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A2 Unit 9 - Marketing Strategy
Introduction
During this investigation I will be discussing ways to market a business of my choice and make an overall judgement as to which marketing strategies would work well for my business. The business I have chosen to focus on is called Fabulous Frostings which is a small family run bakery which will be situated in the quiet seaside resort of Sutton-on-Sea.
My Business
Fabulous Frostings will be a family run bakery with all produce sold being baked on site. Products will range from a selection of pastries and cakes sold individually to scones and bread buns being sold in packs of six. By selling day to day necessitates such as bread, the bakery will be more practical than just a luxury one off of a cupcake every now and then. Fabulous Frostings will also be able to make larger cakes to order for special occasions such as Birthdays, Christenings and Weddings.
The business will be run by myself and my sister whom both have a keen interest in baking and icing. My retired mother will also be a volunteer, helping us to learn more about baking in large quantities as she has a long history of working in large bakeries and delicatessens. My sister and I will own an equal share in the business with profits and investments being shared 50/50. The image of our business will be very important with my mother helping us to produce cakes to a high standard concentrating particularly on how pretty the cakes are.
As previously mentioned, the business will be located in Sutton-on-Sea, this is a small town on the East Coast of Lincolnshire with an average population of 4268, this will alter slightly due to the seasons with tourists entering the resort in the summer and leaving in the winter. A very high percentage of residents of Sutton-on-Sea are retired or elderly people only working part-time, this is also true for the visitors to the resort in the summer. Sutton-on-Sea is generally known as a peaceful and serene seaside town keeping many of the traditional features one associates with places such as Brighton and Blackpool, it is this reputation which attracts an older demographic. Visitors and residents prefer the quiet atmosphere in comparison with the loud and busy environments found in neighbouring towns of Skegness and Mablethorpe.
Other businesses similar to Fabulous Frostings within the area include Gray and Goodliffe and Pocklingtons bakery. Gray and Goodliffe would definitely be the businesses main competitor with them producing in Trusthorpe, only 1.5 miles away from Sutton, and selling in outlets in Alford, 6.6 miles away, and Mablethorpe, 2.5 miles away. All of these can be seen on the map below with Sutton-on-Sea circled in red, Pocklingtons labelled as A and the three bakeries owned by Gray and Goodliffe labelled as B, F and G. The other label, C, is a farmhouse bakery which supplies to small shops in Louth.
The map below shows a closer view of Sutton-on-Sea with A and B representing Gray and Goodliffe’s Bakery in Trusthorpe and outlet in Mablethorpe. This, teamed with the map above, clearly shows that within roughly a 2.5 mile radius from Sutton-on-Sea this is the only competition.
Business Mission
“To make fabulous cakes for all occasions and to please our customers through quality and a smile ☺”
This business mission will appear on all promotional documents such as newspaper advertisements, business cards and the company website. The mission is not set out using SMART guidelines as it is simply a statement which describes the owners’ general wishes for the business. The mission also outlines the overall feel and almost personality of the business for potential customers.
Business Objectives
An objective is a target that a business sets itself. The target may be short term, for example 6-12 months, or long term, such as 5 years. It is important that the targets are regularly reviewed; this helps the business to measure its progress.
I have chosen to use the SMART approach when setting targets for my business. SMART stands for:
Specific
Measurable
Attainable
Realistic
Time related
After each of my business objectives I will assess whether they reach the SMART criteria and the reasons for this.
“To break even within the first twelve months”
“To have made, in profit, all start up costs within the first eighteen months”
“To give back to the local community”
“To have put down a deposit to buy a premises within the first four years”
Marketing Objectives
In order to achieve my business objectives I must be able to market both the business and its products effectively. In order to remain focused on how best to market products businesses set marketing objectives, which similarly to business objectives, they will aim to achieve in a certain amount of time. Marketing objectives are solely concerned with products, sales and marketing activities.
Marketing objectives are usually fairly short term objectives as the aim to meet the longer term business objectives. This is necessary as if a marketing objective is not succeeding the business will not spend to much time and money in pursuing it, instead, a different objective can be set and a new strategy put in place to reach the eventual goal of the business objective.
In a larger business marketing objectives may be different for each department as the whole business works together in different ways to reach the business objectives. However, in my business the marketing objectives will apply to all members of staff as Fabulous Frostings is only small. By setting marketing objectives, I aim to provide motivation for my sister and I along with any other staff which we may employ in the future; the objectives will provide a common goal and help maintain focus.
Again with the Marketing objectives, I have chosen to use the SMART approach and will asses whether they reach the criteria below. I will also explain how each of the marketing objectives relates back to achieving the business objectives which I set earlier.
“To advertise effectively through the use of flyers and local newspaper adverts”
This marketing objective aims to achieve all of the business objectives with the exception of “to give back to the local community.” The other business objectives all clearly link to profits and turnover, by setting this marketing objective to advertise efficiently the business will build a larger customer base and in turn make more profits.
“To gain loyal customers in our intended market segment through promotions such as loyalty vouchers”
The marketing objective above will work towards meeting all the business objectives which I set. By gaining loyal customers the business will turn a grater profit and be more likely to be able to meet business objectives such as putting “down a deposit to buy a premises”. This one will also help to achieve the business objective “to give back to the local community”, as if local customers return to the shop often they will receive discounts, this quite clearly demonstrates benefiting the local community over any other customers.
“To provide cakes for local coffee mornings at a reduced charge”
By introducing this marketing objective, I was focusing specifically on the business objective “to give back to the local community”. By providing cakes at a reduced charge the business will be able to thank the local community for their custom whilst maintaining a positive image in the area. The objectives do have a slight link to profits though, if the business builds a good reputation it will hopefully also build a strong customer base which will in turn give higher turnover and profits.
“To improve on sales by 10% per month”
By setting this marketing objective, I was aiming in particular to meet the business objectives “to break even within the first twelve months” and “to have made, in profit, all start up costs within the first eighteen months”. By increasing sales at a rate of 10% each month, the objectives will be more attainable, especially as there is a difference in time of six months between when they must be met. This marketing objective could also work towards the final business objective “to have put down a deposit to buy a premises within the first four years”, however, it is unlikely that sales would continue to increase at 10% per month for this long, as at 48 months a business of this size would usually have come to the end of the growth stage without implementing new strategies.
Market Segmentation
As part of identifying who will use my business, I will attempt to use market segmentation to divide the market according to characteristics of different customers. This is necessary as it will show me who in particular I will be focusing my marketing strategies at. By gaining a better understanding of my target market I will be able to tailor promotions and other marketing strategies to their wants and needs, hopefully with the outcome of attracting more customers.
By using market segmentation I aim to enhance the profits which my business could make, by learning about my target market I will be able to judge how much disposable income they have and consequently how sensitive to pricing they will be. After acquiring this information I will be able to set the correct pricing strategies to draw more customers to my business.
Another specific reason for using market segmentation is to learn exactly what my potential customers will want. This will mean that Fabulous Frostings is able to tailor products to match exactly what consumers desire, this will generate greater customer loyalty and higher profits.
Age
I predict that the age groups using my business are people in their 30s and those above retirement age. This is due people over the age of 65 having more spare time on their hands to walk down to specific shops such as butchers and bakeries rather than doing all of the shopping at Tesco’s. Certain people in their 30s may also want to take care over their shopping due to new trends regarding using small local businesses, especially food shops.
