Lara K.
Business 11B
10th March 2008
Case Study – Recovery Kitchens Ltd
What are the target markets of the business?
The target markets of the business are people who want to buy a kitchen which is 'old' looking and suites the style of their house and people who are concerned about the environment, also known as environmentalists. Recovery Kitchens Ltd use recy.cled wood so therefore they appeal to the segment of their target markets who are worried about the environment. Due to the fact that the kitchens they produce are traditional so therefore look like aged kitchens they also attract those customers from their target market who want to buy an 'old' style kitchen. The company is also targeting a population which has a relatively high income, as the kitchens do not come cheap, due to reasons such as the cost of production. The target market of Recovery Kitchens is a differentiated market because kitchens are a very broad market however; kitchens using recycled and reclaimed wood are a niche market.
Explain the internal and external factors that might affect the business.
The internal factors that may affect Recovery Kitchens Ltd come from within the business itself. These could be positive or negative. Possible internal factors are:
- Management of Resources – In some cases the wood may not be suitable to be prepared so then wood that has been bought by the company is wasted.
- Brand Loyalty – Recovery Kitchens Ltd have provided their customers with high quality kitchens which has lead to the business having strong loyalty from their customers and they told others about the company’s products, thus increasing the brand awareness.
- Machinery – The machines used to sand, cut and prepare the wood may need repairing so therefore the business would delay the production of the kitchens affecting the relationship with their customers. Machines may also need to be rented or changed so there is also a money factor involved.
- Employee Turnover and Satisfaction – Employees want to receive a certain salary and only specialists would be able to prepare the kitchens to meet a high quality standard so the business would need to keep their employees happy by paying them the right amount of money and remaining an ethical and environmentally friendly company.
- Business Resources - Recovery Kitchens Ltd may not have enough financial resources in order to produce the kitchens that their target market want.
The external factors that may affect Recovery Kitchens Ltd come from outside the business. Possible external factors are:
- Environment - Wood may be scarce so therefore that may affect the business in terms of being able to produce the kitchens. By showing customers that they imply and enforce their ethical believes, they are able to persuade them to buy their product rather then competitor's products. This will help Recovery Kitchens Ltd to increase sales and profit because brand loyalty is increased as more customers are attracted to the company. The negative factor of being environmentally friendly is that there are high production costs and in order to reclaim old wood and make it suitable for a kitchen takes a great amount of work. The increase in production costs for Recovery Kitchens Ltd could make it difficult for them to compete against local competitors. Another factor concerning recycled wood is that it may not always be available because there is only so much wood which can be recycled so therefore if there is not enough wood then Recovery Kitchens Ltd would have a problem manufacturing the kitchens for their customers.
- Competition – Due to competition from local businesses, Recovery Kitchens Ltd may encounter problems because the other companies offer cheaper pine products which can trick the target market into believing that it is reclaimed wood.
- Economy – If interest rates rise and inflation also increases then Recovery Kitchens Ltd has an increasing chance of decreasing its sales and profits. Changes in consumers’ income will have a significant impact on the sales of the company. Recovery Kitchens Ltd will also be affected by the confidence that consumers have in the product and their willingness to spend money.
- Political – The government may be willing to support an environmentally friendly company. Recovery Kitchens Ltd may have to provide documentation which proves that they are using recycled wood rather then making false statements to attract customers. Safety precautions need to be followed when manufacturing the kitchen utilities.
- Social – Recovery Kitchens Ltd can be affected by a change in consumer tastes because the company only specializes in one sort of kitchen so therefore they would quickly go out of business if the consumer tastes changed. If the business appears to be ethical and helping the environment then this would have a social impact due to the fact that people would want to be known as being environmentally friendly.
- Technology – As technology develops different materials will be used to make kitchens which could affect Recovery Kitchens Ltd because they need to charge a high price because they use recycled wood so they may lose out on sales. Improvement in technology or cost reduction will enable Recovery Kitchens Ltd to make more profit.
