1.0 Market Research & Analysis
1.1 Industry analysis
1.1.1 Threat of substitute
Zaza’s Homemade will face threat of substitutes because many substitutes exist for bakery products such as rice, breakfast cereals, potatoes and many more. Individuals also can make all of the baked goods they want at home. Convenience, price and taste are really important to keep individuals switching to a substitute or baking what they need at home.
1.1.2 Threat of new entrance
Threat of new entrance for bakery industry is low. Individual or small businesses can enter this industry with a moderately small amount of capital. Economies of scale are beneficial, but are not required for industry to be success. The leader’s ability to acquire sufficient distribution channels to cover operating costs and their ability to build up brand recognition and loyalty are the two main factors of a new company’s to be success. Strong brand and name are important to maintain our business in industry. Our unique selling point is carrot cheese cake. Carrot cheese cake which is one of the products of Zaza’s Bakery that involve capital intensive because we only use premium raw materials and special shape to make and packaging the carrot cheese cake. We always maintain our ingredients and quality to ensure our loyal customers repeat order for this particular product.
1.1.3 Rivalry existing firms
Nowadays, there are increasingly growing for bakery industry as we can see that many bakers in Selangor. The number of competitors is large because this business is very attractive. There are many bakers that can provide similar products as Zaza’s Bakery such as carrot cheese cake, nutella cheese pie, blueberry cheese tart, cereal cookies, breads and many more. In bakeries industry, the competition among the bakers and the price competition are very important to attract the customers. The bakers compete each other to produce new recipes and of course new product in their business to attract new customers and also to maintain their regular customers. Besides that, in this business we also compete with differentiation, quality and also key relationships with our customers. There are several businesses that would be considered as our competitors such as Hidayah Bakery & Frozen Food, The Baker’s Cottage, The Pistachios, The Kitchen Guardian, Sabrina Bakery, and many more. Our competitors have been successful because of the widespread different locations of each business and also because of such a high demand and request for cakes and cookies. The Kitchen Guardian would be our top competitor in this industry because the owner is a famous baker and they also have a great location which is in Taman Melawati and offer a variety of products that keep their customers coming back. Each bakery has a different niche market. Example; Sabrina Bakery was cover for Petaling Jaya area. But for Zaza’s Homemade as an extra service to our customers we offer and make free delivery in Gombak area. In term of the innovation of the product that we want to suit the niche market, we offer and provide affordable price for students. We keep maintain the ingredients and quality for each product but reduce the size and quantity to make the price lower. This is a part of awareness that our product is competitive in the market.
1.1.4 Bargaining power of suppliers
In bakery industry, suppliers do not have much negotiating power due to the well-developed markets for their products and the common nature of what they are selling. In the other words, the suppliers cannot easily mark up the price by themselves because their competitors also selling the same product as them. What makes the different between the suppliers is the price that they offer for the same raw materials. Some bakeries can be affected by price fluctuates of the raw inputs. The price of the cake to be expensive because of higher raw material costs. In Selangor there are many suppliers of bakery such as Bake Well, House of Ingredients, Bake with Yen, Bagus and many more. What make they different is the price that they offer for the same product. Zaza’s Homemade always keep update and get the latest price of the raw materials that we used. We compare the prices and go for the lower prices that offer by the suppliers. Mostly the raw materials that we used, we bought from House of Ingredients because the prices were cheaper than other suppliers even though the raw materials were same.
1.1.5 Bargaining power of buyers
Due to a larger number of small bakeries that are all trying to find outlets to perhaps sell their products, the buyers of the bakery’s industry products are able to appropriate much of industry’s profit due. Hence, the buyers are able to command low prices and volume discounts. The profit is small because they want to keep putting the product together with competitors from the same industry. The buyers have a power to choose which bakers they want to purchase the cakes, cookies or bread based on the quality, taste, price, variety of products that offer to them and many more.