Derrick's Ice-Cream

Derrick’s Ice-Cream
Derrick’s Ice-Cream Company is located in modern premises and manufactures and distributes
30 different ice-cream product lines from its suburban base in the UK. The products are
distributed by Derrick’s own fleet of refrigerated trucks to six major wholesale distributors.
Annual sales are currently around the £10m level, distributed among the wholesalers
as indicated in Table 1. Derrick’s control about 35% of its metropolitan market, but this shrinks
to less than 10% in outlying areas where there are many small competitors.
Derrick’s will usually hold up to four weeks of stock in their central cold stores to
meet the distribution requirements of their six major customers. The cold stores cost
approximately £500 000 p.a. to run, but excess capacity can be hired out to other non-
competing firms. This becomes especially important during the winter months when consumer
demand is considerably reduced. Even during the summer months demand is highly
temperature sensitive. Derrick’s, therefore, bases its sales on a deseasonalized forecast, related
to increases in disposable real incomes, and hopes that stocks will be adequate to cope with
sequences of extreme high temperatures.
Table 1. Market shares for six customers

S.No. Customer % Market Share
1 Ardron’s Wafers 19
2 Butler Ices 12
3 Cahill’s Cones 25
4 Donleavy Ices 9
5 England Wedges 14
6 Frankston Chocs 20
7 Others 1
Total 100
The raw materials (vegetable oil, butter, milk and sugar) are relatively inexpensive. They arrive
at Derrick’s by tanker and are stored on site. Ice-cream is then manufactured in two major
processes, mixing and forming, followed by packaging to meet specific customer requirements.
The requirements of meeting the sometimes uniquely specific requirements of customers
has been causing Derrick’s management some serious headaches recently. They recognize the
importance of a client-focused approach to marketing and distribution, but are beginning to
feel that they are being exploited by some customers who are never satisfied with the level of
service provided, however extensive it may be. The satisfaction of customer whims is
beginning to cost big money, so Derrick’s has determined to conduct a detailed analysis of the
customers and their varying requirements. These are summarized below:
1. Ardron’s Wafers employ standard packaging and barcode reading systems. They insist
on only low discounts for volume and maintain large regular orders. Consequently, their
delivery requests and inventory holding requirements are highly predictable.
2. Butler Ices are located nearly 150 miles north of Derrick’s base and require packaging
which is unique to them. Despite their remote location, they insist on free deliveries
and require large discounts for volume orders. Their internal inventory control
procedures are not well developed, resulting in not uncommon requests for ‘crisis’
deliveries to deal with stock-outs.
3. Cahill’s Cones have the reputation of always paying on time and requiring low
discounts and commissions. Their inventory holding procedures are perhaps the best in
the business and they have a JIT scheduling system which is entirely compatible with
Derrick’s own. Deliveries require no special packaging or fleet requirements for the
refrigerated vehicles.
4. Donleavy’s Ices always pay late but demand all available discounts, even when strictly
they are not applicable. They insist on daily deliveries, with the requirement of
additional deliveries should demand merit it. They have threatened to take their
business elsewhere if all their inventory holding requirements are not met in full.
5. England Wedges relies on bulk orders which are shipped on an infrequent basis. They
require minimal volume discounts, rare visits from Derrick’s personnel, and are
prepared to collate sales credits and make monthly claims.
6. Frankston Chocs are not noted for the strength of their internal organization. They are
closely located to Derrick’s base, but require frequent calls which extend to assistance
with administrative operations and help with the merchandizing of stock and in-store
displays. They initiate separate sales credits for each item of product returned and
inevitably generate complex orders the detail of which is unclear, so that multiple
queries follow almost every transaction.
You are required to use the above information give in the case and answer the following
Questions:
Q1- Perform a SWOT Analysis for Derrick ice cream
Q2- Assess the marketing growth opportunities available for Derrick with all the six key
customers.
Q3-Develop a portfolio for resource allocation to different customer groups.

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Derrick’s Ice-Cream

Table 1. Market shares for six customers

Q1- Perform a SWOT Analysis for Derrick ice cream

Q3-Develop a portfolio for resource allocation to different customer groups.

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