Hai DiLao Hot Pot Marketing Strategy - Case Study Example

Hai Di Lao Hot Pot Introduction It is only normal for any business, especially the ones that have been there for long, to think about expanding its market. This might be locally and regionally or even internationally. The process might seem easy, but this is not the actual on the ground. A lot of firms have tried to expand their markets, but their efforts have all gone in vain (Baker 2007, p. 45). Organisations think that capital is the only thing needed when it comes to expanding their markets. For instance, a foreign-based organisation might want to start a restaurant in another country might think that by simply having the funds to negotiate with the foreign government and also set up their restaurant will be enough for them to successfully run the business (Gregory & Collier, 2013, p. 33). This is not the case, because a lot of things are needed when it comes to expanding your market. A firm needs to know its internal and external environment well in order to understand its customers, capabilities and business environment. A firm should be aware of its marketing objectives and have international or local marketing strategies and also be aware of the marketing mix recommendations needed to deliver those strategies (Baker 2007, p. 47). Hai Di Lao, a hot pot chain restaurant based in China, has been in business close to 20 years, and with all this time in running business comes with the urge of expanding its market base (Hai Di Lao 2012, p. 1). The restaurants are all over China and there is one outlet in the United States and Singapore (Hai Di Lao 2012, p. 1). However, now, the company is looking to expand to other regions such as Australia, Japan and the United Kingdom. During my first essay, through the rough and fine market screening and opportunity analysis of the international market, the United Kingdom was argued to be the best destination for Hai Di Lao. This second essay will provide a situational analysis that summarises the key findings from the task one audit, present the international marketing objectives based on the opportunities arising from the situational analysis, present a clear international, medium-term marketing strategy and finally discuss the marketing mix recommendations to deliver the strategy. Brief Background of Hai Di Lao The chain restaurant was founded, in 1994, in Sichuan Province, China (Hai Di Lao 2012, p. 1). At its early stage, it was a just small shop known for its hot and spicy soup, but later it expanded its menu choice. Zhang Yong, the CEO of the organisation, came from a small village in Sichuan. In the course of almost two decades, the company has gone to own over 80 marketing stores based in Beijing, Tianjin, Nanjing, Shanghai and many other key cities (Dan 2011, p. 1). Its first outlet in the United States was opened in Los Angeles, California, in September 2013 (Odell, 2013, p. 1). Anyone in China who has visited the restaurant can attest to the top-class customer service that is offered there; even those who have not visited the restaurant know about this service. The organisation has also been awarded over 10 times in Shaanxi, Sichuan and Henan. The restaurant was chosen as "The most popular hot pot restaurant" from 2008 to 2011 (Odell, 2013, p. 1). In 2011, the company received the reward for "China well-know trademark" (Odell, 2013, p. 1). Situational Analysis SWOT Analysis Strengths The first strength is honor brand. The second strength is Innovation of services and products. The next strength is advanced management mode. The last strength is Difficult to replicate of service model (Hai Di Lao 2012, p. 1). Weaknesses The main weakness is Operating simplification. Hai Di Lao success lies on its unique service concept, and a single operation product has become a hurdle to limit its development in UK market (Hai Di Lao 2012, p. 1). The second weakness is smaller coverage and the last weakness is price disadvantage (BBC News 2012, p. 1). Opportunity The most important opportunity is Chinese hot pot as a most unique way of eating, increasing number of British people like it, the proportion occupied by the British public in the diet is growing (Atkinson & Brown 2009, p. 128). The second opportunity is this is a first Hot Pot chain enter the UK market and the last opportunity is there are a lot of Chinese in UK. Threats The first threat is food safety and quality control system more stringent (Atkinson & Brown 2009, p. 128). The next threat is there are a lot of competitors in UK, such as other Chinese restaurant, Japan restaurant, India restaurant, Italian restaurant and so on (BBC News 2012, p. 1). Porter's Five Forces Industry Analysis Substitutes Even though, there are numerous ethnic restaurants, in the U.K., which offer specialised cuisines, especially Chinese cuisines, very few of them offer the hot pot that Hai Di Lao offers (Cridland 2013, p. 1). Threat of New Entrants The calm laws in United Kingdom pertaining to businesses and particularly a restaurant, leaves little barriers of entry for a new firm (Food Standards Agency 2012, p. 1). Therefore, there will always be a continuous threat of new entrants in the restaurant business in the U.K. Bargaining Power of Suppliers Hai Di Lao’s suppliers would essentially include vendors who supply ingredients to the restaurants. Hai Di Lao believes that a volume-based business strategy and bulk buying will earn them