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Marketing Management Final Project

Marketing Plan Submission #3 - Petite Perfection Bakery Keller Graduate School of Management MM522 Marketing Management Professor Cynthia Mable April 10, 2012 Contents 1.0 Executive Summary 4 2.0 Situational Analysis 5 2.1 Market Summary 6 2.2 SWOT Analysis 7 Strengths 7 Weaknesses 7 Opportunities 8 Threats 8 2.3 Competition 9 2.4 Product (Service) Offering 10 2.5 Keys to Success 11 2.6 Critical Issues 12 3.0 Marketing Strategy 12 3.1 Mission 13 3.2 Market Objectives 13

3.3 Financial Objectives 13 3.4 Target Market 14 3.5 Positioning 15 3.6 Strategies 16 3.7 Marketing Mix 17 Product 17 Promotion 17 Budget 19 Place 20 Price 20 Price List 21 3.8 Marketing Research 21 4.0 Controls 22 4.1 Implementation 22 4.2 Marketing Organization 23 4.3 Contingency Planning 23 5.0 Conclusion 24 1.0 Executive Summary Petite Perfection Bakery is a startup company located in the Chestnut Hill area of Philadelphia. This boutique bakery offers the advantages of sophisticated cupcakes and other pastry products paired with outstanding customer service in a cozy atmosphere. Petite Perfection Bakery specializes in over thirty different varieties of cupcakes along with twenty icing choices. It offers creative cupcake designs and extensive customization. The bakery also serves brownies, cookies, and coffee. While there are several boutique bakeries in Chestnut Hill, none are able to meet the market specific needs that Petite Perfection Bakery satisfies.

Market research indicates cupcakes are a major trend among young and old. The trend has even spread to the upper class. There is a growing need in the market for fancy, large scale cupcakes. Petite Perfection Bakery seeks to service this segment of the market. The bakery seeks to cater to the young professional female that celebrates special occasions and accomplishments with party and the country club woman that puts on impressive dinner parties and grand galas. The market strategy will be based on a cost effective approach to reach this clearly defined target market. The approach will utilize resources to create awareness of the bakery and encourage customers to benefit from the products the bakery offers. Petite Perfection Bakery will focus on its selection, superior products, innovative designs, and competitive pricing. The marketing objective is to actively support continued growth and profitability through effective implementation of the strategy. 2.0 Situational Analysis Petite Perfection Bakery is a startup company located in the Chestnut Hill area of Philadelphia. It is about to enter the mature bakery market. Marketing is critical to its success and future profitability. Petite Perfection Bakery offers high quality cupcakes and other pastry products for a wide range of events at a competitive price to meet the demand of the middle to higher income local market area residents. There is a growing demand at local bakeries for elaborately decorated cakes and cupcakes. Currently, there are three bakeries already in the Chestnut Hill area. Each bakery offers similar products. However, there are clear distinctions between the products and services each bakery offers. Two of the bakeries have received national recognition from appearing on TLCs Fabulous Cakes. Petite Perfection Bakerys biggest challenge will be to come up with unique aspects the bakery has to offer that will make it stand above the competing bakeries. Also, it must target specific segments of the market in order to gain competitive advantage. In addition to the challenge of the competition, the current economic state will be a factor that needs to be considered. With the uncertainty of the job market and investment market, consumers are becoming less concerned with brand loyal and more concerned with price. Petite Perfection Bakery must carefully price each product so that it will be reasonably priced for the consumer as well as competitively priced for the bakery. Also, the bakery will need to maintain consistency in quality and taste. This could contribute to the consumers decision to purchase from Petite Perfection Bakery instead of the direct competitors or even a local supermarket. The consumer may justify spending the additional money for quality and taste. 2.1 Market Summary

