Brumby’s Bakeries Company’s Situational Analysis

Abstract

The paper has an analysis of the company in terms of the services it is offering currently. It has an analysis of the company both internally and externally covering the strengths that the company has some of the new opportunities that the company may be able to exploit financially. The paper has also analyzed its current market situation, the size of its market, and how best it can be able to increase its market share.

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Introduction

The main objective of this report is to present the current situation of the company and lay down the marketing strategy that can be used to increase its presence in the market. This report is divided into different sections covering different areas. It has an executive summary that covers the aims of developing the strategy and its conclusion.

The topic on market overview deals with information on the customers who are served by the company. This part seeks to understand the different customer needs. The report also has market information covering the size and nature of the market, trends in the market, the company’s competitors, and its market share. The possibilities of growth, the limiting regulations which are imposed in the market by the government, and the conflicts which may be faced.

In chapter 3 there is the SWOT analysis. This covers the strengths, weaknesses, opportunities, and threats that may be faced by Brumby.

Chapter 4 has the marketing objectives of the report, controls, and evaluation budget determination for the marketing campaign and the action plans which can be implemented by Brumby.

Executive summary

Reasons or aims of developing this strategy

Brumby’s is a big company with a formidable market presence which has been enhanced by the many franchises which it has developed over the years. Despite its current status as one of the leading bakeries in the market, there are still other business opportunities that are in line with its normal business which it can be able to expand into. This strategy aims to explore how the company can expand into these other business opportunities and increase its market presence by enlarging its market share.

Pest Analysis

PEST analysis can be defined as the methodical evaluation of the external macro-environment that impacts all organizations. The factors considered are political, economic, social, and technological. The firm has no control over these factors (NetMBA)

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  • Political factors: these are the government policies and the legal issues within which the Brumby’s works. The political environment in the country is very stable with no wars. This is due to the maturity of democracy here. The tax policies for companies are also friendly thus not very harmful to the business. The business is not affected by any trade restrictions since it only operates here and in New Zealand. The company should therefore take advantage of the political stability.
  • Economic factors: these have an impact on the company’s cost of capital and the ability of consumers to buy its products. The local currency has been quite stable with no major fluctuations. The interest and the exchange rates have also been and still are steady thus not posing any major threats to the financial position of the business.
  • Social factors: These are the issues affecting customer needs and include demographic and cultural factors. The population in the local market is very health conscious thus any mistake that can harm health must be avoided. There were some years when the demand for bread was affected by the trendy dietary changes but these have been reversed by thorough marketing campaigns informing the public of the importance of healthy foods like wholemeal bread. (IBISWorld,2006) The population growth rate is relatively steady thus providing constant growing demand for the company’s products.
  • Technological factors: There is a lot of technological advancement in this country and this has had a positive influence on the baking industry by helping the companies automate most of their production activities. Research and development activities are always on thus rendering the rate of technological change very fast. The company has to ensure the franchisees keep updating technologically in their production techniques.

The conclusion of the plan

This plan concludes that there are opportunities for Brumby’s to exploit and lays down the facts supporting this. It also lays down how these can be achieved.

Market overview

Definition of the market

Brumby’s Bakeries is a specialty bread retailer. It prides itself in baking some of the freshest and tastiest bread in the market. The other bakeries that are in the market deal in a variety of other baked foods just like Brumby’s. The products that are produced by these bakeries are bread, pastries, muffins, cakes, queen cakes, sausage rolls.

Target groups

Brumby’s Bakeries is a baker that is favored by many people all over Australia and New Zealand. Unfortunately, this is not enough and the company needs to expand its reach in the market. This it can only do by reaching newer customers. The objective is to venture into the big party snacks business. This includes wedding cakes and snacks for weddings, major ceremonies and special occasions for the big companies, and exclusive private parties.

The nature of the objective of this strategy makes a wide target market for Brumby’s as there are always occasions where people celebrate and there always will be a need for the services to be provided by Brumby’s.

Demographic information

The target groups of Brumby’s in light of this report stretch throughout Australia and New Zealand. The main target group is those who are into partying at most ceremonies. The people will more often be the working class and the financially well-off individuals living basically in any part of Australia and New Zealand. When most rich people have celebrations, they take pride in dealing with only the best quality and service providers. It is this group of rich partying clients that the party snacks business will be giving the main focus.

There are other catering companies in the industry that deals with catering services for parties, but there needs to be a company that can specialize in the provision of these services and is respected in the market. Brumby’s Bakeries having been in the business longer than most of the other companies, has created an impressive service culture that many people would love to be identified with.

