The Chattanooga Ice Cream Division

In the beginning of the case one thing is immediately clear; changes will have to be made. The loss of one of their biggest clients might result in big problems for the company. Although it is clear there is no possibility that Stay & Shop will get back to Chattanooga in the next 2 year, they do have 90 days until Stay & Shop will be gone as a customer. In this small period of time significant changes will have to be made to recover the losses suffered from the loss of this client. In addition, possibilities to make significant changes to the product, the manufacturing process, marketing etc. will have to be discovered as well to make sure not more big clients will leave Chattanooga. The case makes clear that Chattanooga offers a significant smaller assortment of ice-cream and is not participating in the trend in mixed-in ice-cream, sorbets, yoghurt ice-cream etc. In order to become competitive again, these option should be taken into consideration. Department heads proposed several ideas, which will be briefly discussed.

In the case several ideas are proposed from several department heads. One proposes that we should only replace the volume which was lost from Stay & Shop leaving. This idea does not work since this will not solve any problems which in the future may arise since it does not solve the problem why Stay & Shop leaved in the first place.

The second idea is to cut expenses with the same amount than the lost profit. This might work in the short run, but this solution does not solve the problem in the long-run. Customers will again in the long run choice for the competitors which have a bigger assortment and we will face the same problem over and over again.

The best solution to solving the problem is to invest heavily in expanding the assortment, offer mixed-in ice-cream and increase the marketing program. As suggested in the case, the market changed over the last few decades with a big increase in demand for more luxurious ice-cream, mixed-in ice- cream etc. Chattanooga did not did anything with this trend and is now figuring out they made a big mistake blindly following the previous president.

Chattanooga is now almost forced to make these big investments in order to become competitive again. By increasing the assortment of ice-cream, by also offering mixed-in ice-cream and investigate further the formula of the non-fat ice-cream they will be able to regain market share. The market shows a big movement to these more luxurious and different ice-creams. The company should embrace this movement in order to get back up their feet again.

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