Introduction
The food industry is one of the profitable industries today and in the future. Pepper’s is a UK-based company that followed the structure of successful restaurants located in the USA and France. An industry with this kind of rapid change presents several challenges for companies like Pepper’s, namely production costs, and monopolies. Service quality and unique vision of taste are the primary driving factors of this industry (Drejer, 2002). The restaurant was opened in 1998. At the beginning of the new century, Pepper’s looks for ways to deliver customer satisfaction at a lower cost, smaller size, and higher speed. Pepper’s is a profitable restaurant but it will require changes in competitive strategy to remain in the industry and, under some circumstances, it can occasion the decision to exit a business or an industry.
“Peppers Restaurant based in Scarborough, North Yorkshire, is situated in. The Stephen Joseph Theatre and close to all the major hotels. We are a 1-minute walk from the Railway Station and also all major town bus stops” (Pepper’s Home Page 2009). The company’s mission is to deliver high-quality services to diverse customers. Its strategy is to develop a unique image and deliver unique food for all visitors. “The cuisine at Peppers is based around the fantastic larder of seasonal produce available to us in North Yorkshire. The sound application of classical techniques combined with natural artistry and a contemporary touch all combine to create something really special” (Pepper’s Home Page 2009).
Environmental Analysis
PESTEL
In the UK, the political and legal environment is favorable for the food industry because of the stable political situation and protective legal measures. Pepper’s operates in a highly dynamic environment which requires continuous optimization of a product mix and new ways of doing business. Price competition, backed by improved efficiency, is the main feature of the Food industry today. Many UK-based companies fight for survival in markets faced by global competitors ion. Within a rapidly changing environment, this kind of development ensures that long-term survivors are those firms that are more competitive and are better able to satisfy consumer needs and adapt to the new competitive environment. Pepper’s obtains a strong brand image in the food industry proposing high-quality products. Nevertheless, the weakness is lack of strategic vision, high labor and economic declines (Drejer 2002).
The economic situation in the UK has an impact on Pepper as it reduces the purchasing power of such an industry. Pepper’s has to develop a new marketing strategy. The implementation will require additional spending, but they are essential for the company because without these facilities it will not be able to compete on the market and increase its sales rate. Demographic and cultural situations in the country do not have a great impact on the company and its performance (Buckley and Ghauri 1999).
In terms of technology and environment, Pepper’s relies chiefly on an efficient market system and product improvement. The traditional market for food is not in maturity, and today it offers a limited opportunity for high profits, so it sets about developing products that are both distinctive and could be sold at a premium price. A specialized product range, based on two basic lines of business, necessitated a clear identification of the target market. The original mission had made it clear that it was in the relatively unexploited sector that Pepper’s saw its clearest opportunity for innovation in the food industry. As the most important, these basic lines of business allow Pepper’s set out to create a range of high-quality products that are distinctive in quality and technology (Dobson and Starkey 2004).
SWOT
The opportunities of Pepper’s include the high potential for growth and profitability of the company; promotion to other segments; improvement of the product range. The technological advances are aimed to maximize the security of customers and fasten the process of informational interchange. Intranets allow the industry to react faster delivering customer satisfaction. Technology replaces traditional methods of Food business, and causes growth of online operations. Improvement of Internet services and Website will help to satisfy the customers’ needs. Pepper’s low-cost approach helps the company to maintain long-run supplier relationships and ensure profitability (Drejer 2002). New technology and organizational management system open new opportunities for Peppers. Technological innovations and creativity in production can be regarded as the business philosophy of Peppers. Unique technology management employed by Pepper’s is aimed to coordinate production processes with all levels of the organizational structure including their interaction and performance. The balance of authority has undoubtedly shifted to traditional management who now has more selection over how it conducts relations with its workers and process. Innovation in production technologies and the computerized system of the supply chain is the main opportunity for Peppers. It needs innovative assembly lines in order to increase volumes of sales and storage capacity. Internet is another tool that can help Pepper to reach its potential buyers without additional spending on promotion and advertising (Dobson and Starkey 2004). The strength is a smoke-free approach following by the restaurant for many years (Pepper’s Home Page 2009).
Weaknesses involve economic problems that affected European countries. Constraints of the global economic environment include legal barriers and European law. Many European countries restrict access to those goods which do not meet their standards. This means that goods and materials can be barred access on the grounds that they break national rules on health, safety and environmental protection (Armstrong and Kotler 2005). Pepper’s designed and developed all the products in order to meet international standards and local requirements of cuisine. Operating on the UK- basis involves Pepper’s addressing the issue of cultural difference and consequently developing a balance between standardization and adaptation (Drejer 2002).
Since the beginning of the 1990s, the food industry decline was the main threat that affected many companies. In spite of this threat, Pepper sustains a strong market position and leadership. Also, the threats involve a decrease in sales of the Food industry. The changes in the environment have changed the demand, but they do not have a significant influence on customers’ purchasing power. The threat is population shift which has a great impact on sales. An increase in interest rates and a non-compete clause are other problems for Pepper’s during the last years (see appendix 2,3,4).
