Transcript Marketing Overview

Chapter 7
Marketing
© Copyright 2011 by the National Restaurant Association Educational Foundation (NRAEF)
and published by Pearson Education, Inc. All rights reserved.
Marketing Overview
Market: a group of people who desire the product or
service provided by a business.
Marketing is the process of communicating a business’s
message to its market.
 Marketing includes:
1. Deciding what products and services to offer
2. positioning them in the marketplace
3. promoting them to potential buyers
4. pricing them so people will buy them
5. getting the goods to these buyers.
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Marketing Concept
 In the business environment, marketing drives the
operation.
 This means that an operation has to do the following:
• Determine customer needs and
wants 1st
• Determine the costs, prices, and
profitability of products and services
 This approach is called the marketing
concept.
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Basic Marketing Concepts
 marketing mix: the combination of all the factors that go
into creating, developing, and selling a product.
 A new model is called the contemporary marketing mix,
which consists of three primary elements:
 product-service mix: food and services offered to
customers.
 presentation mix: elements that make the operation
look unique.
 communication mix: ways an operation actively tries
to communicate with its desired customers.
 A successful operation needs to keep up with consumer,
or market trends.
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Marketing Plan
A marketing plan is a list of steps an operation must take
to sell a product or service to a specific market.
 Every marketing plan has five
main components:
1. Research the market
2. Establish objectives
3. Develop a market strategy
4. Implement an action plan
5. Evaluate/modify the action
plan as needed
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SWOT
To do a SWOT analysis (also called a situation assessment), identify
an operation’s Strengths, Weaknesses, Opportunities, and Threats.
 Strengths: List all of the strengths of the operation; areas where
it excels.
 Weaknesses: Identify the operation’s shortcomings.
 Opportunities: areas where the operation could either increase
revenues or decrease costs.
 Threats: These are the factors outside the operation that could
decrease revenues or increase costs (road construction, etc.)
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Market Research Methods
 Experimental method, an operation tries out a
product for a limited time or with a limited group of
people.
 The observational method involves observing how
customers react in a natural setting toward a product
(have wait staff present daily specials in several ways
to determine which way works the best)
 With the survey method, a marketer gathers
information using questionnaires (phone, email, cards
at table)
 Sampling involves testing a product with a specific,
small group of people (focus group)
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Market Segmentation
 target market: the people an operation intends to pursue
as customers.
 Every operation should be customer driven by
satisfying the wants and needs of the customer.
 Mass marketing: treats everyone in the market as
having the same needs and wants
 target marketing: makes a focused appeal to a distinct
group of customers.
 Market segmentation is when marketers break down a
large market into smaller groups of similar individuals
that make up that market.
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Ways to Segment a Market
 Demographic segmentation looks at the personal makeup
of individuals in a given location (gender, age, income, etc.)
• Lots of young families = kids menus
 Geographic segmentation: where consumers live or work
and what kind of transportation they use to get around
• Suburban restaurants close for lunch and city restaurants
close for dinner
 Product usage: can also shed light on how best to serve a
community
• Community loves football, host a football night @ rest.
 Lifestyle segmentation: the activities, hobbies, interests,
and opinions of a given target market.
• Lots of health conscious people = offer healthful menu
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Creating a Market Identity
 Positioning: creating a clear, specific
identity for both a product and the
operation within the marketplace; it is all
about standing out in a crowd.
 Positioning consists of two steps:
1. differentiate the operation within the
market and create a unique identity.
2. Communicate the chosen identity to
a specific target market.
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Ways to Differentiate
an Operation
 To differentiate an operation from its competitors and
create a unique identity, managers can look at the
following:
 Product: The first and most obvious way to position
an operation in the market is through the product it
offers.
 Physical appearance/aesthetics: Use the actual
physical space of an operation to create an image.
 Location: Location can play a big part in creating an
identity.
 Image: Finally, image is yet another way to
differentiate an operation.
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Market Communications
 The ways an operation communicates with its market is called
the promotional mix:
 Advertising: Paying to present or promote an operation’s
products, services, or identity.
 Sales promotions: Limited, or short-term, incentives to
entice customers to patronize an operation (happy hour)
 Personal selling: well-trained service staff can also go a
long way in communicating an operation’s message.
