principles and processes involved in developing marketing strategy

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Pagoda is the first in a planned chain of Vietnamese fast food restaurants that will be established in the United Kingdom by three entrepreneurs who after travelling the world have decided to exploit their love of international cuisine. They particularly liked Vietnamese food and in particular the dishes of pho that were widely and cheaply available. Having noticed the success of various chains specialising in Italian food (Pizza Express and Strada), Japanese food (Yo Sushi), Chinese food (Ping Pong) and Mexican food (Leon) they felt there was room in the market for an equivalent chain that specialised in Vietnamese food. Having pitched the idea to a venture capital group, funding was received and the first Pagoda restaurant is now operating in Marylebone in London.

At present there is a lack of clarity about the marketing strategy that should be adopted. A number of matters have generated discussion between the owners and the backers of pagoda.

In this assignment I am giving clear and accurate outline of planning principles and processes involved in developing marketing strategy. And also describing and critically evaluate a range of tools and techniques that can be used to produce a strategic marketing plan.

Marketing Strategy and Planning Principles


After deciding objectives and selecting generic strategy a person must decide on a varity of closely related operational strategies. One of these is price, how u offer price. Requirement of Net income and objectives for long term market control influence a pricing strategy. Three basic strategies for that are as under :

A Skimming Strategy

If high price is justify with what a person is offering and person desire quick cash and have minimal desires for significant market penetration and control, then person set prices very high.

A Market Penetration Strategy

A person set prices very low, if near term income is not so critical and rapid market penetration for eventual market control is desired.

A Comparable Pricing Strategy

If a person is not the market leader in industry then leaders will most likely have created a price expectation in the minds of marketplace. In such scenario a person can price offering comparably to those of competitors.


Sell is depending on how effectively a person promotes and advertises offers. If promotion and advertisement is not effectively, a person can't sell a product or service in market. There are two promotion strategies, Push and Pull.

The Push Strategy maximizes the use if all available channels of distribution to push the product or service into the marketplace. Generous discount is required to achieve the objective of giving the channels incentive to promote the product or service, so it minimize the need for advertising.

The Pull Strategy requires direct interface with the end user of the product or service. During the first stage of promotion, use of channels of distribution is minimized and major commitment to advertising is required. To pull the prospects into the various channel outlets crating a demand the channels cannot ignore is objective of this strategy.

Some of strategies for advertising product or service are as under:

Product Comparison Advertising:

In market where product or service is one of several providing similar capabilities, A product comparison ad can be beneficial, if product or services stack up well when comparing features.

Product Benefits Advertising:

When a person wants to promote product or service without comparison to competitors, the product benefits ad is the correct approach. This is more beneficial when a person has introduced a new approach to solving a user need and comparison to old approaches is inappropriate.


A person has to select the distribution methods that he will use to get the product or service into the hands of the customer. These include:

On-premise Sales involves the sale of product or service using a field sales organization that visits the prospect's facilities to make the sale.

Direct Sales involves the sale of product or service using a direct, in-house sales organization that does all selling through the Internet, telephone or mail order contact.

Wholesale Sales involves the sale of product or service using intermediaries or middle-men to distribute product or service to the retailers.

Self-service Retail Sales involves the sale of product or service using self service retail methods of distribution.

Full-service Retail Sales involves the sale of product or service through a full service retail distribution channel.


Factors affecting the environment:

Government actions - Government actions (current or under consideration) can support or detract from strategy. Consider subsidies, safety, efficacy and operational regulations, licensing requirements, materials access restrictions and price controls.

Demographic changes - Anticipated demographic changes may support or negatively impact the growth potential of industry and market. This includes factors such as education, age, income and geographic location.

Emerging technology - Technological changes that are occurring may or may not favor the actions of enterprise.

Cultural trends - Cultural changes such as fashion trends and life style trends may or may not support product or service's penetration of the market


It is important to understand the market segmentation as defined by the prospect characteristics which a person has selected as the target for product or service. Factors affecting it are as under:

The potential for market penetration involves selling to past customers or a new prospect, how aware the prospects are of what a person is offering, competition, growth rate of the industry and demographics.

