4 Marketing p’s Product Price Place Promotion

Product

The products, that I’m going to introduce on a market are custom-made cakes for special events such as: Weddings, birthdays, christenings, anniversaries and the variety of other celebrations. It is very specific niche market product and is much different to producing cakes on a big scale. My products are tangible products, because you can actually touch them, smell or eat them. However, the benefits of my products, that my customers will receive are intangible, because they cannot be measured. The type of production method, that is going to be used to make my cakes is going to be a job-production method, because all of my cakes will be different to each other and unique as they will be made according to specific individual needs of my customers.

My product is going to be reliable and will be used by my customers for a certain purpose. It will also comply with all hygienic certificates and quality control methods, which ensure the high quality of the cakes produced, and that they’re safe to be consumed by my customers. It is going to be innovative in terms of the new design used in my cakes, in order to keep up with continuously changing trends on the market such as: changes in fashion, general changes in customers’ tastes, especially for various flavours used in cakes.

Quality is going to be another, very important issue for “Victorio cakes’. Before the product is actually introduced on the market, there will be created a Total Quality Management Control scheme for my cakes, which will make sure that the quality of my products is checked throughout the whole production process. This also means, that I will be making sure the ingredients I buy for my products will always be fresh, and the method that will be used to make them will be satisfying all International and British Food standards.

Packaging, a big part of which is likely to be decoration of my cakes, is very important for the cakes that my business will be producing, because the look of the cake, according to my research given below, is one of the main factors which affects customers’ choice on whether to purchase my cakes or not.

The life cycle of my product should also be paid a particular attention, because in my case it is going to be in the first stage of the product life cycle- Development.At this stage, I will be doing my market research in order to find about my main competitors, the prices they charge and the variety of products (cakes) they currently have on the market. At this stage I will be looking at all different designs used by my competitors, in order to create my own, unique design for “Victorio Cakes”. My initial costs at this stage are also likely to be relatively high, because the sales and demand are likely to be relatively low.

In the long term my product is going to go into the second stage “Introduction” at which it will be actually introduced on the market, and I will start promoting and advertising it, in order to increase the popularity of “Victorio Cakes” and increase the demand for my cakes. As soon as people find out about “Victorio Cakes” and start to buy some from me, I expect my sales to start rising due to a higher demand, and I also expect my production costs to start decreasing.

Below is the analysis of the market research, which I carried out to find the group of my potential customers, their gender, whether or not they would like to buy a custom-made cake or whether they have done it before and who they bought it from, what kind of occasions they would like to order my cakes for, what size, flavour and shape they would like to order, how long would they be willing to wait for the cake to be made and many other details used by me to decide where to locate my business, what price to charge and what promotional offers to introduce in order to increase sales of “Victorio Cakes”.

From this table it can be identified, that the largest proportion (52%) of the people I’ve asked in my questionnaire who would like to buy custom-made “Victorio Cakes” were people between 16 and 19 years old. I expect that this group of people tends to have more parties and special events than the older group of people between 20 and 25 years old. However, the group of people between 20 and 25 happened to be 16%, of all the people I’ve asked. Another 12% were people below 16 years old, which is also a very important group of my potential customers. The fourth largest group of people who would be interested in buying my cakes, were people between 26 and 30 years old, who happened to be 7% of all people I surveyed. 6% of my respondents were people between 31 and 40 years old, 3% between 41 and 50, 2% between 51 and 60 and the same percentage of respondents were over 60. This, therefore, suggests that as the age of my respondents increases, they’re less people who would like to buy my cakes. This may also mean, that my potential customers might also be people of a younger age rather than older. In addition to this, I will assume that as people become older, they might be less tend to buy custom-made cakes, because due to a certain number of factors:

• As people get older, they might have less things to celebrate.

• As people get older, they might be more tend to save their money for their children or themselves, because they have a limited amount of money, so are less likely to buy luxuries.

• As people get older, they tastes might change, and they might start to consume less sweet products like chocolate and cakes.

• As people get older they might be generally less interested in such things as ordering custom-made cakes, whereas slightly younger people might have different tastes to that.

Therefore, from the information, given on my diagram it can be concluded, that I should pay attention to what all people said, however, I will pay an extra attention to these three groups of the people I’ve asked as they may well be my potential customers in the future, and if they’re their opinion will be of most importance, because they form up the largest group of my potential customers- 80%. This also suggests that I will target my promotional strategy at people those people younger than 16, 16-25 and 20 to 25, in order to make it more effective.

From this diagram it can be clearly seen, that 69% of all my respondents said, that they had purchased a custom-made cake before, and 31% hadn’t. This suggests, that I need to take into the account, that 69% of my respondents already had some experience of ordering custom-made cakes and, therefore, initially might expect something of a better quality from my cakes. They do already know some of my competitors, who they can alternatively order the cakes from, so I will have to be very careful and make sure that my quality and design of my cakes and the customer service are up to a high standard which are also expected from my competitors. My products will be no worse, because otherwise I will lose my customers, as they can easily switch to my competitors.

From the diagram on the left it can be clearly seen from what particular competitors my respondents bought their custom-made cakes from. It shows, that 38% of my respondents buy their custom-made cakes from Wendy’s Cakes who is my main current competitor. The second most popular custom-made cake producer amongst my respondents was “Gerry’s Cakes” with 23%, and the third one was “Marks & Spencer” with a 19% share of my respondents. This information suggests, that “Gerry’s Cakes” and “Marks & Spencer” also have relatively strong positions in the popularity amongst my respondents. Although these figures have been obtained from 200 people, which is a relatively small sample, this information might be very similar to the real market share figures. Although the popularity of the previously mentioned three custom-made cake producers was relatively high, “Cake Bytz” maintained a very low position of 1% amongst my respondents, which suggests that it’s generally not as popular as other cake producers. However, again, this data was based on a sample of 200 people, which means there could have been a certain degree of inaccuracy. It is very interesting to see, that 19% of my respondents put other firms as their choice, which suggests that there might be some new custom-made cake producers already existing on the market or maybe new firms coming in the market, which become increasingly popular amongst my respondents, and I’ll carry out some further research to find out who they are.

Therefore, the information, obtained from this diagram suggests, it can be seen that there are three main, most popular custom-made cake producers amongst my respondents and that there’s one- “Wendy’s Cakes’ who dominates with the largest share of 38%. This means, that I will take a closer look at the range of products produced by Wendy’s Cakes as well as other custom-made cake producers and their pricing and promotion strategies or techniques used, in order to help “Victorio Cakes” keep up with an increasing competition on the custom-made cake market.

