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Panera Bread Marketing Fundamentals Fall 2011

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Marketing Fundamentals Fall 2011

Professor Duncan LaBay

Fumie Ishizawa

11/20/2011

Panera Bread Case Study

I. Executive Summary

Panera Bread is one of the largest fast food restaurants offering value added service with high quality offerings. Its strategy is to provide a premium specialty bakery and café experience to urban workers and suburban dwellers. Besides this, unique menu with high focused on fresh artisan bread products, and the outstanding Panera's bakery-cafe operations, signature bakery-cafe design, and the great bakery-cafe locations are major factors of Panera's success. In addition, Franchising is a key component of Panera's success. Franchising has enabled Panera to grow more rapidly because it is the strategy of the Panera that enable it to be available in such location where customer can easily find it. Till December 30, 2008, there were 725 Panera franchised bakery-cafes operating and signed commitments to open an additional 256 Panera franchised bakery-cafes. Nearly 2000 Panera Bread bakery café will be opened by 2010.

According to their official site "Panera Bread serves fresh baked, handcrafted artisan breads, sweet and savory baked goods, hand-tossed salads, wholesome soups, and signature sandwiches in a distinctly warm and welcoming environment. Panera Bread is committed to using high quality ingredients in the food they offer and making a lasting contribution to the neighborhoods in which their customers and employees live and work through programs like Operation Dough-Nation". Therefore, the unique menu offerings itself is the one of the major success factors of the Panera Bread.

II. Situational Analysis

A. Environment

1. Economic conditions and trends

The economic growth rate is low and the economy has not yet recovered from depression. The interest rates are under pressure. Yet, the artisan bread industry is strong. The sale of premium breads in the departmental stores is increasing. In addition, customers are looking forward to more exotic and cultural bread choices in restaurants. Artisan bread options are being introduced by fast food restaurants also.

2. Cultural and social values and trends

Despite slow economic growth, fast food industry has been in good positions. People prefer more convenience and good quality food. In the recession, people watch their spending on low cost with high quality food.

3. Political and legal issue

i. There were bread-makers that had opted for bankruptcy during the late 1990s when health conscious customers turned low-carbohydrate bread eaters.

ii. Panera has a contract for franchises who own one of Panera's franchises, that they do not meet all terms of which Panera's contract indicated, they can be terminated from their franchises.

4. Summary of environmental opportunities and threats

There are many competitors such as McDonald, Starbucks, and king burgers in the industry. The competition is really high so strong marketing plan is needed to survive for new market opportunities.

5. Implications for strategy development

They should continue to Fresh dough making: provided competitive advantage by insuring consistent quality and dough making efficiency.

B. Industry

1. Classification and definition of industry

i. Panera Bread is Public corporation

ii. Industry fast food restaurant

2. Analysis of existing competitors

Panera Bread is competing to other chain restaurants such as McDonald's, Subway, Starbucks, Applebee's and etc.

3. Analysis of potential new entrants

The restaurant industry is a very competitive industry. On a typical day US consumers spend a total of $1 billion at eating establishments. There are constantly new entrants to worry about as well as companies struggling to make a profit. Panera competes on many levels including fast casual dining and specialty foods. Panera's main competitors include McDonald's, Starbucks Coffee and Subway. However there are hundreds of restaurants that compete with Panera on a national, regional, and local level that has a negative impact on the company's revenue and market share.

4. Analysis of substitute products

Other fast food restaurants. Pizza, Pasta, Sushi and Bageles.

5. Analysis of Supplier

Panera's suppliers have a relatively low bargaining power because they implement a lot of controls to keep their bargaining power low. Panera controls the quality of their main product by making the bread themselves daily. Also, the company contracts with numerous suppliers to keep an individual suppliers bargaining power low.

6. Analysis of buyers

Buyer bargaining power is relatively high for Panera. The restaurant must constantly be staying in tune to customer preferences or the customers will easily eat at another restaurant. The food industry is highly competitive and in addition there are low switching costs for consumers and consumers have access to quality and nutrition information.

7. Summary of industry opportunities and threats

Many companies in the fast food industry have survived through the year despite competition, economic depression and other market barriers. Many have found ways to develop a marketing relationship with their customers.

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8. Implications for strategy development

Building long term mutually satisfaction with customer is key strategy of their development. They should provide efficient and reasonable service to make attractive their products.

C. Organization

1. Objective and constraints

i. With the single goal of making great bread broadly available to consumers across America, Panera Bread freshly bakes more bread each day than any bakery-cafe concept in the country. Every day,

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