Introduction:The word gourmet is from the French term, defined as "refined and uncontrolled love of good food". Gourmet is an industry classification for highquality premium foods in the United States. Gourmet may describe a class of restaurant, cuisine, meal or ingredient of high quality, of special presentation, or high sophistication. Gourmet food is characterized by high quality, accurate preparation, and artistic presentation. This name “gourmet” was suggested by his daughter who is living in America. “Gourmet Bakers and Sweets” is the largest food retail chain of Lahore. It is based in Lahore, the second largest city of Pakistan known for its traditional foods and passion for eating. It was started with a single outlet in Ichra in 1987 by Mr. Muhammad Nawaz Chathha, in the begging they did not get good response which resulted in shut down. He again started in 1992 at different place at Muslim town, and Gourmet did not look back since then. Now with its 5 production units, 2 restaurants and 88 sales outlets, gourmet outreaches to a huge population for their food needs. Mr. Chathha the founder of Gourmet stared his business with 20 million rupees. He is holding the position of Managing Director of the company. He was serving in Shezan Bakers as a General Manager and later on he decided to make his own bakery. He started his business through getting employees from Shehzan bakers in the beginning. Gourmet produces a wide variety of bakery items, sweets and dairy products and offers high quality services in their restaurants. Gourmet has introduced many new items in bakery products categories which were previously not in the market of Lahore. Gourmet stresses hard on quality and taste of their products and making them affordable for their customers at the best prices in the market.
The company has shown an explosive annual growth of more than 25% till 2006 in its business since this unique business was started in 1992. Recently gourmet shows 65% of annual growth in its business from 2006 to 2009. With his commitment and strenuous effort to provide the consumers with best quality food products in a convenient and unmatched displaying manner, Gourmet has become a success story of business growth in Pakistan. At the moment Gourmet has more than 4500 employees working in the organization. Mission statement:“Our mission is to provide quality products at lowest prices” Vision:“Leader of quality juice providers in the region by offering products enjoyed in every home. This will be achieved from the dedication of each employee in conjunction with supportive participation from management at all levels.”
Gourmet Dairies is another step forward to provide its consumer with wholesome milk and milk products. This is also a sort of backward integration for the provision of dairy raw materials for bakery.
ORGANIZATIONAL/ HIERARCHY CHART OF GOURMET:
Director G.M Production G.M Market Assistant General Manager Area Managers Branch Supervisor
Assistant Branch Supervisor
Store Supervisor
Sales Man
Industry analysis: -
Assistant Branch Supervisor
Complaint Manager/ Auditor Purchase Manager
Purchaser
The food items industry has been rising constantly at a considerable rate and the eating habits of people are changing over time with the changing life styles. With the growing trend of having light snacks with tea in the afternoon and other readymade snacks for a meal instead of the traditional meals of curry n bread, the demand and consumption for the products of this industry is growing rapidly. Apart from that as more people and youngsters are working especially the women, their daily lives are becoming very fast and they don’t have time to cook at home. Due to this reason more people are now seeking convenience goods, which act as a alternative to the traditional meals. Although people are becoming more aware and more health conscious thus they demand high standards of quality and hygiene along with a balanced nutrition. Along with that the trend of celebrating events and having a get-together in the West is now sweeping our culture as well and more people are now celebrating many different events such as birthdays, ceremonies, anniversaries, New Year, Valentine’s Day, Mother’s Day etc as compared to the few events celebrated earlier such as Eid-ul-Adha, Ramadan, Eid-ul-Fitr, weddings, birthdays and get to gether. These events boost the sales of this industry as people opt to buy things from outside instead of cooking themselves. The trends of dining out have also grown rapidly over the past few years and that’s the reason why many new companies like Gourmet are entering the Restaurants market. The acceptance and need for such products are growing every passing day and it is expected to grow at a higher rate in the future as well which is a very healthy sign for companies like Gourmet to invest smartly and be in front.
