Marketing Issues & Challenges

Team 3 Marketing Issues & Challenges

Team Members Paul Messerly Heather Stos Elizabeth Poe Jiawei Lu Jun Ying December 4, 2012

Table of Contents Executive Summary ...........................................................................................................................1 Overview ............................................................................................................................................2 Industry Analysis ...............................................................................................................................2 Best Practice.......................................................................................................................................4 Considerations....................................................................................................................................5 Market Analysis .................................................................................................................................6 Competitor Analysis ..........................................................................................................................7 Breakfast Competitor Analysis ..........................................................................................................9 Target Market.....................................................................................................................................10 Value Proposition...............................................................................................................................11 Marketing Strategy.............................................................................................................................11 Tactics and Evaluation ......................................................................................................................12 Budget ................................................................................................................................................15 Appendix 1 .........................................................................................................................................17 a. Figure 1 ......................................................................................................................17 b. Figure 2 ......................................................................................................................17 c. Chart 1........................................................................................................................18 d. Chart 2........................................................................................................................18 e. Chart 3........................................................................................................................19 f. Chart 4........................................................................................................................19 g. Chart 5........................................................................................................................20 h. Map 1 .........................................................................................................................20 i. Map 2 .........................................................................................................................21 j. Figure 3 ......................................................................................................................21 k. Figure 4 ......................................................................................................................22 l. Table 1 .......................................................................................................................22 Appendix 2 .........................................................................................................................................23 a. Survey 1 .....................................................................................................................23 Appendix 3 .........................................................................................................................................25 a. Figure 5 ......................................................................................................................25 Works Cited .......................................................................................................................................26 i

Executive Summary Local fits into the fast casual restaurant segment of the industry and focuses on non-profit charities that make the restaurant unique to the community. The main purpose of the restaurant focuses on helping the community and local charities by giving away one hundred percent of the profits to the charities. The key challenges Local faces include developing a value proposition that drives consumer demand and targeting consumers through specific communication channels.

The competition and location create the main marketing-related issues facing competitors in the industry within Manhattan. In terms of competitors, looking at the restaurants in the industry reveals multiple levels of competitors to compete with such as casual dining restaurants, fast food restaurants, and fine dining restaurants. Examples of the competitors include Applebee’s, Panera, McAlister’s, Early Edition, and the Chef. Another concern of many restaurants deals with the location of the restaurant and not having the ability to move to “A” locations since many now have limited space available. Local faces both of these issues in relation to the marketing challenges. With the current “B” location, Local needs to focus on the promotion aspect of marketing because it will become important in order to compete with the abundance of competition.

The key considerations for Local to address in terms of marketing strategies consist of the location surroundings, promotion techniques, and competition. Emphasizing attributes that makes Local stand out, such as the quality of food, can help to better promote the restaurant. Local has a menu selection that reflects the local community through a variety of locally grown foods, thus creating a menu that offers quality food, with a variety of monthly specials. Another consideration involves keeping an open mind to change since the restaurant industry moves at a fast pace.

In looking at the different market segments of the Manhattan area, we formed three viable segments and decided to focus on K-State students as the target market, which mostly consists of males and females between the ages of 18 and 24 years old. Not only does this large market of college students in the Manhattan community continue to grow, but recently fast casual restaurants have grown in popularity among young people as well.

The main objective of the marketing strategy consists of creating a strategy that reaches consumers in order to increase awareness of the restaurant, drive consumer demand, and ultimately build a loyal customer base. The supporting marketing objectives involve informing the customers through creating brand awareness of Local, persuading the customers that Local has a product that can fulfill their needs, and remind the customers to continue to take action. The aim of this strategy consists of creating awareness of Local. By implementing the strategy and continuing to measure goals, it will keep Local on track to increase college student’s knowledge of the restaurant and receive their support.

We have a variety of strategies that range from social media to t-shirts. In looking at all of the possible strategies, Local should have the ability to reach a large number of college students at Kansas State University. The strategy that coincides with the best practices we selected consists of developing a ‘LOCAL Club’ that allows consumers to become fans on the website and use Facebook to post pictures/statuses/comments about Local. Two other strategies that enrich the main objective include discount strategies such as a ‘word of the day’ discount and a student discount. Both strategies appear simple, but can result in an increase in student customers. Another strategy focuses on college students and free items by randomly giving away three shirts every week to college students. Between t-shirts and word of mouth we hope to spread the word about Local though numerous touch points. Additionally, the loyalty card idea allows consumers the opportunity to earn free food after purchasing five meals. Lastly, the ‘LOCAL Partners’ program emphasizes partnering with student groups and helping the community.

The budget consists of low implementation costs and continuously evaluating the strategy. All of the ideas focus on keeping the current marketing budget within range, but still increasing the touch points Local has on college students. The initial cost of implementing the strategies represents approximately $174 of the budget with about $358 in monthly costs. We believe the marketing strategy and tactics we developed will help Local increase the awareness through several communication channels and drive consumers to the restaurant.

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I.

Overview Local Food & Friends (Local) has a restaurant location at 3011 Anderson Ave. Manhattan, KS, formerly

known as Ingredient (in•grē•di•ent). Seen by most as a fast casual restaurant, Local also has a non-profit focus that makes the restaurant unique to the community. A fast casual restaurant falls between the fast food and casual restaurants (see figure 1) and has the definition of “a hybrid of quick service and casual dining that offers the consumer more freshly prepared and customized product than a fast food restaurant” (Wall). Therefore, fast casual does not offer full table service, but promises a higher quality of food and atmosphere than a fast food restaurant.

