Key Points

1. Dairy products are not very popular in China. Health concerns and a large lactose intolerant population are obstacles Wang must consider.

2. Carvel has a very limited ($20,000) advertising budget for the year. Radio and television advertising are ruled out by the low budget.

3. Several segments of the Beijing population are potentially promising to Carvel. The three most attractive segments are (1) middle and upper class Chinese professionals, (2) "little emperors" (children in one-child homes, who tend to be spoiled by parents and grandparents), and (3) expatriate residents.

4. Costs of Carvel products could be reduced by 5% by whipping more air into the ice cream, but this might compromise Carvel's image for quality products.

5. Wang is considering introducing a new product, the "Piece of Cake" (a small, single slice of ice cream cake) to provide an inexpensive introduction to Carvel's cakes to Chinese consumers.

• Carvel's products are available in Carvel retail stores (4 full-service and 6 scaled- down outlets), high-end supermarkets (25 accounts), local supermarkets (25 accounts), bakeries (40 accounts), and restaurants and bars (60 accounts).

Case Questions

1. Carvel's new Beijing manager, Steven Wang, has not yet formulated his pricing and product policies. What advice would you give him? Should Wang reduce Carvel's prices, perhaps by reducing product quality?

Wang needs to carefully consider the position of Carvel's products vis a vis Baskin-Robbins and Haagen-Dazs products. This is key, developing appropriate product and pricing policies. Also, Wang needs to consider longer term implications of product and pricing decisions. If Carvel is committed to the Chinese market (as it seems to be) the product and pricing decisions Mr. Wang makes need to build for the