PEST analysis:1) Political change= from one party (change of government) to another Political analysis:Political scenario in Pakistan has seen many important changes in recent years. The political environment directly influences all the industries working in the country. Similarly the production distribution and use of Gourmet’s products are subject to some federal laws, such as the Food and Drug Act. The businesses are subject to the Government stability in the countries as the businesses are directly subjected to the taxation policy of the country they are operating. They also have to comply with federal, state and local environmental laws and regulations. According to the Global Competitiveness Report 2010-2011, Pakistan ranks poorly in terms of domestic commerce measures: business sophistication, goods market efficiency as well as property rights protection. Pakistan ranks lowest when compared to other Asian countries including India, Indonesia, Thailand, Malaysia and China. As shown in Table 1, Pakistan ranks 46 out of 139 countries in terms of business cluster development compared with India at 29 and China at 17. Table 1: Business Sophistication9 Countries
Pakistan India Indonesia Thailand Malaysia China
Cluster
Local
Local
Developme
Supplier
Supplier
nt. 46 29 24 34 15 17
Quantity 87 7 43 26 29 19
Quality 95 60 61 43 37 54
According to the prices above, a small office space of 12 x 38 square feet is rented out for between PKR 29,640 (minimum) to PKR 91,200 (maximum) in Islamabad. The productivity of a city and employment generation needs more entertainment, hotels, shopping areas and offices in large complexes, but no space has been provided for large complexes to develop. Trading policies are the long run hurdles that cannot be resolved in near future. The Pakistan Pure Food Laws (PFL) of 1963 is the basis of the existing traderelated food quality and safety legislative framework. These laws cover 104 food items falling under nine broad categories: milk and milk products, edible oils and fat products, beverages, food grains and cereals, starchy food, spices and condiments, sweetening agents, fruits and vegetables and miscellaneous food products. The regulations address purity issues in raw food and as well as additives, food preservatives, food and synthetic colors, antioxidants, and heavy metals. All these improvements will help Gourmet baker to enter in new markets which are conscious about traditional food items and also with security measures such as Sharjah, Dubai and other Middle East countries. •
TAX MEASURES 2010-11
Existing system of General Sales Tax would be reformed to eliminate multiple tax rates and replace it with a single lower rate of 15%. The reformed GST will not apply on health, education and food items consumed by the poor. The GST will not apply to turnover less than Rs. 7.5 million per year whereas the current threshold is Rs 5 million per year and would be automated thus reducing possibilities of corruption and refund delay. Above situation analysis of taxation structure for 2010-11 shows some mixed trends for the future prospectus of gourmet baker of Pakistan. Increase in exemptions for income tax will increase the buying potential of gourmet customer
and will stabilize the employee the gourmet baker by strengthen there economical conditions. In the mean while increase in GST and Surcharges on electricity consumption will lower down the sales volume of gourmet products due highly cost of production resulting in high product prices. •
Home market lobbying/pressure groups
In Pakistan sugar industry is operated almost in all by some political families and in food industry sugar is a major raw material. For the sake of fetching good profits these groups put a strong pressure and prove themselves a strong lobbying group. Employee union is also an other lobbing group that pushes the gourmet baker for higher wages that will result in high cost of productions. Strong transport unions may also create some logistic problems for Gourmet baker distribution channel. •
International pressure groups
India is a leading manufacturer of sweet and bakery items. Low labor costs in India has enable Indians to get more share in international markets. In the mean while Indian lobby is strong enough as compare to Pakistan to reach in foreign markets. Gourmet and many other entrepreneurial needs strong government assistance and coloration to enter in international markets
•
Wars, conflict & Terrorism
Recent wave of war against terrorism has created a sense of in security in general public in Pakistan. Shopping trends are decreasing due to suicidal attacks and
people are not willing to come at bazaar as they were in past. This situation has adversely affected the sales of gourmet baker and sweets. 2) Economic change= For example a recession creating increased activity at the lower ends of product price ranges. Rate of interest raises depressing business and causing redundancies and lower spending levels as well as energy crisis too. Economic analysis Despite inhospitable domestic and international environment resulting from the either the global recession or due to the terrorism acts, Pakistan’s economy grew by 2 percent in the financial year 2008-09 according to Economic survey 200809. Reports have shown increase in GDP, increase in per capita income and increase in IT development as well which are positive signs for the industry but there are some negativities as well. Like all the other companies are subject to the harvest of the raw material that they use in their soft drink and juice, like corn, oranges, grapefruit, vegetables etc. – Gourmet also relies heavily on trucks to move and distribute many of their products, fuel is a very important subject, so they are subject to the fuel prices. Moreover, there has been a crisis in the production of sugar in Pakistan, with prices sky rocketing. Another crisis that Pakistan is dealing is the shortage of electricity. Such economic factors have resounding impact on such industries and increase the cost of goods. 3) Socio-cultural change=Involves changing attitudes and lifestyles. The increasing number of women going out to work, for example, led to the need for time-saving products for the home. Socio-culture analysis
The population of Pakistan is on the rise where as the health consciousness among the people is also a lot more than it has been in the past. The age distribution of Pakistan is also very balanced, major portion of its population consists of youth. Gourmet bakery products, dairy products as well as beverages and moreover Juices and ice creams are subject to the lifestyle changes as the awareness of health consciousness is rising in the people now. This has affected the industry in the positive manner and many new companies are being entered in the food market, the usage of the food products in the households has increased a lot. The need for hygienic products and healthy products are in important in the average day-to-day life. Consumers from the ages 37 to 55 are also increasingly concerned with nutrition. There is a large population of the age range known as the baby boomers. Gourmet has to pay a special attention on the lifestyle changes. Further Income of people is increasing more trends towards FMCG. Further a major social trend in the rural areas of Pakistan has been a shift from presenting guests with drinks and bakery products such as lassi towards such beverages and bakery products. People use bakery products on different events new born babies, Basant, Shabraat, Eid milad-un-Nabi (s.a.w), Eid-ul-Fiter, Eid-uladha, Weddings, Engagement parties, birthdays, Father`s day, mother`s day, valentine`s day and get together. All these situations are calling for new and new opportunities and investors. 4) Technological change=creates opportunities for new products and product improvements and of course new marketing techniques- the internet, e-commerce. Technological analysis Pakistan is considered as developing country. Although it is a nuclear power yet it lacks behind in other technologies. Technology plays a secondary role in this industry, as it is not heavily dependent on technological advancements like the
