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  1. 1. HTM 2121 TOURISM AND HOSPITALITY MARKETING   GROUP PROEJCT Project Title :F & B Operation in TST EAST Names: LAM KA YEE, Iris, 11225906D LEE CHO YIN, Kristy, 11025186D LEE KA YU, Jason, 11370913D1
  2. 2. Table of content Sections Page number Executive summary P.3-4 External environmental analysis and P5- opportunities & threats Objectives Target market Marketing mix strategies and programs Implementation milestone Marketing budget Marketing controls Reference2
  3. 3. Executive Summary  Mission of GreenLife:  Provide high quality of Food & beverages and customer services to the guests → Taking the Corporate Social Responsibility  Promote organic and fair trade‘s concepts and products →establishing healthy eating habit  Break-even and then be a revenue-earning café →raising the awareness of them to the third world countries3
  4. 4. Executive Summary  Resources  Maintain serving skills, organizational knowledge and  morality of employees and managers   ↑ productivity  Update the information of external and internal environment   ↑ competitiveness  Resources are essential for marketing programs (e.g. Fair Trade coffee bean )4
  5. 5. External Environment macro-environment5
  6. 6. Demographic trendsMacro Opportunities Threatsenvironment • Customers knowledge aboutDemographic • Organic food  attract customers (growing coffee products↑ trend of healthy eating) • Price sensitive customers • Products should keep in high  generally not brand loyal when quality a discount is offered ∴ when GreenLife offers discounts, consumers will probably buy our product6
  7. 7. Demographic trends Opportunity Threat Trend for healthy eating • Organic food  attract customers Growing trend of Cafe • Customers knowledge culture about coffee products↑ • Products should keep in high quality Price sensitive customers • Generally not brand loyal when a discount is offered  when GreenLife offers discounts, consumers will7 probably buy our product
  8. 8. Economic trends  Fair Trade products ensure steady and reliable supply. New Fairtrade figures show business is changing for good  Non Fair Trade farmers being exploited, started to leave the industry since they get only a small fraction of the retail price after middlemen, processors, shippers and retailers.8
  9. 9. Ecological trends  Get raw materials from Fair Trade, as it promotes equity, sustainable development and organic farming etc.  Gaining environmentalist support  Promoting some values9
  10. 10. Technological Trends  global technological trends  influences and powers of computer and Internet ↑  changes the way of obtaining information  Nowadays, global internet users >20 billion  global use of mobile devices to access internet  accounted for total internet users : 4.3% in January 2011 and 8.5% in January 2012  doubled the growth  growing trends10
  11. 11. Technological Trends  marketing planning and mixes more focused on Internet  Customers : obtain products and services information online, shopping online  Suppliers and distributors :  (1) provide online service (e.g. homepage which contains product and services’ categories with order and delivery services)11
  12. 12. Technological Trends  (2) ↑ focused on Internet promotion (e.g. Facebook page and Apps )  F&B operation  computerized system : ( e.g. POS system and Management system run the operation and keep records such as inventory.)12
  13. 13. Political-legal  According to the Public Health and Municipal Services Ordinance (Cap. 132) and other relevant legislation  F&B operation : apply corresponding licenses match numbers of requirements  Two licenses for our operation 1. Restaurant licence (from FEHD) : selling any kind of food for consumption on the premises13
  14. 14. Political-legal 2. Liquor licence (from Liquor Licensing Board): Selling any kinds of Liquor on the premises Requirements fire-fighting equipment (from HK Fire Services Department) ensure the health and hygiene conditions (form FEHD) ensure buildings safety (Buildings Department)14
  15. 15. Political-legal  marketing planning and mixes more focused on Internet  Customers : obtain products and services information online, shopping online  Suppliers and distributors :  (1) provide online service (e.g. homepage which contains product and services’ categories with order and delivery services)15
  16. 16. Political-legal  Certified no unauthorized building + compliance with Government lease conditions (The Land Registry)  Statutory Plan Restrictions (Town Planning Board)16
  17. 17. Threats  Costs ↑  Application fee and annual fee of the licenses :  Our store : 100-150 sq.m $3140 (annual fee )  maintenance costs  match the reqirements  Time costs : obtain the licences from FEHD provisional food business licence maintain these standards for 6 months  full licence17
