Introduction of the Organization
We have conducted an informal interview with the person in charge on 29 January 2010, Friday. The organization that we chose to interview is a food stall located at the ground floor of Bangunan C.I.C.T. in Universiti Teknologi Malaysia. The organization is named as Sweet Amuse which is owned by Rafidah Nostakim. The name of the stall doesn’t have any special meaning but for the reason of sound good. The stall was rented from C.I.C.T and is under owner’s personal business. This business was started since August 2009. There are 3 employees working at the stall and the business hour is from 8.30a.m to 5.30p.m but will only open during weekdays.
The stall sells over 10 types of foods including nasi lemak, mee siam, kuih-muih, fruits, drinks and etc. Recently they have launched new foods which are sandwiches and coconut jelly. Among these foods, the best seller is nasi lemak. The peak time of the business is start from 9am to 12 pm which is the time for breakfast and lunch. The flow of the people is most crowded during that period.
The customers are students and UTM staffs and the stall do have their frequent customers. The employees there will always take notice of their customers’ purchases and their request. They can even remember some of the customers’ habits by their memory. The customers always give some feedback to the person in charge according to the food quality and price. For instance, they hope they can enjoy eating hot food such as goreng pisang during tea-time but the stall is forbid to cook at the stall. It did disappoint the customers. However, the customers are quite satisfied with the foods and the price so far. In order to attract more customers to increase the profit, the owner does plan to do some promotion such as having combo set.
There are some strengths of the food stall. First of all, the location of the food stall is very strategic. This is due to it located at the main path that students and staffs will pass-by every day. Some more, there is a computer lab at third floor, which means students that will pass-by the stall is in a large number. Hence, the sale of the food stall is also increases.
Secondly, there are various types of foods and drinks allow customers to choose their favorite. There are some foods is same as the other stall sell, but the choice of the foods is more than the other stall. It allowed the food stall to be more competitive with the other stall.
Thirdly, the price of the foods is set at the lower price. Basically, students can settle their meal by not exceeding RM3.00. It is a good choice for a student to have their breakfast and lunch at the food stall as it can help them save more money.
However, the food stall does have some drawbacks. There are a lot of students attending class at 8.00 am and might buy breakfast before attend to the class. However, the food stall will just start business on 8.30am and therefore they will lose certain number of customer at that period.
As the stall cannot cook, the food is not fresh and delicious when it is afternoon. Furthermore, the foods will also spoil easily as the foods are prepared since the early of the morning.
Finding from Activity 1
Now, let’s get started on thinking how to impose the direct marketing system in this organization first. First of all, we have to understand about the definition of the direct marketing. Direct Marketing is an interactive system of marketing that uses one or more the advertising media to affect a measurable response and/or transaction at any location, with this activity stored on database. From this definition, we can try to analyze the application of direct marketing from these 3 key words: interactive system of marketing, advertising media, and activity stored on database.
Firstly we will view the management of the food stall by referring to interactive system of marketing. As we know that profit retention is always the main target of an organization, while most of the profit of the organization is coming from the minority, regular customers, especially in service industry. In another words, it is the regular customer that the organization is depending. Direct marketing creates better service quality and customer satisfaction. To a food stall, service quality and customer satisfaction is the most important things. Higher satisfaction can lead to a longer lifetime value of the customer.
Besides that, by using interactive system of marketing the organization can communicate to its customers more effectively. Direct marketing enable the organization to target different messages to different recipients, according to their needs and wants and their characteristics. As a result, a more systematic of direct marketing system can be established to always know more about customers and deal with their requirements in the shortest time. Constantly communicate with customers and collect feedback from them is an effective way to improve the stall quality. For instance, if there are some customers having the similar request, then the owner can make some adjustment according to their feedback.
As referring to advertising media; our target, Sweet Amuse, which is the food stall, has the least degree of publicity and advertising media. The existence of competitors increases the importance of the advertising media. There are many direct and indirect competitors around the food stall, for example, like the other same size stalls, restaurant, or even the restaurant outside the campus. The owner of the food stall should do some strategic planning to advertise the food stall to the public, create an image of our target food stall outshine the others. Sometimes only adjusting the service quality is not enough. The benefits must be spread to the other people, let the potential market aware of the strong point of the organization, only then there will be chances for the organization to explore the new potential market.
