The SWOT analysis is an important tool to collect strategic information from different sources in order to put together a matrix, that helps the entrepreneur to make decisions.
The analysis consists of strengths, weaknesses, opportunities and threats. (Pahl & Richter 2007, 3-4.)
The SWOT analysis is an excellent tool for the company to evaluate internal and external factors that can influence the business. It helps the company to identify the possible prob- lems, and then assist in changing the weaknesses into strengths and threats into opportu- nities. SWOT is a basic, informative tool, that gives the company detailed information of the factors that influence the success of that business. (Baines et al 2013, 20-25.)
Strengths and weaknesses are something the company can have an influence on and are coming inside the company. Opportunities and threats are environmental, and the company does not have power over them. The following figure 4 clarifies the different aspects of SWOT analysis. (Hay & Castilla 2006.)
Helpful for the business Harmful for the business
Internal Strengths Weaknesses
External Opportunities Threats
Figure 4. SWOT analysis. (Hay & Castilla 2006.)
For Hygla bakery, the overview of SWOT analysis is listed in the chart below, figure 5, and explained more in detail afterwards. The first SWOT analysis covers the whole business of Hygla bakery and is not focusing entirely on marketing. The second SWOT analysis (figure 6) is more in depth overlook of the marketing.
STRENGHTS
Unique appearance of the cakes Low costs on baking premises Location
Entrepreneur’s background as a marketing professional
WEAKNESSES High production costs
No collaborations yet with different product providers
No previous experience in entrepreneur- ship
No at door delivery
OPPORTUNITIES
Change in buying behaviour
“Support your local”
Whole Helsinki as a potential market area
THREATS Global pandemic
Stiff competition in the industry The rise of healthy food industry
Figure 5. SWOT analysis for Hygla bakery
The strengths of Hygla bakery are in the appearance of the cakes. They look unique and are prepared on order allowing the customer to decide what he or she wants. Below two examples of the cake design by Hygla bakery.
Other strengths, that there are no costs on premises at the moment as the entrepreneur is running the business and making the cakes at home. Also, the location of the business is very central and could easily serve customers across Helsinki. The entrepreneur does have a background as a marketing professional and has knowledge on making marketing mate- rials and being involved in marketing campaigns and that can be seen as a strength when developing own business.
The side of weaknesses includes the highness of production costs as the entrepreneur does not yet have access to wholesale store and the flowers used in decorations are very expen- sive. Hygla bakery does not yet have any co-operations with product providers, such as flower stores or restaurants, cafeterias or the wholesale shops. Other weakness is that the bakery does not provide a delivery service and the customers must pick up the cakes them- selves. Because of the lack of delivery service, the business can possibly not serve the whole Helsinki, but the segmentation will be narrowed down in the inner Helsinki area. The last weakness is that the entrepreneur does not have any former experience in running a business. The lack of knowledge in doing business may cause extra work in the future.
In the opportunities there are change in buying behaviour meaning, that people are willing to buy and spend money on high quality products and the thought of supporting the local entrepreneur rather than supporting big supermarket chains. As mentioned before, the lo- cation of Hygla bakery is very central and the business can reach people around Helsinki, but as long as the delivery system is not operating, the business area is narrower.
The current corona virus situation is a threat for any business, but for the baking industry too. People are staying at home and avoiding contacts which makes organizing parties dif- ficult. Also, as the people are staying at home, they are more willing to bake themselves rather than ordering cakes elsewhere. Another threat is that the competition in the cake making industry is very stiff and there are several businesses providing cakes and pastries.
The last threat listed here is the rise of healthy food trend. The healthy food trend can be seen as a competitor for Hygla bakery even though the cakes can be modified vegan or healthier.
As it was mentioned already above, the SWOT analysis in figure 5 covered the whole busi- ness concept of Hygla bakery as it is important to get a complete overlook of the business first before taking it into more in detail information about marketing only. The next SWOT analysis, figure 6, focuses entirely on marketing.
STRENGHTS
Well-designed Instagram page Beautiful pictures of the cakes
Social media as part of the marketing strat- egy already
Entrepreneur is familiar with different social media platforms
WEAKNESSES
Not active enough on social media
Only one possible marketing channel – In- stagram
No marketing activities at all
OPPORTUNITIES
Target segment is active on social media WOM-marketing
Enough customers even the marketing ac- tivities are lacking
THREATS
Competitor’s active marketing presence Are people attracted on Instagram for very long anymore?
Figure 6. SWOT analysis based on Hygla bakery’s marketing
The beautiful design on Hygla bakery’s Instagram account can be seen as a strength as it is important to adapt the interest of possible new clients. With a help of design adapting customers is easier. Also, the previous knowledge of social media platforms and marketing activities via social media are seen as strengths of the business as the marketing in 2021 is heavily relying on digitalization and social media.
