Case Scenario
Henry opened The Pie Shop (TPS) in 2012. Harry’s business was stable and profitable, so he is considering opening another store. TPS sells whole pies and pieces of pie. Instead of selling staple flavors such as apple, peach, and pecan, TPS sells unusual flavors such as bean, mincemeat, sweet green tomato, whiskey butterscotch praline cream, strawberry guava, hot oatmeal, and funeral pie, among others.
The pie business is generally stable year-round. TPS has eight full-time and one part-time employee. The minimum wage is currently $15.50/hour, but will increase to $19/hour within the year. Opening a new store will require The Pie Shop to hire more employees. Harry would like to reduce the number of employees at his current and planned stores.
Residents comprise 30% of TPS’s customers, with the remaining customers coming from surrounding cities and tourists. Tourists make up the majority of the non-local customers. Harry expects fewer tourists to visit the store when he opens the new store, so he wants to increase local traffic.
Growth Opportunities
The most apparent branch of development of The Pie Shop is the possibility of creating a pie delivery service if it has not already been implemented in the company. So Henry can significantly increase the flow of orders just among the residents, which is the target audience that the manager is counting on. However, in this case, the number of employees must either be kept at the same level or even increased since the workload may increase significantly.
On the product side, Henry can continue diversifying his line of unusual flavors as the ingredient supply chain becomes available, as this feature is the store’s competitive offering. Diversity is always attractive to tourists, so if Henry opens a point in a tourist area, Henry will be able to increase revenue. Locals who are already tempted by the current line, in this case, can try new tastes, especially if, at first, they discount them in the form of special promotions.
Targeted Marketing Strategies
The best marketing tools for the described TPS situation would be the following: Firstly, to increase the influx of residents, outdoor advertising on the streets and the possibilities of the media, such as local television, newspapers, magazines, or mailing lists in the surrounding area, would be necessary.
Secondly, suppose the company has well-developed public pages on social networks. In that case, Henry can use contextual advertising, buying posts in thematic groups, especially those where most of the audience is Studio City residents. The ranking of the marketing budget depends on the target audience buying pies. In addition to dividing the market into locals and tourists, the manager should conduct marketing research regarding customers’ age and other demographic characteristics.
Depending on the target audience, the use of media channels will be prioritized. Suppose Henry’s main clients are families and people over 30. In that case, betting on local television, newspapers, and mailing lists is worth it. If young people predominantly buy pies, then differentiation of possible marketing paths would include the following.
First, the store’s participation as a sponsor of fairs and local events can increase brand awareness and presence for the target audience. Second, collaborations with other well-known brands to produce limited-edition pies with unusual fillings can also be a sales force, and such collaborations can take place entirely online (Palmatier & Steinhoff, 2019). In addition, young people are also more likely to be present on social networks and the Internet in general, which increases the value of contextual advertising and the purchase of advertising posts in relevant groups.
Increasing local traffic, in addition to the use of traditional advertising media through these channels, may include the following recommendations. First, given the breadth of the assortment and the short shelf life of products, Henry can introduce an evening discount on the pies left in the window to increase turnover. This offer will be especially relevant for the working locals, who return home in the evening and can save money.
Secondly, if the number of employees decreases, the manager can increase the store’s opening hours or expand the working days to make the products even more accessible to residents. Finally, cooperation with the fairs mentioned above can be another brand awareness extension, which will make residents more aware of the TPS competitive offer and order pies there, at least for special occasions.
References
Palmatier, R. W., & Steinhoff, L. (2019). Relationship marketing in the digital age. Routledge.