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HTM 2121TOURISM AND HOSPITALITY MARKETING GROUP PROEJCTProject Title :F & B Operation in TST EAST

Names: LAM KA YEE, Iris, 11225906D LEE CHO YIN, Kristy, 11025186D LEE KA YU, Jason, 11370913D

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Table of content

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Sections Page number

Executive summary P.3-4External environmental analysis and opportunities & threats

P5-

Objectives

Target market

Marketing mix strategies and programsImplementation milestone

Marketing budget

Marketing controls

Reference

Executive Summary

3

Mission of GreenLife: Provide high quality of Food & beverages and

customer services to the guests → Taking the Corporate Social Responsibility

Promote organic and fair trade‘s concepts and products

→establishing healthy eating habit

Break-even and then be a revenue-earning café →raising the awareness of them to the third world

countries

Executive Summary

4

Resources Maintain serving skills, organizational knowledge and morality of employees and managers ↑ productivity

Update the information of external and internal environment

↑ competitiveness

Resources are essential for marketing programs (e.g. Fair Trade coffee bean )

External Environmentmacro-environment

5

Demographic trends

6

Macro

environment

Opportunities Threats

Demographic

• Organic food

attract customers (growing

trend of healthy eating)

• Price sensitive customers

generally not brand loyal when

a discount is offered

when GreenLife offers discounts,

consumers will probably buy our

product

• Customers knowledge about

coffee products↑

• Products should keep in high

quality

Opportunity Threat

Trend for healthy eating • Organic food

attract customers

Growing trend of Cafe

culture• Customers knowledge

about coffee products↑

• Products should keep in

high quality

Price sensitive

customers• Generally not brand loyal

when a discount is offered

when GreenLife offers

discounts, consumers will

probably buy our product

Demographic trends

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Economic trends

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Fair Trade products ensure steady and reliable supply. New Fairtrade figures show business is changing for good

Non Fair Trade farmers being exploited, started to leave the industry since they get only a small fraction of the retail price after middlemen, processors, shippers and retailers.

Ecological trends

9

Get raw materials from Fair Trade, as it promotes equity, sustainable development and organic farming etc.

Gaining environmentalist support

Promoting some values

Technological Trends

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global technological trends influences and powers of computer and

Internet ↑ changes the way of obtaining information Nowadays, global internet users >20 billion

global use of mobile devices to access internet accounted for total internet users : 4.3% in

January 2011 and 8.5% in January 2012 doubled the growth growing trends


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marketing planning and mixes more focused on Internet

Customers : obtain products and services information online, shopping online

Suppliers and distributors : (1) provide online service (e.g. homepage which contains product and

services’ categories with order and delivery services)


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(2) ↑ focused on Internet promotion (e.g. Facebook page and Apps )

F&B operation computerized system :( e.g. POS system and Management system

run the operation and keep records such as inventory.)

Political-legal

13

According to the Public Health and Municipal Services Ordinance (Cap. 132) and other relevant legislation

F&B operation : apply corresponding licenses match numbers of requirements Two licenses for our operation1. Restaurant licence (from FEHD) : selling any kind of food for consumption on

the premises

Political-legal

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2. Liquor licence (from Liquor Licensing Board):Selling any kinds of Liquor on the premises

Requirementsfire-fighting equipment (from HK Fire Services Department)ensure the health and hygiene conditions (form FEHD)ensure buildings safety (Buildings Department)

Political-legal

15

marketing planning and mixes more focused on Internet

Customers : obtain products and services information online, shopping online

Suppliers and distributors : (1) provide online service (e.g. homepage which contains product and

services’ categories with order and delivery services)

Political-legal

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Certified no unauthorized building + compliance with Government lease

conditions (The Land Registry)

Statutory Plan Restrictions (Town Planning Board)

Threats

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Costs ↑ Application fee and annual fee of the licenses : Our store : 100-150 sq.m $3140 (annual fee )

maintenance costs match the reqirements

Time costs : obtain the licences from FEHDprovisional food business licencemaintain these standards for 6 months full

licence

Social cultural trends

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Three are three opportunities namely E-commerce, coffee and tea culture and finally trends towards healthy eating.


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IntroductionOur society shapes our beliefs, values and norms affect human behavior

Culture in Hong KongBlending Eastern and Western cultureDifferent religions. For example, Buddhism: 90% of the total population, Christian: 500000 of the total population.Educational system is now under reformed 334 curriculum


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1st opportunity E-commerce the use of smartphone is becoming widespread WIFI-service According to PayPal, more than 8,000 mobile

payments were processed on average per day in Hong Kong in 2011

106 million active PayPal users in 190 markets worldwide buy products from thousands of Hong Kong-based PayPal merchants

Many businesses are now done online through computers or smartphone devices a need for our target customers to access to

Internet the service we provided satisfy their needs.

