Marketing in Motion - the Bamboos - Essay Example

? Marketing in Motion A case study on application of marketing concepts in planning, developing, and designing the marketing aspects of a family restaurant: The Bamboos By Submitted to University of 2011 Marketing in Motion A case study on application of marketing concepts in planning, developing, and designing the marketing aspects of a family restaurant: The Bamboos Part A: Introduction “Marketing management is not solely the domain of the marketing department within a business. Indeed, for marketing to be truly successful it is generally thought that all parts of the business need to have a marketing orientation. The marketing department is responsible for a number of specific marketing activities, but it also often has an important co-ordinating role between other functional areas in order to facilitate a holistic marketing approach (Schaefer, 2010, p. 8).” The engagement This engagement relates to the period during the second half of the last year, when a distant relation of mine wanted me to help him in designing the marketing department and developing the marketing aspects of his start-up family restaurant. This relation of mine took retirement from the Royal Navy as a Chief Petty Officer. He approached me to help him in designing and developing the marketing aspects of his business. I being a student of business studies, he thought I would be in a better position to help him in guiding on the marketing aspects. According to him, the navy taught him everything about cooking and gave him enough exposure on the culinary skills, managing the production facilities and managing men, but he lacked seriously on marketing knowledge. Although he believed if he starts a restaurant, with his culinary skills and personnel management as the chief cook in a frigate, he would be able to do good business. On the flipside, he was sceptical that the different and highly competitive environment may make it very difficult for him in the formative days. He felt that some help in marketing would make him more confident. He was undecided about to how to go about the whole thing about marketing. For me this was an opportunity to make application of my lessons in marketing. Defining Marketing To gauge his understanding on marketing, I asked him to tell me what he knows about marketing. According to him, marketing includes such activities as selling, advertising, marketing research and so on. I explained him that marketing is a way of doing business which starts with a focus on customer needs and expectations. I quoted the definition of UK Chartered Institute of Marketing which states: Marketing is the management process which identifies, anticipates, and supplies customer requirements efficiently and profitably. (Blythe, 2001, p. 11; cited by Schaefer, 2010, p.8) I explained him that to begin with we have to understand what he visualises about his would be customers, their likings and dislikes in respect to their food habits and decor and ambience. I continued that in addition to these factors, we need to know about their level of income to gauge about their affordability, so that we can plan to meet their requirements both efficiently and profitability. With this information, we would have to apply the marketing concepts. Setting the orientation I discussed with him about the four types of orientations a business can have, namely the (1) product orientation, (2) the production orientation, (3) selling orientation and (4) the marketing orientation. I advised that we develop a marketing orientation of the business, which in reality is an ‘outside-in’ approach in contrast to the other three approaches of inside-out approaches. Here, we had to start with a thorough assessment of the needs and expectations of buyers and then trying to fulfil those needs and expectations in order to attract customers. I explained that in this perspective, he not only have to assume what its potential customers may want, but also he has to find out what his customers would actually want. Accordingly, the business offering have to be aligned with the customers would like to buy. Subsequently, we discussed on a few points that would set the fundamentals for our marketing needs. We agreed upon the following points before we discussed on finding out the concepts such as marketing segmentation, targeting and positioning: 1. It will be a family restaurant where customers can stop by for a meal, a snack or just a quick cup of coffee. 2. The restaurant will be able to welcome the customers with a relaxing atmosphere. 3. The menu will be able to satisfy most every taste. 4. The price will be affordable and even should be able to inspire visitors to visit again and again. 5. The provisions for the restaurants will be sourced from eco-farms and organically grown products. 