Introduction
This report is to provide the management of The City Grill Room Steak house restaurant with effective marketing, and customer satisfaction strategies, in order that they may attract new visitors or customers to their location and encourage repeat purchase by the customers.
To carry this out this report highlights some of the effective marketing strategies they can employ, and some of their services that require greater improvements in order that they may attract and retain new patrols to their steak house.
This report closely examines the Australian restaurant industry, the emerging trends affecting it, the major players in the industry and how their policies or strategies affect City Grill and the industry at large.
The report also looks at the market segments the City Grill serves and how it attempts to serve this target market effectively.
In addition, the report examines how City Grills key service characteristics impacts them, their current promotional and marketing strategies, their pricing strategies, the transportation or logistic strategies affecting them, their service processes; including their service blue print, an examination of their operational side of business, and the overlap and transparency between their operational and service elements.
The report also examines the Grill’s service environment, and how their business service scope can be organized and strategized for effectiveness in their operations, and an examination of the things that can improve or disadvantage their services.
It also talks about issues in the management of employees and customers by looking at how the customer relationship and loyalty can be improved using effective customer relationship and retention strategies.
The report concludes by giving recommendations for improvement, examining the Grills’ overall strengths, weaknesses, and opportunities, in its advice to the management.
Background Information on the City Grill Room Restaurant
The City Grill Room is steak restaurant located at 535 Little Lonsdale Street, Melbourne, Victoria (Australia). As O’Brian (2008) asserts, this restaurant specializes in ribs, grill, seafood and steak.
Having been established on the 27th of October it provides a range of beef products, ranging from pork, chops, to sausage dishes and fish like prawns, calamari, and salmon.
Industry Analysis
Vonnegut (1990) splits the restaurants industry into two broad categories that is, fast food sector and full service sector. Full service restaurants have waiter and waitress services, and the patrol takes an order while seated.
In quick service or limited service restaurant, the patrols orders for food at a cash register, and food is delivered to them by use of a drive-thru or select items from a food bar.
City Grill faces stiff competition from high end restaurants like Tetsuya’s; the best restaurant in Sydney Australia, Bather’s Pavilion, MG Garage, and Salt among others, known to be among the the best in Australia. This competition stiffens in its own backyard, Melbourne; a haven for nearly 200 restaurants.
These restaurants include, the famous Charcoal Grill, The Meat & Wine Co., Babarino’s and Wong, Rockpool Bar and Grill among others. Melbourne is also known for Australia’s best steak restaurants offering steak and other delicacies, like the Mediterraneo Charcoal grill and Wine Bar.
This steak house located at Bourke Street City in the CBD is known for offering a range of delicacies at an affordable rate compared to City Grill. It offers foods like: Balkan, Croatian, Gluten-Free and Macedonian. Another competitor is Steak Restaurant steakhouse located at Docklands.
This restaurant is known for availing the biggest range of quality steaks, from the certified Australian Angus to the renowned wagyu steaks.
Another major competitor is Squires Loft Steakhouse, also known as Melbourne’s original steakhouse. It is famous for serving a variety of delicious cuts on tradition designed grills. This steak house is located in 12 Goldie Place, in Melbourne.
The Meat & Wine Co Restaurant, which is a part of an international group of steakhouse restaurants, situated in 3 Queens Bridge Street, south bank is known for its variety of high quality steaks. Rare steakhouse located at 6/61 little Collins Street is known to offer finest quality of Australian steak.
Another competitor is the BlueFire Churrascaria Grill, located in Melbourne central, a home for more grilled items ranging from octopus to quail, and prawns.
Valdo’s charcoal grill steak house has a reputation of offering high quality steak never tasted before in Australia; it only rivals Argentinean steak and it is located in 61 Bridge Road, Richmond.
Rockpool Bar & Grill located is located at 8 Whiteman Street, Southbank, and is famous for offering the cheapest services ranging from $ 19.0. France-Soir or little France as it is informally known is located at 11 Toorak Road; South Yara, it is a famous steak core offering high quality steak.