Direct marketing always relate to database. A direct marketing is a method to know more about customer and thus raise their satisfaction while, database is a synergy to the direct marketing as it helps in record the particular of customer and direct marketing provides itself a plan to fully utilize the data. The food stall tends to meet with different demands, wants and needs from their customer every day. Generally, small business like this food stall does not have a proper system or tools to record all the information but only by their memorization. Memorizing by mind has its limitations and it is not efficient. Furthermore when their customer increase, their memory must be can’t cope with this for sure. For example, there is a customer always orders a cup of coffee and a pack of nasi lemak at every weekday morning. If the stall owner is meticulous enough, he will remember the customer habits and then always prepare the stuffs that the customer wants at every weekday morning beforehand. However, if there are 1000 customers who have regular needs but are different with that customer, can we expect the owner able to remember all the customers need? For sure the answer is no.
Therefore, the owner needs a device to get help in this which is a database. If every customer’s details are recorded, the stall owner is able to identify and segment the customers into distinct groups. Then, she can deal with the customers’ needs more effectively as the time needed for fulfilling their requirements are shortening. Consequently, it increases the customers’ satisfaction and retention.
Furthermore, the existence of database is a must in segmenting the customers. Segmentation is the process of dividing the total market into the groups of people with similar needs and desires based on their characteristics and past purchase behavior. We must record all of the detailed information of the customer first then we can segment them successfully and easily. As the segment become smaller, it is able to develop marketing strategy and program that are more specific to the needs of the particular segment. Select and target the most profitability group with proper marketing strategy can attract more customers and induce the sales of the organization. In contrast, mass marketing which targeting all types of customer is not efficient and will incur extra high cost.
Direct marketing is also play an important role in building long term relationship with customers. Direct marketing can deal with the distinct need of customers by launching different kinds of promotion and product for each segment of customers. Customers feel that they have been taken in great care hence their satisfaction increase and that’s how the building of long tem relationship goes. Only an organisation that familiar with the favour, buying pattern or purchase behaviour of the customers can help them build a close relationship with the customers. Especially for the regular customers, they are treated differently from the others as most of the profits are gaining from them. Just some marketers always say: “the 80% of the profits are coming from 20% of customers.”
Last but not least, direct marketing can also help the organization to identify the prospect customers. It can be done by find out the best response rate, the common trait and characteristics of the largest segment of customer. For this food stall, their potential customers probably are students and staffs that work and study at the same area with the food stall, because they tend to passing-by the stall more often than the others. Never underestimate the power of prospect customers because they are the future customers that can bring the large profit to the stall. Prospect customers are also as important as regular customers. The owner should make use of direct marketing system to expand his market to attract more potential customers.
In conclusion, there are many benefits and reasons of why our target stall should implement direct marketing system. Actually, the rationale implementation of direct marketing system also can be applied to all businesses that require the increment of customers’ satisfaction to survive. Although the stall is not a big organization but it still need to go through a lot of effort and mechanism to expand its business, and what it different from the big organization is just in terms of cost.
Finding from Activity 2
Since the organization has not captured any individual customer data, we had design a form for the organization to capture customer data. The form that we have designed includes customer demographic and psychographic data.
The customers’ demographic data that we use includes first and last name of the customer, gender, age, race, national origin, and occupation. First and last name of the customer is the main and basic information that have to include in the form. It is the main identity of the customer, and it let us easily record and update customer’s details and current information. In addition, give convenience to the organization to trace back the customers’ records. While for gender, due to male and female have different preference, needs and wants, and level of satisfaction on food, so, to meet and exceed each one of the customers’ satisfaction, the organization has to concern with both of the gender.
Instead of gender, races and national origin also play an important role. As we all know, Malaysia is a country that consists of several races. Besides Malaysian students, there are also international students from other countries in UTM. Due to the difference of cultural, lifestyle and eating habit in different races and nationality, the organization has to prepare different types of food that satisfy these customers or prepare the food that all the races and foreigners can accept. That’s the reason of why we decide to include those two into the particular of database.
