Philly Pretzel Factory's 5 Forces Analysis
- Threat of substitution- LOW, since their competition is only Auntie Anne’s and Wetzel’s Pretzels.
- Bargaining power of customers- LOW, It is the least expensive out of its competition (Auntie Anne's and Wetzel's Pretzels), but is less convenient than those stores since it is not in shopping malls and is mostly found in strip malls as a stand alone store or in Walmarts. Prices are balanced and customers have little say.
- Threat of new entrants- LOW, because outside of Auntie Anne’s and Weztel’s Pretzels, there aren’t many pretzel shops. Also, since each pretzel shop makes their own type of pretzel and has such high customer loyalty, it is difficult for new shops to compete.
- Bargaining power of suppliers- LOW, as well since Philly Pretzel Factory is a franchise
- Rivalry- LOW, because their only direct competitors are Auntie Anne’s and Wetzel’s Pretzels.
Philly Pretzel Factory's Competitive Strategy-
Focus Cost Leader
Philly Pretzel Factory cost leadership is the least expensive pretzel option compared to Auntie Anne’s and Wetzel’s Pretzels, thus making it a cost leader. Philly Pretzel Factory charges one dollar for a pretzel, whereas Auntie Anne’s original pretzel cost $3.29 and Wetzel’s Pretzels cost $3.49 for one pretzel. For Philly Pretzel, the more pretzels you buy the cheaper it will be. Some examples are $1 for one pretzel, $4 for five pretzels, $6 for ten pretzels, $15 for twenty five pretzels, etc. The more pretzels that are sold, the price point goes down the higher the volume. Due to their competitors being limited, they have a more distinct target market such as wholesales and events. Philly Pretzel Factory focuses on wholesales orders rather than relying on foot traffic like its competitors, and stores are mainly located on the east coast. Their market is centered around catering for events such as sport events, parties, family events, or business meetings. Philly Pretzel Factory would be considered to be an Focus Cost Leader because of their competitive low prices and their locations only being on the east coast.
Value Chain
Philly Pretzel Factory inbound logistics is a supply chain company with fixed prices regardless of market forces. Something substantial has to happen in order to make the prices fluctuate. Its outbound logistics fall onto the owner to go out and collect secured accounts. Due to how inexpensive the final product is, Philly Pretzel Factory gives out a lot of products in order to bring in more profit. Giving up a lot out up front allows the company to receive more on the back end. Operations and manufacturing includes flour, water, and yeast to make the pretzel and a complentary side of mustard. The company promotes themself by attaching coupons to orders, bringing menus to any catering event, and product drops. To fulfill the customer needs and wants, the pretzels are freshly made throughout the day, which means Philly Pretzel Factory will not give out any hard or old pretzels. They also keep the store clean and sanitized which makes customers feel more comfortable to visit their store.