Since most of the clients that the company will be dealing with are not likely to be having financial constraints, the cost of the services provided by Brumby’s will not have such a big sway in determining whether they can hire Brumby’s. The main deciding factor for these clients will be the performance of a company of the services required with a touch of high class. They will want high-quality products and a reputable name to be recognized with. Since Brumby’s has been in the market for a long time now, it has been able to develop employee training and management techniques which are far above the class of the others, it will be considered an honorable luxury, they will be eager to receive Brumby’s services.

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Marketing Mix

Products

Brumby’s has an advantage in the aspect of the products it produces, fresh hot baked bread. This is because at any time people would prefer these to the already packaged bread. This is the value in the product most people want on top of the variety of other tasty baked foods. The bread which is sold at Brumby’s is usually freshly baked using the traditional scratch method of baking. This is done daily all over New Zealand and Australia throughout their stores. Brumby has a list of other products like hot sausage rolls, pies, bruffins, freshly made twists, foccacias and scrolls, muffins, cupcakes, slices, and scones!

Brumby’s has ensured that the quality of their products never goes below the expected standards. This has been done by training their bakers to high standards and using laid down guidelines that all their employees and franchisees are familiar with.

Price

Brumby’s has franchises in many towns in the country and since the procedures for preparing the food products must be the same and therefore they have been able to keep uniform prices throughout the country for their products. Their prices also have been favorable for their customers.

Placing

Since Brumby’s has been operating as franchises, the franchise stores have been well placed all over Australia and New Zealand. This has increased the company’s reach in the market.

Process

For Brumby’s, to maintain the quality and uniformity of their food products, they have developed manuals that guide their franchise managers in the preparation of the foods to ensure uniformity. When Brumby’s hires new employees to work in their bakeries, they are taken through nationally accredited training to empower them with the specific skills needed at Brumby’s for the job.

People

For Brumby’s to continue producing high-quality baked products for its customers, it ensures that there are operation and training manuals for the employees to use for guiding them on their daily activities at work. These laid down procedures are easily followed even by the new employees. With a belief that people are the most important assets, they give the employees high-class training in the bakery. Their training is called Bread 4 Success. (Brumby’s). Everyone involved at the bakery is trained for accredited skills.

Physical Evidence

This can be viewed as the place where the tangible part of the service can be viewed and it should be attractive. The Brumby’s Bakeries franchise stores are very well established in terms of physical appeal and their management has operation manuals to follow for their management.

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Market information

Currently, the market for the baked food products is quite big. The market is coming to near saturation by many small bakeries. The biggest percentage of the market is taken by the supermarkets which sell already made and wrapped bread. For Brumby’s their market goes up to New Zealand and stretches all over Australia. This market presence is aided mainly by the use of franchising of the different stores.

Some of the competitors in the market are Laurent Bakery, Beejans, babka, and Sarah lee bakeries among others. Even though some of these bakery companies also have numerous outlets for their products, franchises, and branches as well, they do not enjoy a favorable public opinion as much as Brumby’s Bakeries. This major weakness for the other bakeries has worked against them despite their numerous numbers, has worked mainly against them, and worked for Brumby due to its franchising techniques.

Market Share

Brumby’s has arguably one of the largest individual market shares in the bread and cakes market in Australia since it also has one of the highest numbers of franchise stores in the local market. This has given it a big edge in competition over the other bakeries in the market. It only comes second to the supermarkets which have a joint market share of almost 60% combined while on its own, its share is about 7%.

In the past, most of the bakeries just stuck to producing just a few products to satisfy a small section of their markets. With time the bakeries have started to increase their portfolio of products to enhance the level of their sales and revenue. The bakeries also are getting more and more into franchising as they find it a quicker way of expanding. The big companies also find that they are having no alternatives but to also get involved in corporate social responsibilities.

Industry information

In the baked foods and snacks market, there are new ones that always come into the market, or the old ones which are already established find new opportunities for expansion that they can exploit. This has lead to continuous growth in the industry.

The FSANZ is a bi-national standards setter for both Australia and New Zealand. It is charged with the duty of managing food recalls and surveillance, ensuring the hygiene and safety standards are met by the primary industries that deal with food.

The governments of Australia and New Zealand also have rules against the use of GMO foods. This is put in place to protect people. (Food standards monitoring). The regulations set by the governments have to be adhered to.

The conflicts in wants that occur or have occurred were the demand by a group called choice for the government to stop the advertisement of junk foods to reduce the causes of obesity in the country. The request for this would impact negatively the market in general and on the company in particular.

Product information

The company has always done major advertisement campaigns to promote its products across the two countries. The main advantage of Brumby’s is that it has stayed in the market for a long time having started from a humble background and has therefore established some of the best ways of making delicious products. For this, the Brumby’s has always got very high reviews.