The profile for Petite Perfection Bakerys customer consists of the following geographic and demographic factors: Geographics * The immediate geographic target is the Philadelphia neighborhood of Chestnut Hill with a population of 9,608. * The Mount Airy neighborhood will also have access to the bakerys location. * The total targeted population is estimated at 38,481. Demographics * Male and Female. * Ages 25-59, this is the segment that makes up 57% of the Chestnut Hill and Mount Airy markets according to the * Young professionals who work close to the location. * 52% of the population has attended college. * Median household income $91,803. * Eat out several times a week. * Tend to patronize higher quality establishments. Petite Perfection Bakerys market consists of consumers who prefer sophisticated cupcakes with custom designs and specialty flavors instead of the usual tiered cake. The specific segments being targeted by Petite Perfection Bakery include female young urban professionals as well as older country club women. 2.2 SWOT Analysis Petite Perfection Bakery has several strengths that allow it to have a competitive advantage, but its major weakness is lack of market presence and reputation. There is a major opportunity for specialty cupcakes due to the increased demand for products that accommodate gluten free and dairy free diets. Petite Perfection Bakery also faces the threat of economic factors influencing consumer spending on nonessential purchases.

Strengths * Excellent service - The bakerys staff members are highly committed and very customer focused. Customers receive an unmatched client experience. * Great location - The bakery is bright, hip, clean, and located in a trendy upscale urban neighborhood. * High quality - Petite Perfection Bakerys high quality food offerings that exceed competitors offerings in quality, presentation, and price. * Quick turnaround - Petite Perfection Bakery provide customers with a quick turnaround for pick up or delivery on custom cupcake orders. * Large selection - The bakery offers a larger variety of cake flavors, icings and toppings customers can choose from. Weaknesses * Lack of brand awareness - Petite Perfection Bakery's has no market presence or reputation whereas other local bakeries have strong reputations. Extensive efforts will be put forth in order to address this issue. * Limited marketing budget Since this is a startup company funds are limited due to slow business. This will limit how much can be spent on developing brand awareness. Affordable and effective marketing tools will be used to target potential customers. * Unreliable cash flow Cash flow will be unreliable in the early stages of business due to slow business and high costs. This may hinder Petite Perfection Bakery from offering the lowest prices or purchasing new technology that may increase production. Opportunities * Growing market - Growing market with a significant percentage of the target market still not aware that Petite Perfection Bakery exists. * Increased demand for cupcakes There is a growing trend for cupcakes. This gives the bakery an opportunity to capitalize on business beyond simply kids birthday parties. * Increased demand for special dietary needs There is a growing population of people that have special diets. Petite Perfection Bakery may benefit from offering gluten free and dairy free cupcakes.

Threats * Competitor Response - Competition from local bakeries that respond to Petite Perfection Bakery's superior offerings. * New Entry - Other cupcake specialty bakeries seeking to enter the Chestnut Hill area. * Economy - Continued economic uncertainty reducing customer's disposable income spent on nonessential purchases such as cupcakes. 2.3 Competition Petite Perfection Bakery has three competitors in the Chestnut Hill area. The first and most relevant competitor is Bredenbeck's Bakery & Ice Cream Parlor. Bredenbeck's Bakery & Ice Cream Parlor has a strong presence in Chestnut Hill. The bakery has been in the neighbor for thirty years. It serves cakes, cupcakes, pies, cookies and ice cream. Bredenbecks bakery is best known for its elaborate custom cakes. They have received recognition from bridal magazines and national television shows for their wedding cakes. While Bredenbecks bakery sells cupcakes, they do not specialize in them. They produce cupcakes on a small scale. Its website indicates it has been experiencing growth in its cupcake business. Even though it is clear Bredenbecks bakery is starting to shift its attention to cupcakes, Petite Perfection Bakery still has a great chance to compete. Bredenbecks bakery only offers limited cake and icing flavors. Petite Perfection Bakery offers a larger selection. The second competitor is The Night Kitchen. This bakery has been in the neighborhood for twelve years. The Night Kitchen serves specialty cakes, cupcakes, brownies, cookies, muffins, scones and tarts. Like Bredenbeck's Bakery & Ice Cream Parlor, The Night Kitchen has been featured in magazines and national television programs. Its main focus of business is specialty cakes. However, it has a caf where they serve the other products. The Night Kitchen currently does not focus much of it attention to cupcakes. It only serves four flavors. Its website does not provide any pictures of any specialty cupcakes in its gallery of past orders on showcase. As in the case of Bredenbeck, Petite Perfection Bakerys large selection of flavors will be the advantage over The Night Kitchen. The last competitor is Metropolitan Bakery. This bakery has five locations in Philadelphia, including the one in Chestnut Hill. This location has been there for several years. Metropolitan Bakery serves in bread, granola, brownies, traditional cakes such as pound, carrot and coffee, cookies and cupcakes. Its main focus is bread. And like The Night Kitchen, the cupcakes are served on the caf menu. They put not extra focus on cupcakes as a specialty. This lack of focus will give Petite Perfection Bakery an advantage.

