KITCHEN (name changed) is a small independent enterprise restaurant/bar in a small town, founded in 2006 serving gastropub style food and drinks.
Due to the nature of the business being in Cornwall UK, there are more potential customers during holiday periods and therefore sales are often much higher around these times.
Competition is primarily from other independent restaurants, pubs and cafés, as there is a lack of chain restaurants/bars in the area.
The rationale for this marketing strategy report is to boost overall consistency of sales by increasing sales over the shoulder period of the year.
This analysis shows that overall, competition is medium. Key factors are;
The moderate rivalry amongst competitors, due to the low number of restaurants and med/high number of independent pubs in the region
High number of substitutes such as McDonalds, Fish & Chips and other takeaways/fast food
The pubs in particular offer stronger competition, as there is more of them and they offer both food and drinks. In this particular example, there is one substitute competitor which presents more of a threat than other substitutes as it is a takeaway that currently offers the only delivery service available in the area.
The threat of suppliers is low and should not affect KITCHEN. However, the customers hold a lot of power as they have such low switching costs, with a wide range of available substitutes and competitors. It is therefore important that KITCHEN meets the needs of customers as best as possible to avoid switching.
In more detail...
Threat of New Entry: Medium
Threat of Substitutes: Medium
Power of Suppliers: Low
Power of Buyers: High
Industry Rivalry: Medium
Some of key factors encouraging innovation for KITCHEN are:
One of the main innovations should be around a delivery service, by partnering with a company or developing an offering an inhouse delivery service. At the same time, menu items to suit the changing consumer needs should be provided.
Innovating based on these factors aims to maximise the potential gains from KITCHEN’s resources. By understanding the needs of customers and focusing on creating new innovative value through offering a delivery service for premium food, with a wide range of vegetarian/vegan options distinguishes innovation from novelty.
Competing in this way will maintain fast innovation diffusion because of factors such as:
The result of fast innovation diffusion in this case is that the service should gain good momentum throughout the local population, with customers adopting the new behaviour, idea and products being offered.
In order to successfully innovate, KITCHEN must focus on a shared vision led by strong management that focuses on the challenges in the future rather than successes from the past. Doing so, will help to avoid potential barriers involving perceptual, intellectual, cultural, environmental and emotional issues.
The many changes impacting the macro environment will bring new opportunities to KITCHEN, so if they capitalise on the key innovations and keep moving forward, they’ll continue to be really successful.
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