 Public relations (PR): an operation interacts with the
community at large (sponsoring local baseball team)
 Direct marketing: Making a effort to connect directly with
a certain segment of the market (direct mailing, telephone
calls, tableside feedback)
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Types of Sales Promotions
 Types of Sales Promotions:
 Special pricing (limited time)
 Frequent shopper program
 Premiums (cup with rest.
name on it)
 Samples
 Contests and sweepstakes
 Typical promotional
materials:
 Premiums
 Carryout and door hanger
menus
 Apparel and branded
merchandise
 Point-of-purchase (displayed
at table or counter)
 Direct mail (mass mailing of
coupons)
 Email
 Signage
 Flyers
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Public Relations:
Engaging the Community
 Publicity is the attention an operation receives.
 Community relations involve interacting with the people in
the local area to create awareness of and trust for an
operation.
 Media relations are the relationships that marketers maintain
with media outlets
1. press release: brief presentation of promotional info.
written to sound like a news article
2. press kit: packet of info. Given to media
representatives to answer questions they might have
about a business
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Menu Overview
1. There may be no stronger marketing tool for a restaurant
than its menu.
2. functions in two ways: planning and communication
3. It can greatly influence what customers decide to order.
4. The menu also helps create the image or identity of an
operation. The items listed on a menu say a lot about an
operation, but so does the way the menu is laid out.
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Types of Menus
 À la carte menu: This menu prices each item
separately.
 Du jour menu: Du jour is a French term that means
“of the day,” so it simply lists the menu items that
are available on a particular day.
 Cyclical menu: chefs or managers change menu
items after a certain period of time.
 Limited menu: There are typically only a few items
offered on a limited menu.
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More Menus
 Fixed menu: offers the same items
every day.
 California menu: lists all meals
available at any time of day.
 Prix fixe menu: the opposite of an
à la carte menu in that it offers
multiple courses at one price.
 Table d’hôte menu: similar to a
prix fixe menu in that it bundles
various elements of the menu into
one package (value meal)
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Organizing a Menu
 Most menus organize foods according to the order in
which they are usually eaten.
 Prepare foods using a variety of cooking methods.
 Chefs or managers can divide entrées by categories (fish,
chicken, pork)
 Maintain balance in the choice of vegetables, sauces, and
potatoes used to complement entrées.
 The number of desserts on the menu depends on
customers’ tastes and past sales.
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Designing a Menu
 Well-designed menus are pleasing to read, easy to
understand, and clearly express the identity and
character of the operation as a whole:
 Layout: How the menu is categorized and sequenced also adds
to the identity of an operation.
 Color: The colors chosen by an operation help create its identity.
 Font: A font can highlight certain elements on the menu, drawing
customers’ attention.
 Art: The art selected for a menu can say a lot about an
operation.
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Pricing the Menu
 Management needs to make sure that pricing aligns with the
goals of the operation and the skill level of the staff.
 Price also determines profitability, which is the amount of
money remaining for an operation after expenses, or costs,
are paid. This difference is also called the margin.
 The price of a menu item must account for all of the costs
involved in producing that item for the customer.
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Menu Pricing Methods
 Contribution margin method: There are two steps to the
formula:
(Total food cost + Target profit) ÷ Number of customers =
Contribution margin
Contribution margin + Food cost = Menu price
 Straight markup pricing: With this method, managers mark
up the costs according to a formula to obtain the selling price.
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More Menu Pricing Methods
 Average check method:
total revenue
# of seats + average seat turnover + days open in year
The result is an average check amount, which gives
managers an idea of the price range of items on the
menu.
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Analyzing Menu Sales
 It is crucial to the success of an operation that managers
analyze how well items on the menu are performing.
 sales volume: the number of times the item is sold in a
time period.
 sales mix analysis: an analysis of the popularity and
the profitability of a group of menu items (at least 4 times
a year)
 Menu engineering is systematically breaking down a
menu’s components to analyze which items are making
money and which items are selling.
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Using Menu Item Classifications
 Stars: are both popular and profitable.
*stars should be left on menu.
 Plow Horses: are popular but less profitable.
 These items are reason for a restaurant’s popularity.
 Because they are less profitable, one solution may
be to increase their price.
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Menu Item Classifications
Puzzles: unpopular but very profitable.
One of the best solutions is to decrease its
price.
Dogs: unpopular and unprofitable
Eliminate all dog items from menu if possible.
Replace them with more popular items.