BX3083 Strategic Marketing Marketing Strategy Report Growth Opportunities of BreadTalk in China

Phuvadol Uewongtrakoon 12877726

Pakorn Chotikarn 12846392

Ma Jie 12760128

Kong Qianhua 12742939

Li Qilin 12740634

Lecturer : Mrs Chuanchu Thurston

Table of contents

1.0 Executive summary 1

2.0 Introduction 2

3.0 Company/Organisation analysis 3

4.0 Product analysis 4

5.0 PESTEL analysis 9

6.0 SWOT analysis 14

7.0 Market analysis 19

8.0 Target market 24

9.0 Marketing objectives 25

10.0 Marketing strategy 25

11.0 Implementation and control 36

12.0 Conclusion 38

13.0 References 39

14.0 Appendices 45

1

1.0 Executive summary

This marketing plan projects the entry and expansion of BreadTalk in the Chinese

market. Based on the customer analysis in the report, the demand of bakery products has

remained steadily substantial, and the consumer purchasing power has remained growing in

China recently. In the meanwhile, the annual sales growth rate of the bakery industry in China

has surpassed 10% in the recent years. This could imply that the Chinese bakery industry has

entered the rapid development period and contribute the direct impact to business development

of BreadTalk in China. By comparing with main competitors in Chinese market, there are some

competitive advantages of BreadTalk; respectively are special names of bread with modern style,

innovative creations of breads, also the premium quality of products and services. Therefore, it is

recommended that BreadTalk should catch the growing opportunities and increase its

competitiveness to expand its market and business in China.

BreadTalk will target two segments in Chinese market which are the working adults and

white-collar professions who live in the 1st, 2nd and 3rd tier cities. Moreover, the secondary

target markets will be female teenagers because of the large percentage of female population in

China.

In order to operate the business in China and achieve the marketing objectives

successfully, BreadTalk uses a series of marketing strategies to promote its product. For the

product strategy, BreadTalk will provide the customised service to the customers, and promote

special bread designed such as Mickey Mouse bread and cakes. Furthermore, for the promotion

strategy, it uses the golden hour promotion, traditional moon cake promotion and talk through

breads promotion to attract more customers.

2

2.0 Introduction

The BreadTalk Group Limited (BGL) is a promising company that was first established

in Singapore. The company has been expanding its businesses rapidly to local and international

markets. BGL has three product lines which are augmented around the catering business, that

include bakery, restaurant and food atrium. The corporation has also managed more than 500

boutique bakeries and 800 food atriums and chains of restaurants across 15 countries such as

China, Singapore, Indonesia and Philippines.

The purpose of this marketing report is to define the marketing strategy and influence

BGL to continue expansion and growth in overseas. The scope of the report is limited to

BreadTalk bakery product line’s expansion in China as the preliminary marketing research

indicates the home market (Singapore) is saturated and the raise of Chinese Economy presents

market opportunity. In particular, the report includes:

(1) Company analysis of the BreadTalk Group Limited including Portfolio analysis

regarding the organisation’s products offering that are categorised into three-business

units bakery restaurant and food atrium. Each business unit’s position in relation to

the market growth rate and market share possession is explored in this section.

(2) Product analysis in Mainland Chinese market including product description and

position in lifecycle.

(3) PESTEL and SWOT analysis in order to draw implications on the marketing strategy.

(4) Market analysis for BreadTalk consisting of competitor analysis (the advantage and

disadvantage about those competitors), customer analysis (consumer behaviour,

trends and their buying power) and competitive analysis in order to draw implications

on the potential target market in China.

(5) Target market for BreadTalk in the Chinese market.

(6) Marketing strategy for BreadTalk entering the Chinese market and obtaining the

market share.

(7) Implementation and control including the budget allocation and contingency plan.

3

3.0 Company/Organisation analysis

BGL was founded in July 2000 in Singapore. The company had primarily specialised in

bakery business, it had expanded to a corporation and listed on the Singapore Stock Exchange

three years later in 2003. Nowadays, BGL manages more than 500 boutique bakeries and 800

food atriums and chains of restaurants across 15 countries, such as Singapore, China, Indonesia,

Malaysia, Philippines, Thailand and, supports by 7,000 global staffs (BradTalk Group Limited,

2013). The vision of BGL is to become an international, trend-setting lifestyle company that

focus on food and beverage. Moreover, BGL aims to establish and sustain its competitive

advantage by introducing new food culture as well as improving the quality of food and beverage

industry in this operating geographic market. With the strategic intend guiding the corporation,

the organisation has established a number of brands including using the corporation’s name,

BreadTalk for its bakery, Toast Box for Singaporean style of cafes, The Moh Chan for traditional

handcrafted pastries shop, Food Republic for its food court, RemenPlay for Japanese Restaurant,

and The Icing room for shop that offers DIY cake decorative services. In addition, BGL has also

managed franchises from Taiwan’s Michelin Star recipient Din Tai Fung in Singapore and

USA’s Carl’s Junior in China (BradTalk Group Limited, 2013).

As the organisation’s product lines can be categorised into three business units, the

revenue stream of BGL can also be analysed from this angle. According the annual report of

BGL for Financial Year 2013 (FY13), more than 50% of FY13 revenue was contributed by

bakery business unit, 26.6% was contributed by food atrium and the rest was contributed by

restaurants as stated in Appendix 1 (BradTalk Group Limited, 2013). With the successful

industry, BGL is required to seek potential markets in Asia for securing the future revenue as

well as developing the brand equity and enhancing the brand experiences for the customers

behind the Singapore market within the same region.

It is worth noting that the corporation’s success in Singapore is not only the result of the

marketing effort but also its corporate strategy in pursuing investment in commercial complex

buildings. The Group invested real-estate projects in Singapore, for example S$17.49 million

invested in junior bonds, preference shares and ordinary shares to acquire TripleOne Somerset

(A commercial complex) in Singapore in 2014 (BradTalk Group Limited, 2013). These

investments not only help the Group to gain generous profits, but also provide the favourable

4

locations for their product offerings and brands to meet the target market. In addition, their estate

investments serve as a hedge against rising rental costs as well. Hence, the Group is growing

sustainably and successfully since they keep on seeking the potential markets to develop the

organisation and implement the proper long-term strategies with the distinct insights.

4.0 Product Analysis

4.1 Portfolio analysis

In this section, BCG Matrix is used to initially classify the position of each BGL’s brands

in the current market in order to analyse and determine the appropriate marketing strategy for

each brand. In the case of BGL, the brands can be categorised into 3 key business units as

followed below.

Bakery

BGL is currently a leading company of bakery industry in Singapore. It accounted for

50.6% of the total revenue of BGL in 2013 as illustrated in Appendix 1, which BreadTalk is the

most profitable brand among bakery business unit in the Group (BradTalk Group Limited, 2013).

Nevertheless, BGL has experienced the decline in growth rates of the Singapore market plus the

increase in wage costs due to the Government policy (OCBC, 2012). Moreover, the macro

strategy of BGL is to expand its business into Hong Kong and Mainland China (BradTalk Group

Limited, 2013). This could reflect that the bakery units of BGL in Singapore which comprise of

BreadTalk, Toast Box, Bread Society, Thye Moh Chan and The Icing Room are in the Cash

Cows. The bakery units of BGL are dominating the market in Singapore; they do not require

much of investment but can generate an excessive profit to support other BGL’s business units in

the long-run.

Therefore, BGL can sustain its bakery units in Singapore to generate profitable income in

order to support the bakery units in Mainland China as they are required a wide range of

expansions and investments to overwhelm the market.

Restaurant

In the case of restaurant industry, the sales rose 19.1% to S$122.2 million from 2012 to

2013, it accounted for 22.8% of the overall BGL revenue as stated in Appendix 1 (BradTalk

5

Group Limited, 2013). However, the increase was mainly dominant by the performance of Din

Tai Fung restaurants which was very popular in Singapore and Thailand that relieved BGL from

the unprofitable operations in RamenPlay and Carl’s Junior (China) (OCBC, 2012). This could

imply that Din Tai Fung is currently a Star that has an opportunity to grow and generate more

profit. On the other hand, RamenPlay experienced the decline in revenue of 2.0% from 2012 to

2013, and had closed 4 non-performing outlets (BreadTalk Group Limited, 2014). It could reflect

the position of Ramen Play is in Dog that lack of market share and potential to grow even though

it has been in the market for several years. In addition, BGL has just invested in Carl’s Junior

(China) as a joint venture with Carl Karcher Enterprise since August 2013 (BradTalk Group

Limited, 2013). It could therefore imply that Carl’s Junior (China) is currently in Question Marks

that still need to find the right direction and strategy to obtain more revenue and market share or

gradually be phased out of the market.