6. The food will be tasty, uncomplicated and good for the visitors. At the end, I reiterated that we must not have to forget about the corner stone of our business that is the “marketing orientation”. I emphasised that we are not selling what we like to produce or what we like our products to cost or what we like to have our selling efforts, but to sell the food and beverages the families in the vicinity would like, the decor they would love and the ambience they would adore and the price they can afford. Part B: Analysis I inquired about, where he would like to locate the restaurant and explained that the location of the business is the most important aspect in a business especially for a start-up, that too for a service venture such as restaurant. Start-ups usually do not have much choice with them when choosing the location of their business, as it would very expensive to start a restaurant in the downtown area; even the rentals would cost considerably, which he may not afford. He had an answer. He said, he had thought about it, and is considering opening the restaurant in the uptown University area, where he has an ancestral home. Giving me a brief of the location he told, the place is ideal for a restaurant with almost 2000 sq-ft dining area, and an equal amount of area for the galley, server, and store purposes. It is located on a corner plot with about 10000 sq-ft total area having road frontage in two directions. On the front with a 60ft-wide road, it measured nearly 200 ft and on the other side, where a 30 ft road gives a 50 ft road frontage. In fact, he had already worked out the operations and was good at it. According to him, he would use the 30-ft artery road to for the back-office operations such as for pickups and dropping of provisions and as staff entrance, while the main side facing the road, he would leave it as the show-side of the restaurant. He said that there is enough place for roadside parking and also for a few cars inside the plot. He said, the biggest advantage of the location is that it is on the way to the university, but a little of the main entrance. Overall, I liked his decision and we proceeded to the foremost marketing concept – segmenting the market. Segmenting the market After learning that he did not have much idea about market segments, I quoted Schaefer from our Book 4, Introduction to Marketing, as “grouping customers according to the differences in their needs and behaviour is called segmentation (Schaefer, 2010, p. 12)”. I explained that since the corner stone of our business is “marketing orientation”, it necessitates that we need to have good understanding of the type of customers living in the vicinity of our proposed location and must address the right kind of customers with the right kind of products. To ensure there is not much difference between what the customers like to have and what we would like to offer, we need to split up the market into smaller segments, which we can target with specific product offerings. When he asked on what basis, we can split up the market; I explained that it could be done in one of the four generally accepted segmenting basis marketers usually adopt. These are (1) geographic segmentation, (2) demographic segmentation, (3) psychographic segmentation, and (4) behavioural segmentation. Characteristics of market segments I said before embarking upon the evolution of segmenting the market, it is important to note the five important characteristics of market segments. These are, the market segment need to be (1) measurable, (2) accessible, (3) substantial, (4) congruent, and (5) stable. Even though all the characteristics are important, yet congruence sets the tone of the segment as the members of the segments must have fairly similar requirements with respect to this type of product (Blythe, 2001; cited by Schaefer, 2010, p.14). Figure 1: Segmenting - the five important characteristics of market segments Source: Adapted from Schaefer, A. (2010). An introduction to marketing. Milton Keynes: 2010, p.15. I suggested that we discuss each of these segmenting methods and eliminate the ones that are not suitable for our type of business. For instance, segmenting geographically would not be suitable, as we are presently focusing only on one small geographic area near the university. Besides, the customers and consumers have to come to the restaurant to consume the product, except in case of take-home food parcels, which would also be confined within the same geographical area. Similarly, segmenting demographically may make sense, as for our restaurant business we may like to split the population in the area according to age, gender, lifestyle, education and economy. On the contrary, we may not like to segment our potential customers according to their beliefs, attitudes, and opinions, as well as their psychological characteristics. Another disadvantage of psychological segmentation is that psychological traits are difficult to measure. Figure 2: How to segment potential customers Source: Adapted from Schaefer, A. (2010). An introduction to marketing. Milton Keynes: 2010, p.15. Finally, in behavioural segmentation, people are grouped according to the way in which they use, and benefit, from the product. At the end we agreed that food, family food habits are largely based on ethnic food habits. Therefore, we felt that segmenting our potential customers in the University area would make sense. For this we used two segmenting techniques, (1) demographic and (2) psychographic segmentation. The locality in the university area was more cosmopolitan than its surrounding with students and families from across the world are living in the area. Accordingly, we figured out that the following major segments can be identified depending upon the food habits. European and North American Asian including Chinese, continental and Indian Brazilian African Targeting segment After we completed the segmenting of the market, we