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Marketing, Promotion and Advertising Strategies of the Eating Out Market - UK - January 2009

This report considers the marketing, promotion and advertising strategies used in the eating out market and will explore the process that allows an eating out organisation to maximise the effectiveness of its marketing budget, thereby achieving a sustainable competitive advantage.

Ultimately these strategies have one core aim, to improve customer satisfaction in order to bolster sales and consumer expenditure. Ideally, the marketing strategy should be one aspect of a wider corporate strategy, which will determine a firm’s engagement with the market. The strategy will consist of a series of tactics that integrate into a cohesive whole. Marketing strategies are dynamic and interactive and may be only partly the result of planned, conscious effort.

The more fragmented the media becomes, the more integration is required by advertising and marketing initiatives. At the same time, the traditional mass marketing approach to advertising is becoming less relevant as consumers become savvier about the function of advertising and more aware of being sold to. This begs the question that is central to this report: Is advertising worth the expense?

This report will show that integrated marketing communication is of growing importance, with public relations and promotions increasingly seen as central to the marketing strategy, with advertising playing a role only for a select group of major chains.

In addition, the report offers a unique insight into which factors are the most influential to consumers when deciding where to eat out, as well as gauging quantitative evidence regarding consumers attitudes towards restaurant marketing and promotion. The exclusive primary consumer research was carried out for Mintel by Ipsos Mori amongst a nationally representative sample of 2,056 adults aged 15+ between 31 October and 6 November 2008.

Main report themes:

  • How effective is main media advertising in the eating out market and if it is generally seen as ineffective, why is so much invested in it?

  • PR is often seen as a very powerful weapon in this market, but how does it compare to main media advertising: can it be a double-edged sword?

  • Promotions are increasing in frequency, why is this and how will the recession impact on their usage and nature?

  • The internet can be used for advertising, PR and promotions but where do its strengths lie and how is it being used in practice?

  • Knowing the customer is rising in importance and the industry has seen the growth in new CRM tools, which are now even open to small outlets: how are these changing the marketing activities of outlets?

  • What factors drive consumers to choose one restaurant over another and what implications do these have for eating out marketing?

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Table of contents

  1. Issues in the Market

      • Figure 1: The key elements of an eating out marketing strategy, 2009
    • Main issues
      • Terminology
        • Abbreviations
        • Future Opportunities

          • Main media bars entry to the big boys’ table
            • Cultivating a connection
              • Build customer loyalty and...
                • …exploiting the internet to the full
                • Market in Brief

                  • Drivers of restaurant choice vary by sector, leading to…
                    • Figure 2: The importance of the decision drivers, by type of outlet, 2008
                  • …the ingredients of the marketing mix varying by sector
                    • Figure 3: The Importance/use of the market mix, by outlet type, 2008
                  • The three watchwords: credible, personal and sales
                    • Figure 4: The feature of the marketing mix used, 2008
                • Strengths and Weaknesses in the Market

                    • Strengths
                      • Main media barrier
                        • Word of mouth
                          • Coupons
                            • The internet
                              • Weaknesses
                                • Main media
                                  • Word of mouth/Viral marketing
                                    • Coupons
                                      • Traditional advertising methods
                                      • Is Main Media Advertising Past its Prime?

