The following is the outline we had to follow for our paper, the part in yellow is what I need you to complete for me please. The rest I have already done and the content I wrote can be found below.
1. Background (description of the problem or initial assumptions)
a. List up the different aspects of the company’s background.
b. Precisely identify the problem or challenge to be solved.
c. Describe the initial assumptions for the elaboration of the plan.
d. Presents a well-founded starting hypothesis, clearly written.
2. Company / Organization internal analysis.
a. Develop a robust qualitative & qualitative description of the company’s resources and capacities.
b. Present an analysis of the information gathered.
c. Draw the main weaknesses and the strengths of the company.
3. Macro-environmental analysis
a. Develop a robust qualitative & quantitative description of the macro-environment based on a PESTLE analysis.
b. Integrate and reflect on the relevant and not relevant factors affecting the marketing proposal.
c. Describe an analysis of the information and elaborate on the main threats and opportunities that can influence the company or be exploited by the marketing proposal.
Background
Perhaps the best known home of cupcakes in the city, Cup & Cake is a Barcelona favorite. Locals and tourists from all over pay this cake shop a visit at least once to enjoy its delectable treats as well as the boutique’s trendy décor. While the brand initially started as a cake shop with a focus on cupcakes, the business has expanded its menu to include brunch meals, sandwiches, salads, and more creative desert options. People from all over have fallen in love with Cup & Cake’s hand-made creations and the quality of their food, with the company continuing to hold high ratings on social media and travel websites. Locals and tourists know that if they have an aching sweet tooth, they can stop by the boutique anytime between 9:30 am and 8:30 am for a quick and satisfying fix!
But what if there isn’t a limit to when and how you satisfy your food cravings? Maybe you are coming back from a late night out- whether it’s from a movie night or a party with friends- and your hunger starts to kick in at 1:00 am. You start to consider the possible sources of food that would still be open at this hour: vending machines, 24-hour supermarkets, McDonalds? But the reality is that you don’t want to waste your calories on a burger. Rather, you want something sweet. Perhaps a fresh cupcake?
Or maybe you are a working individual who drives to work at 6:00 am every day and would like to pick up a box of birthday cupcakes for your coworker before the boutique opens?
Imagine the convenience of enjoying or purchasing FRESH cupcakes at any hour of the night and early hours of the day! Imagine “The Cup&Cake ATM”: a self-service convenience ATM that operates exactly as a regular ATM would, except this one dispenses fresh cupcakes.
In today’s market, there is a huge demand for efficient and convenient product distribution strategies. In the fast-paced world we live in, we're always on the move and want to be as efficient as possible when it comes to our day-to-day errands and purchases. More and more companies are employing vending machines in order to expand their business and cater to people’s needs. Fresh food products at vending machines, however, is still lacking and the demand for that from consumers is even higher. Yet, it can be made possible if the machine were to be restocked several times a day in order to keep the products fresh. This requires a little extra labor, a small degree of it as a matter of fact, but it would be completely worth it on the long run. This is the mission with Cup&Cake’s cupcake ATM service, with two ultimate goals in mind: on behalf of the consumer, the company would be providing stellar customer service, and in terms of the company’s business, the assumption is that sales will increase with the brand uniquely establishing itself in the Barcelona market.
The plan would initially launch with the cupcake ATM attached to the Cup&Cake boutique at Carrer d'Enric Granados, 145. Then, with its success, this service can be expanded to introduce individual cupcake ATMs around the city, without them having to be connected to the cake shop itself. The lower cost vs. retail shops would allow Cup&Cake more affordable extension of distribution to more locations, including spots around office buildings, and other commercial areas. These ATMs would also be great in locations such as universities, where people are likely to be up late. Other than restocking the machines in order to keep the cupcakes fresh, labor costs do not exist here. In addition, there would generally be no threat of competition or category killers around these machines and their locations. Another important factor to consider is the strong advertising value that these ATMs will add to the company. Cup&Cake can utilize these machines to their advantage and brand them in unique ways in order to draw public attention. If a passerby is unfamiliar with Cup&Cake, and has never shot a glance at the shop, he/she sure will now.