needed to decide how many and to which segments we would want to sell our products. There were several considerations. First, given our limited resources, it was not possible to target all the segments. Secondly we need to target the most profitable segment or segments that are not well served. Thirdly, we needed to consider the match between our capability and the requirements of the segment and need to serve the segment that is the closest match to our business. To give a better idea about the concept of targeting, I explained about the three generic level targeting strategies marketers use, such as (1) niche marketing, (2) differentiated marketing, and (3) undifferentiated marketing or mass marketing. In niche marketing, the business concentrates on a single segment. In fact, for a start-up or a when the business is quite small, when the resources are limited, and cannot afford to target several segments, it makes sense to focus on one segment. Targeting a niche segment may also make sense, when the business has unique know-how or such other capabilities that permits it to serve the needs of this segment well. Differentiated marketing, on the other hand is about targeting two or more segments, with differentiated product offerings for each segments. For instance, in the family restaurant, when food is served to cater to two or more segments e.g. Asian and European or pricy and inexpensive food. Undifferentiated marketing, also called as mass marketing, where the strategy is to sell one basic product is sold to the entire market. We considered the options available before us in the segments, and then we considered the targeting strategies and came to the conclusion that, at the moment, we would not target many segments. Instead we would focus on just one niche segments. Later, when the restaurant develops financial strength and gains experience, we may venture but certainly we would not target more than one segment. Positioning the offerings of our business After the segmenting and targeting exercises, we were ready to work on positioning the offerings of our restaurant. One major obstacle was to choose, which of the four segments, we would select. There were many considerations that were required to be borne in mind, but three of the characteristics of marketing segments were particularly essential. These were (1) substantial, (2) congruence, and (3) stable. In other words, our segment must be large enough to be worth aiming for. The members of the segment must have fairly similar requirements with respect to this type of product. Besides, the nature and membership of the segment must be reasonably constant so that once we don’t run into problem after the segment suddenly disappears, such as a restaurant in the vicinity of construction project. After a brainstorming process, we decided that we would position the offering of our restaurant in the form of an Asian family restaurant. Considering the multi-ethnic customer base, and rising popularity of Asian food such as Chinese and Indian cuisine in UK, it would attract considerable number of visitors both from the Asian population and also from the British population as well. We zeroed on the name of the restaurant as “The Bamboos”. We felt that bamboos represent environment and would remind of a warm tropical ambience in the cold climate of UK. Positioning ‘The Bamboos’ with an Asian menu will be able to attract the Asian food lovers and would serve a fitting niche. This will also be able to attract some of the European food lovers, who would not mind hopping on to our restaurant to dine with their families in a warm and cosy tropical-forest-themed ambience and for a weekend meal. In summary, we planned for a sit-down family dining segment of the restaurant industry, and not any other segment such as take-out food or fast-food or sort, and planned to offer meals across the day, with a strong presence in the breakfast daypart; and a limited alcohol with value conscious menus to cater to the people of this segment. Our research pointed out that the typical users of the segment would be adults 25-49 with average household income of $40,000-60,000 and household size of three or more. Additionally, the segment would attract a large senior as well as multi-ethnic customer base. The average guest check in the segment ranges from $8-10. In response to the segment and targeting strategy, our positioning strategy was as follows: The restaurant will be family dining restaurant. It will have Asian tropical rain forest theme and decor. The menu will be a combination of food from three different parts of Asia as: Chinese food with authentic Chinese recipes Indian food with both North Indian and South Indian recipes complete with breakfast curries and condiments Continental food with tandoori items In addition, the restaurant will have a few European menu, especially for deserts, and sweet dishes, which is popular throughout the world. The beverage offering will be mostly non-alcoholic. In addition to tea and coffee, it will also have Asian beverages such as buttermilk and Jaljeera etc. In addition, it will have light alcoholic beverages such as beer, wine and breezers. Relationship marketing The family restaurant being a service business, and also to ensure repeat businesses, I suggested that we plan for relationship marketing from the beginning itself. I emphasized that our business need