significant buying economies. Bargaining Power of Buyers In a business like this, which circulates around fine dining, prices are usually fixed; thus there are little odds of bargaining for clients (FitzGerald 2013, p. 34). Nevertheless, Hai Di Lao will continue developing with promotional campaigns, which will present low-priced dining experiences to the customers (Daily mail 2010, p. 1). Competitive Rivalry Many restaurants in downtown London offer regular fast food and continental food. There are a handful of restaurants offering authentic cultural cuisines and, out of these restaurants, even fewer offer Chinese cuisine (Wai-ki 2008, p. 119). Regularly, these restaurants simply center on exclusive cuisine with little focus on ambience and comfort. This is where Hai Di Lao will enjoy a competitive edge. International Marketing Objectives Hai Di Lao’s international marketing objectives involve recognizing customers’ needs and responding to them in a manner that is superior to its competitors. To be specific, the franchise seeks to establish in the minds of its consumers that its hot pot is a health, traditionally motivated Chinese cuisine (Gregory & Collier 2013, p. 34). The restaurant has tried to maintain a traditional view towards its Chinese cuisines, which a lot of traditional foods serving restaurants have not taken into consideration. Another international marketing objective is that, in order to enhance customer satisfaction, the firm has raised its worker productivity by a minimum of 20% (Gu 2011, p. 1). Hai Di Lao is involved in widespread training of its workers for they believe that, even though it is the product that attracts the client most, it is the connection between the client and the employees that maintains a loyal customer (Gu 2011, p. 1). Another international marketing objective is to enhance customer satisfaction through constantly enhancing and updating its operation systems and marketing databases (Gu 2011, p. 1). Hai Di Lao, as discussed in my first essay, highly makes use of technology in running its daily dealings. The chain restaurants have gone to the extent of allowing clients to order means using their iPads, while at the restaurant. They now endeavour to have a 24/7 restaurant. This will surely be something new for the Briton customers if implemented. Briton customers will enjoy and benefit from it because we all know that Britain runs a 24-hour economy (Kotler & Armstrong 2009, p. 50). An International Marketing Strategy The marketing strategy of Hai Di Lao will center on the wider community, not only those of Chinese origins in order to offer a steady, persistent stream of business. Other potential target clients also comprise of tourists from other regions of the globe such as China, as well as the United States (Parker 2012, p. 45). The target market will be divided in line with age groups and income groups. Seasonal promotions will aim at tourist audiences applying a marketing mix, which comprises of local advertisements/promotions in the radio spots and newspapers, sign boards along major highways off the ramps, near hotels, and brochures distributed at tourist attractions and local hotels. The fact that Hai Di Lao will be one of the handful restaurants in London, which offers 100% Chinese cuisine, will help attracting the local population and also tourists. The famous Chinese smoking pipe will be provided by the restaurant, which will target people who smoke and also tourists willing to try it (Parker 2012, p. 45). Because Chinese pipes are not similar to ordinary cigarette smoking, there are also some odds that it may attract some non-smokers. When it comes to positioning, Hai Di Lao wants to position itself as an all inclusive restaurant; this includes a fast food restaurant, fast casual restaurant, casual dining (family) restaurant and fine dining restaurant. This will make the chain restaurants stand out as midscale restaurants (Parker & Song 2007, 1043). Even if the costs of small sized restaurants are fairly the same, the fact is that a majority of the non-Chinese cuisine small-size restaurants are primarily self-service restaurants, which implies there are no waiters in such restaurants. Nevertheless, Hai Di Lao is a table service restaurant. Therefore, the real position of Hai Di Lao is actually above the scale of midscale restaurants and fast-food restaurants. A majority of the Chinese restaurant companies deem that price is the answer to win a market (News archive 2012, p. 1). According to them, a lower price translates into more customers. However, Hai Di Lao plans to establish itself as a high-scale restaurant, which a majority of the Chinese cuisine eating population in Britain opt for. The 38% of Britons who prefer Chinese cuisine also prefer to eat if in a fine dining restaurant, which prepares the food well in order to bring out the fine taste (NEWP 2010, p. 1). Aside from this, Hai Di Lao should also position itself as a traditional Chinese cuisine restaurant, an aspect that has been missing in nearly all Chinese cuisine restaurants. This will give them a large competitive advantage over other Chinese restaurants (Parker & Song 2007, 1043). When it comes to building a strong brand, Hai Di Lao should continue offering its first class service when it ventures into the British market. A lot of restaurants in London have failed to take the importance of customer experience into consideration, yet the clients still dine with