Pinkberry Strategy

Becoming a National Brand

Bettina Chen Lisa Yee Eythan Familier Robbie Paolini

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Memo to the CEO:
Executive Summary
• • • Pinkberry needs to take advantage of its first mover status Expansion of the firm is possible due to the product’s higher quality Can use the following strategies • • • • • • • Establish Pinkberry as a national brand by controlled franchising Advertise with a focuson health and flavor Target health-conscious individuals as well as young crowds Maintain simplicity of menu choices Maintain upscale status of locations Hire young motivated people Provide opportunities of advancement to employees of the company

Market and Competitive Analysis
The overall market
The current level of health awareness in the United States has led to a steady increase in thenumber of yogurt restaurants in Southern California. This has occurred despite the fact that Southern California already experienced one frozen yogurt boom-and-bust cycle in the 1980s and '90s. With consumers seeking healthy alternatives for frozen dessert, frozen yogurt sales grew 12 percent in 2007 alone1. According to the U.S. Market for Ice Cream and Related Frozen Desserts, the U.S. market forfrozen desserts is set to grow by more than $4 billion by 2012, with frozen yogurts attaining the 2

strongest growth. This represents an 18 percent increase over the next five years, from the market's 2007 value of $23.3 billion across retail and foodservice. However, in spite of these promising prospects, the world of frozen yogurt is cutthroat and the growth of one vendor often comes at theexpense of another.

Customer characteristics
Pinkberry and most of its new competitors are upscale frozen dessert restaurants that target young adults as well as health conscious individuals offering a variety of flavors such as tart plain or green tea-flavored yogurt, sprinkled with healthy toppings including fruits and nuts. Frozen yogurt shops are not only attracting customers who arecraving an appetizing and healthy snack, but also crowds that previously hung out at Starbucks or the Coffee Bean & Tea Leaf. This can be partially attributed to their interior design, as well as the consumers’ increasing appreciation for the health benefits of eating yogurt over drinking, for instance, a Frappuccino. The buying decisions of frozen yogurt customers are affected by numerous factorsincluding the price and the cleanness and atmosphere of the store, in addition to the plethora of yogurt flavors and toppings.

Nature of competition
Frozen yogurt was first produced in the 1970s, but did not become especially popular until the 1980s and has only recently become an extremely competitive business. Yogurt shops are popping up like wildflowers, which require businesses to scout outtheir competitors for exotic new flavors and toppings; lawsuits have even been formed between rival stores. Although each store attempts to differentiate itself, they all have two common characteristics: the claim of being the only store with nonfat, natural, frozen yogurt and an upscale interior store design that often includes halogen lights. To be 3

at the forefront of this mature butcompetitive market, frozen dessert manufacturers must continue to be innovative in order to address challenges arising from almost contradicting consumer desires. While consumers want luxury through premium products, they also desire products that are low in fat, sugar and calories.

Primary competitors
Red Mango Red Mango is one of the main competitors in this “second wave” of the frozen yogurt fad.Although Red Mango offers similar toppings, such as mango, strawberry, coconut, granola, and various cereals, the difference is claimed to be in the frozen yogurt itself. Red Mango’s frozen yogurt is slightly tarter than Pinkberry’s, but is also much creamier. Unlike most other frozen yogurt shops, the yogurt at Red Mango, like Pinkberry’s, meets the National Yogurt Association's criteria for...