Marketing Strategy of Breadtalk Group Limited in the United Kingdom - Term Paper Example

ANALYTICAL REPORT ON THE INTERNATIONAL MARKETING STRATEGY OF BREADTALK IN SINGAPORE ENTERING UNITED KINGDOM By (NAME) Course Professor University Date Table of Contents Introduction 4 Company’s Vision 4 Mission Statement 4 Current Strategies of BreadTalk 5 International Marketing Situations that May Affect the Company Strategies 6 PESTEL Analysis of the UK 8 Political factors 8 Economic Factors 8 Sociological factors 9 Technological factors 9 Legal Factors 9 Environmental Factors 10 SWOT Analysis of BreadTalk 10 Internal Factors 10 External Factors 11 Threats 11 International Marketing Plan for BreadTalk 11 Segmentation and Targeting 11 Current Positioning 12 Chosen Market Entry Strategy 12 Effective development into UK marketplaces 12 International Marketing Mix 13 Adaption Approach 13 The 4Ps 13 Product 13 Price 14 Place 14 Promotion 15 Conclusion 15 Bibliography 15 Iesingapore.Gov, n.d. BreadTalk Boss Goes Hands on Overseas. Available at http://www.iesingapore.gov.sg/Venture-Overseas/Browse-By-Sector/Lifestyle-Business/Food-Products/Success-Stories/cs/Success-Stories/BreadTalk-boss-goes-hands-on-overseas [Accessed 21 Dec. 2014]. 16 Introduction BreadTalk Group Ltd. was founded by Dr. Quek and Katherine Lee. The company has a chain of retail stores, which it operates through its principle subsidiary BreadTalk Pte Ltd, which is a private company incorporated in Singapore on 6th of March 2000 under the Companies Act (BreadTalk Group Ltd, 2013). The company sells a wide range of products that include bread, buns, cakes and pastries. During the early years after inception, the company’s operations were centralised and the baking process right from the preparation of dough to the final process of topping of each objects of bakery was done at individual retail stores (BreadTalk Group Ltd, 2013). However, as the company continued to grow, and the plan of establishing franchisees was conceptualised, the company created a single central kitchen and shifted its headquarters to KA FoodLink, on September of 2001. Moreover, the company acquired more space and current machinery in 2002 to expand its production capacity. Currently, the company has about 746 retail outlets with over 7000 workers throughout Singapore, Hong Kong, Middle Ease and China. Company’s Vision Our vision is, “establishing BreadTalk as a brand and enterprise known for its innovative, trend setting and delightful bread and pastries”, which we believe we can achieve through franchising by opening new outlets both in the existing and new markets e.g. the current one being the United Kingdom. Mission Statement Our mission statement is “leading a new lifestyle culture with new innovative changes and creative differentiation to craft products with passion and vibrancy”. Thus, this mission statement implies that as a company we want we want to employ a mix of strategies to create a new culture at the company that embodies the production of quality vibrant crafted products that are better and bring satisfaction to the consumers than those of consumers. Current Strategies of BreadTalk At BreadTalk we are happy with our financial performance given that we have already surpassed the half-way point of S$1billion revenue mark towards our 2016 target (Iesingapore.Gov, n.d.). The excellent performance has been attributed to our current strategies and accelerated growth. Firstly, since inception we have use the franchising strategy to venture into new markets. For instance as at 2009 December we had 259 bakeries out of which 154 were franchisees. For example, our entry into China was part of our strategic plan to accelerate the franchising strategy development to use it to penetrate into other international markets while growing the whole system. Secondly, as a company besides the franchising strategy, we also identified joint ventures at the corporate level strategy as an alternative strategy for venturing into international markets, in addition to, to direct operation strategies, which is evident in China e.g. the setting up of Shanghai BreadTalk Co. at an estimated cost of RMB2million (BreadTalk Group Ltd, 2013). Moreover, as a company we have used the branding strategy by creating a strong brand name for our products and business. As a company we have tried to differentiate ourselves from the old fashioned bakeries by not only developing smooth and spacious age fastening store frontages but also open thought designs, which allows customers looking at the bakers as they work, hence, generating a lot of curiosity for our products (Iesingapore.Gov, n.d.). Thus, this unique concept and design can be found in all our branches and has helped spurring sales and increasing profitability. In addition, to the aforementioned strategies at BreadTalk we emphasise on the need for strong human resources and management that is characterised by strong management team, strong expertise. That notwithstanding, at BreadTalk, we emphasise on strong innovation strategies at the corporate level strategy (Iesingapore.Gov, n.d.). Therefore, through this strategy we have been able to provide customers with innovative products by innovating pro-actively hence, maintaining the customer’s hype in our products. For instance, through the innovative strategy, we are able to provide consumers with different bread regularly both in terms of appearance and ingredients. Moreover, currently, we are able producing ten new flavours after four months, in