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Marketing. Chapter 7 Foundations of Restaurant Management and Culinary Arts. 7.1 Introduction 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. Introduction to Marketing. Advertising .

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marketing

Marketing

Chapter 7

Foundations of Restaurant Management and Culinary Arts

introduction 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
Introduction to Marketing
advertising 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 them
  • How to get these to the buyers
Advertising vs. Marketing
marketing 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
Marketing Functions
current 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
Current Business Operations
basic 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
Basic Marketing Concepts
the new model

Contemporary Marketing Mix:

    • Product-service mix
    • Presentation mix
    • Communication mix
The NEW Model
product 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
Product Service Mix
presentation 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)
Presentation Mix
communication 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
Communication Mix
market 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)
Market Trends
marketing 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 Plan
marketing plan1

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 Plan
marketing plan2

Step 2- Establish Objectives

    • Establish objectives or goals
    • State goals and deadlines
Marketing Plan
marketing plan3

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 Plan
marketing plan4

Step 4- Implement an Action Plan

    • The action plan is the way the market strategy is put into action
Marketing Plan
marketing plan5

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?
Marketing Plan
swot analysis

SWOT Analysis- also called situation assessment

  • Identify Strengths, Weaknesses, Opportunities and Threats
SWOT Analysis
swot analysis1

Strengths

    • List all strengths of the operation- areas where it excels
      • Well trained Staff
      • Good location
      • Well kept facilities
      • High food quality
SWOT Analysis
swot analysis2

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 Analysis
swot analysis3

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 Analysis
swot analysis4

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
SWOT Analysis
market research methods

4 Basic Methods Marketers Use to Gather Research

    • Experimental Method
    • Observational Method
    • Survey Method
    • Sampling Method
Market Research Methods
4 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 Research
4 methods to gather research1

#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 Research
4 methods to gather research2

#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 Research
4 methods to gather research3

#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
4 Methods to Gather Research
market 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 Segmentation
market segmentation1

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 Segmentation
market segmentation2

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 Segmentation
market segmentation3

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

Market Segmentation
4 basic ways to segment the market

Demographic Segmentation

    • Gender, ethnicity, marital status, income, size of household
  • Geographic Segmentation
    • Where consumers live, work, and transportation
  • Product Usage Segmentation
    • Lots of coffee houses in area, add desserts that have coffee flavor
  • Lifestyle Segmentation
    • Activities, hobbies, interestes
4 Basic Ways to Segment the Market
creating 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
Creating a Market Identity
differentiating 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
Differentiating an Operation
ways 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
WAYS TO ATTRACT CUSTOMERS
creating 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
Creating an Identity
market 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 Communicators
market communicators1

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 Communicators
market communicators2

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
Market Communicators
sales 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
Sales Promotions
types 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
Types of Sales Promotions
typical 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 Materials
typical promotional materials1

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 Materials
typical promotional materials2

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)
Typical Promotional Materials
public 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
Public Relations
benefits 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
Benefits of Public Relations
public relations1

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 Relations
public relations2

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
Public Relations
importance 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
Importance of a Menu
menu 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 Types
menu types1

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 Types
menu types2

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 Types
menu types3

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 Types
menu types4

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
Menu Types
organizing 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
Organizing a Menu
creating a menu

A menu should reflect the character and goals of the operation

  • Two steps in menu creation:
    • Planning
    • Design
Creating a Menu
creating a menu1

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 Menu
creating a menu2

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
Creating a Menu
pricing the menu

A critical process for any operation

  • Price serves two main purposes:
    • Provides information to customers
    • Determines profitability
  • Price speaks to the market category in which the restaurant falls
Pricing the Menu
pricing the menu1

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.
Pricing the Menu
analyzing 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
Analyzing the Menu
menu items according to popularity

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
Menu Items According to Popularity
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