Market Analysis For Seafood Restaurant

Red House is a seafood restaurant is established in the year 1976 is a Singapore based company. Initially it was opened in East Coast Road (ECR) and later in the year 1986 it was shifted from ECR to East Coast Seafood Centre with the same name since the restaurant already had very good name among the group of loyal customers. Ever since it is opened, it had its own style of dishes and services. Over a period of time they didn’t had great flourish in their business since they didn’t show great varieties in their dishes. People of younger generation started to demand more varieties in menu and started to expect change in the taste but Red house failed to provide to the customers. They restaurant was more than 33 years old but still they have only one outlet in Singapore. From the research we indentified that this is due to the following reasons

They don’t understand the customer needs

Red house is not ready to change according to the environment

Poor marketing strategy

From the above issues, we did a detailed research on the Seafood restaurants in Singapore to provide solutions for the Red House Restaurant. In this report we have analyzed what are the Current Market needs, trends, growth and competitors of seafood restaurant in Singapore from this analysis we came out with new products which is made of Salmon Fish and also we have suggested changing in the service of Red House restaurant by introducing bar culture. We believe that the new product will give us a competitive advantage over their competitors. We also did a demographic analysis to find our target market. With these analyses we have formulated a Mission and marketing strategy for Red House Restaurant which includes advertisement, Importance of branding activities, marketing mix, implementation, and financial control.

Mission of Red House is

“Creating the brand image is carried out by bringing to everyone the taste of Seafood and soothing ambience”

To achieve this mission, Red House need to start few new outlets in hangout places in Singapore and should concentrate on branding activities and innovation in products. These new strategies will help Red House to develop their financial status and also they can considerably increase their market share.

Introduction:

Singapore is well known food lovers who can choose different variety of ethnic foods. We can find Indian, Chinese, French, Malay and Italian foods in this small island country. Food is passion for Singaporeans as most of the people prefer to dine outside home. It is always an exciting thing for new comers to choose where and what to eat in Singapore.

A marketing plan is a crucial part of a business plan. This is especially true for products that must be niche marketed. Niche marketing needs great effort and time to develop and service markets. A host of factors must be considered including choosing a product line, targeting a market segment, identifying individual prospective buyers, pricing products, estimating storage requirements, evaluating alternative production methods and schedules, examining processing capabilities, and planning promotional strategies. Market information of various types is needed. Consumer trends at all levels need to be examined. Market expectations and trends within the targeted market segment need to be explored. Competing products need to be understood. Accurate, reliable market information is essential to devising a useful marketing plan.

Situation Analysis:

Seafood lovers in Singapore are continuing to increase, since the consumers are more educated and aware of the available new food varieties and also have more disposable incomes. The rise in the monthly income of the people and the demanding power of the consumers for the imported seafood is consider to be the major reason for the growth of the seafood industry. In Singapore 74.2 % people are Singaporeans which an added advantage for the seafood industry. Shanghai is a highly competitive, complex and rapidly developing market. Consumers are willing to pay a premium price for imported foods, as they are viewed as being more nutritious and of a higher quality. Since many imported foods are new additions to the Singaporeans diet, significant promotional campaigns are needed to educate consumers. Careful planning and consideration should be undertaken before entering the market (Best 2004). Understanding the market and its preferences can make the difference between success and failure. Customer preferences must be thoroughly examined and appreciated when formulating an entry strategy. A key success factor in the Singaporeans market is to be attentive to local market needs. Singapore consumers are sensitive to issues of convenience, sanitation, flavor, nutrition, and price.