Gender
I think that it will be mostly women who use my business as they are traditionally the gender group which will do the food shopping. Women also stereotypically take more care over the food they eat and will be more likely to want to use specialist shops.
Socio-Economic Group
The socio economic groups which I will be targeting are the groups between C1 and A. This prediction is based on the income of the family unit rather than the individual person’s job as most people I am targeting will actually be unemployed, although this will be through choice and the ability to live from either a pension or a husband’s wage alone. Therefore the pensioners, or stay at home mums, will actually still be living a comfortable lifestyle and will have enough money to spend in small bakeries. This is in comparison to the stereotypical view of the unemployed, on benefits and shopping at ASDA.
Lifestyle Group
There are two main lifestyle groups which will use my business, these will be stay at home mums with interests centred mainly around their family and providing a perfect home life for their husband and children. The second will be pensioners interested in activities such as gardening, walking and crafts. The pensioners will like to use the business as they will be pleased that they now have the time to shop for luxuries such as handmade cakes, and the mothers will like to use my shop to treat their family.
Geographical Group
The main geographical group which ...
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Lifestyle Group
There are two main lifestyle groups which will use my business, these will be stay at home mums with interests centred mainly around their family and providing a perfect home life for their husband and children. The second will be pensioners interested in activities such as gardening, walking and crafts. The pensioners will like to use the business as they will be pleased that they now have the time to shop for luxuries such as handmade cakes, and the mothers will like to use my shop to treat their family.
Geographical Group
The main geographical group which I will target my promotions at will be those living in Sutton-on-Sea itself, these will be regular users and loyal customers. One other geographical group which I will target will be tourists travelling into Sutton-on-Sea and the surrounding area either for day trips or a holiday.
General Overview of Market Segment
Intended Marketing Strategy
A marketing strategy sets out how a business intends to achieve its marketing objectives, it concerns markets, positioning, directions of development and how to gain a competitive advantage. There are several different marketing strategies which a business could chose to adopt, these depend on the competitive position of the business.
The four main competitive positions are:
- Market Leader – the dominant business with the highest share in the market.
- Market Challenger - a non-market leader which is striving to become the market leader.
- Market Follower – a business with a low market share and no desire to challenge the market leader.
- Market Nicher – a business focusing on specific segments of a market and offering a restricted product mix.
I have identified my competitive position to be that of “market challenger” due to the competition in the surrounding area including bakeries in Alford and Mablethorpe. In order to challenge the current market leader, which I have had identified to be Gray and Goodliffe in Mablethorpe and Alford, my business will need to adopt an offensive strategy which focuses on the weaknesses of Gray and Goodliffe. Having identified this, I will need to choose a marketing warfare strategy.
The four main marketing warfare strategies are:
- Offensive – This focuses on strategies which are designed to attack competitors head on, it deliberately targets customers of competing businesses focusing on the theory that they could be won over by a superior deal.
- Defensive – This focuses on maintaining a share of the market or the contribution made on sales. This may apply to smaller high street businesses which must defend themselves against larger chain retailers.
- Flanking – This is used when a business sees no way to defend a market, instead it must find a new market which is not under attack, this could mean relocation or repositioning of products.
- Guerrilla – This marketing strategy focuses on the element of surprise, neither defence nor attack is possible, a new or smaller business will attack the weaknesses of the market leader.
My subsequent marketing warfare strategy will be that of Guerrilla, I will rely on the element of surprise to announce Fabulous Frostings as a market challenger. Despite this strategy having the promise work well when attacking immediate competitors such as Gray and Goodliffe, I will not realistically be able to attack large competitors such as Tesco. When dealing with this size of competitor I may also have to implement defensive strategies to maintain my share of the market.
My Current Considerations in Relation to the Marketing Mix
The marketing mix is the set of marketing decisions that a business will make to implement their marketing strategy and to achieve their business objectives. The marketing mix is in relation to product, price, promotion and place. After deciding upon a competitive position and a subsequent marketing warfare strategy I must consider how I will use the four Ps to implement the strategy of Guerrilla to attack the weaknesses of competitors whilst remaining defensive. These considerations may alter after conducting market research as my findings could suggest that different tactics are more suitable.
Product
The bakery will sell luxury individual cakes as well as day to day necessities such as bread loaves and buns. We will also be able to make large decorative cakes for special occasions such as Christenings and Birthdays. We will also make filled sandwiches and buns daily for people to buy for their lunch. By making day to day products such as sandwiches and bread loaves, Fabulous Frostings will be able to maintain a defensive strategy against large competitors such as Tesco in order to keep a market share. Also, my making large decorative cakes for special occasions Fabulous Frostings will attack one of the main weaknesses of Gray and Goodliffe which is that they do dot provide this service.
Price
My first idea about the pricing strategy I will use is that it will be cost plus pricing. This will be appropriate for me as I want the price to be set according to profit, by using this pricing strategy I will be able to maintain a balance between charging extortionate prices and not making enough profit. I may also use competitive pricing against Gray and Goodliffe as one of their weaknesses can be their prices, especially those of their more decorative cakes. I will not, however, be able to use competitive pricing against large stores such as Tesco as they are able to make best use of economies of scale, buying in such large quantities at a reduced cost with the ability to then sell on at a lower price.
Promotion
In order to promote my product I will use advertisements in the local newspaper and post flyers in letterboxes of houses in Sutton-on-Sea. By advertising in this way I will be attacking Gray and Goodliffe as at present they do not use any advertising. However, I will not be able to rival the adverts of larger stores which may appear on the television and on national radio. Instead, I will use a defensive strategy against the larger stores offering something which they cannot, polite conversation and a friendly personal service.
Place
I have chosen Sutton-on-Sea in which to base my business, this is due to there being no bakery in this town and also the high percentage of pensioners which live in the area. I will rent a premises on the High Street as this is the area of town which attracts the most people. By choosing Sutton-on-Sea I will be able to use the Guerrilla strategy and surprise Gray and Goodliffe as they will not see the construction or opening of the new bakery as they are based in different towns. I am also using a defensive strategy against larger stores here as by opening in a quiet town with no large supermarkets it will be easier for Fabulous Frostings to take and maintain a share of the market.
Competitors
The general types of businesses which I will be competing with will include other bakeries in the surrounding area. This will not include Sutton-on-Sea itself as there are no other bakeries in this town. Instead it will be in surrounding towns such as Alford and Mablethorpe. I will also have to compete with larger companies mentioned above such as Tesco; these may compete against Fabulous Frostings both as a supermarket store and as an online retailer.
Difficulties with Implementing the New Strategy
Possible differences I may encounter when implementing my new strategy include the recent recession and new announcements of government cuts. The recession has meant that Sutton-on-Sea, a holiday resort, has seen fewer visitors recently than in previous years. This could mean that a new business will not be able to survive, however, my business will mainly rely on those living in Sutton-on-Sea and as the town is growing with a new housing estate being built in the past 6 months I am sure that Fabulous Frostings will thrive.
The other external factor which I mentioned above was that of government cuts, these will affect many people living in the Sutton-on-Sea area as one of the largest employers in our area is East Lindsey District Council based in Manby just a few miles away. The council plans to make cuts of 40% or its total employees in the next three years, many of whom will live in Sutton-on-Sea. The loss of jobs will obviously mean a cut in disposable income for many families in the area meaning they will have less money to spend in my bakery.
