A marketing analysis for Hard Rock Cafe

“Product strategy is critical to achieving competitive advantage”(Jay and Barry 2008). The strategies include selecting, designing and defining products and services and transition it to production or sale to customers. By answer the question of which products or services the company select and offer, and how it be designed will determine company successful or not.

HRC specializes in restaurant sector which operates in food production, merchandise of souvenir retail and provider services in advice, ambient and service in the food. For food, HRC provides a wide range of quality foods, most of them come from America: Burgers, steaks, sandwiches, nachos, fries, ribs…and continuously change food to meet customer need as the HRC’s Chef said “modifying the menu from classic American burgers and chicken wings to include higher-end items such as stuffed veal chops and lobster tails”. HRC always serves its customers with well-prepared disk, nice appearance in unique music and ambiance. HRC don’t want to localize the food in the country on which HRC stand by keeping the original food with original flavor and taste.

Beside that, they also offer many souvenirs in retail shop inside restaurant, it is convenient for customer buy and bring home goods with HRC logo. The music also is very unique, first step coming inside, customer feel fully of rock music, HRC think that coming with HRC café, customers enjoy not only food or drinking, but also the unique memorabilia which is very high value.

Base on what HRC deliver to its customers, no doubt, those are the differentiations creating the competitive advantages, HRC could be unrivalled in Vietnam with the same segmentation. However, not many customers in Vietnam who like rock music or oversea food, so that, domestic customers may be not the target customer of HRC,

Quality

Recently, many companies recognized that quality is a very important and essential part for its growth. Indeed, quality connects closely to customer satisfaction, reputation, low cost, productive which driving company’s profit. HRC strictly deployed quality management system in their chain of restaurants for continuous improvement. The quality system is implemented from input, processing and output. Finally, HRC brings the best services and foods for customer, they conduct the survey on every customer about quality of services and food who has experienced at their restaurant, the survey have 7 scales, they consider services and food being failure if the survey scores below 7. It is really impressive of their perfect expectation on what they provide to their customers.

Process and capacity design

With huge meals are served per day meaning large amount of customers they can serve. 400 employees were employed in one branch like Orlando, or 100,000 meals were served per day on whole HRC in the world, It is obviously that all operating activities from input to output must be put in efficient and optimal processes from purchasing, storage, processing, delivery to customer. Optimal process means reduced cost, high quality and customer satisfaction. Each process has to adapt with customer requirement and layout designed.

Process-focus is process strategy of HRC because the restaurant characteristic. Base on processes designed, HRC calculated how much time and how many people needing for completion single process to deliver goods or service to customer. So total capacity finally determine exactly, that is how many customers HRC could serve per day or per hour.

Location

Globalization has broken down economic and geographical border. Many companies expand its business to globe, so location decision strategy become the very important for success or failure of a company as Jay and Barry(2009) stated: ” location has a major impact on the overall risks and profits of the company”

HRC’s location decision strategy is the long-term agreement in rent up to 10 -15 years, they firstly search the country and then go to the city and go to exactly place need to rent by careful consideration and research. As Mr Oliver Munday stated that, looking at the market they going to expand into is a critical pursuit because it really underwrites and underpins the future success of the Hard Rock brand.

When selecting the location, HRC carefully considers some factors below:

Political risk: Consider the safety of economic environment, stable of political institution. Currency risk: Depreciation of current, exchange rate. Social norm: People want to publicly show their rebelling with rock passion or not,

Brand fit, social cost…business practices also were carefully considered.

A market research and market analysis were conducted after one location selected, those are demographics, visitor market, transportation, restaurant and night club, real estate market, comparable market analysis…

Layout

Optimal layout create long-term efficient operations as Jay and Barry(2008) suggested: “The objective of layout strategy is to develop an effective and efficient layout that will meet the firm’s competitive requirements”.

In HRC, layout provides an effective flow between bar, kitchen and dining area, eliminating the waiting time, reducing transportation.

For ordering, they computerise ordering system by putting ordering computer at each corner of restaurant, their staffs just simply come and enter ordering data to this computer instead of going to the kitchen, this helps to reduce unnecessary transportation to pass orders to kitchen by walking all the time,

Layout makes people feel comfortable to have a general view to other or easy to enjoy live music. The layout in each branch could be different but have to be suitable with each process designed, make sure it is effective and efficient. At HRC HCMC, all customers can see performances on the stage, big premises but fast serving. Well designed layout creates warm and welcome ambiance which is suitable with eastern culture and style.