F rom the pie chart on the right it is evident, that the most popular event for which my respondents would like to order a custom-made cake is birthday with a 47%, which is almost a half of all my respondents. This suggests that I will make my business specialise at producing birthday cakes only. The second most popular event amongst my respondents was Christmas (27%), which also suggests that to a certain extent I will concentrate on producing Christmas cakes. E.g. concentrating on producing two types of cakes such as birthday and Christmas cakes may not only help my “Victorio Cakes” to specialise, but increase its sales, become more efficient and decrease its costs of production, because I will only have to buy the ingredients needed to make these two types of cakes, and I won’t have to buy any other cake tins apart from those for birthdays and Christmas. The third most popular event, for which my respondents would order a custom-made cake was wedding (14%). Wedding cakes are more expensive to make, so my business may, for example, specialise at producing birthday and Christmas cakes, and make wedding cakes on request, although not specializing at making wedding cakes only. It is evident from the diagram that 10% of my respondents would order a custom-made cake for anniversary, which suggests that I will have to buy some cake tins for the anniversaries and create designs for the cakes which can be used for anniversaries. 2% of my respondents chose other events, such as a cake after to celebrate graduation from school or university. This might also be an interesting thing to consider, e.g. making cakes for schools or after graduation parties. From the information, provided on this diagram, I will conclude that there are various events which I should be aware of and be able to make certain cakes upon a request. However, there are certain types of events, for which custom-made cakes are more popular and demandable than for others, so I will have some cakes already prepared or have prepared designs for certain occasions, which should reduce my production costs and the time it takes my business to make cakes.

From the diagram shown on the left it is evident that 57% of all my respondents would prefer to order to a 12 inch cake. Although this data has been obtained from my questionnaire sample of 200 people, this information suggests that I will set 12 inches as a standard size for all of my cakes. 32% of my respondents preferred to order 10 inch cakes, which I will also make one of the possible options of the sizes offered by “Victorio Cakes”. 9% of my respondents chose a 6 inch cake I will still offer as an option for my cakes, however, I will specialise more at producing much bigger cakes, because this way I will have to buy less tins of the 6 inch size, which might help to reduce some of my production costs. 2% of my respondents chose other sizes of cakes such as small, muffin size cakes, which I will actually start producing in the long term, in order to offer a wider variety of products to my customers and potentially increase the demand for the smaller cakes pproduced by “Victorio Cakes’.

The diagram, shown above, identifies the percentage of my respondents who would prefer to a certain type of shape of the cake, if they were to buy it. So, from the diagram it is evident, that the most popular shape amongst all my respondents happened to be a circular shape (36%), and the second most popular shape was rectangular (25%). 20% of my respondents chose other shapes of the cakes such as heart shape, a bear shape or anything else, which shows that quite a many of my respondents prefer a complete individuality. 19% of my respondents chose a square shape of the cake. Based on this information, I would like to conclude, that although there are all different tastes and opinions about the shapes of the cakes, the percentage popularity for each of the cake shapes are relatively similar, apart from the most popular circle shape. Therefore, I’m going to offer all different kinds of shapes of the cakes to my customers, but I will mainly concentrate on the several such as circular, rectangular, and square shapes. This suggests, that although I will be producing all types of the shapes, I will concentrate on producing circle and rectangle shapes of the cakes and the other ones upon a request, which still gives me a flexibility to make them, but I will be able to prepare circular and rectangular shape cakes in advance, if necessary.

On this diagram, it is clearly shown, that the percentages preference given by my respondents to each of the flavour for the cakes are almost equal, apart from Vanilla flavour which had the least percentage preference by my respondents. 28% of all respondents chose a fruit cake, which is the most expensive cake to make for “Victorio Cakes” and which is likely to have the highest price, comparing to the other cakes which will be produced by “Victorio Cakes”. This means, that to a certain degree, I will be able to specialise at producing the most expensive, fruit cakes, which is likely to bring most profit to “Victorio Cakes”. 27% of all the respondents chose a chocolate flavour, which isn’t as expensive to make as fruit cakes, however it is quite popular. 25% of my respondents said chose a strawberry flavour and this gives an almost the same percentage of preference as for the chocolate and fruit cake flavours. Although, vanilla was left out with the 20% preference, I will still be offering it as one of my possible flavours for the cake. However, I will specialise at producing and offering Fruit, Chocolate and Strawberry flavours.

This diagram, based on my market research, shows what are the most important factors for my respondents when they buy a cake. For the majority or 48% of all respondents it is actually how the cake tastes. For the next 39% of my respondents, it is how the cake actually looks like, for the minor 7% of my respondents it is how much the cake costs, and for the least 6% it is some other factors. Therefore, this diagram suggests that I’m going to make sure that “Victorio Cakes” both look and taste good. However, due to the fact that for majority of my respondents the most important factor is the taste of the cake, I’m going to concentrate or specialise at making tasty, deep in flavour cakes. However, I will not forget about such important factors as how much the cake costs, in order to keep my products and “Victorio Cakes” itself competitive on the market. I will also do some research on what the other important factors when buying a custom-made cake are, and whether or not I will be able to take these factors into the account and help “Victorio Cakes” make ideal cakes, which will suit every customer.

On this diagram it is clearly shown how the preference about the best way to purchase “Victorio Cakes” has changed between all different respondents in accordance to their most preferred methods of purchasing products and maybe personal habits. 50% of my respondents said, that they would rather order a custom-made cake from “Victorio Cakes” on-line. To a certain extent this is good for my business, because this will encourage the orders to come through much quicker, than if the phone or direct contact was used. However, this also means, that I will have to create a website for “Victorio Cakes” on which I will not only be promoting and advertising my cakes, but also receiving orders from some the certain customers. Creating a website will also lead to an increase in my initial or set up costs, as well as fixed, because I will have to pay a monthly charge to the company which will be hosting “Victorio Cakes” website on-line, and also further equipment might be needed. 38% of all respondents said that they would rather buy “Victorio Cakes” products directly from Birmingham. This is actually quite good, because it will be much cheaper for my business, because I won’t have to go anywhere or spend extra money onto creating a website for “Victorio Cakes” or anything like that. This is also likely to be more efficient and will lead to a better understanding of how my customers will want their cake to be made, because there will be a direct contact with the customers, and there is likely to be an opportunity to discuss each order in details. 12% of my respondents did actually say, that they would prefer to order custom-made cakes from “Victorio Cakes” via telephone, which is also likely to be much cheaper for “Victorio Cakes” to do, than creating a webpage. However, there’s a higher chance that the information might be misinterpreted, or the sole trader might not be aware of what some particular needs of his potential customers are.

