Description – This article aim to recognize which are the substitutes and alternatives that play a substantial role in F&B market space, in connection with the prevalent customers’ motivations behind their, often unconsciously, decision. Finally, will summarize the customers’ strategic groups and understand the importance of why they move up or down from the higher or lower groups. Objective – Can the above analysis, give some hints to the F&B market players to create a new market space; and/or help to mitigate, or better, make the competition irrelevant; and/or help to create and capture a new customers’ demand; and/or help to smash down the relationship between value & cost of the products or services offered; and/or help Firms to pursuit differentiation and lower down the operational cost?

1. http://www.artistrising.com/products/60775/java-man.htm
Can we reshape the Singapore’s F&B Market space?
1st part – Considerations on alternatives and strategic groups
Description – This article aim to recognize which are the substitutes and alternatives that play a
substantial role in F&B market space, in connection with the prevalent customers’ motivations behind
their, often unconsciously, decision. Finally, will summarize the customers’ strategic groups and
understand the importance of why they move up or down from the higher or lower groups.
Objective – Can the above analysis, give some hints to the F&B market players to create a new market
space; and/or help to mitigate, or better, make the competition irrelevant; and/or help to create and
capture a new customers’ demand; and/or help to smash down the relationship between value & cost of
the products or services offered; and/or help Firms to pursuit differentiation and lower down the
operational cost?
***
“…La bocca sollevò dal fiero pasto…” [“…Raises the mouth from his fierce meal…”] Dante Alighieri – The Devine
Comedy - Inferno (canto XXXIII), meeting the Count Ugolino Della Gherardesca.
***
The pleasure of eating is a common feeling, also the animals has pleasure when eating.
Thus, this pleasure is connected with the hunger and with what is needed to satisfy the hunger; but for
the humankind the pleasure of the “TABLE” is a reflected sensation, arising from different situations,
places, things and persons, which are associated with our meals. In fact, most of the time we are eating,

2. enjoying the “TABLE”, even if we are not hungry. The “TABLE”, quite often, is an excuse for meeting and
talking with friends and relatives, to test new flavors, to explore new places, to networking, to celebrate
an event or… to seduce someone.
So, manipulating and serving foods and beverages is the F&B core business, which has the purpose to
satisfy F&B customer’s pleasure.
Broadly speaking, an F&B firm is competing not only with the other firms operating in the same market
cluster (Food court stalls, fast foods, bakeries, bars, pastry shops, cafes, bistros, pub, pizzerias,
restaurants and etc.), but also with companies in other industries that are selling alternative products
and / or services; products and services, which have different function and forms but the same purpose.
Let me expand this concept; if I’m tired and need to sit down and craving to have a good Cappuccino
and maybe a slice of cake; well, I have few choices: a nearby vending machine and sit down in the park,
or go to a café (Starbucks, Coffee Beans, Tiong Bahru Bakery, Paul, Toast Box, Mac Café, all the Hotel
lobby cafes and so on for many other more) or go home and do it by myself.
Than, all of them, from my prospective, are competing to satisfy my actual need… sit down and have a
Cappuccino and a slice of cake. All of them are each other’s substitutes (the vending machine; the cafes
and my own coffee machine), I’ll make my choice in accordance to typical motivations or factors, which
could be the location and the interior atmosphere maybe, or the price (personal financial possibility), or
my personal test expectation (gastronomical culture), or because I’m loyal to a brand (rewarding points
for example), or because someone has recommended me this place/brand (word-on-mouth, social
media, etc). In contrast, please consider for example, restaurants versus Concert Halls or Theaters or
Cinemas.
The restaurants have few characteristics in common with a Concert Hall or Theater or Cinema and they
are serving a diverse purpose; they (the restaurants) provide convivial and gastronomical pleasure.
Totally different experiences from musical and/or visual entertainment offered by Concert Hall,
Theaters or Cinemas. Notwithstanding the differences in forms and purposes, yet people go to the
restaurants for the same aim that they go for a concert or show or a movie… enjoy a night out, and these
are not substitutes, but alternatives to choose from.
In making every purchase decision, you and me, in general the buyers, implicitly weight alternatives,
often instinctively. Do you want a self-indulgent couple of hours? What you do to achieve it? Do you go
to visiting a museum / art gallery, or go for a concert, or have a massage, or stay at home and cooking
your favorite dish?
The decision-making process is spontaneous and is the same for both, individual consumers and
industrial buyers. But apparently, for some reasons, we often dump this instinct thinking, when we
become sellers. Rarely do sellers consider consciously about how their customers swapping across
alternative industries.
Sometimes, a shift in price, a change in model, even a new ad campaign, can draw out a huge response
from competitors within the industry, but the same actions in an alternative industry usually are

3. undetected. This because trade media, consumer rating reports, reinforces the barriers between one
industry and another.
Nevertheless, often, the space between alternative industries could provide opportunities for value
innovation. Which is the theoretical space created when a company trims down general costs by
eliminating and/ or reducing the factors, which the industry competes on; and raise the customers
value by lifting and creating elements that the industry has never offered before.
A clear example of this vision is the Cirque du Soleil, which is offering to the people the fun and thrill of
the standard circus entertainment and the intellectual sophistication and artistic richness of a theater at
the same time. Thus, gained the normal circus’ customers and also adult theater’ customers.
So, if we can try to reshape the market space, looking across the alternatives industries we can also do
the same, by looking across the strategic groups, which are competing in the same market space. A
strategic group is referring to a group of firms that pursuing a more or less similar strategy. These
groups can be generally be ranked in a very simple hierarchical order based on two factors: Price and
Performance. Where performance has to be interpreted more likely to quality services to the customer.
For each price step escalation will corresponding somehow, an escalation of the performance (quality
services). Almost all the firms operating in the F&B market aim to improve their competitive position
within its strategic group.
For example, Restaurant Andre, Jaan Restaurant, Les Amis, Iggy's, all of them are focusing on
outcompeting one another in the Fine Dining sector; as Fast Food chains are focusing on excelling over
one another in their strategic group. Nevertheless, they are not paying much attention to what the other
is doing, because from a supply point of view, they do not seem to be competing. The clue to reshape the
market space, is smash down this way of thinking by understanding which factors push customer’s
decisions to jump up or down from one group to another. This can be done by combining the most
attractive strategic group factors and removing and/or reducing everything else.
Let me give you an example not related to F&B Industry, but in the Customer Goods Industry… the
1970s boom of Sony Walkman. What Sony did, was to looking across the High Fidelity sound system
boom, with the low price and mobility of transistors radios, within the audio equipment industry and
created the personal portable-stereo market.

4. The famous Walkman took share from these two strategic groups, High Fidelity sound system and
portable transistor Radio. Without reinventing the wheel, just changing perspective Sony created a new
market space.
END
Acknowledgments
To Dr. W. Chan Kim and Dr. Renee Mauborgne professors at INSEAD for their publications, which have
inspiring me a lot and to professor Mike Lenox at Darden School of Business University of Virginia and
to professor Robert Austin at Copenhagen Business School for their business strategy courses which
have open to me a new career path.
The next article, Can we reshape the Singapore’s F&B Market space? Part 2, will analyze the chain of
buyers and complimentary products and services offering.