Human resource and Job Design

HRC consistently implements its HR strategy from recruiting, training, staffing, compensation to promotion. Requirement for candidate are skill and passion for rock music. Successful candidates have to be received 2 days of training before enter to work, and they received the wallet-sized called “Hard Rock value” which they carry all the time,

Recruiting:

Candidates are required not only on the skill in work, but also rock music love. They have to own the ability to tell story, communicate well with customers, bight, positive-attitude, self motivated individual,

Staffing:

Two first days training before working and they will receive “HR value”, and period training were delivered to staffs for enhance their skill and knowledge, it helps to develop personally and professional. After training, new comings are assigned in different jobs and position: Waiter, kitchen, retailer…,staffs were trained specific course follow job-oriented interactive, continuous training,

Promotion:

– 60% managers were promoted from internal. The advantage is not taking time for training a lot. Their staffs were given a chance to develop their career when working in HRC, so they will engages with company and being motivated to try the best for company.

Compensation:

Payment base on performances which they achieved last month, each employee have their evaluation in period, they have the achievable targets, if the targets were achieved, certainly, they will receive the bonus.

Human resource is very important to the survival of a company. Today, HRC also considered their as long-term asset, not just simply hire the staff, that is the long-term investment. Human resource is critical for success of a service company, so HRC strongly focuses on their human resource to take the competitive advantage.

Creating a culture in work, good environment, good condition, each staff feel proud of HRC when they work for.

Supply chain

Nowadays, outsource trend become very popular with many company in world due to its benefits as efficient and effective inventory management, HRC carefully chose the qualified suppliers which provide materials and goods consistently in quality and quantity. On the other hand, HRC hires AVICON – an expert logistic company – for their retail apparel and gift operations, HRC just focus on their core business, the benefits after outsourcing are: Reduced warehouse(in North America) space by 44 percent, reduced operation cost by 20 percent, improved service level by 22 percent, and optimized transportation, distribution network…(Avicon, 2003)

Inventory

By outsourcing and accurate forecast, HRC reduce significantly their inventory. They use long-range, intermediate-term in forecasting like food materials as beef, chicken, and pork. Short-term sales were forecasted monthly by café. They have system called “Point of Sale”, this system captures all data transaction in Hard Rock café all over the world, and then transfer to its head quarter, this data is very critical for their headquarter and each branch forecasting. The gap between forecast and actual are checked regularly and given correct action is implemented. By this way, it could be said that their forecast is very accurate and efficient. Otherwise, they will lack of foods, materials or huge inventory making high cost, reducing services provided…

Scheduling

At HRC, the daily forecast is broken into hourly sale, this will drive short-term schedule, an hourly forecast of $5,500 in sales translates into 19 workstations, the job will be assigned to wait staff, hosts, bartenders, and kitchen staffs with how many staffs needed to mobilize.

They equipped a computerized scheduling software plugs in people based on their availability. So they did the best utilization on their resources and make operation more efficient.

Maintenance

Like some other companies, HRC understand that maintenance is a very important to maintain and improve the performance. Jay and Barry(2008) said that maintenance make the system reliable, reduced waste, anti-disruptive, generally, it helps to maintain the capability of the system, HRC has a plan to maintain regularly their kitchen machines, equipments and overall system to keep reliable and smooth operating to deliver best services and products to its customers.

Challenges and Opportunities when HRC expand it business into Hanoi,

Selection a location is very important for the company’s success, so before expanse its business to Hanoi, HRC carefully considers the location decision strategy as long-term investment with some factors: Political risk, currency risk, social norms, brand fit, social costs, business practice and together some other factors below:

Demographics (local, city, region), with trend analysis

Hanoi is the capital of Vietnam, the biggest city in the north and second big city of the country, it has the population of 6,913,161 people, and the density is 2,069 people per square kilometer. Most of residents live in urban, the highest population density is in District Dong Da with 38,071people per square kilometer, the second is Hai Ba Trung district with 32,346 people per square kilometer, Hoan Kiem is the third with 29,596 people per square km(Laodong, 2011), Hanoi’s population will continue increasing because it is the cultural and economic, political center which is attractive place for graduated students, business people, visitor coming and staying, Hanoi have the second high population and density(general statistic office, 2009) that have some disadvantages: Traffic jam, difficult to manage the social and security problems, pollution… and also have some advantages like: Big potential customers, plentiful workforces, two these advantages are really beneficial for Hard Rock café when it is in Hanoi,

Economic Indicators: 2010, Hanoi has a year with impressive growth with GDP increase 11 percent compare with 2009, and income per capita reached 1950usd(vneconomy, 2010), the more income, the more money customer spent, so HRC considers this factor is an opportunity.

