Amy’s Bread Brand Case
So far, the brand extension Is no longer a new concept. However, If “dissecting” the concept in business practices, there are still many things to consider. In general, brand extension is not Inevitable path of all businesses In the path of development. When brand extension Is considered, up to now there are still many people think of Improving the product. In fact, the development of new products Is Increasing feature of the product over the old product line and soul uses the old brand. Brand extensions must be understood as the creation of new brands or sub-brands based n the prestige of the brand are available.
When a new brand launched and succeeded, a new market has been created. And when enterprises evaluate the potential of this new market means that they will give a strong strategic, long-term and to protect the newly created market. Meanwhile, the peers will immediately think of plans to expand the brand, to create one (or more) new brand to protect, prevent the landing of the enemy. Many brand owners believe that the brand extension is a trend (path) the inevitability of the development process. Therefore, they put a new brand on the market at all costs.
But the reality shows that brand extension is not always the right choice and wise. In other words, brand extension is not the inevitable path of all businesses want to grow. Enterprises having brand building strategy for their own Is more Important than the brand extension. Based on that, the purpose of this essay focus on analyzing the situation and provide strategies for Amoy’s bread brand which revolves around the following questions: Expanding business or remaining? Retail? Just retail? Two locations or only one location? 1. Expanding business or remaining?
First of all, to solve the problems which Amy is still concerned, the analysis and carefully research on the basis of reality is needed. Thus the information about the actual operation of base of Amy which related to strategic decisions need to be considered as follows: – Amy knew that opening a bakery facility in New York will be extremely difficult. Firstly, it is a highly competitive business with low profit wholesale. Secondly, the space in New York is always a very high price, and rent a desired location will be extremely expensive. Thirdly, she found out that the bank will not lend her money.
The bank considers the bakery production facilities like restaurants, is an risky investment without the profile data which has been previously authenticated. Operating business goal of Amy is a business will consume bread was worth a million dollars per year. Amy has opened production facility Amoy’s Bread on 9th Avenue, in an difficult area of Manhattan which known as hell’s Kitchen. The place she found was an old shop in the fish market and abandoned for 5 years. Though only 650 square feet, it is still very expensive, but it is the most reasonably possible that she could find.
With the elf of family and friends, it still took up to six months to repair shops, including plastered and painted. Amy installing equipment, hiring and training staff, developing a client list, and start producing. – Facility of Amy sometimes post employment ads in the newspaper, but the most effective is the table “recruitment” hanging in the window of the facility. – The facility of Amy prescribed 5 days of working per week, while other bread production facilities require six days of working per week. In addition, Amy also creates a happy, open and friendly environment.
Amy said: “Our aim is to have a reflect product, but we realize that we are dealing with human beings. Anyone who has the temperament too intense will not fit here. Our site is not available for those people. We also tend to pay higher wages than our competitors”. – The major management challenge of Amoy’s breads is helping employees avoid boredom due to their repetitive work. The best-achieving employees have a positive attitude; reliability and conscious thinking in action and well interaction with colleagues.
The staff is able to suggest solutions to management problems, and Amy will make the final decision. All employees shall make ideas which based on their specific areas of expertise. The objective of the facility is manually producing highest quality bread. Amy pays employees a wage which us sufficient for a decent life and she ensure that customers get value worth the money. – Over the past years, Amoy’s Bread production facility have very few employees leave status. Retail employees starting salary is $ 8. 00 an hour and baking staff is $ 10. 00 per hour.
In fact, the lowest income in Amoy’s Bread production facility is the toilets clean staff, and their starting salary is $ 7. 50 an hour, which is higher than the minimum wage. Benefits for employees who work more than 20 hours a week, and the staff who work in this enterprises for more than a year will have eligible to receive 401 k plan. Most of the employees in this enterprise (88%) were minorities, whom English is a are extremely high, accounting for over 50% of revenue. With a handmade product, very difficult to achieve any significant savings related to labor. The new sales lead to increased wage costs.
It can be said that, Amoy’s bread production facility is fully converged by both the necessary elements to expand the business and the objective factors which prevent the expansion of the business. In fact, New York is one of the most expensive cities in the world due to the space, so business expansion should be carefully calculated. In addition, Amy can manage and maintain production while regularly increasing the revenue of production facility. Those proved her business talent. In addition, Amy is also a very important factor for business expansion is the human factor.
Amoy’s facility has a major competitive advantage in human resources through attractive salary and welfare policies. So, although there is no advantage in terms of production area but Amoy’s facility has the major contributions in human sources in return. Although the contrast between the area of production facilities and production performance is negligible thanks to the dedication of human resources, but the contradiction lies in the thought of Amy is “l want to be famous for having making a great product and for creating a good workplace. I do not care much about getting rich.
I Just want to sell the delicious bread from a place nice and warm worship. “According to the opinion, the basis of the production of bread Amy has enough favorable conditions as well as the urgent need to expand the business, but at the resent time, business expansion is not necessarily good. Global economic downturn is likely to affect marketing activities in many different ways. First of all, it raises a long-term problem – maintaining brand extension activity – using the influence of a well known brand of a certain type as a lever in order to release anew product category.
Brand extensions different from a product line extension. Basically, a product line extension is filled shelves with products of the same type under the same brand name. It is a relatively low risk to the potential increase in demand for a certain product categories by increasing options. Throng, expanding it is difficult to be strong. In fact, the brand extension can not protect the brand before the downturn of the economy, especially in the current situation. Factors which increase possibility of success of brand extension activity is “aware of your target audience. Your customers who have a problem in the overall outlook contacts will easily accept brand extensions than others, especially if you can attract their attention and direction them to a sense of connection between the brand and the product. 2. If the business expanded, it should only be a wholesale operation? Wholesale and retail? Just retail? Wholesaling is the sale of a large quantity of goods with a base price or have chicest price discount at a high level in order to demand faster, or provide security for cargo volume.
