The External Environment of the Cookie Industry - Research Paper Example

The paper “The External Environment of the Cookie Industry" is a perfect example of a research paper on marketing. The cookie industry, in general, has about 370 cookie companies and the top 50 of these  - led by Nabisco, Keebler, and Sunshine, account for half of the $24.3 billion in sales of the industry and Nabisco controls almost a third of the industry sales. The cookie industry, in general, has about 370 cookie companies and the top 50 of these  - led by Nabisco, Keebler, and Sunshine, account for half of the $24.3 billion in sales of the industry and Nabisco controls almost a third of the industry sales. (Cohen 1995, 10) Certainly, the leaders, particularly Nabisco trail blazes the trend in the industry. This is demonstrated in the way healthy cookies, the niche wherein our product will most probably be classified, have been introduced and sold today. (For more details see economic environment section)

In examining the competition, it is important to keep in mind that new businesses start every day. Traditionally, it was hard for new entrants to thrive in the cutthroat industry but technological and other developments, including the Internet, have leveled the playing field somewhat. Today, it is now possible to build a customer base and to compete with established players easily because of the unprecedented access to consumers that the Internet platform allows businessmen. This advantage also becomes a disadvantage when people started to realize the Internet benefit and join the scramble to compete to the point that the market becomes saturated.

Economic Environment
Today, many consumers are health conscious. This is demonstrated in the growing number of cookie products to display health claims on the label. There is an acknowledged growth in this market segment, characterized especially by mothers who are concerned about their children’s meal. As a new niche category, healthy cookies have been introduced in the market: Pepperidge Farm’s Wholesome Choice hit $14.6 million in its first year out; Health Valley Natural Foods saw its cookie sales jump 173 percent to $23.7 million; Nabisco’s line of healthy cookies called Snack Well performs according to the company’s standards. (Cohen, 10) Cookies exhibited the highest growth in the Standard Industrial Classification codes developed by the Census Bureau under its 20S2 product category. (Cohen, p. 8)

All in all, the snack food industry, wherein cookies belong along with crackers and salty snacks, is a $12 billion industry in the United States and is dominated by large, diversified manufacturers and, surprisingly and, fortunately for our plan, a few strong regional/niche players. (Hunt 2009, 150) These two main players constitute over 70 percent of the market share in the US. What this means is that the economic environment can accommodate niche products such as our veggie cookies.

Technological Environment
There is a difficulty in anticipating and predicting the technological changes that will happen in the near future within the cookie industry. However, according to Abrams and Kleiner (2003), even if you are making old-fashioned chocolate-chip cookies, advancement in oven design, food storage, or inventory control software will place competitive pressures on the business and that the competitor’s technological advances may cause significant downward pricing pressures on us as we enter into the fray. The solution here is for a company to be adaptable to change.

Legal Environment
The main consideration in the veggie cookie venture, especially in the context of food production and marketing, is the Food and Drug Administration or FDA. The task of the FDA as a food industry regulator is to oversee the food industry to ensure that it meets its legal requirements. (Hubbard 2003, 139) One of the expected issues that would have to be faced in cookies production and sale is the HACCP or the Hazard Analysis Critical Control Point requirements. The FDA has already issued that industries including dairy, frozen dough, cereals, bread, salads, cookies, and other related products must follow the HACCP requirements.

Socio-cultural Environment
As a product concerned with the health of its consumers, our veggie cookies can score points in the socio-cultural environment. Consumers recognize that the food they and their children eat is one of the most important variables in changing their lifestyles for the better. In a way, our veggie cookies can be revolutionary or represent the change that the public wants for their food today as they become more health-conscious.

Opportunities and Threats

• Again, as part of the niche products, our veggie cookies, has the potential of being successful in the market. This has been demonstrated in its popularity among consumers. In addition, a vegetable cookie is a novel idea, at least, in the commercial cookies production industry. Direct competitors have consisted mainly of specialty bakeshops.
• The most significant threat would definitely come from competition either from major players such as Nabisco or from startup companies once they got wind of the success of our veggie cookies. Nabisco, along with other big firms, could utilize their mass-producing facilities and the strength of their brands to claim the market. Smaller players could prove to be threats when they start to saturate the market. The collective competition was summed up by Cohen when he reported that approximately 1,000 new products are introduced in the cookie market each year. (9)