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Romano’s takeout

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  • Category: Food Pizza

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OPPORTUNITIES
Romano’s Take-Out in Flint, Michigan is located in the area where many industrial plants are present. This gives the store an opportunity to cater the needs of the people working in the sites in terms of food services. These plant sites mostly have two to three shifts, five days a week in which during each shift, workers have a one half- hour break. This break usually occurs at 11 am, 8 pm, and 2:30 am, depending on the shift. Because of this number of break in shifts, the workers might opt to eat and order for pizza as food.

Moreover, the plant businesses present in the area are very profitable for the RT business. The advantages of this are; large quantity of orders can be delivered at the same time and place that would minimize the transportation cost of RT store, and also in these orders different toppings (such as double, cheese, pepperoni, mushrooms, and hamburger) could be added. The additional orders of toppings in each pizza could result to additional revenue of $11 to $14. As for the benefit of the driver who will deliver the pizzas, additional tip could be incurred ranging from $1 to $2.

THREATS
RT Flint’s Store was located in the place were aggressive competitors are present wherein promos were heavily advertised. These promos that competitors included were distribution of cent- off coupons and 2-for-1 deal offerings. This aggressive competition also contributes to the problem of RT’s residential sales. Due to the competition that comes from the aggressive national chains that are fighting for the market share and squeezing little firms like RT, competitive pressure for the store seems likely to continue. Moreover, another threat that was observed was there are time sensitive consumers who really hate waiting for the pizza to be delivered. This might create bigger problems if not responded eagerly, considering the production capacity of RT.

STRENGTHS – WEAKNESSES ANALYSIS
STRENGTHS
At present, Romano’s Takeout is the only pizza delivery store that is located near the area to serve the big industrial plants. Because of this, RT Flint Store has a good position to serve the market. WEAKNESSES

Production capacity is one of the limitations of Romano’s Take-Out in Flint. It was shown that the store’s daily capacity is only 144 pizzas which are far from the estimated daily demand of 320 pizzas. One of the cause of this limitation is the store has a limited staff and oven capacity which could not accommodate all the orders at the same time. Another thing is, the store is located 5 to 8 minutes away from the plant sites which cause a longer waiting time of customers. Another weakness is RT Store has a weak connection with the residential markets. This is due to the location of the residential neighborhoods in the area. As far as the promotion is concern, RT Store compared to its competitors has weak strategies. Probably this was also the reason why they have weak connections with the residential market. Moreover, RT Flint’s Store has a bad reputation which is the insensitivity in delivery time of the orders thus, making the customers felt bad that leads to turning down of orders or the worst is not paying the orders if it is delivered late. PRODUCT LIFE CYCLE

Romano’s Take-Out Inc in Flint Michigan is at the Maturity Stage of Product Life Cycle. At this stage, aggressive competition is present in the location that causes pressure to the management. Because of this, the store needs to start spending again specifically in distribution and promotion, in order to defend the product’s market position.

TARGET MARKETS
Romano’s Take-Out in Flint target the large industrial plant throughout the city. Basically, Workers in these plants are the ones they are catering. In addition, residential areas near or far from the sites were also considered
to be their market. PRODUCT POSITIONING

Romano’s Take-Out is an owner managed pizza take-out and delivery business. Take-Out services for food should be provided quickly but in the case of the Flint store, their delivery services were considered poor, thus indefinite product positioning were shown. CURRENT MARKETING MIX

PRODUCT: Romano’s Take-Out product consists mainly of pizzas which include various toppings such as double cheese, pepperoni, mushrooms and hamburger. They also have some beverages composed of limited selection of softdrinks. PRICE: The average selling price per unit of pizza is $12.50 and two medium-sized beverages per pizza ordered at 75¢/piece. Prices are perceived to be affordable and attractive to the city residents and the plant industries. PROMOTION: Romano’s Take-Out advertised using direct-mail flyers to several office buildings within 3 miles of the store. The flyers described RT’s willingness and ability to cater large orders for office parties, business luncheons and so on. It has weak promotional strategies thus they do not able to connect with many residential customers far from its area.

