Marketing Environment of Baxter Organic Bakery - Case Study Example

Executive summary Baxter Organic Bakery is a new organic bakery specializing in healthy, convenient and tasty products based on use of organic flours of the highest quality that produces non gluten. In the past few years, demand of these products increased since doctors have begun to diagnose food allergies correctly. The company will assess its environment by scanning both micro and macro environmental factors to identify various factors affecting the business. Baxter will be offer a wide range of products to its customer which will include spelt breads, muffins, and pastries. The company will focus on three distinct segments, namely; allergy group, doctor group, and, dieters group. To market its products, the company will use the 4ps. 1.0 Introduction Baxter Organic Bakery is a bakery located in Adelaide South Australia which will be specializing on whole grain, gluten-free, dairy free and eggs free products. Over the past few years, there has been increased demand for products specifically targeting people with allergies. This is a niche market that has not been served before. There has also been advice by doctors for people to watch their weight by eating nutritious food while doing away with the junk food. Moreover, with the increased levels of lifestyle diseases, doctors are advising patients to eat whole grain foods. Baxter Organic Bakery intends to create a solid relationship with its customers by creating an atmosphere where clients are comfortable and feel the urge to frequent our joint regularly. We are very sensitive to the population of allergy sufferers who have been overlooked for a long time. We are seeking to find a fair profit just enough to keep our company financially stable and to compensate our employees fairly. This report comprise a market analysis which reviews the market and the industry and marketing strategies which segments the market and recommends a marketing mix for the product. The report also has recommendations based on the whole report. 1.1 Vision “To be the world premium organic bakery” 1.2 Mission Baxter Organic Bakery has a team of committed individual who will provide our clients with quality bakeries. Our goal is to provide our clients with trendy, healthy, fine and tasty non-gluten baked goods and pastries. Our team of talented pastry chefs cutting edge cooking methods and pure ingredients to create products that are healthy and of high quality. We will provide outstanding customer services to ensure customer satisfaction. Our company is dedicated to provide its employees a positive and respectful working environment while ensuring equality. 1.3 Keys to success Baxter Organic Bakery keys to success include: Providing high quality healthy products with personalized customer care Competitive pricing Shop design which will be visually attractive and ensure fast and efficient operations marketing strategies aimed at solidifying loyal customer base and maximizing sales 1.1 Objectives The objectives of Baxter Organic Bakery are: To attract the allergy group, doctor group and the diet group at a rate of 35% of new customers in the first year and 75% in the second year To become the finest organic bakery in Australia To breakeven within the first two years 2.0 Target Marketing Baxter Organic Bakeries will target three segments: Segment 1: The allergy group: Our first group of clients is the group of people with allergy. According to New South Wales Food Authority, 1 out of every 20 children and 1 out of every 100 adults suffer from food allergies. The report further indicates that Australia has one of the highest occurrence rates of allergies in the world and the allergy tends to run in the families. The high occurrence rates of allergy are concerning especially because there is no cure for food allergies. The only successful way of managing an allergy is avoiding foods containing the food component or allergen (NSW, 2014). Some of the most common food allergens include: Crustaceans Fish Eggs Peanuts Milk Soybeans Sesame seeds Tree nuts Gluten (from barley, wheat, oats rye and their products) Sulphites (added to food as a preservative) (NSW, 2014). This is a niche market for our company considering that no other bakery has gone out of its way to produce non-gluten, dairy-free, eggs-free bakeries for persons with allergies. Segment 2: The Doctor’s Group For many health reasons, doctors are warning people to stay away from certain foods due to the risk of high blood pressure and high cholesterol. According to the Heart Foundation, the main cause of death in Australia is cardiovascular disease (CVD). CVD kills at least 12 people every 12 minutes in Australia. There are several risk factors for CVD including: obesity, overweight, smoking, alcohol intake and physical inactivity. Nine in every Australian adult has at least one of that CVD risk factors (Heart Foundation, 2014) .To prevent heart diseases, doctors are advising patients to avoid foods with high cholesterol and eat whole grain foods including: Whole-grain pasta Whole-grain bread, Oatmeal (steel-cut or regular) High-fiber cereal Whole grains such as brown barley, rice and band buckwheat (kasha) Ground flaxseed (Heart Foundation, 2014). We will be targeting this group with our 100% whole grain bread. Segment 3: The dieters group This segment is making modification in their diet with the desire to lose weight. Statistics indicate that 92% of young ladies