When a 150-year-old company finally redesigns its logo and launches its first national ad campaign, that’s big news. Graeter’s, the beloved Cincinnati-based maker of premium, hand-packed ice cream, is still managed by direct descendants of its founders. Its new logo is just one part of a major rebranding effort to support the company’s first big, planned expansion. “If we don’t continue to improve and innovate, somebody will come and do it better than us,” says Chip Graeter, the company’s vice president of retail stores. “And we don’t want that to happen.”

Quality Builds the Brand

Graeter’s considers as its competitors not only the Häagen-Dazs and Ben & Jerry’s brands, national premium ice-cream brands that have much bigger marketing budgets, but also all kinds of premium-quality desserts and edible treats. Taking that wide-angle view means its competition is both broad and fierce. One thing the company is firm about, however, is maintaining the quality of its dense, creamy product (it’s so dense that one pint of Graeter’s ice cream weighs about a pound). Graeter’s quality standards call for adhering to its simple, original family recipe—which now includes more all-natural ingredients, like beet juice instead of food dye and dairy products from hormone-free cows—and an original, artisanal production process that yields only about two gallons per machine every 20 minutes. “We were always allnatural,”
says CEO Richard Graeter II, “but now we’re being militant about it.”
That hard-earned premium quality is what built the Graeter’s brand from its earliest days when refrigeration was unknown and ice cream was a true novelty. Today, “Graeter’s in Cincinnati is synonymous with ice cream,” says a company executive. “People will say, ‘Let’s go get a Graeter’s.’ They don’t say, ‘Let’s go get an ice cream.’” Quality is also what the current management team hopes will propel Graeter’s beyond its current market, which consists of 55 companyowned retail stores in Ohio, Missouri, Kentucky, and nearby states, and the freezer cases of about 6,000 supermarkets and grocery stores, particularly the Kroger chain. Graeter’s is also on the menu in some fine restaurants and country clubs. The company operates an online store and will ship ice cream overnight via UPS to any of the 48 continental states (California is its biggest shipping market). Graeter’s also sells a limited line of candies, cakes, and other bakery goods, and its ice-cream line includes smoothies and sorbets.

Expanding to New Markets

Graeter’s ambitious expansion plans are backed by a recent increase in production capacity from one factory to three (one of the new factories was built, and the other purchased). The plans call for distributing Graeter’s delectable, seasonal flavors to even more supermarkets and grocery stores, and for gradually opening new retail stores, perhaps as far away as Los Angeles and New York. The Kroger chain is Graeter’s biggest distribution partner. Of the tens of thousands of brands Kroger carries, says the chain, pricey Graeter’s commands the strongest brand loyalty. It was through Kroger, in fact, that Graeter’s managers hit upon the idea of conducting a trial expansion to Denver, a new market for the brand.
Kroger owns the King Soopers chain of grocery stores in Denver, and research showed that more Denver ice-cream buyers choose premium brands than cheaper choices, suggesting that Graeter’s might do well there. So Graeter’s chose 12 flavors to send to 30 King Soopers stores in Denver as a test market, with the goal of selling two or three gallons a week. The test was an unqualified success. Within a few weeks, the company was selling an average of five gallons a week per store.
“I’d like to be coast to coast,” admits Graeter’s CEO.
In fact, the management team would like to explore selling Graeter’s in Canada, perhaps within the next five years. “The challenge, of course, is to preserve the integrity of the product as we grow. But we have done that for more than 100 years, and I’d argue that it’s better now than ever.”

Promoting the Brand

Graeter’s had already gotten a big free boost from a positive mention on the Oprah Winfrey Show, when the influential talk-show host called it the best ice cream she had ever tasted. “We were shipping about 40 orders a day,” says CEO Richard Graeter II. “After her show, the next day we probably shipped 400.” National attention continues with occasional exposure on the Food Network, the Travel Channel, and even the History Channel. “How does that happen?” asks one of the firm’s executives. “It happens because we have a product and a process and a growth that is exciting.”
Still, says George Denman, the company’s vice president of sales and marketing, Graeter’s faces the same challenge in new markets as any “small, regional niche player” and one with a limited marketing budget: “establishing a relationship with the consumer, building brand awareness [through] trial and repeat. . . . So obviously when we roll into a marketplace one of the first things we do is we sample the product. We get it out in front of the consumer and get them to taste it, because the product sells itself.” The company has also been reducing its price to distributors, who pass the savings along to stores that can then advertise that Graeter’s pints are on sale. “If a consumer has maybe been buying Ben & Jerry’s and never considered ours, because maybe that dollar price point difference was too high, this gives her the opportunity to try us. And once she tries us, we know we’ve brand switched that consumer right then,” says Denman.

Marketing Communications

Through its Cincinnati-based ad agency, Graeter’s does some local advertising, including attractive point-of-sale displays in supermarkets and grocery stores and some radio ads, occasional print ads, and billboards. The company launches small-scale promotions for the introduction of a new flavor or to celebrate National Ice Cream Month or other occasions. To support the brand’s nationwide presence in grocery stores, the company began airing commercials nationally for the first time in 2014. The company has also received good publicity from its strategic partnerships with The Cure Starts Now Foundation and the Cincinnati Zoo. After the zoo had a baby hippo born premature, Graeter’s introduced a new flavor called Chunky Hunky Hippo, with part of the revenue from the flavor going to help support the zoo and baby Fiona the hippo.
However, brand loyalty for this family business has grown mostly through word of mouth that endures across generations. “We are the beneficiary of that loyalty that our customers have built up over so many years, multiple generations,” says one of the company’s executives. “Our customers have told us they were introduced to the product through their grandmother, or a special time. . . . They don’t come to our stores because they have to; they come because they want to.”
“We use the traditional [marketing] methods,” says Denman. “We are also doing nontraditional methods. We are looking at electronic couponing, where consumers will be able to go to our website as a new consumer . . . and secure a dollar-off coupon to try Graeter’s, just for coming to our website or joining up on Facebook. We’ve done loyalty programs with Kroger where they have actually direct-mailed loyal consumers and offered . . . discounts as well. . . . So far it’s worked well for us. We’ve had to go back and look at the return on investment on each of these programs and cut some things out and improve on some other things, but in the end we have been very pleased with the results.”

“Quality . . . We Never Changed”

“We ship our product, and that was something that for the first hundred years you never thought about. I mean, who would think about shipping ice cream from Cincinnati to California? But it is our number-one market for shipping, so all those things you can change,” says Richard Graeter, the CEO. “The most important thing, the quality of the product and how we make it, that we never changed.”

Questions
1. What are the elements of Graeter’s marketing mix?
Which are most likely to be affected by external forces in the marketing environment?
2. Graeter’s ice-cream line includes smoothies and sorbets.
Do you think it should consider other brand extensions such as yogurt, low-fat ice cream, coffee drinks, or other related products? Why or why not?
3. How might Graeter’s capitalize on its valuable capacity for word-of-mouth promotion in expanding to new markets where, despite some national publicity from Oprah Winfrey, its name is still not widely known?