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Kathy Kudler opened the first Kudler Fine Foods (KFF) store in 1998. After shopping for fine food ingredients, store to store, Kathy realized she could combine her love of gourmet cooking in a one-stop shopping experience with her marketing expertise to target other people’s culinary passions. Three store locations now operate in California and Kathy recently contracted with organic growers to provide her customers with locally grown organic produce, and has decided to expand KFF further by adding a catering business.
KFF's rapid growth over the last 10 years and the catering opportunities will affect KFF immensely. Kathy will need to evaluate carefully the marketing methods to launch the new catering business, assess the relative value of the market research, and identify the components of the marketing mix for KFF’s new catering service (product, place, price, promotion). She will need to determine the products KFF should offer and how the company will determine the price structure compared to other catering companies in the area. In terms of a catering service, term place will be explained. Kathy will decide how KFF will promote the catering service and how KFF’s target market affects the use of technology. If Kathy decides to launch the catering service, she will need to decide how her decision will mesh with the recent contracting of organic growers and how the decision will affect the success of KFF.
Relative Value of Market Research
KKF needs to realize the importance and value of performing market research, and the feedback the research will bring to the company. Market research is the process of defining marketing problems and to identify opportunities for the company. Collecting and analyzing information to benefit the business so the feedback makes the necessary changes and improves the business (Berkowitz, Hartley & Kerin, 2006). Before adding a catering business KFF needs to determine the risks and opportunities of adding such a service. Marketing research is used to determine the risks the company will encounter, the unknowns that can influence the business and to improve decisions the marketing department makes (Berkowitz, Hartley & Kerin, 2006). By using the marketing research tool KFF will be able to incorporate solid business decisions and changes into the sales plan.
Evaluating the risks and opportunities of their plan to market a catering business, KKF should include the reality of local catering businesses to determine if they will maintain their competitive edge. Looking at the potential customer base and how the customers will use the catering services will determine if a catering service will be cost effective.
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Marketing Mix Components
Four components are factors in the marketing mix; they are product, price, promotion and place. These four components are designed to address the needs of the consumer and KFF will benefit from these four factors because they can be controlled by the marketing department. Being able to control these factors, KFF can solve marketing problems for the company while attaining the goals to offer the best products, gourmet cooking supplies, services and still retain customer loyalty. Kathy has ensured that KFF carries a unique assortment of gourmet foods and supplies, to customers. These unique products can be used in the catering service. Prices associated with the catering service need to remain competitive with other catering companies in the area. The marketing team will want to research the local catering businesses to determine how the price structure should be established. Promotion of the products and services are crucial to KFF in relation to the purchasing powers of the buyers or consumers. New ideas, services in and products need to be introduced on a regular basis to continue to attract customers and for the survival of the business. Offering the in-store cooking classes and catering services creates a centralized location for customers to congregate. "We will initiate specialty cooking classes as a way to increase the consumption of high-margin items among existing customers and to build awareness, trial, and regular shopping among new customers" (Kudler, 2008.). In–store classes enable KFF to have firsthand knowledge of what customers want, what they are interested in and if the catering business could be a valuable asset to the company.
Determine the Products and Price.
Determining the products to offer and the price to set for the products are important factors for KFF to succeed in the catering business. Kathy needs to define the products (menu items) and prices it intends to offer customers through their catering services. The marketing team needs to research and evaluate the clientele desires. Benchmarking other organic catering businesses would give Kathy an idea of what to offer and the prices to charge. Looking at a company such as New Seasons Market, also located in the California area, who also offers similar cooking schools, catering services, and products as KFF (New Seasons, 2008). KFF is not like other catering companies because it provides quality organic products and gourmet ingredients. KFF’s pricing will be affected by the cost of the products and ingredients’, organic foods, gourmet ingredients, preparation and delivery costs. The price should be affordable yet still marketable compared to other types of catering services in the area.
Term Place in a Catering Service.