Food Atrium

According to BGL (2013), even stores in some countries like Thailand and Taiwan did

not perform well to reach the standard; the outlets in Singapore, China and Hong Kong were

very profitable. There was a significant increase of 29.2% in sales revenue in 2013 which

contributed to 26.6% of the total BGL revenue. And in 2012, the sales increased 18.1% form

2011 which represented 25.0% of the BGL overall revenue as illustrated in Appendix 2

(BreadTalk Group Limited, 2012). From the wonderful performances of Food Republic, it could

be classified as a Star for the overall performance that has the potential to grow and generate

more revenue for BGL.

Overall, the bakery business unit especially BreadTalk is the most profitable business

unit in BGL as mentioned above. However, the bakery market in Singapore has experienced its

saturation and BGL therefore is required to grow overseas. Mainland China is the most

promising market for BGL’s bakery business unit that has potential to grow significantly based

on the performance in 2013. Hence, this marketing plan is going to focus on BreadTalk in

Mainland Chinese market in order to expand and increase BGL’s sales and revenues.

6

4.2 Product description

As the focus of this study is the bakery business unit (brand name: BreadTalk) in this

expansion in China, the following preliminary product analysis only covers the product offerings

from BreadTalk.

BreadTalk has provided bread as its single product. The core of the product is a food to

meet customer basic needs. In additional, it has offered various kinds of breads in order to satisfy

the consumers and obtain more profit.

In the case of tangible products, bread is nutritionally which an ample source for the

grains category of nutrition. Nowadays, BreadTalk has adopted natural yeast into its breads in

order to make them distinct from their competitors (Habib, 2014). The products are also given an

exotic and popular name such as "Down2earth" and "Mount Fuji Swirl", "Spice Girl",

"Crouching Tiger, Hidden Bacon", "Moshi Mushroom", "Earthquake Cheese Loaf" (Lee, 2011).

In additional, BreadTalk already has two specialised research and development teams

(BreadTalk Group Limited, 2012), which are devoted to creating and discovering new bread

flavours and designs in order to keep them up to date for the ever-evolving consumer preferences

and taste. BreadTalk invests in the research and development teams to continuously develop new

buns for its bakery, about ten items are introduced every four months (BreadTalk Group Limited,

2012). Therefore, BreadTalk currently offers more than 150 varieties of breads, buns, pastries

and cakes.

However, bread as a food, so it can be perishable in a short time. Therefore, BreadTalk

has applied the bread improver which is one kind of food additives to enhance its products. The

bread improver has abilities to slow down the aging of bread; improve the gluten and machining

properties and the quality of bread, so that the bread’s colour, smell, taste and shape could meet

the needs of consumers (Karisfoodie, 2013).

7

$-

$50,000,000

$100,000,000

$150,000,000

$200,000,000

$250,000,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

BGL Bakery Sales

BGL Bakery Sales

4.3 Product lifecycle

The single product that BreadTalk offered has very short life cycle due to the nature of

food and beverage sections. Bear in mind that the actual product offered to the customer by the

group is augmented with the customer service-physical contact as well as the décor of the outlet.

With the regular update of the menu or bakery product, and if to view the whole organisation’s

product offering as a single product mix and to place it in the product life cycle, it can be argued

that the entire product mix is in the growth stage of the product life cycle according to the

increasing in sales every year as illustrated in the Figure 1.

Figure 1: BGL Bakery Sales

(Source: BreadTalk)

The growth stage is the period during which the product eventually and increasingly

gains acceptance among consumers and the wider general public as can be seen in the picture

below. During this stage, the BreadTalk product becomes accepted in the bread industry market,

as a result sales and revenues start to increase and create profit for the company.

8

4.4 Strengthening product position

The extended markets are demanded for BreadTalk to strengthen its business. Chinese

market should be considered primarily due to the growth potential. The constant innovation of

the products to lead the trend should also be maintained as mentioned above that BreadTalk has

already invested in R&D team to improve its products. Likewise, BreadTalk should keep giving

a creative name and interesting story for its breads to attract attentions from the customers. Décor

and presentation of BreadTalk outlets could be renovated every 3-5 years in order to keep the

stores modern and up-to-date as well as matching the outlets in Singapore and overseas to be in

the same design. In addition, the point of contact is orientated approach which could be adopted

to acquire more customers.

9

5.0 PESTEL analysis

As this research is focus on the expansion of BreadTalk in China, the following analyses,

target market and marketing strategy only cover for BreadTalk in the Chinese market.

Political

China has governed and controlled by one party system since in the past in order to

reduce the conflict of each province which leads to the cohesions of leadership and the domestic

stabilities. Nowadays, Chinese government are governed and dominated by the paramount leader

Xi Jinping who has been promoted to be the president of China since in 2013 (Franklin, 2013).

The stability of Chinese politics has significantly affected BreadTalk in order to enter the

Chinese market. The foreign organisations which aim to enter the Chinese market will be

developed steadily by the government stability. In terms of stable political environment in China,

the foreign organisations will not be threatened by the political disorder and tensions; they

therefore could be able to operate their businesses smoothly in Chinese market.

In addition, The China-Singapore Free Trade Agreement (CSFTA) was signed on 23

October 2008 in Beijing. This is the first comprehensive bilateral FTA that China has signed

with Singapore, including trade in goods, trade in services, rules of origin, trade remedies, and

sanitary measures, technical barriers to trade, customs procedures, economic cooperation and

dispute settlement, among others. With this FTA, there will be the long-term standing

relationship shared between China and Singapore, which build a stable foundation for investing

and establishing businesses in China. It also benefits and increases the Singaporean

organisations’ competitiveness in China (International Enterprise Singapore, 2012).

Additionally, during the annual APEC meeting in Beijing in 2014, the Chinese President Xi

Jinping has told the Prime Minister Lee Hsien Loong that Sino-Singapore ties have always been

one step ahead of China's ties with ASEAN countries (The Straits Times, 2014).

In short, the stable political system, and bilateral free trade agreement between Singapore

and China indicate that BreadTalk entering China is a favourable move in the political

perspective.

10

2010 2011 2012 2013 2014

Singapore Dollar (SGD)

to Chinese Yuan

Renminbi (CNY)4.96 4.9 6.3 4.78 4.73

0

1

2

3

4

5

6

7

CN

Y

1 Singapore Dollar (SGD) to Chinese Yuan Renminbi

(CNY)

Economics

According to the CCTV News (2014), Chinese Premier Li Keqiang declared that China

has determined to target their Gross Domestic Product (GDP) growth rate at 7.5% in 2014 as

same as the last year, and will maintain the consumer inflation rate at around 3.5% (Li Keqiang,

2014). The economic growth is anticipated to continue expand in 2015 since China has

attempted to revamp their maturing economy and move it towards slower but better-quality

growth. Furthermore, more than 10 million urban jobs expected to be created in order to ensure

the registered urban unemployment rate will not rise above 4.6%. The employment would be the

key factor that the state taking into consideration with the economic condition in the future

(CCTV News, 2014).

In addition, the interest rate, currency exchange and stability of exchange rate should be

taken into account for foreign businesses to enter the Chinese market. As Singapore and China

has signed the Free Trade Agreement which leads to the lower trade barrier, so the stability of

exchange rate is very significant for the trade between Singapore and China. However, with the

increase of GDP and consumer inflation in China, the Chinese currency (RMB) is appreciated

over the years; in contrast, the Singapore Dollar is depreciated as illustrated in the table below.

The depreciation of Singapore currency implies that investors in Singapore have to pay more in

Singapore dollars to all its value chain members which evitably increase its operational cost in

China. Because of the better quality of economic growth, BreadTalk therefore can have a

positive future in China; however, the appreciation of Chinese currency should be primarily

taken into consideration, and securing a future forward contract therefore is recommended in

order to minimise loss.