Although Cup&Cake is no longer simply a cake shop and has developed into a full-service café, the cupcake ATM strategy seeks to revive the initial spark that the company created in Barcelona when it first launched its business. Cup and Cake was one of the first cake shops to introduce artisan confectionary to the city. Their colorfully decorated cupcakes brought a New York feel to Barcelona, and the people were excited and impressed. While the brand still holds a good position in the market, a close look at consumer reviews, however, further suggests the need for reassessment. Several loyal customers have expressed their disappointment, mentioning how the cupcakes have reduced in variety and standard, with a few even cutting it off completely. One customer said:
“I was served by the same girl who was unable to explain why they don’t have any more cupcakes considering the place is called Cup and Cake and that's exactly was they should be selling. They don't really care about customer’s needs and they just rely on the fact the place used to be packed in the past.”
Needless to say, consumers always appreciate you when you give them more, and Cup&Cake’s renovated menu was undoubtedly a success. However, with great success comes great responsibility. With a store name like Cup&Cake that now serves a small variety of cupcakes lacking the same devoted quality as before, and a long list of customers who fell in love with what the company used to offer, maybe a few steps back is necessary. The business plan that we are offering highlights the beloved cupcakes that have been overshadowed by their counterparts. It reminds the public and the market that this business started out selling cupcakes, and this is what lead to their success before the loaded pancakes, salads, and smoothies. And it’s doing that in an innovative and creative way! You say Cupcake ATM?! I say yes please!
Body
The Cupcake business has expanded in the past decade to become one of the fastest growing industries in the baking and culinary world. It is a niche market, however it rakes in $1.6 billion annually in the United States. Consequently, Europe and neighboring continents will undoubtedly start to see numbers like these in the coming years with more and more cultures adopting American foods and way of life.
The manufacturing process of producing a cupcake is built on the primary function of transferring inputs ( labor, energy, and raw materials) into a final product that does not only taste good but looks good as well. The resources used here are divided into two categories: renewable resources and unrenewable resources. The renewable resources consist of the labor behind the production as well as the commercial kitchen equipment such as the oven that is used to bake the cupcakes. The unrenewable resources consist of the natural capitals such as flour, water, cooking oil, sugar, salt, color, etcThese are of course consumed during the manufacturing process.
The next step should be a creation of pilot version of Cup & Cake ATM. It is needed to minimize all the risks related to new service implementation and reducing possible costs. All in all, this approbation of new service should answer the question will it be interesting for clients at all. Two month period should be enough for take a final decision on starting a full-scale network of Cup & Cake ATMs.
And the last step in this implementation plan is establishing network of Cup & Cake ATMs all over Barcelona. As for resources, it will take two major segments. The first segment is related to basic business performance of Cup & Cake – more sweets should be made in order to face increasing demand, as a result, more labor, energy, and raw materials will be needed. The second segment is connected to ATMs itself – they are needed to be bought and set (fixed costs) and special technical supporters need to be hired (flexible costs).
As any other new business, this idea has both weaknesses and strengths. The core weakness of this new model is that this is a totally new service, so there is a high risk that clients will not like the idea at all. It will take some time and resources (marketing costs) to persuade them that cakes in ATM are fresh and tasty as they are in bakery. As the food culture is very traditional and stable, it can be hard to swift consumers into new service. Also, even in case of success, the new model is easy to be copied by competitors. The technology of wending machines (the Cup & Cake ATM is one of types of wending machines) is open, so there is no legal basis to patent it as a new product or technology. Customers’ rejection and easiness of replication are two major weaknesses of this project.
On the other hand, the idea of Cup & Cake ATM has some strong and clear strength. First of all, it is a really innovative business model in bakery industry. And this service really faces needs of customers that want to have an option to get fresh and tasty cakes any time. The ability to receive service (or product) any time and everywhere is one of the strongest business trends in nowadays economy, and Cup & Cake ATM meets it for 100%. Another strength is that there is a possibility to implement this service step by step, so the reputational and financial risks could be minimized. And the last strength is that due to market traditionalism and conservatism there is no real competition for such a service – so Cup & Cake will be the only company, who provides such opportunity to its customers all over the city.