them taste (NEWP 2010, p. 1). Hai Di Lao should seek to benefit from this by ensuring that they give clients a good experience which will turn them into loyal clients and maybe even steal them from other restaurants. Also, the restaurant should seek to improve the quality of its meals, which some clients in China have complained about taste (NEWP 2010, p. 1). The quality of its food will be the highest factor of creating a winning brand. Hai Di Lao should be very specific about the dishes they serve and also how clients are welcomed into the restaurant. This will create an everlasting effect to the customers, which will keep them coming to the restaurant. In order to enter the British market effectively, a firm should build bonds will promoters, marketers, sponsors, who will ensure that the business effectively diffuses into the Chinese market. Hai Di Lao should look to establish bonds with radio stations, television stations newspapers and magazines, which will effectively advertise their brand. They should look for sponsors such as banks that will finance them and also save their money. Marketing Mix Recommendations Product Hai Di Lao will be set in the restaurant market through its unique selling point, which is an exceptional cuisine offered in a distinctive and ethnically rich ambience. The chain restaurants offer meals prepared in genuine, natural and customary Chinese spices and it can be enjoyed in a both a modern and also a traditional Chinese setting taste (BBC News 2012, p. 1). Unlike other characteristic restaurants in the United Kingdom, Hai Di Lao will offers an aroma of Chinese fragrances and the comfort of unique Chinese dining tables. Prince Pricing will make Hai Di Lao’s dishes affordable, in comparison to direct rivalry and somewhat below rivalry in the mid-level, traditional cuisine category. Meals with a mixed price range will be sold so that individuals with a different financial background can be served. Value meals and combo meals will be offered to raise the affordability of the meals, which will enhance the results by increasing the clients taste (NEWP 2010, p. 1). They will offer promotional discounts in off-peak season and also psychological pricing might be adopted, at times, so as to promote sales. Promotion Hai Di Lao should make brochures, billboards, posters attracting and interesting enough to attract its target market and raise awareness of likely clients. Their brochures, billboards and posters should be centered on the advantages that consumers will receive by buying their products (Watt & Mason 2013, p. 1). In other words, they should mainly communicate their positioning through such channels. Place Hai Di Lao should be situated in a location where it can attract attention from a lot of consumers. As a result, they should being their expansion to the major cities in the United Kingdom such as London, Manchester, Southampton and Liverpool among others. After this, they should then move to the relatively smaller towns (Wei 2011, p. 6). Because they will be targeting the working class and also well-off people, the restaurants should be situated in regions where the rich and working class people are more familiar with. This could be near urban centers that are well maintained (Wheal 2012, p. 1). People Hai Di Lao should seek to train its clients on how to deal with the customers in order to enhance their customer experience. This includes who to greet a client, how to serve the client, how to assist the client when they are being faced with challenges and also how to enlighten the client to make use of the services being offered (Yeh 2012, p. 70). All these aspects will work hand in hand to ensure that the customer experience is first class (Xihua 2013, p. 1). Process Hai Di Lao should seek to offer food sample to its clients as they wait to be served. Hai Di Lao can use this change to ask the client to sample a new dish that they want to introduce and give them his or her opinion. Also, employees should talk to the clients in a manner that portrays respect and elegance (Wei 2011, p. 6). Physical Evidence Finally, Hai Di Lao should develop an environment that portrays class. The set up should be in a way that makes the clients feel at ease. It is no harm to play soft music at a low volume from a far, which is appealing to couples/dates who decide to try out the restaurant (Williamson et al 2010, p. 98). The seats should be easily accessible and the restaurant should not be squeezed. Conclusion This paper has provided a situational analysis of that summarised the key findings from the task one audit, presented the international marketing objectives based on the opportunities from the situational analysis, presented a clear international, medium-term marketing strategy and discussed the marketing mix recommendations to deliver the strategy. Britain offers a lot of opportunities for Chinese investment and also Briton have a more fondness to Chinese cuisine. Therefore, the best place for Hai Di Lao to invest internationally is Britain. This country will be much easier for the organisation to establish itself. References Atkinson, H & Brown, J 2001, 'Rethinking performance measures: assessing progress in UK hotels,' International Journal of Contemporary Hospitality Management vol. 13, no. 3, pp.128 – 136. Baker, M J 2007, Marketing strategy and research, 4th edn, Palgrave Macmillan, Handmills. 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