KFF is in the retail business and planning to add catering to the other services they already provide. Hospitality is a part of catering to customers wants and as a business offering specialty services KFF will need to consider the location to establish the business and customer access. Identifying the customer base and how to best fulfill their needs is a main consideration for companies embarking into the catering business. KFF will need to examine the community to know how many other catering businesses are located nearby. Considering the cost of the location, KFF will not need to find a location to house the catering business; they will need to make sure they are equipped with the space and specialty equipment necessary for catering events, such as platters, refrigerator and freezer storage. The 2007 sales plan at KFF establishes the company’s desire to use existing store space for the catering service. "At this time, we are focusing on improving our existing locations. However, sales are encouraged to actively consider new ways that we can expand our business geographically in the future" (Kudler, 2008). Using space in the three retail stores, KFF will be able to access ingredients and products to prepare the menus where the customer's already shop. Using existing space inside one or all three of the KFF stores will save money on location overhead. KFF will have a chance to establish the catering service without the expense of additional rent.
Promoting a Catering Service.
KFF has already established a quality repetition within the three communities where their retail stores are located. They have been able to establish this reputation by providing quality service, ingredients, the freshest products, meats, bakery goods, produce, dairy and wines to their customer base, gaining customer loyalty. KFF has provided a frequent shopper program, in-store parties and cooking demonstrations that provide a good atmosphere for gathering personal opinions from the customers. Using only organic produce provides a competitive edge for the catering service because it provides additional quality to the meals, for customers who are health consensus and care about the quality of the produce they serve their families and friends. KFF can promote the catering service as having not only provide tasty gourmet dishes but adding environmentally friendly, healthy produce without pesticides and chemical fertilizers used in the growing process. Chase, Jacobs and Aquilano, 2005 mentions that understanding how processes work is essential to the competitiveness of a company. The process in any organization occurs when the company takes inputs and converts them into outputs, enhancing the value of the original inputs to a superior value for the organization.
Use of Technology
Technology is currently used and is important for the ease of operating KFF. Kathy will need to add a catering page to the company website. Defining the menus, areas the company is willing to travel for catering services, reviews, online order forms, an online consultant to answer questions, and the type of customer clientele. Orders should be entered and tracked, linking the store inventory with the items necessary to fill a catering job. Combining the software KFF uses for the catering business will save department managers time of having to check with each other and the catering manager to ensure there will be enough product in the store to fill a catering order. The software can track the customer usage and even combine the catering services into the frequent shopper program to generate more shopper points for the customer. Tracking the trends, time of year with more orders or the slow times in the catering industry will need to be identified for cost and efficiency of maintaining the catering services. If Kathy decides to implement the catering services, she will not only need to expand the technology, but the operation. Additional employees, training sessions and catering managers will be required to effectively meet the customers’ needs.
Catering Service and Integration of Organic Produce
Incorporating organic produce to sell to customers and use in the catering business by contracting with local growers benefits both KFF and the local economy. This marketing strategy is strong for the company because KFF would be supporting local farmers to provide the three KFF stores fresh produce, with little travel, and less cost of transportation. With the reduced transportation there will be less chance for the product to be damaged during shipping, and the produce will be ripe when harvested instead of green. Most produce is transported from other states and countries before reaching its final destination. Using local produce will provide a fresher product to the customer adds to the quality of the product for the consumer. “By purchasing local products, not only are you supporting your local economy, you're also supporting the earth since buying locally reduces the environmental impact and cost of transporting goods” (Whole Foods, 2008).
Offering organic produce from local growers will enable KFF to supply not only the finest ingredients, but healthy ones that maintain their standards of quality. The price of organics may be higher, but it gives the health conscious customers a choice in what they feed their families and they make a decision to be socially responsible by offering quality products versus cheaper products that do not benefit the overall well being of the consumer or the environment. Combining organic produce and the catering service puts KFF in the position to have a competitive advantage over other local businesses.
Kathy needs to identify the customer base for organic catering, if it will be cost effective to start the service and the risks and benefits needing to be evaluated to make sure the marketing mix is favorable for the company. Kathy has decided to use the existing store fronts to house the catering services, yet still needs to determine the products, price and effectively promote the catering services. New technology needs to be added to meet the demands of their consumers, to ensure that the catering business benefits KFF. Introducing the organic produce and the catering services proves that the company is trying to meet their customers’ needs and retain loyal customers. KFF is a viable business and with the addition of new services to accommodate their customers’ needs, will maintain the competitive edge the company needs to continue to grow.