SUBJECT NAME: Microeconomics
SUBJECT CODE: BEC1001
ACADEMIC YEAR: AY 2011/2012, April Semester
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Name of Student
Matriculation No.
Tan Chee Yen
1106673E
Laura Lim Rou Tian
1106550E
Fang Lee Mun
1100096E
Adriel Li Yong Heng
1104200I
Yap Seow Ting
1103111I
Tutorial Class
: _________T27______________________________
Tutor
: _____Mr Simon Seah ________________________
Diploma
: _____Diploma In Leisure & Resort Management __
Date of Submission : _______________31 July 2011_
_____________
Information on the Retail Outlet
In this report, we will be focusing the BreadTalk outlet, which is located at
Compass Point in the East region of Singapore.
BreadTalk was found in 2000. In the years, it has expanded to many countries
with more than 300 boutique bakeries, 40 food atriums and restaurants.
BreadTalk has been incessant creating new tastes and designs of breads, buns
and pastries such as macaroons, full cake as well as dessert cake that offer a wide
variety.
BreadTalk offers up to 150 varieties. Each outlet provides around 40-60 different
varieties each day, depending on the size of the outlet. For every 4 months,
BreadTalk will definitely produce 10 new sets of varieties to satisfy the different
likings and changing demands of the customers.
BreadTalk has 25 outlets in all areas of Singapore: Central, North, South, East and
West.
Products and Customers
All customers are highly valued as they bring in revenue to the shop. It is to
satisfy customers’ needs, as they will have bread for breakfast and pastries for
teatime. However, it is very competitive because there are many bakeries
allocated in the market field and customers’ tastes and preferences are always
changing.
BreadTalk also has its own creation, with exotic names like "Spice Girl",
"Earthquake Cheese Loaf", “Mount Fuji Swirl”, their most popular bun “ChickenFloss aka Flosss” – with or without seaweed wasabi and etc. It has recently also
introduced green tea and pandan flavoured mooncakes in its stores, in
conjunction with the local mooncake festival.
The innovative recipe of Breadtalk includes buns and pastries with meat, fruit,
vegetarian, and nuts as fillings.
Profile Target
BreadTalk cater for the entire populations. They follow and keep up with the
current trend of the society and constantly come up with innovative changes of
products. Individually, they design products with cartoons to captivate the
attentions of the children. BreadTalk targets teenagers, adults and senior citizens
as it can sustain their hunger, convenient to everyone and is essential to
everyday’s life. As the products provided in BreadTalk are of reasonable prices, it
opens out to everyone in all income groups.
Pricing and Promotion
The products in Bread Talk are definitely highly price elastic in demand as there
are many close substitutes available. For example: Whenever Breadtalk
increases the price of a product, they will generally face a decrease in the
percentage of quantity demand which is much greater than the percentage of
price increase. When the price is brought down, Breadtalk will also face an
increase in the percentage of quantity demand which is greater than the
percentage of price decrease, shown in figure 1.Majority of the customers are
willing to change their taste and preferences accordingly to the price increase.
The new products in BreadTalk are price inelastic in demand as other
competitors do not have the products they produce, as mentioned above. Thus,
the customers will still purchase them for their satisfaction despite the price
increase which results in experiencing only a slight decline in the percentage of
quantity demand despite there has been an increase in the percentage of the
price, shown Figure 2. This can be illustrated by the graph shown below:
Price
Price
P2
P2
P1
P1
D
Q2
Q1
Quantity
D
Q2 Q1
Quantity
Figure 1
Figure 2
Using Penetration Price strategy, BreadTalk is able break into market, develop
market share and build customer goodwill and loyalty. Also, it creates
impression of ‘high-pricing’ in competitors’ products. The other strategy used is
through value pricing, which firm price their products based on the perceived
worth of the good or service to its intended customers. As shown in BreadTalk,
the prices of the products are above average as compared to other competitors.
It allows customers to know the quality of BreakTalk in terms of freshness, and
ingredients used are definitely worth the price that they are paying for.
Competitors will remain their price as it is, however, BreadTalk’s innovation and
creativity do leads into temptation whereby customers would spend the extra
cost willingly to buy and satisfy their appetite. Furthermore, they are wellknown for their strong brand equity, innovative to keep up with their customers’
changing taste.
