International Food Research Journal 21(6): 2101-2107 (2023)

Marketing strategies to improve the sales of bakery products of small-medium

enterprise (SMEs) in Malaysia

Dr. Theodore Jeremy Bagwell

California State University, Santa Barbara
Article history Abstract
Received: 17 July 2022 Bakery products become a regular food in most part of the world and are essential commodities
Received in revised form: today. There is a high potential for business growth in selling bakery products. In the business
16 June 2022
world, Small-Medium Enterprises (SMEs) are primarily engaged in the bakery business, but
Accepted: 26 June 2023
cannot compete with the branded bakery Industry. The SMEs in Malaysia are striving hard
Keywords to achieve growth in the business of bakery products. The present case study deals with the
issues faced by SMEs and provided some valid recommendations to resolve the existing
Bakery products problems in the bakery business. The case analysis and its findings reveal that SMEs have
Food industry
unstructured marketing strategies and needs enhancements in the areas of packaging, value add
Service sector
Small-Medium Enterprise
to the bakery products, focus on promotion and appropriate advertising strategies. Further, the
(SMEs) analysis reveals that more coverage of selling points for bakery products, the increased number
of distribution centers and proper incentives to the agents may definitely improve the marketing
of bakery products.
© All Rights Reserved

Introduction compared to the standard bakery industries. Further,

the target group of AFISB is government hospitals;
Renko et al. (2011) suggested potential plans to they cannot sell their products at a higher price. Based
improve sustainable competing benefits for one of on the frequent personal field visits with the officials
the Croatian small bakery industry and the results of AFISB, Malaysia, and the responses received from
suggested to formulate a suitable marketing strategies 20 experts of similar groups of industries (SMEs), the
to achieve future plan of actions. Constantin (2009) following critical issues were emerged:
mentioned the importance of sales promotion of Improve marketing for bakery products and
bakery products and provided the marketing strategy services and develop new market to continue with
layout. Aisha Food Industry Sdn. Bhd. (AFISB) the existing marketing partners. Identify the potential
established in 19 October 1992 and is one of SMEs advertising sources (newspapers, billboard, bulletins,
in Malaysia. The Industry started as a family business and business cards). Increase the number of agents in
and later changed from the traditional way to modern Malaysia and develop sales team with experienced
business, thus a small family business converted to marketing personnel. In addition, increase volume of
medium enterprise industry. The buildup area of the the best selling product with reasonable profit margin.
plant of AFISB is about 8000 square feet and the Execute promotional activities to achieve the target.
authorized capital of the company is US$150,000 Organize sales motivation programs and develop
with the paid up capital is US$135,000. AFISB distribution centers with possible new distribution
sells fresh daily-baked bread, cakes and cookies in centers. Collect feedback from retailers to resolve
Malaysia with the total sales per month is around the issues. These issues were common in most of the
US$60,000. The major customers of AFISB are SMEs who are engaged in bakery products business
government hospitals, government prisons and and the present study attempts to find a solution which
hostels in Malaysia. About 28 employees are working is feasible under the prevailing market conditions.
in AFISB to run the operations and routine activities.
The main purpose of this case study is to determine Materials and Methods
how to improve the marketing strategies and sales for
AFISB in particular and for those SMEs involved in The major challenges experienced by the SMEs
this business in general. In the customers judgment, in Malaysia are the lower cash flows and the limited
AFISB uses level-B ingredients (products with financing agencies to support them as stockholders
slightly low quality) since their selling price is low when they want to invest more in business. Harvie
(2004) suggested that the SME sector has a crucial investigated the fat content of selected labeled and
role to play in closer regional economic integration, unlabeled Indian bakery products. Campo and
advances in information and communications Gijsbrechts (2004) suggested that the supermarkets
technology (ICT) and more specifically the business should primarily adjust the space shares of food
opportunities emerging from the Internet. For most categories whereas the hypermarkets should adapt
