Channel management Group assignment 2012

Channels Management
MKT 542
Group Assignment
Lecturer :
INTRODUCTION........................................................................... 3
Product Choose- Cupcake............................................................ 4
The Segmentation of Consumer Market ................................... 4-5
The Partnering Involves. ............................................................... 6
Marketing Channel......................................................................... 6
Business Transporter..................................................................... 7
Existing Competitors...................................................................... 7
The Pros Statement of the Partnerships.................................... 8-9
The Cons Statement of the Partnerships .................................... 10
External Uncontrollable Factors............................................. 11-15
CONCLUSION............................................................................ 16
REFERENCES............................................................................ 17
A marketing channel is ‘an organized network of agencies and institutions which, in combination, perform all the activities required to link producers with users to accomplish the marketing task’ (Bennett 1988). This channel must be designed such that it delivers a level of value to the customer that creates a sustainable competitive advantage for the supply chain. This ‘value’ can take many forms depending upon the requirements of the customer. The relationship between the value of the product and the shopping experience is particularly important and the skill of the value chain is in the positioning of the total offer in a profitable way.
Another key management system that has been one of the most popular mechanisms for expanding the distribution network is partnering with business that offer products or services to the same market segment. We have choose cupcake business and made Secret Recipes company as our partnership to distribute our products and at the same time build-up our relationships, knowledge, skill and experience to further our economic goals.
Product Chosen – Cupcake
It’s about Test. It’s about Texture!!
Indulge and enjoy a piece of heaven today!!
The Segmentation of Consumer Market
Market segmentation is one of the steps that go into defining and targeting specific markets. It is the process of dividing a market into a distinct group of buyers that require different products or marketing mixes whenever we partnering with secret recipe store.
A key factor to success in today's market place is finding subtle differences to give a business the marketing edge. Businesses that target specialty markets will promote its products and services more effectively than a business aiming at the "average" customer.
Opportunities in marketing increase when segmented groups of clients and customers with varying needs and wants are recognized. Markets can be segmented or targeted using a variety of factor. The bases for segmenting consumer markets include:
  • Demographic bases (age, family size, life cycle, occupation)
  • Geographic bases (states, regions, countries)
  • Behavior bases (product knowledge, usage, attitudes, responses)
  • Psychographic bases (lifestyle, values, personality)
A business must analyze the needs and wants of different market segments before determining their own niche. To be effective in market segmentation we will keep the following things in our marketing channels. He we included that all Malaysian citizens with 27 million people are our future target market. We understand that Malaysian people needs and wants to eat variety of foods and cakes for their substitute preference foods.
Segments or target markets should be accessible to the business. Here, we chosen secret recipe for our business partner because its outlet accessible to the business area and located at shopping mall such as Subang Parade, KLCC etc.
Each segmented group must be large enough to provide a solid customer base. This criteria has been major consideration for choosing marketing channels for our cupcake product. Each segmented group requires a separate marketing plan. Demographic and behavior bases as influences factor for consumers demand.
Large companies segment their markets by conducting extensive market research projects. This research is often too expensive for small businesses to invest in, but there are alternative ways for to a small business to segment their markets.
A small business can do the following to gain knowledge and information on how to segment their markets:
  1. Use secondary date resources and qualitative research. We use the following resources for external secondary data:
    • Trade and association publications and experts
    • Basic research publications
    • External measurement services
  2. Conduct informal factor and cluster analysis by:
    • Watching key competitors marketing efforts and copying them.
    • Talking to key trade buyers about new product introductions
    • Conducting needs analysis from qualitative research with individuals and groups.
There are many reasons for dividing marketing into smaller segments. Any time we suspect there are significant, measurable differences in our market we should consider market segmentation. By doing so, we will make marketing easier and discover niche markets and become more efficient with your marketing resources.
The Partnering Involves
Chilled Transporter
Marketing Channels
Secret Recipe is our best business partner for marketing and distributing our product to all consumers. Secret recipe has been well established with variety of foods and able to provide convenience environment for our cupcake customers.
