.

From this analysis, it is vital that a number of factors influence the ice cream consumer behavior. Different age groups have varied reasons as to why they purchase and consume ice cream. As such, age as a factor determines the distribution channel used and the products to be consumed (Tyagi & Kumar 2004). For instance, different age groups have their own likes and dislikes. On the other hand, age determines the level of consumer implication as far as one’s health. To add on this, sex does have an impact on the ice cream consumer behavior, because both men and women have different interests, needs, preferences, knowledge and hold different statuses in society. Similarly, the two will exhibit varied purchasing patterns. It does not necessarily mean that men will like what women like and vice versa.

A consumers’ purchasing power is determined by the income. Consequently, there are different levels of income in society. With a disposable income, a consumer is able to make a purchase. However, an income will not in any way cause a purchase. Using income levels within different geographical regions, marketers can know how much a consumer will be willing to spend on a given product like ice cream. As such, the income brackets are critical to companies in their pricing strategy. Another essential segmentation factor is occupation. Different occupations offer varied levels of consumer involvement for a given product. For instance, professionals in the military or agricultural sector have varied consumer habits. Thus, by considering their interests and preferences, marketers are able to come up with products best suited for their needs and wants.

There are a number of psychological influences that determine consumer purchasing decisions. In targeted marketing, it is critical for companies to understand the consumers’ mental processes, as well as behavior that influence their decision making. For instance, consumers’ personality will determine their choices concerning given products (Hoyer & Macinnis 2008, p. 13). The unique traits here include extroversion, risk-loving or self-confidence. Consumers’ lifestyle implies the way they live and spend their money and time, for example sports fanatics or bookworms. On the other hand, there are various reasons that motivate consumers to make particular decisions. According to Lantos (2010), motivation depends on one’s goals, needs, desires and wants. All these factors can either pull or push a consumer away from purchasing certain products. Here, a consumer can be interested in buying a product based on an economic motive. Given this, it is imperative for marketers to develop strategies that stimulate and appeal to motives which are appropriate to a given product.

Consumers are also influenced by perception in choosing what to buy (Tyagi & Kumar 2004, p. 36). However, given that consumers are selective and subjective in their perceptions, they show a tendency to deviate from reality. It is, thus, upon the marketers to create the right perceptions through advertising. For instance, creation of brands that appeal to both the male and female consumers. Additionally, consumers’ learning is essential in influencing their decisions (East, Wright & Vanhuele 2013, p. 10). Here, consumers can learn simple things like remembering brand names. To marketers, they should use consumers’ learning behavior to teach them on the new brands launched. This can be done through the use of promotions and advertisements. Consumers have varied feelings and tendencies towards different products. This forms consumers’ attitude (Proctor 2000, p. 152). Therefore, the marketers need to form, change or maintain the consumers’ attitude through appropriate promotional activities that appeal to consumers.

People from different cultures make different choices to purchase products depending on their beliefs. For instance, the buying habits of an American are totally different from a Chinese or Italian. Here, subcultures include African-American or Caucasian. Moreover, religion determines one’s buying behavior like Catholic, Jewish or Protestant (East, Wright & Vanhuele 2013). There are other people whose buying patterns are influenced by their social class in society. Similarly, bachelors will have different consumption behavior compared with young married couples hence the family life cycle plays a critical role here. On the other hand, the usage rate influences one’s consumption behavior. Here, you cannot expect heavy users to have similar patterns to light or medium users. In a case where a marketer has created an awareness concerning a particular product, the consumer behavior is different from areas with low awareness. Users with strong brand loyalty have different buying behavior as compared to that with no loyalty. Other determinants of consumer behavior include time, objective, location and the person involved.

Decision making: Scenario

Consumers are faced with numerous decisions among them the choice between the various products on offer. The consumer decision making process starts with identification of a consumption problem. For instance, a consumer might need to buy an umbrella. Normally, in problem recognition, the consumer realizes the difference existing between their actual state and a desired state intended to meet a need (Tyagi & Kumar, 2004). The need here is too much sunshine or rain. Thus, the consumer is motivated to get an umbrella in order to protect themselves from the identified need. Walking on sun or being rained on stimulates one’s desire to get an umbrella. To marketers, consumer problems present marketing opportunities to them (Lantos, 2010). As such, marketers develop products that solve problems recognized by consumers. A marketer’s problem-solving mechanism includes creating awareness of the new product through advertising. Additionally, it is imperative for a marketer to employ consultative strategies that explain how the developed product will meet the need of the consumer.  

Afterwards, it is upon the consumer to search for market information on the product they need to satisfy a need. Information search starts with the consumer trying to recall in coming up with the appropriate solution to satisfy the need (Hoyer, Deborah & Macinnis, 2008). An internal search involves the use of the memory in recalling some of the brands the consumer believe can solve the problem. Apart from recalling memorable brands, a consumer also recall product attributes, as well as evaluations and experiences. Consequently, the motives for doing an information search are to make the best buying decisions. The marketer is to use the most likely marketing sources the consumer is likely to use in their information search in advertising the product. Here, the marketer can influence the consumer’s decision by referring the consumer to their personal preferences. Given the numerous product alternatives available to a consumer, one has to do an evaluation to select the best option. In so doing, criteria is based on factors like style, price and quality (Lantos, 2010). The post purchase evaluation is either the consumer is satisfied or dissatisfied after using a given product.

Recommendation

Hagen-Dazs should put more emphasis on product promotion through advertisements given it played a key role in marketing the brand. Advertising, as a marketing strategy, was vital in setting a clear brand for Hagen-Dazs. Moreover, the campaign had a considerable effect on how consumers perceived the image of Hagen-Dazs. The company would, therefore, be well positioned to compete through vigorous advertisement campaigns.  Other important company decisions that will improve its image and competitiveness here include product and pricing. This is because pricing has a direct connection to customer demand. Thus, the product price in Hagen-Dazs in the UK should be adjusted accordingly to stimulate demand among customers.