Increasing income and health awareness makes Singapore a major consumption market of aquatic and fishery products. The per capita consumption of aquatic and fishery products in towards coastal areas is higher than inland areas. Consumption is also related to the diet tradition and availability, as people in inland Singapore consume more red meat. Most Singaporeans consumers are still price sensitive while purchasing aquatic and fishery products. Freshwater cultured products are popular at home and restaurants due to their cheap price; high quality imported seafood is mostly consumed in hotels and restaurants. Along with the increased middle class in large cities and coastal regions, these imported seafood products prospective remains increasing.

a. Target Market:

Nowadays in Singapore, especially in big/middle sized cities, middle class consumption capacity has been the main force. It is leading the Singaporeans market trend. The middle class in Singapore has a better educational background than high/low income groups. Though the quantity of middle class consumption is not the highest, but as to consumption class, value and quality, it is a leader. This means the middle class consumption is driving Singaporeans market progress and development. In general, imported food is purchased by the middle-upper income younger Singaporeans.

b. Market Trend

Import food purchases are often made out of curiosity to try something new or as a gift to relatives or friends. As a result, repeat sales are more difficult to achieve than the first. Price, brand and quality remain the leading decision making factors.

Economic development in the fast-growing coastal provinces of eastern and southern Singapore has led to the emergence of a burgeoning middle class with increasing enthusiasm for imported consumer goods. Consumer spending is strongest in densely populated urban markets in these regions and consequently these areas have the most developed retail trade environments.

c. Market growth:

From 2000 to 2006, the sales of restaurants keep increasing by over 10%. In 2003 the growth rate was up to 28.2%, almost an economic wonder. In 2005 it was 17.7%. The growth of restaurant sales is about double that of inhabitants’ income growth (aweb.com.cn 2006). If a company engages in opening Singapore’s food market, the key is opening the Singaporeans restaurant market first. The high sales value and growth speed come from public money- business affairs consumption and official consumption. The principal part of these two types of consumption is the Singaporeans middle class. In Singapore almost all the business and official activities are achieved finally on the tables of restaurants.

Key Players (Top Competitors)

PORTERS 5 FORCES MODEL [INDUSTRY ANALYSIS]:

http://www.shopzone.co.nz/mworld/porter_files/forces.gif

Threat of new entrant:[high]

Threat of new entrant is high which lead to an unfavorable condition for any new venture company. Even though potential new entrant will face problems like financial, cultural, tough competition they will try to enter because the market is very attractive and huge and also has bright future prospects.

The bargaining power of the suppliers:[low and medium]

This power of the supplier evaluates the cost of the resources for the business since Red House has its own resources they don’t want worry about third party supplier. The work force in Singapore needs to have locals and they are bit demanding but still we can bring people from other country to work in Singapore to compensate.

The bargaining power of the buyers:[medium]

The overall strength and bargaining power of the customer is medium which since they have the alternate choice of the same product. So the company has to concentrate on the attracting the new customers by adding value preposition to their product which will create a loyal customers.

Threat of substitute product:[low]

Substitutes or alternatives offered for seafood is generally Pork, Chicken or lamb etc. The cost of the alternative products is almost similar to the seafood yet the threat of substitute is low because of the passion of the seafood lovers in Singapore. From the research we found seafood Lovers don’t like to eat to other foods often but they do when they don’t get seafood around them and yet in different occasion not with seafood time.

Intensity of competitive rivalry:[medium and high]

The attractiveness and the market of the business will bring many competitors in to the business. Seafood is an evergreen business with strong competition in the market in every season. We can see if the intensity of the competition is high we need to spend more money on marketing and we cannot raise the price of the product too. This will decrease the profit margin. The competition for Red House will come from two categories of competitors one is international branded players like Jumbo Seafood, “Long beach restaurant, No sign board seafood restaurant, Dragon Town Seafood Restaurant Pte Ltd, Ban Leong Wah Hoe Seafood, and the other is from the local players like seafood shops in the food court and the intensity level of these competitors are high.

From the overall industry analysis using Five Forces it is clear that Red House have a very good favorable condition to expand their business in Singapore.

SWOT Analysis

Strength:

Professionalism in the business with experts in all departments.

High quality and competitive price for all the products.

Effective supply chain management which is the main reason for successful business.

Excellent service is provided to the customers with good ambience, which will make the customers to feel like the place for special occasions and real taste of Seafood.

There is no real strong competition for smoked Salmon since it is new product for the Singapore market.

Weaknesses

The raw material is very much limited

They don’t have strong brand image

To develop powerful business network effective communication is required.

