Restaurant Association of New Zealand

Hospitality Businesses Need To Reconsider Marketing Mix To Attract Customers

New Zealands hospitality industry continues to be a highly competitive market in which customers have the buying power to choose from a large variety of outlets. The market continued to expand by 236 outlets to 14,455 businesses in 2011 compared to the previous year (Statistics New Zealand, 2011). However, a survey by American Express in 2011 indicated that the frequency of dining decreased; 55 percent (up 5 percent) indicated they dined less frequently in 2011.

However this survey also showed that the majority of New Zealanders (64 percent) have continued to dine out at least once a month (down 5 percent) and 29 percent (down 3 percent) of these patrons dine weekly.

In order to attract and retain customers, an organisation needs to communicate to current and potential stakeholders the unique benefits they offer. There is a need for restaurateurs to be aware of marketing strategies that could potentially set them apart from competitors. This can be based on their marketing mix including their pricing, product/service, place and promotional strategies.

However considering the tough economic environment restaurateurs operate within, businesses may be reluctant to make an investment toward sound marketing campaigns. This attitude is reflected in a recent Restaurant Association of New Zealand survey of which 45 percent of members intend to keep their marketing budget the same throughout 2012. Typically members spend a minimal 1.39 percent (as a percentage of sales) on advertising and most spend less than $10,000 on marketing per year.

Just over a quarter of the businesses surveyed intend to spend their marketing budget on social media channels such as Facebook, Twitter and Flickr. Most members indicated their marketing budget will be spent on their own companies website or through more traditional tools such as print advertising. Email marketing also proved to be popular with 39 percent indicating they will use this medium, and about 30 percent of members surveyed send out an electronic promotion or newsletter at least once a month to their customer base.

The power of non-traditional media should not be underestimated, as in the case of Facebook, 58.8 percent of New Zealanders have a profile, with women spending an average of 4 hours and men 3 hours per week on this website (Auckland University, 2011).

According to American Express (2011) most New Zealanders (89 percent) obtain information regarding where to eat out through word of mouth from family and friends and from outdoor signage (45 percent). A Restaurant Association member made the comment: In a tourist town like ours, at the end of the day they walk down the only main street and look at your menu board for price and selection, because every eatery has them here. Then they make their decision.

In 2011 consumers in New Zealand became more aware of one-day Internet deals. In 2011 15 percent of diners used this medium to find out about an eating establishment. With the popularity of these increasing, over half of diners (55 percent has used a daily deal, discount site or entertainment book voucher during 2011, and 11 percent use them religiously. Using a daily-deal to promote your restaurant can be expensive, as the discount offered to consumers can cut significantly from potential profit and while there certainly seem to be an endless supply of hospitality businesses advertising on daily deal sites, not all are convinced. According to a restaurant owner: "Daily deals are a huge waste of time for a restaurant, unless it is so desperate for customers, that it doesnt care whether it makes any money or not." However... the consumer dining monitor indicates 78 percent of New Zealanders who use a discount offer are willing to visit again and pay full price if the experience was great (American Express, 2011).

Source, the 2012 Hospitality Report.

The second edition of this comprehensive hospitality report will be available in April. Packed with vital information to help hospitality businesses understand the current hospitality environment, benchmark their performance against the wider market, and help to anticipate and prepare for emerging trends that could impact the industry, the report will be available free of charge toAssociation members.