External Factors Affecting the Bakery Industry

This report discusses the external factors affecting the bakery industry, including competitor analysis, economic growth and stability, political trends, legal and regulatory issues, and socio-cultural trends.

MARKETING MANAGEMENT

Contents
Introduction...........................................................................................................................................2
Competitor`s analysis............................................................................................................................2
Economic growth and stability..............................................................................................................4
Political trends.......................................................................................................................................4
Legal and regulatory issues...................................................................................................................4
Socio-cultural trends..............................................................................................................................5
Conclusion.............................................................................................................................................6
References.............................................................................................................................................7

Introduction
Black star pastry started as a tiny shop in the Sydney in the inner suburb Newtown. Black
star pastry has opened its first bakery in unconventional and colourful Newtown that is
featured with vibrant inner neighbourhood with thrilling designing, theatre, music, and
restaurant scene. This store is not anything more than side street nook (Bakery, 2018). It is a
fast established hipster-haunt. The café is quite famous for watermelon and strawberry cake
whose sweet sensation is an instant hit. The bakery offers dragon cake, vegan flower
cupcakes, vegan chocolate popcorn cake, raspberry cakes, pistachio lemon zen cake, orange
cake with the Persian figs and many more delicious cakes. The report brings out a discussion
on external factors affecting the bakery industry. Under the external analysis, this report has
undertaken components of pestle framework and competitor`s analysis (Bakery, 2018).
Competitor`s analysis
The recipe of strawberry and watermelon cake was published in gourmet traveller, lonely
planet Sydney travel guide, black star and had detector of Sydney’s more than three million
international tourists. Its filling ranges from seafood to the lamb shanks. The bakery has won
many culinary award and got media attention for many times (Roy Morgan, 2017).
As the black star pastry is an small scale establishment that undoubtedly faces huge
competition from the large scale bakeries but at the same time there are some bakeries such
as dojo bakery, sharp`s bakery, rolling pin bakery, Yallingup woodfired bread, choux
patisserie in Newcastle. However, among these entire bakeries, black star pastry has four
setups in newtown in roseberry that has shifted 20,000 slices of the strawberry watermelon
cake in a week. The bakery has a huge range of products to offer such as pulled pork roll,
eggplant katsu sando, salad, beef and pork roll, goat cheese, quiche Lorraine, mushroom and
herbal quiche, kangaroo pie, ham croissant, brekkie slider, and brisket pie. The bakery offers
gluten free cakes such as lemon pistachio Zen cake, orange cake with the Persian figs,

strawberry watermelon cake and many more (Blackstarpastry, 2019). Whereas, other bakeries
are not able to provide such number of gluten cakes.
It has been observed that the organisation has been facing competition from the emergence of
artisan bakers. Apart from this, low priced innovative bakeries have hampered down the
black star pastry. Cheap bread production houses are another threat to the existence of black
star pastry. In this industry, the companies strives to get grab more market share but famous
supermarkets have been offering the artistic cakes. This has become challenging with the
recent price wars between the private label breads and supermarkets in the market.
Franchisees setups for cakes and breads have encountered high competition because of offers
such as homemade chocolates, and organic food (Blackstarpastry, 2019).
(Source: Roy Morgan, 2017)

Economic growth and stability
The economic position of Australia is stable. If the country reflects global crisis then this will
lead to customers that are more conscious while spending the money as the disposable
income of families decreased. Australia`s GDP was about AUD1677.47 billion in 2016 and
the per capita income was projected at USD51850.27 whereas the purchasing power in the
esteem to per capita income was projected at USD 1187.32 (Market research report, 2017).
The Australia`s business potential lies in numerous sectors such as retail and wholesale trade
inclusive of their insurances. Australian economy is a stable country with increased FDI
inflows in the country that further increased competition among the bakeries (Oraman,
Unakitan, Konyali, Basaran, and Abdikoglu, 2018).
Political trends
The political conditions of the Australia are table and it has a good environment to operate.
Stable political conditions enable the business to operate a good business. Whereas, unstable
political system threats the operations of the business increase the cost of operating business
(Roy Morgan, 2017).
Legal and regulatory issues
Technological advancements- It has been observed that after Second World War, it is seen
that technology transformation included automation. This change has resulted in the
development and improvement in the quality. Further, technological changes have enriched it
with large bakery plants. It is undoubted to say that small bakeries are not able to compete in
the market because of large bakeries. This advancement has led to increase in the production
and the time related to production. The technology has facilitated the introduction of rapid
dough process. For instance- CBS system ERP solutions in the program has led to manage
the bakery activities on high level and finally acquire competitive advantage with the help of

