TBUS620 Introduction, Business Model And Strategies Of The Cricket Bakery Assessment 2 Answer
The unique marketing design for the company The Cricket Bakery is outlined in the report which highlights the competitive analysis, and marketing strategy opted by the company projecting the importance of protein-rich diet during the pandemic crisis. Human beings from ancient time have been adventurist to explore their diet preference from vegan to non-vegan options. The excessive utilization of livestock has been the cause of their depletion as well. The marketing report is focused to introduce the client company recognized as The Cricket Bakery with recommendations on the business model and strategies that could support the company in enhancing its revenue and introduce its unique product to the target customers. The bakery focused on introducing cricket-based edible food to be consumed by the youth, which requires minimum water and food to be fed and reared up as the replacement of the livestock.
The marketing report also focuses on the financial plan of the company highlighting every possibility of earning better revenue while being reasonable on the expenditures like advertising and sales and promotion for the products. The timeline and the objectives of the company are highlighted as well with a proper business model which can help the company to propagate its commodities in the target based market to incur profit and earn sustainable brand value for the company.
The focus on the food industry of the future generation will lay on the foundation of utilizing nutrient-dense food that may comprise of insects, bugs, and other animal sources of protein. The vegans may however protest against the depletion of livestock which causes an imbalance in the food chain and adversity for the environment to maintain its equilibrium. Hence, the idea of using insects and bugs like cricket, flies and silkworm have motivated the founders of The Cricket Bakery to use their unique proposition of cricket cultivation and use them to produce flour and powder. This idea of growing food is also believed to be an impactful source of protein, essential amino acids, calcium, iron and omega 3 & 6.
Ruth Galloway and Glenn Kiernan have founded the bakery in the year 2015 which is headquartered at New South Wales, Australia. The business strategy report aims to establish the role of marketing and finance to create various scopes for the client to flourish their business by evaluating their market position, analyzing the future of the industry. The report also aims to decipher the competitive advantage of the company over the rivals by assessing SWOT and Porter's Five Forces Model to determine the growth potential of the client company.
2. Analysis of the Market Situation and Overview of the Industry
2.1. Situational Analysis
2.2. Industry Analysis
The international insect edible food industry has the potential to reach $160 billion by the year 2026. The collaboration between the manufacturers and retailers are enhanced with visible awareness is witnessed among the buyers who are enthusiasts to try new products in the market. The innovative thing of the cricket-based products is that they can be grounded into powder form to make ready to eat meals or converted into edible flour which will provide more nutrients' and proteins with less inhibition from the consumers without having to consume them intact as insects.
Edible cricket flour is the dominant market shareholders have attributed the most to the food sectors across the world. The easy to farm methods, convenient techniques of processing the insects, transforming the grounded powder into protein bars, snacks, and other edible items have consequently witnessed that growth of the company in the industry. The organic food market across the globe has increased from $18 billion to $97 billion, where Denmark shows the highest market share of 13% in 2017 (Lähteenmäki-Uutela et al. 2017). The consumers who have a varied preference for food irrespective of their source have been termed as flexitarians who are flexible in trying new source of meals (Van Huis, 2019). The industry has good marketing opportunities for consumers who are not on healthy diets. At the same time, the protein-rich cricket-based flour can be recommended for them with a reduced psychological barrier in the form of flour which is served directly.
Figure 1: The potential growth opportunity of the edible insect food market
(Source: Reports and Data, 2019)
2.3. Competitors’ Analysis
Porter’s five forces model can be elaborated to determine the competitive advantage of the firm in the insect edible food industry, as mentioned below:
Rivalry among the competitors- The rivalry among the competitors is assessed low in this industry since the conception of consuming edible insects products have been new to the population of Australia in comparison to several other countries like China, Denmark, Iceland and others (Thompason et al. 2015). The competitors of the company are recognized as The Cricket Effect, Circle Harvest, GrubsUp and HoppaFoods. The limited number of competitor reduced the intensity of the competition for the company.
Figure 2: The competitive position and challenges of the dietary inclusion of cricket-based food are represented in the chart.
(Source: Bashi et al. 2019)
Bargaining power of suppliers- The suppliers of the edible cricket-based flours and powder are recognized as the local farmers who have high bargaining power since the suppliers of local cultivated cricket are less in number. At the same time, the market is propagated to grow (Arena et al. 2020). Client relies on total local yield, which gives the suppliers an edge to bargain on the cost.