Many businesses are now done online through computers or smartphone devices a need for our target customers to access to

Internet the service we provided satisfy their needs.


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2nd opportunity Coffee and tea culture Coffee culture is strong in Asia According to the Synovate survey, among the 501

respondents, about one third of residents now purchase ready-to-drink coffee from outside

coffee is imported from 50 different countries world while in China

Tea culture is one of the traditions and customs of China important to be included in our menu

As the coffee and tea culture is strong, our target customers would try our products especially when they are having meeting or

gathering.

Social cultural factor

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3rd opportunity Trends towards healthy eating Sales of organic food have been increase in Hong

Kong in the past few decades. The choice of organic products also expands to

over 2000 items. Park N’ Shop and Wellcome & CitySuper, and

Jusco, have set up separate organic food sections or allocated retail space to organic products.

The fad of organic products intrudes in Hong Kong the sales of organic coffee, tea and cakes in our cafe could be guaranteed.

The fad of organic products intrudes in Hong Kong the sales of organic coffee, tea and cakes in our cafe could be guaranteed.

External Environmentmicro-environment

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Competitor analysis

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Current Competitors :Coffee shops and café in TST East

46 coffee shops : 13 large chain stores 33 non-chain stores

13 large chain stores : 9 Starbucks 3 Pacific Coffee 1 Mc cafe

Major competitor

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Starbucks:Products : beverages (various kinds with hot and iced) Fresh food & Snacks (e.g. breakfast, lunch, tea,

salads and cakes)

Services Computer with web cam Free Wi-fi services Sofas and chairs with magazines and

newspapers

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Starbucks: Relaxing environment with soft music

Official website and facebook page interact with customers

(obtain the latest information ,history of starbucks )

Online registration system member receive special promotion

Delivery services (a minimum of HK$300 per order ,except 12 noon -2pm)

Major competitor

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Starbucks:Price range ( different categories): Breakfast $8-22 Lunch $19-38 Snacks and Salad $8-38

Beverages (3 different sizes in order)1.1. Tall $222.Grande $343.Venti $42Overall price range :$8-42

Major competitor

Major competitor

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Starbucks:Location Located at : Avenue of Stars ,Tsim Sha Tsui

Promenade ✔facing victoria habour ✔having trees and flowers nearby ✔footpaths in front of the shop no cars ✔sunlight and sea breeze

Environment : ✔ relaxing , peaceful and comfortable ✔ fresh air

Major competitor

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Starbucks:Promotion ✔ Press releases✔ Internet : Official website ,Facebook,Email

Close to the market trends and nowadays’ technology

SWOT analysis

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StarbucksStrengthens & Opprtunities world’s brand name company Highest percentage of share of mind High percentage of market share Positive Image : ✔ social responsibilities enormous amount of capital ↑products and

services’ quality high bargaining powers among suppliers and

customers ↑ selling price ↑revenue

SWOT analysis

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Weaknesses & threats Certain extent of over-expansion (9 stores in Tst East may weaken its

own turnovers)

Only focus on western food (lack of variety) People don’t like western food culture ✕

consume E.g. many elder in HK will go tea restaurant

rather than Starbucks

Major competitor

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MC CafeProductsBeverage (Espresso, hot and iced drinks)Frappes and extrasServicesFree WiFi serviceSofa and chairsOfficial website and facebook page interact

with customers

Major competitor

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MC CafePrice ranges The overall price ranges are between $8 and $26. Location Most of the stores are located at the ground floor

convenientPromotion Coupons or punch cards Slogans Advertisements Apps Newspaper

SWOT analysis

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MC CafeStrengths and opportunities:A mid-range quality substituteMcDonald’s reputationA large amount of capital

SWOT analysis

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MC CafeWeaknesses and threatsProducts are lack of varietyThe place is smallAre not operate independently

Supplier

Three are two opportunities namely the cooperation with Fair Trade and the

abundant supplies of certain food and one threat which is the few supplies of some

food.

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SupplierIntroductionSuppliers provide the raw materials that we need and the number of supplier affect our bargaining power of attaining the materials.

1st opportunity Cooperation with Fair TradePeople are more concerned about their health and environment than before and thus they choose to consume organic food.According to a recent statistics, organic food accounts for 1 to 2% of total food sales worldwide.

