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Ice Fili 5 Forces

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Case study 3: Competitive Advantages
Ice-Fili: Ice cream market in Russia

Here is a résumé of the Five forces model of the ice cream industry in Russia:
Threat of new entrants High
Threat of substitute High
Bargaining power of supplier Low
Bargaining power of customer High
Rivalry among competitors High

“What are the potential sources of competitive advantage in the Russian ice cream market?”
How do customers buy?
- Russians consume 2.5 kg of ice cream compared to the 16 kg in the USA. This is due to a different mode of consumption. Russians consume ice cream “on the go” as a snack – Spontaneous/impulsive purchase (no in-house consumption at the beginning) o Chanel of distribution
 Kiosk: 49% of the ice cream distribution
 Minimarket: 29% of the ice cream distribution o Future growth: restaurants and supermarket

- Russian ice cream consumption at his top level in summer (July: index 220; October: index 70)
- Single portion size – “snack” o Substitutes: beer, soda…
- Raising demand for in house consumption

What are customers ready to pay for? How can a company differentiate its offer?
- Russian are more concerned about preservatives than fat level; traditional recipe: all natural ingredients, no preservatives
- Substitutes: Beer, soda, yogurts, chocolate, confectionary candies
What are the cost components (analysis for example exhibit 9)?
The costs component are:
- Raw materials: 42% of the total costs
- Production cost: 6% of the total costs
- Distribution cost : 19% of the total costs
- Retailer cost: 33% of the total costs
Equipment:
- Cost a lot for modernization o Ice-Fili reinvested up to $ 8 million
- Needed to improve efficiency
Marketing:
- Historically, no marketing needed
- With the opening market, beginning of the marketing process o Build a strong brand o Promotion
Based on these elements, we can

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