A Visit To Royal Food (case)

CASE ANALYSIS

Case A Visit to Royal Foods Chain DM's college Goa University 26th September 2009

Prepared by: Delawar Barekzai

A VISIT TO ROYAL FOODS - CASE STUDY There were still days remaining for the Real Life Case to be submitted and we were still in the holiday spirit. Soon upon realizing, we prepared ourselves with the questions and decided to visit the royal foods outlet continuously for 2-3 days and collect the data. On interacting with the managers of Royal Foods, whatever we actually perceived about their outlets was completely different with what opinions they shared with us and what they actually delivered to their customers. The interaction basically started with a small introduction of Mr. Valadares and his venture in to the foods…………….

Introduction Mr. Valadares started Royal Farms in 1961 in certain rural places like Usagao, Pernem etc. The Royal Farms concentrated on breeding chicken, with an intention of having something larger for all the segments of the market due to which there was an origin of Royal Foods, a retail outlet which mainly famous for its chicken broilers and others like savories, snacks, pastries, bread, eggs and fast foods like chicken lollypops, 65, fried rice etc. The outlets are located in a number of places in Goa i.e. 2 -Margao, l - Panaji, 1 - Mapusa, 1 – Calangute, 1 – Vasco and l-Ponda The outlets receive their products i.e. pastries, savories, bread, snacks etc through their Verna industry. The demand is placed by the respective managers of outlets depending on the demand probability and certain factors like seasons, weather etc. Some outlets in Margao & Panaji only provide broilers and eggs to its customers which are located deep in the markets. The centrally located outlets cater to all the requirements mentioned above due to which they maintain about 15- 30 employees in their outlets but the number is comparatively less in those outlets providing broilers & eggs i.e. about 7-8 employees. The

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Margao Centrally located outlet is the only outlet having a coffee shop which provides its customers to relax when they drink & eat. In every outlet we visited, it seemed like everything went on well, but the organization did not realize this and did not pay attention to its in-depth problems. One such instance occurred at the Margao outlet when a prospective customer arrived at the outlet with an extremely empty stomach and had to leave the outlet empty stomach because the stock was over and there was no safety stock arranged by the outlet to cater to emergency needs. As we were about to leave the outlet at 2:00, there were customers arriving at that time to take lunch and unfortunately the outlet remain closed at that time and other outlets got the benefit of gaining royal foods customers and most of the time customers would rather prefer visiting the other outlets rather than visit Royal Foods. Customers having their lunch were made to vacate the outlet early during their closing time. On scrutinizing the reason, we realized that the break was mainly given to manage the supply, as mainly their stock used to get over early and demand during the evening could not be fulfilled, therefore a vehicle carrying the stock from Verna would deliver twice a day thereby increasing the expenses. As they do have so much deterministic probabilities about the variation of demand, they sometimes have to lose a portion of customers every day. As per the company standards there should be less wastage during a given day and hence all the customers should be served and no single customer should leave the outlet without purchase, but it is not maintain so. Normally people go with the perception that the outlet will be open during lunch break, as this is time allotted to the employees for lunch and offices located nearby Royal Foods or even Shop owners or workers prefer to come to Royal Foods as it is convenient, but keeping the outlet closed at that time for any reason is creating shortage of customers and loss of prospective customers too. As we arrived at the Vasco outlet, it became unbearable for our group to stand over there even for a minute. The outlet was very attractive and maintained in a good state, the interiors were well decorated, good ambience but the surroundings of the outlet were in an uninviting manner and the customers for snacks and savouries would not prefer the location.

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As per the standards of the Company, home delivery or delivery to the suppliers should be done by the outlet, but some outlets don’t follow this practice and some do. Mainly the customers like hotels and suppliers would find it convenient that the broilers are delivered at the venue so do the customers living in nearby areas of royal foods would prefer the same. As per the observation, Royal Foods did not face any shortage of customers during Chaturthi celebrations. On interacting with the staff, they told us that they arrived in the market with a view to target every segment but some of the outlets were opened during Christmas. Therefore the brand was positioned as mainly serving the Christian community. Therefore they have a huge market potential in the other segments which they have left untargeted.

