Chapter 7 Foundations of Restaurant Management and Culinary Arts Marketing Chapter 7 Foundations of Restaurant Management and Culinary Arts

7.1 Introduction to Marketing

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 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

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

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

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: 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 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 Plan

Marketing 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 Plan

Marketing Plan Step 4- Implement an Action Plan The action plan is the way the market strategy is put into action Marketing Plan

Marketing 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? Marketing Plan

SWOT Analysis SWOT Analysis- also called situation assessment Identify Strengths, Weaknesses, Opportunities and Threats SWOT Analysis

SWOT Analysis 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 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 Analysis

SWOT 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 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 SWOT Analysis

7.2 Market Analysis, Identity and Communication

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 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 Research

4 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 Research

4 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 4 Methods to Gather Research

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

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 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

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

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

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 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 Market Communicators

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 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 Materials

Typical 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) Typical Promotional Materials

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

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

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

7.3 The Menu As A Marketing Tool

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

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

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 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 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 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

A menu should reflect the character and goals of the operation Two steps in menu creation: Planning Design Creating a Menu

Creating 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 Menu

Creating 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 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

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

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? 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?