Introduction

Baskin Robbins is known as the world’s largest chain of ice cream stores. The founders, Burt Baskin and Irv Robbins, came up with the concept of having one flavor for each day of the month in their ice cream parlor. Through their innovation and creativity, they led the ice cream industry successfully. Baskin Robbins is better known for its generous variety of flavors as it offers over 1,000 flavors of ice cream, including Sugar Free, Fat Free and Light choices. Its comprehensive menu also includes frozen yogurt, sorbets, sherbets, beverages, ice cream cakes and sundaes.

Reason of choosing Baskin Robbins

• Well known at ice cream brand in the world
• Located all around Malaysia, hence it is easily to do survey
• Extreme hot weather in Malaysia
• Have many promotion periods

Market Competition

Baskin Robbins Company is categorized as monopolistic competition that it is a market structure in which a large number of sellers that sell close substitute products. In the ice cream industry, the goods produced and sold are different but close to their substitute products. For example, the greatest competition between Baskin Robbins is Haagen Dazs.

One of the characteristics is there are larger number of sellers. The size of the firm is small, thus it cannot influence the market price. Hence, Baskin Robbins follows an independent price-output policy. Besides that, Baskin Robbins Company will produce differentiated products by using various methods to differentiate their products to create a preference among buyers or consumers through designing, labeling, advertising, branding and packaging (Vengedasalam, 2009). Moreover, entry into and exit out of the monopolistic ice cream competitive industry are unrestricted. New firms can enter the industry with close substitutes to the existing brand but entry into and exit out of a monopolistic competition is not that easy because of the product differentiation.

In addition, monopolistic competition is competing based on the products and is not for the price of the product. As for Baskin Robbins, many consumers may purchase and choose this brand because they create a sense of brand awareness among customers. Lastly, the price elasticity of Baskin Robbins products’ demand is relatively large. The income level of consumer will affect the sales on Baskin Robbins ice cream products.

Problem Statement

• What are the main factors that influencing the demand for Baskin Robbins?
• What are the reasons for buyers to purchase ice cream during promotion period?
• As the consumers’ income increases, will buyers consume more ice cream?
• If the price of other ice cream brand is lower than Baskin Robbins ice cream, will buyers continue to buy it?

Objectives

• To determine the factors of demand for Baskin Robbins ice cream
• To determine the price elasticity of Baskin Robbins ice cream.

Limitation

One of the limitations in conducting the survey is that respondents always reject us because they are in a rush and busy. For some, they might not be interested as they do not get benefit from filing in the survey forms. Besides that, in the process of collecting back the survey, we realized that the respondents are not that cooperative in filling up the survey questions as they might leave them blank or write in handwriting that is difficult to read. Moreover, as the respondents are unwilling to answer the survey questions, their answers might not be that genuine and sincere as they just simply ticking the answers as an easygoing manner. 

Methodology

First of all, a discussion about the topic “Demand and Supply” is being held and the group members decided to choose Baskin Robbins as the research company. A research on the quality of the feedback survey is carried to determine the factors of demand. The questionnaire is prepared with tutor advises and encouragement. Therefore, a better feedback survey form is done by using word document. There are some criteria included in the feedback survey such as scenario, scale questions, the flavors of the ice cream, their opinions about Baskin Robbins ice cream and so on. The questionnaire is printed and distributed to 10 Baskin Robbins ice cream lovers in Taylor’s University. Last but not least, the survey forms are collected from the correspondents and the results are analyzed to show the details of Baskin Robbins ice creams.  

According to the feedback survey form, the price of the ice creams is important because the potential consumers will determine the ice creams are whether worth the price and it will lead to the different purchase decision. The atmosphere of the shop is important to the consumers as the environment of the store determines the behaviors and emotions of the potential consumers. Besides that, the quality of the ice creams is significant to the buyers as the quality gains trust from the consumers towards Baskin Robbins Ice-creams because it will determines the number of purchasing by the consumers. In addition, location strategy is important as the stores must be located at the targeted market so that loyal customers will be maintained and the new consumers will be attracted. Last but not least, consumers pay attention to the crew services as well. Crew services reflect the attitude of the business towards the customers as they are the one who purchase for the items and have rights to get the best service. 

Finding and Analysis

Based on the survey forms that have been concluded, there are five factors that are affecting the demand of Baskin Robbins in the ice cream industry which are price of goods, atmosphere, quality, location and services. As there are also three other external factors affecting the demand of Baskin Robbins that are promotion, consumers’ income and substitute goods.

Diagram 1: Percentage of factors of demand

First of all, the highest percentage among factors of the demand is the quality of goods that is up to 50%. The quality of the ice cream must ensure to be well guarded at all times because the quality of the ice cream will significantly affect the demand of the consumers. Customers always choose what to eat carefully as they wanted to eat safe and eat healthy. If the ice cream is made using healthy recipe and from different kinds of rich ingredient, this will lead the Baskin Robbins’s ice cream to a next higher range.

