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Gourmet Express’ Management Problems Case Study

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Updated: Aug 12th, 2019

Executive Summary

Gourmet Express is a novel idea, which emerged after the realization that many people are unable to plan their menu and do shopping at grocery stores due to the misconception that it is an involving task. This new product in grocery marketing entails both menu planning for an entire week and delivery of a complete package of groceries to the customers’ doorstep.

The product targets young professionals who live in urban centers and are committed to two-income households. The targeted customers have busy schedules, high purchasing power, do not have leisure time, and are ready to pay for menu planning and delivery services of groceries.

The firm’s goal is to target about 400 households after a period of three years in grocery marketing. It projects an annual income of about $120,000, which would form the basis for it to penetrate into other lucrative markets. In a bid to achieve its goals, Gourmet seeks to promote its products through campaign while providing premium-quality goods and first class services. For starting capital, the business requires about $258,000, out of which the owner will invest $183,000 and finance the remaining through bank loans.

Problem Statement

With busy schedules, many people do not have time to plan their menu and queue at the grocery stores. Often, people try to overcome hassles of grocery shopping and menu planning by eating out in hotels. However, eating out is not only expensive, but also does not provide delicious meals with proper nutrition. Therefore, people with busy schedules do not have time to plan their menu and shop at groceries, yet they need delicious and nutritious food at their homes.

Situational Assessment

Gourmet Express has a new business idea that has minimal competition in the grocery market. The business idea of planning menu for people who have busy schedules is new because most groceries just deliver groceries without considering the clients’ needs. Hence, the firm has absolutely no competition in the aspect of planning menu for busy customers. Conventionally, customers have the prerogative of selecting the nature of groceries that they need.

Moreover, the idea of delivering groceries to customers has minimal competition because in Oshawa, Ontario, out of about 400 grocery stores, only two stores are primary competitors as they provide delivery services to their customers. Although these grocery stores provide delivery services, they are very expensive irrespective of the size of order that customers make.

Other primary competitors are pizza chains because they deliver pizza and chicken to common customers. These pizza chains offer indirect competition because their products of specialization are exclusively competitive. However, Gourmet Express has an advantage because its products are cheaper than competitive products in pizza chains.

For one to start a grocery store in Oshawa, Ontario, s/he should comply with rules and regulation of three levels of government, viz. municipal, provincial, and federal governments. At Oshawa, municipal government is responsible for regulating grocery stores by issuing permits.

The municipal government implements standards set by the Canadian Food Inspection Agency (CIFA) by issuing permits to grocery stores that have complied with essential requirements. Moreover, at Durham Region, local health authorities have the responsibility of inspecting groceries in a bid to ensure that they comply with food safety standards set by CIFA.

At the provincial level, Ontario CIFA sets guidelines and procedures that form the basis of CIFA standards. It also has the responsibility of effecting standards sets by federal CIFA to guarantee safety of food in Ontario. Moreover, Ontario Ministry of Agriculture Food and Rural Affairs (OMAFRA) regulates the sale of agricultural products, thus will influence products that Gourmet Express deals with in the retail business.

The federal government regulates grocery stores through CIFA. CIFA provides guidelines and procedures that enhance food safety. The grocery stores should comply with safety standards that CIFA sets for the grocery industry. CIFA demands that grocery stores should ensure safety of food storage to prevent contamination by both chemicals and microbes.

Moreover, CIFA demands labeling of all foods so that consumers can know the nature of foods that they are consuming, whether they are genetically modified foods or not. Therefore, the standards set by CIFA influence the way Gourmet Express will operate its retail business in Oshawa and determine the nature of food products it will deals with in its grocery store.

The economy of Ontario is growing significantly because the government has attracted investors from various parts of Canada. Huge investments in Ontario have attracted many people who will provide market for the firm’s idea. Specifically, at Oshawa region, economic activities have been growing steadily in the past decade, thus attracting considerable population into the region and thus potential customers for Gourmet Express.

In the agricultural sector, which provides goods for the grocery business, Ontario has been doing well because the government, through OMAFRA, encourages farmers to grow different types of food crops. The ministry also provides incentives to farmers as a means of enhancing food production in Ontario. Hence, the economy of Ontario, particularly Oshawa, is promising and lucrative for Gourmet Express.

Social trends indicate that many young professionals live in urban regions of Oshawa and they earn two-household income. Since they have busy schedules and do not have time to plan for their meals or queue at grocery stores, they often prefer eating out in hotels and restaurants.

