Market Situation Essay
There are threats faced by the company. One is its diverse competitors. The company competes with various firms. The company competes directly with cafes and bakeshop conglomerates and indirectly with fast food and full-service restaurants and indirectly with other venues for acquiring baked goods and other cafe products (Thompson 293). The company needs to continuously innovate on differentiation to distinguish itself from these various competitors while at the same time enhance value for consumers. Another is the copying of its strategies by competitors.
The issue with innovation is to develop a strategy unique to the company and that is not easily copied to secure long-term benefits. Market Situation The market of the baked products industry is large because the product is a staple. Everybody eats bread. The challenge for baked products companies is to get customers to select to buy bread from the company frequently and regularly. The market for baked products cuts across different socio-demographic segments. Panera Bread Company engages in psychological segmentation of its market to support its differentiation strategy by appealing to families, friends, business associates, and individuals.
The company targets these behavior-based segments by creating an inviting and cozy ambiance for its cafes and bread displays similar to
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One is price or cost to the consumer of selecting a firm to buy from. The other is the comparative benefit obtained from choosing a specific firm. The ability to reduce cost, provide high benefits or balancing of both are options for competitors in the industry. The selected focus determines the ability to draw consumers to choose the company. (Bradford et al. 38-41) Panera Bread Company opted to provide high value at competitive costs to allow the company to tap into a wide range of market relative to other fast-casual firms and influence shifting by placing the company as an alternative to fast and full-service companies.
The market for baked products is already highly saturated and it is to companies to develop strategies to retain their customers and encourage more consumers to shift to its products and services. The combination of cost effectiveness and differentiation, which Panera Bread Company applies, appears to the sustainable solution. Collaborator Situation The baked products industry comprise of a number of large companies with wide market reach and distribution channels and many small firms with limited market reach and small number of distribution outlets.
Many of the large firms emerged through strategic mergers and acquisitions (Bradford et al. 50). These moves are important to the long-term success and competitiveness of large baked products companies. Panera Bread Company expanded by purchasing a small chain of Saint Louis Bread and developed the bread-cafe concept in transforming the chain into Panera Bread Company (Thompson 281). The acquisition of an already existing chain, albeit small, already ensured a base market for the company and a framework for developing the business concept.
Now, the company comprises one of the large competitors in the industry. It was able to justify the acquisition of Saint Louis Bread and the shift to Panera Bread Company by operating as a bakeshop-cafe positioned as a fast-casual business offering artisan products at competitive prices. Apart from expansion through mergers and acquisitions, partnerships and key collaborations also affect firm performance and industry competitive atmosphere. Key partners are suppliers, distributors and other alliances.
(Bradford et al. 50) The strength and effectiveness of partnerships and collaborations determine the achievement of the market goals of firms. Panera Bread Company engaged selected suppliers of ingredients for its fresh dough and other food products are partners. The selection criteria included the quality of the ingredients supplied and the cost of acquisition relative to similar companies. By doing so, it is able to secure a source of ingredients of the quality and quantity that it requires in the long-term.
Part of the partnership agreement is the direct ordering of the bakeshop-cafes from suppliers and ensured delivery within a given period to ensure freshness. The firm’s alliances comprise of its franchises for the production of fresh dough and management of bakeshop-cafes around the country. Again, the company thoroughly selects franchises to ensure alignment with the business values of the company as well as the continuity of the partnerships through a six-store franchise agreement within a given timeframe.
This agreement ensures that franchises become long-term partners. The company purchase franchises unable to meet these terms. Overall, the company has maximized the benefits from mergers and acquisitions and partnership and optimized the benefits from its collaborations. Collaborations explain the success of the firm in expanding while at the same time retaining its core values. Although the company enforces a stricter franchising system, which means longer process of selection, it was able to obtain long-term partners it needs for expansion. Company Situation
The situation of the company is comprised of four areas, which are product, pricing, place or distribution, and promotion. The consideration of the situation of the company in terms of these areas determined specific successes and failures to support the areas for improvement. In terms of product, the company succeeded in developing a high quality and attractive range of products as shown in its menu. The offer of artisan bread using only the four basic ingredients of flour, water, salt and natural yeast and without using any preservatives (Thompson 285) ensured the quality of its bread products.
This has strong appeal, especially with a more aware market becoming more conscious not only about the cost of their food but also its components and the preparation. The company also rotates different food products to match the change in tastes during the seasons. In addition, the various company-owned bakeshop-cafes and franchises also fit their menu based on the tastes of its target consumers. Moreover, the company has diversified its products to provide different food needs to draw customers anytime of the day. It is clear that the company has an in-depth understanding of its consumers.
However, it also has to keep watch over the menu innovations of its competitors to ensure that its menu is unique and able to comprise a point of distinction for consumers. With regard to price, the company’s pricing is competitive as a fast-casual company. Its relative or average price is slightly higher than fast foods but more affordable than full-service food companies, albeit it offers high quality products and high end service. (Thompson 288) By being in between, the company can use its price to draw fast food consumers looking for healthier alternatives and full-service consumers looking for more affordable alternatives.
However, the company needs to regularly assess its pricing relative to competitors to ensure that it is offering unique value at a competitive price. Relative to distribution, the company relies on its capability and that of its franchise partners. This led to the company retaining a uniform values at the business unit level to ensure consistency in the quality of products and services to consumers. However, the company needs to regularly assess the additional costs involved in selecting and maintaining franchises to ensure that its methods remain effective.
In relation to promotion, the company relies on the physical presence of the bakeshop-cafes as a means of building market awareness and creating a pleasant experience to encourage repeat visits and recommendations. There is lack of noticeable advertising. There are other promotional options that the company is not optimizing such as billboards, loyalty cards, referral promos as well as the use of ICT tools such as direct mail, company website to provide information on the company, blogs, forums, and other online means of introducing the company to the wider market.
Doing so would increase market awareness of the company and should increase customer traffic. Fulfillment of its promotional message should ensure repeat purchases and even loyalty. Exploring the global online market could also open the opportunity for online retailing and international expansion. Works Cited Bradford, Robert, Peter Duncan, and Brian Tarcy. Simplified Strategic Planning. Worcester, MA: Chandler House Press, 2000. Thompson, Arthur. “Case 5 Panera Bread Company. ” Essentials of Strategic Management, The Quest for Competitive Advantage. Ed. Arthur Thompson and John Gamble. McGraw-Hill Companies, 2007. 286-302.