Presented By: Patrick Culley Deepak Gupta Lindsey Hoffman Stephanie Luongo Sulyn Oum Ryan Stevens
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- Plant Selection
- Distribution Density
- Channel Length and Alignment
- Distribution Logistics
- Channel Members
- Product decisions
- Pricing
Market Entry StrategyContract manufacturingTasty Baking Company will introduce our Tastykake products to the United Kingdom by foreign production as opposed to exporting. Due to the nature of our product and shorter product shelf life, Tastykake products could not endure an overseas shipment and distribution and still provide the freshness that Tastykake stands for. We will utilize contract manufacturing so that we can still maintain responsibilities for sales, marketing, promotions and distribution of Tastykake goods. We are not the only player in the convenience prepackaged baked good category so it does not merit constructing our own factory. The production technology of prepackaged baked goods is also widely available throughout the United Kingdom. Plant SelectionTasty Baking Company will select the Nestle factory in Tutbury in Strattsford Shire in the United Kingdom. Nestle manufactures four successful brands of cakes in their product line and has ten factories in the United Kingdom. Since “Food scares like BSE and E. coli have pressed manufacturers to renew old plants, with strong encouragement by the supermarkets” (Food Manufacture, p5) , we wanted to select a well-known, established brand that would have a product measured by high standards. We sourced Nestle for their reputation of quality control and valued products and selected the Nestle Tutbury factory for its strategic location to London and its suburbs. Distribution DensityTastykake will have an extensive density of distribution. We are selling convenience foods so consumers are “less likely to exert much shopping effort” and they will buy “more frequently and in nearby outlets” (Global Marketing, p354). Our geographic sales area will be the southern UK concentrating on major cities, like Wales and London. A far-reaching network of southern UK retailers is ideal in this situation. Channel Length and AlignmentTastykake’s extensive distribution strategy will affect the channel lengths. Extensive distribution strategies reach more retailers and tend to have longer channel lengths, which mean there will be more intermediaries. We plan to offset the long channel length by strategically selecting the Nestle Tutbury Factory location. As opposed to Manor Bakeries factories in the north UK or other Nestle factories with locations by the water, our prime Tutbury location in south central UK will decrease our channel lengths. Companies must make sure that channel members are aligned in their actions to achieve a unified result. Some companies may have little control over the local scene, where others companies become channel captains. In the UK, “there has been some significant consolidation in 3rd party logistics sector between the larger players, although as a whole the sector remains highly fragmented”( IGD, 1). Tasty Baking Company desires more international control of their product, and cannot risk a smaller logistics provider. We will choose a successful local third party logistics provider, Wincanton. Wincanton will provide us the flexibility we want in our inventory, and also the dependability in shipments. Distribution LogisticsThe Tasty Baking Company plans to distribute our Tastykake product to the Southern UK region. The distribution of Tastykake product is strategic to our value of freshness. We need to ensure strong supply chain performance to have on time deliveries and freshness in our products. We will be selecting the third party logistics provider, Wincanton, as our logistics and warehousing service. In order to compensate for our short product shelf life, we will employ a shorter lead time by method of trucking shipments. Inventory will be controlled, having a small number of days in supply rather than JIT. Just-in-Time is more effective when supplying larger items of less volume, not a high volume item. We will have to test out the market to determine the most optimal days of supply, based on our forecast. Tasty Baking Company will utilize a more technologically advanced order processing system with easy user capability, provided by Wincanton. Wincanton “has an enviable reputation as a leader in technology enabled logistics” (Wincanton, 1) and they develop a wide range of applications to suit each client. We plan on consolidating our services and logistics by using the well-rounded Wincanton Company. They are the second largest third-party logistics company in the UK. We will utilize their warehousing capabilities also providing a more streamlined process from orders to shipments. There are 37 warehousing locations in the Southern UK providing many options for strategic distribution centers to deliver to our retailers. They have triple the amount of warehousing locations in the UK compared to their #1 competitor, Exel. Wincanton provides predominately ambient warehousing, which is needed for our product. Since our volume is unable to fill a dedicated warehouse with product, they also operate with shared user basis. Channel MembersTastyKake products will be sold by a direct sales forced owned by Tasty Baking Company. We will manage our own direct sales force in order to maintain the effort exerted in the retail locations. Our sales force will be making face to face contact with our retailers and can provide the most accurate feedback on our sales and product image. The sales force will be divided into regions in the Southern UK and will be organized in a management hierarchy starting with Regional Manager, Divisional Manager, Area manager who ultimately oversees the retail manager. Incentives Incentives will encourage our sales force to reach for higher product volumes. Our incentive program will be mainly focused on monetary reward for performing higher than average gross margins and for Wincanton reaching over our target in Supply Chain Performance. This is the basis of our program, but we also provide fun incentives to better portray our fun corporate attitude. We will provide contests for our sales force to drive competition and meet sales volume and we will reward trips to our top-performing retail locations. We will also involve our retail locations in annual conferences and trade conferences to make them feel involved in our business. Tastykake products will have a heavy advertising and promotions campaign to also assist the sales force and distributors in sales. Our sales force will visit our retail locations to develop relationships with our retail managers. This will make our retail outlets more receptive to change. In addition, they will ensure that our advertising, promotions, shelf space and layout is meeting the requirements set by Tasty Baking Company. Tasty Baking Company will place a minimum requirement of sales to our retail locations, but our sales force will work hard to help them achieve the minimum and more.
