Download Lesson 9 - Marketing and Sales (revised)

Lesson 9
Sales and Marketing
Identifying your market,
maximising your sales
Lesson 9: Sales and Marketing
Lesson Overview
9.1
Introduction
 9.2
The changing marketplace for bars
 9.3
Marketing opportunities and strategies
 9.4
Positioning for competitive advantage
 9.5
The mix for your marketing strategy
 9.6
Sales in the bar
 9.7
Food costing
 9.8
Control and calculations of costs to achieve profit margins
 9.9
The mystery shopper
 9.10
Loyalty schemes
 9.11
Social media
 9.12
QR codes for marketing
Conclusion
References
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Lesson 9: Sales and Marketing
Aims and Learning Outcomes of the Lesson
On completion of this lesson the learner will be
expected to be able to;
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Describe the external and internal factors influencing the
success of a bar operation
Apply management tools and marketing strategies to influence
consumer behaviour
Demonstrate the formulas and pricing policies used in bars to
control costs and to generate profits
Adopt sales skills and personnel projection techniques to
increase sales in the bar
Use the appropriate techniques and diagnostic methods for
monitoring customer satisfaction in bars.
Lesson 9: Sales and Marketing
9.1 Introduction
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Marketing and sales are critical components of
running a bar business,
A lot of bars use ineffective and inefficient marketing
and sales strategies.
Successful marketing and sales programmes grow
organically and evolve with your customer’s
demands.
Marketing strategies are commonly associated with
endeavors such as branding, selling, advertising and
many other functions.
Lesson 9: Sales and Marketing
9.2 The Changing Marketplace for Bars
Changes (externally) which can affect a bar’s operation include;
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Political: government legislation, change in taxation structures, specific government taxes (VAT, local charges)
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Economic: rising costs of labour, fuel, rates and insurance, sales instability, disposable income changes, credit
facilities, high interest rates, access to finance
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Demographic, social: changes in population distribution, socio-economic groupings, and growth in ethnic
minorities, food fashions, family composition, and mobility of the market
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Technical: mechanization for food service and production, product developments and innovations, advances in
technology.
Changes (internally) which can affect a bar operation include;
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Products: wastage and bad portioning control, low standard yields, perish ability of food, recipes and portion sizes
to be reviewed, pilferage problems
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Staff: employees shortages, absenteeism, illness, use of part-time staff, poor supervision, lack of job descriptions
and proper on the job training needed
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Financial controls: correct pricing systems, stores and cash control and collection, high frequency of low average
spend transactions.
Dramatic changes in the marketplace are creating many marketing opportunities and challenges for bars.
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Major marketing developments can be summed up in single theme; connections.
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Huge growth in connecting technologies (social networks, IPhones, lap top computers, telecommunications and
information technologies) has created exciting new ways for bars to learn about and serve consumers in large
groups or one-to-one.
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Bar owners are redefining how they connect with their customers, locally and internationally.
Lesson 9: Sales and Marketing
9.3 Marketing opportunities and strategies
Marketing research, mapping your market:
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(chapter 9 – pp. 164-165).
what information does the bar need, market size, segments, consumer behaviour, market feasibility for
new product launches
where will the information be collected, (primary research, secondary research, outside the
organization
how will the information be collected, sampling and interviewing techniques, consumer panels,
interview methods
how will the information be analysed, depends on how the information is collected
how will the information be utilized, information should be used creatively to target offering products,
eliminate poor selling products
and focus on more effective promotion for your market.
SWOT analysis: (chapter 9 – pp. 165).
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SWOT (strengths, weaknesses, opportunities and threats) a form of analysis,
Strengths and weaknesses are often referred to as internal, opportunities and threats as external.
S.W.O.T analyzing helps bars to innovate rather than react, Strengths (pub features distinguishing it
from others, personal). Weaknesses: (lack of car parking, poor toilets, bad visibility from the road, late
bars), Opportunities (new housing areas, factories), Threats (identify changes, closing of factories,
competition).
