Companies have both B2B and B2C markets. Consider the following short case study
ID: 375721 • Letter: C
Question
Companies have both B2B and B2C markets. Consider the following short case study, and devise a marketing strategy that could have either prevented the chain of events, or strategies that may resurrect the company:
The U.S. cupcake chain Crumbs Bake Shop announced that it would cease operations and close all of its stores a week after its shares were suspended from trading on the Nasdaq.
Crumbs operated with 79 shops in 12 states and Washington, D.C. at its peak. The company was founded in 2003, and sold cupcakes in a range of flavors, among them red velvet cheesecake and Girl Scout lemon shortcake. Cupcakes ranged in size from 1 inch to a colossal 6.5 inches, and some cupcakes included in the product range boasted 600 calories. The cupcake concept was highly popular with competitors; Georgetown Cupcakes consistently enjoyed long lines of waiting customers and was so popular that it morphed into reality television with the show DC Cupcakes.
Crumbs reported losses in 2013 of $18.2 million, following losses of $10.3 million in 2012. Crumb's management issued warnings in spring of 2014, based on cash flow difficulties. Crumbs was listed on the stock market in 2011 at the height of the cupcake boom, but it seems that Crumbs had succumbed to new competition in the form of food trucks. There has been discussion about a purchase by an investor group and the company’s website remained live but was not taking orders
What do you think? What could the company have done differently? What options remained for the company following the closure of the stores? Include some reflections on the confectionery market of today. Use what you have learned over these 8 weeks to develop a marketing strategy that could have possibly prevented the company’s decline. Use elements of the marketing audit whenever appropriate to develop your proposal.
Sources
BBC News. (2014, July 8). US cupcake chain Crumbs Bake Shop shuts stores. Retrieved from http://www.bbc.com/news/business-28206895
O'Connor, C. (2014, July 10). Crumbs finds a buyer, but are cupcakes worth saving? Forbes. Retrieved from http://www.forbes.com/sites/clareoconnor/2014/07/10/crumbs-finds-a-buyer-but-are-cupcakes-worth-saving/
Explanation / Answer
Consider a Grand Strategy Matrix in this case. A Grand Strategy Matrix represents a set of diverse and alternative strategies available for an organization. It is also known as a Global strategy. It consists of four quadrants. Each quadrant carries a set of diverse strategies and the whole organization and the divisions belong to any one of the quadrant at each stage of the product life cycle or market growth. The matrix pertains to competitive position and market growth.
Let us apply the Grand Strategy Matrix Scenario in this case. It will help to identify what should have been done by Crumbs Bake shop in each stage according to the market growth and competitive position.
Quadrant 1
This quadrant represents a set of strategies that should be followed by the company when the company is placed in a highly competitive position. i.e., when the firm has more market share, better quality and prices compared to the competitors. The quadrant also consists of strategies for retaining the same fast pace of growth in competition.
Quadrant 2
The second quadrant represents a set of strategies for a quick growth when the firm has a weak position relative to competitors.
Quadrant 3
The third quadrant pertains to strategies when the firm has a weak competitive position with a slow pace of progress.
Quadrant 4
The fourth quadrant represents strategies when the firm possess strong competitive characteristics but has a slow paced growth. During this stage, when the company may realize that its market share remains almost static and the company has saturated with the current mode of operations and products. slow paced growth.
Crumbs Bake Shop must have gone through all these phases of the Grand Strategy Matrix. According to the case, the company is currently in fourth quadrant when the company has no more product growth or have almost declined its activities.
What are the options available now?
As the company is in a stage where there its competitive position and market growth are low, the strategic option available for the company is to adopt a DIVERSIFICATION STRATEGY. i.e., if the company could resort to produce new products and enter into a new market or new industry. In this way, Crumbs Bake Shop could start its operations. The company can choose to produce a new product which is related to the confectionary business or related to food industry. If the company enters a new market, a market research and audit of the existing competitors and products should be done.
What could have done differently earlier?
Again, based on the Grand Matrix Strategy
--when the company was in Quadrant 1, Crumbs Bake shop, could have resorted for market penetration strategy in order to maintain its market position. That was the stage when the bake shop chain enjoyed, a high market growth and a high competitive position.
--When the company was in Quadrant 2, i.e., when the company had a high market growth and a weak position related to competitors, they should have resorted product development strategy or a market penetration strategy.ie., either they should have produced new confectionary products in their existing market or they should also have adopted a penetration strategy by marketing through food trucks. Their reputation would have helped them a long way in order to beat the competition from food trucks. This was the stage when the chain faced competition form the food trucks in 2011, they needed a foresight at this stage in order to devise strategies to beat competition and survive in the confectionery market. They could have done a market audit at this stage, to analyze their competitive position and plan appropriate strategies.
--When the company was in Quadrant 3, i.e., when they had a weak competitive position and a weak market growth, they should have gone for market expansion. They should have expanded their market to other locations in US or to other countries. The bakery chain could have explored new segments for their existing confectionery products. For example, producing sugar-free candies for the diabetic people. They should have identified a new segment like this by producing a sugar-free variant of their existing confectionary products. Here also, the chain could have resorted to market audit to identify the tastes and preferences of the new segment to launch a variant of confectionaries.
Fourth stage is the Quadrant 4 stage, stage of decline, discussed earlier.
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