“Over the past decade, “fast casual" has been the fastest-growing segment of the restaurant industry” (“Fast Casual Restaurant Leaders…”). The main purpose of the restaurant focuses on helping the community and local charities by giving away 100 percent of the profits to the charities and every month a different charity receives the profits from the restaurant. The charity has to complete an application process and then during their month they spend time representing their charity by greeting people at the door and shaking hands. The key challenges Local faces include developing a value proposition that drives consumer demand and targeting consumers through specific communication channels. The main objectives of our marketing strategy include: reach customers in order to increase awareness of the restaurant; drive customer demand; and build a loyal customer base.

II.

Industry Analysis When examining the fast casual restaurant segment in Manhattan, the industry appears extremely

competitive. The competitiveness creates the main marketing-related issue facing competitors in the industry, because it causes the challenge of getting customers in the door and having loyal customers. The industry itself also plays into the challenge, because without a successful industry restaurants cannot survive. According to a recent report about the market size and forecast of the fast casual restaurant industry this year, “Mintel estimates growth of 8% for fast casual restaurant sales and a market value of more than $26 billion” (Wall). Even though the recession has caused many people to seem more conscious of their spending habits, fast casual restaurants have put themselves in a position to give customers a less expensive, but healthier meal choice than fast food. As a result, the number of competitors continues to grow as the industry grows. This has also caused fast food restaurants to make changes in order to keep up and not lose their customers. One example arises in the MarketLine case study of Five Guys, and the effect they have had on United States fast food giants like McDonald’s and Wendy’s. Many of these

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restaurants have made changes to their menus to deal with the “threat posed primarily as an issue of quality” (“Five Guys...”). With this in mind, the competition will continue to grow within the segments of the restaurant industries, mainly fast food and fast casual, due to the gray area that blurs the perception.

Naturally, multiple levels of competitors appear within the general restaurant industry to compete with such as casual dining restaurants, fast food restaurants, and fine dining restaurants. Casual dining accounts for the majority of full service restaurants, with 39.40 percent of the market share, making casual dining restaurants a prominent competitor (“Full-Service Restaurant Industry, 2010”). Two of the most recognizable companies in the industry, Chili’s Grill and Bar and Applebee’s, both have locations in Manhattan. These two restaurants both have meal specials, name recognition, and other aspects that drive customers in the door. Numerous other smaller scale casual dining restaurants also have locations in Manhattan such as Coco Bolo’s, Little Apple Brewing Company, and So Long Saloon, which have all earned their own unique reputation and customer following. Finding ways to draw customers to a restaurant versus the competition remains one of the main issues facing all of the restaurants in Manhattan because of the abundant number of chain and independent restaurants. Additionally, this issue will face restaurants today and in the future because competition will only continue to grow and restaurants will find ways to become more competitive.

Location also appears as a main marketing-related issue that many Manhattan restaurants face today. This creates an issue for many restaurants in Manhattan because they do not have locations in prime zones known as “A” locations for customers. Therefore, many restaurants struggle with finding ways to market to customers. A key approach comes from the idea of getting customers to keep the restaurant in mind when deciding on lunch or dinner and not just settling for a nearby restaurant. Many of the less well-known or newer restaurants struggle with this problem, especially if they have “B” locations.

The restaurant industry remains very competitive and continues to grow at a relatively fast pace, but Manhattan lacks the number of “A” locations needed. Currently, Aggieville has the position of one of the most profitable areas to have a restaurant in Manhattan. Aggieville receives the title of an “A” location due to the immense amount of foot traffic the space receives from students, other Manhattan citizens, and tourists. However, the two blocks already consist of numerous bars and restaurants, and an expansion does not seem possible.

Additionally, a majority of the Aggieville restaurants has enough foot traffic to keep them in business; therefore,

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the businesses will not change locations in the near future. Another “A” location zone has recently developed in the area located on the southwest end of Tuttle Creek Boulevard, however, this area quickly grew and now has several restaurants, and expanding the area continues to become more limited. Unfortunately, due to the limited available area, Manhattan lacks the ability to accommodate the growing restaurant industry. This creates problems for new restaurants trying to come to Manhattan.

Overall, the competition and location serve as the two primary marketing-related concerns for any restaurant considering entering the Manhattan restaurant industry because these two factors play a vital role in determining the success of the business. Restaurants will face challenges to find ways to receive recognition and compete with the numerous other restaurants in Manhattan if it does not have a good location. Creating strategies to overcome these factors will determine the success and survival of a restaurant in Manhattan today and in the future.

When looking at Local, both of these marketing-related issues apply to the marketing challenges that the restaurant faces today. Although all the aspects of the marketing mix have importance, promotion remains undisputedly the most important factor for the future success of Local in overcoming the challenges. Local already has an established “B” location that cannot immediately improve; therefore, focusing on the promotion aspect of marketing will become important in order to compete with the abundance of competition.

III.

Best Practice In looking at the best practices of a business that utilized marketing to overcome customer communication

issues, Moe’s Southwest Grill (Moe’s) did a great job utilizing digital media in order to communicate with customers. Moe’s only has one location in Kansas, but has a similar menu selection to Chipotle in Manhattan. The restaurant has locations in thirty-eight states. Therefore, when began thinking of the best place to connect with young people, “digital media is fitting for fast casual as the trendy and youthful foodservice segment market” (Wall). Moe’s found a way to not only gain customers, but to develop loyal customers. They created a Check-In Club to reward fans for checking in across social platforms (see figure 2). “Fans can register at the company’s website, connect their Facebook and/or Foursquare account, check in each time they visit a Moe’s location, and earn prizes for doing so” (Wall). On the website, they have a member page where they show rankings and statuses of customers (fans). This strategy gives Moe’s the opportunity to interact with customers and see what they like or

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dislike in terms of immediate feedback. Local should keep Moe’s strategy in mind when considering potential future strategies for interacting with younger customers.

