Greggs in the UK Market - Case Study Example

DETAILED ANALYSIS OF GREGGS AND IMPROVEMENT OPPORTUNITY (Part 2) Table of Contents Executive Summary 3 Greggs in the UK Market 4 Supermarket distribution channel for Gregg’s Breakfast Muffin range 6 Technology Requirements: Predicting Demands 8 Performance Specifications and Improvements: Greggs Bakeries 9 Reference List 12 Bibliography 16 Executive Summary The analysis of the external environment gives the researcher a clue of the factors that the brand may incorporate to have suitable advantages over the competing brands in next 5 years. The strengths of Greggs are in its quality and value that it has developed with its prolonged operation in UK market (Thomas, 2013). The purpose of the report is to introduce a new product or service for Greggs in the UK market. This would give the brand further opportunity to derive maximum profits and further develop its market share. The launch of Gregg’s breakfast muffin product in the super market channels is a new addition of process proposed in the report. The opportunity to have a larger share in the market would utilise the super market channels that have vast reach and larger volume of sales. The super market channels are competent channel for volume increments in sales due to its spread and footfall. The risks include aspects of the new product’s lifecycle, sales volume strategies, product and pricing strategies for the new channels failure in the scope developed. The risks of introduction of such channel are many as the channel is new to Greggs. However the ways to monitor and control the channels are developed to assist the business to predict the sales, meet consumer expectations, utilize technology to assist the ways of future prediction for cost effective production. Further the product of breakfast muffins would change the offerings of Greggs for 5 different flavours are launched in the super market channel. The changes in operations to suitably assist different sizes to keep the price differentiation in retail and supermarket channels are planned where supermarket with 50 grams product weight while retail chain with 70 grams of product weight is planned. The use of its current infrastructure is proposed but the change in manpower allocation, raw material purchase, different baking proportion for the new product, volume of baking utensils for the change in production process is proposed. The new product and services added would need suitable manpower planning and distribution implementation to achieve regular availability in every channel. The distribution planning in different retail outlets from the production sites are best planned and executed with effective use of ERP. The promotion for the new range is suggested to have Social media use for economy. Greggs in the UK Market The business of Greggs has a fleet of 375 vehicles that caters its 1600 plus retail outlets from 10 different regional bakeries (Greggsfoundations.org, 2014). The trends of UK based retail market suggest that the sales revenue would increase by 16.3% in the next five years compared to its 2009-14 figures (Gladding, 2014). Therefore the volume of sales expected in such a channel is also predicted to increase for Greggs. With increased production, the cost of the business (fixed and variable) gets distributed on the number of units produced. Therefore the brand that would produce more units at one may achieve lower cost of production. Worlock (2007) argues that operational efficiency is primary for the business to introduce its product in the new market channel like Supermarket. Yamashita (2010) suggests that the plans for new channel for sales addition would need to assess the steps in the product life cycle: 1. Develop the plans to introduce Supermarket as channel sales partner, 2. Introduce product in the channel with effective marketing and promotions, 3. Growth of sales in the competitive market, 4. Maturity or peak of sales for the introduced line and 5. Decline of product sales in the channel therefore new improved service and product introduction. The new channel would target new segment of consumers or the supermarket consumers (over and above its retail channel consumers) in the UK market and would need new planning of production, packaging and distribution to succeed (Tokmaji et al. 2013). Thus the planning required to have the new channel would encompass production facility planning, raw material purchase, packaging and pricing to suite the channel. McDonough (2002) suggests that the efficiency of a process is dependent on the technological inputs that the business uses. When the mechanical efficiency is lesser, the costs of running the production process increases causing the ‘diseconomy of scale’. Further for a specific production in large quantity the economy may be good but changing the product line may not be possible to achieve the economy of scale. Thus the business needs to evaluate the cost of such channel addition for its muffin range and therefore suitable price the product (Hopkins, 2013). Jaichandran and Irudhayaraj (2010) suggest the consumers in the process of purchase, needs to consider factors like availability, price, benefits and value received from the purchase. Therefore the production facilities need to be selected with time of operations for the production of the Muffin range to supply its consumer segment of super market channel (Greggs.co.uk, 2014). However, for daily operation the use of working capital to increase speed of operations, distribution etc involves working capital. This capital and variable cost gets