MarketingMarketingChapter 7

Foundations of Restaurant Management and Culinary Arts

7.1 Introduction to 7.1 Introduction to MarketingMarketing

Introduction to MarketingIntroduction to Marketing

Market: A group of people who desire a product or service

Marketing: The process of communicating a business’s message to it’s market

Advertising vs. MarketingAdvertising vs. Marketing

Advertising Marketing

Just one component of a successful marketing strategy

Determining what products and services to offer

How to position them in the marketplace

How to promote them to buyers

How to price themHow to get these to

the buyers

Marketing FunctionsMarketing Functions

1. determine what products and services to offer

2. position them in the marketplace

3. promote them to potential buyers

4. price them so people will buy them

5. get the goods to these buyers

Current Business OperationsCurrent Business Operations

Marketing drives the operation

An operation must:◦Determine customer needs and wants

◦Determine the costs, prices, and profitability of products and services before beginning to produce them

◦Organize all aspects to provide what customers want

Basic Marketing ConceptsBasic Marketing Concepts

Marketing Mix: combination of all factors that go into creating, developing and selling a product

For years it was known as the 4 P’s◦Place◦Product◦Price◦Promotion

The NEW ModelThe NEW Model

Contemporary Marketing Mix:

◦Product-service mix

◦Presentation mix

◦Communication mix

Product Service MixProduct Service Mix

All of the food and services offered to customers

Restaurants can often gain a competitive edge by offering a greater variety of services with better efficiency

Delivery, Take-out Service, Curbside Take-out

Presentation MixPresentation Mix

All of the elements that make the operation look unique

Layout, furniture, decorations, color scheme, lighting, service uniforms

Aesthetic- the way it looks and feels to customers (dimmed lighting)

Communication MixCommunication Mix

All of the ways an operation actively tries to reach, or communicate with it’s desired customers.

Advertising through TV, radio, newspapers, FACEBOOK!

Also, the menu, customer survey requests, other customer feedback requests

Market TrendsMarket Trends

Aspects of contemporary marketing mix are constantly changing

Operation must continually evolve with the times

Operations should be aware of what’s going on in area and around

They must keep up with consumer trends (also known as Market Trends)

Marketing PlanMarketing Plan

Marketing Plan: A list of steps an operation must take to sell a product or service to a specific market.

All must have 5 components.

◦Research the Market◦Establish Objectives◦Develop a Market Strategy◦Implement an Action Plan◦Evaluate/modify the Action Plan as Needed

Marketing PlanMarketing Plan

Step 1- Research the Market

◦Know the ins and outs of the market and what you’re up against

◦Gather information

◦Know strengths and weaknesses of your own operation

Marketing PlanMarketing Plan

Step 2- Establish Objectives

◦Establish objectives or goals

◦State goals and deadlines

Marketing Plan Marketing Plan

Step 3- Develop a Marketing Strategy

◦Brainstorm ways to achieve objectives

◦It’s helpful to come up with a variety of different strategies and then evaluate each

Marketing PlanMarketing Plan

Step 4- Implement an Action Plan

◦The action plan is the way the market strategy is put into action

Marketing PlanMarketing Plan

Step 5- Evaluate/Modify the Action Plan

◦This stage is an ongoing process of monitoring actions and gauging how successful they are

◦Is the plan working? Are there ways it is missing the mark? What can we be doing better? How can this be improved?

