MBA  - HGM502: Strategic Marketing Assessment task 2 - Market Analysis (30 )  

7DEOHRI  RQWHQW  

  ( HFXWLYHVXPPDU  

2.1  Macro environment.  6

2.1.1  Economy.  7

2.1.2  Demographic, sociological, and cultural influences.  8

2.1.2.1  Urbanization.  8

2.1.2.2  Convenience  8

2.1.2.3  Food consumption trends  8

2.1.3  Political and legal  9

2.1.4  Technological.  9

2.1.5  Natural environment.  11

3.1  Industry review  12

3.1.1  Major players  12

3.1.2  Geographic segmentation.  12

3.1.3  Industry size.  12

3.1.4  Product life cycle.  13

3.2  Customer Identification.  14

3.2.1.1  Customer Profile  14

3.2.1.2  Costumer needs.  15

3.2.2  Supplier relationship and distribution channel.  16

3.2.3  Supply chain  16

3.2.4  Selling chain  17

4.1  Direct competition.  17

4.2  Indirect competition  18

4.3  Opportunities and Threats.  18

3

MBA - HGM502: Strategic Marketing Assessment task 2 - Market Analysis (30%)

$SSHQGL[HV

Appendix 1: Type of business: ...................................................................................................23 Appendix 2: Customer profile of online grocery shoppers ..........................................................24 Appendix 3: Selling chain - process of acquiring orders ............................................................24 Appendix 4: Partner network ......................................................................................................25

/LVWRI)LJXUHV

Figure 2.1: External forces Figure 3.1: Product life cycle Figure 5.1: Porter’s five forces

/LVWRIWDEOHV

Table 3.1: Costumer segments Table 3.1: Differentiation from Competitors Table 4.1: Opportunities and Threats

4

MBA - HGM502: Strategic Marketing Assessment task 2 - Market Analysis (30%)

([HFXWLYHVXPPDU\

This market analysis is prepared to learn about the specific methodologies required to conduct a sound market analysis for a self-selected market segment. For this purpose, a hypothetical virtual business that serves as a gathering place for Australian breakfast or fresh bread lovers and bakeries has been created. To prove the profitably of this potential opportunity, influencing factors within the Australian baking industry as well as the ecommerce industry are researched.

According to Cravens (2000), it is essential to gain an understanding of the market to become market driven. Therefore, the first part of this analysis is often referred to as the PEST analysis, which identifies the external factors that influence the baking and ecommerce industry and thus change the size and composition of the market overtime.

The second part is concerned with obtaining internal information about the baking and ecommerce industry, its customers, suppliers, and direct and indirect competitors. The assessment of both the internal and external forces that drive the market, lead to the definition of the critical success factors for this virtual venture. A summary of the findings is then given through Porter’s model of market profitability to potentially serve as the basis for developing a market driven strategy for the virtual opportunity. Despite the high thread of substitute products, it is believed that the trend towards more convenience will make this business successful. With respect to the analysis provided and given that business partners are willing to cooperate, this business concept is considered a sound investment.

,QWURGXFWLRQ

This market analysis is prepared to research relevant aspects of the Australian baking industry as well as its online shopping environment to justify the profitability of an individually created hypothetical eBusiness model. A simple customer focused eBusiness model design will serve as the reference point to analyse a specific market segment. Although all industries are subject to external trends that affect their businesses over time, the rapid rise of the Internet unlocked innovation that created even new market spaces. Without analysing and sensing markets and competition, companies are faced with a future disadvantage (Cravens 2000). Many of the emerging businesses in this new market environment started without having taken the necessary market research to justify that there actually is a market and therefore often failed. Therefore, before pursuing the opportunity to challenge the traditional retail model of a bakery,

5

MBA - HGM502: Strategic Marketing Assessment task 2 - Market Analysis (30%)

this report will serve to develop the necessary market knowledge to become market oriented and to then stay in business.

Starting with the description of the environmental influences like government actions, social change, economic shifts, technology, and other factors that alter buyers’ needs and wants for baked goods, a detailed research on Australia’s baking industry including its size, growth, and composition, its typical marketing practices as well as the anticipated industry changes will be provided. To identify the business’ strengths & weaknesses, a study of direct and indirect competition will then be followed by the reflection on critical success factors for the hypothetical virtual business to respond to the so far unsatisfied customer desire to have fresh bread daily delivered for breakfast. A description of the background of this emodel idea as well as its type and purpose is given in Appendix 1 and serves as a reference throughout the report.

