Dippin' Dot Case Analysis

CASE ANALYSIS – Dippin' Dots Ice Cream

I. Key issues and problems

• Soaring operating costs and plummeting sales

• Competition from copycat products (loss of patent)

• International shipping storage problems

• Retail storage problems – convenience factor

• Lack of new growth opportunities in product lines

II. Analysis of external environment

General environment

• Technological – better storage system at retail locations,

• Economic – operating costs rising

• Sociocultural – innovations such as slab concept, independent scoop shop, etc surpassed Dippin' Dots ice cream of the future innovation

• Legal – patent infringement lawsuit was dismissed, allowing competition to sell similar products

• Demographic – older generation still likes Dippin' Dots, as well as introducing newer generations to the product

Industry environment

• Potential entrants – high threat due to loss of patent; product can be copied by competition and former employees

• Suppliers – high input costs to flash freeze ice cream gives suppliers medium power because of unique freezing process

• Buyers – low buyer power because they pay a high premium for the product and are more dedicated fans

• Substitutes – high power of substitutes because there are many substitutes – large variety of frozen desserts such as other ice cream brands, frozen custard, sherbets, gelato, etc.

• Industry competitors/rivalry – high rivalry from family owned businesses, full line dairies, and large international companies

Competitor environment

• There are two giants dominating U.S. ice-cream industry: Nestle and Unilever PLC of London and Rotterdam, along with about 500 small businesses

• Challenge for producers is to woo customers away from competitors and sustain a loyal fan base by continuing to innovate

III. Analysis of internal environment

Strengths

• Differentiated product

• Liquid nitrogen process

• Pallet reefers – ability to transport across country