Marketing is a very common word which we practice and follow in our day to day life and is present everywhere. The way any celebrity or any individual personality is walking, singing or reacting to any particular situation is his own way to distinguish him or in other way it can be said his own way of marketing himself. For example Michael Jackson a pop star having long hair, hat and his moon walk dance step market him and he became the super dancer and known all over the world. The way Mc Donald fast food chain markets them “I’m Lovin it” tagline. KFC has its own fried chicken prepositions to market and distinguish its offering from others.
According to Craig et al (2005) the formal definition of marketing is “Marketing is an organizational function and a set of process for creating, communication, and delivering value to customers and for managing customer relationships in way that benefit the organization and its stake holder.”
Need & Wants
It should be prime focus of any marketer to understand the need and want. Needs are the basic necessities required by the human like food, shelter, cloth, oxygen etc, while in present societies recreation, education and entertainment etc also becoming a basic need. These Needs convert into a Wants when they are directed towards a particular product or offering. For example an Italian would like a pizza for beating his hunger while a Chinese may ask for Noodles, while for American point of view he/she opts for a Burger. These wants lead to demand when backed by the paying ability of the consumer. A consumer might want a Mercedes Benz but is it a demand? It may or may not be, if consumer is having the ability to pay for that than it’s a demand otherwise only want.
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Exchange & Transaction
For obtaining any desire service or good there are only four way. One manufacture or product it, second theft, burglary or by any forceful manner, third is to beg it and fourth is to purchase it with other person or party (Newman, 1999). Exchange is the basic fundamental from which the whole marketing and economies has been evolved. It is the process of obtaining a desired product from someone by offering something in return. For exchange potential to exist, five conditions must be satisfied (Newman, 1999):
There should be at least two parties
Each party has something to offer that is valuable for the others.
Each party is capable of communicating and delivery
Each party is free to accept or reject the deal
Each party believes it is appropriate or desirable to deal with the other party.
In 1943 a researcher Abraham Maslow’s presented a theory about human motivation. According to that there are five different levels, the motivation for a particular group or individual depends upon the level they are associated with. For example the in the lower strata there is basic physiological needs like food, shelter, clothing etc. For example if an individual is having basic needs then he will be more motivated by offering him/her safety or security. For a labour or factory worker basic money, food, shelter would work rather for a manager a new self esteem would be a more critical issue.
Marketing Mix are four pillars on which the whole marketing depends. These are known as Product, Price, Place, and Promotion. These are the four basic fundamental for any marketing campaign.
Food is among the basic amenities and without it nobody can survive. In today’s era everybody is busy with his own work and life. All are busy in their routine work and specialized jobs. People want to spend more time into their core competencies rather than making themselves indulged in other activities and outsource the work to others. Food is required for every person and it requires substantial amount of energy and time for them to consume. That’s why catering industries are flourishing day by day people, and the companies in this industry are more prone to outsource it. Catering industry today became more competitive as more and more players are entering into the industry. The lifestyle changes further allow them to grow rapidly.
The word Catering is defined as the act of providing food & Beverage services to a remote site like educational institute, hotel, corporate, any event, public houses and various types of location (Shiring et al., 2000; Suurmond, 2008).
The catering Industry
In USA food service business is the third largest industry. More than $240 Billion worth of revenue generated into this industry in the year 2007 (Suurmond, 2008). On an average almost 15 % of the income has been spending over food by an average American. This thumb rule can be applied to all over the universe. The catering industry is growing faster than national economies. As per Craig et al (2005) the main reason for the rapid growth are lifestyle changes, economic climate and increment in no of product verities.
Consumer Motivation & Demand
The Potential for the catering industry is huge in short-run as well as in long-run. Craig et al (2005) emphasized that the modern living style will create favourable condition for catering industry. As people will have more disposable income they will be compelled to experiment with their eating habits. OECD (2010) describes the below points about the catering industry:-
According the National Restaurant Association the future of the food service industry will be shaped by the following practices.
The money spent by the consumer on food away from home will increase.
New entrepreneurs and organization will shape the new catering concept.
More will come from dishes, menu planning, and hygiene and nutritional concern will be more critical factor in the future.
As the study, industry will grow more and regulatory and environmental policies will be implemented to support it.Task 1.4
The catering industry will have ripple effect on Society as more and people will be eat out or outsource their meal (Roman, 2001). More and more catering companies will open and more people will be opting for the eating out. Employment will be generated due to the increase in number of companies in the industry. Consumer would be having access to their desired food at reasonable price and the catering companies will get benefited by economies of scale.