PLACE: Romano’s Take-Out Inc has three stores located in Ann Arbor, Southfield and Flint, Michigan. Ann Arbor store is near to University of Michigan and it primarily caters to the student market. Southfield store is near large residential suburb of Detroit. Flint store is near to several industrial plants and some residential areas. PEOPLE: Romano’s Take-Out Inc consists of internal and external customers. The internal customers refer to the delivery and preparation personnel. They are the ones who directly or indirectly interact with the consumers in the store’s processes. External customers refer to the main consumers of the product who are the workers in the plant and also the residential customers. PHYSICAL EVIDENCES: The physical evidences of Romano’s Take-Out include the store itself, oven equipments, delivery cars, staffs, and their products which are pizzas and soft drinks and others. PROCESSES: Romano’s Take-Out Inc takes its orders either from telephone or walk-in orders. Customer will either phone or fax their orders. After receiving orders, RT staff will prepare the pizza for 20- to 25mins then delivers them to the customers.

THE CASE ISSUE AND PROBLEM STATEMENT (DISTRIBUTION)
PROBLEM STATEMENT:
What distribution strategy should Romano’s takeout implement in order to meet customer demand and avoid delays that result to customer loss? ALTERNATIVE COURSES OF ACTIONS
Alternative 1: The store will continue to distribute via delivery. However, they will add additional oven, purchase a new delivery vehicle and hire additional riders in order to cover wider area. The additional vehicle may be a motorcycle which may be also be used to deliver to residential areas. Adding an additional oven, purchasing a new delivery vehicle and hiring an additional riderwill ensure the high product quality and timely delivery of orders. This could also provide additional capacity to meet the forecasted demands of the store provided by the information on the table given below. The table shows a conservative estimate of potential daily demand for plant orders which has been compared to the current capacity and proposed increased capacity.

Estimated Daily Demand
Current Daily Capacity
Proposed Daily Capacity
Pizza units (1 pizza)
320
114
300

More consideration should be included in determining the cost of additional oven and delivery vehicle. However instead of delivery car, motorcycle could be purchased to lessen the cost. This motorcycle could be utilized also in delivery services to residential areas. Another table was provided in the case which gives the comparison of cost and information about the depreciation and fixed costs. Cost information of delivery motorcycle is also being added to compare it with the delivery car.

With this alternative, the following additional pizza preparation and delivery personnel costs would be required:

Hours Required
Cost per Hour
Total Additional Daily Cost
Delivery personnel
6
6
$36.00
Preparation personnel
8
6
48.00
$84.00

Considering the information provided and stated in the tables, this alternative could still incur additional cost, though delivery car has been changed with delivery motorcycle. Moreover, additional oven and additional personnel/rider are still not considered due to the fact that the store is not that large enough to occupy it/them once this alternative is chosen.

Alterative 2: Partner with various vending trucks to carry Romano’s best seller Pizzas in their menu. The partnership will be commission based. RT will provide ready-made pizzas as well as Pizza heating equipment to the Vending trucks. On the other hand, RT will still continue its delivery services to residential areas and to some industrial sites not covered by the vending trucks.

One of the ways in providing food services to the people working in the plant sites is through vending trucks. Partnering with these vending trucks could possibly help the RT Flint store in meeting the customer demands and avoiding the delays. In this alternative, RT store’s manager will set an appointment to the one managing each vending trucks and could negotiate about the commission that they will get in distributing the ready-made best seller pizzas. The only equipment that RT will provide is the heating equipment so as to still deliver the quality pizza that the customer wants. The vending trucks will basically distribute the RT’s best seller pizza which could gain them an additional income as well as helping the RT store to solve their dilemma. On the other hand, RT will still continue its delivery services to residential areas which are not covered by the vending trucks. With this, the delivery service of the store could focus more on the residential areas hence, avoiding the delay.

One of the limitations that were seen in this alternative is the assurance of quality pizza to be sold to the customers. Transferring of ready-made pizza to other location could somehow affect its quality due to handling. Another thing is there is no assurance that the ready-made pizzas will be sold which could incur possible loss in the part of RT store. In the part of the vending trucks, the manager might not consider the offering since distributing the pizzas might affect the market of the food that they offer. Alternative 3:Transfer to a new location where the store would be closer to industrial site and the residential areas as well.

RT will retain the number of personnel and equipment. Transferring of RT store to another location which is half-way near to the industrial sites as well as to the residential areas could solve the problem in meeting the demands of the customer. Through this alternative, reduction of delivery time will be possible in which there could have less than 8 minutes. In this way, RT could handle the unmet needs and could also avoid the delays of the services. However, this alternative would incur bigger cost due to the transferring of the whole facility. This may also affect the services of the store during the implementation of this alternative. Moreover, transferring of the store to new location doesn’t guarantee a fast recovery of the cost used in putting up the new facility. It might also incur additional losses to the store.

