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BSBMKG515 Conduct a Marketing Audit Assessment To achieve competency in this unit you must complete the following assessment items. All tasks must be submitted together. Tick the boxes to show that each task is attached. 

Task 1. Marketing Plan Review ☒

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Task 2. Conduct a Marketing Audit and Report ☒

Assessment cover sheet Student to complete coloured areas Student’s name

Julia Carolina Moraes Contrucci de Souza

Qualification

Diploma of Marketing

Trainer Name

Francis

Student’s ID

22427

Student’s declaration Yes

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I have read and understood the details of the assessment.

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I have been informed of the conditions of the assessment and the appeals process and understand I may appeal if I believe the assessment is not equitable, fair or just.

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I agree to participate in this assessment, and I am ready to be assessed.

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I certify that the attached is my own work (or in collaboration with other members of the group as required).

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I have acknowledged all sources where appropriate in accordance with ILSC’s Academic Integrity Policy, and I believe other group members have done the same.

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Julia CMC de Souza

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Assessment (ILSC office use only)

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Congratulations! You have addressed the outcomes of this unit and have been deemed competent.

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Please see your trainer to discuss (Trainer’s name below). You will need to address the above feedback and resubmit/provide the required answers before an assessment decision can be made.

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Task 1

Marketing Plan Review

Assessment description and requirements In this Assessment Task, you are required to prepare for a marketing audit by developing a plan outlining how an internal and external audit can be conducted within the case study organisation. You will need to review the case study marketing plan provided with this assessment (Appendix 1), and describe a plan that outlines the scope, approaches, and timelines for the audits. You will need to clearly identify the type of marketing audit and format to be used in conducting the audit and collecting information.

Procedure 1. Using the case study information provided to you (Appendix 1), complete the following steps by providing dot-point written information to describe: a. the purpose of the marketing audit, including details about micro and macro factors that may affect the marketing operations b. the scope of the marketing audit that is required c. the methodology required to be used in conducting the audit and when the audit could occur for the organisation d. the participants to be involved in the conduct of the audit and what their involvement would require (their role) e. the main characteristics of the marketing audit and how they meet the audit priorities for the organisation f. the format of and the main elements to be included in the marketing audit g. write a marketing audit plan, ensuring you present information according to standard report format, this includes: o title page o introduction o body o conclusion

Specifications You must provide: ● a completed marketing plan review, with written information as outlined above Your assessor will be looking for: ● evidence that you analysed and identified the needs of the case study ● evidence that you have analysed the marketing activities of the organisation

Task 2

Conduct a Marketing Audit and Report

Assessment description and requirements Using the plan for the organisation developed by you in Assessment Task 1 and the Marketing Plan (Appendix 1), you need to:  identify relevant criteria for internal and external marketing audits  conduct the audits and  collate the information collected in light of the audit requirements.

Procedure Using the case study information provided to you (found in Appendix 2), complete the following steps by providing written information to: 1. Conduct an external audit by describing in both qualitative and quantitative terms the criteria to be used in the external marketing audit, including: a. external macro-environmental factors that meet audit requirements including: i. economic factors ii. demographic factors iii. technological factors iv. political/legal factors b. external micro-environmental factors that meet audit requirements, including: i. market characteristics ii. customer needs iii. competitor factors. 2. Conduct an internal audit. a. Identify the criteria to be used in the internal marketing audit, including: existing research data; internal sales data; supply chain management and logistics. b. Describe the organisation conducting the marketing in terms of functional efficiency and internal interface with the organisation. c. Describe the marketing systems in terms of marketing information, planning and control. d. Describe the marketing productivity in terms of profitability and cost effectiveness. 3. Write a marketing audit report, ensuring you: Present information according to standard report format, which includes: o title page o introduction o body

o conclusion and recommendations N.B. Your report must compare the assumptions from the Marketing Plan with the actual findings of your audit.

Specifications You must provide: ● a completed marketing audit report, with written information as outlined above. Your assessor will be looking for: ● evidence that you analysed and identified the needs of the case study ● evidence that you have analysed the marketing activities of the organisation.

