MKTG 2001 Group Paper [Case Study of Rituals] 4 PDF

Preview

Summary

Download MKTG 2001 Group Paper [Case Study of Rituals] 4 PDF

Description

i

COVER PAGE

Case Study of Rituals An analysis of the various elements of the marketing mix which have been implemented by Rituals

Presented to Ms. Denise Julien

Prepared by ByDesign Name Student ID # Chardis Isaac Daryll Lewis Kerwin Joseph Kristoff Miranda Quacy James Renesha Hunte Tamera Gabriel

816003889 811003220 814117638 815007370 814003267 807007107 815007406

July 9th, 2018

“The Starbucks of the Caribbean” Case Study of Rituals

Contents Chapter 1: 1.1. Background on Local Market

1

1.2. Product Position

1

1.3. Points of Differentiation

2

1.4. SWOT Analysis

2

Chapter 2: Analysis of Pricing Strategies

3

Analysis of Product Strategies

5

Analysis of Promotion Strategies

7

Analysis of Distribution Strategies

9

Chapter 3: Recommendations

11

References

13

Appendix:

List of Illustrations FIGURES 1.

Figure 1: Rituals Price Adjustment Strategies

4

2.

Figure 2: Product Mix

5

3.

Figure 3: Advertising Strategy

7

Image 1: Ritual’s Hot Cross Buns Ad.

5

IMAGE 1.

Introduction Chapter 1

1.1. Background on Local Market Rituals Coffee House (hereinafter referred to as "Rituals") is a franchise and it is part of the chain of restaurants owned by Global Brand Limited within the Caribbean. Founded in 2004, the franchise has established 118 restaurants throughout the Caribbean across 10 different countries; with 56 outlets situated in Trinidad and Tobago. Rituals’ activities involve producing and selling of coffee drinks, teas, smoothies, chillers and other drinks (despite the Trinidad and Tobago market being classified as a place with a tradition of tea-drinking). Additionally, Rituals offers an assortment of sweet and savoury pastries and other food items. As a benefit of no real competition (apart from the recent arrival, Starbucks), Rituals has thrived in targeting serval market segmentations, notably coffee lovers, university students and the working middle class who are in the age group of 16-45 years old. Rituals brand has become a household name for premium coffee, light foods, breakfast and desserts, great service, décor and environment that set them apart from all their competitors.

1.2. Product Position Essentially, Rituals has positioned itself has a ‘full-fledged coffee house’ where anyone and everyone is welcomei. It is positioned in the mind of its customers as a quality home-grown brand; a place where one can either relax, have breakfast or lunch with the family or have a casual business meeting. Rituals believes in creating value for their customers and building customer relationships, therefore, their positioning strategy also focuses on its product attributes, benefits and unique features which is closely linked to its customer value and satisfaction.

RESEARCH PAPER: RITUAL’S MARKETING MIX

1

1.3. Points of Differentiation Rituals has many points of differentiations which creates its clear position within the market. These include the price, product, and technology. The prices of their items are substantially lower when compared to others within the market. As it relates to product, their offering of a wide range of home-grown brewed bean products and seasonal products which cater to the local market. Technological, includes high- tech coffee makers, blenders, espresso machines, Wi-Fi and the loyalty card system.

1.4. SWOT Analysis

STRENGTHS

WEAKNESSES

▪

Currently leading in the number of outlets in Trinidad and Tobago with 56 outlets spread throughout the country.

▪

Provides poor customer service; often expressed on the various social media platforms.

▪

Products offered in each store are tailored to meet the needs of the customer base of that location.

▪

Inadequate advertising of menu additions and seasonal offerings, leaving prospective customers oblivious/uninformed.

▪

Products are relatively cheaper than those of its competitors.

▪

Outlets are not consistent in appealing to the customer’s guest experience. Many stores need maintenance or complete overhaul.

▪

Some products on the menu seem to be of lacking in quality in comparison to ones offered by competitors.

▪

Seasonal products and menu expansion keeps loyal customers satisfied and attracts prospective customers.

