Baking Up Business

I was thrilled to finally read a post written by a fellow classmate that discussed my favourite topic – you guessed it – bakeries!  In My Le’s post on differentiated products, she introduces a friend’s company named Bridal Cookies, a bakery that specializes in making exquisite wedding-themed cookies. Upon visiting the company website, http://www.bridalcookie.com/, I instantly fell in love with the incredible detail, creativity, and craftsmanship that goes into every single cookie design. All it takes is a single glance to realize that these decorated, sugary treasures could really just sell themselves.

That being said, Bridal Cookies has established an extremely impressive online presence that is perhaps the most important factor in their growing success. Since the company is an e-Commerce retailer, they have implemented a number of services to reduce the risk of making high-volume and thus relatively expensive online purchases. They offer a 100% Satisfaction Guarantee and 24/7 customer support. Customers are able to chat either online or over the phone with a knowledgeable service representative at any time from any country in the world.

As for the cookies’ prices, I find them quite reasonable, even surprisingly so, for such labour-intensive products of astounding uniqueness and quality. Customers are also able to order free samples of their choice, and although shipping costs are not covered for the free samples, 50% of shipping fees are covered by Bridal Cookies for any regular purchase. There are several other free services available to customers, including free wrapping or packaging with ribbons, personalized cookie writing or monograms, and personalized thank-you tags. Customers also have the option of sending in their own customized designs or printing actual photos on the cookies, creating an edible wedding favour that is truly one of a kind.

The website has pages dedicated to positive testimonials from satisfied customers from all around the world, and it’s no surprise, seeing as how Bridal Cookies has managed to mitigate almost every area of potential concern. For example, the cookies can even be made using Halal ingredients upon request. In addition, they ship their products worldwide and provide order confirmation and tracking information. The cookies are able to stay fresh for up to nine months (convenient for any last-minute changes), but orders are nonetheless shipped 24 hours after the cookies have been made. Issues of product breakage are addressed swiftly; however, breakage is claimed to be an extremely rare occurrence.

Bridal Cookies has a Twitter account, a corporate blog, a YouTube and Flickr channel, and a significant following on Facebook, with over 9,000 “Likes” on their Facebook page. Not only that, but customers can also sign up to be on their e-mailing list in order to receive more promotions, special offers, and regular updates. Product, promotion, price, and place – this company has nailed them all.

Oftentimes, the pricing of a product is the most visible indicator of quality. A loaf of bread will look like any loaf of bread, but how else are you to know that the loaf had been hand-kneaded, made of stone-ground, organic flour, and baked in a wood-fired, hand-forged German brick oven?

The prices at the Bakery often elicit a response of shock, confusion, dismay, or in the best of situations, curiosity. “Just why are your breads, pastries, cookies, and cakes so expensive?” This opens up an opportunity for us to give a winning sales pitch, which usually consists of culinary catchphrases along the lines of “decadent, creamy, melt-in-your-mouth heaven.” Unless we catch a hint that the customer is a bakery buff, he or she would rather accept that our levain bread costs $5.79 because of its chewy, heavily aromatic interior and crisp, caramelized onion crust, not because we let our dough starter pre-ferment in a two-stage process involving wild yeast cultures and lactic-acid bacteria. The idea of consuming bread brought to life by rarely-used bacterial cultures is too much to handle for some; all they want to know is that the bread tastes fantastic.

An alternative explanation I could technically give customers is an analysis of the 5 Cs of Pricing. In terms of company objectives, the Bakery follows a profit orientation, as the mark-up on our prices are quite high. It is possible that the Bakery may also be engaging in premium pricing, but seeing as how employees often change prices at their own discretion, this is perhaps unlikely (or poorly implemented).

Customers generally find our prices too high due to their existing reference prices. Grocery store bakeries, Asian bakeries, small, independent bakeries, and even expensive specialty bakeries all charge lower prices relative to the Bakery, even if their prices are still above average.

I would categorize the Bakery as operating in a monopolistically competitive market since product differentiation is one of our key strategies. We rely on our quality ingredients, hand labour, and unique creations to allow us to charge higher prices.

Costs also play an important role in pricing; however, my knowledge of the Bakery is limited in this area. I’m certain the Bakery’s costs are more than covered though, as the cost of inputs in baked goods is not particularly expensive. I would be interested in seeing a break-even analysis, but we sell so many different items that I doubt anyone could tolerate calculating more than one.

The manufacturer of our goods owns all of the Bakery’s locations, as well as the other retailers. The larger Bakery location occasionally acts as a wholesaler, but is not involved in any contracts. The delivery agents who transport the goods from the plant to the retailers also work for this same company, meaning the entire supply chain is vertically integrated. Pricing orientations should therefore be aligned. 

Now, I highly doubt a customer would stand around long enough to hear all this, and I also highly doubt that he or she would find the price of our goods any more reasonable afterwards, but hey, at the very least, I’ll sound smart and the offending complainer will walk away.

