Part A: Evaluate marketing opportunity options
Report
1. Findings
Strategic direction and organisational objectives for 2021
The strategic direction is to make Pesto’s a leading Italian restaurant. The restaurant aims to offer customers unique and authentic recipes less popular Italian traditions. In preparing the high quality dishes, Pesto’s focuses on environmental sustainability as well as customer expectations. Pesto’s targets 100% customer satisfaction, 15% staff retention rate on annual basis, increased profitability, 100% purchase from local ingredient suppliers, and 50% reduction in landfill waste (Pesto’s, 2020).
For 2021, Pesto’s aims to surpass the 10% profit margin. By achieving this, the company will exceed gross profit of $120,000 in 2021. Pesto’s targets total sales of $1,100,00, total operating expenses of $959,400, and net profit of $100,529. Pesto’s estimates that costs of food and beverages will equal 50% of the sales, payroll will be 23% of sales, and allocated marketing expenses is $24,000 (Pesto’s 2020).
Current Size, Capabilities, and Organisational Resources
According to the company’s business plan (Pesto’s, 2020), Pesto’s gains its competitive advantage from the use of rare recipes and unique menus that feature ethnic Italian dishes. The restaurant is strategically located, in Eagle St. Pier (in Brisbane City), to attract local customers as well as tourists. The restaurant has both indoor and outdoor spaces. Outdoor space can accommodate 40 seats and indoor 80 seats.
Marketing Objectives of Pesto’s
Pesto’s aims to increase company sales. The following are Pesto’s marketing objectives:
l Increasing market penetration
l Introducing new plant-based menus (products) for product development purposes
l Targeting new markets for current products or setting up new business units
l Diversification of products or market through franchises and acquisitions
Effects of Capabilities and Resources Weaknesses of Pesto’s on Marketing Objectives
l If Pesto’s fails to find adequate local suppliers for its ingredients, the company will still sell food at high costs and be unable to enter new markets where its competitors sell food at relatively low prices. This may hinder attainment of its market penetration goal.
l Again, with the high rental costs, Pesto’s may be unable to meet its goal of targeting new markets, especially if it involves establishment of new business units.
l The absence of properly established social media is also a disadvantage for Pesto’s because the company intends to use social media platforms to market its products and menus
2. The risks and returns of each of the four marketing opportunity options being considered by the CEO
Marketing Opportunity | Risks | Returns |
Increasing market penetration | Pricing wars, lower profit margins | Faster diffusion and adoption of products and menus into the marketplace |
Introducing new plant-based menus (products) for product development purposes | Setting of unrealistic expectations, external influences | Increased market share, more sales and revenue |
Targeting new markets for current products or setting up new business units | Financial risk - high initial investment | Increased sales and earnings |
Diversification of products or market through franchises and acquisitions | Lack of experience in new markets or high initial investment and decreased profits | More menu or product varieties and options |
3. Recommendation for two opportunities to pursue that have the lowest risks and highest potential for return
1. To increase marked penetration - Market penetration offers the opportunity to face and defeat competitors. Pesto’s already has a competitive advantage in that it uses unique and rare ingredients to make the Italian food (Pesto’s, 2020). Besides, the company recognises its role in sustainability. Mintel (2019) argued that even restaurants should observe restainability goals when sourcing, producing, and even disposing products. Pesto’s aims to source its ingredients from local supplies and reduce food wastage by 50%.
2. Introducing new plant-based menus (products) for product development purposes. Plant-based dishes are on high demand. In Australia, about 2.4 million people are fully or almost vegans and the country takes third place among the market with the most significant growth in vegan diets (Gbogbo, 2019). Lam (2018) also identified plant-based eating as a new trend that was popular in Australia. In fact, Kneebone (2019) reported that Australia would hold the third place in plant-based eating from 2015 to 2020 and by 2020 the vegan market would reach $2.5 million.
Part B: Develop a marketing strategy
1. Research and outline a marketing strategy that meets the marketing objectives and brief
Market Penetration Strategy: To focus on selling the current menus and products within the old markets with the goal of gaining higher share of the market (Team FME, 2013). To achieve this, Pesto’s should increase the market share of its existing menu, achieve dominance in such growth markets, and find ways of increasing menu usage among current customers.
Product Development Strategy: Involves development of new menus for the old target markets. Continuous research and development are required for successful implementation of this strategy, and evaluation of customer needs should be consistent as well (Team FME, 2013). To increase success chances, Pesto’s should ensure that the new product it launches is closely related to current dishes, relates to purchasing habits of existing customers, and reinvents current menu or products.
