Running Head: TOMASINO’S RESTAURANT LTD
Tomasino’s Restaurant Ltd
Tomasino’s Restaurant Ltd. is located in Halifax, Italy. It’s managed by Leo Arkelian (partner) and Thomas vacon (owner). Primarily, this restaurant specializes in selling Gourmet pizza pies in this saturated market. The main competitor has been Salvatore’s which opened selling high quality pizzas on South Street the same location that Tomasino’s decided to relocate to. They started in 1989 testing the market for gourmet pizzas as takeout and delivery operation business. Operations in its initial five years were in McCully Street where they won their reputation as “one of Metros best.” Despite this earned reputation, they still had plans to expand and become a full-service restaurant. Their new location on South Street was on a building that was adjacent to Hotel Nova Scotia where the recent occupant of this room, Citadel caf� recorded an average sales volume of more than $70,000. Promotion efforts applied are cheap and they value an old adage that postulates that a good product or service automatically sells itself (Roy, 1996).
1. How would you segment the market for Tomasino’s pizza?
Demographic segmentation
In its quest to capture a great market, Tomasino’s Restaurant should use a formidable market research analysis in segmenting its market. The new location on South Street has a larger population. This ranges from residents, students, office holders to diplomats who from time to time attend G7 meetings. Thus, I would segment its market based on demographics. There are different people in this region who can become loyal customers for their Gourmet pizzas. Demographic segmentation for Tomasino’s pizzas must align to the fact that the population on South Street is varied in terms of income distribution. It must be borne in mind that the student population cannot get the equal amount of money as office holders in South Street. Pizzas will thus be designed in such a way that students and other residents who may not afford the same pizza as the office workers and the diplomats of G7 have a cheaper product. Pizzas for the low income earners will be provided in terms of their sizes, i.e. small size pizzas that are low priced to cater for the differences in income. Occupation is a variable that will also feature in this type of market segmentation. In downtown Halifax, universities, hospitals, hotels, residential areas and office towers provide a population that requires to be grouped on social class basis. By doing this, Tomasino’s will easily identify the attitudes, concerns, habits, values and information needs. The differences in social classes will be identified through raw data collected first hand. This will ease development of marketing messages that are successful.
Geographic segmentation
There is a densely populated region downtown Halifax. This will be used as one of the targets. Production must be improved to cater for this large population. Those regions that have a high population growth rate must be served with more centers. Different regions will require different promotional methods. Some may be suited for the rural setting while others are suited for the suburban or urban setting. By segmenting the market for pizzas geographically, Tomasino’s Restaurant will be able to alter their product, the marketing mix, promotion and advertising so that individual need of their customers will be met in each geographical unit.
Behavioral segmentation
Customers need to be recognized in terms of their usage patterns and rate, loyalty to the Pizza product and how sensitive they are to our prices. If the customers in a given niche market buy our products because it’s cheap, we must sell to them at this fair price. Market niches with high rates of pizza usage must be identified. Loyal consumers of Gourmet pizzas offer an attractive and continuous sales volume.
2. Suggest appropriate marketing mix strategies for each of Tomasino’s potential target markets.
Each potential target market for Tomasino’s Restaurant calls for the application of different marketing mix. One of the target markets for Tomasino’s Restaurant is the student population in universities who are bound to resume classes in September. Marketing mix calls for the use of the 4p’s (product, price, place and promotion). Gourmet pizza is the main product. The appearance of pizza must be better than that of our competitors. Giving the students a high quality pizza must be our main strategy. It must be of higher quality compared to our competitors. Continued employment of qualified workforce will guarantee this. It’s by use of proper packaging procedures and materials that can win our student customers. Because students may want to have a packaged product that they can carry back into their colleges, service in product provision must be hastened. Quick service is the only remedy as they may have little time to spend in the restaurant.
Price of the pizza should take into account the prices of our competitors (competitive pricing). It’s most likely that they are price sensitive. Lower prices engineered through low cost in production will win more students and their loyalty too. Place or distribution channels used in reaching the students must be cheap. In order to reach the largest student population, we can use distributors who will be distributing pizzas to the students. A medium-sized restaurant can be established near the universities or even inside the institution through seeking permission from the authorities. Promotion strategies will use flyers near the universities. However, we must first of all perform a break-even analysis to cut costs in relation to our pizza price.
Another target market for the Tomasino’s is the densely populated residential area. We must provide our pizza product in such a way that its appearance outshines that of our competitors. A large population of customers calls for high volumes in unit production. Inconveniences must thus be avoided. As one of our strategies to keep our customers coming for more, any change in taste or quality of our pizza can be checked from the responses in our customers. All customers are happy if the service provided to them in acquiring the product is quick and of quality. Deployment of qualified employees in the production line, packaging and service provision will give our customers the urge to come for more.
