Halo Top in Japan Final Report (Due May 12) PDF

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Final Research Project: Halo Top in Japan Energize Consulting Group

BADM 382 International Marketing University of Illinois at Urbana—Champaign May 12, 2020

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Table of Contents Executive Summary

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Company Profile

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Situation Analysis

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SWOT Analysis

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Marketing Objectives

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Marketing Mix

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Final Recommendations

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References

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Appendix

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Executive Summary Over the course of the past semester, Team Energize has researched, analyzed, and developed a strategy for famous US based ice cream brand Halo Top to occupy a space in the Japanese Ice Cream Industry. While Japan has been a world economic leader with a large audience interest in healthy food alternatives, we believe that Halo Top will be able to thrive in the Japanese Market. With several urban cities who have seen successive American ice brands attracting large audiences, we believe that Halo Top will be a stand-out brand for Japan because of its healthy ingredients and vibrant brand image. Since Japan is also known for their unique compositions, we believe that Halo Top’s opportunity to advertise its pops will be a strong competitor in the market. Moreover, Japan’s population and our young, urban target audience is greatly influenced by social media today; Halo Top has the potential to market its various colorful products via many several platforms in order to appeal to your target audience. Additionally, Energize emphasizes that Halo Top places emphasis on Corporate Social Responsibility efforts in the Japanese community when integrating the company into the area. In doing so, Halo Top will appeal to both the local community and will gain approval from the nation ultimately creating shared value. The goal of Halo Top’s expansion is to continue expanding its brand worldwide to ultimately continue the mission of providing healthy ice cream to its consumers. While moving into any new country and culture has various challenges, our team has identified Halo Top’s strengths, weaknesses, opportunities for growth, and threats that your company faces in order to develop an adequate marketing plan moving forward. Moreover, we analyzed and took into consideration the current situation of Japan including recent events such as the COVID-19 world pandemic as well as how this may affect a company such as Halo Top looking to move the brand into the nation. From there, our team developed a list of final recommendations that we identified as best moving forward for Halo Top. First, we recommend that Halo Top must market a large share of your pops as well as pints of traditional flavors beginning first with Vanilla, Strawberry and Banana-Chocolate, and Green Tea before going into their more exotic flavors. It is also necessary to offer Dairy Free options of flavors to showcase an emphasis on healthier options for their customers. Moreover, it is crucial that Halo Top keeps their prices competitive, but lower than your competitors. Since individuals in Japan place emphasis on brand and reputation before paying for expensive products, the pricing strategy is to initially keep prices lower than others. Next, we recommend that Halo Top build a strong reputation in Tokyo before expanding into other areas of Japan. In specifically Tokyo, the hope is to target artistic, cultural, urban areas with younger demographics such as Shibuya and Shimokitazawa. Moreover, areas such as Roppongi are frequently visited by both locals and tourists and are known for International stores; we believe Halo Top can thrive in communities such as these. Lastly, we recommend that Halo Top utilizes social media platforms and Japanese influencers to market to the younger target audience via Twitter, Instagram, and Facebook. While Halo Top has a strong influence amongst consumers in the United States through social media, it is crucial for your company to adjust its content to fit the preferences of the Japanese community. Additionally, there are other ways for Halo Top to initially market: giving out free samples on the streets, utilizing flyers, and providing discounts for individuals next purchase after their first.