The Appendix is on the next page. Appendix 1 – Case Study Information and Marketing Plan Appendix 2 – Additional Case Study documentation

APPENDIX 1 Case study information Excerpt from letter of appointment Ready-made marketing engages you to conduct a marketing audit on their client, Sarto’s Gourmet Pasta. ● The audit is to cover macro and micro environmental factors, and the internal marketing operations including the marketing organisation, systems and productivity. ● Sarto’s will make available existing research data, internal sales data and details of their supply chain logistics. Your audit is to research the Graceville trading area and its place in the wider Australian community, while specifically targeting the pasta restaurant trade. ● Priority of the audit is to uncover the key factors that have inhibited the client’s ability to achieve the objectives of the market plan. ● The audit is to make findings in relation to the marketing plan, culminating in a report that compares the marketing plan assumptions with actual findings. It is expected that the report will follow the outline of the marketing plan. Meeting with Rose Ready of Ready-Made Marketing You met with the owner of Ready-Made Marketing, Rose Ready, who explained that their client had agreed to the marketing audit but wanted an external person, like you, to conduct it, so that all points of view could be canvassed from an independent perspective to minimise the chance for subjectivity. Rose explained that Sarto’s has not achieved the anticipated business objectives, and the hope is that your audit will uncover why this has happened by investigating the macro and micro environmental factors affecting the business, as well as the internal and external influences. The timing of the audit is right in fitting in with the planning cycle and the availability of relevant data. Rose stressed that they were looking for a variety of methodologies to be used in the marketing audit including one-on-one interviews with the key participants, use of customer focus groups that she could facilitate and research of data available for market research firms and government agencies. To assist you with the marketing audit, Rose gave you a copy of the marketing plan (which begins on the next page) and also provided research data for you to use in your report, sourced from: ● Australian Bureau of Statistics data ● IBSA World market research ● Australian Treasury reports.

Rose also outlined the key participants, apart from herself, that could be involved in the audit process. These included:  Mario Sarto – owner, who could provide reasons behind the decisions and directions given  Eric Yeung – accountant, who could provide financial data on costings and profitability  Adriana Como – sales and promotions, who could help with the internal operational problems with the marketing process.

Marketing Plan Sarto’s Gourmet Pasta December 2015

Table of Content

1.0 Executive Summary............................................................................................................ 8 2.0 Situation Analysis............................................................................................................... 9 2.1 Market Summary......................................................................................................... 9 2.2 SWOT Analysis........................................................................................................... 11 2.3 Competition............................................................................................................... 12 2.4 Service Offering......................................................................................................... 13 2.5 Keys to Success.......................................................................................................... 14 3.0 Marketing Strategy........................................................................................................... 16 3.1 Mission...................................................................................................................... 16 3.2 Marketing Objectives................................................................................................. 16 3.3 Financial Objectives................................................................................................... 16 3.4 Target Marketing....................................................................................................... 16 3.5 Positioning................................................................................................................. 17 3.6 Strategy Pyramids...................................................................................................... 17 3.7 Marketing Mix........................................................................................................... 18 3.8 Marketing Research................................................................................................... 18 4.0 Financials, Budgets, and Forecasts...................................................................................19 4.1 Break-even Analysis................................................................................................... 19 4.2 Sales Forecast............................................................................................................ 19 4.3 Expense Forecast....................................................................................................... 20 5.0 Controls............................................................................................................................ 21 5.1 Implementation Kmstones........................................................................................ 21

5.2 Marketing Organisation............................................................................................. 22 5.3 Contingency Planning................................................................................................ 22

