1Running head: BROADWAY CAFÉ 21ST CENTURY
The Broadway Café Enters the 21st Century
November 6, 2011
The Broadway Café is a family coffee shop located at 1225 S. Broadway in Baltimore, Maryland. The Café offers many different kinds of coffees, teas, baked goods, homemade soups, sandwiches, and salads. For many years this was the place to meet with family and friends to relax and have pleasant conversation. For the past five years, however, business has been declining. At one time the Café held the competitive advantage; however, that is not the case now. To compete in today’s marketplace Broadway Café must upgrade in ...view middle of the document...
Because of the rewards customers may receive, they are more likely to be repeat customers thus giving the Café the competitive edge needed to grow the business.
The force of Supplier Power assesses how easy it is for suppliers to drive up prices. The number of suppliers, the uniqueness of their product or service, their strength and control over you, the cost of switching from one to another and so on drives the number of suppliers. The fewer the supplier choices you have, and the more you need supplies, the more powerful your suppliers are. The Supplier Power of the Café is low as there is a wide variety of suppliers available to the Broadway Café. Just doing a search of café supplies on Yahoo resulted in over 20 pages listing companies that offer the convenience of ordering online. The challenge would be in finding the supplier that can satisfy the needs of the Broadway Café in the most economical and efficient fashion.
The threat of substitution is affected by the ability of customers to find a different way of doing what you do. There are many competitors in the café business and with the threat of a Starbucks on the horizon competition will be severe. Competition cannot be avoided in this industry but it can be managed. The threat of substitution is deemed as being high for the Broadway Café. This is evident by the decline in business. This threat can be managed and possibly be reduced with the implementation of a program targeting switching costs. Switching costs are costs that can make customers reluctant to switch to another product or service (Baltzan & Phillips, 2009). The Café could implement a program that provides all customers with a savings card that calculates points towards a free purchase that can be redeemed sometime in the future. This would tie the customer to the Café for a period of time to establish a relationship.
The threat of new entrants is high when it is easy for new competitors to enter a market; but when there are significant entry barriers to a market the threat is low (Baltzan & Phillips, 2009). The easier it is to enter a market the more “cut throat” is the competition. There is always the need to keep one step ahead of the competition. Broadway Café’s threat is high because there are few barriers hindering anyone from opening a similar or same type of business.
To rebuild the Broadway Café and bring it into the 21st Century the Café should use a focused differentiation strategy. A focused strategy concentrates on providing a high perceived value to justify a substantial price premium to its targeted market. The outcome of the strategy is more predictable as focus is placed on a targeted market. Broadway Café could focus on the family recipes that have helped to sustain the business up to this point in time.
The Internet has become a most valued asset to any type of business. Especially the ones wanting to participate in the competition associated with its...