...The widening income gap pushes Red Lobster to either go upscale or go downscale (Chen, 2013). The top 10 percent richest people earned 12 times what the lowest ten percent earned, according to 2012 Census Bureau data. Although an unexpected high percentage (23%) of experientials patronized the restaurant in 2008 (Red Lobster Case, 2010), the shrinking middle class makes it embarrassing to serve both experientials who expect the best service and price sensitive customers at the same time. Neither the rich nor the poor will choose Red Lobster since rich people will directly go to fine dining restaurants because they expect top notch service, and the low income people tend to spend more time eating at home (Gustafson, 2012). For a chain restaurant as large as Red Lobster, it should not go premium and change its customer base to experientials because of potential market opportunities and its own operating features. Segmentation The revenue brought by more profitable experientials will be offset by the loss of other 70% price sensitive customers because they can not afford the costly upscale service. It is true that experientials account for 23% of total customers and contribute more to profits. Indeed, the three phase plan has attracted many experientials that the company has not expected. However, they could not represent the company’s new customer base since 23% of them are far from enough when compared to 70% of price sensitive customers that include indulgents, traditionals...
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...4277 APRIL 4, 2011 JAMES L. HESKETT RICHARD LUECKE Porcini’s Pronto: “Great Italian cuisine without the wait!” In January 2011 Tom Alessio, marketing vice president at Porcini’s, Inc., of Boston, was pondering issues raised by a potential expansion of his company’s restaurant business. The domestic market for full-service chain restaurants was nearing its saturation point at both in-city and shopping mall locations. The big chains were looking overseas for growth, but as a small regional player, Porcini’s had neither the resources nor brand power to pursue that option. It needed a domestic avenue for growth. Alessio had persuaded Porcini’s senior executives to consider opening limited-menu outlets, Porcini’s “Pronto,” to serve interstate highway travelers. Most competitors serving this market were fast-food or low-end outlets. Alessio believed that Pronto could offer a quality difference that travelers would value, but the challenges were substantial. Could Pronto’s profitably provide a limited selection of Porcini’s standard menu at moderate prices without jeopardizing the company’s reputation for excellent food? Could it maintain Porcini’s famously high service standards? Could it profitably break into a market occupied by established competitors? Food and service quality were only two aspects of the challenge. Porcini’s—a slow-growing, privately held enterprise—would need to roll out its new restaurants quickly in order to establish itself as a powerful brand. With...
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...4277 APRIL 4, 2011 JAMES L. HESKETT RICHARD LUECKE Porcini’s Pronto: “Great Italian cuisine without the wait!” In January 2011 Tom Alessio, marketing vice president at Porcini’s, Inc., of Boston, was pondering issues raised by a potential expansion of his company’s restaurant business. The domestic market for full-service chain restaurants was nearing its saturation point at both in-city and shopping mall locations. The big chains were looking overseas for growth, but as a small regional player, Porcini’s had neither the resources nor brand power to pursue that option. It needed a domestic avenue for growth. Alessio had persuaded Porcini’s senior executives to consider opening limited-menu outlets, Porcini’s “Pronto,” to serve interstate highway travelers. Most competitors serving this market were fast-food or low-end outlets. Alessio believed that Pronto could offer a quality difference that travelers would value, but the challenges were substantial. Could Pronto’s profitably provide a limited selection of Porcini’s standard menu at moderate prices without jeopardizing the company’s reputation for excellent food? Could it maintain Porcini’s famously high service standards? Could it profitably break into a market occupied by established competitors? Food and service quality were only two aspects of the challenge. Porcini’s—a slow-growing, privately held enterprise—would need to roll out its new restaurants quickly in order to establish itself as a powerful brand. With...
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...goods, while they can be seen, often can': be tried out before they are bought. Underjitanding the degree of a product's intangibility can affect hoth sales and postsales follow-up strategies. While services are less able to be tested in advance than goods, the intangible factors in both types of products are important for convincing prospective customers to buy. Sellers of services, however, face special problems in making customers aware of thi; benefits they are receiving. The author considers the intangible factors present in all products and also advises producers of services about how best to hold on to their customers. Mr. Levitt is the Edward W. Carter Professor of Business Administration and head of the marketing area at the Harvard Business School. He has written nearly two dozen articles for HBR, including the well-known "Marketing Myopia" {published in i960 and reprinted as an HBR Classic in September-October 1975) and "Marketing When Things Change" [November-December 1977). //lustration hy ]im Kingston. Distinguishing between companies according to whether they market services or goods has only limited utility. A more useful way to make the same distinction is to change the words we use. Instead of speaking of services and goods, we should speak of intangibles and umgibles. Everybody sells intangibles in tbe marketplace, no matter wbat is produced in tbe factory. Tbe usefulness of the distinction becomes apparent when we consider the question of how the marketing...