Pure south restaurant and bar is located in Southbank is strategically located, with the most intriguing food sourced from the famous Tasmania and king Island. These steakhouses among others offer tight competition to the City grill through their extensive range of products, high quality steak preparations, among others.
Steak restaurants form a greater portion of the Australian restaurant industry, and apart from this they are the major reason for economic growth, and a major source of employment.
Findings by The Australian Bureau of Statistics (ABS) website (2007) report that the restaurant sector of the hospitality industry has 37,699 restaurant businesses, of which 89% employ 20 or less people.
Furthermore, these reports assert that this sector employs about 188,102 people in Australia, and yet it is still 7% underemployed.
This industry faces a shortage of cooks, waiters, chefs, and managers, and the level of skill is generally low. This trend of under employment in the industry is estimated to increase; to a demand of about 55,000 people per year.
ABS’ report released in July 2005 cites the industry’s employment level to be at 188,102 persons. This was a drop compared to 468,400 persons employed by the industry in May 2004. The bureau estimated the number of persons working in this industry by Nov 2007 to be 493,900, as compared to May 2007 of 534,000.
Restaurants in this sector have 53.4% of their employees working as casual workers with full time employees making 25.4% of the labor sector. Major participants in this industry labor force are waiters, kitchen hands, and bar attendants.
Table 1 – Occupation distribution (abs 2007).
Employment rate in this sector has been growing consistently ever since the 1990’s when it picked up, though employment levels are still low.
An emerging trend in this industry is the conspicuous decline in consumption of restaurant services. This can attributed to the decline in total consumption due to the rising prices, and a lack of productivity and growth in this industry.
ABS also states that the relative prices having risen by 17% over the previous 10 years, has made household spending in relation to this industry to be somehow discretionary and cyclical (Evans 1992, p. 10)
The 1956 Olympic Games brought with it a variety of changes in this industry, like the introduction of new types of cuisines in the Australian restaurants to replace or reinforce the common steak (Smitz 2005, p. 80).
This landmark change has introduced with it a new trend of unique cooking ideas. Among these trends are the uses of traditional cooking ingredients used by Aborigines, in modern day cooking, using modern Chinese food preparation methods, to make Chinese food in more western appeal, and lastly the use of seasonal produce as ingredients to make food.
The Olympic Games also birthed an increased awareness to food safety and quality. According to Hing (1999), consumers are looking for quality as the economy tends to shifts into growth.
Since the average customers are getting more information about food quality and preparation through programs like the famous MasterChef and My Kitchen Rules, they are now keener about what they want than ever before.
This increase in consumer education acquired from the internet, magazines, radio and televisions, has a caused a long-lasting transformation in this industry, more so towards quality issues. A recent trend in this industry is the dining versus the cooking option.
It has been observed that more and more people are opting to take meals in restaurants at the expense of cooking. This could be attributed to the limited resources in terms of time and skills to cook (Wong 2002).
Recent research shows that more and more people are spending a bigger portion of their earnings on restaurant food at the expense of cooking. This has been characterized by increased demand for menu items for kids in restaurants (Wong 2002).
Parents want kid-sized portions of usual menu items to be offered as more families opt to dine out rather than cook at home. Apart from the issue of whether to dine or to cook, the issue of customized menu has been predominant.
People want to choose their own portion sizes in restaurants since not everyone has the same level of appetite. The change in market demand is another issue that has influenced the normal trend in this industry. This is attributed to the change in economic patterns brought about by the changing employment levels.
With the rising global unemployment and poverty levels, decline in spending levels has been observed. This has resulted to change in eating habits and eating trends where people go for cheap fast food.
Another trend is quality and health issues. Consumers are now craving for high quality meals, and demanding for more healthy alternatives to be included in the usual menu.