  18. 18. Social cultural trends Three are three opportunities namely E- commerce, coffee and tea culture and finally trends towards healthy eating.18
  19. 19. Social cultural trends Introduction Our society shapes our beliefs, values and norms affect human behavior Culture in Hong Kong Blending Eastern and Western culture Different religions. For example, Buddhism: 90% of the total population, Christian: 500000 of the total population. Educational system is now under reformed 334 curriculum19
  20. 20. Social cultural trends  1st opportunity E-commerce  the use of smartphone is becoming widespread  WIFI-service  According to PayPal, more than 8,000 mobile payments were processed on average per day in Hong Kong in 2011  106 million active PayPal users in 190 markets worldwide buy products from thousands of Hong Kong-based PayPal merchants Many businesses are now done online through computers or smartphone devices a need for our target customers to access to Internet the service we provided satisfy their needs.20
  21. 21. Social cultural trends  2nd opportunity Coffee and tea culture  Coffee culture is strong in Asia  According to the Synovate survey, among the 501 respondents, about one third of residents now purchase ready-to-drink coffee from outside  coffee is imported from 50 different countries world while in China  Tea culture is one of the traditions and customs of China important to be included in our menu As the coffee and tea culture is strong, our target customers would try our products especially when they are having meeting or gathering.21
  22. 22. Social cultural factor  3rd opportunity Trends towards healthy eating  Sales of organic food have been increase in Hong Kong in the past few decades.  The choice of organic products also expands to over 2000 items.  Park N’ Shop and Wellcome & CitySuper, and Jusco, have set up separate organic food sections or allocated retail space to organic products. The fad of organic products intrudes in Hong Kong the sales of organic coffee, tea and cakes in our cafe could be guaranteed.22
  23. 23. External Environment micro-environment23
  24. 24. Competitor analysis  Current Competitors :Coffee shops and café in TST East  46 coffee shops : 13 large chain stores 33 non-chain stores  13 large chain stores : 9 Starbucks 3 Pacific Coffee 1 Mc cafe24
  25. 25. Major competitor  Starbucks: Products :  beverages (various kinds with hot and iced)  Fresh food & Snacks (e.g. breakfast, lunch, tea, salads and cakes) Services  Computer with web cam  Free Wi-fi services  Sofas and chairs with magazines and newspapers25
  26. 26. Major competitor  Starbucks:  Relaxing environment with soft music  Official website and facebook page  interact with customers (obtain the latest information ,history of starbucks )  Online registration system  member receive special promotion  Delivery services (a minimum of HK$300 per order ,except 12 noon -2pm)26
  27. 27. Major competitor  Starbucks: Price range ( different categories):  Breakfast $8-22  Lunch $19-38  Snacks and Salad $8-38  Beverages (3 different sizes in order) 8. 1. Tall $22 9. Grande $34 10.Venti $42 Overall price range :$8-4227
  28. 28. Major competitor  Starbucks:  Location  Located at : Avenue of Stars ,Tsim Sha Tsui Promenade  ✔facing victoria habour  ✔having trees and flowers nearby  ✔footpaths in front of the shop  no cars  ✔sunlight and sea breeze  Environment : ✔ relaxing , peaceful and comfortable ✔ fresh air28
  29. 29. Major competitor  Starbucks:  Promotion ✔ Press releases ✔ Internet : Official website ,Facebook,Email  Close to the market trends and nowadays’ technology29
  30. 30. SWOT analysis  Starbucks  Strengthens & Opprtunities  world’s brand name company  Highest percentage of share of mind  High percentage of market share  Positive Image : ✔ social responsibilities  enormous amount of capital  ↑products and services’ quality  high bargaining powers among suppliers and customers  ↑ selling price  ↑revenue30
  31. 31. SWOT analysis  Weaknesses & threats  Certain extent of over-expansion  (9 stores in Tst East  may weaken its own turnovers)  Only focus on western food (lack of variety)  People don’t like western food culture ✕ consume  E.g. many elder in HK  will go tea restaurant rather than Starbucks31
  32. 32. Major competitor  MC Cafe  Products  Beverage (Espresso, hot and iced drinks)  Frappes and extras  Services  Free WiFi service  Sofa and chairs  Official website and facebook page32
  33. 33. Major competitor  MC Cafe  Price ranges  The overall price ranges are between $8 and $26.  Location  Most of the stores are located at the ground floor  convenient  Promotion  Coupons or punch cards  Slogans  Advertisements  Apps  Newspaper33
  34. 34. SWOT analysis  MC Cafe  Strengths and opportunities:  A mid-range quality substitute  McDonald’s reputation  A large amount of capital34
  35. 35. SWOT analysis  MC Cafe  Weaknesses and threats  Products are lack of variety  The place is small  Are not operate independently35