This diagram identifies different periods of time that my respondents are prepared to wait for the cake to be made. From this diagram it can be clearly seen that the majority (57%) of my respondents are prepared to wait up to a week for their cake to be made, which gives me enough time to make sure, that the cake is ready, that everything my customers would like to have is included, decorations are done and that it’s made up to a high quality standard. 19% of my respondents said that they were willing to wait for up to 2 days, which doesn’t give me as much time to prepare a cake. However, by asking this question I wanted to find out the percentage or proportion of the respondents who would like a cake to be made urgently or in a very short period of time. 19% is quite reasonable, and therefore, I will prepare some cakes that will be already made and stored in the fridge so that decoration will only be needed which will save my time to make a cake. Although, 2 days gives me very little time to make a cake, these cakes will be sold much faster, which means more cash inflow in a short period of time into my business, which is good, because business like “Victorio Cakes” will need some operating cash to buy raw materials such as ingredients and decorations for cakes. 11% of my respondents said that they were willing to wait for less than 2 days. This also means that out of all my respondents there are a certain percentage of people who might potentially be able to pay an extra amount of money for the cakes to be made in less than 2 days. Although, this will cause some costs and difficulties for my business in terms of storing already made cake bases. This might also affect the quality of my cakes, because they will be stored in a fridge and might not be as fresh, as if they were made, decorated and delivered the next day. This also suggests, that due to the fact that 30% of my respondents are prepared to wait for 2 days or less, I will have to spend time making sure that short-term ordered cakes are made first to obtain some cash inflow, and there’s also some time spend on the preparation of those cakes, for which I’ll have a longer period of time to make.

Another 11% of all respondents were willing to wait for up to 2 to 3 weeks for the cakes to be made, which gives me even more flexibility and time to make sure that these cakes are of the highest standard, exclusively made in accordance to individual needs of my customers. 2% of my respondents said that they were willing to wait for up to a month, which is a very small proportion of the respondents I’ve asked. Although these likely to be very expensive cake orders for such events as weddings which means they’re going to bring more profit into my business, it will actually take longer for the money/cash to come into my business, which doesn’t give as much flexibility as with a short-term cake orders.

Price

In order to decide what price I’m going to charge I have first worked out what prices my competitors were charging for the similar products, worked out the average price charged by my competitors. Below are the diagrams and calculations, showing my results:

Average prices charged for a fruit wedding cake by my competitors (10 inch)
Name of competitor	Price/£	Mid-point	F(x)
Marks & Spencer	55-199	127	1
Gerry’s Cakes	70-250	160	1
Wendy’s Cakes	175-325	250	1
Cake Bytz	46-280	163	1
Total:		700	4
700/4=175
Average price per cake charged by competitors= £175

From this table it can be clearly seen, that the average price per 10 inch fruit wedding cake is relatively high. However, this data was based on the prices charged by my main four competitors excluding other companies on the market. There’s also a certain degree of inaccuracy, because some of the figures are anomalies as some prices charged by two of my competitors are considerably higher than those prices charged by the other two. This has therefore affected the overall outcome of the average price.

In addition to this, I have also conducted my own primary research from which I’ve also found what prices my respondents were most likely to pay for my cakes. The results of my primary research are given below:

From the diagram given above, it is evident that the largest proportion of my respondents, that is 34%, is prepared to pay a price ranging from £61 to £70. This is a relatively high proportion of my respondents which may identify that my potential customers might also be able to pay a premium price of this type of cake. If we look at the second largest proportion of my respondents, 24% of them are prepared to pay from £51 to £60 per 10 inch fruit wedding cake. If we add the percentages of two groups up, we will obtain a result that 58% of all my respondents were prepared to pay the two highest price options for my cake. If we then look at the lowest price option that I had set, we will see that 21% of my customers are prepared to pay from £40 to £50 for my cake. 21% of my respondents chose ‘Other’ as a price option, but even if assume that those other 21% were not prepared to pay such a high price, we obtain a result that 79% of my respondents were prepared to pay a price from £40 and higher, which is likely to bring from £29,26 of profit per cake, because the cost of making one 11 inch fruit cake was calculated to be £10,74.

Average price that my respondents were prepared to pay for a fruit wedding cake by "Victorio cakles" (10 inch)
Price/£	Mid-point	Frequency	F(x)
40-50	45	42	1890
51-60	55,5	47	2608,5
61-70	65,5	70	4585
Total:		159	9083,5
9083.5/159=57.13
Average price= £57.13

From this table it is evident, that the prices that my respondents were prepared to pay for a fruit wedding cake were, to a great extent, lower than those charged by my competitors which had more than halved the price, that my respondents were prepared to pay and the price charged by my competitors. This also suggests that the prices charged by my competitors are too high, because very few of my respondents were prepared to pay such a high price for a fruit wedding cake, even though it would be custom-made, which that these might prices might be too high for their potential customers as well.

There are different pricing strategies that businesses use to sell their products most effectively, and I have chosen to use a ‘Skimming’ price strategy, because it allows to charge high prices at first, which should help to cover my initial costs, also find out how my customers will react to such prices and how it will affect their demand for my cakes. After “Victorio Cakes” business achieves economies of scales and covers its initial costs, I will decrease my prices to encourage more sales and increase demand for my cakes. Therefore I will set my initial price to be £55, which covers the cost per cake, which takes into the account most anomalies and should, in theory, encourage the demand from two groups of my customers- those who are prepared to pay a price between £51-60, and those who are prepared to pay from £61 to 70 per cake. After the period of development and introduction of the product in the market, my customers are likely to become less excited about it, and therefore, less likely to pay such a high price. Usually customers are prepared to pay a premium price, when a firm or a product is new to the market. ‘Skimming’ as a pricing strategy will be used by “Victorio Cakes” in the short term only. I will charge higher prices in the short term, mainly because my customers should be able to pay them and due to the initial high costs of setting up my business.