1.0 Executive Summary Sarto’s Gourmet Pasta will be the leading gourmet pasta restaurant in Graceville, leveraging the rapidly developing consumer demand for pasta and a growing customer base. The signature line of innovative, premium, pasta dishes include pesto with smoked salmon, pancetta and peas linguini in an alfredo sauce, and fresh mussels and clams in a marinara sauce. Sarto’s Gourmet Pasta also serves distinct desserts and beverages including alcohol. Sarto’s Gourmet Pasta will reinvent the sit-down and home-delivery pasta experience for individuals and families, with high discretionary income by selling high quality, innovative exotic products at a reasonable price, designing tasteful, convenient locations, and providing industry-benchmark customer service. In order to grow at a rate consistent with our objectives, Sarto’s is offering an additional $500,000 in equity. Existing members will be given the first option to subscribe to the additional equity to allow each of them to maintain their percentage of ownership. The portion not subscribed by existing members will be available for prospective new investors. Note: This marketing plan has been prepared for Trans-Australian Financiers by M. Sarto in conjunction with Ready-Made Marketing, as part of an application for finance. Ready-Made Marketing have recommended a marketing audit be done each year to assess the effectiveness and achievements of the plan, and make adjustments where required.

2.0 Situation Analysis Sarto’s Gourmet Pasta is close to entering their third year of operation. The restaurant has been well received, and marketing is now critical to its continued success and future profitability. The store offers an extensive offering of gourmet pastas. The basic market need is to offer individuals, families, and take away customers fresh, creative, exotic, attractive, pasta dishes and desserts. Sarto’s uses homemade pasta, organic vegetables, and premium meats and cheeses.

2.1 Market Summary Sarto’s Gourmet Pasta possess good information about the market and know a great deal about the common attributes of our most prized and loyal customers. Sarto’s Gourmet Pasta will leverage this information to better understand who is served, their specific needs, and how Sarto’s can better communicate with them.

Market Analysis 2.1.1 Market Demographics The profile for Sarto’s Gourmet Pasta's customer consists of the following geographic, demographic, and behaviour factors based on a local Chamber of Commerce report: ● Overview Graceville:

○ Large % of families. ○ Area growing at 10% per year. ○ Household income – increasing steadily. ○ Regional distribution – Graceville growing faster that the city and state at 7%. ● Geographic:

○ Our immediate geographic target is the area of Graceville with a population of 130,000. ○ A 30 km geographic area is in need of our services. ○ The total targeted population is estimated at 46,000. ● Demographics:

○ Male and female. ○ Ages 25-50, this is the segment that makes up 53% of the Graceville market according to the Graceville Chamber of Commerce. ○ Young professionals who live close to the location. ○ Have attended secondary and have further education.

○ An income over $60,000. ○ Eat out several times a week. ○ Tend to patronise higher quality restaurants. ● Behaviour factors:

○ Enjoy a high quality meal without the mess of making it themselves. ○ There is value attributed to the appearance or presentation of food.

2.1.2 Market Needs Sarto’s Gourmet Pasta is providing its customers with a wide selection of high-quality pasta dishes that are unique and pleasing in presentation and utilises top-shelf ingredients. Sarto’s Gourmet Pasta seeks to fulfil the following benefits that are important to their customers. ● Selection – A wide choice of pasta options. ● Accessibility – The patron can gain access to the restaurant with minimal waits and can

choose the option of dine in or take out away. There is a planned ‘Park ‘n Ride’ to be built adjacent to the property providing parking for patrons at night. ● Customer service – The patron will be impressed with the level of attention that they

receive. ● Competitive pricing – All products/services will be competitively priced relative to

comparable high-end pasta/Italian restaurants. Above all, Sarto’s believes that quality tasting food, an exotic assortment and range of pastas, in a family-based dine-in environment is the key to our customer’s needs and wants.

2.1.3 Market Trends The market trend for restaurants is headed toward a more sophisticated customer. The restaurant patron today relative to yesterday is more sophisticated in a number of different ways. ● Food quality – The preference for high-quality ingredients is increasing as customers are

learning to appreciate the qualitative differences. ● Presentation/appearance – As presentation of an element of the culinary experience

becomes more pervasive, patrons are learning to appreciate this aspect of the industry. ● Selection – People are demanding a larger selection of foods, they are no longer

accepting a limited menu. The reason for this trend is that within the last couple of years the restaurant offerings have increased, providing customers with new choices. Restaurant patrons no longer need to accept a limited number of options. With more choices, patrons have become more sophisticated. This trend is intuitive as you can observe a more sophisticated restaurant patron in larger city markets such as Sydney or Melbourne where there are more choices available.

