Finding new Market Opportunities in Food Business: A Case Study of GOPA Pakistan
- Case studies
We usually tend to think of innovation in terms of advanced technologies. But in fact, any business needs to innovate and explore new growth opportunities, especially in turbulent times. Here is the case of a local catering business from Pakistan, applying the Market Opportunity Navigator to find new market opportunities in light of a changing environment. Analysis was done by Dr. Faisal Shahzad.
GOPA Pakistan is a premium Catering and Tentage business established in Gujrat, Pakistan. Their root lies in a small ice-cream manufacturing and sale unit which was established back in 1988. They slowly grew their business from an ice-cream vendor in marriage events to a cooked-food supplier. In 2000, they included tentage into their portfolio and since then they have established themself as a premium brand in marriage event management. Most of their business growth was vertical by focusing on food, tentage, and decoration for marrying couples and their families. Recently, the epicenter of marriage organization in Pakistani culture is shifting towards marriage halls and marquee and the demand for traditional catering and tentage business has been falling. The recent Covid-19 pandemic has hit it further and GOPA Pakistan found itself completely out of business and struggling for its existence. It was time to explore new business opportunities and lay out a clear strategy for the firm. Applying the Market Opportunity Navigator, they thoroughly identified, evaluated, and prioritized 3 new market opportunities and set a clear strategic focus to grow the business:
Here is a step-by-step guide on how they did it.
Step 1: Market Opportunity Set
As a first step, the core competencies of GOPA Pakistan were analyzed. This analysis highlighted that Gopa has strong competencies in Event management, Cooked food supply, Decoration, and Human resource management for events. As part of event management competency, they were providing services for marriage planning, tentage/venue planning, and food menu. They were having a strong presence in the regional market and their brand is known for quality food suppliers for Cold Kitchen, Pakistani- Indian food, Chinese, and Tea/Coffee. They also offer services for flower, lightning, and South Asian style marriage decorations. The management of these competences also requires an in-depth understanding of human resource management and GOPA has also specialized in this domain by using state of the art IT infrastructure and mobile apps. This infrastructure helps them to manage waiters, chefs & cooks, drivers /delivery boys, and stay in contact with the event hosts. Based upon these competencies, the following 3 opportunities were defined
- Opportunity Nr. 1: Tea and Coffee Shop which offers a takeaway and sit-in food point. Here potential customers are individuals, corporations, and families who can sit-in or organize their events for tea/coffee gathering. A takeaway set up is considered as several customers prefer to drink coffee/tea at home.
- Opportunity Nr. 2: Takeaway Restaurant which is a takeaway and food delivery opportunity. Food will be delivered to customers e.g. individuals, corporate and family or they can come for a pickup.
- Opportunity Nr. 3: Event Service Provider is an opportunity where Gopa can offer its wide range of services as an outsource for other event organizers
Worksheet 1 summarizes this step:
Step 2: Attractiveness Map
Each opportunity from the market opportunity set was individually analyzed to estimate its attractiveness.
Opportunity Nr. 1: Tea and Coffee Shop The reason this opportunity seems interesting is that Tea in Pakistani/Indian culture is like beer culture in Germany. A good indicator for this fact is the growing number of Chai-Startups in India . For this reason, the compelling reason to buy tea/Coffee is placed in Mid-High. The market volume is estimated to be mid as most people prefer to drink homemade tea at home. This opportunity has profit margins of 50% and the regional market volume is estimated to be about USD 10 million. On the challenge side, there is a low implementation obstacle as the know-how of this opportunity is already available for Gopa, although they still need to organize a teahouse. Time to revenue is low due to short transactional volume and the short sale cycle. There is a higher-super high external risk associated with this opportunity as there are many competitors. They also risk the short supply of organic milk due to the rising demand. Overall, this opportunity was evaluated as mid potential and low-mid challenge. The detailed analysis of this opportunity can be found in the following worksheet:
Opportunity Nr. 2: Takeaway Restaurant Due to the pandemic situation, more and more people around the world prefer takeaways and hence this opportunity offers a high compelling reason to buy and high market volume which is estimated to be around USD 35 million in this regional market. This opportunity has a profit margin of about 50%. This opportunity offers mid-level implementation obstacles as a takeaway system (physical and IT) needs to be build-up, although food delivery can be started with a minimum obstacle. This opportunity has a short sale cycle with quick payments. There are higher external risks e.g. threats from other suppliers, the location of the Gopa takeaway point is outside of the main city but in a well-off Posh area. In the overall ranking, this opportunity was evaluated as a high potential and mid-high challenge, as seen in the detailed worksheet :
Opportunity Nr. 3: Event Service Provider is a market opportunity where Gopa can offer all its services to other business e.g. marquee, corporates, or local authorities for public events. The compelling reason for this opportunity is very low as there are other players in the market which can provide similar services. Due to the seasonal nature of this work, the market volume is also relatively low. The profit margins and hence the economic viability for this opportunity is lower, as competing actors drive prices down. There are lower implementation obstacles, as Gopa already poccess the required knowledge and infrastructure for this opportunity. The time to revenue is much longer due to the seasonal and B2B nature of this opportunity. The sale cycle with Govt. authorities can take several months to a year although with a corporate client it’s quicker. There are also several external factors, especially form competitors and 3rd party dependencies. For these reasons, this opportunity has been evaluated with an overall low potential and high challenge. The detailed worksheet is shown below:
All the opportunities have been drawn on the Attractiveness Map. Here, the tea/coffee shop was classified as a Quick Win while event services were classified as Questionable, and the takeaway business can be viewed as a Moon Shot.
Step 3: Agile Focus Dartboard
After analyzing all the opportunities for their respective potential and challenges, Worksheet 3 was used to design the Agile Focus strategy. Looking at the Attractiveness Map, it seemed that opening a takeaway restaurant was the most attractive opportunity as it offers the highest potential.
The other two opportunities were also examined for their suitability for backup and growth options. Tea and Coffee shop is related to the main opportunity and shares the same market segment. Here the difference is only with the sit-in option which is not viable now. Due to this reason, this option was chosen as a backup and growth option and it was decided to keep it open. Event Service provider shares some product relatedness as the food supply is a common feature between both, but they are not tightly related. This opportunity focuses primarily on B2B customers, and they share no traits with the customers from the main opportunity. For this reason, this opportunity was not marked as a growth or a backup option and was placed in storage. The detailed agile focused analysis is shown in worksheet 3 Below:
Based on the analysis carried out using the Market Opportunity Navigator, GOPA Pakistan decided to go with the Takeaway Restaurant. As a next step, a zoomed analysis into different target groups e.g. corporate, families, and individual customers is required.
Based upon this strategy along with the organizational setups (infrastructure/IT) a marketing plan was carried out: personalized printed letters were sent to loyal customers from the catering business, and online marketing campaigns were published on Facebook and Foodpanda to spread the message.
The takeaway restaurant has already started delivering food in the last couple of weeks, with current daily deliveries of around 100 meals, and highly positive feedback.