Introduction
James Baxter is a pastry chef and owns a small bakery in Adelaide. James wants to grow his brand nationally and compete with chains like Pie Face, Brumby’s, Michel's Patisserie and Bakers Delight. He has also considered selling through Coles and Woolworths bakery options or creating high end specialty stores like Adriano Zumbo’s. Taking the above discussion into consideration this particular paper attempts to analyze the business environment and customer preferences in the bakery industry.
The buyer behaviour associated with bakeries
Customers today have become more attentive than ever before regarding the food items they consume, and they wish to purchase items they feel satisfied about offering to their family members (Progressive Baker, 2014). To meet the trend of increased health consciousness among consumers and increasing awareness about obesity, the bakery category requires innovation to be competitve. Additionally, customers are beginning to expect nutrition information with all food products they purchase from the market. The companies should consider placing a label or minimum the fundamental nutrition facts, to their food menu as well as to items in the case (Progressive Baker, 2014). They give importance to superior-quality, ingredients and premium foods and are ready to shell out some extra for the gourmet treats (Progressive Baker, 2014).
Analysis of the microenvironment
The scope for bakeries is growing at a speedy rate in the present day. However, the customers are very selective and they look for freshness, quality, variety and flavours. The suppliers for the James Baxter’s store would be retailers offering raw materials like flour, milk and meat and poultry products for making the bakery products. The rising costs of flour and other basic raw materials pose a challenge for the company. This is because achieving low cost would be difficult as suppliers would also tend to increase their price in future. The bargaining power of the suppliers is low as they mainly supply products of commoditized nature (Thompson, et.al., 2008). The nature of products that bakeries produce is perishable in nature. So, all products need to be prepared freshly on a daily basis. This requires suppliers to supply products on short intervals and sometimes on daily basis. So, effectiveness of the supply chain will impact the performance of the bakery. The intermediaries for James Baxter include the super markets and speciality retailers. The challenge for the company would be to gain shelf space and negotiate a good rate form these intermediaries. At times, it is found that large retailers have higher bargaining power and James Baxter will have to face the challenge of getting a better price and terms and conditions.
Competitor analysis
There is no doubt in the fact that the bakery industry is highly competitive with large number of small and large companies offering similar products. Likewise, James Baxter is likely face threat from several companies such as Pie Face, Brumby’s, Michel's Patisserie and Bakers Delight. These giants have already gained sound market standing and high recognition among the customers. Thus, in order to attain its market share, the company would need to offer its customers new and innovative products to differentiate itself from the competitors (Michman and Mazze, 1998). The below section provide an overview of the likely competitors of the company.
- Pie Face
At Pie Face pies with funny little faces on them are made (Pieface, 2014). The pies are very tasty and made from fresh ingredients, a flaky crust and Aussie beef. The products offered at pie face include sausage rolls, pastries, cakes, pies, sandwiches, wraps, sweets and others (Pieface, 2014).
- Brumby’s
Brumby's prides itself for being a retailer of specialty bread and one among the Australia's leading and highly successful franchise panels (Brumby’s, 2014). Brumby offers to preservative free, freshly baked bread simpler daily by making use of most excellent constituents, such as 100 percent Aussie wheat fresh obtained from the farm (Brumby’s, 2014).
The indirect competitors of the company would include the fast food outlets and the coffee shops. Both the fast food and coffee shop industries are marked with presence of large multinational companies like McDonald’s, KFC, Subway, Starbucks, etc. who have higher level of competencies and efficiencies compared to James Baxter as they have higher economies of scale (Michman and Mazze, 1998).
Analysis of macro-environment
The macro-environment analysis of the bakery industry has been provided in the below sections. There are several factors like economic, political, technological, social and cultural factors that can impact James Baxter’s bakery store.
- Economic Factors
There are several economic factors that can have an impact on James Baxter’s bakery store including changes in income level, inflation, rise of population and living standards. Bakery products, being non-essential products will be purchased by customers only when they have disposable income. So, difficult economic conditions will easily affect the demand for bakery products (Ali, et.al., 1995).
- Political and legal factors
Political factors impacting James Baxter’s bakery store include government rules and regulations. The company at all times need to follow the set industry rules and regulations.
- Socio-cultural factors
Social factors impacting James Baxter’s bakery store include changing preferences of the customers, buying behaviour, changing market trends and lifestyle. Increasing middle class population will increase the demand for bakery items (Ali, et.al., 1995). Also, the company needs to evaluate the cultural aspects in developing the products and communicating with the customers. For instance, there are communities who ear only vegetarian food, or who prefers only halal meat. James Baxter’s bakery needs to adapt the products according to these customer preferences (Theodosiou and Leonidou, 2002).
- Technological factors
The company needs to remain continuously informed about latest technologies, prevailing market trends, customers’ preferences and competitors’ strategies in order to ensure long term sustainability and existence.
References
Ali, K., Erdener, K. and Orsay, K., 1995, Marketing Strategy for Fast food restaurants: a customer view. International Journal of Contemporary Hospitality Management, 7(4).
Brumby’s (2014) About Us [Online] Available at: http://www.brumbys.com.au/about, Date Accessed: 29/11/2014
Michman, R. and Mazze, E., 1998, The food industry wars: Marketing triumphs and blunders, New York: Greenwood Publishing Group.
Pieface (2014) Food [Online] Available at: http://www.pieface.com.au/#food, Date Accessed: 29/11/2014
Progressive Baker (2014) Bakery Category Trend Report [Online] Available at: http://www.progressivebaker.com/downloads/ConsumerTrendRep.pdf, Date Accessed: 29/11/2014
Thompson, A. A. Jr., Strickland III, A.J., and Gamble, J. E., 2008, Crafting & Executing Strategy The Quest for Competitive Advantage Concepts and Cases, New York, N.Y. : McGraw-Hill/Irwin.
Theodosiou, M. and Leonidou, L., 2002, Standardization versus adaptation of international marketing strategy: an interactive assessment of the empirical research. International Business Review, 12, pp. 141-77.
