Abstract
Broadway Café has been in existence for over fifty years now. Over the years, the café’s competitive advantage has been its established menu and a loyal customer base. Nonetheless, the entrance of new players in the café business has led to increased competition. In order to maintain a competitive advantage in its target market, there is need for Broadway Café to upgrade its business operations by embracing E-business.
Business intelligence, customer relationship management and knowledge systems are helpful in strategic decision making. In addition, these strategies would also help to preserve the café’s vital information, attract new customers and raise customer loyalty. By integrating the café’s traditional but distinctive offerings with innovations in the information age Broadway will not only profit from IT but also join World Wide Web’s online community
Introduction
Broadway Cafe has been in business since 1952. It comprises of a series of cafés located in Atlanta, Georgia. Broadway offers a wide range of services but mainly serves coffee, tea, homemade sandwiches, a full service bakery, salads, and soups. Broadway’s competitive advantage has been its well established menu and high customer loyalty. However, over the last five years, the performance of the cafe has been on the decline due to competition. This is because the Café business has attracted many investors in the last few years.
The possible arrival of Starbucks is a major threat to Broadway. To remain relevant in this business, Broadway needs to consider using new and improved methods of business operation. New business environment calls for new approaches to business. In this case, Broadway can make use e-commerce to gain competitive advantage over its competitors.
Competitive Advantage
According to Baltzan and Philips (2007), competitive advantage refers to the factors in an organization that makes it more competitive relative to its competitors. Competitive advantage could be in the form of product or service that customers consider to be valuable in comparison with similar products or services that are offered by the competition. Nonetheless, Baltzan and Philips warn that competitive advantage is temporally because it may be replicated by competitors. In light of this, there is need to review the competitive strategies of a firm on a regular basis to ensure that they work effectively for the organization in question. The best way to review an organization’s competitive advantage is by way of analyzing its environmental factors through Michael Porter’s Five Forces Model, and the first-movers advantage.
At the moment Broadway Café is the sole coffee shop in Georgia. However, there are suggestions that Starbucks, a major player in coffee industry, plans to establish a store in the area. In order to respond to this business threat, it is important to evaluate the status of the competition through an environmental analysis (Baltzam & Philips, 2007). In this case, the two main competitors of Broadway are Starbucks and Panera.
A review of the websites for these major players in coffee industry reveals that the organizations have adopted high technology in their operations. In order to compete with these organizations, Broadway needs embrace better ways of incorporating new technological development in its business model. The café needs to rely more on computer processing in providing appropriate to services to customers, suppliers and employees.
Porter’s Five-Force
The buyer power force of Broadway Café has been shown to be exceedingly high. At the moment, there are more than 80 restaurants serving wide range of services in the city of Atlanta in Georgia. This provides customers with a wide range of restaurants to choose from and a wide range of dining options. One of the ways to lower this buyer power force is to start a customer loyalty program. Customer loyalty will ensure that the café maintains its customers despite new competitors and other services provided elsewhere.
The solution to customer loyalty may involve establishing a large-scale IT system. This solution is expensive for relatively small firm as Broadway café. In addition, Broadway Café may decide to provide its target customers with a special and unique meal that they may not possibly find from the other establishments run by their competitors. This is a form of a niche market in service provision.
Broadway café’s suppliers’ power force is low as there is a wide range of suppliers from whom the café can obtain its supplier. A search for restaurant suppliers in the World Wide Web show reveals several organizations that offer this service. Broadway can be able to obtain its supplies conveniently by evaluating quality, terms and conditions for every supplier. Most of the suppliers obtained through Google search had online services. One of the most convenient ways of obtaining suppliers is internet based services for business-to-business marketplace (Balzan & Philips, 2007).
The threat of substitute products and services for Broadway café is also high. Presence of many restaurants and cafes providing almost the same services and product provide customers with a wide range of alternative to choose from. However, there is a difference between on the one hand, substitute products/services threat and on the other hand, a high buyer power. This is because substitute products/services are more concerned with specific products that are only available at the café. For instance, if the café has unique dish that is not easily found in another café, then this force could be lowered effectively.
The switching cost that Broadway café use with its customer is price of a meal comparative to prices offered by its competitors and the distance its customers have to travel to the café. These switching cost are not unique to lower the threat (Kontzer, 2004). To keep threat of substitute products at a minimum, Broadway café should seek to maintain unique selection of popular meals that are based on recipes which other restaurants do not have easy access.
