Trends in the market
According to Barrow (2005), the prevailing trends in the market may be looked at from the perspective of consumer preference and from the perspective of product development. There has been a great change in the market trends in Birmingham due to upcoming factors that affect both the consumers and the market in general.We will write a custom Trends in Consumer Preference specifically for you
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Trends in consumer preference
The consumption behavior of people in developed countries like England is becoming challenging due to the fact that many people are more concerned about their health rather than the variety of food that restaurants offer. The awareness on observing proper dietary measures have made people to move from consuming high amounts of food rich in fat to those diets that have high contents of minerals and other nutritive value contents.
According to Burns (2006), globalization of the world markets has significantly increased the variety of food products that are available to the consumers and this has in turn led to high competition between the various restaurants and other food companies. The consumers have, on the other hand, had a variety of products from which they can choose from and it also brings about individualization of consumption behavior. This is the reason why some people will prefer the take away foods in the food stores while others will eat from the restaurants and still others will prefer to prepare their own meals.
According to Burns (2006), many customers are driven to taking food from restaurants as a result of their prevailing moods. In a study carried out 70% of people taking the quick foods do this because of the mood or the desire to have these meals at a particular time. On the other hand, convenience of the fast foods is another driving force. Many people will go for those restaurants that are convenient to them. This ranked second from a survey carried out in a few of the major cities in London. 59% of people surveyed opted for the fast foods because of their convenience.
Customers will also go for the fast foods because of their relatively low costs. The menu of a restaurant and its location is also taken into consideration by customers. Depending on the variety and the kind of food shown on the menu, people will decide whether to eat from the restaurant or purchase food from the stores (Smith 1993).
The Taste of India restaurant has provided a variety of foods to the people of Birmingham and if it maintains its high quality standards, more customers will desire to have their meals from the restaurant. The idea of establishing a restaurant that offers worldwide variety of foods is likely to increase the product market especially if consumer behavior promotes the sale of products. In England, food products are fresh, hygienic, and well packaged to prevent contamination and access to impurities. This has been put into effect mainly by the legal regulations and the consequent high standards which restaurants and other food companies maintain.
Trends in product development
Food companies need to ensure that they develop their products from time to time to cater for the change in consumer tastes and preferences (Burke 2005). Product development may be in terms of coming up with new products or improving the already existing products. The Taste of India has literally brought a taste of Indian cuisines into England and this enabled both the Indians and non-Indians in Birmingham to enjoy the unique products. On the other hand, introducing worldwide cuisines will also be a way of enhancing the restaurant’s product development process. Product development will go towards generating new products and commercializing them in the market to compete with other products from other companies.Get your
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The idea of determining the market trends in terms of consumer preference and product development can be carried out using any of the following procedures (Burke 2005):
- The SWOT analysis
- The PEST analysis.
These will help the Taste of India identify the key areas that need to be improved in order to win a large market and to create value from the target market.
The PEST analysis
There are external environmental factors that affect the business and which the management must be aware of during strategic planning of the business or while enhancing product development (Burke 2005). PEST factors that will have an impact on the industry include the political, economic, social and technological factors and these have been summarized as follows (see appendix (c)):
With this analysis, it may be identified that the restaurant has been able to compete well with its competitors. This is because, it has been able to use the PEST analysis to make the best from its services and compete well with its business rivals. The analysis can be summarized as follows:
Political factors: Good. The city of Birmingham is politically stable and this is one factor that will greatly promote the success of the restaurants. The Taste of the World, with the support of the government, will be a major success in the city.
Economic factors: Excellent. The economic factors have played the greatest role in bringing about the success of the Taste of India. The people of Birmingham advocate for quality in food products and for there to be enhanced quality, the economic factors should be favorable to the food industries. Factors like promotion of the tourism sector has also contributed to the success of the Taste of India and it is likely to have an even greater positive impact on the Taste of the World that will be offering more variety of dishes.
Social factors: Fair. This has been as a result of the variety of foods and drinks that the restaurants have been offering in respect to the kind of food that people prefer. The Taste of India has attempted to provide those dishes that will be appreciated by a great number of people and it is also through this that measures of product development are being implemented.We will write a custom
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Technological factors: Excellent. They have enabled the Taste of India to come up with better methods of presenting their products, including the means of packaging.