SWOT AnalysisSWOT Analysis

SWOT Analysis- also called situation assessment

Identify Strengths, Weaknesses, Opportunities and Threats

SWOT AnalysisSWOT Analysis

Strengths◦List all strengths of the operation- areas where

it excels Well trained Staff Good location Well kept facilities High food quality

SWOT AnalysisSWOT Analysis

Weaknesses◦Identify weaknesses so they can be eliminated

or even turned into strengths Boring Menu Dirty facilities Limited abilities or resources Poor service High staff turnover Poor reputation

SWOT AnalysisSWOT Analysis

Opportunities◦Areas where the operation could increase

revenues or decrease costs Launching a delivery or take-out service Recognizing weak competition Gaining volume or discount from a supplier

SWOT AnalysisSWOT Analysis

Threats◦Factors outside the operation that could

decrease revenues or increase costs◦Identifying threats helps control them

Increased competition Increased taxes Increased costs of certain products Road construction

7.2 Market Analysis, 7.2 Market Analysis, Identity and Identity and

CommunicationCommunication

Market Research MethodsMarket Research Methods

4 Basic Methods Marketers Use to Gather Research

◦Experimental Method

◦Observational Method

◦Survey Method

◦Sampling Method

4 Methods to Gather Research4 Methods to Gather Research

#1 Experimental Method

◦Try out a product for a limited time or with a limited group of people

◦If response is favorable, operation might think about using product on larger scale

◦If product is not well received, operation knows that more work will be required

4 Methods to Gather Research4 Methods to Gather Research

#2 Observational Method

◦Observing how customers react in a natural setting toward a product

◦Example: manager tells service staff to present daily special in 3 different ways and record which was most successful

4 Methods to Gather Research4 Methods to Gather Research

#3 Survey Method

◦Marketer gathers information using questionnaires

◦Can administer by telephone, email or feedback cards presented tableside

◦Often they offer an incentive (coupon for free dessert)

4 Methods to Gather Research4 Methods to Gather Research

#4 Sampling Method

◦Testing a product with a specific small group of people, sometimes called a focus group

◦REMEMBER- MARKETING STRATEGIES ARE GUIDED BY RESEARCH RESULTS

Market SegmentationMarket Segmentation

Target Market- People an operation intends to pursue as customers

Every operation should be customer driven.

Customer Driven- making sure that satisfying all needs and wants of the customer drives the market strategy

Market SegmentationMarket Segmentation

Mass Marketing- treats everyone in the market as having the same needs and wants

Target Marketing- treats people as different from each other and tries to make a focused appeal to a distinct group of customers

Identifying a target market enables an operation to avoid mass marketing and focus on a target market

Market SegmentationMarket Segmentation

Market Segmentation- when marketers break down a large market into smaller groups of similar individuals that make up the market◦Like looking at the market through a

microscope to see what parts make up the whole

◦Segmenting will help identify target demographics in any given location

Market SegmentationMarket Segmentation

Demographics- refers to the ways in which researchers categorize or group people and can be done in any number of ways

4 Basic Ways to Segment the 4 Basic Ways to Segment the MarketMarket

Demographic Segmentation◦Gender, ethnicity, marital status, income, size of

householdGeographic Segmentation

◦Where consumers live, work, and transportationProduct Usage Segmentation

◦Lots of coffee houses in area, add desserts that have coffee flavor

Lifestyle Segmentation◦Activities, hobbies, interestes

Creating a Market IdentityCreating a Market Identity

Positioning- creating within the marketplace a clear, specific identity for both a product and the operation that offers that product. ◦Three steps to positioning

Identify ways to differentiate the operation within the market and create a unique identity

Select the right mix of differentiating aspects Communicate the chosen identity to a specific

target market

Differentiating an OperationDifferentiating an Operation

There are many ways to do this◦Product

Unique items or traditional items in a unique way◦Physical Appearance/aesthetics

Use the actual appearance to create an image◦Service

How will the service staff be dressed? Delivery?◦Location

Steakhouse in area with lots of vegetarians? Not good idea.