and 44% of middle aged women diet with the aim of losing weight at least once in their lives. Another study conducted in Melbourne indicated that 20% of boys had dieted to lose weight. While many teenagers recognize the need to lose weight to prevent lifestyle diseases in future, many of them lose weight for their looks. Weight-loss is achieved by balancing nutritious diet with good physical exercise. Weight-loss programs are discouraging fad diets but instead avoid foods with dairy and gluten flours. We will target this market with our non-gluten flours such as spelt and non-dairy products (Kausman, 2014). Characteristics Segment 1: Allergy Group Segment 2: Doctor’s Group Segment 3: Diet Group Geographic- Australia Australia Australia Psychographic-segmentation based on the lifestyle of the consumers This group avoids food with Allergens. Our products are non-gluten and dairy free. This group avoids foods with high cholesterol. Our products are 100% grain with high fibre as recommended by doctors This group makes modification in their diets to lose weight. Our products are dairy free and use non-gluten flours Demographic-This is based on age. Children aged between 5-16 years Young adults between 17-25 years Adults between 26 and above years Adults aged 40 years and above Young adults between 15 years to 30 years Behavioural-This is based on benefit sought by using the product. The only successful way of dealing with allergy is avoiding food with the allergens. Our products are non-gluten and dairy-free To avoid heart diseases, they avoid food with high cholesterol. Among those foods are bakeries that use 100% whole grain. To lose weight, one should observe a nutritious diet which is dairy free, has high fibre and non-gluten. 3.0 Positioning and Competitive Advantage 3.1Positioning Positioning is a marketing strategy that aims to make a company’s brand occupy a distinct position higher than the competitor’s brands in the mind of the customers (Moller, 2006). This concept is aimed at selling the benefits of the product to a particular target market. Moreover, the concept focuses on the emotional or rational benefits that a customer will receive by using the product. Baxter Organic will position it products as healthy, convenient and tasty products based on use of organic flours of the highest quality that produces non gluten products which are recommended to its target customers. The bakery will position itself as the preferred joint for people suffering from food allergy, diet craze group as well as people who are warned off certain foods by their doctors. 3.2 Competitive Edge For Baxter Organic Bakery to identify their competitive edge which will help it position its self in the market, they will have to undertake a SWOT analysis which will to identify its strengths so that they can be used to overcome threats in the external environment as well as identify the company’s weaknesses so that it can overcome them with the opportunities that are offered by the external environment. Strengths Healthy menu Cheaper that competitors Niche target market Weaknesses No reputation High operation cost Opportunities Opening many restaurant various cities in Australia To enter the foreign market Threats High competition from major competitors such as Hungry Rising operating costs Price war From the SWOT analysis above, Baxter Organic Bakery competitive edge is on its quality of goods they will offer to the target market. The company will only use organic flours of the highest quality that produces non gluten products which are not currently offered by any competitors in the market. Moreover, Baxter Organic Bakery has clearly defined its target market and further segmented it. This will enable the design products according to the customers’ need hence achieve customer loyalty and this will increase the company’s Brand and revenue. For instance, the company will bake products that are specifically for customers who suffer from common food allergy. This will build customer loyalty from approximately 65,000 children and 96,000 adults who suffer from food allergy in Australia. 4.0 Marketing Mix Marketing mix is as a framework that a manager uses in decision making to make their products suit the consumer needs. It is defined as a set of factors, actions and tactics that are used by a company to promote the brand and the products of the company. The traditional marketing mix is comprised of a set of controllable elements referred to as the 4P’s they include the product, the price, the promotion and the place. The mix however nowadays includes factors such as packaging and positioning (Moller 2006). The 4P’s are combined to form a situation that meets the needs of the customers. The marketing mix is important because if successfully applied it is a source of great success to the company in terms of returns. The purpose of this marketing plan, a marketing mix will be recommended for Baxter Organic Bakery. 