Pasta Tree is the sole fresh and nutritious pasta providers in the market of Springfield. The owner of the company Jill Forman and John Wingate produced their first pasta in hteir kitchen for their part-time catering business. The freshness of the products delivered by the company worked as a promoter and helped them to gain customer loyalty in the market, which ultimately led them to directly sell their products under the name of Pasta Tree. This helped the company to increase their sales by 15% every year. The primary objectives of the company are to maintain the quality and price, while meeting the increased customers demand. This led the company to plan for expanding their business in the supermarkets and grocery stores of the city. However, there are various factors that will play active role in regulating the quality and value of the products. Detailed review of the expansion plan is provided in the following section of the report.
The company seeks to expand their business by reaching out the supermarkets and small grocery stores. However, it is evidenced that the large supermarkets in the market is constantly losing their market share to the small store in the locality due to the product range offered in the small stores. However, the products offered by Pasta Tree are likely to get attention in both their fields due to the perceived value of the products. The company delivers a range of fresh pasta to their customers in affordable price that made them to build strong customer loyalty. This will obviously provide the company a grace in the plan of expanding their business in the supermarket chain and the small store. The range includes Fettuccine, Linguini, Spaghettini, Spinach linguini, tomato fettuccine, tricolor fusilli, next Mexico Chile linguini, black linguini, basil linguini, cayenne tagliolini and black and whiyte spaghettini. However, the idea of expansion of these products in the super markets and grocery might back fire on the company as these products offered by the company are to be served right after the preparation to maintain the freshness as promised in their mission and vision statement. This expansion is likely to reduce the quality of the products, which in turn will make them lose the perceived value of the customers. Moreover, the results are likely to reflect in the brand loyalty of the company (Rong, Akkerman and Grunow, 2011).
In addition, the quantity of the products produced for the supermarket and grocery store needs to be controlled and kept under the limit to avoid wastage, which needs to be incorporated in the business plan (Carpenter, Lyon and Hasdell, 2012). The controlled production and supply of the products will keep the demand high as well as help them to maintain the quality being delivered. However, the controlled production and supply will likely to increase the production cost, which again will increase the pricing (Hubbard, 2012).
Market Analysis Summary
As mentioned in the plan, the population in Springfield has increased by 5% over the past few years, which is expected to grow in the coming years. Such growth in the population certainly strengthens the market capacity, which is a good opportunity for the organization Pasta Tree. This is because if the population grows, the organization can focus on a particular area of the market for implementing the business plan. As given in the plan, about 60% of the stores have the customers from the communities that are made of urban professionals; thereby, the firm particularly focuses on the upper class people of the community to sell their products but Hoek, and Jones (2011) mentioned that the people of all classes consume Pasta products. Therefore, restricting to upscale customers for fresh pasta products might not be an appropriate marketing initiative.
The organization mainly focuses on two different types of stores through which the products reach the target consumers.
Supermarket: Even though the supermarket is a tremendous medium for selling the products, sales of Pasta Tree might be affected, as the smaller stores sell the same product at cheaper price compared to large supermarket. As put forward by Mhurchu et al. (2016), the supermarkets may charge additional price for their operation. Thus, the customers might not buy the product paying extra as they have the best alternative option- smaller store and shop. On the other side, fast food industry in Australia is dynamic, which means consumer taste changes on a frequent basis. Therefore, the upscale shoppers might not persistently buy the same product paying $3.00. So, here price is the factor which could affect the plan.
Smaller Grocery Stores: It is certain that grocery stores serve the regular customers of particular communities. Therefore, targeting small grocery stores and small stores for selling fresh pasta would remain as a significant initiative. However, it is also certain that upscale shoppers might not purchase from the grocery stores of local communities; they rather prefer to do it from the supermarket (Gittelsohn, Rowan and Gadhoke, 2012). Thus, the sales margin might not go higher through small grocery stores to upscale shoppers.