of the Multinational companies in Malaysia, SMEs the space shares of non-food categories based on
are the major suppliers. In fact, there is only a small the local market conditions. Albisu et al. (2000),
risk for SMEs in Malaysia if the existing MNCs suggested four competitiveness issues for the agro
move out of Malaysia to lower labor cost countries food industries which are applicable to Spain. Gomez
like China and India. Zulkifli-Muhammad et al. et al. (2004) constructed a statistical model to address
(2009) have elaborated on how SMEs can compete nonlinearities and asymmetries which focus on the
in the global business environment in the Malaysian behavioral consequences of customer satisfaction
perspectives. It is worthwhile to mention that SMEs in the retail sector. Siro et al. (2008) discussed on
in Malaysia particularly in the business of dairy the food market situation in USA, Japan and some
products production are highly capable to carry out European countries and pointed out the relationship
potential business with the help of stakeholders and between nutrition and health. The factors influencing
like-minded people to enlarge the business operations the consumption of chicken meat and relative merits
both at business-to-business (B-B) and at business- was investigated in Jayaraman et al. (2013). Eastwood
to-customers (B-C) levels. et al. (2005) provided ideas to generate better store-
According to the “Passport Baked Goods in specific strategies to meet consumer expectations.
Malaysia” (International Euromonitor, 2011), Gutiérrez et al. (2009) suggested the importance of
more Malaysian customers changed their eating oil-based packaging without any manipulation in the
routine in the direction of much healthier diet plans, food preservatives. Marić et al. (2009) commented
which often lead to bread as a breakfast every day that manufacturing bakery products occupies a special
rather than local delicacies such as noodles and place in the processing industry and suggested a model
nasi lemak, literally ‘fatty rice’. Out of the baked to improve the quality of bakery items. Abdullah et
goods, packaged/industrial bread noted the quickest al. (2007) evaluated the muffins for color variation by
growing in Malaysia in the past year 2011, showed a visual examination and by development of a machine
4% increased value growing to US$0.6 billion when reading system. Cleanthous et al. (2010) have pointed
compared to 2010. Unpackaged cakes also moved out that the bakery product is fast moving consumer
up comparable to high growth in 2011, because of good (FMCG) needed to a particular consumer on
increasingly wide selection of unpackaged cakes that a regular basis. The key nutrient contributions from
are available in Malaysia. The most preferred in-store bread namely sodium and fibre were investigated in
bakery in Malaysia is located inside the outlets of this study.
Cold Storage, Carrefour, and Giant, Tesco, and Jusco There are lots of difficulties faced by SMEs in
outlet stores. Bakery Business in Malaysia is popular, Malaysia particularly in the areas of barrier from
as the three major races of Malaysia namely Malay, global sourcing, low productivity, lack of managerial
Chinese and Indians prefer bakery products not just capabilities, lack of financing, difficulty in accessing
for their breakfast time but also for the whole food management and technology and emerging successful
consumption of the day. Gardenia Bakery KL Sdn. SMEs during recession period, as reported by Decker
Bhd. is the top ranked branded industry within baked et al. (2006). Choong Foo et al. (2013) studied the
goods in Malaysia with 21% share value, followed survival of family business on local coeffe shop
by Stanson Bakeries Sdn. Bhd. with 11% share value. in Malaysia while Gopichandran et al. (2013)
The leading brands in packaged/industrial bread in and Khalique et al. (2011) have investigated the
Malaysia during 2013 were Gardenia and High 5, challenges and sustainability of SMEs over the long
both these companies produce bakery products that run. The intangible factors for SME scccess in the
are widely acceptable by the consumers and regarded context of developing countries were discussed in Ng
as an excellent source of well-balanced nutrition. et al. (2012). Based on these research articles, SMEs
In the global scenario, Webster et al. (2010) involved in dairy products must take advantages from
studied the salt amount in breads that are above low labor cost, flexible logistics, new technology,
the reasonable benchmarks. Louie et al. (2012) cheaper materials and more disciplined operating
have found that there was no significant difference environment in order to sustain in the market.
detected in nutritional composition of breakfast In general, SMEs have engaged in marketing
cereals between 2004 and 2010. Reshma et al. (2012) medium quality bakery products to a low-end
 2103

