COVID-19 May Force Your Business to Close If You Don’t Adjust Your Marketing Mix
Optimize Your Marketing Mix to Stay Profitable and Viable
Changes happen every day. Some small others make a major impact on your business. With COVID-19 and the “Stay at home” mandate, many businesses have experienced a major change to their “Place” strategy. Within the marketing mix, place identifies how your customers get access to your product or services. Restaurants, bricks, and mortar retailers, and many other businesses underwent a major impact on how they had to change their place strategies and move to a different way of doing business.
Whether it was going online, providing pickup or delivery, or just shipping the product to the customer, many processes in the normal day of running the business had to change.
But just as important, did the other aspects of the marketing mix change to adapt to this new way of doing business? Think of each of the 4 P’s as individual levers. When one aspect or lever moves within your marketing mix strategy, no matter if it affects your product, place, promotion, or price, all of the other components or levers need to change to optimize the mix and the company’s profitability.
With the place strategy changing to a pickup and delivery option the product, price and promotions must change to address the new variables that have been introduced into the marketing mix strategy. For example, a restaurant cannot continue to effectively provide the same custom-made-to-order meals at the same price. Many variables such as food quality, due to the added time it takes to get the food to the customer; or price, with the now added cost of delivery and packaging, affect the profits and must be addressed.
Here is one example that is a good review of how making the change to just the way your customer accesses the product/service and not changing the product, price, and promotions can be the downfall of your business.
Example of One Restaurant’s Failure to Adapt All of the 4 P’s
This past Mother’s Day a local restaurant provided order and curb pick up to their local customers. Mother’s Day always being a busy holiday for the restaurant, they felt that the business would be good even though the indoor seating was closed due to the COVID-19. The restaurant was fully staffed and ready to accept takeout orders. The server’s role now changed to taking the phone orders and providing the food packaging and delivery to the customers as they came to pick up their orders.
What happened that day was a disaster. The phone rang off the hook, orders were written like they were in the past. However, most were ineligible since the orders were taken so fast over the phone and all of the orders came in around the same time for morning brunch pickups. Very little was changed in how the business operated in the past including the offering of the same menu, pricing, and service as their previous take-out business normally ran. However, this time, orders were incomplete, food quality suffered due to the massive amount of orders and the staff was tired and totally stressed. In the end, the customers were not happy with the experience that they normally enjoyed at the restaurant.
So what needed to change? The business needed to change their total outlook at how they needed to manage each of the 4 P’s to optimize the overall marketing mix strategy. The total change in how the service and products were delivered changed many other aspects of the business that were not modified to meet the customer’s expectations. Here are a few variables that changed that needed to be addressed:
1. Food delivery (Place) – in the past the restaurant’s total demand on the servers and the kitchen staff was based on the number of people in the restaurant at one time. The number of people was limited to 110. The staff knew how to handle this number and it never changed that much from day today. The takeout orders were never enough to really affect the service quality or demand.
2. Food quality (Product) – the food was ordered, prepared, and delivered to the customer within minutes. The food was also made to order to meet the needs of specific customer requests. Since the orders were cooked in the order that they were received by table all of the food came to the table in top quality.
3. Price – the price was always based on the food costs at 25-30% since that was the number that allowed the restaurant to make a profit based on all of the other fixed costs associated with preparing and delivering the meals to the tables.
4. Promotion – advertising was normally done for the restaurant through their social media outlets to customers that frequented the restaurant regularly. There was no online ordering system or app used for takeout orders or any other automated way to take orders or promote the business.
What Should You Do?
Based on this what could have the restaurant done to better manage this scenario and optimize its profitability by changing its marketing mix? The first is to step back and look at the vision and purpose of the establishment. Relook at how they can best deliver a product that stood up to the normal standards of the customers’ expectations. This included identifying some of their top-selling signature dishes and providing options for family servings instead of providing single, custom made to order entrees. The optimal way to maximize the product component was to limit the menu to the select items that could be produced in bulk, packaged, and stayed fresh/hot during the transfer to the customer’s home.
Regarding the order, this set menu will make it easier when ordering over the phone or a Google form could have been used to let customers order online. A specific quantity and cut-off time for orders should also be established to limit the orders to those that can be successfully handled by the cooking staff. The orders should also have been made before Mother’s Day so the staff was aware before that day what the demand and qualities of specific items would need to be prepared.
And finally, the price would need to be modified to address the family-style offering, increased cost of packaging and any other aspects that would add to the cost of this new way of processing the orders.
These are just a few examples of simple modifications that could have been made to make the life of the restaurant’s workers less stressful and the customers experience more positive.
The bottom line is setting the expectation upfront on what is available, the price, and the commitment that needs to be made by the establishment and customer to be successful. Moving all of the levers together within the marketing mix strategy in a way that the business now has control over the variables once again becomes important in both the business financial success and the mental sanity of the workers.
In short, during this time of COVID-19, there are many challenges that continue to be new and unprecedented. But, it all goes back to the basic building blocks of a good marketing mix strategy and optimizing the 4 P’s to the best of your ability to maintain control in the business and continue to service the customer with the same quality and focus. The difference may be what you offer, how you offer it, and how you set the price. But, your business purpose, vision, and the reason you love what you do remain the same.
As you navigate through these many changes, make sure you look at your total marketing mix strategy. Remember as you move the lever for one of the 4 P’s understand that the other parts of the strategy have to adapt as well to optimize your company’s profitability.
If you are interested in learning how you can build your marketing brand and tell your brand story go to the Strategy and Marketing Toolkit for more information.
If you are interested in learning more about the Marketing Mix you can view the video developed for my marketing class.