The prospect's willingness to pay higher price because product or service provides a better solution to their problem.


Factors to consider:

Some or all of technology for the offering might be proprietary to the enterprise.

The advantages of the prospect will derive from use of the offering.

The probable for product obsolescence as affected by the enterprise's obligation to product development, the product's proximity to physical limits, the ongoing possible for product improvements, the ability of the enterprise to react to technological change and the probability of substitute solutions to the prospect's needs.


The following factors to consider:

Each of competitor's experience, staying power, market position, potency, certainty and freedom to dispose of the market must be evaluated.


The following factors to consider:

Enterprise ability to be leader in low-cost production considering cost control infrastructure, cost of materials, economies of scale, management skills, availability of personnel and compatibility of manufacturing resources with offering requirements.

The importance of the enterprise.

The competence between management team.


A review of the strength and feasibility of the product or service development program will heavily influence the direction of strategy. The following factors to consider:

The strength of the development manager including experience with personnel management, current and new technologies, compound projects and tools used by the development personnel.

Sufficiency and suitability of the development tools and equipment.

The needed funding to achieve the development targets.

Design specifications that are manageable.


The following factors to consider production:

Economies of scale allowing the input in operations, involvement in production and the potential for vertical integration.

Production experience and technology.

The essential production personnel skill level and enterprise's ability to hire or train qualified employees.

The ability to control over suppliers bargaining power.

The skill of the enterprise to control the quality of raw materials and production.

Sufficient access to raw materials and sub-assembly production.


The following factors to consider:

Experience of Marketing or Sales manager including relations in the industry (prospects, distribution channels, media), familiarity with advertising and promotion, common management skills and a history of profit and loss responsibilities.

The capacity to generate publicity as measured by past successes, connections in the press, quality of promotional literature and market education capabilities.

Trade allowances, special pricing and contests are sales promotion techniques.

The efficiency of distribution channels as measured by history of relations, the extent of channel operation, financial constancy, status, access to diagnosis and familiarity with offering.

Advertising capabilities including media affairs, advertising budget, past experience, how easily the offering can be advertised and promise to advertising.

Sales capabilities including availability of human resources, quality of staff, location of sales outlets, skill to generate sales leads, relationship with distributors, ability to show the benefits of the offering and sales support capabilities.


The following factors to consider include:

Support of the Customer Service manager in the areas of similar offerings and customers, quality control, technical support, product records, sales and marketing.

The availability of technical support to service or product offering after it is purchased.

One or more factors that causes customer support to stand out as unique according to customer.

Convenience of service for the customer.

Customer service of reputation of the enterprise.


This is an analysis of the factors that will affect costs to achieve significant market.

The following factors to consider include:

Marketing strength.

Entrance to low cost materials and efficient production.

Enterprise experience.

The difficulty of introduction problems such as lack of devotion to industry principles, unavailability of materials, poor quality control, regulatory problems and the incapability to explain the benefits of the offering to the prospect.

The efficiency of the enterprise infrastructure in terms of organization, recruiting capabilities, employee benefit programs and customer support facilities.

The availability of sufficient operational capital.


The following factors to consider include:

Potential for competitive retribution is based on the competitor's assets, commitment to the industry, cash position and certainty as well as the status of the market.

The enterprise's ability to stop competition such as the creation of high switching costs, gaining large benefit from economies of scale, exclusive access to or congestion of distribution channels and the ability to differentiate offering from the competition.

The strength of competitive rivalry as measured by the size and number of competitors, limitations on exiting the market, differentiation between offerings and the speed of market growth.

The ability of the enterprise to control on suppliers bargaining power.

The enterprise's ability to maintain its market position is determined by the potential for competitive simulation, resistance to inflation, capability to maintain high prices, the potential for product obsolescence and the 'learning curve' faced by the prospect.

The availability of substitute solutions to the prospect's need.

