Detailed Analysis of Greggs and Improvement Opportunity - Case Study Example

DETAILED ANALYSIS OF GREGGS AND IMPROVEMENT OPPORTUNITY (Part 2) Table of Contents Executive Summary Greggs is considered the leading UK retailer in the UK market after its successful results and growth in the early twenty century. Over the years, the operating and revenue collected by the company has steadily increased amidst challenges experienced by other retailers dealing in the same line of products and services. Therefore, the purpose of this report is to conduct detailed analysis of GREGGS and improvement opportunity in the introduction of a new product bread loaf in its stores and supermarkets (Gregg, 2013). The new brand of bread loaves will be artisanal in nature therefore will be considered as artisanal bread. This is because the employees responsible for baking the bread will be highly skilled as they it will be simple, baked slowly and will have a great taste because of the ingredients applied in its baking. New technologies will be used to improve on traditional techniques known for baking this type of bread thus being better than the common commercial baked breads. The new bread product introduced in the company stores and supermarkets will do well in the market because of the key strengths associated with the company. Firstly, Greggs is a recognized bakery brand within the UK market therefore its introduction will be easily accepted in the market due to consumer’s loyalty of the company’s brand. Secondly, Greggs has a strong financial capability therefore the introduction of the bread loaf product in the market will not face financial challenges as the stores and supermarkets will be adequately supplied with resources. Lastly, Greggs uses a strong positioning strategy which will further avail the new bread loaf product where the intended audiences will easily access them. On the other hand, bread loaf as a new produced by the company has its own advantages some of which are that it will allow Greggs expand on its already existing customer base because it will be eying both existing and new markets. Secondly, due to the already known brand of good baking, the bread loaf product will easily earn quick trust amongst consumers as they believe that it is good if not better than its predecessors. Lastly, introduction of the product into the company stores and supermarkets will be easy as they will use the existing resources used in company instead of purchasing completely new ones. However, as a company Greggs faces various risk in the introduction of its new bread loaf products into the market. In the recent times, we have witnessed various characteristics in the economy which either affects it positively or negatively (Bake, 2012). The introduction of the new product into the market will greatly be dependent on the economic condition of the country and market at large. However, this does not severe threat to the company because it can always analyze the economy before introducing the new product. Secondly, Greggs faces risk of loosing some of their existing customers because of the differences in change of taste of the new bread loaf as compared to the products which were already produced in the market by the company. The company can however rectify this by ensuring that the new product is adequately tested before being introduced into the market (Greggsfoundation.org.uk, 2014). Lastly, does the risk of other substitute products exist in the market. This will mean that Greggs will have to be very creative and effective in the production and introduction of the new product into the market. In order for Greggs to successfully introduce the new bread loaf into the market, it will be forced to create changes in their marketing strategies like conducting an internal expansion of their production, venturing into new markets, introducing new services in the production and distribution of the product and lastly investing a lot in online marketing strategies (Grazin, & Olsen, 1997). The UK Market In spite of Greggs enjoying a strong brand within the UK market, the market is crowded with suppliers around the region recording significant growth in the number of bakeries, pastries markets and county cakes which both serves as substitute’s products for the new bread loaf product to be introduced by Greggs in the market. Therefore, an analysis of the UK market will require Greggs to apply the elimination strategy in its expansion in order to identify potential markets for its new bread loaf product without encountering severe difficulties along the way. The company will use simple elimination strategy in achieving this successfully. The strategy will enable Greggs to identify markets which meets their criteria for marketing and introduction of the new product into the market as it integrates several factors like industrial, economic and cultural factors which are crucial in retaining their brand and placing them as the leading brand in the market and the entire region (Gladding, 2014). Greggs will keenly conduct a thorough research on its objectives and using the simple elimination strategy the company will excludes markets of non-European countries for the list of their targeted market. Through the same strategy, the Greggs will venture into markets which show quick growth in the bakery markets to look out for. An example though actual value not used, when competing with markets like England,4.60%, Wales 3.70%, Northern Ireland 3.60%, Cockburn Town1.80%, Denmark1.80% that showed a significant increase the number of bakeries between the period of 1995 and 1999. Using the statics of the increase in bakeries in years as shown on the statistics above, Greggs may decide to eliminate country with lowest percentage of increase in number of bakeries, consider the such factors like the psychological distances between their