Market Environment of Mitchells and Butlers - Case Study Example

Introduction Competition is increasing getting stiffer with many business firms coming into existence. This is because every business is striving to capture bigger market share than its competitors. For every business to succeed there ought to be an appropriate marketing plan. Therefore, this paper aims at analyzing both internal and external marketing environment for Mitchells and Butlers pubs in the United Kingdom. Moreover, the paper seeks to offer segmentation, targeting and positioning recommendations for future development of the business while applying marketing theoretical concepts. Part 1: Analysis of the market environment Mitchell’s and Butlers is among the leading pub operators in the United Kingdom. The firm was established in the 19th century as a merger between two family brewers that came from the English Midlands (Stickney, Weil, Schipper & Francis 2010, pp. 313-320). The company, for over 100 years, has undergone a series of mergers that eventually led to the establishment of the Brass Charrington Cognolomerate. However, in 1989, the Monopolies and Mergers Commission maintained that the concentration in the pub industry had grown upto the level in which there was severe restriction of competition (Pederson 2009, pp. 15-25). Microenvironment The company’s microenvironment has a direct influence on its operations. It entails the company’s suppliers who operate indirect or directly, customers and consumers, and other domestic stakeholders (Bamforth 2011, pp. 13-120). In this case, the company has numerous suppliers of food, technology and raw materials, such as, Fujitsu, Tradeteam and IBM (Wierenga 2008, 15-25). Moreover, its consumers consist of the local residents, city dwellers, city center professionals, both young and the old. According to Bamforth (2011, pp. 10-20), this also involves the company’s public that includes media, financial, government, citizen-action, local and general public. The organization deals with various banks, media channels, government regulations, and the general and local public. Besides, Wierenga (2008, 567-570) says that micro-environment outlines the relationship that exists between the company and the driving forces that regulate this relationship. Because this kind of relationship is a local one, the company can exercise a level of influence. What is more, Kurtz (2011, pp. 274- 280) asserts that the company has a wide range of offerings and brands that are aimed at meeting all the needs of its clients. Macro-environment On the other hand, the company’s macro-environment consists of the political, cultural, technological, demographic, and natural forces that pose threats and shape opportunities to the company. Political environment In term of political factors, there are regulations regarding smoking in the country. The national issue of banning of smoking in public places has helped a lot attract clients that do not like hanging around smoking areas. In the case demographics, the firm’s employees and clients are mostly British, although there are other racial groups that either work or live in the United Kingdom. (Wrenn 2010, pp.13-17) Moreover, clientele entails both male and female residents, workers and foreigners in the United Kingdom. In terms of the clients’ age, the company offers its services to various age-groups that include the old, middle-aged and young people. In addition, Roy (2011, pp. 12-17) argues that the company has highly-competent personnel that can adjust to any environmental changes in the business. Additionally, the firm’s demographic environment involves the clients’ occupation that consists of the clients that work in the city offices and local businessmen (Nash 2000, pp.49-56). Economic environment In terms of the company’s economics, there are certain factors that influence the consumer spending habits and purchasing habits. Some of these factors include the clients’ employment and wages. This implies that they consumption rate depends on the amount of ages they get and the nature of their occupations. Explicitly, the more people employed in the United Kingdom, the more money they earn. Moreover, Cadeaux (2004, pp. 8-12) holds that the consumers’ purchasing power and sending habits are determined by the prices of commodities in the market. For instance, in the case of Mitchells and Butlers, the clients spending power is affected by the inflation rates that raises the prices of food and drinks offered by the company. When the prices are high, the consumers buying power greatly reduces. On contrast, Wierenga (2008, 567-570) says that deflation in an economy can be as a result of bad economic matters. Although the prices reduce, the clients’ purchasing power also drastically reduces. According to Paley (2005, pp. 3-10), another economic issue that affects the clients’ spending power and buying power is currency changes. When the country’s currency devalues, the cost of goods increases, hence limited the clients from buying them. In turn, this affects the company’s customers from visiting their joints. On the other hand, Nash (2000, pp.49-56) asserts that consumption rates of the clients increase when the currency’s value gets stronger. The availability of credit is another influential factor in the company’s marketing environment. If the banks are unwilling to lend the consumers money, then their surplus money to use in purchasing the