Market Research
In order to devise the best marketing strategy for my business I will conduct both primary and secondary market research. By collecting this research I will have a much more certain idea of who my target market is and whether this group of people match my predictions made earlier. I am hoping that my target market is who I expected it to be and that they are enthused about the idea of a bakery in Sutton-on-Sea.
I also hope to find out more about my business compared to others which are similar in the local area, by identifying strengths and weaknesses of both myself and my competitors I will be able to make a decision as to whether the business will be a success and which weaknesses need to be improved upon.
By doing primary research I also hope to find out which products, promotions, places, and prices will attract my customers most. I will also be able to see to what extent they are concerned about these aspects of the bakery and which they would be most likely to compromise on such as price, as there is no doubt that ASDA will always be a cheaper option, or promotions, as a loyal customer for Fabulous Frostings would not reap the same benefits as a Tesco club card holder receives free trips to Alton Towers etc.
Questionnaire
The first piece of primary research will be my questionnaire; I have attempted to cover all aspects of the 4 P’s in my questionnaire to find out what my potential customers want in a business. I have also asked some more personal questions such as age, occupation and income to find out who exactly my potential customers are and whether they match my prediction of my target market.
The questionnaire was sent out to 65 people including students and teachers at my school, other adults in the local area which I know, family members and high number of pensioners as I really wanted to find out whether they would be enthusiastic about a local bakery. 30 out of the original 65 responded and I was surprised to see that a high percentage of pensioners had replied as my main fear was that the questionnaire was sent out by email using a website called , this I though may be too technological for the pensioners as stereotypically they are not so good using computers.
Despite me sending the survey to an even number of male and females, the number of females which returned the questionnaire far outweighed the number of males. This suggests that it is females who are more interested in using a bakery as they were willing complete a questionnaire about the possible addition.
Again with age, I attempted to send the questionnaire to an even number of each age category however, it is clear to see that the age group of 19-30 were not interested in answering questions about a bakery. However, it is clear also that pensioners were highly interested in the prospect of a bakery suggesting that they would be potential customers.
The average incomes shown above are fairly widely spread over the five categories, the lower incomes of below £35,000 will account for the pensioners over age 65 who are either only in part-time work or receiving a state/private pension. The age group of under 18 will have taken into account their parents’ wages and so will not give an accurate representation of their individual earnings.
47% retired
13% teachers
20% students
20% other
The occupations listed above generally match with the age range identified earlier, with 20% as under 18s listed here as students and the 40% of over 65s listed here as retired. The 47% retirement level suggests that some people under 65 have taken early retirement. Jobs in the “other” category included Local Government Officers, Business People and Cleaners. These results would suggest that retired people followed by students would be most likely to use my bakery, this will help me with promotions as I will be able to target them towards these age groups/occupations.
This question was merely to find out whether my prospective customers had children, most people answered no to this question, this is probably due to some being student/pensioners, these groups of people are unlikely to have dependants. Now I know how many of the prospective customers have children I will be able to tailor the right amount of products towards children such as gingerbread men, fairy cakes and train shaped biscuits.
Here I can see that most people who answered yes to having dependants have two children, however some have just one and some have more than 6. People answering that have 6 or more children are more than likely pensioners whose children have now left home, here they will have misunderstood the term dependants as simply meaning children instead of the correct definition of children who still depend financially on their parents. Again, not every respondent answered this question as it was not compulsory and depends on the answer to question 5.
60% Sutton-on-Sea
13% Mablethorpe
7% Withern
7% Alford
7% Louth
7% Horncastle
Here, it appears that the percentages listed above equal 101%, however this is only due to rounding errors. Most people answering my questionnaire lived in Sutton-on-Sea, this can be for two reasons, one is that I attempted to send questionnaires to people living in Sutton as it would be more relevant to them, the other is that people in Sutton would be more likely to answer and submit a questionnaire on a bakery in Sutton as it concerns them more. Other people who answered the questionnaire lived in the surrounding area with all towns listed contained in Lincolnshire.
60% 0 miles
13% 3 miles
7% 6 miles
7% 8 miles
7% 10 miles
7% 25 miles
Again, it appears that the percentages listed above equal 101%, however this is only due to rounding errors. The 60% listed as living 0 miles away corresponds with the 60% of people living in Sutton-on-Sea from the last question. These results show that most of the people answering my questionnaire live in Sutton-on-sea itself, and therefore that these are the people most likely to shop in the bakery.
The highest proportion of people appeared to buy their bread and cakes from small shops such as Spar, this corresponds with the percentage of retired people living in Sutton-on-Sea whom have answered this questionnaire as the only “supermarket type shop” is a small Spar shop on the high street. I would assume that the 20% of people buying from a local bakery would live in Alford and Mablethorpe as these towns have local bakery owned by Gray and Goodliffe, my main competitor. I was pleased to see the result that nobody answered that they never buy bread or cakes as this would have implied that some people have no need for the product making building a large customer base much harder. The 6% of people who answered online shops more than likely order from Tesco Online or something similar. It will be hard to convert these people into buying from my bakery as they would simply include items such as bread or cakes in their large weekly shop, the same applies for people that answered large supermarket. These people may only become casual users of the shop when they simply “fancy a treat”.
From these qualitative results and the percentages shown above I can determine that it is mainly cakes and bread as the products which customers will chose to buy from my bakery. This is a pleasing result as these two products were two of the main ideas I had thought would sell well. The first 15 results shown above are very well representative of the whole collection with the percentages matching completely. I was slightly surprised though that only 40% of people said that they would buy bread, as I thought that this would be a more common product that potential customers would wish to buy. However, I now see that the bakery will mainly be used for luxuries like cakes rather than day to day shopping like bread which will still mainly be bought from larger shops and supermarkets.
The three qualities which potential customers listed as the most important were friendly service, a location close to home, and the quality of products. This will help me to make sure that I meet these criteria when opening the bakery a making sure the business mission of “To make fabulous cakes for all occasions and to please our customers through quality and a smile ☺” is reached. This mission fits well with what customers have said they want as it outlines both quality and a friendly smile. One quality which the mission doesn’t feature is the location close to home. This is met through having a shop on the high street in Sutton as this is the most central area and therefore the closest to all those living in Sutton. One problem is that potential customers living in Mablethorpe, Alford and other areas will not be granted a location close to home and will have to travel to reach the bakery.
Just over half of people asked answered yes to this question although the result was definitely not unanimous, this result could either be because they do not have a local bakery or that they do not wish to use their local bakery. The answer to this question should become clear with the following results. The almost 50/50 split shows me that the bakery will not be a hit with ever resident in Sutton-on-Sea and the surrounding area, although there seems to be many people in the area willing to use a bakery and some of the potential customers who answered no could always be converted with a bakery closer to home.
The answers to this question are relatively far spread between the choices, I am pleased to see that nobody uses their bakery less than once a month meaning that there is a real need for a daily bakery. However, with some potential customers saying that they already use a bakery everyday this could suggest that they are already loyal customers to one of my competitors.
Only 47% of people answered this question as it was not compulsory and was also dependant on the previous question 12.
71% of people who answered said they had no local bakery
14% of people who answered said the supermarket met their needs
14% of people said they have to order at their local bakery and this is inconvenient.
It appears that the percentages listed above equal 99%, however this is only due to rounding errors.
