This report is a marketing plan for the new establishment that Bendy’s Bar intends to open. The report assesses the industry situation to determine whether the conditions are favourable for new investment.
The report also examines the ability of the new establishment to compete in the market. The study finds that the new establishment of Bendy’s Bar can achieve success in the marketplace. A growing tourism industry has created business opportunities for the establishment due to a growing consumer market for the bar and club sector. Technological advancements can also enable the firm to market its products and services to a wider audience at minimal costs. The use of online marketing can help the establishment to gain a competitive advantage in the market. The study also finds that the new establishment should focus on creating excellent consumer experiences even as it adopts a low-cost strategy. Experience-based marketing can improve the competitive advantage of the firm in the market. The study also concludes that the investment decision is viable because the establishment will break even within the first financial year.
Introduction
The business environment is often characterised by stiff competition as business enterprises strive to gain a competitive advantage in the marketplace. The importance of satisfying consumer needs and preferences has driven many firms to develop customer-oriented marketing strategies to improve their performance in the market (Walls et al. 2012). The critical role of marketing in the current business environment has further been amplified by ever-changing consumer preferences. Business organisations must remain creative and innovative to effectively meet these changing needs and preferences if they desire to achieve their performance objectives. While several marketing strategies exist, Verhoef et al. (2009) argue that customer experience creation is the most important marketing strategy in the service industry. Experience-based organisations in the service sector are likely to gain a competitive advantage over rivals because they provide customers with great and memorable experiences (Wu and Liang 2009). Bendy’s Bar in Prague operates in the bar and restaurant industry, a key service sector in the Czech Republic. The business aims to open a second establishment to cater to the needs of its growing customer base and the expanding bar and restaurant market. Bendy’s Bar can focus on experience-based marketing to ensure the success of its new establishment in the Prague bar and restaurant industry. This report develops a new marketing concept for the new location of Bendy’s Bar to ensure that the business gains a competitive advantage in the industry. The report conducts a company overview to offer insights into the firm’s current market position and business performance. The paper also conducts analyses of the bar and restaurant industry, customers, and the competition. The report further develops marketing, operations, management, and financial plans for the new establishment.
Problem Statement
The study examines whether the new establishment of Bendy’s Bar can use experienced-based marketing as a marketing strategy to achieve success in Prague’s bar and club industry.
Research Questions
The primary research question that this paper aims to answer is: Can Bendy’s Bar use experience-based marketing to gain a competitive advantage in Prague’s bar and restaurant industry.
Other research questions that the paper aims to answer are:
- What is Bendy’s Bar’s current target market?
- What is the firm’s source of competitive advantage in the marketplace?
- What are the challenges that the firm currently faces in the business environment?
- What is the industry’s current state and can it provide an opportunity for business growth and expansion?
- What are customer needs and preferences in the potential market?
- What is the most suitable marketing strategy that can result in a sustainable competitive advantage?
- Does the company have the necessary resources to succeed in the proposed market?
Research Objectives
The objectives of this marketing report are:
- To identify the marketing challenges that Bendy’s Bar currently faces
- To determine consumer needs and preferences and how the organisation can satisfy these needs and preferences
- To establish the company’s potential for success in the proposed market
- To develop an effective marketing strategy that can give the company a sustainable competitive advantage in the market
Delimitation
The study will focus on the bar and club industry in Prague and not the whole of Czech Republic. The primary objective of this research is to develop a marketing plan that can be used by Bendy’s Bar to open a second establishment in Prague. The study, therefore, concentrates on how the firm can achieve a competitive advantage only in Prague. While the study is primarily a marketing plan, it will also develop an operations, management, and financial plan that the organisation can implement to succeed in its new project. At the end of the study, the report will determine whether the proposed strategy can help the new establishment achieve success in the market based on the findings of the analysis.
Research methodology
This research aims to determine whether Bendy’s Bar can use experience-based marketing to gain a competitive advantage in Prague’s bar and restaurant market.
Research Design
The research is a mixed method research because it involves a thematic literature review and quantitative research. The thematic literature review is critical for determining the current state of research regarding marketing in the services sector and more specifically the use of experience-based marketing to gain a competitive advantage in the marketplace. The literature review approach also enables the researcher to obtain information from primary sources to understand the industry. For instance, industry analysis is mainly conducted using data from primary sources such as government websites. Customer review websites are also important primary sources for obtaining customer reviews and understanding consumer perception regarding the value of services and products offered by the organisation in question. Quantitative research, on the other hand, is useful for conducting online surveys. Online questionnaires are useful for understanding consumer demographics and customer needs and preferences. The mixed method research design will, therefore, enable the researcher to understand the state of research regarding the proposed marketing strategy, conduct industry analysis and market research, and develop an effective marketing plan for the organisation’s proposed market.