Lesson 9: Sales and Marketing
9.4 Positioning for competitive advantage
Bars cannot appeal to all purchasers in their markets, or at least not all consumers in the
Same way. The bar owner must carefully design their marketing plans to ensure that they
complement their bar capacity, capabilities and financial constraints.
Market Segmentation: (a) studying customer’s characteristics using demographic and
geographic criteria: customer’s age, sex, religion, occupation, income, etc, (b) studying
customer’s behaviour, why do they buy our bars products? What attributes of our product are
important to our customers, why do they buy our products instead of other bars, or indeed vice
versa.
The target concept: Once the segmented groups have been identified for your bar, market targeting
evaluates each market segment’s attractiveness and suggests one or more segments to enter. Much
depends on company resources, products and its competitive marketing strategies
Market positioning: Once a company has decided which segment to enter, it must decide on its
market positioning strategy – on which positions to occupy in its chosen segments.
Objective for the bar’s marketing message, using AIDA: Attention, interest, desire, action
Further information: (Chapter 9 – pp.166-167)
Lesson 9: Sales and Marketing
9.5 The marketing mix for your marketing strategy
The different elements of your marketing strategy can be divided into seven
basic decision areas that bar owners may use to devise an overall marketing
strategy for a single product or the complete bar. This is often referred to as the,
seven Ps;
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Product: tangible and intangible features.
Place (distribution): location. (Chapter 9 – p. 174)
Promotion: informing your customers (advertising, merchandising and public
relations). (Chapter 9 – pp. 171-173 Figures 9.4 / 9.5)
Price: most flexible element, pricing policies, tiered pricing (house, up-sell and premium brand)
Process: internal and external procedures, mechanisms for service delivery.
Physical evidence: interior and exterior appearance (menus, floor plans etc)
Participants: the staff
These seven decision areas are applied to bars the following way;
(chapter 9 – Figure 9.4)
Lesson 9: Sales and Marketing
9.6 Sales in the Bar
Macleod (1994) contends that ‘pleasing the customer, is a tall order, as all customers are
different with varying interests, ideas and demands’.
Telling is not selling: communicate with the customer to ascertain their needs, and
personalize the sales pitch to take their expectations into account and demonstrate the
benefits of the product or service to them.
Selling techniques: conversation selling, over-selling, related selling, suggestion selling,
selling up, silent selling. (Chapter 9 – p. 175)
Personal selling: selling – preparation, sales play, the follow-up. (Chapter 9 – p. 176)
What motivates customers to buy?: customer’s buy for many different
reasons. (Chapter 9 – p. 176)
Staff communication, rules of selling, nature of persuasion: (Chapter 9 – pp. 176-177)
Lesson 9: Sales and Marketing
9.7 Food costing
Trying to control your food costs is very challenging because of the perishability of the product, the
unpredictability of the business and customer’s selections, the yields obtained from food products,
your staff and your equipment.
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Portion cost and plate cost: These come from the price we pay for our
products, the yield on the product, the recipe cost, portion size and cost, garnish and labour
must also be considered.
How many choices do you offer ? Dopson & Hayes (2011) contend this answer depends on ‘the
operation, the skill level of employees, and the level of menu variety management feels is necessary to
properly service the guests’
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Food cost percentage: (To establish the relationship between cost and price).
Food cost percentage for individual menu items or the overall food sales: Formula: Food cost % menu item = cost of
Food / menu price x 100. e.g Irish Stew: Cost €3.75, menu price €12.50 Food cost % = 3.75/12.5 x 100 = 30%.
Food cost percentage to project a food sales price: Sales price = cost of food / cost % . e.g Irish Stew: cost €3.75,
cost % = 30%. €3.75 / 30% = €12.50.
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Projecting food selling prices: (using a multiplier to project food items sales price
includes VAT) Chapter 9 – p. 179 Table 9.1
Lesson 9: Sales and Marketing
9.8 Control and calculation of costs to achieve
profit margins
The pricing of the food and beverages is perhaps one of the most important
mathematical functions we perform in the bar, consider initially;
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your bar companies formation and the owners philosophy, ability to drive the best
deals through purchasing power, value and beliefs of the company founder in supporting
certain local or national food and drinks companies
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scale selling prices to different areas of the bar premises to achieve performance
yields, late bars, restaurant, night clubs, private bars
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low yields from recommended retail price items
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vat levels on drink, food, and cigarettes
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price discounts from companies given to major key account holders
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free goods, deals for bulk buying or new goods.