addition to, to inventing fun-sounding and creative names for our buns both globally and locally (BreadTalk Group Ltd, 2013). International Marketing Situations that May Affect the Company Strategies Globalised brand strategy & localised management: One of the greatest marketing situations affecting our company is the management of change resulting from the change of consumer taste and preferences in the different geographical markets that our company ventures into (BreadTalk.Com, n.d.). For instance, it is undeniable that BreadTalk’s bakery brand particularly focuses on the taste of Singaporeans because of its strong local flavours. Therefore, diversifying this brand into the UK markets may face great resistance from consumers because of their difference in taste and preference. However, as a company I recommend that we devise new measures, which aim at establishing a corporate headquarter that overlooks the global strategy for venturing into the UK markets to ensure the new business outlets in the UK conform to the corporate values of the company. Thus, through this overall strategy we can be able managing the local UK outlets to cater for the unique local preferences of the UK consumers (BreadTalk.Com, n.d.). The hunt for and development of distinct capabilities: the second marketing challenge that our business will face include the hunt for and development of distinct capabilities. The new global UK marketing environment produces new wishes and needs while advanced technology results to the production of subsidised new products and services. Therefore, because of the need for diverse proficiencies as a company we will need to develop an active tactic to the expansion of management to cultivate managerial concepts, thoughts and policies (BreadTalk.Com, n.d.). Therefore, as a business venturing into the UK markets will pose technological challenges which will hinder the development of distinct capabilities or competitive advantages. Creating Knowledge Based Company: Knowledge is the one of the sources competitive advantages for companies. Therefore, as a company venturing into the UK market will give us the challenge of attaining, storing, saving and making use of information & acquaintance ads to create distinct proficiencies. Moreover, the growth of management practices is changing in the market thus, posing a great challenge to the business. Therefore, such marketing issues will demand that as company we need to have enthusiastic managers to deal with such marketing issues that are critical to the success of the company (BreadTalk.Com, n.d.). Financial growth & corporate strategy: in addition, with our financial growth & corporate strategy aforementioned which has resulted to unprecedented growth of the business is also likely to pose challenges to our company especially after venturing into the new UK markets. For instance, because of the shifts in consumer tastes and preferences, as a company we will need enthusiastic managers and a globalised brand strategy to be able to cope with such unprecedented growth resulting from the creation of e.g. franchisees and establishment of businesses (BreadTalk Group Ltd, 2013). Therefore without such strategies in place, which is impossible within the short-term as a company we will need to adopt a slow expansion strategy by taking into consideration the existing resources of the company to be able to attain the sales target as a business we endeavor to achieve from the global markets of the UK. PESTEL Analysis of the UK Political factors Political factors include the stability of the political environment & the policies of political parties. Moreover, it includes political movements in the company’s area operation (Cartwright, 2002). Thus, given that the UK is one of the most stable economies in the world with active participation in the Trade organisations, we believe as a company the environment will be favourable for our outlets to prosper. Moreover, the tax rates both at the bottom line in form of corporation and at the consumption level in form of income tax for consumers. However, with the lowered corporation tax rates in the UK, as company we can be able to increase our profitability by venturing into such market (Telegraph, 2012). Economic Factors Economic factors encompass economic growth rates, unemployment, employment levels, costs of raw materials, interest rates, monetary policies, inflation and exchange rates (PESTLE Analysis, 2011). These elements have a direct influence on the business operations. Despite varying from one country to another, these factors are highly susceptible to change. Therefore, as a company will need to do a comprehensive study of all the economic factors aforementioned before venturing into the UK market (Srdjevic, Bajcetic and Srdjevic, 2012). Therefore, given the rising incomes (from £14,308 in 2007- £16,042 in 2011 per household) & lower interest rates in the UK, it implies that consumers have more disposable incomes to spend on consumption, hence, creating an opportunity for our company to venture into and increase sales (Tutt, 2012). Conversely, the interest rates in the UK have all the years remained low at 0.5% (BoE, 2010) implying that as a company we can be able to borrow large amounts of capital for investment at lower costs of capital. Sociological factors Sociological factors encompass events that socially influence on the community and market as a whole (Worthington and Britton, 2006). There are many cultural and social changes taking within the