We all do it, all the time. We ask ourselves, “Is this (insert indulgence here) really worth the money?” Take the dessert above, for instance. Do I really need a US$25,000 frozen hot chocolate sundae made from 28 different cocoas, 14 of them being the most expensive and exotic in the world, infused with 5 grams of visible, edible gold, and served with a diamond-encrusted gold spoon? Maybe not. This magnificent creation named the “Frrrozen Haute Chocolate” is the masterpiece of New York restaurant Serendipity 3, whose US$1,000 Golden Opulence Sundae does appear on the regular menu and is routinely ordered.

The Golden Opulence Sundae was created in celebration of Serendipity 3’s 50^th anniversary in 2004. However, the menu item remained so coveted among the rich and status-conscious that it became a mainstay on the restaurant’s menu, although you do have pre-order it two days in advance.

What began as a publicity move has actually achieved much more for Serendipity 3. Their restaurant has now been elevated to being a “destination,” a place on people’s lists. There are even online articles outlining “How to Get a Table at Serendipity 3.” The pricing of their entire menu indicates an extremely high level of product quality and a clear profit orientation.

As if the restaurant’s popularity wasn’t assured enough, having Oprah announce in an “Oprah’s Favourite Foods” episode that Serendipity 3’s frozen hot chocolate makes her want to “dance on the chandeliers” sent online sales of Serendipity 3’s hot chocolate mix through the roof. Being put in the spotlight even convinced Serendipity 3 to share the real recipe with Oprah on her daytime talk show, and consequently, with the rest of the world. Take all that and throw in two Guinness World Records, and Serendipity 3 has some serious marketing ammunition that has cemented their long-term success in stone.

Speaking of Oprah, who will fill her shoes after she leaves her immensely popular daytime talk show next year? The “Oprah Effect” refers to the dramatic increase in sales a company experiences after receiving even the most casual of mentions on the Oprah show. Her show has become one of the most powerful marketing vehicles in existence, and virtually all companies dream of receiving such automatic fame and popularity simply by earning Oprah’s stamp of approval.

Is there anyone currently in the public arena other than Oprah who can influence audience’s perceptions on a product (or person) almost entirely on the basis that this public figure is perceived to have incredibly good taste? Is there anyone else whose main audience already consists of primary purchase decision-makers and trend-conscious suburbanites? Consumer behaviour may be easily influenced, but it takes an especially influential individual to get the job done right. Love her or hate her, Oprah is the one.

Product innovation plays a crucial role in keeping a firm relevant to its target market and allowing the firm to continually create and deliver value to its customers. The needs, wants, and interests of customers often change over time, so product innovation becomes the key to long-term customer satisfaction. Offering new products or repositioning existing products also keeps current customers hooked to the firm and maintains loyalty.

But what if the firm is a bakery? Product innovation is rarely seen in most bakeries; after all, most customers enjoy their favourite childhood treats and flavours that are familiar to them the best. Bakeries will, of course, offer their own take on classics such as fudge brownies and lemon tarts, but “new-to-the-world” baked goods are not easily produced or seen.

 Here is where the latest “it” factor bakery comes in: Bonchaz Bakery Café in Downtown Vancouver (on W Hastings St. between Richards and Homer St.). In addition to their regular café menu that offers coffee, soup, and sandwiches, they serve up a “new-to-the-world” product: the Bonchaz.

The Bonchaz is a delicious marriage between a Mexican concha, a French brioche, and a Chinese pineapple bun with filling. This soft, light pastry combines the cookie-like shell of the concha, the mouthfeel of brioche, and the concept of a filled pineapple bun into one. Available in five flavours and fillings, each bun costs less than $2. The location of the bakery is ideal too; SFU students and other downtown commuters are always drooling right outside.

Another remarkable aspect to Bonchaz Bakery Café is their primary means of promotion. The bakery’s website is their frequently updated Facebook page, and Bonchaz is also active on Twitter. Using this form of communication is uncommon for a small bakery with only one location, but they have been successful in using it to their advantage. Their booths offering free samples at a variety of local destinations, such as EAT! Vancouver 2010, the Coquitlam Farmer’s Market, Lonsdale Quay, and the Chinese New Year Celebration at Dr. Sun Yat Sen Garden have also helped establish followers and fans all over Metro Vancouver. 

Is there the possibility for Bonchaz, a first mover, to be overtaken by a second mover? It is possible, but in my opinion, the prospect seems unlikely. I believe Bonchaz will follow in the footsteps of Japadog and Beard Papa’s – firms that offer food products so unique and distinctive to that firm that all imitations would be perceived as inferior. However, even though Bonchaz has been creating buzz over the past year, the opportunity still exists for a new bakery with an even fresher “it” factor to open up shop right around the corner.