Presented By: Patrick Culley Deepak Gupta Lindsey Hoffman Stephanie Luongo Sulyn Oum Ryan Stevens
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- Navigate this page:
- Company Profile
- Product Line
- Corporate Enhancement
- Demographics
- Market Profile
- Market Segmentation
- Special Days Extra special recipes that make the most of special occasions, e.g. Birthday Cakes
- Existing Competition
PlaceTasty Baking Company will employ contract manufacturing when entering our product, Tastykake, into the United Kingdom market. Our focus is to internationally maintain control of sales, marketing, promotions and distribution. We will select the Nestle Factory in Tutbury for their south central location to manufacture our product and will have an extensive distribution density throughout the southern UK region. The third party logistics provider, Wincanton, will provide our transportation and warehousing services. We are gaining more control of our channel and sales by owning our own direct sales force and will provide our retail locations, sales force and supply chain with incentives. ProductWhen it comes to our product decisions, features, positioning, and branding there are three key ideals The Tasty Baking Company keeps in mind; freshness, great taste, and giving the customer what they want. We’ve built our products on these standards and that has made us successful in the US. These qualities set us apart from the competition. Through careful execution of the product, we can carry this same “Tasty” tradition into the UK. Price TastyKake Baking Company will be implementing a multi-phase, hybrid pricing strategy. The overall strategy will involve a careful combination of both EDLP (Every Day Low Pricing) and High-Low approaches. The initial phase will focus on price penetration, with low prices and strong emphasis on the product benefits. The second phase will focus on raising prices to meet our competition while introducing occasional promotions. The last phase will be a leveling off of both strategies to arrive at competitive prices and frequent, intriguing promotions. TastyKake will also be utilizing line pricing for their products, whereby the range in prices directly reflects the level of benefits in each part of the range. In conjunction with the line pricing, the promotional pricing strategies will involve BOGO (Buy One Get One) and Bonus Packs to outpace the competition. Promotion TastyKake has built its U.S. market on the quality, freshness and convenience of its products. In order to effectively build brand awareness and communicate these brand messages in the U.K., TastyKake has decided to use advertising and sales promotion to introduce their products into the market. Advertising will consist of a mass marketing strategy and two segmented strategies: Parents with Children and Older Consumers. In addition to advertising, the sales promotions will include value-added purchases and off-shelf displays in hopes to encourage impulse purchases. Lastly, TastyKake will try something that they currently do not do in the U.S., character merchandising. The character that is licensed for the U.K. promotions is Shrek©. Company ProfileHistoryThe Tasty Baking Company (TBC) was founded in 1914 by Philip J. Baur, a Pittsburgh Baker, and Herbert T. Morris, a Boston egg salesman. These men joined together in Philadelphia to produce high quality baked goods using only the finest ingredients. Morris and Herbert revolutionized the pastry industry by introducing the first ever individually wrapped lunchbox size pies. Tastykake is a baking company focused on providing their customers with a variety of fresh pastries in convenient locations at a reasonable price. Foundation The Tasty Baking Company is supported by their building blocks that are the driving forces of this successful company. People: Involvement in the lives of the employees, consumers and the community. Brand Equity: Positioning the Tastykake brand through several media vehicles. Product Innovation: Creating nearly 100 products in nine specialized product families. Core Routes: Enhancing the distribution routes while staying true to the freshness and quality. Operational Excellence: Operating in an efficient manner to provide reinvestment opportunities and support the shareholders. Product LineThe Tastykake product line includes a variety of different individually wrapped pastries to satisfy any desire at any time including Cupcakes, Donuts, Honey Buns, Juniors, Kandy Kakes, Kreamies, Krimpets, Pies, Sensables, Snack Bars, Tasty Kookies, and several other mainstream snack items such as pretzels, brownies and wafers. FinancialThe revenues for the Tasty Baking Company were significantly higher in 2004 compared to the past three years, but unfortunately the most recent quarterly earnings produced only a fraction of what was projected. Compared to their current competitors in the market, the Tasty Baking