to develop the relationship marketing programme based on four simple yet profoundly successful aspects – concern, trust, commitment and service and laid the following four conditions that would characterise our relationship with our customers and stakeholders. These are: Our business must be concerned for the welfare of customers and other stakeholders, meeting or even exceeding their expectations and producing customer satisfaction or even delight. We will create an atmosphere of trust, whereby, our customers and stakeholders will be able to have confidence in us and in our reliability. We will be committed towards customers and stakeholders and will maintain relationship through concern for its stakeholders’ welfare. We will be dedicated to delivering good service. We discussed about the good economic reasons for establishing our relationship marketing programme. One of the most important ones is to retain old customers and second would be that maintaining relationship with the customers would be rewarding in the long-run, provided we maintain that relationship. Figure 3: Concern, trust, commitment and service - the four pillars of relationship marketing Source: Adapted from Schaefer, A. (2010). An introduction to marketing. Milton Keynes: 2010, p.21. We made an in depth study on the relationship marketing practices adopted by both the restaurant industry and also those adopted in the other services sector. Finally, we decided that we will go-ahead with starting our relationship marketing programme. We developed three objectives of this programme: The chief objective of our programme would be to try and avoid customer defection. To ensure repeat business. To harvest long-term benefits. To achieve these objectives, we decided to adopt the following measures: We will introduce a ‘loyalty card’ with customers, and give them incentives depending upon three parameters: Number of visits Number of referrals Sales generated Discount vouchers to select group based on previous purchases Newsletters to regular customers where we intended to provide information about good food guide, culinary skill development, new recipe and even contests and competitions Part C: Discussion Ethical issues This project was expected to encounter several ethical issues, especially in issues relating customer relations, pricing, competitor relations, supplier relations, and customer relations. Some of the issues are discussed in the succeeding paragraphs. Ethical issues in customer relations In our family restaurant business, we feel that we are responsible to the customer almost all aspects of marketing such as product policy, marketing communications, pricing, marketing strategy and even while doing market research. This is in spite of the caveat emptor (‘buyers beware’) principle, where the customer is on her own free will enters into the purchasing agreement and it is her responsibility to ensure that the product or service meets her requirements. Notwithstanding this principle, we believed that it was the responsibility of our business to address all the ethical issues with the customer. In fact, being guided by this requirement, we decided to adopt relationship marketing, where our relationship with the customers would be based on mutual trust, concern, commitment and dedication to service. This has originated from our firm believe that customer is the most important stakeholders in our business. We understand that consumers are likely to have less knowledge on the products and services we offer, predominantly on the intangible aspects such as quality of our foodstuff. For our business, important aspects such as safety standards, and durability, may not be prominent as in case of manufactured goods. On the contrary, as producers of the goods and services, we have complete knowledge, technical expertise about the products we sell. Accordingly, we would need to devise a mechanism for adequate compensation and refund for unsatisfactory purchases. Ethical issues in competitor relations In addition to the ethical issues relating to the customer, we expect to encounter ethical issues relating to competitor relations. We understand that our action in the market place, would affect our competitors vying for the same reward that we are seeking. The strategy we adopt on four Ps i.e. price, promotion, place and people, is bound to affect our competitors. We recognise that we have certain more obligations towards our competitors, for instance, the right to ‘fair play’ or the right to privacy (Crane and Matten, 2004; Schaefer, 2010). We also recognise that we have to desist from anticompetitive practices such as being or not being overly aggressive competitive. We consider employing underhand ways to collect information of competitors are unethical and would keep ourselves away from these activities. We also believe that trying to adopt ‘dirty tricks’ including such activities as negative advertising, by which we will knowingly attempt to tarnish the reputation of a competitors’ products or business practices. Similarly, we also consider ‘staling customers’ using deceitful methods, such as bribery, misleading claims or similar tactic as unethical. Likewise, we consider poaching of competitors employees as unethical. Even adopting ‘predatory pricing’ and setting prices below cost price with the sole intention of wiping out the competitors will also be unethical