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Essay Name       : 452.txt 
Uploader         : Mike Berry
Email Address    : 
Language         : English
Subject          : Politics
Title            : Marketing Plan
Grade            : 79%
School System    : University
Country          : Canada
Author Comments  : 
Teacher Comments : 
Date             : Oct, 12 /95
Site found at    : 
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Executive Summary
	Only a block off the Queen’s University campus, JJ’s Café represents a gold mine of unrealized opportunity.  Currently, the establishment is characterized by dark colors, limited hours of operation and poor menu selection.  Thousands of students pass by a day and yet only  31% of those surveyed had ever been inside the place.  
	Approaching JJ’s management revealed an unwillingness to co-operate with efforts to improve their current service.  With this in mind, the marketing plan before you seeks to gain maximal increase in revenues while keeping the costs at an attractive level.  Areas of improvement include minor renovations inside to accommodate swift take-out service, extended hours of operation to include breakfast items and late night service, expansion of the current menu to offer more variety and an emphasis on the quality aspect of the service.  The various decisions involved in making these changes were based on a series of surveys, experiments and observations, as well as data collected by the Mackenzie Management Group.
	The proposal as it currently stands would require approximately $5 087 to get it started and the two year return would be $10 360. 

	    

Situation Analysis

Internal Assessment
	The internal analysis of J.J.’s consisted of two parts.  Due to the unwillingness of the current management of J.J.’s to cooperate in this study, we were unable to totally assess all internal data.  Therefore, we choose to rely on primary and secondary data.
 The first part  included careful observation of the business.  We analyzed J.J.’s observable level of business, service and quality, through many personal visits to the premises.  We were also able to assess the physical attributes of the restaurant.
We obtained a copy of J.J.’s current menu (exhibit 1.4), and were able to identify possible problems with it.  Unfortunately, we were not able to identify current sales statistics for each menu item, but were able to judge the items popularity, in contrast to current trends, and research.
	The survey (exhibit 1.2) included questions about the quality of food, service and atmosphere of the establishment, in it’s current state.  The survey also sought to identify the extent to which J.J.’s is known, in the Queen’s University  community.  
	We also attempted to identify the value of the location to J.J.’s , through counts of pedestrian traffic flow ( exhibit 1.3 ) at various times of day.


External Assessment
In the external assessment, we concentrated on direct competitors of J.J.’s, specifically ones that are located on campus, or in close proximity to campus.
  We considered the perceived quality and value (exhibit 2.1) of  these competitors, through secondary research data. We also investigated the preferences (exhibit 2.2)  and purchase patterns (exhibits 2.1, 2.4, 2.5) of our potential target market.  Preferences were also examined through the marketing survey, specifically part C: (exhibit 1.2).  Much of the secondary research was obtained through study of the summary of the Retail Operations Food Service Survey, done by MacKenzie Management Group.
The menus of many direct competitors of J.J.’s were examined, including Stooley’s, Sidewalk Café, Subway, and other on and off campus establishments.  This gave us additional information about the preferences of their current clientele, and our target market.









SWOT

Internal Strengths
· prime location
· high student traffic, during potential peak sales times
· atmosphere and decor pleasant
· recent internal renovations
· three entrances, easy customer flow
· high perceived food value
· LCBO license
· dedicated owner/operator

Internal Weaknesses
· limited hours of operation
· not open during certain peak pedestrian traffic times
· limited menu
· service perceived as poor
· food quality lower then direct competitors
· exterior of premises dark, not open look
· high lack of knowledge of J.J.’s name and/or location


External Opportunities
· large off campus student market
· proximity to campus allows for potential gains from on campus market
· student population has a high demand for prepared food
· take-out  capabilities

External Threats
· many  established competitors off campus
· newly expanded competitors on campus
· consumers have price elastic demand
· low demand during the summer months





















Marketing Objectives

· To increase sales 10% by April 1997.  
· To offer a large variety of high quality food items.
Note: the plan is to be introduced in September of 1996.

