TEAM 9 E-CONCEPT DEVELOPMENT SEMESTER 1 PROJECT 1 GROUP 1 ASA spice ASA TRADING INSIGHT REPORT 02 03 2014
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TABLE OF CONTENTS CLIENT GOAL 1 PROBLEM AREA 1 PROBLEM FORMULATION 1 HYPOTHESIS 2 CONSTRAINTS 2 USER RESEARCH 2 ANALYSIS 3 SWOT 5 TOWS 7 PORTER’S 5 FORCES 7 CONCLUSION 9 SOURCES 10 APPENDIX 11
CLIENT GOAL As stated in the client brief (24.02.14), ASA Trading requires a digital solution in order to establish an online B2B platform. S.M.A.R.T. goal analysis in appendix(p.11).
PROBLEM AREA
Situated in the heart of Copenhagen, in Torvehallerne, ASA is still an upcoming new brand from 2011. Even though it is a new brand ASA had a 1 million income in 2011/2012 with a 0 profits and the year after a 1.3 million DKR. in income with 50.000 DKR. in profits. The products are 98% organic and imported from all around the world. Today ASA is selling B2C and 40-60% of them are women. ASA is also cooperating with “Årstiderne” and wants to become a big operator in the B2B market. Through the next couple of years ASA wants to become a big brand in the business industry. ASA doesn’t operate on the online B2B market, this is a problem since the online sales are booming at the moment (Business.dk). Since they are a small company, new and bigger operators could be first movers on the market, therefore it is important for ASA to be represented in the industry. Because ASA is new on the market, they are not in peoples mind, which is important if they want to be a big player on the market. Another problem is that they are very focused on CSR and that they have organic products, but do not exploit the potential. Statistics Studies show that CSR is very important in the danish people’s minds (Bader, 2013). Organic food is aswell an important factor in the danish minds (Organicdenmark.dk, 2013) Studies on CSR(Bader, 2013) and organic food consumption(Organicdenmark.dk, 2013) is strongly imprinted in danish people minds. ASA doesn’t have their production in Denmark. They get their products from all over the world and have to rely on the suppliers to get their products on time because they can’t store a lot in the shop.
PROBLEM FORMULATION
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What kind of businesses should be addressed? - What are their needs and preferences regarding online purchases? How could it be done combined with ASA’s existing website? What is the target group’s opinions, issues and expectations regarding the service?
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HYPOTHESIS We believe that it is a bad decision not to make use of the fact that the products are organic and is being grown under good conditions. Although it would be nice if people assumed that everything was organic by default, we do not believe that this is the mindset of the consumer.
CONSTRAINTS • Must work in Danish and English. • It has to be simple and user friendly. • There shouldn’t be a sign up fee. • B2C must not have an access to the B2B section of the website. • Spices delivery should be fast and reliable. This includes delivery time, quality of products when delivered. • B2B platform combined with existing website.
USER RESEARCH In order to gather data about what the possible customers of the products would prefer, we did some user research, so that we could get more information about how to execute a possible solution. Focus Group - professional We executed some qualitative user research in the form of a focus group made out of people who cook or work with food in their profession. They were given a couple of questions and an exercise, followed by more questions allowing for a discussion in the group. The data we gathered are as follows: • They all bought their spices in grocery stores because they have the biggest selection of fresh spices and herbs. • Part of the group valued the freshness of the product very high, while others did not mind it as much. • The information that was the most important to display online was in their opinions; origin and time of planting, soil and environment, if chemicals were used in the process, the time they were harvested and the delivery time for the products once you buy them in the webshop. • Reliability and delivery time was an important factor for everyone, other than that they had different opinions about what they valued the most (price/quality/quantity). • User friendly navigation was highly valued, along with visual representation • No one had prejudice against switching to e-commerce, but they would want it to be reliable, and proposed a contract or something similar to insure this. Heuristic analysis In order to meet the client’s criteria for the future B2B platform we decided to use the Heuristic Analysis to research the current ASA webshop. We used the “The 7 C’s of Effective Website Design Elements” to guide us
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through the process of finding problems. Identified problems: • • • •
Low quality photographs in a few cases Small layout and navigation issues Inconsistent brand identity between Facebook and actual webshop No optimization for mobile navigation
Recommendations:
ANALYSIS In order to create a solution, we needed information about the company, what their interests and strengths are ad how they differentiate themselves from their competition. AŠA spice brand and visual identity ASA spices visual identity represents most of their values as a company and the owners personal experiences and vision. One of their outstanding values of the company is strongly reflected in their slogan: “Travel through adventure and taste”. Vision comes from the professional and life experience, where quality, travel, good food, adventure is emphasized. When it comes to the product finest quality, organic growing is put to the top priority. Furthermore, ASA stands very strong on social mission, that covers ethical outlook on business by giving something back. In elaboration, company is aiming not only to the profits, but rather to use them to promote and establish projects in order to help for sustainable social benefit. which could be direct benefit in real people’s lives. Logo and trademark from the asaspice.dk website, along with the color scheme (from left to right):
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ASA’s logo is in a circular form with a company’s name in an authentic name, which comes from Hindu, english: “Hope”. Additional graphical elements above the logotype is visual representation of the smell. Colors and typography Throughout the site, colors represent the main feel of the spices, which give the look and the feel which resembles the shop in Torvehallerne from Copenhagen. The backgroundo is brown/gray shade with grungy patterns. The color in the logo background in hexadecimal #B63117 and lettering #FDFAFA. Display text in the menus and headlines and reading text goes by the priorities as follows: Arial, Helvetica, Tahoma, Sans-serif. Images and other media in the website represent physical shop, to show the exact environment, with natural, organic feel. Layout, grid and navigation ASA’s website uses vertical grid system, which aligns objects around to achieve an orderly look. By following the most of the horizontal alignments main navigation positioned on top, with login and shopping basket with distant proximity which makes them easier to find. Responsive or adaptive versions are not available for mobile devices. Segmentation Behavioural segmentation Approach businesses that want to work with high quality, organic spices. Geographical segmentation Approach mostly Copenhagen and Denmark based companies, but businesses from all over the world are welcome to order products. Psychographic segmentation Approach businesses that find it important to represent value and a higher living standard. User Scenario Erik Andersen is the head of chef at one of the most popular high quality restaurants in Copenhagen. The cuisine of Restaurant X is Asian and the founders’ mission is to provide high quality Asian food with unique experience for the visitors. Restaurant X is located in the centre, close to Amagertorv and is always overbooked on Fridays and Saturdays. Restaurant X is working with more than 150 hundred spices in order to provide an authentic experience for their customers. The variety of spices Erik Andersen is using are exotic, some of them grown only on a specific climates in a specific part of a country. Erik Andersen has always found it extremely difficult to purchase the best ingredients in town with a very short delivery time. One day he met with some of his friends, who happen to be also chefs. Erik got to know a new opportunity, where it is easy and fast to order different kinds of spices. After arriving home, he immediately checked out
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ASASPICE website and registered Restaurant X with CVR number. What he saw was a simple yet userfriendly interface with an extremely huge variety of spices from all over the world. The most surprising information he found was the delivery time, which is very short as it is possible to order spices around midnight and get them by next day. From that day Restaurant X is purchasing all the spices from ASA platform. In order to list some attributes about the company we decided to create a SWOT, to get a better overview.
SWOT
Strengths S1. Service People visiting the shop from Torvehallerne can get small samples for free. They can also get special mixes and recommendations from the seller. S2. High quality products The products come from the best spices in India and therefore their quality is high. ASA makes their own mixes which makes it special and unique. S3. Organic. 98% of their spices are organic. S4. Good location ASA is placed in the center of Copenhagen in Torvehallerne where there are visitors from all over the world and people from the restaurant industry. Torvehallerne is filled with high quality products for both B2B and B2C. S5. Well organized business They don’t have any debts. They cooperate with Årstiderne. They opened a few franchises in India. There
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is only one stakeholder and there aren’t any dividends to pay. Other than that the CEO is very enthusiastic about his business and goes to the farms growing the crops to inspect and make sure that they are the right people to work with. Weaknesess W1. Not present on the B2B market ASA doesn’t sell to the B2B market at the moment. They only have a cooperation with “Årstiderne”. W2. Inexperienced in online business ASA is a new business (only 3 years). W3. Advertising Advertisement is used in the form of ‘word of mouth’, sending promotions, offers, samples of spices. But the word is being spread quite slow, although it means it will be faster as more people get to know the brand. W4. Not using CSR in promotion. It’s a good thought and it should be common sense to donate money, and ASA could definitely gain more customers by using it in their branding. Opportunities O1. Get emails ASA has successful email offers service functioning for B2C, which could be expanded into B2B market as well. O2. Expansion possibilities By getting more popular and gaining more trust from customers, expansion with a help of online