                                        • Key points
                                          • Description
                                            • Background: How powerful is advertising?
                                              • Advertising does not consciously drive restaurant choice
                                                • Figure 5: Influence of advertising on choice of restaurant/outlet+, November 2008
                                              • Advertising is often too much of blunt instrument for most restaurants
                                                • Advertising doesn’t work, eateries don’t advertise right! Well, not exactly…
                                                  • Figure 6: Advertising expenditure of eating out establishments (£m), 2004-07
                                                  • Figure 7: Segmentation of the eating out market+ by the impact of marketing, 2008
                                                • Do the big boys advertise because they are big or are they big because they advertise?
                                                  • Figure 8: Advertising expenditure (£m) of eating out establishments by size, 2004-07
                                                • TV dominates spending overall but only among the big boys
                                                  • Figure 9: Advertising expenditure of restaurants/pubs/catering, by media, 2007
                                                  • Figure 10: Advertising expenditure (£m) of restaurants/pubs/catering, by media and size, 2007
                                                • The big five dominate
                                                  • Figure 11: Advertising expenditure of restaurants/pubs/catering, by media and size, 2007
                                                • Key analysis: Advertising, barrier to choice
                                                  • A barrier to prevent entry to the young market
                                                    • Figure 12: The percentage of consumers who are influenced, by advertising, by age and lifestage, 2008
                                                  • Advertising theme: ALOB
                                                    • McDonald’s: We understand your lifestyle and attitudes
                                                      • Remember being empathetic does not mean being sympathetic…
                                                        • Fat Pride
                                                          • Horses for courses
                                                            • But you still have to heed the ‘masstige'
                                                              • But will the recession change the emphasis?
                                                                • Oddvertising: A step too far?
                                                                  • Bandwagoning: Well used….
                                                                    • Figure 13: Influence of celebrities over consumer purchasing decisions, 2006-08
                                                                  • Burger King leads the way
                                                                    • Pizza Hut show some pizzaz
                                                                      • Key analysis: Beware the pitfalls
                                                                        • The war between Clarissa and Jamie: A Warning
                                                                          • It works both ways
                                                                            • Could character licensing be on its way out?
                                                                              • Domino Pizza and the The Simpsons: A model of TV sponsorship
                                                                                • The slogan summarises attitude
                                                                                  • I'm Lovin' It
                                                                                    • Slogans never really die
                                                                                      • Key analysis: Measuring the wrong thing
                                                                                      • Is PR the New Advertising?

                                                                                        • Key points
                                                                                          • Why use PR?
                                                                                            • PR is cheap
                                                                                              • PR is personal
                                                                                                • PR has impact and shelf life
                                                                                                  • But PR lacks control
                                                                                                    • Its advertising Jim but not as we know it
                                                                                                      • Advertorials: PR/advertising hybrids
                                                                                                        • The ‘as seen in’ phenomenon and the award for best goes to…
                                                                                                          • Corinthian Greek Restaurant: We are the best!
                                                                                                            • Pizza Hut: The mother of all PR campaigns?
                                                                                                              • Key analysis: PR is word of mouth gone big time
                                                                                                                • But is PR for everyone? The Supersize Me effect
                                                                                                                  • But every cloud has a silver lining
                                                                                                                    • As a PR medium, the web is growing in power
                                                                                                                      • Figure 14: Influence of comments/reviews posted online by other internet users over consumer purchasing decisions, 2006 and 2008
                                                                                                                    • Key analysis: The credit crunch is good news for PR…
                                                                                                                    • Promotions: Sales Tactic or Brand Builder?

                                                                                                                      • Key points
                                                                                                                        • Promotions come of age
                                                                                                                          • Coupons reach the parts that advertising can’t reach
                                                                                                                            • Figure 15: Lifestyle penetration of those influenced by advertising and coupon crazy, 2008
                                                                                                                          • The importance of point of sale
                                                                                                                            • Customer service: Covert promoting?
                                                                                                                              • Custom-smoothing price deals
                                                                                                                                • Loyal reward program
                                                                                                                                  • The crunch bites
                                                                                                                                    • Coupons/discounting: The answer to the credit crunch?
                                                                                                                                      • High level of coupon activity
                                                                                                                                        • Figure 16: Vouchers offered by eating out venues, November 2008
                                                                                                                                      • Vouchers need supporting marketing activity
                                                                                                                                        • Figure 17: Attitude towards mailing lists, 2004-08
                                                                                                                                      • Nando’s combined promotion with door drops
                                                                                                                                        • Key analysis
                                                                                                                                          • But he who lives by the voucher can sometimes die by the voucher
                                                                                                                                            • Figure 18: Use of money off coupons and vouchers, 2004-08
                                                                                                                                          • Key analysis
                                                                                                                                            • The rise of the set menu
                                                                                                                                              • Figure 19: Examples of fixed price deals in November 2008
                                                                                                                                            • Key analysis
                                                                                                                                              • Price-size deal
                                                                                                                                                • Co-operative promotions
                                                                                                                                                  • Chain activity
                                                                                                                                                    • Figure 20: Examples of Co-operative promotions in November 2008
                                                                                                                                                  • Individual outlets
                                                                                                                                                    • Key analysis
                                                                                                                                                      • Subway shows how promotions can build brands
                                                                                                                                                      • CRM: Talking about my Demographic