This trend has forced restaurants to include healthy choices such as baking instead of frying, inclusion of alternative choices such as vegetarian, lacto-vegetarian and gluten-free, and special diet preference in their menus (Wong 2002).
The multicultural menu is another emerging trend. Consumers are requesting for more multicultural meals, as their tastes are broadening to include many different cultures.
Some other minor trends in this industry trends are establishment of more franchises and the increased need for higher productivity through provision of formal training programs for management, supervisory personnel, skilled, and technical staff.
This is done with a major aim to improve productivity, maximize the use of computerized and vending machines, and to encourage the development of specialized and standardized menu.
Other trends affecting this industry, is the issue of consumer appeal with restaurants manipulating their strategies to suit the consumer (Hing 1999). This involves is delivering products at low costs, maintenance of safety and cleanliness, provision of child friendly atmosphere where the whole family can have a meal.
Position marketing is another strategy hotels can use to attract customers through special delicacies and traditional cuisines that are specific for a particular hotel (Dalgic 2006, p.78).
They do this by differentiating their products through reinvention and innovation. Some of these niches include, hot chocolates infused with chilies or other spices, raw seafood bars that serve rare delicacies, among others.
Apart from the trends observed in this industry; it being a service industry, it portrays tangibility and intangibility. An example could be the amount of time a customer has to wait before being seated when dirty dishes are being cleared, or even a restaurant’s make up, inclusive of its services and menu delivery.
Tangibility on the other hand is related to dining experience and expectations of customers. They include the appearance, decoration and amenities provided by the restaurant such as outside eating, parking and live entertainment and so forth.
Tangibility in addition also encompass the factors affecting dining experience like food production, health and safety concerns, customer relations, marketing, and quality of service and production.
Customers expect both satisfactions from the quality of food, through to the way it is served, to the surroundings appearance and atmosphere, thus the tangible and intangible factors will influence greatly a service firms’ progress.
Segmentation/Target Market Strategy
Market segmentation is the division of a market into different groups of customers with distinctly similar needs and products or service requirements (Croft, 1994).
Its major purpose is to pull scarce resources and ensure that the elements of the marketing mix, price, distribution trends, products and promotion are premeditated to satisfy the particular needs of the different customer groups.
City Grill’s main approaches to market segmentation, could include using the breakdown method where they can view the market as to consist of consumers who are in essence the same, having similar tastes, and so forth. Their duty could only be to identify groups which share particular differences.
Alternatively they could use the build-up method. In this method they will have to consider the market as to consist of consumers who are all different. Their task in this approach will be to find similarities.
City Grill being a restaurant, serves the food service sector of the market, and provide steak as their main menu item. In order to serve this segment effectively they have employed various market segmentation techniques.
Among these techniques are: demographic segmentation, geographic segmentation, behavioral segmentation, psychographic segmentation, and price segmentation.
In segmenting the market demographically, they have used measurable characteristics, such as age, gender, and occupation. With their intent to serve the food services market effectively, they have located themselves in the Central Business District of Melbourne city.
This is a strategy to target the working class. Their prices are also relatively high meaning they intend to specialize on the middle working class to the high working class. Being that they operate at evenings too, and allow prior orders and booking, they target a given age group, preferably mature adults.
Using the geographic segmentation approach, they have divided the market into two segments rural and urban, of which they serve the urban.
Behavioral segmentation divides the market according to attitudes, they have located themselves at strategic positions and provided ambience in the restaurant to satisfy different temperaments of people.
In employing psychographic segmentation, they have divided the market on the basis of lifestyle preferences. In using price segmentation, they have divided the market in lines of luxury, economy, and value.
After segmenting the market there is a need to narrow down to a specific target, this achieved through target marketing, which breaks down the clientele into primary, secondary and tertiary categories (Dibb & Simkin 1996).
From the empty seats in the restaurant it could be true that City Grill employs niche marketing to reach its target group. Niche market in simple terms is selecting a small group within a large group. By offering steak as their main delicacy they have specialized in a small group or a niche in the extensive restaurant industry.