Marketing Strategy
In order to increase sales, a combination of product development and market penetration strategies will be used.  A revised menu will constitute product development, selling a new product in an existing market.  Market penetration is seen by selling present products  in the existing market.  This strategy puts JJ’s in the best possible position to achieve its marketing objectives.  

The results from both our survey and that of Mackenzie Group serve as a guideline for our marketing strategy.  The data obtained suggests changes are needed in order to successfully fulfill our marketing objectives.  These changes will be discussed in detail in the marketing mix.

Market Segmentation
On a broad scale the market can easily be divided into two markets, students and non-students.  Students can further be broken down into high, medium, and low frequency diners.  While students comprise a large portion of the market, non-students cannot be overlooked.  Non-students can be segmented into faculty/staff members and those that live around the school, but are not connected with the university. 

JJ’s fits a unique role, in that it can be considered either on or off campus.  While it is close enough to campus for students and faculty to realistically walk to, it is also far enough away that it will attract those who live in the student housing area.
Market Segment
General	Specialized
Students	high frequencymedium frequencylow frequency
Non-students	faculty/staffothers


Target Market
The target segment that JJ’s intends to go after is the frequent to moderate.  This decision is based on the size and cost of reaching this segment.  The frequent to moderate users  make up 63% and 55% of the total student on-campus and off-campus purchases respectively.  As well, the research indicates that there is a steady stream  outside of JJ’s  during breakfast hours, which is why the restaurant will open earlier to accommodate these people.  Clearly, the student population is pivotal to the success of the restaurant.  Moreover, JJ’s close proximity to the campus reduces the cost of reaching this segment.  In other words, the student market is accessible to JJ’s marketing actions.  On the flip side, it would be a waste of money trying to advertise to those that live around the school, but are not connected to the university.   

Sustainable Competitive Advantage
JJ’s  will stress and deliver on a promise to provide its customers with high quality , large variety and fast service.  If JJ’s can provide this, then the great location it enjoys will place it in a competitive position.  Students like good food and often grow tired of the generic ‘fast food’ chains.  JJ’s will be different in that its product will be of a high quality and variety.  In addition, students are price conscious and cannot afford to spend a lot of money on food. This is why JJ’s must keep prices down and competitive.  Lastly, there is no denying the fact that students lead a very busy lifestyle.  For this reason, fast service and the option to take-out is crucial.   JJ’s must sustain high quality, variety, and speedy service in order to hold off the competition.

Product Positioning

JJ’s must position itself in terms of its sustainable competitive advantage.  The customer has to understand this competitive advantage and buy into it, in order for it to be of some use.  Within the market JJ’s needs to be seen as a restaurant that does not sacrifice quality for low pricing and fast service.  Through proper positioning, JJ’s competitive advantage can be realized.


                                                                    High Quality                                                
                                                                                                       *JJ’s 

            								*Stooley’s
                                                                                         *Firehouse Grill
                                                                                                        
                                *Pizza Hut                                        
         Small Variety                                                                                           Large Variety
                                                                          
                                           
                                                 *Subway 			*Lino’s
                                                                                                                      
                                 *Taco Bell
                                                                     Low Quality                                                                 


Marketing Mix
Initial analysis of our research data revealed that  of those who had been to JJ’s, few were satisfied with the quality or variety of the food offered.  We believe that given J.J.'s location it has the potential to be a successful establishment.  What follows is a proposed marketing mix that will allow J.J.'s to take advantage of it's various opportunities.  In order to implement this marketing plan, minor renovations to accommodate effective take-out services would be necessary.  Please see exhibit 4.1 for an explanation of the proposed changes.     
	
