Market and company overview of pret a manger
Prêt a Manger established in 1986 by two college friends - Sinclair Beecham and Julian Metcalfe (who also is the founder of Itsu - sushi bar/restaurant). It is a UK based sandwich retailer, which now is an international business (Prêt). They named the company 'Prêt a Manger', which in French means 'ready to eat' (see Appendix 1.0)
Rix (2004) states, "a product is a set of tangible attributes in an identifiable form" and he adds, "each product is identified by a commonly understood descriptive" (p. 199). Prêt produces sandwiches, filled baguettes, soup, salad and coffee. It also prepares desserts, muffins (the American variety), cakes, and croissants. Some locations also serve sushi and noodles. Prêt has a range of vegetarian options including roasted vegetable sandwiches and hummus wraps. In marketing though, customers seek to purchase its quality and benefits (Rix, 2004). Prêt essentially provides fresh fast food made with natural ingredients. They are passionate about freshness - all food is made fresh in the shop on the day of purchase. Sandwiches are packaged in paperboard rather than sealed plastic, to emphasise that they are fresh and cannot be kept overnight. Some packaging contains recipes for some of their products; these are for people who want to make sandwiches like Prêt's for themselves. Moreover, Prêt also provides a delivery service for orders over £30 minimum. Service can be identified as activities that meet customers' needs or wants solely on intangible benefits (Rix, 2004). Their services are excellent; the staff are friendly, always greet with civility, approachable and enthusiastic, which makes their customers feel welcome (ref).
Rix (2004) states "Marketers are increasingly being faced with a choice between profitably satisfying the wants of their customers and complying with the wishes of various other groups in the community" (p. 5). Prêt is aimed at the middle to upper class including white-collar workers and businessmen and women who use it regularly to have a coffee before work, especially the City type customers (ref). Therefore, Prêt stores are normally found near the train or tube stations, affluent places such as Canary Wharf, and cities such as Central London. These are places where will be more consumers that they are targeting at.
Pret's competitors include Starbucks, Costa, Nero and Eat. Relatively speaking, Starbucks is the biggest competitor since it is the largest coffeehouse business in the world.
Companies that anticipate changes in consumer behaviour and respond with new gods and services are likely to achieve long-term health and profitability. But companies that change consumer behaviour have the opportunity to make major breakthroughs in new markets and industries (Hoffman et al. 2005)
Already there are about 240 Prêt shops, which are mainly based in the UK. Statistically, their yearly turnover is approximately £270 million a year (see Appendix 1.1)
"A thorough analysis of the situation in which the firm finds itself serves as the basis for identifying opportunities to satisfy unfulfilled customer needs" (City of London Academy, Edition 1). Need to be changed
One of procedures of the marketing planning is the marketing audit, which plays a huge part that constantly is being conducted throughout the whole process. It is to study internal factors, while also anticipates stakeholders and external factors. The Chartered Institute of Marketing says: "Carrying out the marketing audit provides the opportunity to review and appraise your whole marketing activity, enabling you to assess past and present performance as well as to provide the basis for evaluating possible future courses of action." (year)
Marketing audit breaks down into two categories:
The microenvironment is "the forces close to the company that affect its ability to serve its customers" (Kotler et al. 1998, pp. 885-886).
This is focusing on the internal business experiences, where an organization has a complete control, giving this opportunity to improve the business.
The macro-environment is "the larger societal forces that affect the whole microenvironment" (Kotler et al. 1998, pp. 885-886).
This is the external factors, where a business barely or has absolute no control on, that changes may adversely affect the organisation. (ref)
SWOT analysis is a method, which came from the research conducted at Stanford Research Institute. It draws all the evidence from several analytical techniques used, provides basic useful information of developing the business, marketing objectives or aims and new products into the market. Prêt undertakes a SWOT analysis, which its abbreviation is Strengths, the strong features and positions of the company, Weaknesses, where the company needs to improve in order to maintain the best image of the business as possible - internal issues, Opportunities, where the company can grab chances to better themselves and to expand their reputation, and Threats, where the company relish challenges that may affect the business - external issues (Rix, 2004). Example of SWOT analysis is shown below:
Table 1: (1.1 Explanation of SWOT analysis)
- Non-stop producing new products.
