Competition in the Bakery Industry Essay

Excerpt from Essay :

James Baxter Company

Market analysis

Buyer Behavior


Suppliers and Intermediaries




Key environmental factors

Market analysis

The bakery industry is one of the industries driving and contributing to the stability of the global economy. Financial analysts report that, the financial growth of the industry is postulated to increase from the current $235 billion in the year 2010 to $130 billion in the year 2015. Some of the factors expected to fuel economic growth of the bakery industry include affordability of the bakery products, convenience, and health benefits associated with the baked products. Therefore, it is important for new entrants into the market such as James Baxter bakery to conduct market analysis to ensure its success and performance in the competitive marketplace full of established bakery industries (Cousins, Foskett, and Pennington, 2011).

Conducting market analysis will enable the James Baxter bakery to acquire vital information related to the prevailing opportunities, weakness of the existing companies and threats likely to affect its performance. This facilitates the segmentation of the targeted consumers and provides insight to the potential growth of the company. It also allows the new company to identify the consumer needs and the nature of bakery products highly demanded in the market. The analysis covers areas such as the purchasing habits of the consumers, commercial information about the targeted market, competitors' information, demographic and geographic information, and structural requirements to ensure success of the business (McDonald and Meldrum, 2013).

Buyer Behavior

Consumers have different purchasing habits depending on their taste and preference of the product. Social, cultural, psychological, and personal factors influence the purchasing behavior of consumers from a bakery. Social factors refer to behaviors that are socially acquired. Social classes within a society influence the purchasing behavior of the bakery products. The classes influence consumer values, lifestyles, buying behaviors and interests to a product provided by the company. People from the various social classes, the lower, middle, and upper social classes have different consumption patterns and desires towards the products provided by different bakeries.

Cultural trends such as the need for purchasing a product to amplify popularity and conform to the social pressures influence the buying behavior of the products provided by the bakery by the consumers. Consumers acquire their cultural preferences from their families and the social institutions that influence their wants, behavior, basic values, and perceptions towards a product. As such, James Baxter Bakery must consider the cultural factors affecting the consumption of the product by consumers in the target market (McDonald and Meldrum, 2013).

Psychological factors like motivation, learning, perception, attitudes, and beliefs influence the buying behavior of consumers. Motivation drives them to develop buying behavior as they act to satisfy the needs of the subconscious level. Perception refers to the process by which a consumer interprets information related to the product before buying it. Therefore, taking into consideration selective distortion, selective retention, and selective attention will influence the consumers to buy the product provided by James Baxter Company. Personal factors, including the preference to the product also affects their buying power. Consumers have mixed traits, sociability, ambition, charisma, autonomy, curiosity, and lifestyle that influence the buying behavior of the consumers (Ojugo, 2010).

Table 1: Overview of Buyer Behavior



Characteristics of consumers of baked goods


Factors embedded within the society one is brought up in Have varied norms, values, beliefs, behavior and perceptions


Factors created by the society socially constructed

Social classes -- High class

Social classes-middle class

Social classes-lower classes


Factors unique to an individual

Tastes, Preferences, Attitude, Lifestyles and behaviors


Factors that attract the consumer by making them feel attracted to the product



Perception and learning


Cousins, Foskett, and Pennington (2011) defined microenvironment as the environment that is mostly related to the firm. The environment does not have a full control over the business, and the business influences it. Unlike the macro-environment, which its impacts become apparent after a long period, the effects of the microenvironment become apparent immediately within the business. Therefore, this section covers the components of the microenvironment, the suppliers, intermediaries, publics, and competitors that will determine the performance of James Baxter Bakery (Dopson and Hayes, 2011).

The microenvironment of the James Baxter Bakery will consists of consumers, competitors, marketing intermediates, suppliers and the public. Consumers/customers are the real buyers of the products produced by James Baxter bakery thereby determining its performance. The suppliers will provide the necessary inputs, raw materials, and services to the company. The competitors will provide a basis for improving the quality of products provided by the company. The intermediary suppliers will help the company in marketing its products. The public will influence consumer perception of the products of the James Baxter Bakery (Fratamico, Annous, and Gunther, 2009).

Suppliers and Intermediaries

James Baxter Bakery will require suppliers of different products including baking equipment, baking products, and supplier of human resources required by the company. The company will require intermediaries such as the wholesalers, retailers, marketing agencies, distribution companies, agents, and value added resellers to facilitate marketing of the products produced by the company. However, intermediaries and suppliers might affect the company negatively by introducing unfair prices of the products produced by the company to the consumers. This decreases the productivity and consumer supply of the company. They also promote unhealthy competition between bakery companies. This occurs through the suppliers promoting the marketing of the company's product more than those of the companies promote (Weygandt, Kieso, and Kimmel, 2010).


The company will target all populations in the society. This includes the consumers from all the social classes: the top, middle, and low classes. The customers from the top class will promote the consumption of expensive baked products while the middle class consumers will increase the consumption of the average to expensive products. However, the low class consumers will promote the consumption of the cheap to average products produced by the company. Therefore, their buying behavior will affect the performance and productivity of the company (Ojugo, 2010).


The company will face stiff competition from Pie Face, Bakers Delight, and Brumby's Michel's Patisseries Companies. These companies will provide direct competition to the company. Other companies outside Adelaide will provide indirect competition to the company. These companies provide closely related products and services including high quality foods and coffee and pie to its consumers. These companies have excellent positioning strategies. Therefore, the company must adopt the most effective strategies to enable it acquire similar productivity and performance as its competitors. Among the strategies used by these companies, include product differentiation, product promotional strategies such as reduced pricing, market segmentation, multiple channels of product distribution, foreign direct investment, and use of the social networks to promote marketing of their products. As such, the James Baxter Company will have to invest most of its resources to achieve the desired positioning in the market (McDonald and Meldrum, 2013).


Jones, Lane, and Schulte (2010) define macro-environment as factors within the external environment that influences the performance of an organization/company. The components of the external environment affect planning, implementation, monitoring, and outcome of a designed strategy in an organization. Therefore, this section will describe some of the macro-environmental factors that will affect the performance of the company (Ionescu-Somers and Steger, 2008).

Macro-environmental factors include demographic, economic, technological, political, legal, social, and natural factors. Demographic factors like the population size will influence the buying of the products provided by the company. The economic recession will affect the stability of the company while social factors like social classes will affect the consumer purchasing power. Natural factors, including floods, legal factors like legislation, and technological factors such as the adoption of new technology will influence the overall performance and productivity of the company (Fratamico, Annous, and Gunther, 2009).

Key environmental factors

In summary,…

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