company’s products is minimized (Handlechner 2008, pp. 50-60). This negatively affects the company’s performance because of the reduced purchasing power of the customers. On the contrary, the more the banks are willing to lend money to the clients, the greater the spending power of the company’s customers. Ecological environment Additionally, the company’s ecological environment involves the natural resources that affect its marketing strategy. Mitchell and Butlers Company have a consistent supply of materials because its brands are located at places that have sufficient natural resources. Technologically, the company employs modern technology in the production and delivery of its products (Handlechner 2008, pp. 50-60). The sophisticated technology is instrumental in the effectively service delivery in firm. Social environment Socially, the company has its business widely distributed in a community that in which people like interacting with others in social places. This implies that the clients are sociable beings who enjoy taking their drinks and food in such places as pubs and restaurants (Nash 2000, pp.49-56). Technological factors The company is employing the modern technology to conduct market research and promote its businesses. The company markets its business through the social networking sites like Facebook and Twitter. The use of technology also enhances its service delivery and the overall performance by promoting its efficiency and accuracy (Paley 2005, pp. 3-10). Cultural environment Furthermore, the company has a cultural environment that is influential in the promotion of its performance (Nash 2000, pp.49-56). This entails customers who value going out with family, friends and relatives for meals in restaurants, and people who value occasional drinking after work. The company’s market segments favor this culture in that people go for the appropriate offering in the country that suit their lifestyle. However, the company faces a challenge that is related to the government’s regulation on drinking. Therefore, its customer base is negatively affected by the regulations. Moreover, maintains that the government often has the industry’s policies and regulations changed; hence imposing adverse effects on the company’s operations in the country. In addition, this also makes it hard for the company to maintain a competitive edge (Handlechner 2008, pp. 50-60). Another challenge to the company is the availability of numerous offerings that make it hard and very costly for the company to manage them effectively. Therefore, the company’s performance is adversely affected; hence difficulty in the achievement of the set goals and objectives. Part 2: STP recommendations Current STP strategies In this section of the paper, various recommendations on the segmentation, targeting and positioning are addressed. The Mitchells and Butlers Company has certain elements concerned with segmentation, targeting and positioning, and segmentation as discussed below: Locals To begin with, Handlechner (2008, pp. 50-60) points out that the company has segmented its market into various sections in order to strategically serve each segment appropriately. The first segment entails pub restaurants, which are food-led pubs that are situated in the country’s residential areas. According to the organization, this market segment is influential in the improvement of its performance (Fifield 2007, pp. 15-20). This is because it is capable of enhancing the amenity levels within the pubs in order to capture a large market share. In order to attract domestic residents to these pubs, the firm is striving at offering cleaner environment as well as improved facilities. The company’s local clients make up 30% of its sales as well as 38% of the pubs. These pubs function under Scream, Ember Inns and Sizzling brands. This segmentation is beneficial to the company as it raises its sales volume through attraction of more clients. Pub restaurants The second segmentation of the company’s market involves the pub restaurants. Just like the locals, these are food-led pubs that are located in various residential areas in the United Kingdom. Currently, the company believes that this market has an advantage that is determined by the existing providers. Therefore, it strives to maintain its strong presence in the United Kingdom’s market. Besides, this market segment accounts for 45% company sales and 37% of its pubs. Some of the brand names under which the company operates are Harvester, Toby, Vintage Inns and Premium Country Dining. The company created this segment mainly to target the families that enjoy eating out at their local areas. Moreover, the company has taken advantage of the high demand for eating joints that are convenient for the clients (Hunt & Arnett 2004, pp. 13-75). This implies that the target market desires eating joints that enable them to take a quick taxi ride, or take a walk back home so as to avoid the United Kingdom’s strict driving and drinking laws. This segmentation gives the company a strong competitive advantage; hence improved performance. High street segment The third market segment that the company is currently operating under is the high street segment. Unlike the two aforementioned market segments, this particular one entails drinks-led pubs that are located at the city centers. The establishment of this segment was as a result of the company’s belief that it would serve the city dwellers