B. Visitor Market, with trend analysis

1. In the year of 2010 International visitors to Hanoi is 1.7millions, 62 percent increase in compared with 2009(Vietbao,2011), most of them come from China, UK, US, Germany….the target customer of HRC is tourist, 70% of their customer are tourists. No doubt, this is one of their advantages when Hanoi become more attractive foreign tourists because it have many interested festivals, heritages, famous landscapes, long time traditional and culture. Furthermore, Hanoi is also an economic center in North of Vietnam, so most of international and local business organization have its representative office in Hanoi, this is a chance for business visitors coming Hanoi,

Hotels: There are many five stars standard hotels: Hanoi Hilton Opera, Sofitel Metropole, Melia Hanoi are located in center nearby Hoan Kiem lake by just walking distance to shopping area and old quarter. Beside that visitor can easily find many small to three or four stars hotels which are also in around Hoan Kiem lake and in old quarter like: Hoan Kiem lake, Mai Son, Phu Long, Hoa Binh palace, Prince, Sunway hotel.. these are the ideal , cheap, clean, convenient place for tourists staying, discovering, shopping Hanoi.

Convention Center: international standard national convention center was built in 2004, and Vietnam was the successful host of many international summit: 14th APEC summit, 17th ASEAN summit…, this is an opportunity for Hanoi welcome many foreign visitors.

Entertainment: Many options for visitors entertain in Hanoi like: Modern and traditional theater, Hanoi big theater, cinema, karaoke, very special art is water puppetry showing at the Thang Long Water Puppet Theatre, Thang Long theater, Hanoi art gallery , French cultural center,

Sports: Multi-functional My Dinh stadium locates in the south-west of city and its capacity is up to 50,000 people, about 10 kilometers far from center. Where Vietnam become the host for many international sport competitions: Sea Game, AFF Suzuki cup – the football competition organized by ASEAN Football Federation…

Retail: The specific characteristic of all area in Vietnam is many shops on 2 sides of street (street-front store), so coming to Vietnam, Visitors can see many convenient shops, so it is quite easy for customers shop and go. So far, in center of Hanoi, a busy trading in ancient town (old quarter) which locates nearby Hoan Kiem lake, come here , visitors can see the original of architect of old Hanoi with 36 streets which are very narrow and busy. Each street have particular trading focusing on specific goods and the name of each street reflects the type of merchandises of its selling, beside shopping, tourists can easily enjoy local food in a restaurant, pub, bar… There is a big market called Dong Xuan which is very busy and colorful. Night market at old quarter opening the end of weekend from 7pm till midnight, it sells many kind of cheap goods for using, souvenir. Some other shopping malls or markets are nearby Hoan Kiem lake: Trang Tien Plaza, Intimex supper market, electronic device mart (Pico, Nguyen Kim plaza)…

Transportation

Hanoi is the centre of transportation, so from here visitors can go anywhere conveniently by air, train, car, boat…

Airport: Noibai International Airport opened in 1995 and steadily develop till now, it is the largest airport in north of country, 40km far from city center, it is quite easy to get center of city from Noi Bai by taxies or buses. In the year of 2010, the Airport received 9.5millions customers(Vneconomy,2011), There are many Vietnamese and international Airline in Noibai: Vietnam Airlines, Pacific Airlines, AirAsia, Cathay Pacific, Hong Kong Airlines, Thai Airways, Lao Airlines, Nok Air and Tiger Airways(hanoiairportonline,n.d.). This is one of favorable condition attracting visitors to Vietnam.

Rail: Hanoi railway station is biggest one on the railway from North to South, located in the center of the city, in Tran Hung Dao str, Hoan Kiem Dist. Just several kilometers distance to Hoan Kiem lake, after visiting Hanoi, tourists can easily take a train to south provinces or north-west provinces and reserve.

Road: It could be said that the road in Hanoi too small compared with its high density, especially, in the center of city, the traffic is really the nightmare. The difficulty in moving can make visitors discouraged when exploring Hanoi.