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2nd Opportunity Abundant suppliers of certain foods

Having lots of food supplies is good for a business we can have more bargaining power to bargain a lower price for our products.

There are 420 manufacturers supplying sauce and seasoning and 34 manufacturers supplying flour in Hong Kong.

Supplier

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Threat Some food have fewer food supplies Meat either frozen or fresh and spaghetti, we

only get 22 and 15 manufacturers respectively in Hong Kong.

There are fewer suppliers, they are strong in charging a higher price for the materials food cost of the cafe will be increased among these products

It is important to make sure the food quality is up to our standard when a particular good has loads of suppliers.

Supplier

Marketing intermediaries

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Opportunities:ewspaper and magazinese.g. Daily Economics, Times and Asia Finance Direct mail housemail an advertisement to those business firms in Tsim Sha Tsui East (by staff in café)(match with the target group of customers)Threats:•Increase costs

Publics

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There are two opportunities namely the support from various citizen-action publics and the promotion from media groups.

Publics refer to any group that perceives itself having an interest in a company’s ability to achieve its objectives

Publics

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1st opportunity support from various citizen-action publics

our cafe is going to sell organic food which helps to promote public health

various citizen-action publics such as environmental groups would be attracted and turn to support our products

For example, the Environmental Working Group which recommending consumers should look for organically produced products so as to lead a healthy life be attracted to our business

By selling organic products, the sales would be increased as supported by the environmental groups maintain regular

customers

By selling organic products, the sales would be increased as supported by the environmental groups maintain regular

customers

Publics

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2nd opportunity the promotion from media groups

open an account in Open Rice provide various types of online coupons make an app

By using the promotion from various media groups attract our target customers to consume our products and expand our business

without physical boundary provide the latest information to our customers and maintain their regular visits

By using the promotion from various media groups attract our target customers to consume our products and expand our business

without physical boundary provide the latest information to our customers and maintain their regular visits

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Target market

Target customers

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Business people Tsim Sha Tsui is one of the Central Business District Younger age groups majority of buyers in Hong Kong of Western foods tend to

be females, who do more food shopping than males, with younger age groups

Middle class income group Demand for high-value food and beverage is mainly among

the 2.3 million middle class consumers Business customers are willing to pay large

amounts of money in purchasing price is not the main factor to decide purchasing

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Marketing mix strategies and programs

Marketing Strategies

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Products and services:customer-oriented, psychographic segmentation

Pricing: market skimming Cost-based pricing à breakeven pricing

Price-adjustment strategies : segment pricing, psychological pricing

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Four marketing mixes

Products & Services

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GreenLife: Food Beverages Customer service

Food (3 categories)1. Spaghetti and rice (main dishes) (Salmon, meat sauce, bacon & mushroom and vegetable)

2. Snacks chicken wings Sandwiches (egg, cheese, tuna, tomato for mix and match) Fruit salad (fresh organic vegetables and fruit)

Cakes (blueberry cheesecake, chocolate cheese cake and cup cakes)

Products & Services

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✔ From light main dishes Not only for tea time ✔ breakfast , lunch ,dinner (normal meal)

✔ healthy and fresh ( use organic products)good refreshment for business peopleTailor-made for business people

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Beverages (3 categories)1. Coffee :Cappuccino, Mocha, Latte and Espresso (most of the coffee beans organic and fair trade products)

2. Alcoholic drinksRed wine (e.g. Chateau des Leotins 2008 )White wine (e.g. Trebbiano d'Abruzzo Badia Frasca, D.O.C. 1998 )Champagne (e.g. (A.O.C.) Brut, Pascal Fleury )

3. Non-alcoholic drinksmilk, chocolate, milk tea and lemon tea in terms of hot and iced.Special drinks : Tea (both British tea and Chinese tea)Fresh fruit juice (apple ,orange & pineapple)Fruit punch

Products & Services

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✔ variety of beverages different people’s taste

Refresh help to think & brainstorm ideas ↑

Unique beverages among coffee shop and café ★ Alcoholic drinks Various kinds (red, white wine and champagne) Red wine for meetings champagne for celebrations

Services

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Customer service: provision of service to customer before, during and

after a purchase

(1) First stage (before purshcasing)Customer can make reservation ( through

reservation system online or by phone call)

Research information (through company’s homepage ,Facebook page ,email , phone call & Fax)

Services

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(2) Consumption phase Core product : Food and beverages

Facilitating products : customer services like taking order of food , handling guests’ requires

Environment (augmented product) (target customer’s needs)quiet and relaxing environment Tables, computers, projector, stationery, free wi-fi