The findings can be represented in form of a matrix as below (see appendix (d)):
The desired objectives of the firm must be attainable. The Taste of India’s main objective is to introduce and provide the best Indian cuisines in Birmingham without having to compete with other restaurants. The restaurant desires to be the sole provider of Indian cuisines and it is also focusing its activities on reaching out to other nationals residing in the city by establishing the Taste of the World that will offer worldwide cuisines. This will mean increasing its markets and being able to gain competitive advantage over other restaurants.
The SWOT analysis may be summarized in form of a table as below (see appendix (e)):
- Strengths: The restaurant is well developed with proper and qualified management and it has a significantly large number of employees that are experienced and thus provide products that outdo most other food products in the market.
- Weaknesses: The restaurant provides products that may not be accepted by all the people of Birmingham. The Indian cuisines provided may be unique but may not be positively taken by people and most feel that they mainly target the Indians in the city and the products do not offer a variety to the different consumers. There is therefore the need to come up with a mix of products in order to attract more customers.
- Opportunities: The economic conditions in the country are favorable and promote the expansion of business ventures. The government in particular supports the service sectors and the restaurant therefore needs to fully exploit this opportunity. The Michelin stars are also creating an opportunity for the business to be successful. By awarding stars to the best restaurants, Taste of India has a great opportunity to be ranked one of the best offering Indian cuisines in the United Kingdom and this will promote its markets a great deal. Another great opportunity is the fact that markets have continued increasing for the last decade.
- Threats: The major threats include those restaurants that are already developed and well known restaurants that are way ahead of the Taste of India in terms of providing best products. In Birmingham alone, there are three restaurants that have already received the Michelin stars and these are lowering the restaurant’s competitive advantage. The Taste of India must overcome the threats by creating appropriate strategies in terms of product or market development.
The major competitors of the Taste of India restaurant are Shimla Pinks, Alfrash and Itihaas.
This has been one of the Taste of India’s greatest competitors. The restaurant has had progressive development since its establishment and has received a number of awards. Shimla Pinks offers Indian cuisines just like the Taste of India and this is one challenge that the Taste of India may be experiencing. Since both restaurants offer similar products, the Taste of India must aim at gaining competitive advantage through product development or through market re-orientation.
Unlike the Taste of India that has been in the market for the last fifteen years, Shimla Pinks has been able to gain a large market within a short period of time. The Taste of India has however shown tremendous growth as well and despite the fact that restaurants like Shimla Pinks have dominated the market, there are great opportunities prevailing and this crates advantage of the restaurant over Shimla Pinks.Not sure if you can write
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Shimla Pinks’ décor has been designed by professionals and its meals have been made by qualified chefs and most qualified services are provided while serving the dishes. The restaurant highly believes in quality in terms of life, the surroundings and most of all the food they offer. It has professional employees who are classic and who treat all with equality. Unless the Taste of India comes up with more unique and greater quality services, Shimla Pinks may take over the market because of its quality products and the effective means of providing their services to customers.
The restaurant provides a range of products to be offered to the large market and this enables it to have a larger market than the Taste of India which offers only the Indian cuisines. It has well qualified management system that enables it to properly run its operations and the staff is also well qualified. It also provides services that are enjoyed by all kinds of people, from children to the adults. Al Frash has been able to capture larger markets than the Taste of India because it has catered for the children and has used this as a way of advertising its services. Besides the individual services, it offers corporate services as well that caters for the corporate organizations and this also should be used by the Taste of India to ensure that it has gained competitive advantage because it offers similar services as well.
Itihaas restaurant offers both vegetarian and non-vegetarian dishes to its clients. Just like Shimla Pinks and the Taste of India, it offer Indian cuisines in Birmingham and it has created very high standards in its services. Its dishes combine a taste of both the Indian and Bangladesh diets and this makes its products unique and different from the other restaurants’. The staff is qualified and always at the service of their customers. It blends most of its dishes with nuts and it offers services to individuals as well as to large groups of people.
The three companies compete with each other and with the Taste of India to ensure that they win as large markets as possible through gaining competitive advantage. A competitive analysis may be created from these restaurants to identify that which is the best of them all (see competitive analysis table in the appendix).