2. How the strategy leverages current organisational resources and capabilities
Market penetration strategy: Requires Pesto’s to sell more of the products in current menu to the existing customers who belong to Gen Z and millennial aged 18 to 37 and the adults aged 38-50. It also requires selling to potential buyers within these age groups, who also exist in the current target markets.
Product development strategy: Also involves leveraging of the existing customer base. In other words, the company will research needs of existing customers and introduce a new products that meets such demands. Pesto’s existing research and development team will take an active role in the assessment of both the products and customers before the official launch of new menu.
3. How the strategy aligns with the strategic direction and goals of Pesto’s
The market penetration and product development strategies match Pesto’s intentions to achieve 100% customer satisfaction, dominance in current target markets, and grow profit margin past 10%. Additionally, the product development strategy aligns with the company’s focus on introducing new vegan dishes to its existing customers.
4. Feasibility of the Strategy
Market penetration and product development strategies make maximum use of company’s existing strengths such as unique ad rare Italian food and existing customer base. Again, both strategies have the potential to help Pesto’s grow its profit margin past 10%. Product development strategy can also enable Pesto’s to introduce variety of vegan dishes and solve the identified customer demands. In this way, it will help to increase customer satisfaction and minimise complaints.
5. How the strategy increases organisational resources or expertise to bridge the gaps between current capabilities and marketing objectives
Market penetration strategy should help Pesto’s to gain new customers and grow its existing customer base. This should result in increased sales and profits. Growth of customers should also enable the company to sell more of its food and reduce food wastes in bins. When this happens, Pesto’s will be closer to its sustainability goals. On the other hand, product development strategy involves introduction of more vegan dishes to meet the already identified demands within the existing market. It should increase customers for the company, lead to growth of sales, and contribute to more profits.
References
Part C: Draft marketing plan
Appendix C
Pesto’s Marketing Plan
Prepared: 14/06/2022
Pesto’s is an Italian restaurant that entered food business in June 2017. The restaurant now strives to become the leading plant-based food producer and seller in Brisbane City. Pesto’s strength is in its ability to make unique Italian dishes from rare and authentic ingredients. The company aims to exceed its 10% profit margin by 2021 and the aim of this marketing plan is to help with sales growth and profitability.
Pesto’s targets Gen Z and millennials within the ages of 18-37 and adults aged 38 to 50. The main marketing platforms include social media (Facebook and Instagram) and website or blog. Pesto’s must exploit a number of marketing opportunities to compete with players in plant-based food division, which is fast growing and currently attracts more investors.
The Business
Business name: Pesto’s Fine Foods
Business structure: Pty Ltd.
ABN: 123 456 789
Business location: 123 Main Street, Brisbane, QLD 4000
Date established: 12th June 2017
Business owner(s): Rose Rossi, Lily Rossi
Relevant owner experience: Several years of experience as a chef at acclaimed Australian and overseas restaurants. Experienced in management of food businesses.
Products/services: authentic plant-based Italian cuisine that offers high quality dining
Vision statement:
To make Pesto’s a premier Italian restaurant in Brisbane by introducing more vegan dishes and exploiting various opportunities for market expansion
Goals/objectives:
l To improve market penetration
l To encourage product development by introducing new plant-based menus
l To find new markets for existing menus or establish new business units
l To diversify menus or markets using acquisitions and franchises
Target market:
Customers that seek trendy dining experiences and have higher chances of sharing on social media. In particular, these are Gen Z and Millennials of ages 18-37, and adults aged 38 to 50.
Marketing strategy:
Social media platforms like Facebook and Instagram.
Blogs and websites
To exceed 10% profit margin by 2021
To surpass $120,000 in gross profit by 2021
Pesto’s is an Italian restaurant that serves Italian food made using Tuscan traditional recipes.
The restaurant is situated close to lively dining area in St. Pier, Brisbane City.
Pesto’s entered the food business in June 2017.