Data Collection
Literature reviewed for this research have been sourced through Google scholar, a website for accessing peer-reviewed journals. The research will limit the literature reviewed to within the last ten years to ensure that the findings are relevant and useful for the current business environment. The relevant research articles will be identified using keywords to ensure that the articles analysed are relevant to the current study. The CASP appraisal checklist will be used to ensure that the systematic review meets the objectives of the current research. The findings of the studies are analysed to answer the research questions regarding experience-based marketing and competitive advantage. Primary data is obtained from government websites. Data is also collected from reports prepared by reputable business research firms. Market research data is, however, collected through online consumer surveys using Google questionnaire. The survey targets Facebook pages and groups. Questionnaires are also sent to 50 customers of Bendy’s Bar to understand their perceptions of services provided at the establishment.
Data Analysis
A critical analysis is adopted for the systematic literature review to ensure that a balanced review is conducted. For the quantitative research, the results obtained are automatically analysed using Google research programs.
Company Overview
Bendy’s Bar is situated in Křemencova street 10 in Prague. The bar has been in existence for close to a decade. Bendy’s Bar mainly offers bar services and, therefore, clients visiting the establishment should expect to be served alcoholic drinks. Customers can listen to music as they enjoy cocktails and traditional Czech beers. The bar is also a popular spot with football fans who get to watch Champions League matches and matches from major leagues across the world on large screens. Bendy’s Bar also customises birthday and corporate parties for guests who wish to use the establishment as a location for hosting events. The establishment operates between 1800 hours and 0100 hours from Monday to Thursday and between 1800 hours and 0300 hours from Friday to Saturday. The operating hours are an indication that the bar mainly targets customers looking to experience Prague’s nightlife.
The bar has 45 seats arranged in a way that encourages guests to interact. Figure 1 shows the physical arrangement of the bar. Ideally, Bendy’s Bar is regarded as a local bar where customers that are sensitive to prices visit. Drinks are fairly priced to attract survivalist customers whose purchasing decisions are significantly influenced by the prices of the products and services offered. Although the bar is designed for the average customer that prefers to have a good time in an establishment that charges fair prices for its products and services, it is relatively understaffed and, therefore, characterised by poor services. While the guests are lively, the services provided are poor mainly as a result of unprofessional staff.
The bar has also attempted to take advantage of advancements in communication and technology by developing a company website. However, the website is simple and does not offer sufficient information to customers looking to know more about the establishment. Customers aiming to obtain reservations through the company website are also likely to be disappointed because they have to send an email instead of making reservations on the website.
Economy and Industry Analysis
The Czech Republic is a European country with a relatively small but open market economy. The country has experienced strong economic growth in recent years because its growth dynamics are not affected by excessive external, internal, or financial imbalances. Living standards in the country are at 90.5 percent of the European Union average determined by Gross Domestic Product per capita based on the purchasing power parity (Deloitte 2017). The average GDP growth rate in the last two decades is 2.7 percent. The services sector has been the best performing sector, creating 60 percent of gross added value.
The country’s labour market is significantly strained. Rapid economic growth has created thousands of jobs, effectively reducing the unemployment rate to 2.6 percent as at October, 2017. The rate was the lowest of unemployment in the whole of the European Union. The continued increase in labour demand has further amplified the challenges presented by insufficient labour force in the country. Czech Republic’s unemployment rate is currently estimated to be below the natural level. The bar and restaurant industry is, therefore, bound to experience challenges with finding the right people for employment. Bars and restaurants depend on highly-competent and professional staff to offer high-quality services that ensure customer satisfaction. Incompetent employees, on the other hand, are likely to provide poor quality services that would in turn have a negative impact on customer experience. The labour market challenges are exemplified by Bendy’s Bar. The establishment does not have an adequate number of employees to provide excellent services to clients. The difficulty of finding new employees has also had a negative impact on staff attitude. Employees are not bothered by customer complaints. They also do not seem driven to ensure that customers receive value for money. Significantly low rates of unemployment reduce competition among workers in the labour market and encourage complacency among employees. For instance, the number of unemployed people in the country towards the end of 2017 was stated as 139,000 by the Czech Statistical Office. However, the country began 2018 with employment vacancies totaling to 200,000 (Deloitte 2017). The data shows that there are more employment vacancies than the number of people seeking employment. The industry labour situation means that organisations must develop effective mechanisms to improve employee motivation and increase productivity. Without strategic human resource management strategies, organisations in the sector will continue to experience service quality challenges as a result of staff complacency.
