河南省考生注意：怎么才能避免ACCA考试失分?

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(a) To: Helen Bradshaw
From:
Entry strategies for ‘Helen’s cakes’
Your choice of market entry strategy is a crucial one for you and one which will have significant consequences for the
operational side of the business. Your choice of distribution channel will determine the customers you reach, the volume of
sales you will achieve and ultimately the level of profitability attained. Key questions will include – is there a market for my
cakes, how big is this market, what segments of the market will I reach and is this the most appropriate channel for accessing
my customers? These are key questions that will influence your marketing strategy and its implementation through the
marketing mix detailed below. This choice of channel will effectively position your cakes in the market.
Your intention to produce ‘distinctive quality cakes’ suggests you are intent on differentiating your cakes from those of your
competitors. I have provided an assessment of the implications of choosing a particular entry strategy. Each entry strategy
will have a different combination of costs and benefits and involve different levels of risk. Although you will be supplying
basically the same product into each market, each market is very different and will require a different marketing approach.
Premium cake market
Here there is the opportunity to establish your brand and develop your reputation for meeting the demands of discerning
customers. There is also the opportunity to obtain premium prices based on the exclusivity of your cakes. New quality brands
are likely to be welcomed by the specialist cake shops and cafes and there is the advantage of relatively few brands with
which you have to compete. Entry barriers are therefore relatively low and the product range can be developed in a planned
way. Volumes, at least initially, are likely to be low and your existing capacity should be able to cope. However, entry into this
premium market may have some disadvantages. Clearly, for a premium product, commanding premium prices, quality is an
absolute must. Therefore, rigorous quality systems must be in place to ensure customer satisfaction. Equally, the demand will
be for fresh cakes with a short shelf life and this again will require small batch production and careful scheduling and
planning. Your distributors are likely to want many varieties of cakes, but in small volumes again has cost implications and
your ability to make-to-order may be an important factor in generating sales. As you are likely to be supplying a large number
of outlets spread over a wide area, this is likely to lead to high distribution costs per unit sold. Opportunity should be taken
to supply cakes to any chains of cake shops or cafes and thus lower the costs of distribution. You will clearly have to work
out the break-even position for each customer so as to avoid having large numbers of small customers who order insufficient
quantities to cover costs.
Supermarkets
Here there is the advantage of generating high volume sales and achieving some economies of scale. Equally, if you are able
to convince the buyers to stock your product using your brand this will gain you excellent exposure in the market. The fact
that you are supplying to a small number of large customers will also have a beneficial effect on your distribution costs.
Supplying the supermarkets with your cakes will bring some problems however. Here the attention to quality will be
considerable and the product must be consistent to prevent product rejection. You are likely to have to meet demands for
recipe change and price variations may also be required. Above all, the buying power of the supermarkets will put extreme
pressure on your prices and is likely to result in small profit margins. Equally important is the likely pressure to make cakes
to be sold under the supermarkets’ own label brands. Again the pressure on costs is likely to be intense and there is no
opportunity to develop your brand. Getting space on the supermarket shelves is likely to be expensive – you may be under
pressure to reduce prices to support in-store promotions. Also, the power of electronic point-of-sale equipment means that
underperforming products are soon deleted from the product list and removed from the shelves. Overall this is a high
volume/low margin market entry and getting your product accepted may take considerable time and effort.
Catering market
Here, typically, supplying catering wholesalers who in turn supply catering establishments. Volumes are likely to be
significant, with large bulk orders being placed. The product range is likely to be less extensive than with the other two
markets and there will be less need to offer recipe variations. This market is likely to be less quality conscious provided the
cakes meet the demands of the caterers. There is less pressure to produce cakes under the caterer’s own brand and therefore
the opportunity to build your own brand. Barriers to entry would be relatively low with the caterers having little brand or supply
loyalty. Batches of cakes are likely to be large with lower production costs as a result. Distribution costs are also likely to
benefit from delivery to a few large wholesalers.
The downside of supplying this market segment is meeting the particular demands of the caterers – they may be more
interested in products that can be stored as opposed to being fresh. As wholesalers operate on narrow margins, there will be
pressure on prices. The volume demands will also place pressure on your ability to deliver the right sort of cakes from the
limited capacity at your disposal. Also, having your brand associated with a mass catering market with its modest reputation
for quality may limit your ability to move the brand into higher quality segments of the market.
From the above analysis you can see that each distribution channel has particular demands. It is unlikely that in starting your
business you will be able to supply all three outlets. It is important that you choose your distribution policy carefully with a
view to where you want to be in the future. Each route to market will have a significant impact on the whole of the companyand place different demands on you.

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