The analysis of my other price diagrams and price preferences from my respondents to the other sizes of cakes are given below:

From this diagram it can be clearly seen, that the largest percentage of my respondents (33%) in this price category were prepared to pay from £10 to £20, which was the lowest price option that I had set. This could be due to the small size of the cake, for which some of my respondents are not yet prepared to pay a higher price. It is strange, because the second largest percentage (29%) of my respondents were prepared to from £31 to £40 which was my third, most expensive price option. 25% of my respondents were also prepared to pay from £21 to £30 per 6 inch fruit wedding cake. If we add the percentages of the second and third, two largest groups of my respondents it, we will get a result of 54% of all respondents are prepared to pay a price from £21 and higher, up to £30 or £40. This, therefore, means that the largest percentage of my respondents were actually prepared to pay a much higher price for my cake than the first 33% of respondents. Therefore, for a 6 inch fruit wedding cake, based on my primary research, I’m going to set the price of £30, which will still cover my cost per cake and bring £19,26 of profit, because the cost of making one cake fruit cake approximately 11 inch size is £10.74. In theory, it should be even lower, because not as many ingredients will be needed, which should bring even more profit or save some of my ingredients to make other cakes. This means, that my product is still profitable when sold at this price, and should in theory encourage the highest percentage of my potential customers. However, this is going to be my short term price strategy for this particular type of cake, because as soon as it helps me to achieve economies of scale, I’m going to decrease its price down to £20 to encourage more sales from the lowest percentage of my potential customers who have not yet been prepared to pay a higher price. It should also be taken into the account, that I’ve based this pricing strategy on the results obtained from my respondents who might actually not be my potential customers in the real market conditions. The prices set had only been estimated, which presumably my potential customers should be prepared to pay, however, they might not be. From my diagram, it is also evident that 13% of my respondents had actually preferred to pay another price for my cake, which should be also considered, as they might or might not be able to pay a high price for my cake.

From the pie chart on the left side, it can be clearly seen that the largest proportion of my respondents as on the previous price diagrams, were 30% who were prepared to pay from £91 up to £100 per 12 inch fruit wedding cake. This might actually identify the principle, that as the cake gets bigger, the proportion of the respondents who are prepared to pay the highest price option either increases or decreases slightly. There were 29% of the respondents, who were prepared to pay the highest price option per 6 inch cake, and there were 34% of the respondents who were prepared to pay the highest price option, and there were 34% of the respondents who were prepared to pay the highest price option for the biggest size option (12 inch), which identifys what I’ve just said. It is strange though, that there were only 13% of the respondents who were prepared to pay the second highest price option between £81 and £90, which means there was only a small minority of people in my questionnaire who were prepared to pay the highest price option, but the majority prefers to pay a lower price. 25% of my respondents were prepared to pay from £70 to £80 for my cake, which although is a relatively low proportion, if we add the percentages up, we will get 68% of all respondents who prepared to pay a price £70 or higher. If I consider my cost per cake, although it’s a cost per 11 inch cake, and it would be slightly higher for a 12 inch cake, it is £10,74 whereas my price was from £70 and higher. If we work out the margin that I will get from selling one 12 inch cake, it would be £70 - £10,74= £59,26 or higher. This is a very large proportion of the price. If I look at how the proportion of the margin, that I receive per cake increases in relation to an increase in size of the cake, it will be at least:

£19,26 for a 6 inch cake

£29,26 for a 10 inch cake

£59,26 for a 12 inch cake

This directly affects the profits that I receive, although some additional costs have to included and subtracted from this margin. It is possible to see, that as the size of the cake increases, costs increase slightly. However, the margin that and potential profit increases to a large extent, as the size of the cake increases. This also means, that in the long term I could decrease my prices dramatically by e.g. £10 for a 6 inch cake, £15 for a 10 inch cake and by £20 for a 12 inch cake. This will likely to boost my sales up, but I will still receive a relatively large proportion of that price, that may cover all costs and essentially become my profit. This long-term pricing strategy will allow me to charge the lowest prices on the custom-made cake market, without having to dump and sell my products below the cost of producing.

In the end, I have decided that I’m going to charge £55 per standard 10 inch cake, because I want to have a high price to cover my costs as well as a high demand for my products. This price was based on both of my secondary and primary market research, and according to my predictions, this pricing strategy is likely to encourage more customers.

Although my questionnaire was only based on the sample of 200 people, 100 males and 100 females, these figures and diagrams identify that my potential customers are prepared to pay a premium price for my products.

Almost anyone in the UK is likely to buy or try a cake at some point in their live, but how special will the person feel if he or she gets a personal cake, maybe designed by his/her friends. If a person wants to buy a normal cake, he or she may choose to go to the supermarket like “TESCO” and buy a cake for £13.34. This will be a cheap, tasty, well made cake, but it will be an of the shelf cake. Those cakes that I’m going to introduce on the market are going to be custom made and this will be a big difference from what you can buy in the shop, for that I will expect my customers to pay a premium price.

Tesco Large Rich Fruit Celebration Cake From the Birthday & Celebration Cakes shelf - see whole shelf

£13.34 (£13.34 per each)

Although my products will be positioned in a premium class and will not be cheap, the demand for them is likely to be relatively elastic, due to competitors and changing economic and political patterns on the custom-made market. Potential ability to charge such low prices as I will actually help my business survive or compete very strongly on this market.

Promotion

This part of my marketing plan will show me how my respondents and potential customers are likely to react to particular promotional offers, to what extent this is likely to change the demand for my cakes, which will suggest me what promotional strategy and offers to use. My main promotional objectives are:

• To make the customers aware, that my products exist

• To create a well known brand and promote the image of the company, in order to make my products more popular

• To become more competitive on the market in terms of promotion and popularity in comparison to my competitors (more efficient promotion campaigns in terms of how much money is spent on promotion and how much money is coming back)

Before, I start discussing the types of promotion, that I’m going to use to promote “Victorio Cakes” and the products that I will be producing, I will look and analyse the promotion methods and techniques used by my competitors.

If we look at “Marks & Spencer’s”, we can see that as above the line type of promotion, they mainly advertise their cakes on-line. However, due to the fact that “Marks & Spencer’s” is such a big company and produces many other products, it advertises itself relatively frequently on the Television, Radio, and popular magazines. My business cannot afford to do this, because it won’t be as big and will be unlikely to benefit from economies of scales and low cost production at least in the short term. Although “Marks and Spencer’s” is a slightly different business to mine, it also uses below the line promotion methods, which can also be used by “Victorio Cakes”. For example, “Marks and Spencer’s” offers money off promotion in the form of vouchers or promotional tickets, which can be used both ways, when you go into the “Marks & from them on-line. When I did my market research, I was considering creating a website for “Victorio Cakes” as well to be able to receive orders on-line, so I will also introduce a similar type of promotion as “Marks & Spencer’s” does on my website as well. Another below the line method of promotion that “Marks & Spencer’s” uses is that if you order several products from them, you will receive a discount on the next product you buy. They also use such forms of promotion as Buy One Get One Free or make a 50 pounds order from Marks & Spencer and get 5 pounds off or a free delivery, if you order the products on-line. These methods of promotion are not new or unique on the market, and most firms use them anyway.