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...create value and profit for the company. Maintaining a strong and compelling value proposition and long-term relationship with the company’s customers are vital for the company’s continued success and require constant monitoring of market, environmental, technological and competitive forces. Marketing is therefore integral to establishing a company’s strategic direction. This in turn makes marketing skills and perspective essential to the success of all business managers in any business. This course provides an in-depth exploration and practical application of basic marketing tools. These include product policy, pricing, promotion, distribution, sales management, and customer segmentation and retention. In most classes, we will analyze case studies that require us to identify marketing opportunities, refine value propositions, select customer segments and develop marketing programs for a variety of management situations. The course also includes a number of creative and analytic...
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...didn’t shop; instead she took mental notes about store traffic, first at the Reed store and then at an indirect but increasingly worrisome kind of competitor—a dollar store. The Reed was predictably well lit and inviting, and Collins could see three registers open and two or three customers in line at each. “Not too bad” she thought, “but not what I would hope for at this time of day, this close to the holidays.” She’d felt the same way at two other Reeds she’d visited that day . Collins walked on to the Dollar General (DG). A fairly steady stream of shoppers entered DG’s doors, their progress slowed by families exiting with plastic bags jammed full. When Collins looked inside, she noticed workers filling what was obviously a new freezer case—the first freezer she had seen in a dollar store that day. This DG was doing just as well, to judge from this glimpse, as the Family Dollar she’d walked past half an hour earlier at North Valley—but no better than the Aldi store she had visited in the morning. That Aldi trip was interesting: a bright and spotless mini- supermarket, run by a giant firm from Germany that carried one-tenth the food items that a Reed did and sold virtually no brand names, only private-label—but still posed a threat to Reed due to its remarkably low prices. As she drove out of the parking lot, thinking back to last week’s discussions with the management team about the newest threats to Reed’s position as a leader among the region’s supermarkets, Collins wondered...
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...create value and profit for the company. Maintaining a strong and compelling value proposition and long-term relationship with the company’s customers are vital for the company’s continued success and require constant monitoring of market, environmental, technological and competitive forces. Marketing is therefore integral to establishing a company’s strategic direction. This in turn makes marketing skills and perspective essential to the success of all business managers in any business. This course provides an in-depth exploration and practical application of basic marketing tools. These include product policy, pricing, promotion, distribution, sales management, and customer segmentation and retention. In most classes, we will analyze case studies that require us to identify marketing opportunities, refine value propositions, select customer segments and develop marketing programs for a variety of management situations. The course also includes a number of creative and analytic assignments, including a semester-long, group...
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...Executive Summary Industry and macro-environmental analyses of the international restaurant industry provides an overview of the industry and reveals the conditions that impact competitiveness and profitability of the industry’s players. The industry is split in two sectors: full-service restaurants (FSR) and limited-service restaurants (LSR). FSRs typically have a wait-staff; LSRs do not have wait-staff. The top five countries, in terms of total number of foodservice outlets, are: China, India, Brazil, Japan, and the US. The industry is of low concentration. Combined, the top industry players make up less than 3% of total global industry revenues. In terms of size, 2013 global sales were $2.6T, up 4.9%. The 2013 global labor force was 62.4M employees, up 2.4%. In accordance with Porter’s Five Forces framework, the forces that shape competition in the restaurant industry have a moderate to high impact on competitiveness. There is a moderate threat of new entrants and a high threat of substitutes. Buyers have a high degree of bargaining power and suppliers have a moderate degree of bargaining power. The restaurant industry is highly competitive and experiences intense rivalry. In terms of macro-environmental factors, emerging markets around the world over are having an impact on how restaurants execute strategy both domestically and abroad. The growth of the middle class in emerging markets, such as China and India, presents a new demographic and an opportunity...