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Company Profile Your company Halo Top was founded in 2011 by former attorney Justin Woolverton (Halo Top Creamery). The revolutionary ice cream boasted “fewer calories, less sugar, and higher protein than traditional ice cream, it became the first of its kind and created an entirely new category in ice cream” (About Halo Top Ice Cream). Halo Top’s unique formula and 280380 calories per pint have put it on the forefront of “guiltless ice cream”. Your company started with four flavors, quickly expanding to the current 25 flavors. Halo Top has also expanded its offerings with dairy-free options and keto options which align with its health-conscious brand (Halo Top). Halo top’s pints and pop ice cream are currently sold throughout the United States, Australia, New Zealand, Mexico, Canada, Ireland, Germany, the Netherlands, and the United Kingdom (Halo Top Creamery). This globalization could only have followed your company’s growth as it was recognized as the #1 best selling pint of ice cream in America, beating out Ben & Jerry’s and Häagen-Dazs (Dairy Foods). In 2019, your company was acquired by Wells Enterprise, with plans to expand further out of the USA and Canada. Halo Top’s current marketing strategy revolves around its products’ health qualities: natural sweeteners, low-calorie count, and diet-friendly. It’s packaging and design highlight fun simplicity: bold colors but simple shapes with a focus on the brand and the calorie count. It has further capitalized on its innovative product by honing in on digital marketing trends through the heavy use of Instagram, Youtube, influencers, and vloggers. For example, @Helenjtea, a fitness influencer, posted a variety of Halo Top’s ice cream pints, encouraging her followers to name their favorites (Gilliland, Nikki). With it’s globalization, Halo Top focused on strategic alliances to distribute and place your products, for example, Brand of Brothers in the UK. Moreover, Halo Top was responsive to local tastes and adapted its marketing to fit its international audience (Gilliland, Nikki). Situation Analysis Halo Top has excelled in its home market and in various international markets. As we look towards more growth for Halo Top, we consider the unique market of Japan. The potential for Los Angeles-based Halo Top to launch in the East Asian country relied on the following situational analysis. Japan is governed by a constitutional monarchy, therefore it has a royal family, a prime minister who leads the executive branch of the government, the Cabinet (Politics of Japan). The National Diet holds legislative power, with two houses. And the supreme and lower courts hold judicial power. The royal family (Emperor) is a ceremonious figurehead that represents Japan’s close relationship to its cultural history. The Prime Minister is considered the head of the government. Japan’s political environment is considered stable, with Shinzo Abe as the longestserving prime minister (2020 Index of Economic Freedom). However, the country currently experiences territorial disputes and political disagreements with Russia, China, South Korea, and North Korea (PESTEL Analysis of Japan). Fortunately, Japan has favorable ties to the United States and is part of numerous international groups like the G8 and ASEAN (PESTEL Analysis of Japan). The political environment poses no major concerns for Halo Top. Economically, Japan has many favorable aspects however there are a few issues that are important to discuss. Japan ranks #5 in world economies, but the coronavirus is expected to severely affect the country’s GDP and economy largely due to the repercussions of the 2020