  36. 36. Supplier Three are two opportunities namely the cooperation with Fair Trade and the abundant supplies of certain food and one threat which is the few supplies of some food.36
  37. 37. Supplier Introduction Suppliers provide the raw materials that we need and the number of supplier affect our bargaining power of attaining the materials. 1st opportunity Cooperation with Fair Trade People are more concerned about their health and environment than before and thus they choose to consume organic food. According to a recent statistics, organic food accounts for 1 to 2% of total food sales worldwide.37
  38. 38. Supplier  2nd Opportunity Abundant suppliers of certain foods  Having lots of food supplies is good for a business  we can have more bargaining power to bargain a lower price for our products.  There are 420 manufacturers supplying sauce and seasoning and 34 manufacturers supplying flour in Hong Kong.38
  39. 39. Supplier  Threat Some food have fewer food supplies  Meat either frozen or fresh and spaghetti, we only get 22 and 15 manufacturers respectively in Hong Kong.  There are fewer suppliers, they are strong in charging a higher price for the materials food cost of the cafe will be increased among these products  It is important to make sure the food quality is up to our standard when a particular good has loads of suppliers.39
  40. 40. Marketing intermediaries Opportunities: ewspaper and magazines e.g. Daily Economics, Times and Asia Finance Direct mail house mail an advertisement to those business firms in Tsim Sha Tsui East (by staff in café) (match with the target group of customers) Threats: •Increase costs40
  41. 41. Publics  There are two opportunities namely the support from various citizen-action publics and the promotion from media groups.  Publics refer to any group that perceives itself having an interest in a company’s ability to achieve its objectives41
  42. 42. Publics  1st opportunity support from various citizen-action publics  our cafe is going to sell organic food which helps to promote public health  various citizen-action publics such as environmental groups would be attracted and turn to support our products  For example, the Environmental Working Group which recommending consumers should look for organically produced products so as to lead a healthy life  be attracted to our business By selling organic products, the sales would be increased as supported by the environmental groups maintain regular customers42
  43. 43. Publics  2nd opportunity the promotion from media groups  open an account in Open Rice  provide various types of online coupons  make an app By using the promotion from various media groups attract our target customers to consume our products and expand our business without physical boundary provide the latest information to our customers and maintain their regular visits43
  44. 44. Target market44
  45. 45. Target customers  Business people  Tsim Sha Tsui is one of the Central Business District  Younger age groups  majority of buyers in Hong Kong of Western foods tend to be females, who do more food shopping than males, with younger age groups  Middle class income group  Demand for high-value food and beverage is mainly among the 2.3 million middle class consumers  Business customers are willing to pay large amounts of money in purchasing  price is not the main factor to decide purchasing45
  46. 46. Marketing mix strategies and programs46
  47. 47. Marketing Strategies Products and services: customer-oriented, psychographic segmentation Pricing: market skimming Cost-based pricing à breakeven pricing Price-adjustment strategies : segment pricing, psychological pricing47
  48. 48. Four marketing mixes48
  49. 49. Products & Services  GreenLife: Food Beverages Customer service  Food (3 categories) 1. Spaghetti and rice (main dishes) (Salmon, meat sauce, bacon & mushroom and vegetable) 2. Snacks  chicken wings  Sandwiches (egg, cheese, tuna, tomato for mix and match)  Fruit salad (fresh organic vegetables and fruit)  Cakes (blueberry cheesecake, chocolate cheese cake and cup cakes)49
  50. 50. Products & Services  ✔From light  main dishes  Not only for tea time  ✔breakfast , lunch ,dinner (normal meal)  ✔healthy and fresh ( use organic products)  good refreshment for business people  Tailor-made for business people50
  51. 51. Beverages (3 categories) 1. Coffee : Cappuccino, Mocha, Latte and Espresso (most of the coffee beans  organic and fair trade products) 2. Alcoholic drinks Red wine (e.g. Chateau des Leotins 2008 ) White wine (e.g. Trebbiano dAbruzzo Badia Frasca, D.O.C. 1998 ) Champagne (e.g. (A.O.C.) Brut, Pascal Fleury ) 3. Non-alcoholic drinks milk, chocolate, milk tea and lemon tea in terms of hot and iced. Special drinks : Tea (both British tea and Chinese tea) Fresh fruit juice (apple ,orange & pineapple) Fruit punch51