headquarters and host markets and the product propositions offered in various markets. (Elangovan et al 2011). In addition, to selection of the market for the new product, Greggs will be expected to keenly study their customer’s needs for the new products. This will include the value aspect in different markets and a good example is that Greggs is known for their good value which is responsible for their success in the UK market (Rauf &Butt, 2012). However, in venturing new markets, the company will be forced to thoroughly study the product value in those specific markets like for example when it enters a UK market with numerous French citizens the company will have to consider elaborate, exquisite and gourmet bread loafs as the markets in the region is known to offer such kinds or products to their customers. Secondly, Greggs will address the issue of quality customer service in the different markets selected in accordance with the different traditions and cultures practices by the targeted customers. Lastly, the company may decide on the after sales needs of their customers in respective markets since customers always like to be appreciated when they are loyal to a brand of a product (Ashmore, 2013). In introducing the new product to the market, Greggs target market will be based in the food-on- the –go market and bread and baked goods markets. The markets are considered to be one of the largest in the sector because of its continued expansion over time. Many consumers prefer this type of market as they find it very convenient in purchasing products offered and using them in their respective homes. The level of competition faced from different competitors will increase because Greggs will be forced to compete in the repacked bread and bread and baked goods market The major competitors the company will face in the introduction of the bread loaf are Subway, Pret A Manger, Allied Bakeries, Hovis and Warburtons since the markets had been previously ignored by Greggs thus giving them a footing on the market sector in the region. Introducing the bread loaf product into the food-on-the-go and bread and baked goods market will mean an increase in the competition posed by these major competitors as they will increase the number of shops and introduce new strategies like also introducing new products to lock Greggs new product form the market. Additionally, due to the large market share they hold because of the years of experience they have been operational in the market, they may decide to reduce their prices and initiate new marketing strategies to beat the new competition posed by Greggs new bread loaves. However, the idea of the new bread loaf product introduced into the market will be successful because it will based on bread loafs with a great taste, a wonderful shopping experience for the targeted customers and change as the core center for any improvements to be applied by the company (Foster,2012). The figure above displays the strategy that will be deployed in introducing the bread loaf products into the food-on-the-go market and other external markets. Technological or Operational Requirements According to Comstock (2012), For Greggs to successfully introduce its new bread loaf product into the market, the company will have to consider various technological and operational requirements. To succeed in this, Greggs will have to use technological advancements in increasing the quality of the new product in the market. Advancements in technology has led to the production of machines like the computers which are will be essential in monitoring the different stages involved in bread baking process. When good technologies are used, the quality of the end product is always pleasing to the customers; therefore customers will be attracted to the new bread loaf introduced by the market. Secondly, to successfully acquire the food-on-the-go and bread and baked goods market, Greggs will have to rethink on the technological equipments its used in the bread loaf production process and the speed which this takes. A new product like the quality bread loaf requires to introduce in the market may create a huge demand in the market that when not properly addressed may lead to shortages to both consumers and company itself. Therefore, in their different stores and supermarkets, the company may decide to use good computers, good ovens, good transportation modes amongst other things to ensure that the product reaches their targeted customers at convenient time and places (Mintel, 2013). Thirdly, Greggs requires good technological advancements in the production of the bread loafs to ensure that there is dependability amongst their customers. When the bread loaf production is consistent and reliable, customers develop a loyalty towards the brand hence increasing the revenues the entire revenues collected by the company. This will mean that state of the art technology is used in the entire bread loaf production process. An example is the use of Automatic 600 ton per day bakery flour machine. This will ensure that the customers are constantly supplied with the new brand of bread loaf produced by the company (Day, 2005). Fourthly, Gregg’s operational department should be flexible in its level of adjusting to certain issues like change. The employees working for the company should be ready and willing to learn new things like use of use new technologies in order to bit the competitions which exist in the market due to substitutes produced by other companies. This may involve regular maintenance of equipments used in the production of bread loafs and conducting training among employees so as to develop the required skills (Greggs.co.uk, 2014). In addition, they will be trained to operate trail runs in selected stores to see customer’s reaction to new product. This will give them an opportunity to acquire information on new bread