Strategic marketing msc by Colm Folan

Writing a Strategic Marketing Plan

Marketing for the Contemporary Chef MSc in Applied Nutrition Colm Folan

Contents

Executive Summary ................................................................................................................................... 3 What’s the Problem? ................................................................................................................................. 3 Internal and external analysis of the issue ............................................................................................. 3 SWOT ......................................................................................................................................................... 3 PEST(LE) ..................................................................................................................................................... 3 Political issues ...................................................................................................................................... 3 Economic issues: ................................................................................................................................ 4 Social Issues ......................................................................................................................................... 4 Technological Issues .......................................................................................................................... 4 Legal issues .......................................................................................................................................... 4 Environmental issues: ......................................................................................................................... 5 Porters 5 Forces ........................................................................................................................................... 5 Porter’s Five Forces ............................................................................................................................ 5 Threat of New Entrants ...................................................................................................................... 5 Threat of Substitute Products ........................................................................................................... 6 Bargaining Power of Suppliers and of Buyers ............................................................................... 6 Intensity of Competitive Rivalry ....................................................................................................... 6 Your Restaurant Concept......................................................................................................................... 7 The Health and Wellness Market ............................................................................................................. 7 Building a vision .........................................................................................Error! Bookmark not defined. Branding Restaurants with “Healthy” Image .................................................................................. 10 Your 4 P’s (The Marketing Mix) ............................................................................................................... 13 Product ...............................................................................................Error! Bookmark not defined. Price .....................................................................................................Error! Bookmark not defined. Place ...................................................................................................Error! Bookmark not defined. Promotion ...........................................................................................Error! Bookmark not defined.

Executive Summary The executive summary is the summary of the total document. Complete your Executive Summary last, and, as the name implies, this section merely summarises each of the other sections of your marketing plan. Your Executive Summary is the first thing that will be read so it needs to be clear and concise, and will be helpful in giving yourself and other readers an overview of your plan.

What’s the Problem? This is where you outline the problem or task you have been asked to complete- in this case: Introduce a new health and wellness restaurant concept. Analyse and communicate innovative marketing strategies that will help ensure the concept’s success This is where you outline your health and wellness restaurant concept in context and explore proposed target markets. What is the problem you wish to solve? Who is doing this already? If no-one is doing it- there are two reasons- no one has thought of it or someone has, but, does not see a market for it.

Internal and external analysis of the issue Firstly explore the marketing environment- look at internal and external factors that will influence you decisions. In this case you will be looking at the health and wellness industry as a whole, and restaurants/menus with a health and wellness theme as a unique selling proposition (USP)

SWOT Internal analysis- SWOT- what have you got going for you? What makes a success of your business at the moment? This is an opportunity to take stock of your business- what are your strengths? And can you match these strengths to opportunities in the market. Weaknesses and threats? Is there anything you can improve on? Don’t be afraid to get constructive feedback.

PEST(LE) Political issues: what changes in government policy might affect your business idea? Proposed changes in VAT Rate? Can Government regulations and legal factors affect the business environment and trade markets? The main political issues include political stability 3

(stable government) tax guidelines, trade regulations, safety regulations, and employment law. Example: the Government may increase the VAT rate on tourism services from 913.5% how would this impact you?

Economic issues: what are the economic forces that could affect your business? What are the economic issues that are bound to have an impact on the company? This would include factors like inflation, interest rates, economic growth, the unemployment rate and policies, and the business cycle followed in the country. Example: BREXIT- what impact would BREXIT have on our economy? There could be negative or positive impacts on the country 1. What impact would an inflation increase have on business as a result of BREXIT?

Social Issues: The social aspect focuses on the forces within society. Our reference groupsfamily, friends, colleagues, neighbours and the media are social factors. These factors can affect our attitudes, opinions and interests. The rise in alternate lifestyle eating-Vegetarian, vegan, pescetarian, and health issues (either enforced or chosen) are becoming less of a fad and more of a lifestyle choice â&#x20AC;&#x201D; particularly with the younger generation. Example: Freshly CHOPPED! 2 - Restaurant saw a gap in the healthy food/fitness market- and have expanded rapidly using a franchise operation. According to their website Freshly Chopped was born in Ireland through pure love of health and fitness, and due to a true lack of nutritious food available to people wanting to live a healthy lifestyle on the go.

