Bakers’ inn provides customers with a one-stop platform for cakes, snacks, bread, sandwiches, and other products. The service enterprises ensure that customers get a fresh-baked cake with a fair price and quality. The products of the enterprise vary in design, shape, texture, taste, and size. They meet the varying tastes and preferences of customers. The enterprise provides the ultimate solution for all the party and wedding cakes to customers on request or by order.
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The growth in the bakery business and the increase in the demand for quality and freshly baked products present an opportunity for Bakers’ inn products. According to Global Industry Analysts’ report, the worldwide market for bakery products is estimated at the US $410 billion in 2015. Such an increase is attributed to the growing demand for bakery products in developing countries, as well as an increased emphasis on on-the-go bakery foodstuffs (Market Intelligence Department, 2007).
In the past years, there is an increased cost of production in bakery trade and an elevated price of raw materials worldwide. There was also a tremendous change concerning consumer preferences since they begin focusing on the health, extravagance, and convenience of the bakery products. As a result, bakery product prices have increased tremendously. The product is natural, baked, portable, and healthy, thus creating a less elasticity of demand for the product. The attractive packaging of the product encourages impulse purchasing from the consumers (Parker, 2007). There is increasing growth of new entrants with the industry attracting multinational firms. As such, the product will be traded in a perfectly competitive market structure.
The production costs will comprise fixed and variable costs. The fixed costs include rent for the premise amounting to the US $500 per annum and license fees are the US $100 per year. On the other hand, the variable costs include the cost of raw materials amounting to the US $1000 per month, direct expenses of US $750, and indirect expenses amounting to the US $300. The enterprise will expand to new territories to increase the revenue as well as engage in retailing for a wider consumer base. The optimal profit-maximizing level of output is attained at the point where the marginal revenue equals the marginal cost. The MC curve should cut the MR curve while increasing. As such, the enterprise should avail of the total income and total outlay of the product. This will assist in calculating the marginal cost, marginal revenue, and average costs.
Concerning the product, a product brand, and quality management strategy is recommended to be carefully considered. The pricing strategy will be penetration pricing to take up the market within the shortest time possible. Media advertising will be used as a promotional strategy taking into account the timing and coverage of the media. Bakers’ inn will use certain channels and bring into play the relationships as a strategy to boost its countrywide as well as the worldwide rollout of Bakers’ inn products. The 4P’s strategies recommendation provided will help both the companies maximize their potential in the US market and improve customer satisfaction with the bakery products (Sheehan, 2008).
In a perfectly competitive market, there is free entry and exit of firms; therefore, it will be difficult to create or increase barriers to entry. Product homogeneity is necessary, but to attract more customers and generate revenue, the enterprise will develop attractive packaging for the product to encourage consumer’s desire of buying, and at the same time, promote product brand and image. In essence, minimization of the cost of production can be done by engaging in the bulky purchase of raw materials and encouraging employee satisfaction to improve performance and reduce time wastage. This will lower the unit cost of the product compared to other competitive bakery products.
Market Intelligence Department. (2007). Key players in the global bakery industry. (2nd ed.). Leatherhead, Surrey: Market Intelligence Section, Leatherhead Food International.
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Parker, P. M. (2007). The world market for non-electric bakery and biscuit ovens, the: a 2007 global trade perspective. Calofornia: CA.
Sheehan, R. (2008). Writing proposals (2nd ed.). New York: Pearson/Longman.