Integrated Case Study: Pret A Manger and Market Development Strategies

This integrated case study examines Pret A Manger (PAM) and its strategies for creating a new market. The study delves into PAM's background, mission, products, and services, alongside its challenges in market research, diversification, creating a new market, and entering new markets. The analysis employs various analytical frameworks, including the STP model, SWOT analysis, Ansoff Matrix, 7Ps marketing model, Blue Ocean Strategy, and Porter's Five Forces, to identify problems and propose solutions. The findings highlight the need for improved market research, strategic diversification, differentiation, and a franchising approach for expansion. The study also appraises resource availability and constraints, stakeholder implications, and concludes with a transfer of learning between Pret A Manger and Allergy Therapeutics PLC, demonstrating how knowledge can be shared between a fast food and a pharmaceutical company. The case study provides recommendations for PAM's stakeholders and concludes with suggestions for future strategic development.

INTEGRATED CASE STUDY (ICS)
(MOD003412)
TOPIC:
CREATING A NEW MARKET THROUGH THE
APPLICATION OF EFFECTIVE STRATEGIES:
ACASE OF PRET A MANGER
BY:
EBENEZER ADU-APPIAH
STUDENT ID: 1519626

TABLE OF CONTENTS
TABLE OF CONTENTS ii........................................................................................................................
LIST OF FIGURES ................................................................................................................................ v
LIST OF TABLES i................................................................................................................................. v
GLOSSARY OF ACRONYMS i............................................................................................................. v
EXECUTIVE SUMMARY .................................................................................................................... 1
CHAPTER 1: INTRODUCTION ........................................................................................................... 2
BACKGROUND OF THE STUDY ................................................................................................... 2
1.2. MISSION STATEMENT ............................................................................................................ 3
1.3. PRODUCTS AND SERVICES ................................................................................................... 3
1.4. AIMS, QUESTIONS AND OBJECTIVES ................................................................................. 4
1.4.1. AIMS ..................................................................................................................................... 4
1.4.2. QUESTIONS ........................................................................................................................ 5
1.4.3. OBJECTIVES ....................................................................................................................... 5
1.5 THE SCOPE OF THE STUDY .................................................................................................... 5
1.6 STRUCTURE OF THE REPORT ................................................................................................ 5
CHAPTER 2: CASE DESCRIPTION .................................................................................................... 8
2.1. INTRODUCTION TO THE CASE STUDY ............................................................................... 8
CHAPTER 3: PROBLEM STATEMENT AND PLAN OF ANALYSIS .............................................. 9
3.1. PROBLEM STATEMENT .......................................................................................................... 9
3.1.1. MARKET RESEARCH AND DEVELOPMENT ................................................................ 9
3.1.2. DIVERSIFICATION .......................................................................................................... 10
3.1.3. CREATING A NEW MARKET ......................................................................................... 10
3.1.4. ENTERING INTO A NEW MARKET .............................................................................. 11
3.2. ANALYTICAL FRAMEWORKS/TOOLS ............................................................................... 12
3.2.1. RESEARCH AND DEVELOPMENT ................................................................................ 12
3.2.2. DISVERSIFICATION ........................................................................................................ 14
3.2.3. ANALYTICAL TOOLS FOR CREATING A NEW MARKET ....................................... 16
3.2.4. ENTERING INTO A NEW MARKET .............................................................................. 19
F3.3. PLAN O ANALYSIS ..................................................................................................................... 22
3.4. SOURCES OF DATA ............................................................................................................... 23
3.5. ETHICAL CONSIDERATION ................................................................................................. 23

