Marketing C212

Marketing C212 1 Marketing C212 Table of Contents Marketing C212 2 A1. New Products………………………………………………………………………………...3 A1a. Three Methods to Determine Product Need…………………………………………………3 A1b. Competitive Advantage of Company………………………………………………………..4 A1c. Risks in Products Launch……………………………………………………………………5 A2. Customer Relationship Management (CRM)………………………………………………..6 A2a. CRM Best Uses……………………………………………………………………………...7 A3. Distribution Channels………………………………………………………………………...8 A3a. Key Considerations for Entering Market……………………………………………………8 A3b. Global Supply Chain………………………………………………………………………...9 A4. Pricing Strategy……………………………………………………………………………...10 A4a. Cost of Developing Products……………………………………………………………….10 A4b. Consumer Acceptance……………………………………………………………………...11 A4c. Competitor Prices…………………………………………………………………………..11 A5. Promotional Strategy………………………………………………………………………...12 A5a. Media Promotions………………………………………………………………………….12 A5ai. Media Promotions Justifications…………………………………………………………..13 A5b. Two Sales Promotion Activities …………………………………………………………..14 A1. New Products Marketing C212 3 Little Caesars was established in Garden City, Michigan in the year 1959. Ten years later, it opened its first Canadian franchise. Today the company has over 5,500 locations in all 50 states and 18 international markets. In 1971, owners Mike and Marian even started Little Caesars Mushroom Farms in order to help improve quality and pricing for mushrooms used on their pizzas. This would later evolve into a full-service distribution company called Blue Line Foodservice Distribution. Currently, Little Caesars is the third-largest pizza chain, behind only Pizza Hut and Dominos. Two new menu items I propose to bring to the global market are hamburgers and a slushie soda drink. The addition of these items will differentiate Little Caesars in Canada and help them gain a larger market share. A1a. Three Methods to Determine Product Need Little Caesars utilized three different marketing research methods to determine that there was a need and global market for the two new products. The first method utilized was customer surveys. Surveys are a quick and cost-effective way to describe and analyze the buying behaviors of our customers. We offered online surveys to every customer that made a purchase. The survey contained a list of potential menu items that they would like to see added to our current menu. To encourage customers to provide feedback, we offered them 10% off their next purchase for completing a survey. Offering consumers incentive provided us with more viable data to use when determining the two new products for our menu. It also helped increase repeat business. After analyzing the survey data it was clear that these two new products would have enough demand to make them viable menu items. Marketing C212 4 The second method we used was focus groups. These focus groups were a great way to obtain customer information based on the given topic of new menu items. We knew the focus groups were going to be expensive, so we wanted to ensure that we didn’t obtain tainted data. To do this we hired a third-party company to help us develop the questions and product demonstrations for the focus group. Then we let the third-party company moderate the focus groups to help eliminate moderator bias. We held the focus groups in ten different locations in Canada. In each location we brought in ten random Little Caesars customers and presented our potential new items and asked the group questions about them. After all feedback from the focus groups was compiled, we concluded that these two new products were most favorable to our customers. The feedback also helped determine which regions these two new products would have the biggest impacts in. The third method used for product research was direct observation. Direct observation is a way to gain information without influencing the results. For this method, we began offering our two new menu items at select locations across Canada to gauge customer response. After a set period of time our team analyzed customer reactions to purchasing the two new menu items at each location. Because these customers were unaware that we were performing a test, we were able to gather data on how each customer truly viewed the new menu items and gauge their reactions during consumption. These direct observations guided us to the outcome that these two new menu items were in high demand and that it would be beneficial to offer them in all of our Canadian locations. A1b. Competitive Advantage of Company Currently the two biggest competitors to Little Caesars in the Canadian pizza market are Pizza Pizza and Pizza Hut. Little Caesars expects to gain market share by having a competitive Marketing C212 5 advantage in its menu items. The introduction of hamburgers and our slushie soda drink sets Little Caesars apart from its competitors, as they do not have any similar menu items. Offering these items will allow Little Caesars to capitalize on families or larger groups of people that prefer different options at their restaurants. Offering slushies is a great way to encourage children or teens to go eat at Little Caesars. Because Little Caesars already uses all of the ingredients for most hamburgers it can offer a wide variety of customized burger options to those that seek more than just pizza. These two new menu items will allow for Little Caesars to expand its market base and pave a way forward for additional menu items in the future. A1c. Risks in Products Launch The first risk that