University of Houston Perfect Foods Restaurant Margins & Sales Research Paper Please read the attached 3 files for the background information. The files ar

University of Houston Perfect Foods Restaurant Margins & Sales Research Paper Please read the attached 3 files for the background information. The files are “background”, “business_idea_v2”, and “template”. I’ve also listed “Preferred Resources to use” at the end of each Part, but you are not limited to those. One of those resources is also attached as a PDF (Core Concepts of Marketing).

Margins & Sales Volume

Different industries have varied benchmarks for margins. For example in restaurants alcohol margins are usually much higher than food margins. In other industries, margins are affected by seasonal demand.

Industry Research and Application

Research your product/service’s industry with regard to mark-ups and contribution margins.

– Provide a brief introduction of the company with which you are working (see attached file “business_idea_v2”).

– Describe the industry

– Discuss the margins and markups on goods or services

– Discuss other economic factors that affect the mark-ups

– What marketing techniques can companies use to support the pricing schemes that support their margins? Please elaborate on this and do not just identify. Include rationale to back up your decisions.

Use research from quality graduate-level resources and at least two articles from full-text databases like (Academic Search Complete, Business Source Complete and/or Proquest Central). Stay away from consultant sites on the internet.

Do not use any quotations. Since you are engaging in research, be sure to cite and reference the sources in APA format. The paper should be written in third person; this means words like “I”, “we”, and “you” are not appropriate.

Use the attached APA-formatted template (see attached file “template”) to create your submission.

Assignment Expectations

Written in third person

A 4- to 5-page paper with APA citations (2- to 3-sentence introduction, body, 2- to 3-sentence conclusion)

The reference list page in APA format

Preferred Resources:

Core Concepts of Marketing- Chapter 9 Pricing the Product (PDF attached)

“5 Marketing KPIs You Cannot Measure but Should Care About” – Nicole Rodrigues https://bit.ly/3gUeIEq

Alternative Approaches to Determining Price (read all 5 links on the page) https://bit.ly/2ZkSxkR

