Planning for New Product Development - Case Study Example

• New Product Development

Planning for new product development is considered to be one of the major components for a company to differentiate its position as compared to the other existing competitors in the market. With the continuous increase in market opportunities, the number of businesses has also risen with the passage of time, which poses immense level of competition along with risks in developing businesses within the market (Poor, Kuchtova, Leeder and Januska 343). Concerning the fact, nowadays earning fair profit from a small chain cafe business has become a serious concern due to less confidence among the investors, especially in London market. This is beacuse the consumers have become more conscious about their expenses. However, with innovative product development strategies and high brand value, companies still possess the opportunity to gain competitive advantages in the current market scenario. The increase in the customers’ consciousness and concern about their spending forces the companies to provide more satisfactory services with high quality products to retain their sustainable position in the long run (Kotler 275-277).

Thesis statement. The paper concentrates on the development of an innovative business plan of a small ethical cafe in London market by analyzing market opportunities and determining the strategies to overcome the limitations evident within the market.

• MARKET OPPORTUNITIES IN LONDON

While starting any business, analyzing the market opportunities is the most effective practice for developing a business plan along with strategies. In the current market, the major priority of the companies is to differentiate their products or services from the competitors so that they can attract a large number of customers for the generation of high revenue (Hou 69). There are various aspects in the external environment such as customers’ requirements, cultural diversification, competition and economic forces among others, which influence the business growth or expansion. Based on these factors, a company can develop its own business priorities and implement the formulated strategies accordingly. Prior to strategy implementation, the company needs to evaluate the market along with the preferable choices for the business plan (Teece 175).

London is recognized to be one of the foremost multicultural cities in the world, based on which it can be considered as among the most preferable places for developing a café business. The major players in this market include Kaffeine, TAP Coffee No.114, Prufrock, The Attendant, Curators Coffee Studio and Espresso Room among others. All these companies concentrate mostly on the lower price perspective to retain its customers, and therefore there focus on the development of services or environment is largely contrived by this endeavor (Sheppard, "London's best cafés and coffee shops"). The fact that developing business with satisfactory service as well as better environment can also be considered to be one of the significant factors for attracting a large mass of customers. With respect to this fact, the company can concentrate on developing the theme for internal environment through which the customers can enjoy collaboration of different cultures (Kanagal 3).

In terms of economic growth, London is one of the prominent financial centers in the world and the most popular region in the UK. The supportive economic purview in the region has facilitated the growth of a number of leading businesses which are successfully operating for a long period of time. Thus, enhancing the space to provide a comfortable environment for a large number of customers is another important factor. In keeping with the fact that a limited range of products might restrict the sales, the increase in product range can also be regarded as a significant part of the business plan. The following pictorial illustration (Figure 1) indicates that within seven years, the market opportunities for business companies have significantly increased in which the service industry is considered to be the most profitable market in the UK. In this development, London contributes the major part based on its food industry (Monaghan, "The UK economy: six key charts").

• Figure 1: Industry Growth in the U.K, 2008-2014

Source: (Monaghan "The UK economy: six key charts")

Based on the stated fact, it can be affirmed that a business can concentrate on several aspects such as providing the customers with quality product at low price, enhancing profit margin initially, concentrating on providing satisfactory service along with the development of the environment to attract customers (Paiva 213). The business can implement strategies based on these factors which will eventually provide positive outcome as the target market is large in London due to higher buying population (Crow and Goldstein 17).

• RECOMMENDATIONS

Based on the evaluation of the market opportunities, the ethical café chain business is considered to be the most suitable business plan specifically for the market of London. Since the competitors of the business purely consider low cost strategy as a priority, therefore developing an ethical business with higher prospects will help the company to communicate with its customers more effectively in the long run.

Nowadays, people have also become largely conscious about their health and mainly prefer superior quality products or services within comparatively lower price. The consumers’ have become largely ethically-minded wherein they generally always attempt to derive utmost satisfaction from their purchases with a precise focus on purity of a product. This will be a major priority of the business plan from the initial stages itself. This will help the café to attract customers and achieve a sustainable position within the market.

• STP Analysis

Segmenting. Effectiveness of a business plan largely depends on its segmentation strategy. Owing to the reason that based on this the company will target the consumer market and try to satisfy their requirements as well (Bailey, Baines, Wilson and Clark 233). The suggested business will be segmented based on demographic characteristics such as age and income level with different product ranges as well as the psychographic factors such as ambiences and cultural collaborations.

Targeting. The café will mainly target the younger generation or students, who prefer to spend time with their friends. The cafe will therefore concentrate on enhancing the availability of products with different price-structure through which it can target people from different income levels.

Positioning. Positioning strategy focuses on placing the brand in front of the target customers so that they can recognise the brand on being a new entrant into the market. The cafe will be placed in the most popular place of London that is the Victoria Arcade, where it will be able to draw huge attention (Dibb and Simkin 7-8; Lynn 361).