and professionals effectively. Moreover, Cadeaux (2004, pp. 8-12) maintains that the company strives to create and maintain strong brands through identification and satisfaction of the customers’ needs all over the country. In fact, it is now explicit that this market segment is already being overtaken by the rising demand for drinking places in the United Kingdom’s cities. This implies that despite the fast growth rate of the market, there are numerous other pubs that are coming up faster than the market in the cities (Dolnicar, Freitag & Randle 2005, pp.11-17). In order to overcome this challenge, the company is intending to address it with a stronger market differentiation strategy. This is done through the O’Neill’s Irish theme, Flares’ 70s theme and the Reflex’s 80s theme. Additionally, this segment is aimed at serving clients that are above the age of 50 years. In fact, the customers that go to Flares and Reflex pubs can easily recall the 80s and 70s the initial time round. Restaurants Mitchells and Butlers Company have another market segment that entails restaurants. These restaurants are located at the city center, and they are food-led firms. According to the company, the segment is strongly developing compared to its other market segments. In order to benefit from the market, the company seeks to create and maintain powerful brand values so as to keep and develop their market share (Kurtz (2011, pp. 274-280). Under this market segmentation, some of the major brands that the company operates under include Brown and All Bar One. These particular brands are aimed at attracting female clients and satisfying their clients. This is because the joints are suitable for female customers who can easily coffee as any other drink. The places are beneficial to the company as they are always full with office employees that enjoy after-work drinks as they catch up with friends. Besides, this segment has enabled the company to grow metropolitan professionals, a new chain that targets the inner- city office employees. Present company strategy Moreover, the present company strategy entails promotion that is intended to attract and retain as many clients as possible (Gupta 2011, pp. 118-125). Promotion is done through advertisements on both offline and online strategies. Apart from advertisements, the company employs other marketing techniques that include sales promotion, personal selling, and use of the social networking sites, such as, Facebook, Twitter and MySpace (Botha, Strydom & Brink 2004, pp. 61-70). Consequently, this hugely enhances its operations by capturing a large customer base. The company has a website on which all its information is made available to everyone. In the website, the company has placed its strategy, its services and products, its brands, people, and corporate responsibility. Additionally, the company has won various awards that help it boost its image in the United Kingdom, such as, Marketing Society Excellent Awards 2011. As a result, this is instrumental in widening its market share over its competitors. Furthermore, the company’s market is improved by the fact that it has well-trained and competent employees who are very efficient in serving the customers in all its pubs and restaurants. Clients are attracted by the kind of reception and treatment that they receive in a firm. (Botha, Strydom & Brink 2004, pp. 61-70) For the Mitchells and Butlers, the clients are always satisfied because of the great staff that they have. What is more, the company employs the modern technology in its operation, which results in greatly improves the company’s service delivery and marketing strategies. Recommendations Although the company is excelling in the aforementioned segmentation, targeting and positioning strategies, it is explicit that the large number of segments and offerings are costing it a lot. Besides, the company finds it hard to manage all the offerings appropriately towards the achievement of its set goals and objectives. Maintaining a competitive advantage in the market is now the company’s biggest challenge (Cadeaux 2004, pp. 8-12). Therefore, there is a need for the company to make some changes in its marketing plan so as to solve most of its present challenges and meet its objectives. Firstly, it is vital that the company considers reducing its pubs and restaurants in the country so as to enable it manage the remaining ones effectively (Hunt & Arnett 2004, 11-17). Currently, the company has a total of 2000 joints under its strong brands. Wright (2008, pp, 10-15) says that considering the kind of challenges that it is facing, the reduction of these offerings will be influential in cutting on the heavy costs that the company incurs in the maintenance of the remaining offering. This is because it is a lot easier and cheaper to maintain, manage and supervise few establishments, rather than having a large number of firms that cost the company a lot of resources without increasing its profits. Besides, Srivastava (2006, pp. 6-12) holds that the company is likely to improve its efficiency because it will be handling a few establishments that are well-equipped with appropriate technology and personnel (Ferrell 2011, pp.41-50). As a result, there is a going to be high profits due to large sales volume and minimized costs of production. Secondly, it is imperative that the company works on the meeting all the government regulations in order to benefit from