UK, which are impacting on the performance of bakeries in the UK. For instance due to changing eating habits, currently consumption is about 2-3 slices of bread per day indicating a gradual decline in consumption by about 1-2% per year. Therefore, due to this changing lifestyles as a company we are likely to face challenges of competition with other producers competing for the shrinking market. Therefore, despite bread being a favourite food, we need as a company to take the necessary measures before entering the market to be able to compete relatively with the existing producers. Technological factors Technology becomes outdated within a short period of time (Campbell and Craig, 2005). Thus, there is no doubt that the UK’s technological environment has drastically changed especially in the retail sector. The major developments have taken place in communication and internet based technologies such as the elaborate diffusion of the broad bands (Jobber, 2007). However, given that our company engages in aggressive technological adoption combined with innovative designs of bread production, as a company we can competitively compete with other major producers in the UK market and be able to expand our market share (Cipd.co.uk, 2013). Legal Factors Like any other company, as a company we must comply with the minimum legal standards that are enforced within the UK. Moreover, it is admissible that the UK legal environment is more complex than those of other jurisdictions, because we must comply with the legal regulations both those of the EU and the UK. Some of these regulations include: the minimum wage legislation, which requires employers to pay their workers a minimum wage of £6.19/hour for workers aged 21 years (Gov UK, 2013). Other major legislative laws include the equal opportunities legislation & other parliament acts designed ensuring equality in recruitment & selection process (Pilbeam and Corbridge, 2010). Environmental Factors Some of the environmental factors that as a company we are likely to face include the frequent floods and snow storms, which impact on sales and the failure of the local authorities preparing for such periods of inclement weather (Hall, 2011). On the other, given this is a new market area, we are likely to face environmental challenges relating to ethical sourcing policies, which can affect our production capacities. SWOT Analysis of BreadTalk Using the SWOT tool we can be able to identify some of the challenges, opportunities, weaknesses and strengths we are facing as a company (Grant, 2008). Internal Factors Strengths (Mbaskool.Com, n.d.). Some of the strengths of BreadTalk include the following; Strong brand name “BreadTalk” can easily be facilitating factor for penetrating into the UK markets. We also enjoys economies of scale, which can enable us make savings from operations hence enabling us to offer our products at better prices. A strong human resource management e.g. the diverse management and skilled team of employees. Strong R&D group spearheading our innovation of products Strong relationships of franchisees Weaknesses (Mbaskool.Com, n.d.). Over-reliance of the Singaporean market (generates about 49% of revenue of our company) High products substitutability Limited control of raw material supplies because we obtain them from 3rd parties Over-reliance on the bakery sector (generates about 45% of revenue of our company) Franchising demands high costs incurrence e.g. renewing of franchise licenses etc. External Factors Opportunities (Mbaskool.Com, n.d.). The food and beverage (F&B) industry is expanding hence creating market Rising household incomes in the UK implying an increase of consumption income Strong F&B market in the UK. For instance, despite the recent trend of declining consumption of bread in the UK, bread remains one of the favourite foods for most UK families. High chances of cross-collaborations among business in the UK Threats The high flavours of ingredients and appearance in our products would be unfavourable in the UK High rental costs because of our desire locating our outlets in strategic areas, which is one of our strategies (Mbaskool.Com, n.d.). International Marketing Plan for BreadTalk Segmentation and Targeting At BreadTalk it has been our history to target the up-scale suburb customers, working professionals and the young generation. Therefore, our segmentation strategy in the UK will focus on the high and medium income earners who can afford buying slap-up bread, who like bread ad those who are willing to new bread (BreadTalk Group Ltd, 2013). Current Positioning In the competitive F&B industry, we at BreadTalk try creating a young, fashionable and a healthy image to consumers by offering a variety of tastes, quick service and up-scale products. Therefore, by spearheading the trend of fresh & stylish culture of bread eating, we have been able to position our products in the minds of the consumers hence increasing our market share (BreadTalk Group Ltd, 2013). Chosen Market Entry Strategy Effective development into UK marketplaces For us to effectively penetrate the UK markets we will need to contract out/franchising or use the direct operations method to get into the UK markets. Moreover, we will need to implement a transcontinental strategy but at the same time try to cope with its pressures by devising means of adopting a confined adaptation to enable us drop off some costs (Mbaskool.Com, n.d.). For instance, by adopting this strategy, we can be able to penetrate and develop business