2

Table of Contents

Executive Summary 3

Environmental Analysis (Internal) 4—5

Environmental Analysis (External) 6—8

SWOT Analysis 9

Marketing Objectives 10

Target Market Strategy 11

Product Strategies 12

Distribution Strategies 13

Promotional Strategies 14

Pricing Strategies 15—16

Implementation/Action Plan 17

Evaluation 18

Appendix 19

3

Executive Summary

We developed a marketing plan for First Avenue Bakery. First Avenue Bakery is owned and operated by Deb Heims in Dyersville, Iowa. The business offers a variety of cakes, cookies, pies, bars, and cheesecakes. Her major competitors include J & D Catering and Sweets in New Vienna and Payless Foods grocery store in Dyersville. The current state of the economy affects First Avenue Bakery’s business in a minimal way; anyone who wants a wedding cake is still going to order a cake under any circumstance. Other forces that have a certain level of impact on the business include political forces, legal and regulatory forces, technological forces, and sociocultural forces.

As part of our marketing plan, we conducted a SWOT analysis for First Avenue Bakery. This analysis entails a description of the company’s strengths and weaknesses, as well as the opportunities and threats that the business has less control over. First Avenue Bakery’s strengths outweigh its weaknesses. Although the business does not have ready-made cakes for sale, First Avenue Bakery’s prices are reasonable and cakes are baked fresh. Word of mouth advertising has been very successful for Deb Heims. In our marketing plan, we promoted other forms of advertising that would benefit the business. We implemented three marketing objectives that are reasonable goals for Deb Heims to accomplish.

First Avenue Bakery’s target market consists of newly engaged couples that are looking for cake or other desserts for their wedding. To help Deb Heims grow her business, we have included a set of product strategies, distribution strategies, promotional strategies, and pricing strategies. We have also developed an action plan for Deb Heims to follow in order to help her business. The marketing plan we have created for First Avenue Bakery will definitely provide a positive impact on the business.

4

Environmental AnalysisInternal

The business we chose to conduct a marketing plan of is First Avenue Bakery in Dyersville, Iowa. First Avenue Bakery is a small bakery located in downtown Dyersville that sells a variety of cakes, cookies, pies, bars, and cheesecakes. The business was established in October 2001 by Deb Heims. Until December 2007, Heims also sold bread and donuts. The following year, she discontinued selling these two items because she downsized to a smaller location. Her best-selling product is her freshly baked and decorated cakes. A customer may order a cake from Heims for an event such as a wedding, graduation, birthday, anniversary, first communion, confirmation, or baby shower. Heims does an average of 90 wedding cakes per year, which keeps her very busy. All products need to be ordered by the customer; the business does not have ready-made cakes that can be purchased. The current target market includes newly engaged couples who need cake for their wedding and anyone else who needs a cake or cookies for a special occasion.

Products and services being offered by Deb Heims include a variety of cakes, cookies, pies, cheesecakes, and bars. Cakes are one of most successful products because they are baked fresh and are professionally decorated. A variety of decorating options are offered for a reasonable price, cakes can come in a variety of flavors and fillings and frostings, cakes can be made to accommodate people with special dietary restrictions—gluten free, lactose free, egg free. First Avenue Bakery will deliver cakes to a customer’s desired location. Heims has delivered wedding cakes as close as Dyersville to as far away as Michigan. Cookies are another of her more successful products. Cookies are baked from scratch and therefore meet the customers’ demand for freshness and quality. She has eight different varieties to choose from. Heims also offers a wide variety of pies. The most popular flavors include apple, cherry, pumpkin, and pecan pie. Cheesecakes are one of her least popular items due to high prices. She offers a wide variety of flavors including turtle, chocolate, raspberry swirl, and strawberry swirl. Along with cake and cookies, Heims’s bars are becoming increasingly popular. She offers brownies, pumpkin bars, seven layer bars, and pecan pie bars. Her turtle brownies compete as the number one seller along with her chocolate fudge frosted brownie. In order to obtain any of her sweet products, customers must order them by visiting her business or by calling her. These current strategies for ordering products are effective because she has limited space in her building and does not have enough room to sell ready-made products. The customer has the freedom to order what they want instead of having to choose a product already made from a display case.