IV.

Considerations Some key considerations to address when looking at various marketing strategies consist of the location

surroundings, promotion techniques, and competition. Local needs to spend time examining the overall industry in Manhattan, as well as the area surrounding the business, with the purpose of making an appropriate selection of the target market so the restaurant can focus on a well-defined market. With a competitive restaurant industry, having the ability to know and understand the target market, as well as the business itself, can help ensure that Local correctly identifies the right strategies to use. One of the key issues for many businesses deals with selecting a target market; businesses need to look at the big picture in order to communicate effectively with the right target market, at the right place, and at the right time. In terms of guidance, avoid explaining why the target market needs Local; instead explain how Local meets the needs of the target market.

Another consideration comes from a marketing strategy that would allow Local to partner with Kansas State University (K-State) groups and organizations in ways that assist in advertising and spreading the message of both groups. Looking for out of the box ideas in order to connect with the student population can greatly increase the awareness of the restaurant. K-State has a very giving and charitable student base that we believe would enjoy getting involved with the restaurant and the charities. A possible method to increase Local’s name recognition would come from partnering with a student organization. Local must stress the charity aspect of their organization, and foster more involvement from the K-State student population.

Effectively emphasizing attributes that makes Local stand out seems like another important consideration.

Local has a menu selection that reflects the local community through a variety of locally grown foods, thus creating a menu that offers quality food and a variety of monthly specials. Many restaurants in Manhattan do not have this strength, and Local has an opportunity to stand out among the competitors (see chart 1). A recent survey by Bethany Wall revealed that 18 percent of internet users over the age of eighteen believe that, out of several characteristics, the quality of food measures as the most important attribute for fast casual restaurants (see chart 2).

Continuing to create buzz about the food and using it as a way to raise awareness of the restaurant would create a demand by the customers. Looking for ideas such as this one will help with future marketing promotions.

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The final consideration involves keeping an open mind to change because the restaurant industry moves at a fast pace, thus constantly evolving. Preparing for changes and embracing them as much as possible will help to keep the restaurant from falling behind. However, keep in mind that too much variation can have negative effects because it will begin to confuse customers. In noticing an effective new trend or marketing strategy, having the ability to modify the operations to incorporate new ideas can help keep Local up to date with the other restaurants.

V.

Market Analysis The main segments of the market for Local include K-State students, families, and nearby empty nesters

(see chart 3). Each of the segments hold great value for the company, and in their own ways can help the restaurant succeed. All three segments reside in Manhattan, KS. One commonality of the three groups consists of the basic need for everyone to eat. By providing the extra incentive of helping various charities by simply eating, Local sets itself apart from others and gains customer’s attention.

The segment for K-State students involves 18-24 year olds in Manhattan, KS. Although this may seem like an unlikely segment, college students eat out more often than people normally think they do. The size of the segment can potentially run upwards of 24,000 students, and the university continues to have record-breaking enrollment (Office of the University Registrar). Students, whether they live in the dorms or off-campus, grow tired of dorm food. Many do not like cooking and routinely fall back to the second option of eating out. Although many students travel to Aggieville to eat, many students will drive across town to various restaurants for something different. The key for Local becomes getting the students to know the restaurant exists.

Residents ranging from 20-24 year old, both male and female, each account for six percent of the population in Manhattan (see chart 4), resulting in both age groups having the largest percentage of the population for Manhattan (“Lifestyles…”). The second largest group includes those 15-19 years old, which includes a portion of the remaining college student population. The statistics support the assumption that a large percentage of the population consists of students because the college student segment remains as the top segment in the area with 31 percent of the population. The young adult group has grown in size over the years and contributes to an increase in Manhattan’s population as a whole. The annual growth rate of the Manhattan, KS population falls just above one percent, displaying a higher percentage than the average of the United States over the last decade (see chart 5).

Another segment includes middle class families, typically 25-44 year old adults with children. Offering a

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quick, but healthy option meets the needs of many parents when they decide to eat out instead of making dinner at home. This segment continues to grow as well because the city continues to bring in more jobs and create a prosperous community to live in. These groups tend to live in the nearby area because of the location of many elementary schools within the neighborhoods.

Mostly due to the location by the restaurant, the third segment encompasses nearby empty nesters (see map 1). The group involves 45 year old adults and older, and they tend to have older children or children that no longer live at home. This opens up more money to spend on food and other items. The household income for the area near Local ranges between $70,000 and $84,000 (see map 2), which the nearby empty nester segment mostly occupies (“Lifestyles…”). Since they tend to live in this section of town, Local has the opportunity to advertise to the group in various ways. The segment does not grow as rapidly as the college student segment, but the group continues to make progress. Due to this segment’s age and life experience, a higher emphasis on community and philanthropy tends to appear. For this population segment, the ability to have a healthy meal while also contributing to charity will play into the popularity of eating at Local.

VI.

