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Teaching Note: Case 8 – Dippin’ Dots: Is the Future Frozen?
Case Objectives
1. To discuss the decisions and actions that a firm has to undertake to sustain a competitive
advantage.
2. To understand the importance of managing innovation, especially when pursing an
See the table below to determine where to use this case:
NOTE: There are both PRIMARY and Secondary chapters that can be used for this case. The
Chapter Use Key Concepts Additional Readings or
Exercises
PRIMARY
Strategy
Generic strategies NOTE – see additional
8: Entrepreneurial
Entrepreneurship; opportunity
NOTE – see additional
12: Managing
Innovation; scope of innovation;
SECONDARY
2: External
Environment
External environmental forces; five
3: Internal Analysis Value chain; tangible vs. intangible
6: Corporate-Level
Diversification; synergy; core
9: Strategic Control Informational vs. behavioral control
Case Synopsis
Dippin’ Dots was a specialty ice-ceam company headquartered in Paducah, Kentucky. In 1998,
Dippin’ Dots founder Curt Jones had patented his idea to flash freeze liquid cream and sell the
The frozen dairy industry had been occupied by family-owned businesses like Dippin’ Dots, full-
line dairies, and a couple of big international companies that focused on only one sales region.
But by 2009, Dippin’ Dots faced bankruptcy due to increased competition from companies such
as Cold Stone Creamery in the “scoop shop” ice cream market, from direct competitors
MolliCoolz and Ittibitz whose product was available in the grocery freezer, as well as from
knock-offs like Mini Melts in vending machines. With such fierce competition, Dippin’ Dots
needed to adapt to customers‘ changing needs and invest in product and service inovation to
Teaching Plan
This short case is a good one to use to illustrate the competitive environment of companies
pursuing entrepreneurship and innovation. The Dippin’ Dots case can also be used to discuss
ICEBREAKER
This case can start with an icebreaker. Starting from the perspective of a customer may make it
easier for students to transition to a strategic analysis.
How many of you have tried Dippin’ Dots? Or Mini-Melts, Ittibitz, MolliCoolz?
What do you think of this product?
If students are confused about the product, show one of these brief videos, produced by different
customer segments (military personnel in Kuwait, and senior citizens at an ice cream social):
Here is a one minute video showing the operation of a Dippin Dots vending machine in Kuwait,
on a military base:
http://www.youtube.com/watch?v=8ZTxd_24Alg&mode=related&search=ice%20cream
%20contest%20competition%20fun%20humor%20lol%20animation%20Packy%20Dippin
%20Dots%20cool%20funny%20hip%20awesome%20rad%20future
And here’s a two minute video of a 2007 ice cream social event in Dippin’ Dots’ hometown
Paducah, KY featuring a brief appearance by Curt Jones:
http://www.youtube.com/watch?v=iVrSz2LVeEw&NR=1
Or visit the Dippin Dots website:
http://www.dippindots.com/
Some students may have encountered similar products, Ittibitz or MolliCoolz, in their local
grocery freezers. Others may have seen Mini-Melt or Dippin’ Dots vending machines on campus
Summary of Discussion Questions
Here is a list of the suggested discussion questions. You can decide which questions to assign,
and also which additional readings or exercises to include to augment each discussion. Refer
Discussion Questions:
1. PRIMARY QUESTIONS: What is Dippin’ Dots’ competitive strategy?
2. What role did entrepreneurial strategy and the management of innovation play in
establishing Dippin’ Dots’ initial competitive edge?
3. SECONDARY QUESTIONS: What elements in the external environment might affect
Dippin’ Dots’ strategy?
4. What internal resources does Dippin’ Dots have that might help it support its competitive
strategy? What challenges remain?