for us. Finally, we will not attempt deliberately to put our competitors in such disadvantageous positions which would make them run out of business and consider these activities as unethical. Ethical Issues in pricing Further, to the ethical issues related to pricing discussed above, we also consider excessive profiteering on the face of demand as unethical and we would desist from such activities. We also consider colluding with competitors to form up cartels and jack up prices as unethical. In addition, ‘predatory pricing’ by keeping artificially low prices, below the cost of production, with an intention to win majority of customers and driving completion out of the market is also unethical for us. Ethical issues in supplier relationships Ours being a start-up restaurant, we are unlikely to have any ethical issues in supplier relationships. However, we take note of the ethical issues in business-supplier relationships that usually erupt from unequal power between the two partners. We consider such tactics as taking undue advantage of buying power and exploiting small suppliers by paying very low prices and not passing these low prices to the customer as unethical and we will desist from this. Ethical issues in marketing communications Marketing communications is yet another area where ethical issues are encountered by many industry segments. But in the restaurant industry, it is unlikely to crop up, as we do not have much to provide misleading claims with an aim to deceive our potential customers. Exaggerated claims made through advertisements, and overly large and elaborate packaging deliberately made to give the impression to the buyer of a larger quantity of the product is some of the unethical means adopted by a few marketers. We take note of such unethical issues and will remain clear of them wherever a need arises. Sending intrusive marketing communications, pop-up internet advertisements, unsolicited telesales calls are some of the unethical issues, which we will refrain from. Likewise, creating artificial wants and reinforcing materialistic values, presenting glorified, unattainable lifestyle, perpetuating social stereotypes, thereby living people unhappy are some other types of unethical marketing communications, which we would like to keep away from. In addition, unethical advertisements such as portraying women in revealing or exploitative attire and poses, those for junk food aimed at children, those for products that are very environmentally polluting will always be unethical to us under any circumstances, which we will avoid. It will therefore be our endeavour to abstain from such practices as to perpetuate sexual stereotypes, which would demean women, encourage overeating and consequently childhood obesity and embolden denudation of environment. Implication of ethical issues The ethical considerations discussed above, though some of them were not applicable, yet they guided us to consider a few important issues that we overlooked initially. These were our ethical responsibility towards the society and the environment. We figured out that one of the most important implication of the ethical issues discussed above have wider ramifications and necessitated a relook at our business orientation. Accordingly, we planned to do a major modification to our marketing orientation. We decided that our marketing would be oriented towards a sustainable society and sustainable environment. The societal marketing approach that we planned to adopt demanded long-term consumer welfare rather than immediate satisfaction to the consumers. We felt that although our marketing-mix, in particular the product offerings would be governed by an understanding of the customer need; yet we will not sell junk food. Besides, even though these foods would be tasty and would be loved by our consumers, especially by children will, yet we will not have them in our menu. The reason being these foods are not good for the society in the long run. Instead, we would ensure that our food products will contain low fat, low cholesterol and high fibre content at the same time, tasty. Similarly, as our concern towards ethical use of environment, we believed our commitment towards sourcing or raw materials, consumption of energy, production of food items, delivery of services, and even disposal of waste would be guided by creating a sustainable environment. This is from the sourcing of raw materials, through the production of goods and services and storing and transportation of finished goods, to the use of the product by the final consumer and its eventual disposal. Part D: Conclusion This part of the essay is discussed in three sections, namely, (1) utility of the case, (2) what we learnt from this case and (3) suggestions for improvement. These are discussed in the succeeding paragraphs. Case utility This case represents an important utility for all start-ups and even well-established business on two accounts. First, it urges to develop the understanding of the type of business a firm is operating and the needs and expectation of the customer. As Levitt (1960) pointed out in his article “Marketing Myopia”, “sustained growth depends on how broadly you define your business— and how carefully you gauge your customers’ needs” (Theodore Levitt, 1960, p.1), ingraining this understanding right from the beginning of the business can obviate surprizes in