  52. 52. Products & Services  ✔ variety of beverages  different people’s taste  Refresh  help to think & brainstorm ideas ↑  Unique beverages among coffee shop and café  ★ Alcoholic drinks  Various kinds (red, white wine and champagne)  Red wine for meetings  champagne for celebrations52
  53. 53. Services  Customer service: provision of service to customer before, during and after a purchase (1) First stage (before purshcasing)  Customer  can make reservation ( through reservation system online or by phone call)  Research information (through company’s homepage ,Facebook page ,email , phone call & Fax)53
  54. 54. Services (2) Consumption phase Core product : Food and beverages Facilitating products : customer services like taking order of food , handling guests’ requires Environment (augmented product) (target customer’s needs) quiet and relaxing environment Tables, computers, projector, stationery, free wi-fi54
  55. 55. Services  VIP room (private area)  ✔ conference table  designated for meetings  (3) Detachment phase  ask for feedback satisfied or not  ✔ service recovery chance  create satisfaction to unsatisfied guests  create a guests profile (visited ≧5 times)  Records find out preference and spending patterns  Keep paid bottle wine  for next visit  Quality of service ↑55
  56. 56. Pricing  Definition: Pricing refers to the amount of money charged for a product or service or the sum of the values that consumers exchange for benefits of using the product or service Pricing approach Break-even pricing  Break-even pricing :Determining the price at which it will break even. At the break-even point, profit equals to loss. Its formula is BE = fixed costs/contribution (selling price-variable cost).56
  57. 57. Reasons for choosing break-even pricing 1. Predicting the change of sales when price changes 3. Preventing losses 5. When the business will start generating a positive return57
  58. 58. Price list Here are the tables showing the fixed costs (Table 1) , variable costs (Table 2)and food costs(Table 3).Items Cost(HKD)1.Rent 80,0002.Decoration 83333.Furniture 25004.Kitchen equipment 16665.Coffee machine 8336.Salaries 25007.Others 261Totals 96093 Table1 Items Cost(HKD) 1.Gas 2,000 2.Water 1,500 3.Electricity 3,000 4.Others 75058 Totals 7,250 Table2
  59. 59. Table3- Items Selling Unit Expected unit Total revenue Total costs ProfitBeverages price demand demand at a (HKD) needed to given price break-even 1.Cappuccino(hot:350ml, cold:500ml) 45 480 750 33,750 27,110 6,640 2.Expresso(hot:350ml, cold:500ml) 42 546 450 18,900 21,110 -2,210 3.Mocha(hot:350ml, cold:500ml) 45 480 460 20,700 21,310 -610 4.Latte(hot:350ml, cold:500ml) 45 480 485 21,825 21,810 15 5.Wine a) BORDEAUX , A.O.C., Chateau des a)130 a)109 a)40 a)5,200 a)12,910 a)-7,710 Leotins 2008 (750 ml) b)370 b)34 b)19 b)7,030 b)12,490 b)-5,460 b) Cardeal Reserva, DAO, c)114 c)105 c)49 c)5,586 c)13,090 c)-7,504 D.O.C. 1983 ( 750 ml) d)170 d)80 d)32 d)5,440 d)12,750 d)-7,310 c)Trebbiano dAbruzzo, Badia Frasca, e)200 e)60 e)23 e)4,600 e)12,570 e)-7,971 D.O.C. 1998(750 ml) f)340 f)37 f)20 f)6,800 f)12,510 f)-5,710 d) PETIT CHABLIS A.O.C. (Chardonnay), Domaine Millet 2007 (750ml) e) CHAMPAGNE Brut, Charles Leprince, Chateau Leprince (half-bottle), A.O.C. f) CHAMPAGNE (A.O.C.) Brut, Pascal Fleury 59 6.Non-alcoholic drinks(hot:250ml, 35 800 810 28,350 28,310 40 cold:500ml)
  60. 60. 7.Spaghetti/rice- 69 245 450 31,050 21,110 9,940 Table3- food andSalmon snack8.Sandwich 40 600 350 14,000 19,110 -5,1109.Cakea) blueberry cheese a)35 a)800 a)980 a)34,300 a)31,710 a)2,590cake and chocolate b)38 b)672 b)510 b)19,380 b)22,310 b)-2,930cheese cakeb)Cup cake10.Fruit salad 45 484 540 24,300 22,910 1,39011.ChickenWings(6 40 600 700 28,000 26,110 1,890pieces)60
  61. 61. Pricing strategy Market skimming!!!61
  62. 62. Pricing strategy-Market skimming Definitionsetting a high price at first,lowering the price over time when the market is price insensitive Reasons for choosing:  1. Target customers are price insensitive towards our products  According to Journal of Business Research, business customers are willing to spend large amounts of money in their purchase of goods and services, while keeping loyal business customers can give greater revenue for a supplier or a service provider.62
  63. 63. Pricing strategy-Market skimming Reasons for choosing:  a high quality image of GreenLife can be created by charging a higher initial price  first cafe selling organic coffee and cakes and providing facilities such as projectors and small conference room in TST East  high chance in grabbing the early adopters63
  64. 64. Place  Shop 44B, G/F, Harbour Crystal Center, 100 Granville Road, Tsim Sha Tsui East in Kowloon  Near to the Hung Hom and Tsim Sha Tsui MTR Station  ground floor high in accessibility and convenient64