- Often do offers.
- Prices are cheap and affordable.
- Always create new advertisements.
- Services are fast and easy.
- Products are not healthy.
- Advertise unhealthy products i.e. burgers
- Contributes to obesity.
- Loaded with sugar.
- Exploitation of interest in healthier eating.
- Sponsoring could help the business their sales.
- Home deliveries service
- International exchange rate
- Increasing labours' wages
- Competitors pricing
- Competitors invent similar products, might be better.
Source: The researcher
PEST is an analysis of external factors, generally considered to be outside the control of a business. The PEST analysis is to identify both presents and future's opportunities and threats. PEST stands for Political; Economic; Social and Technology (ref). Clear explanation of each of these are shown in the following:
Table 2: (1.1 Explanation of PEST)
These are factors that are controlled by the government policies.
These factors are related to political and are concerned about interest rates, exchange rate, economic growth and income levels.
Concerning the factors of age, size of families, healthy lifestyle and religions.
Factors concern such as computers, machineries, motor vehicles etc.
Source: The researcher
"A mission or vision statement is a statement that provides a signpost of where your business aims to be in the future" (Chartered Institute of Marketing, ). Choose better one
A mission statement has to be concise and explicitly explain that provides a clear view of Prêt's intention to customers and stakeholders, what is their business and who their customers are. It also provides motivation within the organization, helps them to focus on accomplishing their objectives (ref). This helps marketer to make informed decisions of suitable strategies and programs.
Here are the two mission statements of Prêt:
Turnover - currently £270 million: to increase 9% within 2 years time.
To expand wider and open new stores this year: 3 new stores to be opened in Birmingham, (BBC News, 2010).
According to media sources, Prêt's turnover is constantly increased in the recent years. Although economic crisis has just ended, nonetheless the business somehow managed to make profits. This shows that the business's financial situation is stable and secure.
Table 3: (1.2 Marketing Mix for Prêt a Manager)
Hoi sin Duck Wrap is a Cantonese style of wrap Prêt does. Inside the wrap has shredded roast duck, hoisin sauce, red onions, cucumber, leaf spinach and a touch of mayo in a tortilla wrap. The wrap contains nuts, sesame free, dairy free, GM free and high protein, which keeps customers full longer. Every single Pret store has its own kitchen, they make the product every single purchase day, to make sure it is fresh and healthy. Those left unsold at the end of the day, they will not be re-sold, but will be collected by the charities, and then given to those are homeless.
This product quite pricey due to the qualities it contains, which cost £2.95 each. This can be cost plus pricing, average cost of the product and service plus a profit margin; it has a high mark-up.
The channels of distribution of this product will be service providers to consumers, as well as direct marketing through the website so the consumers can shop at home, but minimum of £30. This product sells in a clean and pleasant environment, affluent places like the city, where the market targets will perform the desire behaviour. Usually during lunchtime, when this product can be purchased the most.
Prêt promotes the product through word of mouth by informal communication about the product by ordinary individuals, satisfied customers or people specifically engaged to create word of mouth momentum. Sales staff often plays an important role in word of mouth. This promotion also includes leaflets, shop windows, and its own website, targeting at older group, middle and upper class groups.
SWOT analysis is used to get something in the right position in the market and help in company's strategic planning. It must be done before Prêt's product (Hoi Sin Duck Wrap) is launched and at regular intervals after that, also needs to spend resources to maximize profit and minimise potential threat (ref). The following table shows the SWOT analysis of Prêt that may influence their sales of the new product.
Table 4: (1.2 SWOT Analysis for Prêt a Manager)
Prêt is well known for handmade sandwiches, which are made with natural ingredients, and immaculate service, which the quality of products and customers are the company's priorities. The business also does delivery service that other sandwich bars do not provide, as well as online order. Thus, these advantages may aid to gain repeat sales of Hoi Sin Duck Wrap.
Prêt is considerably to be one of the most expensive sandwich bars in the world. This also means that the business only has certain target audience and stores can be found in affluent areas only. Prêt stores are generally small that unable to provide sufficient seats for customers to eat in. Thus, the sales of Hoi Sin Duck Wrap will not be expectedly high.
