Earlier this year, following a trend set by many other food companies, Häagen-Dazs took the step of reducing the size of its premium ice cream and sorbet cartons from 16 ounces to 14 ounces. The feisty Ben & Jerry’s brand has now drawn attention to this change with a banner on their Web site proclaiming “A pint’s not a pint unless it’s a pint.” This salvo by Ben & Jerry’s has attracted attention in the press and blogs (see links to Serious Eats, the Kansas City Pitch, FranchisorMarketing, and Slashfood) but the question no one seems to be asking is: Which brand is likely to win out in the long run? Has Häagen-Dazs done the right thing by frankly explaining the reason for the downsizing on their own Web site? Has Ben & Jerry’s boxed themselves into a corner by making a public outcry?
In my Point of View from May of last year, titled “Marketing During Recession: Survival Tactics,” I stated that “Any action you take is subject to a competitive reaction… If you make a cost-cutting move and misjudge the competitive response, you may get caught out.” So when I saw the article in AdAge by Emily Bryson York titled, “Ben and Jerry’s Calls Out Häagen-Dazs on Shrinkage,” I had to read it. Unfortunately, because neither company was “available for comment,” the article sheds little light on either the Häagen-Dazs decision to downsize or the question of whether Ben & Jerry’s will continue to draw attention to it. But this ambiguity presents us with a chance to anticipate the likely position of each brand six months hence.
Needless to say, Häagen-Dazs did not highlight the change ahead of time in the press, or call attention to it on the new packaging (which is barely discernible from the original). However, they do provide a thoughtful explanation (”The Straight Scoop,” as they call it) on their Web site, saying many of the things that we might expect to hear from a premium brand seeking to reassure its consumers during hard times. For example:
“To offset increasing costs, we did not consider reducing the quality of our ingredients or the care we take in making your ice cream, sorbet, and frozen yogurt. We opted instead to slightly reduce some of our carton sizes.”
Not surprisingly, this statement does not address the issue of price. Does the new unit sell at the old price? The response from Ben & Jerry’s seems to suggest as much, and my best efforts to confirm this led me to believe that Häagen-Dazs is selling the new 14-ounce container at the same price formerly charged for the old 16-ounce package. Pricing for Häagen-Dazs and Ben & Jerry’s had been on par, at least in my neck of the woods ($3.99 per pint), so by highlighting the Häagen-Dazs move, Ben & Jerry’s seem to suggest that they are providing 10% more product for free.
If that value differential does now exist, it seems Häagen-Dazs may have just shot itself in the foot. Premium ice cream is an affordable luxury, and evidence from past recessions suggests that such items, particularly comfort food, do relatively well during economic downturns. But I believe people will still be conscious of value when purchasing these items. If they take time to check what they are getting for their money, the price differential might be enough to trigger some shoppers to switch to the competitor’s bigger carton.
How many people will actually switch depends on people’s price sensitivity when shopping the category and how substitutable they consider the brands to be. On the latter point, the two brands do seem to be well differentiated. Häagen-Dazs appears to favor simple flavor combinations and a more “Scandinavian” design ethic. Ben & Jerry’s lives up to its origins with a lot of funky chunks and a counterculture attitude. Häagen-Dazs wants to save the bees. Ben & Jerry’s urges the U.S. government to spend more on kid’s education. So how many people will substitute Häagen-Dazs Chocolate Chocolate Chip or Vanilla Honey Bee for Ben & Jerry’s Chocolate Chip Cookie Dough or Phish Food (named for the band of the same name)?
So what do you think? Which brand will win out in the long run? Would you swap Häagen-Dazs for Ben & Jerry’s?
(7 votes, average: 4.43 out of 5)
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March 28th, 2009 at 6:49 pm
[...] with Millward Brown writes one of the better strategy blogs online. In one of his latest posts ‘Less is not more’ he guided me to a report he wrote already last year about ‘Marketing During Recession’. In that [...]