Strengths | Weaknesses |
Pesto’s has an existing market, with significant number of customers Pesto’s has a Research and Development to help with assessment of new markets, new products, and customer needs Pesto’s specialises in plant-based menus whose demand is currently high globally, and in Australia (Lam, 2018; Gbogbo, 2019; Kneebone, 2019) The restaurant recognises its sustainability role (Mintel, 2019) and is currently working on how it sources ingredients (switching from importing to local suppliers) and purposes to cut food wastage by 50% (Pesto’s, 2020) | High food costs due to need to include the costs of research and development. Also, Pesto’s still depends on imported ingredients High rental costs Absence of a well-established social media presence |
Opportunities | Threats |
Market penetration Product development through introduction of new plant-based products Market development - setting up of new business units or targeting new markets for Pesto’s brand Diversification of market /product through acquisition or franchise | Possibility of new entrants as plant-based market is fast growing, and attractive to many investors (Lam, 2018; Gbogbo, 2019; Kneebone, 2019) Economic conditions that affect costs of ingredients may affect Pesto’s cash flow
|
S.W.O.T weakness/ threat | Activity to address weakness/threat | Activity completion date |
High food costs due to need to include the costs of research and development. Also, Pesto’s still depends on imported ingredients | Source ingredients from local suppliers to cut the costs associated with dependence on imported products | January 2021 |
Absence of a well-established social media presence | Prioritising social media in Pesto’s marketing plan | November 2020 |
Possibility of new entrants as plant-based market is fast growing, and attractive to many investors | Differentiating from competition by focusing on unique and rare traditional Italian menus | November 2020 |
Product/Service | Description | Price |
Grilled Salmon Teriyaki | Contains fresh fillet of atlantic salmon glazed with pesto, olive oil & teriyaki sauce, served with basmati rice | $15 |
Eggplant Parmigiana | Eggplant lightly breaded, fried golden & topped with marinara sauce & mozzarella cheese, served on a bed of angel hair pasta tossed in a pesto sauce | $13 |
Lasagna Vegetariano | Layers of tender cooked noodles filled with ricotta cheese, spinach & a mixture of vegetables, topped with mozzarella cheese | $11 |
Market position: The products are competitive. As stated in Pesto’s (2020) business plan, dinners are willing to spend $15.20 per meal. Pesto’s Italian entries range between $10.50 and $15. A competitor such as Mecca Bah Brisbane sells food from $14 to $29 while Grassfed’s specials sell from $13-15.5.
Unique selling position:
Pesto’s Tuscan recipe offerings are rarely found on menus of Italian restaurants. Currently, the company has succeeded in capturing plant-based food flavours and recipes.
Other than excellent wine and food quality, Pesto’s provides unique cultural encounters and customers get the chance learn the Italian cuisines that are less known.
Pesto’s emphasises application of vegan ingredients sourced locally and Italian cheeses, sauces, and cured meat.
Anticipated demand:
Intermedia indicated that Australia’s Eating Out report showed that average household spending on eating out is $4,900 and spend on average $15.20 for dinner (Pesto’s, 2020). Additionally, customers show higher preference for healthy food.
Although the demand for Italian seemed to decrease, Pesto’s has adopted a differentiation strategy that sees it serving healthy, rare and authentic Italian food.
Besides, the growing trend in Australia is preference for plant-based or vegan recipes (Lam, 2018; Gbogbo, 2019; Kneebone, 2019) and Australia remains third among the fastest growing vegan market with an anticipated annual growth rate of 9.6% (Kneebone, 2019). Pesto’s believes that its rustic and fresh food will surely appeal to customers within its target markets.
Pricing strategy:
Although Pesto’s lacks economies of scale and has to incorporate research and development costs in its plant-based options, its menu item prices are within the range of what competitors charge.
Value to customer:
Pesto’s adds value to the customer experience by providing unmatched service, innovative menus, and high quality food. Restaurant also gives customers a relaxed setting where they can eat in groups, like a family.
Growth potential:
Pesto’s anticipates an above 10% profit margin return. The growth will result from increased market penetration, leading to more sales.
Job Title | Name | Responsibilities |
Marketing Manager | Jamie Mason | Develop marketing and pricing strategy, analyses trends while managing business budgets, and oversees staff from marketing department |
Marketing Opportunity | How they align with strategic goals |
Increasing market penetration | Increase market dominance through faster diffusion and adoption of products and menus into the marketplace |
Introducing new plant-based menus (products) for product development purposes | Contribute to profit margin growth through increased market share, more sales and revenue |
Targeting new markets for current products or setting up new business units | Enable the company to exceed $120,000 profit threshold through growth of sales and earnings |
Diversification of products or market through franchises and acquisitions | Improve customer satisfaction levels through more menu or product varieties and options |
Pesto’s Tuscan recipe offerings are rarely found on menus of Italian restaurants. Currently, the company has succeeded in capturing plant-based food flavours and recipes.
Other than excellent wine and food quality, Pesto’s provides unique cultural encounters and customers get the chance learn the Italian cuisines that are less known.
Pesto’s emphasises application of vegan ingredients sourced locally and Italian cheeses, sauces, and cured meat.