Business Transporter
Yamato Ta-q-bin as our company transporter by providing chilled transporter storage. Delivery quality and service are most important factor in order to choose Japanese transporter.
Existing Competitors
1) Humble Beginning Cupcake
2) Dunkin Donuts
3) Berry Cake House.
4) Cupcake Hill House
5) Cupcake
And cupcake business is booming. Recent data from market researchers TNS shows cupcake sales are overtaking flapjacks to rival biscuit sales, with a 22% increase over the past year to £37m. Cupcake was the fastest rising recipe search on Google last year.
The Pros Statement
Secret Recipes successfully transformed a small business into a market leader within a short period of time. Secret Recipe has established a firm presence in Asia, including Malaysia, Singapore, Philippines, Indonesia, Thailand and Pakistan. A large variety of cakes and fusion of foods that people love to enjoy it. In a period of seven years, Secret Recipe has expanded by over 100 cafes throughout the region. Secret Recipe has won numerous awards across the region for its authentic food recipes and fine quality cakes including:
•“Best Cheesecake Award”
• “Most Original Chocolate Award”
• “Best Lamb Stew Award”
• “Malaysia’s Best Local Restaurant Chain”
• “Indonesian’s Best Restaurant Award”
• “Singapore’s Excellent Food Award”
• “Best Brand Food & Beverage Café – The Brand Laureate Asia Pacific”
• “Best Restaurant Award – Philippines Talter”
• “Best Casual Dining Restaurant of the Year – Hospitality Asia Platinum Awards”
Secret Recipe offers customers a warm and friendly ambiance in a trend setting environment. In line with Secret Recipe’s lifestyle café concept, the cafe features the theme of fresh and simplicity chic interior. The interior also presents an interlude of vibrant splashes of dramatic colours with plush sofas and arty seats that liven up the ambiance and adding on to the cosmopolitan characteristics of the cafe. Customers may look forward to a pleasant dining experience in a modern in-trend set up. The café concept provides a location for birthday and celebration parties, private functions or business lunch functions.
Secret Recipe brand and engrave a good brand impression in the hearts of Malaysia population, they strive to adhere to strict self regulation and control on the food and service standards and quality that provided to customers.
It is everything they do. Quality is a word they used to describe their food and service. It is a philosophy that everything they do. It is always the result of high standards, sincere effort and skilful execution.
They are dedicated to maximize the level of performance and productivity in all areas of the business. To drive success of the company, they have set aggressive goals, focus on results and an obligation to earn a profit in order to remain in the business and growth.
It is a differentiated and verified concept with broad consumer appeal. This uncommon positioning and strong brand image remain part of the strongest competitive advantage.
It is an effort secret recipe put in building positive customer relationship, transcend ingenuity, hard work and passion for service excellence.
Result Oriented
It is the managing performance within the company and through customer feedback is sparingly important to measure the growth of the company. They continuously measure the performance and set targets by benchmarking to stay competitive and to move ahead for growth.
The Cons Statement
Partnerships do come with their share of disadvantages as well. Working with another individual who has control of the bakery can cause unnecessary stresses and conflicts when determining the bakery's future. Some differences between partners can become so severe that it destroys the business relationship and even the bakery itself. Other disadvantages to partnerships include:
Conflict with partners. While collaborating with partners can be a great advantage to a small business owner, having to actually run a business from day to day with one or more partners can be a nightmare. First of all, we have to give up absolute control of the business and learn to compromise. And when big decisions have to be made, such as whether and how to expand the business, partners often disagree on the best course and are left with a potentially explosive situation. The best way to deal with such predicaments is to anticipate them by drawing up a partnership agreement that details how such disagreements will be dealt with.