Little Caesars will take on when launching these new items is variances in the supply of fresh beef for the burgers. The quality of meat and consistency in supply of beef can vary depending on suppliers and locations. To help mitigate this risk Little Caesars will need to source beef from two of the biggest beef suppliers in Canada. In the unlikely event that these suppliers cannot meet Little Caesars demand, they can be supplemented with our US beef suppliers. Importing beef from the US to Canada would increase costs, but would allow for stores to keep the menu item in stock and give the company time to react to a beef shortage from Canadian suppliers. Having two suppliers for beef in Canada and several options in the US allows Little Caesars to have multiple contingency plans: if one supplier encounters issues with production, another one can be used in its place. Also, if both Canadian suppliers were to cut production, Little Caesars can shift to importing beef from the US. These contingency plans will help successfully mitigate one of the biggest risks to adding hamburgers to the menu. The second risk to adding these two new menu items is consistent quality in the final products. If a product is not the same high quality every time it is made, Little Caesars will lose Marketing C212 6 business and the new menu items will fail. Most of the staff at Little Caesar stores will not have much experience making hamburgers or slushie soda drinks. To eliminate the risk of inconsistent quality in our new menu items, all staff will go through a company-wide standard training process. Each member of the cooking staff will have interactive video lessons, on-the-job practice preparing burgers, and visual aids posted in the kitchen. This ensures that every location provides the same quality of hamburger. All non-cooking staff will be given similar training on how to operate and clean the new slushie machine. To further mitigate the risk of inconstancy in our final products, a corporate trainer will visit each location to oversee the training before the new products are officially launched at that location. Implementing a successful training program will aid in the success of these new products and help Little Caesars gain a bigger market share. A2. Customer Relationship Management (CRM) The customer relationship management program I chose to utilize was Oracle’s NetSuite. NetSuite offers Little Caesars everything it needs in one user-friendly package. The program can be used for planning and scheduling, supply chain management, order management, marketing, and CRM. This cloud-based software allows senior managers in our company to properly track its products from farm to consumer. The second reason I chose NetSuite was its ability to track company leads to purchases. Whether leads are from a website, phone, or POS transaction, sales data is compiled and made easily viewable from any device. This allows management to see what areas of marketing are working and what products are top sellers. The company can use this information to tweak its menu to provide the best combination of food items for the consumer. The third reason I chose to utilize NetSuite is its marketing features. NetSuite allows the Marketing C212 7 company to set up marketing campaigns in which it tracks the results. It will also assist the company with search engine optimization, website optimization, and email/mail marketing campaigns. By optimizing the company marketing and tracking leads, Little Caesars can increase sales and as well as customer retention. A2a. CRM Best Uses The information generated by NetSuite will give Little Caesars the ability to track sales from a regional level to a store level. Using this information, the company can ascertain if the two new menu items are performing to the desired level. If certain locations are having low sales of the new menu items, then NetSuite marketing features can be used to develop campaigns to boost sales. The marketing data that is provided from NetSuite on each advertising campaign will allow the company to see which marketing avenues are the most successful. Little Caesars can use this information to better utilize its marketing funds. If in one region an email campaign drives customers to purchase new products, the company can focus on utilizing that method; While, in another region, the data provided may show social media as a more successful marketing approach and the company can switch its focus to advertising on social media to attract customers. NetSuite can also be used to track customer traffic by analyzing which hours have the highest sales volume. This grants the company the ability to maximize their staffing during peak business hours. If the data shows that weekends from 12:00 PM to 7:00 PM bring in the highest sales volume, the company can schedule staff appropriately during these hours in order to prevent long wait times on products and inconsistent quality. On the same note, this data allows Marketing C212 8 the company to minimize staff needs during times of lower sales volume in order to save on payroll costs. A3. Distribution Channels Little Caesars will use a direct distribution channel for its products. It will sell menu items directly to the public via dine-in, carry-out, and delivery options. The orders will be placed over the internet, phone, or in person. Little Caesars already has a distribution network in Canada, but some ingredients will still be imported from the United States. Hamburger ingredients, such as ground beef and certain