Customer demographics
Customers that seek trendy dining experiences and have higher chances of sharing on social media. In particular, these are Gen Z and Millennials of ages 18-37, and adults aged 38 to 50.
Anticipated demand and market trends
Intermedia indicated that Australia’s Eating Out report showed that average household spending on eating out is $4,900 and spend on average $15.20 for dinner (Pesto’s, 2020). Additionally, customers show higher preference for healthy food.
Although the demand for Italian seemed to decrease, Pesto’s has adopted a differentiation strategy that sees it serving healthy, rare and authentic Italian food.
Besides, the growing trend in Australia is preference for plant-based or vegan recipes (Lam, 2018; Gbogbo, 2019; Kneebone, 2019) and Australia remains third among the fastest growing vegan market with an anticipated annual growth rate of 9.6% (Kneebone, 2019). Pesto’s believes that its rustic and fresh food will surely appeal to customers within its target markets.
Key customers
Customers that seek trendy dining experiences and have higher chances of sharing on social media. In particular, these are Gen Z and Millennials of ages 18-37, and adults aged 38 to 50. Instagram posting will be used to market Pesto’s plant-based food items to these key customers.
Customer management
Addressing customers’ complaints and finding the most appropriate solution to their identified problems.
Using Instagram to post new food offerings and recipes
Responsing to customers’ queries on both Instagram and Facebook
Informing customers that the company is environmentally concious and serves plant-based food for healthy living
Competitor | Marketing Strategy | How Pesto’s rate against them | How Pesto’s can improve its offering |
Il Centro Restaurant & Bar – Eagle St. Pier | Facebook and review sites like Tripadvisor and Zomato | Pesto’s focuses on using Facebook, Instagram and website/blog for marketing | Join Tripadvisor and Zomato |
Cha Cha Char – Eagle St. Pier | Uses Facebook, Twitter, Instagram, and on review sites such as Zomato, Trip, and Opentable | Pesto’s focuses on using Facebook, Instagram and website/blog for marketing | Use Twitter, Trip, and Opentable |
Otto Ristorante | Advertises menu on Facebook and company website. It is also found on Tripadvisor, Tatlerasia | Pesto’s focuses on using Facebook, Instagram and website/blog for marketing | Consider using Tripadvisor and Tatlerasia |
George's Paragon Seafood Restaurant | Company website/blog and Facebook for advertising. Also review sites like Zomato, Tripadvisor, and Opentable | Pesto’s focuses on using Facebook, Instagram and website/blog for marketing | Start using Zomato, Tripadvisor and Opentable |
Grown | Advertises menus on Facebook, Instagram, and company website/blog. Also on review sites like Zomato, Tripadvisor, and Opentable | Pesto’s focuses on using Facebook, Instagram and website/blog for marketing | Consider using Opentable, Zomato, and Tripadvisor |
Competitor details
Competitor | Product and Pricing | Promotion | Value to customers | Strengths | Weaknesses |
Grown | Ala Carte and Shared Plates priced from $7-$24. Pesto’s prices fall within this limit, though the upper limit is higher | Online ordering and bookings | Innovative vegan food, including Mediterranean inspired food, with a focus on environmental sustainability | • Diverse menu featuring multiple cuisines • Strong relationships with suppliers within 400 km radius of Brisbane resulting in low carbon footprint | • High price point |
Otto Ristorante
| Menu items priced from $6 to $74. The lower value is less than Pesto’s and the higher price is too high compared to Pesto’s. | Autumn festivals Picnic Packs
| High quality Southern Italian cuisine in an inviting atmosphere | - High quality of food and service - Interesting décor, and ambience - Well established, good reputation - Well received vegan menu featuring Italian classics | High price point |
Cha Cha Char – Eagle St. Pier
| Char signature classic entrees prices range between $24 and $29, much higher than Pesto’s ($11-$15.5) | Good Food gift cards Tropical Days and Summer’ Nights promotions (Every $10 gives one entry for winning Audi Q2 SUV) | - High quality meat dishes served in a quirky and whimsical setting | - High quality of food and service - River view for diners - Well established, good reputation | - Menu remains static - Not enough vegetarian options |
Environmental/industry analysis
In Australia, about 2.4 million people are fully or almost vegans and the country takes third place among the market with the most significant growth in vegan diets (Gbogbo, 2019). Lam (2018) also identified plant-based eating as a new trend that was popular in Australia. In fact, Kneebone (2019) reported that Australia would hold the third place in plant-based eating from 2015 to 2020 and by 2020 the vegan market would reach $2.5 million.