Discussion Questions and Responses
1. What is Dippin’ Dots’ competitive strategy?
Referencing Chapter 5: Business-Level Strategy
How firms compete with each other and how they attain and sustain competitive advantages go
to the heart of strategic management. In short, the key issue becomes: why do some firms
outperform others and enjoy such advantages over time? The viability of a firm’s success is
A business-level strategy is a strategy designed for firm or a division of the firm that competes
within a single business. Within the firm’s industry environment generic strategies include basic
advantage:
●Overall cost leadership
oLow-cost-position relative to a firm’s peers
●Differentiation
oCreate products and/or services that are unique and valued
●Focus strategy
oNarrow product lines, buyer segments, or targeted geographic markets
Generic strategies are plotted on two dimensions: competitive advantage and strategic target. The
Both casual observation and research supports the notion that firms that identify with one or
more of the forms of competitive advantage outperform those that do not. In order to achieve a
sustainable competitive advantage, Dippin’ Dots has to assess its ability to contend with other
Cost Leadership: This is perhaps not a good strategy for Dippin’ Dots at this point since it is still
Differentiation: The challenge of differentiation is to create a product that is perceived industry
wide as being unique and valued by customers so much so that they will seek it out if not readily
available. Dippin’ Dots must work to link its value chain processes, for instance integrating
Focus: Dippin’ Dots had so far chosen to market to the out-of-home market, but industry giants
Other options firms sometimes pursue include:
Combination of Differentiation and Cost Leadership, Combination of Focus and Cost
Leadership, Combination of Differentiation and Focus: Although initially best suited for a
Stuck in the Middle? Dippin’ Dots must be careful to choose a strategy that will fit with its
NOTE – ADDITIONAL READING, EMBEDDED VIDEO STORIES:
Here is an interview with founder Curt Jones in 2006:
http://www.msnbc.msn.com/id/14001806/
Jones is trying to reinvent Dippin’ Dots in 2009 with the coffee product. See the story here:
http://www.usatoday.com/money/companies/management/entre/2009-05-10-dippin-dots_N.htm?
csp=34
Here is a video from the Food Network showing how the product is made in the Kentucky
facility. Note how the LOW temperature is critical to the process:
Further news on the production facility comes from January 2013 as the new owners invest in the
Regarding the various customer groups who might be interested in Dippin’ Dots, here is
a two minute video of a 2007 ice cream social event in Paducah, KY featuring a brief appearance
by Curt Jones:
http://www.youtube.com/watch?v=iVrSz2LVeEw&NR=1
Here is a one minute video showing the operation of a Dippin Dots vending machine in Kuwait,
on a military base:
http://www.youtube.com/watch?v=8ZTxd_24Alg&mode=related&search=ice%20cream
Visit the Dippin Dots website:
http://www.dippindots.com/
Which demographic group does this seem aimed at? Does it seem to be consistent with previous
marketing promotions?
Here is commentary on the popularity of ice cream, and its long-term prospects as a market
commodity:
http://www.nytimes.com/2006/07/26/dining/26cream.html?
ex=1182916800&en=501180740dd57a44&ei=5070
And on the category of frozen specialty treats:
http://www.nytimes.com/2006/10/26/business/26sbiz.html?
ex=1319515200&en=5f77555844021708&ei=5088&partner=rssnyt&emc=rss
Read this article from 2008 describing the state of the ice cream industry. Dippin’ Dots is
mentioned as the originator of the cryogenically frozen ice cream pellet dessert, but competitors
Mini-Melts, MolliCoolz and Ittibitz have gained strength. In 2007 MolliCoolz broke down the
And an article from 2011 details the competition for Dippin’ Dots then new coffee product:
http://www.nytimes.com/2011/07/20/dining/in-the-lab-with-the-ice-cream-makers.html?
pagewanted=all&_r=0
IttiBitz markets itself as different from competitors “because you can serve, store and ship it like
regular ice cream. While other products require special handling and freezing at -40ºF, IttiBitz
To illustrate how this process is not that unique, see this video of how to make dippin’ dots
yourself, as long as you have access to liquid nitrogen and the right equipment (styrofoam
In 2013 there was another new product from Dippin’ Dots: the vanilla and chocolate YoDots line,
which “is made with nonfat yogurt and has only 70 calories per three-ounce pack.” This was
Dippin’ Dots promotes itself as the “ice cream of the future”, but doesn’t seem to have changed
2. What role did entrepreneurial strategy and the management of innovation play in
establishing Dippin’ Dots’ initial competitive edge?
Referencing Chapter 8: Entrepreneurial Strategy and Competitive Dynamics
Entrepreneurship involves the creation of new value by an existing organization or new venture
that involves the assumption of risk. New value can be created in start-up ventures, major
For an entrepreneurial venture to create new value, three factors must be present—an
entrepreneurial opportunity, the resources to pursue the opportunity, and an entrepreneur or
Entrepreneurs need to understand the concept of opportunity recognition: the process of
discovering and evaluating changes in the business environment, such as a new technology,
socio-cultural trends, or shifts in consumer demand, that can be exploited. Good entrepreneurial
Dippin’ Dots had been in business for 23 years as of 2011, the year it filed for bankruptcy, and
had had some success, growing into a multimillion-dollar company with authorized dealers
operating in all fifty states and internationally. CEO Curt Jones had introduced a new product,
The major challenge for Dippin’ Dots appeared to be the lack of opportunity in the industry,
opportunity that was perhaps unachievable given the firm’s existing resources, or the inability of
Resources are an essential component of a successful entrepreneurial launch. The most Important
resource is usually money, but human resources, strong and skilled management, is also an
essential asset. Social capital, or entrepreneurs who have extensive social networks or well-
The Dippin’ Dots story contains many elements of the resource dilemma – even the best idea can
be difficult to launch without proper resources. Jones had difficulty acquiring both money and
human resources. Although he was initially successful getting financing through his family, and
Launching a new venture requires a special kind of leadership involving courage, belief in one’s
convictions, and having the energy to work hard. Three characteristics of entrepreneurial leaders
are:
●Vision
To achieve excellence, venture founders and small business owners must understand the
Jones appeared to have had the initial vision, dedication and drive, but he had also seemed to get
tired of the day-to-day operational aspects of the business. (Although not in the case, Jones had
removed himself from any administrative decision-making at Dippin’ Dots for several years – in
2006 a news story reported that he was working to develop an ethanol plant in southern Illinois.