toppings, will be sourced from Canadian farms to keep the meat and produce as fresh as possible. The slushie soda mixture will be sourced from the United States and shipped from the main supply terminal to each individual store. If Little Caesars experiences a disruption in the Canadian supply chain, any ingredients that are needed for the two menu items can be supplied from the United States until the supply problem is resolved. A3a. Key Considerations for Entering Market There are always certain risks to take into account when entering the global market. Several potential risk factors to consider are: geopolitical risk, trade agreements, international laws, and different cultures. The first hurdle to overcome when entering the global market is the typical trade agreement that countries have in place. Currently, Canada and the United States are negotiating on a new trade agreement. Under the old North American Free Trade Agreement (NAFTA), there were no tariffs placed on imported food to Canada. This will still hold true under the new United States-Mexico-Canada Agreement (USMCA). Just like NAFTA, the USMCA will remain in place for the next 15 years before a new trade agreement will be negotiated. This Marketing C212 9 allows Little Caesars to import ingredients from the United States to Canada without any tariffs driving up its prices. This long-term trade agreement also gives Little Caesars piece of mind, as it can invest in its supply chain and stores in Canada knowing that it will not face rising cost or complications from tariffs. The second consideration for Little Caesars is the geopolitical and cultural risk involved in becoming a global brand. Little Caesars analyzed the different financial, economic, and political risks in Canada before it decided to add two new products to the menu. Once the analysis was completed it determined the level of risk to be relatively low. Canada is similar to the United States in its culture, which means that the new menu items will not be viewed as out of place or unfamiliar. Canada’s economy is stable and there is no risk to the direct sales distribution channel. Canada is also a politically stable country with no threat of sudden or massive political change that could negatively impact business. A3b. Global Supply Chain Little Caesars has already established a supply chain between the United States and Canada for importing certain US ingredients and sourcing local Canadian-grown ingredients. The new menu items would follow the same supply chain. The slushie soda drink machines can be acquired at the main supply terminal in the United States and shipped to each individual store. From that point forward, the containers of slushie mix can also be routinely sourced at the main facility and shipped to each store location in Canada. Because the mixture doesn’t require refrigeration during transit, shipping it from the main terminal will not compromise the product. Meat and ingredients for the hamburgers would be sourced locally from distributers in Canada. This would keep the products fresh. In the event that the Canadian supply of fresh meat and Marketing C212 10 toppings were disrupted, Little Caesars could temporarily begin shipping the ingredients from the United States to Canada. This contingency plan is possible because under the current trade agreement, Little Caesars would not take on extra expenses from tariffs when shipping between the United States and Canada. A4. Pricing Strategy Little Caesars will be using penetration-based pricing for its two new menu items. Penetration-based pricing was chosen to help Little Caesars grow its market share quickly by allowing Little Caesars to discourage other competitors, like Pizza Pizza and Pizza Hut, from offering similar items. The pricing of each item will be set low enough to attract customers at a rapid rate while discouraging competitors from offering similar items due to their low profit margins. The slushie soda drink will be sold for a special rate of $1.00 from 2:00 PM to 5:00 PM each day and for $2.00 regularly. The base price of the hamburger will start at $5.00 but will have customizable add-ons that can raise the price. A4a. Cost of Developing Products There are several costs associated with developing the two new menu items for Little Caesars. The main costs for these two items include research and development, marketing, materials, and training. The research and development cost includes conducting customer surveys, focus groups, and the onsite testing of the products at several different locations. Another cost associated with research and development is the testing of ingredients and cooking equipment to ensure that the final product is tasty and consistent. The marketing cost is tied to all marketing activities performed before and after the new menu items launch. This will include advertisements placed in flyers, mailers, billboards, and online. The material cost covers the Marketing C212 11 ingredients used to prepare menu items and the equipment needed in order to cook them. Pertaining to the two new products, this cost includes the slushie machines, burger cooking equipment, and the ingredients for both items, along with packaging for shipping everything. The last cost is the training cost. This includes the training-staff who develop new training programs to teach staff members how to prepare the new items. There is also labor and travel costs for training-staff to visit each store and provide hands-on instruction for the training program. A4b. Consumer Acceptance