Competitor Analysis Having a location in Manhattan with a wide variety of restaurants, Local has many competitors, such as

Panera Bread (also referred to as Panera). In terms of the atmosphere and as a fast casual restaurant, Panera appears as a very close competitor to Local. According to the Mergent Online database, Panera’s net earnings from 2011 earned $135,952,000, up from $111,599,000 from the previous year ("Panera Bread Co"). Panera has grown in earnings and popularity, and is known by consumers as a healthier restaurant. Given the growing trend, Panera has attracted a target market of young adults who want to enjoy a healthy meal in a quiet atmosphere.

Panera’s strengths include the name recognition of the company and the wide variety of the menu items.

While they offer food that can cover any meal, they also have a large share in the breakfast market because of their bakery selection every day. The major weakness is the location at the edge of town. Panera has found various ways to overcome the location weakness through advertisements and by creating a demand for their food. Panera’s value proposition aims for young adults, who value a quiet atmosphere, Panera provides a calm and quiet restaurant where people can enjoy a healthy meal for a reasonable price.

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Similar to Panera, McAlister’s Deli (also referred to as McAlister’s), operates as a bread-based restaurant.

These two restaurants compete for the customers that Local also tries to attract. McAlister’s, like Panera, also offers healthier choices than the majority of restaurants today. McAlister’s operates very similar to Panera in terms of the process for ordering and receiving food. Like Panera, McAlister’s also has a very large menu selection and can meet the needs of almost any customer. A difference from Panera comes from McAlister’s only focusing on lunch and dinner. They do not have a breakfast menu; however, this does not create a weakness for the company. Instead, the tactic shows that they understand their business and their market, providing them current and future success.

McAlister’s major strength comes from the healthy, but reasonably priced deli foods that they offer. They also have a calm, family friendly atmosphere that appeals to a variety of customers, mainly families. The location of the restaurant appears as a weakness because even though it sits in a popular area, many families tend to live on the opposite side of town. Many families will go to McAlister’s, but many times causing them to weigh the desire for the food against eating at a competitor or at home. McAlister’s value proposition aims for families, who value their health, McAlister’s provides a healthy meal for a reasonable price.

Applebee’s also competes in the Manhattan restaurant industry, but differs from Local, McAlister’s, and Panera because it falls under the casual restaurant segment. However, Applebee’s captures the K-State student market by providing a great atmosphere. Applebee’s also contrasts from the other competitors because they do not focus on the health benefits. Instead, they focus on a friendly atmosphere and cost saving deals to drive K-State students to the restaurant. Applebee’s has various deals that attract college students, and many times college students will return because of a specific deal. According to the Mergent Online database, their net earnings from 2011 hit $80,906,000, which decreased from $101,802,000 from the prior year. A potential reason for the decrease in net earnings comes from the rise in popularity of fast casual restaurants ("Applebee's International, Inc").

On weeknights, Applebee’s offers half price appetizers, which has become a good deal for college students because of the low cost. This has strengthened Applebee’s ability to drive customer demand. Another strength of Applebee’s involves the friendly and fun atmosphere. On the other hand, the location by the mall brings up an issue for many students because the location requires them to travel across town and parking issues arise from time to time. However, Applebee’s tries to leverage their specials and atmosphere in order to drive customers in the door.

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Applebee’s value proposition aims for K-State students, who value friends, Applebee’s provides a great place to socialize while eating a low cost meal.

VII.

Breakfast Competitor Analysis Local also participates in the breakfast segment since they offer breakfast menu options every morning;

however, Local does not generate much traffic for breakfast. Many fast food restaurants also offer breakfast items, but commonly do not consist of too many healthy alternatives. In Manhattan, two restaurants focus mainly on breakfast and lunch and have large shares of the breakfast market, the Chef and Early Edition. Through personal observations of both restaurants, we discovered many similarities and differences between both restaurants, and in comparison to Local.

The Chef has a small restaurant location just off Poyntz Avenue that seats about 40 people. During the week, they have a heavy traffic flow of customers, but on weekends, the wait time can average over an hour. The prime time for eating there ranges between 9-10:30am on Sunday mornings. From our observations, most of the customers in the restaurant consisted of couples and individuals, but no children. The bold colors and fun atmosphere of the restaurant stood out as well. The menu seemed very simple, but we also observed that the restaurant serves alcohol, usually mixed with juices.

Therefore, the main strengths of the restaurant consist of the alcohol, food, and atmosphere. In terms of the college student market, the ability to drink while waiting in line can help people’s patience. The major weaknesses appear to be the wait time and limited seating. Although the weaknesses seem easy to overcome, the restaurant may not expand because it would lose the atmosphere that customers value. The Chef’s value proposition aims for KState students, who value excitement; the Chef provides a fun adult atmosphere and good food at a reasonable cost.

In comparison, Early Edition also offers a wider range of brunch menu items, plus skillets, which the Chef does not. Both restaurants offer meals for roughly the same price. Early Edition has two locations, Candlewood Shopping Center and by K-Mart. Early Edition has almost double the amount (60-70) of seating available in each restaurant. The prime time to eat breakfast falls relatively close to the Chef (9-10:30am). One major difference we found occurs in the wait time: at Early Edition they seat guests quicker, but this appeals to the family target market.

The main strength of Early Edition, compared to the Chef, entails the amount of seating the restaurant has for their guests, as well as the large menu selection because they provide breakfast items to suit a variety of tastes,

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which appeal to the family target market. The main weakness for many families comes from potentially only eating breakfast at a restaurant on the weekends. Early Edition’s value proposition aims for families, who value choices, Early Edition provides a large breakfast menu at a reasonable cost.