Authority of partners. When one partner signs a contract, each of the other partners is legally bound to fulfill it. Even if a clause in the partnership agreement dictates that each partner must inform the other partners before any such deals are made, all of the partners are still responsible if the other party in the contract was not aware of such a stipulation in the partnership agreement.
Unlimited liability . Because of the way partnerships are filed, all liabilities fall on the shoulders of the partners. So if the business fails, we have the potential to lose it all. . The primary reason many businesses choose to incorporate or form limited liability companies is to protect the owners from the unlimited liability that is the main drawback of partnerships or sole proprietorships.
Changing partners or the partner agreement can be difficult, A partnership is generally a convenient way for two or more entrepreneurs start a bakery. For those without much start-up capital or equity, or who are concerned with overhead costs, a partnership may be a good option. However, starting a business is a stressful process, and individuals need to realize that although working with others can relieve stress, it can also create stress. Potential bakery owners should deeply consider whether or not they will be able to work with other individuals closely before entering into a partnership.
External Environment
The external uncontrollable factors of Secret Recipe or the current conditions of the food-service retail industry in Malaysia. Due to the fact that the performance is the primary objective of the company, and application of IT is the primary strategy, it is commonly accepted that the structure and the process of the decision-making is affected by different environmental complexities and volatilities. Thus, the alignment of the different strategies of organizations with the requirements of their given environment helps to do better than those organizations that fail to get the said alignment. This is because of the fact that environmental scanning helps an organization to discover more regarding the different opportunities for taking competitive advantage as well as threats to its overall survival.
The process of environmental scanning focuses on the thorough and comprehensive study of the international, macro as well as market environment, but focuses more on the relationship between the structural and dynamic characteristics of each of the environmental factors.
In order to analyze the macro-environment aspects of factors that are considered as uncontrollable and inevitable for Secret Recipe, including political changes, demographics, economic status as well as social and technological changes that has an impact to the plan of the company to apply new technology, PEST analysis is used. PEST stands for Political, Economic, Social and Technological. The consumer food service industry in Malaysia is considered as one of the most successful industries, the following are the different factors that had affected the entire performance of the industry:
Political factors can have a direct or indirect effect on the way certain operates. This is because of the fact that the decisions that are being made by the government affect the operations of units of the company. First is the action or policy of the government towards investing in the country, primarily by foreign Multinational companies. In 2003, 100% of the foreign equity holding is allowed for all investments in new projects and investments regarding the process of expansion or diversification of project by the existing company. The said supportive effort of action of the government enables many players in the food-service industry to develop and grow.
In addition, the government also assertively launches its Visit Malaysia Year 2007 campaign in order to improve its tourism industry. The said action was important because of the fact that food service is dependent in tourism, because tourism will help to increase the number of people in the country, thus increasing the target market for Secret Recipe.
All businesses, regardless of which industry they belong, are affected by different changes and trends in the national and international economy. The improving economy of Malaysia offers opportunity for all of the businesses in the country; this is because it can affect the entire buying behavior of the citizens. Malaysia is considered as one of the most affluent nations in Asia, it had reported a GDP per-capita of about US$6,807 in 2007. As a result, the country is already considered as an upper middle income country, and ranked by the World Bank as the 8th wealthiest nation in the East Asia. In 2007, the economy of the country grew by 6.3%, 5% in 2008, and expected to rise to 3.4% to 4% this 2009 (US Government, 2009).
Due to the said economic growth, together with the effort of the government to open its policy for foreign investors, expansion of different shopping malls and supermarkets or hypermarkets in the country is observable (2008). In addition, major retail outlets have seen a tremendous growth since 1980s, and there are about 400 such outlets in the country which include big players such as Dairy Farm Giant Retail, Jaya Jusco, Makro, Parkson, Carrefour and Tesco. Aside from that, after their debut in the 1990s, foreign-owned hypermarkets are gaining its popularity in Malaysia which attracts customers. As a result, in 2003 alone, there were 32 foreign-owned hypermarket outlets in the country. Thus, it creates an intensive competition.