Her products are being promoted on a local level. Methods for advertising include radio advertising, bridal fairs, word of mouth, print advertising (local newspaper), and food tasting events (such as Taste of the Midwest and Women’s Night in Dyersville). Bridal fairs definitely work because these events are targeted towards brides who are looking for cake. Print advertising doesn’t work as well unless people read the newspaper. Radio advertising works better than the local newspaper because local businesses support the radio station and therefore, more customers hear the business name. Consumers listen to the radio more often than reading the newspaper.

5

Heims prices her products priced competitively to other businesses that offer similar products. Price of her products includes labor costs as well as production costs. She figures up how much it costs to make the product and prices it around 3-4 times more in order to account for ingredient, overhead, and packaging costs. This strategy is working because the owner is making a profit on her cakes. A limitation is when her suppliers raise the cost of their products, and her profit margin becomes narrower. Heims states that “I can’t raise my prices every time my suppliers raise them. I need to keep my prices steady and consistent for my customers so I do not lose business. When I do raise my prices, loyal customers understand and readily accept the increase. I raise my prices to absorb around 3-4 price increases from my suppliers.”

Currently, she has not collected any kind of marketing data for her business but would like to expand advertising on the internet such as creating a website and a Facebook page that will allow customers to view her products. She is starting to gather pictures of her products that she intends on using for the website.

6

Environmental AnalysisExternal

Competitive Forces:

First Avenue Bakery’s major competitors include J & D Catering and Sweets in New Vienna and Payless Foods grocery store in Dyersville. J & D Catering and Sweets is a gas station that has expanded their business to include catering and cake decorating. This small, family owned business is owned and operated by Jeff and Diane Knepper. For their ‘Sweets’ product line, the target audience is the same as that of First Avenue Bakery.

Some of the strengths of their business include advertising on a large scale and offering a wide variety of services. The business advertises on local radio as well as across Dubuque County. They have a Facebook page that features some of their cakes and a website that explains what products they offer for catering and sweets. J & D Catering and Sweets caters food and decorates cake for weddings. Since they are a convenience store, they also sell products typical for a gas station. The company’s income does not rely solely on cake; therefore, it can afford to advertise on a large scale.

Although J & D Catering and Sweets is widely advertised and offers a variety of services, there are some weaknesses to the business. They are located in a small town five miles from Dyersville, not in a convenient location for most consumers. The business is more successful with its catering more than its cake products, although they are both equally advertised. They have not been offering decorated cakes as long as First Avenue Bakery. Also, J & D Catering and Sweets has higher prices on its cake products than its competition.

Payless grocery store is another competitor of First Avenue Bakery. The grocery store is located near highway 136 in Dyersville, which is a great location for this business. They are open seven days a week, 7:00am-10:00pm for customers’ convenience. Along with selling a variety of groceries and office supplies, this grocery store has an in-store bakery that sells breads and decorated cakes that are on display and ready for purchase. Their prices for the cake products are reasonable in comparison to their competitors. Despite this, their cake sales aren’t as high as their grocery sales.

If First Avenue Bakery increased its product line, then J & D Catering and Sweets and Payless probably would not increase their product line. If First Avenue Bakery increased the price of its products, Payless may raise their prices. They may do this in order to keep up with their competition and make a profit. On the other hand, J & D Catering and Sweets may not raise their prices due to the fact that they are already priced higher than the competition. If First Avenue Bakery would introduce display products that would be ready for purchase, it would not affect the competition. If First Avenue Bakery would increase their amount of advertising, it would greatly affect their competition. If the business had a website, customers could see the high quality of the product and business would shift in their favor. Business may also shift if our business would increase their promotion tactics. For example by offering free samples, First Avenue Bakery would be able to expand their product to a wider range of

7

people. Expanding like this would affect the competition because all competitors involved want the loyalty and business of the same customers.