I was pleased to see that 71% gave their reason as having no local bakery as to why they do not use a local bakery, this is reassuring when put into the context of who actually responded to this survey as 60% of potential customers answering these questions live in Sutton-on-Sea. This suggests that many of the residents of Sutton-on-Sea would use a bakery if one was provided locally. 14% of potential customers listed there reason as having to order from their local bakery as why they do not use it, at Fabulous Frostings this will not be necessary hopefully making it more attractive for future customers.
From these results it is obvious that the 60% of people who live in Sutton-on-Sea answered everyday, other prospective customers reveal that they come to Sutton-on-Sea everywhere between weekly to less than once a month. It is clear to see therefore that loyal customers would not really come from an area outside of Sutton itself as these people do not make regular trips into the small town. The only exception for this would be if a prospective customer works in Sutton but does not live in the town, the bakery could then be used to buy lunch or luxury treats.
With this question I was attempting to establish how many prospective customers would be willing to pay above supermarket prices at Fabulous Frostings. It seems that the most popular increase in price would be between 21%-30%, this is pleasing to hear as obviously products at my bakery will be more expensive than the mass produced products at a supermarket. Some people did answer that they would pay above 40% more, however, I would attempt to keep the limit at a 30% maximum increase to attract more of the market.
The most popular promotion with prospective customers appears to be the free delivery service, this would probably be popular with the pensioners who answered my questionnaire as they are less able to travel out to do their shopping. The second most popular promotion is the idea of loyalty cards, this is pleasing as it suggests that prospective customers are already considering using the bakery on a regular basis. The other promotion ideas received a few votes each but were not as popular as the two previously mentioned. I believe that the best idea would be to start with the two most popular promotions to attract customers and then listen to these loyal customers as to which promotions they would select.
Overall Analysis of Questionnaire
Target Market – I was pleased to see that the target market who answered my questionnaire were pensioners as I had predicted, despite my early fears that they would be reluctant to answer a questionnaire on the computer. I was also surprised to see that the other part of my prediction regarding the target market, stay at home mums, did not appear to have answered the questionnaire. This may be due to the fact that I did not send enough questionnaires to this group of people, that they do not have time to answer, or simply that they are not interested in a bakery in Sutton-on-Sea.
Product – In terms of products I have found out that it is cakes and bread which potential customers want to buy rather than filled sandwiches or sausage rolls etc. Potential customers did seem interested in the quality of the products though they placed this aspect third on the list of qualities they most look for in a local bakery after location close to home and friendly service.
Place – The location choice of Sutton-on-Sea looks like a good one as 60% of people answering were from the town itself, and 71% listed their reason for not using a local bakery as that they don’t have one. Location close to home was also listed as the highest scoring quality which my prospective customers look for in a business.
Promotion – The most popular promotion choices were the free delivery service and the loyalty card, this is pleasing as it appears that people are already considering becoming “loyal” customers. The free delivery service probably attracts the pensioners answering my questionnaire as they find it harder to travel out especially carrying bag of shopping.
Price – I was pleased to see that my prospective customers were willing to pay above supermarket prices for produce from a local bakery. Also, low prices were only fourth out of six in the qualities people look for most in a local bakery suggesting that they accept prices will always be higher than in ASDA or Tesco’s.
Product Differentiation
After determining that cakes will be the most popular product once my business is open I have decided to look further into the breakdown of the product and really pull apart why it will be successful and how it can be improved. To do this I am using a method called product differentiation which takes into account the three aspects which a product is comprised of. These are then shown on a diagram which can be seen on the following page.
Key
Cherry: Core product – this is the basic function of the product, the core benefit or service.
Icing: Actual Product – this includes any additional features of the product on top of the basic function.
Cake Itself: Augmentation – this concerns the support aspects for the products, any benefits which are associated with this brand over another.
Product Differentiation Diagram
SWOT Analysis
I will be using the form of a SWOT analysis to structure my secondary research. I will first put in qualities of my only business and then I will compare this to a further two analysis’ of competitors my business may face.
SWOT stands for strengths, weaknesses, opportunities and threats. I hope that by using a SWOT analysis I will be able to make sense of the marketing environment and indentify an appropriate marketing strategy for Fabulous Frostings. The competition I have chosen to produce SWOT analyses for are Gray and Goodliffe’s and Tesco’s online store. The tables for these and the analysis of my own business will be shown on the following pages.
SWOT Analysis for Fabulous Frostings
SWOT Analysis for Gray and Goodliffe
SWOT Analysis for Tesco’s Online
SWOT Analysis Conclusion
When identifying the key qualities of my own businesses and my competitors, I came to realise that even larger more established businesses have flaws and ways to improve. This was especially brought to my concern when researching Tesco’s online as I found that, through reading forums and conversations between internet users, prospective customers were unhappy with being expected to give private information about themselves and their bank details and also were disappointed with the lack of personal care. One comments on the website read, “They may pretend to know our name and record what we buy but at the end of the day it’s only a database, what happened to real people passing the time of day and getting to now a person? Bring back the small shops”.
By using a SWOT analysis I also identified weaknesses in my own business which I may need to work on such as possibly not employing enough members of staff which could cause tension and poor quality of service. Below I have attempted to identify exactly how, the strengths and weaknesses in particular, of my business compare with those of Tesco’s online and Gray and Goodliffe’s.
Strengths:
- “Good communication between the owners”, this is more than likely true of both my competitors too and so is not really a great advantage.
- “A strong mentor with experience in the field, my mother”, this is definitely an advantage in terms of my business though would not be needed in the other two.
- “Great creativity and flair with many new ideas”, Tesco’s will have whole teams of people doing this job though probably not with such a personal touch. Gray and Goodliffe do not show these qualities at all.
- “Warm, friendly, family touch”, neither Gray and Goodliffe nor Tesco’s provide this strength so, here, Fabulous Frostings has the edge.
- “Free delivery service” Gray and Goodliffe’s do not have this strength although Tesco’s online definitely do.
Weaknesses:
- “No brand loyalty as of yet, the business is still unknown to the public”, this is not true for Tesco’s or Gray and Goodliffe’s, both businesses have strong customers bases and brand loyalties.
- “Ideas such as providing free cakes to local coffee mornings may not be cost effective”, Gray and Goodliffe’s do not promote themselves highly within the community and so would not make a loss on any advertising or promotions. However, Tesco’s are known to promote loss leaders in the business to advertise low prices and draw customers in, however, they have much more capital allowing them to do things like this.
- “Low number of staff may mean slow service”, this is true for Gray and Goodliffe’s too as often at peak times during the day service can be slow, however, in small family businesses this can be expected. Tesco’s employ thousands of people meaning service is never slow, their online site is fast and productive, however, when the internet site crashes the whole online shop ceases to work, this is a major disadvantage.
Marketing Models
Marketing models aim to find strategies a business could follow in order to successfully implement segmentation and the product mix. It is important that a business explores marketing models in order to gain a more comprehensive understanding of how it should go about attempting to gain a greater market share and also how reliable and stable a potential new product could be. By using marketing models ad entrepreneur could decide whether a risk is worth taking and how to go about following an idea through.
Ansoff Matrix
Ansoff matrix identifies four possible strategies a business could employ when seeking to achieve certain marking objectives. Each strategy focuses on a different aspect of a business’ target market and product mix. Ansoff Matrix is often used as a follow up to how the business is doing although it can be used in deciding upon marketing strategies as I have chosen to use it here.
