Location. As a part of my production plan I will also be choosing an appropriate location for my business

 

As a part of my production plan I will also be choosing an appropriate location for my business. In order to choose location which will best suit my business and will, at the same time will have good links with the city, my customers and raw materials and be available at a reasonable price to help my business maintain lower costs, I will have to carry out a decision process based on Quantitative Cost-Benefit analysis, which involves considering and analysing all different factors, which will essentially determine where my business will locate. These quantitative factors include the following:

 

• Looking at operating costs in particular areas such as rents and labour costs.
• Break-even or identifying how long it would take a business to pay back the cost of investing into a particular location (payback period).
• Looking at how close or how far my consumers are and identifying the potential costs of transporting my products to consumers and the time it takes to do this.
• Looking at how close or how far my raw material suppliers are and calculating the approximate costs of transporting raw materials to my business. A good planning would help to decrease my distribution costs.
• Looking at how close or how far my competitors are.
• I might also start looking at the supply of labour forces for the future employment and in the long term, even though it might not be an issue in the short term.
• Looking for local training facilities, in case I or my future employees might need further training.
• Looking the hosing prices and the quality or standards of living in the area where my business will be located. For example, if it is a boutique selling designer clothes, it would be very good for such business to locate on the center of the city, because people in the center of the city are more likely to have higher wages, living standards, more disposable income and, therefore, more likely to buy expensive clothes.
• Looking for a possibility of the further expansion of my business in a local area.
• Looking at how the water and electricity supply costs in a local area.
• Looking at whether there are any financial or insurance services centers nearby, so that if my business needed a loan, it would be much easier to obtain it or receive a consultation.
• I may also look at how easy it is to buy necessary equipment for the production of property on the UK market or how easy it is to obtain any technical support in my particular area.

 

Although a location is a very important issue, it always depends on the type of the business which wants to locate in a particular area. For example, for small retailers it might be better to locate in the center or near the center of the city where there’s a high percentage of people working.

 

Break-Even

Price for "Victorio Cakes"
Average price charged for a fruit wedding cake by "Victorio cakles" (10 inch)
Price/£	Mid-point	Frequency	F(x)
40-50
51-60	55.5		2608.5
61-70	65.5
Total:			9083.5
9083.5/159=57.13
Average price= £57.13
Average prices charged for a fruit wedding cake by my competitors (10 inch)
Name of competitor	Price/£	Mid-point	F(x)
Marks & Spencer
Gerry’s Cakes
Wendy’s Cakes	175-325
Cake Bytz	46-280
Total:
538/4=134.5
Average price per cake charged by competitors= £134.50

 

Break-Even

 

In order to work out my break-even point, I had to workout my fixed costs and variable costs. The results that I have obtained are given below:

 

Fixed Costs
Name:	Costs/£/per year:
Equipement	288,96
Creating a website
+ maintenance costs
Facility maintenance
Salary
Public Liability Insurance	498,75
Loan Repayments
Total Fixed Costs:	£9,603
Variable Costs
Name:	Costs/£/per year:
Ingredients and raw materials	3866,4
Decoration costs	968,4
Total Variable Costs:	£4834,8

Number of cakes made per year= 360

Variable Cost per cake= £4834,8/360cakes= £13,43

Selling price= £55

 

à Break-Even= Fixed Costs/(Selling price – Variable costs)

à Break-Even= 9603/(55-13,43)= 231.0079à 232 cakes will have to be made, in order to break-even.

 

Research

Dolce Pezzetto Bakery

 

Market Research

 

Competitor analysis:

 

1) List of my potential competitors on the custom made cakes market:

• Marks & Spencer
• Gerry’s Cakes
• Wendy’s Cakes
• Cake Bytz

 

All of the above competitors are located in the Birmingham area, where I’m initially planning to set up my business.

 

2) Maps showing location of each competitor:

 

 

3) Comprehensive details my competitors’ marketing strategy:

 

Gerry’s cakes

-Offers a range of different cakes for weddings, birthdays, Christmas, and other celebrations

-Most cakes are of the following shape and format:

· Iced chocolate cake

· Sponge cake

· Christening cake

· Flower cupcake

· Photo or picture cakes

· Decorated cakes

· Novelty cakes or custom made cakes of different shapes or the ones which the customer orders, such as e.g. a dinosaur shape cake for children

 

And the main shapes and sizes are:

 

6, 8, 10 and 12 inch circle shape cakes, square shaped cakes, and rectangular shape cakes.

 

The prices for Gerry’s cakes may vary on the individual basis. However, there are some prices for certain types of cakes and flavours:

Name	Price
5 inch (serves 8 to 10) Vanilla (Round)	£16.49
6 inch (serves 10 to 12) Vanilla (Square)	£18.99
6 inch (serves 10 to 12) chocolate (Square)	£18.99
8 inch (Serves 20 to 22) vanilla (Square)	£34.99
6 inch (serves 10 to 15) Vanilla	£25.99
6 inch (serves 10 to 12) Vanilla	£21.99
6 inch (serves 10 to 12) chocolate	£21.99
8 inch (Serves 20 to 22) vanilla	£39.99
8 inch (Serves 20 to 22) chocolate	£39.99
10 inch (serves 35 to 40) Chocolate	£61.49
12 inch (serves 50 to 60) vanilla	£82.49
12 inch (serves 50 to 60) Chocolate	£82.49

 

Small Vanilla	£55.99
Small Chocolate	£55.99
Medium Vanilla	£76.99
Medium Chocolate	£76.99
	Price	Price
Cake Size	Sponge	Fruit
6" Square or 7" Round	£20.00	£40.00
8" Square or 9" Round	£35.00	£55.00
10" Square or 11" Round	£45.00	£70.00
12" Square or 13" Round	£55.00	£80.00

 

Examples and pictures of what Gerry’s products look like:

One of the most expensive cakes that “Gerry’s cakes” offer are:

 

Wendy’s Cakes

-Offers various types of cakes for: Birthday, Weddings, Christenings, Corporate, Adult, Retirement, Anniversary, Engagement, Christmas, and other important or popular events.

Prices of Wendy’s products are individual and cannot be currently identified. However, they require a £75 deposit for all cakes that they make.

They also do home delivery.

 

Cake Bytz

-Offers custom made cakes and some simple cakes such as sponge, chocolate and fruit cakes of circle, square and rectangle shapes.

 

The prices they charge for the cakes they produce are also estimated and are normally set on an individual basis, however there are some general boundaries:

Sponge = £210.00

Chocolate = £235.00

Fruit = £280.00

 

And some extra cost for:

Sponge Cakes with Vanilla Butter Cream & Raspberry Preserve Filling £3.95 each

Chocolate Cakes with Chocolate Butter Cream Filling £4.05 each

Traditional Fruit Cake Covered in Marzipan £4.95 each

The examples of the products they make are given below:

 

 

Also, their opening hours are the following:

Opening Hours
Monday - Saturday	9.00am - 9.00pm
Sunday	10.00am- 4.00pm
Bank Holidays	Closed

 

-examples of promotion and advertising used

 

To advertise in Cake Craft & Decoration or on this website contact