Low-Margin Business vs. High-Margin https://bit.ly/38VTpzJ

Know Your Sales Margins https://www.entrepreneur.com/article/206390

Measuring the Impact of Economic Factors on Consumer Satisfaction and Pricing Perceptions https://bit.ly/2CrLuOA Pricing
In marketing we do not view price the way an economist views price. We look at price as a variable to
motivate the target market to buy. Economists argue that (except for luxury items where raising the
price or refusing to discount increases sales) lowering prices will increase sales. Marketers consider
much more than whether a product (good or service) is classed as a luxury or commodity in setting
prices.
Price is what it costs the customer to own our product. Note that this conceptualization of price, rather
than “what we charge the customer,” is a more useful representation of the customer-oriented
perspective taken by marketers. This conceptualization raises a number of questions, such as:
What alternative methods are available to marketers to price their products?
What factors do marketing managers take into account when setting prices?
The common understanding is that price is a key competitive variable. Price your product below that of
competition and you are bound to be successful. That tends to work if price is the key factor in
consumer choice. But it also presents two important limitations. First, price is a very perishable variable
in marketing, easily and quickly matched or beaten. Second, that approach ignores the prospect that
price may be less important than some other attribute of the total offering (e.g., prestige, convenience,
selection, service, design, durability, or some other aspect of product quality) that provides recognized
value that people are willing to pay extra for. This is not to say that price is unimportant; other things
being equal, most of us would prefer to pay less. However, that condition is seldom the case, and, to the
extent that price is a signal of total value and the reward for its creation, pricing at or below competition
may be less important than providing your target customers with superior values that are aligned with
their wants.
The other important dimension of the pricing issue, of course, is that it provides the revenue stream that
ultimately pays for producing and distributing products, promoting them, and all the other costs borne
by a company in the way of general overhead. Thus, attention to volume, gross margins, and the other
elements of the profit equation must also be considered.
Running Head: MARKETING PLAN FOR A LOCAL RESTAURANT
1
Week 1 posting
I’ve always wanted to open a restaurant, and I believe Perfect Foods Restaurant can be
the local restaurant that will be established within my grandparents local community. My
grandparents and I share a common love of traditional American cuisine, and Perfect Foods
transcends a typical American traditional restaurant that puts real heart into customer service. It
will also bring back the real memories for traditional American cuisine through unique
presentation. My choice to operate within my grandparents community, and those like it, is to
serve the inherent needs of the older population. I believe one of those needs is to share the real
traditional food memories with their grandchildren in a safe, family focused environment.
The three possible target customer profiles for Perfect Foods Restaurant include thinkers,
believers, and survivors. Thinkers are important group of target market because they enjoy
historical perspective and will find it more engaging to taste the traditional American cuisine as a
reminder of the American traditions. Believers on the other hand, are a potential target market
for the restaurant due to their character of wanting friendly communities. The traditional foods
offered by the Perfect Food restaurant will be a perfect match for them as it provides a platform
for connecting with other members of the community (Sun & Morrison, 2007). Survivors will
form the most significant target market for the Perfect Food Restaurant because this type of
consumers are the oldest and the traditional foods will provide a framework of evoking old
memories to them. The traditional food will help them rewind old memories allowing them to
engage and come together (Lee, Cho &Ahn, 2012).
Many restaurants offer contemporary foods that the old population find unappealing. In
this case, Perfect Food will try to target older population which is the most neglected market
segment. The restaurant will mostly use television, radio, and social media as a way to connect
MARKETING PLAN FOR A LOCAL RESTAURANT
2
with the target market. Although this population is not commonly found in the social media
platforms, their grandchildren and their children will likely get the information and pass the
information to them. The older population mostly relies on television as a way of receiving
information as such as they are more likely to get television advertisement regarding the
traditional foods offered by Perfect Food Restaurant.
References
Lee, T. J., Cho, H., &Ahn, T. H. (2012).Senior citizen satisfaction with restaurant service
quality. Journal of Hospitality Marketing & Management, 21(2), 215-226. Retrieved from
https://www.tandfonline.com/doi/abs/10.1080/19368623.2010.520822
Strategic Business Insights. (n.d.). VALS™ | VALS™ types | SBI. Strategic Business Insights
(SBI). Retrieved from http://www.strategicbusinessinsights.com/vals/ustypes.shtml
Sun, Y. H. C., & Morrison, A. M. (2007). Senior citizens and their dining-out traits: Implications
for restaurants. International Journal of Hospitality Management, 26(2), 376-394.
Retrieved from https://doi.org/10.1016/j.ijhm.2006.03.003
MARKETING PLAN FOR A LOCAL RESTAURANT
3
Additional questions/feedback since the Week 1 posting was written:
1) Hello, thank you for your post. I enjoy food myself and several kinds of food. Because
America is considered and has been called the melting pot. I am curious as what specific
food items would be on your menu. In the south traditional might include black-eye peas,
coleslaw, cornbread and other food commonly called soul-food in the southwest the food
items deemed traditional have Mexican or Indian roots. Still other areas carry the traditions
of settlers from other countries such as Munster, Texas has a lot of traditional food that most
would classify as German. Some people would call hamburgers and hotdogs as all
American. For that matter you could even throw in apple pie and ice cream. So, could you
expand more on what you are calling typical American traditional restaurant food?
i) Hi, thanks for the reply. To me typical traditional restaurant food of America