Threat of new entrant is high. Just as Broadway café has to contend with low supplier power, other restaurants also experience similar conditions. In this case a new entrant into the market would find it much easier to establish a restaurant in the region. It will be especially easy for them to get supplies for the commodities that they need. Although it is generally easier to establish a restaurant business in Atlanta, it is possible for the new restaurants to fail to attract customers. The new entrants may provide services and products that are not attractive to consumers thus reducing the impact of the threat. Customer loyalty and the provision of unique and established recipe may also help in reducing the impact of this threat. Although it may be easier for new entrants to start up their business, it will not be easy for these new restaurants to get the customers. It will not be easy to attract customers from their regular restaurants to the new restaurants.
The threat from new entrants is high since many places sell coffee of late. Many restaurants and fast food chains do have breakfast menu that is inclusive of coffee. There is increase in business people that are passionate about meeting customer’s demands. The pressure is especially of established businesses as new entrants come with aggressive ways to fill gaps in the market and boost sales. Because of the large number, prices offered at these restaurants must be competitive. This implies services offered at the restaurants must be excellent in order to keep the customers. The café also has to provide novel selection in its menu in order to be competitive. Customer loyalty and reward programs are very essential in this situation.
Considering the broader food industry, it becomes easier therefore to realize that the café face high competition, threat from new entrants, and high buyer force. However, when considering food service specialization, the forces above are much lower. This implies that focused differentiation strategy would be the best is handling the Broadway case. Broadway cannot be able to offer all food services to all people but offer a selection of high quality recipe that it has been able to establish over the past fifty years.
E-Business Strategy development
E-business solution would help the Broadway Café to keep in pace with the information age as other players in food industry such as Starbucks and IHOP has done (Kontzer, 2004). Broadway Café requires a knowledge management system in order to manage the wealth of recipe that it has been able to develop in its many years of operation. Apart from managing list of ingredients and algorithm for producing its popular meals, knowledge management system will enable gathering of important data about the recipe. Some of important data that can be gathered include customer reviews, and variations.
Customer satisfaction is vital if at all Broadway Café is to maintain a competitive advantage in its market of operation. In order to enhance the level of satisfaction of the business’s current customers, it is important for the firm to embrace a management system of its customer relations department. Customer Relation Management system will play an important role in gathering business intelligence. The system will be used to track customer spending habits thus helping the café respond appropriately to spending trend. The program is capable of organizing customers into different depending on their preferences thus enabling the management to attend accordingly to the needs of all their clients.
Website ought to display menu, activities scheduled to occur at the café and other special issues that are of important to their targeted customers. This will not only provide customers with important information, but also allow them to review meals and specials. Online suggestions box is very important in enabling customers to participate in the operations of the café (Papa John’s Pizza, 2008). This will be necessary in reducing the wait time at the café thus promoting customer satisfaction.
The information age is characterized with many people moving along with their laptops. The café can respond this trend in cafes by providing customers with unsecured Wi-Fi connection to enable them surf the internet. This would provide a very important incentive for attracting customers into the café (BBC News, 2008). Apart from attracting customers in the café, Wi-Fi connection can bring other benefits. Through the free internet connection the cafe can be listed in online directories such as Wi-Fi Free Spot (Wi-Fi Free Spot, 2008).
The café can also make additional revenue by providing advertisement in collapsible portion of the browser. Apart from Wi-Fi connection, Broadway can gain competitive advantage by providing kiosks. Customers without laptops will be able to use the kiosks while those with laptops can make use of the Wi-Fi connection. To ensure that the kiosks are accessible equally to all customers, a time limit of twenty minutes can be set at peak time.
Telecommunications Considerations for M-Coupons
Broadway Café can make use of M-Coupon to increase sales and increase customer loyalty. M-coupon has advantage over paper or e-coupon since they are not easily forgotten. According to NetInformer, m-Coupon can reduce delivery and redemption substantially and promote impulse buying (NetInformer, 2008). Although this is a highly potential marketing strategy, there are various concerns over the method.
One of the concerns is newness of the strategy. Another concern over the use of coupons is the perception that some people have over messages. Some people may view the coupon messages as just another spam thus leading to negative perception over the business (BizCommunity, 2008). To prevent the marketing strategy from backfiring, the number of coupons could be made as infrequent as possible. The system used for the method must be able to detect cell phones, acquire the number before sending the text-message coupon; this procedure however involves ethical issues where an individual’s cell phone number is acquired without the individual consent.