Prêt does not franchise. The business could take this opportunity to franchise out; not only Prêt can gain popularity, the business can also earn some fees from franchising! Prêt does not involve a lot of advertisements. Advertising plays a major part in every organization - Prêt should seriously think about advertisements on television and newspapers etc. Thus, Hoi Sin Duck Wrap is highly unreachable.
The risk of competitors entering the market. Competitors such as Starbucks often distribute discount vouchers. Customers are aware of the price and generally; they tend to go for cheaper options. Thus, Hoi Sin Duck Wrap's product life cycle is predictably short.
Prêt must consider on the external environment influences, which may have impact on its product. It is a strategic planning technique that provides a useful framework for analysing the environmental pressure on Prêt and its product (ref).
Table 5: (1.2 PEST for Prêt a Manager)
Source: The researcher
Barriers are vague obstacles that tend to thwart a marketing plan and unable to pass messages to external stakeholders. A marketer needs to understand and identify each of the barriers that they are confronting, in order to avoid scuppering the plan. Marketers generally realise these barriers when they manage to envisage a business is not growing or a prolonged unstable position (ref). These barriers can be both internal and external, and all must take into account:
Not knowing your product - Lack of knowledge in a business's product and what services the business can provide to their customers can be an immense barrier to the business' success. There will be no guarantee, security, customer loyalty, and number of complaints will increase, the business is ineffectual and needs improvement immediately. Whilst the business' competitors understand their products, this can adversely affect the business' turnover and repeat sales will not occur.
Not knowing your competition - If a researcher does not know where a business stands and positions of the business' competitors, it is highly unlikely that the business can topple its competitors. Competitors study and observe their own competitors. This will give competitors the ideas how to better their performance. Gradually, competitors successfully satisfy customers and therefore eventually, the business will be ceased.
Not understanding the market - A product is ready to enter the market. However, if a researcher does not know what a business' segmentations are can cause problems to the sales campaign. If the researcher does not know where these segments are, which segment should be regarded and disregarded, the marketing plan will not be effective. It is also concerned with costs. For example, the researcher does not study the environment for the business' products, high premises cost, electricity and gas, the business will have no the potential to reach the top.
Capital requirements - The amount of financial resources that every new business enters a market is immense. Businesses such as manufacturing industries and building constructions are required extortionate machineries in order to run its business. Investments can also occur to existing businesses. For instance, investing in new product: finance availability for research and development, production, marketing etc. The investment risk is great, therefore creates barrier. However, there is a prospect of overthrowing the business' competitors.
Government policy - This is concerned with macro-environment. Government policies sometimes are forced to halt competition. For example, laws and regulations such as product testing regulations, global warming and limits on access to raw materials can inhibit the growth of competitions due to licensing requirements.
Solutions for marketing barriers
Knowing your product - It is vital to understand wholly and study what products and services that Prêt are providing, how they are functioned and any most recent information that a marketer should know. This will guide the marketer to the right direction and helps to plan a marketing strategy. Having knowledge of the company's products can laden relationships with customers, suppliers and other stakeholders. For instance, customer's expectations will be made, therefore sales enhance. Suppliers will be delighted to supply, as Prêt seems stable and able to meet payments on time.
Knowing your competition - It is important to know and learn about competitors. Competitors can be one of keys to a Prêt's achievement, as researchers can study and observe the business' competitors to acknowledge its weaknesses, opportunities and threats. This consists of competitive pricing, niche market availability, promotion, advertisements and other relevant useful information that can be learned.
Understanding your market - Researchers must know what are the target groups and who prêt is selling its products to. To conduct a market research can help researchers to understand the specific target audience and customers expectations in terms of price and quality. Methods of market research can be primary and/or secondary, quantitative and/or qualitative. Internet is a very effective tool that can help Prêt to overcome its barriers. Information and data that are needed can mostly be found online. Also, if researchers are struggling, good guidelines can also be found on the Internet. Until researchers are fulfilled with the results, decisions are then made and subsequently, implement a marketing plan.
In competitive world, companies need to produce new products to satisfy customer needs. A company cannot expect to continue growth or to maximise profit by relying exclusively on its existing products. The company must retain to control its market by continuous product innovation that involves complete new product development, product improvement, which is to discover different ways in improving existing products effectively, and imitative products, which means a copied product that is already exist in the market by other companies. It is essential to know how to manage a new product, which goes through its life cycle (Kotler et al., year)
Every product has its life cycle, showing how long a product will last for. Product life cycle is the phases a product goes through from its introduction to its final decline (ref). The product life cycle has five main phases:
Table 6: (3.1 Product Life Cycle)
This is the starting point, where a product has just begun its sales life. There is usually no profit making due to higher cost of marketing and development.
This is the period when a product's sales has just set to rise, and the cost begins to fall due to economies of scale - the more consumers purchase the product, the quicker the product will run out, therefore the more quantities of the product will be supplied by the suppliers.
A sale is expanding at a slower rate and profits are soaring. More and more consumers purchase the product. The pricing may be lower due to greater competition.
A market is begun to fall due to many other similar products, better products, out of date etc. The product will not be produced as much as it used to.
The ending of a product where the sales cannot survive again, therefore the price will be reduced more. The product then is withdrawn.
Source: author , date
Hoi Sin Duck Wrap is a product, which has been developed and marketed to Pret's customers, and is currently market leader. Still as the researcher knowledge, there is no market follower for this product. Kotler et al. (year) believe a product tends to develop, improve and modify through research, as well as to identify, create and deliver the new product that has not emerged in the market yet.
Every business must have its segmentation and targeting, its own branding and knowing relationship marketing in order to innovate flawlessly and increase demand.
Segmentation technique is separated a market into groups, where there will be different segments requires and different market approaches. It is concerned on understanding customers' lifestyles, preferences and aspirations. This can help businesses to find out what consumers are expected and their needs in order to develop products and increase overall demand. ACORN and MOSIAC help to identify groups consumers who are willing to purchase, therefore there will be a market for each product.
Table 7: (3.1 Segmentation)
A Classification Of Residential Neighborhoods, is a tool used to identify and understand the population and the demand for products and services. Businesses use this information to identify consumers' needs and try to target at more consumers. Also identifying consumers' age, income, employment, and type of holidays they go for etc.
Information Services develops classification of residential areas, market analysis and provides information.
This is another classification to identify household types by combination of credit history, share ownership, postcode data etc. This can help businesses what type of characteristics they are aiming at.
Source: author, date
Segmentation technique also includes geographic, demographic, and psychographic. This can be developed so that it can create an effective marketing plan.
This is a method to identify customer behavior information, such as consumer density, past purchasing behaviors etc, which may differ from other countries.
This uses population factors based on variables such as age, gender family size, income, occupation, education, religion, race and nationality (ACORN).
A breakdown of consumers according to different characteristics, including the attitudes expectations and activities of consumers, their interests and lifestyles.
Source: author, date
Marketing ethical is related to or concerning morals, justice or duty, based on ideas of right and wrong. Rules or laws that have already been set, everyday we make any decision may consider on those principles (Baker, 2006). There two main approaches in ethical identified by Rix (2004) are rules approach and outcomes approach. Rules approach is otherwise known as deontological. It is when rules must be strictly adhered, despite of the outcome. Rix (2004) states trust is one of the main keys of ethical rules in marketing. For instance, a product's appearance is deceptive that lures a customer into purchasing the product, although it does not physically harm the customer is still ethically wrong. Likewise a company intends to maximise profit by conducting unethical approaches, such as making redundancies without a reason, the action is regard as unethical (Rix, 2004). Outcomes approach is otherwise known as teleological. It is occurred when an outcome is seemingly good and bad, depending on the outcome prospective. For instance, Tesco brings a product into the market, but other groceries have had the product in the market already. Tesco set an unreasonable price for the product that is much lower than other competitors, which competitors accuse Tesco of unethical pricing. A contrary point of view from Tesco, that the outcome is beneficial to its stakeholders. If this action stays on, it may produce a greater amount of good than damaging others (Rix, 2004).
Marketing mix is a tool that a company has the complete control. There are 4 main elements (4ps) in marketing mix, which are product, price, place and promotion. The fifth P, which is people, sometimes is added to demonstrate the relationship with customers. 2 further Ps are usually added within service industry, which are process and physical evidence (Lancaster and Reynolds, 1999).
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