Now, if we look at my business, the key in promotion of “Victorio Cakes” is to grab consumers’ attention to a new firm and make them interested in the products that “Victorio Cakes” will produce- custom-made cakes. In order to do this, I will use both types of promotion- Above-the-line promotion and Below-the-line promotion. I will advertise my products in various sources of media at different stages of my product development. I’m not considering the option to advertise my cakes in such media sources as Cinema, TV and Radio, because they are too expensive for me to advertise at, and this will cause my costs to rise to such an extent that I won’t be able to breakeven. However, there are few sources of media, which I will be affording to use in order to promote my business. Firstly, I can start promoting “Victorio Cakes” on the website which I will create, in order to be able to receive orders and advertise the range of the products that I will be making, on-line. I will also use specialist cooking websites with the recipes of the cakes or those websites, which can be related to custom-made cakes. According to my research (shown in the table below), obtained from “www.hobo-web.co.uk”, this type of promotion is unlikely to be very expensive.

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By advertising “Victorio Cakes” on its website or elsewhere in the internet, my business is likely to benefit, because the information about “Victorio Cakes” may be easily spread and for some people it might seem to be much easier to use internet to make their purchases. I will also be able to keep a record of how many people will be clicking on my adverts and how long they will spend on my website and whether or not they will leave the website, come later, or purchase a cake on-line. This will also help to find out what websites are most effective-mine or some of the websites run by other companies. In addition to this it, will also help me find out what particular types or designs of adverts attract my consumers’ attention best. However, there’s a chance that my competitors will be advertising their cakes on the similar or maybe the same websites as mine, whereas if I advertise on my own websites, I will make sure that my potential customers won’t carried away onto the websites of my competitors. Secondly, I will advertise “Victorio Cakes” in the specialist magazines such as “Cake craft and decoration” which is issued in both countries UK and America. This type of promotion is most suitable for “Victorio Cakes”, because this magazine is usually sold in those shop areas where people buy sweets and cakes, and, therefore, already want to buy something sweet like a cake, or maybe be looking for a custom made cake. There’s a higher chance that this magazine will be read by potential customers of “Victorio Cakes”, although it can also be read by my competitors. There are many other advantages of advertising in the specialist magazines for my business. Firstly, I will be able to put colourful adverts, which have a great visual effect on consumer, it will be easier for people to read than a newspaper, and so they will be able to take with them anywhere, e.g. read it in the car. Advertising will be linked to particular features of my product such as being custom-made with any type of decoration. I will also be able to write and publish some articles about “Victorio Cakes” which may also make some people interested in the products I make and potentially encourage them to buy them. My readers or potential consumers will always have a chance to refer back to the article or advert about “Victorio Cakes”. And finally, advertising in the specialist magazines will help to save my budget and minimise the costs of introduction and promotion of my cakes.

However, there may also be some negative sides for my business to advertise “Victorio Cakes” in the specialist magazines. For instance, it is more expensive than advertising in the newspapers. Such magazines as “Cake craft and decoration” are issued once a month, so it might take a long time to put my advert in the magazine. Also, there will not be as many places to advertise “Victorio Cakes” in the magazines as in the newspaper. It might also be quite difficult to get a good place for advert in the magazine due to competition on the market and a large number of firms wanting to advertise similar products in this magazine, so I will have to book or reserve an advert place in the magazine in advance. There might also be some places in the magazine which are more effective than the others. For example, I will put a very good advert on the 3^rd page in the magazine, or in the end of it, but my competitor may put his advert on the front cover which is likely to have a greater effect on the reader. One of my competitor’s adverts may also be put next to mine. It will be very costly though for my business to advertise on the front cover though, because it is usually very expensive and, therefore, unlikely to happen at least in the short term. There’s also no movement or sound, however, some specialist magazines may include a CD or DVD which may have promotional videos. For example, in the long term I will introduce a CD or DVD in the magazine which will explain and show how to make e.g. a wedding cake in the home conditions, and at the same time, advertise the products made by “Victorio Cakes”.

Many of the “Victorio Cakes” competitors use below-the-line promotion methods. I will also use one of them, but in order to find out what particular method of below-the-line promotion is most efficient, I’ve carried out a market research. The diagram and analysis of my results are given below:

The diagram above identifies the percentage preference from my respondents to a particular type of promotion. From the results obtained, it is evident that the majority or 26% of my respondents preferred to have a free delivery. It is important, because initially I wasn’t considering a delivery service to my customers, and I would rather prefer them to come and pick a cake that they’ve ordered from “Victorio Cakes” directly, which would reduce the costs of transporting the product for my business, allowing me to charge lower prices for my customers. 22% of my respondents preferred to have a discount on a cake they order. It is a significant percentage of my respondents and this would be much easier and cheaper for me to do than e.g. employing a delivery man, providing him with a car or a moped and paying him a salary. Moving on, 19% of my respondents chose to recommend “Victorio Cakes” to one of their friends and receive a free cake. This is actually quite an effective way of promoting my products by the word of mouth, and it isn’t going to be too costly. Although, I haven’t yet specified it in my coursework, when I did my questionnaire I had actually informed them that I would only give a small sponge cake for free to those customers, who actually do recommend “Victorio Cakes” to people, and this will only occur, if these people eventually buy a cake from me. 18% of my respondents said that they would like to buy two cakes and get the 3^rd cake free. By this I mean, that I will be keeping a record of each customer in my system, and if they buy two cakes from me throughout the year, the third time they need a cake, they will receive it for free or they may receive it when they buy their second cake. This method I found is actually encouraging people to buy my cakes fairly well. It isn’t going to lead to high costs, because the prices that I’ve set for my cakes will well be covering the costs of production, and giving away a 3^rd cake isn’t going to make much difference to my business and its costs, but is likely to encourage more customers, which is likely to increase my sales and profits overall. 13% of my respondents preferred money off coupons as a method of promotion, which is also a decent percentage, which identifies that there are people who are interested in getting some money off by collecting special coupons. However, the percentage of all my respondents who were interested in this type of promotion was much lower than for the other methods of promotion. 2% of my respondents chose competitor methods of promotion, which is only a small percentage of all my respondents is unlikely to be yet used by my business, because it is at its early stage of development and it would be difficult at this stage for “Victorio Cakes” to compete with its strong competitors, which have already existed on the market for a relatively long period of time.