Through personal observations of both restaurants, we have based a future recommendation for Local on a variety of facts. The Manhattan area has a very competitive breakfast market and with the Chef and Early Edition focusing on breakfast and lunch, this creates a challenge for a new restaurant without name recognition.

We suggest making a change to the breakfast side of Local, a possible idea would switch to having breakfast only on Sunday morning because that appears as the high traffic day for breakfast in Manhattan. This would also give Local the opportunity to create a demand for breakfast since people cannot get it every day. In addition, running special promotions and other advertising would help get customers into the restaurant. Looking at the K-State student target market, most students rarely eat out for breakfast during the week, but many students tend to eat out on Sundays around 9am or 10am.

VIII.

Target Market In looking at the different market segments, we formed three viable segments and determined that they

should each have their own strategy. Focusing on the K-State student market in the Manhattan community allows Local to reach out to a segment that has increased in popularity for eating at fast casual restaurants.

Manhattan has a large number of college students that Local has the ability to reach, and during the school year, Local can potentially reach up to 24,000 students that attend K-State. Even though college students have less money than working adults, many of the students still eat out regardless of the price. Many college students use the activity of eating out as a way to socialize with friends, which will outweigh the cost of a meal in many instances.

College students also see fast casual restaurants as a better alternative than fast food restaurants because of the idea that fast food consists of food made in large quantities or prior to the order. Anymore, fast food restaurants have similar meal prices of fast casual restaurants and sometimes even full table service restaurants. Additionally, many students participate in various clubs and organizations that deal with different philanthropies and causes, using that to Local’s advantage in targeting the K-State students will help gain loyalty.

The Local target market profile for K-State students consist of males and females, with a majority of them between the ages of 18 and 24 years old in the Manhattan, KS area. The target market wants to find healthy meal

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alternatives when possible and eats out at least once a week. College students tend to lack the skills and desire to cook, so their eating habits tend to rely on eating out. With family or friends, students tend to eat out with other people and rarely alone. They feel good about themselves when they have the opportunity to help a cause because they feel like they have made a difference. Although most students do not have full-time jobs, the prices seem affordable for most people within the target market since they have a willingness to pay for the meal. This target market also appears very connected in terms of social media, and if they find the meal/restaurant goes above their expectations, they will tell their friends though word of mouth and social media.

The K-State student profile also consists of singles with shared households, referring to most college students sharing housing, with lower middle income, some college education, and white ethnicity (“Lifestyles…”).

This segment tends to listen to the public, radio, and social media for information. Although the K-State campus makes walking around easy, most students own or lease a vehicle. This segment also takes part in college sporting events and going to the bars in order to socialize and spend time with friends.

In considering the location of Local, advertising to families and the nearby empty nester markets will prove easiest because many of them live in the area of Local on the west side of Manhattan. However, college students do not regularly travel to this area of town, therefore, finding ways to raise awareness of Local and spread the word will help increase the traffic of college students. For many students, they enjoy eating at different and new places, so finding ways to market directly to them will help increase the number of students who eat at Local.

IX.

Value Proposition Local’s value proposition aims for K-State students, who value friends and family, Local provides

opportunities to help local charities while enjoying a reasonably priced healthy meal. Unlike the competition, Local fully supports the local community because they donate 100 percent of the profits to local charities. Since many young people perceive fast casual restaurants as healthier than fast food restaurants, they do not mind paying more for the food. Promoting the benefit of Local giving profits to charity can aid in their decision to eat there because consumers feel like they have helped others within the community.

X.

Marketing strategy The main objective entails developing a strategy that reaches consumers in order to increase awareness of

the restaurant, drive demand, and build a loyal customer base. The supporting marketing objectives involve

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informing the customers through creating brand awareness of Local, persuading the customers that Local has a product that can fulfill their needs, and remind the customers to continue to take action. The strategy to accomplish these objectives will center on the target market we have addressed, K-State students. The strategy utilizes key communication channels most used by college students, such as social media (Facebook) and word of mouth. In conjunction with creating brand awareness, including the persuasive message of why students should eat there, can help drive the desire because Local provides a unique opportunity to help the community. The next step focuses on finding ways to create loyalty among the students and getting them to return to Local through a type of loyalty or check-in club.

The aim of this strategy consists of creating awareness of Local. By implementing the strategy and continuing to measure goals, it will keep Local on track to increase K-State student’s knowledge of the restaurant and receive their support. The largest hurdle remains as the initial touch point but once a connection exists, the established link makes the customer much easier to reach. Our strategy provides several ideas that will prove effective if implemented correctly. This strategy will provide support for the beginning stages of creating a loyal customer base and sustaining until the restaurant gains large recognize across campus. At that point, the strategy will require re-evaluation and alteration to fit a restaurant that will work to maintain customers instead of solely focusing on driving demand of new customers. The new strategy will encompass both ideas.

Therefore, understanding the surrounding environment, creating an overall enjoyable experience, and providing a higher perceived value of the restaurant all integrates into the current promotional strategy set out by our group. By integrating the four strategies, Local can respond to the customers and create relationships, as well as making a profit to donate to charities. Local also can provide relevance to the community beyond just a restaurant and actually helping support the community.

XI.

Tactics and Evaluation Our strategy involves several ideas of different ways to reach K-State students. The first idea comes from

the best practices example previously provided, the Check-In Club, which would link the customers (fans) and Facebook to allow them to share comments and pictures in order to gain more interaction with the students. Local may consider another name for a similar program, such as the ‘LOCAL Club’, but use similar guidelines from Moe’s in order to develop an effective program that fits Local and can expand upon the current use of Facebook.

