SUBJECT NAME: Microeconomics
SUBJECT CODE: BEC1001
ACADEMIC YEAR: AY 2011/2012, April Semester

“By submitting this work, we are the declaring that we are the originators of this work and that all other original sources used in this work have been appropriately acknowledged. We understand that plagiarism is the act of taking and using the whole or any part of another person’s work and presenting it as our own without proper acknowledgement. We also understand that plagiarism is an academic offence and that disciplinary action will be taken for plagiarism.”
Name of Student Matriculation No.

Tan Chee Yen 1106673E

Laura Lim Rou Tian 1106550E

Fang Lee Mun 1100096E

Adriel Li Yong Heng 1104200I

Yap Seow Ting 1103111I

Tutorial Class : _________T27______________________________
Tutor : _____Mr Simon Seah ________________________
Diploma : _____Diploma In Leisure & Resort Management __
Date of Submission : _______________31 July 2011_ _____________

Information on the Retail Outlet
In this report, we will be focusing the BreadTalk outlet, which is located at Compass Point in the East region of Singapore. BreadTalk was found in 2000. In the years, it has expanded to many countries with more than 300 boutique bakeries, 40 food atriums and restaurants. BreadTalk has been incessant creating new tastes and designs of breads, buns and pastries such as macaroons, full cake as well as dessert cake that offer a wide variety.
BreadTalk offers up to 150 varieties. Each outlet provides around 40-60 different varieties each day, depending on the size of the outlet. For every 4 months, BreadTalk will definitely produce 10 new sets of varieties to satisfy the different likings and changing demands of the customers.
BreadTalk has 25 outlets in all areas of Singapore: Central, North, South, East and West.
Products and Customers
All customers are highly valued as they bring in revenue to the shop. It is to satisfy customers’ needs, as they will have bread for breakfast and pastries for teatime. However, it is very competitive because there are many bakeries allocated in the market field and customers’ tastes and preferences are always changing.
BreadTalk also has its own creation, with exotic names like "Spice Girl", "Earthquake Cheese Loaf", “Mount Fuji Swirl”, their most popular bun “Chicken-Floss aka Flosss” – with or without seaweed wasabi and etc. It has recently also introduced green tea and pandan flavoured mooncakes in its stores, in conjunction with the local mooncake festival.
The innovative recipe of Breadtalk includes buns and pastries with meat, fruit, vegetarian, and nuts as fillings. Profile Target
BreadTalk cater for the entire populations. They follow and keep up with the current trend of the society and constantly come up with innovative changes of products. Individually, they design products with cartoons to captivate the attentions of the children. BreadTalk targets teenagers, adults and senior citizens as it can sustain their hunger, convenient to everyone and is essential to everyday’s life. As the products provided in BreadTalk are of reasonable prices, it opens out to everyone in all income groups.
Pricing and Promotion
The products in Bread Talk are definitely highly price elastic in demand as there are many close substitutes available. For example: Whenever Breadtalk increases the price of a product, they will generally face a decrease in the percentage of quantity demand which is much greater than the percentage of price increase. When the price is brought down, Breadtalk will also face an increase in the percentage of quantity demand which is greater than the percentage of price decrease, shown in figure 1.Majority of the customers are willing to change their taste and preferences accordingly to the price increase. The new products in BreadTalk are price inelastic in demand as other competitors do not have the products they produce, as mentioned above. Thus, the customers will still purchase them for their satisfaction despite the price increase which results in experiencing only a slight decline in the percentage of quantity demand despite there has been an increase in the percentage of the price, shown Figure 2. This can be illustrated by the graph shown below:

Price Price

P2
P2

P1
P1

D D
Q1
Q2
Q1
Q2 Quantity Quantity
Figure 1
Figure 2

Using Penetration Price strategy, BreadTalk is able break into market, develop market share and build customer goodwill and loyalty. Also, it creates impression of ‘high-pricing’ in competitors’ products. The other strategy used is through value pricing, which firm price their products based on the perceived worth of the good or service to its intended customers. As shown in BreadTalk, the prices of the products are above average as compared to other competitors. It allows customers to know the quality of BreakTalk in terms of freshness, and ingredients used are definitely worth the price that they are paying for.
Competitors will remain their price as it is, however, BreadTalk’s innovation and creativity do leads into temptation whereby customers would spend the extra cost willingly to buy and satisfy their appetite. Furthermore, they are well-known for their strong brand equity, innovative to keep up with their customers’ changing taste.
The pricing of breads sold in BreadTalk starts from SGD$1.20 onwards. While the dessert cake sold are from $4.90 onwards, full-size cake from $39 onwards.
Non-priced competition: BreadTalk have “see through” kitchens to present the chef baking procedures to the customers. This showcase will lure customers to try their bread.
Encounter the best experience seeing your favourite buns being prepared right in front of your eyes is always an enjoyable experience. BreadTalk showcase their expertise of their bakers and guarantees that the bread sold in the store comes directly fresh from the oven.
Building good relations with the public, BreadTalk can obtain favorable publicity and developing a good company image. BreadTalk has participated Corporate Social Responsibility (CSR) programme to give back to society. Breadtalk created 'Ping Chuan Xiong' 平川熊 (Peace Panda) - Panda bear shaped bun with four different expressions symbolizing the terror of the 7.8 magnitude earthquake to play a part in relief efforts for Sichuan earthquake victims on 12th May 2008. The proceeds raised went to the Chinese Embassy and Red Cross Society's 'China Earthquake Appeal Fund'. Therefore, BreadTalk held a positive image in customers resulting in more customers patronizing.
By attracting customers’ attention, sales promotion is done such as discounts are given to customers after 9PM daily. It invites and rewards quick response from customers and maintaining the freshness slogan by selling away all the remaining buns for the day.
Celebrating BreadTalk’s 11th Birthday, purchase 10 Buns for $10 storewide while $1.10 individually. Buy 2 Sliced Cakes and Get 1 Free. Lastly, 15% off Classic Cakes from 9-14 July. Enjoy 3% SMART$ Rebates with your UOB Card at BreadTalk
Using Loyalty card with minimum purchase of $5, a stamp is given. Redemption of a free bun is available upon full collection.
BreadTalk also implemented a Package meal with purchase of 5 buns for only $5 and Breakfast set (coffee/tea + bun = $2.10).

Television advertisement and banners are used to attract customers. They also implement their own brand on plastic bags. Pamphlets and coupons also serve as a type of promotion to attract new customers whenever and wherever the name carries it.

Competition

As Breadtalk belongs to Monopolistic Competition in the market structure, Product substitutes are very competitive in the bakery industry as their prices can be comparatively lower and customers face low switching costs. Monopolistic Competition consists of many firms and therefore, holds only small market share. It is differentiated but close substitute products. In the market there are free entry and exit.

In the same shopping mall at Compass Point, the competitors are Prima Deli, Four Leaves, and Bengawan Solo. They have Q-Bread and Swee Heng around same neighbourhood and lastly Bread Connection Bakery, Simply Bread (Fifth Ave), Bread Lover Bakery House Lip
,Bread Point
,Bread Signature
,Baker's Heaven Pte Ltd
,Bread Garden
,Bread Story
,Honey NutriCAKE House
in other parts of Singapore.
Competitors VS BreadTalk in marketing strategy | BreadTalk | Prima Deli | Four Leaves | Plastic Bag with logo and name | X | X | X | Advertisement (Magazine/TV/Web/Promotion/Newspaper/Brochures) | X | X | X | Corporate Social Responsibility | X | | | Privileged Card | | | X | Loyalty | X | | | Rebates on credit card | X | | | Anniversary | X | | X | “After 9pm” Promotion | X | | |