Similar to our US product, we will coordinate with holidays in the UK. The list of UK holidays that Tastykake feels are appropriate to celebrate is as follows: Lammas Day: August 1 The predecessor of Thanksgiving Day and Canada's Harvest Festival Queen’s Birthday: a Saturday in the middle of June. This celebrates the birthday of Queen Elizabeth of England. Other Public Holidays throughout the United Kingdom that we can coincide with our products are New Year's Day, Easter Monday, May Day (1st Mon. in May), and Christmas. By celebrating the holidays in our international market, we can appeal more to our customers. In addition to relating to our international customers, there is the opportunity for our international customers to use these cakes at their holiday functions in place of the bakery products. Product decisions can also come from certain trends and fads in the market. For instance, in following with the low carb craze, we can create products to suit our more health conscious customer. Also, when thinking about product decisions for our customer, we have to think about people with health problems. For our diabetic customer, we will have cakes with icing made from Splenda, the fastest growing sugar substitute. Another way we will make product decisions is through the voice of the customer. We need to hear their ideas. We will have a suggestions email on our website as well as a toll free number for customers to call. The closer we are to the customer the easier it will be to know what they want. Other ways to connect with the customer are by surveys and taste tests that we can do in areas where the Tastykakes will be sold. Hearing their likes, dislikes and suggestions on how to improve our product will be helpful when making product decisions. Making products that cater to a variety of different needs and wants can ensure that we will be successful internationally.
When entering an international market, we have to make sure our products are a step ahead of our competitors. By being innovative, people will be attracted to our product. Customers always want to try the new fresh item to hit the market. It is our job to make sure that after they try us they’ll never want to go back to any old packaged cakes. Our number one feature that we focus on is freshness. We use real ingredients. It is like having a bakery fresh dessert at your local convenience store. Our only drawback to our freshness is the shortened shelf life. In our displays, we have our expiration date prominently placed so our customer knows it is fresh. Most of our products last only about a week in store, but that is what draws our customer to them. When comparing our Tastykake to another brand that has been sitting there for weeks, possibly months, it will be easy for our customer to make the right choice. Another feature that the Tastykake brand is built on is taste. That is after all how we got our name in the first place. By using the freshest ingredients, we have the best tasting product. Biting into a Tastykake, reminds you of your mother’s baking. Competitor products with a longer shelf life use processed ingredients that can stay on the shelf longer, but take away from the great flavor. When it comes down to brand loyalty, you’re going to choose the product that tastes the best. There are other factors that make a customer more likely to buy a product like which is less expensive or has a prettier package, but the one you will stick with is the most satisfying product. We take as much pride in our taste as we do in our freshness. These two features are most important when purchasing a food product. Positioning After looking at UK demographics, we have a variety of age groups as our target markets. We will develop products and promotions to cater to all of our age groups and their concerns. However, we will primarily focus on the females aged 18 to 35 since they are the primary decision maker in the retail locations where they are often buying for their children. Branding Tastykake has built our brand here in the US on freshness and taste. We want our name to be synonymous with those two words. Since we have a very short shelf life, we are only found in a certain part of the country. By keeping the brand hard to find makes people want it more. The desire for our brand makes us successful. We have to build the same brand reputation in the UK as in the US. After establishing ourselves in the UK, we want to be the brand you grew up on. When our international customers think or hear the word Tastykake, we want them to think of their favorite Tastykake dessert and want it. With our new more modern packaging, Tastykake has an updated look to bring to the UK. Our packaging designers didn’t stray too far from our original look, but just gave it a fresh kick, more appealing to the eye. We make sure that the product pictures on our packaging are true to life, to avoid disappointment when actually opening the box.
Wrapped cake sales in the UK have grown steadily since 2000. Smaller companies have seen an increase of about 5% year to year. Larger companies have grown about 20-30% in similar years. When computing our expected market share, we took into account the small number of competitors in this industry, along with our potential to set ourselves apart. The Tastykake brand should expect to see numbers somewhere in the 25-35% market share within our introductory year. After building our brand and making it recognizable, there are endless possibilities to what percent of the market we can capture. Old Tastykake Packaging New Tastykake Packaging  
Tastykake 2004 Business Stats $ in millions, except per share data (a) Percentages may not calculate due to rounding (b) EPS for quarter and fiscal year may not agree due to rounding and shares outstanding
Q4 Q4 Change(a) 2004 2003 Change(a) ------- ------ --------- ------- ------- --------- Gross Sales $63.1 $62.5 1.0% $259.0 $250.6 3.3% Route Sales $47.8 $47.0 1.8% $194.5 $184.7 5.3% Non-Route Sales $15.3 $15.5 -1.5% $64.5 $65.9 -2.1% Net Sales $39.2 $39.0 0.5% $159.1 $159.1 0.0%
points points Net Income (Loss) per Fully-Diluted Share(b) $(0.01) $(0.22) N/A $0.15 $(0.29) N/A
Pricing is one of the most important factors to consider when deciding to expand into a new market. The difference between whether a product succeeds or fails hinges heavily on the pricing strategy the company chooses to employ. Although price is not the sole factor consumers consider when buying a product, it is a major player in the “Value vs. Price” equation. Consumers consciously weigh the benefits and sacrifices of each purchasing decision, utilizing the product’s price to determine whether or not buying the item provides them a certain degree of value. Consequently, understanding consumer behavior and price sensitivity was paramount in devising Tasty Baking Company’s pricing strategy for entry into the European market. Download 174 Kb. Share with your friends:
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