2.4 Product (Service) Offering Petite Perfection Bakery sells sophisticated cupcakes and other pastry products paired with outstanding customer service in a cozy atmosphere. Petite Perfection Bakery specializes in over thirty different varieties of cupcakes. The bakery also serves brownies, cookies, and coffee. Customers can place custom orders for cupcakes. Or they can dine-in and eat their cupcake with a cup of coffee. The bakery freshly bakes its cupcakes and pastry products at all times during business hours. Petite Perfection Bakery prepares six to eight moderate batches during the day to assure fresh baked goods are always available. Petite Perfection Bakery delivers a unique blend of artist design and delicious taste. The bakery is dedicated to collaborating with clients to create unique, elegant and delectable cupcake displays and towers for any event. It doesnt matter if its a birthday party, bridal shower, baby sho wer, christening, wedding or other special occasion, Petite Perfection Bakery provides the desserts clients need with the quality they deserve. Petite Perfection Bakery uses fresh, local produce, high quality ingredients, and takes no shortcuts with its products to enable the best quality products. Petite Perfection Bakerys philosophy is to produce cupcakes and other pastry products that will bring consistent quality, competitive prices, and product satisfaction to its customers. Management personally samples each of the bakerys products that it offers to ensure the quality it guarantees. Petite Perfection Bakery provides its customers with an extensive menu offering of cupcakes and other pastry products. Typically bakeries produce cakes and cupcakes that are bland, traditional, and far from innovative. Petite Perfection Bakery is meeting the market need of a wider menu offering for events that require upscale and sophisticated cupcake designs. Petite Perfection Bakery seeks to fulfill the following benefits that are important to their customers. * Selection: A large selection of cupcake flavors. * Accessibility: Petite Perfection Bakery bakes all orders on the premises and delivers to events within the greater Philadelphia metropolitan area. * Customer Service: Customers will be experience unmatched service. * Competitive Pricing: All of the offerings will be competitive relative to the competitors in the Chestnut Hill area. 2.5 Keys to Success Keys to success for Petite Perfection Bakery will include:

* Providing the finest quality products with exceptional customer service. This will allow Petite Perfection Bakery to create and maintain the highest level of customer satisfaction. This will generate repeat business. * Competitive pricing. This will allow Petite Perfection Bakery to attract customers that may have otherwise purchased from the competitors. * The creation of unique, innovative, upscale cupcake displays and towers. This will differentiate Petite Perfection Bakery from other local bakeries. * Continue to build brand awareness. This will allow Petite Perfection Bakery to become the preferred bakery over its competitor. Also, it makes marketing efforts easier for future stores. 2.6 Critical Issues Petite Perfection Bakerys distribution channel will be a retail location. Customers will purchase and place orders for their cupcakes and other pastry products at the store location in Chestnut Hill. For the most part, it is the customer's responsibility to acquire products by their own means. Petite Perfection Bakery will make deliveries for special orders at an additional cost to the customer. To begin, the bakery will operate one delivery truck for special deliveries between scheduled delivery days. Deliveries will be made Monday through Saturday, and will be strategically routed to minimize travel time and fuel costs. As the number of accounts increase, the need for additional delivery trucks will continue to be evaluated. 3.0 Marketing Strategy Petite Perfection Bakerys marketing strategy is based on becoming the bakery of choice for people looking for sophisticated cupcake designs, innovative flavors, unique dessert displays and high quality ingredients to create an unforgettable impression at special events. Our market strategy will be to offer our basic products. Petite Perfection Bakery will focus on cupcakes and will not branch into other products until it experiences enough growth. The bakery will build product awareness. Heavy sales promotions will be implemented to entice potential consumers. Our marketing strategy is based on superior performance in the following areas: * Product selection. * Product quality. * Customer service.