Marketing Mix of Royal Foods Chain 1. Product: Royal Food Chain have the products like chicken broilers and others like

savories, snacks, pastries, bread, eggs and fast foods like chicken lollypops, 65, fried rice etc. They maintain good quality & proper packaging besides the products are perishable. 2. Place: The outlet locations for Royal food chain is convenient in some places for

customers and in some places its deep in the market which customers lose their way finding it, i.e. Vasco outlet. 3. Promotion: There are no official advertisements for the products but it's promoted by

sales people "employee" while dealing with customers and also through word of mouth. 4. Price: Price level is almost the same like other competitors. They keep flexibility in their

prices (sometimes discounts in some occasions, or hike in prices due to hike in raw material prices or other factors). Special discount to regular customers are also given especially to caterers. But they do not compare their prices with market prices and the price sensitivity in the market sometime affects the sales of the Royal foods. 5. People: Employees who are involved in selling of the products have very good behavior

and have got good communication skills to face with the customers. The customers who are purchasing from Royal Food Chain are mainly Christian's communities.

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6. Physical Evidence: The outlets are well decorated and well equipped with the facilities

like Microwaves, refrigerators and etc. Employees are also well dressed. But as far as the facility layout is concern especially partition between broilers and snacks and saviors sometimes customers leave the outlet without any purchase because during the purchase of snacks and saviors when they see cutting of broilers and smell inside the outlet, they don’t like and leave the outlet. 7. Process: As it is a self service Food Chain, here the level of customer involvement is

more and the process starts when the customers come to place the order and the till the delivery of the order the customers waits either in the queue or individually for receiving the order. Currently Mr. Valadares feels that he has a huge market potential wherein he can create demand for his products but before expanding he needs to determine the loopholes and wants an answer to the loopholes, then only he can expand the operations.

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Analysis Peripheral problems 1. They do not maintain proper balance of demand and supply, as it is mentioned in the case that during the day there is shortage of foods, broilers etc from 1:00pm to 3:00pm and the customers are not served during this time, and even the new stock is received during break and they start serving customers after 3:00PM.

2. Positioning of the brand was wrong, because when they first started with the outlets, they were targeting all the segments but recently it seemed that they have targeted only Christian communities. This led to have less potential customers and even other customers deviated from them to other local butchers etc.

3. Lacks of brand awareness amongst certain customers living in Goa or even in nearby

areas were not at all aware about the location of the outlets.

4.

Timings allotted for closing the outlet for a short break was improper as it’s a crucial time for gaining customers

5. No maintenance of safety stock.

6. Improper implementation of standards of the company by the outlets. Case Analysis 6|Page

Central Problem Attracting new prospective customers from other Segments of the Market for savories, snacks, pastries, in order to tap untapped market, and generate revenue and hence expand the business.

Alternatives (addressing the peripheral problems) 1. Make shifts for breaks Instead of keeping the outlet closed for a certain period of time, make shifts for breaks i.e. let the staff work in shifts which will help in serving customers during the free time.

2. Do Ratio Trend Analysis: This will help to keep the record of customers in order to

determine the variation of demand & supply By adopting the ratio trend analysis strategy and by recording customer data, the outlet will be able to determine the preferred choices of his customers and how much stock they take on a day to day aspect.

3. Keep safety stock for broilers and snacks only.

Normally the demand for broilers and snacks is not constant instead there is a variation every day. Thus instead of turning back on your customers, safety stock of broilers and snacks should be maintained so as to meet the emergency situations.

4. Outlets supplying only broilers can be located deep inside the market but for snacks & pastries location should be changed to maintain hygienic conditions. Case Analysis 7|Page

5. Home delivery standards should be established.

6. Keep partition between snacks and broilers as it is painful to see the live cut chicken when actually coming to purchase something else.

Long term plan 7. Psychographic segmentation Basically people in physiographic segmentation perceive things in a different way. Every segment does not think in a similar manner. The company has to function the way they perceive or expect. Untapped segments include communities such as Hindus, Muslims etc. Even in a scenario if they don’t prefer boilers, they can be targeted for other products like savouries, snacks etc.

The presentation of the products and the way they are

produced to be portrayed in such a way that they are designed by taking in consideration the view of all the prospective as well as current customers. 8.

Brand repositioning through market and competitor analysis The brand Royal foods can be repositioned in the minds of the prospective customers as well as current customers. People make their decisions based on the perception of reality or what they see. The strategy used should be entirely different which can be done by market analysis i.e. by determining the size of the potential segment as well as competitor analysis i.e. using viable opportunities to achieve differentiation and competitive advantage. Identifies the differential advantages in each segment, decides on a different positioning concept for each of these segments.