The aspect of this matrix which applies to my business is an existing product in an existing market meaning that my business will be performing market penetration. Market penetration is when sales increase of an existing product in its current market. My existing product is cakes and bread; this is entering the existing market of the residents of Sutton-on-Sea and the surrounding area.
The offensive and flanking marketing warfare strategies which relate to the Ansoff matrix suggest that, in the case of market penetration, an appropriate offensive strategy would be for the challenger to attempt to gain a large market share, also the matrix outlines that this is the least complex way of attacking a market share. It also states that an inappropriate strategy would be flanking which would be not considering contesting a market share and instead getting out of a market segment. This would definitely be inappropriate as it would be giving up in that market before the business had a chance to gain a market share. When taking into account the results from my questionnaire they would appear to agree with this notion as 60% of respondents were living in Sutton-on-Sea and 71% who didn’t use a bakery listed their reason for there not being one in the local area, this suggests there is a demand for Fabulous Frostings and that a flanking strategy would definitely not be appropriate.
This tells me that when choosing my marketing strategy I should aim to focus on existing market segments with existing additions to the product mix, this could be by adding the large cakes for special occasions range to Fabulous Frostings as it offers a product which Gray and Goodliffe do not.
The Boston Matrix
The Boston Matrix is used by businesses to analyse the suitability of their product mix, from this a business may have a clearer understanding of whether the product mix needs to be altered or changed in any way.
In the case of Fabulous Frostings, I would suggest that the business is either a cash cow or a dog. This depends on whether the “market” is that of the UK or that in Sutton-on-Sea and the surrounding area. If the market includes the whole of the UK then the business is definitely a dog as it will have a very small market share with low prospects of growth. However, if the market simply relates to that of Sutton-on-Sea and nearby towns then the business could develop a high market share due to a lack of competition. Despite this high market share, I still believe there is little prospect of growth as the town of Sutton-on-Sea is not growing and therefore the target market will remain the same size for years to come, this is supported by research which I have conducted which states that the population of Sutton-on-Sea in 2007 was 2100 people compared to the year 2010 in which it was still 2100 (figures recorded to the nearest 100). The only foreseeable way for Fabulous Frostings to grow would be to diversify into providing other products to attract new target markets. Nevertheless, I do not see such strong diversification in the near future for Fabulous Frostings and would therefore remain to place under the category of low market growth.
When looking finally as to where my business will fit in the Boston matrix, I have decided to class the market as that of Sutton-on-Sea and the surrounding area, as this will always be where my target market and competition lies. This makes Fabulous Frostings a cash cow. I am sure that with a lack of nearby competition my business will be able to hold a high market share.
Positioning Maps
Positioning maps are geographical representations of a business’s position in a market, this is according to specific customer benefits. For example, in the clothing market, these might be on trend styles and value for money. Different maps include different variables but all maps aim to see what your personal business’s strengths and weaknesses are compared to competition. In my positioning maps I have chosen to plot myself (Fabulous Frostings), Gray and Goodliffe’s, Tesco’s Online, and Pocklington’s Bakery (another competitor in the area). Pocklington’s have not previously been considered as despite their actual bakery being close to Sutton-on-Sea their outlets are much further afield.
The positioning map below considers location and product range.
The positioning map above shows that compared with competitors, Fabulous Frostings, is much closer to Sutton-on-Sea though has a slightly smaller product range. However, this should not affect prospective customers as, in the questionnaire, wide product range was not in the top three qualities listed but location close to home was. I was not sure where to place Tesco’s online in terms of location as it is completely dependant as to whether a family has a computer and whether they are computer literate. My final decision was to simply leave it on the border.
In analysing this positioning map further, I would suggest that Pocklington’s Bakery does not pose a threat to my new business as it is so far away, despite having a larger product range.
However, Gray and Goodliffe continue to be a major competitor as although they are slightly further out of Sutton-on-Sea, this will not necessarily put them at a disadvantage. I have come to this judgment through researching average distances to work in our local area; in rural England, such as Lincolnshire, the average distance to work is 13.70 km, compared to 9.90 km in urban England.
This is relevant as it suggests that people living in Sutton-on-Sea and the surrounding area will travel out of their hometown to work meaning that a persons’ money may not be spent in my bakery even though they live in Sutton-on-Sea. Potential customers may still use Gray and Goodliffe as their shops are in the town in which they work. However, this may also work in my favour as residents of Mablethorpe and Alford may choose to use Fabulous Frostings over Gray and Goodliffe if they travel to work in Sutton-on-Sea.
The positioning map below considers personal/quality of service and size of business.
The positioning map above shows that, compared to competitors, my business gives a much more personal service but is much smaller in size. This can be beneficial as more customers will be happy with the service than if the used a larger store which was less personal, this is particularly relevant as friendly service was in the top three in my questionnaire. This is also supported by my secondary research as according to StartUpNation, a website for entrepreneurs, friendly and personal service was ranked number two, below knowledgeable and available staff. This shows that a personal service seen in small businesses such as Fabulous Frostings is more highly valued than the lower prices which are present through economies of scale in large businesses. However, good value was ranked a close third showing that large businesses such as Tesco’s still have a pull towards a large customer base.
Other Secondary Research with Links to My Own Investigation
Whilst investigating different ways to market my chosen business, Fabulous Frostings, in the town of Sutton-on-Sea, I have carried out additional secondary research to that of my own data received through forms such as a questionnaire.
In order to gain a more comprehensive idea of who my target market is and how best to approach them, I have looked at other sources of data, mainly on the internet, regarding Sutton-on-Sea, with particular reference to the people who live in the area in comparison to those in other local towns and villages. Whilst researching, I have also attempted to link back the data I find to that I have already gathered in my own independent investigations, attempting to gain an understanding of how reliable my results have been.
Age of potential clients is highly important to Fabulous Frostings as I have already identified that the target market for the business will be within the 30s or over 65s. When conducting my own research in the form of a questionnaire I found that the most of the potential customers answering the questions were over the age of 65 with 40% identifying this as their age group. On the other hand, only 13.3% of participants were in the age group 31-40 suggesting that either this age group is not interested in the business proposal of a bakery, or, that there is simply a low number of people in this age group that reside in Sutton-on-Sea. When comparing my results with the average age for Sutton-on-Sea listed on house-hunting site “Nestoria”, I found that they listed the average as 49, this is much higher than the UK average age of 39, again suggesting that the residents of Sutton-on-Sea are older. Regarding my target market, this may mean I have to change my plans and instead only focus my marketing strategies on the over 65s rather than young mothers in their 30s.
I had also outlined within my target market that I would be focusing my marketing strategies on females rather than males. After considering my own results from the questionnaire I felt that this was still appropriate as 73.33% of respondents were female. When comparing this with data from “Nestoria”, I found that my results, though a little exaggerated, did represent correct data. The average UK female to male ratio is 1.04:1 whereas the ratio in Sutton-on-Sea is 1.11:1, an increase of 0.7 females to every male. This is a pleasing result as it suggests that the results of my questionnaire were reliable and also that I was correct in aiming the marketing strategies at a female target market. The male to female ratio for Alford is 1:1.01, less than the UK average, this shows that there are far fewer females with relation to males in the town of Alford. I assume that, like my own, the target market for Gray and Goodliffe is also female giving Fabulous Frostings the upper hand.