consumer electronics industry, or the software industry. Because bakery and beverages products are non-tech based in nature, technology in this industry is therefore limited to function as a catalyst to improve production capacities, speed of product manufacturing cycles, inventory management. It has to pay attention to the new distribution techniques as well. Even though one have to take into account that specialized factors involve a heavy and sustained investment, but also at the same time if one is able to achieve them, he could generate competitive advantage. The new technology of internet and television which use special affects for advertising through media. They make products look attractive and this help in selling of the products. Due to affective transport facility the company has achieved great success in distributing its products to all over the country. SWOT Analysis: SWOT stands for Strengths, Weaknesses, Opportunities and Threats. Internal factors, the strengths and weaknesses and external factors, the opportunities and threats. The
analysis
shows
Gourmet
Baker
Pakistan's
Strengths,
Weaknesses,
Opportunities and Threats. The SWOT analysis will give you a clear picture of the business environment Gourmet Baker Pakistan is operating in at the present time. SWOT Analysis of Gourmet Strengths: Research and Development Center: By having a strong R&D center Gourmet is offering a quality product to their customers. Gourmet is offering a product to their customer in different packing and according to different occasions. Well Organized Structure:
Gourmet has a well organized structure. All the departments perform their work according to the organizational structure. 100% of production at Gourmet is carried out at automated plants. Computerized Database System: Gourmet has an organized database; all the activities are recorded in the database. Computerized database provides error free center. It is updated on the regular basis. Team Work: All the departments are working as a team such as Quality assurance, Marketing, MIS, HR and Administration etc. Working as a team increases the efficiency of the Gourmet. Low cost: Keeping costs lower than their competitors and keeping the cost advantages helps Gourmet Baker Pakistan pass on some of the benefits to consumers. Supplier relationship: Supplier relationships are strong at Gourmet Baker Pakistan, which can only be seen as strength in their overall performance. Quality: By applying the various strengths Gourmet offers the product to the customer. Gourmet never compromise on quality that is why they are able to capture a huge market share. Sweet and other bakery products are prepared with immense care using traditional and authentic recipes to give unforgettable taste. Customer Retention:
As Gourmet is offering complete range of sweets, dairy, and bakery products to their customers with the best quality and taste. Gourmet is able to retain the customers because of its brand name and worth of the brand. As retaining the customer is better rather than switching towards the new customers. Weakness: Less Financial resources for advertisement: Gourmet is using less financial resources for advertisement. By using the appropriate resources they can advertise their product by different tools of advertisement. Latest Machinery required increasing the Production Rate: Latest machinery is the key strength of any organization, but Gourmet lacks in this point. By using the latest machinery Gourmet can increase the production rate. No broadcast media is used: The term broadcast media covers a wide spectrum of different communication methods such as TV, radio, newspaper, magazines and many other materials supplied by the media and press, so more focus should be on broadcast media. Opportunities: •
Gourmet Baker Pakistan could benefit from expanding their online presence and making more money from online shoppers/internet users.
•
The changes in the way consumers spend and what they buy provides a big opportunity for Gourmet Baker Pakistan to explore.
•
Gourmet Baker Pakistan is in good financial position, which is an opportunity for them to explore in terms of investment in new projects.
•
Grasping the opportunity to expand the customer base is something Gourmet Baker Pakistan can aim for, either geographically or through new products.
•
Expanding the product/service lines by Gourmet Baker Pakistan could help them raise sales and increase their product portfolio.
•
Gourmet Baker Pakistan has a number of highly skilled staff, which is an opportunity for them to explore as expertise of their staff can help Gourmet Baker Pakistan to bring the business forward.
Many cities to capture: One of the most important opportunities is that Gourmet can increase their target market by capturing other cities which consist of the potential customers. Brand Worth: Gourmet is the well recognized brand nationwide and it is also operating internationally which means the worth of the brand is good in the mind of the customers. Because of the brand worth Gourmet can come up with the different market of bakery products. New market to explore nationwide and internationally: It is the great opportunity for Gourmet to expand their business and market by exploring the new markets nationwide and internationally.
Threats: •
Consumer lifestyle changes could lead to less of a demand for Gourmet Baker Pakistan products/services.
•
Tax increases placing additional financial burdens on Gourmet Baker Pakistan could be a threat.
•
Change in demographics could threaten Gourmet Baker Pakistan.
•
The financial burden of increasing interest rates could be a threat to Gourmet Baker Pakistan.
•
Increased competition from overseas is another threat to Gourmet Baker Pakistan as it could lead to lack of interest in their products/services.
•
Extra competition and new competitors entering the market could unsteady Gourmet Baker Pakistan and be a threat.
•
The actions of a competitor could be a major threat against Gourmet Baker Pakistan, for instance, if they bring in new technology or increase their workforce to meet demand.
•
Price wars between competitors, price cuts and so on could damage profits for Gourmet Baker Pakistan.
•
A slow economy or financial slowdown could have a major impact on Gourmet Baker Pakistan business and profits.
•
The rise and/or fall of the foreign exchange rate could threaten Gourmet Baker Pakistan with regard to importing and exporting.