CHAPTR 4: PAM ANALYSIS AND FINDINGS ............................................................................... 24
4.1. RESEARCH AND DEVELOPMENT ....................................................................................... 24
4.1.1. SEGMENTATION, TARGETING AND POSITIONING ANALYSIS (STP MODEL) .. 24
4.1.2. FINDINGS .......................................................................................................................... 26
4.2. DIVERSIFICATION ................................................................................................................. 27
4.2.1 SWOT ANALYSIS.............................................................................................................. 27
4.2.2. FINDINGS .......................................................................................................................... 30
4.2.2. ANSOFF MATRIX ANALYSIS ........................................................................................ 31
4.2.3. FINDINGS .......................................................................................................................... 33
4.3. CREATING A NEW MARKET................................................................................................ 34
4.3.1. 7P’S MARKETING MODEL ............................................................................................. 34
4.3.1.8. FINDINGS ....................................................................................................................... 35
4.3.2. BLUE OCEAN STRATEGY ANALYSIS ......................................................................... 35
4.3.3. FINDINGS .......................................................................................................................... 36
4.4. ENTERING INTO A NEW MARKET ..................................................................................... 37
4.4.1. PORTER’S FIVE FORCE .................................................................................................. 37
4.4.2. PESTLE ANALYSIS .......................................................................................................... 38
4.4.3. FINDINGS .......................................................................................................................... 40
CHAPTER 5: RECOMMENDED SOLUTIONS TO THE PROBLEMS ............................................ 40
5.1. PROBLEM 1: MARKET RESEARCH AND DEVELOPMENT ............................................. 40
5.1.1. RECOMMENDED SOLUTION – MARKET RESEARCH .............................................. 40
5.1.2. JUSTIFICATION OF SOLUTION..................................................................................... 41
5.2. PROBLEM 2: DIVERSIFICATION ......................................................................................... 41
5.2.1. RECOMMENDED SOLUTION – MERGER AND ACQUISITION (M&A) .................. 41
5.2.2. JUSTIFICATION OF SOLUTION..................................................................................... 42
5.3. PROBLEM 3: CREATING A NEW MARKET ........................................................................ 42
5.3.1. RECOMMENDED SOLUTION – DIFFERENTIATION AND COST LEADERSHIP ... 42
5.3.2. JUSTIFICATION OF SOLUTION..................................................................................... 42
5.4. PROBLEM 4: ENTERING INTO A NEW MARKET ............................................................. 43
5.4.1. RECOMMENDED SOLUTION – FRANCHISING .......................................................... 43
5.4.2. JUSTIFICATION OF SOLUTION..................................................................................... 43
5.5. RESOURCE AVAILABILITY AND CONSTRAINTS APPRAISAL OF PRET A MANGER
.......................................................................................................................................................... 43
5.6. IMPLICATIONS OF THE RECOMMENDED SOLUTION TO PAM’S STAKEHOLDERS 45
Internal Stakeholders .................................................................................................................... 45
External Stakeholders ................................................................................................................... 45

CHAPTER 6: APPLICATION OF LEARNING TO ALLERGY THERAPEUTICS PLC ................. 46
6.1. INTRODUCTION ..................................................................................................................... 46
6.2. COMPANY BACKGROUND .................................................................................................. 47
6.3. BUSINESS CHALLENGES OF ALLERGY THERAPEUTICS PLC ..................................... 47
6.3.1. SPECIALIST MARKETS .................................................................................................. 47
6.3.2. REVENUE REDUCTION IN NEW MARKETS ............................................................... 48
6.3.3. POLITICAL INSTABILITY AND RUGULATORY INTERVENTIONS ....................... 48
6.3.4. INTENSE COMPETITION ................................................................................................ 48
6.4. ANALYSIS OF PROBLEMS USING THE RELEVANT ANALYTICAL TOOLS ............... 48
6.4.1. SPECIALIST MARKET ..................................................................................................... 48
6.4.2. REVENUE REDUCTION IN NEW MARKETS AND POLITICAL INSTABILITY AND
REGULATORY INTERVENTIONS ........................................................................................... 50
6.4.3. INTENSE COMPETITION ................................................................................................ 51
6.5. TRANSFER OF LEARNING .................................................................................................... 52
6.5.1. TRANSFER OF RESEARCH AND DEVELOPMENT FROM ALLERGY PLC TO PAM
...................................................................................................................................................... 52
6.5.2. TRANSFER OF MARKET DEVELOPMENT FROM ALLERGY PLC TO PAM .......... 52
6.5.3. TRANSFER OF RELATED DIVERSIFICATION FROM PAM TO ALLERGY PLC ... 52
6.5.4. TRANSFER OF EMPLOYEE DEVELOPMENT FROM PAM TO ALLERGY PLC ..... 53
6.5.5. TRANSFER OF BLUE OCEAN STRATEGY FROM PAM TO ALLERGY PLC .......... 53
6.6. SOLUTIONS AND RECOMMENDATIONS .......................................................................... 53
6.6.1. SOLUTION TO SPECIALIST MARKET ......................................................................... 53
6.6.2. SOLUTION TO REVENUE REDUCTION IN NEW MARKET...................................... 53
6.6.3. SOLUTION TO POLITICAL INSTABILITY AND REGULATORY INTERVENTIONS
...................................................................................................................................................... 53
6.6.4. SOLUTION TO INTENSE COMPETITION ..................................................................... 53
6.7. CONCLUSION AND RECOMMENDATIONS ....................................................................... 54
7. REFERENCES ................................................................................................................................. 54
8. APPENDIX ....................................................................................................................................... 64