However, on the other hand more people will become dependable on outsourced food. Then it would be imperative that they have to make sure their meal timing, hygiene & health issue. They also require sharing their cooking skill from time to time.
Strategic Marketing Planning
To enter in any market or any business marketer require keeping the long term horizon of the business. Catering industry is flourishing day by day. As in corporate offices, Schools, Event organizations, restaurants, hotels; food and lunch box etc. is outsourced from catering company. It can be assumed the market will grow rapidly in the future.
Hence it is required for a caterer to decide its objective and goal. It helps them to formulate the strategy and planning in their business. Like whether they will offer lunch box service, event management catering services, restaurant services etc. the type of offering should be clear at this moment. What would be time of operation; will it be a 24 hours or will it be lunch or dinner restaurant. These question need to be answered at the initial level of business planning.
Strategies have to be formulated and milestone has to be decided, for example within 2 years the turnover of the company should cross the X million. Or by 10 year the company should have at least X stores across the country. The milestone has to be decided rationally and constantly reviewed against the objective set. If there is any deviation then it is required to rectify them.
Before entering into any industry, any format of business an in-depth analysis of market has to be done (Drucker, 1973). The size of the market need to be clearly distinguished and the information about the competitors and their offerings have to be analyzed. The information about the product, menu planning, services and future opportunities has to be viewed. The target market has to be chosen for example let’s say college universities or corporate houses. The offering research has to be done like a pizza will be more suitable or a burger will work for a particular type of consumer. Future demand and government regulations have to be anticipated. Like opening a catering company close to university campus which is supposed to be closed in coming time is not a good idea, hence a cautious study and research has is necessary before starting up any venture.
The production unit and office location has to be researched out how much area is required, machinery, equipment, furniture and the cost associated with it is to be researched out (Drucker, 1973). Hours of operation has to be researched because in different cities people have different time of lunch and dinner. For an example in urban town the lunch & dinner time is generally 1 hour late than rural town (Newman, 1999; Doegra, 2007).
The competition offering has to researched out such as; their price, discount, commissions etc. how many universities, colleges, student, organization are there. Business potential has to be found as well. Information about local population, their eating habit habits, information about hotels, number of tourists etc has to be collected. The purchasing power of the people has to be judged so that offering can be decided accordingly.
The telecommunication revolution and means of transportation and technology has made the world more closely and diminished the impact of geographical boundaries. The consumer is more aware about the product and is now specific to their wants and demand. For a marketer it is becoming more difficult to satisfy the whole group. Rather it is found more convenient to cater the need of a particular segment. Segmentation can be done on various basis, price basis, gender basis, geographical basis, interest basis, economy basis, age basis, society basis, demographical basis etc (Newman, 1999).
“A market segment can be defined as a group of customer who share the similar set of need and wants; meaning that they can be satisfied by the similar offering” (Harnel, 1996). Generally a market can be classified into three categories as per Harnel (1996):-
A homogenous preference market would be an ideal one for a marketer, though in real life it hardly exists. Most types of the market are with diffused preference. It is marketer’s interest to find out or make cluster into that so that they can design an offering.
Marketer requires doing the segmentation for better offering to different types of consumers (Newman, 1999). For example the university student may be different from a working professional in terms of likes or dislikes for the product. The eating habit of teenager might be differing from a middle aged man. Hence catering companies need to take care of the consumer segmentation and design their offering according to that. For example a company wants to offer premium services by offering the services only for a niche market; therefore they shall be more focused towards the quality food, hygienic practices and great sitting ambience. If a catering company wants to offer launch box services, then they need to have good contact in offices and colleges as well as their service quality and supply chain has to be very effective as it has to be supplied to a particular location within the given time frame. It also requires to be reasonably priced, which can be obtained by economies of scales.
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Designing Marketing Mix is the biggest challenge in front of a catering company marketer. The task involved in this is to device all the marketing activities and assemble them in fully integrated way. The marketing programme consists of various activities related to market, product, competition etc. and at the end its all element have to lead value creating for the consumer as well as for the marketer. A common name given to these practices is marketing mix. According to Baker (2001) these marketing activities can be classified into four broad groups, which are known as 4 P’s of marketing worldwide named as: Product, Place, Price and promotion.
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Figure: 4Ps of Marketing Mix
Source: Baker (2001)
The four P’s above are from seller’s point of view, from consumer or purchaser’s point of view they are different benefit. Robert Lauterborn has given 4’c corresponding to 4 p’s given by McCarthy et al. (2008).