The other advantage enjoyed by Brumby’s is the fact that it has come out as one of the best franchising bakeries in Australia and New Zealand. With over 300 franchises it has a very solid presence in the market. The main aim of my courses is to increase Brumby’s market share in the industry through innovation and venturing into a new market area. Brumby’s products are some of the most loved and enjoyed by families across the two countries. In most journals, the products have always got top reviews as the tastiest. The strategy used by Brumby’s is to make the freshest and tastiest bread. To a great extent, this has been achieved. More important now is to increase the market share and also to venture into something new.

Current promotions

Brumby’s has a marketing team that uses various methods for marketing its products. Apart from the numerous radio and television adverts, they use lotteries to be won for customers to participate in. the marketing team also moves around the franchises meeting with the customers and talking with them. This gives the customers the feeling of being cared for and appreciated.

SWOT Analysis

SWOT analysis can be defined as “a subjective assessment of data which is organized by the SWOT format into a logical order that helps understanding, presentation, discussion and decision-making.”(Chapman,1995).

Strengths

  1. Brumby’s has been profitable of late and is still profitable with a bright financial future.
  2. Brumby’s prides itself in producing the freshest tastiest bread.
  3. According to ABN AMRO, the company has stable cash reserves which are an asset in its quest for expansion into other markets.
  4. Brumby’s avoids the use of some preservatives with chemicals that are harmful to health. This is a plus for the franchise. An example of the chemical is mold inhibitor 282.
  5. Most of Brumby’s franchise stores are located in rich neighborhoods where their products are consumed freely as necessities.
  6. The franchise only operates with franchised stores without any of its own thus posing no risk to the company itself.
  7. In its marketing campaigns, it comes across as having the capability of eliciting the need for freshly baked bread from customers. (ABN AMRO, 2003)
  8. Brumby’s is a name to reckon with in Australia and New Zealand, its brand name is strong and over the years it has developed a reputation of brilliance and high quality services for its customers.
  9. The bread and cakes industry in its local market is one which always has demand and still growing.

Weaknesses

  1. The company has a problem with finding good bakers. It costs a lot of time and resources to train a baker who can be able to work in any of their franchise stores.
  2. it’s a big challenge for the company to get franchisees willing to join them.
  3. Brumby’s is liable to be affected terribly by any considerable movements in currency and interest rates.
  4. Since the company only operates as a franchise with no store of its own, should a single franchise make a mistake that tarnishes its name, the whole company is liable and will be affected in terms of sales and publicity.

Opportunities

  1. It’s a good opportunity for the company to convince customers that it is better to be buying the fresh hot bread than the already packaged bread.
  2. The company can continue expanding its territory by buying independent businesses and rebranding them into Brumby’s.
  3. The industry in which Brumby’s is in is still growing and presents growth opportunities.
  4. Brumby’s can be able to and is planning to expand into other markets in the united states and Asia.

Threats

  1. Its very difficult getting a good franchisee
  2. With the current growth rate the saturation point in the market could be reached early.
  3. There is increasing competition from the other players in the market. This might have the impact of reducing the company’s’ revenues.
  4. There is a possible risk that their customers may change preference of breads due to the high competition.
  5. The prices of goods are always increasing and they may be affected if their prices are increased.

The key issues arising from the SWOT analysis is that as the competition intensifies both in finding franchisees, the company should consider venturing into other areas.

Marketing objectives

According to the chartered Institute of Marketing, marketing is defined as the management process which is responsible for identifying, anticipating and satisfying customer requirements profitably. The main objective here will be to establish the position of Brumby’s in its market about the market factors that may affect it so that it can be able to make maximum returns from them.

The marketing objectives to be carried out by the company would be aimed at charting new territories. This is to venture into new market where it has not operated before. The areas to be looked into includes the possibility of starting to bake specialty occasional cakes specifically for the high end market.

Conclusion

Considering the rate at which the other baking companies are also trying to catch up with Brumby’s the company must get strategies which will help to keep it still ahead of the rest. This can be implemented through increase in the number of franchise stores and also developing new products for the company. The increase in investment would help the company to increase its profits, improve investor confidence in the company as one which is set to grow further thus attract more investments.

References

ABN AMRO Morgans Limited. (2003). Sourced from ABN AMRO Equities Australia. Web.

Alan Chapman (1995). businessball. SWOT analysis. Web.

Brumby’s Bakeries Corporation 2003. Web.

Brumby’s Become A Franchisee 2006. Web.

Franchise expo. (2007) Brumby’s food franchise. Web.

Food standards monitoring and surveillance2007. Web.

Food navigator Europe. New GMO labeling rules in Australia (2000). Web.

IBISWorld. Bread production in Australia. 2008. Web.

Market research.com Bread and Cake Retailing in Australia – Industry Market Research 2008. Web.

NetMBA. “Pest Ananlysis.” Strategy Management. 2002. Web.

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