3. Macro-environmental analysis
As with every marketing proposal, it is necessary to analyze and understand the environment that is operated in. The Cup&Cake ATM can be a big step forward in the growth of the company’s business, and although the city of Barcelona offers opportunities for the potential success of this model, it also poses some challenges and restrictions that need to be examined. What follows is a PESTLE analysis of Spain and more specifically the city of Barcelona, with the purpose of identifying the factors that can influence the company as well as the marketing proposal.
Spain is the one of the most decentralized countries in the EU, if not in the world, with its three-tier political system consisting of a central, regional, and local government. The central government, with the Prime Minister (President) holding the executive power, handles the execution of the law and the management of the routine affairs of the country. Subsequently, the country is divided into seventeen autonomous regions which each have their own level of legislative, executive, and fiscal independence. While the inside sets the wide parameters, regions are in charge of the arrangement of essential administrations including wellbeing, training and social administrations, and have noteworthy impact over the governing environment for business. The main objectives of this decentralization process tackle administrative and political dimensions. From one viewpoint, there were three goals identified with administration: enhance and increment services, convey the management closer to the people, and excuse metropolitan organization. Moreover, there were two primary goals concerning political measures: battle imbalances among various gatherings and zones in the city and advance the people’s contribution.
Essentially, a decentralized government seeks to ensure the country’s stability, and satisfy the various region’s needs and differences. However, while this system has brought about an increase in the number of services provided by regional and local governments over the last thirty years, the economic crises which has befallen Spain since 2008 weakened the people’s trust in their political system. The more that people’s incomes tighten, the more the presence of seventeen self-governing communities is being viewed as an extravagance that Spain cannot bear the cost of anymore. Consequently, the citizens of Spain have also begun to blame their political leaders for spending great deal past their means in their endless attempts to win over voters. This further augmented speculations about government corruption which have already dominated headlines in Spain in recent years. The majority of these cases revolved around the real estate bubble with assumptions that regional governments were granting contracts for cash payments. Three popular examples of corruption cases in Spain were the Bárcenas corruption case which made news in January 2013, the ERE case in 2011, and the ongoing Nóos case which started in 2010 . The Barcenas case, involving the central government and the ruling People’s Party, accused the ex-minister of finance of using undeclared donations from private companies to make illegal bonus payments to senior party figures. The ERE case, on the other hand, involved the Socialist’s Worker’s Party and alleged illegal payments to government officials whose terms have ended in Andalusia. Furthermore, The Nóos case concerned the King’s brother in law Iñaki Udangarin and his nonprofit foundation Nóos institute. The allegations accused Udangarin and his partners of embezzling public funds in order to finance a sports center in Palma de Mallorca.
The presence of governmental corruption in Spain is one of the main reasons why the two main political parties have lost support. However, both sides have taken measures to tackle corruption in Spain and regulate the situation and new laws have been set forth to better control economic and financial activities of the political parties.
However, the outcomes of Spain’s flawed bureaucracy still persists with Barcelona (capital of Catalonia) bearing its consequences along with the rest of its neighboring cities and regions. The economic imbalance in the country brought about high taxation by authorities, affecting business activity in Barcelona. As a result, Spain’s standard corporate income tax rate is 35%. However, companies that earn less than 8 million euros a year are entitled to reductions, which is our case with Cup&Cake. Less-earning companies are required to pay 25% in taxes instead and qualify for certain tax incentives such as accelerated depreciation of fixed assets and a 10% tax credit for investments and expenses in internet, information technology, and communications.
Another tax law in Spain includes a 21% VAT on most goods and services. In addition, import duties in Spain range from 0% until 17%, with a possible higher percentage placed on products manufactured in specific countries.
Another political issue that threatens businesses in Spain is the topic of Catalan separatism, where Barcelona serves as a platform. The country’s successful ability to unite its ethnically and linguistically diverse citizens for over five hundred years has only been challenged with Catalan’s need for independence. However, economists all over the world agree that this agenda is not in anyone’s interest, not even Catalonia, especially with Europe’s current fragile political and financial situation. The Spanish economy is also only just recovering from a long downturn.
