Ice-Fili Case Study
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Key Issues
The major issues Ice-Fili currently faces include: a weak distribution network, decreasing market share, a decreasing ice cream market, variability in demand, weak marketing, and outdated management. Currently, Ice-Fili distributes 49% of their product through Eskimo-Fili and a dozen other distributors who supply to kiosks via their own distribution network. This gives Ice-Fili low power over distributors. Ice-Fili is also having issues forecasting production due to the seasonality of ice cream and the spontaneity in consumer purchasing.
Ice-Fili has also experienced a decrease in market share. Regional competitors have fiercely entered the market, with strong management experienced in operating in a free market and new manufacturing facilities that provide significant cost savings. Regional producers are aggressively expanding the number of kiosks they have in Moscow. Foreign producers also eat up market share, and have become fully capable of manufacturing domestically. The Russian ice cream market has also been decreasing since 1990 until now (2002), with tons produced decreasing from 468,000 to 376,000 respectively.
Ice-Fili also lacks a clear brand strategy, and does not invest much time or money into marketing and advertising. Foreign companies are leveraging their rich marketing experience from abroad and investing in building their brands in Russia. For example, foreign multinationals account for as much as three-quarters of the annual TV advertising in the ice cream industry. Ice-Fili’s slow reaction to the market may be due to the fact many member of senior management have been with the company since the soviet era and they lack the experience of competing in an openly competitive market.