Recommended growth strategies
The management of the Taste of India wishes to establish a new restaurant that will offer foods and drinks from all over the world. The restaurant will be referred to as the Taste of the World and will have chefs from all parts of the world. The business growth strategies are aimed at helping the new restaurant achieve its potentials. Hence, the Taste of India’s key growth strategies are:
- Introducing take away services in the Taste of India.
- Starting a new restaurant, the Taste of the World.
- Selling packaged food products in the food stores.
These strategies are aimed at creating greater markets for the business and hence increase its sales volume. Since there are other restaurants that are competing with the Taste of India, the restaurant should try to ensure that it has been able to successfully accomplish its desired goals. A growth strategy normally enables businesses to be in a position that will enable them solve any arising challenges and also have the ability to improve their profitability through cost control, capital investment, among other means (Willsher 1997). A growth strategy can therefore be said to include the following factors and elements (Johnson 2008):
- Clear objectives, which are also decisive.
- Have the ability to sustain the initiative for having established the business.
- Concentration and focus towards the objectives.
- Flexibility of the strategies to cater for any unforeseen changes.
- A well coordinated and committed leadership.
According to Johnson (2008), these apply when implementing the strategy in developing a business besides other organizations like the government organizations.
The restaurant’s management must put the following into consideration while coming up with an effective growth strategy (Lynch 2005):
Assessment of growth options
According to Lynch (2005), one must be able to assess critically the possible and available opportunities available for growth. These include the finance options, the ability to diversify products, means of enhancing new product development as well as consolidation of a business, either through mergers, joint ventures or acquisitions.
This means identifying the various and most efficient ways of formulating a clear strategy that will act as a driving force for the growth of the business (Johnson 2008). The strategies formulated and implemented should be realistic and based on research from past studies on growth of businesses. They should also put into consideration the external and internal factors that are prevailing.
According to Lynch (2005), a business plan that is focused towards growth should then be prepared and this follows the start-up process. The management of the Taste of the World should be able to monitor the progress of the set plans, constantly review the plans and set the appropriate targets that the plans will be focused on and then allocate resources depending on the objectives.
Growth action planning
There is need to create a growth action plan that will help the management to identify the areas that need improvement and those that the business is strong in. Since the growth strategy is made by an already existing business, the Taste of India, creation of a growth action plan will be implemented relatively easily. The growth action plan can be used with the help of the SWOT or the PEST analysis (Lynch 2005).
Identification of challenges
The growing business will be experiencing challenges. The management should focus on being able to identify these challenges and then look at the possible ways of handling them. By recognizing the common mistakes, with the help of the experiences of the Taste of India, the growth strategy becomes a success. Every business experiences different challenges and the management should focus on creating the best practices that will help the business overcome its challenges (Scholes 2008).
Proper implementation of standards
The growing restaurant should be able to define what good standards are, what benefits they bring to the business and the ways in which they can be implemented to make the business a success. According to Scholes (2008), there is also need to come up with quality management standards which will be used to help the business acquire competitive advantage through improved quality performance.
Acquisition of the social business responsibility
The growing restaurant should be able to know that its success depends on how the society will react towards its services and products and should therefore ensure efficient social corporate responsibility.
Growth through product development
The restaurant can enhance its growth through product development in the following ways (Burns 2004):
- By investing in new products and services so that it can target higher markets and be able to meet the customers’ demands. The idea of offering worldwide cuisines is one positive way of investing in new products.
- By developing appropriate business designs and research. This means the business will have to study the market demands, the supply methods and the available resources.
- By identifying ways in which the business can adapt to the findings obtained from the research carried out.
- By defining the means in which one may use the market research to be able to gain sufficient knowledge on the existing market.
- By using the great innovation to help the business grow. The products or services that have been innovated and any other new techniques may be used to help the business grow.
- By the use of any new technologies and other support networks and facilities developed for research and development.
The business may develop a joint venture with one of the successful star restaurants so that it may further improve its products. When the business is developing, a business angel may be necessary and this may be a financial institution or the government itself. The key issues taken into consideration during process of business growth and the forms of investment that are necessary may be represented in form of a chart (see appendix (b)).
