MKT 470 Research Study Final Report

Should there be an extension of an existing product line of Igloo?

Irfan Ahmed

071650030

Rezwan Habib 072196030 Naziba Hasin Nur a Alome 063197030 062533030

Introduction After brainstorming potential topics for our research study, we selected the subject of extending an existing product line of Igloo because we believed that this subject matter could yield significant experimental results. Changes in consumer taste and demand for food provide opportunities for food manufacturers to introduce new products. The introduction of new food products can benefit food manufacturers in several ways. Of course, a successful new food item will raise its manufacturer's profits. We then discussed past experiences that each group member had accumulated with respect to ice cream products and our experiences. The notion of a product line extension came into play because we had a sneaky suspicion that there might be a gap in the market for a new retail available ice cream product. In turn, by understanding exactly what motivates people to buy ice cream, we could help Igloo to understand what they might look to sell. Our initial suspicions formed an idea that consumers would be interested in a new ice cream cone as they currently only have two products in that category- Cornelli and Cornelli premium. (jpeg appended)

Our Focus Groups Since we did not know what the consumers were interested in, we decided to conduct focus groups to understand their requirements. Focus groups can reveal a wealth of detailed information and deep insight. Our focus groups were groups of eight to ten people led through an open discussion by a moderator. We wanted the groups to be large enough to generate rich discussion but not so large that some participants were left out. We set aside for 45-60 minutes for our focus groups as we had to consider it becoming an imposition on participant time. Since our intent was to create a homogenous group that maximized disclosure between participants we used nomination while choosing participants for our focus groups. Homogeneity levels the playing field and reduces inhibitions among people who will probably never see each other again. We conducted 3 focus groups to produce valid results. We nominated people we thought would make good participants and Nominees were familiar with the topic and known for their ability to respectfully share their opinions.

Focus Groups Questions In our study we tried to investigate the potential for a product line extension by asking the participants what they look for in their ice cream cone not limited to retail ice cream shops. While designing our focus group questions we had to make sure the participants understand and can fully respond to the questions posed. The questions are unambiguous, open-ended and focused on one dimension each.

Sample Questions for the Focus Groups

Engagement Questions 1. What is your favorite ice cream flavor for an ice cream cone (retail or ice cream shop)? 2. What do you look for in your ice cream cone?

Explorations questions 3. What are the pros of retail ice cream cones? 4. What are the cons of retail ice cream cones? 5. How are they different from ice cream available at ice cream shops? 6. Ice creams shops have more available flavorshow does that influence your decision to buy retail available? 7. To what extent does the number of retail available ice cream cones affect your buying decision? 8. How can the manufacturer improve the retail ice cream experience?

Exit question(s) 9. Is there anything else you would like to say about ice cream cones?

All participants completed a consent form that we intend to enclose with this study report.

Compiling and Analyzing the Data In order for all participant comments to be understandable and useful, they were boiled down to essential information using a systematic and verifiable process. We began by transcribing all Focus Group tapes. Each line is then entered into an Excel database. We first labeled three columns: one for coding, one for the participant ID# and one for responses. We then entered each separate response or idea on a separate line with participant ID attached. The coding column is filled in during the next phase.

We simultaneously assigned each participant comment/quote a separate line on the page as well as each new thought or idea therein. We labeled each line with the participant and group number, e.g. a comment from participant 6 in group 2 would be assigned the number 2.6. When all comments had been entered, we looked for common categories or themes across the entries for each question. Once consensus had been achieved regarding the best categories for organizing the data, we assign a letter to each category. We then assigned the letter of the category that best fits to each entry on the sheet. Some entries seemed inconsistent for their category; we considered re-categorizing or adding another category. However it may also be apparent that one or more categories can be collapsed.

We then used the Excel Sort function to group entries by the categories we had assigned to them. We arranged the categories from those with the largest number of entries to those with the smallest and repeated for each group.

Analysis of focus group data, an example:

Synthesized Focus Group Results

Favorite Ice Cream Flavor (retail and ice cream shops) Most frequent response: Chocolate. Next most frequent response: Chocolate and Specialty flavors Next most frequent response: Strawberry Next most frequent response: Vanilla Next most frequent response: Butterscotch What they look for in an ice cream cone Although many participants look for a variety of toppings some have identified that they look for quality. Most participants believe the taste is just as important. Most participants like chocolate overall. Others look for Specialty flavors that are not retail available like Maple Walnut, Caramel etc.

Quality is more important than flavor. In the retail shops the quality is poor. The wafer is broken or soggy. But ice cream shops provide better quality and fresh ice cream Lots of nut and Chocolate Chips.

TASTE
Retail Ice Cream pros Almost all the participants have either answered price and/or availability.