Part: 2

Following functional areas and marketing environment may help pagoda to develop to contribute to the achievement objectives over the three years.


2.1: Developing an Effective Marketing Plan

Developing a business plan for restaurant is very important to plan for future instead of reacting to changes in business. Additionally, it gives reliability and lenders will always ask for one if they consider lending money.

The steps in developing a marketing plan include:

Determine Market

Determine from where business comes from. This could be a four-block area for a small deli or a 40-mile area for an upscale destination restaurant.

Check out the Competition

Gather some competitive intelligence through investigation. Expand a competition profile. Things should be included in a competition profile is name, address, hours of operation, restaurant theme and entree prices. Set it up like a chart and include restaurant for easy evaluation.

Identify Business

Identifying who dines with a person is the heart of marketing plan. Determine who customers are (e.g. business people, social people) and why they dine at restaurant.

Determine If There Is Additional Business Available For Restaurant

Based on current customer list, determine if there are groups of people not dining at restaurant for certain meal periods that could be. For example, maybe a person has a good lunch trade but it consists totally of social people and not business people.

Anticipate the Potential New Business Segments

Once it is determined where new business can be generated; advertising and promotion decisions become more focused. Reach these new market segments with advertising particularly oriented.

Determine Competitive Edge

Find out how organization stand out from competition - best location, best quality of food or best atmosphere relative to competition is main thing. Utilize it when organization determines its competitive edge.

Menu Price Points

Determine specific amounts that influence a consumer to make a purchase and price all menu items accordingly. For example, one price point might be that a bottle of wine priced under £30 might sell more than a bottle priced just over £30. Company must take into account costing issues as well.

Develop Strategies to Enhance Increases in Average Check

Some restaurant chains do this very efficiently. The wait staff is very proactive in trying to sell things such as soups, salads, appetizers and desserts in addition to customers ordering entrees.

Determine Restaurant's Annual Revenue

This will serve as the basis for annual marketing budget and should be done as part of the general budgeting process.

Evaluate the Need for Professional Memberships

Since "people do business with people they know", it is important to participate in professional organizations by mangers.

Employ the Good Neighbor Strategy

Be a good neighbor and take part in community dealings. Do things such as provide meals to the underprivileged or offer services in catering-related events.

Develop the Marketing Expense Budget

Develop a schedule of expenses which would be a breakdown of Marketing expense included in budget for the year. These line items include such things as:

Entertainment Costs

Direct mail




Civic and community projects

The Action Calendar

Introduce an action calendar to organize the myriad of activities and strategies select for implementation..

2.2 VIP Club

The following is a short - and by no means complete - list of tips to help dramatically accelerate the growth of VIP Club list and of restaurant business:

1. Offer a clear benefit

Placing a little fishbowl at the cash register is not enough. Sure, some people will drop their business card in there. But don't expect guests to line up and trip over themselves at a chance to get on list. Organization need to offer a clear benefit to them, the benefit they will realize by joining VIP Club.

2. Training to staff

Staff should be doing the sales work for VIP Club.  Nothing in this world, including VIP Club, sells by itself.  And staff will fail, quit, and spoil vision unless they believe they can sell what manager asking them to sell.

3. Motivation to staff

Why not set up a contest for staff and have them compete for the most new VIP Club enrollments? Obviously, manager can't have such a competition with no buy-in from staff in the first place.

By growing restaurant's VIP Club membership, manager or owner can reduce the need to advertse, has more control over the type of customers attract, and significantly improve the profitability of restaurant business.

Keeping the Seats Filled and the Customers Coming

Even on a shoestring, restaurants have to market themselves. Every restaurant has competition, whether it's the Italian restaurant around the corner, the McDonald's a half mile away or mom's Thanks giving leftovers in the home freezer.

2.3 Guerilla Marketing

Guerilla Marketing is about using a number of smaller strategies rather than utilizing larger strategy like the national TV ads that franchises use.