Growth through market penetration
Market penetration is when a company penetrates a new market but with products that are already existing (Willsher 1997). The most effective way of doing this is by gaining part of the customers’ market share. This may also be through introducing a company’s products to the non-users. For instance, the Taste of India may penetrate those markets that do not consume Indian dishes. The restaurant may promote its markets by going for those customers who have never bought the Indian dishes and when they find them good, the customers will keep on buying the products and the restaurant will have gained a new market. The product/market Ansoff matrix helps businesses identify the importance of penetrating new markets and it is important to note that it takes place when both the product and the market exist.
Growth through diversification
According to Wickham (2006), diversification is one effective strategy of business growth. It aims at increasing the profitability of the business through a rise in the sales that are acquired as the business engages in new products and new markets. The Taste of India will diversify its business through establishing the Taste of the World that will focus on offering worldwide cuisines. Diversification is one of the major marketing strategies that are represented in the Ansoff product/market matrix. The Ansoff matrix can be shown in form of a chart as follows:
The diversification strategy is different from the three others because market penetration, product development and market development strategies are applied using similar resources that are for the initial product line whereas diversification means that a business must acquire new techniques other than those used in the original product. Diversification process therefore involves greater risks than any of the three other processes. Diversification implies creating new markets as well as new products for the sake of attracting new customers (Wickham 2006).
Growth through market development
This implies developing new markets with the already existing products. This is mainly with small business entrepreneurs. The new markets may be the international markets or the domestic markets that are not yet ventured in. The Taste of India, by making use of the advanced economic growth, could reach out to the external markets for its products. It could also do this by repackaging their products or expanding the distribution channels. There is however need to have a good knowledge of the existing markets to be able to develop a new one (Burns 2004).
Overall competitive positioning
As a summary, it can be concluded that the most appropriate strategy to implement is the product differentiation strategy. This will enable the restaurant to gain competitive advantage over the other restaurants while at the same time incurring fewer costs. This will most effectively be achieved through forming a joint acquisition with another competitor so as to reduce unhealthy competition and be able to cost effectively develop its products through differentiation.
Managing the growth
There are various strategies that should be implemented to manage the growth of a business and the most important factor to put into consideration is the proper analysis of the business. A business entrepreneur should be able to determine the growth, how it is likely to affect the business and those procedures that need to be carried out to cope with any changes.
The greatest challenge facing growing businesses is the ability to stay in the appropriate step with changing market conditions and other factors like technology. The means by which a business is able to adapt to the changes depends on the stage at which the business is in its life cycle and since the Taste of India is at the stage of actualization, there is possibility that it will be able to handle its growth. Technology tends to affect the stage at which business development is in and this in turn determines the ability of the business to manage its growth strategy.
Managing business growth also relates to the means of financing, either internally or externally. It is important that a business understands clearly that availability of finances may not be the most important factor but rather, the ways of overcoming the possible resistances to growth and the changes that will result from the growth strategy which are likely to affect the business’s sources of finance. In the initial stages of growth, the business may be financed by the bank or other financial institutions or from the investors themselves.
As the business grows, further financing is necessary and a business angel may be required, who will help the business identify a serious party. When the business intends to go global, like the case of the Taste of the World, the business may opt for the venture capital funding.
The following are effective tools that will help to manage a business growth and which will enhance the success of the business (Lynch 2005):
- Establishing credit facilities that will fully support the growth: According to Johnson (2008) a business should try to establish those credit lines that will grow as the business grows. The business should focus on those credit facilities that are based on a certain percentage of what the company is likely to receive rather than on constant values.
- Proper timing schedule: A timing schedule is necessary as it will enable the business to target towards accomplishing the objectives within the set time limit (Lynch 2005). The timing should be realistic enough to help the business properly affix its strategies.
- Constantly include new Systems and Procedures: There is need to establish systems and procedures that will help the management and the staff to continuously check the accomplishment of the desired objectives (Lynch 2005). This will promote the day to day running operations of the business and will therefore result in the achievement of the company’s goals.
- Take note of the non–financial hindrances: A business, during its growth process may overlook other factors that may result in hindering the accomplishment of its objectives or its ability to grow. These factors may be leadership strategies or other external factors like government intervention or change in technology. Factors such as the size of the business premises may affect the management of business growth if it had not been adjusted to cater for the growth (Johnson 2008).