The pricing of breads sold in BreadTalk starts from SGD$1.20 onwards. While
the dessert cake sold are from $4.90 onwards, full-size cake from $39 onwards.
Non-priced competition: BreadTalk have “see through” kitchens to present the
chef baking procedures to the customers. This showcase will lure customers to
try their bread.
Encounter the best experience seeing your favourite buns being prepared right
in front of your eyes is always an enjoyable experience. BreadTalk showcase
their expertise of their bakers and guarantees that the bread sold in the store
comes directly fresh from the oven.
Building good relations with the public, BreadTalk can obtain favorable publicity
and developing a good company image. BreadTalk has participated Corporate
Social Responsibility (CSR) programme to give back to society. Breadtalk created
'Ping Chuan Xiong' 平川熊 (Peace Panda) - Panda bear shaped bun with four
different expressions symbolizing the terror of the 7.8 magnitude earthquake to
play a part in relief efforts for Sichuan earthquake victims on 12th May 2008. The
proceeds raised went to the Chinese Embassy and Red Cross Society's 'China
Earthquake Appeal Fund'. Therefore, BreadTalk held a positive image in
customers resulting in more customers patronizing.
By attracting customers’ attention, sales promotion is done such as discounts are
given to customers after 9PM daily. It invites and rewards quick response from
customers and maintaining the freshness slogan by selling away all the
remaining buns for the day.
Celebrating BreadTalk’s 11th Birthday, purchase 10 Buns for $10 storewide while
$1.10 individually. Buy 2 Sliced Cakes and Get 1 Free. Lastly, 15% off Classic
Cakes from 9-14 July. Enjoy 3% SMART$ Rebates with your UOB Card at
BreadTalk
Using Loyalty card with minimum purchase of $5, a stamp is given. Redemption
of a free bun is available upon full collection.
BreadTalk also implemented a Package meal with purchase of 5 buns for only $5
and Breakfast set (coffee/tea + bun = $2.10).
Television advertisement and banners are used to attract customers. They also
implement their own brand on plastic bags. Pamphlets and coupons also serve as
a type of promotion to attract new customers whenever and wherever the name
carries it.
Competition
As Breadtalk belongs to Monopolistic Competition in the market structure,
Product substitutes are very competitive in the bakery industry as their prices
can be comparatively lower and customers face low switching costs.
Monopolistic Competition consists of many firms and therefore, holds only small
market share. It is differentiated but close substitute products. In the market
there are free entry and exit.
In the same shopping mall at Compass Point, the competitors are Prima Deli,
Four Leaves, and Bengawan Solo. They have Q-Bread and Swee Heng around
same neighbourhood and lastly Bread Connection Bakery, Simply Bread (Fifth
Ave), Bread Lover Bakery House Lip
,Bread Point
,Bread Signature
,Baker's
Heaven Pte Ltd
,Bread Garden
,Bread Story
,Honey NutriCAKE House
in
other parts of Singapore.
Competitors VS BreadTalk in marketing strategy
BreadTalk
Prima Deli
Four Leaves
Plastic Bag with logo and name
X
X
X
Advertisement
(Magazine/TV/Web/Promotion/
Newspaper/Brochures)
Corporate Social Responsibility
X
X
X
X
Privileged Card
X
Loyalty
X
Rebates on credit card
X
Anniversary
X
“After 9pm” Promotion
X
X
Creating diversity, a wide spread of varieties and customize products to
customers’ liking. For example, different type of toppings used. Price of toppings
varies corresponding to value of topping (eg. Chocolate fudge costs more than
chocolate rice.), all these innovations are suitable for all age groups.
In addition, BreadTalk implemented delivery and the use of EZ Link cards.
Allowing customers to try the samples of upcoming buns and improving the
packaging. Most creative idea is setting up lucky draws and contests for
customers to participate in all their events and buy more than usual in order to
win the attractive prizes!
In Singapore, Multi-Racial is one of the most important guideline in business
industry and therefore, being fair to every customers and allowing all races to
enjoy the privileges of BreadTalk, they also have to be certified with a Halal
Certificate.