Broadcasting technology provides great opportunity for marketing although they may perceived as invading other people’s privacy. According to Dominikus (2007), advancement in broadcasting technology will enable broadcasting messages without invading other people’s privacy. Until this is possible, it is appropriate to use a system as the one used by McDonald’s. Through this system, potential customers opt-in for receive coupon by texting the service and then the service reply. By this procedure, it is ensured that the potential customer give their contact detail voluntarily.
Coupons could be in the form of printable identification numbers. In this case, the coupons could be uploaded into a text messaging device. This way, customer may opt to send text messages to such a system as long as their personal cell phones have been connected to the system in question. They can then use their identification numbers for authentication. This arrangement will enable important data about customer behavior to be gathered. When the same cell phone number is found to be attached to many ids for coupons, then it is known that the customer makes good use of the system.
A new mobile phone number appearing on the coupon will show that a new customer has joined.Alternatively it can be used to inform the others the current contact of an old customer who have changed his/her phone number. Through this system, customers that have not visited the café for long could be identified (Knight, 2008). Customers who resend the coupons to other phone will be helpful in establishing networks of customers. These networks will help in identification of the needs and tastes of different groups of people thus helping in customer satisfaction programs. Surveys conducted of communities identified through this system will provide vital data for decision making. The coupons will be helpful in managing customer reward system. At the point of sales, the M-coupons can be used in providing data outcome of discount campaigns or the items that are bought together.
Second Life for CRM
Second Life is essential in managing customer relation. Socialization and culture are important elements in cafés. Cafes offer great opportunity for people to relax and socialize. Although tangible commodities cannot be sold in Second Life, this new innovation is important for socialization. Second Life will offer opportunity for socialization after the café has been closed during the night. The café can hold concerts and other events. Debates ensuing from such events can find their way into the Second Life where they will find a wider platform for discussion. The Second Life shall be accessible not only to the locals but also to people from different parts of the world. Thus, this will provide customers with opportunity to meet people from different parts of the world.
Although the Second Life is vital in promoting the café’ culture and strengthening customer loyalty, it can have negative implication. If customer hand around at the Second Life instead of the real location of the café, then the café can loose revenue. The main objective of the Second Life is to support communities of the café’s customers. Thus, this method should enable the café increases sales and returns. The second Life will provide opportunity for the café to advertise incentives at the café thus increasing visits to the real world café. As people from different part of he world can visit the Second Life, this method will help in bringing these people to the café.
Developing the system
System development is challenging. All the requirement of the system must be well captured for the system to be effective. To ensure that the system meet its specification, experienced system developers will be needed. The options for developing the systems are in-house development or outsourcing. Outsourcing is opted for. System development can be outsourced to experienced developer. System developers with experience in developing similar systems will be chosen. The developer should be able to develop thee system within proposed time-frame and at minimal cost.
Conclusion
Broadway Café can benefit highly from e-business. By adopting technology in the daily operations, Broadway can not only stay in business through this system but also gain competitive advantage over other competitor. By coming up with a differentiation strategy, the café will be able to overcome the challenge of high competition in restaurant industry. The café should promote a unique and well established menu items to enable the customers to have high customer relation with customers.
Knowledge management system, CRM system and Customer relation management system and business intelligence system should enable the café to be more competitive. A website for the company and Wi-Fi are essential in promoting business services and visibility.
Mobile coupon will not only create incentive to visit the café but also help in identifying and rewarding loyal customers. Broadcasting coupons to any person near the café may lead to unethical issues; as system promoting voluntary participation would be appropriate. Second Life will help in building communities around the hotel. These communities will increase customer satisfaction thus ensuring consistency in sales.
Development of the system is outsourced to experienced developers. System developers with experience in developing similar systems would be able to provide a system that meet specification. Outsourcing will also cut on cost and ensure the system is obtained on time. E-business has great influence on businesses. By implementing system Broadway will join other successful companies such as Amazon.com which have embraced computer technology.
Reference List
Baltzan, P., & Phillips, A., (2008). CIS 500 Information Systems for Decision Making. New York: McGraw-Hill.
BBC News (2008). Coffee ‘Wi-Fi’ breaks for shoppers. Web.
BizCommunity (2008). PR spam negatively affects PR industry’s reputation. Web.
Dominikus, S. (2008). MCoupons: An Application for Near Field Communication (NFC). IEEE Xplore. Web.
Knight, K. (2008). Timing is everything with mCoupons. BizReport. Web.
Kontzer, T., (2004). Pancake Chain Adopts E-Business. InformationWeek. Web.
NetInformer (2008). Mobil Coupons. Web.
Papa John’s Pizza (2008). Order Online. Web.
Wi-Fi Free Spot (2008). Web.