There is no doubt that an independence shift would badly shake both Catalonia’s economy as well as Spain’s. Catalonia makes up 20% of Spain’s GDP, that alone is enough to weaken Spain’s economy under any independence call. In addition, Catalonia is known for its transportation, handling 70% of Spain’s costs. In the unlikely event that the region becomes an independent nation, Spain would have to bear the huge costs of moving those items, adding further strains to its economic situation. Catalonia also creates 45% of Spain’s revenue in the progressive field which includes cars and electronics; this field is the most lucrative in Spain and its loss would also be detrimental. This further downfall of the Spanish economy would cause a stir and loss of trust on behalf of the European Market that deals with Spain. Another complication that concerns Catalonia would be the need to find a currency to replace the Euro, as Spain would veto Catalan membership in the monetary union. This, along with high political uncertainty, would drive Spanish companies as well as multinational companies from Catalonia to other regions in Spain. Additionally, Catalonia would face difficulty getting NATO membership for the same reasons.
The last general elections held in June 16 appointed Mariano Rajoy of the centre-right Popular Party Prime Minister of Spain. Not long after this arrangement, the government set out on a mission to boost the country’s economic state through structural reorganization. While the economic crisis went on for a good 6 years, the situation started to improve in 2013 and further progressed in 2015 with growth exceeding 3% of GDP. However activity dropped again in 2016 when the positive outcomes of lower oil prices and the depreciation of the euro diminished. Moreover, public debt continues to increase and is expected to exceed 100% of the GDP in 2017. The private sector debt is also a problem with Spain suffering deflation.
Moving on to the legal environment, a few laws influence the way that general businesses operate in Spain and the way that customers behave. The governing laws in Spain for establishing companies and carrying out operations are related to those imposed on other EU countries and help them run smoothly. Spain presents a good environment for foreign investment, being the ninth foreign direct investment destination in the world. Moreover, Spanish law allows foreign investment of up to 100% of equity.
Despite regulatory measures set forth to resolve the legal situation in the country, the economy still struggles with lack of independence from government interference. Although tax rates have diminished, investment guidelines have been softened, and private investment is being encouraged in previously constrained sectors, the business sector isn’t free from government intervention. The government is still the determining force behind wages and salary rates. However, wages do not correlate with labor productivity; as a result, collective bargaining in both public and private companies dominates and makes it difficult for regulatory reforms to be applied. Wage constraints like these take a toll on the market’s competitiveness in relation to other nations. With other low wage nations fueling the competition, the situation will only get worse. In addition, not all sectors are allowed private investments.
On a more specific note and with regards to property laws, the perimeters of a rented/owned area – be it a commercial space or a residential one- can be exploited as long as it does not interfere with neighboring properties or spaces and is constrained within specific boundaries. This allows Cup&Cake to install the ATM machine on the perimeter of the boutique which will also need to be connected and accessible from the inside of the store for the purpose of restocking it. In addition, technical regulations concerning products and packaging are required to meet EU standards. The cupcakes being dispensed from the ATM need to be packaged in boxes in order to be taken and eaten out. Thus standard label requirements include expiration date, country of origin, and all ingredients and instructions. While these points are customary and typical in all food products in the market, they can be effectively used to the benefit of the brand. When customers eat in and make purchases at the Cup&Cake boutique store, they never get ingredient or nutritional information, something that has been greatly drawn importance to in recent years. Something as simple as a label on a cupcake box can promote the brand’s value of honesty and transparency. This can even attract health-conscious and fitness-driven customers who would like to indulge in a treat while keeping in mind its caloric value and macro content for their daily calculations.
The social environment in Spain is one characterized by cordiality, individualism, and high equalitarianism, among other things. After the death of Francisco Franco and the transition of Spain into a democracy in 1975, the social environment and cultural life witnessed a major transformation. The country became more in contact with the outside world. The influx of tourists from Western Europe influenced the Spaniards’ social culture and exposed them to democratic political and social ideals. Spaniards became less conservative and more liberalized and their social attitudes became more open-minded and accepting of modernized beliefs. Ideals about gender equality and closeness of family flourished. Social expressions in the media also changed with these altered liberal perspectives.