The marketing strategy will create brand awareness, interest and demand from its target market from what Petite Perfection Bakery offers its customers. 3.1 Mission Petite Perfection Bakerys mission is to become the premier bakery of Chestnut Hill known for serving the highest quality baked goods. 3.2 Market Objectives * Increase new customers from referral and word of mouth to be 20% of overall new customers per month. This should be achieved within a year. * Increase the percentage of customers who are returning customers to 10% within six months. * Increase the number of new customers by 85 per month. This should be achieved within two years. * Increase customer awareness of our brand to 75% in our target market within one year. 3.3 Financial Objectives * Generate an average of $1,000 of sales per business each month by the end of 2012. * Increase marketing budget by 50% over the next two years. * Reduce existing balance on credit line by a minimum of $5,000 within six months. 3.4 Target Market Target Market Profile Geographics: * Lives within the ZIP codes 19118 and 19119. Demographics: * Single and married women. * Between the ages 25 - 50. * Condominium or home owner.

* Education experiences beyond high school. * Earning a combined annual family income of $90,000 or greater. Psychographics: * Status seekers. * Love the finer things in life. * Busy professionals with little time to cook/bake for their family. * Excited about accepting and using innovative ideas and products. * Consistent Web users. Prefer the Internet over magazines and newspapers for information they trust. Behaviors: Benefits Sought * Social standing/good looking * Quality/premium price * Convenient Petite Perfection Bakerys target market is divided into two different segments: Country Club Women and Young Professional Women. They represent groups of people sharing similar behavior patterns and reasons for frequenting Petite Perfection Bakery. Country Club Women - These women are 35 to 50. They are married. They have a combined income of at least $100,000 per year. They own at least one home or condo. They are socially active and often entertain in and outside of the home. Giving events on a grand scale is priority. They spend extra for custom details and menus to appear unique and a cut above the rest. They may place a custom order for their next dinner party or major event. Young Professional Women These women are 25 to 35. They are single. They earn about $50,000 per year. The social scene is important to them and they communicate a successful image. They celebrate major accomplishments and milestones. They spend big when they have received a promotion, turned thirty, got engaged etc. They make customer orders when celebrating special

occasions such as birthdays, anniversaries, graduations etc., and they desire sumptuous desserts and trendy designs. 3.5 Positioning Petite Perfection Bakery will position itself as a premier local bakery of choice for the person creating a personalized and unique impression at special events. Petite Perfection Bakery is the best local source for selection and price points of the cupcakes, customer focused service and a variety of other pastry products. Customers will be impressed with, and return for, the great selection, value pricing and unmatched customer service. Unlike Bredenbecks, The Night Kitchen and Metropolitan Bakery, Petite Perfection Bakery encourages clients creative input and ideas in the cake designing process. Clients do not simply pick from cookie cutter cupcake designs from a book. 3.6 Strategies The objective is to position Petite Perfection Bakery as the premier bakery in the Chestnut Hill neighborhood, commanding a majority of the market share within three years. The marketing strategy will seek to first create visibility and awareness regarding the products offered. Also, the bakery will set out to develop the customer base, establish connections with target markets and work toward building customer loyalty and referrals. In order to achieve its objective, Petite Perfection Bakery will implement market-challenger strategies. As a market challenger, the bakery can gain ground against the market leader, Bredenbecks. The plan is to use marketing efforts to attack the competitor in the areas in which they are not serving the market well. The general attack strategy that will be used is the flank attack. The bakery has identified the segment of the market where Bredenbecks, as well as other competitors, is underperforming. This segment is the decorative cupcake. Cupcakes are no longer for kids parties. They are trendy and more and more people ordering cupcakes for upscale events. Petite Perfection Bakerys competitors are neglecting to offer creative designs and assorted flavors consumers in this segment because they are focusing on their cake clientele. The bakery plans to execute this attack by offering clients a superior product, innovative designs, and wider variety of flavors. 3.7 Marketing Mix Petite Perfection Bakery marketing mix is comprised of the following approaches to Product, Promotion, Place and Price. Product