11

Social

China is the world's most populated country, with a population of over 1.35 billion

(World Bank, 2012). Accompanying with the increasing density of population in the urban areas,

the demand of goods therefore steadily increases, and so as the consumer consumption rate.

According the academic report of bakeries industry in China, it stated that the eating habit has

been changed during the past 10 years because of the tight working schedule among Chinese

urban middle class. A great number of new generations choose to eat baked goods (e.g. bread,

pastries and cakes) rather than traditional Chinese food. Additionally, the demand of baked

goods in China has increased from 3.7 billion RMB to 7.8 billion RMB (Jessop, 2010).

The changing of Chinese consumer behaviour in the urban areas has stimulated the

increase in baked goods demand which illustrates the great opportunity for BreadTalk to enter

the Chinese market.

Technological

For the technological factors comprise of the spread of social network site technology

and the availability of Internet access. The internet has been used extensively all over the

country, which has brought China to become the world’s largest Internet network following.

There were about 564 million internet users by the end of December 2012. Nowadays, Wi-Fi

Internet access has become more popular, a lot of public places have free Wi-Fi services for their

customers, especially in big cities such as Hangzhou and Shanghai. In Hangzhou, free outdoor

Wi-Fi is available in most urban areas. In Shanghai, there are free Wi-Fi services available in

public places like Shanghai Museum, the Bund and shopping malls. In addition, Chinese mobile

network providers have added about 5.4 million 3G subscribed users and over 15.6 million 4G

subscribed users in the period from July to August of this year (Trefis Team, 2014). These data

have shown that Chinese people are very keen in using internet as supported by the increasing

amount of Chinese internet users as stated in the graph below.

12

(Lawton, 2012)

BreadTalk should therefore utilise this market condition, incorporate to its marketing

campaign in particular the communication strategy in order to reach the mass number of its

target market.

Furthermore, transportations and infrastructures in China have experienced major

expansions and growths in the recent years. According to the research, China has made huge

strides in the high-speed train-manufacturing sector and has been developing an extensive high-

speed rail network across the country in the past half-decade. China has become one of the

largest manufacturers of high-speed trains currently in the world and has planned to become the

world’s largest high-speed rail network (Manipal University, 2013). Therefore, this would be

another plus point for BreadTalk’s in operating supply chain from the warehouses to the stores.

Environmental

The idea of being green or environmental friendly has become more popular in Chinese

society nowadays. According to China daily (2010), an international green industry expo have

been held in Beijing in November 2010 in order to educate about environmental friendly and

exhibit the domestic corporations. Foreign companies are also likely to explore Chinese green

market to develop a green economy in China such as emission reductions, low carbon

13

technology and clean energy. Nevertheless, the Chinese rapid industrial developments cause

serious negative impacts on environments including decreasing natural resources and increasing

pollution. Some research estimate pollution costs hold the Chinese economy from 7% - 10% of

GDP per year (The Encyclopedia of Earth, 2012). Therefore, China has prevented supermarkets

and retailers from giving shoppers plastic bags for free. The customers have to pay for the plastic

bags if they want it when shopping in the supermarkets or any other retail stores. China

prohibited the sale, production and use of ultra-thin plastic bags which are less than 0.025

millimetres thick. These rules took effect nationwide in China since 1st June 2008 (Upton, 2013).

BreadTalk’s current practice is that not only use one bag for one piece of bread when the

customers take their tray of bread to the cashier but also put it all goes into a bigger plastic bag

after packaging the breads into a series of small plastic bags. As a result, this creates more

pollution to the environment as well as more cost for purchasing inputs. The recent changes of

banning plastic bag in China therefore have direct impact on BreadTalk’s operation in China, the

implications here is to reconsider the packaging of the product from plastic bag to paper or

reusable packaging.

Legal

The state council of the People’s Republic of China adopted the regulations on the

Administration of Commercial Franchise and scheduled to take effect from 1st May 2007

onwards (Wageman, 2014). In recent years, China has revised its franchising policies in order to

facilitate investors and create environment friendly for investing in franchising. The foreign

operators can launch their franchising operations in China either by setting up an enterprise in

China or through cross border franchising. All franchising operations in China whether domestic

or with a foreign component, they must comply with the regulations of the Administration of

Commercial Franchising (Tam, 2013). In addition, one of the key requirements of the franchising

regulations is that required franchisors to operate a minimum of two directly owned stores or

retail outlets for at least one year within the territory of China in order to gain the franchising

license. This requirement is usually called the “2+1 Rule”. In the case of “2+1” Rule, one of the

important issues is the new filing measures are also required, franchisors need to provide some

evidences that they comply with the “2+1” rule in China.

14

Therefore, BreadTalk could enter smoothly to Chinese market since cross border

franchising in China was allowed for according to the regulations on the Administration of

Commercial Franchise. As for the “2+1” Rule, BreadTalk are required to operate more than two

bakeries for at least one year and provide the evidences in order to obey the laws in China so as

to expand the bakeries more sustainable in the future.

6.0 SWOT analysis

6.1 Strength analysis

BreadTalk would be able to deliver better value to customers by enhancing these

competitive advantages by the following issues:

International recognised brand

There are a wide range of alternatives in bakery industry but brand is the key to success

for the company in order to differentiate from competitors. BreadTalk’s evolution and growth as

an internationally recognised bakery brand over the last 12 years has been encapsulated through

three distinctive Generations with over 600 bakery outlets overseas (BreadTalk Group Limited,

2013). Therefore, its robust brand creates loyalty and advocacy of consumer as well as attracting

new customers.

Innovative bread flavours and designs

BreadTalk has differentiated itself from the traditional bakeries with sleek looking store

facades and an open-concept design (BreadTalk Group Limited, 2013). It allows consumers to

view the bakers at work and attracts a lot of consumers’ interest in its productions. In addition,

BreadTalk has given its buns a creative and story-telling name to guide its consumers about the

taste.

Innovation has always been an important performance measure for food industry.

BreadTalk already has two specialised research and development teams (BreadTalk Group

Limited, 2013), which are devoted to create and explore new bread flavours and designs to keep

up to date of the ever-evolving consumer preferences and taste. Thus, before full implementation

into the outlets, some prototypes are provided to consumer for developing undergo test on the

15

market. With such strong commitment to creative innovation, BreadTalk has carved up a

reputation of being a trendsetter, and is able to command a higher premium as compared to other

bakeries. It also prevents brand boredom and creates a variety of bread in bakery industry where

consumer tastes tend to change frequently.

A wide range of product offerings

BreadTalk has invested in research and development team to continuously develop new

buns for their bakeries. About ten items are introduced every four months (BreadTalk Group

Limited, 2013). Therefore, BreadTalk currently offers more than 150 varieties of breads, buns,

pastries and cakes. Due to the size of the bakery outlet, every bakery can offers 40 to 60 different

items daily (BreadTalk Group Limited, 2013). Thus, it has set BreadTalk apart from its

competitors.

Strong partnership network in Asia

BreadTalk already has a presence in 16 countries spread across Asia and the Middle East.

Its global network of estate managers builds strong relationship with supply chains and

international partners (BreadTalk Group Limited, 2013). In August 2013, BreadTalk has been

partnership with Japan’s Sanrio Company, and launched an exclusive range of Hello Kitty cakes,

buns, cupcakes and doughnuts complete with specially designed packaging at all of BreadTalk

outlets in Singapore (Jazpster, 2013). Therefore, BreadTalk has the competitive advantages in

order to further expand its business in very strategic locations.

6.2 Weakness analysis

High cost of productions

Since BreadTalk position itself as an innovative bakery company that provides premium

quality of breads, it causes BreadTalk lots of money in terms of research & development of the

products and high production costs. This would have a negative impact on net profit of

BreadTalk. In addition, BreadTalk is using high price strategy in positioning; this leads to the

loss of large amount of customers who have high-level price sensitivity.

16

A few direct control over overseas operations

BreadTalk has mostly utilised a franchise model system to expand the BreadTalk brand

name (BreadTalk Group Limited, 2013). This system in which semi-independent business

owners pay fees to BreadTalk in return for the right to become identified with its trademark.

However, it leads to a few direct controls over overseas operations. Some inefficient franchisees

may ruin BreadTalk’s brand in the market, and some may turn into future competitors.