Organization Analysis
Service Processes
They need to reduce the amount of waiting time from the thirty minutes to around ten minutes; their waiters need to be keener when taking customers orders, so that they deliver what is actually ordered.
The operational side of the business includes the number of hours worked, days the restaurant will be open, and its major activities, like food preparation or cooking. To be more effective, they need to employ more cooks and chefs, and increase the number of waiters and waitresses they have.
They also need to detail their day to day activities to help them cook enough food by observing the trend of attendance to their restaurant. In addition they need to train their staff on issues of hygiene, and customer care, if they need to retain their new customers.
Service Offering
Service offering is about meeting customer expectation and satisfying his needs to the letter. Different customers have different expectations of restaurants from the time they enter its gates. These expectations could be built from the picture the restaurant creates in his mind.
Some of the bundles of benefit a consumer derives are satisfaction, and meeting of needs. The customer derives satisfaction and feels that his money has not gone into loss and that it was worth spending on the venture he chose.
Secondly he gets his needs met. The customer derives appreciation when his needs are met and ranks the organization as credible and able to deliver. The customer derives joy when he served with etiquette, and this benefit is more of psychological and cannot be quantified as such.
When this trend of customer satisfaction continues, in the long run the customer wild enjoy high quality products, better services , better prices availability of goods on demand, good customer care services among others.
According to (Hing 1999) every form of service should poses four characteristics, which are intangibility, inseparability, heterogeneity, and perishability. City Grill should offer satisfaction to its customers in the goods it provides.
The customer should derive satisfaction in utilizing the products that is the steak should be served as per the customer’s standards and expectations. Inseparability on the other hand reflects on the concurrent delivery and utilization of services.
The services being offered should be able to deliver value, commensurate to the cost used in sourcing them. Heterogeneity is about the potential for high unpredictability in service delivery.
And lastly perishability is a feature that asserts that services cannot be stored and postponed to a future time period. These characteristics in one way or another impact City Grill, either positively or negatively.
Since services are intangible, that is cannot be touched, since it is not physical; it means anything done cannot be revoked, by offering the clients a wrong food type than what they requested for; City Grill committed a revocable act which impacted them negatively.
Perishabilty of the service affects the business opportunity of firm; if the client is not served within the specified time then the business opportunity is lost. And the service also perishes after it has been utilized by the consumer.
The impact is that City Grill should use every opportunity before it expires to portray its best. Inseparability means the service and the providers are one, how the provider offers the service will determine the customers’ reputation of the provider.
The carelessness of the chefs’ and waiters at the City Grill caused a negative image to the restaurant. Heterogeneity portrays itself when the four consumers were satisfied differently, this is because the services are unique to the consumers, and cannot be repeated exactly.
Promotion Strategies
These refer to the tools to use to spread the knowledge about the goods and services (Armstrong, & Kotler 2007). There are six types of Promotion strategies a firm can employ.
The firm has either an option of advertising, creating good public relations with its customers and employees, or alternatively use direct marketing. Advertising is done through the media with an aim to create awareness and demand for the said product.
The advertising means should consider the costs uncured in its use, the target market, and the current issues. Advertising should motivate customers to use the product or service.
Advertising can be carried out using traditional means like the Television, Newspapers or magazines, use of billboards and other means of outdoor advertising.
Alternatively they can promote their products by using good public relations mechanism; this involves use of etiquette in dealing with customers so that they can recommend them or their products to their friends and thus increase their customer base.
They can also use direct marketing and personnel selling methods, where their agents can vend their goods throughout the city. This can be done by offering an extra item on the menu in case a given meal is bought by the customer. Effectively they can use simply but useful methods like, appreciating loyal customers.
Alternatively they can use sales promotion used to obtain a short run increase in sales. This they can accomplish by selling their products to specific persons that is, through orders made in advance.