- Use the return on investment (ROI) method: To determine the nature of the investment to carry on, a business should carry out a return on investment review. This is because the rapidly growing businesses often have more profitable options to carry on than it the amount of liquidity that it has. In order to find out the option that provides the most effective opportunity for success is to choose that with the highest rate of return on investment.
How to manage the change
The idea of carrying on a business that is growing means constantly thinking of the steps to follow in order to be able to position the business as the market changes. The Taste of India has come up with ways of re-inventing itself by inventing new products (the take away products) and new channels to markets (the Taste of the World) and this needs to be taken great care to ensure that it is able to manage these changes.
The Taste of India should therefore establish a team of business managers who will be able to maintain the growth and come up with the best objectives which will be focused to increasing profitability. The decisions of the managers will therefore play an important role in the growth process of the business. The key factors that the business managers are supposed to consider are:
- There is need to refocus the business objectives in order to cater for the growth and compete in the market.
- The managers should make the business stand out. This is the only way to gain competitive advantage.
- There should be a clear conflict resolution strategy so that the conflicting ideas may be handled with expertise.
- The business growth should be focused on competing in the market economy and taking the opportunity to invest in the global economy.
As a conclusion, it can be argued that a business entrepreneur must define clear strategies that will bring about the success of the business. Every entrepreneur desires to gain competitive advantage and therefore must come up with proper means of making this possible. The Taste of India is one enterprise that has made tremendous growth in Birmingham and it intends to grow further by establishing a new business through product development. The management should focus its attention on establishing the most appropriate growth strategy and managing it to make it a successful venture.
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Competitive analysis table.
|FACTOR||Company||Strength||Weakness||Competitor A||Competitor B||Competitor C||Importance to Customer|
|Products||Indian cuisines only||*||Offers more diverse products||Similar products||More diverse products||1|
|Price||Relatively affordable prices||*||Relatively expensive||Relatively expensive||Relatively expensive||3|
|Quality||High quality||*||High quality||High quality||High quality||1|
|Selection||Low market selection||*||Relatively high market selection||Low market selection||High market selection||4|
|Service||Offers both take away services and take-in services||*||Similar services||Similar services||Similar services||3|
|Stability||Stable prices and in quality services||*||Enhanced stability||Relatively unstable||Stable||2|
|Expertise||Skilled||*||Highly skilled||Highly skilled||Highly skilled||1|
|Company Reputation||Good||*||Similarly good||Similarly good||Similarly good||1|
|Location||Well located at the heart of England||*||Located in the same city, creating competition. A few minutes walk from Brindley Place||Located in the same city, creating competition||Located in the same city, creating competition||2|
|Sales Method||Food stores and in the hotel||*||Food stores and in the hotel||Food stores and in the hotel||Food stores and in the hotel||4|
|Credit Policies||Through bank loans||*||Bank loans and other credit facilities||Bank loans||Bank loans||5|
|Advertising||Through the media only||*||Media and the restaurant’s agents||Media||Media||2|
Appendix (b): Issues taken into consideration during strategic growth process
Funding can take place when the business is coming up with a maximum investment method or when the investment method is minimum; that is, at the critical stages of growth.
Appendix (c): The PEST analysis
Appendix (d): The PEST factors
|Success probability high||Success probability low|
|Good external factors||1||2|
|Bad external factors||3||4|
In the table, when the probability of the business’s success is high and the factors are good, the business can go on to invest in the area. On the other hand, when the success probability is low and the factors are poor, the business should not be invested. With a high success probability and poor factor or vice versa, the entrepreneurs may come up with strategies of modifying the business to succeed with the prevailing the factors
Appendix (e): SWOT analysis
| ||Needs mix of food|
| || |
Appendix (f): The SWOT factors
A threat matrix can be derived to help come up with the most appropriate decision regarding the SWOT analysis (Lynch 2005).
|Probability of occurrence high||Probability of occurrence low|
- 1: These are major threats as they can seriously hurt the company since they have a high probability of occurrence.
- 2 and 3: These do not require strategic or contingency planning but they may be monitored as the business develops.
- 4: Threats falling under this are minor and may be ignored.