Kudler Fine Foods - Essay Example

Kudler Fine Foods Kudler Fine Foods is an upscale, gourmet specialty food store that was started in La Jolla on June 18, 1988 and reached break evenstatus after nine months, recording a profit in the very first year. The second store was opened in Del Mar in 2000 and the third in Encinitas in 2003. The Company now plans to improve its marketing strategy to increase the loyalty and profitability of customers, to increase revenues and decrease costs. Marketing has been defined as an organizational function, which comprises a set of processes that focus upon producing, communicating and delivering value to customers, and also by managing customer relationships in such a way that it benefits the organization and its stakeholders (Kerin et al, 2006:8). The focus of the current strategic objectives of the Company is to improve customer loyalty and enhance customer profitability by offering expanded services such as cooking classes and parties in the store to increase customer frequency of visits and promote word of mouth marketing. Another initiative that is proposed is to track customer purchase behavior and offer loyalty points which may be redeemed for other specialty foods, airline tickets, etc. Thirdly, the Company is also integrating new software systems and starting employee training programs to improve efficiency of operations. With the help of technology, the Company is tracking financial data, so that customer behavior over time can be analyzed. Therefore Kudler is focusing upon delivering value to customers and managing customer relations to benefit the organization. However, before actually entering into this plan, the Company needs to carry out extensive marketing research. Marketing research encompasses the process of first arriving at a definition of the marketing problem and opportunity and then systematically collecting and analyzing information, which will form the basis upon which proposed action can be recommended (Kerin, Hartley, Berkowitz, & Rudelius 2006: 206). In the case of Kudler, it must be noted that most of the initiatives that are proposed are new ones – such as starting cooking classes and rewarding customer loyalty through a points system. While everyday discounts for regular customers have proven efficacy, the efficacy of the points system in ensuring customer loyalty has not been conclusively proved. Customer loyalty has been defined by Dick and Basu as “the relationship between the relative attitude toward an entity (brand/service/store/vendor) and patronage behavior.” (Dick and Basu, 1994: 100). They have distinguished customer attitudes in terms of four different aspects: loyalty, latent loyalty, spurious loyalty and no loyalty. The first of these of course, is the most desirable attribute and according to Dick and Basu, it signifies a positive correlation between the customer’s relative attitude towards a product and repeated patronage of the product.(Dick and Basu 102). This suggests that customer loyalty may be governed not merely by behavioral displays but also by internal attitudes and motivational factors. If Kudler wants to be successful in its initiatives, it becomes vital for it to conduct research into the efficacy of the points system used in other Companies. It must examine the projected costs involved in conducting cooking classes and organizing events against the potential for sales. Although most of Kudler’s customers are looking for quality products, they may also be price conscious since Kudler offers complementary services and money back guarantees. Buying decisions may be very complex and carried out after a lot of thought; on the other hand they may also be very simple, as in the case of buying on impulse. Therefore, it is vital for Kudler to research consumer behavior thoroughly, and also to examine its own financial data and product history, so that it can identify potentially profitable products to stock in its stores. Marketing research is also necessary because in the food industry, factors such as taste, quality and cost need to be combined at optimum levels to generate customer loyalty. Since Kudler offers high priced products, its market outreach is limited, therefore focusing upon building customer loyalty is a good move. But without the necessary marketing research to discover the best methods that may be implemented to reach this end, the Company’s initiatives could misfire in that they may not be cost effective. Both internal and external data need to be analyzed. Kudler must acquire information on customer purchase patterns in the local areas where its stores are located and a great deal of other external marketing information. This needs to be integrated with internal information available with Kudler, as well as benchmarking with a wide range of other specialty stores, so that trends in consumer behavior may be noted and used as the basis to arrive at accurate projections for the future. Such information can then lead to more informed decisions, where the likely outcome can be more accurately forecasted with less likelihood of losses. Kudler has also incorporated software into its management systems, which is an excellent move. Technology can provide a valuable tool to gather a vast pool of information about the current internal as well as external factors that are affecting the Company’s business. By collecting this information and analyzing it properly before implementing the new initiatives, Kudler is likely to be able to identify areas for improvement. It will also be able to identify potential lacunae in the new marketing plan and plug them before they become the source of losses. But most importantly, the process of analysis of internal and external factors and conducting analyses will help the Company to identify those elements that fuel customer loyalty, so that it can focus upon those measures to gain a competitive advantage in the market.(Gomez, Meija and Balkin, 2002). A thorough analysis after research will ensure that the Company is able to implement flexible marketing strategies that are most likely to attain the objectives that are sought. The importance of marketing research in the case of Kudler cannot be over emphasized, in order to ensure that the Company meets with success in its plans. Greenstreet(2005) highlights the importance of marketing research in arriving at an accurate and well founded analysis of customer preferences and the practices of the existing competing companies. The potential for success of a proposed venture or a new marketing initiative, such as that which Kudler now proposes, is much more likely after market research has been carried out. Information about competitor prices and practices can help Kudler to price its services reasonably and assess how successful its cooking classes and loyalty program is likely to be. It can provide information about changing market conditions, customer preferences and likely profitable trends for the future. Marketing research is therefore a source of valuable intelligence that can be mined and analyzed by the Company in conjunction with its own Company data to arrive at the assessment of likely success or failure of its strategies, to provide revisions and amendments where necessary. References: * Balkin, David, Cardy Robert and Gomez-Mejia, Luis, 2002. “Managing Human resources” McGraw Hill * Dick, A.S. and Basu, K, 1994. “Customer loyalty: Towards an integrated conceptual framework.” Journal of the Academy of Marketing Science, 22(2): 99-113 * Greenstreet, Karen, 2005. “Ground truth and the importance of market research.” Passion for Business [online] available at: http://www.passionforbusiness.com/articles/ground-truth.htm * Kerin, Roger A, Hartley, Steven W, Berkowitz, Eric N and Rudelius, William, 2006. “Marketing” Prentice Hall Read More