Wholesale usually applied, or aimed at commercial intermediaries such as general agents, agents of all levels. Customers who buy large quantities as buyers for the projects can also be applied to the wholesale price. The wholesalers often appear a special price which is called as the wholesale price. Wholesale prices can be defined as ladder style sales volume levels to encourage unreal agents, agents buy more while maintaining the balance and fairness of the price in the trading system. Depending on each case, the wholesale price vary with the greater number of orders the cheaper price.
Similarities between wholesale and retail: They are both selling. That is selling the product to the consumer market. It belongs to the distribution. – Wholesale is selling a big quantities. Otherwise, retail is probably selling each product. – Objects of wholesaling are dealers, department stores, supermarket, distributor’s officers, etc. In opposite, objects of retail are end users, customers using these reduces directly. – Price: wholesale prices on individual products below retail prices, people simply sell less profit per product but with many numbers of products in 1 transaction, the total profit will be more.
Retail product prices are higher. – Wholesale had an effective range to markets than retail. When 1 wholesalers deliberately sell 1 product at very low prices (depending on their purpose), the market will have impact on prices. 1 store sell 1 product is more expensive than the other store did not affect the market. The original business plan of Amy is the wholesale supply of bread for saturates and hotels. She has a loyal customer who is one of her former restaurant owner and a list of interesting customers. Her production sites are not really the best place for retail.
Retail business will simply be a side Job; she will sell the leftover bread for those who walk through the manufacturing base of cake. Slowly, but definitely, Amy started with reputation around the city thanks to high- quality products, so be creative and still homogeneous. Bearing her signature bread, semolina bread with golden raisins and fennel, gives enterprises Amoy’s Bread a lot of attention. By 1996, her list of wholesale buyers has increased to nearly 40 clients, and she has prepared about 600 keg of flour a days Just for semolina bread have golden raisins and fennel.
Her product line includes 50 items, is made from 15 different types of flour. Amoy’s best-selling products include semolina bread, walnut bread, onion, black olive twist, bread round apple raisin toast raw organic matter. The beginning is a wholesale model. Moreover, the production of bread also had a reputation for product quality as well as quantity of loyal customers. The category of detail of Amoy’s manufacturing base was Just added later when it had excess product. The strength of the base is still the wholesale category and it also possesses many advantages.
When Amoy’s business grew, she found that retail deserve more attention. The area around Amoy’s Bread production facilities have been improved, many new restaurants and cafes has been opened. She started making cakes served for retail customers. Finally, she had rented booths to serve retail customers and start selling not only breakfast breads, muffins and bread round, but sandwiches for customers. She made attractive signs and added a few small tables in the front of the shop. Amy retail business increased, and now it contributes 25% of total revenue.
The retail side run consists of facial with rosemary, bread twists, sticks sourdough bread, and rustic sourdough bread. The array oft retail business has developed rapidly due to the business expansion of the neighborhood. It is an opportunity for Amoy’s bread production base to implement the retail business model. In fact, the retail business segment’s contribution to profit basis is not small, but still really spontaneous and lack of specific strategies. Meanwhile, wholesale and manufacturing line is still strong.
In personal opinion, Amy business can expand its production base in two directions: – Focus on production in large quantities for wholesale which is the strength of the facility, while improving the productivity of assembly lines and work force. This method will solve the immediate problem for the base, while save a lot of terms arise, but it is difficult to to develop retail later. – Keep the level the wholesale production line stabilize as the current, while restructuring the retail array. This method will costs more but there will be more long ERM benefits in the future.
Amy commented that “wholesale is my mainstay and is the current largest sales. However, retail profits are better than wholesale”. Amy also said that: “An important part of the decision to expand my business is to decide whether to extend only the wholesale space, a combination of retail and wholesale, or retail only’. Amy feels this is a very important issue because the use of real space led to the location. Amy said: “If I have to expand the business to meet a list of customers who buy wholesale, the production facility need to inform the main street and the truck can go n for carrying bread and unloading of supplies and raw materials down.
The production facility can also be placed in a location where its surround is less “busy”. However, if the retail is the focus, I need to find an attractive space where the high volumes of pedestrians passing and there are many people live and work roundly”. Amy commented: “Although retail are profitable but you need to have multiple locations to reach more customers and increase retail volume. Volume wholesale may be increased from only one location. Total sales of Amy is about 75 percent comes from wholesale and 25 percent moms from retail. The wholesale business is much more stable with bulk and fixed sandwich order.
Retail business is dependent on the purchasing decisions of individual consumers with much smaller volume. The question in this case is mainly the Amy wonders in the wholesale or retail decisions from which to decide whether to expand the business or not. This problem is complicated because it will be very difficult for Amy to be able to pursue both wholesale and retail on the same location. One side is wholesale which requires large production area to carry out orders, and the other side is retail which squires a convenient location and space to attract customers.
In general, the change of location for Amoy’s production facility is essential, but it facilities. The most reasonable approach to reconcile the elements is looking for a location where can be deployed both wholesale and retail. Whooshes’ inherent requires location which to be vented to the main street to facilitate the loading and unloading goods while retail’s one also need in a favorable position to attract passer. Therefore, the best solution for production facility of Amoy’s Bread is integrated doth wholesale and retail in one location.
This will save a lot of cost and management, while still maintaining a profit from two business segments. CONCLUSION Through the analysis of the situation of Amoy’s bread production facility through the information on production status, financial, customer and business situation, the essay points out the strengths as well as outlines the weaknesses and shortcomings of the production facility in the expansion of production. The strengths and weaknesses of the facility are carefully analyzed to make long-term strategic.