includes burgers, deep-dish pizza, drop biscuits and sausage gravy, tacos, etc. The
involvement of traditional food like coleslaw, black eye peas, and cornbread is a good
idea because they are mostly liked by traditional people especially those belonging to
Mexican and Indian roots. Along with this, I will also focus on seafood, barbeque,
fried chicken, pecan pie, shrimp, and grits, to have a large variety of food options. In
desserts, I will include pastries, peach cobbler, and Maria mole, along with ice cream
and apple pie.
2) Hello, thank you for the post. Looking forward to seeing what ‘traditional cuisine’ translates
to in the way of the nature of the food and service. Targeting the elderly is an exciting
idea….in terms of restaurants, it is often neglected. In Ohio, two chains….Bob Evans and
O’Charley…..tend to cater to the elderly more than others.
MARKETING PLAN FOR A LOCAL RESTAURANT
4
Week 2 posting
Perfect Foods Restaurant will provide traditional American food to the elderly consumers in the
community. The goal is to provide them the real traditional memories, and the restaurant
will compete with other food chains like KFC. The products of KFC are promoted
through social media, print media, and television advertisements. Social media ads catch
my attention all the time because I am an active user of different social media platforms
like Facebook, Instagram, etc. An effective social media platform is likely the way many
brands get maximum exposure to their targeted consumer demographics (Celentano,
2019).
While television watching and print media reading habits have changed over the decades I
believe advertisements on those platforms to still be an effective way to attract those who
aren’t as active on social media. My parents and I are fond of eating fried chicken, and
the advertisements that appear during our internet television binge nights catch our
attention all the time. KFC advertisements on websites where we read our news can also
be a great way of attracting consumers because the products that company is highlighting
at that time uses attractive colors and appropriate images that invoke memories of
delicious food. Recent advertisements for KFC’s combo deals were so attractive that it
persuaded me stop what I was doing and find the nearest store to my home so that I could
buy the meal. The memories that I had while enjoying the food were so strong that it
literally interrupted my day, and I was ok with it. Yes, I will buy the product because it
reminds me of past happiness.
MARKETING PLAN FOR A LOCAL RESTAURANT
5
Additional questions/feedback since the Week 2 posting was written:
1) Hello! I get the concept to trying to get elderly people to go out to eat more via food relating
to their memories, but I am not sure why it just has to be marketed toward elderly people. I
feel like this would be a hard sell in terms of financing because all ages of people eat food.
Of course, you would want the restaurant to have a clear age group, but elderly people
sometimes have a lack of transport and some do not like to leave their homes because of
movement issues. If you opened this in a place like L.A. where people tend to stay in good
shape, it might work. But I feel that you might consider proposing this to an assisted living
facility or a place that provides condo communities for older people. Some of those places
have dining options on site. Or, you might want to work on expanding the age range of your
intended customer.
2) Hi! I am more likely to see a social media ad than I am a television ad as I use streaming
services and social media way more than I spend watching live TV. However, TV and radio
media ads are not dead and Colling(2017) gives good reasons for why companies are still
buying TV and radio ads. Honestly, quite a few of the television ads make their way to
streaming services for some of the streamed content that has certain licensing requirements to
be available to the viewers. The print media you mention is an evolving form of advertising.
While magazines and newspapers do still exist the way these platforms sell advertising
includes their digital media presence as well as their print (Lisk, 2016). The KFC ad you
describe is effectively called nostalgia advertising and it works mainly on Millenials craving
those old familiar memories (Craft, 2019).
MARKETING PLAN FOR A LOCAL RESTAURANT
6
3) Hello! Many people associate food with their emotions. The motivation to eat is not merely
driven by a desire for nutrients and satiety.Emotional, and psychological processes play an
important role as well. Emotional states affect when people eat, how much they eat, and
which food items they choose to consume. Just like your mentioned, you see a commercial of
KFC and you associate food with a feeling. this can addressed in Maslow’s theory of needs
and it is also a tool for marketing and appealing to potential customers emotions and
encourage them to buy a product
4) Hi! The nature of the proposed restaurant could be more clearly explained. Based on the
selection of KFC, can it be assumed you will focus on a quick-serve, carry-out operation?
Core Concepts of Marketing
© John Burnett
Printing History
This work is licensed under a Creative Commons-ShareAlike 4.0 International License
Original source: Internet Archive
https://archive.org/details/ost-business-core-concepts-of-marketing
293
Chapter 9 PRICING THE PRODUCT
Available under Creative Commons-ShareAlike 4.0 International License (http://creativecommon
s.org/licenses/by-sa/4.0/).
LEARNING OBJECTIVES
After you have read this chapter, you should develop an understanding of
the following key points related to pricing:
• the meaning of pricing from the perspective of the buyer, seller, and
society
• the sellers’ objectives in making pricing decisions
• the alternative pricing approaches available to the manager
9.1 THE MCDONALD’S EFFECT
Available under Creative Commons-ShareAlike 4.0 International License (http://creativecommon
s.org/licenses/by-sa/4.0/).
McDonald’s is one humongous company. With 21,000 restaurants in 101 countries, it
is everywhere—which is why the global economy is sometimes called McWorld. Back
home in America, the executives that run this vast empire are not feeling very lordly.
More than ever they find they have to kowtow to the price demands of ordinary folks
like Alonso Reyes, a 19-year-old Chicago who works at a local car dealership. Never
mind that Chicago is McDonald’s world headquarters—he splits his fast food
patronage between McDonald’s and its arch-rival, Burger King, and counts every
pennyworth of beef when deciding where to eat. So Reyes perked up when he heard
that McDonald’s had announced “an unprecedented value offering”—a USD 0.55 Big