RECOMMENDATION
Based on the evaluation made through identifying the advantages and disadvantages of the given alternatives, it was decided to choose the Alternative 2. Partner with various vending trucks to carry Romano’s best seller Pizzas in their menu. The partnership will be commission based. RT will provide ready-made pizzas as well as Pizza heating equipment to the Vending trucks. On the other hand, RT will still continue to delivery to residential areas and to some industrial sites not covered by the vending trucks. PROPOSED SPECIFIC PLANS

TARGET MARKET
Romano’s Take-Out in Flint will continue to target workers in the plants around the city and the people in residential areas. PRODUCT POSITIONING
The product will be positioned as pizza available anytime as the customers wish. Customers just have to go to the truck vendors nearest them or order via phone to get one.

MARKETING MIX
PRODUCT: Romano’s Take-Out products will stay the same, consisting mainly of pizzas which include various toppings such as double cheese, pepperoni, mushrooms and hamburger. They also have some beverages composed of limited selection of softdrinks. PRICE: If ordered by delivery, the products will continue to sell at its average selling price per unit: pizza is $12.50 and two medium-sized beverages per pizza ordered at 75¢/piece. On the other hand, prices in the vans will be a 50 cents to 1 dollar higher because of the van’s commission. PROMOTION: Romano’s Take-Out will continue to advertise through direct mail flyers. To promote “pizza in the van”, the store will launch a short term promo such as buy 4 take 1 or buy 3 large boxes (in the van), get the next box at 50% off. The store will also posts posters on the vans and at the gate of their plant building to inform the customers.

PLACE: Romano’s Take-Out Inc will continue to operate the three stores located in Ann Arbor, Southfield and Flint, Michigan. Aside from the Flint store, the RT products will be made available to roving vans around the plant to bring the products where most of the customers are. PEOPLE: Romano’s Take-Out Inc consists of internal and external customers. The internal customers refer to the delivery and preparation personnel. They are the ones who directly or indirectly interact with the consumers in the store’s processes. External customers refer to the main consumers of the product who are the workers in the plant and also the residential customers. PHYSICAL EVIDENCES: The physical evidences of Romano’s Take-Out include the store itself, oven equipments, delivery cars, staff, and their products which are pizzas and soft drinks and others.

PROCESSES: No changes will be implemented on orders either from telephone or walk-in. For the roving vans, the store will determine the best seller pizzas among plant customers through a study or survey. The determined bestseller flavours are the ones that will be made available in the store. RT will prepare the pizzas 2-3 hours in advanced then delivers them to each roving vans. Each van will be provided a pizza heater to ensure the freshness and quality of pizzas. RT will provide pizza to the vans 3 times a day specifically before the

FUTURE TRENDS
Since humans continuously seek for life improvement, technological changes and industrialization have been the focus. Along with this is the fast paced environment of individuals working in these industries, thus the fast food culture. People deem time as an important factor for development, sacrificing their consumption of slow food. Given this trend, many fast food stores with delivery services are being and will be established. Moreover, instant food may also be the next option if this fast paced environment thrives.

CONTINGENCY PLAN
If the chosen alternative does not push through, alternative 1, which is to Add purchase a new delivery vehicle and hire additional riders and buy additional oven will be implemented. The additional vehicle may be a motorcycle which may be also be used to deliver to residential areas.

MARKETING MANAGEMENT LESSONS
In analyzing the case, our group was able to apply the concepts learned in distribution methods. Moreover, since this is a service oriented case, the group was able to determine the 6ps of the case as studied in the class. Lastly, the group was also able to

THE CASE ISSUE AND PROBLEM STATEMENT (PROMOTION)

PROBLEM STATEMENT:
What promotional strategy should Romano’s Take-Out Inc implement in order to improve its reputation in the plant sites and to communicate the improvements in the distribution system. ALTERNATIVE COURSES OF ACTIONS

Alternative 1: Romano’s Take-Out Inc will hire an endorser, preferably a famous celebrity or a model that will promote their products through radio advertisements, news papers and flyers. The reputation of the endorser, being a celebrity may attract the consumers to buy the RT products. People also have this mentality that they should have what the famous people have so hiring an endorser may increase sales. In addition, the store can ride with the good image of an endorser. This alternative however is very expensive since the store has to pay talent fee and advertising fees. Also, it may also take time to launch the promotion since the store will go through the process of selecting an endorser, shooting an ad etc.