Lack of awareness of the customer’s expectation and taste in Singapore market.

Opportunities:

Singapore has high demand for the imported seafood on the market.

Singapore has high purchasing power group which will increase the business opportunity for the company

Smoked salmon is very famous in Singaporeans market and it suits the majority Singaporeans people in Singapore and they love the taste of Salmon.

Singaporeans people accepted Salmon as a high quality Seafood dish in Singapore which is a big advantage for the company to try this dish in Singapore.

Continuing opportunities through strategic alliances for referrals and marketing activities

Increasing sales opportunities beyond its target area.

Threats

The raw materials shortage and high cost price.

Smoked salmon is a new product for Singaporean Singaporeans customers, which means more costs on marketing activities and a comparatively longer time to become accepted.

Product Offering:

We are offering three different sets of menu to our different customers they are

Red House Ala-carte Menu

In Ala-Carte Menu we are offering 11 different courses of Dishes they are

1 – HOT & COLD APPETISER

2 – SOUP & BROTH

3 – EXOTIC SEAFOOD

4 – PRAWNS

5 – CRAB

6 – FISH

7 – LOBSTER

9 – RICE & NOODLE

10 – POULTRY & MEAT

11 – DESSERTS

Red House Set Menu:

We have three different sets of Set Menu for minimum 10 persons to dine

Set Menu A consists of only Prawn and Fish Served with rice or Noodles and Desserts.

Set Menu B consists of Prawn, Lobster and Crab with rice or noodles and Desserts.

Set Menu C consists of Prawn, Lobster, Fish and Crab with hot or cold Appetizer served with rice or noodles and Desserts.

Red House Celebratory Sets

Celebratory Set Menu is for Special Occasions like New Year, Mother’s day, Women’s day etc. The celebratory Set is reserved only if there are people more than 10 for dining.

Key Success Factor:

Unique product offerings especially Salmon Fish, Red House will be the only Seafood restaurant which is going to offers the tasty Salmon Fish.

Professionals will be employed in all departments i.e. we believe in Best Fit Frame.

Marketing Strategy

Advertisement

Advertisement increasingly affects consumers and their decision-making habits (Best 2004). As a result, seafood companies which have less brand image among people need to invest significantly large sums of money in developing marketing and advertising campaigns. The key is to find an outlet and an image that appeal to the Singaporeans consumer.

Brand

Developing and marketing a brand is increasingly important. Establishing a recognizable brand will make the difference between success and failure. Branding is a relatively new concept in Singapore’s retail sector. Prior to the 1980s, no real brands existed in the market (Food Distribution in Yangzi Delta 2006). Today, brand names have become one of the top decision making factors influencing consumer-purchasing decisions. Recognizing the importance, Singaporeans producers have also jumped into the game and are building effective brand names for their products. Premium branding will assist in ensuring repeat purchases of the product.

Taste

Creating products that target the Singaporeans taste is a key to success. Significant market research is required to determine and match local consumer preferences. For example, a leading brand’s plain potato chip has a small amount of sugar in the ingredients. Popular chip brands include seaweed, shrimp, roasted pork or curry, whereas in Europe, they are ketchup and sour cream and onion. Another example is the popularity of Aloe-Vera yoghurt on the market. The Singaporeans eat Aloe-Vera in a variety of dishes, and believe in its health benefits. Though not necessary, products catering to local tastes have enjoyed greater success.

Marketing Objectives

Marketing objective is framed in order to improve the sales performance of the Restaurant. The objective should be clear and it should be measurable with limited time frame. The marketing Objective Red House Restaurant is

Increase the awareness of product offerings of Red House among the target audience for about 40 % in one year.

Reaching people and inform the uniqueness of the

a. Sales Forecast (5-year Sales Projection)

Positioning

Positioning in the market:

Red House is positioned themselves to cater the upper middle class people where the people have the ability to spend. To position them in this arena apart from the quality of food they need to concentrate on Atmosphere of the restaurant and the customer service is very important.