◦Image Decide on image first, then create products and

services to work toward that image

WAYS TO ATTRACT CUSTOMERSWAYS TO ATTRACT CUSTOMERS

Educational Promotions such as wine tastings

Specials, such as “buy 1 get 1 free”

Signature items, such as special desserts or “secret” recipes

Frequent shopper cards that offer discounts or other incentives

Themes, both as operation-wide celebrations or special events

Merchandising techniques at the table such as unique garnishing or flambe

Creating an IdentityCreating an Identity

Selecting the Right Mix◦Decide the best route to take◦Finding the right mix takes a lot of time and

research

Communicating the Chosen Identity◦The message needs to be clear

Market CommunicatorsMarket Communicators

Promotional Mix: The way a company communicates with an operation’s market

It can consist of any or all of the following:◦Advertising◦Sales Promotions◦Personal Selling◦Public Relations◦Direct Marketing

Market CommunicatorsMarket Communicators

Advertising- paying to promote an operation’s products, services or identity◦Can be conducted through TV, radio, newspapers,

internet◦Effective ads can be powerful tools

Sales Promotions- limited, or short-term incentives to entice customers to patronize an operation◦Happy hour at Sonic, Kids Eat Free…, Half price

appetizers

Market CommunicatorsMarket Communicators

Personal Selling-well trained service staff. ◦Professionalism, politeness, efficiency

Public Relations- the process by which an operation interacts with the community at large◦Sponsoring little league teams

Direct Marketing- making an effort to connect with a certain segment of the market◦Direct mailing or emails, telephone calls, tableside

feedback

Sales PromotionsSales Promotions

Sales Promotions: provide special incentives for customers to patronize an operation. ◦There are many types◦All are designed to give customers the extra

“boost” to get them into the operation or to get them to purchase certain items

They are the focus of advertising because they are only useful when customers know about them

Types of Sales PromotionsTypes of Sales Promotions

Special Pricing◦Specials, deals, coupons

Frequent Shopper Program◦Free food items or substantial discounts, Cafe Rio

Premiums◦Free or reduced price merchandise, pen or cup

Special Events◦One time or periodic occasions

Samples◦Free tastes of food items, Sams Club

Contests and Sweepstakes◦Games and other programs that involve customer

and provide a prize

Typical Promotional MaterialsTypical Promotional Materials

Signage- menu boards, directional signs

Flyers- paper notices

Premiums- token gifts or giveaway items, pens, toys, mugs, t-shirts

Carryout and Door Hanger Menus- paper menus, door hanger menus for doorknobs

Typical Promotional MaterialsTypical Promotional Materials

Apparel and Branded Merchandise- name and/or logo on t-shirts, mugs, pencils, stuffed animals

Point-of-Purchase (POP) materials- display items near the point of purchase where customers make their decision about what to buy.

Typical Promotional MaterialsTypical Promotional Materials

Merchandising Materials- table tents and other items in the restaurant

Direct Mail- mass mailing of coupons, menus, etc.

Email- electronic mail targeted to a particular market

Complementary Promotions- 2 or more sponsors develop complementary promotional materials (restaurant gives free tickets to a sports event, and sports event gives free appetizer at restaurant)

Public RelationsPublic Relations

Public Relations- purpose is to generate positive public publicity

Publicity- the attention the an operation receives

Community Relations- involve interacting with the people in the local area to create awareness of and trust for an operation

Benefits of Public RelationsBenefits of Public Relations

Create a positive image within the community

Building credibility with the community

Building relationships with other community leaders

Generating positive publicity

Promoting the restaurant

Public RelationsPublic Relations

Media Relations- relationships that marketers maintain with the media outlets◦Newspapers, magazines, TV, and radio

Press Release- is a brief presentation of promotional info written to sound like a news article◦A well written one presents marketing info as

news

Public RelationsPublic Relations

Press Kit- a packet of info given to media representatives to answer questions they might have about a business or organization◦Folder containing the following:

General info about the organization Menus News articles Awards Photos Operation’s mission or goals Contact info

7.3 The Menu As A 7.3 The Menu As A Marketing ToolMarketing Tool

Importance of a MenuImportance of a Menu

A menu serves two purposes:◦Planning◦Communication

Planning- the menu gives an operation an end goal to work toward

Communication- informing customers, selling products, and creating identity

Menu TypesMenu Types

A la carte (AH le CART)