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9. Advertising & Promotion Strategies To attract prospective customers, advertising can be done on a large scale on local channels as well as on newspapers. Discounts during festive seasons should be advertised which will help royal foods create awareness of their brand. The locations of the outlets should also be advertised along with the main theme. 10

. Retain the current customers without any lookout for the prospective ones. In this scenario the company will be targeting the current segment or the market in which it is operating. The company will only concentrate on the current customers and their satisfaction which will not help them in the long run i.e. in order to increase your market share and growth of the products the company has to adopt new strategies for targeting different segments in the market to enable growth of your products

Analysis of Alternatives First Alternative: MERITS: •

The demand at crucial timings (lunch time) will be met.

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The company would thus get more profit.

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The brand image of the organization will be established and maintained.

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Employees will also get a break from their job.

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There will be a systematize flow of jobs and responsibilities.

This will help the company to gain customers loyalty and also regular customers will be maintained. This will help royal foods in long term as more customers and prospective customers will come to know about the timing of it.

DEMERITS: •

The customers will take time to re-approach the organization due to the caused inconvenience.

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•

The organization may find it difficult to form shifts as they will have to recruit more people if not available.

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This may also lead to inconvenience among the employees to properly operate as it will be new to them, also a possibility that some employees may leave the job due to inconvenience.

Second Alternative: MERITS: •

The exact demand and supply ratio will be determined and hence less food products will go waste.

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Customer choice will be known and the products can be modified accordingly to get more profit.

DEMERITS: •

It will be time consuming

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Royal foods may require to employ more professional for this kind of job as all the data will be maintained on computers

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This will incur more expense for royal food.

Third Alternative: MERITS: •

The emergency needs will be met.

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Customers will be delighted as they will get whatever they need in their favorite shop (outlet).

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They will be able meet customers' expectation.

DEMERITS: •

If there is any strike or holiday or in case an emergency doesn't occur, the stock will be wasted, which will ultimately lead to unnecessary cost.

Fourth Alternative: MERITS: Case Analysis 10 | P a g e

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Center of attraction

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Easy access.

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Help in maintaining customer relationship.

DEMERITS: •

A lot of investment will be required.

Fifth Alternative: MERITS: •

The outlet will get more customers.

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The customers will be satisfied to order the desired food product from the residence.

DEMERITS: •

Extra cost will have to be incurred in forming a ‘home delivery’ team and delivery vehicles.

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Without advertisement the scheme might not work.

Sixth Alternative: This alternative depends upon customers to customers, as some customers may like to see whether they are being provided with the fresh chicken or not and some may not, and may accept what is provided to them.

MERITS: •

Customers will not have any kind of inconvenience.

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Ambience will change and the customers will not hesitate and they will be comfortable even if they are waiting in the line for their orders.

DEMERITS: •

Extra cost will be incurred.

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Big facility layout is required.

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Psychographic Segmentation MERITS: •

By psychographic segmentation company would be easily able to find the segment and target the exact target customer within the segment.

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The positioning will be proper and Company will be able to position its product at the mind of target customer.

DEMERITS: •

Psychographic positioning has the risk that may company target wrong customer and do wrong positioning which may lead to confusion.

The analyses of other possible alternatives are already explained in the description of alternatives it selves.

Implementation Beside the course of action on alternatives which addresses peripheral problems, the company after doing its psychographic segmentation i.e. what do the people perceive, what influences their minds etc on doing the analysis, it can basically reposition the brand image in the minds of the other prospective customers of other segments or communities. This can be done by advertising the type of products that each community would prefer. The cutting of broilers or selling can be done in a separate area or room which is not visible to customers who come to purchase other items. Products like savories, snacks, pastries should be advertised on a large scale as the targeted segment should be convinced about the product. Broilers need not be advertised as it is the core product of the company and the company has a high growth rate of this product.

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PROCESS Verna

Industry

(Orders are placed by the respective managers of the outlets)

North Goa

Mapusa

Customer s (hotels etc) Consume rs

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South Goa

Panaji (2)

Customers (hotels etc) Consumers

Calangu te

Customers (hotels etc) Consumers

Margao (2)

Customers (hotels etc) Consumers

Vasco

Customers (hotels etc) Consumers