Bargaining power of buyers- The bargaining power of the buyers is perceived low due to their unawareness of the products and ingredients used. Moreover, the population consuming edible insect-based products are limited who can be easily convinced for more purchase with competitive price in the market while highlighting the benefits of the products.
The threat of substitutes- The threat of substitutes is considered high since the rivals have similar products in the market. The product itself is manufactured from cricket which has a specific limitation of being converted into too many items except for soup and curry, which the company may see as a line of brand extension.
The threat of entrants- The threat of entrants in the market is perceived to be low since the know-how on processing and manufacturing edible products like flour and powder from the cricket is more technology invasive and require good capital investment and knowledge.
2.4. Consumers’ Expectation
Until Europeans landed in Australia, it is believed that entomogaphy did exist among aboriginal people. However, over time, it started becoming rare, with the increasing population of non-aboriginals. The current condition is such that the surveys conducted in 2018 and 2019, have shown significantly less support to insects as food. This can be attributed to the European Effect, to a large extent. However, as the Insect Protein Association of Australia (IPAA) has labelled three insects, namely Zophobas Morio (Super mealworm), Achaeta Domestica (House Crickets) & Tenebrio Molitor (mealworm beetle); as edible and safe for the consumption, there have been some advancements in this line (Roma et al. 2020). Quite a few local companies like Circle Harvest and Client have been producing the insect food for some time now.
Australia being a multi-cultural country, there are extensive chances of varied consumer expectations on insects as food. In order to learn, what are the expectations of consumers in regard to crickets as a food, a survey was conducted which included people from different age groups of 18-30 years, 30-60 years and 60 years above. The findings of the survey gave an insightful data that would be helpful. It was learned that the people hold common perspectives, irrespective of their ages. It significantly affects their expectations, as well. It was observed that people somehow need a strong rationale to accept insect food as an alternative to protein consumption (IPAA, 2020). While some people have resorted to consuming it, there are still many misconceptions surrounding the entomogaphy. First expectation or concern is safety, while many people think it is disgusting to eat insects, the other people look for safety. The second expectation of the consumers is a strong rationale as to why they should prefer insect food over meat or any other protein source. Though there are proven studies that pitch for the consumption of insects due to their nutritional benefits, the client can approach the gymnastics and fitness centres to create a good consumer base
Figure 3: The energy content in cricket is exhibited in this figure which is transformed into edible flour by the company.
(Source: Doberman et al. 2017)
2.5. Barriers and Issues of Alternative Options
The significance of e-retailing has taken four-fold with the advent of a pandemic. While it created havoc among traditional retailing businesses, it always paved the way for them to adhere to the global digitalized world (Sogari et al. 2019). E-retailing is one of the retailing methods suggested for the client as it is safe during the pandemic situation and also feasible for the customers, who might find it hectic to travel far off in the city to buy a product. The other chosen retailing method is Gyms/Fitness centres.
However, there are some barriers to the chosen retailing methods. Coming to the e-retailing, the online shopping websites like Amazon Australia, eBay Australia, Woolworth, they show significantly less support to the edible insect food. Regarding gyms/fitness centres, again, the issue of general negative perspective comes into the picture.
2.6. Segmentation of the market
The segmentation of the market primarily depends on the target market into defined groups based on the demographics, psychographic, behavioral, and geographic orientation. The Client may opt for targeting the market based on psychographic and behavioral pattern. It is assumed that customers tend to avoid insect based products mainly due to the feelings of disgust or phobia (Liu et al. 2020). The psychographic segmentation will be based on the lifestyle, interest, attitude and personality traits of the consumers who can be easily convinced citing the nutritional benefits. The behavioral segmentation is also relevant since the purchasing habit, status of the user and brand interactions with the consumers will benefit the company to understand its potential consumers. The company may tend to invest in B2C segment where the individual customers will be the direct target of the company.
The assortment of products offered by the Client comprises of the protein powder, banana bread, protein pancakes, smoked salt roasted cricket, and pepita mix and wattle seed cricket cracker. The pancakes and protein powder are recommended to be the main products which can attract the potential customers who seek health benefits using variety of products. The ingredients like butter, eggs, coconut oil, milk, and nuts are conventionally used by the company which is believed to be the natural source of proteins, vitamins, amino acids, and omega 3 and 6. The rich content of the products are all health beneficiary which can be conveniently used to replace the junk food out of the platter.
