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Cafe de Coral Marketing Paper Essay

1. Introduction

Background information

This marketing plan is base on the quick service restaurant in Hong Kong market and the Café de Coral Group is focus in this plan. The Group was incorporated in October 1968, it is principally engaged in the food and catering industry as largest Chinese quick service restaurant group, maintaining a publicly recognized leadership position in the mass-market, quick service restaurant chain business, with vertical and horizontal diversification towards the food services, food processing and distribution, catering and hospitality sectors in Hong Kong.

It has prospered through the concept of customer oriented by increasing the environmental, product and services qualities. Besides, it combines the Chinese and Western food cultural in order to create the fashion of fast casual dining for health and nutritional lifestyle and provide a modern and warm experience for the customers.

2. Current Market Situation

3.1 Market Analysis

Café de Coral is a major Chinese quick service restaurant chain in Hong Kong. Following is an overview of the potential in the catering market and a specific review of the fast food restaurant market.

(a) Overview of the opportunities in the catering market

* Hong Kong probably is the most welcomed tourist attraction in Asia. By the forecast of the World Tourism Organization, Hong Kong is the fifth most frequently visited destination in the world, accounted for 57 million visitors per year by year 2020 (InvestHK, 2012). * The majority of tourist population is come from the Mainland China (InvestHK, 2012) and this would probably flavors the Chinese style cuisine or catering services. * The persistence of inflation in Hong Kong may induce the demand of fast food instead of ordinary or luxury cuisines.

(b) Specific review of the fast food restaurant market

* There are 15,757 fast food shop establishments in Hong Kong, hiring for 41,319 people (InvestHK, 2012). * According to a survey sponsored by Mingpao and conducted by the Chinese University of Hong Kong(2011), Café de Coral acquired the titles of “most mentioned catering brand” and “most beloved catering brand” among the three major fast food chains (namely Café de Coral, Maxims and Fairwood). * Café de Coral is keeping expanding its market share in both catering market and specifically the fast food market. In year 2010, Café de Coral has expanded its market share in fast food market successfully to 24.8% and in catering market to 4.6%(Commercial Radio, 2010).

3.2 Company Analysis

The Group was incorporated in October 1968 and went public in July 1986 on the Stock Exchange of Hong Kong, which was the first of its kind at the time of listing. In October 2001, it was appointed as one of the top 200 constituents of The Hang Seng Composite Index Series. After 42 years of development, it has become the market leader in the Hong Kong fast food industry with over 24.8% market share in the Quick Service Restaurant segment and 4.6% of the total dining out industry in Hong Kong. Its business operation spans over 2 continents with more than 300 operating units in Hong Kong.

Over the past years, the Group advanced in strides in profit performance and in its business dimensions. The continuous business growth records over the years speak for itself, recording multiple growths in terms of market capitalization, turnover, profits, employees and net assets value. The Group’s market cap increased by over 20 times, turnover by over 19 times, profit by over 14 times and net assets by over 51 times since listing, with a dedicated workforce of 6,500.

3.3 SWOT Analysis

2.3.1 Strengths

(a) Product Diversity

The Group’s menu regularly rotated to maintain a variety of choices and to meet the taste and budgets of customers. Products on menu range from western cuisine to traditional Chinese dishes. New and seasonal products for each time segment are introduced regularly.

(b) Strong Advertising

“A Hundred Points of Excellence” has been the commitment to customers and is now a household catch phrase. As part of on-going campaign to strengthen the Café de Coral brand, proactive advertising campaigns are launched on a continual basis. Through the campaign, the brand image has been further enhanced by positioning Café de Coral as a place not just for best taste and value meals but also a popular meeting place for all walks of life.

2.3.2 Weakness

(a) Relatively High Selling Price

The food price of Café de Coral is high in generally by comparing with the local style cha chaan teng and fast food restaurant in Hong Kong. This makes a comparative disadvantage for the Group.

(b) Bad Public Relation

In 2010, Café de Coral has offered its staffs that they must forfeit their paid lunch break of approximately 45 minutes a day, a net cut in their pay. Political parties, unions, religious groups and students’ unions of universities, had organized and boycott Café de Coral. After that, Café de Coral had label as “Too Acrimonious”.

2.3.3 Opportunities

(a) Individual Visits

The number of individual visitor from mainland China keep increasing, and most of the visitors from mainland China flavor the Chinese style cuisine or catering services like Café de Coral’s dishes.

(c) Inflation in Hong Kong

The persistence of inflation in Hong Kong may induce the demand of fast food instead of ordinary or luxury cuisines. As Café de Coral maintaining a publicly recognized leadership position in fast food chains which benefits from increasing demand of fast food.

2.3.4 Threats

(a) High Rental Cost

The rent in Hong Kong is almost the highest among the world. According to the report of SingTao, about 40% of production cost is rental cost. And the rental cost keeps increase every year by 30% to 50%. Some of the restaurant cannot afford the high rental cost and go bankrupt in recent year.

(b) Price of Ingredient Increase

Under persistence of the appreciation in RMB, the price of food ingredient keeps increasing. According to the report of SingTao, the price of food ingredient increasing by 25% which is 35% to 45% of the production cost.

3.4 Competitor Analysis

There are two major direct competitor in Hong Kong include Maxim and Fairwood. And there are some other indirect competitor including international chain fast food restaurant, Chinese restaurant, local style cha chaan teng, etc.

Fairwood’s quick service restaurants serve mainly Chinese food. Its menu is frequently changed with seasonal favorites. Despite its Chinese predominance, its menu is enriched by the adoption of Western dishes that have been carefully redesigned to suit local tastes in order to enhance its attractiveness. Also, Fairwood’s philosophy has always been to provide a wide range of good quality Chinese and Western cuisine at affordable prices in a bright, clean and modern ambience.

