Introduction
Dippin dots is a snack made of tiny round beads from ice cream. The snack is stored in very cold temperatures and sold only in the Franchisees’ scoop shops and other national accounts. It was created by Curt Jones in 1987.In making this product, liquid nitrogen is used in a freezing process done in six steps. Dippin dots is operating approximately 400 locations with products like frozen yogurt, ice and ice cream. The Dippin Dots is a privately traded company that uses the slogan “Ice Cream of the Future”. Being a privately traded company, they do not trade the company stock on the stock exchange or to the public. The company has global licenses in ten other countries outside the USA. However, most of the Dippin dots are manufactured at the headquarters in Kentucky. The company believes that by flash freezing, the flavor and the freshness will be locked in by the ice cream ingredients. The company owns the nation’s largest freezer, the 500F commercial walk-in freezer. However, in 2007 the company lost its freezing process after a series of lawsuits because Jones had already made more than 800 sales before applying for the patent.
Background
The company went through difficult times after twenty years of recorded success. Dippin dots used millions of dollars of litigation cost while following a patent claim that was filed by their main competitor. Dippin dots lost the case as the court found out that the company had already sold the ice cream for a year before applying for the patent. The company also experienced various challenges like unsuccessful products that would be manufactured, but the marketing never got the customer attention. Some business lines were not successful, and this made the company lose lots of cash for failure to get returns from the business. There were many franchisee receivables that were uncollectable, and this meant the company had made losses that it would not recover. The product and equipment cost also went up leaving the company in high costs as they had to continue manufacturing even with the challenges. The economy began to deteriorate in 2008 and the entertainment venues like amusement parks experienced reduced attendance. The company could not sell enough to realize the required returns. The company had already accumulated debts that were hard to manage. Consequently, the relationship between the managers of the company and the lender started to deteriorate. The lender put pressure on the company to pay back its loan, and the only option that was available was to sell. However, Jones had spent more than 20 years creating the company and was not willing to sell it. The legal and emotional struggle led to Dippin Dots filing for bankruptcy in 2011 to prevent closure (Areeda, 2011)
Alternatives
Dippin Dots has some alternatives that can help the company get back to its lost glory. In the midst of a flattened market, the company has an alternative of reducing the number of franchises that it operates. It can also expand into other markets like the in home ice cream that the company has ignored for a long time. Cutting the number of franchise number can help in reducing the number of expenses that the company is incurring. When the company has many franchises in operation, it has to go through the cost of manufacturing, storing, and transporting the products to the outlets. Sometimes the returns are not equivalent to the costs but the company has to keep up the supply to maintain the customers. If the market trend remains flattening, the cutting of the number of franchises will be effective in reducing the expenses. The other alternative would be to keep the number of franchises as they are without reducing any of them. The strategy can be costly than the option of cutting the number of franchises as they have done in the past. With time, the market will grow, and there will be enough consumption for the products, and this can boost the profits. However, the company has to be cautious with this plan because if the market shrinks it can make losses.
The company has the alternative of expanding into other markets like the in-home ice cream market. If the market remains as it is, it will become hard to enter the new market. If Dippin dots gets the target market, it would be a profitable option for the company since eventually it may expand creating a bigger customer base. The company can also look at the option of benchmarking before starting on the improvements. Benchmarking involves assessing the quality of an organization regarding its policies, products, programs, strategies and others in comparison with the standard measurement or other similar concepts. Benchmarking can be used by companies at various levels to help in determining where improvements are required and what improvements are needed. It also aims at analysing how similar companies have achieved success and high performance. The information got from benchmarking should be used to improve the company’s performance. Leadership is the wholesome spectrum that includes physical power, superiority, and others. The company will need to consider changing some of the leadership to ensure the right qualities are used for the marketing and management. Leaders who are mentors can be appropriate as they help employees to feel part of the company and help in decision making .The financial perspective of the company also is crucial in helping the company to boost the image. Companies should try to organize their financial books to ensure they can understand the progress as per each day (Cohep,2011).
Dippin dots can look out for particular practices that can be important for the improvement of the company’s market. The purpose of this option is to ensure that the practice is also maintained in their company. Market power is the ability of the firm to raise and maintain a high price above the usual level that is above the common level like the one for the competitors. The disadvantage of market power is that it reduces the output.The company can also try restricting and controlling the supply to given markets or getting some firms to coordinate with to reduce investment. Dippin dots should look out for individuals with specific capabilities like knowledge, capabilities and experience that can be crucial in management and marketing of the company product. Although Jones has some options at hand that can be fruitful to the company, he will need to take the time first to recapture the market. The company will have to consider its financial perspective by looking at the performance to be able to evaluate its strategy is fairing regarding implementation and execution. The other option is to look at the leadership to ensure the chain has competent people for the various posts (Hoerl, 2012).
Proposed Solution
The alternative that would see Dippin dots make profits and incur fewer expenses is by reviewing its market. The company has kept many franchises year after year, and they remain the same. By expanding the market the company will increase the sales that will eventually raise the profits. However, in the process of expanding the market, the company should take a step of reviewing the franchises to ensure only the active ones remain to help in maintaining the image. The company should look at improving the systems that manage the franchises. A system that gives the company reports on the weekly or monthly sales will enable the company to track the performing franchises and take the necessary steps to improve them or even close the dormant ones. Closing them may not be the best option but it will be a better option to have other franchises open in performing areas while areas with fewer consumers may have one. The policies that govern the operations of franchises should be reviewed to ensure that they aim at improving the image of the company. The franchises are like representatives and what they portray affects the company directly. The staff should also be able to help in assisting the company to market and review the consumer needs.
Recommendation
There are many options that Dippin Dots can use as a solution to the challenges that have hindered its success. The alternative that would be appropriate for the current situation would be for the company to continue expanding and broadening their target market. This solution will be appropriate because, with more franchises, Dippin dots will be able to increase its customer base and have minimum expenses at the headquarters since most of the marketing is done at the franchises. There are various steps that will help in making sure this alternative is effective. First, the company should look at making a non-seasonal product that can be used any time of the year. The products could be coffee dots and smoking Joes for the start. It will capture the market fast since consumers like new products. In the expansion, the company should look at keeping their innovation top secret to avoid the competitors from stealing the ideas. Once the competitors get to start competing by selling the same commodity, it becomes hard for the company to stabilize since some customers may not know the original products and who copied who (Jester,2006).The company will also ensure that the advertising money is used wisely and use every chance to improve the brand by using celebrities. The public gets carried by associating the products they use with the celebrities. The company should also consider switching the slogan since the one of ice cream of the future is no longer appealing to the consumer. Consumers like products that have catchy words like “ice cream for your satisfaction”. The research and development department should put in more effort to make sure it has an advantage over the competitors. Dippin dots has enjoyed a competitive advantage over other members, but they have to work on the weakness so that the competitors do not take advantage.