loaves sectors which have not been addresses and raise it up to the management to improve the customer experience of customers purchasing the breads at all stations or stores. In addition, as they will be introducing their bread loaves to supermarkets like Tesco and Sainsbury who produce their own bread, the operational management will require a public relation team to communicate with the management of such supermarkets to allow them supply them with breads as they find this challenging because they will see as a competition on their own produced breads. For Greggs to successfully start up one medium sized bakery for the production of the new bread loaf in the market, the expenses involved are summarized below. Equipment $46,000 Materials $4,500 Rent (2 Months) $2,100 Site Modification $5,000 Signage, Stationary, etc. $1,000 Consultation $1,000 Supplies $600 Cash Reserves $9,800 Total Start Up Costs $70,000 Moreover, the marketing strategy used in promoting the new brand will be intense as it will involve road shows where bread samples will be offered to prospective customers at half prices. Awareness will be created through such forums like social networking sites (face book and twitter) and a team formed to address questions posed by customers will be composed to manage the social network and address the issues posed (Hughes &Perera, 2009). The marketing team will also be tasked with conducting market research to survey and see what type of bread loaves consumers want most or analyze competitors’ sales to see what consumers want. This will give the new product a competitive edge over its competitors as the bakers and the marketing team will know steps to take to increase the sales of the bread loaves. Moreover, public relations teams will be formed by Greggs to collect for consumer feedbacks and complaints and also social networks. This will play a significant role in strengthening the marketing strategy in use for the product as such things like ads will be conducted in accordance to the analyzed data collected from several customers. In addition, the operational costs incurred by the company in terms of payroll for employees will be $5.50 per hour and will they will be required to work for thirty hours week which narrows the wage expenditure per employee employed by Greggs to$707 a month. The company may start by employing ten employees per month as the product will still be new in the market. The company may avoid rent charges as they may use their existing supermarkets to produce the load bread. In terms of utilities, advertising, repairs and insurance, the company may use estimated costs of $7,000 per month. Performance Specifications The final product or bread loaf that the customers will receive in the market will stand out from competition posed by other substitutes because of the quality and the uniqueness characteristics it will possess. Consumers will be marveled at the new brand because the brand in question will stand out from other common brands. Greggs new bread loaf will poses an long life as the ingredients and skills used in its production will enable it stay fresh for days without using common preservatives and flavors present in the market (Churches, 2008). The new bread loaf will be white with soft crust and tender crumbs making it completely different from other substitutes available in the market. In addition, Gregg’s quality assurance team will ensure product quality is on par or superior to competitors so as to beat the competition on both markets brought about by substitute. The packaging of the new bread loaf will be exquisite as the covering will possess the logo of Greggs Company and will also displays a sweet aroma which will be used in the manufacture of the packaging. This will enable the company to effectively compete in the prepacked bread market as buyers who considered visuals beings therefore will go for that product which best appeases their eyes. Apart from the quality, customers purchasing the bread loaf will be pleased with the outside aroma thus will not wait to unveil the suspense of the aroma the bread itself posses (Benac, 2004). Customers purchasing the loaf of bread at different stores and supermarkets will not be placed to queue in lines as other customers purchasing other items but they will their special counter with well trained and mannered agents ready to attend to them. Moreover, the after sales services on the bread will be great as per every purchase a voucher point will be awarded to a customers on special cards which will be created for loyal customers of the brand. The rewards on point will structured in that when a loyal customers purchases more than fifteen loaves of bread within one week, he receives one free loaf of bread (Leung & Cheuk, 2000). The bread loafs will also be available at the customers convenience as they will be distributed to numerous stores and all leading supermarkets (Tidd &Bessant, 2009). Unlike the competitors like Tesco and Sainsbury who produce and sell their own bread by placing emphasis on specific areas like maybe supermarkets, Greggs new bread brand will be available in each store where consumable products are sold (Hopkins, 2013). Conclusion In conclusion, Greggs will immensely benefit form introducing the artisanal bread loaves in the market as this assist it in increasing its sales in spite of the economic downturn experienced by companies all over the world. Coupled with a good understanding of the market in which it operates, Gregg’s new bread loaves will continue thriving in the market despite competitions posed from the availability of various substitutes. The bread loaves will be a success to the operations of Greggs because of the targeted consumers who are considered to take a keen interest in hearty, traditional fare at an affordable price. 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