Company controls only a small portion of the market, mainly because their primary market is located in Pennsylvania, New Jersey, Delaware, and Maryland. The Tasty Baking Company earned approximately $150 million in sales in 2004 but ended the year with a net income of only $1.2 million. Corporate EnhancementTastykake celebrated their 90th birthday in 2004 and decided to make several key enhancements to the corporate structure. They began with their first new slogan in ten years, “Now that’s tasty”. They restructured several departments such as marketing, sales, and key account teams while also integrating several employee focused benefit programs. Tastykake expanded their distribution routes into the Midwest beyond Pittsburgh into Ohio and developed a program to work more closely with Independent Sales Distributors. Internally, Tastykake recently implemented a new ERP system that will integrate all critical areas of the business from sales and marketing to distribution and accounting. Each of these corporate enhancements plays a crucial role in the success of the Tasty Baking Company. Situation Analysis Country Profile: DemographicsThe United Kingdom (UK) is actually a combination of four nations, England, Scotland, Whales and Northern Ireland. Of these nations, England, Scotland and Whales combine to form Great Britain. The population of the UK is approximately 60 million, which marks it as the third largest in Europe and 18th largest worldwide. Nearly one third of the UK’s population lives in England and approximately 7.1 million are located in the prosperous capital of London. The general population consists of 82% English, 10% Scottish, and about 4% either Irish or Welsh. The UK is home to immigrants from all over the world such as Africa, South Asian, the Caribbean, and the Middle East. From a religious perspective, the UK is a melting pot of several different religions including Roman Catholics, Muslims, Sikhs, Hindus, and Jews. Approximately 99% of the population over the age of 15 are literate mainly due to the fact that schooling is mandatory from ages 5 through 16. Close to 20% of all British students go on to receive post-secondary educations. EconomicsDespite the economic activity surrounding the global economy, the UK has made great strides in the past several years. The GDP growth has averaged at 2.8% in the past decade and cut their unemployment rate by 50% to 3.1 percent in 2003, which was the UK’s lowest in over 25 years. The inflation rate has maintained relative stability, around the three percent range, and interest rates have been dropping since 2001. As of 2003 the UK had exports in excess of $304 billion and imports of approximately $363 billion. The Great British Pound (GBP) remains as the primary form of currency within the UK. The exchange rate between the UK and the United States is 1 GBP to 1.86570 U.S Dollars. Controversy still surrounds the issue of whether or not the UK will join the surrounding countries and implement the widely used Euro. PoliticsThe UK is lead by Tony Blair, recently elected to his third term as Prime Minister, and Queen Elizabeth II, Head of State since 1953. The UK is a member of several different international organizations including the European Union (EU), the North Atlantic Treaty Organization (NATO), the International Monetary Fund (IMF), and the World Trade Organization (WTO). The UK is also considered as the international bridge between the United States and Europe, playing an integral role in international relations. As a result of the September 11 attacks in the United States, a “special relationship” has formed between the UK and the United States. Prime Minster Blair has been a firm supporter of the Bush administration and the War on Terror. Culture The European culture is significantly different from popular American Culture in several aspects. First and foremost is the importance of history. Anything more then three to five years old is considered aged and irrelevant in the U.S., on the contrary, in the European culture, historical events play a great role in the business world. Another critical difference is the misconception of land and natural resources. In the United States land, energy and natural resources are considered unlimited, but in Europe all of these factors are not taken for granted and supply is limited. This can be depicted in the size of cars, equipment, and the consumption of natural resources. Fortunately there are several similarities between the United Kingdom and the United States. According to the Hofstede Measure of Cultures both countries are relatively similar scores in power distance, individualism, masculinity, and uncertainty. The United States and the UK have a solid foundation for business and political relations. Aside from certain cultural differences and the concern for environment and natural resources, the UK is a diverse country with a large potential market.