Technological Issues: New technology can have a large impact on how restaurants market their services. The internet has opened the door to new and exciting customer interactions. Customers now research restaurants (TripAdvisor/YELP/ Facebook) before deciding on a dining experience- customers will also research goods online before purchase in the shopsand the opposite is also true- people will look at goods in shops first and then look online for the best value purchase. This has an impact-particularly on customer expectations for a restaurant. Example: McDonaldâ&#x20AC;&#x2122;s now use self-service order stations allowing customers order and pay for their food. They also are using large HD screens to showcase their menu which shows footage of new promotional drinks and foods, as a method of marketing. With technology advancing, it helps food corporations reach consumers in new and easier methods.

Legal issues: Changes in labour law, or changes to established industry agreements can have a major impact on the industry. Implementation of new labour agreements such as statutory sick-leave may have a large impact on the bottom line if employers are forced into paying sick-leave.

https://www2.deloitte.com/ie/en/pages/globalmarkets/articles/preparing-for-brexit.html (accessed 10/10/17) 2

https://www.chopped.ie/our-story/ (accessed 10/10/17)

Example: mandatory labelling of calories on menus in restaurant hotels and guesthouses. An indiscriminate, ‘one size fits all’ scheme may increase labour costs and affect many small producers and would not be practical to implement. (IHF 2017)

Environmental issues: environmental factors that affect business refer to the physical environment- including everything from climate and weather to the availability of resources. There are many different examples of environmental factors that actually affect businessGlobal fuel prices- an increase will lead to more costly air-fairs and therefore less leisure travel. “Green” taxes such as congestion charges will have an impact on car owners coming into the city if implemented. Example: DCC has recently changed traffic flow on the north quays- from three lanes of traffic down to two bus lanes and one “car” lane. Businesses are reporting less footfall as a result, with a corresponding drop in income- Arnott’s are suing DCC as a result.

Porters 5 Forces Porter’s Five Forces- look at these in terms of threats- who can harm your business idea? A new restaurant offers hallmark examples of all the challenges of entering a highly competitive small business market. A variety of factors, unique to the restaurant trade, historically lead to low profit margins. To fully understand why the restaurant business is so tough, we will examine it using Porter’s five forces, an industry analysis framework created by Harvard Business School Professor Michael E. Porter.

Porter’s Five Forces Porter’s Five Forces is a framework based on the economics of industrial organisations. Porter proposed the following criteria when examining a new market segment. 1. 2. 3. 4. 5.

the threat of new entrants the threat of substitutes the bargaining power of customers the bargaining power of suppliers the threat of competition within the industry

Threat of New Entrants There is a well-worn myth that most new restaurants fail within a year of opening. This is patently untrue. Only 17% of restaurants close in the first year, not 90% 3. Opening a restaurant is comparatively straightforward. Many already-successful chains offer franchising options e.g. Freshly CHOPPED! That offer a relatively safe and cost effective way to enter the restaurant trade. Starting a restaurant can seem very attractive, and has been the making or downfall for many entrepreneurs- but we tend to look at success through a distorted glass- called survivor bias i-concentrating on the people or things that made the restaurant a success and overlooking the issues that did not. This lulls new entrants into a false sense of security about the potential for success. This unrealistic confidence can lead to many aspiring restaurateurs entering the business, creating a threat of new competition and decreasing industry profit margins. But direct competition may be the least of a restaurant's worries.

Fields, Roger.(2014) Restaurant Success by the Numbers, Second Edition: A Money-Guy's Guide to Opening the Next New Hot Spot (Kindle Location 11). Potter/TenSpeed/Harmony. Kindle Edition.

Threat of Substitute Products Eating out is mostly discretionary spending. In tough times, consumers can reduce their eating out budget or cut out dining out altogether. Sometimes the greatest competitive challenge comes from substitute products and services. Grocery chains are a huge substitute to the restaurant industry, especially in economically hard times. Like restaurants, grocery stores run on low profit margins and are always looking for a way to capture more market share. Restaurateurs need to bear in mind that increasing prices too much could lead to consumers shifting over to the grocery store where they may be tempted by prepared foods or ready-toeat salads and entrees. This further decreases restaurant industry profit. Brands like M&S offer a meal for two- entrees with sides and a bottle of wine for €14.