Therefore, by looking at all types of promotion available to my business and preferred by my respondents, in short term I will use: recommend “Victorio Cakes” to three of your friends and receive a free cake, and “Buy two cakes and Get the 3^rd one free” in order to encourage more sales at the first stage of the business cycle of “Victorio Cakes” when my business is new and my cakes are first introduced on the market. This will also help me to increase the popularity of “Victorio Cakes”, because by recommending and essentially advertising my cakes to friends by the word of mouth, it is likely to be very cheap and effective. In the medium term, I will use a discount system and offer ‘money off coupons’ also to encourage more sales, however this will not be as costly to my business as the previous two methods. In the long term I will actually introduce a free delivery, but it will, to a large extent, depend on the demand for my products and how my business will develop. It will certainly not be within the first year.

Place

There are a number of factors which have affected my decision to choose an appropriate place for my business. The first and the most major one is that I have a flat which is located near the centre of Birmingham, (about 30 minutes by car), a part of which I will use for my business. Initially I was already planning to create a custom-made cake business at the location which best suits me. It is shown on the map below that the location I chose is relatively close to the centre of the city and it is relatively close to my suppliers. It has good transport links and is going to be relatively easy to access by car. These are the main features, which a good location should pursuit and the location that I chose fully satisfies all major requirements for my business to be successful.

The address is the following:

25 NAVIGATION STREET, ORION BIRMINGHAM

The map below shows how close my location is to the centre of the city of Birmingham.

This picture below shows how close my location is to the nearest TESCO store from which I will buy all supplies and ingredients needed to make my cakes.

If we look at my location more closely, it is evident that it has a good transport infrastructure due to its good links with the highways, supermarket stores and the centre of the city, which will reduce my distribution costs. There’s no need for my business to be located on the high street in Birmingham right in the centre of the city, because this will lead to high rent costs or even higher costs of buying a flat or a place where I will be able to make my cakes. It isn’t a shop and those people who will be coming to my place, are very likely to come to buy a cake from “Victorio Cakes” directly, obtain some extra information about my cakes, or discuss their individual needs and some details about the cake that they want to order. It will be best for me to locate “Victorio Cakes” at the place where my operating costs will be lowest. For example, if I was to locate in “Victorio Cakes” in the centre of Birmingham, I would have high labour and ground rents, which would cause my break-even output to be higher. This means that, in order to cover the costs of producing my cakes, I would have to sell more cakes. In my case, I won’t actually have any rent costs, because I will be making my cakes at the same place where I live. Also, at the place that I chose, everything is located near my business, which means my break-even output will be lower, I will have to sell less cake to cover the costs of production, and this will provide me with more flexibility on price, so that I will be able to charge competitive prices for my cakes. As I said before, initially I’ setting up a business, where it will only be me working on my own, so the labour resources won’t be a major factor for “Victorio Cakes” at least in short term. In the long term, which is likely to be after the first year, I will need someone to help me, in terms of labour resources, according to my research, there has always been a good supply of high quality labour near Birmingham area. This will make sure that my business won’t have any labour problems in the future, which also supports my choice of location. Although I will need some labour, the type of labour that I will need won’t be required to have very high skills such as IT, because I will need labour to help me clearing up and making cakes, and all the rest of the work such as IT, managing website and accounting I will be able to do by myself. Even if there’s an extra training, which might be needed for my workforce in the long term, there are plenty of educational and training resources in the Birmingham area near my business such as “University of Birmingham”. There are also plenty of medical, retail, leisure and sports facilities as well as housing and schooling in the Birmingham area, providing relatively high living standards for me and any workforce that I will employ in the long run.

In terms of the potential future expansion, there is a possibility to expand without having to spend large amounts of money. For example, in order to obtain an extra space for the kitchen I will be able to use a part of my living room, divide it up and build an inside wooden wall. Certainly extra investments will be needed. However, this won’t cost me as much as moving to a new location or buying new premises in Birmingham. There’s a good access from Birmingham and ‘Orion Birmingham, Navigation street 25’, where “Victorio Cakes” will be located, to motorways, rail links, sea ports and airports, if those are needed in order to import some of the raw materials from abroad, although most of the materials can be bought within Birmingham area. In addition to this, by choosing this location, I have also taken into the account “Victorio Cakes” closeness to some support services such as insurance, marketing, technical and banking, which might also be needed for my business at certain times. In terms of qualitative factors such as an image of the area where the business is located, Birmingham doesn’t have an image of a Metropolitan city such as London; however, it is a relatively big city with good business links and has a good reputation as a business centre within the UK and Europe.

Below is the diagram, which shows my market research results and identifies the most preferred ways of purchasing my products, chosen by my respondents, which may also support the choice of location for “Victorio Cakes”.

From what is shown on the pie chart above, it is evident that 50% of the respondents preferred to purchase my cakes on-line. This means, that have to consider creating a website for “Victorio Cakes” where I will be able to receive orders on-line as well as use it as another source of advertising and promoting my products. Although, I will introduce an on-line service, in the short-term this will only be taking orders from customers and they will still have to come to pick a cake that they’ve ordered, because it will be too costly for my business to provide a full delivery service in the short term. 38% of my respondents chose to purchase my cakes directly from where “Victorio Cakes” is located. This is percentage is slightly lower from what I’ve expected, however, it is a relatively high percentage, which supports my choice of location so that I will not have to move anywhere else and I won’t have to employ any extra workers, which would lead to higher costs of production and, as a result, higher prices charged for my cakes, which will benefit neither my customers and “Victorio Cakes”. 12% of my respondents chose to order my cakes via telephone, which I will also use, because, as any other business, I will need to be able to contact my customers and my customers will also need to be able to contact me. Modern telephone service also has an option of leaving a message or, in my case, an order for a cake. This will allow me to do several tasks at a time. For example, talking to my customer on the phone and, receiving an order from another one, and then calling him later.

Overall, it can be clearly seen, that by analysing all different factors which affect the way and the place where businesses locate, I’ve chosen the most appropriate one which satisfies the following needs:

• Suits me

• Reduces the costs for “Victorio Cakes”, allowing me to charge lower prices for my cakes

• Allows me to order and obtain the supplies and ingredients needed to make my cakes fairly easily due its close location to my suppliers such as ‘Tesco’

• Makes it easier for my customers to find my business and reach me to make an order or pick up their cake

• Good labour resources

• Availability of training and education resources

• Availability of support services such as: medical, technical, banking and insurance

• Possibility of expenditure

• Good living standards provided for employees in the area where “Victorio Cakes” is located

• Good reputation of the location

Therefore, locating at “25 NAVIGATION STREET, ORION BIRMINGHAM” will be my final decision, which I believe is going to be successful for “Victorio Cakes”.

VICTORIO CAKES

Questionnaire

Please circle your answers to the following questions:

1 ) Your Gender:

1. Male

2. Female

2) Your age:

1. >16

2. 16-19

3. 20-25

4. 26-30

5. 31-40

6. 41-50

7. 51-60

8. 60>

3) Have you ever ordered a custom made cake for your birthday, wedding or any other special event?