them rather than make losses. Government regulations are instrumental in placing the company in the safe business side (Ranchhod 2004, pp. 60-70). This implies that there will not be any distractions or loses made as a result of regular government regulations and policies. In order to successfully achieve this, it is crucial that the company considers diversifying its offering and business so as to maintain its brands (Möller 2007, pp. 5-7). In other words, this recommendation is aimed at advising the company into indulging in other activities that attract customers other than drinks and food. For instance, the firm can introduce a tour and travel agency in under some of the brands so as to provide clients with complete luxury and recreation facilities. Many people prefer companies that offer a wide range of services to those that only specialize in certain services and products (Mukerjee 2007, pp. 44-50). This idea will facilitate the increase in the firm clients’ base because of satisfaction of their needs. Such an establishment will be most suitable in the city areas since there is likely to be a high demand for recreation and touring. Besides, the diversification of the organization’s businesses will boost its competitive advantage over its competitors. This is also provides the clients with a more whole selection; hence preempting competition. Thirdly, Mukerjee (2007, pp. 44-50) says that the company can improve its performance in the United Kingdom by enhancing its efficiency over its business rivals. This is attainable through increasing the demand of its services and products through more uses, more usage and more users. The company’s efficiency can be achieved by ensuring that the clients’ needs are met effectively (Kurtz (2011, pp. 274-280). When the clients are satisfied, the will make the company the most preferred place to visit whenever a need arises. Subsequently, this increases the company sales, market share, and profits as many customers will be attracted and retained in the company. In addition, effective customer satisfaction is determined by the kind of personnel that is employed by the company. If the company employs workers that are poorly trained and incompetent, it is likely to lose many customers because of inefficiency (Botha, Strydom & Brink 2004, pp. 61-70). Therefore, Mitchells and Butlers should ensure that its workers in all the establishments are highly-competent so as to enhance their service delivery and customer satisfaction. This is possible through recruiting highly-qualified personnel, offering training opportunities to the workers as well as motivating them. Motivation of employees can be done through the creation of clean and favorable working environment, incentives, and provision of the above average pay packages. Motivated employees are more efficient than the unmotivated ones. Fourthly, Mitchells and Butlers Company can improve its performance by doing a lot of extensive marketing through various means. The employment of the customer relationship management (CRM) is critical in improving the company’s interactions with the sales prospects and clients (Mukerjee 2007, pp. 44-50). This also improves the relationship between the company and the customers and clients. This involves the application technology in the organization, automation and coordination of the business processes in the company. Golann (2006, pp. 13-15) maintains that this strategy is instrumental in finding, attracting and winning new customers, nurturing and retaining the already existing clients, enticing former consumers back to the organization, and reducing the marketing and client service costs incurred by the company. Besides, the CRM strategy facilitates the description of the company’s broad business plan that includes client-interface departments and other departments (Sandhusen 2008, pp. 296-300). What is more, the company should indulge in more advertising and sales promotion in order to capture a wide market share. According to Kurtz (2011, pp. 274-280), it can also employ the online social sites to communicate with its clients so as to get their feedbacks and answer the questions. Consequently, the company will get to know about its clients’ needs, dissatisfactions and suggestions. By working on these comments, the firm is certain to improve its customer satisfaction and performance at large. Conclusion Mitchells and Butlers Company is among the leading pub and restaurant operators in the United Kingdom. The company has a favorable business environment, but it is often affected by certain challenges that include too many offerings that make it hard and costly to manage; and the difficulty in the maintenance of the competitive edge. Its present STP strategy entails market segments that target the old, young, female and male, urban and local dwellers as well as professionals and the non-professionals. These segments include the locals, pub restaurants, high streets and restaurants. In order to enhance its performance, the company should reduce its offerings; improve efficiency; diversify its business; do extensive marketing; and introduce CRM strategy. References Bamforth, C 2011, Beer is proof God loves us: reaching for the soul of beer and brewing, FT Press, Upper Saddle River, N.J. pp.10-20. Botha, J, Strydom, J & Brink, A 2004, Introduction to marketing, Juta, Cape Town, South Africa. pp. 61-70. 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