Porters Five Forces Analysis Broadway Cafe
In 1952, The Broadway Café opened its doors for business. Located in downtown Saratoga Springs, the café specializes in a wide variety of coffees, teas, homemade sandwiches and soups and also offers a full service bakery. For quite some time the Café was the local hotspot. However for the last five years business has been steadily declining. My grandfather who owned the shop up until now has been running it the same way since its inception. The lack of information technology has been the driving force behind the Café’s decline. In order to bring the Café up to date with the 21st century, a detailed analysis using Michael Porter’s Five Forces Model will be implemented.
The first force we will tackle is buyer power. According to Baltzan (2011), buyer power is high when buyers have many choices of whom to buy from (p.16). There are over a dozen shops located in downtown Saratoga that offer the same products and services as we do. Customers have a variety of options to choose from thus in a sense resulting in high buyer power. However, the coffee industry typically deals with individuals rather than large volumes of buyers at once so buyers have no bargaining power over prices here. We can conclude that buyer power is relatively high due to the fact that there is a high volume of businesses with the same product offerings. One way to reduce buyer power and at the same time make ourselves more attractive is by introducing loyalty programs. Baltzan (2011) found that “loyalty programs reward customers based on their spending” (p.17). We will create a Broadway Café Card that customers can sign up for free. This card will track and record purchases made every time a customer uses it. After a total of $50 has been spent in the store, a free specialty coffee or tea will be rewarded. With this program, we are hoping to the customers will be aware of the incentives and deter them from going elsewhere.
Supplier power is relatively weak. The coffee export is a $20 billion
The first force we will tackle is buyer power. According to Baltzan (2011), buyer power is high when buyers have many choices of whom to buy from (p.16). There are over a dozen shops located in downtown Saratoga that offer the same products and services as we do. Customers have a variety of options to choose from thus in a sense resulting in high buyer power. However, the coffee industry typically deals with individuals rather than large volumes of buyers at once so buyers have no bargaining power over prices here. We can conclude that buyer power is relatively high due to the fact that there is a high volume of businesses with the same product offerings. One way to reduce buyer power and at the same time make ourselves more attractive is by introducing loyalty programs. Baltzan (2011) found that “loyalty programs reward customers based on their spending” (p.17). We will create a Broadway Café Card that customers can sign up for free. This card will track and record purchases made every time a customer uses it. After a total of $50 has been spent in the store, a free specialty coffee or tea will be rewarded. With this program, we are hoping to the customers will be aware of the incentives and deter them from going elsewhere.
Supplier power is relatively weak. The coffee export is a $20 billion
References: Baltzan, P. (2011). Information systems. (2e ed., pp. 15-18). McGraw Hill/Irwin. Goldschein, E. (2011, November 14). 11 incredible facts about the global coffee industry. Retrieved from http://www.businessinsider.com/facts-about-the-coffee-industry-2011-11?op=1 Monster Energy Drink® | Products. (2012). Monster Energy Drink® | Home. Retrieved from http://www.monsterenergy.com/us/en/products/#!/products%3Atoffee