Economic Forces:

As of this year, our economy is in a state of recovering from the Great Recession. “Stocks have fully recovered, but the job market hasn’t” (Kurtz). Overall economic growth is slowing at the moment. “The private sector is still rolling ahead, helping create nearly 200,000 jobs a month, on average, since the beginning of the year and forcing the overall unemployment rate in April down to its lowest level since the end of 2008” (Schwartz). This shows that we are on the road to recovery.

The current state of the economy affects our business in a minimal way. Everyone who needs a wedding cake from First Avenue Bakery is still going to get one, no matter the economic state. Consumers may choose to minimize their guest list, but they still feel they need a traditional wedding cake. Overall, business has increased for First Avenue Bakery now than in the past. Heims has experienced an increase in prices from her suppliers due to inflation and energy costs. However, she has been able to absorb these costs and is considering raising her prices in the near future.

Political Forces:

President Obama is extremely supportive of small business. He is committed to helping small businesses in the United States prosper as they are the main engine of our economy. To date the Obama administration has enacted eighteen different tax cuts that will help support small business. They have also improved the access to capital through the Recovery Act of 2009 and The Small Business Jobs act. It is important to note that the White House recognizes that small business is vital to the economy. They are doing everything they can to insure the growth and stability of small business in the U.S.

There is also great support at the state level. Governor Branstad has contracted with U.S. Sourcelink to form IAsourcelink.com which helps small businesses find resources online. Governor Terry Branstad understands that small business is the backbone of Iowa’s economy.

It is clear that our politicians both at the state and federal level support small business and are actively trying to make the conditions better for growth.

Legal & Regulatory Forces:

Compliance with the Food and Drug Administration’s regulations is mandatory. Failure to follow their guidelines could lead to expensive fines and potential lawsuits.

First Avenue Bakery is owned and operated independently with no hired employees. While running the organization in this way limits production to a certain extent it does have the advantage of having preventing the threat of any disgruntled employees bringing a lawsuit against First Avenue.

Technological Forces:

8

Recent advancements in technology have created a vast array of opportunities for First Avenue Bakery to take advantage of. The majority of these opportunities exist in the expansion of First Avenue’s presence on social media sites such as Facebook, with these sites offering an inexpensive and relatively easy way to create advertisement and get the name of the business out. First Avenue Bakery has yet to begin building its online presence, but plans to do so in the immediate future are in place.

While these technological advancements offer numerous opportunities to First Avenue Bakery, the same opportunities exist for its competitors. The possibility of a competitor expanding their own presence creates threats to First Avenue’s market, and makes it all the more critical that First Avenue takes the opportunity to act upon these advancements quickly.

Sociocultural Forces:

In a small town such as Dyersville (pop. 4,058) demographics do not play much of a role in the customer base. Generally First Avenue has the same consistent customer base with little variation.

However one sociocultural element has become a critical issue for First Avenue Bakery; offering opportunities and threats, the growing health craze. This phenomenon initially presented itself as a threat by decreasing the demand for the typical First Avenue Bakery product for some. However as the craze has expanded it has begun to create new markets into which First Avenue Bakery has expanded into, and will continue to grow into. These new markets include health friendly products such as gluten and lactose free products. This area will continue to offer various opportunities upon which First Avenue will continue to capitalize.

9

SWOT Analysis

Strengths:

First Avenue Bakery sells a variety of cakes, cookies, pies, bars, and cheesecakes. Prices are reasonable. Cakes are baked fresh and are professionally decorated. Offers gluten free, lactose free, and egg free for those with special diets.

Weaknesses:

The business does not have ready-made cakes for sale. Cakes need to be ordered. Needs to expand level of advertising on a technological level. (create a website and Facebook

page)

Opportunities:

Advertising via word of mouth Heims has loyal customers due to the fact that they have tasted her product or they have heard

good things about it. Business increases in the summer months. Once the weather becomes nice, people plan events

that are in need of a cake from First Avenue Bakery.