LIST OF FIGURES
Figure 1: PAM’s Menu Category............................................................................................................ 4
Figure tru ture of t e ase stud2: S c h c y ...................................................................................................... 7
Figure 3: STP Model ............................................................................................................................. 13
Figure 4: SWOT Diagram ..................................................................................................................... 14
Figure 5: Ansoff Matrix Diagram ......................................................................................................... 15
Figure 6: 7P’s Diagram ......................................................................................................................... 17
Figure 7: Red and Blue Ocean .............................................................................................................. 18
Figure 8: Porter’s Five Forces Model ................................................................................................... 20
Figure 9: PESTLE Analysis .................................................................................................................. 21
Figure lan of anal sis10: P y ..................................................................................................................... 22
Figure 11: Positioning map for PAM .................................................................................................... 26
Figure 12: Pret’s freshly prepared lunch in the loop............................................................................. 27
Figure 13: PAM’s Loyalty Score .......................................................................................................... 28
Figure 14: PAM Number of Stores Worldwide .................................................................................... 31
Figure 15: Value Based Pricing ............................................................................................................ 34
Figure 16: Moving from Red Ocean to Blue Ocean ............................................................................. 36

LIST OF TABLES
Table 1: Identified Problems and associate analytical tools .................................................... 12
Table 2: SWOT Analysis Findings .......................................................................................... 30
Table 3: Porter’s Five Forces Analysis .................................................................................... 37
Table 4: Resource Availability and Constraints ...................................................................... 43
GLOSSARY OF ACRONYMS
ABBREVIATION MEANING
PAM Pret A Manger
R&D Research and Development
M&S Marks and Spencer
UK United Kingdom
US/USA United States of America
EU European Union

1
EXECUTIVE SUMMARY
The motive of this case study was to analyse how Pret A Manger can create a new market
through the application of effective strategies. Generally, the report was based on the work of
Frei, Goldberg and Van Sice (2012).
Pret A Manger (PAM) was established in 1986 by two college friends; Julian Metcalfe and
Sinclair Beecham. The company has developed since then to become one of patronised fast
food outlets on the streets of London and UK as a whole, though, it has few branches beyond
the local market. The company has its headquarters located in London and compete only in
the fast food industry. It offers fast food products such as wraps, baguettes, soups, salads,
sushi, fruits, coffee, cold drinks, sweet treats and sandwiches in both breakfast and lunch
category.
The company has gradually increased its sales performance (as shown in appendix 1 and 2)
in the past years with the mission of providing quality and healthy food products and services
to its consumers. Regardless of this, PAM faces a lot of challenges in the quest to cross
boundaries and operate in the global market. Lack of market research and development,
diversification, creating a new market and how to enter into a new market are some of the
challenges it faces.
These challenges were critically analysed in order to suggest appropriate recommendations to
assist PAM to address the problems effectively. PAM’s lack of research and development
problem was analysed using STP model. The company’s ability to diversify were also
analysed using SWOT and Ansoff matrix. PAM’s potential to create a new market was
analysed by the use of 7P’S and Blue Ocean strategy. Finally, Porter’s Five Forces were used
to examine the capabilities for PAM to enter into a new market.
Findings from the analysis base on the use of appropriate analytical tools stated above, it was
revealed that, PAM does not scan its external environment by conducting the necessary
research to develop products and services according to customers’ preference in different
markets. Secondly, its product line is the only source of income, which means the company
does not spread risk of industrial failure by employing unrelated diversification. Thirdly, the
blue ocean PAM created in its early stages to make competition irrelevant has been diluted by
EAT (a direct competitor), Subway, M&S, Starbucks and Greggs. Finally, the company has
to sustain growth by going beyond its current boundaries of operations. Therefore, it has to
employ an effective global strategy to assist its entering into the international scene.

2
Solutions to these findings have been addressed at the end of each analysis with its
justifications in direction of the strategic solutions. Availability of resources and constraints
to tackle the suggested solutions have been appraised accordingly. Also, stakeholders impact
on the implementation of the recommended strategies were not left out.
The transfer of learning between Pret A Manger and Allergy Therapeutics PLC concluded the
case study. This part of the study shows the possibility of sharing knowledge by the use of
relevant models between two companies from different industries; A fast food Industry (Pret
A Manger) and a pharmaceutical industry (Allergy Therapeutics PLC).
CHAPTER 1: INTRODUCTION
The background of the case, aim, objectives, mission statement and the scope of the case
study are being elaborated in this chapter.
BACKGROUND OF THE STUDY
PAM, which is translated from as “Ready to Eat” in French, was established by two intimate
friends Julian Metcalfe and Sinclair Beecham in the year, 1986. They were hunted by the idea
of proper fast food, which is free from additives and preservatives, after several failed
attempts of not getting “proper sandwich” in the city of London. Metcalfe and Beecham
acquired a loan of £17,000 from a bank, and opened their first branch in Victoria, with the
aim of providing tasty food which is served in a friendly environment (Frei, Rick and Van
Sice, 2012).
In 1998, the company hired Andrew Rolfe as their CEO after it had grown it branches to
about 100 and, was on the verge of retreating from the business. In the subsequent three
years, the company sold one-third of its shares to fast food giants McDonalds, which valued
Pret A Manger at £150 million (Associated Newspapers, 2001). According to Frei, Rick and
Van Sice (2012), McDonalds had a choice to acquire the rest of the shares if Pret was to
attain a specific level of growth. This really compelled the management of Pret to extend
their activities in both local and international market. Pret failed in the U.S market after it
opened 16 outlets in New York City within two years. This was due to customers’
preferences in the market. The company made losses in the U.S. market and experienced
high level of gearing after two years of operation. The owners, Metcalfe and Beecham,
sacked Rolfe and employed Clive Schlee as their new Chief Executive Officer in 2003.

