Charlene Ashley, Contributor
Honey Bun CEO Michelle Chong. - CONTRIBUTED
STARTING OUT in today's business environment is often difficult, staying on top is generally trying and consistently delivering quality is challenging, at the very least. Competition is here to stay. So how does a small business survive in a large industry?
Strategic planning and marketing are often 'fashion statements' that companies make. But how many companies really mean it? How many understand what it means. Today for Marketing Review we take a look at a medium sized company making big sized waves within the baking industry Honey Bun.
Meet entrepreneurs Michelle and Herbie Chong. They returned to Jamaica from Canada in 1982 where Herbie owned a pizza store. Already engaged to be married, the two started looking around for another engagement - a business. Both were to come that year.
First the marriage and then the purchase of the pastry shop located in Spanish Court. The shop was called Honey Bun. The newly weds set out with their challenge to grow the business. Little would they know that twenty three years later, they would be sitting at the helm of a major enterprise with island wide distribution.
But what has been the recipe for their success? What has been their strategy?
I suggest that there are (in summary) five ingredients in strategic planning:-
Structure - Use a structure of thought to tackle the problems
Analysis - Apply this structure to the analysis of data
Integration - Use the different types of analysis presented are then integrated in order to arrive at a decision
Evaluation - A system of evaluation may then be devised to monitor the allocation of resources
Feedback - Leave the door open to modify the strategy as events unfold.
Let's see how this process was integrated into Honey Bun's success plan:-
ANALYSING THE MARKET
Faced with soaring overheads for the retail store, the couple sat down to structure their thoughts around finding a solution. It was from here, that the realisation came, that it was more profitable to focus on the wholesale trade delivering a focused, high-quality line of products. After careful analysis of the market, the strategy to be employed was simple - sell to a high volume retailer with high influence. This influence would be used to promote the products, getting the word out on the streets thereby building the company's brand and reputation. Believe it or not, these savvy entrepreneurs through this process had just proceeded through steps 1-3 in the strategic planning process. Through their derived strategy of 'marketing through association', the sales volumes would increase and economies of scale could be enjoyed, leading to lower costs and a more profitable business entity. The high volume retailer selected was surprisingly unusual - vendors.
As business progressed it was found that the margins on their mainstay item, donuts was being increasingly eroded due to increasing competition. The company then made the conscious decision to expand their product line, still targeting the same users, though remaining open to a widening of the target market within a focused product portfolio system. The company now produces a full line of breads, buns, donuts and cakes, which are, distributed island wide. A very proud, CEO, Michelle Chong explains " Being competitive, has meant the use of first world standards from the get go... from the quality of our packaging and labelling through to the process with which we produce our products. We are proud to say that other companies now use Honey Bun as a benchmark. " She went on to explain that the company was now working on becoming HACCP certified. "HACCP is an international food safety programme. We have already invested heavily in a new factory and have invested in extensive training for our people to develop the skills to manage a first-world operation. Expanding our line and maintaining our margins had to be done at first-world standards".
For any good entrepreneur, steps 4 and 5, evaluating and adapting, are constantly being carried out. Always looking to grow the brand, Michelle kept in mind that a product can be thought of as a bundle of characteristics, which appeal to different consumers in different ways. With this in mind, a critical look at their product portfolio was embarked upon. In time a new product line - BUCCANEER was developed.
SEGMENTING THE MARKET
Buccaneer is a line of fine cakes, featuring varying sizes of fruit and rum cakes targeted at various markets. Interestingly, the packaging and positioning of the product was changed dependent on the market. In the overseas market and local gift shops, the product is positioned to high-end customers as top-of-the-line gift items. It is also retailed at supermarkets and small stores and shops with varying packaging for general consumption.
Market segmentation though seemingly daunting is fairly simple - a group of consumers within a broader market who possess a common set of characteristics may be focused on. Often consumers in a segment respond to market mix variables in broadly the same way. Product differentiation extends the concept of segmentation to the determination of which bundle of characteristics should be incorporated in the version of the product targeted at each group. A mouthful, eh! Simply put, like Honey Bun did, they researched the market and got a clear understanding of variances in tastes and attitudes amongst varying groups of persons. With this in mind, they were able to successfully segment their markets and launch a new product line to satisfy customers not previously targeted.
Responding to the Market
Having your finger on the pulse of the business is critical to success. Honey Bun has designed products for various markets... and ensures that they are packaged in a manner suitable to the targeted customer. As such the company also operates two outlets (on Eastwood Park Road and East Street). Here, they service their vendors who aided in their start up, along with other wholesale customers at their convenience. Again they got an important ingredient in marketing right - give in the customer what the want, in a way they want, at a price they can afford at a location convenient to the customer not to the supplier.
OTHER PRODUCTS
Under the Honey Bun brand the company produces donuts - single serve, 6-pack and 8-pack; raisin bran bread, cinnamon rolls, cupcakes, pineapple cake, marble cake, cheese bread and Easter and spice buns. The Buccaneer line of products includes fruit and rum cakes in various sized packages. Honey Bun is exported to the US, Canada and the UK.
So can they survive in the baking industry? They seem to have the right ingredients and are aware of the important determinants of a product's success. Namely the price of the product compared to similar products and the degree to which consumers perceive the product as having different offerings. A product with high-perceived differentiation and low perceived relative price is likely to succeed.
They were able to follow the key steps in strategic planning ... ensuring clear thought and structure, analysing the market, integrating various feedback in to strategy plans, consistently evaluating their activities and markets within which they operate and consistently reviewing activities through ensuring honest and open feedback from customers, shareholders, staff and partners.
To survive in this ever changing business environment companies must incorporate practical and effective marketing strategies and ensure there is development of clear corporate strategy, portfolio planning and a focus on core business.
Charlene Ashley is a marketing consultant with Ashchar Consultants Ltd