However, the marketing actions of Hygla bakery does have weaknesses too. Instagram as the only marketing channel is not enough and people may have troubles finding the com- pany. Also, the activity of the account is not high enough and based on the statistics of the account, followers are losing their interest if content is not provided.
Opportunities of Hygla bakery’s business are that the target segment, women aged between 25-44 are active on social media and are using it daily. In the interview with the entrepreneur of Hygla bakery was found out, that people hear about the cakes via word of mouth, which is always a good thing for a business. WOM-marketing is free for the business and people tend to trust on the reviews they hear from someone they know. The entrepreneur also told that there have been enough customers, even though the marketing actions are low.
Threats of the business are to do with rivalry and the attractiveness of social media. The competition in the business area is stiff and the rivals are more active in the marketing field as the competitors are bakery chains or bigger companies with more possibilities to focus on marketing. Another threat is the attractiveness of social media. As it was mentioned in the marketing trends in 2021- chapter, Facebook lost its interest among younger genera- tions and most Facebook users are now over 65 years old. Is the same thing happening to Instagram too? Targeting marketing actions to only one channel can be risky.
8 Marketing overview of Hygla bakery’s current marketing activities
This chapter is focusing on researching the current marketing activities of Hygla bakery. To be able to produce a marketing strategy the researcher must be familiar with the current marketing of the company. The focus is on finding out what marketing channels are being used at the moment and how active Hygla bakery is marketing its products.
Hygla bakery is heavily relying on social media when it comes to marketing activities. The business is only using Instagram on marketing purposes. As the business is currently very small and the number of orders that can be taken in is limited, the marketing activities are in line with the business. However, the goal is to grow the business and live entirely on the profit gained from the baking business. In order to grow a business, it is essential to also grow the marketing activities. Social media is a very good platform for marketing when it comes to a small business like Hygla bakery.
Instagram provides statistical information for its business account users. It provides a real time information and tracks the account performance allowing the entrepreneur to find out what is working for the audience and what is not. (Instagram 2021.) Hygla bakery’s Insta- gram account is a business account, which allows the user to see the statistics of the ac- count. With the help of the statistics, it can be found out what actions should be taken to make the most of Instagram marketing. The following figure 7 illustrates the gender balance of the visitor’s on Hygla bakery’s Instagram account and the most active visiting hours.
Wednesday has been selected as the example to illustrate the visiting activity per hour. The statistics represents the time period from 16th of July until 13th of October 2021.
Figure 7. Gender distribution. (Hygla bakery 2021.)
As the statistics shows, most of the visitors are females (91,2%). The target segment of Hygla bakery was females aged between 25-44 and the visitor data shows that the segment is right and up to date as that is the segment mostly visiting the account.
The most active hours of visiting on Hygla bakery’s Instagram account is in the evening.
The activity rises at noon and continues to rise until 6 pm. After 9 pm the activity starts to lower and at 3 am there is almost no activity at all. This helps the entrepreneur to focus the marketing times on the active hours of the day. The figure 8 shows the activity on Hygla bakery’s Instagram account during the time period of 14th of September until 13th of October 2021.
Figure 8. Instagram statistics. (Hygla bakery 2021.)
The figure 8 clearly shows that the number of followers has stayed the same during the whole month. The company has not reached any new followers or if they have, there has been followers who have quit following the account during the month. The previous post on Hygla bakery’s Instagram was on the 19th of September and it can be seen that on that day the account has reached three new followers. However, the followers have quit following the account later that month. The figure 9 will show the same statistics, but on a longer time period, between 16th of July and 13th of October 2021.
Figure 9. Instagram follower statistics. (Hygla bakery 2021.)
When the investigated period of time is longer it is easier to see how activity on the Insta- gram account is dependent on the posting activity of the entrepreneur. In figure 9 it can be seen that the account has had new followers in mid-July. The account of Hygla bakery has been active in July and there are three posts on the account. The following pictures 3 and 4 shows the most popular posts in July on Hygla bakery’s Instagram account. The first photo is a photo of cookies made for wedding and the second one is a christening cake, both made by order.
Picture 3. Wedding cookies. (Hygla bakery 2021.)
Picture 4. Christening cake. (Hygla bakery 2021.)
The marketing overview of Hygla bakery shows, that the Instagram account activity effects on the interest towards the company. During the quieter times, the followers quit following
the account and during the more active times the account gains more followers. For this thesis, the activity information provides useful data when creating the marketing strategy.
9 Market analysis for Hygla bakery