Industry Overview

Ice cream industry of Bangladesh is estimated to have a size of BDT 220 Crore where BDT
131 Crore belongs to branded segment (BDT 121 Crore Common Format Ice cream that is
distributed through retail and BDT 9.8 Crore in the boutique segment) and BDT 79 Crore is
in the unbranded low quality-low price segment. The industry is currently growing at a rate of
19%.
Branded common format is dominated by Igloo with more than 51% share with followers like
Kwality and Polar where Milk Vita and Savoy are much small. Boutique segment is
competed by Club Gelato (20% share), MvenPick, Andrsens (3 outlets) and Gelateria Igloo
(3 outlets). These three have around 17% share.
The market is characterized by low competitive rivalry where Dhaka still contributes to more
than 61% of total countrys sales. This is due to issues regarding electricity and requirement
of cold distribution chain by the industry. There are still huge untapped areas of the country.
However, the industry is extremely capital intensive and there are lots of entry barriers. Only
manufacturers with large capital can invest and thus there has been no big player in the
common format segment since Kwality (1999).
Classification of firms according to the four different roles they might play
The firms of the ice cream sector of Bangladesh can be classified into four different
categories according to their roles about their target market: leader, challenger, follower or
nicher.
Market leader
Igloo is the market leader. Abdul Monem Limited is manufacturing and marketing Igloo ice
cream, countrys leading ice cream brand. Igloo is the pioneer ice cream brand in
Bangladesh, having started its operation in 1964 in Chittagong. The facility is producing
nearly 20,000 liters of ice cream each day that is distributed throughout the country. It has
captured about 51% of market share. They have Strong distribution network as its product is
available in every district and Upozilla of Bangladesh and have Varieties of products. They
are continuously launching new and innovative delicacies. The company is committed to
maintain the highest quality standard, through its continuous R&D activities and Quality
Control Department.



Market Challenger
Kwality and Polar are the market challengers. Kwality started their ice cream business in
1970s and stared distributing in Dhaka city with wide range of flavors and for the Polar ice
cream was started by Dhaka ice cream industries Ltd. and they introduced the first
hygienically packed ice cream in Bangladesh in 1987. The brand name Polar was thus
born. In the early days, the company started the ice cream business with a wide range of
products and a variety of flavors in Dhaka city. In 1988, the company started its distribution
in the city of Chittagong, then Bogra, and then covered city after city. Presently, Polar ice
cream is available throughout Bangladesh. The company today is one of the leading
producers and distributors of ice cream in the country. They cover about 30% of the market
share.
Market follower
Milk Vita and Savoy are small. They usually follow what the bigger companies do. They take
up about 17% share. Savoy Ice Cream is an enterprise of Sena Kalyan Sangstha (SKS). SKS
is a welfare trust created by the Government for Ex-Armed Forces and their dependents.
Savoy Ice Cream has started commercial operation since March 1995. For production of
Savoy Ice Cream, Italian Technology is followed. The main plant machinery had been
imported from Italy. Different types of ice Creams are produced and its about 1600 liter per
day. But the project is too small comparing with the competitors in terms of production
capacity, variety, distribution facilities, storage capacity, investment etc. As for Milk Vita
they started their business in the year 1972, soon after the independence, the government of
the Peoples Republic of Bangladesh initiated a project for the wellbeing of poor milk
producing farmers. They cover about 17% of the market share.
Market nicher
Boutique segment is competed by Club Gelato (2% share), Move n Pick, Buskin Robbins,
Andrsens (3 outlets) and Gelateria Igloo (3 outlets). They only have some outlet in some
areas of Chittagong and Dhaka. Their ice cream are very expensive, therefore they only serve
the high class people who are willing to pay big money for a premium ice cream. All the ice
cream they sell are imported to the country




