Ice-Fili Case Analysis

Ice-Fili Case Analysis

How structurally attractive is the ice market in Russia? How is it likely to evolve?

Structurally attractive segments for ice cream in Russia based on growth potential is the consumption of ice cream in households, boutique restaurants and cafés which is illustrated in Exhibit 3. At gastronomes and kiosks, there has been an over saturation of consumption which is on the go, and this has been shown in the exhibit 3. With the economy in Russia experiencing a change to an open economy from a closed one, it has resulted in such growth potential. Niche markets were not exploited, neither were there any opportunities to exploit them, when the economy was a closed one. To nurture this growth potential Russia adapted to a lifestyle similar to that of a developed open economy. Household consumption had an advantage over other segments due to its insensitivity to variations that may occur in demands based on different seasons. For example, during the winter, a sharp decline is noticed in consumption which is on the go due to the weather, as opposed to consumption in the households, which continues without experiencing any drops. In addition, household consumption, based on each purchase, would register a figure of sales which is a lot higher than the ice cream which is consumed on the go, as a result of greater volume of ice cream. As a result of greater margins of profit, there is more attraction for Ice-Fili in the segment of boutique. Furthermore, this segment will provide Ice-Fili an opportunity to take advantage of its image and brand history as a producer of Russian ice cream of a high standard.

What are the potential sources of competitive advantages in Russia's ice cream industry? In particular, a) what determines willingness to pay?

The consumers, who pay large sums of money, are justified through high value. The widespread belief was that the consumers in Russia were not too concerned about the levels of fat in food, in contrast to being perturbed about the food preservatives (Page 1). Therefore it is the value that the consumer places on the products that will determine what they are willing to pay. Less wastage and enhanced shelf life of products stem from the usage of chemical preservatives by foreign producers, which also decrease the costs. In turn, savings are passed onto consumers and price sensitive shoppers are more willing to buy based on lower price as opposed to ingredients. . Ice- Fili used high quality natural ingredients, in order to stick with traditional ice cream production methods in Russia. In order to entice more purchases, they ice cream was produced in such a way, keeping in mind the taste of the consumers in Russia, specially tailored to appeal to their taste buds. Another prompter for willingness to pay is when a producer, such as Nestle, produces various products, such as confectionary, coffee, chocolate, cereal bottled water and pet food that leads to greater levels of penetration amongst the various ...