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Olympics postponement (Amadeo, Kimberly). Japan’s per capita GDP was 39,293 in 2018, which is the 3rd largest nominal GDP (Japan: GDP Per Capita). Although the ice cream industry is projected to grow 0.9%, the current global circumstances may stunt that growth (Ice Cream Japan). Overall, Japan has a stable economy that is on the rise, however we suspect that the current global pandemic will have long-lasting effects across the globe. In the sociocultural context, it is important for Halo top to consider certain demographics. The country is largely ethnically homogeneous, with the largest minority groups of Chinese and Korean (Index Mundi 2016). With such a strong ethnically homogeneous environment, Halo Top must navigate its identity as an American brand while marketing to a population that experiences little direct contact with other ethnicities in the country. There appears to not be large gaps between social classes within Japan, however, Japan is a high power distance country where hierarchy in business is strict. The country’s official language is Japanese with different dialects throughout areas of the country (Lingualift). Although the familiarity with English is common in Japan, research suggests that English is largely used as a design element in the business context (Jozuka, Emiko). It will be important for Halo Top to invest in translating services with an emphasis on being able to encode and decode marketing messages in Japanese. However, with small adaptations, Halo Top could use English as a design element to appear “cool”. Culturally, Japan is a rich country. They have a strong tie to their historical roots while also celebrating modernity. In terms of ice cream, the Japanese have unique forms of eating it that include flavors like wasabi and squid ink as well as mochi which is ice cream wrapped in rice cake (Spacey, John). Ice cream is eaten casually and during festive occasions. Historically, Japan exercised a strict isolationist policy until they were forcibly opened up to foreign powers in 1853 to Commodore Perry (Asia for Educators). Since then, Western culture has influenced all aspects of Japanese culture like art, lifestyle, and food: most notably the introduction of ice cream in approximately 1860 (Spacey, John). In terms of technology, Japan is a powerhouse. They have stood at the forefront of many technological advances like the bullet train, pocket calculator, and android robots (Thomson, Stephanie). U.S News ranked Japan as #1 in technological expertise (Radu, Sintia). Most significantly, the technological advancements in the country have propelled manufacturing to a high degree of efficiency, especially with the use of automation. It will be essential for Halo Top to be able to use the same technology to decrease their costs and stay afloat among the long standing competitors. Japan’s geography consists of several thousands of small islands, with more than 50% of the country being mountainous and covered by forests (Geography). Because of this, we would highlight that Halo Top should build long-term strategic alliances with suppliers with distribution channels in the region. The country is difficult to navigate at a comparable cost for foreign companies with no experiences in the terrain or with the local seafaring. Since Halo Top offers ice cream, which is mostly consumed in the warmer months, it is important to note that much of Southern Japan experiences tropical-like temperatures (Climate-Japan). Halo Top should consider scaling down production during the winter months as to not incur unnecessary costs. With consideration to existing competitors in the Japanese market for ice cream, Halo Top faces strong competitors like Meiji, Lotte, Morinaga, Glico, and Häagen-Dazs. As strong as these competitors are, with a solid foundation in a marketing strategy Halo Top can set itself apart and obtain a significant portion of the market share. Halo Top’s unique formula and strong niche differentiation has the potential to gain huge success in market acceptance in Japan. The

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initial focus for Halo Top should not be to “attack” these competitors in their offerings, instead focusing on Halo Top’s unique “healthy” message will allow it to be set apart from its competitors. Japan itself is limited in natural resources and as such is the 4th largest importer and exporter of goods (Japan). In respect to barriers to trade, Japan has high tariffs on imports of agricultural products including dairy products (Trade Barrier- Welcome to Japan). Halo Top can mitigate these by using local suppliers and not importing their own dairy products from other suppliers. Another aspect that is important to consider is the overall living conditions of the Japanese population. According to OECD, 75% of people aged 15 to 64 have a paid job, which is above the OECD average of 68% (Japan: OECD). This statistic means that the majority of the population is a working profession, with access to income. Moreover, Japan is a top-performing country in the quality of its educational system, with its students’ performance averages far above the OECD average (Japan: OECD). As our strategies will reveal, we have recommended that Halo Top focus on populous cities like Tokyo and more specifically the young and affluent neighborhoods in this city. Tokyo living conditions includes limited space that is often at a premium in the city, so the Japanese are conservative in relation to sizes (Martin, Alex) It will be important for Halo Top to understand the unique practices of business in Japan. Some of the specific practices and business etiquette that will be expected of Halo Top professionals include tackling the Japanese bureaucratic system. In order to enter the market Halo Top will need to follow specific regulations and procedures (Japan Market Entry). It will include lots of paperwork. It is also important to note that the relationship between businesses and the government is a close one in Japan. The government often supports industries themselves, often in the form of loans (Japan-The Economy). Lastly it is important to recognize the size of competitors and other businesses in Japan. Large conglomerates that comprise of many different businesses linked by shareholders are called keiretsu and are powerful players in the world economy. Moreover there are a few business etiquette practices that we suggest Halo Top follow: punctuality and scheduling are highly important to the Japanese business environment, failing to comply will result in failure to make the right relationships and lead to massive struggling in the industry. Formality is also important, and gift giving is not seen as inappropriate, it is actually an essential business practice. Lastly, it is advised to handle business cards with the utmost respect, within the Japanese culture it is a revered form of someone’s identity (S. Kordatzki). Overall, Japan is a hugely promising country that has several elements that would support Halo Top’s entry. The economy, political, technological, and natural environments are appealing aspects of Japan for the ice cream company. However, it will be increasingly important for Halo Top to consider the differences in trends related to sociocultural, business practices and etiquette, competitors, and living conditions for Japan in order to succeed there. SWOT Analysis As a company, Halo Top has many strengths. Your number one strength is a clear brand image. Halo Top has a clear brand image that allows you to focus on the niche in your industry, being a healthier alternative to traditional ice cream that focuses on natural sweeteners rather than pure sugar and high fructose corn syrup. This clear brand image has paved the way for Halo Top to have great marketing. Use of attractive logos and packaging in ads on social media sites that are commonly used by the younger generation and have even been known to have ads on