Although eating out saves them from hassles of menu planning, queuing at groceries, and cooking, they do not get nutritious and delicious foods because the majority of the available foods in restaurants are fast foods. The Canadian Healthcare System has done health promotion and sensitized people that they should avoid fast foods and eat nutritious foods to improve their health.

Following the health promotions, Canadians are changing their eating habits and lifestyles in an attempt to improve their health. Hence, as young professionals have realized that they need nutritious and delicious food for the sake of improving their health status, they prefer buying fresh food from grocery stores and prepare meals at home instead of eating out.

Information technology is one of the factors that would enhance marketing of products that Gourmet Express offers to the people who live in Oshawa region. Gourmet Express will use Internet marketing tools and strategies to reach out to many people within the ages of 24 to 50 years, who have access to the Internet.

Internet marketing offers an effective marketing tool because it reaches out to many people, unlike print media, which has limited coverage of population. Additionally, Internet marketing allows customers to make real-time orders of goods and services that they require from the store.

Many grocery stores have not employed Internet marketing in expanding their market share, and thus use of technology would give the firm an upper hand in the grocery industry, particularly at the Oshawa region of Ontario. Availability of the Internet in Oshawa provides a framework through which Gourmet Express can use in reaching out to many customers and attending to their demands appropriately. Thus, proper exploitation of Internet marketing would boost the growth of the firm in Oshawa and Ontario regions.

Good climate of Ontario is a natural factor that allows farmers to produce food crops throughout the year, without incurring additional expenses in trying to irrigate their crops. Farmers can grow their crops at any season of the year, thus ensuring constant supply of goods. Moreover, the soil of Ontario is very fertile.

The fertile soil alleviates fertilizer expenses that farmers would have incurred in growing their crops. The expansive tracts of fertile land in Ontario promote growth of food crops and contribute to health of the population in the area. Since the Canadian Healthcare system promotes healthy lifestyles among its population, local health authorities in Oshawa ensure that grocery stores label their foods appropriately, whether organic, inorganic food, genetically modified, or natural.

In this aspect, most food crops in Ontario are natural, and farmers grow them organically because they have fertile soils. Hence, good climate, fertile soil, and natural food crops are some of natural resources bestowed to the Ontario grocery industry.

SWOT Analysis

The concept of Gourmet Express of planning menu and delivering grocery goods to the doorsteps of its customers is a novel idea in the grocery marketing. Many people require grocery goods at their doorsteps because they do not have time to pass through grocery stores, wait for a long time in queues, plan their meals, and spend time cooking.

Strengths: – the first strength of the firm lies in the delivery of goods to the customers. The second strength is the potential customers that the store targets. Young professionals who earn double income are too busy to plan for their meals and line-up at the grocery store to buy groceries they need.

The young professionals consider it a great hassle to waste time when buying grocery goods. Additionally, the service of planning menu is also strength for the firm because customers do not have time to think about the nature of menu they would have for their meals. Hence, weekly planning of the menu is strength that Gourmet should nurture and exploit fully.

Weaknesses: – although the firm has strengths, it has some weaknesses. One of the weaknesses is that it offers unrecognized brand in the grocery industry. Many customers are used to normal grocery business, which offers delivery of grocery goods to the doorsteps, but they have never known about menu planning. In this case, the store has to conduct massive promotion of the new service in the grocery industry.

Given the high start-up and operation cost, Gourmet’s financial insufficiency is another weakness to overcome. Gourmet borrows about a half of its capital and is yet to conduct expensive promotional activities. The use of newspapers, the Internet, and radio in advertising the new brand is a very expensive venture. Furthermore, hiring of nutritionists to plan menu for customers is an additional cost to the business, which may inflate the cost of services and goods offered to customers.

Opportunities: – the firm has great opportunities to explore in the grocery industry because it has a novel idea of planning and delivering grocery goods to customers. The competition in the grocery industry in Oshawa is limited because only two grocery stores offer delivery services, but they do not provide menu planning.

Thus, Gourmet has the opportunity to expand in the Oshawa region and even throughout Ontario. Since the Canadian Healthcare system is promoting healthy living, the firm can seize the opportunity and promote its products by encouraging people to develop good eating habits.

The firm also has an opportunity in advertising by exploring Internet marketing as a strategy of promotion and communicating with customers. The Internet can provide real-time ordering of grocery goods by customers at the comfort of their homes.