Threats:

As gas prices increase, Heims’ margin of profit becomes narrower because cost of her ingredients rise. She cannot raise her prices every time gas prices increase.

Economic conditions have had some impact on business. Weather conditions have an impact on business. During the cold winter months, most people

have less events going on and don’t travel as often as they would in the summer months. Because of this, there is no reason to order a cake.

10

Marketing Objectives

Marketing objective 1:

Increase awareness by 15% within 12 months of the plan implementation. This would be achieved by creating a Facebook page and a website for the business. Other methods include donating products to non-profit organizations, participating in bridal fairs in the surrounding areas, and increasing advertising.

Marketing objective 2:

Expand sales revenue by 5-10% over the next 6 months.

Marketing objective 3:

Increase customer traffic by 5% within the next twelve months. This can be achieved by offering special deals on cake every month or by selling ready-made sheet cakes to customers who are in need of a last minute cake for an event.

11

Target Market Strategy

Our target market resides in or just outside of Dyersville. First Avenue Bakery is near the center of Dyersville making it easily accessible to all customers that reside in Dyersville. We also want to attract customers from Dubuque, Earlville, Farley, Manchester, Monticello, New Vienna, and Worthington. All are towns with direct highway access to Dyersville.

The target market that First Avenue Bakery mainly reaches is men and women who are engaged to get married and are looking to order a wedding cake. The majority of this target market includes people around age 22-35; however, the owner has also done wedding cakes for those over 35. All races and ethnicities are welcome. First Avenue Bakery designs wedding cakes to meet the budget of its customers. Those who are more educated have a clearer idea of what design their wedding cake should be. This target market includes customers of all religions and social classes who want to get married.

Each customer that Deb Heims has consulted with has his or her own personality that is reflected in the final design of the wedding cake. Since all people have different personalities, this aspect is essential in customizing a couple’s wedding cake to fit their needs. Someone with traditional values will most likely order a traditional wedding cake that has a classic style, flowers, and frosted in traditional white frosting. Likewise, a customer with less traditional values may order a cake that is more modern. This type of cake would include bold color, fondant frosting, ribbon, or other wild aspects that reflect this kind of personality. Some motives for customers to come to First Avenue Bakery to order their wedding cake include aspects such as good tasting cake, good looks, and the uniqueness of the cake.

To promote product usage, First Avenue Bakery can create an online portfolio of her wedding cakes to appeal to a wide variety of customers. The business has competitive prices that build consumer confidence in the cakes. When parents of engaged couples order a wedding cake for their first child and are satisfied with the end results, they continue doing business when their next child becomes engaged.

12

Product Strategies

Display wedding cakes in the business so brides can see the size of cake and possible design they desire and narrow down design choices for their cake. We could develop different levels of cake and market them based on wedding budgets. Make it easy for customers to narrow their ideas right off the bat and create portfolios/sales magazines based upon those price ranges. They could be organized by basic styles too, and then the customer could then customize off the set basic cakes.

Display a variety of wedding cake designs in a photo album or on a digital portfolio.

Offer a wider variety of cake flavors and fillings.

Offer a wider variety of specialty cakes such as Snickers, Twinkie, Reese’s, Butterfinger, and Oreo cakes.

Further emphasize the options of styrofoam or real wedding cakes and the large price difference between the two. Advertise the fact that styrofoam cakes are less than half the price as real wedding cakes. Brides can get the same look for either type of cake.

Offer the new option of a double filled cake. For example, white cake with raspberry filling on top of chocolate fudge filling. Other combinations would include peanut butter/jelly filling and chocolate fudge/strawberry.

Expand on the current gluten free line. Offer more flavors and fillings that are gluten free.

Expand cupcake line for wedding cakes and offer specialty cupcakes. Offer more flavors and fillings for cupcakes.

Establish some kind of defining package for First Avenue wedding cakes. Change the packaging of sheet cake/cupcake boxes to make them more eye-appealing. Include a label with the business information. The business can also include nutrition information and allergy information on the boxes.