Current Market Diagnosis and Problem Analysis
Increased competition in the international arena threatens the profitability of such giants as Peppers. The main problem was that imported Food accounted for 20 percent of the UK food consumption which limited price level and competition in the home market. The first group of competitors includes local companies; the second group involves international companies and international competition, and the third one is global competition. In this case, Pepper’s develops a multidimensional strategy to cover three competitive segments: local (national), international and global. This strategy involves brand positioning, market segmentation, strategic alliances and value pricing strategy. New competitors may find it difficult to gain access to delivering service, which will make it difficult to provide their service to customers or obtain the inputs required or find markets for their outputs. On the other hand, these ‘mega-Food markers’ represent the main threat for Pepper in the UK (Thompson and Martin 2005). Employees, who have perhaps worked within the traditional system for a number of years, must now learn a new methodology using technology with which they may not be too familiar. Resistance to change often occurs within businesses that are seeking to introduce an Internet component. If it successfully navigates this balance, it will find that it can not only maintain its current position but also expand into new territories and possibilities for profitability/growth (Armstrong and Kotler 2005).
Customer Wants and Needs
The mission Pepper is to reach a wider target audience. “Short on cash but rich in ideas we had a vision – that was to make Peppers the best restaurant in Scarborough. Ten years on the restaurant has a fantastic new location and with the addition of two new family members, we have seen our dream become a reality” (Pepper’s Home Page 2009). Vision is that food quality is used as a strategic weapon and the aim of Pepper’s is to maintain high-quality standards at costs lower than competitors. Marketing strategies are the broad approaches Pepper intends to adopt in the longer term to achieve its marketing objectives in accordance with its marketing policies. Strategies are developed for the following: The market segments in which Pepper’s will concentrate and the marketing position it proposes to adopt in each segment (i.e., the extent to which it positions itself close to a competitor but establishes differentiation through product features and price distinction, or the extent to which it attacks markers established by gap evaluation) (Drejer 2002). The blend of controllable marketing variables required producing the response wanted in the target market. The mix includes new products, prices, promotion, advertising, field sales and distribution (Thompson and Martin 2005).
Following Mckinsey 7 s model, strong corporate culture is one of the main strengths which help the company to compete. The culture and structure of Pepper’s development over time and in response to a complex set of factors. Usually, large organizations like Pepper’s have more formalized structures and cultures. The increased size is likely to result in separate departments and possibly split-site operations. Another important feature of Pepper’s is the non-price competition which takes the form of branding, advertising, promotion, and additional services to customers and product innovation. Speaking about the nature of competition it is possible to say that Pepper’s has a competitive advantage. Price competition involves businesses trying to undercut each other’s prices; this will be dependent upon their capability to reduce their costs of production. Brand equity represents the added value that accrues to a product as a result of Pepper’s prior investments in marketing. Brand equity is thought of as an asset representing the value created by the relationship between the brand and customers over time (Mintzberg et al 2004).
Evaluation of Strategic Options
The vision of cultural and social values has a direct impact on Pepper’s and its market performance. This factor could be interpreted as a strength but the globalization process and changing international relations show that cultural and social values become opportunities rather than strategies for the global food industry. A solid understanding of cultural preferences is important for any company that markets such products internationally. Pepper’s leverages superior cultural understanding to compete effectively with large foreign firms. It is possible to say that it has an advantage drawing from tradition. In recent years many people are concern about their health and the quality of water they use. The industry structure and market position of Pepper’s suggests that the threat of entry is low. Food giants like Pepper’s resist strongly, so it makes it difficult for new organizations to enter the Food industry (Grant, 1998). For a restaurant like Pepper’s ability of a firm to use its resources and capabilities to develop a competitive advantage through distinctive competencies does not mean it will be able to sustain it. Two basic characteristics determine the sustainability of a firm’s distinctive competencies: durability and imitability. Thus, it ensures that it obtains a leading position and is able to compete with direct and indirect competitors. New economic landscape, Pepper has to choose a new strategy aiming to address new market and environmental changes. Taking into account the current situation, it is possible to say that Pepper’s has to develop a completely new vision of its marketing system based on global strategies. The specification in Pepper’s is determined as a result of an organization’s policy, which in turn resulted from decisions on its market policy, which in turn resulted from its consideration of the market or customer needs, requirements, and the activities of competitors. This is the process of designing quality into the service. Sales strategy is on a one-to-one basis (Armstrong and Kotler 2005; Pepper’s Home Page 2009).
Strategy Implementation
In order to improve its operations and service quality, Pepper’s should introduce IT in accounting and inventory management. This will help to provide comparable buyer value but perform the activities more efficiently so as to attain a cost advantage, or perform the activities in a unique way which raises the value to the consumer and thus allows them to command a premium price – the concept of differentiation. The activities performed may be grouped into two categories: those associated with the core activities of ongoing production, marketing and servicing are referred to as primary activities while those providing inputs, technology, human resources and infrastructure to support the service function are referred to as support activities. Quite clearly, the primary activities draw on a wide variety of support activities in their ongoing management (Gardiner, 2005).