Product
	Further analysis of our data revealed two important points.  First,  the pedestrian traffic at the corner of Johnson and University is particularly high between 8:00 am and 10:00 am on weekdays.  Secondly, many of these pedestrians often purchase breakfast on the way to campus, or at least suggested they would be interested in doing so.  These factors present an opportunity for J.J.'s.  We propose that it would be profitable for J.J.'s to offer a variety of quality breakfast items.  Customers would order at the counter and have the option of either taking their food with them, or  eating at one of the tables.  Our survey population showed a strong preference for particular items.  These items are included in our revised menu (Exhibit 3.1).  We took particular care in revising the menu because it is the most important link with the customer.  The revision of the menu was based on the following criteria:
The menu should:
- stimulate the customer's appetite and imagination
- cater to the taste preferences of the clientele
- offer a good variety
- set the tone of the establishment 
	The sample population surveyed by the Mackenzie Mgmt. Group preferred sandwich combinations and fresh pasta for lunch.  Our own survey also indicated a slightly higher amount of pedestrian traffic between 11:30 and 2:00.  Considering this, and the characteristic needs of the University community, we propose to introduce a Deli style service to customers.  This involves offering a large variety of quality food items that can be prepared quickly.  Once again customers would have the option of taking their food to go, or to take a seat.  Please see Exhibit 3.1 which shows the revised menu.  It is our opinion that these offerings would be superior to any competitors in the immediate area, in terms of quality and variety.

Pricing
There are a number of variables to consider when pricing a particular item on the menu.  The price listed on the menu is a combination of what the food costs, and what is needed in order to meet expenses and realize a profit.  The price of JJ’s items will roughly equal three times the cost of food.  As well, price is contingent upon the type of operation, atmosphere, operating expenses, and competitor’s prices. 
Variety of the menu clearly affects the restaurant’s profitability, which is why JJ’s must maintain a balance between low cost and high cost menu items, as well as those having different degrees of popularity.  Prices should remain within a predetermined range so that the pricing policy is consistent with the rest of the marketing strategy.
JJ’s has to avoid the temptation to multiply the cost of an item with a constant cost factor to obtain the selling price.  This type of strategy for certain items would lead to high prices.  That is why it is so important to tag higher cost items with lower markups and vice versa.  These can be counterbalanced to arrive at the estimated sales.





Promotion
	Primary research suggests that very few people are aware that J.J.'s exists.  Of the people that are aware of the establishment, few have been inside.  This is not surprising considering that J.J.'s rarely advertises.  To remedy this situation we would begin by replacing the existing sign with a larger and more noticeable one.  Further, the large windows running along Johnson and University could be used to advertise particular meals and promotions.   We also propose running ads in the Journal, GW,  and Who's Where?.  These ads could be cut out and used as coupons.  Offering good deals to get people into the establishment, especially during the first few weeks of school, is also recommended.  Even if little or no profit is made initially, it is essential that customers give J.J.'s a try.  If people are satisfied (as we believe they will be) their repeat business will certainly make up for the initial losses.  
	One of the most effective forms of advertisement is by word of mouth.  Maintaining customer satisfaction and high quality is tantamount to achieving a positive appraisal of JJ’j service.

Place
	We propose the following hours of operations,  based on the amount of pedestrian traffic that flows through the intersection at Johnson and University:

	Monday - Wednesday   7:30 am to 11:00 pm
	Thursday - Friday          7:30 am to  2:00 am
	Saturday                       11:00 am to 2:00 am
	Sunday                         11:00 am to 11:00 pm

During the week, the aim is to offer the breakfast items shown in the proposed menu.  The reason for the extended hours on Thursday, Friday and Saturday is based on our primary research and also on our own experience.  On these nights there appears to be an increase in pedestrian traffic at around 1:00am.  This is the bar crowd returning home.  Lino's success and our own experience tells us that this crowd has a high demand for fast food.  This represents a significant opportunity for J.J.'s given it's location in the center of the student ghetto.  
	Two essential components of the services to be offered are that all food will be prepared quickly and will also be available for takeout.  The idea is to appeal to those consumers that want a variety of  good quality food to choose from, but don't have the time to be waited on.  Our reasoning here is that if people wanted to sit down and be waited on, they would go downtown to a specific restaurant.   The advantage of this type of service is high customer turnover and lower labor costs.  Those that choose to eat in the establishment will be able to order alcohol and watch TV.  