distributed on the products, decreasing the cost to consumers in the value chain when the production is in bulk. This price advantage of the products produced in bulk would give the super market channel have a product at a lesser price to that of the retail outlet (Otten, 1990). Use of Information technology to predict demand estimates, to enable the business have better control over its raw materials, sales and distribution, is proposed. The short or long run cost of operations gives the business a strategic planning scope to develop the needed processes to develop. To create a better flow of services by meeting consumer’s demands with satisfaction is the way to create the needed success in the supermarket channel (Hughes and Perera, 2009). Therefore the scale of production along with consumer’s satisfaction is the key to achieve the volume via super market channel (True progress, 2008). Supermarket distribution channel for Gregg’s Breakfast Muffin range The supermarket chain has certain advantages and few disadvantages when incorporated in Gregg’s business for its breakfast line: Cost savings: The cost of producing the breakfast muffins in bulk would give a substantial cost savings for the business when compared to its retail outlet product (Mintel, 2013). However the price for super market and retail channels would be kept different therefore the product size is kept different (Umble et al. 2013). The retail channel and supermarket channel would have different weight of the product where the retail would sell products of 70 grams each while the supermarket channel would sell muffins of 50 grams each. Time Savings: The time for delivery of bulk muffins from the production facility to supermarkets is supposed to be lesser than individual retail outlet delivery. As the retail outlets have lesser quantity of demand for a range of products therefore the time of distribution is more when the quantity of supermarket is compared. Therefore a single vehicle can be used to deliver a larger quantity via super market channel. Consumer convenience: The consumers of different brands of bakery products are seen in supermarkets. The consumers can get the required product at one place instead of visiting different stores for the needful (Goi, 2009). This is convenient for the consumers and business equally as the business can reach more consumers and have higher volume of sales in this media. Offer and discount support: The business of Greggs can ride upon other brands to build its sales volume in the supermarket where the consumer’s purchase volume attracts free gifts and offers (Leung and Cheuk, 2000). The promotion of the new product range launched by Greggs can ride on other product category for its sales and give the new consumers a taste of it for future repeat purchase activities. The disadvantages that the supermarket channel may have are as: Loss of revenue for retails: The loss of revenue for the retail sales in the other retail channel for its muffin sales can be one threat that the business needs to consider. The loss of revenue in such a case may occur where the retail price for Gregg’s muffins would be higher due to its operations costs to its super market channel (Leung and Cheuk, 2000). Therefore the products in the channels are differentiated in product size and price (Hughes and Perera, 2009). The supermarket channels would sell at a lower cost with lesser weight of 50 grams while the retail channel would sale at a higher price for the weight of 70 grams. Loss of communication control: The retail outlets of Greggs have specialized employee support that has people working with effective product knowledge to insure consumer satisfaction (Hallam, 2001). The information about a product can be received from the retail staffs in the retail chain while the supermarket channel have loss of communication control as the people working with them have a different role that is not significantly associated with one single product (Rauf and Butt, 2012). Loss of product’s distribution assurance: the product at the retail outlets has a certain way of operations that gives the decision makes an idea of future sales and demands. However the supermarket channel may pose a threat where the availability of product in time, distribution on time or prediction future trends may cause limits in product distribution assurance as in the retail outlets (Owners toolkit, 2012). However the technology support for the entire process is proposed to achieve the same efficiency as the retail outlets of Greggs. Technology Requirements: Predicting Demands Information technology use is the current sphere of attention for a large number of policy makers and general people (Comstock, 2012). The technology gives the communication advantage within no time therefore the sharing and using a data in real time has changed the way business happens. Major business decision making is made easier with the technology use. However, Hallam (2001) argues that the information technology actually did not raise the productivity but helped in reducing the cost of goods and enhance productivity as for example online ticket bookings. The online e-commerce is one very significant addition from the IT sources where the business to consumer sales can be achieved (Foster, 2012). However the introduction of the supermarket channel would need further specifications to be integrated in the current IT framework to effectively control the distribution and production of the new muffin range. The supermarket volumes are more as the footfall and bulk is big compared to the traditional retail