Table 1. Production details of bakery products in AFISB Table 2. Sales and Profit details of AFISB
(2013-2014) Particulars 2010 2011 2012
Production details 2012 2013 (estimates) 2014 (estimates) Net sales (in US$) 300,000 400,000 550,000
Capacity flour bags 25 40 60 Net Profit / Loss (in US$) -20,000 30,000 40,000
Produced product (in units) 20,500 32,800 49,200 Number of employees 20 24 28
Current price for agent (per unit/ US$) 0.10 0.12 0.15 Source: Interview, available documents, and balance sheet
Total sales revenue per day (in US$) 2000 2500 4000
Source: Interview up of the company in the form of new place, new
customers, machinery and agents (Table 1).
customers and catering the needs to the low-income AFISB has better future if they have the following
group people. In Malaysia, SMEs favor for improving 2-year (2013-2014) strategic plans to further growth.
marketing services through more investment and add
value to the products. For instance, to produce better Two-year plan (2013-2014)
bakery products, one needs to look into improving AFISB has to achieve sales of bakery products
quality and add value like texture, softness, better from US$ 2,000 to US$2,500 per day during 2013
ingredients, taste and attractive packaging. To and enhance to US$4,000 per day during 2014.
achieve this, SMEs were opted to increase the selling AFISB has to focus more on the sales of bakery
price of bakery products and attract new agents to products, expand the business and identify new
boost the sales. The primary objective of this case agents. Further, the wider coverage of sales has to be
study is to identify the current marketing strategies achieved particularly in the rural areas of Malaysia.
of SMEs and suggests improvements for marketing The loss to the extent of US$20,000 during the year
which enhances the sales and services of bakery 2010 is due to the purchase of equipments and export
products produced by them. The major issue in the bakery products to the neighboring countries of
bakery business is that the managers of SMEs engage Malaysia (Table 2).
in multitask activities like looking after operational,
financial and non-financial matters and focus less Results and Discussion
time to do the fieldwork. The other issue is pertaining
to agents, as there are only few agents to look after The managers of AFISB wish to improve sales
the marketing of bakery products. The SMEs spends and marketing of bakery products. The company has
fewer amounts for advertisements and there is no enough capacity in terms of machinery and labor
proper web page to most of the companies. Although, force but they are not able to achieve the business
SMEs have high potential and openings in the future target due to lack of marketing strategies. The usage
since the demand for bakery products increase day of machinery is not 100% as the demand is not
by day in Malaysia. Meanwhile, Aisha Food Industry proportionate compared to the available machinery.
Sdn. Bhd. (AFISB) is one of the SME Company The company can produce 2000 breads per day with
producing bread related products such as cream roll, the available machines whereas they make only 1500
burger, hot dog bun, yam slice cake, chocolate muffin, breads due to less demand. In order to improve sales
and assorted muffin. AFISB has many difficulties in AFISB wants to know on how to value add on bakery
marketing these products. A questionnaire survey was products, its quality, and what type of product is
conducted through personal interview method with moving fast in the market, and which bakery product
the top management people of Aisha Food Industry has a higher profit margin. They could do business
Sdn. Bhd (AFISB). only in public hospitals, government hostels and
The production and marketing strategies of prisons of Malaysia and the company is interested in
AFISB have obtained to predict inferences on the extending the bakery business in the private market.
cost cutting mechanism. The production details of Since, government hospitals, government hostels
AFISB are as follows: and prisons demand less quality products, the bakery
With the existing machinery and capacity, AFISB products sold at low price, while private markets
can produce 820 buns (includes bun / bread / cookies / expect good quality bakery products at competitive
cakes) per one bag (50 kg) of wheat flour. The current price.
production of AFISB Bakery is 20,500 units of buns
per day, which requires 25 bags of wheat flour. The Operational functions of AFISB
estimated target for the year 2013 is 32,800 units of AFISB starts its production of bakery products
buns per day, which requires 40 bags of wheat flour. early in the morning at 5:00 am. The employees of
During the year 2014, AFISB wishes to achieve the AFISB check the record sheet to confirm the quantity
full capacity of 49,200 buns per day, which requires of the business volume per day. They deliver the
60 bags of wheat flour. The loss during the year 2010 bakery items on a daily basis. The strengths of AFISB
to the tune of US$ 20,000 and is due to initial set- Bakery include a wide variety of colorful bakery
Figure 1. Fishbone analysis for Bakery Product Business
of SMEs
products. Some weaknesses of the company include Figure 2. SWOT Analysis for Bakery Product Business of
SMEs
the lack of a customer base and marketing aspects.
The company is new and the brand name is known company established some good relationship with
only to a certain section of customers. The company government agencies and institutions related banks
must find ways to establish a larger customer base. to secure the government orders. The approach to
If some of the orders from government hospitals, get orders adopted by the company is still at its early
hostels and prisons were cancelled then the company stage, and the packaging design of the bakery products
will be in trouble in the end. It is imperative now, needs to be improved. The packaging materials in the
to find a suitable marketing strategy to improve the form of plastics have to be changed, as the quality is
volume of business to AFISB. not up to the standards. The new machine that can
withstand a high-level heat resistance is the need of
Fishbone analysis the hour.
The Fishbone analysis has been applied to deepen
team’s understanding of a problem. AFISB has Weaknesses
produced bakery products with inferior raw materials The diversification of bakery products is
as they sell products at low prices compared to other necessary, as the Malaysian market requires a high
company products. However, the poor marketing volume of bakery products at low prices. AFISB is
strategy of the company give room to identify the still in an effort to produce a variety of new bakery
causes for Fishbone-analysis. The market research products and product packaging. Although the
generally has 6 M’s to determine the needs of the machine does packaging, the quality of the pocket
consumers and to develop the right products, with is not up to satisfactory level. The packaging design
the right characteristics. AFISB has the “HALAL” with no attractive color does not attract the new
logo symbol so that the Muslim friends can eat the customers. Overall, the quality of the products has
bakery products manufactured by the company. With to be enhanced to ensure sales. Apart from the raw
regard to packaging, AFISB products do not have materials, the other factors such as place of preparation
all nutritional ingredients, message framing, contact of products, steam room, oven play are also important
information and certificate (Figure 1). in determining the quality of the product.

