Kyle Mariah Chelsea Case
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BULUT, Kyle Mariah Chelsea
VILLEGAS, Robert Jason
1. What are the dominant economic characteristics of the specialty baking market? Does is appear that the industrys prospects for growth and attractive profits are good?
The case study states that the specialty baking market sales declined in the year 2009 but despite the negative factors in the industry, it is expected that their sales will grow 8.1 % per year until 2014. Also, specialty cupcake bakeries have started to be a “trend” since 2005 because of Magnolia Bakery and its appearance of Sex and the City. Cupcake sales were to rise another 20 percent between 2009 and 2014. These economic characteristics are definitely great for the industry since the sales are expected to rise within the next few years. Statistics show that 63% of consumers had purchased from a specialty bakery store in 2010, compared to the 46% in 2009.
2. How strong are the competitive forces confronting Sift and other specialty bakers? Which one of the five competitive forces is the strongest? Prepare a five-forces analysis to support your answer.
Bargaining power of buyers- MODERATE
Buyers can easily go to other
Bargaining power of suppliers- WEAK
The supplies needed in baking a cupcake are readily available from many suppliers in the market.
Threat of new entrants- STRONG
Rivalry among competing sellers – STRONG
There are 106 cupcakeries in the Bay area. There are also hundreds of dessert bars, bakeries, and other commercial venues that made cupcakes. These shops offer cupcakes that almost have the same price range and costumers can easily switch to these shops whenever they can.
3. What key factors will determine a companys success in the specialty baking market in the next 3-5 years?
Well known and well respected brand name
Great Customer Service
Advertising and marketing
Price of the products
4. What is Sift Cupcakes and Dessert Bars strategy? Which of the five generic competitive strategies discussed in Chapter 5 most closely fits the competitive approach that Sift is taking?