The concept of family is highly valued in Spain, making up a significant part of the social structure. Cup&Cake have successfully leveraged that to the advantage of their brand, which plays on the image of the grandmother’s touch in the kitchen and in baking. Their philosophy really stresses on quality, honesty, passion, hand-made products, family, and respect. The mood they have set up in both their stores as well as their website stresses these values, which are also deeply inherent in Barcelona/Spain’s society. The website portrays the people behind the brand in a family-oriented way, with the images of the coworkers together exuding closeness, love, fun, and support.
Up until recently, a big number of Spaniards worked in family businesses. Families remain the main source of financial and social support. While the people behind Cup&Cake aren’t exactly family members, they’ve developed into an idea of one and continue to evoke this concept in everything that they do and offer to the consumers. This concept can also be stretched to the cupcake ATM, which can be marketed and presented in a way that further highlights these values and the brand, implying ideas like “we always got your back, 24 hour a day to be exact” or maybe “grandmother’s mini automatic kitchen, brought to you with love”.
In terms of social behaviors in Spain, the people know how to mix work and play. They can stay up drinking and partying until the wee hours of the night ( and get their sugar fix from the cupcake ATM afterwards) but they’re on their feet and ready for seriousness the next day. They’re a cheerful, open-hearted, and cordial bunch that are easy-going and open minded. They also exhibit a very laid-back attitude, and don’t worry as much about life with the intention of living it to the fullest.
Being one of the greatest equalitarian countries in Europe, gender equality prevails in Spain. You’ll find women with dominant political positions in the Spanish government; the country’s Gender Empowerment Measure ranks 12th in the world. With more woman attaining higher education in universities, their role in the workforce is being upped to corporate positions that only men occupied in the past.
With regards to the Catalonia-Spain independence conflict, social tensions between Catalans seeking liberation and those opposing it have been rising over the last years. It has been called “a war of cultures” by Catalan President Artur Mas. But this nationalist sentiment isn’t just being invested between government walls, strained feelings have stretched out on the streets and are being expressed by the citizens towards each other. Feelings of hate and hostility are even being conveyed, and are being greatly exhibited over social media as well. Some complain and express their disgust when they hear Catalan being spoken for example. Attitudes from the other side are equally as hostile, too. All these approaches are pushing the debate deeper into acrimony. One Catalan girl said: “It seems, at times, that almost everybody despises us. Yet they still expect us to stick around and pick up the tab for many of Spain’s poorer regions. They can’t stand us but they need our money.” However, despite the existence of these social tensions, many Spaniards as well as Catalans are indifferent when it comes to the subject of Catalonia’s independence from Spain. Many also exhibit allegiance to the other. In any case, Cup&Cake’s values go above separatism and promote togetherness as a community and homogenous culture that appreciates food and the value of family. The boutique and the treats it offers will continue to bring people from all kinds of backgrounds together and remind them to enjoy the little things in life.
When it comes to the technological environment in the country, Spain is increasingly becoming a leader in innovation in the industries of aerospace, renewable energies, water treatment, rail, biotechnology, industrial machinery, and civil engineering. Furthermore, a new initiative has been set forth by the Spanish government in 2013 and is to go on until 2020, which involves all political, social, and economic stakeholders in order to promote the development of innovation and technology in the country. It consists of economic policy measures that tackle both microeconomic and macroeconomic aspects and are meant to strengthen concentration in industries that focus on technology and innovation. Since our proposal is heavily dependent on the use of technology for the installation of the smart cupcake ATM, these scientific advancements can be beneficial and useful for its success.
Investments directed to research & development programs in Spain have witnessed a large increase in the last few years, with GDP growth rising from 0.91% in 2000 to 1.33% of GDP in 2011.
The new strategy for technological advancements aims to collect, employ, and indorse valuable talent in the industry at all levels, as well as maintain backing for research & development in the field despite budget difficulties. The plan also helps small innovative companies to grow while promoting excellence in technological environments of larger companies. Another goal is to expand on the versatility in emerging technologies and enhance the connection between scientific and technical research, while tackling the universal issues that society is facing. Private investment in R&D is also targeted with the aim of increasing it in order to rebalance public and private expenditures.
The ultimate objective of this strategy is to put Spain at the cutting edge of knowledge in order to promote a highly-competitive business sector in a suitable technological environment.