No loyal customer base in Chinese market

BreadTalk entered the Chinese market in 2003 (BreadTalk Group Limited, 2013), and its

franchised store has established in a few main cities such as Shanghai, Beijing, Guangzhou etc.

accounting for 40 ones. However, BreadTalk has not directly provided Chinese customers with

information which is tailored to their needs and interests. Therefore, lack of direct control of its

franchisees, it is difficult to increase the loyalty and maintain long-term relationship with

customers.

17

In addition, the opportunities and threats for BreadTalk in the Chinese market are drawn

directly from the above PESTEL analysis and summarised in the SWOT analysis table below.

Table 1: SWOT analysis

Strengths

International recognised brand

Innovative bread flavours and designs

A wide range of product offerings

Strong partnership network in Asia

Successful business model

Strong financial stability

Experienced management team

Strong research & development team

Weaknesses

High cost of productions

A few direct control over overseas operations

No loyal customer base in Chinese market

Lack of expertise in Chinese market

Difficulty in maintaining standard quality over

the outlets

Price-sensitivity of customers

Opportunities

Further growth and expansion in China

Long staying period for Singaporean business

persons

Growing baked goods demand in China

Increasing of potential customers

Substantial number of internet & social media

users

Expanding of transportations and

infrastructures in China

Friendly franchising policy in China

Threats

Intense competition in bakery industry

Over saturation in china bakery market

Rising of food and labour costs

Innovative products can be easily replicated

Fluctuation of currency exchange rate

Plastic bags policy in China

18

6.3 Strategic focus

A few strategies are formed after matching between strengths and opportunities, refers to

Table 2, SWOT matrix; the strategic focus of BreadTalk is growth and expansion.

Table 2: SWOT matrix, S-O strategies

Strengths

International recognised brand

Innovative bread flavours and designs

A wide range of product offerings

Strong partnership network in Asia

Successful business model

Strong financial stability

Experienced management team

Strong research & development team

Opportunities

Further growth and expansion in China

Long staying period for Singaporean

business persons

Growing baked goods demand in China

Increasing of potential customers

Substantial number of internet & social

media users

Expanding of transportations and

infrastructures in China

Friendly franchising policy in China

S-O strategies

Expand the customer base

Expand the channel of selling, i.e. strategic

partners, social media, delivery services

Enlarge the business scale, recruit more

human resource and increase the number of

outlets

19

7.0 Market analysis

First of all, the customer behaviours are associated with the developed trend of Chinese

bakery industry. According to the Huidian Research (2013), it stated that the annual sales growth

rate of the bakery industry in China has surpassed 10% in recent years, which was absolutely

higher than the average growth rate of food industry. The bakery market in China is expected to

grow significantly, especially in the 2nd

and 3rd

tier cities. In the next 5 years, the growth rate is

projected to increase and remain at around 30%. Additionally, there are numerous of recognised

foreign brands that have entered the Chinese market vigorously which lead to high competitions

in the Chinese market. Many major brands have accelerated their R&D to improve their products

and strengthen their marketing efforts in order to obtain the market share of bakery industry in

China.

This research data have shown that the Chinese bakery industry has entered the rapid

development period; bakery products have become more popular in China. On the other hand,

this could imply the increasing in the demand of bakery products in recent years, which

contribute the direct impact to the entry of BreadTalk.

7.1 Competitor analysis

In principle, the demand of constant updating the baked goods on offer is driven by the

intense competition in China (Gao, 2012). Hence, BreadTalk need to perceive and analyse its

competitors so as to expand and operate its business continuously in China. BreadTalk has direct

and indirect competitors ranging from huge bakery franchise brands to individual bakery outlets

in China.

Paris Baguette

Key international competitors like Paris Baguette from South Korea which is a sister

brand of Paris Croissant. It currently has operated about 80 outlets in China and planned to

establish more than 100 outlets in overseas markets in order to become more global. Paris

Baguette uses its premium brand to differentiate itself and target the upper class in comparison

with other bakery brands in China (Ryu, Jang, & Cho, 2014). Most of the outlets have

established in some first-tier cities such as Beijing, Shanghai and Hangzhou. The café offers light

brunch dishes such as sandwiches, pancakes and salads, while the bakery section is filled with a

20

great variety of cookies, cakes, snacks and breads. Besides, Paris Baguette looks very trendy and

modern with its interior design. However, the price of breads, cakes and pastries are more

expensive compare to other bakery stores.

85℃ Bakery

85℃ Bakery and Café is one of the powerful national brands from Taiwan and developed

rapidly in China. It opened its first store in Shanghai and currently runs a total of 385 stores in

Mainland China, 4 stores in Hong Kong and over 450 stores in Taiwan. Those stores in Mainland

China are also opened in the big cities like Hangzhou, Suzhou, Beijing, and other locations

nationwide. 85-Degree Bakery ranks first in terms of sales among foreign baking companies and

it plans to open a total of 1000 stores within six years in main cities such as Chongqing and

Shenzhen so as to keep its current status (China Briefing, 2013). 85℃ Bakery Cafe mainly sells

cakes, breads and drinks in its stores such as sea salt coffee, vanilla cafe latte, cappuccino, half-

moon sponge cakes, and coconut custard. 85℃ Bakery has more than 70 different types of breads

with prices ranging from about 8 to 15RMB. Its interior design is not as good as Paris Baguette

but it provides a comfortable atmosphere and it is a 24-hour café style.

Christine

Christine is also one of the key home grown competitors and it started business in

Shanghai, China. It currently owns about 800 stores in the Yangtze River Delta area and operates

one of the largest retail chains selling bakery products in China both in terms of revenue and the

number of retail outlets (Christine International Holdings Limited, n.d.). There are some main

cities and provinces that located in the Yangtze River Delta region including Jiangsu and

Zhejiang provinces. The retail network of Christine primarily consists of good neighbour stores,

flagship stores, subway stores and European style fresh-bake stores and each targeting different

customer groups. Furthermore, it offers more than 2200 varieties of cakes, moon cakes, pastries,

breads, and other certain products with many new products launched monthly in order to meet

different customer demands. In addition, Christine was the first company that obtained a

certification of ISO9001 for quality management and Critical Control Point (HACCP) for food

safety (Christine International Holdings Limited, n.d.).

21

Holiland

Holiland is the major key home grown competitor and it is one of the largest bakery

chains in China. Its business is mainly in Beijing, it controls more than 1000 cake shops in 70

medium and large-sized cities including Beijing, Shanghai, Shenyang and Chengdu. Holiland

specialises in breads, dim sum and cakes and control about 85.7% of the market which is

dominating the Chinese bakery market nowadays (China Daily, 2010). Moreover, it has focused

on aggressive store expansion according to the principle that customers do not travel long

distances to purchase the breads and cakes. It has developed into a company that produces cakes,

bread, moon cakes, western snacks, Chinese snacks and Tang Yuan. The average price of

Holiland bread is inexpensive compare with other bakeries such as 85℃ Bakery Cafe and Paris

Baguette. Holiland aims to target the lower middle-class customers by selling the breads at

around 3 to 8 RMB. Besides, it is also a leading company in domestic baking industry which has

thousands of high-talented employees (Tianjin TEDA Trade Promotion Centre, 2014).

All of these competitors may keep expanding to surrounding areas and their bakeries can

be found at various hotels, neighbourhoods, shopping street and shopping mall in China such as

those first-tier cities like Beijing, Shanghai, Hangzhou and Guangzhou. These competitors also

offer some similar products with lower competitive prices to compete with BreadTalk in China.

Currently, BreadTalk competes against its competitors in China mainly on location choice,

exquisite décor and constant innovation of bakery goods on offer in order to overwhelm those

competitors. Besides, there are still more competitors that need to be considered such as the local

sole, family business and small-scaled bakeries in China as well. Overall, these non-branded

competitors located at neighbourhoods usually offer limited product varieties but much lower

price than the larger bakery chains.

Overall, the competitors of BreadTalk bakery use their own unique commercial strategy

in order to compete against BreadTalk. For example, the major competitors such as Paris

Baguette, they compete against BreadTalk by the high quality, style, diversification, and

localisation of the bakery as stated in the market-positioning graph below. The indirect

competitions such as non-branded bakeries compete against BreadTalk by its availability in the

residential community and their consumers’ loyalty rather than in retail hotpot for high foot

traffic.