New entry into markets, whether by start-ups or by incumbent firms, nearly always threatens
existing competitors. This will likely provoke a competitive response. Competitive dynamics —
intense rivalry among similar competitors—has the potential to alter a company’s strategy. New
entrants may be forced to change their strategies or develop new ones to survive competitive
challenges by incumbent rivals. Companies launch competitive responses to:
●Improve market position
●Capitalize on growing demand
When Dippin’ Dots first entered the business, it had obtained a first mover advantage. However,
Jones was not able to protect that advantage. Dippin’ Dots was facing competitive dynamics and
In order to grow the business, new President Fischer would have to maintain and expand his
current market base and choose a big push in the scoop shop through expanded support for
franchising or a push into the grocery store business or develop some truly innovative new
Referencing Chapter 12: Managing Innovation and Fostering Corporate Entrepreneurship
Innovation involves using new knowledge to transform organizational processes or create
Some of challenges of innovation involve choosing when and how to continue to innovate, the
scope of future innovation and the pace, as well as whether or not to collaborate with innovation
partners. The innovation of new ventures requires resources such as financial, human and social
We don’t know how well Jones actually promoted an entrepreneurial orientation in his
organization, but his old habit of hiring friends, and his decision to fire his top managers,
indicates perhaps he didn’t have the willingness to create a culture of autonomy, and team-
Before proceeding, firms must first define the scope of the innovation efforts, and must ensure
that their innovation efforts are not wasted on projects that are outside the firm’s domain of
interest. In defining the innovation scope, a firm should answer several questions:
●How much will the innovation cost?
●How likely is it to actually become commercially viable?
●How much value will it add; that is, what will it be worth if it works?
●What will be learned if it does not pan out?
As a counter example of innovation, Mini Melts had adopted a strategy of global expansion.
Mini Melts expanded by selling dealerships for vending machines and kiosks, rather than
While the strategy adopted by Dippin’ Dots was to introduce new products, it appeared as if the
Dots’n Cream and Dot Delicacies both may have required additional, possibly costly,
manufacturing equipment. Certainly the frozen coffee dots would. Perhaps the Dots’n Cream and
coffee dots products required distribution connections and marketing expertise the company did
What challenges exist for the new ownership? Will any market testing be sufficient enough to
determine whether the new products are worth pursuing? Does new management have the
operational skill to lead this effort? Has new President Scott Fischer thought out the implications
NOTE – ADDITIONAL READING:
Read this 2003 article about two Dippin’ Dots imitators:
http://www.enquirer.com/editions/2003/10/07/biz_wwwbiz2dot.html
Here is information about one of those competitors, who has done well since:
http://www.minimelts.com
Here is a website where you can download a copy of the patent infringement judgment at
http://www.gehrkelaw.com/2007/02/dippin_dots_inc.html
And here is a shortened version of the court case outcome:
http://www.nixonpeabody.com/publications_detail3.asp?ID=1704
Dippin Dots was found to have procured their patent through fraud, so therefore their suit for
patent infringement was unenforceable. Did Dippin’ Dots respond to the imitators appropriately
in your opinion? If not, what would you do differently?
Dippin’ Dots has had trouble in the past with its franchisees. Here’s a report from one former
Dippin’ Dot franchisee, who was not happy: http://askme.hubpages.com/hub/I-was-a-Dippin-
http://www.wsj.com/articles/SB10001424052970204136404577211391192172770 and another
report on unhappy Cold Stone Creamery franchise investors, calling it “one of the worst
Here is information on the Dippin’ Dots franchise from Entrepreneur Magazine:
http://www.entrepreneur.com/franchises/dippindotsfranchising/289468-0.html
and check out Dippin’ Dots competitors’ franchise arrangements at
http://www.entrepreneur.com/franchises/categories/ffqicecr.html
In 2013, the new management announced a renewed push to open up “additional franchise
territories in the Northeast, Southeast and other parts of the U.S.” The selling point for potential