SWOT Analysis Opportunities

SWOT analysis may be useful to determine AFISB may go to the open market to increase the
the overall functional and operational assessment volume of sales. The company is currently targeting
of the industry and check the micro and macro on the low - income group and they have to think in
environment . In the present study, the real business terms of covering middle-income group by producing
issue of AFISB has investigated through SWOT high quality bakery products with competitive prices.
analysis. The company has good opportunities to connect their
marketing to the government schools by introducing
Strengths free products as promotional opportunities to start up.
AFISB has been in the bakery business for the The new business offering, keeping shops at strategic
last 20 years and have loyal customers who have locations and direct selling points may improve
an interest in the company’s bakery products. The AFISB’s volume of business.
 2105

discount, buy one get one free and so on to attract

agents and consumers. Business fliers and business
cards of the outlets portrayed so that the public may
keep informed about the business. The other way of
promoting is by giving coupons and membership cards
with exclusive promotions. Nowadays, a customer
love freebies and discounts and is an effective way
in pulling business volume. In addition, identifying
the strength and weakness of the agents and provide
them with enough marketing training may improve
the sales growth.

Figure 3. Concluding Remarks from SWOT and Fishbone Observations and recommendations from the case
analysis study
Threats Figure 3 depicts the overall issues and problems
The marketing strategies adopted by the AFISB faced by AFISB and the recommendations to resolve
may invite threats as agents are not motivated in the the issues are provide below:
form of rewards, recognitions and incentives. Some The machine capacity of AFISB is not fully
competitors have the upper edge over this company utilize, the machine idle time is 40%, and therefore the
as they sell green bakery products. Some orders working hours rescheduled from 7 am-11 pm instead
got by AFISB under the Ministry of Defense and of the existing 24 hours with two shifts. The current
Ministry of Home may go to other companies as the brand ZARINA changed to some other brand with
competition in the market is high. The increase in raw attractive packaging to unify the standardization for
material price and the fuel price may create problems better production process of bakery items. Currently,
to AFISB. The detailed descriptions in the form of there are no proper scientific processing units and
SWOT analysis is provided in Figure 2. R&D and thus creating more time for management
From the case study, it is clear that those SMEs to focus on analyses and strategic activities may
who are in bakery business needs to strategize costing, fetch good results. The distribution centers from the
profit margin, analysis of products and they should current level of two increased to at least three centers.
focus on some value-added food for taste and increase The productivity of bakery products engaged by
quality. The proper packaging, good advertisement, SMEs (AFISB) can be improved through efficiency
web attractions and healthier food with high fiber- (low operating costs, savings over idle machine time
less, sugar-low, low cholesterol, good looking may and reducing wastages), better procedures for buying
increase the volume of business. To promote the bakery product materials, improved decision making
marketing of bakery products offered by SMEs, the and better staff morale and cooperation.
following salient features may be adopted: In view of the findings from AFISB, the principal
Identify advertising sources (for true promotion) investment is to be increase for business growth
through multimedia presentation to promote and AFISB must equip all employees and agents
marketing with attractive website of the products with appropriate training. They should also realize
on pipeline. The proper advertising in the form of the corporate social responsibility (CSR) to impart
signboards, posters, leaflets, cards billboards, printed business ethics. AFISB may distribute free cakes to
advertisements, mails, newspaper, TV, FM may educational institutions on special occasions to boost
significantly influence the promotion. AFISB has to their sales and marketing tactics. AFISB should
increase cash investment and Market capacity for provide substantial rewards and gifts to agents in
future growth. The periodical comparison with top order to promote marketing. The lack of marketing