The case of Pepper’s market position allows saying that marketing becomes an orientation for the total business, a way of business life. Customers and consumers are perceived as the reason for business existence and their wants and needs become the bases for designing total systems of action. A narrower conception, which is an extension of the business orientation, is concerned with the basic management activities – the entrepreneurial functions-that have to be performed to manage micro-marketing systems. Through marketing, the critical role of consumption is recognized and cultures become reoriented from Producers’ to consumers’ cultures (Drejer, 2002).
Some critics state that the weakness of Pepper’s is lack of promotion campaigns aimed to attract new customers and absence of competitive advantage. High labor and energy costs are the main threat for Peppers. Economic recessions and industry declines affect Pepper’s and its market performance. The role of Strategic Alliances is made all the more complex and thought-provoking because of the competition of ideas between different academic and political standpoints. Pepper proves that Strategic Alliances are the best form to reach global dominance and reduce competition. So, it creates new opportunities for Peppers on a global scale. The joint venture is another important part of Pepper’s international strategy. From the economic side, the Food industry has to spend its own resources in order to meet the requirements focusing on technological efforts, security. Pepper’s has also realized rapid expansion through capital injections (Gardiner, 2005).
Performance
In order to control performance, Pepper’s applies financial measures and statistical control tools. In the long run, however, it may be possible for Pepper’s, through its choice of strategy, to change the strength of one or more of the forces to the company’s advantage. Taking into consideration the statistical data of Pepper’s it is possible to say that it is profitable because the value exceeds the cost of performing various factions which include: financial management, technology management, organization and human resource management, supply and bound logistics, operations, outbound logistics, sales and marketing. Significant variations in national markets originate often in straightforward economic differences. Pepper’s cannot survive just waiting for the customer to come to it. Instead, it gets better at focusing on the specific market segments whose needs match our offerings. The marketing controls consist of the way in which the various component parts and techniques of the marketing effort are combined and varied in order to achieve marketing objectives. Both of these methods are applied successfully to problems of planning and control. Both are effective tools for specifying, coordinating, and integrating activities, situations, and resources that are interwoven in order to reach project aims at time. The main advantage of these techniques is that they do not require large-scale computers except for complex situations. Managing the organization is therefore not just about managing functions, but managing linkages between those functions. More will be said about the integration of various facets of the value chain in the discussion on implementation strategies.
For Pepper’s, food-related products are defined broadly to include both products and services. Products are perceived as means of problem-solving for both buyers and sellers. The discussion relates to both consumer and industrial goods. Product-line management involves the addition of new products to the line and the deletion or modification of current products. Product diversification (horizontal, vertical, or heterogeneous), maybe the result of internal product policies or mergers. Reasons for diversification vary from spreading risks to using by-products and increasing profits. New product policies and strategies may be offensive or defensive, convergent or divergent (Drejer, 2002). Pepper’s may adopt a followership or leadership posture and may choose a strategy of segmentation or product, differentiation. By differentiating new products they try to bend demand to meet their supply and so ensure a niche in the marketplace. Each of the new phases of the product- process (conceptualization, exploration, development, marketplace preparation, commercialization, and appraisal), is considered. Technology-related product development should be seen as one of the core foundations of corporate planning. Its success or failure shapes corporate destiny. Because of this, particular attention is given to a conversation of new products, technology-related products and diffusion processes, the product life cycle, and new-product failures. Channel balance, which is difficult to achieve for Pepper’s, must be realized at various levels.
Conclusion
Still, Pepper’s obtain a strong market position introducing new ways of doing business. Communication, employed by Pepper’s, is affected by the internal and external environment, by the nature of the task, and by technology. Difficulties in communication can arise with production systems where workers are stationed continuously at a particular point with limited freedom of movement. Pepper’s tries to penetrate deeper into the current market. International expansion and global strategy are to aim at a particular target market. One of the main functions of global and international promotional activity is of course to influence the perceptions of the consumer. Pepper maintains a policy of product standardization in order to sell them around the world under the same brand. In order to change and improve the current situation, Pepper’s should attract more customers and introduce new product lines including related technologies and markets. This strategy will help Pepper to survive and remain competitive in spite of market changes and economic crises. Since buyers are often other-directed, they are concerned with what other group members think of them and their taste. Taste is not an acquired or inherited phenomenon. Consequently, the opportunity exists for designers, food companies, and marketers to upgrade tastes. Pepper’s cooking implies repetition over time. What may be rejected in product design or color today may be viewed approvingly after a second, third, or fourth exposure. Pepper’s underlines that effective market promotion requires an integrated promotional system that reaches from primary producer to ultimate consumer. Advertising flows to markets through long, complex channels that include food retailers, wholesalers, consumers, agencies, and media. Each advertising campaign breaks the chain or passes on the information as it sees fit. Formal channels, however, do not account for all marketing communications. Publicity, which is an integral part of many promotional campaigns sometimes precedes the advertising and sales effort. Although it can be important in gaining customers’ acceptance of products, publicity, like word of mouth, is often a relatively low-grade advertising channel with a high degree of interference, distortion, and noise.
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