                                                                                                                                                        • Key points
                                                                                                                                                          • CRM
                                                                                                                                                            • Capturing consumers
                                                                                                                                                              • OpenTable: A global player
                                                                                                                                                                • restaurantdiary™: A newcomer
                                                                                                                                                                  • Quadranet Res
                                                                                                                                                                    • Livebookings Loghos
                                                                                                                                                                      • Key analysis
                                                                                                                                                                      • The Impact of the Internet: Can the Net Hold the Customers?

                                                                                                                                                                        • Key points
                                                                                                                                                                          • Background
                                                                                                                                                                            • Restaurant online activity on the up
                                                                                                                                                                              • How effective is the web in reaching the eating out market?
                                                                                                                                                                                • Key analysis
                                                                                                                                                                                  • Figure 21: The usage of the internet in the past 12 months, by types of eater outer, 2008
                                                                                                                                                                                • Locality, promotions and recommendation
                                                                                                                                                                                  • Figure 22: Factors influencing restaurant choice, by internet usage, October-November 2008
                                                                                                                                                                                • The web as marketing front end
                                                                                                                                                                                  • Key analysis
                                                                                                                                                                                    • The website as CRM front end
                                                                                                                                                                                      • Key analysis
                                                                                                                                                                                        • Affiliate marketing
                                                                                                                                                                                          • Types of affiliates
                                                                                                                                                                                            • toptable
                                                                                                                                                                                                • Figure 23: Toptable’s statistics, November 2008
                                                                                                                                                                                              • Wagamama: Affiliate marketing backed by a fast-changing website
                                                                                                                                                                                                • Key analysis
                                                                                                                                                                                                  • Discount vouchers
                                                                                                                                                                                                    • The My Voucher Codes UK: Standalone voucher site
                                                                                                                                                                                                      • Just Eat
                                                                                                                                                                                                        • Key analysis
                                                                                                                                                                                                          • Online display and search advertising: not widely used but search engines are important
                                                                                                                                                                                                            • Social media marketing: Interesting possibilities
                                                                                                                                                                                                              • Fast Food MySpace pages
                                                                                                                                                                                                                • The Restaurant Guide
                                                                                                                                                                                                                  • Online PR
                                                                                                                                                                                                                    • Viral marketing
                                                                                                                                                                                                                      • The Lincoln Fry: A virus that went pandemic
                                                                                                                                                                                                                        • Warning: When viral marketing goes bad
                                                                                                                                                                                                                        • Factors Influencing Restaurant Choice

                                                                                                                                                                                                                          • Key points
                                                                                                                                                                                                                            • Location, location, location
                                                                                                                                                                                                                              • Figure 24: Factors influencing restaurant choice, October-November 2008
                                                                                                                                                                                                                            • Key analysis
                                                                                                                                                                                                                              • Impact of age
                                                                                                                                                                                                                                • Mature affluent adults strongly influenced by word of mouth
                                                                                                                                                                                                                                • Attitudes Towards Restaurant Marketing and Promotions

                                                                                                                                                                                                                                  • Key points
                                                                                                                                                                                                                                    • To promote or not promote, that is the question
                                                                                                                                                                                                                                      • Figure 25: Attitudes towards restaurant marketing and promotions, October-November 2008
                                                                                                                                                                                                                                    • Menu dumpers are more likely to be affluent and upmarket.
                                                                                                                                                                                                                                      • The young like coupons and so do the affluent
                                                                                                                                                                                                                                        • Recession hits families’ eating out habits the most
                                                                                                                                                                                                                                          • Figure 26: Consumers impacted by the current economic situation in terms of eating out, by age and lifestage, October-November 2008
                                                                                                                                                                                                                                      • Marketing, Promotion and Advertising Target Groups