Next, the organization is located at CICT in UTM. It is a building which contains several lecture classrooms, lecturers’ offices, and computer lab in it. Therefore the customers are usually students, lecturers, and staffs in UTM. Hence, the organization has to concern with the occupation of their customers. By knowing their occupation, we may identify the financial status and spending ability of the customers. From the information, the organization can adjust and set the price of food according to the customers’ spending ability. Since the majority of the food stall customers are students, the owner has to set their products at lower price.
Then, the next data that we need to include in a database is psychographic data. The data that we include in the form are food preference, drink preference, fruits preference, average purchase amount, and number of times on purchase per week. It is crucial to know the preference of customers. After identify customers’ preference, the organization may prepare the food, fruits and drinks according to the customers’ preference. In spite of reach and exceed customers satisfaction, it will also helps the organization in increase income and avoid from wasting of food, fruits and drinks.
Furthermore, from the average purchase amount that spends by customers and the amount of time customer’s purchase per week, we may know the customers purchasing behavior, financial status and spending ability on food. Besides that, the organization can also obtain information whether the customer is satisfied with the food prepared or the price of food set. According to the information, organization can modify, develop and improve its product according to the customers wants.
The number of purchase per week is recorded to help the owner to identify the regular customers and customers who is purchasing less. The owner need to know the reasons of why some people purchase more and some are not. Then from their feedback, change the marketing strategy and make some adjustment that can transform the less purchase customers to regular customers. At the same time, maintain the quality of the products to increase the customer retention.
Since the owner is planning to make a combo set, she can get useful information from the food and drinks preference and average purchase amount. She can analyze the data from database, make the combination of foods and drinks that are more popular among the customers and set a discounted price which is lower than normal prices of buy separately. This can encourage large scale selling in certain products.
Finding from Activity 3
The main function of external data is to supplement in-house customer data and allow marketers to develop more effective marketing programs. Direct marketers use external databases for two major applications: first, adding data to existing internal records in order to understand their existing customers better; second, using lists selected from the external database to contact new prospects directly.
Our group, after developed a series of strategies and databases applicable for our target stall, has recognized the importance of external database, which consistent with the statement that I stated above: first, they need to keep improving their products and know the true wants of their customers; second, their available market is so limited but their potential market is so vast outside, and measures must be taken to solve this. The stall has so many things need to be improved, but also opportunities to exploit. The usage of external database is the last step to the completion of our plan of instilling the database and direct marketing concept into our target stall.
In this essay, we would stress on suitable types of external data that we will use, the source of these data, and the reasons and importance of why we choose them to fit into the external database that we will apply. Only by choosing the types of data wisely then database which produced will be fully utilized, in lowest cost, and easy to use. After collect and analyze the information by each of our own, we have discussed and reached a consensus about the types of external data that we think will constitute a good external database.
First and foremost is the Malaysia’s various races’ and foreigners’ food cultures. Why is it so important? We need to know that the first condition to let the customer coming in is the foods are suitable for their liking. In other words, is to sell the foods which are acceptable and preferred by them. Especially things become complicated when in student customers alone already consist of various races including foreigners and some of their food cultures maybe distance apart from the others. Not all of the Malaysian food will be favored by them. And another thing that should be pointed out is that certain religious banned their trustee in consuming some types of food. This is an issue that should be taken care of because a business would want more and more customer come in and go out happily, and not the other way round. This is a common sense. And they definitely don’t want complaints from their customers, to smear the name of the stall.
Certain information can be taken into account to become the external data. For example, the preferences of the Malaysian and foreigners in breakfast, what is the common acceptable food among the Malaysian, what is the common acceptable food between Malaysian and foreigners, what is the favorite drink for each groups of customers, and so on. Besides that, never forget about gather the information about the banned food for the certain groups of customers like the people who are not allow from taking beef, vegetarian and etc.
As for the source for this kind of information, the most suitable and reliable source of information maybe is still from the word of mouth from customers themselves. We are pretty sure that the customers will give a most truthfully answer if ask them with a kind attitude and friendly tone. The organization can also consider searching the online website for this kind of information, especially the information food culture of the foreigners. All of this can be done by just few clicks and typing in few minutes.