companies and market players to bakery products like communications and product offerings upgraded with
gardenia, High 5 will definitely yield good results. the improved use of technology for sales promotions.
SMEs engaged in doing bakery business might In addition to the government sector, AFISB should
think about preparing the list of agents or distributors concentrate on private sector particularly the small
for cakes, bread, biscuits, cookies, and conduct a and medium enterprise (SME) sector for better
market survey to identify the best suitable agent business development. Periodical sales promotion
for their requirements. The creative promotional may be done using advertising and creating a new
activities may be introduced like founder’s day 20% website.
Conclusions consideration. AFISB caters to the needs of low and
medium ranged income group residing in Malaysia.
In the present case study, the AFISB bakery The company manufactures a variety of bakery
business is taken as a representative of SMEs for products including bread, bun, cake and rolls. AFISB
has 28 employees with the turnover of around
US$60,000 per month and the company has some R. (2021). Effect of promotional mix on the
permanent orders from government hospitals, marketing of insurance services. Journal of Business
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(2023). Information and communication agenda. Journal of Business and Management Studies,
technologies (ICT) and performance of micro, small 3(2), 162-172.
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patronage of milk products. African Journal of customer patronage of internet banking in deposit
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and passengers’ loyalty in the Nigerian civil aviation insurance services. Journal of Business and
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Milling and Bakery Products Sales. Theoretical and public transportation companies. British Journal of
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19 pandemic. International Journal of Academic choice of fast-food outlets. International Research
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sale services and subscribers' satisfaction with
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Journal of Management & Entrepreneurship & Oladejo, M. (2021). Service quality delivery and
Research, 4(3), 170-182. students’ satisfaction in the University of Calabar,
James, E. E., & Inyang, I. B. (2023). Hotel atmospherics Calabar, Nigeria. AKSU Journal of Management
and guests' experience in the Nigerian hospitality Sciences, 6(1&2), 158-179
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Multidisciplinary Studies, 2(1), 42-57 and corporate efficiency of deposit money banks.
James, E. E., Inyang, I. B., & Ochelebe, A. O. (2022). African Journal of Accounting and Financial
Enhancing public awareness of Lassa fever virus Research, 6(1), 98-114
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Pharmacology, 2(1), 49-63) patronage behaviour towards smartphones.
James, E. E., & Inyang, I. B. (2022). Logistics International Journal of Entrepreneurship and
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Inyang, I. B., & James, E. E. (2022). Appraisal of major enterprises (MSMEs) in Nigeria. African Journal of
factors inhibiting the internationalization of small and Economics and Sustainable Development, 6(3), 89-
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access to banking services in rural settlements. 178.
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M. (2022). Trade sales promotion and distributors’ Country. International Journal of Academic Research
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(FMCGS). International Research Journal of Renko, N., Sustic, I. and Butigan, R. 2011. Designing
Management, IT & Social Sciences, 9(2), 254-263 marketing strategy using the five competitive forces
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Social Sciences, 4(2), 9-20. Sundaresan, A. and Jayamurthy, P. 2012. Trans fat
Etim, G. S., Inyang, W. S., James, E. E. & Mbu-Ogar, G. content in labeled and unlabelled Indian bakery
B. (2023). Marketing information system (MKIS) products including fried snacks. International Food
and optimization of banking service delivery. African Research Journal 19(4): 1609-1614.
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and Management Studies, 3(2), 173-184 Bruce C. 2010. A systematic survey of the sodium
Etuk, A., Anyadighibe, J. A., Amadi, C., & James, E. E. contents of processed foods. The American journal of
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