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...Harvard Business School 9-795-191 Rev. February 14, 1997 The Ready-to-Eat Breakfast Cereal Industry in 1994 (A) All is not well in the land of Tony the Tiger.1 In early 1994, the ready-to-eat (RTE) breakfast cereal industry had reached a critical turning point in its evolution. In an industry historically characterized by stability and above average profitability, slowing demand growth and a surge in private label sales threatened to undermine the dominant positions of the Big Three: Kellogg, General Mills, and Philip Morris. The 1993 year-end statistics showed that industry sales growth had slowed to under 2%, while private labels had topped 5% market share by sales and 9% by volume for the first time. Price increases by the Big Three had widened the gap between branded and private label products. The competitors had traditionally avoided destructive head-to-head competition, but this mutual restraint appeared to be crumbling. Each of the firms faced major decisions going forward about whether to break with the industry’s lock-step moves and how to deal with the threat of private labels. History of the RTE Breakfast Cereal Industry2 The ready-to-eat breakfast cereal industry got its start in 1894, when Dr. John Kellogg and his brother W.K. Kellogg invented wheat cereal flakes in an attempt to make whole grains appealing to the vegetarian clients of the Seventh-Day Adventist sanitarium Dr. Kellogg ran in Battle Creek, Michigan. 3 W.K. went on to invent the corn flake...
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...OVERSEAS CHINESE TABLE INTRODUCTION: Defining overseas Chinese 4 UNDERSTANDING OVERSEAS CHINESE A. History and cultural background 1. Southeast Asia 2. North America 3. Europe 4. Chinatowns B. The reasons for immigrating abroad 1. Political reasons 2. Economic and social reasons C. Current status 1. Population distribution 2. Southeast Asia a. The overseas Chinese’s paradox b. The Indonesian case 3. The United States 4. Europe BUSINESS WORLD OF CHINESE A. Rise of Global Chinese Companies & Huaqiao B. Regional Analysis 1. Asia 2. The United States 3. Europe C. Size of Chinese Capital Worldwide SUCCESS OF OVERSEAS CHINESE A. The Business Style B. The Downside of their Business Style THE CHANGES IN THE OVERSEAS CHINSESE SOCIETY A. Old and New Generation: How are they Different? B. The New Business of the New Generation C. The New Trend in the Chinese Immigration CONCLUSION A. Future Outlook of the Hua Qiao B. The opportunity to work with Overseas Chinese: WCEC 2005 in Seoul Introduction Defining overseas Chinese Overseas Chinese are ethnic Chinese people who live outside of China. China, in this usage, may refer to Greater China including territory currently administered by the rival governments of the People's Republic of China and the Republic of China as per traditional definitions of the term prior to the Chinese civil war, or only to the People's Republic of China by some quarters. In addition, the government of the Republic of China granted residents...
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...ADVERTISING'S FIFTEEN JIB FOWLES* BASIC APPEALS Emotional Appeals THE NATURE OF EFFECTIVE advertisements was recognized full well by the late media philosopher Marshall McLuhan . In his Understanding Media, the first sentence of the section on advertising reads, "The continuous pressure is to create ads more and more in the image of audience motives and desires ." By giving form to people's deep-lying desires, and picturing states of being that individuals privately yearn for, advertisers have the best chance of arresting attention and affecting communication . And that is the immediate goal of advertising : to tug at our psychological shirt sleeves and slow us down long enough for a word or two about whatever is being sold . We glance at a picture of a solitary rancher at work, and "Marlboro" slips into our minds . Advertisers (I'm using the term as a shorthand for both the products' manufacturers, who bring the ambition and money to the process, and the advertising agencies, who supply the know-how) are ever more compelled to invoke consumers' drives and longings ; this is the "continuous pressure" McLuhan refers to . Over the past century, the American marketplace has grown increasingly congested as more and more products have entered into the frenzied competition after the public's dollars. The economies of other nations are quieter than ours since the volume of goods being hawked does not so greatly exceed demand . In some economies, consumer wares...
