HTM 2121 TOURISM AND HOSPITALITY MARKETING 

GROUP PROEJCT Project Title :F & B Operation in Tsui Sha Tsui East

Names: LAM KA YEE, Iris, 11225906D LEE CHO YIN, Kristy, 11025186D LEE KA YU, Jason, 11370913D KWOK WING TUNG, Kylie, 11205003D

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Project flowSectionsExecutive summary

External environmental analysis and opportunities & threats

Objectives

Target market

Marketing mix strategies and programs

Implementation milestone

Marketing budget

Marketing controls

Reference2

Name and Logo

GreenLife:Environment and life cannot be separated

Logo:Orange - cooperate with Fair TradeBrown (words) - coffeeGreen (leaf) - organic products

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Mission

High quality of Food & beverages & customer services

Promote organic and fair trade‘s concepts and products

Break-even

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External Environmentmacro-environment

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Demographic trendsOpportunities:•Healthy eating trend

Organic product attract customers

•Price sensitive customersGenerally not brand loyal when a discount is offered

Threats:•Growing trend of Cafe culture

Customers knowledge about coffee products↑

High quality products6

Economic TrendThe local economy is started to recover since 2010 Opportunities A chance for GreenLife to survive The more the prosperity of economy, the more revenue

expected to earnThreats Problem of inflation may arise

Affect the food cost May affect spending pattern of people

EcologicalOpportunities Eating habit changed organic products Support sustainable development

Threats Organic products are high in costs Trend may vary if new idea pop up

TECHNOLOGICAL TRENDS• Opportunities Marketing planning and mixes more focused on Internet

Nowadays, global internet users >20 billion Global use of mobile devices to access internet ↑ accounted for total internet users : 4.3% in January 2011

8.5% in January 2012

Customers : obtain products and services information online, shopping online

↑ Distribution channel ↑ Promotion channel 9

Suppliers and distributors : (1) provide online service(e.g. homepage which contains product and services’ categories with order and delivery services)

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

F&B operationcomputerized system :( e.g. POS system and Management system run the operation and keep records such as inventory.)

↑systematic , ↑effective ,↑efficiency 10

POLITICAL-LEGAL 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)

sell any kind of food for consumption on the premises

2) Liquor licence (from Liquor Licensing Board) Sell any kinds of Liquor on the premises

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

Certified no unauthorized building + compliance with Government lease conditions(from The Land Registry)

Statutory Plan Restrictions (from Town Planning Board)12

THREATS 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 FEHD

provisional food business licence maintain these standards for 6 months full licence 13

Social cultural trends• Opportunities E-commerce Use of smartphone &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)

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Social cultural trends• OpportunitiesCoffee and tea culture 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 customs of China

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Social cultural factorOpportunities Healthy eatingSales ↑ in the past few decades

The choice 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)

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External Environmentmicro-environment

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COMPETITORS ANALYSIS 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

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MAJOR COMPETITORStarbucks 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 19

SERVICE 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) 20

COMPETITOR’S PRICE RANGE Price range ( different categories) Breakfast $8-22 Lunch $19-38 Snacks and Salad $8-38

Beverages (3 different sizes in order) Tall $22 Grande $34 Venti $42 Overall price range :$8-42

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A STARBUCKS’ STORE IN TST EAST LocationLocated 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

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STARBUCK’S PROMOTION Promotion

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

Close to the market trends and nowadays’ technology

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SWOT ANALYSIS

Starbucks Strengthens & Opportunities 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

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SWOT ANALYSIS

Weaknesses & threats(1) Certain extent of over-expansion

(9 stores in Tst East may weaken its own turnovers)

(2)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

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MAJOR COMPETITOR26

MC CafeProductsBeverage (Espresso, hot and iced drinks)Frappes and extras

ServicesFree WiFi serviceSofa and chairsOfficial website and facebook page interact with customers

MAJOR COMPETITOR27

MC CafePrice rangesThe overall price ranges are between $8 and $26.LocationMost of the stores are located at the ground floor convenient

PromotionCoupons or punch cardsSlogansAdvertisementsAppsNewspaper

SWOT ANALYSIS 28

MC CafeStrengths and opportunities:

A mid-range quality substituteMcDonald’s reputationA large amount of capital

SWOT analysis 29

MC CafeWeaknesses and threats

Products are lack of varietyThe place is smallAre not operate independently

Supplier

OpportunitiesCooperation with Fair Tradeprovide organic food (According to a recent statistics accounts for 1 to 2% of total food sales worldwide)

Abundant suppliers of certain foods↑ chance to find out the lowest possible food cost (420manufacturers supplying sauce and seasoning)

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Threats Some food fewer food suppliesMeat dominated by big supplier(Spaghetti only22and15 manufacturers in Hong Kong)

bargaining power ↓ relatively

Supplier

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Marketing intermediariesOpportunities:Newspaper and magazinese.g. Daily Economics, Times and Asia Finance Direct mail houseMail an advertisement to business firms in Tsim Sha Tsui East (by café’s staff)(match with the target group of customers)

Threats:•Increase costs 32

PublicsOpportunitiesSupport from citizen-action publics

Environmental groups may be attracted by our fair trade 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)

Support from media groups

Environmental groups may be attracted by our concept of healthy eating habits 33

Target market

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Target customers 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 groupDemand for high-value food and beverage is mainly among the 2.3 million middle class consumers