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popular dating apps (Danao, et al.). Through this, Halo Top has successfully impressed the younger generation. Halo Top’s convenient online store also provides consumers with an opportunity to research more of your products and find out where to buy the flavors they desire. Halo Top has also won awards in Men’s Health and Muscle and Fitness (Lane, Men’s Health and Muscle and Fitness), has great product reviews (halotop.com/about-us.), and was named the best selling in US grocery stores in 2017 (Business Wire). Like every company, Halo Top has weaknesses. For example, your company doesn't have as much retail distribution as compared to competitors, meaning that your products can be hard to find. Even if the brand can be found in a store, it is possible that not all of Halo Top’s flavors or forms of ice cream will be there. All of this to say that Halo Top is not widely available in all grocery or convenience stores. In terms of the flavors of ice cream that Halo Top offers, the flavors provided are more generic, but this can always change. Halo Top also may have low brand recognition among consumers and this may be due to the fact that the products are not yet widely available abroad. Halo Top has many opportunities for growth. Given that there is a growing trend of healthier diets and body fitness (Wells, Talking Fitness), this gives Halo Top an advantage because they are, calorie wise, the healthiest product in the ice cream industry (McCulloch, healthline.com). As mentioned before, your company has many generic flavors, which is a weakness, but it can also be seen as an opportunity for growth because they can create more flavors to capture a wider audience . For example, if through market research Halo Top found that pistachio ice cream is becoming more popular, steps can be taken to create their own pistachio flavored product. Another major opportunity for growth would be expansion to other countries. Halo Top is currently not available in any Asain countries (Halo Top), meaning that expansion to this new, large, market could be highly beneficial for you as a company.. As for some threats that Halo Top faces, it is common knowledge that it is harder to establish yourself abroad. This is because there are so many local brands that are loved by the community and it could be hard to break through that in order to establish oneself. Another threat that Halo Top faces is that more well known brands also provide the low calorie product lines. Meaning that a lot of companies have come out with low calorie or healthy alternatives to their own products thus reducing some of Halo Top’s competitive advantage. Since the ice cream industry is highly competitive, there will be a fight for shelf space which may cost Halo Top a lot of money in order to ensure that they are on the selves in a good location. The last threat that was found is that Halo Top’s ice cream is more expensive than its competitors. Most of your pints sell for $5.99 per pint which is 647.06 Japanese Yen, which may be too high for certain consumers given that it is a bit expensive for such little product. Marketing Objectives In order for Halo Top to successfully and strategically position themselves in the Japanese community, it is important that your company create a set of objectives to follow moving forward. Noting that the following recommendations are specific to the first phase of Halo Top moving into Japan, it is vital that your company follow before considering further expansion phases. Moreover, like any company looking to expand into a new country, it is important that Halo Top consider the target Japanese audience and norms when marketing to Japanese consumers. Through researching what may appeal most to Japanese consumers,

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Energize found that Japanese consumers consider the following: space saving, cost conscious, luxury centered, and reputation focused (Word Bank 2020). For example, it is common for Japanese consumers to consider all of the company’s options before marking a purchase as well as tend to purchase fewer, more luxurious items. Additionally, Japanese’ consumers are focused on which brand’s have a strong reputation and view word-of-mouth as an important way of obtaining reliable information. All of these factors assisted our team in developing the following objectives which we identified ...