Tutorial – Global Marketing

BreadTalk

BreadTalk, a bakery and confectioner, was founded in July 2000 in Singapore. It is,
however, not an ordinary bakery. It is often labelled as a “bread boutique” – turning
bread into an item that is differentiated in order to cater to different tastes. Different
types of bread in BreadTalk have exotic names such as “Crouching Tiger, Hidden
Bacon”, “Spice Girls”, “Down2earth” and so on. Each month, the company creates more
than ten new types of bread. In order to constantly generate streams of new bread,
BreadTalk has hired foreign chefs who have won awards for their baking skills.

BreadTalk targets consumers aged between 18 and 40 years and mainly students and
young working adults. Interestingly, the concept of “special” bread took off, and the
company expanded in Singapore and in Asia within a couple of years, moving towards
the vision of becoming the foremost international, trend-setting lifestyle bakery brand.
Brand, however, is not the only thing that makes BreadTalk stand out. The company is
also very particular about the stores’ settings. Outlets are characterised by a white
minimalist, space-age décor, coupled with the extensive use of see-through glass
panels, creating a bright-looking fluorescent lit, boutique-like feel that allows people
from outside the shop to look in. The set-up also allows customers to watch the chefs
make the bread from start to finish. The walls are splashed a clinical white, and the
bread and pastries are displayed on sleek white plastic and glass shelves.

The company is totally committed to quality, innovation and customer service. At the top
of BreadTalk’s agenda is creative innovation, which it maintains through training and
constant performance reviews. An example is its porkfloss bun, a hugely popular
invention that saw its sales soar over many months and received rave consumer
reviews. To ensure quality, it sourced and used the best quality Japanese made flour.
The company is diligent in protecting its intellectual creations: the brand is trademarked
in 30 countries and is a pending trademark in about 60 others.

Merely one and a half years after its inception, it was already running a profit of S$2
million. Since then, it has won many awards, including “Superbrands Singapore”,
Entrepreneur of the Year, Singapore’s Promising Brand, and the Design for Asia Award
(DFA). In addition, it has been ranked number 1 in Enterprise 50’s annually published
“e50 Startup” list of the most innovative start-up businesses in Singapore. Winning such
awards helps to strengthen BreadTalk’s brand both locally and internationally. This
allows the company to continue to franchise its way into global markets. Partly as a
result of these successes, it was listed on the Singapore Stock Exchange in 2003.

BreadTalk’s principal activities are carried out through two divisions: bakery operations
which relates to the manufacture and retail of all kinds of food, and confectionery
products, including franchising and restaurant operations, which relates to the
operation of food and drinks sales outlets, eating houses and restaurants.
BreadTalk is rapidly expanding its franchise network in the Asia Pacific region, currently
seeking compatible enterprises to be part of our growth. It has successfully regionalised
through a franchise network in the Asia Pacific region. It has forged partnerships
currently in Indonesia, China, Malaysia, the Philippines, Kuwait, Oman, India, Hong
Kong, Thailand, Korea, Vietnam, Bahrain, Saudi Arabia, Sri Lanka, Jordan, Lebanon
and Qatar. The only store in Taiwan was opened in May 2004 in Taipei. The offerings
include both original recipes from Singapore and some customised to local tastes. In
December 2006, it signed a master franchise agreement with Crustum Products Private
Limited of India to establish the BreadTalk bakery chain in the Indian subcontinent. The
agreement is to open 40 outlets in five years, first in major cities like New Delhi and
Mumbai, then stretching to the eastern city of Kolkata. The food and beverage in India is
estimated to be worth US$70 billion and is projected to grow at more than 15% in the
next few years. The market is very culturally diverse which provides BreakTalk the
opportunity to develop new recipes for the Indian market.

At the same time, the company announced plans to develop its franchise in China
where it will retain a direct operation pattern only in Shanghai and Beijing. BreadTalk
plans to open at least 500 franchised stores in China. It has already opened twenty
stores in Shanghai and has also set up regional franchising businesses in cities like
Nanjing, Hangzhou, Chongqing, Shenzhen, Chengdu and Guangzhou.

In 2010, the Group opened 94 new outlets, of which 38 are owned and 56 are
franchised. This brings the total number of outlets to 395. Bakery contributed 52.2% to
overall Group revenue, recording sales of S$158.1 million (including S$21.1 million from
franchise income), an increase of 22.2% from 2009.

BreadTalk has been cautious in its ventures abroad. It moved into new markets only
after getting professional advice and help from government agencies such as IE
Singapore which provides networking opportunities, intelligence, research and
groundwork. The company has been lucky to get partners who are proactive. The main
criteria for the selection of partners are dedication, drive and passion. At the same time,
it adopts both own-and-operate and franchising as complementary strategies. For more
familiar markets, it tends to rely on own-and-operate outlets. For less familiar markets, it
tends to rely on local partners so that the business can be tailored to local tastes. It
maintains 80% of its product range and adapts 20% to the local palate in these markets.
For example, BreadTalk used halal mixes and created new recipes at its Kuwaiti outlet.
As Kuwaitis have a sweet tooth, the company created a range of mini pastries and
packed them in a specially designed gift box. Such a customised approach has proven
to be successful.

(a) BreadTalk experienced phenomenal growth and success soon after it started
operations. From the case, identify any six (6) reasons that could explain its
success.
1: it managed to become the trend setting lifestyle bakery brand, allowing it to stand out
against it competitors.
2. it manages to increase its consumer base through innovative methods and breads

3. It strives to expand its operations and reputation through franchising and restaurant
operations, especially to the Asia regions.

4. It seeks professional advice and is very cautious, allowing them to minimise the risks
involved.

5. Professional team to lead the company, such as the partners.

6. Customised approach to retain and attract customers

(b) Discuss the criteria that you would use to assess whether BreadTalk could be
considered as a “Multi-National Enterprise” (MNE). Based on these criteria, do you
think BreadTalk is a “MNE”?

The criteria would be whether they operate their services in 2 or more countries
other than their home country. Therefore yes.

(c) The task of international marketers is to plan, organize, develop and implement
strategies that will ensure a long-term competitive advantage and sustainability
for the company. Imagine yourself as the Marketing Manager of BreadTalk.
Suggest six (6) ways to ensure that the business would remain profitable and
sustainable
1: ensure that they are able to continue to innovate and cater to the ever
changing tastes and preferences
2. have a consistent management within the company to help push the company
3. A powerful brand which continues to earn reputation and rewards known
around the world.
4. ability to retain customers by heeding feedback and investing on R&D
5. Repeatable sales through increased productivity levels
6. Operational efficiencies and reducing cost and productivity increases