1. Yes

2. No

4) If you have, who did you buy it from?

1. Marks & Spencer

2. Gerry’s Cakes

3. Wendy’s Cakes

4. Cake Bytz

5. Other (please specify)………………………………………………………………

5. What type of event did you buy it for or would like to buy for?

1. Wedding

2. Birthday

3. Anniversary

4. Christmas

5. Other (please specify)………………………………………………………………

6. Would you like to order or buy a custom made cake again in the nearest future?

1. Yes

2. No

7. What size of the cake would you be most likely to order?

1. 6 inch

2. 10 inch

3. 12 inch

4. Other (please specify)………………………………………………………............

8) What shape of the cake would you like to have?

1. Square

2. Rectangle

3. Circle

4. Other (please specify e.g. heart shape)……………………………………………..

9) What flavour of the cake would you like to have?

1. Vanilla

2. Chocolate

3. Strawberry

4. Fruit cake

10) What price would you be willing to pay?

6 inch:

1. £10-20

2. £21-30

3. £31-40

4. Other (please specify)………………………………………………………………

10 inch:

1. £40-50

2. £51-60

3. £61-70

4. Other (please specify)………………………………………………………...

12 inch:

£70-80

£81-90

£91-100

Other (please specify)………………………………………………………………

11. What is more important for you about the cake?

1. How it looks

2. How it tastes

3. How much it costs

4. Other (please specify)………………………………………………………………

12) How long would you be willing to wait for the cake to be made?

1. Less than 2 days

2. 2 days

3. Up to 1 week

4. 2-3 weeks

5. 1 month

6. Longer

13) How would you like to buy or order custom made cakes by “Victorio Cakes”?

1. Directly from Birmingham where “Victorio Cakes” will be located.

2. Order the cakes on-line

3. Order the cakes by telephone

4. Other (please specify which method)………………………………………………

14) What promotional offers might encourage your purchase?

1. Money off coupons

2. Discounts

3. Buy two cakes and get the 3^rd one free

4. Free delivery

5. Recommend “Victorio Cakes” to three of your friends and receive a free cake

6. Competitors

7. Other (please specify which):……………………………………………………....

THANKS FOR YOUR ATTENTION!

Production Plan

In order to make and provide high quality cakes, I will have to buy all necessary equipment for my business. The list of the equipment with prices, obtained from the www.cakecraftshop.co.uk is given below:

List of the equipment
Name:	Price/£:
3 TIER S SHAPE METAL STAND	55,93
SET OF SQUARE TINS 6, 8 & 10 INCH	36,45
SET OF 3 ROUND TINS 6, 8 & 10 INCH	29,4
COMPLETE AIRBRUSH KIT AND SET OF	247
11 AIRBRUSH COLOURS
SET OF 11 AIRBRUSH COLOURS	24
9mm FMM BEAD CUTTER	8,24
5mm SMALL METAL BLOSSOM	3,45
/FORGET-ME-NOT PLUNGER CUTTER
3mm HEART SHAPED PLUNGER CUTTER	3,45
SMALL ROSE LEAF PLUNGER CUTTER	2,9
BUNCH OF BALLOONS CUTTER	3
REVERSE BRIDE & GROOM	3
SANTA PATCHWORK CUTTER	3
SNOWMAN PATCHWORK CUTTER	3
SANTA, SLEIGH & REINDEER	3
PATCHWORK CUTTER
NYLON BRUSH	1,75
BRUSH NO.3	2,15
BRUSH NO.5	2,76
2 CELSTICKS FOR MODELLING &	3,6
FRILLING FLOWERS
MEDIUM CELPIN FOR MODELLING &	2,78
FRILLING FLOWERS
DRESDEN TOOL	2,35
PME BONE TOOL	3,4
PACK OF 100 DISPOSABLE PLASTIC	14
SAVOY BAGS (12 INCH)
30 PIECE DELUXE BAKERS ICING SET	14,99
UBE CLEANING BRUSH	1,34
SILVER PLATED WEDDING KNIFE	9,85
ET OF 8 PME MODELLING TOOLS	21
GREEN NON-STICK	10,98
MULTI-PURPOSE BOARD
9 INCH NON-STICK ROLLING PIN	4,6
DEEP FRY AND JAM THERMOMETER	4,25
WHITE FLOWER TRIM	1,25
SPRING SONG WEDDING	17
CAKE DECORATIONS
PACK OF 12 ICING HEARTS ON WIRES	5,4
IN SILVER SPARKLE WITH PLASTIC PICK
10 INCH ROUND AND 14 INCH ROUND	83,67
ACRYLIC PLATES AND THE HIGH TUBULAR
SEPARATOR
6 INCH ACRYLIC SQUARE PLATE	10,66
8 INCH HEART CAKE DRUMS IN SILVER	1,89
10 INCH HEART CAKE DRUMS IN SILVER	2,56
12 INCH HEART CAKE DRUMS IN SILVER	3,01
STACKED CAKE BOX	14,2
8 INCH WHITE CAKE BOX	0,75
10 INCH WHITE CAKE BOX	0,94
12 INCH WHITE CAKE BOX	1,1
PACK OF 10 GREASE PROOF WHITE DOILIES	2,95
PACK OF 9 RED HEART DOILIES	3
250 METER OF SILVER CURLING RIBBON	6,45
500 METER OF RED CURLING RIBBON	3,3
8 INCH ROUND LOOSE BASE SANDWICH PAN	4,79
8 INCH NON-STICK SPRINGFORM CAKE TIN	6,5
10 INCH ROUND STAINLESS STEEL TIN	12,88
Dishwasher	300
Bosch oven	299
Samsung Fridge	299.99
Kitchen sink	59,97
Facility maintenance	200,00
Total cost of equipment:	1239.99

This equipment is universal and is also used by my competitors. The only difference might be that my competitors have more decorations.

Different stages of production:

1^st stage

Buying and supplying all necessary ingredients

2^nd stage

This stage involves receiving an order for the cake and discussing particular wants and needs with the customer.

3^rd stage

Making a cake

4^th stage

Decoration of the cake

5^th stage

The final stage of the production process involves a supply of the cake to the customer meaning that the customer has to come and pick the cake up himself, or home delivery service, depending on the customer’s choice.

