The Main Objective Is to Ensure Sustainable Growth for Red Lobster

Objective: The main objective is to ensure sustainable growth for Red Lobster.

Recommendation: Kim Lopdrup should not just focus on either the former target group of “Indulgents, Traditionalist and Frugals” or the growing portion of “experiential” customers, but spotlight the historical approach of providing top quality and fresh seafood at an affordable price to a currently increasing range of different customers and occasions. Hence the target group should include all customers who crave for great seafood.    

Pros: By going with the above mentioned strategy, the broader base of guests is likely to result in a higher degree of capacity utilization of the restaurants, which will increase the revenues. Furthermore, attracting additional “experiential” customers will probably help to increase the portion of the alcohol sales which are the lowest within the group of the “Big 7” and hence will increase the revenues as well. In addition, having low and higher priced meals does not only serve demands of different customer segments but also gives the opportunity to fit to different occasions. For example, “Frugals” are able to go there for business meetings to eat higher priced seafood as well as going out with their family and safe money by ordering lower priced food. The overall “problem to solve” is homogeneous within all the costumers because the variety of customers can be uniformly appealed due to their common love of seafood. Another advantage is that the segment of “experiential” customer is likely to grow and the average profit margin for their dishes is higher which gives additional growing potential for the future.

Cons: One potential issue is the dilution of the brand by serving different segments of customers with different needs. Therefore a very well-thought-out marketing program has to be developed concerning the right price, product, promotion and place decisions. Furthermore, the need of additional menus and wines will increase the operational complexity and costs. And in addition the remaining restaurants have to be remodeled fast. The cons are weighted out by the potential of achieving remarkable growth.

Implementation: First of all Red Lobster should broaden the menu in the higher price segment to better meet the demand of the growing segment of “experiential” customers and demand due to special occasions. Due to the same reason a better wine selection should be added and fast remodeling of the remaining restaurants has to be pushed. The positioning as “approachable, fresh seafood” should be maintained, by emphasizing these values with ads and focusing on seafood instead of increasing the number of non-seafood dishes. Hence the current ads that already are positioning around “freshness” generally fit to the new strategy. To attract additional “experiential” customers, ads should be extended to advertise the fine dining possibility and the healthy aspect of seafood as well. To avoid dilution and misunderstanding of the brand image, the message that everybody who loves seafood can choose between different types of all fresh and high quality seafood due to the amount of money he or she wants to spend should be communicated. The traditional price promotions should be maintained as long as it builds brand equity. Another implementation should be the possibility to change the ambience by the time of the day to be more attractive for business meetings during the day and make atmosphere more personal in the evening and on weekends when people are more likely to go out with their family and friends. Amongst others this can be achieved by “intelligent lightning”.