A catering Company has to design their offerings as per customer needs and make it available economically and conveniently to everyone. The communication and promotion has to be in line with the offering.
A catering company need to think about the products they will offer in the menu and the type of cuisine they will offer (Scanlon, 2006). Under each cuisine there are different types of verities, which marketer has to offer. The quality of food is also increasing with the increase in food prices. For a catering industry, the taste of food is the main concern. Hence marketer needs to work upon the food quality and taste as taste is very subjective aspect and it varies from individual to individual. If there are 5 members in a family it may happen that all the five people would be having their own food taste. The aroma and presentation of food also matters, because it is said that food is first eaten by our eyes later by our tongue (Davis et al., 1998). How the branding of the product has to be done, how the packaging of the food has to be done either in air tight pack, poly pack, paper pack etc have to be decided as well.
Price is the second most critical factor for any catering company; they need to price their product reasonably to maintain their profitability and to beat the competition (Harris & McDonald, 2004). Different items have different price. A price has to be worked out by menu planner by calculating the raw material cost of the food and the other expenses involved (Harris & McDonald, 2004). In catering industry a higher operating margin is required to operate as products are perishable by nature and wastage has to trade off. For organizations, corporate, special guest, clubs a discount policy has to be worked out. The payment term for institutional and regular customer has to be finalized. Credit limits and advances come into this planning.
The biggest task in front of a caterer is how to promote their products and services. As the competition is becoming fierce day by day, the caterers are required to market their product effectively to the target audience (Harris & McDonald, 2004). They need the advertising print or media, Telephone or internet marketing, direct marketing, giving special coupons, complementary, special activities, or by doing sales promotion for an example on the eve of Christmas day by giving 50% discount. A good public relation and better publicity can pay off better. Word of mouth is one of the best publicity for catering companies as the food taste is most critical (Nargundkar, 2006). Social networking sites like face book, twitter etc can be used for promotional activities as well.
Place is the fourth pillar of the marketing mix. It cannot be neglected for a successful catering company. For example a catering unit cannot be open like a factory in a remote location. As food is perishable item and has to be delivered 3 times in a day at least. It cannot be assembled like electronic goods. Location is very critical for a food venture. If the target audience is college student then it should be in the proximity of university campus. A deep understanding of the consumer is required on which day how much consumption can take place. A lunch Tiffin catering service provider has to be very effective in supplies and distribution within the stipulated time (Scanlon, 2006). The catering plant has to be ideally located within the city from where it can be easily accessed to its large chunk of customers. Caterer needs to think upon the channel partner whether they will supply or outsource the third party to do that.
Importance of Service in Catering Industry
Catering industry is among those offering goods as well as service, as it has the experience of food in the form of goods while the ambience, responsiveness, politeness offered by the stewards or care takers is service (Scanlon, 2006). The service cannot be kept as such for later use. Therefore, the marketers in catering industry need to use marketing strategy in such a manner, that the product sells quickly.
Internal Marketing ensures that everyone in the catering company follow the practices which leads to build the brand, reflect its image, its quality, and its process (McCarthy et al., 2008). It starts with recruiting, training and motivation the employee to serve customer in a better way. For example the fast food chain McDonald all employee have the same dress code. They have their batch tagged on their shirts.
Advertising, sales promotion, personal selling, publicity are all the parts of promotional mix (Kazmi, 2008). In order to promote the product, catering industry player need to promote its product to market it to the target segment. There should be thorough plan for this approach; else the results might not be good. Therefore, an organization has to use proper plan and strategies for sales and promotion. The organization, at this stage creates brand value through its efforts, which can be beneficial for the long terms success. These can result in overall success and growth of an organization.
The promotional plan for an organization shall reflect its worth (Bordern, 2003). The plan shall aim at attainment of outcomes. The organization shall make optimal use of its resources in order to ensure that the results are satisfactory. Therefore, for a catering organization it is recommended that the organization should have a thorough strategy to properly evaluate its service, which can make a big difference. There shall be proper use of strategies for growth and survival. The promotional strategies shall include advertising and sales promotion through print media, website, and local sources. Thereafter, the membership facility shall be promoted to maintain and retain customers. These all can result in proper growth and success of an organization even at initial stages.
The catering industry is growing day by day. It has been observed that there is immense potential available for catering industry due to changing food habits and life style of people. By conducting in-depth marketing research a caterer can open the venture which should be ideally placed near to the target market. “Think Customer” should be the focus of any caterer. Taste, aroma and presentation of the food are very critical for the success of any catering company.
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