In order to decide what quantity of cakes I will be producing, I decided to find out how long it actually takes to make a cake. It takes up to two hours to make a simple vanilla cake, and about half of an hour to decorate it. It also doesn’t take much time to make small cup cakes, but it may take up to 1 or 2 days to make a proper wedding or fruit cake, because the individual needs of the customers have to be discussed. Considering the fact, that I will be working 8 hours per day or 40 hours per week, it is possible to project that my potential quantity of cakes produced is likely to vary between 2 and 4 simple vanilla cakes per day and 24 cakes per month. However, if it’s a wedding cake my projections are likely to be less optimistic and are likely to be between 3 to 5 cakes per week, and about one cake per day.

Quality Control Management

For my business I’m going to set up a Quality Control Management program, that will ensure the high quality standards at the production of ‘Victorio Cakes’, by building up a quality in every department. Due to the fact that my business is very small and initially I’m going to be doing everything on my own, I will be the one who will always be checking my own work. I will be taking a responsibility for checking the quality of my own work. I can assume that the errors are avoidable and there are ways of preventing errors and getting things right first time. However, to face the truth there may be some situation in the baking process, when it might be too late to change something. E.g. if I bake the cake and after an hour I suddenly remember, that I’ve forgotten to put one or two ingredients, it might be too late to change something and the cake might be thrown away. This is going to be a waste of my time and raw materials which cost money, and which will increase my production costs. In order to prevent an increase in my production costs, I will have to check and keep up with the following procedures:

• Make sure, that the kitchen and all equipment is always clean and that I have an appropriate baking wear, in order to maintain hygienic standards.

• Check, that I have the right quantity of ingredients needed to make a particular cake, before I actually start making it.

• Check whether I put the right ingredients at the right time throughout the whole baking process as well as decorating.

• Continuously check whether or not I bake the cake at the right temperature, for the correct period of time, so that it doesn’t burn or changes its properties in any way.

• Make sure that I decorate the cake in accordance to particular needs and wants of the customer, and in accordance to the particular instructions of how to carry out the process of decoration of a particular cake.

• Make sure that after the cake is made, it is stored appropriately so that it doesn’t go off too quickly and remains fresh till the customer actually receives it.

Although it normally takes a long time to introduce a Total Quality Management program and some employees may even become demotivated, it is mainly due to the fact that there are usually many employees working in one company, who have to check theirs and somebody else’s work which can be demotivating. This is not the case for me, because I’m the one, who actually wants to set the high quality standards and, at the same time, the one who will try to maintain them. This makes the TQM a much easier process for my business and is likely to take much less time to introduce than with other businesses which will only advantage my business. I may also introduce a Japanese method of quality control called ‘Kaizen’, the approach of which basically means that employees should be improving their work slightly all the time throughout the whole process, generate and try to implement their own ideas of improving the quality standards. In this case it may be very useful to me, because I will much easier for me to make the adjustments and implement my ideas about the quality standards, because I won’t have to spend my own time explaining something to the other employees and trying to make them understand what I want them to do. I may also introduce a quality circle system, when there have to be some meeting over certain periods of time and some key issues or problems arising from quality control being discussed. Although there are not going to be anyone in my business who I will be able to discuss some issues with in the short term, I can just sit in the end of every week or month, look and analyse any mistakes that might have occurred over a certain period of time and think of the ways of maintaining and improving the quality standards in my business.

Location

As a part of my production plan I will also be choosing an appropriate location for my business. In order to choose location which will best suit my business and will, at the same time will have good links with the city, my customers and raw materials and be available at a reasonable price to help my business maintain lower costs, I will have to carry out a decision process based on Quantitative Cost-Benefit analysis, which involves considering and analysing all different factors, which will essentially determine where my business will locate. These quantitative factors include the following:

• Looking at operating costs in particular areas such as rents and labour costs.

• Break-even or identifying how long it would take a business to pay back the cost of investing into a particular location (payback period).

• Looking at how close or how far my consumers are and identifying the potential costs of transporting my products to consumers and the time it takes to do this.

• Looking at how close or how far my raw material suppliers are and calculating the approximate costs of transporting raw materials to my business. A good planning would help to decrease my distribution costs.

• Looking at how close or how far my competitors are.

• I might also start looking at the supply of labour forces for the future employment and in the long term, even though it might not be an issue in the short term.

• Looking for local training facilities, in case I or my future employees might need further training.

• Looking the hosing prices and the quality or standards of living in the area where my business will be located. For example, if it is a boutique selling designer clothes, it would be very good for such business to locate on the center of the city, because people in the center of the city are more likely to have higher wages, living standards, more disposable income and, therefore, more likely to buy expensive clothes.

• Looking for a possibility of the further expansion of my business in a local area.

• Looking at how the water and electricity supply costs in a local area.

• Looking at whether there are any financial or insurance services centers nearby, so that if my business needed a loan, it would be much easier to obtain it or receive a consultation.

• I may also look at how easy it is to buy necessary equipment for the production of property on the UK market or how easy it is to obtain any technical support in my particular area.

Although a location is a very important issue, it always depends on the type of the business which wants to locate in a particular area. For example, for small retailers it might be better to locate in the center or near the center of the city where there’s a high percentage of people working.

Break-Even

Price for "Victorio Cakes"
Average price charged for a fruit wedding cake by "Victorio cakles" (10 inch)
Price/£	Mid-point	Frequency	F(x)
40-50	45	42	1890
51-60	55.5	47	2608.5
61-70	65.5	70	4585
Total:		159	9083.5
9083.5/159=57.13
Average price= £57.13
Average prices charged for a fruit wedding cake by my competitors (10 inch)
Name of competitor	Price/£	Mid-point	F(x)
Marks & Spencer	55	55	1
Gerry’s Cakes	70	70	1
Wendy’s Cakes	175-325	250	1
Cake Bytz	46-280	163	1
Total:		538	4
538/4=134.5
Average price per cake charged by competitors= £134.50

Break-Even

In order to work out my break-even point, I had to workout my fixed costs and variable costs. The results that I have obtained are given below:

Fixed Costs
Name:	Costs/£/per year:
Equipement	288,96
Creating a website	250
+ maintenance costs
Facility maintenance	200
Salary	8832
Public Liability Insurance	498,75
Loan Repayments	321
Total Fixed Costs:	£9,603
Variable Costs
Name:	Costs/£/per year:
Ingredients and raw materials	3866,4
Decoration costs	968,4
Total Variable Costs:	£4834,8

Number of cakes made per year= 360

Variable Cost per cake= £4834,8/360cakes= £13,43

Selling price= £55

 Break-Even= Fixed Costs/(Selling price – Variable costs)

 Break-Even= 9603/(55-13,43)= 231.0079 232 cakes will have to be made, in order to break-even.

Research

Dolce Pezzetto Bakery

Market Research

Competitor analysis: