The solution to the declining business in the case of hometown deli could be found by an accurate analysis and implementation of the Michael Porter’s model, else known as the five forces which affect existing business. The first thing is to identify the challenges affecting the store. Some of them are: being old-fashioned and obsolete. With the current changes in technology, it has not yet evolved to meet the demands of the modern market and, as a result, it risks being closed due to low customer turn out. The deli, being a popular joint, still enjoys loyalty from some of its patrons, but with the entry of new competitors, it has to adopt changes to meet the current demands. Operating a deli is a profitable business, which is also simple to start and operate and therefore the risk of stiff competition is inevitable. To facilitate its existence and business survival, I would employ the following procedures.
The deli has been in existence for many years and has been able to identify itself with several aspects of cafeteria business like own recipes and being a popular meeting place. I would capitalize on this loyalty by maintaining high customer satisfaction standard as well as improving on the weakness of existing trends in customer retention. With the current technology, I would strive to invest in modern computers that would ease the placement of orders and other services like the use of credit and debit cards. The existing recipes would be closely monitored to keep the originality of their tastes and flavors as a way of retaining the existing customers and curbing the influx of substitute recipes that may be introduced by the potential competitors. There should be conducted a thorough market survey to establish what the competitors are offering and strive to offer better services either by maintaining high quality of the already existing recipes or still by introducing newer ones to fit the demand. Cost wise, I would ensure reasonable prices for our food and drinks without compromising the quality.
With time, loyal customers might opt to shift to the competitors if their bargaining power is ignored. Some of the strategies I would put in place include leveling the prices to suite some clients, making available some substitutes that the competitor might be offering, buying materials in bulk to attract the incentives of large scale purchases thereby reducing the cost food and drinks. The main idea is that with the entry of competitors in the market, customers may become sensitive with the prices of various commodities and it is wiser to retain them than to lose them to the competitors.
With the entry of competition, the supplies, which in this case include the workers and those, who bring in raw materials, may apply for negotiation of the cost of goods and services needed to conduct business (Roebuck, 2011). Competitors may be willing to pay better than the existing business and also offer better wages to experienced employees. In order to retain such customers, it is necessary to adjust the payments remuneration to the parties in order to survive in the competition.
The magnitude of the competition should be dealt appropriately. Proper marketing should be conducted and in the case of deli, there is a need to introduce technology in advertisements to meet the current standards of operations. Opening a website or conducting web advertisements on the popular sites can do well for the cafeteria. Introduction of newer products ahead of the rest would put the cafeteria on higher grounds and thereby would help to be in a position to survive stiff competition. The above techniques are designed to keep an existing business in the competition and remain relevant with both, saving the existing customers and also a finding way of attracting new ones.