Atmosphere:

The Restaurant is comfortable and soothing with an essence of eastern culture

Unique Asian magic and kindness, cozy cushions, calming harmony great ambience and friendly service.

Apart from the greatness of Eastern culture, customer can experience the convenience that the west provides.

Customer Service:

The company sees a direct link between customer satisfaction and customer loyalty.

The company believes that employee satisfaction leads to customer satisfaction

Employees are trained to connect with customers and focus on “customer intimacy”. Showing commitment with the society and the environment.

Marketing Mix Strategies

Place:

In marketing, Place plays a major role to run a good business. For example if a company sells pork where only Muslim people live will be bad idea for their business. Hence every company should choose the place where the demand for their product is very high. For seafood restaurant in Singapore the place should be where people like to hangout during special occasion and in weekends to make the day a memorable one. From our research we found Clarke Quay will be a best place to open a new outlet where mixture of people from all ethnicity gathers together in different occasions

Product:

The best selling Seafood in Singapore are Crab, Tuna, Pollack, Flatfish, Shrimp, Cod, Prawn and Lobster is common in all seafood restaurants. Additional we are introducing our new unique product called Salmon which is a bestselling Seafood in Singapore. In addition to the foods we are introducing the beverage culture in to our restaurant where the customer can enjoy hot or soft drinks before and after meals which will allow the customer to enjoy and spend time in the restaurant.

6.2 Pricing:

Even though people from Singapore are wealthier they are very much concerned about the price of the product. But from the research we found, for the imported foods and quality new products Singaporeans welcome very well and they don’t bother about the price. We fix the minimum price of $35 per person for a set menu and a competitive price for the Ala-carte Menu.

Promotion:

As an opening week for the Red House in Clarke Quay we have a plan of few promotions for the customers.

50 % discount on the opening day for the 1st 10 customers and later 25 % for the other customers.

From the second day we are going to offer special gifts for the Set Menu ordered customers.

MARKETING ACTION PROGRAM AND IMPLEMENTATION

Stage I: Trial selling

Importance of trial selling

As a new product, smoked salmon marketing should start from trial selling in one or two target markets. It can help the company to know about fitting customers’ needs and market information during the course. So product promotion will be attained before large scale selling. Additionally, it can help the marketing firm to correct the action plan in accordance with the experiences of the first step on time, reducing mistakes before expanding the sales. After a period of trial selling the company gains enough evidence to forecast the prospects and decide the investment scale. So unrealistic strategies or financial risks will be avoided. Trial selling also wins the time for the company, Red House doesn’t need to start their business a few years later after it solves pollution problems and founds a salmon farm.

Step II: Marketing

During the trial selling period the company should start small sized advertisement and other marketing activities instead of large scale. The main reasons are: The Company needs to know customers’reaction to the product to improve or correct the marketing mix. It ensures that the company will be able to offer the products and services which the market needs and also build up a good image before expanding sales. To avoid large input before knowing the market’s reaction, reducing investment risks. We have to find efficient marketing/advertising channels during this period of trial sales in the Restaurant.

Strategy summary

Imported food accounts for 5% of total food stocks in Singaporeans hypermarkets and supermarkets. Imported brands produced in Singapore have greater success. They are able to compete on price, market awareness, and production costs. Price, taste, and branding are key elements to understanding the Singaporean consumer. Effective and adequate market research should be performed to ensure an understanding of the market. Additional requirements may be needed to ensure that the product reaches the consumer. These include the placement of the product on shelves, packaging, and market timing.

12. Financial Analysis:

Initial Investment: S$100,000 for opening new Outlet in Clarke Quay,

Expenses

Building rental and decorative work: S$ 20,000

Furniture’s and kitchen Equipments: 25,000

Human resources for Average Salary per month including (Manager, Service Crew, Chefs): S$12,000

Raw materials required for Cooking Restaurant Dishes: $25,000

Distribution, delivery and Transport charges: S$ 7000

Marketing Expenses: S$10,000

Other miscellaneous expenses: S$ 1000

Totally S$100,000 are estimated to start a new business of Red House Restaurant in Clarke Quay Singapore.