relationships with other UK businesses to help us get into other F&B sectors easily. Moreover, given the level of competition existing in the F&B industry, we will need to identify some digital company in the UK to help us develop electronic mail marketing, public media channels and web designing renovation for all our family of brands. In addition, we will need to develop a yearlong strategy for promoting our company brands with the digital company. International Marketing Mix Adaption Approach As we noted earlier, the F&B industry is a competitive industry with many players. Moreover, bread consumption trends in the UK from recent statistics seems to be declining with an average consumption standing 2-3 slices per person per day unlike in Singapore where bread and other dough products form the favorite food for the locals. Therefore, with this trend in the UK, we will need to adopt the adoption approach, which would take into account such trends, in addition to, to the changing tastes and preferences. Moreover, given that the cultural lifestyle of the Singaporeans is different from that of the UK such as in terms of food flavours added to the products, it is imperative that the company employs the adaptation approach even though it is expensive compared to the standardisation approach to be able to gain much penetration into the market, thus, increase its customer base and revenues (Sakul, 2012). For instance due to changing eating habits in the UK characterised by gradual decline in consumption of bread by about 1-2% per year, BreadTalk will need to engage in aggressive promotion compared to the home; offer better affordable and quality products to the consumers compared to the competitors so that it can be able to gain market penetration (Sakul, 2012). The 4Ps Product In order for us to succeed in the UK market, we will need to increase our product lines by avoiding depending only on bread (Cipd.co.uk, 2013). For instance, we will have to identify a market for our other family of products e.g. the buns. Moreover, we will have to consider the differentiation strategy and try to provide high innovative products that meet the customer’s expectations and give them the most satisfaction, in addition to, quality by ensuring that we offer sweet and chocolate bread, which is preferred by most UK consumers (Sakul, 2012). Therefore, through differentiated products and consumer tailored products as a company we can increase our sales maximisation that will in the long-run lead to increased profits. Price As already mentioned above, we should adopt the adaption approach to set our prices across our UK outlets as opposed to the standardisation approach. The adaption approach will enable us consider various factors such as competition and demand levels. That notwithstanding, we should focus first on sales maximisation lieu of profits to enable us increase our customer base by using the market based pricing method to help us offer competitive prices, which are in tandem with those of competitors to avoid situations where customers will find our products more expensive than the competition. Moreover, this method will be in line with our objective of sales maximisation (Sakul, 2012). Ultimately, we will need to employ the penetration pricing strategy that is in line with our core objective of sales maximisation to enable us increase our market share through lower products and discounts (Sakul, 2012). Place It is our company to locate at strategic commercial strategic places. Therefore, the UK will be no different and thus, we will endeavor locating at commercial district areas, in addition to, using the franchising method to reach other customers. Moreover, given the competitive nature of the UK B&F industry, with large retails chains such as Tesco and bread producers such as Warren Bakers, as a company we will need to have a good of outlets and locate them in strategic points as well as have innovative point of sale designs, which are interesting and appealing to the customers (Sakul, 2012). Promotion Moreover, given the level of competition existing in the F&B industry, we will need to identify some digital company in the UK to help us develop electronic mail marketing, public media channels and web designing renovation for all our family of brands. In addition, we will need to develop a yearlong strategy for promoting our company brands with the digital company. That notwithstanding, we will need to engage in aggressive promotional activities to create awareness of our Brand and products to encourage consumers to buy. For instance, we can inform customers that we offer discounts on our product prices through the media advertisements and brochures to encourage consumers to walk into our stores all over the UK to buy our products (Sakul, 2012). Conclusion Therefore, from the above it is evident that BreadTalk we will have to adopt a multiple of strategies such as franchising, the adaption approach, strategic location strategies, etc. in order to penetrate into the UK marketplaces because the F&B is a volatile industry characterised by intense competition. Ultimately, as BreadTalk we will need to capitalise on our strengths to exploit the available opportunities while we try to minimise our threats and remedying out weakness. Moreover, if we can build on our strengths, when can overcome out threats and weaknesses and be able to exploit available opportunities within the UK market. Bibliography BoE, 2010. 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