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Lickity Inc. Company analysis Report (Assessment)


Background

Lickity Inc. is one of the foods producing companies in Malaysia dealing with supply of variety cakes. The company was founded in the year 1990 and operated a number of franchised stores within Kuala Lumpur. The stores were strategically located near major tourist shopping market segments in Kuala Lumpur. Lickity attracted a number of investors in the 1990s who desired to acquire franchise store with the company since the brand dominated food market (Wood et al 26).

Description of the Company

The company’s supply chain management ensured incorporation of limited product line for the purposes of reducing unnecessary wastes during manufacturing and marketing processes. Their product cakes were recognized for high quality ingredients sold at affordable proportions depending on consumer need.

The cakes were full of cream and served all social classes and considered fit for all occasions including birthday parties. Lickity’s product portfolio comprised of twenty variety cakes including portable three-slice-cake served and eaten instantly since the pack contained required cutlery.

Traditional moon cake was prepared specially for patrons who preferred enjoying in store eating within various shopping centres. The company experienced financial problems owing to increased rates in operational activities. Such expenses included rent payments across all stores as well as increase in cost of raw materials and other resources required due to high level of taxes (Wood et al 26).

Lickity did not apply modernized system within their international market communication mix. They relied on traditional means of using retailers as the only means through which they reach customers. They heavily depended on distributions through franchised stores to generate revenue.

Another problem was on the composition of labour force where even students were considered for employment. Such strategy was used for the purposes of reducing cost of production. The company did not invest much in training and development of its staff and therefore experienced poor management strategies within the food and beverage market.

Due to lowered costs of production and quality products, their brand was well positioned in the market attracting multitude of customers. However, the profit levels decreased since the year 2000, this was due to stagnation experienced within various segments of the supply chain (Wood et al 26).

Their products were based on unique qualities such as distinctive taste and shape of which sufficiently attracted customers. However, the stated objectives and mission statement are capable of driving any company when applied and implemented appropriately.

This should have enabled Lickity revive company’s marketing strategies based on global brand management within the segments it had experienced worst performances (Wood et al 26).

Review of main ingredients should have been done on a monthly basis, the same to use of modern equipment and application of computerized technology in monitoring of supply chain. This should have been preceded by careful evaluation on market size, consumer behaviour towards food products within the different international market segments (Wood et al 26).

Problem

Lickity’s popularity before financial woos of 2000 was based on excellent services and prime quality products. The company benefited from market monopoly where its dominance was felt in most market segments (Wood et al). There were no competent competitors from the initial stages of operation hence Lickity enjoyed supplying customers with products at will.

There was lack of properly organized sales and marketing team with profound strategies capable of capturing significant customer base within Malaysian market. Global market had adopted the use of internet in dispatching products, most consumers found it easier to place orders via company’s websites. However, Lickity still relied on their manual system of delivery which experienced drastic fall on customers (Wood et al 26).

Lickity was associated with poor management style especially on resources within supply chain stores. The results could be noticed on the drastic drop on sales over the last ten years since the year 2000. Effects of economic downturn further added to the company’s financial woo.

Marketing team did not recognize the importance of company’s brand name within the market. Customers usually purchase products based on brand position within the market, brands within the food industry associated with healthy products appear more attractive to consumers since health is a priority. Lack of thorough inspection by the management on franchises is also considered as great contributor towards Lickity’s financial problems (Wood et al 26).

At the same time adjustments on consumer tastes was not easy owing to different consumer preferences towards their health. This calls for the need for robust management team capable of making profitable adjustments within the core strategies. Inexperienced labour force is at times the mother of adversity within such companies (Pride et al).

Competition was stiff within the food and beverage industry with such aggressive moves and strategies applied by competitors such as Maxims and queens. This was attributable to the nature of healthy products they offer consumers compared to Lickity. Consumers became health conscious hence preferred light low-fatty cakes as well as fruit cakes. This led to mass exodus of customers from in-store purchase of cakes.

The operations from franchise stores recorded low sales leading to hefty overheads which contributed towards the company’s instability. Most consumers preferred making their purchases on-line hence worked with sophisticated companies. Reduction in the purchase of birthday party cakes was attributed to the fact that most customers organized such events in fast food restaurants.

The competitors operated on strategic marketing where they target working class within the upper-market since most of them were usually loyal to the brand. Growth of other coffee-houses alongside baked products such as Starbucks uses branded products creating easy recognition and at the same time reward loyal customers (Starbucks Corporation 1). Level of hygiene matters since consumers’ value quality despite the kind of pricing mechanism used (Johlke and Dale 265-277).

Problem Analysis

Majority of the problems discussed could be attributed to poor management principles and use of unqualified workforce. There was great competition from within food industry and international market. There was possibility of lack of workable strategies owing to lack of serious management team (Johlke and Dale 265-277).

Lickity experienced its first financial drawback in the year 2000 leading to reduction of stock price to below $10 per share. The other problem was based on consumer health concerns; the products had high carbohydrate content considered harmful to health hence making consumers avoid Lickity cakes. Such incidences of closure affected the company’s profitability negatively (Johlke and Dale 265-277).

Financial support can be obtained through varied activities including from financial institutions. There is opportunity for the company to generate more through on-premise sales. Lickity can also utilize fees and royalties from the Franchises, arguably organization of the supply chain determines to a greater extent level of success attained by business companies (Johlke and Dale 265-277).

Alternative Solutions

One of the possible solutions to Lickity is to consider forming partnership with other modernized company’s for the purposes of technology improvement. This should be accompanied by incorporating ways on product modification for the purposes of satisfying current consumer needs and tastes.

At the same time Lickity requires recruitment of professionals with the ability of predicting and analysing market trends (Johlke and Dale 265). Use of internet in advertising should be considered by the company since majority of the clients use internet and social sites for communication based on purchases and deliveries (Johlke and Dale 265-277).

There is profound need to work out on the company’s business models with change of strategy on working within recommended market segments which would enable positive experiences despite expected market uncertainties.

Extensive training of marketing professionals is required especially within the international market. Diversification of product portfolio should be considered since consumers prefer to purchase from one-stop shop.

Pricing techniques used by the company requires change since they deal with both domestic and international clients, such pricing as geographical pricing techniques should be used in this case. Nature of product’s quality, pricing and marketing strategies should vary depending on the demands of the market supplied with the products. Service marketing plays a vital role in making or breaking an organisation (Johlke and Dale 265-277).

Excellent services tend to be remembered for all the good reasons which leave customers with a sense of delight, hence they remain loyal. On the other hand, a poor experience always leaves a bitter feeling which deters customers. Therefore satisfaction, value and quality are essential for a successful marketing service venture (Services Marketing).

Works Cited

Johlke, Mark & Dale, Duhan. “Testing Competing Models of Sales Force Communication.” Journal of Personal Selling & Sales Management, 21 (2000): 265-277.

Pride, Rundle-Thiele, Waller, Elliot & Palandino, Ferrell. Marketing. Milton:John Wiley, 2007

Starbucks Corporation 2009, Company Profile: Reproduced in Business Source Premier EBSCOhost. 2012. Web.

Services Marketing. 2010. Web.

Wood et al. Management Problem Solving Frameworks- Tools & Techniques. Sydney, McGraw-Hill, 2009. p 26.

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