▪

Staying abreast with modern healthy eating trends attracts new customers and maintains customer loyalty. OPPORTUNITIES

▪

The insurgence of new competitors into the local market has appealed to a new coffee drinking culture, bringing new customers into the market. This increases the size of the market giving Rituals an opportunity to capture/lure a larger market share.

▪

The growing coffee market can fuel competitive innovations in products contributing to increased customer satisfaction and customer loyalty.

▪

Rituals should consider expansion into the South American market as larger populations can greatly increase profits.

RESEARCH PAPER: RITUAL’S MARKETING MIX

THREATS ▪

The emergence of small food businesses offering coffee as a secondary product can decrease market share, especially when lower prices are offered e.g. Subway, Linda’s bakery and corner cafes.

▪

Trinidad and Tobago’s economic recession may filter consumer spending. This may cause the business to reduce its spending by choosing any variety of cut-backs e.g. wages, employees, work hours, source cheaper raw materials- this may compromise product quality.

▪

Increase competition with the arrival of Starbucks.

2

Analysis of Marketing Mix: Chapter 2

Analysis of Pricing Strategies Effective pricing strategies is a crucial part of any company’s marketing mix and success, as price creates income for a company. Notably, Rituals’ pricing strategies are primarily based on the perception of value from their customers, whilst considering the cost of production. As such, Rituals’ product prices incorporate a combination of value and cost based pricing, where ‘customer value perceptions set the price ceiling, costs set the floor’ (Philip & Gary, Principles of Marketing, 2016). Therefore, Rituals’ prices fall somewhere between that what is too low to produce a profit and that which is too high to generate any demand. 1.1. Value-based pricing For the most part, Rituals’ prices are utilized to create and maintain an image of quality for their products. Typically, their prices are associated with products of premium quality. Therefore, they formulate a targeted price that captures the greatest amount consumers who are willing to pay without driving them off. 1.2. Cost-based pricing Rituals also utilizes cost-plus based pricing, that is, establishing a cost base and adding a mark-up to determine a target selling price, where the size of mark-up depends on their desired return on investment based on the value customers place on them. 1.3. Competition-based pricing As mentioned previously, with no real competition (apart from the recent arrival Starbucks), Rituals’ pricing was largely based on its monopolistic control of the market. As such, competitionbased pricing was and largely remains uninfluential in their pricing strategies within Trinidad and Tobago.

RESEARCH PAPER: RITUAL’S MARKETING MIX

3

1.4. Product Mix Price Strategies Product line pricing: Rituals encompasses a range of nine different product lines. These product line prices are the different levels for which their segmented target markets are willing to pay. The value and quality differ at each level and allows customers unlimited options to suit their needs. The product bundle pricing at Rituals allows for the simplicity of orders and leaves no room for error as customers can simply order a wrap combo (see appendix A). While bundling allows their target markets the convenience of paying one price for a food and drink rather than separated and higher prices, Rituals benefits from more sales of the combination at a reduced price. 1.5. Price Adjustment Strategies Over the years, Rituals has employed several price adjustment strategies to maintain their

Figure 1: Rituals Price Adjustment Strategies

profitability, growth and development. The most notable includes the following; Discount and Allowance Pricing

Employed to reduces prices to eward customer responses such as making volume purchases or promoting the product. Example: iscounts available for bulk orders for 30 or more boxes!

Segmented Pricing

Employed via location-based pricing, Rituals charges different prices for the same products at different locations. Example: Rituals Buffet....Tobago (Sunday & Monday $100.00) Maraval (Saturday $75.00 Sunday & Monday $150.00) Pointe a Pierre ( Saturday & Sunday $75.00) Some products are further segmented by customers, where kids 12 and under are 1/2 price

Promotional Pricing

Employed by temporarily pricing products below the list price, to increase short-run sales. Example: Wednesday 13th - Sunday 17th September BUY ONE CHILLER AND GET THE 2ND CHILLER 50% OFF

Ultimately, Rituals utilizes varying pricing strategies to accomplish different objectives at different times. Rather than employing a single pricing strategy, they employ a range of pricing strategies to confront the changing needs and goals of the company.