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This tool could have several measurable elements such as looking at the number of members, the rankings, number of people who check in daily or how many times a day customers post a comment or picture.

Keeping the ‘LOCAL Club’ idea in mind and mixing it with the College of Business Administration (CBA) display monitor system would help to create a combined marketing strategy. The CBA has a live feed of tweets that appears on their display monitors. Local can mix these ideas together to create a check-in club similar to Moe’s and use one of the television monitors in Local to display customer posts. People love to share information, and giving them the opportunity to display it to others that come into the restaurant would entice more people to share pictures and statuses while making them more aware of the social media presence. In the future, possibly offering free WiFi would give customers another reason to engage with Local via social media while dining in the restaurant.

Adding onto the digital media idea, Local could also offer a ‘word of the day’ every Monday (or any day of the week) that would allow customers to receive a discount or free product. In practice, every Monday Local would post a word on the Facebook page and customers who come in and share the word when they order then can receive a discount on their meal or a free baked good. With young college students, utilizing social media creates an inexpensive, direct, and easy way to reach them. Therefore, this would get K-State students to visit the Facebook page. The measurement will come from the number of customers who use the ‘word of the day’.

Another way to help Local connect with K-State students comes in the form of a college student 15 percent discount with valid student identification. This discount would follow a similar structure of the ‘word of the day’ and Local can offer the discount every Thursday (or any day of the week). College students enjoy deals and having ones specifically for them help drive the desire to eat at Local versus another restaurant where they would pay full price. The discount strategy measurement would come from the number of students per day that utilize it and watching to see if trends increase in the number of students.

The word of mouth strategy can prove effective and does not require much work for Local since the customer’s experience drives the strategy. However, by providing great service, great food, and a great atmosphere, generating buzz among customers will take little effort. According to our Local Awareness Survey (see survey 1) of forty-three people, about 58 percent of the sample has heard of Local, and of that group, 45 percent heard about the restaurant through word of mouth. However, an overwhelming majority, over 90 percent, have never eaten at Local.

Of the surveyed group, 58 percent said they would likely eat at the restaurant in the future. From a marketing

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perspective, people have possibly told their friends, family, and coworkers about the restaurant. Unfortunately, Local has no control over the word of mouth marketing, thus making it challenging to measure and regulate.

The advertising through students involves using them as walking advertisements. By creating and giving away t-shirts, the K-State students can advertise the restaurant to a large number of other college students on campus. With the connection to GTM, Local can receive the t-shirts for seven dollars per shirt. Three times, randomly, throughout the week Local will give away free t-shirts to students who come in to the restaurant and can show a valid student ID. This also provides students with an extra incentive to come into Local. The possible t-shirt design will have the Local logo on the front of the shirt and a catchy phrase on the back in order to catch the eyes of students; for instance, “Helping the LOCAL community one meal at a time” (see figure 3 & 4).

By using the t-shirts as advertisements, Local will significantly increase the number of touch points among college students. Unfortunately, this channel cannot accurately measure the touch points because students may not act or act at different times after seeing the t-shirt. However, a way to measure would entail asking customers how they heard about Local or tracking the number of customers that ask about the shirts. Additionally, having surveys at the tables for customers to fill out can also give Local the opportunity to ask how they heard about the restaurant.

This can also measure the other communication channels to determine the most effective way to reach various target markets.

One way to encourage customers, especially students, involves creating a loyalty program that benefits them. An effective way to incorporate this idea comes from offering a punch card for “buy five meals, get a free baked good” (see figure 5). The measurement will come from keeping track of the number of punch cards handed out and the number of cards filled. These numbers will show the effectiveness of the loyalty program.

Lastly, the idea of partnering with K-State organizations and their philanthropy events shows great promise for Local and K-State. Several on-campus organizations support local charities as well and partnering with them would allow Local and the students to both help the local charity. Local can offer an organization a night where they will close the restaurant and offer a select menu for half price as a kick-off to the philanthropy event. This can take place the night prior to the actual event as way to get more people involved, including opening the event to all K-State students. The event would also give the group an opportunity to share more information about the event the next day, and all the money would go to the local charity. A way to increase participation among organizations

14

involves designating them as ‘LOCAL Partners,’ and offering a certificate to the group to show the appreciation of the partnership in order to continue the relationship. The number of student organizations partnered with Local would measure the success of the program.

All of the ideas target K-State students in various ways, and implementing the ideas can help increase the brand awareness of Local through different channels, which will ultimately help to overcome the marketing challenges and reach the objective we set for the strategy. The strategy not only involves implementation, but ways to continuously monitor them to accomplish the end goals. We believe the students will help to increase the overall brand awareness among the large population of K-State students.

XII.

Budget The budget consists of the low costs of implementing and continuously evaluating our strategy. All of the

ideas focus on keeping the current marketing budget within range, but still increasing the touch points Local has on college students. Identifying low cost ideas remained a goal of our group in order to have the most potential for success without increasing the marketing budget. Our marketing budget contains the ideas involving the implementation and evaluation costs, as well as the continued monthly costs (see table 1).