•
Rising costs could be a major downfall for Gourmet Baker Pakistan as it would eat into profit.
•
Gourmet Baker Pakistan could be threatened by the growing power customers have to set the price of their products/services.
•
Gourmet Baker Pakistan could be threatened by the growing power their suppliers have to set their prices.
Gourmet could be a big threat because it is also offering a sweet Nirala’s taste and quality could be the restrictive force for other to penetrate. Change in the consumer preference:
Changing of consumer preferences is a major threat of any organization. As if we talk about Gourmet now people prefer international brand over local brand which have become a major threat.
BCG Matrix
The BCG matrix method is based on the product life cycle theory that can be used to determine what priorities should be given in the product portfolio of a business unit. To ensure long-term value creation, a company should have a portfolio of products that contains both high-growth products in need of cash inputs and lowgrowth products that generate a lot of cash. It has two dimensions: Market share Market growth The basic idea behind it is that the bigger the market share a product has or the faster the product's market grows the better it is for the company. Placing products in the BCG matrix results in 6 categories in a portfolio of a company: 1. Stars (=high growth, high market share) Stars generate large amounts of cash because of their strong relative market share, but also consume large amounts of cash because of their high growth rate; therefore the cash in each direction approximately nets out. If a star can maintain its large market share, it will become a cash cow when the market growth rate declines. The portfolio of a diversified company always should have stars that will become the next cash cows and ensure future cash generation. 2. Cash Cows (=low growth, high market share)
As leaders in a mature market, cash cows exhibit a return on assets that is greater than the market growth rate, and thus generate more cash than they consume. Such business units should be "milked", extracting the profits and investing as little cash as possible. Cash cows provide the cash required to turn question marks into market leaders, to cover the administrative costs of the company, to fund research and development, to service the corporate debt, and to pay dividends to shareholders. Because the cash cow generates a relatively stable cash flow, its value can be determined with reasonable accuracy by calculating the present value of its cash stream using a discounted cash flow analysis. 3. Dogs (=low growth, low market share) Dogs have low market share and a low growth rate and thus neither generate nor consume a large amount of cash. However, dogs are cash traps because of the money tied up in a business that has little potential. Such businesses are candidates for divestiture.
4. Question Marks (= high growth, low market share) Question marks are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is large net cash consumption. A question mark (also known as a "problem child") has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share.
5. War Horses They have high market share, but the market has negative growth; the problem for management is to decide whether the product is in an irreversible decline, or whether it can be revived, perhaps by repositioning into another market. 6. Dodos They have a low share of a negative growth market, and are probably best discontinued. DATA FAZAL SWEETS: Avg. per day sale of Fazal sweets in 2010=
75000
Avg. per month sale of Fazal sweets=
2250,000
Estimated sale of 2010=
27000,000
Avg. per day sale of Fazal sweets in 2009=
68,000
Avg. per month sale of Fazal sweets=
2040,000
Estimated sale of 2009=
24480,000
Avg. per day sale of Fazal sweets in 2008=
63,000
Avg. per month sale of Fazal sweets=
1890,000
Estimated sale of 2008=
22680,000
NIRALA SWEETS: Avg. per day sale of Nirala Sweets in 2010=
60000
Avg. per month sale of Nirala Sweets =
1800,000
Estimated sale of 2010=
21600,000
Avg. per day sale of Nirala Sweets in 2009=
40,000
Avg. per month sale of Nirala Sweets =
1200,000
Estimated sale of 2009=
14400,000
Avg. per day sale Nirala Sweets in 2008=
20,000
Avg. per month sale of Nirala Sweets =
600,000
Estimated sale of 2008=
7200,000
GOURMET SWEETS: Avg. per day sale of Gourmet Sweets in 2010=
85,000
Avg. per month sale of Gourmet Sweets =
25550,000
Estimated sale of 2010=
30600,000
Avg. per day sale of Gourmet Sweets in 2009=
70,000
Avg. per month sale of Gourmet Sweets =
2100,000
Estimated sale of 2009=
25200,000
Avg. per day sale Gourmet Sweets in 2008=
50,000
Avg. per month sale of Gourmet Sweets =
1500,000
Estimated sale of 2008=
18000,000
SALES Companies Fazal sweets Nirala Gourmet
2008 2268 720 1800
2009 2448 1440 2520
2010 2700 2160 3060
Total 7416 4320 7380
Total
4788
6408
7920
RELATIVE MARKET SHARE-(RMS) Companies Fazal sweets Nirala Gourmet Total
2008-09 1.26 0.31 0.79 2.36/3=0.78
2009-10 0.97 0.57 1.02 2.56/3=0.85
MARKET GROWTH Company Growth of 2008 to 2009
2009 to 2010
Each year Fazal sweets
(2448-2268)/2268*100=7.94%
(2700-2448)/2448*100=10.29%
Nirala Sweets Gourmet Sweets
(1440-720)/720*100=100% (2520-1800)/1800*100=40%
(2160-1440)/1440*100=50% (3060-2520)/2520*100=21.45%
INTERPRETATION: In the BCG matrix, Relative market share is given at the x-axis with a median point of 0.8 and market growth is given at y-axis with a median point of 38.83% and with positive growth upward and negative growth downward. Positive growth upward and negative growth downward.