BreadTalk is located in highly accessible areas where nearby public transport
and high human traffic flow areas as it can be more visible and convenient to
customers.
BreadTalk has many outlets thus buying in bulks from suppliers lower the cost of
raw ingredients. As such, the cost of producing the breads, buns, pastries and
cakes are lower. Therefore, the customers purchase them in such low prices.
Conclusion / Suggestion:
Although BreakTalk have been constantly coming out with new products and
advertising promotions to remain its competitive edge, the F&B industry in
Singapore is highly competitive and fragmented with low barriers to entry. With
many bakeries reinventing their existing products and expanding, it gets
increasingly difficult to compete for choice locations and market share.
The highly competitive F&B industry results in high demand of staffs therefore,
leading to the need in recruiting foreign workers who has passion and right
attitude to work in the company. Mainly from China, the staffs have difficulties
communicating with customers and colleagues, which causes communication
barrier.
There are many substitutes available in the existing market, BreadTalk face
threats in the competition, as such; BreadTalk needs to constantly come out with
new ideas in order to sustain the customers’ taste and expectations.
BreadTalk is not an absolute choice for the budget-conscious customers as the
price of their products are slightly above market price to keep up with their
value. However there are a wide variety of promotion activities available for
them.
Singapore is a very small island; BreadTalk faces difficulties in finding strategic
location to set up more outlets. Therefore, they focus on making their products
and promotions as appealing as possible in order to attract customers. In
addition, the promotions are mostly of lower price than usual of its product
therefore, customers would pay lesser and enjoy the extra satisfaction when they
do not pay for.
BreadTalk can consider implementing on personal selling to foster a relationship
and make customer feel that they are valued. Customer feels a greater need to
listen and respond when personal selling is involved. Thus employee could use
this opportunity to interact with the customers to build up good customer
relationship while selling the bread. When new creation of product is created,
BreadTalk allow customers to try and get their feedback on the new product
before official launch. In addition, customer will be given a token of appreciation
in a form of gift voucher. Not only this will help BreadTalk to improve its product
and it also enables the staff of BreadTalk to interact with customers too.
Coming up with a new membership card for customer’s to sign up and enjoy the
privilege of being a BreadTalk Customers of a minimum spending of $30. And
Customer will receive a $5 dollar voucher upon signing up for the membership
card. Example: Birthday month will get a free mini birthday cake specially make
for them. Get a 15% off for every cake purchase. Get your 4th bread for free of the
lowest price etc.
Breadtalk can also consider implementing the idea of Do It Yourself (DIY) bread.
You can decorate your own bread with ingredient while the bread is already
baked for you. Customers will only be paying for the ingredients. There will be
staffs to assist and manage the station. This will help BreadTalk improve on its
business while customers will be attracted by the new innovation.
With the changing taste of the customers, BreadTalk has to come out with new
ideas continuously to meet up with the customers’ demand. For example,
introducing waffles and donuts to the shop. BreadTalk can also improvise on the
different flavors of the fillings on the waffles so that they do not need to waste
their capital in constantly coming up with new ideas.
Appendices and References
http://www.bakery.sg/bread_shops.html
http://www.breadtalk.com.sg/breadsociety/index.htm#signatures
http://www.scribd.com/doc/3699043/BreadTalk-FinalReport
http://www.breadtalk.com/breadtalk/promotions.php
http://www.breadtalk.com/breadtalk/ourcreations.php
http://www.scribd.com/doc/7036613/Breadtalk1
http://infopedia.nl.sg/articles/SIP_657_2005-01-25.html
http://www.streetdirectory.com/restaurants/singapore/reviews/branchesBread+Talk-2016.php
http://www.breadtalk.com/about_us.php
http://www.reviewstream.com/reviews/?p=51126
http://www.sgrate.com/forum/thread-13107-1-1.html
http://www.scribd.com/doc/7036613/Breadtalk1
http://www.scribd.com/doc/7036613/Breadtalk1
http://www.fourleaves.com.sg/webtop/promotions.html
http://www.primadeli.com/primacard/primacard.asp
http://sg.openrice.com/singapore/restaurant/sr2.htm?shopid=4531