Despite of the highest percentage, the less influencing factors are the location and atmosphere that is 0%. Even though that store atmosphere determines the approach behaviors and emotions of the potential consumers and also choosing a right location is important as potential consumers are targeted so that they will always go to the nearest spot to consume ice cream but these two factors are being inelastic to consumers.

In addition, the average percentage that influences the demand is the price and service. Each of these factors cover up to 20% in the pie chart. The price of the ice cream is affecting the demand of the consumers. The price of the ice cream depends on the cost of production, which in turn will determine the quantity that will be purchase by the consumers. As the price rises higher, the lower demand from the consumers (Vengedasalam, 2012). Furthermore, the crew services must also not to be neglected. Consumers will feel more delightful when they are served in the best from crew service. The attitude and smile of the crew are crucial when they are asking question to the consumers or answering them.

Based on the statistics above, consumers are more sensitive to the quality of the ice cream as it covers about 50% of pie chart. As the less factors of demand for the ice cream are atmosphere and location that are 0%.

Diagram 2: Price elasticity during promotion period

The reason of “No” is because
* Fattening
* Not the main meal
* Too expensive



Nevertheless, promotion affects the demand of the consumers as well. During the promotion period of the Baskin Robbins that are every 31st of certain months and “Pink Wednesday”, ice cream is always selling at lower price compare to the actual day. As the price goes down lower, the demands will increases (Vengedasalam, 2012). 60% of consumers will purchase ice cream if there is a promotion going on. This factor is being very elastic to the consumers as the buyers are always sensitive to price changes. 

Diagram 3: Demand for purchasing as income increases

The reason of “No” is because
* Addiction
* Health issues
* Not economical

When the income of the consumer increases, consumers’ demand for more goods and services will increase. Baskin Robbins ice cream is known as normal goods. As the income increases, the income level will also affect the demand for Baskin Robbins ice cream to increase. Meanwhile, 70% of consumers will choose not to consume more ice creams even though their income increases. People in the higher income group will tend to have inelastic demand because they become less sensitive towards price changes.

Diagram 4: Demand on cheaper closer substitues

The reason of “ No” is because
* Loyalty

The demand for the ice cream is also affected by a change in the price of related goods and the related goods refer to substitute goods. Substitute goods are goods or services that can be used in replace of another product or service. When the price of Baskin Robbins’ ice cream increases, the quantity demand for it will eventually fall and consumers will look for another alternative. 90% of the consumers will purchase others brand ice cream if the price of Baskin Robbins’s ice cream increases. Therefore, the demand is more elastic because consumers are very responsive to the price changes.

Conclusion

For the analysis on Baskin Robbins Ice Cream, a few survey questions related to demand and price elasticity had been prepared and the questionnaires were distributed to 10 respondents to express their own opinions and comments in the Taylor’s University compound. After that, analysis on the demand and price elasticity was done based on the survey forms that were collected.

The factors of demand on Baskin Robbins are price of the product, atmosphere, quality, location and crew service. One of the highest determinants that affect the demand is pricing of the goods while the least influencing factor is atmosphere. On the other hand, promotion, income level of the consumers and the price of the substitute products determine the price elasticity of Baskin Robbins ice cream in the market. The most elastic factor is when the price of substitute product decreases. When the income level increase, consumer will not buy more Baskin Robbins ice cream product, therefore it is the least price elastic determinants.

Throughout the process of preparing the questionnaire to interpretation, a lot of information and knowledge had been obtained. There were many potential questions were created which have led to useful information for project analysis. Also, approaching and communicating with variety of people in a polite and nice way were exposed as the respondents will be more willing to help in answering survey feedback questions. Besides that, by analyzing on the demand and price elasticity on Baskin Robbins Ice-creams, information and knowledge are gained as for this studies, survey feedback forms for Baskin Robbins ice creams are distributed to the Baskin Robbins Ice- creams lovers. The analyzing is based on the answers from the respondents, accurately. This study is truly benefits for all of us.

Throughout the project study, the readers will gain benefits as well. Ways on how an analysis is interpreted and the correct way of interpreting data were also learnt. Besides that, other firms who see our blog information such as the analysis and other details about Baskin Robbins ice cream also gain benefit as the other firms will know their business performance as compared to Baskin Robbins Ice creams. As a detailed and great explanation analysis were made, the investors might be interested towards the huge demand by consumers on Baskin Robbins ice cream, thus the investors might wants to invest in the Baskin Robbins’ shares or be a potential business partner with Baskin Robbins.

After the analysis on Baskin Robbins, there is still much space for improvement. For example, to make the analysis to be more reliable, distribute more than 10 survey forms to more respondents are required. The more comments and opinions collect, the more accurate the analysis. Moreover, create higher quality questions which able to interpret and analyze in more detail such as being concerned on how many respondents do have the Baskin Robbins loyalty card or how much percentage of sales that have increased during promotion period.

References

Baskinrobbins.com.my (n.d.) Welcome To Baskin-Robbins. [online] Available at: http://www.baskinrobbins.com.my/history.html [Accessed: 6 May 2013].

Deviga, V. and Karunagaran, M. (2007) Principles of Economics. Selangor: Oxford Fajar, p.150-153, 174-175.