22

7.2 Customer analysis

Regarding the IBIS World Industry Report of Bread & Bakery Product Manufacturing in

China, it reported that the demand of bread and bakery products has remained steadily

substantial. Bakery products have become daily necessities for many people, especially for

students and workers in urban areas. With the intensive government food regulations, there has

been an increase of demand for high-quality bread and bakery products, more customers pay

great attention to the quality and nutritious attributes of bread and bakery products. Therefore,

the consumer habit and behaviour for the daily food consumption has been changed nowadays.

The customers are not only first considering the bread flavour, but the nutritious and qualities of

bread are also the key factors that customers taking into consideration (IBIS World, 2011).

In addition, the customers’ purchasing power has remained growing in China recently.

According the statics from the World FactBook of Central Intelligence Agency, it was shown

that the gross domestic product (GDP) of China has been raised from $11.54 trillion US dollars

to 13.39 trillion US dollars during 2011 to 2013 (CIA, 2014). Moreover, The International

Monetary Fund has announced that the purchasing power parity surpassed that of the United

States to become the world's largest (Schiavenza, 2014).

BreadTalk

Price

Quality

Paris Baguette

Holiland

85℃

Christine

23

With the increasing purchasing power, it could therefore stimulate the consumption rate

of food and bakery in China to continue to increase. Hence, BreadTalk should promote its

products with higher price than the other bakery brands in China’s market, since the higher price

and position are associated with higher food quality and safety in the consumer perspectives.

7.3 Competitive analysis

In the case of BreadTalk, it has utilised the differentiation strategy to gain the competitive

advantages in order to compete in mass market. Regarding BreadTalk (n.d.), it has totally

changed the way customers enjoyed bread. BreadTalk has presented the art of bread-making

through the novel creations and given names of its breads with the modern style of its outlets. A

wide range of new innovative creations of breads have been launched to differentiate itself from

competitors. As can be seen in the Euro bread series, that combines the taste and quality of

European breads with a variety of Asian flavours, such as drunken longan, black sesame, spinach

and sweet potato. Moreover, BreadTalk pays lots of attentions towards the on-going of healthy

trend by introducing a series of healthy breads that has been currently awarded for the Healthier

Choice Symbol by Singapore’s Health Promotion Board (HPB).

With the refreshed store concept and engaging platform plus a variety of unique and

innovative breads that no one is not yet offering or unable to do so as its competitive advantages,

BreadTalk therefore has been successfully differentiated itself from other competitors and

become leader of the market in many countries, especially in Singapore.

24

8.0 Target market

Segmentation base Selected variables Description

Geographic Density 1st, 2

nd and 3

rd tier cities

Demographic

Income Above 4000 Yuan per month

Age 18-40 years old

Psychological

Social class Middle class and over

Lifestyle Rush and hasty

Behavioural Benefits sought Premium quality

BreadTalk has primarily targeted working adults and white-collar professions who live in

the 1st tier cities. These people are rush and hasty all day because of their working-life in the

urban areas, they do not have much time to cook or eat. Fast food like breads that are convenient

for carrying on the way, therefore would likely be the most suitable breakfast for their lifestyle

instead of the proper meal (Zi, 2013). Moreover, the target markets are expected to be in the

middle class or over and have more than 4000 Yuan monthly income due to the price and quality

of BreadTalk are higher than the average of other bread shops (Carrie, 2005).

In order to expand and increase the market penetration, working adults and white-collar

professions in the 2nd

and 3rd

tier cities, likewise, higher-end and more affluent clienteles in the

urban areas who seek premium quality of breads could be targeted as the primary targets for

BreadTalk.

In addition, the secondary target markets would be female teenagers. In China, the female

teenagers represented 23% of the whole population (Chen, 2011). It reflects a large market for

BreadTalk to earn more profits and increase its market share. As young females are perceived as

a group that is more adventurous in experiencing new flavours, BreadTalk therefore would be

their ideal breads because it offers a various taste of bread by using natural ingredients and

25

processes to meet the demand of sweet tastes of the female teenagers, such as Floss bread,

Brown sugar toast and French country pumpkin (Lim, 2013).

9.0 Marketing objectives

To raise awareness of BreadTalk in China by 20% within 1 year

To increase sales of BreadTalk in China by 15% within 1 year

To obtain more market share in the Chinese bakery industry by 3% within 1 year

10.0 Marketing strategy

The bakery market in China is very intense because of the large amount of local and

international competitors in the market. Thus, in order to gain more revenue and awareness from

customers among those competitors, the product and service differentiation are required. Firstly,

BreadTalk is needed to maintain the high quality standard of its products to reflect its image as a

premium brand in order to differentiate from the competitors. Secondly, a wide range of product

offerings should be maintained and developed continuously by launching or improving 10 items

every 3 – 4 months based on R&D team’s recommendations to gain more preferences and

awareness from the customers. Thirdly, in the case of services, normally a local bakery store

does not provide high quality standard of services. By providing premium services through well-

trained employees and comfortable atmosphere in the outlets, BreadTalk could be able to achieve

high level of customer satisfaction and stand out from its competitors in the market.

10.1 Product

Creative given name

This is one of the product strategies that BreadTalk has successfully utilised it to gain

more customer attention and awareness. A creative and interesting name is given to each

BreadTalk’s bread in order to convey the story and taste of the bread to customers as . The name

allows the customers to learn about the bread before purchasing. Therefore, BreadTalk should

continue this product strategy because it could be able to increase the possibility for the

customers to purchase more bread and cakes while spending more time in the outlets by

considering each bread name.

26

Customised service

It is a service that allows customers to create their own bread or cakes through

BreadTalk’s creative patterns provided. The customers can mix and match the types of bread,

flavours and toppings; they also can write some messages on their bread or cakes. This service

will be offered with a minimum purchase 6 items of bread or 1 pound of cake for each design

plus an additional 10% of service charge. By doing so, BreadTalk could differentiate itself

significantly from the competitors by providing unique experiences to the customers, as well as

gain more awareness and preferences from the target audiences.

Mickey Mouse bread and cakes

The first Disneyland in Mainland China, Shanghai Disney Resort will be located in

Pudong, Shanghai. It comprises of Shanghai Disneyland, 2 themed hotels, a large retail venue.

The resort is scheduled to open in 2016 (Shanghai Disney Resort, n.d.). This could be a

promising opportunity for BreadTalk to associate with Shanghai Disney Resort in order to create

and launch bakery products in Mickey Mouse or other cartoon designs in Shanghai Disney

Resort and BreadTalk’s outlets as can be seen in Hong Kong Disneyland that the bakery is

offered in cartoon design in the outlet (Disney Parks, n.d.).

27

In order to entice Disneyland to have BreadTalk on site, BreadTalk may purpose to return

Disneyland with royalty fees and 40% operating profits of all the BreadTalk outlets in Shanghai

Disney Resort.

10.2 Price

The Premium pricing strategy should be adopted. This pricing strategy intended to

exploit the tendency for buyers to assume that expensive bread enjoy an exceptional reputation

or represent exceptional quality and distinction (Gettings ,2002). BreadTalk therefore should

maintain the price of its products around 10% - 15% higher than the industry average in order to

reflect its premium brand image and encourage favourable perceptions among the target markets.

10.3 Place

Supply Chains

China agriculture ranks first in the world in terms of the production of cereals, cotton,

fruit, vegetables, meat, poultry, eggs and fishery products (Ministry of Agriculture, n.d.). Hence,

BreadTalk does not demand to import ingredients because it could have ingredients in a cheaper

price in China comparing to Singapore. However, a logistic system in China to transport the

agriculture products is lack of safety and not very effective because of pollution, effects of

exhaust emission, traffic congestion and wastage exist in agriculture products in the logistic.

Since BreadTalk demand good quality of fresh ingredients to produce and serve fresh

bakery, it should partnership with an experienced and reliable company to supply and deliver

ingredients in each region. As can be seen in Huadong region (East China), The BreadTalk

Group has been partnership with Ajinomoto Bakery to develop a joint venture facility to produce

frozen dough for bakeries (BreadTalk, n.d.).