(QYLURQPHQWDQDO\VLV

According to Reed (1999) market analysis and synthesis are a vital part in the logical flow of the strategic marketing planning process. To determine the capabilities required of an organization to compete within its underlying external environment, it is important to consider both its macro as well as its industry environment. The ultimate aim is to provide a broad situation analysis also known as SWOT analysis.

0DFURHQYLURQPHQW

Due to the rate of change that takes place in the market, trends in the following can present a number of opportunities and threats:

(1) Economy

(2) Demographic, sociological, and cultural influences (3) Political and legal aspects (4) Technology (5) Natural environment.

The next paragraphs give a modified PEST analysis of the macro environment and its effects on the breakfast delivery service. Since the breakfast delivery business will be initiated in Melbourne, Australia’s macro environment will be looked upon. Although acknowledging that significant market variations are apparent even within a country, a country can still be

6

MBA - HGM502: Strategic Marketing Assessment task 2 - Market Analysis (30%)

characterized through its same political and social issues as well as its overall technological trends or green practices. Figure 2.1 illustrates the PEST model applied to the breakfast delivery service.

)LJXUH([WHUQDOIRUFHV

6RXUFH$XWKRU

(FRQRP\

The global economy plays a big role in any consumer industry, and Australia’s economy has also been moderately affected by the financial tumults of the past years. How severely these economic ups and downs affect a country’s baking industry depends on consumers’ perceptions and uses of bakery foods (IBIS World Pty Ltd 2003).

Expenditure on food is correlated to real household disposable income and the price of food relative to other consumption expenditure. Generally, when real household disposable income declines, there is a slowing in the rate of growth of expenditure on food. During period of low disposable income, consumers are more likely to purchase only basic products from supermarkets or grocery stores and do without the luxury items a bakery offers. In the current low inflation environment, bakeries have to control their costs and search for efficiencies, because it will be increasingly difficult to pass on price increases to cover inefficiencies (Alberry, R 2002). Even confronted with overall negative economic trends, it is still believed that there will exist sufficient demand for the timesaving and convenient breakfast delivery service.

According to the Australian Bureau of Statistics (ABS) Household Expenditure Survey, in the period from 1993-94 to 1998-99, the average household weekly expenditure on goods and services increased from $602 to $699. Part of this 16% increase can be attributed to inflationover the five years since the previous survey, the price of goods and services rose by 10%. Over the same period, average weekly household income increased by 22% and the average household size was unchanged at 2.6 people. In 1998-99, total expenditure on food and non-

7

MBA - HGM502: Strategic Marketing Assessment task 2 - Market Analysis (30%)

alcoholic beverages accounted for $127 per week or 18.1 percent of total weekly expenditure (Australian Bureau of Statistics 2002). 'HPRJUDSKLF VRFLRORJLFDO DQG FXOWXUDO

Demographic, sociological, and cultural aspects are assessed to determine the significance of population changes on the nature of the customers and their purchase behaviour. Several common denominators such as the change in food consumption patterns link the Australian baking industry (Bread Research Institute Australia Limited 2002). The underlying purchase behaviour towards online shopping will be covered within the technological environment.

8UEDQL]DWLRQ

The transition from a rural state to a more urban one resulted in the emergence of convenience foods. With more women entering the workforce and consumers in general leading busier lifestyles, mini bread loaves, snack foods, and bite-size versions of biscuits and crackers are just some of the bakery items repackaged to respond to the high demand of single-served goods. Along the same line, ready-made meals provide an attractive feature to the rising number of dual-income families (Sosland Publishing Co 2002).

&RQYHQLHQFH

Although craft bakers still dominate Australia’s baking industries, market research consistently shows that convenience is important to a customers' selection of a particular store. This trend toward convenience is propelling the development of in-store bakeries and quick-serve establishments. Eighty percent of shoppers live within 3 km of the bakery they most often use and 79 percent use a motor vehicle to reach it (Australian Bureau of Statistics 2002).

)RRGFRQVXPSWLRQWUHQGV

Per capita consumption of bread is at a relatively high level, so that baked goods contributed the greatest amount to the mean food intake for men (26%) and women (23%) aged over 18 (Australian Bureau of Statistics 2002). Australians favour bread as a fresh, frequently unpackaged, product. In many cases, lower prices for artisanal bread, as compared to the commercial, wrapped loaf, are credited with gaining consumer preference. At the same time though, attention is called to the rising number of "two paycheck" families, where a working wife, without the time for shopping, begins to favour grocery stores and packaged bread. Another

8