Bargaining Power of Suppliers and of Buyers Two important competitive drivers in Porter's Five Forces are the bargaining power of suppliers and the bargaining power of buyers. Restaurants, especially fine-dining establishments, often offer exotic or rare ingredients to differentiate from competitors- which can lead to issues in supply. A shortage or difficulty in supply will lead to price increases. Suppliers are not in business for the good of their health- and will manipulate pricing whenever it is prudent to do so. When dealing with suppliers of specialised seafood, vegetable or meat products, restaurants may not have much bargaining power because of lack of competition in the supply market. Large general producers, will sell to a huge number of restaurants, which also makes bargaining with these suppliers challenging as well. Price sensitivity- Buyers (Customers) have a keen sense of value and recognise when they are being taken advantage of. Customers will change if they are not happy with the service offer in your restaurant. Value for money is a key element- Restaurateurs ignore this at their peril The power of the huge supplying companies, and price sensitive customers are two forces pushing restaurant profit margins down.

Intensity of Competitive Rivalry There is very little loyalty in the restaurant industry. Today’s consumer has a wide variety of choices available to them. Customers are increasingly informed and vocal in their criticism. There is truth in the saying- “you are only as good as your last meal” That is why it is crucial to foster good customer relations and make every effort to retain customers. Because of the level of competition in the industry- at every level- from Macari’s Chip shop to Guilbaud’s there is an intensity of scrutiny and competition, never seen before. 6

“Only 1 out of 26 unhappy customers complain. The rest churn. A lesson here is that companies should not view absence of feedback as a sign of satisfaction. The true enemy is indifference.” Gartner (2016) 4

The emergence of online review sites and social media platforms means that customer expectation now needs to be managed at every level. One bad experience for a customer means they may not return, especially if it is was their first visit. It is therefore vital to remain value conscious, price aware and customer centred to remain competitive.

Your Restaurant Concept The task is to develop a new health and wellness concept- So what does that actually mean/what market segment are you going to address / what problem are you going to solve? Across the board, your customers are now looking for eating or drinking out experiences that reflect their lifestyle choices. Increasing numbers of people are turning their back on the “established” restaurant or bar experience and are looking for a community-based, ethical or distinctive experiences. These days, ever greater numbers of us are making lifestyle changes that include choosing to live a healthier lifestyle. Failing medical systems, an ageing population, increased cost of health care, work & life balance, have led people to take on more responsibility for maintaining their own health (Wells, 2014) 5.

The Health and Wellness Market Historically, in terms of the health and wellness sector, most consumers were either looking to solve an underlying health issue or wished to lose weight. These fell into 2 broad categoriesThe first issue was health condition management, where consumers were looking for food and beverage products that would help them treat or prevent specific conditions. The second issue was specifically around weight management. This has changed considerably in the last ten years. The global “wellness” economy has grown to huge proportions.

The global health and wellness sector is a massive market- from preventative public health campaigns to wellness tourism- there is a huge market to segment. If we look at Tourism alone as a sector- this is worth a staggering 536 billion dollars. If we segment this further, we can look at culinary tourism which sits at a very comfortable 350-500 billion dollars.

4Gartner

12/10/17

(2016) https://www.huffingtonpost.com/vala-afshar/50-important-customer-exp_b_8295772.html accessed

Wells, R (2014) "Wellness: A Lucrative Business," The Middle East, September 2014, http://www.questia.com/read/1G1-455415535/wellness-a-lucrative-business. 5