Our products enable our customers to purchase cupcakes with a unique blend of artist design and delicious tastes made from the highest quality ingredients and deliver a touch of sophistication with any event. They will be able to collaborate with cake designers to create unique, elegant and delectable cupcake displays for their event. They will not be able to do this in the same way through any other resource. Also, the bakery will offer exceptional, one-of-a-kind customer service. This is an attribute that cannot be duplicated by any competitor. Promotion First, the bakery will distribute its most popular flavored cupcakes at the Chestnut Hill farmers market on a busy Saturday. For two hours, free cupcakes will be given to shoppers in the farmers market. They will be greeted smiles from the employees. Also, refrigerator magnets and brochures will be on the tables for customers to take with them. On the magnets and brochures, it will give store information including hours, location, website and the variety of flavors the bakery offers. Not only will the bakery give samples to shoppers at the farmers market, but the bakery will make special cupcakes for the local businesses and restaurants. Management will personally deliver the cupcakes to the businesses to become familiar with the neighboring businesses and begin building relationships. Advertisements are another way Petite Perfection Bakery will promote its products. Advertising offers various methods and channels to create brand awareness. The ad will feature simple, elegantly designed cupcakes. One ad will read Good Things Come in Small Packages. Another ad will read A Little Taste of Heaven. The cupcakes will be decorated and staged to enhance the appearance of the cupcakes to grab readers attention. Bright colors, intricate designs and large scale displays will be tailored to the magazine, website or newspaper it is being featured in. Petite Perfection Bakery will advertise through print media such as The Chestnut Hill Local and Philadelphia Magazine. The Chestnut Hill Local is a weekly local newspaper that offers news and information from a local perspective. It covers local events, news, restaurants, arts and cultural, etc. This will help the bakery inform local residents of our existence and specials. In addition to the local paper, Philadelphia Magazine will be good exposure. While Philadelphia Magazine covers the entire city, it also releases food guides and special editions dedicated to restaurants, food and weddings. These guides and special editions are read my foodies and people willing to pay a premium to eat at the best restaurants and bakeries. Both The Chestnut Hill Local and Philadelphia Magazine have highly frequented websites. Along with these websites, and are other popular websites that can help with the bakerys exposure. All of

these websites review restaurants and bakeries. People visiting these sites are looking for more than chain restaurants and supermarket bakeries. Considering our best sales in the future will come from our current customer base, the bakery will put efforts into leveraging its existing customer base. The bakery will develop a quarterly newsletter for its customers. The newsletter will allow the bakery to keep in touch with its customers regularly. The newsletter will announce new flavors, special promotions and customer news. The newsletter will be on the stores website as well as in print at the store. Along with the newsletter, the bakery will offer discounts for repeat customers. For the clients that come to the bakery for a special treat or small cupcake orders, the bakery will offer a frequent buyer card. If the client buys 10 cupcakes, he/she will get the 11th free. For large or specialty order, the bakery will give 5% off the next order. This should encourage clients to come back. Finally, the bakerys staff will provide unmatched customer service. The staff will be knowledgeable, pleasant and eager to help customers with their orders. Petite Perfection Bakery has $5,000 budgeted for marketing activities. Below is how these funds will be allocated: Budget Source | Size | Frequency | Cost | Chowhound | 728 x 90 (Leader Board) | 6 Months (Jan., Mar., May, Jul., Sep., Nov) | 6 Months @ $250 for 16,667 Impressions = $1,500 | Chestnut Hill Local | 1/2 page for 52 weeks | Weekly | $348 | Philadelphia Magazine | 728 x 90 (Leader Board) | 6 Months (Feb., Apr., Jun., Aug., Oct., Dec.) | 6 Months @ $17 per impression (Buy 15)= $1,530 | Chestnut Hill Patch | 728 x 90 (Leader Board) | Three Months | 3 Months @ $200 for 15000 Impressions = $600 | Bakery's Own Website | 4 Pages | 365 Days | $1,000 | Place Petite Perfection Bakery in the Chestnut Hill section of Philadelphia. Chestnut Hill is an eclectic neighborhood filled with coffee shops, specialty boutiques, bakeries, antique stores, art galleries and restaurants. Chestnut Hill has a strong sense of community. It offers a small town feel in the big city. The shop is located on the main of Chestnut Hill. It is on the 8500 Block of Germantown Avenue.