Lesson 9: Sales and Marketing
9.8 Control and calculation of costs to achieve
profit margins (continued)
Generating costs and sales prices to calculate profits (the formulas)
It is crucial to update regularly the cost of the goods, which your bar sells to achieve profit margins
acceptable to the business. (Gross profit method chapter 9 – pp. 180-181 Figure 9.6)
Calculating your cost price (formula: total unit price divided by the amount of units divided by amount
per service will equal the cost price)
Calculate the sales price while excluding the vat price (formula: remove the vat, to do this simply
divide the sales price into vat level this equals the sales price excluding vat)
Calculating the gross profit and the gross profit percentage for your stocks when the sales price and
cost price is supplied or not known (formula: subtract the sales price from the cost price this equals the
gross profit, then divide this gross profit into the sales this equals the Gross profit percentage (calculating
your gross profit percentage is also useful for working acceptable profit margin which you would require
for your individual bar products)
Calculate the sales price when a gross profit percentage is also required (formula: set the target or
margin you wish to achieve then subtract it from 100 this equals the cost percentage then multiply the
cost price by 100 and divide the result by the cost percentage this equals the sales price excluding vat.
Multiply the vat level by the sales price this equals the sales price required.
Lesson 9: Sales and Marketing
9.9
The mystery shopper
Mystery shoppers pose as your normal customers behaving in a certain way to create real life
scenarios, mystery shoppers at a restaurant may pretend they are lactose- intolerant, celiac or
unreasonably disruptive. Not all mystery shoppers include a purchase.
Mystery shoppers provide detailed reports or feedback about their unique experiences to management
The mystery shopper diagnostic auditing tool for bars - Appendix III pp. 220-221)
Some of the areas which the mystery shopping team will explore include;
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date and time of the pre-visit phone call, name of the bar visited
number of employees in the premises on entering
how long it takes before the mystery shopper is greeted
name of the employee, whether or not the greeting is friendly
the questions asked by the shopper to find a suitable product
types of products shown, if or how the employee attempted to close the sale
whether the employee invited the shopper to come back to the bar
cleanliness of the bar and the other service staff, speed of service
compliance with the agreed company standards relating to service, bar appearance, and
grooming/presentation.
Lesson 9: Sales and Marketing
9.10
Loyalty schemes
‘Loyalty programs are structured marketing efforts that reward, and therefore encourage loyal buying behaviour – behaviour
which is potentially beneficial to the firm’ (Sharp & Sharp, 1997).
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Loyalty schemes and cards are a system of the loyalty business model.
Cards typically have a barcode or magstripe for scanning some are even chip cards.
Small key ring cards (keytags) serve as key fobs used for convenience in carrying and ease of access .
The five most common kinds of loyalty schemes (are as follows)
Rewards: award points for purchases, unrelated to brand, used to differentiate your brand and attract new customers, used with limited product
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lines, administration can be complex – needs special equipment, cards and database systems to optimize the benefits. Members expected to track
and redeem their points on-line (i.e frequent diner programs).
Rebate: awards a gift certificate redeemable for the next purchase, when guest reaches a certain spending level. Wide selection of products, this
reward program good for motivating new incremental purchases, increase store traffic. Department stores use this to increase additional sales from
existing guests. (i.e. Coffee Cards, Clubs and casinos where card holders have a swipe card which accumulate points from gambling spends
towards F & B purchases).
Appreciation: Goal is to increase your customers’ LTV (lifetime value), not to acquire new guests. Also used to get good customers to sample
more of your products. Airlines, hotels, phone companies used this to accumulate points for additional services within their own brand (seat
upgrades, free tickets, hotel stays at different locations).
Partnership: rewards a guest’s accumulated purchases with a partner’s products or services. Primary goal is to acquire new guests where you
have a partnership arrangement to use the partner’s extensive guest database. Airlines use this frequently when they give you points for renting cars
and sleeping in hotels. Works well in small rural areas with businesses (shop local concept, local loyalty rewards).
