Marketing Management: Case Study of Black Velvet Sydney

This report presents the external environment analysis for Black Velvet Sydney, a local cake shop, which will help the business in effective decision making. The report highlights the opportunities and threats for the organization in the Australian confectionary market.

Running head: MARKETING MANAGEMENT
Marketing Management: Case Study of Black Velvet Sydney
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Executive summary
Black Velvet Sydney is a custom made cake and dessert shop, located in Durlinghurst, Sydney.
Since its establishment in 2014, the organization has been able to earn reputation for its highest
quality and wide variety of products and exclusive innovatory items. This report presents the
background of BV Sydney and external environment analysis, which depicts that it has quite a
few opportunities to grow in the market, such as, stable economy and political scenario, growing
demand for innovative desserts from a large share of the market and advanced technology to
support the growth. However, there is increasing competition in the market from the local and
international players which is a big threat for BV and it needs to deal with the competition
through creativity and innovation.

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Table of Contents
Introduction......................................................................................................................................3
Case background..............................................................................................................................3
Theoretical framework.....................................................................................................................4
Environmental analysis (External analysis: PESTLE)....................................................................4
Summary of Opportunities and Threats...........................................................................................5
Conclusion.......................................................................................................................................6
References........................................................................................................................................7

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Introduction
The purpose of this business report is to present the external environment analysis for
Black Velvet, Sydney, a local cake shop, which will help the business in effective decision
making. The organization holds the authorization of this report as it wants to expand its business
in the Australian confectionary market and hence, wants an external environment analysis to
understand the market situation and scope of expansion. Limitations of the report include time
and budget, for which, internal environment analysis cannot be performed and only external
environment for the organization has been explored. This report has scopes for further analysis
of the internal environment and market competitiveness to design business strategies.
Case background
Black Velvet Sydney (BV Sydney) is a dessert shop located in Durlinghurst, Sydney. It
was established in 2014 and has already won few gold medals in Annual Bake Off awards in
Australia for introducing exceptional flavors, such as, Lemon Vodka, Italiano, Black Velvet and
Passionfruit Velvet etc. (Bvsydney.com.au 2018). It is a designer confectionary and dessert store
that specializes in gourmet cupcakes, custom made cakes, and handmade chocolates. BV Sydney
has a simple organizational structure with its owner, production unit, supply unit, and store
operations. It has introduced over 100 flavors for cupcakes with many innovative flavors like
bacon and cheese, salted caramel etc. to make itself stand out in the market. Along with cakes,
BV Sydney also emphasizes on its coffee and has introduced various exclusive designer blends
by collaborating with Melbourne-based roaster Single Estate (Hart 2014). It also offers less sugar
as well as sugar-free, vegan and gluten-free options to suit everyone’s needs. The target market

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for BV is quite large, which includes individual and corporate clients belonging to all age group,
and economic background (Theurbanlist.com 2018).
Theoretical framework
External marketing environment consists of the forces and the factors that are exogenous
to the business, and on which the business has little or no control (Hueske, Endrikat and
Guenther 2015). To have a competitive position in the market, the organizations must know the
market environment that they are operating in and the external factors that can influence their
business performance significantly. This will help them to decide the market strategies to retain
their existing position or grow in the industry. Thus, external environment is highly important in
shaping the future of the businesses and hence, it is essential to study and analyze the external
environment while adjusting the business strategies accordingly (Madhavaram, Hunt and Bicen
2017).
The relevant external environments are the political, economic, political, legal and
regulatory, technological, socio-cultural and competitive environment that needs to be analyzed
for evaluating their impact on the marketing strategies and plans of BV Sydney.
Environmental analysis (External analysis: PESTLE)
Political: Sydney and the entire Australia have liberal-capitalist democracy system, and have a
stable political scenario, which is an encouraging situation for the industries (Almond and Verba
2015). There has been no recent incidence of political instability in the economy and hence, BV
Sydney operates in a favorable market condition.