The bakery is a brick store front shop. It is immediately surrounded by a TD Bank, Sovereign Bank, Starbucks, a printing shop and an antique shop. Most of the shopping traffic happens about two blocks down from this location. The bakery is at the lower end of the main street. However, it is still located in a great position. Petite Perfection Bakery will use a direct-to-consumer distribution model. All products are distributed through the bakery. The store does receive phone orders from established customers and we will be developing the website to support cupcake orders. Price The bakery intends to charge prices that are, on average, 5% higher than some of its competitors. This is necessary because Petite Perfection Bakery is a new baker, therefore the costs are high. Also, it is a smaller scale bakery and it purchases higher quality ingredients. It is our belief that customers will accept these higher prices because of the value they place on high quality foods. In addition to quality, the value is determined based on the unique customization, convenience, and timeliness in acquiring the product. Certain customers who value high quality desserts and unique designs will accept that extra expense and consider it the price of eating a good food. Price List shown below: Price List | | Minis are | $1.50 each | Classic Cupcakes | $2.75 each per dozen | All Specialty Cupcakes | $3.00 | Save $2.00 on every dozen | Custom Orders | Special pricing specific to request | Pie | $2 per slice. $15 whole pie | Cheesecake | $3.5 per slice. $25 whole cake | Fruit Tart | $20 | Brownies | 2 per square | 3.8 Marketing Research

Initial Question Results The staff notes customer responses to the "How did you hear about us?" question. The bakery will attempt to compare customer response information with our advertising and promotional activities and referral-generation programs. Store Suggestion Box The store suggestion box is another method to gain additional information from customers. Some of the most helpful questions are: * What suggestion do you have to improve the store? * Why did you visit the store today? * What other products or services would you like to have available in the store? Competitive Shopping In order to get a good idea of what the competitors are doing, management will continually shop other competing bakeries. They will visit each bakery in our market at least once each quarter for competitive information, merchandising and buying insight. 4.0 Controls The purpose Petite Perfection Bakerys marketing plan is to serve as a guide for the organization. The following areas will be monitored to gauge performance: * Revenue: both monthly and annually. * Expenses: both monthly and annually. * Dependency on the credit line to satisfy cash requirements. * Number of cupcakes purchased and orders placed. * Feedback and comments received from customers. * Repeat customers. If Petite Perfection Bakery fails in any of these areas, it will need to re-evaluate our business model. 4.1 Implementation

The following identifies the key activities that are critical to our marketing plan. It is important to accomplish each one on time and on budget. Milestone | Estimated Time | Secure SBA Loan | 1 Year | Identify and Lease Building | 10 Months | Obtain Business Privilege License | 6 Months | Obtain Food License & Food Safety Certification | 5 Months | Purchase Kitchen Equipment & Other Bakery Equipment | 4 Months | Set Up Bakery | 3 Months | Purchase Inventory | 2 Months | Hire and Train Staff | 6 Weeks | Advertise Opening | 4 Weeks | Send Invitations | 2 Weeks | Grand Opening | Today | 4.2 Marketing Organization Tiana Young, the owner, is the only person responsible for marketing activities. She does depend on some outside resources for web design and graphic design. 4.3 Contingency Planning Difficulties and Risks * Inability to generate enough demand as expected. * Failure to create brand awareness. * Overly aggressive and debilitating actions by competitors. * A parallel entry by a new competitor.

Worst case risks might include: * Determining the business cannot support itself on an ongoing basis. * Having to liquidate the inventory to pay back the bank loan. * Losing personal assets of the owner used for collateral. * Dealing with the financial, business, and personal devastation of the store's failure. 5.0 Conclusion Based on the abovementioned analysis, Petite Perfection Bakery appears to be a potentially profitable and innovative product with a strong outlook for market share presence and segment growth opportunity. Upon implementation of the marketing plan, , Petite Perfection Bakery will gain increased market shares and claim its targeted situational position of market leader in the designer cupcake segment as well as establish a long-standing consumer recognition for innovative and quality in the market.