Affinity: Used where rewards are no longer needed to cultivate a long term relationship. Offers special communications, value added benefits
and bonuses and recognition as a valued guest.
Lesson 9: Sales and Marketing
9.10
Loyalty schemes
(continued)
Loyalty coupons
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Offered as a component of an overall reward scheme where customer is rewarded for dining and drinking in your bar or
local establishment.
Encourages customers to become a VIP member to get valuable coupons, offers and event information delivered
straight into their computer or mobile phone.
Customers either print a hard copy or to display a digital copy for presentation upon arrival at your bar to take up offers.
Livingston as cited in Anderson (2012) contends that ‘some businesses use them as a distraction from the fact they are
not price competitive’
Loyalty Coupons – types and usage (chapter 9 – pp. 185-186)
Buy one get one free / Catalinas / Coupon insert / Double or triple coupons / Extra care bucks (ECBs) / Loss leader / Manufacturer’s coupon (MFC) /
Peelie / Store coupons / Your Mileage May Vary (YMMV).
Top trends in loyalty schemes to consider: (chapter 9 – pp. 184-185)
Uniqueness is expected / APIs and easy connections are required / Develop your brand’s signature insight / Game
mechanics fuel today’s loyalty programs / Payments is the new PLCC / Invisible payments are replacing POS / Traffic is
everywhere / Real-time is the real deal.
Lesson 9: Sales and Marketing
9.11
Social media
Social Media: ‘Refers to a group of internet-based applications that build on the ideological and technological foundations
of Web 2.0 and that allow the creation and exchange of user-generated content ‘(Kaplan & Haenlein, 2010).
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Social media depends on mobile and web based technologies to create highly creative platforms which individuals and communities share, cocreate, discuss and modify user generated content.
Differentiates from tradtional / industrial media such as quality, reach, frequency, usablity, immediacy and permanance.
One of the hottest marketing tools today for bar owners.
Attracting and retaining customers for your bar using social media
Geolocation platforms: lets customers use the GPS in their smartphones to ‘check in’ at your bar, customers can also check in on Facebook
or foursquare, when friends see where their friends are socialising it motivates them to join. Encourage customers to check in by offering promotions
and discounts (i.e. free drink, meal discount). Be creative: look for check in rewards that are likely to get shared.
Review sites: Monitor your reviews, check sites daily, respond quickly to negative reviews, personalize your comments whenever possible, ask
customers and reviewers if you can feature their review on your website or marketing materials. Reviews are a (free) opportunity to learn what
your bar’s services and products need to improve.
Social media sites (i.e. Facebook, Twitter, Pinterest): attracting attention with their visually oriented focus, works well for your bar with
timely information (i.e lunch special tweet at 11am, 3.30pm tweet free happy hour appetizer. Pinterest uses mouthwatering photos of food and drink,
themed boards. Consider the following: Be visual / engage / have fun / track results / cross promote. Further information: Chapter 9 – pp. 187188.
Managing social media / Pros and Cons of usage: Third party apps and tools to simplify things include (NutshellMail –
monitors your bar’s Facebook and Twitter activity and emails you a summary of events and activities. Mediafeedia - for Facebook helps schedule
posts, manage multiple pages, get email notifications about page activity. Tweetdeck – for Twitter sorts incoming Twitter data, schedule tweets and
manage multiple Twitter accounts). Pros = marketing and sales tools are free, uniquely tap into the social nature of the bar experience. Cons you
have to invest time and money maybe hire (part-time) somebody with IT skills.
Lesson 9: Sales and Marketing
9.12
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QR codes for marketing
QR codes are similar to the standard bar codes, except these codes contain much
more information .
QR codes in advertising and promotions provide paper based hyperlinks that connect
the physical world with the on-line world.
Works by simply scanning the code with a mobile device that is equipped with a camera
and QR code reader application, which can downloaded for free on popular
smartphones platforms (i.e. iPhone and Android).
QR code - once scanned translates code into actionable information (i.e. text message,
mobile web page).