• Strategies for the Business

The brand value refers to be the most valuable asset of a company through which it steadily stimulates the business growth along with the increase in revenue. As regards to brand name, the café is suggested to be recognized as "Café Zone", which would be placed in Victoria Arcade with its assortment of products such as tea, coffee, snacks, light meals and other drinks in different prices and quantities (Crow and Howard 7).

In the current market purview, recognizing the customers’ requirements and implementing a strategy to develop the purchase decision of customers have become a major concern. In this regard, ambience of the place has significant contribution in the cafe chain business to increase the overall profit. In this perspective, it can also be stated that nowadays people prefer the places with better ambiances, low cost structure and high quality products (Kotler 5). To address these factors, the business would mainly concentrate ethical aspects such as environment friendly preparation, healthy foods with lower price structure and professional service. This strategy will help the business to differentiate its products or services from its existing competitors, which is an essential factor for it to attract customers (Skokan, Pawliczek and Piszczur 58).

Concentrating on the financial perspective, providing quality products with better service in lower cost can be considered as a matter of significant concern in the initial stages of generating profit, for which the business will need to focus on the strategy of expansion by increasing the number of its outlets in the market. This can be considered as the value proposition strategy as this will enhance the brand value in front of the customers (Teece 175).

It has been apparent in most situations that people prefer a recognised brand in terms of food, which can become a barrier for Café Zone in developing its service or position in the market (Doole and Lowe 287). Thus, the business can intend to merge with Kaffiene in its initial stage, which will enable the new product to come into prominence more effectively. This merger can help the business to become a popular brand through its strategic priorities and further provide a chance to serve an extended group of people (Doole and Lowe 156).

In the changing paradigm of 21st century, most businesses have adopted several innovative technologies to provide better facilities to the customers. Accordingly, Café Zone will adopt certain innovative facilities such as placing card swiping machines within the outlets. Through these suggested strategies, the business can achieve a sustainable position along with high profit and brand preference (Tice, "How Restaurants Are Using Technology to Deliver Better Customer Service").

• MARKET RESEARCH
• Strengths & Opportunities

Designing internal environment based on cultural collaboration can prove to be the most effective strength of the business. The customers nowadays prefer to spend time within a familiar environment (Proctor and Jamieson 19). Hence, multicultural design in environment helps the business to turn customers’ preferences into purchase decision. Although parallel to providing better environment, the business needs to provide quality product with extra value added on it, which will influence the customers to shift their preferences towards a new brand (Alexander 276). This indicates that not only the environmental factor, but enhancing product range and quality in a single outlet can boost the sales rate as well because the customers prefer innovation.

Apart from this, the cafe will further provide snacks and other homemade desserts, which will help people to change their tastes. Frequently developing the taste factor will aid the business to retain its customers and attract more number of them which can bring forward huge opportunities for the business (Wohlfart, Bilan and Schimpf 57). Café Zone will consider the environment sustainability as a strategic priority, which will help it to gain competitive advantages in this era of high competition as well.

• Weaknesses & Threats

With the advancement of technologies and other managerial tools, developing the business further poses certain limitations. London is one of those places which is always considered as the place of food. Thus, the suggested business will have to face huge competition in which managing own brand value can become a challenge in the long run.

Financial factor is another problem that might be faced by the business as customers generally prefer recognized brands for their requirements. This in turn can create challenges for the business in terms of managing low price strategy due to comparatively less customer preferences which can reduce the sales rate to a large extent.

• REMEDIES TO OVERCOME

From the above discussion, it has been apparent that the ethical café chain business has huge opportunities; however there are certain initial limitations such as financial support that need to be dealt with. Although the suggested strategies have large potential to provide profitable outcome to the business, the company needs to be financially strong to implement these strategies in the market (Poor, Kuchtova, Leeder and Januska 343). Therefore, approaching investors into the business can be considered as a profitable action for surviving in the market at the initial stages. The company will tread the path of involving in a merger with Kaffiene in order to enhance its financial condition to compete with other rival companies.

On the other hand, the company can also develop certain aspects with the passage of tine such as dividing the internal space of its stores based on age or generation, which will help the business to gain more advantages in the competitive market.

• SUMMARY

Nowadays, the businesses operating globally need to be proactive in terms of their strategy implementation and decision-making process as the customers have a large assortment of options in the market to move on. Cafe Zone can be considered as a profitable idea in the ethical coffee chain business through its low cost and differentiation strategies. The company will pay significant attention to provide the customers better quality products along with innovative service to draw and to retain them. 0The business can also be suggested to implement unique ideas for designing the stores such as multi-cultural collaboration, including card swiping machines through which it can serve the customers more effectively. Effective communication between the customers and the company will help in building brand loyalty and generating high revenue in the long run.