Some Guerilla Tactics

Customer Comment Cards - Make notice of names, email addresses and birthdates of your customer. Email them a special coupon 3 weeks before any occasion.

Flyers - Make sure people know opening of it. Give them 15% off an entree the first week from opening.

Loyalty Programs - Offer people something for free after they've bought numbers of items at restaurant. Motivate people to come back often.

Public Relations Stunts -. Have staff dress up as chickens and walk around neighbourhood, if you serve the best roast chicken in town. Be imaginative. Do whatever it takes to get noticed. Hand out menus and cards.

Great Customer Service and Warmth - Treating people graciously will create buzz. People will tell their friends about a great experience they had.

Promotions - Offer special themed dinners and other fun events to give people a reason to come to the restaurant on a usually slow night.

Sampling - Having your best looking and most personable server handing out samples of tempting muffins in the morning or delicious pasta in the afternoon goes a long way to building a relationship with new customers.

Manage and Grow

The first step toward success is getting a new restaurant off the ground. Lack of planning is one of the reasons for the high failure rate of new restaurants. Knowing how to manage a restaurant's finances, day to day problems, customer service and training staff are all part of managing and helping new restaurant to grow.

2.4 Restaurant week

How restaurant week works

Restaurant Week is different from place to place. The general concept is that local restaurants partner with local tourist organizations or chambers of commerce to promote a week of lunch and dinner specials. Other partners may include banks, local businesses and food vendors. Restaurant offer reduced prices for a fix menu, the idea being that what they lose in check averages they gain in sales volume. Some restaurants report increased volume as high as 40% during restaurant week.

Reason behind Restaurant Week is Good for Business

Restaurants aren't the only businesses to benefit from Restaurant Week. It helps increase tourism, therefore increasing businesses for hotels, stores and other local businesses. Cities and states can use Restaurant Week as a platform to showcase their area and build their culinary reputation. In London City where there are plenty of restaurants who don't need promotion.

Restaurant Week is a great promotional idea that can kick -start a slow time of year.

2.5 Five Tips for Surviving the Restaurant Recession

1. Revamp Restaurant Menu

Take a closer look at restaurant menu. Which items are there which is not moving? Check weather food cost is correct or not. It may be time to trim down menu and remove pricier items offer less expensive items that will appeal to customers on a budget.

2. Don't Cut Advertising

A recession is not the time to cut out advertising. While manager doesn't need to do a full scale media assault, with radio ads, TV commercials and a print campaign, one should budget out enough for newspaper ads and keep website updated.

3. Watch Payroll

Look for ways to trim payroll. If Mondays nights are typically slow then decrease staff availability. If owner employ a general manager, they can fill in for a bartender or host, because they are on salary. However, be wary of cutting back too much staff at the risk of sacrificing customer service.

4. Offer Restaurant Promotions

Three-for-two specials, coupons, early bird dinners are all great ways to attract customers during a recession. It can range for a nightly happy hour to an annual customer approval day, with drink and dinner specials.

5. Take Small Steps to Save Money

Don't waste electricity, water or food. There are many small ways that restaurants can save money, from installing low-flow faucets to purchasing energy efficient appliances.


3. Conclusion

According to above discussion Pagoda have to keep in mind is that marketing efforts must be cohesive and promote one brand image in order to create an adequate representation of the company' concept. Choosing appropriate marketing vehicles that reflect organization and how food is unique are keys to an effective marketing plan.  After defining strategy pagoda must use the information he has gathered to determine whether strategy will achieve the objective of making restaurant competitive in the marketplace. Identify the general marketing strategy under which plan is being developed. Plan developers may get some guidance and also basis for strategy by examining results from the Situational Analysis. Pagoda has to make marketing strategy and follow it. As per above discussion pagoda can create VIP club and attract customers. As per guerilla marketing pagoda can introduce different small strategies than introduce one large strategy. There are number of restaurants in London. So Restaurant week is good option for Pagoda in competitive market. There is several tips given is discussion to survive in recession period. There are different tools and techniques that can be used to produce a strategic marketing plan for pagoda.