Prague is also a popular European tourism destination. Overnight visitors have steadily been increasing in the last five years. The city recorded a total of 18 million overnight visitors in 2017, with most visitors coming from Germany and other cities within the Czech Republic (Praguecitytourism.cz 2018). Russia, the United States, and the UK also contribute a significant number of visitors to the city. A high number of overnight visitors to the city has contributed to its vibrant nightlife. Bars and light clubs in the city thrive because of the thousands of travellers looking to have a good time on a night out (Tizard and Sullivan 2018). An increasing number of annual overnight visitors, therefore, present an opportunity for growth for Prague’s bar and restaurant industry. Bars and cocktails are a major tourist attraction in the city just as much as historical sites and culture.
Prague’s bar and restaurant industry has potential for growth because of a strong economy and a well-performing tourism industry. Bars in the city can design their services to meet the needs and expectations of travellers and locals looking to experience the city’s nightlife. The high number of visitors from other European countries also means that organisations in the industry will be catering to a culturally diverse consumer market.
Customer Analysis
Customer analysis is a critical part of a marketing plan. An effective marketing strategy can only be developed when an organisation understands its target market. A customer analysis examines how consumer characteristics influence their buying decisions. The following analysis is based on the results of the online market survey.
Age
Most of the customers that frequent Bendy’s Bar are between 26-45 years. Customers in this age group make up approximately 48% of Bendy’s customers. Age data also shows that the bar is frequented by many millennials because customers between 26-35 years alone make up 25 percent or a quarter of the people that visit the establishment. The bar should, therefore, identify its target market to develop marketing strategies that appeal to the needs and interests of this market. Millennials are unlikely to be attracted to the same things as customers above the age of 40 years. Identification of the target market, therefore, ensures that an organisation designs marketing strategies that enhance the experience of customers and improve their perceptions regarding product and service quality.
Income
Income is also an important factor that influences consumer buying decisions. The purchasing ability of customers and, therefore, their buying decisions are significantly influenced by income. Consumers often satisfy the basic needs before they move to less urgent or necessary needs and wants. High-income consumers are capable of affording highly priced products and services while low-income customers mainly go for low-cost products. Survivalist customers tend to have low-incomes because their purchasing decisions are significantly influenced by prices. High-income customers, on the other hand, tend to focus on product quality. These differences in purchase behaviour depend on the portion of a consumer’s income that is regarded as disposable income. Such income can be used to fulfill desires that are not necessarily basic or important. For instance, visiting a club to buy alcoholic drinks is not an immediate need. However, customers with disposable income can afford to visit a club and purchase alcohol. From the consumer survey, most customers earn between €0 - 1000€, representing 79 percent of Bendy’s Bar customers. The results of the survey show that most customers of the establishment are low-income and, therefore, cost is an important factor to consider when developing marketing strategies. The low amount of disposable income forces most consumers to spend a significantly small portion of their money on alcohol. The assertion is supported by the results of the online survey which show that most consumers spend between €0 - €15 each time they visit a club. The establishment should, therefore, ensure that the prices set for its products and services reflect the financial situation of customers in the target.
Behaviour
The survey shows that majority of customers would like to party. Of the people surveyed, 83 percent stated that they often go clubbing and attend nightclub parties. A total of 65 percent stated that they party or visit nightclubs at least twice every month. These statistics provide insights into the behaviours of the company’s target market. Behavioural characteristics play a critical role in consumer purchasing decisions because quite often behavioural patterns match purchasing decisions. De Mooij and Hofstede (2011) argue that consumer behaviour are significantly influenced by culture. The research shows that most of the respondents surveyed like to party and this might reflect the culture of people living in Prague and the individuals that visit the city. The organisation should develop a marketing strategy that responds to this consumer behaviour when setting up operations for its new establishment.