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Economic: Australia has experienced more than 2 decades of continuous economic growth
which is a record in itself (Hatfield-Dodds et al. 2015). In 2018, the revenue of the confectionary
industry was USD 5,746 million in Australia and experienced a 0.7% growth from 2013-2018
(Ibisworld.com.au 2018). Tax rates for bakeries are quite low and most of the items are tax free
if sold from a bakery, and level of inflation and unemployment are lower too and therefore
people have more disposable income.
Social: There is a significant change in the lifestyle of people. Consumers are becoming more
health conscious and aware of the food composition; and changing their eating habits. There is
growth in vegetarian and vegan preferences, low calorie food, and rise in multicultural
population due to increasing migration and hence, the demand for bakeries is also increasing like
the other food items.
Technological: Australia is developed country and advanced technology is being used in all
types of industries. Apart from the advanced manufacturing equipment, there is also advanced
channels for marketing, such as, digital and social media marketing (Badia-Melis, Mishra and
Ruiz-García 2015).
Legal: Taxation legislation is supportive for the food and bakery industry of Australia. The labor
laws are favorable with a minimum wage law in effect.
Competition: there is tough competition in the bakery industry in Sydney as well as in the
Australian market, as there are not only local confectionaries, but some international companies
also, such as, Starbucks, Costa etc. Hence, innovations are very important in this industry.

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Summary of Opportunities and Threats
Based on the external environment analysis, it can be inferred that the stable economy,
growing population, stable disposable income, lower inflation, advanced technology and
growing demand for healthy food are the opportunities for BV Sydney and they have already
taken ventures to explore these opportunities. By introducing innovative and exclusive products,
including low calorie, sugar free, vegan products, at a reasonable price and implementing social
media marketing, BV Sydney has been able to capture a strong position in the market. Social
media marketing is another opportunity that helps the industry to reach out to wider audience.
On the other hand, increasing competition in this industry from local and international
players is a major threat for BV Sydney as each organisation is focusing on innovation and
creativity. Moreover, advanced technology is enabling the companies to integrate with better
manufacturing equipment, at par with the large international organisations, which is another
threat for local shops like BV Sydney.
Conclusion
From the above report, it can be concluded that BV Sydney is one of the prominent
names in the bakery market of Sydney, having won gold medals and awards for their innovations
within a span of four years since its establishment in 2014. Stable economic, political and social
environment, coupled with advanced technology, supporting innovation and creativity; and
social media marketing, create opportunities for BV to expand its operation in the Australian
market, however, the increasing competition from the local and international confectioners and
coffee sellers are posing major threats for BV and it needs to emphasize more on its innovations
and marketing strategies to stay ahead of the competition.

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References
Almond, G.A. and Verba, S., 2015. The civic culture: Political attitudes and democracy in five
nations. Princeton university press.
Badia-Melis, R., Mishra, P. and Ruiz-García, L., 2015. Food traceability: New trends and recent
advances. A review. Food Control, 57, pp.393-401.
Bvsydney.com.au, 2018. About Black Velvet Sydney. [online] Black Velvet Sydney. Available at:
https://bvsydney.com.au/pages/about-black-velvet-sydney [Accessed 8 Dec. 2018].
Hart, E., 2014. Black Velvet Sydney. [online] Concrete Playground. Available at:
https://concreteplayground.com/sydney/restaurants/black-velvet-sydney [Accessed 8 Dec. 2018].
Hatfield-Dodds, S., Schandl, H., Adams, P.D., Baynes, T.M., Brinsmead, T.S., Bryan, B.A.,
Chiew, F.H., Graham, P.W., Grundy, M., Harwood, T. and McCallum, R., 2015. Australia is
‘free to choose’economic growth and falling environmental pressures. Nature, 527(7576), p.49.
Hueske, A.K., Endrikat, J. and Guenther, E., 2015. External environment, the innovating
organization, and its individuals: A multilevel model for identifying innovation barriers
accounting for social uncertainties. Journal of Engineering and Technology Management, 35,
pp.45-70.
Ibisworld.com.au, 2018. Chocolate and Confectionery Manufacturing – Australia Industry
Report | IBISWorld. [online] Ibisworld.com.au. Available at:
https://www.ibisworld.com.au/industry-trends/market-research-reports/manufacturing/food-
product/chocolate-confectionery-manufacturing.html [Accessed 8 Dec. 2018].

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Madhavaram, S., Hunt, S.D. and Bicen, P., 2017, May. The FREE (Firm Resources and External
Environment) Framework as an Alternative to SWOT: An Abstract. In Academy of Marketing
Science Annual Conference (pp. 49-49). Springer, Cham.
Theurbanlist.com, 2018. Black Velvet Sydney. [online] The Urban List. Available at:
https://www.theurbanlist.com/sydney/directory/black-velvet-sydney [Accessed 8 Dec. 2018].