Services

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VIP room (private area) ✔ conference table designated for meetings

(3) Detachment phaseask for feedback satisfied or not ✔ service recovery chance create satisfaction to

unsatisfied guestscreate a guests profile (visited ≧ 5 times)Records find out preference and spending patternsKeep paid bottle wine for next visit Quality of service ↑

Pricing

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Definition: Pricing refers to the amount of money charged for a product or service or the sum of the values that consumers exchange for benefits of using the product or service

Pricing approach Break-even pricing

Pricing approach Break-even pricing

Break-even pricing :Determining the price at which it will break even. At the break-even point, profit equals to loss. Its formula is BE = fixed costs/contribution (selling price-variable cost).

Reasons for choosing break-even pricing

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1. Predicting the change of sales when price changes

2. Preventing losses

3. When the business will start generating a positive return

Price list

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Here are the tables showing the fixed costs (Table 1) , variable costs (Table 2)and food costs(Table 3).Items Cost(HKD)

1.Rent 80,000

2.Decoration 8333

3.Furniture 2500

4.Kitchen equipment 1666

5.Coffee machine 833

6.Salaries 2500

7.Others 261

Totals 96093 Table1

Table2

Items Cost(HKD)

1.Gas 2,000

2.Water 1,500

3.Electricity 3,000

4.Others 750

Totals 7,250

Items Selling

price

(HKD)

Unit

demand

needed to

break-even

Expected unit

demand at a

given price

Total revenue Total costs Profit

1.Cappuccino(hot:350ml, cold:500ml) 45 480 750 33,750 27,110 6,640

2.Expresso(hot:350ml, cold:500ml) 42 546 450 18,900 21,110 -2,210

3.Mocha(hot:350ml, cold:500ml) 45 480 460 20,700 21,310 -610

4.Latte(hot:350ml, cold:500ml) 45 480 485 21,825 21,810 15

5.Wine

a) BORDEAUX , A.O.C., Chateau des

Leotins 2008 (750 ml)

b) Cardeal Reserva, DAO,

D.O.C. 1983 ( 750 ml)

c)Trebbiano d'Abruzzo, Badia Frasca,

D.O.C. 1998(750 ml)

d) PETIT CHABLIS A.O.C. (Chardonnay),

Domaine Millet 2007 (750ml)\

e) CHAMPAGNE Brut, Charles Leprince,

Chateau Leprince (half-bottle), A.O.C.

f) CHAMPAGNE (A.O.C.) Brut, Pascal

Fleury

a)130

b)370

c)114

d)170

e)200

f)340

a)109

b)34

c)105

d)80

e)60

f)37

a)40

b)19

c)49

d)32

e)23

f)20

a)5,200

b)7,030

c)5,586

d)5,440

e)4,600

f)6,800

a)12,910

b)12,490

c)13,090

d)12,750

e)12,570

f)12,510

a)-7,710

b)-5,460

c)-7,504

d)-7,310

e)-7,971

f)-5,710

6.Non-alcoholic drinks(hot:250ml,

cold:500ml)

35 800 810 28,350 28,310 40

Table3- Beverages

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7.Spaghetti/rice-

Salmon

69 245 450 31,050 21,110 9,940

8.Sandwich 40 600 350 14,000 19,110 -5,110

9.Cake

a) blueberry cheese

cake and chocolate

cheese cake

b)Cup cake

a)35

b)38

a)800

b)672

a)980

b)510

a)34,300

b)19,380

a)31,710

b)22,310

a)2,590

b)-2,930

10.Fruit salad 45 484 540 24,300 22,910 1,390

11.ChickenWings(6

pieces)

40 600 700 28,000 26,110 1,890

Table3- food and snack

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Pricing strategy

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Market skimmin

g!!!

Pricing strategy-Market skimming

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Definitionsetting a high price at first,lowering the price

over time when the market is price insensitive

Reasons for choosing: 1. Target customers are price insensitive towards

our products

According to Journal of Business Research, business customers are willing to spend large amounts of money in their purchase of goods and services, while keeping loyal business customers can give greater revenue for a supplier or a service provider.