Du juor (doo-ZHEUR)

Cyclical

Limited

Fixed

California

Prix Fixe (PREE FIX)

Table d’hote (tah-buhl DOHT)

Menu TypesMenu Types

A la Carte- menu prices each item separately, everything has it’s own price and is paid for separately

Du jour Menu- Du jour is a French term, it means “of the day” ◦A du jour menu lists items that are available on

a particular day◦In the USA, it’s often presented as a Daily

Specials Menu

Menu TypesMenu Types

Cyclical Menu- chefs or managers change the menu after a period of time◦Four menus for four seasons◦Can change on a daily, weekly, or monthly

basis

Limited Menu- limited menus are just that- limited◦These menus make it easy to keep track of

costs

Menu TypesMenu Types

Fixed Menu- offers the same items everyday◦Customers know what to expect◦Sometimes they supplement with a de jour

menu to offer variety

California Menu- lists all meals available at any time of day◦Diners that are open 24 hours often use

california menu

Menu TypesMenu Types

Prix Fixe Menu- opposite of an a la carte menu, offers multiple menu items at one price◦Choice of appetizer, full entree with sides, and

dessert for one price

Table d’hote menu- similar to prix fixe menu, bundles various menu items into one package◦Often offered at banquets

Organizing a MenuOrganizing a Menu

Often organized by the order of courses◦Appetizers◦Soups◦Salads◦Sandwiches (can be offered before or after salads)◦Entrees◦Vegetables◦Desserts◦Beverages

Variations depend on what an operation offers and the image it wants to promote◦An Italian restaurant might offer a pasta course

separate from the rest of the entrees

Creating a MenuCreating a Menu

A menu should reflect the character and goals of the operation

Two steps in menu creation:◦Planning ◦Design

Creating a MenuCreating a Menu

Planning◦Managers must keep the following in mind:

Physical Layout of the Facility◦Size of storage, service and dining areas

Skill of Personnel◦Operation’s personnel must fit the menu that planners

create Availability of Ingredients

◦How cost efficient are items to produce Target Market’s Wants and Needs

◦Management can never forget who the operation is supposed to be serving

Target Market’s Expectations◦Consistency is important

Profit Margin◦Planners should create the menu with profitability in mind

throughout the entire process

Creating a MenuCreating a Menu

Designing◦ Designers must consider the following elements when

laying out a menu: Medium

◦ Paper, menu boards, spoken menu Layout

◦ How it is categorized and sequenced◦ It can help further an operation’s identity and work to sell menu

items at the same time Color

◦ Designers need to think about the feeling they want customers to get when considering the operation

Font◦ Different fonts have different connotations

Art◦ Art can say a lot about an operation

Pricing the MenuPricing the Menu

A critical process for any operationPrice serves two main purposes:

◦Provides information to customers◦Determines profitability

Price speaks to the market category in which the restaurant falls

Pricing the MenuPricing the Menu

Profitability- amount of money remaining for an operation after expenses, or costs are paid

Target Margin- The difference between the amount of money left over from the sale of food or beverages (after preparation costs) and the amount needed to pay for other overhead, like rent or heat.

Analyzing the MenuAnalyzing the Menu

It is crucial to success of any operation that management have the knowledge and means to analyze how well items on the menu are performing.

One of the most popular methods is menu engineering◦Menu engineering- systematically breaks down

a menu’s components to analyze which items are making money and which items are selling

Menu Items According to Menu Items According to PopularityPopularity

Stars◦Menu items that are profitable and popular

Plow Horses◦Menu items that are popular but less popular

Puzzles◦Menu items that are unpopular but very profitable

Dogs◦Menu Items that are unpopular and unprofitable

DID YOU KNOW?DID YOU KNOW?Carbonated Soft Drinks are one of the most frequently

ordered items in the US. Their low cost and high profitability makes them a STAR on any menu

Any Questions?Any Questions?