Diverse distribution channels

BreadTalk do not require outbound products from the main company because every piece

of bread is baked freshly every morning and served in a store. By this way, BreadTalk still need

to deliver ingredients every day. BreadTalk therefore should have a warehouse like a central

kitchen to store and prepare the ingredients from its suppliers before delivering to each

28

BreadTalk outlet in an area. The warehouse will be located in each 1st tier cities of Chin that

BreadTalk has opened its outlets such as Shanghai, Beijing, Tianjin and Chongqing. With these

warehouses, BreadTalk could be able to improve the logistic system in order to deliver fresh

ingredients daily. Likewise, it could be able to provide improvement for its product quality

standard by conducting the quality checking for the ingredients from its suppliers before deliver

to the BreadTalk outlets.

Store locations

BreadTalk will mainly expand its outlets through franchising. By doing so, BreadTalk

could reduce risks and investments in expanding the outlets. According to the target markets, the

expansion of BreadTalk outlets will primarily be located at large community malls, business

centres and MRT stations in 2nd

and 3rd

tier cities due to high potential to attract attentions for the

target audiences.

As mentioned above about Shanghai Disney Resort, BreadTalk should also purpose as a

partnership to open its outlets in the Disney Resort. According to Travel China Guide (n.d.),

Shanghai Disneyland is projected to have around 7 – 17 million annual tourists visiting. Thus,

this could be good opportunity for BreadTalk to widen its market and increase sales.

Franchise

The franchisee will be selected after it has satisfied the qualification criteria of

BreadTalk comprising of having a strong network of contacts and financial background

(BreadTalk, 2003). The franchisees have to sign a 10 year agreement with an option to

renew, plus an estimated initial start-up investment of US$500,000 to cover master

franchise fee and preparation of the first outlet (Bursa Franchise, n.d.).

In order to heighten the possibility of success, BreadTalk has created the franchise

division to work with its franchisees about the selection of locations and outlet designs.

The selection process is monitored by the franchise division and reviewed by the

management team. All of the franchisees are required to experience 3 – 6 month worth of

training upon signing on before they can actually open their first outlet. Moreover,

29

BreadTalk has scheduled regular visits to each franchise outlet in order to maintain its

high quality standard of operating procedures, products and services (Morgan, 2010).

Mobile and Internet application

This application is a channel for customers to place their orders to BreadTalk. The

application will be provided on the official BreadTalk’s website in China and on BreadTalk

application in smartphones. The customers can simply access to the website or application via

their smartphones, then choose bread or cakes and place an order respectively with the minimum

purchase of 10 Yuan. After the order has been placed, there will be 2 options for the customers:

Pre-order: The customers are willing to collect the order by themself at the store

and time that they have selected. With this method, the customers are required to

make a payment via Credit/Debit card only.

Free delivery: BreadTalk will deliver the order to the customers within 30

minutes. With this method, the customers are required to make a payment via

Credit/Debit card or cash.

Regarding the Customised service, the customers could also place their customised orders

through this application. The customers can simply access to the website or application via their

smartphones, then choose the Customised service, then start create their own bread or cakes, and

place an order respectively. After the order has been placed, the customers will follow the same

exact method as described above.

10.4 Promotion

Golden hour

Since BreadTalk bakes a new bread every day. Even though some of the breads could not

be sold out in one day, BreadTalk will not keep and offer that bread again in the next day

(BreadTalk, n.d.). This could cause lots of loss in terms of resources and profits.

The Golden hour is the promotion to encourage customers to buy more before the outlet

is closing every day in order to solve the above problem and increase sales. The promotion will

offer customer a 30% discount for breads in the last hour of every day. This promotion could

30

attract customer attentions and persuade them to buy more bread in last hour of store operating

time. However, the customers need to understand that if they want new baking bread, they need

to come earlier because most of the breads that BreadTalk offers in last hour promotion are not

newly baked.

Traditional moon cake promotion

Chinese culture is so diverse and unique, yet harmoniously blended, and presents itself an

invaluable asset to the world (Chinahilight.com, n.d.). Chinese Moon Festival is traditionally

celebrated on the day 15th

of the eighth lunisolar month which is in September or October.

Chinese people believe a full moon is a symbol of peace, prosperity, and family reunion. On

Mid-Autumn Festival night the moon is supposed to be the brightest and fullest, which is why

the festival is also known as the "Day of Reunion" and the "Moon Festival". In the festival,

Chinese people are having dinner with family, making moon cakes, and lighting up Kongming

lanterns. BreadTalk should take this opportunity serving a special moon cake edition as a one of

its major menu during the Mid-Autumn Festival. It could attract attentions and gain awareness

form the customers as well as encourage a first try from new Chinese customers.

Talk through breads

Under the on-going international campaign “Get Talking”, BreadTalk should promote the

“Talk through breads” as its promotion on the coming Valentine’s Day in China. The idea of this

promotion is to encourage customers to express their feelings to family, friends or lovers by

writing message on breads through the Customised service with free charge of services. The

breads will be delivered with one red rose as a complement from BreadTalk to the person on the

exact time and place that the customers have chosen. Therefore, BreadTalk could be able to

create lots of awareness and gain more preference form the customers who would like to

specially impress their lovers with something new and for those who have limited budget. This

promotion will be offered only in February.

31

Digital billboard

Advertising strategies

Internet advertising

As mentioned in PESTEL analysis that China has become the world’s largest Internet

network following, internet will be utilised as a main media for advertising. A Facebook page,

Twitter and Instagram of BreadTalk will be created and encourage customers to follow. The

interactive marketing team will be formed to harness these social media. BreadTalk’s products,

promotions and campaigns will be greatly promoted through these channels in order to reach out

the mass target markets.

Outdoor advertising

Outdoor advertising will be used as support media for BreadTalk in order to create brand

awareness and recognition, and remind customers about the on-going promotions and

campaigns.

o Billboards

Large 3D and Digital billboards in the urban areas of 1st, 2

nd and 3

rd tier cities could be

used as one of BreadTalk’s advertising tools. The purpose of using large billboards is to create

awareness of BreadTalk in the mass market rather than promote its product. Billboards

advertising also contribute to reflect the prestige image of BreadTalk.

3D billboard

32

Small billboard Brochure

Transit advertising

On the other hand, small billboard advertisements and brochures are likely to be used in

order to promote certain products and promotions such as the Golden hour, Traditional moon

cake and Talk through breads. BreadTalk could use small billboard advertisements at its outlets

whereas brochures can be given away at the MRT station or around the outlet area.

o Transit advertising

In order to reach out target market effectively, transit advertising could be adopted.

According to the target markets are working people, most of them are using public transportation

like MRT in rush morning. Additionally, there are 14 metro lines and 329 stations. The Shanghai

Metro ranks in the third place of the world in annual ridership with 2.5 billion rides delivered in

2013 (回顾上海地铁, 2013). And on a normal weekday over 8 million people use the Shanghai

Metro ("889.8万人次 岁末上海地铁再创客流新高". 上海地铁运管中心, 2014). Moreover, the

expansion of BreadTalk outlets will be primarily focusing to open at major MRT station in the

2nd

and 3rd

tier cities. Therefore, painting BreadTalk creative advertisement at MRT stations in

the 1st, 2

nd and 3

rd tier cities could be able to remind the customers about promotions and

campaigns advertised on the internet, significantly increase customer awareness and stimulate

the sales of BreadTalk.

33

10.5 People

Employee training programs

To guarantee premium services provided to customers, BreadTalk needs to ensure the

efficiencies of the employees in terms of positive opinions, readiness and service minds. Hence,

BreadTalk should provide a training program for its staffs and its franchisees’ employees before

actually start working. In the training program, it is designed to build organisation culture by

introducing BreadTalk’s history, visions and missions in every program. The training will be

divided into 2 programs including bread & cake baker and service staff. Each program is directly

related to the knowledge and skills to function a particular job.

As it is needed to employ Chinese staffs, many of them may have never done the

particular jobs before. In the case of new employees, the training is absolutely necessary for

them to learn high quality standard of services. It also gives the employees an idea how to

function their jobs as well as confidences in their abilities. Moreover, it greatly diminishes the

chance of making mistakes of new staffs that may ruin BreadTalk’s profits, credibility, image

and reputations.

Control and Evaluation

In order to maintain good performance standard of the employees, an evaluation will be

conducted every 3 months. It will focuses mainly on staff performance in the outlet, resources

used and customer satisfaction. Firstly, a performance of staff will be tested by a store manager.

