Sunday 4 December 2011

The Four Ps of Marketing

So I was reading a marketing question on a forum today from a guy who was promoted from being a waiter in a Cajun restaurant to being director of marketing.  He had no idea what to do and most people were suggesting various promotional tactics such as giving free meals to hotel clerks.

I was transported in my mind back to marketing class, which was one of my favourite classes because I had a great teacher and I understood it well.  So I went through a classic analytical model, one of the basics they teach in marketing class.  The 4 Ps of marketing. Acutally, with services like restaurants they talk about 8 Ps, so I went through all 8, which I now present to you, dear reader, because I believe it's interesting.

The Background Info

So the background information I was given was that the restaurant is a Cajun restaurant that is straddling the line between casual and upscale.  The servers dress in black, the floors are concrete, the tables have a checkered tablecloth on them, the food is very nice and runs between $20 and $30 an entrée.  Their current plan is to give away 75 free meals to hotel clerks to encourage them to promote the restaurant, and have flyers with coupons available for potential customers.  The coupons give the client free gumbo with their entrée.  This is all the information I have about the restaurant.

The 4 Ps, or how I stopped worrying and learned to love marketing

These are things that need to be looked at when marketing a product or service.  Marketing isn't just promoting the service, it's creating, communicating and delivering value to customers and managing customer relationships.  It is in this spirit that I present the 4 Ps and how they could apply to this Cajun restaurant.

1. Product

- Designing the product concept to fit with the customer's needs and desires.  This restaurant is selling Cajun food. That's a good start, because there's a concept.  Now some questions need to be asked: Is the brand strong in people's minds? Does it have a good logo? Website? Does it convey the feel of a place you want to be?

Do the menu items have interesting names? I was reading a study just a few days ago that showed that menu items with more descriptive names both sold better and were rated higher than those without. So "gumbo" is not as good as "Mama's down-home New Orleans-style gumbo". "Hushpuppies" are not as good as "Mark Twain's favourite Hushpuppies"

2. Price

- The price of a service sends a signal about quality and type of restaurant.  Judging from the background information, this may be an issue if they're straddling the line between casual and upscale. It might be best to choose, but maybe take some time and track how full the restaurant is on an hourly basis for a week or two. If the restaurant is filling up during peak hours regularly, maybe there's no need to change. If, however, it's never full, then you can point to the spreadsheet and say "we've got 60% capacity maximum, and most of our clients [for example] want a casual restaurant. I think we need to shift gears to get bums in seats.

3. Promotion

- Getting the word out there.  This seems to be what the person in question has been relegated to, judging from the work he had done already and the advice he was given.  The important thing with promotion is to be communicating the benefits of the restaurant to the right people.

  • For promotional material that's going to the customer it has to send the message of "casual (or upscale?) Louisiana experience with delicious cajun food."
  • To the hotel clerks and anyone else that you want to promote the restaurant for you, you're communicating the benefit to them - maybe a free meal and the satisfaction of helping out a guy who asks nicely. 
If the customers are mostly businessmen in town for business, he could try promoting at the businesses or conferences that people are in town for. If clients are mainly tourists, maybe try getting cozy with tour guides. I once worked as a tour guide in the Old Port of Montreal and if I were to get a free meal out of the deal I'd be willing incorporate the restaurant as part of my tour!

It's also worth mentioning that Groupon is not always the best choice to promote a restaurant.

4. Place

- This talks about distribution.  How do the customers receive the service? Are they doing mainly dine-in or also delivery or also take out? For a restaurant straddling the line between upscale and casual I'm imagining it's mostly dine-in, but does the restaurant offer catering services for lunch for business conferences? Might be an option if mid-day sales are slow.

The next 4 Ps - The service frontier

Services are fundamentally different than products because they are less tangible.  It is harder for a customer to judge the quality of a service than of a product because services have intangible aspects to them.  Some services are more tangible than others. It is easier to evaluate the quality of a restaurant than, say, legal services or medical diagnoses, but they are still a service.  More factors must be looked at than the quality of the food alone.

5. People

- Who is doing the serving?  One of the hardest aspects of any service experience to control is the people that your customers interact with.  A customer's experience at a restaurant can be made or broken by whether their server was having a bad day or not.  If the wait staff don't have clear directives for how to serve customers, then this aspect is essentially left up to chance.

Internal marketing is often used to drill the restaurant concept into the heads of the employees.  Training sessions, pep talks, uniforms, anything to get servers to be sending the same message.  For a casual restaurant, a lighter demeanour, service with a smile, maybe even standard jokes that the wait staff can tell, or a script they can follow will do wonders to set the tone. For an upscale restaurant, everything should be more formal. But clearly communicating that concept to the employees will help them act accordingly.

6. Physical Evidence

- The environment around the service.  Imagine going to a lawyer for advice in a prestigious office.  Got it?  Good.  Now imagine going to a different lawyer whose office is in his parents' garage and his desk is a cardboard box.  Because services are largely intangible their quality is judged in part by the environment they operate in.

First impression management is key here, making sure that the evidence the client sees communicates what the restaurant is about.  Restaurant flyers shouldn't be black and white photocopies, the website shouldn't have animated GIFs on it, the menus shouldn't be overcrowded, garbage shouldn't be on the floor. Some of this is obvious, but it's all part of making sure that the customer gets the feeling of "I'm going to a place that's good."

7. Process

- What are the actual procedures and flow of activities that make the service happen?  Are there formalized procedures so that everything flows smoothly?  How can they be improved?

Making a flow chart of what happens when the customer comes in to when they leave will highlight trouble spots in the service, such as:
  • How long does the customer have to wait for a table?  
  • Who talks to them at what points?  
  • How long does it take for them to get their meal?  
  • How long does it take for the customer to get their bill?  
  • Is there anything that can be changed to make everything smoother?  
This step can be very complex to analyze.  There are a lot of factors that go into the running a service like a restaurant.  One paper I read recently talked about a restaurant that wanted to ensure their customers didn't feel rushed eating, but didn't wait around after they were eating to get their bill.  Their case required extra training so their bussing staff would clear dishes as soon as customers were done eating, and the hostesses would deliver the bill within 2 minutes of the diners finishing their meal.  This increased the number of customers served during peak hours by a substantial percentage.

8. Productivity

- AKA yield management. If you're selling widgets, if you don't sell them today, you just sell them tomorrow.  For a service, however, every empty seat is lost revenue.   If a plane takes off with 10 empty seats, the potential revenue from those seats is lost forever.  Same with a restaurant - you want to maximize the number of people in the restaurant at all times. So start by tracking the number of people in the restaurant on an hourly basis over a few weeks. When are the peak times? the lag times? Don't offer free gumbo to everyone with a coupon, offer free gumbo during slow times. Free gumbo until 4:30.   Happy hour on Tuesday nights.  Whatever it takes to even out the demand.

The next thing to look at is the number of seats that are available. One study I read about a particular TGI Fridays that was very very busy and had huge lineups discovered that at peak times with the longest lineups to get in, only 60% of the seats were filled because most of their tables were 4 seaters, but most of their clients came as couples. They renovated the restaurant to add more 2-seat tables and got an extra 150k/year. To figure out the optimal seating arrangement though, you may need to use.... math.

And that, my friends, is some basic marketing analysis using the four Ps tool.


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