Pricing Strategy
There are various pricing tactics that City Grill can use to prosper by attracting more clients besides retaining existing ones. In searching for an appropriate pricing strategy, one should be chosen in which the price set caters for the cost of manufacturing and the cost of materials used in production of goods.
Among these strategies we find penetration pricing. This pricing strategy involves setting a very low price for ones good or services in comparison to the market price.
This is intentionally done in order to gain as many sales as possible more so in the developmental stage of the product. When they are set at a low price, the products can attract a large market share.
Price skimming strategy is used when the product is new and the firm is the sole producer, it is used to gain quick profits and recover costs within the shortest period ever by taking advantage of the minimal competition available as then.
Predatory pricing is about setting a very low price, below your competitors. This strategy is carried out with an aim of knocking out all other competitors. The trend in every industry is that the firm with the lowest price will attract the largest share of the market.
Price discrimination involves having different prices for the same product, depending on the market and a good example of this is the peak and off peak cell phone calls.
This method is effective in utilizing the potential of each market segment. Psychological pricing uses a mechanism of setting prices just below a large number to make it appear smaller.
Premium pricing approach is similar to value pricing where for every additional feature or value a high price is required of the client. These high prices can be set for luxuries such as Canard Cruises.
Another pricing strategy is economy pricing. This strategy involves setting seemingly low prices, enough to cater for the costs of production. The cost of promotion and production is kept at minimum levels.
Lastly price skimming can be applied; this involves charging a high price due to having a substantially competitive advantage. City Grill should be selective and cautious in its pricing strategy, and I recommend they use penetration strategy, in order to attract more customers to their joint and increase their sales.
Distribution Strategies
Distribution strategies determine whether the firm’s goods and products will reach the anticipated consumer. To succeed in ensuring that its products reach the final consumer, firms can either employ: exclusive distribution, intensive distribution, or selective distribution.
Exclusive distribution is all about distributing of goods and services to only one intermediary, who then distributes them to the final consumer. Intensive distribution on the other hand entails distributing goods or services from as many outlets as possible.
Selective distribution the products are distributed to selective retailers. Any distribution strategy used should encompass customer markets and buying habits, consumer needs, competitor perception. City Grill being a service store, offering food, they should look at making themselves easy to locate and identify.
Being situated in the Central Business District is both advantageous and disadvantageous. The advantage comes out du to the large market, and disadvantage comes out by the presence of many competitors.
In order to overcome the challenges of accessibility it is better they use signboards and leaflets, business cards and so forth to increase their accessibility.
Physical Evidence
Majority of customers make assumptions about the service provider’s capabilities, the quality of services he offers, through examining the physical evidence of the firm. The physical evidence refers to everything that constitute to the area of location, the layout, the atmosphere, and aesthetics.
Managing People
The organization is about people, from the employees to the customer. No organization can run without people, because the organization is the people.
In managing the employees, the manager needs to provide management training to its employees to upgrade and inform them of emerging trends and how to handle these trends and utilize them to the advantage of the organization.
Management should also look into ways of providing good remuneration packages to its employees; provide proper working conditions and environment by avail proper tools and equipments. The management should also protect its employees.
In dealing with customers, the most important aspects that the organization should consider is the need of retention and establishing relationships with customers. Good relationship with customer encourages retention which is vital for any growth.
Whenever the customer’s expectations are satisfied, the firm benefits as this will build loyalty, repeat purchase behavior, and will result into positive feedback and word of mouth advice to untapped market.
Some customer retention strategies could be: talking to them in a friendly manner, thanking them for choosing your services, offering after sale services, asking for feedback and working on it, and more so providing services to their level best desires.
Conclusion
In conclusion, city Grill still has a long way to go, for it to feature among the industries tops. They need a lot of transformation in their customer handling strategies, in their physical environment settings among others.
The secret to every business is not good promotion strategies but proper customer handling and retention methods. An improvement in these, can take the steak house far.
References
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