Current Buying BehaviorsIt was recently discovered that 88% of adults snack between meals, while only 12% rarely or never do. This percentage of “snackers” is dominated by the female population, and also by younger generations. The most common foods people consume as a snack are fruit at 39%, chocolates and sweets at 38%, biscuits and cakes at 36%, and crisps and nuts at 32%. The high percentage of cakes equals high growth potential, which The Tasty Baking Company intends to capitalize on. Moreover, women and younger consumers were more likely to select sweet foods like cakes, biscuits, and chocolates than were men and older people. From this segmentation we can see that we would be best off to select a target market of young females between the ages of 18-35. While consumers are most likely to snack at home, there is also a large percentage that snack at work, followed by those that snack in the car, at a bar or pub, etc. Ten percent of consumers snack as a result of having missed a meal because they were too busy. Sixty-six percent of those snacking to replace missed meals worked full-time, and almost fifty percent are under the age of 35. This clearly demonstrates the impact that modern time pressures have had on traditional meal patterns. While 34% of people snack because they are actually hungry, still another 29% snack simply because they are bored. This becomes important when you look at the positioning and distribution of your product, ensuring that it is readily accessible in various places. Snacks can be classified into three different categories dependent upon the consumer’s snacking habits:
Planned: These are foods that consumers are traditionally happy to eat between meals because they are healthy, such as fruit. These snacks are bought for this purpose. Unplanned: These are foods that consumers are more remorseful towards than others. They include sweets that are less healthy and that consumers therefore wish they had not eaten. Rewards: These are small snacks, usually chocolate, that are used as a reward or indulgence for a specific achievement or occasion. Research shows that over 40% of all cake is purchased on impulse. This means that display is vital in achieving our maximum sales. Customers entering a shop need to be able to find products quickly and easily. TastyKake is looking to capitalize on all three of the above-listed categories, with a diversified product line, including traditional recipes for those that are not planning their snack times, low-fat options for those that are, and highly decadent items for those that feel the need to “reward” themselves. Trends The traditional eating pattern of three meals a day is being replaced by snacking and grazing. There is an increasing sense of reliance on ‘others’ to prepare and cook food. Expenditure on eating out is on the increase, and the younger generations are eating out more than older generations; bringing many changes to the way we eat. 25 to 34 year olds spend the greatest amount on eating out each week (£11.05), compared to older people who spend somewhere between £5.00 and £7.00 a week eating out. Another important aspect of eating out is that it is dependent upon the time which people have available to go home and actually prepare a meal themselves. Working hours in the UK are among the highest in Europe. The most common length of the working week for men is 40 hours, followed by 60+ hours, while women tend to work less than 40 hours a week. Still more women work part-time than do men, but this is changing. If we look back to the buying behaviors we see that less free time means more snacking and grabbing food on the go; this is our area of opportunity. Needs/WantsAs the number of households and sizes of those households change, the type of food people are eating and cooking is changing. There is a greater demand for smaller pack sizes, for “ready-to-eat” food, and for eating out. People are less likely than before to eat a formal meal and more likely to eat a number of snacks throughout the day. More of the UK population is employed, with many working longer hours and with more people working part time and working at different hours of the day. Thus there is a demand for longer opening hours, for food that doesn’t take too long to prepare and for technologies that simplify life. Home delivery and home shopping are becoming more popular as people become used to receiving help from others. The food offer is changing to reflect the way people live their lives. There is greater demand for food that takes less time to prepare. People want food that is easily available and that can be eaten on the move. Market SegmentationSnacking More substantial cakes that satisfy when hunger strikes Time Out Cakes that help you unwind and make the most of ten minutes to yourself in a hectic day Kids Cakes that provide an extra layer of fun to keep your kids happy Traditional Family favorites that have always been and will forever be popular Special Days
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