We have listed our word of mouth strategy as only requiring time in terms of costs, and the ‘LOCAL Club’ strategy only needing a small dollar amount for a HDMI cable as an initial cost. The cable will connect the computer and the television. The t-shirt strategy has a cost because of the shirt give away to students. The two discount strategies will have a cost of approximately $100 per month. The two remaining strategy tactics focus on the loyalty card and partnering with student organizations. The loyalty card has a higher initial cost to start, and then the monthly costs decreases depending on when Local reorders items, therefore staggering the costs. The ‘LOCAL Partners’ cost will depend on the number of student organizations that participate in the program. Another element of the budget contains the evaluation tactics, like the other tactics, it does have a higher initial cost, but once the surveys become established the costs will vary and should continue to stay low.

Currently, food costs for Local remain around 30 percent, which means for every dollar at menu price, thirty cents goes to the cost of food. For example, having baked goods at approximately two dollars would cost about sixty cents. In looking at the loyal customer card strategy, based on rewarding ten cookies per week for a

15

month, costs rough $24. The zero initial cost comes from the start of the program and not having an effect on inventory for a few weeks.

Overall, the proposed budget for our marketing strategy will remain low, but effective. The initial cost of implementing the strategies represents approximately $174 of the budget with potentially $358 in monthly costs.

We believe the marketing strategy and tactics we developed will help Local increase the awareness through several communication channels and drive customers to the store.

16

Appendix 1

Figure 1

Fast Casual

Figure 2

17

Chart 1

Chart 2

18

Chart 3

Families Nearby Empty Nesters

K-State Students Segments

Chart 4

19

Chart 5

Map 1

Local

20

Map 2

Local

Figure 3: T-Shirt Front

21

Figure 4: T-Shirt Back

Table 1 Budget

22

Appendix 2 Survey 1: Local Awareness Survey The purpose of this survey is to gain knowledge of the awareness of the restaurant 'Local' within the Manhattan community. Your information is very important to us. Please take a few minutes to answer the following questions. Your responses will be kept strictly anonymous. Thank you for your help.

1.

What is your gender? a. Female b. Male c. Prefer not to answer

2.

What is your age? a. (fill in box)

3.

Which of the following best describes your current occupation? a. Architecture and Engineering Occupations b. Arts, Design, Entertainment, Sports, and Media Occupations c. Building and Grounds Cleaning and Maintenance Occupations d. Business and Financial Operations Occupations e. Community and Social Service Occupations f. Computer and Mathematical Occupations g. Construction and Extraction Occupations h. Education, Training, and Library Occupations i. Farming, Fishing, and Forestry Occupations j. Food Preparation and Serving Related Occupations k. Healthcare Practitioners and Technical Occupations l. Healthcare Support Occupations m. Installation, Maintenance, and Repair Occupations n. Legal Occupations o. Life, Physical, and Social Science Occupations p. Management Occupations q. Office and Administrative Support Occupations r. Personal Care and Service Occupations s. Production Occupations t. Protective Service Occupations u. Sales and Related Occupations v. Student w. Transportation and Materials Moving Occupations

4.

What is your approximate average household income? a. $0-$24,999 b. $25,000-$49,999 c. $50,000-$74,999 d. $75,000-$99,999 e. $100,000 and up

5.

Have you ever heard of the restaurant ‘Local’? a. Yes b. No

6.

If “Yes” to question #5, how did you hear about the restaurant ‘Local’? a. Television b. Radio c. Newspaper d. Word-of-mouth e. Internet f. Other: Please Specify _______________ g. N/A (Please choose if you answered “No” to Question #5)

23

7.

If “Yes” to question #5, have you ever eaten at the restaurant ‘Local’? a. Yes b. No c. N/A (Please choose if you answered “No” to Question #5)

8.

On average, how many times have you eaten at the restaurant ‘Local’ in the past month? a. Once a day b. More than once a week c. Once a week d. Once e. Never

9.

Were you aware that ‘Local’ donates 100% of their profits to charity? a. Yes b. No

10. After completing this survey how likely/unlikely are you to visit/return to ‘Local’? a. Very likely b. Likely c. Neutral d. Unlikely e. Very unlikely

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Appendix 3 Figure 5: Punch Card 3011 Anderson Ave Manhattan, KS Phone: (785) 320-2550

3011 Anderson Ave Manhattan, KS Phone: (785) 320-2550

http://www.LocalFoodAndFriends.com

http://www.LocalFoodAndFriends.com

Buy 5 meals, get a Free baked good

Buy 5 meals, get a Free baked good FREE

FREE

3011 Anderson Ave Manhattan, KS Phone: (785) 320-2550

3011 Anderson Ave Manhattan, KS Phone: (785) 320-2550

http://www.LocalFoodAndFriends.com

http://www.LocalFoodAndFriends.com

Buy 5 meals, get a Free baked good

Buy 5 meals, get a Free baked good FREE

FREE

3011 Anderson Ave Manhattan, KS Phone: (785) 320-2550

3011 Anderson Ave Manhattan, KS Phone: (785) 320-2550

http://www.LocalFoodAndFriends.com

http://www.LocalFoodAndFriends.com

Buy 5 meals, get a Free baked good

Buy 5 meals, get a Free baked good FREE

FREE

3011 Anderson Ave Manhattan, KS Phone: (785) 320-2550

3011 Anderson Ave Manhattan, KS Phone: (785) 320-2550

http://www.LocalFoodAndFriends.com

http://www.LocalFoodAndFriends.com

Buy 5 meals, get a Free baked good

Buy 5 meals, get a Free baked good FREE

FREE

3011 Anderson Ave Manhattan, KS Phone: (785) 320-2550

3011 Anderson Ave Manhattan, KS Phone: (785) 320-2550

http://www.LocalFoodAndFriends.com

http://www.LocalFoodAndFriends.com

Buy 5 meals, get a Free baked good

Buy 5 meals, get a Free baked good FREE

FREE 25

Works Cited "Applebee's International, Inc." Mergent Online. Mergent Online, n.d. Web. 01 Nov. 2012. <http://www.mergentonline.com.er.lib.kstate.edu/companydetail.php?compnumber=60161>.