Consumer Preferences and Expectations
Consumer preferences and expectations are important considerations to make when developing marketing strategies. Organisations cannot develop effective marketing strategies when they do not consider what consumers prefer and expect. Diehl and Poynor (2010) argue that the products and services offered to consumers should match or exceed their expectations. Customers often approach business organisations when they have already developed perceptions regarding the quality of products or services that they intend to purchase. Organisations that understand their target markets will ensure that the services and products offered match or exceed these expectations.
The online consumer services provided a range of data concerning consumer preferences and expectations. A key question asked in the research focused on the days of the week that customers frequented or preferred to go to the club. 25 percent of those surveyed stated that they preferred to go to the club on Friday while 22 percent stated Saturday as their preferred day. Thursday followed at 13 percent with Sunday coming fourth at 11 percent. The findings of the research show that most people go to the club on Friday and Saturday. Bendy’s Bar should, therefore, develop a marketing strategy that increases sales during the peak days of Friday and Saturday. Since most of the organisation’s customers are people who are employed (58%), the weekend is their most preferred time to visit the bar as they relax after a busy week.
The research also explored the most pressing concerns of Bendy’s customers and determined that price is a key issue for many of the establishment’s clients. 43 percent of those interviewed in the survey stated that they pay attention mostly to price when they visit a bar or club. Price as a primary factor that influences consumer purchasing decisions shows that the majority of Bendy’s customers are survivalists. Customers regarded as survivalists consider price as an essential factor when making purchasing decisions mainly due to their low incomes. The survey established that most of those interviewed earn between €0 - 1000€, an indication that they have minimal disposable income. The consumer survey also shows that customers love happy hour.
The prices of drinks during happy hour are usually relatively low. The data further reinforces the notion that customers visiting Bendy’s Bar are more concerned about pricing than anything else. While they visit clubs and bars to have a good time, they limit their choices to the products and services that they can afford. Bendy’s Bar must, therefore, consider a low-cost strategy to gain a competitive advantage in the marketplace especially in the new establishment. After pricing, the next important thing that consumers consider is location. The survey shows that 36 percent of customers believe that the location of a bar is the most important factor to consider when making buying decisions. The finding is an indication that many customers fear for their safety when they go to clubs. They, therefore, prefer to visit clubs that are situated in much safer locations. Bendy’s Bar must consider this consumer preference if it is to achieve success in its new business. The organisation should strive to establish the new bar and club at a location that is safe and convenient for customers.
Price-sensitive consumers also tend to be low-involvement customers. They are more concerned about the prices of products and services than the actual quality of these products. Low-involvement consumers do not actively search for information regarding the products and services of an organisation (Veale and Quester 2009). Their brand loyalty also shifts easily and organisations must, therefore, constantly satisfy their changing needs and preferences. Bendy’s Bar customers are low-involvement consumers whose loyalty to the brand can easily be shifted by organisations that design their brand images to appeal to the needs and expectations of such consumers. According to Anselmsson, Vestman Bondesson and Johansson (2014), brand awareness significantly influences the purchasing decisions of low-involvement consumers. To continuously attract customers to its establishment, Bendy’s Bar must have a strong brand presence in the marketplace. Baker, Cronin Jr and Hopkins (2009) suggest that customer engagement can enhance brand loyalty among low-involvement customers. Bendy’s Bar must, therefore, develop strategies to engage its customers to improve brand loyalty.
While only 13 percent of consumers identified service quality as a key issue that they consider when they visit a club, studies show that service quality is an important determinant of customer satisfaction in the service industry. The experiences that customers have when visiting an establishment will influence their decisions on whether to return to these establishments (Kuo, Wu and Deng 2009). The high percentage of people stating price as a primary concern based on the online survey does not, therefore, diminish the importance of service quality. The company must ensure that customers have excellent experiences at affordable prices.
The survey also shows that customers prefer live bands to other entertainment activities such as pool table and video games when visiting Bendy’s Bar. The customers are, therefore, sensitive to prices but still expect to have memorable experiences when they visit the bar. The new Bendy’s establishment should, therefore, be designed to meet these customer expectations regarding entertainment. Experience-based marketing can enhance the experiences of clients and ensure that their entertainment needs are satisfied.
The study also shows that customers prefer mostly non-alcoholic drinks and beer. The firm should, therefore, ensure that its product offering meets these needs and expectations in order to enhance customer satisfaction. The survey also reveals that most customers prefer to relax at the restaurant. 47 percent of those surveyed state that they visit the bar for meetings or relaxation. However, 39 percent visit the establishment to party and have fun. The establishment must, therefore, develop a marketing strategy to meet the preferences and expectations of all of these customers or target a specific segment and exploit the business opportunities that it offers.