Progressive health and wellness consumers are increasingly influential in redefining food culture: While they may be a minority group in terms of overall numbers, the influence progressive wellness consumers have over food culture is disproportionate 6. Progressive wellness consumers are paving the way, sharing their enthusiasm and knowledge with mainstream consumers who are hungry for guidance and direction. As shoppers, progressives are no longer thinking about condition management (lowering cholesterol or blood pressure) or dieting (low fat, low carb) but are focused on real quality food, positive nutrition, fresh, less processed foods and beverages and fun. Another issue is the rise of Gluten free/ Gluten intolerance and other dietary health issues. A customer whoâ&#x20AC;&#x2122;s looking to avoid gluten will often lead the decision as to what restaurant to eat at. This means that even though customers looking for gluten-free options may only amount to one in one hundred, if you count in their spouses, friends or family members you could be missing out on a much bigger lost sales opportunity when you donâ&#x20AC;&#x2122;t offer meals that cater to this group (Currid ibid) From a purchase and use perspective, this means moving away from carbohydrates to more plant based nutrition supplemented by proteins. In food service it's important to understand that cuisines are among shortcuts consumers use to navigate health and wellness goals while eating out. For example, Asian cuisines, especially sushi, are shortcuts to a perceived healthy meal out. Many consumers develop rules relating to "balancing choices" to help guide menu choices when eating out. They work to balance indulgent favourites with healthy choices, such as salad instead of fries with a burger or skipping dessert after an indulgent entrĂŠe. In food retail, customisation is important to progressive consumers; grocery food bars offer relatively inexpensive, freshly made meals that can be personalised and can assist in health and wellness goals. Food retailers can also offer meal kits, which reduce the work of choice making, to facilitate meal-prep at home. (Forbes 2015)

https://www.forbes.com/sites/thehartmangroup/2015/11/19/consumer-trends-in-health-andwellness/#5a5ba2ab313e 6

The Health and Wellness Market Health conscious eating is on the upward trend with several large chains now offering menus that either count the calories or offer healthier or gluten-free options in the place of carbohydrate and fat-rich dishes. Zizzi 7 and Pizza Express 8 (in Ireland-Milano) have both made an impact with health conscious diners by offering a selection of low-calorie pizza and salad options on their menu.

Zizzi also provide downloadable information on allergens and dietary information. This shows that their marketing teams understand that it is possible to provide healthy and tasty food /dietary options within a saturated market (Italian/Pizza) This differentiating their offer from the others in the same market segment. Freshly CHOPPED- have built a hugely successful business on the back of promoting fresh and healthy meals- on the premise that there was no real alternative available .Both of these examples show a vision of purpose- if you look at their websites and marketing material, both are clear about their vision- what they want to achieve and more importantly what you should expect as a customer.

7 8

https://www.zizzi.co.uk/food (accessed 16/10/17) https://www.pizzaexpress.com/careers/our-irish-restaurants (accessed 16/10/17)

Branding Restaurants with “Healthy” Image Fast-food example- SUBWAY- have had remarkable success in marketing themselves as the healthiest option in the QSR/FF division. Subway have separated themselves in this market segment by being the only fast food restaurant that consumers view as more “healthy” than unhealthy. This did not happen by accident- Subway were already looking at healthier options- but the catalyst came through an article in Mens Health magazine in 1999, about a college student, named Jared Fogle, who lost 245 pounds by walking and by eating a Subway diet consisting of a two sandwiches each day.

Subway recognized a huge opportunity existed• •

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Firstly, Subway recognised the divergence between healthy eating and the visible role of fats in their menus. Secondly, Subway had a portion of their menu that was (relative to other QSR/FF offerings) perceived by the public as “healthy”- they recognised that seven of their sandwiches contained under 6 grams of fat and had branded them as “7 under 6.” Thirdly competitors in the fast food space were either struggling with healthy offerings or image or, more likely, did not see the need to get involved.

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Fourth, it was not easy to provide differentiation and energy to a brand in this space and a healthy eating claim with substance could do both

There was an opportunity for a new healthy image strategy and Jared and his story would be crucial in visibility and credibility. Subway were also in the vanguard of placing nutritional information and in particular calorie counts at point of sale. Jared’s story was highlighted in advertising. Subway associated itself with the high profile TV show “The Biggest Loser” A subset of sandwiches were branded as FreshFit to guide ordering and to help tell the story. Even now Subway lead the way in offering nutritional and calorie content in their stores. Was the campaign successful? Absolutely-There is no doubt that Subway won the battle for this fast growing and influential subcategory some years ago and has retained that position. “Eat Fresh” still resonates FARMACY- Vegan/Vegetarian- From one extreme to the other- Farmacy 9 Plant led restaurant offering vegetarian/vegan food What market segment are they aiming for?- certainly the younger professional customersthe “progressive health and wellness” consumers. Their vision is to treat food as medicinethey are socially and environmentally conscious- they wish to promote sustainable living through sustainable nutrition. Is it a philosophy or a gimmick? .