Mac that the company boasted was bad news for their competition. “Cool,” said Reyes,
“Coupons, specials, sales. I’ ll take whatever I can get.”
For McDonald’s top management, this pricing strategy made perfect sense. After all,
declining same-store sales in the US were the chain’s most glaring weakness. What
better way to put some sizzle in the top line than a bold pocketbook appeal?
Well, McDonald’s executives should have realized that there is, in fact, a better way.
Apparently they took no notice of the fallout when Phillip Morris announced deep cuts
on “Marlboro Friday,” or of “Grape Nuts Monday”, when the Post unit of Kraft Foods
kicked off a cereal price war. Predictably, “Hamburger Wednesday” sent investors on a
Big Mac attack, slicing 9 per cent off McDonald’s share price in three days and
dragging rival fast-food issues down with it. “It looks almost desperate,” says Piper
Jaffray, Inc. analyst Allan Hickok of the USD 0.55 come-on. Adds Damon Brundage of
NatWest Securities Corporation: “They have transformed one of the great brands in
American business into a commodity.”
294
In theory, McDonald’s plan will payoff, because customers only get the discount if they
buy a drink and french-fries, too. Yet that gimmick-within-a-gimmick threatens to
undermine pricier “Extra Value Meals,” one of the most successful marketing
initiatives. Consumers expecting cut-rate combos will not go back to paying full price,
1
especially if other fast-feeders discount their package deals.
9.2 INTRODUCTION
Available under Creative Commons-ShareAlike 4.0 International License (http://creativecommon
s.org/licenses/by-sa/4.0/).
From a customer’s point of view, value is the sole justification for price. Many times
customers lack an understanding of the cost of materials and other costs that go into
the making of a product. But those customers can understand what that product does
for them in the way of providing value. It is on this basis that customers make
decisions about the purchase of a product.
Effective pricing meets the needs of consumers and facilitates the exchange process.
It requires that marketers understand that not all buyers want to pay the same price
for products, just as they do not all want the same product, the same distribution
outlets, or the same promotional messages. Therefore, in order to effectively price
products, markets must distinguish among various market segments. The key to
effective pricing is the same as the key to effective product, distribution, and
promotion strategies. Marketers must understand buyers and price their products
according to buyer needs if exchanges are to occur, However, one cannot overlook the
fact that the price must be sufficient to support the plans of the organization,
including satisfying stockholders. Price charged remains the primary source of
revenue for most businesses.
9.3 PRICE DEFINED: THREE DIFFERENT PERSPECTIVES
Available under Creative Commons-ShareAlike 4.0 International License (http://creativecommon
s.org/licenses/by-sa/4.0/).
Although making the pricing decision is usually a marketing decision, making it
correctly requires an understanding of both the customer and society’s view of price
as well. In some respects, price setting is the most important decision made by a
business. A price set too low may result in a deficiency in revenues and the demise of
the business. A price set too high may result in poor response from customers and,
unsurprisingly, the demise of the business. The consequences of a poor pricing
decision, therefore, can be dire. We begin our discussion of pricing by considering the
perspective of the customer.
1. Sources: Greg Burns, “McDonald’s: Now, It’s Just Another Burger Joint,” Business Week, March 17, 1997, pp. 3-8; Bill
McDowell, “McDonald’s Falls Back to Price-Cutting Tactics,” Advertising Age, 3, 1997, pp. 5-7; Michael Hirsch, ”The Price is
Right,” Time, February 10, 1997, p. 83; Louise Kramer, “More-Nimble McDonald’s is Getting Back on Track,” Advertising
Age, January 18, 1999, p. 6; David Leonhardt, “Getting Off Their McButts,” Business Week, February 22, 1999, pp. 84-85;
Bruce Horovitz, “Fast-Food Facilities Face Sales Slowdown,” USA Today, Wednesday, February 21 , 2001, p. 3B.
295
9.3.1 The Customer’s View of Price
Available under Creative Commons-ShareAlike 4.0 International License (http://creativecommon
s.org/licenses/by-sa/4.0/).
As discussed in an earlier chapter, a customer can be either the ultimate user of the
finished product or a business that purchases components of the finished product. It
is the customer that seeks to satisfy a need or set of needs through the purchase of a
particular product or set of products. Consequently, the customer uses several criteria
to determine how much they are willing to expend in order to satisfy these needs.
Ideally, the customer would like to pay as little as possible to satisfy these needs. This
perspective is summarized in Figure 9.1.
Figure 9.1 The customer’s view of price
Therefore, for the business to increase value (i.e. create the competitive advantage), it
can either increase the perceived benefits or reduce the perceived costs. Both of these
elements should be considered elements of price. To a certain extent, perceived
benefits are the mirror image of perceived costs. For example, paying a premium price
(e.g. USD 650 for a piece of Lalique crystal) is compensated for by having this exquisite
work of art displayed in one’s home. Other possible perceived benefits directly related
to the price-value equation are status, convenience, the deal, brand, quality, choice,
and so forth. Many of these benefits tend to overlap. For instance, a Mercedes Benz
E750 is a very high-status brand name and possesses superb quality. This makes it
worth the USD 100,000 price tag. Further, if one can negotiate a deal reducing the
price by USD 15,000, that would be his incentive to purchase. Likewise, someone living
in an isolated mountain community is willing to pay substantially more for groceries at
a local store rather than drive 78 miles (25.53 kilometers) to the nearest Safeway. That
person is also willing to sacrifice choice for greater convenience. Increasing these
perceived benefits is represented by a recently coined term, value-added. Thus,
providing value-added elements to the product has become a popular strategic
alternative. Computer manufacturers now compete on value-added components such
as free delivery setup, training, a 24-hour help line, trade-in, and upgrades.
Perceived costs include the actual dollar amount printed on the product, plus a host of
additional factors. As noted, these perceived costs are the mirror-…
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