The employment rate has a great impact on the buying behavior of the consumer. In the country, in 2003, the total unemployment rate was just 3.5%, or showing an almost full employment. The said event was due to improve labor market conditions. It also resulted to stronger purchasing power of the customer as well as higher standard of living, that’s why eating away from home is considered as part of life of Malaysian, which contributed to the greater competitive edge for the consumer foodservice market.
Social factor plays a very important factor in the decision of the consumers regarding what, where and when to buy something. Due to the improvement of the economy of Malaysia, the standard of living also heightened. This had affected the eating habit of the citizens. Eating is considered as an obsession for many Malaysians regardless of their races. It can be observe that eating out with family or friends are done much more regular by Malaysian than the Western countries.
Aside from that, due to the continuing expansion of shopping malls and supermarkets or hypermarkets in the country, consumers are spending more time in different retail outlets; thus, create opportunities for the food-service retail industry.
In terms of demographic, it is important to consider that Malaysia has a multi-racial population; most of them are multi-lingual that speaks two languages fluently, primarily English that is widely used in the business field. This is important because it can affect the decision of the company in hiring its employee that will serve the customers. Furthermore, it must also consider on the different products that they are offering.
As of now, more and more women are entering the global labor force, this has an impact to the food-service industry. In Malaysia, since 1995, the employment rate for women is 80.06%. In Malaysia, 60% of the entire population is Muslim, that’s why the demand for halal foods by Malaysian consumers is high. The Malaysian halal standards are recognized as stricter than those of other Islamic countries.
Another important aspect that is affecting different businesses in the food-service industry is the growing demand of the people for Wi-Fi. This is because of the changing lifestyles of the people, primarily those people who are busy in their work, and who wish to work, even while they are eating or in break.
Food-service industry is not only about the menu or the taste of the products or services, but it is also belong to the business groups that are in great need of fast, efficient and good quality service. Based on the different factors that have mentioned in the first part of the paper, it can be observed that the main challenges for the Secret Recipe focuses on maintaining the interests and loyalty of their customers despite of the massive number of competitors in the market. Thus, it also focus on maintaining competitive advantage which focuses on how the company will handle time pressure and will prevent any errors in the transactions that will drive the customers away.
Currently, we are now living in the world where in information is already considered as an important resource for a company or organization. Thus, integration of the different systems inside the organization is a vital aspect. Application of properly planned, implemented and maintained IT and IS in the entire process of any business, can help managers in the process of decision making. This is because the data that were gathered from the different transactions or in-flow or out-flow of data can be used in order to analyse the current performance of the company, and from that use it as a tool to decide regarding different matters or issues such as the products to be offered, the market that must be targeted. In general, it has a great influence in the process of developing the entire strategy of the company. Another important aspect is that IT or IS can help to improve the customer relationship, because it will help to improve the customer satisfaction. Customer satisfaction depends greatly on the accuracy and comprehensiveness of given or detailed information which concerns on their demand, preferences and tastes.
Another important aspect to consider is the growing popularity of the different wireless connections such as Wi-Fi and mobile Internet. This can help the company in the process of connecting to their consumers. First is that it will be important to offer their customers, primarily business customers an access to a free Wi-Fi connection that will serve as an additional attraction or marketing. Above all, due to the growing popularity of mobile Internet, it is a must for the company to establish a website that is compatible in the said technology.
Successful channel marketing programs depend on finding loyal partners whose businesses meet a related need yet is not in direct competition with our business. As part of Channel marketing strategy, we must assess our target market to find a partner that complements our business. Create a win-win situation as with our partners when we establish a channel management marketing system. As the channel marketing manager of our own business, make sure the marketing channel that we choose is willing to promote our business.

Channel partners have a power to make or break our business. That makes it even more important for us to build and maintain strong partnerships with all channel partners, including dealers, distributors, agents, resellers, and systems integrators.
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Partnership - advantage, benefits, Advantages of forming a partnership

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