  65. 65. Distribution channel-Internet  Create website and facebook  Upload Coupon  76.4% of all households in Hong Kong have PC at home and able to access the Internet (according to Thematic Household Survey Report - Report No. 48)  The most influential social networking site in Hong Kong is Facebook  Hong Kong users have has grown to 3,700,320 users65
  66. 66. Promotion  Promotion policy and advertising  Promotion cards on tables  Large poster on the window of café  Public relations and sales promotion  Products tasting event  Membership scheme  Different festivals promotions  Issue online coupon  Design an app  Giving sample66
  67. 67. Products tasting event  knowing which products can be main or are most popular products  held periodically  3 to 5 new products or improved products to be tested67
  68. 68. A membership scheme  Establish a good relationship with customers  gain support and loyalty  Invite them to join the events giving them discount and sample, and using special equipment in café without extra charge  A-one-year membership spending $400 or above at once or spending $800 within 2 months  Permanent member meet other standards to get the membership card i.e. purchase the coupons or to spend more68
  69. 69. Different festivals promotions  Christmas  New Year (31st Dec – 1st Jan)  Valentine’s Day  build relationships with new customers and the members or regular guests69
  70. 70. Issuing online coupon  Cooperate with online restaurant guide websites i.e. Open rice  Rate GreenLife  Download the coupons of GreenLife issued  Easy to know the comments of GreenLife Improve our products and services  Facebook (the most influential social networking site in Hong Kong)  By updating the information of GreenLife, people can always catch up with it and promote GreenLife70
  71. 71. Design an app  The trend of using smart phones  Design app on our own and allow the people to download  make reservations  book the facilities (Projector)  download the code of the coupon and use it in GreenLife, members can have a special chat room or corner71
  72. 72. Giving sample  Let others know GreenLife will be launched soon  How good our products are or our products do match with their taste72
  73. 73. Marketing budget73
  74. 74. Marketing budget- projected sales  The time period of the sales projection is one year and the figures are presented in a monthly basis.  We need to have three hundred and thirty-nine thousand dollars in order to open a cafe in our chosen destination  After half year of operation, we can cover our cost.Months Expected revenue Expected costJanuary 309,210 339,230February 315,394 342,622March 321,702 346,048April 328,136 346,013May 341,391 342,553June 348,218 339,128July 351,700 335,737August 355,217 332,380September 358,769 329,057October 362,357 325,767November 365,980 322,510 74December 373,300 328,960
  75. 75. Marketing budget- marketing expense  Including fixed costs, variable costs which include the promotional expense and food costs  Fixed costs$96,093 per month, Variable costs$7,225 per month which includes $9,000/12 = $900 average monthly promotional fees. Here is the list about the details of our promotional fees.  All food costs are $235,887 in the first month. As we have eight types of products and thus the food costs for each type product is $982 every day. Name of promotional programs Date Budget Pre-promotion Mid May – June $2500 Opening ceremony 1st June $3000 Member recruiting - $200 Product tasting event Mid Nov. $800 Printing cost - $500 Decoration fee Christmas, New Year and $2000 Valentine’s date75 Total - $9000
  76. 76. Marketing control76
  77. 77. Marketing controlProgram name Person responsible Date Budget Explanation Budget1.Sales Accountant and Monthly N/A To find out whether the actual sales meet the Expected revenue:evaluation Managers expected sales target. Then, adjusting the Jan-June: ↑2% monthly strategies that are using to boost up the sales Jul-Nov: ↑1% per month revenue or to maintain a steady sale. Dec: ↑2% increase. Expected cost: Jan-Mar  controlling cost: ↑ 1% Apr-Nov  cutting cost by1% Dec  controlling cost: ↑2%2.Progress All Quarterly N/A To evaluate how the business goes during half a Expected Revenue:check year time in order to meet with the objectives, First quarter: To evaluate whether the revenue and i.e. break even and customer retention. May cost of these three months are moving to our monthly need to change the price-adjustment strategies target. Second quarter: Compile the revenue of three months, revenue7%, cost-2% Third quarter: Compile the revenue of three months, revenue4%, cost-2% Fourth quarter: Compile the revenue of three months, revenue3%, cost6%3.Annual All N/A To evaluate how the business goes during whole Expected revenue: $4,131,374 31stevaluation year in order to meet with the objectives, i.e. Expected Cost: $4,030,005 May break even and customer retention. May need to  Earn $101,369 at the end of a year77 change the price-adjustment strategies