Colombo Soft - Serve Frozen Yogurt Abc - General Mills Inc

Introduction

General Mills Inc. (GMI) was seeking adding Colombo Frozen Yogurt to their current product lineup to increase net sales with little additional marketing cost. The product is sold through independent shops and impulse locations. In the first couple of years, GMI focused on impulse locations; sales from shops dropped significantly with dissatisfaction in its or- ganization. The company allocated costs based on sales rather than by segment.

Competitive Environment

From the table above, it clearly shows that impulse locations capture the majority of soft- serve yogurt market, but the yogurt is not their main business and they are unwilling to put on more risks. This implies that the potential sales growth from impulse locations is limited, GMI should not put too much effort on boosting sales from this segment, although it is still important for maintaining stable sales.

Compared to impulse locations, although independent shops are facing competition from franchise operations, this actually increases their demand and makes them a high-potential market segment for GMI. Therefore, GMI need to gradually shift their main focus from impulse costumers to independent shops.

Yogurt Shops

IImpulse Locations

OOpportunities

Threats

Opportunities

Threats

Shops make their living from the soft- serve business & must innovate -- GMI could offer more innovative products to them to boost its sales.

Franchise operations replaced many inde- pendent yogurt shops -- if shops cannot sustain, it could eventually hurt GMI's sales from them.

Food service opera- tors are adding soft- serve yogurt to their business, they ac- counted for 2/3 of the soft-serve mar- ket -- it is a very im- portant segment for GMI.

Soft-serve trade is only performance topspin to them, they are unwilling to take risks -- poten- tial sales growth is limited, GMI might need to target shops more while main- taining sales from impulse locations.

ABC Case R eport" 3

GMI's Strategy

GMI is using current salesforce to cover new Colombo yogurt. The salesforce is spending a lot of time on teaching impulse customers while ignoring shops.

Colombo does not charge for merchandising and provides the same large scale merchandis- ing to both segments. However, many impulse locations did not use the kits.

GMI offers graduated price promotions to both segments, typically $5 per case, averaged $3; it is only targeted to impulse locations though.

Financial