LEON restaurants- Fast and healthy- again- the owners wanted to produce food that was fast and healthy- “Naturally Fast Food” https://youtu.be/6ABySRLEjVs “We opened Leon because we wanted to prove that it was possible to serve food that both tastes good and does you good. We want to make it easy for people to eat well on the high street. We want to do this in every major city in the world”.

http://farmacylondon.com/ (accessed 10/01/17)

RAW Food- Raw food is making inroads in the market- again among young professionals who see themselves as “Fit-Foodies”. Interest in “gut health” is becoming increasingly important as well- with pro-biotics and other fermented products being placed on the menu. Raw food or ‘live food’ dishes are made from produce – usually but not always unprocessed, organic and vegan – “cooked” at a temperature below 48C (warmer than body temperature, but still not even half way between frozen and boiling water). On raw food websites it is often referred to as ‘high vibrational food’, some theories suggesting that, being uncooked, ‘live’ foods have more enzymes and a higher nutrient content than cooked ‘dead’ foods and consequently more healthy than standard cooked food

The top practitioners of this style of cookery is NAMA- who believe their sole aim is promote “wellbeing through nutrition”. They believe in harnessing the power of natural food to create balanced, nourishing, life-enriching dishes that help you to attain greater levels of health, in both body and mind.

Your 4 P’s (The Marketing Mix) Now you should have some idea of the health and wellness market, and hopefully an idea for a new restaurant concept aimed at that market. Often referred to as the marketing mix- the 4P’s can help with decision-making as part of a new offer on the market or testing your existing offer. Before building or analysing the marketing strategy based on the 4Ps or a related model, you must define your target market. To do this, you must conduct a market study, which will enable you to better understand the expectations of consumers and position themselves accordingly. We have identified the target market as health conscious diners or “Progressive Wellness” consumers. In this market you are to develop a “Health and Wellness Restaurant Concept”- a restaurant idea which would meet the needs of these progressive wellness consumers.

So some of the questions you will need to ask are:

Product Your product is your new restaurant concept- what is your vision and how can you make it a reality? What does the consumer expect from your concept? What are the necessary attributes of the concept to meet those expectations? How does the food look and taste? This question includes the appearance of the food and how it is presented. What is the name and branding should be given to the concept? How is the restaurant different from that of its competitors (DRIP Criteria)?

Price What market segment are you aiming at? How price sensitive are your customers? What is the value of the concept to your customers? Does this product have a base price? Where is it positioned according to its competitors? Does the product have much price elasticity? Can prices be lowered to increase your customer base? On the other hand, would raising the price have any long term benefit?

Place Where would you do business? What location? If you are an established restaurant how will a change in dining style affect attitudes among your customers? How easy is it for customers to find you? Are you on established public transport links?

Promotion How will you attract customers? What media will you use to attract them? It is essential to know the target and the desired reaction before developing a strategy in order to choose the appropriate means of communication. The bulk of spending on marketing communications is devoted to advertising. This can involve campaigns using: TV, Radio, Press (general or specialised) Static(Print) Audio Visual displays or signage, multi-media, and the fastest growing sphere- social media.

During World War II, the statistician Abraham Wald took survivorship bias into his calculations when considering how to minimize bomber losses to enemy fire. Researchers from the Center for Naval Analyses had conducted a study of the damage done to aircraft that had returned from missions, and had recommended that armour be added to the areas that showed the most damage. The holes in the returning aircraft, according to Navy logic represented areas where a bomber could take damage and still return home safely. Wald proposed that the Navy instead reinforce the areas where the returning aircraft were unscathed, since those were the areas that, if hit, would cause the plane to be lost