	

	
	Financial Analysis

	Due to a lack of co-operation from the management, some vital internal financial information about the JJ's current costs and revenues will not be included in this analysis.  Instead, this analysis will illustrate the costs and potential sales associated with the suggested alterations over the next five years.  In short, the strategy aims to shore up the restaurant's lacking image through minor renovations and an advertising campaign that will start out strong to increase consumer awareness, and then taper off.  This analysis will attempt to show that once these initial (expensive) changes are made, increasingly large revenues will be realized.
	Since Stooley's Cafe is a similar establishment (although significantly more successful) and its managers offered financial information, it will be used as a benchmark.  Total sales for an average day during the school year are between $800 and $1200.  Keep figures slightly lower than these in mind when considering the various numbers to follow:



Increase in Sales
	With extended services and hours of business, previously un-targeted consumers include: the early morning crowd, take-out and late-night eaters.

Early Morning

7:30-11:00   Pedestrian Traffic Study Shows:
		   Avg 29 pedestrians/min * 60min * 3.5hrs = 6090
			75% of this number are double counted 
			(i.e. pass intersection twice or more)
				6090 - [0.5*(75%*6090)] = 3806

		   Marriot Study Shows:
			Avg morning purchase = $1.63
			Suppose 3% passing enter = 3806*3% = 114 patrons
			114 * 1.63 = $185.82/day (during week)

Take Out
	These services are positioned competitively against those offered on campus by Marriot, especially Subway.  Superior quality breads, sauces and meats should attract discriminating customers.  During the lunch and dinner hours (11:00-8:00) there are approximately 15(90) + 12(90) + 5(180) + 9(90) + 12(90) = 5220 people that pass by.
	If 75% are double counted, 1% desire take-out and spend $3.67, then the extra revenue per day would be:
		5220 - [.5*(.75*5220)] = 3263 * 0.5%
						   = 32 patrons * $3.67
						   = $117.44/day (all week)


Late Night

	Those looking for late night snacks after studying or drinking and those needing a coffee are the customers during this period.  Extending hours of service beyond 11:00 to 2:00 Wednesday through Saturday enables JJ's to reach this market.
	Avg. Pedestrians/min * minutes open beyond 11:00 =
		3.5		*	180	  = 630
	Suppose 4% stop and spend $2.65
		(630 * 4%) * $2.65  = $66.78/day (4 days/week)

Total Increase in Sales = $370.04/day
				    =$117.44(7 days) + $66.78(4 days) +							$185.82(5 days)
				    = $2018.30/week



Capital Cost Expenditures
									Estimated Cost
1. Improvements
	a)Electrical							$200
	b)Exterior (neon) sign					$500
	c)Counter & Fridge Installation				$900
	d)Decor							$100
	e)Benches							$550
	f)Shelving in kitchen						$400
	g)Allowance for error					$300
2. Expenses
	a)City Building Permit					$300 												_____
Total Capital Cost Expenditures Required			$3250



Increases in Operating Costs
								Weekly Est.Cost
1.Administrative Expenses
	a)Wages-26 extended hours/week
		  -short order cook +12hrs/week
		  -@$7.50/hr						$285			
	b)Lease Undercounter Fridge
		@$78/month						$19.50
	
2.Marketing Expenses(first 3 months)
	a)1/2 page Queen's Journal and
		Golden Words launch ads
		@$320 for each					$640
	b)Flyers							$150
	c)General promotional expenses				$50 
 									_____
Total Increases in Operating Costs				$1144.50/week	




Projections
	With improvements in layout, service and advertising, there will be loss suffered at first.  But, whether or not these changes are effective (that is, the same ratio of passerby’s enter JJ's) increase in profits will still be realized after time.  Some projections:

Mo.  T-1Carry-over 		 Profit*  	Cap.Cost    	Ops         Cum.Loss/Gain
S	0			2825.62	3250.00	3438.00	-612.38
O	-612.38		2825.63	3250.00	3438.00	-1224.76
N	-1224.76		2825.63	3250.00 	3438.00	-1837.14
D	-1837.14		2825.63	3250.00	1416.00!  	-403.14
J	-3.14			2825.63	2000.00	1416.00	-356.49	
F	 156.49		2825.63	1000.00	1416.00	166.12
M	 566.12		2825.63	     	 0   	1416.00	575.75
A	 975.75		2825.63		 0	1416.00	1985.38
M  	2385.38		2825.63		 0	1416.00	3295.01
J   	3795.01		 800.00		 0	1416.00	2679.01
J   	3179.01		 800.00		 0 	1416.00	2163.01
A   	2563.01		 800.00		 0	1416.00	1547.01

*assumption that cost of goods is 35% and operating expense 30% of revenues (Dun and Bradstreet)

!change in operating cost due to reduced advertising

	The figures indicate that JJ's has relatively high overhead that remains constant over time.  During the summer months this is translated into losses and may be avoided by reducing hours of operation.  
	Profits decrease with advertising expenditure assuming that it has no effect on revenues.  However, promotions are essential to initially increase customer awareness.  By halting advertising after three months,	it can be observed how much effect it has on revenues and re-implemented accordingly in the future.
	Further projections would follow the same pattern except that there would be no capital cost expenditures.  In general, this plan would create $1409.63 (2825.63-1416.00) in profits per month in addition to current profit levels.

	Some General Facts

Cost of Implementing Plan = One Time Costs + Funds to Cover 									Initial Losses
				= $3250 + $1837.14
				= $5087.14
Return on Investment YR1 = $1547.01
			   YR2 = $8813.04











	












Exhibit 3.1
JJ’S Menu

Breakfast
Coffee (regular and decaffeinated)
Flavored coffee (Hazelnut, Mocha Java, Irish Cream)
Juice (Apple, Orange, Grapefruit, Cranberry)
Milk (Skim, 2%)
Toast
Muffins
Bagels (with cream cheese extra)
Fruit

Lunch/Dinner
Sandwiches(Make your own): 
Meat- Premium quality deli meats(turkey, pastrami, ham, roast beef, garlic roast beef, corned beef, montreal style smoked meat)
* Falafel
Cheeses- Provolone, Swiss, Mozzarella, Cheddar, Feta
Accessories-Romaine Lettuce, Tomatoes, Pickles, Spanish Onions, Alfalfa Sprouts, Black Olives, Banana Peppers, Cucumbers, Green Peppers, Red Peppers
Spreads- Dijon Mustard, Honey Mustard, Mayonnaise, Tzatziki
Breads- White/Brown bread, Kaiser, Rye, Pumpernickel, Pita, Bagel

Sandwiches(Prepared):
Crazy Bagel (fried egg and bacon sandwich)
BLT (bacon, lettuce, tomato)
Grilled Cheese
Philly Melt(shredded roast beef, topped with sauteed onions, green peppers and baked mozzarella cheese)
Grilled 5 oz. Chicken Breast Sandwich
Grilled 6 oz. Steak Sandwich

Soup: Minestrone, French Onion, Beef and Barley, Soup Du Jour 

Salad: Pasta, Caesar, Chef

Side Orders: French Fries(with gravy), Onion Rings


Beverages
Iced Tea
Mineral Water
Soft Drinks 
Juice
Milk
Tea (Orange Pekoe, Earl Grey, Camomille)
Hot Chocolate
Coffee (regular and decaffeinated)
Flavored Coffee (see breakfast menu)

Alcoholic Beverages     
Draft (small-10 oz., large-20 oz., pitcher-60 oz.)
House Wine (glass- 5 oz., carafe- ½ litre)
Shots (1 oz.)

Hot Drinks
Sarah Vaughan (Kahlua, Amaretto, Rye Whiskey, Coffee & Whipped Cream)
Jimi Hendrix (Brandy, Kahlua, Coffee & Whipped Cream)
Jim Morrison (Dark Rum, Amaretto, Bailey’s, Coffee & Whipped Cream)
BB King (Grand Marnier, Amaretto & Tea)
Billie Holiday (Bailey’s, Kahlua, Grand Marnier, Coffee & Whipped Cream)






 
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