BCG MATRIX- GOURMET SWEETS
STARS
QUESTION MARK N1 N2 Gourmet (2008-2009)
100%
38.83% CASH COWS Market Growth
DOGS
Gourmet (2009-2010) F1 F2
0 1.5 1.4 1.3 1.2 1.1 1.0 .9 .8 WAR HORSES
.7 .6 .5 .4 .3 .2 .1 .0 DODOS
Relative Market Share
INDUSTRY AND MARKET DESCRIPTION Sweets are in our culture for centuries. It is our cultural heritage; people of our region have different taste in sweets as compared to west. The western people eat chocolate as sweets but in our region sweets are mithai. So in every town every city of Pakistan these sweets shops are seen. Lahore and the people of Lahore are known for their tastes and eating habits so there are many small scale sweet shops
in almost every area. Gourmet has also started as a small shop in Lahore but with changing market conditions with increase in purchasing power of customer and their every day changing taste buds gourmet has also improved. Although the tastes of customers in many other dishes are changing people now a days are eating fast foods and liking Chinese and western dishes rather than our typical eastern or Pakistani dishes, like we have seen many western dishes in our wedding occasions which shows the changing consumer needs. But this trend is not in sweets industry the habit of eating sweets is very much in like centuries before. It is the most essential component of wedding no wedding, no ceremony or other occasion of celebration is complete without sweets. With the ever increasing purchasing power people are purchasing sweets in bulk form. Although the industry of sweets is century old but it is not fading with the time it is getting rich day by day. CUSTOMER CHARACTERISTICS How selective is your customers in terms of buying your product How much customer switch from your product to another product
POSITIONING AND BRANDING Gourmet carries its image in a positive manner. In consumer’s perception Gourmet is producing hygienic products with high quality. Its packaging is perfectly according to the occasions. For the best quality and impressive representation of the events people prefer gourmet. 1. Brand Positioning:
Gourmet Position their product in the mind of the consumers by offering: Superior in Price and Taste Quality Freshness Superior Quality Brand Name 2. Brand Image/Personality: Superior in Price and Taste Status Conscious (consumer’s perception) Strong Commitment No Compromise on Taste & Quality Positioning: Product Analysis: The main product because of which Gourmet was able to make a name for it and has been continuing to go on and on is mithai and they are famous for it but their bakery products and beverages also give value to their customers. The product includes: 1. Product Attributes/Features: The products being sold at Gourmet carry the following attributes which are: • Quality: Gourmet has been very careful and has been following a very strong standard for maintaining its quality so that customer is not complaining about its products.
Since they are dealing in food products where quality plays a very vital role so they believe in quality good and healthy product to the customer. • Purity: It’s another attribute which has been taken care of. In products such as mithai where people like that they get pure things specially in milk and better where there are chances that the customers don’t get pure products. Gourmet has made sure that they use pure materials in making of the product so that when the customer gets it they don’t feel that it’s not pure. • Freshness: Food products all over the world are loved for their freshness and if we talk about products which Gourmet is selling they should be fresh otherwise customer won’t purchase it. Gourmet promises to give fresh products to their customers by giving them those products which they feel are good and healthy to eat and if any product they feel is not fresh enough they won’t give it to the customer. • Good Taste: Taste is because of which a customer would love to purchase a product again if he likes the taste of your product. For so many years, Gourmet has been way ahead in the market and leading it on the basis of its taste and it promises to give good taste to their customer so that they enjoy it. 2. Benefits: • Same taste: This is one of the biggest benefits of coming to Gourmet that the consumer will get the same taste whenever he purchases products from Gourmet it’s not that at one time the products will taste different and other time they would be different.
