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Developing the business venture is a crucialdecision for the entrepreneurs, where it is mandatory to analyse the market structure and acknowledge the actual needs and preferences of the customers in the market. The entrepreneurs try to analyse the market condition and utilise the economic theory to analyse the customer’s needs preferences in the market to propose the right products and services in the market. The study focuses on analysing the market structure to develop a business venture, cafeteria. Through this study, it is possible to review the neo-classical and behaviouraleconomics and analyse the consumer’sbehaviour, which is mandatory for the entrepreneurs to make the businesssuccessfully after acknowledging the actual needs and preferences of the consumers. The paper also provides a scope to create good business planning for successfulestablishment of the business where market analysis, segmentation as well as applying the economics theories will help to develop the businesssustainably.
Ways to develop the business decision
Business decision making behaviour is important for the entrepreneur, where the personal skill and abilities as well as knowledge about market structure are fruitful for the leader to establish the organisations in a systematic process. The entrepreneur aims at developing cafeteria in the UK where it is possible to create good customers base as recently the demand for the cafeteria is high in the market (Nguyen et al., 2018). The business decision making process is critical, where the leader tries to develop business vision and in this regard the business vision is to make the cafeteria famous in the UK and strengthen their customer’s base in long run.
The organisational mission would be maximising the quality of products and services to meet the consumer’s requirements in the market at affordable price so that the clients can make extra purchase decision at lower cost. After that, the entrepreneur tries to arrange the capital investment through taking business loans, investing cash and sponsorships to develop the cafeteria efficiently. In this regard, the business leader mainly takes business loan and utilise personal cash for developing the cafeteria. Next, the leader tries to hire efficient chef at the cafeteria and would like to hire one manager and four staff at first to establish the business in the UK. The UK restaurant industry is growing at a rapid rate and it would be beneficial for the business leader to introduce innovative cafeteria in the market which would be beneficial to attract the customers and retain them for long run (Nguyen et al., 2018).
The business leader also would like to develop business functions, such as production of the quality snacks items and beverages by hiring good chef as well as creating good atmosphere and interior decorations to retain the consumers and manage consumers service successfully both online and offline. The entrepreneur also aims at providing good quality and a huge variety of snacks items to the customers so that they can have various options to choose of enjoying their leisure time. Moreover, the business leader would like to promote the products and services through marketing tactics and strengthen their consumer’s base in long run.
Porter’s five forces analysis is effective to analyse the external and internal market condition where the model proposes five factors which are threat of new entrants, threat of substitute products, competitive rivalry, and bargaining power of the suppliers and the bargaining power of the consumers.
Behavioural economics is also important to understand the consumer behaviour in the market where it provides a scope to the business leader to acknowledge the actual needs and preferences of the clients in the market or the organisational products and services. It is helpful to gain better understanding about consumer behaviour and decision making practice of the customers for a particular basket of goods and services (Manning, 2018). It provides a scope to make rational decision for a particular product, where the consumers try to identify the marginal utility of the products.
The economic factors are such as personal income, family income and perception regarding future income, where the customers try to make the purchasedecision as per their economic stability. Personal factors such as age, occupation, life style and personality are important to choose a particular product and services (Mueller, 2018). Psychologicalfactorssuchas motivation, involvement, learning, and attitude are mandatory to choose a suitable product in the market as well as the social cultural factors are important including culture, societalnorms and status.
The demand of the consumers is negatively related to the price of the products which further indicates that if the price of the goods in the market increases, the demand of the customers for that particular product basket will fall. Thus, there is negative relationship between the price of the goods and services and its demand in the market (Farias et al., 2020). The product price depends on the production and consumption of the products in the market where the entrepreneur is trying to maximise their profitability in long run. In this regard, supply is another component which also determines the price of the goods and services in the economy. There is positive interlink between the supply and price of the products. If the priceof the products and services increases in the market, the suppliers would like toincrease their supply of that particular basket in the market to generate revenue. As per the classical economics, the major factor of price of the basket of good is the cost of the products (Sazanova et al., 2019).
Whereas, the consumer’s perception about a particularproduct or service or product value is the driving force of the market price of the products. As per the theory, the economist try to reach the equilibriumpoint, where the demand and supply of a particularproduct or service is equal and price is determined on the basis of the equilibrium point. Hence, the neoclassical approach is effective to market the products and services of cafeteria, where the businessleader set the price for their beverages and supply the products in the market as per the customers demand(Morelli, 2018). The price rate for their products is determined through the demand of the consumers and the supply of the products in the market, so that the leader can set suitable price for their coffee and other products and retain the consumers in long run.
These are the major factors that helpthe consumers to make rational decision so that they can maximisetheirsatisfaction. In this regard, the rational decision making behaviour can be developed through the steps such as problem recognition, information search, evaluating alternative basket of products and services, making the purchasedecision, evaluating the purchase for analysing own satisfaction. This is the process of rationaldecision-makingpractice wherethe consumer behaviour can be analysed and it differs from the neo classical approach of demand and supply analysis (Kanev and Terziev, 2017). Hence, the behavioural economics is effective for the business leader to promote a particular good and service in the market, the businessleader in this context aims at opening cafeteria, where it would be possible to identify the actual needs and preferences of the consumers and propose different beverages and atmosphere where the clients can enjoy their leisure time.
Hampton, S. and Adams, R., 2018. Behavioral economics vs social practice theory: Perspectives from inside the United Kingdom government. Energy research & social science, 46, pp.214-224.
Kanev, D. and Terziev, V., 2017. Behavioral economics: development, condition and perspectives. Business Economics, 4(52), pp.387-410.
Manning, P., 2018. Behavioural economics and social economics: opportunities for an expanded curriculum. International Journal of Social Economics.
Morelli, C.J., 2018. Business Strategy, Economic Crisis, and the Theory of the Firm. In Post-Crash Economics (pp. 47-67). London: Palgrave Macmillan, Cham.
Mueller, D.C., 2018. Corporate governance and neoclassical economics. International Journal of the Economics of Business, 25(1), pp.47-64.
Nguyen, Q., Nisar, T.M., Knox, D. and Prabhakar, G.P., 2018. Understanding customer satisfaction in the UK quick service restaurant industry. British Food Journal.
Sazanova, S.L., Valenczyk, R., Yerznkyan, B.A. and Ryazanova, G.N., 2019. Relationship of Economic Communications and Productive Consumption: Theoretical Aspect. In Institute of Scientific Communications Conference (pp. 357-364). Springer, Cham.
The new business idea must be creative and innovative where the businessleader in this context aims at openingup good cafeterias with quality products and services. The business is about opening an innovative cafeteria with good quality of coffee and snacks items and beverages for the customers. The target market would be the students and also the individual who are working in corporate, where the organisation can target the audiences for their quality products. It would be beneficial for the leader to establish the operations and analyse the actual needs and preferencesof the customers for providing high quality products. The major aim of the business is to establish the cafeteria efficiently in the market and gain high market share in the UK restaurant industry (Yerznkyan and Ryazanova, 2020).
On the other hand, the organisation also focuses on creating values for the customers by delivering high quality products and services to the consumers so that they can fulfil their needs and aspirations and enjoy their leisure time at the cafeteria. Tofulfilthe strategic objective of the organisation, the entrepreneur also aims at managing the business creatively, where there would be huge variety of products including coffee, tea, and other beverages, etc. This product range would be beneficial for the businessentrepreneur to attract more audiences in the market and retain them for long run. The business leader also aims at setting effective price range for the customers so that it can influence the purchase decision for their quality products and efficient services. Additionally, the leader runs the business innovatively by creating good atmosphere, friendly relationship with the clients, and good interior decoration which also attract the audiences in the UK market. The new businessventure is hereby beneficial for the entrepreneur to be successful and strengthen their customer’s base for long run.
On the other hand, the entrepreneur also focuses on developing good business structure in order to run the operations in a systematic process where there are efficient chef, staff and waitress as well as customer management team and managers who are able to maintain the operational efficiently in long run. The entrepreneur also focuses on online businessexpansion, where there would be organisational official website from which the customers can place their orders and make payments for enjoying their food and beverages at home. This is also another innovative business plan, where the organisational leader would like to incorporate for making the businesssuccessful and improvingreputation of the cafeteria.
The long run goal of the business is to strengthen their consumer base for which such innovativebusinessplan would be beneficial for the leader to lead the employees and achieve future sustainabledevelopment. On the other hand, marketing promotional activities are also necessary to be arranged here in order to promote thecafeteria in the UK market and in this regard the businessleader would like to promote the products through social media advertisement where it is beneficial to develop two way communication with the customers and retain the loyal customers for long run(Storesletten, Zhaoand Zilibotti, 2019). On the other hand, distributing leaflets of the cafeteria, televisionsadvertisement and billboards would also effective strategic planning through which the business leader can establish the cafeteria and fulfil its goal in long run.
Market segmentation is mandatory for the new business venture to target the audiences and promotes the organisational activities in the market. In this regard STP analysis is effective for the organisation to identify the customers as per their demographicfactors, economic class and other cultural background (Madra, 2016). It further provides a scope to the businessentrepreneur to acknowledge the actual needs and preferencesof the customers in the UK market. In this regard, STP analysis stands for segmentation, targeting and positioning. It is mandatory for the new business venture to segment the market and in this regard the market segmentation can be done on different factors such as demographicbehaviour, including age and gender, economic class including social status, occupation and income class as well as region, personalpreferences and cultural values.
The businessleader focuses on targetingthe customers in each market segment so that it would be possible to retain the clients for long run. As per the target customers base, for the cafeteria business venture, it would be beneficial for the entrepreneur to target thee age group between 18 years to 60 years, where the individuals are willing to drink coffee and enjoy different snacks items. As per gender, the company will be able to target both male and female to enjoy their products and services. The company is also able to target the individual in urban and rural areas to enjoy their leisure time at the cafeteria with good food.
Additionally, there are personal preferences of the customers and in this regard the company will target the customers who like coffee and other beverages as well as different snacks items to enjoy their evening time, lunch or dinner. Moreover, economic class is one of the major market segmentation factors, where the company would like to target the middle and high income class, so that they can afford the products of the cafeteria. Additionally, the company would also like to target the audiences, who are working in corporate firms, as well as the company is also efficient to target the students who can enjoy their leisure time at the cafeteria.
These are the major market segmentation and targeting, which provide a scope to the businessleader to understand the market trend for the cafeteria services in the UK economy and acknowledge the actual needs and preferencesof the customers(Smith, 2016). For positioningthe brand in the market, it is mandatoryfor the businessentrepreneur to adopt market promotional activities and run the operationsefficiently through utilising latest technology and brand infrastructure. Hereby, through market segmentationand targeting, the businessleader would like to target the audiences and propose them good cafeteria services, snacks items and beverages so that it would be possible to satisfy the clients.
The behavioural economics is effective to determine the behaviour of the human being as well as analyse the market trend. In thiscontext, the entrepreneur seeks to identify the actual behaviour of the individuals in the recent years about the restaurants and the food items, required by the consumers. The consumer behaviour can be analysed throughthe behavioural economics. The price for the products is the major factors to influence the consumer purchase decision, where the business entrepreneur tries to set affordable price for their products in order to retain the consumers for enjoying the cafeteria (Boerger, 2016).
On the other hand, the quality of the productsmust be met efficiently to influence the customerspurchasedecision. In this regard, the organisationalentrepreneur comes to know about the requirementsof the customers for coffee and other beverages as well as the peak season in the restaurant industry, where the demand of the consumers is at high level. Moreover, the customer trend and recent market condition can also be understood through behavioural economics and it is beneficial for the entrepreneur to assess the future market opportunities and threats to run the business in long run(Terzievand Kanev, 2018).
As per the behavioural economics, it is possible for the entrepreneur to identify the future market opportunitieswhere the organisationwould be able to expand their business and secure future sustainabledevelopment. In future, there would be economic growth and social sustainabledevelopment after such pandemic era of COVID 19 and it would be advantageous for the companies to run their businessactivitiessuccessfully. Moreover, technological advancement and IT framework also provide a scope to the business to manage their operations across the UK market, where it is possible to handle the customers and ensure good customer relationship management. There is e-commerce growth across the UK market which is also another major scope for the future business to manage their online operations and make smooth distribution network to serve the customers in an efficient way and as per the behavioural economies, the customers also prefer to place their orders for the quality products from home and try to get the best product within effective time (Maialeh, 2019).
On the other hand, the organisations would be able to contact the consumers and develop two-wayconversationsthroughthe company website and customers portal which are beneficial to strengthen their customer’s base and develop good bonding and trust. Consumer try to build trust and the behavioural economies also refers that the consumers aim at relying on the brand with quality products, so that they will get the right products within effective time. It is also possible for the organisations to expand their businessoperations across the UK market by strengthening their distribution network and creating good atmosphere at the cafeteria to influence the consumer’s decision making behaviour as per the behavioural economies, where price is a major indicator for the customers to choose the right products and services of cafeteria. Products portfolio management and maintaining diversity in product ranges are also the major business opportunities to sustain in the market and target different segment of customers where the consumers can choose the right basket of goods at the cafeteria as per their personal choice and preferences. Business excellence and efficacy of managingcustomer’s services are the advantage sin the recent era of digitalisation, where the organisations can satisfy the consumers and expand the operationssustainably. The organisations also can focus on maintaining the quality of the products and set affordable price to encourage the consumers for coming to the cafeteria and enjoy their different menu as the behavioural economies indicates that the consumers will choose the right basket of goods with affordable price according to their needs and personal preferences.
Apart from the above mentionedopportunities in near future, there would be some challenges in running the new businessventure, where the entrepreneur would face difficulties to fulfil the business aim. The major challenge is intense competition in the restaurant industry in the UK where it would be difficult for the new businessventure to retain the customers and attractmoreaudiences in long run. Additionally, the threat of substitute products creates challenges for the new business venture of cafeteria to diversify their product range and attract the audiences for their innovative products. It is challenging for the business to satisfy the customers with a new range of product category so that the entrepreneur can run the business efficiently as the consumer choice and preferences is changing over the period of time where the behavioural economies refers that recently the consumers prefer healthy and high quality food products for being healthy. It is problematic for the entrepreneur to arrange capital during establishing the new venture which is another changing factor for the entrepreneur (Terzievand Kanev, 2018).
As perthe market analysis, in the recentpandemic situation, there is sharp declining in the demand of the customers for the cafeteria services and it has adverse impacts on the business. It would be difficult for the entrepreneur to retain thee customers in such a pandemic situation and the businessexpansion is also another challenge for the businessleader in the recent era. Increasing food quality standard and government regulations on food and beverages as well as high cost of raw materials are other challenges for the businessofcafeteria where it would be difficult for the entrepreneur to maintain the price range of theproducts and services and it further affect the customers retention activities negatively in long run (Farias et al., 2020).
In this context, the new entrant must aim at analysing the market structure and identify the actual needs and preferences of the consumers in the UK market so that it would be possible for the business leader to manage them and restructure the business so that the leader can satisfy the consumers in long run. There is intense competition in the restaurant sector of the UK, which is considered to be a critical challenge and it further influence the business leader to make creative decisions so that it would be possible to attract the audiences for the quality products and services(Good, 2019). Cafeteria is an innovative business, where the company leader may develop good strategy to create values for the customers and it will further provide a scope to the business entrepreneur to establish the business innovatively and retain the customers for long run.
As per the discussion, economic theories of neo-classical and behavioural concept are beneficial for the businessentrepreneur to acknowledge the consumer behaviour and identify the market economics. As per the neo-classical economics, the market price is determined by the demand and supply of the products and services and on the other hand, the behavioural economic provide a scope to understand the behaviour of the human being in choosing the right products and services as per their needs and personal aspirations. The consumers try to identify the quality products at affordable price, and it is the major principle of the consumers to choose a right basket of goods and services.
On the other hand, theentrepreneur is also efficient to set the price for their products and services as per the market demand and recent market trend. The market analysis is effective, where it has been explored that, there is intense competition in the restaurant industry of the UK and it further influence the businessentrepreneur to strategies their operational activities and establish the cafeteria in an innovative way. The organisationalentrepreneur aims at developing a creative cafeteria in the UK to attract the audiences and satisfy them by delivering high quality and diverse food items and beverages at effective price range. The behavioural economics and market analysis are effective in this practice, where it is possible to understand the market trend and the demand of the customers for the snacks items and coffee and other beverages.
Additionally, as perthe analysis, the major market opportunities are such as enhancing the demand for the cafeteria services, requirements for good atmosphere with songs, free Wi-Fi, good food and beverage at effective price range, enhancingthe ecommerce activities and online selling activities as well as brand expansion through promotional activities. On the other hand, the major challenges are such as intense competition, threat of substitute products and the increasing price of raw materials as well as recent pandemic era, for which the customers demand become less. It is hereby necessary for the businessentrepreneur to manage their position in the market develop the cafeteria with good food, quality beverages, diverse food items, efficient customers services and friendly atmosphere to spend time at the cafeteria. The entrepreneur also needs to promote the products and services in the UK market through social media marketing and attract different segments of the customers to influence their purchasedecision making behaviour.
Boerger, L., 2016. Neoclassical economics. Exploring Economics, 18.
Farias, G., Farias, C., Krysa, I. and Harmon, J., 2020. Sustainability Mindsets for Strategic Management: Lifting the Yoke of the Neo-Classical Economic Perspective. Sustainability, 12(17), p.6977.
Good, N., 2019. Using behavioral economic theory in modelling of demand response. Applied energy, 239, pp.107-116.
Madra, Y.M., 2016. Late Neoclassical Economics: The restoration of theoretical humanism in contemporary economic theory. London: Routledge.
Maialeh, R., 2019. Generalization of results and neoclassical rationality: unresolved controversies of behavioural economics methodology. Quality & Quantity, 53(4), pp.1743-1761.
Smith, T.G., 2016. Is behavioural economics ready to save the world? The Lancet Diabetes & Endocrinology, 4(12), p.982.
Storesletten, K., Zhao, B. and Zilibotti, F., 2019. Business Cycle during Structural Change: Arthur Lewis' Theory from a Neoclassical Perspective (No. w26181). London: National Bureau of Economic Research.
Terziev, V. and Kanev, D., 2018. Modern developments in behavioral economics. In the International Science and Technology Conference" FarEastСon" (pp. 10-23). Springer, Cham.
Yerznkyan, B.A. and Ryazanova, G.N., 2020. Relationship of Economic Communications and Productive Consumption: Theoretical Aspect. Scientific and Technical Revolution: Yesterday, Today and Tomorrow, 129, p.357.
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