Initial customer surveys were implemented to collect consumer feedback regarding pricing in relationship to quality of certain menu items. Focus groups were then conducted to further evaluate the customers opinion on the quality of the menu item and its price point. After considering the results, Little Caesars decided that a starting price point of $5.00 for the hamburger and a tiered price structure, starting at $1.00, for the slushie soda drink were the right prices to satisfy customers. The initial testing launch of the products confirmed that the price point of both products was satisfactory. A4c. Competitor Prices The hamburger and slushie soda drink were selected as new menu items neither of Little Caesars’ main competitors offer items that are direct competition to them. Pizza Hut and Pizza Pizza both offer soft drinks for just under $2.00. This places the slushie soda drink in a great position during happy-hour where it sells for just $1.00. Before and after happy-hour, the price is still on par with what the competitors are offering for a regular drink. At this price point the slushie soda drink should give Little Caesars a competitive edge and entice more customers to come try the new drink. Currently, neither competitor offers hamburgers. They do both offer Marketing C212 12 wings that are priced from $6.29 to $12.99 depending on the amount the consumer purchases. Pricing the hamburger at $5.00 keeps it below the lowest cost of wings. It is Little Caesars’ intention to gain market share and attract some of their competitors’ customers by offering these two new menu items that the top competitors don’t have. A5. Promotional Strategy Little Caesars will utilize a pull strategy to promote their new menu items in Canada, using a combination of advertising and promotions to drive demand. The goal of this strategy will be to create brand loyalty and to keep repeat customers coming back. The main purpose of this promotional strategy is to create long term market growth in order to catch up to their competitors, Pizza Hut and Pizza Pizza. A5a. Mass Media and Social Media Channels Little Caesars will use several different media channels in order to promote their two new menu items. The first used will be a social media advertising campaign. On this channel, Little Caesars will focus on Facebook, Instagram, and Twitter. Little Caesars will purchase ads for their new products on these social media platforms. A social media giveaway will also be featured on these outlets, offering prizes for consumers sharing the best photos of the new products. Little Caesars will also run television and radio ads in conjunction with these social media ads. These will promote the new menu items and will tell the public about the social media contest being offered for the products. Marketing C212 13 A5ai. Media Promotions Justifications Little Caesars chose the mass media channels of radio and television because of the range of individuals they reach. They also considered how effective each of these mediums has been throughout the years. They can utilize both channels to direct customized ads towards certain demographics. The ability to tailor different ads to different demographics allows for all market segments to be reached effectively, and raises awareness of new products quickly. An example of this is placing an ad during a sporting event, such as a hockey game. Tailoring an ad to fans of the sport (with hockey-themed ad) would ensure that it was received well. The one downside to these mass media promotions on radio and television is the high cost, but because these mediums reach so many people, they can create a large demand for the new products. The reason Little Caesars chose to advertise on the social media platforms of Facebook, Twitter, and Instagram was due to how many potential consumers use at least one of those networks. These are three of the most popular social media platforms in use, and Little Caesars can post targeted ads for each demographic that it would like to appeal to. Alongside these specialized and targeted ads, Little Caesars can start promotional giveaways. Such promotions will help to quickly spread news of the new products and entice people to purchase them. The chain effect of the promotions and targeted ads will lead to increased demand for the products. Marketing C212 14 A5b. Two Sales Promotion Activities Little Caesars’ first promotional activity for the new menu items will be a social media giveaway. Each customer can take a picture of one of the new products and post it with a hashtag or link to Little Caesars social media page. Every week, Little Caesars will select the best photos and post the winners of the prizes. This promotion will generate interest in the new products and increase demand. As people start to see these items pop up in their news feeds from friends and family members, it will encourage them to try the items themselves. This word-of-mouth marketing is the least expensive and one of the most effective methods of advertising Little Caesars can use to promote new products. The second promotional activity utilized will be to offer coupons for one free small slushie soda drink or half-priced hamburger with the purchase of another entree. These coupons will be distributed in several different ways: newspaper circulations, emails, store receipts, and coupon fliers in the mail. This promotion will reach potential consumers who may not frequent social media, or are not currently aware of the new menu items, and encourage them to try them