Sift Cupcake and Dessert Bar

You have asked me to evaluate the plans and strategies of Sift Cupcake and Dessert Bar in accordance with seven key questions. After the restatement of each of the questions I have provided answers based on my evaluation.

1. What are the dominant economic characteristics of the specialty baking market? Does it appear that the industry's prospects for growth and attractive profits are good?

From the material provided, the baking industry was on the decline in 2009. They estimated that retail bakeries are expected to grow 8.1 percent per year on average through 2014. The popular television show "Sex and the City" put specialty cupcakes on the market. The cupcakery business is expected to grow another 20 percent between the years of 2009 to 2014. This rising cupcake trend also spawned the Food Network show, Cupcake Wars.

The National Association for the Specialty Food Trade predicted that the next big food trend will be "Back to the future- a reaction against organic/healthful, etc., and a realization that old fashioned moderation is a joy. Food will play the role of a necessity, a pleasure, and an indulgence." Purchased specialty foods have risen 17 percent from 2009 to 2010. The benefit these cupcakes is their portion size at the small price of 3 dollars a cupcake. The small portions are good for the health conscience consumer looking to get a sugar fix while still controlling their intake.

2. How strong are the competitive forces confronting Sift and other specialty bakers? Which one of the five competitive forces is the strongest? Explain your decision.

According to Yelp.com, in 2010, there were 106 known cupcakeries in the Bay Area. The majority of these are single-store establishments. Sift's main competitor is Kara's Cupcakes, who has six establishments in the Bay Area. The increase in growth of these specialty bakeries could be a competitive issue that Sift Cupcake and other specialty bakers will face. The rise of health conscience consumer may cause a risk to these specialty bakeries.

In my opinion, the competitive force that is the strongest is the broad differentiation strategy. Sift is expanding their locations. In 2008, Sift's first location was opened in a 1,000 square foot coffee shop, located in a small strip mall in Cotati, California. In 2009, Sift then opened its second location, in Napa. This location site was strictly just for retail. Sift's most recent opening was a 2,260 square foot full-service bakery, in Santa Rosa. This site not only featured a full-service bakery but also provided decorating and parties for children and adults. They adapted each location to suit the environment and opportunity that presented itself in its specific market.

3. What key factors will determine a company's success in the specialty baking market in the next 3-5 years?

The key factors that will determine their success are marketing and human resources. Sift had disappointing results from their print ads. Sift decided to promote on local radio stations. Sift joined social media as well. They used Facebook and Twitter to promote and communicate their brand to local customers. Sift's involvement on Facebook earned them 5,000 "fans". They would run weekly promotional to drive traffic into their stores.

Not only did they use social media to their advantage, they also got involved in the community. Sift donated to local schools and nonprofit organizations. Sift participated in Levi's Grand Fondo and the Relay for Life to allow the consumer to try their products and for brand recognition. Sift recognized another market opening, the wedding industry. In order to reach this market, Sift reserved booth space at wedding shows to promote cupcakes in exchange for the traditional wedding cake.

Sift also rebranded their company to Sift Cupcake and Dessert Bar, in order to add dessert such as cruffles, whoopie cookies, ice cream sandwiches, macaroons, profiteroles and frosting shots. They wanted Sift to be a dessert destination for families, which did not exist in the local marketplace.

Sift believes that a happy employee equals a happy customer. The Sift staff is supported in learning new skills and opportunities for individual growth. Sift faced the issue of promoting from within. Sometimes these employees were not suited for a particular job. In 2010, Sift hired Robert Evans to manage their Santa Monica location. The hiring of Mr. Evans signaled a change in their hiring policy by improving their "business IQ". The task would be offering enough compensation to attract talented employees and finding the incentives to motivate old and new employees to the company.

4. What is Sift Cupcake and Dessert Bar's strategy? Which of the five generic competitive strategies discussed in Chapter 5 most closely fits the competitive approach that Sift is taking? Explain.

Sift wants to deliver the OMG factor to all of their customers by providing them with house-made treats, exceptional customer service and with bright trendy décor. They want their customers to leave with a positive and memorable experience that they want to repeat time after time.

Sift is continuing to offer an innovative product to draw in sales. They experiment with new flavors, have seasonal flavors and since changing their name they are able to offer a wider variety of desserts, not just limiting them to cupcakes.

Sift is also wanting to venture out of their brick and mortar stores by executing a mail-order division. By proceeding with this, they will be able to spread their name throughout the United States. This could get them more brand recognition and help