QR codes can be integrated into many types of printed materials, conferences, print
advertisments, business cards, brochures, flyers etc.
Other ways to strategically bridge offline and online media with QR codes (examples include).
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QR code with a link to the bar’s Google places page with customer reviews and coupons
QR code next to the bar’s main products to view product demonstrations and reviews
QR code on a food, beverage, cocktail takeout menu, which links to a mobile bar and restaurant website for online
reservations, orders and interactive directions.
Lesson 9: Sales and Marketing
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Conclusion
The first rule of marketing is always about knowing your consumers.
The location of the bar and its crowd is a crucial factor in determining where consumers feel
comfortable to eat, drink, socialise and stay for longer periods.
Identify what you sell best food, drink, music or the atmosphere, you must then find out about
the market place.
Identify your customers needs when they come to your bar.
Identify the local competition for their disposable income
Deciding on what products and services your bar can promote better than others to give your
business ‘a competitive advantage’.
Ensure that people know about you through advertising, publicity and sales promotions.
If you also want to generate more money from existing guests train your management and staff
to use selling skills and techniques.
Bars must keep a tight control on costs, portions and profit margins.
The sustainability of any bar is based on its ability to generate profits, consider the formulation
of a proper costing structure (updated regularly) for your bar which focuses in detail on the
individual and collective cost and sales prices plus the gross profit margins achieved by your bar.
Bars can adopt loyalty schemes and rewards programs which include the use of
coupons, social media sites with third apps and monitoring tools, geolocation platforms,
QR codes to strategically bridge offline and online media about your bar and its products and
services to actively encourage local buying behaviour.
Lesson 9: Sales and Marketing
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References
Anderson, G. (2012) Publix to Test Digital Coupons Sans Loyalty Card, available at
www.retailwire.com/discussion/15978/publix-to-test-digital-coupons-sans-loyalty-card [retrieved 2/3/13]
Croner. (1998)Croner’s Management of Public Houses, Croner CCH Group Ltd: Surrey.
Dopson, L. R., Hayes, D. K. (2011) Food and Beverage Cost Control, 5th ed, New Jersey: John Wiley & Sons.
Lesonsky, R. (2012) Bar and Restaurant going social, accessed at www.score.org/resources/bar-and-restaurant-goingsocial [retrieved 10/1/12]
Macleod, S. (1993) Food & Drink Service in the Restaurant, Hodder and Stoughton, Edinburgh’s Telford College: UK.
Murphy, J. (2009) ‘Strong merchandising can Drive Sales’, July Issue, Licensing World, Jemma Publications Ltd: Dublin.
Murphy, J. (2009) ‘Promoting Bar Sales’, November Issue, Licensing World, Jemma Publications Ltd: Dublin.
Murphy, J. (2010) ‘Improving Customer service through mystery shopping’, Licensing World, Jemma Publications Ltd:
Dublin.
Murphy, J. (2009) ‘Customer Relationship Management (CRM) in the Licensed Trade Industry’, Licensing World, March
Issue, Jemma Publications Ltd: Dublin.
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Murphy, J. (2013) Principles and Practices of Bar and Beverage Management, Goodfellow Publishing Ltd, Oxford: England.
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Kaplan. A, Haenlein, M. (2010) Users of the World, unite ! The challenges and opportunities of social media, Business
Horizons, Vol. 53, Issue 1.
Kotler, P. and Armstrong, G. (2001) Principles of Marketing, 9th edn, Prentice Hall International Edition: USA.
Sharp. B, Sharp A. (1997) Loyalty Programs and their impact on repeat purchase loyalty patterns, International Journal of
Research in Marketing, 14 (5), 473-86.
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Web resources
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http://www.mcmullens.co.uk/businessplan.pdf McMullen Brewers (UK Company), Business and marketing plan for tenancy.
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http://m.wpi.edu/Pubs/E-project/Available/E-project-121909-212418/unrestricted/GoatsHead IQP.pdf Goats Head pub marketing
plan.
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http://www.morningadvertiser.co.uk/Opinion/The-Guv-nor/A-marketing-plan-can-really-help-your-pub Case study Marketing Plan.