Jamba Juice External Analysis Essay

Sociocultural factors influence and restrict consumption ideas, needs, desires and purchase behavior. People from different countries and different regions have different life patterns and different sociocultures. These differences directly influence the products that industries want to produce because people may even have different attitudes and value toward the same product due to different sociocultural factors. With the rapid development of modern society and the continuous improvement of living standards, the degree of attention paid to health has increased.

Franchise businesses continue to pay close attention to their customers’ need for convenience, new flavors and, yes, healthier options” (Fenwick, 2011).

In order to provide products that can satisfy consumers, Jamba Juice’s marketing team “reviews reports, health trends, product innovations, as well as consumer focus group input on what… [their] own consumers think… [they] should be offering” (Fenwick, 2011). Due to different socialcultures, Jamba Juice also introduces hot beverages and foods to their regular fruit smoothie menu to meet different customers with different desires in different areas.

Technological Factors Jamba Juice is identified by its healthy and nutritive ingredients. The company said “it uses only 100-percent real fruits and fruit juices in its beverages. The menu offers not only smoothies but also fresh-squeezed juices and snacks, such as Jamba Breads and Jamba Pretzels. The smoothies are available in three sizes: 16-, 24- and 32-ounce servings” (Cannon, 2004). Jamba Juice demands large amounts of fresh or fresh-frozen vegetables and fruits. Hence, keeping these raw materials in good, fresh quality becomes one of the most important issues for each Jamba Juice store while making sure shortage of raw materials will not occur.

In order to ensure the raw materials’ fresh quality and enough provision, Jamba purchases all raw materials a year in advance. It also conducts assurance testing at the time of packing the raw materials to make sure the vegetables and fruits will not rot during the lag time. With the aim of becoming the fast food alternative, Jamba Juice’s foods and beverages need to be prepared and ready in a very short time. Hence, the company purchased many fast-cooking types of equipment to help them make beverages and foods so that customers can grab and go without waiting.

Threat of Entry The entry level for restaurant retailer industry is considered low. This is indicated by the high economies of scale and high capital requirements. Economies of Scale “As of January 3, 2012, there were 750 locations in the United States consisting of 307 Company-owned and operated stores and 443 franchise-operated stores. In addition, as of January 3, 2012 there were 19 international locations” (Jamba Juice). Economies of scale have played an important role in cost reduction. Jamba Juice advertized its products with the motto of health and fitness.

It demands great amount of organic vegetables and fruits. Purchasing all of next year’s required materials simultaneously at the height of the season helped to reduce the unit cost and avoid a shortage of raw materials during production. Capital Requirement The capital requirements needed to produce these soft drinks are high. Jamba Juice offers a variety of beverages in order to attract different customers with different flavors. Hence, it needs to stock a large amount of projected produce that requires large amounts of investment.

In addition, technologically superior equipments are needed to keep these raw materials in good quality that implicates another large investment. Finally, in order to differentiate Jamba Juice from its competitors and increase profit and sales, the company needs to spend a certain amount on adverting and marketing. These financial investments together contribute to the low entry of entering the market. Power of Buyers For restaurant retailers, the power of buyers is high. This can be indicated by the low switching costs and undifferentiated products.

Switching Costs Since there are many stores, like McDonald’s and Starbucks that are also providing all kinds of healthy smoothies with a price that is similar to Jamba Juice’s, buyers actually will not face high switching costs. Therefore, low switching costs enhance the bargaining power of buyers. Product is Undifferentiated Even though Jamba Juice advertizes that its products are healthy, low in calories and rich in vitamins, many other stores also provide the similar smoothies or fast foods. This indicates that Jamba Juice’s products are not differentiated.

Consumers can still find products in other stores that are familiar to Jamba Juice’s, which enhances the power of buyers. Power of suppliers For restaurant retailers, the power of suppliers is high. This can be indicated by lack of substitute produces and low importance of restaurants as buyers. Availability of Substitutes Although Jamba Juice demands a large amount of agricultural commodities to help produce the healthy and organic smoothies, these commodities are limited. There are not other substitutes can replace these agricultural commodities to make smoothies as healthy as the organic raw materials.

Hence, this gives the suppliers the opportunities to raise the price or decrease the quality of the agricultural commodities. Importance of Customer to Supplier Besides Jamba Juice, many restaurant and foodservice stores need agricultural commodities. If Jamba Juice discontinues buying their raw materials from the supplier, the supplier can still sell these materials to other restaurants or stores. Therefore, suppliers have the advantage of deciding material price and quality. Threat of Substitute The threat of substitutes in restaurant retail industry is high.

Jamba Juice is best known for its all natural, healthy fruit smoothies and fresh blended juices. However, most of these healthy, organic beverages can be easily made at home with cheaper price. All it needs is a blender, fruits, vegetables and maybe some ice. Moreover, many health stores supply different kinds of vitamins, minerals and supplement tablets or drinks at low prices. “According to the latest data from SymphonylRI Group Inc. , sales of the core vitamin category through food, drug and discount stores (excluding Walmart) grew a modest 2. 4% to $803. million during the 12 weeks ended November 27,2011” (Consumer Trend, 2012).

Competitive Rivalry Many stores have started to work on producing nutritive, organic products to satisfy consumers’ demands since the concept of health and wellness’ importance rise quickly in recent years. Even though Jamba Juice’s beverages and foods are well known for their low of calories and fats, and rich of vitamins and nutrition, they are costly. According to the article “Now That’s A Rich Market”, a couple of coffee with the same size and similar amount of calories and fat cost $4. 00 in Jamba Juice but only $3. 9 in Cinnabon and $2. 44 in Dunkin’ Donuts (Khermouch, 2005).

In order to expand its market and attract more customers, Jamba Juice also offers some convenient, healthy snacks and hot drinks other than smoothies. However, there are many stores, like McDonald’s, Wendy, and Burger King, provide low in calories and low in fat fast foods currently. These stores are more equipment and have more experiences on providing fast food than Jamba Juice. Stakeholder Analysis Stakeholders in the restaurant retailer industry usually refer to shareholders/investors, employees, government, customers, suppliers and the media.

One of the most specific interests that these stakeholders have is health and fitness. As the degree of health concern increases, stakeholders pay more attention on the foods and drinks ingredients, calories, fats and vitamins, etc. Hence, a company might need to work on this aspect if they want to attract more customers and get support from investors, governments. Some of the stakeholders are more concern on the price and convenience of the products. The company’s customers range from children to adults who want to eat and drink healthier in a convenient way.

Since these customers have different level of incomes, people have low incomes may want the company to lower the product prices while high income people who efficient in work might just hope the company provide more convenient product. Ethical Issues As the leading healthy and nutritive drink provider, Jamba Juice not only does a great job on promoting the healthy and wellness concept but also bring a lot of convenience to people’s lives. In today’s busy society, lives are full of pressure. People are always in a rush to work, school or somewhere else.

Until now people who did not pay attention to their health and nutrition issues graduate begin to notice the importance of health and nutrition because more and more healthy products have emerged in the market. People start to look for things that can give them the health and nutrition they need in a fast, convenient way. With the existing of restaurant retails like Jamba Juice, people can go and grab a snack that is low in calories and fat or/and a cup of organic beverage on their way to work, which save them the time of waiting and still able to have a healthy and nutritive meal.