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...The Social Network screenplay by Aaron Sorkin BASED ON THE BOOK “THE ACCIDENTAL BILLIONAIRES” BY BEN MEZRICH 1 FROM THE BLACK WE HEAR-- 1 MARK (V.O.) Did you know there are more people with genius IQ’s living in China than there are people of any kind living in the United States? ERICA (V.O.) That can’t possibly be true. MARK (V.O.) It is. ERICA (V.O.) What would account for that? MARK (V.O.) Well, first, an awful lot of people live in China. But here’s my question: FADE IN: INT. CAMPUS BAR - NIGHT MARK ZUCKERBERG is a sweet looking 19 year old whose lack of any physically intimidating attributes masks a very complicated and dangerous anger. He has trouble making eye contact and sometimes it’s hard to tell if he’s talking to you or to himself. ERICA, also 19, is Mark’s date. She has a girl-next-door face that makes her easy to fall for. At this point in the conversation she already knows that she’d rather not be there and her politeness is about to be tested. The scene is stark and simple. MARK How do you distinguish yourself in a population of people who all got 1600 on their SAT’s? ERICA I didn’t know they take SAT’s in China. MARK They don’t. I wasn’t talking about China anymore, I was talking about me. ERICA You got 1600? MARK Yes. I could sing in an a Capella group, but I can’t sing. 2. ERICA Does that mean you actually got nothing wrong? MARK I can row crew or invent a 25 dollar PC. ERICA Or you can get...
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...Teaching Note Overview This case describes the evolution of the global fast-food industry and Yum! Brands, Inc.’s development of the Pizza Hut and KFC franchises worldwide. It focuses on international business risk assessment and develops a model of country evaluation that students can use to analyze international business and market entry decisions in a variety of industries, regions, and countries. Teaching Objectives 1. Develop skills in industry analysis 2. Develop skills in global industry analysis. 3. Develop knowledge of franchising and the costs and benefits of expanding globally using franchises versus company-owned stores. 4. Develop skills in international business risk analysis. 5. Develop skills in country portfolio evaluation and assessment. Suggestions for Using the Case This case has been used successfully in undergraduate, MBA, and Executive MBA classes in strategic management, marketing management, and international business. It can be used in undergraduate courses to develop student skills in industry structure analysis, strategy analysis, and international business risk assessment. The teaching note is designed to give students practice in each of these three areas. Instructors may choose to use the case to discuss only one of these three areas during a single class period or to cover all three areas over two class periods. The case can be also used for student presentations and...
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...Licensed to: iChapters User Licensed to: iChapters User Essentials of Management, Ninth Edition Andrew J. DuBrin VP/Editorial Director: Jack W. Calhoun Editor-in-Chief: Melissa Acuña Executive Editor: Scott Person Developmental Editor: Jennifer King © 2012, 2009, 2006 South-Western, a part of Cengage Learning ALL RIGHTS RESERVED. No part of this work covered by the copyright hereon may be reproduced or used in any form or by any means— graphic, electronic, or mechanical, including photocopying, recording, taping, Web distribution, information storage and retrieval systems, or in any other manner—except as may be permitted by the license terms herein. Senior Editorial Assistant: Ruth Belanger Marketing Manager: Jonathan Monahan Senior Marketing Communications Manager: Jim Overly Content Project Management: PreMediaGlobal For product information and technology assistance, contact us at Cengage Learning Customer & Sales Support, 1-800-354-9706. For permission to use material from this text or product, submit all requests online at www.cengage.com/permissions. Further permissions questions can be emailed to permissionrequest@cengage.com. Media Editor: Danny Bolan Production Technology Analyst: Jeff Weaver Frontlist Buyer: Miranda Klapper Production House/Compositor: PreMediaGlobal Senior Art Director: Tippy McIntosh Permissions Acquisition Manager/Text: Mardell Glinski-Schultz Cover Designer: Stuart Kunkler, triartis communications ...
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...GMAT GRADUATE MANAGEMENT ADMISSION TEST McGraw-Hill’s 2008 Edition James Hasik Stacey Rudnick Ryan Hackney New York | Chicago | San Francisco | Lisbon London | Madrid | Mexico City | Milan | New Delhi San Juan | Seoul | Singapore | Sydney | Toronto Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. Manufactured in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher. 0-07-151120-2 The material in this eBook also appears in the print version of this title: 0-07-149340-9. All trademarks are trademarks of their respective owners. Rather than put a trademark symbol after every occurrence of a trademarked name, we use names in an editorial fashion only, and to the benefit of the trademark owner, with no intention of infringement of the trademark. Where such designations appear in this book, they have been printed with initial caps. McGraw-Hill eBooks are available at special quantity discounts to use as premiums and sales promotions, or for use in corporate training programs. For more information, please contact George Hoare, Special Sales, at george_hoare@mcgraw-hill.com or (212) 904-4069. TERMS OF USE This is a copyrighted work and The McGraw-Hill Companies, Inc. (“McGraw-Hill”) and its licensors reserve all rights...
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