                                                                                                                                                                                                                                        • Key points
                                                                                                                                                                                                                                          • Target group profiles
                                                                                                                                                                                                                                            • Direct Mailers
                                                                                                                                                                                                                                              • Coupon Crazy
                                                                                                                                                                                                                                                • Internet Reliant
                                                                                                                                                                                                                                                  • Influenced By Advertising
                                                                                                                                                                                                                                                    • Anti-advertising
                                                                                                                                                                                                                                                    • Appendix – Factors Influencing Restaurant Choice

                                                                                                                                                                                                                                                      • Most popular factors influencing restaurant choice, by detailed demographics
                                                                                                                                                                                                                                                        • Figure 27: Most popular factors influencing restaurant choice, by detailed demographics, October-November 2008
                                                                                                                                                                                                                                                      • Next most popular factors influencing restaurant choice, by detailed demographics
                                                                                                                                                                                                                                                        • Figure 28: Next most popular factors influencing restaurant choice, by detailed demographics, October-November 2008
                                                                                                                                                                                                                                                      • The number of factors influencing restaurant choice, by detailed demographics
                                                                                                                                                                                                                                                        • Figure 29: The number of factors influencing restaurant, by detailed demographics, October-November 2008
                                                                                                                                                                                                                                                    • Appendix – Attitudes Towards Restaurant Marketing and Promotions

                                                                                                                                                                                                                                                      • Most popular attitudes towards restaurant marketing, by detailed demographics
                                                                                                                                                                                                                                                        • Figure 30: Most popular attitudes towards restaurant marketing, by detailed demographics, October-November 2008
                                                                                                                                                                                                                                                      • Next most popular attitudes towards restaurant marketing, by detailed demographics
                                                                                                                                                                                                                                                        • Figure 31: Next most popular attitudes towards restaurant marketing, by detailed demographics, October-November 2008
                                                                                                                                                                                                                                                    • Appendix – Marketing, Promotion and Advertising Target Groups

                                                                                                                                                                                                                                                        • Figure 32: Target groups, by detailed demographics, 2008
                                                                                                                                                                                                                                                      • Target groups, by internet usage
                                                                                                                                                                                                                                                        • Figure 33: TGI marketing target groups, by usage of the internet in the last 12 months, 2008
                                                                                                                                                                                                                                                      • Target groups, by coffee shop usage
                                                                                                                                                                                                                                                        • Figure 34: TGI marketing target groups, by usage of coffee shops and sandwich bars in the last 12 months, 2008
                                                                                                                                                                                                                                                      • Target groups, by sandwich bar usage
                                                                                                                                                                                                                                                        • Figure 35: TGI marketing target groups, by usage of sandwich bars in the last 12 months, 2008
                                                                                                                                                                                                                                                      • Target groups, by consumption of takeaways
                                                                                                                                                                                                                                                        • Figure 36: TGI marketing target groups, by consumption of takeaways in the last 12 months, 2008
                                                                                                                                                                                                                                                      • Target groups, by frequency of eating in fast food restaurants
                                                                                                                                                                                                                                                        • Figure 37: TGI marketing target groups, by frequency of eating at fast food restaurants in the last 12 months, 2008
                                                                                                                                                                                                                                                      • Target groups, by frequency of visiting pubs/bars
                                                                                                                                                                                                                                                        • Figure 38: TGI marketing target groups, by frequency of visiting pubs/bars for a drink or a meal in the last 12 months, 2008
                                                                                                                                                                                                                                                      • Target groups, by usage of restaurants
                                                                                                                                                                                                                                                        • Figure 39: TGI marketing target groups, by usage of restaurants (during the day and evening) in the last 12 months, 2008
                                                                                                                                                                                                                                                      • Target groups, by financial lifestyle characteristics
                                                                                                                                                                                                                                                        • Figure 40: TGI marketing target groups, by agreement with selected lifestyle statements on finance, 2008
                                                                                                                                                                                                                                                      • Target groups, by shopping lifestyle characteristics
                                                                                                                                                                                                                                                        • Figure 41: TGI marketing target groups, by agreement with selected lifestyle statements on shopping habits, 2008
                                                                                                                                                                                                                                                      • Target groups, by attitudes towards advertising
                                                                                                                                                                                                                                                        • Figure 42: TGI marketing target groups, by agreement with selected lifestyle statements on advertising, 2008
                                                                                                                                                                                                                                                      • Target groups, by attitudes towards forms of advertising
                                                                                                                                                                                                                                                        • Figure 43: TGI marketing target groups, by agreement with selected lifestyle statements on forms of advertising, 2008