later years. In the present case, instead of focusing selling food products, we decided to sell customer experience associated with eating food. And consequently, we felt that the need of the customer to which we were targeting is not just to have tasty or healthy food, which even a take-out or a mail order caterer can fulfil. Instead, we were looking for giving the customer an inspiring and memorable dining experience in a warm and cosy tropical rain-forested theme, even in mid-winter, along with tasty and healthy food that are good for the society and also for the environment as well. At no stage, we felt that the customer while she enjoys her meal along with her family should feel that she is doing something which is not good for the society in the long-run, or, she is doing something that is detrimental towards the health of the environment. In essence, our intention to sell food stuff along with the delightful and memorable experience would be the most important part of our strategy and would include consideration right from how a customer pars her car until she again drives away. We figured out that even though Asian food is not likely to run out of favour in the foreseeable future, we were almost certain that the desire to have a memorable experience would never run out of relevance. The second utility of this case is utilising the first utility as a differentiator in our positioning strategy to mitigate the three formidable challenges to the success of a business in the long-run. These are strategies to (1) thwart competition, (2) to obviate customer defection and (3) to prevent product or business obsolescence in the long run. Learnings from this case An important learning from this case is that, irrespective of the age and industry type all firms need to understand that marketing is more than just a set of techniques, and undoubtedly beyond mere advertising and selling. In contrast, it is a particular orientation of business that identifies the needs and expectations of the customer as the starting point and designs the firm’s products or service offerings so that these needs and expectations are met. On a more detailed level, this case provided an excellent window on how to use the marketing information system to segment the market into smaller and more homogenous segments. It also provided example of targeting these segments and then devise a positioning strategy to meet the need and expectations of the customers. In addition, it showed how to consider the many ethical issues that surrounds even an apparently simple looking business – a restaurant. Finally, it demonstrated that marketing is not limited to and focused on individual transactions with buyers, instead it is developing an on-going relationship that is based on concern for welfare of the customer, along with building mutual trust that would enable customers and other stakeholders to develop confidence in the service provider and its reliability. It also demonstrated on how to develop commitment towards customers as part of the relationship building and maintain a relationship through its concern for its customers’ welfare. Finally, it showed how to ingrain dedication to good service as an important component of relationship marketing. Suggestions for improvement From the discussion above, four suggestions are made to improve marketing practices. These are discussed in the following paragraphs. Develop the right marketing orientation A business without an orientation of a business, it is like an unsettled magnet, which can point only to nowhere. However, developing product or production process or selling orientation is not sufficient. It requires that a business needs to develop a marketing orientation, where it focuses on the need and expectations of the customer. Even mere developing the marketing orientation is also not adequate; it needs to cultivate the societal marketing and green marketing practices with ethical issues in marketing. Use marketing information systems extensively Venturing into business without adequate study is like sailing in the sea without the knowledge of wind, currents, and hidden dangers. Thorough research on the subject not only instils confidence in the entrepreneur, but also prepares the business for unforeseen dangers. Segment the market with care Segmenting the market is a must for a start-up business, as it not possible to cater to the entire market with limited resources. Even established large businesses segment the market to effectively cater to the need of the customers. Use appropriate targeting strategy Targeting is equally important as segmenting the market. Without appropriate targeting, the efforts will be infructuous. For a start-up targeting a nice segment is appropriate. Adjust the marketing mix to position the products or services Positioning the products and services for the target customer segment is an important consideration, especially, adjusting the product, or manipulating the price without being unethical, and using ethical promotion to attract the customers is a vital part of marketing, which needs due priority. Develop relationship marketing Finally, as marketing is not just limited to one transaction of a buyer, firms need to adopt relationship marketing based on concern, trust, commitment and service. Reference Schaefer, A. (2010). An introduction to marketing. Milton Keynes: 2010. Read More