• Uniqueness: One of the strong aspects of Gourmet is that its sweet (mithai) has a unique and at the same time very nice taste which no other player in the market is providing. • Large Variety: The customers can benefit from a large range and variety which Gourmet is providing them not only in its major products which is sweet (mithai) but lot of other products such as dairy products etc. •
Cleanliness:
At each and every outlet of Gourmet, special emphasis is laid on cleanliness so that consumer feels that he is standing at a nice place and doesn’t get irritated. Owner Point of View: • Social Class: From Gourmet point of view they are benefiting from segment they are targeting which is the upper middle and upper class as they enjoy a large amount of profit by charging handsome amount and are enjoying huge amount of financial reward. • Brand Name and branding Gourmet is one of the strongest brand name and market leaders in its field which enables them to get more benefit out of it. Since they are one of the biggest as well as the oldest in this field they have established a name in the market and consumers are automatically attracted towards Gourmet. SEGMENTATION AND TARGETING
There prices of Gourmet products are higher as compared to their main competitors and secondly their shops and stores are mainly located costly areas of cities. Keeping these factors in view we can say that there target market is upper middle to upper class. Continuous Learning about the Market: Gourmet is different from others because they have been continuously upgrading themselves over the years. They started their business from the inner city congested Locality as traditional sweet shop mostly found in cities doing small scale business and selling only mithai related products or dairy products. But Gourmet has learned a lot from the changing tastes of their customers and their preferences. They changed their stores outlook made them more modern and updated and introduced more updated functions in stores operation. They have been successfully able to shift their small scale business to a company level business. Their initial area of business was their hometown Lahore, but they successfully expanded their business to other big cities of Pakistan. Secondly they continuously keep working on their products and for over the years been able to launch different successful products in market. Their major focus is on quality of their products so to maintain strict laws of quality they have separate quality control department. The other example of their continuous learning about the market is their successful launch of snacks product category and their dairy products. They launched Gourmet milk in the market a few years back although their milk was not the big success as it has to compete industry giants like nestle, haleeb etc. but their snacks category is successful and been able to capture a large portion of the
market. These snacks and beverages are not only available at gourmet stores but at some other stores also. Target Market Analysis: Demographics: Mithai is a product well-known among all age group people. People of all: Age Gender Generation Family Size People belong from all ages generally love sweets and our core products so there is no exception likewise teenagers like it whereas old people don’t like it, but in one sense gourmet is targeting more towards people belong from age group approx 10 to 50 years I.e. including teenagers, youngsters, mature people however age group exceeding 50 years i.e. old usually suffers from different sugar prohibit diseases. So this sector is a low consumer of their traditional product. New generation is more concern about new taste and looks, gourmet’s seems quite conscious about this factor. It is continuously modifying its products according to the changing needs of the new generation i.e. virtual placement in order to facilitate the customers worldwide. Being a server of eastern society like Pakistan where family size is usually large which means strong concern about events and occasions. Gourmet as one of the
largest sweet dealers was always be there to facilitate them i.e. whether it’s a joyful moment like marriages or a moment of sorrow. Geographic: Gourmet is targeting mostly the urban areas all over Pakistan Lahore, Karachi, Islamabad, Rawalpindi, Faisalabad, Sialkot, Kasur, Multan, Gujranwala Psychographic: Marriages, cultural occasions and personal events are the events from which no social class can be excluded. However being a sole marketer of high quality which ultimately leads to higher price, Gourmet’s focus is more towards society’s middle and upper class. Media Graphics Hoardings, Banners, Leaflets, Magazines, Newspaper, Advertisement on public transport
Porter 5 Forces
Threats of New Entrants:
Capital Requirements: High capital cost is required for acquiring good places for the outlets if anyone wants to jump in the market. Government Policy: In our country the government has no policies for this industry. Own Distribution System:
It’s very difficult for newcomer to own a distribution channel because it needs huge investment. Gourmet has its own distribution systems.
Brand Identity: To identify a brand in the market is more difficult for any new entrants, because gourmet already has introduced such type of taste & quality in this industry that it is very hard to compete. Threat of Substitute Products: The substitute products may be; Bakery makes cakes, chocolates, ice-cream etc Local area manufacturers
Bargaining Power of Buyers: The bargaining powers of buyers are high because; Convince Product Low Involvement of Buyers Buying Behavior – Price sensitivity Brand Loyalty Status is low
Bargaining Power of Suppliers: The bargaining powers of suppliers are low because; Large number of suppliers in the market. It is an honor to become a supplier for Gourmet. Now Gourmet has become its own supplier.
ORGANIZATION PROCESS AND CULTURE Culture and environment inside the Gourmet is very much attractive people serving customers are always available for service. The person at desk always is in a happy mood to treat the customers. Well Organized Structure: Gourmet has a well organized structure. All the departments perform their work according to the organizational structure. More than 20% of Mithai production at Gourmet sweets is carried out at automated plants. Computerized Database System: Gourmet has an organized database; all the activities are recorded in the database. Computerized database provides error free center. It is updated on the regular basis.
Team Work: All the departments are working as a team such as Quality assurance, Marketing, MIS, HR and Administration etc. Working as a team increases the efficiency of the Gourmet sweets. Quality: By applying the various strengths gourmet offers the product to the customer. Gourmet never compromise on quality that is why they are able to capture a huge market share. Sweet is prepared with immense care using traditional and authentic recipes to give unforgettable taste.
Product Life Cycle: The stages that product go through from development to withdrawal from the market. •
Each product – different
•
Determines revenue earned
•
Helps -identify when a product needs support, redesign, withdrawal etc. -in new product development -in forecasting and managing cash flow.
The stages of the product life cycle: •
Development
•
Introduction
•
Growth
•
Maturity
•
Decline
Gourmet sweet & bakers
Gourmet bakers Gourmet deals in multi products and it possess: •
A distinct mission
•
Own managers
•
Identifiable customer segments
•
Specific competitors
•
Ability to plan independently
BCG Strategies •
Question marks- products with low market share in industries with high growth potential- Covert to star, or Exit market.
•
Stars- products with high market share in industries with high growth potential- make heavy investment because of sales/profit potential.
•
Cash cows- products with high market share in industries with low market growth potential-maintain status as long as possible-products produce strong positive cash flows.
Cash cows support Gourmet because of good will and market share. •
Dogs-products with low market share in industries with low market growth potential-minimize position-withdrawal. HIGH
LOW
HIGH
Stars Cash cows(hold)
Question? Dogs
LOW
War Horses
Model Use and Applicability
Dodos
•
The BCG identified four major strategic thrusts in terms of market share.