Restaurants and Nightclubs:

Many restaurants locates in around Hoan Kiem lake and in Old Quarter, ex: Thai Express, Luc Thuy, Pane E Vino, Pepperoni’s Pizza, La Salsa Restaurant, Bobby Chinn, Hanoi Restaurant, KFC …where visitor can enjoy variety of food from east to western, fast food, local food,…with wide range of price from very cheap to expensive.

Nightclubs are rising surround the bank of the Lake: Le Pub, Ho Guom Xanh Bar, 1001 Pub in Hang Bom str, Dragon Fly in Hang Bom str, Funkey Monkey, Next Bar, Jaguar, Tuan Anh, Tan An in Hang Ga, all of them open till midnight and having specific style for teen or older customers,

Political Risk:

Vietnam was considered a safe country and political stability, this is the main factor that has helped Vietnam pursue its economic development policy and become attractive destination for tourists and investors (Phillippe, 2010).

On other hands: Vietnam also are facing with some risks: Unstable in exchange rate, corruption, social unrest, complicated administrative could be the barrier for foreign investment.

Real Estate Market: It could be crazy in Real Estate Market which is very hot all the time, very high density and high growth of population, lacking of information and knowledge and practical experiences could be the root cause which contribute the crazy price of real estate in Hanoi. Now beginning of 2011, the price is still on sky-high, and continue inflating the bubble, especially, in some place in which investors think be rezoned, as a result, rental price also stay in sky, especially in center of city (Stockbiz, 2010). As a result, this will increase fix cost of company and become the disadvantages for foreign investors who want to invest or expand business to Hanoi.

Hard Rock Café Comparable Market Analysis

Brand name

Average

Price

Location

Food and service

Target market

Customer’s purpose

Hard Rock Café

7 USD

Center of big city

Beverage, coffee, American food,

Tourist, Rock fan,

Enjoy rock music,

food, memorabilia

Very big premises

Rock music, memorabilia,

Retail shop

High income people,

young people

crowed and busy trading center

Live music

Highland coffee

2 USD

Crossroad, crowed and busy

trading center

Coffee, beverage, food(local, Italy food),

normal music

Businessman,

office worker

Business dealing,

discussing; talking

Ground-Floor of a big building

Music Club

7 USD

Center of city,

moderate premises

coffee, beverage, normal food

(no food at evening)

Rich Young and

middle-aged customer

Enjoy music

Live classic and pop music

(main services drive profit)

The table above is some information about Market Analysis between Hard Rock, Highland coffee and a Music Club nearby Hoan Kiem lake. It obviously shows the differentiation in products, services and ambiance of HRC and differ in target market. So with average price 7USD is reasonable for people who want to enjoy the unique experience in Hard Rock Café.

SWOT Analysis when the location was selected nearby Old Quarter and Guom Lake:

Threats:

-Although many young people in Hanoi are crazy fan of rock music. Teenage is the one who like to show their stylish and high level when they experience in some famous and expensive restaurants, on the other hand, most of Hanoi people prefer drink coffee or eat food at sidewalk of street for seeing people working to seat in the luxurious restaurant. Local and traditional food is enjoyed more than foreign food. Furthermore, the income is still very low, so 100,000 Dong average price of HRC could be the challenge for local customer to experience its services. Rental cost is also the problems for all investors want to build a business in Hanoi, especially in centre of the city. There are many strong competitors including international and domestic restaurants, café and bar with long time operation with unrivalled price like: Trung Nguyen Café, Highland café, Kangaroo, Hapro , Ciao, ILLy, Old Quarter café or even street vendor café.. which located around Hoan Kiem lake and Old Quarter. Beside that, traffic jam is headache with residents and visitors.

Opportunities:

There many young people who love rock music, more and more foreign visitors to Hanoi next time due to its attraction and charm. High population and density, together with long time and busy trading around Hoan kiem lake and Old Quarter where is the most attractive place tourists by many entertainment centers, restaurants, shopping centers, cheap, small hotel to international standard hotel gather together here. Political stability, fast economic growth, cheap and young labor, international standard convention, stadium,

Strengths:

HRC always select best locations, recognized band name with tourists all over the world. Unique food, services and music, memorabilia, big and comfortable space for customer show their exciting. Good management system, efficient operation.

Weaknesses:

High price and target market are tourists and rich people because its high price. Rock music, sometime, not all people can enjoy it. Most of foods come from oversea whereas Vietnamese prefer local and traditional food. Hard Rock Café are famous in the world but it is not familiar in Vietnam.

In sum up, from all analysis above,