The packaging of the products is vital for the company which needs to highlight the ingredients of the products that might build trust factors among the customers. Attractive packaging with benefits highlighted and translated in two languages will create effective marketing strategy for the product which may create potential base for the customers. Product packaging also comprises a substantial value in attracting the attention of the customers. A clear picture of the product, price of the product mentioned with clarity, mention of the ingredients used, sturdy and eco-friendly materials applied in the packaging enhances the overall value of the product.
Figure 4: The assorted product range offered by the Client.
(Source: Products, 2020)
4. Application of Business Strategy with Implementation Plan
4.1. Selection of the strategy along with the Business Model
Business strategy with a definite business model gives an edge to a comparatively new company in the market. The taste and preference of the customers have to be thoroughly researched at the initial stages. Business strategy of the Client will have to be planned with conscious efforts by recognizing its strength and weaknesses (Johnson et al. 2017). This evaluation helps in building the positive point of sales of the products with efficiency and knowledge of the market demand. The products of the company are unique as well as innovative which can build a strong base for the youth (Modlinska et al. 2020). The inhibition of consuming cricket based flours or pancakes or roasted cricket will be a unique experience for the youth. Hence the prime target must be the youth who are more conscious to build an immune health system. The marketers have to be conscious while advertising for the product since there is a scope to promote immunity and protein based strategy due to the outbreak of corornavirus in the global market. Once the company gets a foothold in the local market, it will be easy to make a transition to product differentiation for strategy for the company.
The present market situation offers multiple business models for a company which is not restricted only to mortar and bricks store. The company already exhibited its presence with an authentic website through which it represents on-demand model for the business. The client can flourish more with networking and banking on e-commerce platform which will give a competitive edge to the business.
4.2. Implementation Plan
4.2.1. Marketing Campaign
The marketing campaign which is flourishing and catching up with the trend is social media platform. The influencers utilizing this social media platform can directly conduct business through their pages. The investment through this type of campaign is way reasonable and has the potential to reach people located at the remotest corners of the world. The media is popular with Instagram, Twitter, and Facebook which gives extensive scope to the small and medium scale entrepreneur to register them with their business pages (Lombardi et al. 2019). Television is another audio-visual medium which reaches the mass population. The customers are more influenced by the contents now and can easily understand the gimmicks and the authentic advertisements. Video bogging or Vlogs are the trendiest ones followed by millions on You Tube where the marketers have their own channels to propagate the business (Pambo et al. 2018). The Client can utilize all the above mentioned ones at reasonable investment while harnessing all the benefits of social media and audio-visual advertisements.
Figure 5: The marketing campaigns can utilize these topics to highlight the importance of protein diet
(Source: Pambo et al. 2018)
4.2.2. Organizational Structure
The organizational structure that can be incorporated by the Client is functional structure with the founders functioning as CEO of the company. The client can have three departments where marketing division, sales division and customer service division may be operated by the dedicated teams (Van Theilen et al. 2019). The separate divisions under one head make the functions of the company specific and goal-oriented. The Research and Development team can also be built with time where the employees will be dedicated towards the innovation of products while searching for more potential ingredients to be added in the brand lines (Awa, 2016). The departmental division also makes allocation of funds convenient where the teams could assess how much funds to be allocated for cultivating raw materials, advertisement costs, promotional costs, costs dedicated to supply chain and final delivery of the products.
Figure 6: The functional organization chart that can be utilized by the bakery
(Source: Awa, 2016).
The marketing activities will schedule a five months charter with suitable goals of propagating the business online through different promotional channels. The Client may start initiating the project with a name “True Value” at the onset of January 2021 with the inauguration of different products across channels (Hanlon, 2019). Media influencers can be hired or the founders can themselves make video on recipes using the cricket flour to publicize their products online.
The objectives of the company are to create awareness about the protein diets which is necessary to build immunity in the times of pandemic. The preliminary sales expectation is of 40% keeping in view the population who prefer non-vegan diets and wis o include insect based edible food products in their diets.
5. Financial Plan
In conclusion, it may be inferred that the Client posses immense potential to stand out in the competition of the Australian market to advertise and create awareness of its unique product range which can build strong immunity for the generations to come. This initiative for transition of diet from livestock will help them reduce the depletion of poultry and livestock farming while more investment can be utilized in producing insect-based edible food products.