Dippin Dots Analysis 3q3g5e

Dippin’ Dots

General Environment Analysis • Demographics

The youth population (aged 15 -29) in Singapore is approximately 20.2%, which is approximately 1,212,000 teenagers. • Sociocultural “As consumers develop more sophisticated tastes, they are increasingly purchasing more ice cream. In addition, due to increased health consciousness amongst consumers, they are also choosing healthier ice cream that is less sweet and less fat”. (Euromonitor, 2013)

General Environment Analysis • PhysicalPolitical/Legal Possible regulations on the production process (eg: AgriFood & Veterinary Authority of Singapore) • Technological Possible new techological advancements that may render the current technology process obsolete • Economic Strong economic growth • Physical Warm tropical weather of singapore.

Industry Analysis 1. Define the relevant industry Ice-cream retail industry

Industry Analysis 2. Identify the participants and segment into the 5 forces. (a) Threat of new entrants (M) • Capital requirements - high For a dippin dots store – based franchise, the initial franchise fee is $12,500. The estimated initial investment ranges from $80,428 to $235,250. For a Dippin Dots event-based franchise, the initial fee is $2500. The estimated initial investment ranges from $27,723 to $160,100. • Customer switching costs – low Customers can switch to cheap ice cream such as Walls, Cornetto.

Industry Analysis 2. Identify the participants and segment into the 5 forces.

(b) Bargaining power of suppliers (M) Industry firm’s dependency upon suppliers • Medium (the number of suppliers selling milk, sugar and nitrogen is high but substitutes may not be available to produce the same taste and result) Suppliers’ dependency upon industry firms • Low (there are other buyers of these raw materials)

Industry Analysis 2. Identify the participants and segment into the 5 forces.

(c) Bargaining power of buyers (H) Low switching costs to other kinds of ice cream due to many other competitors offering similar products at comparable prices (eg. Dippin’ Dots $3 vs Ben and Jerry’s $4 for a similar sized cup) Online product reviews help increase bargaining power of buyers as companies’ revenues may take a hit if there are substantive negative reviews

Industry Analysis 2. Identify the participants and segment into the 5 forces. (d) Threat of substitute products (H) Other substitute products includes cold desserts shaved ice, frozen yogurt and ice ka-chang, which offers similar price-performance ratio in of quantity and taste for a cold and sweet dessert. Furthermore, buyer switching costs is low. (e) Intensity of rivalry (High) Existing competitors in Singapore are Unilever and Fraser and Neave, with ice cream retail brands like Cold stone Creamery, Island Creamery, Ben and Jerry’s and Haagen Daz. There is also an increasing trend of fastfood restaurants selling ice-cream, such as McDonalds.

3. Conclude whether it is an attractive industry based on your analysis (why or why not??) 4. Decide whether the franchise is worth considering

Conclusion Yes, it is an attractive industry

“Ice cream is expected to record a 2% constant value CAGR over the forecast period. Growth is expected as consumers are trading up to ice cream. Consumers are also expected to continue to demand healthier ice cream. Manufacturers are expected to launch new products which are healthier, such as reduced-fat ice cream to meet the demands of the increasingly health-conscious consumers.” (Euromonitor, 2013)

Conclusion No, the franchise is not worth considering. High start-up costs. For a dippin dots store – based franchise, the initial franchise fee is $12,500. The estimated initial investment ranges from $80,428 to $235,250. For a Dippin Dots event-based franchise, the initial fee is $2500. The estimated initial investment ranges from $27,723 to $160,100.