RESEARCH PAPER: RITUAL’S MARKETING MIX

4

Analysis of Product Strategies 2.1. Product Mix With products designed to be portable, tasteful, soothing, cooling and satisfying, Rituals is one of the fasting growing and widely recognized coffee shops in the Caribbean. At present, the following are the main categories of Ritual’s products (see appendix B for full breakdown): Figure 2: Product Mix

Bagels

Barista Bar

Chai Tea Bar

Cold Sandwiches

Hot Sandwiches

Chillers

Coffee Free Chillers

Java Bar

Paninis

Smoothies

Wraps

This product mix is a result of years of business innovation. For instance, when the first Rituals launched, it offered a staple list of coffees, teas and espresso drinks (hot and iced). Years later, the menu has expanded with a variety of espresso and tea flavours as well as offering a wide selection of pastries and sandwiches that makes it a true family establishment. Moreover, Rituals has actively altered its existing products, along with introducing new products to attract and maintain its customer base or market share; such innovation includes catering for health-conscious and lactose intolerance. Rituals offers low-carbohydrate, organic and supplement drinks to accommodate their customers’ active and healthy lifestyles. Also, a few baked goods offered are egg and fat-free and the food menu gives customers a broad selection of bagels to gourmet panini sandwiches and bistro items to enjoy. Additionally, they have constantly altered their menu depending on the season/occasion. For example, during Easter and Christmas period, customers have options such as hot cross buns and eggnog donuts/chiller respectively. Image 1: Ritual’s Hot Cross Buns Ad.

RESEARCH PAPER: RITUAL’S MARKETING MIX

5

2.2. Level of Product Rituals’ products are classified as convenience products. These are products and services that customers usually buy frequently, immediately, and with minimal comparison and buying effort. According to (Philip & Gary, Principles of Marketing, 2016) there are three levels of a product, core customer value, actual and augmented product; see appendix C. 2.3. Branding, Labelling and Packaging The whole brand identity concept conveys the friendly essence of a place that embraces you with the smell of freshly brewed coffee in a friendly and cozy atmosphere. Rituals has a unique logo, so regardless of what sort of new outlines or flavor assortments are acquainted with the company, it can in any case be easily identified and recognized from different brands. Packaging: Rituals’ product style and design are very unique and it is developed to particularly adopt to the temperature of the hot and cold products. Some of their packages consist of reusable and recycled cups, containers and bottles. They also personalize these packages by writing customers’ name etc to make them feel welcome and special. Additionally, they change their designs to suit different seasons and to support social/health causes in terms of colours and styles, for example, Christmas and autism awareness. (see appendix D) 2.4. Product Life-Cycle As more Rituals doors continue to emerge and expand throughout Trinidad and Tobago, there is no doubt of the boost in the nation’s quality of life with increased convenience and customer satisfaction. This product is considered to be at its growth stage in the Product life cycle, although citizens from Trinidad and Tobago are more or less familiar with the products, the brand is expanding and is being launched in other regional countries.

RESEARCH PAPER: RITUAL’S MARKETING MIX

6

Analysis of Promotion Strategies Once a company has identified their product strategies, they’ll have a good idea of the best way to communicate them to potential customer. According to (Philip & Gary, Principles of Marketing, 2015) promotion refers to activities that communicate the merits of the product and persuade target customers to buy it. Just like any other company, Rituals utilizes promotion as a method to disseminate information and promote its products. These methods correlate to the promotion mix outlined by (Philip & Gary, Principles of Marketing, 2015). As such these include a mix of: advertising, sales promotion, personal selling, public relations and digital marketing to reach and engage customers. 3.1. Advertising Perhaps the most widely used marketing method, advertising constitutes the core of Rituals’ promotional campaign. It focuses solely on bridging the barriers between the company and customers by relaying product offerings and promotional specials. Rituals’ advertising strategy

Figure 3: Advertising Strategy

mainly consists of following:

indow Display or Outdoor Advertising ey utilize bright fonts with attractive product sters on storefront to persuade the passing by dience to enter the store. elevision and Radio hey use cable television to persuade audience nd generate interest in products to expand ustomer base. E.g. "Grounds for Enjoyment" Rituals Coffee House TV Commercial Point of Sale In store advertising, i.e. at the point where the consumer makes a purchase decision e.g. stickers, instore digital advertising, signage, shelf or counter posters.

