Chapter 7 Marketing

1. Chapter 7 Marketing

2. 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: • Deciding what products and services to offer • positioning them in the marketplace • promoting them to potential buyers • pricing them so people will buy them • getting the goods to these buyers. 7.1 Chapter 7 | Marketing

3. 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. 7.1 Chapter 7 | Marketing

4. 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. 7.1 Chapter 7 | Marketing

5. 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: • Research the market • Establish objectives • Develop a market strategy • Implement an action plan • Evaluate/modify the action plan as needed 7.1 Chapter 7 | Marketing

6. 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.) 7.1 Chapter 7 | Marketing

7. 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) 7.2 Chapter 7 | Marketing

8. 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. 7.2 Chapter 7 | Marketing

9. 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 7.2 Chapter 7 | Marketing

10. 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: • differentiate the operation within the market and create a unique identity. • Communicate the chosen identity to a specific target market. 7.2 Chapter 7 | Marketing

11. Ways to Differentiatean 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. 7.2 Chapter 7 | Marketing

12. 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) 7.2 Chapter 7 | Marketing

13. 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: • Signage • Flyers • 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 7.2 Chapter 7 | Marketing

14. 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 7.2 Chapter 7 | Marketing

15. Menu Overview • 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. 7.3 Chapter 7 | Marketing

16. 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. 7.3 Chapter 7 | Marketing

17. 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) 7.3 Chapter 7 | Marketing

18. 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. 7.3 Chapter 7 | Marketing

19. 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. 7.3 Chapter 7 | Marketing

20. 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. 7.3 Chapter 7 | Marketing

21. 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. 7.3 Chapter 7 | Marketing

22. 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. 7.3 Chapter 7 | Marketing

23. 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. 7.3 Chapter 7 | Marketing

24. 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. 7.3 Chapter 7 | Marketing

25. 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.