outlets of Greggs (Mintel, 2013). Thus IT would help the business track the sales and make demand predictions for future sales. The daily sales and future demand calculation is important for the brand to make necessary preparation for the production and distribution. Manpower planning for production process, distribution, purchase of raw materials gives the business an edge to maintain economy in the new product launch. ERP (Enterprise Management Systems) that have a organization wide connection with different processes gives the decision makes a clue of the purchase volume, manpower for production, hours needed for production, distribution volume etc (Foster,2012). However since the supermarket channel is out of the Gregg’s ERP so the daily sales report may be one way to generate the future sales prediction. The gap in demand supply predictions can be made with effective use of IT in a region wise basis where multiple bakeries can be used to evenly distribute the production pressure. The feedback received from various channel sources can be stored and analyzed via ERP for further product modifications (Elangovan et al. 2011). Performance Specifications and Improvements: Greggs Bakeries The new breakfast muffin range of Greggs in the supermarket channel is discussed in accordance to its specifications. The marketing mix for such a channel is discussed with its 4 Ps for Greggs Bakeries. Product: The product for the supermarkets is packed in 2 units and 6 unit packets of 50 grams unit weight. The product size is kept different to create the difference between muffins sold in Gregg’s retail outlets to its Supermarket channel. The supermarket gives the brand the desired sales volume and due to the bulk its volume sales thus the product needs to be priced in a way that suites both the channels and cause no adverse effects on retail outlet sales. Pricing: The consumer perceived value of a product is the key behind a successful pricing plan (Day, 2005). The pricing for the Greggs baker had been consistent with time where the variable attributes of the business like competitors pricing, fluctuating price of raw materials in the market and other production specific variable cost was kept in control to develop the pricing policy over a longer period, with ERP, to keep the consumers perception remains the same. However the supermarket channel demands a lower price due to the price affectivity through bulk volume. Therefore the pricing is done to accommodate both the channels to actively participate in the sales of different product weight with different pricing. Promotion: Promotions for a brand is key to its awareness generation plan and product information propagation for the Greggs brand. The use of IT may further help the business to design its promotion in a cost effective manner via social media (Day, 2005). The use of social media promotions is of lesser cost compared to its traditional competitors so the use of the same makes the promotion not only cost effective but also competent. The daily promotions for a certain locality become easier to communicate with use of social media. The supermarket would need special attention. The differentiating factor between the muffins at Supermarket and retail outlet has to be achieved through promotions. Place or distribution: The brand of the Greggs Bakery is transmitting fast with its new stores, franchised outlets and supermarket making a larger space for itself and attracting larger audience for their offerings. The supermarket channels would need the distribution planning between the production bakeries of each region to the subsequent supermarket outlets (Churches, 2008). The use of multi channels needs the distribution planning along with volume of delivery and production in each of the bakeries. Again the data about the consumer’s feedback and success in the supermarket channel would lead the brand to develop products for future sales via this media. Based on the liking and trends of the market, the business has to develop its future strategies of opening stores or acquiring new brands to gain progressive space in a certain market. The competence and validity of the success of the business in the longer run depends upon the consumer’s perception of the goods and services (Churches, 2008). The better the service and quality in competition to the rival brands the better is the capacity to retain consumers. The futuristic growth and development is dependent upon the longer period focus for a brand in achieving the market space with volume and sales via supermarket channels. For the multichannel sales the brand of Greggs needs to revive its process of production, purchase, operations to suite the new channel partner. The increase in volume would attract the extra working hours for bakery manpower. The distribution vehicles can be utilized to deliver the product in those supermarket outlets those are closer to the respective bakery. The allocation of raw materials for production of new series of muffins along with production standards like measure, volume and moulds for baking needs to be arranged. 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New Jersey: Jon Wiley & Sons Ltd Tokmaji, G., McClure, R., Kaneko, T. and Aranki, S., 2013. Management Strategies in Cardiac Surgery for Postoperative Atrial Fibrillation: Contemporary Prophylaxis and Futuristic Anticoagulant Possibilities. Cardiology Research and Practice, 2013, pp.1-16. Tripathi, U., Hinkelmann, K. and Feldkamp, D., 2008. Life Cycle for Change Management in Business Processes using Semantic Technologies. JCP, 3(1). Read More