4.1 Product Product can be defined as that physical product or service which is eventually offered to the client. For products, this includes the services or the conveniences that are part of the product offered. Some of the important product aspects include: appearance, warranty, and positioning, branding, service, packaging and product life cycle (Palmer 2004). Baxter Organic Bakery will specialize in non-gluten, dairy free, and eggs-free baked products and pastries for the allergic and diet conscious and consumers who are under doctors institutions. Our products will include: Oat meal Whole grain bread, pastries and muffins Oat meal is non-gluten and as such will suit perfectly the needs of all those who are allergic to gluten. At the same time oat meal being a whole grain product will suit the needs of the doctors group and the diet group who are advised to take whole grain products which are high in fiber. Yeast-free breads For people who are allergic to yeast or those who have been advised by the doctor to avoid it, we are offering breads that are yeast free. Dairy-free muffins and pastries Some people are allergic to dairy products. Bread does not necessarily require any dairy product and as such we have not put any consideration. However, muffins and pastries mostly require butter. In its place, we will use soy as a substitute. . Egg-free breads, muffins and pastries This product is for the people who are allergic to eggs. In the place of eggs, we shall use apple sauce which gives the same amount of moisture. As part of the product, the sales persons attending to the clients should be neat, clean and very professional when dealing with the clients. This is because clients will perceive the value of the product not only based on the product itself but also based on services they receive from the people serving. The serving area should remain exceptionally clean with fresh fragrance to assure the customers that the food Baxter Organic Bakery is serving is clean. Originally packaging was aimed towards protect the product against the risk of damage but over the years marketers have realized the importance of packaging to marketing. Packages have been used as an attraction tool to customers. Packages are now designed to be appealing and it is because of this that the marketers are greatly concerned about the perception of the package to the consumer (Wang 2005).The packaging of bread, muffins and pastries will be very appealing to ensure that customers are motivated to try out our products. Packaging is especially important for the first few months when the product will be introduced to the clients. 4.2 Pricing When a company is deciding on a suitable price, it must take into consideration the profit margin and consider how competitors will respond to that price. Price plays a very vital role in a company’s strategy and as such must be in line with the overall business plan. Pricing is especially demanding considering that there is no precedent to base the pricing decision on. Should he price be too high, they risk making very low sales to the extent of failing. Should they price the product at a very low price, they risk not covering the operational costs. Therefore there is need to strike a balance and ensure that the price set is acceptable to the potential customers, will allow the business to gain a market share in a competitive industry and earn a profit margin (Palmer, 2004). There are three main pricing strategies that a company can choose from when setting price, namely cost-based, customer-base, and competitor based pricing strategies (Palmer, 2004). Cost-based pricing is determined by adding a profit margin on top of total cost of manufacturing a product. Although this approach will ensure that costs are being covered, it may lead to products to be priced un-competitively. Customer-based pricing approach is when price are set by what the company believes customers is willing to pay for a particular product. Under this approach, a company can use these methods; penetration pricing, price skimming, loss leaders, or psychological pricing. Lastly, competitor-based strategy pricing strategy is where competitors prices influences the price set by a company on a particular product (Palmer, 2004). Since Baxter Organic bakery is launching its product for the very first time in a rather competitive environment, it should consider using penetration pricing. Under the customer-based approach, market penetration is a suitable pricing strategy for companies that are looking to venture in a market that is highly competitive market. Although Baxter Organic Bakery is offering healthy products which are unique and trendy, there are other giant players in the market including Bakers Delight and Pie Face bakery who have been in the market longer. Market penetration would therefore be the most suitable way to penetrate the already crowded market. Using this pricing strategy, Baxter Organic will price its healthy products at a price lower than those of the competitors. This means that the price should be slightly above the overall cost to gain a wedge in the market and gain high volume of sales. The low profits will discourage other new entrants from entering the market and at the same time create a customer base. 4.3 Distribution Refers to how a company will distribute its products they are offering to the customer (Palmer, 2004). A company must ensure that it distributes its products to the end users at the right place at the right time. For an organization to meet its overall marketing objectives an effective and efficient distribution channel is very important. Moreover, a company’s profitability will be affected if it under estimates demand and customers can not purchase products. There are two types of channel of distribution methods that a company can use to distribute its products to the end users (Palmer, 2004). Direct distribution method involves distributing the company’s products direct from the producer to the end users. Under this