With regards to the field of mainstream products and services , like banking ATMS for example, a few companies have started to make the move to incorporate technology. In 2011, Spain’s La Caixa bank was proud to announce its plans to install the world’s first contactless ATMs manufactured by Fujistsu, that allow customers to withdraw money with their smartphones or wearable devices ( while still working with conventional cards). The new Fujitsu ATM Series 100, manufactured in Spain, was launched in 2014 as the first of a new family of ‘smart’ ATMs. La Caixa Bank installed the machines in a district in Barcelona at first, as well as in Sitges and Palma and later expanded to include the Catalonia region and the Balearics with plans to continue installing the machines around Spain over 10 years to come.
“CaixaBank is the world’s first financial entity to add this revolutionary technology to its cashpoints, allowing customers to withdraw cash without having to insert their card,” the bank said in a statement. Contactless technology makes the process of withdrawing money a lot more efficient and faster compared to conventional ATMs. The Fujitsu ATMs can immediately recognize and eliminate forged bills as well as process NFC payments. They improve end-user interaction and exchange, include a big variety of advanced safety measures, and allow high levels of personalization of the ATM look in order to portray the bank’s corporate brand image.
Fujitsu predicted that in the future, NFC transactions will overtake credit and debit card payments. More than 245,000 Fujitsu Series 100 Atms are planned to be installed across Europe over the next five years, replacing old conventional models.
In this case, Fujitsu is a great example of a company with a market-leading position in innovative financial services technology in Spain, following its well-established success in Japan. It has its own manufacturing plant in Málaga, an ATM management center in Barcelona, as well as its own-IP technology and software.
Another example of an innovative financial service in Spain is Bit2Me developed by a Spanish startup company. The service allows customers to send money to someone else’s mobile phone which can be withdrawn by the recipient at any Hal-Cash compatible ATM. In a statement, Bit2Me claimed: “We’re willing to become Spain’s point of call for converting bitcoins into euros by building a solid and strong service”. In short, “Bit2Me is an easy way for new users to probe cryptocurrencies by converting bitcoin into euros anywhere in Spain, without registration and from a mobile device.” (founder of Bit2me, 2015)
In a highly competitive market, banks are constantly looking for new ways to stay at the forefront of the game while yielding to customer’s needs. Technological solutions like smart ATMs pave the way for omni-channel retailing, and allow the customers to make their purchases in a wide range of ways anytime, anywhere through their mobile devices for example. Cup&Cake will also be using this concept as a unique selling proposition for their Cupcake ATM. Thus, interconnecting the fields of hospitality with finance and banking through the application of a smart ATM that dispenses cupcakes can really be a cutting-edge success in today’s ever evolving market.
Considering the environmental challenges in Spain, a main problem that relates to the Food and Beverage industry is the water shortage. The country has been facing the worst drought in 40 years with reservoirs at only a quarter of what they’re actually supposed to hold and rainfall below 40% of the average. Fines are being enforced in regions such as Catalonia that reprimand excessive use of water for gardens or swimming pools. Regional governments are constantly trying to reduce the consumption of water; however, this has led to a decline in living conditions as the country is slowly nearing desertification. Global warming as a result of climate pollution also does not help Spain’s situation and will only speed up the desertification process.
The introduction of the cupcake ATM as an addition to the current store and its products means more cupcakes need to be produced to stock the machine, which means more water needs to be expended as a result. Generally, 2 cups of water are needed in order to make 12 cupcakes. While water cannot be sacrificed in the making of the cupcakes as it is an integral part of the recipe, careful consumption measures need to be taken in other aspects of the business. Maybe Cup&Cake can encourage the customers to spend less water and promote green solutions to help the city of Barcelona in exchange for rewards (coupon for free cupcake after 5 cupcake purchases?). The company can also monitor the worker’s consumption of water from sinks during working hours and limit it to a minimum.
Another challenge that needs to be tackled is the issue of energy consumption, and the implications of a 24-hour- run ATM machine powered by technology. ATMs generally are huge energy wasters. However, compensations need to be made as a result of this extra energy intake. Cup&Cake can monitor which hours of the day on which days of the week exhibit the very least amount of ATM purchases and choose to reduce the power for these specific periods.