Competitive Analysis
Competitive analysis is an important activity in the development of an effective marketing plan. Business organisations constantly face the threat of competitors in the business environment. They must, therefore, develop marketing strategies that give them a competitive advantage in the marketplace to achieve their performance objectives. Bendy’s Bar does not operate as a monopoly because other bars also operate in Prague’s bar and restaurant industry. Fig 2 is a competitive strength assessment of bars and restaurants operating in the same market as Bendy’s Bar to determine areas that the organisation should improve to gain a competitive edge in the market.
Out of the four clubs assessed for their competitive strength, Bendy’s Bar ranks the lowest. The three clubs whose competitive strengths are assessed against Bendy’s Bar operate in the same market segment. They are all night clubs that sell alcoholic drinks and provide entertainment to customers. The clubs are also all located in Prague which means that they are in direct competition with Bendy’s Bar.
Service quality and price have been given the highest weights because they are the two factors that have the greatest impact on customer satisfaction and repeat visit decisions. Organisations that perform well in terms of pricing and service quality are likely to gain a competitive advantage in the market (Hu, Kandampully and Juwaheer 2009). Bars and restaurants are service organisations and, therefore, service quality is a key success factor because high service quality enhances consumer satisfaction. Establishments that provide poor quality services are likely to develop a bad company reputation in the market. Price has also been given a high weight because it is the greatest concern for Bendy’s Bar customers. The online consumer survey shows that most individuals visiting the establishment would be more worried about pricing than anything else. Service quality is also a major concern for customers visiting Bendy’s Bar. The customer reviews on the company’s website show that many of the customers that have given the bar a poor rating have mainly been disappointed in the quality of services provided. The reviews reveal that service quality is a key determinant of customer satisfaction in the bar and restaurant industry. Most of the establishments that have higher ratings than Bendy’s Bar have performed well primarily as a result of service quality.
Entertainment is also a key determinant of customer satisfaction in the bar and restaurant industry. Most customer reviews identify entertainment as one of the major reasons why they enjoyed their time in a particular bar or restaurant (Tizard and Sullivan 2018). The online customer survey also shows that many customers consider entertainment as an important issue when they visit a club or bar. The survey shows that a majority of respondents (35%) prefer to watch performances by live bands as a pastime activity when they are in bars or clubs. The data corresponds with the finding that many people go to clubs and bars to party. Entertainment is, therefore, a key determinant of customer satisfaction hence the weight assigned.
Although location and ambiance are important, they are not as consequential as the other three factors of service quality, pricing, and entertainment. They influence customer satisfaction but not to the extent that these three factors do. Entertainment and ambiance have not been mentioned adversely on customer review websites as key customer satisfaction determinants. They have, therefore, been assigned the lowest weights.
The competitive analysis shows that Bendy’s Bar is outperformed by its competitors on most key success factors that have the greatest impact on customer satisfaction. The bar is at par with its competitors in terms of pricing. Competitive parity means that customers do not make buying decisions based on pricing when deciding whether to go to Bendy’s Bar or its competitors. A customer will enjoy relatively low prices whether he or she visits Bendy’s Bar or the competitors of the establishment. Bendy’s Bar also has competitive parity in terms of location. The bar is not located in a better or safer location than its competitors except for Le Valmont Club & Lounge that has been reviewed by most of its customers as being ideally located. Bendy’s Bar, however, ranks second in terms of ambiance. Many customer reviews identify the less crowded atmosphere of the bar as one of the benefits of visiting the establishment. Many reviews, however, suggest that Le Valmont Club & Lounge and ALIBI cocktail & music bar tend to be crowded. Customers have to wait for tables because the bars are often packed to capacity by revelers. While this may be an indication of their popularity, the long wait time before a customer is served has a negative impact on service quality perceptions. According to Ryu, Lee and Gon Kim (2012), wait time and the nature of the physical environment in which customers wait before they are served is an important determinant of service quality. Bendy’s Bar performs relatively better in this regard because the establishment is rarely crowded and customers can enjoy their time at the place. Abrakadabra Bar, however, has a competitive advantage over Bendy’s Bar in terms of ambiance mainly because of the interior design of the bar. According to Dabholkar (2015), the design of the physical environment of an establishment determines the types of experiences that customers have when waiting for services.