sales within Denmark and surrounding countries has huge potential. O3. Cooperation Cooperation with other companies e.g. with Årstiderne would boost sales remarkably. And would be a good way to get the products into the homes of the target group. Threats T1. Unreliable suppliers ASA imports organic spices from all around the world, but because of the increased value when buying organic food, some farmers might say and pretend that their crops are organic while they are not. Suppliers providing spices from foreign countries (India, Sri Lanka, Spain etc.) could be unreliable with delivery times and amount. Weather or pests might also ruin crops which can pose as a threat. T2. Other spice shops Since there is a lot of competition on the spice market, especially from bigger companies, Santa Maria could pose as a threat. Although ASA has found a good place in the market with a price of 75% of the total market, where Mill and Mortar is at 100% and Santa maria around 50%. This gives them a good middle ground with a more affordable premium product, but the other companies still pose as threats because their product target
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the same demographic. T3. Delivery issues Possible local delivery issues caused by the delivery service, which by the time being is Post Danmark. Problems occur such as: delivery time, cost, reliability. A possibility could be switching to Fed Ex but it would require larger quantities of deliveries. Utilizing what we knew after making the SWOT, we have tried to put together some strategies based on te different attributes, they are as follows.
TOWS Possible options: S3 → W4, W3 ASA sells fresh, high quality and organic spices from the manufacturers. It is an extremely important feature that ASA spices are organic, because it can add value to the brand and reach different target groups, that are highly interested in purchasing original, non-artificial products. O3 → T2 For the moment, ASA cooperates with Årstiderne which is a company that delivers quality food ingredients to which they add samples of the ASA spices. ASA should look up for other opportunities that could advertise and promote their business. O1 → W2 Company’s strategy to collect emails and then use it as a promotion to the customers has gotten good ground to the digital connection with the customer. A good start to test online selling strategies and to tie customers to get used to the online services provided by ASA. To investigate the market situation of spices we decided to use Porters 5 forces, and from that we gathered the following information.
PORTER’S 5 FORCES Porter’s 5 forces model visualization in appendix(p.12). Threat of substitutes When trying to think of a substituting product to spices it became clear that there is nothing that can replace that product or offer a similar experience. But if we look into spices themselves, we find that some spices might work as substitutes for others (Jane, August 28 2011, read 28/02-2014). Although they do not provide the exact same taste or colors to the dish. When venturing online it is possible to find a lot of different substitute mixes to some of the more expensive and exotic spices, which people use either because they do not have access to them or because they have allergies that makes it impossible for them to enjoy the spices. In a B2B situation this might be used to enlighten the load of the budget, by buying regular spices and trying to mix them and replicate the more expensive ones, or it might be used because the spices simply are not available in the given area. This means that the threat of substituting product is rather low.
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The threat from new entrants New entrants in an industry will often have a desire to gain market share and that can put pressure on prices, cost and the rate investment necessary to compete. Especially when new financially strong entrants from other industries entering a new market, there may be great competition, which could be dangerous if you are not as financially strong. When the threat is high, already established, they must hold their prices down or boost investment to deter new competitors. (Porter: 2008, 80). The threat of entry depends on the height of entry barriers and in ASA’s case entry barriers are low. One can without big financial background step into the spice business. Like in ASA’s case you just have to do a lot of research and make good connection. ASA is a small company that does everything in-house, from mixing the spices package it and do the shipping, therefore they do not possess some economies of scale. The spice market is low cost market even though ASA is selling a high quality product. So if potential competitors enter the market and offer cheaper or better product, there won’t be any switching cost for the buyer. With the above taken into account, it is estimated that the threat from new entrants is very high. The barrier to entry the spice market is low, they do not posses economies of scale and there is no switching cost. So it is possible for new entrants to overtake ASA on the B2B market. They therefore need to think fast and smart to get business going on with the right customers. Power of suppliers According to Michael E. Porter a supplier is powerful if it does not depend heavily on the industry (Porter: 2008, 82). In ASA’s case it’s assumed that the supplier needs ASA more than ASA needs a specific supplier. Also there is no big switching cost for ASA if they are changing to another supplier. If they had invested a lot of money in the farms in India for instance, the switching cost