optimising various business process (Roy Morgan, 2017). Here is the illustration of bakery
using CBNS system in the bakery-
(Source: Roy Morgan, 2017)
The bread research place came up with an approach to minimise the preparation time for
dough. This process was referred to as rapid dough process that involves the use of additives
in order to enhance oxidation. This processing technique related to packaging that ensures
that it remains fresh for several days. The small scale café uses pre-mixed flours, automated
equipment for dough, bread manufacturers in order to specialise and compete with the large
manufacturers. The evolution of online stores has increased the demand.
Socio-cultural trends
This factor has transformed to huge extent that affect the operations of Black star pastry
bakery. This factor includes the changing behaviour of the customers that is related to health
consciousness as well the increasing aging population. A misconception lies in the people of
1960s is that carbohydrates will increase the body weight. This misconception has led to
lessen the consumption of bread among the customers especially among who are concerned
with weight (Oraman, Unakitan, Konyali, Basaran, and Abdikoglu, 2018). The scientific
evidence has established a link between disease and diet. The balance between the texture,

colour, and in-take concerns health issues have highlighted that there is a need to ensure the
quality of the bread. Apart from this, customers demand gluten-free cakes, as it does not
increase the weight. Moreover, global financial crisis has reduced the effect of disposable
income and other retirement savings at major levels. Due to increasing population of aged
people, they have started focusing on healthy and other nutritious food. In this case, there is a
need to understand marketing and production of other functional bakery products and form
the marketing strategies accordingly (Roy Morgan, 2017). Apart from this, it is important to
know for the company that according to market reports, the customers have reduced the
consumption of sodium level, increase in the fibre content. This has resulted into production
of bread that maintains partially hydro carbonated fat content with low saturated fat. The fast
advancement in the technology has resulted to reduce the salt content to 400mg/100g and
lower that was not even very feasible without change in the preferences of the customers.
Marketing strategies can be undertaken with the help of segmenting markets. The first
method is the breakdown type that adopts position that involves customer, and identified
groups the second method is to recognise built-up method that argues that market includes
customers (Blackstarpastry, 2019).
Conclusion
From the above discussion, it can be concluded that price war has become a threat in the
competition as it decreases the level of autonomous retail bakeries who has maintained a
stake of 64% of market share in 2017. This further lead to work in reduced profits and
reduction in the sales too as in case of chocolates, handmade chocolates have become more
popular. There is a need to undertake and conduct an extensive market research and develop
new business model that will further productivity. From the competitive analysis, it can be
seen that supermarkets have started offering cakes, chocolates, and breads of different dough,
who have grabbed the major market share.

References
Bakery, (2018) Black star pastry. Available at: https://blackstarpastry.com.au/cakes
[Accessed on 02/09/18]
Black star pastry, (2018) HOME OF THE FAMOUS STRAWBERRY WATERMELON
CAKE. Available at: https://blackstarpastry.com.au/about-us [Accessed on 02/09/18]
Blackstarpastry, (2019) pastry. Available at: https://blackstarpastry.com.au/pastry [Accessed
on 02/09/18]
Instreet Investment Limited, (2013) Political uncertainty weighs on Australian economy.
[online] Available at: http://www.instreet.com.au/content/political-uncertainty-weighs-
australian-economy-%E2%80%93-instreet-market-and-economic-opinion [Accessed on
03/09/18]
Market research report, (2017) Australia PESTEL Analysis Market Research Report.
[online] Available at: https://www.marketresearchreports.com/market-research-reports-inc/
australia-pestel-analysis-market-research-report [Accessed on 02/09/18]
Oraman, Y., Unakitan, G., Konyali, S., Basaran, B. and Abdikoglu, D. I. (2018) WHAT
EXTERNAL AND INTERNAL FACTORS AFFECT ORGANIC FOOD SECTOR. New
knowledge Journal of science, 7(2), pp. 33-44
Roy Morgan (2017) Available on: Slicing up Australia’s $4.7 billion bread market.
http://www.roymorgan.com/findings/7198-slicing-up-australias-bread-market-201703281034
[Accessed on 21/04/2019]