Nature of competition
The market is characterized by low competitive rivalry where Dhaka still contributes to more
than 61% of total countrys sales. There are still huge untapped areas of the country. Many of
these companies get stuck in the same production level for a long period because of the lack
of capital and eventually exit the market. However, the industry is extremely capital
intensive and there are lots of entry barriers.
Porters fiver forces to analyze the nature of competition
Threat of intense segment rivalry
There are only three big competitors Igloo, Kwality and Polar. Igloo is the market leader and
the Kwality and polar are the challengers of Igloo. The rivalry among the companies is very
high. If one of them comes up with a new flavor and the other one tries to copy them. Due to
the plant setup, fixed cost for the company is high that does not allow to exit the industry
very easily.
Threat of new entrants

Brand war heats up in ice cream market. New players are making a foray into the growing
market for ice cream, industry. Poultry sector giant Kazi Farms already launched its ice
cream early this year and Golden Harvest now plans to enter the business, encouraged by the
growing buying power of people. Cold Stone Creamery, a concern of US-based Kahala, is set
to open its first store this year with Olive Tree Foods as its local franchisee. Golden Harvest
Ago, which presently markets ready-to-eat foods, will make ice cream through one of its
subsidiaries: Golden Harvest Ice Cream Ltd. The company eyes to launch the ice cream by
the year end. Golden Harvest will need an investment of nearly Tk 170 crore to set up the
factory and develop a distribution channel.
There are some unmet demands in the market for the price sensitive customers. To serve that
segment, new company may enter in the near future due to the segments attractiveness to the


risk lovers. In this industry, entry and exit barrier are high due to high production & setup
costs and it leads to high profit potential that makes it more risky. Therefore, for profit
potential of the industry may attract new entrants.
Threat of substitute products
There isnt any potential or direct substitute of the product. Ice cream industry has demand
that cannot be replaced by other products. There are but indirect substitute which are soft
drinks but the people who has a craving of ice cream would not go and replace ice cream for
a soft drinks.
Threat of buyers growing bargaining power
The buyers are unable to bargain because they buy it at fixed price because all of the
companies in the industry provide quality ice cream within reasonable price. Therefore, there
is no possibility of buyers to bargain.
Threat of suppliers bargaining power
Suppliers are the most important part of this industry because they are the root of providing
high quality food colors and flavors. Here suppliers bargaining power is somewhat which
does not always reflect their dominance because there are three to four big companies and
they are running in the market, so though suppliers have power to bargain, they have limited
choices for choosing customers. Therefore, for developing a long term relationship suppliers
are very helpful to continue with the business in the industry.
Identifying competitors
Ice creams of three brands Abdul Monems Igloo, Dhaka Ice Creams Polar and Kwality
Foods Kwality account for nearly 70 percent of the branded market. Igloo is the market
leader followed by Polar, according to industry insiders. If I only consider these three
companies, it may lead to the wrong. Therefore, they will have to usage new technologies,
which will be very helpful to increase market share by meeting the demand within reasonable
price. Therefore, Igloo is using its latest technology to meet the demand of its target
segments.
Analyzing competitors
Igloo has identified Polar and Kwality as potential competitors. Therefore, the company
wants to make an analysis of these competitors:


Strategies
Strategies followed by polar and Kwality are that they use Danish equipment and technology.
Production activities and quality control measures are supervised and managed by Danish
expert. Raw materials are imported from Europe and they have Steady growth of the
organization and their Product qualities are well maintained.
Objectives
Kwality and Polar products have given the local market a very good alternative to Igloo. The
growth prospect, sound business model and good management these companies look
sustainable.
Strengths and weaknesses
Customer Awareness Product Quality Product Availability
Igloo E E G
Kwality G G G
Polar F G F
Others P E P
Note: E = excellent; G = good; F = fair; P = poor

Therefore, from analyzing the above attributes Igloo turns out to be well known and
respected for producing high quality ice cream. Kwality and Polar is not well known but
product quality, availability and service is satisfactory though it has to improve in technical
assistance.
Selecting competitors
Ice cream industry players are good in terms of competing with one another. All of the
manufacturers have almost same price for similar design and quality. Moreover, they set
prices by keeping a reasonable margin. Some of them are punished for charging higher price.
Selecting customers
The three targets for the ice cream shop are teenagers, college-aged young people, and young
urban professionals. The growth in the area has already had a profound effect on available
local entertainment services. It is estimated that the population is still growing in Dhaka and
Chittagong. In the last three years, there have been major multi-plexes built in the major
cities. In addition, a large number of restaurants have opened to serve the growing
population. The demand for entertainment will grow. The market trends are positive for a
business that can offer customers a unique and entertaining product and/or service.