Develop a line of wedding cake toppers and accessories such as cake knives and servers.

13

Distribution Strategies

Create an organized delivery system that guarantees delivery on time and at the correct location.

Heims should hire a second driver to deliver wedding cakes. The bakery should invest in a small refrigerated truck that will accommodate three to four wedding cakes. Along with this truck and the current van in the owner uses, a total of six wedding cakes can be delivered. This will also increase the geographical area of our target market.

Heims should relocate her business to 1st Avenue, the main street in downtown Dyersville, in order to be closer to downtown business.

Expand business hours. Stay open for longer hours and open earlier. Most people in this target market work during the day and cannot make it to the bakery in time on a weekday to order their cake.

Open a new store in an area where a large number of the target market resides or where there is a need for a cake decorating service like First Avenue Bakery. A large proportion of First Avenue Bakery’s target market is from the Dubuque and Manchester areas, so opening a new store in either of these areas would prove to be beneficial. However, there may be a high cost associated with doing this and it may be ineffective. This one would take a little bit of creativity.

Set up an agreement or partnership with other businesses in the area that will agree to sell a small selection of products from the bakery on a daily basis in their store. These products will be delivered to these businesses every morning to ensure freshness and high quality.

14

Promotional Strategies

Offer a discount. If a bride books her wedding cake six months before the date of her wedding, she will get 10% off the total cost of her cake.

If a bride orders her wedding cake from First Avenue Bakery, she will receive a complementary two layer six inch round cake for their first Anniversary.

Celebrate a notable number of years of the bakery being in business. For example, celebrate the 10th, 15th, or 25th number of years. Offer special deals on cake during this celebration.

Offer free sample cake to engaged couples.

The bakery could offer a free cake or two to veterans who are returning home from Iraq or Afghanistan that plan on getting married. Most people in our target market would like the idea of supporting our troops in some way. This would also be a boost in public relations.

Use a promotional system in which customers who refer others to the bakery would receive coupons, refunds, or free items for doing so. This would serve to create advertising, while building relationships with customers that would prove to be beneficial to all involved.

15

Pricing Strategies

Reference pricing: Encourage customers to buy a higher priced cake by selling a lower cost cake as “bait” so customers buy the higher priced cake. Our target market will be able to see cakes of different sizes and prices in the display case, which will help them in deciding on a specific cake for their needs. An 8 inch two layer round snickers cake costs $25.99, more expensive than most cakes. A snicker’s cake consists of a chocolate cake with a caramel filling inside it. It is frosted in whip cream frosting and topped with caramel syrup, chocolate syrup, chopped nuts, and cut-up snickers candy bars. Putting another lower priced cake next to this one in the display will act as bait, so the customer is inclined to purchase the more expensive one.

Reference pricing can also be used for trying to sell fondant-frosted cakes. Fondant is a type of frosting that is used on most wedding cakes today and is increasingly becoming more popular. It is made from water, vegetable shortening, confectioners’ sugar, unflavored gelatin, glucose, and glycerin. To frost a cake with this type of frosting, it needs to be kneaded and rolled out like pie crust before being smoothed onto the cake. Because of the labor and ingredients that go into making fondant, this frosting has more costs associated with it than other frostings. Therefore, a fondant frosted cake is more expensive than one frosted in whip cream or in traditional wedding cake frosting. A cake that not frosted in fondant frosting acts as bait for the cake that is beautifully decorated and frosted in fondant.

Bundle pricing: First Avenue Bakery can use the bundle pricing strategy when offering a variety of cakes, cheesecakes, cupcakes, and cookies for a bride as part of the desserts for her wedding. Some bundle pricing options include:o Receive a dozen cupcakes and a full sheet cake (serves 80) for $49.99o Receive a cheesecake and two dozen cookies for $49.99o Receive two full sheet cakes for $99.99By implementing these bundle pricing strategies, First Avenue Bakery’s target market is introduced to items that are not as popular (such as cheesecakes) at wedding receptions.