method, the company is give complete control over its products. On the other hand, indirect distribution method involves distributing company’s products by use of an intermediary. For instance a company can franchise its brand or sell its products through retailers such as supermarkets. The diagram below shows direct and indirect distribution methods (Palmer, 2004). Baxter Organic Bakery should use both direct and indirect distribution methods to distribute its products to its target market. To begin with, the company should open sores in major cities of Australia to sell its products directly to the customers. The diagram below show how Baxter Organic Bakery may look like. By opening it own stores, Baxter Organic Bakery will interact directly with customers hence having a chance to observe changes in consumer preferences and trends in the market. Moreover, by adopting direct distribution, the company will be able to implement its penetration pricing strategy since it will do away with the cost of an additional layer of distribution between the consumer and the manufacturer. Using agents to distribute your products adds more cost such as transportation cost. Cutting such cost be eliminating these agents translates into better price for customers. By using direct distribution method, Baxter Organic Bakery will have a better control over its products sales and pricing. In addition, many bakeries have appointed major retailers such as Coles and Woolworths bakery to distribute its product. Such retailers sell products of many companies and since Baxter Organic is a new company, it will be hard to recognize its product hence leading to low sales. However, since its requires a lot of money to open Baxter Organic Bakery stores in all cities in Australia, the company such franchise its brand to investors to open stores where the company will not have been able to establish its stores. This will ensure that the company will distribute its products to the end users at the right place at the right time. The franchised store will be designed the same way other stores run by the company look like. Moreover, the franchised stores will deal exclusively with Baxter Organic Bakery products. 5.0 Recommendation Strategy Recommendations Target market It is recommended that the company focuses on the niche groups which have not been focused on before. These niche group are : the allergy group, the doctor group and the diet group Value proposition It makes a company’s brand occupy a distinct position. Baxter Organic will position it products as healthy, convenient and tasty products based on use of organic flours of the highest quality that produces non gluten products which are recommended to its target customers. Competitive advantage The company will only use organic flours of the highest quality that produces non gluten products which are not currently offered by any competitors in the market. Core product strategy This is the benefit of a product that makes it valuable. The benefit that our customers get from consuming this product is that there is no allergic reaction after consumption and also for those who are on diet watch; our products are low on cholesterol. Actual product This is the actual product. We are selling muffins, bread and pastries which are gluten free, dairy free, yeast free and eggs free. These products will serve the unique needs of people with common allergies of gluten, dairy products, yeast and eggs. It will also serve the unique needs of the doctor group Augmented product This is the additional value from purchasing the product. Our customer will received quality customer service as part of the product. Pricing This is the prices that will be charged on the company’s product. Since Baxter Organic bakery is launching its product for the very first time in a rather competitive environment, it will use penetration pricing approach to penetrate the market Distribution This is the channels used to ensure a product reaches the end user. We will use both direct and indirect distribution strategies. At the beginning the company will open few stores in major cities in Australia and later franchise its brand to investors who will operate stores. Conclusion Baxter Organic Bakery faces many favourable micro and macro environmental factors such as political stability, health economic condition and social trends that support consumption of organic products. However, the company will face high competition from major brands such as pie face. To penetrate this market, the company will differentiate its bakery products and become a preferred joint for people suffering from food allergy, diet craze group as well as people who are warned off certain foods by their doctors. References Heart Foundation ( 2014), Data and Statistics. Retrieved on 26th January 2014 from http://www.heartfoundation.org.au/information-for-professionals/data-and-statistics/Pages/default.aspx Kausman R. (2014), Weight loss dieting facts. Retrieved on 26th January 2014 from https://www.ifnotdieting.com.au/cpa/htm/htm_article_view.asp?id=126 Moller, K. (2006). The Marketing Mix Revisited: Towards the 21st Century Marketing by E. Constantinides. Journal of Marketing Management NSW (2014). Allergy and intolerance. Retrieved on 26th January 2014 from http://www.foodauthority.nsw.gov.au/consumers/problems-with-food/allergy-and-intolerance#.VMPsEiw7Vi9 Palmer, A. (2004). Introduction to Marketing - Theory and Practice, UK: Oxford University Press. Read More