David Dirks Director, Global Market Development Satin Fine Foods, Inc.
Let’s face it, the cake business is highly competitive. Differentiation is your ability to create space between what value you offer your customer and what your competition provides. The wider the distance between you and your competition where you have the differentiation, the longer you will last.
Retail bakeries face intense local competitive pressure from every supermarket in-store bakery in town. Supermarkets have awakened to the fact that the center aisle is no longer the way to differentiate themselves. Supermarket strategy is now focused on building excitement and profitability around the outer perimeter of the store – the traditional in-store bakery being a key profit center.
While it’s difficult to gain a handle on how many cake decorators are operating a business in a particular area, we can tell from their presence on social media that there are many of them. Many of them compete on price. However, offering low prices on premium-decorated cakes is the fast way to the bottom or going out of the business.
So how do you differentiate cake-decorating business from all your competitors? What do you do that your competition can’t do or do well? Why should someone pay more for your decorated cake offering versus your competition?
Is creating differentiation easy? No, it takes time and patience but the payoff is great. Creating differentiation requires three key actions:
- Intensely study all cake decoration competition and catalog exactly what they offer and how they offer & price it. How is your competition differentiating itself from you? Where are the spaces in their service or product offerings that might give you the differentiation you need? What do their customers complain about when they buy cakes from your competition?
- Clearly articulate your levels of difference, don’t expect anyone to get it. This is harder than it looks but worth the investment in time to do. “We offer great customer service” is not going to cut it because most everybody says that. “Our product tastes better” is not enough because taste is so much based on individualized tastes that it doesn’t hold up well.
- Focus on making sure your pricing allows you to earn a living and then some. Taking on business at bottom-rate pricing (a very common theme in the cake decorating business) is a good way to ensure you make as little per hour as possible. Be prepared to walk away from people who only want rock bottom pricing. Let someone else lose time and money chasing that business. Focus on premium pricing with the ability to clearly define what separates you from the rest.
By David Dirks, Director, Global Market Development at Satin Ice. He is the author of “The New Marketing Analytics: A CMO’s Guide to Harnessing Traditional & Big Data To Drive Business Results”. Dave can be reached at firstname.lastname@example.org.