•
Once the products have been plotted, the planner then has to decide on a strategy for that product. There are 4 major strategies that can be followed. Build Hold Harvest Divest
Build The product or SBU’s market share needs to be increased to strengthen its position. Invest in one or more SBUs to build a share .This strategy are suited to Question Marks.
Hold Gourmet objective is to maintain the current share position and it lies in cash cows and this strategy is often used for Cash Cows so that they continue to generate large amounts of cash. Gourmet invests just enough to maintain a share in the market. Harvest Here management tries to increase short-term cash flows as far as possible (e.g. price increase, cutting costs). It is a strategy suited to weak Cash Cows or Cash Cows that are in a market with a limited future. Harvesting is also used for Question Marks where there is no possibility of turning them into Stars, and for Dogs. Divest The objective of this strategy is to rid the organization of the products or SBUs that are drain on profits and to utilize these resources elsewhere in the business where they will be of greater benefit. This strategy is typically used for Question Marks that will not become Stars and for Dogs. Gourmet lies in Cash cows and these are cash generators and require an invest or hold strategy while maximizing cash flow. Gourmet aim is to achieve a balanced portfolio, sustaining or holding the Cash Cows. Cash Positions of Gourmet VS Competitors
Business Type Cash Cows(Gourmet) Star
Cash Source More More
Cash Use Less More
Net cash Balance Funds available Build Competitive position and grow
Dog
Less
Less
(Fazal Sweets) Question
Divest and redeploy proceeds
Less
More
Funds needed to invest
mark(Nirala Sweets)
Market Attractiveness/Business Strength Matrix Or GE Matrix It includes: Market Attractiveness Organizations strength Gourmet Attractiveness is determined by factors such as: Market Growth Rate Market Size Demand Variability Industry Profitability Industry Rivalry Global Opportunities Macro Environmental Factors (PEST) Gourmet Strength can be determined by following factors:
Market Share Growth in market share Brand Equity Distribution Channel Access Production Capacity Profit margin relative to competitors Technological or other innovation Customer Loyalty
GE Matrix (Gourmet sweets & bakers)
Gourmet sweets & bakers Gourmet lies in YELLOW ZONE; a position in the yellow zone is viewed as having medium attractiveness. Management must therefore exercise caution when making additional investments in this product/service. The suggested strategy is to seek to maintain share rather than growing or reducing share. Best Strategy: INVEST FOR EARNINGS The GREEN ZONE consists of the three cells in the upper left corner. If your enterprise falls in this zone you are in a favorable position with relatively attractive growth opportunities. This indicates a "green light" to invest in this product/service. Best Strategy: INVEST FOR GROWTH The RED ZONE consists of the three cells in the lower right corner. A position in the red zone is not attractive. The suggested strategy is that management should begin to make plans to exit the industry. Best Strategy: HARVEST or DIVEST.
High Attractiveness
High Attractiveness
High Attractiveness
LEADER
GROWTH
IMPROVE/QUIT
Strong Competitive
Average Competitive
Weak Competitive Position
Position
Position
Strategies
Strategies:
Strategies:
provide maximum investment diversify your position to focus
build selectively on strength define the implications of challenging for market
ride with the market growth seek niches or specialization seek an opportunity to increase
your resources accept moderate nearterm profits to build
leadership
strength through acquisition
fill weaknesses to avoid vulnerability
share Medium Attractiveness
Medium Attractiveness
Medium Attractiveness
TRY HARDER
Average Competitive
PH. WDL
Strong Competitive
Position
Weak Competitive Position
Position
Strategies:
Strategies:
Strategies: invest heavily in selected segments establish a ceiling for
segment the market to find a more attractive
cash flow as you exit the
position
business
make contingency plans
the market share you
to protect your
wish to achieve
vulnerable position
seek attractive new
act to preserve or boost
seek an opportunistic sale seek a way to increase your strength
PROCEED WITH CARE
segments to apply strengths Low Attractiveness
Low Attractiveness
Low Attractiveness
CASH GENERATION
PH. WDL
WITHDRAWAL
Strong Competitive
Average Competitive
Weak Competitive Position
Position
Position
Strategies:
Strategies:
Strategies:
defend strengths shift resources to attractive segments examine ways to revitalize the industry time your exit by monitoring for harvest or divestment timing
make only essential commitments prepare to divest shift resources to a more attractive segment
exit the market
prune the product line
STRATEGIES BUSINESS STRENGTH (Gourmet)
Strong PROTECT POSITION •
Invest to grow at
Medium INVEST TO BUILD •
maximum digestible rate. •
Concentrate effort on
maintaining strength
Challenge for
Weak BUILD SELECTIVITY •
leadership •
Build selectivity on
strengths • areas
Reinforce vulnerable
Specialize around ltd strengths
•
Seek ways to overcome
weaknesses •
Withdraw if indications of
sustainable growth are lacking
BUILD SELECTIVITY • •
Hold SELECTIVITY/
LIMITED EXPANSION OR
Invest heavily in most
MANAGE
HARVEST
attractive segments
FOR EARNINGS
Build up ability to counter
•
competition’ •
Emphasize profitability by
•
raising productivity
•
•
Look for ways to expand
Protect existing
without high risks else
program
minimize investment
Concentrate investments
in segments where profitability is good and risks are relatively low.