I know from personal experience that Gray and Goodliffe in Alford gain a lot of custom for school children at the local Grammar School buying their lunch in the shop. I therefore wanted to look into the possibility of Fabulous Frostings selling to children on a regular basis. There is only one school in Sutton-on-Sea, Sutton-on-Sea Community Primary School, compared to the three in Alford, two secondary schools and one primary school. This would definitely mean that Fabulous Frostings would have a much smaller market to sell to and would be more dependant on the mothers choosing to buy food for their children from the shop rather than the children buying for themselves, due to their young age. According to Ofsted there are 157 students enrolled at the primary school, however, due to the high average age in Sutton-on-Sea I would assume that some of these students travel to school from neighbouring villages rather than living in Sutton-on-Sea itself.
Regarding current social factors which could affect a mothers’ buying habits, it has become quite fashionable recently to eat healthily with pressure being put on young families to eat their “five a day”. Celebrity chefs such as Jamie Oliver are constantly shown in the media, making healthy eating appear glamorous and fashionable. Government guidelines will also have an affect on the buying habits of families as school enforce a “healthy packed lunch” policy, banning foods with excessive sugar and fat. These social factors will mean that mothers will be less likely to buy from Fabulous Frostings on a daily basis as bakeries have a reputation of simply selling cakes and sweet luxuries. This will make it much harder to sell to the younger school children as they will not have the independence to choose their own lunch which the secondary schools in Alford do have with regards to Gray and Goodliffe.
As a large proportion of my proposed target market will be retired, I thought it best to look into the data for Sutton-on-Sea regarding employment status. For this, I gathered the Official Labour Market Statistics from East Lindsey District Council. The data is based on the last census taken in 2001 and takes into account all residents between the ages of 16-64. In the north of Sutton-on-Sea 13.3% of residents are retired (116 people) and in the south of Sutton-on-Sea 18.0% of residents are retired (183 people). These percentages are very high in comparison with those of other areas, 7.0% of people within East Lindsey are retired and just 4.5% of people within the whole of Great Britain. This result is very pleasing and clearly shows that aiming my marketing strategies at the retired community of Sutton-on-Sea appears the best way for Fabulous Frostings to succeed.
Review of the Marketing Mix
By conducting primary and secondary research in the form of a questionnaire and SWOT analyses, I am now able to review the marketing mix which I outlined earlier on. As a reminder, here is what my original considerations were.
“My Current Considerations in Relation to the Marketing Mix”
Product
The bakery will sell luxury individual cakes as well as day to day necessities such as bread loaves and buns. We will also be able to make large decorative cakes for special occasions such as Christenings and Birthdays. We will also make filled sandwiches and buns daily for people to buy for their lunch. By making day to day products such as sandwiches and bread loaves, Fabulous Frostings will be able to maintain a defensive strategy against large competitors such as Tesco in order to keep a market share. Also, my making large decorative cakes for special occasions Fabulous Frostings will attack one of the main weaknesses of Gray and Goodliffe which is that they do dot provide this service.
Price
My first idea about the pricing strategy I will use is that it will be cost plus pricing. This will be appropriate for me as I want the price to be set according to profit, by using this pricing strategy I will be able to maintain a balance between charging extortionate prices and not making enough profit. I may also use competitive pricing against Gray and Goodliffe as one of their weaknesses can be their prices, especially those of their more decorative cakes. I will not, however, be able to use competitive pricing against large stores such as Tesco as they are able to make best use of economies of scale, buying in such large quantities at a reduced cost with the ability to then sell on at a lower price.
Promotion
In order to promote my product I will use advertisements in the local newspaper and post flyers in letterboxes of houses in Sutton-on-Sea. By advertising in this way I will be attacking Gray and Goodliffe as at present they do not use any advertising. However, I will not be able to rival the adverts of larger stores which may appear on the television and on national radio. Instead, I will use a defensive strategy against the larger stores offering something which they cannot, polite conversation and a friendly personal service.
Place
I have chosen Sutton-on-Sea to base my business in, this is due to there being no bakery in this town and also the high percentage of pensioners which live in the area. I will rent a premises on the High Street as this is the area of town which attracts the most people. By choosing Sutton-on-Sea I will be able to use the Guerrilla strategy and surprise Gray and Goodliffe as they will not see the construction or opening of the new bakery as they are based in different towns. I am also using a defensive strategy against larger stores here as by opening in a quiet town with no large supermarkets it will be easier for Fabulous Frostings to take and maintain a share of the market.
“Reviewed Considerations in Relation to the Marketing Mix”
Product: I will definitely still sell individual cakes as well as bread as these products were highly popular when analysing the results of my questionnaire. The idea of larger cakes for special events will probably need to be introduced when a certain brand loyalty has been established as from researching online I have found that customers are less willing to commit to buying something large from a new brand. One idea which I don’t think I will be pursuing is the product that is filled rolls and sandwiches as there were only two comments from the people who answered my questionnaire which outlined them as products they may buy. This shows in my positioning maps as my business has a smaller product range than my competitors.
Price: When carrying out my SWOT analysis I found that the price of cakes, bread etc. At Tesco’s is definitely lower than I could produce at. However, when talking to customers of Gray and Goodliffe’s they did not have any qualms with the higher prices of a local bakery. This opinion also came through in my primary research as when asked “On average, how much above supermarket basic prices would you be willing to pay at a small independent bakery in your village/town?”, the general consensus appeared to be between 21%-30% more, this was pleasing as it means that prospective customers will not be put off by slightly higher prices. I feel I will still go ahead with the cost plus pricing strategy as it ensures I will make a profit and does not grossly overcharge customers.
Promotion: When first outlining my views on promotion I appear to have only really focused on the advertising side, however, through using my questionnaire I now have ideas of what promotions to run in store, these will be a free delivery service and a loyalty card. Though the delivery service may appear hard to put into practise, it will not run at peak times of the day and customers will be told a calculated waiting time so as not to disappoint. In terms of advertising again, the ideas I previously had about flyers and newspaper adverts will definitely be sufficient.
Place: My chosen place of Sutton-on-Sea seems to have been a good idea as when conducting my questionnaire 60% or respondents lived in Sutton. They also seemed to be enthused by the idea of a bakery. In terms of competition, Sutton appears to be the ideal location as many prospective customers listed their reason for not using a bakery at present as because they do not have one, this proves that there is a need in the area. By using the positioning maps it is obvious that my bakery would be the closest to Sutton itself.
Can the Marketing Objectives be met?
Due to the research I have conducted, I can now make an informed judgement as to whether my marketing objectives can be met. Below are the four marketing objectives I listed earlier and why I believe they can or cannot be met.
“To advertise effectively through the use of flyers and local newspaper adverts”
I think that I will be able to meet this objective as I think that local newspapers and flyers will be plenty good enough to inform prospective customers of my business and convince them to give it a try. Through my questionnaire I have found that it is mainly people local to Sutton-on-Sea who would use my bakery therefore advertising only in the town would be enough to draw people in. I have also researched outlets for my advertising with the most attractive looking to be the “Mablethorpe and Sutton-on-Sea Leader”. This is a free newspaper which is handed to the residents of Sutton-on-Sea and the surrounding areas of Mablethorpe and Trusthorpe. Advertising in this paper is also relatively inexpensive due to the locality of the audience.