Threats: – Even though Gourmet Express has great opportunities to explore in the grocery industry, it experiences some threats. Competition from competitive goods from restaurants can inhibit expansion of the firm. A significant number of people still prefer consuming fast foods because they are easily available in restaurants. Other grocery stores that offer competitive goods and services are likely to threaten the growth of the firm because grocery industry is very dynamic.

Alternatives

  • Gourmet Express should involve customers in planning their menu, rather than using pre-planned menu packages, which restrict the choice of products that customers can choose from the grocery stores.
  • The firm should target all customers, irrespective of their income status, as long as they are willing and able to pay for the services and goods.
  • In addition to planning and designing menu, the nutritionists should prepare a recipe so that consumers can easily understand how to cook the unique foods that they do not know how to cook.
  • The firm should employ Internet marketing to reach out to many customers in Oshawa region and use the Internet in providing real-time communication with customers.
  • Finally, Gourmet Express should link with reliable distributors of grocery goods so that customers can get constant supply of fresh goods from farms, which would significantly boost the image of the business.

Criteria for Measuring Alternatives

The number of customers who require their own menu rather than planned menu would measure the first alternative, which underscores involving customers in menu planning. In the second alternative, the number of customers who earn below $65,000 per year would indicate the potential markets that the poor provide for Gourmet Express.

Satisfaction that customers express regarding prepared recipe would measures the third alternative, which shows the relevance of nutritionists in designing new menu and cooking strategies, hence motivation on the part of the staff.

The number of customers who access the firm’s services and goods would measures the fourth alternative, which shows the importance of the Internet in the grocery industry and the extent of market share. In the fifth alternative, the amount of grocery goods and their reliability indicate the market share that Gourmet Express has gained in the Oshawa region.

Analysis of the Alternatives

Gourmet Express should involve customers in planning of their weekly menu because they have different tastes and preferences. The choice of products that customers need provides criteria for measuring different tastes and preferences as per the first alternative. The pros of the alternative include the fact that it enhances diversity of goods and provides freedom for customers to choose their preferences. If the diversity of products that the customers demand is high, it implies that customers do not need pre-planned menu package.

Hence, the number of customers who require their own menu would indicate the essence of involving customers in planning of menu. The cons include the probability that the store might not satisfy the varied needs of customers and that it would overwhelm the work of nutritionists.

Regarding the second alternative, as it indicates the market share of the poor, its pros include the fact that this potential market share enables the firm to expand its market share and increase the number of customers. On the other hand, the poor have low purchasing power, and thus can compel Gourmet Express to sell its products and services at different prices, which underscores the downside of this alternative.

The third alternative measures the relevance of nutritionists in planning menu and designing meals. The pros of this alternative touch on the fact that nutritionists and customers can interact, and thus increases customer satisfaction. However, interacting with customers is time consuming and intensive because it takes invaluable time of the staff at the firm, hence the demerit of this alternative. The fourth alternative deals with Internet marketing and real-time communication with customers.

Its pros include the fact that it enables the store to reach out to many customers coupled with providing real-time communication. Nevertheless, the downside of this alternative lie in the fact that most customers cannot access the Internet and the concept of online business is still new. The fifth alternative shows the reliability of the store in supplying goods and services to customers based on the reliability of the distributors of grocery goods.

The pros of the alternative include the fact that it is a good parameter for market share and gives the firm an upper hand in the grocery industry. On the other hand, although a grocery store may have a huge supply of goods, the number of customers restricts and limits the supply, hence the downside of this alternative.

Recommendation

The appropriate step that Gourmet Express should take is to focus on the second alternative, which enhances expansion of market share by targeting all customers. The firm should target all customers, irrespective of their income status, provided they are willing and able to pay for the services and goods as aforementioned.

Action Plan

What Who When How Why Where
Surveying Manager November 8, 2012 Visiting Assess Oshawa
Registration Manager November 10, 2012 Secure permit License business Oshawa
Advertising Advertising Officer November 15, 2012 Using newspapers, radio and internet To attract customers Oshawa
Hiring of staff Human resource manager November 20, 2012 Interview To get staff members Oshawa
Purchase goods Purchase and supply officer December 1, 2012 From suppliers of grocery To obtain enough stock for business Oshawa

Contingency Plan

In case the business idea of planning menu and delivery goods to the customers fails, the contingency plan is to operate Gourmet Express as a normal grocery store. In the contingency plan, the firm will improve the quality of products and services while reducing the prices marginally so that it can achieve a competitive edge over other grocery stores in Oshawa, and ultimately gain a large market share.

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