Maxim’s quick service restaurants are bringing to customers a variety of quality dishes, a new interior and comfortable dining environment. Also, Maxim’s philosophy is “Whole-Hearted Mission” that is to surprise, delight and inspire customers with a unique dining experience.

International chain fast food restaurant like McDonald, KFC are indirect competitor of Café de Coral. These types of fast food restaurant are western style, usually with French fries and hamburger. Their target customers are general public with different nationality and culture. And they are especially focus on young people market.

Chinese restaurants are focus on the middle age and elder market. They provide traditional Chinese dished like dim sum for customer. They are not position as quick service restaurant and they provide a place for customer eating slowly and chatting with family, friends and co-workers.

Local style cha chaan teng are focus on low-mid income working class market. They are quick service restaurant provide affordable dishes for customer. The envirnment of cha chaan teng are crowded and noisy which is not suitable for having a relaxing and comfortable dinning experience.

3.5 Customer Analysis

2.5.1Market Segments

(a) Segment A – Visitor from China: The segment consists of visitors who are Chinese residents and having a Chinese style eating habit.

(b) Segment B – Family: The segment consists of people who usually have dinner outside and do not cook their dinner at home with small family size.

(c) Segment C – Teenager and young adult: The segment consists of people who ages are between 15 and 45 and they enjoy gathering with friend.

2.5.2 Bases or variables of Segmentation used

(a) Geographic Segmentation:

Geographic segmentation divides the market of Hong Kong into group base on the variables of “Region”. Since the target customer of Café de Coral are local low-mid income working class and visitor from mainland China, public housing estate and shopping plazas are preference in this segment. And the groups which segment out from the market are luxury residential areas and mid-level area.

(b) Demographic Segmentation:

“Age” and “Family Size” are the key variables used in this segment.

As Café de Coral adoption of Western dishes into the menu and have fusion of Chinese and Western food cultural which is suitable for the teenager and young adult, ages are between 15 and 45, and elder people do not prefer in this type of dishes. So “Age” is selected as a key variable.

As most of family in Hong Kong are small in size and some of the family do not like to cook due to the hustle and bustle city live in Hong Kong. These families prefer having dinner outside and Café de Coral offer them a moment of leisure, relaxation and warm experience to go with the delicious dishes. So “Family Size” is selected as a key variable.

(c) Psychographic Segmentation:

“Income” and “Lifestyle” are the key variables used in this segment.

As the consumer behaviors and preferences of food will be affected by income. Local low-mid income working class will choose quick service restaurant with affordable price due to the hustle and bustle city live in Hong Kong as a place of meeting place with friends and co-workers. So “Income” is selected as a key variable.

As Hong Kong is an international city, people prefer a modern experience with fusion of Chinese and Western food cultural. Café de Coral creates a fashion, health and nutritional dinning lifestyle for customers to gather with friends with warm and joyful experience. So “Lifestyle” is selected as a key variable.

(d) Behavioral Segmentation:

“Benefits” is the key variable used in this segment. As city life in Hong Kong is hustle and bustle, convenient and speedy are very important factors for customer to choose a restaurant in order to save their time. Also, Café de Coral prospered through the concept of customer oriented by increasing the product and services qualities which make Café de Coral publicly recognized leadership position in the mass-market.

3. Target Market And Positioning

3.1 Recommended target market

Teenager and young adult are recommended as a target market. Since teenager and young adult enjoy gathering friends in restaurant and prefer a wide range of good quality dishes at affordable prices and a bright, clean and modern ambience. As Café de coral adoption of Western dishes into the menu and have fusion of Chinese and Western food cultural with the fashion of fast casual dining for health and nutritional lifestyle and provide a modern and joyful experience for customers, it is suitable for Café de Coral to focus on teenager and young adult market.

3.2 Recommended position

As teenager and young adult are selected as target market, Café de Coral is recommended to position as a diversified, health and energetic quick services restaurant. Since teenager and young adult are keen on having new experience, diversified dishes can satisfy their wants. Also, teenager and young adult are caring about their body shape, appearance and style, health and energetic dishes can satisfy their wants and fulfill their perception.

4. Market Objectives

5.6 Build up a diversified, health and energetic brand image

In order to build up a diversified, health and energetic brand image, Café de Coral can make some advertisement in the internet and invite some young artist and singer to promote the new image. Café de Coral can have some seasonal theme interior design for different western festival and play some soft but popular songs. This enhances the attractiveness of Café de Coral as a good choice for young people gathering with friends.

4.2 Design more new diversified, health and energetic menu

The menu may have more high fiber and low fat dishes which fits the image of health and energetic. Also the menus can have different seasonal and festival theme in order to satisfy the wants of diversification for young people. Also, Café de Coral can provide more meal plan for friends instead of only provide individual meal plan.

References

Café de Coral, 2012 http://www.cafedecoral.com
Eastweek, 2011. http://dev.eastweek.com.hk/index.php?aid=19412 InvestHK, 2012.http://www.investhk.gov.hk/wp-content/uploads/2012/07/2012.07-foodservice-en.pdf Mingpao, 2011.http://marketing.mingpao.com/hkbrand/cfm/other.cfm?html=10c Commercial Radio, 2010.http://www.snb.hk/page/zh-tw/snb_report.aspx?ItemId=264449 Min Wage Research,2010. http://minwageresearch.blogspot.hk/2010/11/ongoing-cafe-de-coral-debacle.html


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