Analysis: Principles followed by firms
Firms can be classified as Market leader, market challenger, market follower and market
nicher. In this part, I am trying to identify as their classification whether they are following
the competitive strategies or not.
Market leader
Igloo wants to make consumers to buy more and not only on occasions i.e. for whole family
so that more consumption will be ensured. Igloo has recently introduced two new types of
flavors i.e. kulfi and khere and these are also followed by other industry members. Igloo also
tries to defend its market share by following position defense strategy because the name Igloo
has become a superior brand power which is impregnable.
Market challenger and Market follower
Kwality and Polar are the market challengers and followers as well. Where ever Igloo goes or
give their outlets, they both follow which shows that the company is following frontal attack
strategy. Kwality and Polar prefers product imitation rather than product innovation. Kwality
and Polar follow and play the role of imitator because this company likely to copy designs,
quality, and customer service by maintaining a little differentiation i.e. lower price, different
color and flavors environment friendly packaging etc. recently igloo came up with a new
flavor and packaging which was khere and kulfi, soon within a month Kwality imitated the
product. Kwality and polar are doing well in the recent market. It has also initiated a move to
increase their retail outlets across the country.
Market nicher
Imported ice creams of foreign brands such as Mvenpick, Baskin-Robbins, Andersons and
Hagen-Dazs are carving a niche here. They are following multiple niching strategies rather
than single niching. Besides that, they are geographic specialist because all of them
concentrate on certain region and export only. It has made them profitable enough and
encourages new entrants. Moreover, they are delivering superior services & good quality
product with premium price.
Promotion is the starting point for these companies, but its the last element of the niche
marketing strategy for protecting niche. Their marketing promotions are straightforward.
They do few promotions, coupons and buy-now campaigns with focus on expertise and
commitment to the niche.


After analyzing the whole scenario of ice cream industry of Bangladesh, it is obvious that
industry players somewhat follow the principles described in chapter 09 Dealing with
competition.
From the analysis conducted above, Igloo can resume its next strategy to launch its ice
cream products by:
It could then offer freezers to the retailers to exclusively sell its products, together with its
other range of ice creams. Fulfilling the demands of all levels of Igloo ice cream consumers
through creating several ranges of ice cream products that would vary in ingredients, flavor,
packaging design and distribution location. For example, an ice-cream range for kids aged 4
to 12 will be packed in colorful, visually attractive packages, and will be sold in smaller
sizes, at cheaper prices, and distributed at school cafeterias, malls, street vendors,
supermarkets, and small shops. On the other hand, the high-end ice-cream range for adults
aged 21 and above will be packed in dark colors, with catchy words displayed. Leveraging on
its already popular name brand and by focusing the marketing of its ice cream products
around the fact that it is Igloo, and not just any other typical ice cream on the market, this
would serve to remind its consumers of the quality and reputation of its confectionary
products, and persuade them to perceive the ice cream as they would perceive the chocolate
bar.
Target Market
Igloo can offer offers a variety of sugar free ice cream and fat free. Ice cream made with
special attention to health conscious people and young people and those suffering from
diseases such as diabetes. For various special flavor and sugar free and fat-free will be more
popular among people concerned about health and fitness.
Igloos can target markets where people are willing to buy junk food for healthy appetite and
the fact that it is completely free of fat and sugar to taste the same original. Igloo Ice Cream
Company can market where people from the age of 5 year to 80 years can enjoy their favorite
ice cream, bearing in mind those who are health conscious, diabetics, young, etc.