3
Schlee was appointed to occupy the position of Chief Executive Officer base on his
experiencewith chains of fast food companies, such as,Pizza Hut andSizzler franchises in
Australia and Taco Bell franchises in North America(Telegraph, 2008). However, Metcalfe
had already worked with Schlee when he founded Itsu (A Sushi Restaurant) in 1997.
Metcalfe still owns majority shares in Itsu, while Schlee and Gerard Loughran own the
minority (Jefford, 2015).
Bridgepoint, an European private equity company, purchased majority shares in Pret (a deal
which worth £345 million) after McDonalds had sold all its shares in 2008. Bridgepoint
understood Pret’s special product offering and its unique culture which has positioned the
company on the verge of growth. The company demanded a development goal. Thus, adding
up to the existing number of Pret’s outlets by fifteen percent (15%) each calendar year. Prêt
increased it shops to 286 in 2011, 236 stores in the United Kingdom, 36 in United States and
11 in Hong Kong. This led Pret to make huge stable profits and operating income (Frei, Rick
and Van Sice, 2012).
Currently, Pret has 288 stores in UK with London boasting of 160 of them, 60 stores across
the United States and few stores in Hong Kong, Shanghai and Paris. Mr. Schlee noted in an
interview that, Pret’s ambitions are not limited and therefore it will go beyond its current
boundaries to compete globally with the fast food giants like McDonalds, KFC, and Burger
King (The Independent, 2014).
Pret’s strategy has always been to focus on its distinctive culture to produce quality services
to their loyal customers locally. However, for Pret to compete with the fast food giants in the
world, they have to consider how to create a new market with the appropriate strategies.
1.2. MISSION STATEMENT
PAM’s mission is to serve customers with, handcrafted organic products, preventing the use
of uncertain chemicals, preservatives which is a routine to ‘prepared’ ‘fast’ food in the
industry (Pret A Manger, 2017).
1.3. PRODUCTS AND SERVICES
Pret A Manger provides freshly made foods in their various stores, with the intention of
providing healthy lifestyle to its customers. These food products are shown in figure 1 below.

4
Figure 1: PAM’s Menu Category
Source: (Pret A Manger, 2017)
1.4. AIMS, QUESTIONS AND OBJECTIVES
1.4.1. AIMS
The aim of this study is to critically analyse how Pret A Manger can create a new market
through the application of effective marketing strategies.

5
1.4.2. QUESTIONS
To enter into the world of commerce, market research and development, and diversification
are very essential in creating a new market based on appropriate marketing strategies. That
being the case, the following questions must be answered accordingly to achieve the aim of
this study.
1. Does PAM undertake effective market research and development to enhance its
sustainability?
2. Can PAM diversify to gain competitive advantage?
3. Can PAM create a new market to make competition irrelevant?
4. What is the most effective global strategy for PAM to enter into a new market?
1.4.3. OBJECTIVES
1. To analyse whether PAM undertakes effective market research and development to
enhance sustainability.
2. To analyse how PAM can diversify to gain competitive advantage
3. To examine how PAM can create a new market to make competition irrelevant.
4. To review the most effective global strategy for PAM to enter into a new market.
1.5 THE SCOPE OF THE STUDY
This study is founded on Frei, F.X., Rick, G. and Van Sice, S., 2012. Pret A Manger. In spite
of that, supportive facts from 1986 (The year Pret A Manger came into existence) to 2017
were established from various newspapers, academic journals, articles and many validated
sources as well. Where information was acquired apart from Frei, Rick and Van Sice (2012),
they were all referenced accordingly.
This study includes a comprehensive business strategies related to PAM’S product
diversification, market creation, effective research and development and how PAM can enter
into a new market.
1.6 STRUCTURE OF THE REPORT
This analysis is categorised into six chapters. These chapters have sub topics which are
arranged into subject matters. The introductory chapter, which is the first chapter of the study
gives the background of the case study. It determines the boundary of the case study and
pinpoints the aims and objectives of the study. The second chapter is a brief introduction to
the study, where PAM’s problem is being summarised. The third chapter lays emphasis on
the problem statement and the layout of the study. This chapter portrays the identified