Introduction
Marshal Catering Inc. is planning to expand its operations by setting up a new catering service business in San Diego, California. The company is presently operating in Sacramento, California. The new proposed business aims to service high quality catering services not limited to food and beverages but also other value added services including decoration and venue booking. Although the business idea is not a new one but the management of the company believes that based on their vast experience and industry relationships the new company will be able to develop a strong position in a tough competitive catering market of San Diego.
The company’s strategy is to target high end customers not only in the household sector but also corporate sector. Potential clients will be sought after who wish to have the prestige for high premium. Therefore, the company aims to serve household sector by providing catering services for different avenues including dinner functions, weddings, graduation ceremonies or other events. While on the other hand, corporate sector will be offered catering services for conferences, official meetings, employee-events and grand openings etc. The company will be offering different types of services such as Butler Style, White Glove Service, Family Style, Plated Dinners, and Buffet. Furthermore, the company will also provide services for arranging Cash Bar, No-Host Bar, Beer and Wine Bar, Host Bar, and Open Bar (Service Magic, 2010).
The pricing strategy suggested for the new business is skim pricing that suggests that the demand for high quality catering service is inelastic to high price and large cost savings are not expected at high production volume (NetMBA, 2010). Therefore the company can enjoy high profit margins on its sales. The following table provides suggestive prices for some of the offerings by the new company (please note that these prices are based on averages and estimations are based on the company’s present business in Sacramento, California. Variations are expected depending upon the actual order):
- Alcoholic Beverages will be served according to their acquisition cost plus profit margin
- Event arrangements including venue selection, seating and other clients’ requirements will be charged according to their cost plus profit margin.
Market Analysis
The target market for the new proposed business is San Diego, California. Demographics of the target market are provided as Appendix I. The reasons for selecting this market based on secondary data collection include:
- Management’s several years experience in the chosen market
- High household population with high average income level
- Major corporate sector operating in the region
- Relatively high spending on food services
However, further investigation of the market suggests that San Diego is a tough competitive market where not only private ownerships are carrying out similar business but also large corporations and hotels are major contributors of this market. Also the companies that are operating in this industry rely on heavy marketing activities to promote their services through both printed and broadcasted media (SD Best, 2007). The competitor’s analysis matrix is presented in the following that represents major competitors and three major assessment factors including price, quality, service and differentiation along with their weighting. This analysis would assist the company to understand what potential clients value most and how competitors align their strategies to serve their needs.
Basis for Analysis
Appraisal Values= From 1 (Lowest) to 5 (Highest)
For each company that may be considered as a competitor to the proposed business the score is derived by multiplying an appraisal score times the weight of each factor.
The company has collected useful data regarding the trends and market conditions by carrying out several market surveys and interviews of potential clients and suppliers currently associated with the catering industry of San Diego. Important findings of the primary research are highlighted as follows and are essential for understanding the basis for forecasts developed for the new proposed business:
- Product and service differentiation are major factors for catering services.
- Quality of service is another important factor.
- High end customers are least concerned about pricing and value more the service they receive.
- There is great potential for new business that can offer high prestige with their catering services.
Target Market
Marshal Catering Inc. has set out its strategy to serve both middle and upper markets of San Diego, California. The chosen markets segments are viewed to have high income and savings. The market participants are inelastic to the price for services charged in return of high quality offered to them. The middle market average annual income lies above $35,000 and less than $100,000 while that of upper market is above $100,000 per annum.
Sales Strategy
The company will seek out to acquire business initially based on the existing client relationships that the management of the company have. Building upon the reputation that the directors of the company possess the new business is likely to receive some initial orders from faithful clients in the market. The company will also hire a team of sales representative on a salaries plus commission basis. In addition to these the company will also employ operations in-charge who will be responsible for managing kitchen, warehouse and transportation facilities.
The company will set up its registered office in San Diego that will be used for carrying out the administrative work whereas the kitchen operations and warehouse facilities will be situated at a different industrial location. Furthermore, the company plans to set up online website that will offer online booking and selection options from a wide range of offerings to be made by the new business. The company will contract out a marketing firm to carry out a series of marketing activities to attract clients from the chosen market.
Company Structure
The company’s management includes Mr. Chris Rock and Mr. Adrian Mark who have entered into a joint partnership sharing equal risks and rewards. Both directors of the company know each other since they graduated and have been working together for various companies. The company will be LLP in order to restrict the directors’ liabilities only to the business assets.
References
City Search. (2010). Ranch Catering Inc. Web.
Just-USCatering. (2010). Menus. Web.
NetMBA. (2010). Pricing Strategy. Web.
SD Best. (2007). San Diego Catering . Web.
Service Magic. (2010). Know Before You Hire: Food Catering Basics . Web.
U.S. Census Bureau. (2010). San Diego County, California. Web.
Yelp. (2009). Bettina’s Custom Catering. Web.
Yelp. (2010). The Abbey Catering & Event Design. Web.