Pricing strategy-Market skimming

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Reasons for choosing:a high quality image of GreenLife can be

created by charging a higher initial price

first cafe selling organic coffee and cakes and providing facilities such as projectors and small conference room in TST East

high chance in grabbing the early adopters

Place

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Shop 44B, G/F, Harbour Crystal Center, 100 Granville Road, Tsim Sha Tsui East in Kowloon

Near to the Hung Hom and Tsim Sha Tsui MTR Station

ground floor high in accessibility and convenient

Distribution channel-Internet

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Create website and facebook Upload Coupon 76.4% of all households in Hong Kong have

PC at home and able to access the Internet (according to Thematic Household Survey Report - Report No. 48)

The most influential social networking site in Hong Kong is Facebook

Hong Kong users have has grown to 3,700,3203,700,320 users

Promotion

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Promotion policy and advertising Promotion cards on tables Large poster on the window of café

Public relations and sales promotion Products tasting event Membership scheme Different festivals promotions Issue online coupon Design an app Giving sample

Products tasting event

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knowing which products can be main or are most popular products

held periodically3 to 5 new products or improved products

to be tested

A membership scheme

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Establish a good relationship with customers

gain support and loyalty Invite them to join the events

giving them discount and sample, and using special equipment in café without extra charge

A-one-year membership

spending $400 or above at once or spending $800 within 2 months

Permanent member

meet other standards to get the membership card

i.e. purchase the coupons or to spend more

Different festivals promotions

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ChristmasNew Year (31st Dec – 1st Jan)Valentine’s Day

build relationships with new customers and the members or regular guests

Issuing online coupon

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Cooperate with online restaurant guide websites i.e. Open rice

Rate GreenLife Download the coupons of GreenLife issued Easy to know the comments of GreenLifeImprove our products and services Facebook (the most influential social networking

site in Hong Kong) By updating the information of GreenLife, people

can always catch up with it and promote GreenLife

Design an app

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The trend of using smart phonesDesign app on our own and allow the

people to downloadmake reservationsbook the facilities (Projector)download the code of the coupon and use it

in GreenLife, members can have a special chat room or corner

Giving sample

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Let others know GreenLife will be launched soon

How good our products are or our products do match with their taste

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Marketing budget

Marketing budget- projected sales

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The time period of the sales projection is one year and the figures are presented in a monthly basis.

We need to have three hundred and thirty-nine thousand dollars in order to open a cafe in our chosen destination

After half year of operation, we can cover our cost.

Months Expected

revenue

Expected cost

January 309,210 339,230

February 315,394 342,622

March 321,702 346,048

April 328,136 346,013

May 341,391 342,553

June 348,218 339,128

July 351,700 335,737

August 355,217 332,380

September 358,769 329,057

October 362,357 325,767

November 365,980 322,510

December 373,300 328,960

Marketing budget- marketing expense

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Including fixed costs, variable costs which include the promotional expense and food costs

Fixed costs$96,093 per month, Variable costs$7,225 per month which includes $9,000/12 = $900 average monthly promotional fees. Here is the list about the details of our promotional fees.

All food costs are $235,887 in the first month. As we have eight types of products and thus the food costs for each type product is $982 every day.

Name of promotional

programs

Date Budget

Pre-promotion Mid May – June $2500

Opening ceremony 1st June $3000

Member recruiting - $200

Product tasting event Mid Nov. $800

Printing cost - $500

Decoration fee Christmas, New Year

and Valentine’s date

$2000

Total - $9000

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Marketing control

Program

name

Person

responsible

Date Budg

et

Explanation Budget

1.Sales

evaluation

Accountant

and Managers

Monthl

y

N/A To find out whether the actual

sales meet the expected sales

target. Then, adjusting the

strategies that are using to boost

up the sales revenue or to maintain

a steady sale.

Expected revenue:

Jan-June: ↑2% monthly

Jul-Nov: ↑1% per month

Dec: ↑2% increase.

Expected cost:

Jan-Mar controlling cost: ↑ 1% Apr-

Nov cutting cost by1%

Dec controlling cost: ↑2%

2.Progress

check

All Quarte

rly

N/A To evaluate how the business goes

during half a year time in order to

meet with the objectives, i.e. break

even and customer retention. May

need to change the price-

adjustment strategies

Expected Revenue:

First quarter: To evaluate whether the

revenue and cost of these three

months are moving to our monthly

target.

Second quarter: Compile the revenue

of three months, revenue7%, cost-

2%

Third quarter: Compile the revenue of

three months, revenue4%, cost-2%

Fourth quarter: Compile the revenue of

three months, revenue3%, cost6%

3.Annual

evaluation

All 31st

May

N/A To evaluate how the business goes

during whole year in order to meet

with the objectives, i.e. break even

and customer retention. May need

to change the price-adjustment

strategies

Expected revenue: $4,131,374

Expected Cost: $4,030,005

Earn $101,369 at the end of

a year

Marketing control

77