Behavior: Business customers are willing to pay in purchasingprice is not the main factor to decide purchasing

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Marketing mix strategies and programs

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Marketing Strategies

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

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1. Products& Services

2. Price

3. Place

4. Promotion39

PRODUCTS & SERVICES• Food• Beverages• Customer service

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PRODUCTS- FOOD (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)

(3)Cakes (blueberry cheesecake, chocolate cheese cake and cup cakes) 41

EXPLANATION OF FOOD PRODUCTS✔From light main dishes

Not only for tea time✔breakfast , lunch ,dinner (normal meal)

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

Tailor-made for business people

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PRODUCTS- BEVERAGES(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

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EXPLANATION OF BEVERAGES PRODUCTS ✔ 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

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SERVICES Customer service:

provision of service to customer before, during and after a purchase

(1) First stage (before purchasing)Customer can make reservation ( through reservation system online or by phone call)

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

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SERVICE(2) Consumption phase

Core product : Food and beverages

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

Augmented products : (atmosphere) (target customer’s needs)quiet and relaxing environment Tables, computers, projector, stationery, free wi-fiVIP room (private area) ✔ conference table designated for meetings 46

SERVICE(3) Detachment phase

ask 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 ↑

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Price

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Pricing approach

Break-even pricing!!

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Reasons for choosing break-even pricing

1. Predicting the change of sales when price changes

2. Preventing losses

3. When the business starts generating a positive return

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Price listHere are the tables showing the fixed costs (Table 1) , variable costs (Table 2)and food costs(Table 3).

Table1

Table2

Items Cost(HKD)

1.Gas 2,000

2.Water 1,500

3.Electricity 3,000

4.Others 750

Totals 7,25051

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

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

Market skimming!!

!

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Pricing strategy-Market skimming

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)

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Pricing strategy-Market skimming

Reasons for choosing:2. a high quality image of GreenLife can be created

by charging a higher initial price

first cafe selling organic products in TST Easrhigh chancegrabbing the early adopters

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Place

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PlaceShop 44B, G/F, Harbour Crystal Center, 100 Granville

Road, Tsim Sha Tsui East in KowloonNear to the Hung Hom and Tsim Sha Tsui MTR StationGround floor High accessibility and convenient

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Distribution channel : Internet

Create website and facebook Upload Coupon76.4% 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)

Facebook is the most influential social networking site in Hong Kong

Hong Kong users have has grown to 3,700,320 users3,700,320 users

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Promotion

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PromotionPromotion 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

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Products tasting eventKnowing which products can be main or are most

popular productsHeld periodically3 to 5 new products or improved products to be tested

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A membership schemeEstablish good relationship with customers gain support and loyalty Invite them to join eventsgiving them discount and sample, and using special equipment in

café without extra chargeA-one-year membershipspending $400 or above at once or spending $800 within 2 monthsPermanent membermeet other standards to get the membership card i.e. purchase the coupons or to spend more

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Different festivals promotionsChristmasNew Year (31st Dec – 1st Jan)Valentine’s Day

build relationships with customers

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Issuing online coupon• Cooperate with online restaurant guide websites

Open rice Facebook

Customers • Rate GreenLife• Download the coupons

of GreenLife issued

• always catch up with GreenLife

GreenLife • Easy to know the comments of GreenLife

• Improve our products and services

• Promote GreenLife

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Design an appTrend of using smart phonesDesign app for download

make reservationsbook the facilities (Projector)download the code of coupon and use it in GreenLife,

members can have a special chat room or corner

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Giving sampleLet others know GreenLife will be launched

soonHow good our products are or our products

do match with their taste

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Marketing budget

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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

revenueExpected cost

January 309,210 339,230February 315,394 342,622March 321,702 346,048April 328,136 346,013May 341,391 342,553June 348,218 339,128July 351,700 335,737August 355,217 332,380September 358,769 329,057October 362,357 325,767November 365,980 322,510December 373,300 328,960

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Marketing budget- marketing expense 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

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Program name

Person responsible

Date Budget Explanation Budget

1.Sales evaluation

Accountant and Managers

Monthly N/A 1) Find out whether the actual sales=the expected sales target

2) Adjusting the strategies to ↑the sales revenue

Expected revenue:

Jan-June: ↑2% monthly

Jul-Nov: ↑1% per month

Dec: ↑2%.

Expected cost:

Jan-Mar controlling cost:

↑ 1% Apr-Nov cutting

cost by1%

Dec controlling cost: ↑2%

Marketing control

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Marketing controlProgram name

Person responsible

Date Budget Explanation Budget

2.Progress check

All Quarterly

N/A To evaluate how the business goes meet the objectives

i.e. break even and customer retention the price-adjustment strategies

Expected Revenue:

1) First quarter : evaluate whether the

revenue and cost of these 3

months=monthly target.

2) Second quarter: three months

revenue7%, cost-2%

3) Third quarter: three months,

revenue4%, cost-2%

Fourth quarter: three months

revenue3%, cost6%

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Program name

Person responsible

Date Budget Explanation Budget

3.Annual evaluation

All 31st May

N/A To evaluate how the business goes meet the objectives

i.e. break even and customer retention 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

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Thanks