Reference no: EM132238310

Case GaGa: Not Just a Lady

Several years before Lady Gaga made her musical debut, Jim King started a company he named GaGa after his beloved grandmother. King, a Rhode Island television news anchor turned entrepreneur, planned to use his grandmother’s recipe for frozen dessert as the basis of his first product. Because the lemony dessert contains more butterfat than sherbet and less butterfat than ice cream, he couldn’t legally label it as either. So King came up with the idea of calling the product “SherBetter,” using the word play to suggest that it’s similar to sherbet, but better.

King wasn’t intending to compete with major ice cream firms like Hood, Breyers, and Ben & Jerry’s. First, as a tiny start-up business, GaGa couldn’t begin to match the marketing resources of the national brands. Second, GaGa’s focus would be much narrower than the big brands, because sherbets and sorbets make up only a tiny fraction of the overall market for ice cream products. King determined that GaGa would compete on the basis of high quality, all-natural ingredients, and a fresh, creamy taste. He coined the slogan “Smooth as ice cream, fresh like sherbet” to describe SherBetter’s appeal.

After he cooked up batches of SherBetter in his home kitchen, King drove from grocery store to grocery store until he made a sale to his first retail customer, Munroe Dairy. This initial order for 500 pints of lemon SherBetter was enough to get GaGa off to a solid start. During the first four years of business, the company marketed just one product—the original lemon SherBetter in pint containers. In that time, Stefani Germanotta shot to fame under the stage name of Lady Gaga, giving GaGa’s frozen desserts an unexpected but welcome boost in brand awareness and sales.

Four years after founding GaGa, King realized that he could increase sales and enlarge his brand’s visibility in supermarket frozen-food cases by expanding with sufficient products to fill a shelf. Over the next four years, he introduced raspberry, orange, and several other new flavors of SherBetter packed in pint containers. He also launched a line of frozen dessert novelty bars, called “SherBetter on a stick” because they’re shaped like ice-cream bars. In addition, he decided to develop a tropical flavor to enhance his product offerings. That led to the introduction of toasted coconut SherBetter, a flavor that tested very well during GaGa’s research. As he gained experience, King learned to account for cannibalization of existing products when he launched new products, knowing that overall sales would gain over time.

However, King didn’t anticipate that supermarkets would display SherBetter pints and bars in separate freezer sections several doors away from each other. This complicated GaGa’s marketing effort, because customers might not know they could buy SherBetter in both bars and pints unless they looked in both frozen-food sections. GaGa simply couldn’t afford advertising to promote bars and pints. Instead, King and his wife Michelle, who serves as marketing director, began setting up a table outside the frozen-foods case in different supermarkets and distributing free samples on weekends. They found that when they offered samples, customers responded positively and the store sold a lot of GaGa products that day. This opened the door to repeat purchasing and brand loyalty.

One lesson King learned is that the GaGa brand is more memorable than the SherBetter product name. As a result, he changed the product packaging to emphasize the GaGa brand and its playful implications. After hiring professionals to analyze the company’s marketing activities, he also learned that he should focus on what makes GaGa’s products unique rather than trying to fit into the broader ice cream product category. The basics of high quality, a unique recipe, and a fun brand have helped King acquire distribution in 1,500 supermarkets and grocery stores throughout the Eastern United States.footstar.png

Questions for Discussion

When GaGa began adding novelty bars in new flavors, what was the effect on the width and depth of its product mix?

Why is packaging particularly important for a company like GaGa, which can’t afford advertising?

Do you think GaGa’s SherBetter pints and bars are likely to follow the product life cycle of traditional ice cream products? Explain your answer.