1. How structurally attractive is the Russian ice cream market? Why?
The Russian ice cream market is faced with various challenges, which makes it less attractive. The consumption rate of ice cream in Russia is high, but lower than that of the United States. This therefore, is the reason behind the increased local demand of ice cream in Russia. High local demand has in turn resulted in the presence of many local ice cream producers in the market, a situation that has increased competition on the market. Growth of these companies is thus, limited due to the high competition. In addition, the new foreign entrants in this market are powerful, and have the capability of outdoing the local companies. Although the local companies register commendable profits, they lack the capacity to grow (Xin 4).
2. How is the Russian ice cream market likely to evolve? Why?
The ice cream market in Russia is set to experience more competition in future. The main reason for this stems from the fact that competition among local producers has been high over the years. In addition to the local producers, foreign companies have infiltrated the Russian ice cream market, increasing the level of competition. Although the Russian ice cream producers remain dominant in the market, it is expected that if they do not change their marketing strategies, the foreign companies will dominate the market. Today, foreign companies have influenced a number of local consumers, through advertisements. Investing in intensive advertising is affordable to most foreign companies such as Nestle, while the local Russian ice cream producers claim to lack advertising funds. Although these remain popular today, in future, the Russian ice cream market might be taken over by foreign companies (Xin 3).
3. What course of action would you recommend to Anatoliy Shamonov? Why?
Since competition is high in the Russian ice cream market, Ice Fili should develop an effective differentiation strategy. Ice Fili competes with Nestle in the production of high quality ice cream. Therefore, this company should build differentiation in order to compete favourably. First, Ice Fili should increase its brand recognition through more promotions and advertisements. Currently, the company has limited brand recognition. Secondly, the company should invest only in its strong brands. Today, Ice Fili has a wide range of products it produces, and it has failed to cater for the cost of advertising and promoting all the products. Therefore, by choosing to invest in the strongest brands, the company will have easy time managing them. Finally, the company should widen its distribution networks locally and globally. This will help the company build their brand and brand loyalty.
Xin, Lili. “Strategy Analysis on Ice-Fili.” 2003. Web.
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