The existence of competitors and peer organization definitely will give a headache to the owner of our target food stall. The most obvious answer is they all selling the almost same type of food same with our target stall. However, they still have much different in the aspects like, for example, food price, cleanliness, the available of other facilities, extra service available, distance from the lecture halls and etc. In spite of the influence from the direct competition from them, there are also indirect competitions like the available of drink vendor machines, the restaurants outside the campus and so on.
As a result, to handle this obstacle effectively by using external database, the organization must gather the information about the condition of his competitors first. This include: Check the price boards of his competitors; check the foods available in each competitor; survey the condition of his competitor like their cleanliness and extra service available; identify the drink vendor machine in the same area; identify the potential competitor outside campus like fast-food restaurant; and etc. Although it may require a lot of effort in getting these data, the benefit which returns to the organization is immense.
Talking about the benefit, the benefit of retrieving the data of competitors can be seen in few ways. Firstly, it can be a reference for the organization to prepare foods and drinks, inventing and adjusting the new menu, or even adding extra service in the stall. It is important to stress that the adjusted or added menu and services shouldn’t focus on “selling the good things that other people have”, but “selling the good things that other people don’t have”. It’s meaning that the stall should promote something which is not available in other places or justified their own products with added value.
Secondly, is understands the customers purchasing behavior. How does it related to the benefit of getting these data? If we combine all the data together and analyze, there is high possibility to find out the reasons of high customer flows in certain restaurants and stalls which have very high sales volume. The reason can be like: it is nearest to the lecture hall; low prices; good services, and etc. If we analyze further then maybe can find out the customers purchasing behavior, to put it simply is the reasons of consumers decided to go to these stalls and restaurants.
Lastly is knows more about needs and wants, preference of customer. They want what kinds of food? They want what kind of services? What kind of prices that is acceptable for them? The organization can get some clue through the process of surveying its competitors.
Among the customers of the organization which is also our target stall, some of them are lecturers or the staffs of UTM. It is a common sight to see some staffs or lecturers of UTM sitting down in front of the stall with their colleagues, drinking coffee and eating snacks while chatting with each other. They are also the main customers which constitute a rather high percentage of total customers, and there is the need to gather more information about their preferences and spending pattern so the organization can further expand this market.
We have identified 3 ways in capturing their income and preferences data: first, interview them personally and observe their daily habits in purchasing their foods; second, sending enquiries to the UTM management; and the third one is launching a survey, get a detailed information about their preferences and spending pattern from them directly. All this 3 ways can be chosen optionally or proceed together, depend on the timeliness and effectiveness of each way.
About the reasons of gathering these data, it is about the same with the group of student customers: understanding their preferences and modify the products accordingly to reach the customer satisfaction; give a peek into their income to predict their spending pattern. However, due to their higher spending power, more available choice, and more high quality lifestyle compare with the student customer group, their preferences tend to show more variability and this is why surveying is suggested in capturing their data.
Loan PTPTN (Perbadanan Tabung Pendidikan Tinggi Nasional) is the loan specially provide for the student in high education level. In UTM, almost all of the local students have applied for it. In another words, the students spending pattern has some relations with the average amount of loan PTPTN that they get. Normally the loan will be used to pay for their tuition and accommodation fees, and the rest will be taken as the living fees of the students themselves. In lieu of this, we can estimate the spending pattern by dividing their living fees into a few parts and deducing their food budget.
Customer spending pattern is one of the main yardsticks to decide the product price. If the student have sufficient food budget, then the food pricing may not prove to be a problem. However, if their food budget shows the other way round, then the food pricing is a prior problem need to be solved. The organization may need to cut down cost or using large scale selling with low profit strategy. Conclusively, the food price should be adjusted according to the potential customers’ ability to spend.
The 4 types of external data that I mentioned above: average amount of loan PTPTN provide for students; income and preferences of the lecturers and staffs; competitors or peer organization; and Malaysian’s and foreigner’s food cultures, all of them consist of inevitable reason to include into database and its potential benefit if the organization has used it wisely. However, the rest still depends on the management and usage of the database to determine its success.