Alterative 2: Romano’s Take-Out Inc will give out 1 best-seller pizza for every purchase of 3 pizzas in one purchase. This sales promotion will last for a couple of months or it could be extended depending on the acceptance of the market. RT will also continue to give away flyers and post posters around the city to disseminate the information.

Since RT Flint store is located near the plant sites, customers especially during meetings will possibly grab this promotion. This could save less spending for the food during meetings. This could also be a great deal for the families living nearby who have no time for preparing food and for pizza parties they will be holding during the duration of the promotion. However, this entails a risk in the part of the RT store. New sales promotion also requires cost because it also needs to be promoted through posters and flyers. This strategy also doesn’t guarantee a sustained growth in sales.

Alternative 3: Romano’s Take-Out Inc will re-introduce its offering through local newspaper and radio. The management will do a scouting for the best advertisement agency in the location and arrange all the necessary requirements in using the advertisement. The best way to communicate promotion is via mass media which include newspapers and radios. Frequent announcement of the product will get the attention of the radio station’s avid listeners. Moreover, daily readers of broadsheets would be reminded of the store and its products once seen. The biggest limitation to this alternative is the cost of having the store advertised. Minor limitations could include hiring models to be included in the broadsheet ad and hiring singer/s for the company’s jingle for the radio ad.

RECOMMENDATION
Based on the evaluation made through identifying the advantages and disadvantages of the given alternatives, it was decided to choose the Alternative #2. Romano’s Take-Out Inc will give out 1 best-seller pizza for every purchase of 3 pizzas in one purchase. This sales promotion will last for a month or it could be extended depending on the acceptance of the market. This promotion strategy is also the best way since the store is also changing its distribution system.

PROPOSED SPECIFIC PLANS
TARGET MARKETS
Romano’s Take-Out Inc in Flint will still cater its offerings to the residential areas and to the people working in the plant sites.

PRODUCT POSITIONING
Romano’s Take-Out will still be positioned as an owner managed pizza take-out and delivery. The only changes would be the additional pizza distributing parties through the partnership with vending trucks. MARKETING MIX

PRODUCT: Romano’s Take-Out product will still be consisted mainly of pizzas, regular and best-sellers, which include various toppings such as double cheese, pepperoni, mushrooms and hamburger. They will also have some beverages composed of limited selection of softdrinks. PRICE: The prices of the offerings will be retained in which the average selling price per unit of pizza is $12.50 and two medium-sized beverages per pizza ordered at 75¢/piece. A free pizza will also be given for every 3 boxes purchased PROMOTION: The new offering will be promoted as “Add your toppings with another pizza” which will connote the Buy 3 take 1 pizza. This will be promoted through posters which will be posted everywhere in the location including the store, delivery service and the distributing parties (the vending trucks).

Word-of-mouth could also be of great help to promote the new promotional strategy. PLACE: The new promotion of the Romano’s Take-Out Inc offering will mainly focus in Flint Michigan, near several industrial plants and some residential areas. PEOPLE: Romano’s Take-Out Inc still consists of internal and external customers. The internal customers refer to the delivery and preparation personnel. They are the ones who directly or indirectly interact with the consumers in the store’s processes. External customers refer to the main consumers of the product who are the workers in the plant and also the residential customers. PHYSICAL EVIDENCES: The physical evidences of Romano’s Take-Out still include the store itself, oven equipments, delivery cars, staffs, and their products which are pizzas and soft drinks and others. PROCESSES: No changes will be implemented on order processing either from telephone or walk-in. To implement the promotion, the store will just add an additional box of pizza for every 3 boxes ordered by the same customer.

CONTINGENCY PLAN
Based on the evaluated pros and cons of the alternatives given, if the chosen alternative will not be approved, the next best alternative decided is the Romano’s Take-Out Inc will hire an endorser, preferably a famous celebrity or a model that will promote their products through radio advertisements, news papers and flyers.

The store will choose a celebrity with a good reputation (preferable with food choices). After which, the management will conceptualize and produce a radio ad, posters and flyers with the selected endorser

FUTURE TRENDS
Given the advanced technologies being developed through time, advertising channels will have more options, including internet advertising, cellphone or email advertising or even movie ads. Companies and small business such as RT should continue to improve their promotional strategies and take advantage of the newly available technologies in the market.

MARKETING MANAGEMENT LESSONS
In analyzing this case, the group were able to use the concepts tackled on Promotion strategy setting. We were able to identify a real company’s product marketing mix, position and lifecycle. Moreover, in solving the case problem, the team made use of strategies on product positioning using promotion strategies.

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