RESEARCH PAPER: RITUAL’S MARKETING MIX

Newspaper and Magazines They publish advertisements in local newspapers to reach new and existing customers to build image, disseminate information and sales campaigns. Online They include advertising on their own website, advertising on other websites, offering online product games and social networks and website.

7

3.2. Sales Promotion Usually specific and short-term in nature, this promotional method encourages customers to buy more and faster, keeping loyal consumers and persuading potential ones. With many people making saving money a priority, Rituals has engaged in numerous sales promotion, such as; ▪ ▪ ▪ ▪

Discounts, Chill Night, Grill Night $99. Thursdays campaign, $50 for kids under 12; Coupons, Buy one chiller and get the 2nd chiller 50% off and Birthday Club coupons; Free Samples of our new drinks at selected outlets; Loyalty Reward Programs and Reloadable Gift Cards

3.3. Public Relations Rituals utilizes public relations to build good relations with the stakeholders (public) to obtain favorable publicity, building a good corporate image. This is achieved mainly through communication between the organization’s management and society which in turn affects their behaviour. For example, Rituals regularly generates communication in support/celebration of varying public holidays; they also introduce several seasonal products. Additionally, Rituals’ staff participated in the RBC Walk Against Cancer for Kids, while officials at the company also sponsored the St Ann’s and Cascade RC Church Annual Family Day. 3.4. Digital Marketing The options for online advertising continue to grow rapidly, Rituals has extended its digital presence and maintains interaction with customers mainly through their websites and digital catalogs, online ads and video, social media and blogs. For example, they have accumulated over 93,399 Facebook Likes, 15,000 Instagram followers, and 187 Twitter followers. Rituals utilizes digital marketing to reach customers with carefully targeted messages about product offerings, online product games/promotions/giveaways.

RESEARCH PAPER: RITUAL’S MARKETING MIX

8

Analysis of Distribution Strategies Place, more commonly referred to as distribution, can be described as the placement. Distribution matters for businesses of all sizes, it is a crucial part of the product mix definition. The objective of distribution is to make products available in the right place at the right time in the right quantities. It is typically achieved via all the intermediaries the product must pass through between the stages of production and consumption, also known as distribution channels.

4.1. Marketing Intermediaries In relation to rituals, one must position and distribute the product to locations that are easily accessible to potential buyers. This is most effective with a thorough understanding of their target market. Rituals adapted two major distribution strategies; Selective distribution (a distribution strategy that lies and operates between intensive and exclusive distribution) and Franchising (arrangements where one-party grants another the right to use its trademarks as well as certain business systems to produce and market a good/service according to certain specifications). 4.2. Market Coverage Currently, Rituals utilizes one market coverage strategy known as physical stores. Market coverage refers to how wide or varied one desires their products to be distributed. This applies to both direct sales and through intermediaries. Rituals stores offer a full range of products and services tailored to thoroughly satisfy each customer and his or her needs through front-end retail locations. Some large-scale coverage locations utilized by Rituals include: shopping malls, airports and university campuses. Apart from physical stores, Rituals also adopted place strategy which outlines how and where they will place their products in an attempt to gain more market share and consumer purchases.

RESEARCH PAPER: RITUAL’S MARKETING MIX

9

4.3. Retail Outlets Questions such as; “How do you access the different distribution channels?”, and “How is your distribution strategy different from your competitors?” allow Rituals to conduct market research pertaining to identifying the ideal locations to open a Rituals Coffee Shop outlet. Moreover, as mentioned in the introduction, Rituals has over 70 Rituals Coffee Shops opened in Caribbean islands, occupying prime spaces in each island. Of these, 60+ locations have been spread throughout Tri...