The store manager will observe behaviour of the staffs about concentration in their job and how

well they perform. If the manager notices a drop in performance, he/she needs to approach them

to encourage or find out what is the reason that causes the performance dropped. Secondly,

BreadTalk should evaluate the performance by inventory usage such as failures in baking

process or failures in delivery service to customers. This evaluation can be testing by the amount

of wasted resources that the staffs made during their works. Lastly, customer satisfaction could

be evaluated by the number of negative and positive feedbacks given by the customers through a

customer survey and a feedback box.

34

10.6 Process

Self-service

In every BreadTalk outlet, it is a self-served bakery. Customers may use a tongs and a

tray to select breads that they want to purchase from the shelf. After that, they need to take the

breads to the cashier counter in order to make a payment by cash or Debit/Credit card, and then

the employees will package it for the customers.

Customer interactive

BreadTalk should provide a feedback page on its official website for customers to give

their feedback about the products and services. Customers can simply post their comment or

feedback online in the website via their smartphones. The page will be checked daily to solve the

problem and improve the quality of products and services. Moreover, BreadTalk’s staffs in each

outlet should approach customers to interact with them about their satisfactions such as the

quality of products and services of their last purchase in order to seek for suggestions and

improvement as well as encourage them to participate in the feedback page on the website. After

that, the manager of the outlet may report to the main company to consider the improvement

accordingly.

35

See through kitchen Opened fresh design

10.7 Physical evidence

See-through Kitchen

According to the research about Chinese customer behaviour, many people are willing to

see the process of cooking to prove about the hygiene level since China has a low level of

regulations to control about food’s hygiene (Yongmin, 2007). Whereas many bakery stores have

covered their kitchens, every outlet of BreadTalk has a signature design called See-through

Kitchen that allows customers to actually see ingredients, chefs’ expertise and the process.

With the See-through Kitchen, the customers could be assured that BreadTalk have a

very high hygiene level. The kitchen also illustrates the high technological innovation of

equipment using for baking a bread and cake. These would be advantages to BreadTalk gaining

the customer awareness and increasing the curiosity among its customers.

36

11.0 Implementation and control

11.1 Implementation

In order to be able to compete and success in the intense bakery market in China,

BreadTalk should be flexible and agile in operating. It therefore should adopt the marketing

Implementation-through-Change approach. Affordability budgeting could be utilised to do the

marketing budget by using the retained profits from the last year as the initial capital which is

around $22.4 million (BradTalk Group Limited, 2013).

Time Frame Activity Description Budget

1 March - 1

July 2015 Warehouse

A warehouse is required to store

ingredients before delivering to each

store in an area.

$1,000,000

Start at 1 July

2015

Mobile and Internet

Application

Online application and website allow

customers to place an order or customise

their bread and cake via their computers

or smartphones.

$100,000

Start at 1 July

2015 Golden hour

A 30% discount promotion will be

offered in the last operating hour of

every day.

$500,000

February 2015 Talk through breads Free service charge for using

Customised service. $300,000

1 June - 1 Aug

2015

Internet and

Outdoor Ads

Internet Ads

Through social media

Outdoor Ads

Digital billboards in urban areas.

Transit advertising in MRT stations

in 1st, 2

nd and 3

rd tier cities

$3,000,000

37

11.2 Evaluation and control

Formal control

The marketing plan will be able to achieve and success if the company implemented

properly by using Output control, Process control and Input Control.

Input control

Evaluation of product quality by getting feedback from

customers.

A feasible budget for the plan should be estimated and

prepared by financial management team.

Process control

Ensure employees’ skills to reach the standard.

Provide a great work environment due to management

commitment.

Output control The contrast of gross profit and sales volume in the budget for

estimating how much it could gain from a new plan.

Informal control

Focus on the commitment, satisfaction and confidence in knowledge and skills of all

employees. It is essential to train the employees and make them feel familiar with the company

goal, culture and process.

Employee Commitment and

satisfaction

Encourage and guide employees to perform their job

effectively.

Arrange personal need for each work with clear goals.

Employee Social Control Arrange more group work for employees

Arrange activities and events for employees to strengthen

their work relationships.

Employee Cultural control Working language in the company, employees are suitable

to speak in their mother tongue.

38

Contingence plan

Based on the action plan, in this contingency plan;

The first key assumption to secure the 15% increase in sales is the 30% Discount in

Golden hour promotion. However, if the strategy is not effective so that people are uninterested

in it, therefore, BreadTalk could consider about using the buy 2 get 1 more promotion instead.

The seconded assumption is to make sure that the brochure and billboard advertisements

are attractive to the target markets. If the strategy cannot attract customer’s attentions, BreadTalk

should consider adjusting the advertisement contents, contexts and placing.

The third assumption is to ensure the Internet application allows customers to place an

order or customise their bread and cake. However, if the Internet application is not popularised

for the mass market, BreadTalk should provide some sales promotions or discounts to encourage

the customers to use the Internet application.

12.0 Conclusion

In conclusion, to be successful in product line’s expansion in China, BreadTalk should

continue using its differentiation strategy to position its products differently among the

competitors in the market. According to the analyses in this study, the Chinese market would be

the largest market and the most promising opportunity to expand and sustain its business.

Therefore, as discussed in the marketing strategies, the 7Ps strategies could have been carefully

adopted and implemented in order to penetrate the Chinese market and increase its sales,

revenues and profits.

39

13.0 References

Alexandre, F. & Mendes, C. (2011). Growth, Consumption and Political Stability in

China. Retrieved from http://www.nipe.eeg.uminho.pt/

Alice, Angeleyes. (2013). Pork Floss Buns. Retrieved from

http://biteonit.com/2013/04/24/pork-floss-buns/comment-page-1/

BreadTalk (n.d.). Our Story. Retrieved December 31st 2014 from

http://www.breadtalk.com.sg/ourstory.php

BreadTalk (n.d.). Bakery, Business Review. Retrieved December 31st 2014 from

http://www.breadtalk.com/business-review.html

BreadTalk Group Limited (2003). Annual report, BreadTalk Group Limited. Retrieved

November 5th

2014 from

http://breadtalk.listedcompany.com/newsroom/BreadTalk%20AR%202003.pdf

BreadTalk Group Limited (2012). Annual report, BreadTalk Group Limited. Retrieved

November 5th

2014 from http://breadtalk.listedcompany.com/misc/ar2012.pdf

BreadTalk Group Limited (2013). Annual report, BreadTalk Group Limited. Retrieved

November 5th

2014 from http://breadtalk.listedcompany.com/misc/ar2013.pdf

BreadTalk Group Limited (2014, November 4). Financial Statement and Dividend

Announcement for the Third Quarter and Period Ended 30 September 2014. Retrieved

from

http://breadtalk.listedcompany.com/newsroom/20141104_181235_5DA_8SIF4VR9UJFF

MBQ7.1.pdf

Bursa Franchise (n.d.). BreadTalk. Retrieved January 5th

2015 from

http://bursafranchise.com/breadtalk-indonesia.htm

Carrie. (2005). Bread Talk-The Trendy Bakery. Retrieved from:

http://carrietse.blogspot.sg/2005/11/bread-talk-trendy-bakery.html?m=1

CCTV News (2014, March 11). GDP growth, inflation, employment all key factors for

China´s 2014 economy. Retrieved from http://english.cntv.cn/20140311/103566.shtml

CCTV News (2014, March 6). China finance minister downplays GDP target, stresses

employment. Retrieved from http://english.cntv.cn/20140306/103362.shtml

40

Central Intelligence Agency (CIA) (2014). The World Factbook-GDP (PURCHASING

POWER PARITY). Retrieved from https://www.cia.gov/library/publications/the-world-

factbook/fields/2001.html

Chen, Qi. (2011). The research report for population in China. Retrieved from

http://www.chanet.com.cn/html/top2/merchanet_1_3.htm

Chen, Qi. (2011). The research report for customer behaviour about bread in Xuzhou

city. Retrieved from

http://wenku.baidu.com/link?url=T2wOLIGZMJw0bQ0Wdp6woLwtS5h7qtuCdnN9ArQ

EYF8EEEDdFybP4E4Zp7BhpoJW6V49gEjt4cugczSACJdkPrs5Y2BnXMAty2ywikmo

moq

China Briefing. (2013, Octorber 9). China’s Coffee Industry is Brewing. Retrieved from

http://www.china-briefing.com/news/2013/10/09/chinas-coffee-industry-is-brewing.html

China Daily. (2010, July 26). Holiland looks to new strategies in online market.