Odd-even pricing: First Avenue Bakery can use this strategy to price items competitively. When a customer hears $19.99 for a quarter sheet cake (serves 15), he or she will think it is cheap because under $20—even though it is only one penny less. This kind of price seems more attractive to customers psychologically.

Prestige pricing: To implement prestige pricing, Heims can decorate wedding cakes very intricately and price those cakes higher. The more detail involved in the wedding cakes, the higher the cake can be priced. Same situation goes for cupcakes. As more detail goes into making and decorating each cupcake for a wedding, the higher the cupcake can be priced.

16

Special event pricing: If a bride or newly engaged couple books a wedding cake with First Avenue Bakery at a bridal fair, they will receive a significant discount on the total cost of their cake.

17

Implementation/Action Plan

Since Deb Heims is the sole owner and operator of First Avenue Bakery, Heims will do the following by, June 1, 2014, one year after the marketing plan implementation. Parts of this plan can be started before this, but everything should be done by the date listed.

Buy another vehicle for the bakery to increase delivery efficiency. By doing so, they can increase area of delivery and increase the number of wedding cakes that can be done per weekend.

Create and display styrofoam wedding cakes (non-edible fake cakes) in the store so brides can visualize their desired wedding cake.

Update her photo album of wedding cake designs to give brides more ideas.

Create a website that advertises her variety of cake flavors, fillings, specialty cakes, and cakes for people with special diets.

Develop a line of wedding cake toppers and accessories to increase income and expand product line

Expand business hours to be open Monday—Friday 7am-5pm, Saturday 7am-12pm.

Advertise by giving some business cards to other local businesses that are bridal related such as Always and Forever Bridal Boutique, Capture the Moment Photography, the Head Shed.

Sell cakes, cookies, and cheesecakes as a bundle for brides who are looking to First Avenue Bakery for their wedding desserts. For example, bundle a dozen cupcakes and a full sheet cake for $49.99.

Offer a 10% discount on the total cost of a wedding cake order if a bride books First Avenue Bakery at a bridal fair. Minimum order needs to be $100.

18

Evaluation

We believe our marketing strategies in our proposed marketing plan are very effective. We will measure our progress towards our objectives by developing a marketing audit for the business and checking in with Deb Heims at First Avenue Bakery. Ways we will do this include calling her every month to see how she is accomplishing her goals from the plan, visiting her website once she completes it to see the content she has put into it, and visit her business to see firsthand how she is implementing our strategies from the plan. By keeping in touch with First Avenue Bakery about our plan, we will further enhance our marketing strategies for the owner.

We will also develop a marketing audit to measure our progress towards the marketing objectives. The marketing audit will consist of a chart outlining the following key components: Social media/digital advertising, in-store product promotion, event promotion, product delivery distribution, accessibility, and product pricing. The marketing audit will allow First Avenue Bakery to expand its business quickly and efficiently. With the marketing audit and other strategies in place, our proposed marketing plan has been a success.

19

Appendix

External Analysis Resources

Dubuque city, Iowa QuickLinks from the US Census Bureau. (n.d.). Retrieved fromhttp://quickfacts.census.gov/qfd/states/19/1922395lk.html

IASourceLink - Helping Iowa Business Start and Grow. (2012, November 5). Retrieved June 6, 2013, fromhttp://IAsourcelink.com

Kurtz, A. (2013, June 4). Recession ended 4 years ago: How far have we come? - Economy.Retrieved June 6, 2013, from http://economy.money.cnn.com/2013/06/04/recession-ended-4-years-ago/?iid=EL

Lee, J. (2010, September 27). The White House. Retrieved June 6, 2013, from http://Whitehouse.gov

Schwartz, N. (2013, May 3). Jobs Data Eases Fears of Economic Slowdown in U.S. - NYTimes.com.Retrieved June 6, 2013, from http://www.nytimes.com/2013/05/04/business/economy/us-adds-165000-jobs-in-april.html?pagewanted=all&_r=2&