1. © Copyright 2011 by the National Restaurant Association Educational Foundation (NRAEF) and published by Pearson Education, Inc. All rights reserved. Chapter 7 Marketing

2. Marketing Overview  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. 2 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. 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: 3 7.1 Chapter 7 | Marketing Determine customer needs and wants 1 st Determine the costs, prices, and profitability of products and services  This approach is called the marketing concept.

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. 4 7.1 Chapter 7 | Marketing

5. Marketing Plan  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 5 A marketing plan is a list of steps an operation must take to sell a product or service to a specific market. 7.1 Chapter 7 | Marketing

6. SWOT  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.) 6 To do a SWOT analysis (also called a situation assessment), identify an operation’s Strengths, Weaknesses, Opportunities, and Threats. 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 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. 8 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 9 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: 1.differentiate the operation within the market and create a unique identity. 2.Communicate the chosen identity to a specific target market. 10 7.2 Chapter 7 | Marketing

11. 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. 11 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) 12 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 13 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 14 7.2 Chapter 7 | Marketing

15. 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. 15 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. 16 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) 17 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. 18 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. 19 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. 20 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. 21 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. 22 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. 23 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. 24 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.