Creating diversity, a wide spread of varieties and customize products to customers’ liking. For example, different type of toppings used. Price of toppings varies corresponding to value of topping (eg. Chocolate fudge costs more than chocolate rice.), all these innovations are suitable for all age groups.
In addition, BreadTalk implemented delivery and the use of EZ Link cards. Allowing customers to try the samples of upcoming buns and improving the packaging. Most creative idea is setting up lucky draws and contests for customers to participate in all their events and buy more than usual in order to win the attractive prizes!
In Singapore, Multi-Racial is one of the most important guideline in business industry and therefore, being fair to every customers and allowing all races to enjoy the privileges of BreadTalk, they also have to be certified with a Halal Certificate.
BreadTalk is located in highly accessible areas where nearby public transport and high human traffic flow areas as it can be more visible and convenient to customers.
BreadTalk has many outlets thus buying in bulks from suppliers lower the cost of raw ingredients. As such, the cost of producing the breads, buns, pastries and cakes are lower. Therefore, the customers purchase them in such low prices.
Conclusion / Suggestion:
Although BreakTalk have been constantly coming out with new products and advertising promotions to remain its competitive edge, the F&B industry in Singapore is highly competitive and fragmented with low barriers to entry. With many bakeries reinventing their existing products and expanding, it gets increasingly difficult to compete for choice locations and market share.
The highly competitive F&B industry results in high demand of staffs therefore, leading to the need in recruiting foreign workers who has passion and right attitude to work in the company. Mainly from China, the staffs have difficulties communicating with customers and colleagues, which causes communication barrier.
There are many substitutes available in the existing market, BreadTalk face threats in the competition, as such; BreadTalk needs to constantly come out with new ideas in order to sustain the customers’ taste and expectations.
BreadTalk is not an absolute choice for the budget-conscious customers as the price of their products are slightly above market price to keep up with their value. However there are a wide variety of promotion activities available for them.
Singapore is a very small island; BreadTalk faces difficulties in finding strategic location to set up more outlets. Therefore, they focus on making their products and promotions as appealing as possible in order to attract customers. In addition, the promotions are mostly of lower price than usual of its product therefore, customers would pay lesser and enjoy the extra satisfaction when they do not pay for.
BreadTalk can consider implementing on personal selling to foster a relationship and make customer feel that they are valued. Customer feels a greater need to listen and respond when personal selling is involved. Thus employee could use this opportunity to interact with the customers to build up good customer relationship while selling the bread. When new creation of product is created, BreadTalk allow customers to try and get their feedback on the new product before official launch. In addition, customer will be given a token of appreciation in a form of gift voucher. Not only this will help BreadTalk to improve its product and it also enables the staff of BreadTalk to interact with customers too.
Coming up with a new membership card for customer’s to sign up and enjoy the privilege of being a BreadTalk Customers of a minimum spending of $30. And Customer will receive a $5 dollar voucher upon signing up for the membership card. Example: Birthday month will get a free mini birthday cake specially make for them. Get a 15% off for every cake purchase. Get your 4th bread for free of the lowest price etc.
Breadtalk can also consider implementing the idea of Do It Yourself (DIY) bread. You can decorate your own bread with ingredient while the bread is already baked for you. Customers will only be paying for the ingredients. There will be staffs to assist and manage the station. This will help BreadTalk improve on its business while customers will be attracted by the new innovation.
With the changing taste of the customers, BreadTalk has to come out with new ideas continuously to meet up with the customers’ demand. For example, introducing waffles and donuts to the shop. BreadTalk can also improvise on the different flavors of the fillings on the waffles so that they do not need to waste their capital in constantly coming up with new ideas.

Appendices and References http://www.bakery.sg/bread_shops.html http://www.breadtalk.com.sg/breadsociety/index.htm#signatures http://www.scribd.com/doc/3699043/BreadTalk-FinalReport http://www.breadtalk.com/breadtalk/promotions.php http://www.breadtalk.com/breadtalk/ourcreations.php http://www.scribd.com/doc/7036613/Breadtalk1 http://infopedia.nl.sg/articles/SIP_657_2005-01-25.html http://www.streetdirectory.com/restaurants/singapore/reviews/branches-Bread+Talk-2016.php http://www.breadtalk.com/about_us.php http://www.reviewstream.com/reviews/?p=51126 http://www.sgrate.com/forum/thread-13107-1-1.html http://www.scribd.com/doc/7036613/Breadtalk1 http://www.scribd.com/doc/7036613/Breadtalk1 http://www.fourleaves.com.sg/webtop/promotions.html http://www.primadeli.com/primacard/primacard.asp http://sg.openrice.com/singapore/restaurant/sr2.htm?shopid=4531