                                                                                                                                                                                                                                                    Companies Covered

                                                                                                                                                                                                                                                    • Alliance Boots
                                                                                                                                                                                                                                                    • AOL
                                                                                                                                                                                                                                                    • Asda Group Ltd
                                                                                                                                                                                                                                                    • Bartle Bogle Hegarty (UK)
                                                                                                                                                                                                                                                    • Bebo Inc
                                                                                                                                                                                                                                                    • Bombay Bicycle Club
                                                                                                                                                                                                                                                    • British Airways Plc
                                                                                                                                                                                                                                                    • British Broadcasting Corporation (BBC)
                                                                                                                                                                                                                                                    • British Market Research Bureau (BMRB)
                                                                                                                                                                                                                                                    • Burger King UK Ltd
                                                                                                                                                                                                                                                    • Caffé Uno
                                                                                                                                                                                                                                                    • Co-operative Group
                                                                                                                                                                                                                                                    • Costa
                                                                                                                                                                                                                                                    • DDB Worldwide Communications Group Inc.
                                                                                                                                                                                                                                                    • Domino's Pizza UK & IRL, plc
                                                                                                                                                                                                                                                    • Facebook, Inc.
                                                                                                                                                                                                                                                    • Fine Burger Company
                                                                                                                                                                                                                                                    • Frankie & Benny's
                                                                                                                                                                                                                                                    • Google UK
                                                                                                                                                                                                                                                    • Greggs Plc
                                                                                                                                                                                                                                                    • Harvey Nichols UK
                                                                                                                                                                                                                                                    • J. Sainsbury
                                                                                                                                                                                                                                                    • JD Wetherspoon
                                                                                                                                                                                                                                                    • KFC Corporation
                                                                                                                                                                                                                                                    • La Tasca Restaurants Ltd
                                                                                                                                                                                                                                                    • Leo Burnett International (UK)
                                                                                                                                                                                                                                                    • Little Chef
                                                                                                                                                                                                                                                    • Marks & Spencer
                                                                                                                                                                                                                                                    • McCann-Erickson Advertising Ltd
                                                                                                                                                                                                                                                    • McDonald's Restaurants Limited (UK)
                                                                                                                                                                                                                                                    • Millies Cookies (Retail) Ltd
                                                                                                                                                                                                                                                    • MySpace.com
                                                                                                                                                                                                                                                    • Ofcom
                                                                                                                                                                                                                                                    • Pizza Hut
                                                                                                                                                                                                                                                    • PizzaExpress Limited
                                                                                                                                                                                                                                                    • Pret A Manger
                                                                                                                                                                                                                                                    • Ronald McDonald House Charities
                                                                                                                                                                                                                                                    • Somerfield
                                                                                                                                                                                                                                                    • STA Travel
                                                                                                                                                                                                                                                    • Strada
                                                                                                                                                                                                                                                    • Taco Bell Corp.
                                                                                                                                                                                                                                                    • Tesco Plc
                                                                                                                                                                                                                                                    • The Gaucho Grill
                                                                                                                                                                                                                                                    • Time Out London
                                                                                                                                                                                                                                                    • Wagamama Ltd
                                                                                                                                                                                                                                                    • Waitrose
                                                                                                                                                                                                                                                    • Wimpy International
                                                                                                                                                                                                                                                    • Wm Morrison Supermarkets
                                                                                                                                                                                                                                                    • Yo! Sushi
                                                                                                                                                                                                                                                    • YouTube, Inc.
                                                                                                                                                                                                                                                    • Zizzi

                                                                                                                                                                                                                                                    Marketing, Promotion and Advertising Strategies of the Eating Out Market - UK - January 2009

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