Retrieved from http://www.chinadaily.com.cn/bizchina/2010-

07/26/content_11048722.htm

Chinahighlights.com. (n.d.). Mid-Autumn Festival, Chinese Moon Festival, 2014 Zhong

qiu jie in China. Retrieved from http://www.chinahighlights.com/festivals/mid-autumn-

festival.htm

Christine International Holdings Limited (n.d.). Group profile. Retrieved December 30th

2014 from http://www.christine.com.cn/html/about_profile.php

Daxue (2013, February 27). Marketing research on Bakeries market in China. Retrived

from http://daxueconsulting.com/marketing-research-on-bakeries-market-in-china/

Disney Parks. (n.d.). Market House Bakery | Hong Kong Disneyland Resort. Retrieved

from https://www.hongkongdisneyland.com/dining/hong-kong-disneyland-park/market-

house-bakery/

Franklin, L. L. (2013, April 1). China: Economy, Social Stability, Leadership and

Foreign Policy. Retrieved from http://www.heritage.org/research/lecture/2013/04/four-

issues-facing-china

Gao, H. (2012, December). Bakery Products-China. Retrieved November 8th

2014 from

http://store.mintel.com/bakery-products-china-december-2012?cookie_test=true

41

Gettings, C. (2002). The Advertising Handbook. New York. Routledge. ISBN 0-415-

24391-2

Habib, K. (2014). Artisan Loaf and a bit of BreadTalk. Retrieved from

http://addmorebutter.com/2014/01/16/artisan-loaf-and-a-bit-of-bread-talk/

Huidian Research. (2013, June). Research and Development Trend of China Bakery Food

Industry, 2013-2017. Retrieved from

www.researchandmarkets.com/reports/2570038/research_and_development_trend_of_chi

na_bakery

IBIS World (2011, November). Bread & Bakery Product Manufacturing in China.

Retrieved from http://file:///Users/macbookair/Downloads/Bread--Bakery-Product-

Manufacturing-in-China.pdf

International Enterprise Singapore (2012). FTA Singapore Government. Retrieved from

http://www.fta.gov.sg/sg_fta.asp

Jansen, K. (2014). BreadTalk Singapore Launches New Natural Yeast Bread Series Made

Using Natural Yeast Dough. Retrieved from

http://www.darrensim.com/2014/06/23/breadtalk-singapore-launches-new-natural-yeast-

bread-series-made-using-natural-yeast-dough/

Jazpster (2013, August 6). BreadTalk launches Hello Kitty collection. Retrieved

December 30th

2014 from http://six-and-seven.com/2013/08/06/breadtalk-launches-

hello-kitty-collection/

Jessop, S. K. (2010, December 21). Bakeries Claim a Growing Niche in China.

Retrieved December 29th

2014 from

http://www.nytimes.com/2010/12/22/business/global/22chinabread.html?pagewanted=al

l&_r=0

Karisfoodie, G. (2013). Bread Talks. Retrieved from:

http://karlsfoodie.blogspot.sg/2008/08/bread-talks.html

Lawton, T. (2012, January 18). Pretty graphs on Chinese internet user demographics.

Retrieved from http://www.nanjingmarketinggroup.com/blog/chinese-internet-user-

demographics-jan-2012

Lee, J. (2013). BreadTalks’-FLOSS. Retrieved from:

http://graziecasem.wordpress.com/2013/01/24/breadtalks-floss-2/

42

Ministry of Agriculture of the People's Republic of China. (n.d.). Retrieved from

http://english.agri.gov.cn/aboutmoa/message/

Morgan, J.P. (2010, September 13). BreadTalk Group Limited. Retrieved from

http://breadtalk.listedcompany.com/misc/100914_JPM_BreadTalk_Group_Limited_2010

-09-13_471410.pdf

OCBC (2011). BreadTalk Group Ltd (013/06/2010). Retrieved from

http://www.ocbcresearch.com/pdf_reports/company/breadtalk-110310-oir.pdf

OCBC (2012, August 13). Investment Research, BreadTalk Group. Retrieved November

5th

2014 from http://breadtalk.listedcompany.com/misc/OIR_2Q12.pdf

Pimcharice (2012, November). Industry Analysis BreadTalk. Retrieved November 8th

2014 from http://www.studymode.com/essays/Industry-Analysis-Breadtalk-

1239467.html

Rachel, C. (2014, November 9). PM Lee Hsien Loong meets China's Xi Jinping on

sidelines of Apec Summit - East Asia News & Top Stories - The Straits Times. Retrieved

from http://www.straitstimes.com/news/asia/east-asia/story/pm-lee-hsien-loong-meets-

chinas-xi-jinping-sidelines-apec-summit-20141109

Ryu, S., Jang, W. & Cho, H. (2014). China Market Entry Strategy of Paris Baguette,

Journal of Business Case Studies, number 2, volume 10.

Schiavenza, M. (2014, October 8). China Economy Surpasses US in Purchasing Power

But Americans Don’t Need to Worry. Retrieved December 30th

2014 from

http://www.ibtimes.com/china-economy-surpasses-us-purchasing-power-americans-dont-

need-worry-1701804

Shanghai Disney Resort (n.d.). Welcome to the Shanghai Disney Resort. Retrieved

January 1st 2015 from http://www.shanghaidisneyresort.com.cn/en/about/welcome-to-

the-shanghai-disney-resort/

Sharon, Teng. (2011). BreadTalk analysis. Retrieved from

http://eresources.nlb.gov.sg/infopedia/articles/SIP_657_2005-01-25.html

Southern California Public Radio. (2013, January 29). "Starbucks of Taiwan"-85 Degrees

C-expands in Southern California. Retrieved from

43

http://www.scpr.org/news/2013/01/29/35753/85-degree-c-taiwanese-bakery-open-more-

stores-cali/

Statistics about the Population Growth in China, 2001-2013, World Bank, July 2012.

Retrieved 14 December 2014

Straits Times (2009, December 20). The bad bag habit. Retrieved from

http://wildsingaporenews.blogspot.sg/2009/12/bad-bag-habit.html#.VIvvRqSUcgw

The Encyclopedia of Earth (2012, August 10). Geography, China. Retrieved from

http://www.eoearth.org/view/article/151099/

The Science Technology and Security Forum. (2013). The Phenomenon of 'Technology

Transfer': Lessons from China. Retrieved from http://stsfor.org/content/phenomenon-

technology-transfer-lessons-china

Tianjin TEDA Trade Promotion Centre. (2014). Tianjin Development Zone Holiland

Cake World Co., Ltd. Retrieved from

http://www.tradeteda.org/en/enterprise/detail.asp?id=183

Travel China Guide (n.d.). Shanghai Disneyland. Retrieved January 1st 2015 from

http://www.travelchinaguide.com/attraction/shanghai/disneyland-park.htm

Trefis Team. (2014, October 17). China mobile earnings preview: 3G, 4G adds, subsidies

in focus . Retrieved from

http://www.forbes.com/sites/greatspeculations/2014/10/17/china-mobile-earnings-

preview-3g-4g-adds-subsidies-in-focus/

Upton, J. (2013, June 4). China's plastic-bag ban turns five years old. Retrieved from

http://grist.org/news/chinas-plastic-bag-ban-turns-five-years-old/

Wageman, R. (2014). China's new franchise rules. Retrieved from

http://www.franchising.com/articles/chinas_new_franchise_rules.html

WikiWealth. (n.d.). Diverse distribution channel (BreadTalk). Retrieved January 5, 2015,

from http://www.wikiwealth.com/five-forces-supplier:breadtalk:diverse-distribution-

channel

Yongmin, B. (2007, April 19). The Challenges for Food Safety in China, China

Perspectives [Online], 53 | May- June 2004. Retrieved from

http://chinaperspectives.revues.org/819

44

Zi. Y. (2013). Why White- collar worker always eat bread. Retrieved from:

http://tnb.xywy.com/yinshi/926356.html

45

14.0 Appendices

Appendix 1:

Appendix 2: