Botak Jones Segmentation

Contents                                                                                Page

Executive Summary

1.        Introduction

2.        PEST Analysis

        2.1        Political-Legal

        2.2        Economic

        2.3        Social

        2.4        Technological

3.        Competitors Analysis

4.        Market Potential

5.        Market Strategy

6.        Recommendations

6.1        Product

6.2        Price

6.3        Place

6.4        Promotion

Appendices

1.        Introduction

1.1        Purpose

The objective of the report is to help Botak Jones look for opportunities in expanding their business overseas. The report will include analysis on the country and research on Botak Jones’ competitors and the advantages and disadvantages that the eatery will face when expanding to Malaysia. We will also do a research on the target market in Malaysia and the potential it has. We will also suggest market entry strategies so that Botak Jones will be able to successfully penetrate the Malaysian market. We will then recommend on marketing mix factors in Malaysia.

1.2        Background

Botak Jones first started out as a food and beverage business that solely wants to introduce quality food and service to the Singaporean heartlands by having their stalls located at the humble coffee shops in the neighbourhood and industrial areas. Bernie Utchenik, founder of Botak Jones, targeted these areas because people were used to being served sub-par quality food with matching service.

Bernie Utchenik founded Botak Jones back in August 2003, with the first stall located at Tuas, which is an industrial area. The chain is under the parent firm Great Big Food where Bernie Utchenik and his wife Faudziah Mohd Ali are major shareholders of. They have since expanded to 12 outlets; seven Botak Jones outlets, four halal Botak’s favourites and one restaurant named Botak’s Backyard in Dempsey. Most of his outlets are located in food courts and coffee shops around the heartland area, which is easily accessible.

Bernie Utchenik didn’t have a smooth start in the beginning; Botak Jones was not his first venture into the Food and Beverage industry. In 1996, he started a pub restaurant in Upper Changi Road with his friends under the holding firm Four Amigos. He left the firm 3 years later, in 1999 with a profit of 5 times his personal investment in the beginning. He went on to set up Bernie Goes to Town in Boat Quay with two friends, he sold out in 2000 when the business became impossible for him to handle after the investment turned sour. He had made a loss of more than $200,000 then.

The setback was hard for him to handle then, but he bounced back stronger than ever with Botak Jones. It too, was not an easy start; many people doubted his intentions when he first started providing cheap but quality western food in the heartland areas. Stall holders operating in the same coffee shop would think that the entire situation of a foreigner ditching everything to be a stall vendor in a coffee shop at the heartlands to be absurd. But Bernie Utchenik gradually won them over with his hard work.

1.3        Methodology

Secondary research was conducted and cross-referenced through online resources such as articles and reports.

1.4        Scope

This report will include the PEST analysis and competitor analysis of Malaysia. Also, the report will analyse the market size and market potential of Malaysia. It will also include a market entry strategy and recommendations for the marketing mix of Botak Jones.

2.        PEST Analysis

2.1        Political-Legal

There are certain political-legal factors that may affect Botak Jones when expanding into Malaysia. Out of 183 economies, Malaysia was ranked 88th for ease of starting a business in the year 2010. Foreign company have to register with Companies Commission of Malaysia (SSM) in order to start business in Malaysia. The procedures consist of applying the name of the company, submitting registration documents and paying the registration fees. The registration fees vary depending on the company’s share capital. Botak Jones must research on the registration procedures and calculate its registration fees before registering.

The income tax for companies in Malaysia was 25%. It was reduced from 26% during year 2009 to encourage foreign investments. A 4% goods and service tax (GST) will be introduced in 2011. It will replace the current sales tax at 10% and service tax at 5%. Products like rice, sugar, cooking oil and flour will be excluded to keep cost of living low for consumers. The introduction of GST will affect Botak Jones decision to expand to Malaysia as it will increase the price of its food-services and consumers will reduce their spending. Botak Jones will have to lower its pricing or absorb the GST to attract consumers if they choose to operate in Malaysia.

In Malaysia, there are food regulations to ensure food safety in the country. The two food regulations are the Food act 1983 and Food regulation 1985. F&B companies in Malaysia are subjected to these regulations. Laws in Singapore are different from those in Malaysia. Therefore, Botak Jones has to be sure of the laws before they can be certain to set up stores in Malaysia. This would directly affect Botak Jones’ decision to expand into Malaysia.

There are intellectual property laws such as patent, trade mark and copyrights law to protect companies in Malaysia. The intellectual property laws in Malaysia are similar to the international standards by World Intellectual Property Organisation (WIPO). These laws on intellectual property would be easier for Botak Jones to expand into Malaysia since they are already familiar with them.

There are laws to control advertising messages. For example, advertisements in Malaysia must be decent and not be related to sex. The advertisements cannot have foreign models in them. Only local models are allowed. When advertising, companies need to abide the Malaysian code of advertising.

2.2        Economic

Malaysia has estimated a 7.0% growth in economy for the year 2010 and a forecast of 5.0%-6.0% in 2011. They have a GDP (PPP) of US$403.042 billion which makes them the 29th largest economy in the world and the 3rd largest in South-east Asia coming after Indonesia and Thailand.