“To gain loyal customers in our intended market segment through promotions such as loyalty vouchers”
This definitely appears to be a marketing objective that I will be able to meet as the loyalty scheme was rated in the top three promotions which would attract customers to my business in my questionnaire. Looking at competitors, I would have the edge over Gray and Goodliffe’s and Pocklington’s, neither of whom provide loyalty cards, and would be copying the long term success of giants, Tesco’s. One other promotion which looks to bag the business loyal customers was the free delivery service which was especially attractive to the elderly residents of Sutton-on-Sea.
“To provide cakes for local coffee mornings at a reduced charge”
I am unsure as to whether this marketing objective will be met as through my SWOT analysis I have seen that only Tesco’s are able to promote through loss leaders and more localised competition does not. I will make a judgment on this once the business is running as this way I will be able to see whether the business needs further promotion. If it does, I could reduce profits but still use cost-plus pricing scheme for events like coffee mornings.
“To improve on sales by 10% per month”
My final marketing objective was simply sales related, I think that the enthusiasm of prospective customers shows that sales will increase by at least 10% per month as the business builds up a strong customer base and brand loyalty. However, I am not sure as to how long this increase will last as during working on the Boston Matrix, I identified the business as a cash cow, one that holds a large market share but with little prospects of growth. This could suggest that in the introduction and growth stage of the business it will definitely meet this objective but it will probably reach maturity relatively fast.
Finalised Plan
Marketing Mix:
Product – The bakery will sell individual cakes such as cup cakes, brownies and gingerbread men, bread loaves and buns, and over time more larger cakes for special events.
Price – Using the cost plus pricing scheme I will be guaranteed to make a profit however I will regularly compare prices of my business to those of other bakeries in the local area.
Place – The bakery will be situated in Sutton-on-Sea as there are no competitors in this town and the residents appear to be excited about the idea.
Promotion – The bakery will offer free delivery but not during peak times of the day, this will be aimed at the elderly. The second promotion will be a loyalty card through which loyal customers will be rewarded with free gifts or cost reductions every now and then.
Market Segments:
Age: 60+
Gender: Mostly female.
Lifestyle: Retired or casual part-time workers with interests in gardening, walking and community projects.
Geographical: Living in Sutton-on-Sea itself.
Socio-Economic: Most will be unemployed or working only part time but also receiving a pension. When in work, my target market would have been in the groups C1 to A, this will give them a healthy pension with a disposable income.
Why my market segment has changed:
My market segment used to include stay at home mums with a high family incomes, however this has changed due to the results of my questionnaire. It now only includes pensioners or older people with only part time jobs as these were the segment who answered my questionnaire and seemed enthused about the idea of a new bakery, especially with the promotion of a free delivery service.
Competitive Position:
I originally thought that my competitive position would be as a market challenger due to competition in the surrounding area. However, I now think that the market I will be entering is that of Sutton-on-Sea rather then Lincolnshire and in the town there is no competition at all making my business the market leader. With this in mind I have come to change my competitive position to being the market leader.
Marketing Warfare Strategies:
I originally thought that with the position of market challenger I would need to adopt and offensive strategy concentrating on the weaknesses of the market leader in the area. I had decided to use the Guerrilla marketing warfare strategy to announce the business as a challenger. However, I now think that with being the market leader I should adopt the warfare strategy of Flanking, this is more of a defensive strategy in a new market which should not be under attack.
Evaluation
Through performing an evaluation I hope to make a judgement as to whether my chosen marketing strategy and associated marketing activities are suitable for my business based on the findings from my market research such as the questionnaire and SWOT analysis and the risks and uncertainties associated with my target market.
Timeliness
Regarding the amount of time I had to conduct my market research, I would have obviously preferred longer to conduct further and more detailed research into both my competition and target market. With more time I would have been able to gather more information, for example I would have been able to give out more questionnaires for my primary research and look through further websites and other secondary sources to collect relevant information about my potential target market.
With particular reference to my secondary research, I would have been able to delve much further into 405,000 results for Sutton-on-Sea when entered into Google had I had more time. This is one specific example as I found it the most time consuming activity in my investigation, mainly due to the fact that there is simply so much data to look through, only a very small amount of which is relevant to my business.
Similarly, given more time, I would have been able to look much further into my competitors when researching for the SWOT analysis, this is highly important as it allows a new business to gain a clear understanding of the strengths and weaknesses of relevant competition. Without spending sufficient time on this section of my investigation I feel I would not be prepared to begin a business as I would be entering into a market to compete with competitors I do not know enough about.
Likewise, I would have definitely produced more positioning maps as, despite not being the most accurate of methods, they provided me with a very clear visual of my place in the market in comparison with competitors. I feel that the quality and information presented in the positioning maps was high and with more time I could have made more in order to further assess the strengths and weaknesses of Fabulous Frostings.
With more time to spend on research I would have also looked into different research methods such as a land use survey or a pedestrian count, both of which take large amounts of time. With data gathered using different methods I would have been able to make a more complete judgement as to whether a bakery in Sutton-on-Sea using my chosen marketing strategies would have been a good idea.
Accuracy
Due to a lack of experience and a tight time schedule I did not expect the result of my primary research in particular to be accurate. My secondary research however, I expected to be reasonably accurate as I attempted to use only trustworthy resources with relevant information.
Regarding my questionnaire, I would not have expected accurate results as an insufficient amount of data was gathered due to both a lack of responses and my own fault of simply not handing enough out. In order to gain more accurate data larger samples must be taken with an ideal world having every resident of Sutton-on-Sea taking the questionnaire.
Whilst looking into secondary research I found that often to gain more accurate results payment is required, this now seems obvious to me as these websites are simply asking to be paid for providing a service, however at the beginning of the investigation this was not a problem I expected to encounter. Before opening the business in Sutton-on-Sea I would definitely look in to paying, within reason, for more accurate secondary research as to provide this myself would cost both time and money.
Before opening Fabulous Frostings as a business I would need to obtain much more accurate data about particularly about whether people living in Sutton-on-Sea would actually use the business. Whilst evaluating the accuracy of my questionnaire I noticed that at no point did I actually pose the question “Would you use a bakery in Sutton-on-Sea?” or an obvious follow up question such as “If so, how often would you use a bakery in Sutton-on-Sea?” In this instance, I definitely required the data I had gathered to tell me more about the target market than was ever going to be possible. Instead, I simply had to assume that respondents who identified themselves as living in Sutton-on-Sea and not using a local bakery because they do not have access to one would want to use Fabulous Frostings, this information would not be accurate enough when making the decision as to whether to open the business.
Also, I would have preferred more accurate information regarding the income of potential customers. When conducting the questionnaire I was careful not to make the income brackets too narrow as most members of the public prefer to keep information of that nature very personal. However, more accurate information about income would have made analysing the disposable income of the residents of Sutton-on-Sea much easier. This would have given me a more comprehensive idea of how much money potential customers would be prepared to spend in the shop.
Regarding the research methods which I used, I think there was definitely room for improvement judged on the accuracy of the results which I collected. When using the positioning maps, accuracy was probably not the most crucial element as this method aims to give a broad visual representation of competitors within a market. However, in order to improve the accuracy I would have liked to ask several members of the public to place my competitors on the maps and taken the average. This would mean that the results would not be biased in any way and I would be gaining a true representation of how the public view my competition, this is far more important than how I perceive my opposition.
Concerning my SWOT analysis, I feel that, like the positioning maps, the data has the potential to be fairly biased and opinionated. Therefore, given more time, I would have wanted to improve the accuracy of the SWOT analysis by backing up every strength, weakness, opportunity and threat with evidence rather than an informed judgement. I realise, however, that this would not always be possible, especially when reviewing Fabulous Frostings as it is not yet a functioning business.
Validity
When beginning the investigation my expectations for the validity of my research were very high. In some places I would say that I have fulfilled this expectation, however, I would definitely say that there is room for improvement in many places throughout my research. The validity of this research is closely linked to the accuracy as in many cases data collected would carry more strength if it was more definite and exact.
When opening a business the validity of research gathered must very high as any wrong or misinterpreted information could be the downfall of the business later on.
The validity of the questionnaire which I carried out was very high as, to my knowledge, none of the respondents lied about their information as they would simply have no need to. One problem concerning the legitimacy of the information collected would be how broad the brackets for the answers to the multiple choice questions were. I mentioned earlier about the accuracy of the income question, this applies to most questions as I cannot be sure at which end of the scale the exact answer would be. For example, people who identified that they visit Sutton-on-Sea less than once a month could either mean that they go every five weeks or that they have never been in their entire life, these two answers are very different and could effect decisions which the business needs to make.
When performing the SWOT analysis I felt that the information collected had the potential to be biased, however, I attempted to remain impartial in order to gain more valid results. As I stated earlier, by using more facts rather than judgements both the accuracy and validity of the SWOT analysis could be improved.
The validity of both the Boston Matrix and the Ansoff Matrix was high as I was able to make clear judgements between categories in which to place the new business, for example whether it was entering a new or existing market. These judgements were usually obvious and gave clear results as to what type of business Fabulous Frostings is and how it should enter the market.
The validity of the secondary research which I collected was very high, however, it could be improved as a lot of the information taken from Nestoria and East Lindsey District Council was obtained originally from the 2001 census and is now 10 years old. Before going ahead with opening Fabulous Frostings I would definitely enquire as to when the results of the new 2011 census will be collected and subsequently released into the public domain. By obtaining these results I would be able to make a more comprehensive judgement as the whether my target market is still present in Sutton-on-Sea after the ten years have passed since the data was last recorded. I feel this would be highly necessary as often the primary data which I would have collected in the form of a questionnaire is not as reliable due to the feeling that a census should be taken more seriously than enquiries regarding a new bakery in the town.
Possible Risks and How These May be Reduced
Marketing Strategy
Possible risks concerning my chosen marketing strategy mainly concern the reliance that my business has on being the market leader for bakeries in the Sutton-on-Sea area. If another bakery was to open in the area then my marketing warfare strategy of Flanking may not be suitable and they business may have to take a more direct approach to challenging the opposition and defending the position of market leader.
Having decided to class Fabulous Frostings as the market leader in the Sutton-on-Sea area and take on the more defensive strategy of Flanking, the business will no longer be looking to surprise competitors such as Gray and Goodliffe by attacking their weaknesses. This is a definite risk as it leaves my business open to attack, however, it could also pay off as if the two almost agree to disagree and neither attacks then both could co-exist successfully.
Associated Target Market
My business heavily relies on the disposable income of its customers as the products are not necessities; instead they are luxury items which customers could swap for a cheaper alternative. Possible risks regarding this are concerned mainly with the current economic situation of a large government deficit and consequent government spending cuts. These cuts will occur through macroeconomic strategies meaning that all areas of society will be affected, including my target market in Sutton-on-Sea.
One main example of how the cuts will effect my target market is the amount of pension savings on which people receive a tax break being reduced from £225,000 to just £50,000. Through this scheme the government will aim to save £4 billion per year. This will mean that pensioners will be subject to a much lower disposable income giving them less money to spend in my bakery. The Government also plans to reduce the lifetime pensions savings allowance that benefits from tax relief from £1.8 million to £1.5 million from April 2012.
One other factor which may affect my business is the fact that Sutton-on-Sea is a seaside town which is far busier in the summer than in the winter. Despite my target market being pensioners who reside permanently in Sutton-on-Sea, Fabulous Frostings will obviously benefit from much higher custom in the summer months when the town is flooded with tourists and holiday makers, many of whom are also retired. This will mean that business is much slower out of season making with Fabulous Frostings generating much lower profits. However, this can be compensated for during the summer months when the population of Sutton-on-Sea, and subsequent target market for Fabulous Frostings, almost triples. It can be seen through the success of other businesses in Sutton-on-Sea that it is possible to run a prosperous business in a seasonal town.
Suitability of Marketing Activities
With regards to achieving my marketing objectives, I believe that the marketing activities I have outlined will comfortably meet the targets.
By using cost-plus pricing I will always be guaranteed a profit on the products which the bakery sells rather than the competitive pricing which I had originally considered which, despite making sure that Fabulous Frostings remained highly competitive, may have meant that some products were being sold at a loss in order to compete with Gray and Goodliffe. This would have been especially relevant had the business ever judged larger stores such as Tesco’s as close rivals.
The promotions which I have identified should work together successfully to advertise the business as a market leader in the Sutton-on-Sea area with a friendly exterior. The free delivery will benefit my target market of those over 65 and the loyalty card will reward those living in the local area. This will help the business break even during winter as loyal residents of Sutton-on-Sea will use the business all year round rather than holiday makers who will only shop at Fabulous Frostings during the summer months.
The only marketing objective which I have set and now have doubt about achieving is “to provide cakes for local coffee mornings at a reduced charge”. This is due to information highlighted in the SWOT analysis which shows that only large supermarkets and chain stores can afford to run products as loss leaders, as I would be doing to meet this objective. However, in order to still meet the objective Fabulous Frostings could sell the cakes at cost price (only charging for ingredients used) and only provide the service once every three months as more of a special treat than a regular occurrence.
Do I believe that I have developed a comprehensive strategy which is capable of being achieved?
So far, I believe that my marketing strategy is highly capable of being achieved, however, before opening the business I would definitely conduct further market research to make sure that particularly people in Sutton-on-Sea, rather than residents of the surrounding area or tourists during the summer, would use Fabulous Frostings on a regular basis as this is the staple turnover which will keep the business breaking even during the winter months.
I would also need to analyse the data collected from my research again with regards to the new marketing warfare strategy which I have chosen. Whilst conducting the research I had in mind that my initial thoughts regarding a strategy centred around that of Guerrilla, I will now need to conduct further research to make sure that I have chosen correctly this time. This further research could simply be in depth analysis of data already collected or the use of further methods of research such as the previously mentioned land use survey.
Overall, I would judge that the strategies I have concluded upon, with a little more research, would work very well for Fabulous Frostings if it were to open as a business in Sutton-on-Sea.
Appendices
Appendix One – Nestoria for Sutton-on-Sea
Appendix Two – Neighbourhood Statistics
Appendix Three - Ofsted
Appendix Four - Statistics on Buying Local
Appendix Five – Distances to Work in Rural Areas
Appendix Six – Nestoria for Alford
Appendix Seven – ELDC Documents for Sutton-on-Sea North
Ward Labour Market Profile
32UCJR : Sutton on Sea North
Appendix Eight – ELDC Documents for Sutton-on-Sea South
Ward Labour Market Profile
32UCJS : Sutton on Sea South
Appendix Nine – ELDC Documents for Alford and Sutton
Electoral Division Profile
Alford and Sutton