Break Even Analysis:

Return of Investment : Initial investment/ Expected monthly sales

: 100000/25000

: Approximately 4 months

Breakeven: Expected per day sales/expected minimum bill from a customer

: 25000/30/35

: 28 customers per day.

SALES FORECAST PROJECTION FOR 5 YEARS:

From our research we are expecting 7% increase in Sales every year, which is portrait below.

PROJECTION FOR 5 YEARS:

Years

2010(September to December)

2011

2012

2013

2014

Projected Sales

$ 100,000

$ 321,000

$ 343,470

$ 367,512.9

$ 393,238.90

Control:

No financial budgeting can be successful exclusive of having an efficient and capable system of control. Budgeting is entirely related with control. The exercise of control in the organization with the help of budgets is known as budgetary control. The process of budgetary control includes:

Preparation of various budgets.

Continuous comparison of actual performance with budgetary performance.

Revision of budgets in the light of changed circumstances.

A structure of budgetary control should not be stiff. It should need to have enough degree of flexibility to provide for personage idea and impel. Budgetary control is an important device for making the organization more efficient on all fronts. It is an important tool for controlling costs and achieving the overall objectives.

Result:

The Singapore seafood market provides increasing opportunities for high-quality imported seafood. The markets in the eastern coastal region are ready for Singapore’s value-added products. Target markets have been found to be Clarke Quay, Sentosa, Marine Parade, Doby Ghaut, Orchard, and Jurong East. We suggest the company should choose one or two of those as an entrance to the Singaporean market. There are more large or middle sized cities in this region that are attractive, and also big cities in central Singapore that fulfill the requirements of possible future markets for Singapore to expand its business. According to the analysis, target products offered in Singapore should be smoked salmon and halibut. The emphasis in this project has been more on smoked salmon, and the author suggests the company should look at that product initially as the main target product. The taste of Icelandic smoked salmon should be adjusted to the taste preference of Chinese customers. Smoked salmon is high-quality imported seafood; therefore its forecast price is at a high level. The price relates to the high quality and nutritional value of the fish. In the case of smoked salmon, the market size and the distribution channel is wider than for other products of Singapore. The author suggests smoked salmon should be distributed in various food stores. Halibut is not the product for general customers because of its high price. The market and distribution channels are narrower than is the case with other products from the company. Singapore should choose the biggest cities, such as Shanghai, Beijing, Guangzhou and Shenzhen as target markets and focus on high grade restaurants.

Customer segments for the target products, smoked salmon and halibut, are of the Chinese middle-class, which is growing, with an actual population of around 100 million and strong purchasing power. Through careful market analysis, the company is now relatively well informed about the market, compared with its competitors. Its strength lies in high technology, good quality and services. The most significant weakness relates to insufficient knowledge of the market and Chinese culture. There is the opportunity of being the first large company involved in salmon selling in Singapore; and, on the other hand, the threat that accompanies the uncertainty of launching a new product on a new market. The author suggests objectives including target products, target markets and financial objectives. According to the results from various analyses, Singapore can develop appropriate marketing mix strategies of products, pricing, promotion and packing to achieve its objectives.

The action plan turns the strategies into marketing activities to attain the company’s goals. Singapore’s action plan of marketing smoked salmon is composed of two stages as follows:

Stage 1: Trial selling with new imported dishes for a month with the expected target market in Singapore.

Stage 2: Expanding business by establishing a salmon farm, on the condition the company is able to solve problems related to importing cost.

We suggests an initial period of trial selling to win the market, learn about its consumers, and develop skills in applying the marketing tools and gain general knowledge about a foreign market which is very different from other markets where Red House is active. After the trial period, the company can evaluate whether the time is ripe to advance to stage two.

Conclusion:

The importance of marketing plan can be tasted only after the success of the business. From the analysis we studied the market and we have identified the issues which hinders the success. From the solution we provided in term marketing plan, we will have a strong effect in the Singapore market. We have strong believe that we will have successful business in future.