For 2021, Pesto’s aims to surpass the 10% profit margin. By achieving this, the company will exceed gross profit of $120,000 in 2021. Pesto’s targets total sales of $1,100,00, year-on-year profits, and 100% customer satisfaction (Pesto’s 2020).
Marketing Strategy | Tactics to achieve strategy | Expected business improvement | Costs involved | Resources and staff required |
Market penetration | Lower or raise menu item prices Revamp digital marketing plan to increase brand awareness | Faster diffusion and adoption of products and menus into the marketplace | Costs involve production of more food items and marketing expenses Expenses: $4,000 | Marketing Manager
Operations and Finance Officer
Research and Development department staff
Pesto’s may source sales staff from external organisation |
Product development | Modify existing products to solve an identified problem Invent plant-based menu items to attract new customers | Variety in menu offerings
Growth of customer base once the strategy attracts new buyers
Customer retention | Costs of researching and assessing customer needs, and potential of new products Expenses: $6,000 | Marketing Manager
Research and Development department staff
Operations and Finance Officer |
Marketing activity schedule
Activity type | Strategy | Target date(s) | Review schedule | Personnel responsible for review | Success Metrics | Contingency measures |
Instagram | Used to showcase Pesto’s entrees for customers to know what to expect
Also useful during launch of the new menu items
| Nov 2020 | Weekly and Monthly | Marketing Manager
Operations and Finance Officer
Sales team | Customers know the names of popular menu items
Food items posted on Instagram are the most purchased | Inform customers that visit the restaurant about the company’s Instagram page
Increase engagement with customers on Instagram |
Website or blog | To show the entire menu, promotional events, and reservation tab | Nov 2020 | Monthly, quarterly | Marketing Manager
Operations and Finance Officer
Sales team | At least 70% of customers order food online, sign up for listed events, and participate in promotions | Create awareness of online products and services
Make the website user-friendly |
Review sites (Zomato, Tripadvisor) | To show customer ratings of Pesto’s. This will help the company to determine customer satisfaction and identify areas to improve to achieve 100% customer satisfaction | Dec 2020 | Weekly, Monthly, Quarterly, annually | Marketing Manager
Operations and Finance Officer
Sales team | 0-1% customer complaints | Respond to customer complaints immediately
Find a lasting solution |
The Finances
Pesto’s should charge a price range of $10 to $25 for its vegan dishes. This prices accounts for personnel, cashflow, and operational costs. The price should also increase the profit margin and will help Pesto’s to meet its sales objectives. This price range is within what Pesto’s competitors charge for their products, meaning that no problems should be faced by both customer and supplier sides.
Pesto’s should surpass the 10% profit margin and exceed gross profit of $120,000 in 2021. Pesto’s total sales should be $1,100,00 by 2021. However, seasonal influences may affect these objectives. Pesto’s should sell more menu items during peak season and the demand could drop slightly during low season.
Marketing budget 2020
Legal and Ethical Requirements
The marketing plan and activities must meet the following legal and ethical requirements:
Legal requirements:
l Stay up-to-date about marketing regulations or even hire trained experts to assist, to avoid legal risks
l Avoid false advertising. All the images and messages used should not mislead buyers. Honest details should be provided regarding what customers should expect while buying the products.
Ethical requirements:
l Responding meaningfully to customer concerns. The company should prioritise customers’ concerns over safety of products or service. Protecting consumer rights means investigating the complaints immediately
l Minimising risks while maximising benefits. A marketing strategy is ethical if it benefits a vast number of people while posing harm to the least number of individuals.
Assessment 3
Part A: Role Play – Present marketing plan for feedback and approval
[Role Play]
Part B: Revise and disseminate marketing plan
Covering Email
To: CEO and Subordinate Staff
From: Marketing Manager of Pesto’s
Date: 14/06/2022
Dear Sir/Madam,
Re: Marketing Plan Dissemination
Pesto’s now strives to become the leading plant-based restaurant in Brisbane City. Pesto’s strength is in its ability to make unique Italian dishes from rare and authentic ingredients. The company aims to exceed its 10% profit margin by 2021 and the aim of this marketing plan is to help with sales growth and profitability.
Pesto’s targets Gen Z and millennials within the ages of 18-37 and adults aged 38 to 50. The main marketing platforms include social media (Facebook and Instagram) and website or blog. Pesto’s must exploit a number of marketing opportunities to compete with players in plant-based food division, which is fast growing and currently attracts more investors.
Find more details in the attached Marketing Plan.
Sincerely,
Marketing Manager