Compared to ice cream shops they provide a good ice cream in a cheaper price. I mean the price-quality ratio is better than the Ice cream shops.
Retail Ice Cream Cons As aforementioned most participants look for good quality ice cream and have pointed that out as a con. Some participants mentioned that the whole experience of the ice cream shops is missing in the retail ice cream. Also, ice cream shops have fewer flavors to pick from and the wafers are soggy. Very few participants have identified price rise as a con. Most frequent response: quality Next most frequent response: ice cream shop experience Next most frequent response: fewer flavors Nest most frequent response: soggy wafers Next most frequent response: price rise Next most frequent response: no negatives Difference between retail available and ice cream shop ice cream The responses were evenly distributed among the participants. Most participants believe the difference lies in quality and other believe the difference lies in price, # of flavors, toppings and the ice cream shop experience Most frequent response: quality Next most frequent response: price Next most frequent response: flavors and toppings Next most frequent response: ice cream shop experience

The experience is better. When we get in we get the fresh smell of ice cream which makes me feel good.
Would more flavors influence their decision to not buy retail Most participants responded yes if they have enough money in hand. Some participant said no as retail ice cream is convenient and some of the products are classics like the Lolly and Chocobar.

Influences if there is enough money in hand Sometimes theres one particular ice cream found in the retail stores that we can buy from them again and again. Like Polar's Penguin and Igloo's Lolly. In this case the ice cream shops' variety cant influence. ice cream shop ice cream is too expensive not possible for everyone to buy it regularly
Number of retail available cones Participants believe if they have the resources they will go to an ice cream shop as there is not enough retail available ice cream flavors.

If there is a new ad of cone ice cream we might go and have it but maybe after two or

three weeks if the quality is not good it won't work. very few options
What can the manufacturer do to improve the retail experience Most of the participants think that the manufacturer should introduce new flavors. They have also mentioned that ice cream manufacturers should improve their quality (with or without price rise), make better ads, keep the price low or operate their own shops. The success of new food products is contingent on the product's availability and on consumers responding to the promotions and consistently purchasing the new items. Branding may be one important way to add value to the food product. Branding differentiates the food item and provides an alternative to price competition. Most frequent response: introduce new flavors Next most frequent response: improve quality and introduce a new brand Igloo can start a premium brand which will be high in price, still I will have it but the frequency of consumption will be lower than before. Next most frequent response: better ads

The positioning should be better. There was an ad of a fruity or some ice cream of igloo and the tag line was "Fruitz is good" which didn't make me buy that new ice cream.
Next most frequent response: operate its own shop Igloo should start its own ice cream parlor like movenpick. Next most frequent response: keep the price low Additional Information The general consensus is that a new cone should be introduced

A new multiflavored cone can be introduced.

Scope and Limitations Although the participants were nominated for homogeneity they may not reflect the whole picture of the ice cream market. Therefore, future analysis may exhibit different outcomes. Furthermore, there are gaps in what consumers feel about a brand and how they actually behave when making a purchase decision. Some participants answers may have been distorted and these people may have responded differently from how they normally would have in a different setting. Also, the survival of firms is contingent on the

conditions of the market in which they enter. Entry, exit, and the survival of firms in terms of evolutionary changes in the market from the first introduction of a product to maturity of the market are critical to the introduction of new products. Recommendations and Conclusions Several factors may influence a food manufacturer's decision to introduce a new food item into the retail market. The lower the entry cost (e.g. the cost of developing the new food or the cost of introducing the new product into the retail store), the more likely the product will be introduced. The more the manufacturer believes consumers will be interested in purchasing the item, the more likely the product will be introduced. The more likely the firm feels the new product will help its market share, the more likely the product will be introduced. One reason firms may introduce products is to expand their potential markets by varying the characteristics of their products to fit those most likely to sell in a particular market. The results from our focus group would suggest that there is consumer interest in a product line extension. Igloo should introduce a new product. However the manufacturer should look into improving the quality of the new product. The manufacturer should also be careful about the ads they make as they can turn off potential customers. Also chocolate is the most popular flavor, so Igloo can introduce an all chocolate cone. Igloo can also look into improving the wafers of retail available ice creams and introduce the new product as a new brand. Marketing Implications For Igloo, the results from our research can be used in several ways. For instance, it will help them understand whether they need to extend their product line. Also how can they look to extend their product line by seeing how the consumer demand has changed. However, despite consumer interest in the product, Igloo will introduce a new product only when the expected revenues from doing so are greater than the expected costs. If Igloos cost of producing its current products is raised by the introduction of a new product, the firm will be less likely to innovate. However, Igloos brand loyalty remains an important firstmover advantage. Consumers may identify with particular brand name items, and they will be inclined to continue to purchase the products with which they are familiar.

Igloos' new product developments can increase the opportunity for price discrimination by retailers. In many cases, retailers will welcome some high-priced new food products because high income consumers, being less sensitive to prices, are willing to purchase them. The fact that retail stores handle numerous products suggests the possibility that price discrimination would exist. Food manufacturers find it relatively easy to supply a variety of similar food products because development costs are often low. Industry technology and cost structure do not provide significant cost savings from large production runs of homogeneous products compared to several smaller production runs of differentiated products, and the retail food distribution system is structured to facilitate the introduction of new food products.

Igloo tends to compete for market position not only with price but also by using advertising and new product introductions to deter or limit entry. Igloo may introduce a new product in an effort to prevent other companies from being able to enter the market. Once an established firm introduces a new food item, it may be more difficult for new entrants to enter the market with similar food items. Traditionally, growth has been achieved in the food industry through a high rate of new product introductions and promotion methods to develop strong brands. Food manufacturers with name-brand items familiar to customers are more likely to be able to successfully introduce new food products. Once a food manufacturer has established a positive reputation with its new food products, it may be able to introduce other new items with more ease.

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