may be taken in consideration. But for ASA that is not the case, so they could pretty easy find another supplier who could deliver organic spices. This taken in consideration the power of supplier is rated low. Power of consumers When looking at the power of the consumer the most obvious fact that comes to mind is that the consumer might pressure ASA on price if they are not as cheap as their competitors. Another thing is the delivery time, because ASA uses Post-Danmark who can be unreliable at times, the consumer might demand that another service is used to make sure the delivery arrives in time (Herschend, 2014) Or they might demand to knock off some of the costs as a result of a late delivery. So ASA has to make sure that the service they provide will correspond with the price that they are asking for their product, their force in this case is the premium quality though, that the competitors might not be able to provide. Competitive rivalry in an industry The biggest competitors to ASA in the industry is Santa Maria and Mill and Mortar, they both offer slightly different products though. Santa Maria offers spices at a very affordable price and can be found in supermarkets all around the world, while MIll and Mortar provides a very exclusive product for feinschmeckers. ASA have differentiated themselves pricewise by being 20% cheaper than Mill and Mortar and 20 - 25% more expensive than Santa Maria, while still providing top quality spices. So in this sense they are competing more with Mill and Mortar as they also provides high quality but at a lower price, which might entice some of Mill and Mortars market share to switch over . ASA has a good USP as well, being that 98% of their spices are organic, but the problem is that this information is not easily available to the customer. All in all the competition is low to medium, as the companies have done a good job by differentiating themselves via both prices, quality and USP. The reason for the competition being medium is that there is a possibility that ASA might steal some of Mill and Mortars market share, because of their lower prices and USP (98% organic), but in order to succeed in doing this they would need to make their USP more visible.
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CONCLUSION ASA should address businesses within the food chain. These could be restaurants, supermarkets or food delivery companies. Everybody likes to keep it as simple and fast as possible when buying something from the internet. Taking this in account ASA should find a clear user friendly solution that could help other businesses have their spices delivered on time. They could interact with the other businesses by extending their existing webshop with a separate B2B platform. Some possible rebranding should be taken in consideration. This B2B service should be easily accessed by any business, it should be easy to get in contact and it should provide a big load of trust. They should include information about the origin of the crops, where it was grown, if chemicals were used, that it is organic and other information, as this is highly valued when using premium quality goods.
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SOURCES Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard Business Review (January, 2008, p. 79-93). Organicdenmark.dk. Facts and figures. 28.02.2014. http://www.organicdenmark.dk/uk/organics-in-denmark/ facts--figures.aspx Business.dk: Internethandel fortsætter voldsom vækst. 7. marts 2013 http://www.business.dk/markedsrapporter/internethandel-fortsaetter-voldsom-vaekst Bader, Christine: 7 May 2013. The Bangladesh factory collapse: why CSR is more important than ever. http://www.theguardian.com/sustainable-business/blog/bangladesh-factory-collapse-csr-important http://www.dr.dk/Nyheder/Indland/2014/01/12/094518.htm (Sofie Synnøve Herschend, 12. jan 2014, read 28/02-2014) http://www.janespice.com/recipes/what-spice-can-i-substitute-if-i-dont-have-the-correct-spice-on-hand (Jane, august 28 2011, read 28/02-2014)
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APPENDIX SMART Goal Specific - What: Increase B2B sales - Why: In order to increase brand recognition and profits - Who: Food businesses (restaurants, catering, supermarkets) - Where: Denmark, maybe global in the future - Which: more reliable delivery method Measurable - How much money? - How many members? -How will I know when it is accomplished? Quantifiable indicators Measures for this goal: • For the beta version(initial) of this online solution expectation would be to have at least few(2-3) businesses actively buying spice stocks • For work Achievable: How: How can the goal be accomplished? • By finding reasonable solution for their online shop considering possibly limited resources(time and money) • Implemented solution • Tested to have comfortable and fast for the B2B user • Spreading the word about it Relevant Does this seem worthwhile? • Is this the right time? • Does this match our other efforts/needs? • Are you the right person? • Is it applicable in current environment? • We’re assigned by ASA to solve this task and we’re capable to make needed research and analysis in order to make a well documented solution in a form of pitch. • Our team is also capable to make estimations on budget, time frames, technical requirements. The next steps for this solution, such as technical implementation, logistics etc. is beyond our scope of expertise. Time Time frames for this task are as follows: • Deadline: 7th of march 2014
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Porter 5 forces
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