PROTECT AND REFOCUS •
Manage for current earnings
•
MANAGE FOR EARNINGS •
•
Concentrate on attractive Defend strengths
•
Upgrade product line
•
Minimize investment
Sell at time that will maximize
profitable segments
segments •
Protect position in most
DIVEST
cash value •
Cut fixed costs and avoid
investments meanwhile
SCORPIO TECHNIQUE This technique is used to justify the strategies that we have selected while doing the analyses of BCG Matrix. Scorpio technique is a continuous process of every company and each and every company have own time frame to review the technique may be in 0ne year or one month ,may be in one week or other .
Industry or Market
Industry or technology thinking
1. Example:- online complaint centre, e-commerce, research & development. CUSTOMER:-
1. 2.
Middle class, upper middle class, upper class.
Cakes, pastries, beverages and dairy products, because large number of
branches are there for their easy access. 3. Soft drinks charges are less then coca cola and Pepsi etc, online complaint desk, as people are more concerning about health. 4.
Increase number of branches, Alternate Distribution Channel.
5.
Inflation rate, high prices of sugar, energy crisis, etc
6.
Reliability, loyalty, customer relation, customer retention.
7. Branches, website under construction (updating reason), online complaint desk. SEGMENTATION AND TARGETING
1. Differentiated, each and in every branch give response to the customer same and fair interaction. 2.
To increase customers by targeting all the level of social classes now.
3.
Upper middle class, upper class.
4. To develop Durability, to targeting the customer according to the need and demand, built a positive relations to customer , to increase loyalty and to do research and survey on customer preferences. 5.
No priority because same treatment to all the customer
6. Now they are trying to target all the segments as their beverages are available on other local retail shops. 7.
By delivering new offerings e.g. catering in parties on different occasions.
POSITIONING AND BRANDING
1.
Differentiation marketing.
2.
high quality and good position
3. more and more improvement in quality of the product and position to built relation to customer to improve brand loyalty 4. To innovate different product and services and built a positive image in the mind of the customer. 5.
Establishment a complete bakery of first choice to facilitate the customer.
6.
Customer trust increases
7. Increase promotional activities like advertising on different channels, pamphlets, concerts etc. Retention Strategies
1. Holding current customers to attract new customers, and giving more value to customer through more advertisement. 2.
Listen and Respond to complaint
3.
No, it can also increase the customers
4.
No.
5.
Good
6.
To get satisfaction of the customers
7.
Offering new items.
ORGANIZATION: PROCESSES AND CULTURE
1.
Both internal & external include employees ,customers
2.
Providing better hygienic and healthy food.
3.
Strictly followed
4.
Yes
5.
BCG Matrix
OFFERINGS
1. Superior values and services with attractive and hygienic and healthy products. 2.
Different products, beverages, cakes, pastries.
3. Provide banking facility that influence the customers, provide value, improved brand image, introduced new innovative products. 4.
Sugar free ice creams. Providing more healthy products to satisfy each and every type of customers 5.
6.
Yes we are managing the life cycle.
Through Advertisement, print media, number of branches increase. 7.
Analysis and recommendations The whole report shows that the Gourmet bakers and sweets are striving to get a competitive advantage against its customers but there are some problems too on which the company should concentrate because they serve many other factors respectively 1. Gourmet should offers incentives and benefits to its old employees to reduce its turnover rate. 2. And secondly they should reduce the employee work hours so that they better deals the customers.
3. The Gourmet hasn’t advertised themselves through media; they should have adopted some other source of advertisement to cater the market. Well they are well known in the market but they should use TV media for their advertisement, they could also advertise themselves on the cable in the areas in which they are having their chains. 4. The Gourmet should plan for the loyalty of its customers. They should give discounts to its regular customers in this way the customer’s sincerity with the company will grow. 5. The Parking area of the Gourmet bakers should be enhanced if their customers face problems in parking .then the customer would prefer to go on some other store to find convenience rather than buying for the Gourmet. 7. The Gourmet should increase the quality of the new products as it has offered (milk and ice-cream) and it should also concentrate on the advertisement of the new product seriously. 8. The Gourmet should take feedback from the customers by personally survey and should concentrate on the requirement of the customers. 9. As the people is weight and diet conscious today so the Gourmet bakers should introduce sugar free sweets and cakes for those people too.
10. They should be concentrating on the quality of their products so that the customers wouldn’t be returning the goods back and thus the image of the Gourmet wouldn’t be lost in the eyes of the customers. 11. By adopting reduce price strategy they can make more and permanent customers. Not only more customers will come there will be increase in the number of loyal customers as well. 12. They have to acquire new technology for production if they don’t move towards acquiring new technology then they won’t be able to meet the needs of customers. 13. Sales promotions like prizes, lucky draw schemes should be introduced to attract more customers and involve kids and children to increase sales. 14. Must capture some special events like local sports series, convocations & charities shows by sponsoring these shows as would give a good image about the company to the consumer.