As given in the business plan, Pasta Tree’s marketing focuses on the professional segment and the people in this segment do not have plenty of time to make their dinner. They are rather attracted to fresh fast food items like Pasta. Nonetheless, Müller and Hamm (2014) commented that health obesity is increasing among the people of Australia due to the consumption of junk fast food items. Consequently, people have become more concerned about their health and started controlling the consumption of pasta and other fast food items. Thus, it is not certain that upscale professional busy people in Springfield will only have pasta as their dinner.
As provided in the business plan, the major competition is only in the dry pasta because fresh pasta has much shorter life compared to dry ones, thereby, the competition is less in this category. As the preparation time for such fresh pasta is less, the demands might increase in the initial stage of the launch. Thus, Pasta Tree can strengthen its position in the market by launching this new category.
If the products of The Pasta Tree is displayed in the deli case of the supermarket, the firm still has to deal with the confusion of consumers regarding the selection of purchase. The packaging of fresh pasta should be done in a way that people could differentiate the product and understand the value associated with the products.
The concerned company has undertaken steps in order to boost their sale of the line of products prepared by the company. In order to undertake the smooth functioning of the organization, the company has taken steps to lower the price of the products by 20%. It is supposed to help the company with the maximization of the sales in comparison to the other existing competitors in the market. However, the plan that is being formulated by the company might affect the growth of the company in the initial years of its play in the market. In the long run, the company is sure to earn the benefits of the processes undertaken by the company. The company supplies its line of products in the supermarkets in airtight colorful plastic containers, which attracts the attention of the consumers (Kerzner, 2013). It has helped the company in enjoying a competitive advantage over the other two lines of products made by the competitors. It has helped the organization in holding on to the market.
On the other hand, the lower prices that are being quoted by the company for its products might affect the growth of the company. The other competitors might lower the prices in this context and thereby the concerned company would never be able to raise the price in the future. It might affect the continuous growth of the organization in the market. The speculative buying habits of the consumers might also affect the sales of the company as the consumers might think that the products offered by the company is not up to the mark relating to the quality. Therefore, the company must take steps in order to review the buying habits of the people they frame their strategies.
The management that is being undertaken by the company is based on the skills of the entrepreneurs and their knowledge on the industry in which they are aiming at performing. The knowledge of the processes has helped the company in making the rightful decisions based on the planning and the strategies. It also helps in determining the needs and the change in the tastes and the preference of the consumers. However, the management also includes a proper understanding of the whereabouts of the business (Goodwin and Wright, 2014). Specific knowledge based on the products will not help in managing the productivity and the marketing of the product. The directors of the company have got specific knowledge on the food production and sales. However, the processes undertaken by the company requires far more knowledge on the processes that are being involved for ensuring the smooth functioning of the organization. Therefore, the management team of the company should be strengthened with the introduction of different promotional methods (Easterby-Smith, Thorpe and Jackson, 2012). It will help in the smooth functioning of the organization in the market. The different segments that are being considered by the company are based on the requirements of the organizational growth. However, the company must take steps for making the management more efficient for the proper functioning of the organization.
It has been observed that at the initial stage of operation, the firm might not be able to achieve the expected profits. However, after two-years of launching, Pasta Tree might reach the break-even point. Nonetheless, Pasta is a fast moving and less expensive item; if such product items takes two years to reach its break-even the firm might observe losses in the coming years.
Extension of consumer class- It is certain that all classes of people consume Pasta; thus, the focus should be on lower- middle class and upper class people. This would be effective because the people who use dry pasta now can experience a new taste of cooked and fresh pasta. Thereby, people belonging to lower-middle class can buy this product besides the upper class. If people belonging to all social and economical classes can receive the products, the sales margin certainly go up.
Stock management- In order to avoid risk of excessive stock, the firm could manufacture limited amount of products to observe the market response. Likewise, based on the demand, fresh pasta should be manufactured. A particular period will be set to sell the manufactured items and record the profits. This strategy would help to avoid cost risk associated with the plan.
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