People in this residential area have different income levels. Pizza prices will go hand in hand with each niche’s capability for purchase. Low priced pizzas in relation to competitor prices should be used. All areas in this residential area must be covered through the use of distributing channels that can reach all our customers. Deciding to deliver our products to the retailers in the market will eliminate any inconveniences. Promotion strategies must use advertising techniques that can easily communicate with our customers effectively. The methods of advertising applicable here include mail flyers and electronic advertising. Direct advertising will serve us better also as its relatively cheap.
For those in the office towers and occasional G7 conference attendees, gourmet pizzas to be sold to them must be of high quality. Appearance, packaging and service must be of high class. Focus must be production of pizzas that are qualitative than our competitor’s. Price in this target market should go together with the quality offered. A more quality product has high costs of production. This therefore means that we must sell our pizza to these consumers at a higher price than in our other two above target markets. This is a target market that requires us to use a convenient distribution channel. The location of our selling point also must not only be clean but also quiet. Promotion methods in this segment can even include electronic advertising. These are consumers who are capable of accessing e-mails. We can thus put adverts in the internet to woo these consumers.
Generally, marketing mix in the whole target market population can be applied by use of the long term strategies. Firstly, by branding, Tomasino’s should use high profile methods of advertising and other activities that shape the image of the restaurant. Points of contact with our consumers will mold the image and make them loyal. Secondly, philanthropy is another technique in marketing strategies. Tomasino’s should donate some of their time, services and money so that trust in the restaurant can be built. Lastly, a new product pipeline should be developed through research and development. This will represent our future sales. In addition we can decide to have reduced sales prices, offers and group discounts or use search Engine roles to get immediate sales.
3. If you were responsible for approving the small-business loan based on the data provided in the case, would you have granted Tomasino’s the money? Why or why not?
Information provided will not make me grant them the $25,000 small business loan. The cash flow data provided shows that their projections in one year will give them a difference of approximately 50,000 in profits. The amount they must repay is $20,000 excluding the interest to be earned by the lenders. It shows that it may not be possible for Tomasino’s to obtain repayment installments. Qualification for a loan not only looks at the cash flow history but also depends on whether there is collateral security. There is no collateral security for the Tomasino’s restaurant Ltd. Their records are not clear as to what amount of inventory, equipment and accounts receivable they have as these are other collateral sources (smallbusinessnotes.com, 2009). In their projections in expansion budget, there are no costs included to be involved in the actual move in business expansion. Granting of loans only happens when the business in question shows its seriousness in preparation of the business plan. Their closest rival, Salvatore’s who were operating in an adjacent building in their new location went bankrupt and had to close down its business. Goods and Services Act (GST) was one of the reasons why they were forced to close down. This happened to Salvatore’s despite being in this location where there is a potential market which has a dense residential population, several office towers, hotels and universities. To add, their promotional strategies cannot earn them a large pool of consumers considering that there are competitors who may have hostile advertising campaigns than them.
4. Evaluate the promotional efforts practiced by the business. Should more be invested in advertising, the move and expansion? Explain your answer
They are only depending on word of mouth advertising, direct mail flyers and an old adage that a quality product always sells itself. This would make me not to grant them the loan as violent and varied promotional strategies are associated with high sales volumes and thus high profits. Tomasino’s Restaurant Ltd uses direct mail flyers as their main promotional tool. This was preferred because it was cheap, convenient, more effective and easier to measure. Other methods in application included the belief that since they were offering a quality product, then consumers will buy from them automatically. However, a business that is relocating and has plans to expand should use violent promotional campaigns. Customers have to be extensively informed that the restaurant is relocating lest they loose the loyalty they had in the business. In every business, customer is the king. More money must be invested in informing customers about the move so that they can see that they are highly respected. Any complaint that consumers may have are always directed to the headquarters of the business. It’s therefore important for customers to be notified as these complaints also help in checking the quality of the offered product and service quality. Expansion of business means that Tomasino’s will be dealing with a large pool of consumers than before. New target markets must be notified that a new business offering Gourmet pizzas has been established. Different regions though in the same country have different consumer behaviors. Market research on the new markets in downtown Halifax should be performed. This will in the end give conclusions that since this target population may be different from that in the previous location, a different advertising method is required. Moreover, some areas are cosmopolitan than others. Some of these people may need several adverts to be convinced that Tomasino’s offers the best Pizzas in the region. This thus calls for more funds to be injected in promotional efforts.
References
Roy, J. A. (1996). Cases: Tomasino’s Restaurant Ltd. University of New Brunswick: Fredericton.
Smallbusinessnotes.com. (2009). Loan Approval Criteria. Retrieved from http://www.smallbusinessnotes.com/financing/loanapp.html
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