"Fast Casual Restaurant Leaders to Meet in San Diego for Annual Conference." PRWeb Newswire 1 Oct. 2012. Business Insights: Essentials. Web. 3 Nov. 2012. <http://bi.galegroup.com.er.lib.kstate.edu/essentials/article/GALE%7CA303841266/6608841892f1c20bf417dfa75cba657 3?u=ksu>.

"Five Guys: The "Better Burger" Restaurantâ&#x20AC;&#x2122;s Success Story Is Indicative of a Change in Tastes." MarketLine. MarketLine, 26 Sept. 2012. Web. 4 Nov. 2012. <http://advantage.marketline.com.er.lib.k-state.edu/Product?pid=ML00007-022>.

"Full-Service Restaurant Industry, 2010." Market Share Reporter. Detroit: Gale, 2012. Business Insights: Essentials. Web. 30 Oct. 2012. <http://bi.galegroup.com.er.lib.kstate.edu/essentials/article/GALE%7CI2502040048/94b39578f01b86cd83cf832cf03d03b e?u=ksu>.

Office of the University Registrar. "Enrollment Statistics." Kansas State University. Kansas State University, 27 Sept. 2012. Web. 06 Dec. 2012. <http://www.kstate.edu/registrar/statistics/>.

"Lifestyles-ESRI Tapestry Segmentation." ESRI Data. ESRI, n.d. Web. 15 Oct. 2012. <http://www.esri.com/data/esri_data/tapestry>.

Local. "Local Awareness Survey." Survey. 11 November 2012.

26

"Panera Bread Co." Mergent Online. Mergent Online, n.d. Web. 01 Nov. 2012. <http://www.mergentonline.com.er.lib.kstate.edu/companydetail.php?compnumber=66466>.

Wall, Bethany. "Fast Casual Restaurants - US - October 2012." Mintel. Mintel Group Ltd., Oct. 2012. Web. 2 Nov. 2012. <http://academic.mintel.com.er.lib.kstate.edu/display/590739/>.

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Marketing Issues & Challenges Team 3 TEAM Paul Messerly Heather Stos Elizabeth Poe Jiawei Lu Jun Ying

December 4, 2012

Marketing Challenges ď&#x201A;&#x203A; Developing

a value proposition that drives consumer demand ď&#x201A;&#x203A; Targeting consumers through specific communication channels

Industry Background  Restaurant    

Industry

Fine dining restaurants Casual dining restaurants Fast casual restaurants Fast food restaurants Fast Casual

Fast Casual Restaurants ď&#x201A;&#x203A;A

hybrid of quick service and casual dining ď&#x201A;&#x203A; Fastest-growing segment of the restaurant industry Fast Casual

Market Background  Broad 

Market

Entire Manhattan, KS area

 Segments  



K-State students Families Nearby empty nesters

 Target 

Market

K-State students

Population

Competitive Background  Panera   

Bread

Name recognition Variety of food choices My Panera rewards program

 McAlister’s  

Deli

Name recognition Healthy meal choices

Competitive Background  Applebee’s   

Name recognition Friendly and fun atmosphere Deals (half-priced apps)

Competitive Background  Chef   

Food and alcohol Fun atmosphere Well-known restaurant

 Early  

Edition

Wider range of brunch menu items Large seating area

Recommendation  Only 

Sunday morning breakfast

High traffic day for breakfast  Sundays

9am-10am

 Create

demand for breakfast  Run special promotions and advertising  Save money  

Cost to operate Paying employees

Competitive Advantage • Healthy meal • Variety of food • Fun atmosphere

• Locally grown food • Support local charities • Quality food

Customer

Competitors

Local

Target Market: K-State Students  Males

and females  Between 18 and 24 years old  K-State student  Lower income, but tends to eat out  Eat out at least once a week  Looks for healthy meals  Most own or lease a vehicle  Connected to social media

Value Proposition ď&#x201A;&#x203A; For

college students, who value friends and family, Local provides opportunities to help local charities while enjoying a reasonably priced healthy meal. ď&#x201A;&#x203A; Unlike the competition, Local fully supports the local community because they donate 100% of the profits to local charities.

Marketing Strategy 

Main objective   



Increase awareness of the restaurant Drive consumer demand Build loyal customer base

Supporting objectives   

Creating brand awareness of Local Persuade customers that Local has a product that can fulfill their needs Remind the customer to continue to take action

LOCAL Club (Best Practices)

Word of the Day (Discount)  Post

a word on the Facebook page  Customers come in and share the word when they order  Receive a discount on their meal or a free baked good

Student Discount  Offer

college students 15% off with valid student identification  Offer the discount  



All the time Specific days During specific times  ie

2pm-4pm

Word of Mouth  Driven

by customer’s experience  Generate buzz  Provide great service, great food, and great atmosphere

Local Awareness Survey How did you hear about 'Local'?

Radio Newspaper

Word-of-mouth Internet Other

T-Shirts

Punch Card (Loyalty Card)

LOCAL Partners  Partner 

Organizations support charities too

 Kick-off  



with K-State organizations philanthropy event

Close restaurant Select menu, half price Open to all K-State students

Budget

Questions?