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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, 11370913D
1

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
Reference
2

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 countries
3

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. External Environment
macro-environment
5

6. Demographic trends
Macro Opportunities Threats
environment
• Customers knowledge about
Demographic • 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
product
6

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 will
7 probably buy our product

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. Ecological trends
 Get raw materials from Fair Trade, as it promotes
equity, sustainable development and organic farming etc.
 Gaining environmentalist support
 Promoting some values
9

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 trends
10

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. 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. 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 premises
13

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. 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. Political-legal
 Certified no unauthorized building
+ compliance with Government lease conditions
(The Land Registry)
 Statutory Plan Restrictions (Town Planning Board)
16

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 licence
17

18. Social cultural trends
Three are three opportunities namely E-
commerce, coffee and tea culture and
finally trends towards healthy eating.
18

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
curriculum
19

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. 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. 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. External Environment
micro-environment
23

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 cafe
24

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 newspapers
25

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. 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 :$8-42
27

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 air
28

29. Major competitor
 Starbucks:
 Promotion
✔ Press releases
✔ Internet : Official website ,Facebook,Email
 Close to the market trends and nowadays’ technology
29

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  ↑revenue
30

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
Starbucks
31

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 page
32

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
 Newspaper
33

34. SWOT analysis
 MC Cafe
 Strengths and opportunities:
 A mid-range quality substitute
 McDonald’s reputation
 A large amount of capital
34

35. SWOT analysis
 MC Cafe
 Weaknesses and threats
 Products are lack of variety
 The place is small
 Are not operate independently
35

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. 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. 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. 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. 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 costs
40

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 objectives
41

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 customers
42

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 visits
43

44. Target market
44

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 purchasing
45

46. Marketing mix strategies
and programs
46

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 pricing
47

48. Four marketing mixes
48

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. 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 people
50

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 d'Abruzzo 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 punch
51

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 celebrations
52

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. 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-fi
54

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. 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. 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 return
57

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 80,000
2.Decoration 8333
3.Furniture 2500
4.Kitchen equipment 1666
5.Coffee machine 833
6.Salaries 2500
7.Others 261
Totals 96093 Table1
Items Cost(HKD)
1.Gas 2,000
2.Water 1,500
3.Electricity 3,000
4.Others 750
58 Totals 7,250 Table2

59. Table3- Items Selling Unit Expected unit Total revenue Total costs Profit
Beverages 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 d'Abruzzo, 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. 7.Spaghetti/rice- 69 245 450 31,050 21,110 9,940 Table3-
food and
Salmon
snack
8.Sandwich 40 600 350 14,000 19,110 -5,110
9.Cake
a) blueberry cheese a)35 a)800 a)980 a)34,300 a)31,710 a)2,590
cake and chocolate b)38 b)672 b)510 b)19,380 b)22,310 b)-2,930
cheese cake
b)Cup cake
10.Fruit salad 45 484 540 24,300 22,910 1,390
11.ChickenWings(6 40 600 700 28,000 26,110 1,890
pieces)
60

61. Pricing strategy
Market
skimming!!!
61

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. 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 adopters
63

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 convenient
64

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 users
65

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 sample
66

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 tested
67

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 more
68

69. Different festivals promotions
 Christmas
 New Year (31st Dec – 1st Jan)
 Valentine’s Day
 build relationships with new customers and the members or
regular guests
69

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 GreenLife
70

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 corner
71

72. Giving sample
 Let others know GreenLife will be launched soon
 How good our products are or our products do match with
their taste
72

73. Marketing budget
73

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 cost
January 309,210 339,230
February 315,394 342,622
March 321,702 346,048
April 328,136 346,013
May 341,391 342,553
June 348,218 339,128
July 351,700 335,737
August 355,217 332,380
September 358,769 329,057
October 362,357 325,767
November 365,980 322,510
74
December 373,300 328,960

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 date
75
Total - $9000

76. Marketing control
76

77. Marketing control
Program name Person responsible Date Budget Explanation Budget
1.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
31st
evaluation 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 year
77 change the price-adjustment strategies