Sarto’s strongly believe that customers are more interested in exotic taste than any other issue. This will be why they shop with us and become loyal patrons.

2.1.4 Market Growth In 2008, the global pasta market reached $10 billion dollars. Pasta sales are estimated to grow by at least 10% for the next few years. This growth can be attributed to several different factors. While not all pasta is ‘good for you’, particularly the cream-based sauces, pasta can be very tasty. Sarto’s sees no real substitute for what it provides – ‘Impossible to substitute this taste and offer’, according to Sarto’s owner and founder, M. Sarto. Another variable that is contributing to market growth is an increase in the number of hours our demographic is working. Over the last five years the number of hours spent at work of our archetype customer has significantly increased. As the number of work hours increases, there is a high correlation of people that eat out at restaurants. This is intuitively explained by the fact that with a limited number of hours available each day, people have less time to prepare their meals and eating out is one way to maximise their time.

2.1.5 Economy Based on economic forecasts, Sarto’s Gourmet Pasta assume that interest rates are coming down and that this reduction will create more disposable income and more money available for families to eat out. In terms of available credit, Sarto’s assumes that this will not change in the foreseeable future and will not be a threat to the potential sales. The same assumption is made about employment levels, where Sarto’s assumes that unemployment levels remain the same at 5.1%.

2.1.6 Political From research carried out, Sarto’s identify that the government focus and emphasis in future legislative direction will be about ‘work/life balance’, which Sarto’s see a positive for their business model. Sarto’s, as a business operating in Australia, will abide by the law in all its dealings and comply with legislation that impacts on its business activities.

2.2 SWOT Analysis The following SWOT analysis captures the key strengths and weaknesses within the company, and describes the opportunities and threats facing Sarto’s Gourmet Pasta.

2.2.1 Strengths ● Strong relationships with vendors that offer high-quality ingredients and fast/frequent

delivery schedules. ● Excellent staff who are highly skilled at food preparation. ● Great retail space that is bright, clean, and located in an upscale mall, suburban

neighbourhood, or urban retail district.

● High customer loyalty among repeat customers. ● High-quality food offerings that exceed competitors offerings in quality, creativity and

presentation. ● Ready supply of organic food in the area not like other states.

2.2.2 Weaknesses ● Sarto’s name lacks brand equity. ● A limited marketing budget to develop brand awareness. ● The struggle to continually appear to be cutting edge.

2.2.3 Opportunities ● Growing market with a significant percentage of the target market still not aware that

Sarto’s Gourmet Pasta exists. ● Increasing sales opportunities in family business. ● In the expansion, Sarto’s will have the ability to spread overhead over multiple revenue

centres. Sarto’s will be able to spread the management overhead costs among the multiple stores, decreasing the fixed costs per store.

2.2.4 Threats ● Competition from local restaurants that respond to Sarto’s Gourmet Pasta’s exotic

offerings. ● Gourmet pasta restaurant chains found in other markets coming to Graceville. ● A slump in the economy reducing customer’s disposable income spent on eating out.

2.3 Competition National Competition ● Pasta Buzz: offers consumers their choice of noodles, sauces, and ingredients, allowing

the customer to assemble their dish as they wish. Food quality is average. ● Pasta Bite: has a limited selection but the dishes are assembled with high-quality

ingredients. The price point is high, but the food is quite good. ● Pasta Mia: offers pasta that is reasonably fresh, reasonably innovative and at a lower

price point. The company was sold a few years ago, and consequently the direction of management has been stagnant lately and has resulted in excessive employee turnover. ● Verdi Pasta: has medium-priced pasta dishes that use average ingredients, no creativity,

and less than average store atmosphere. Sarto’s is not sure how this company has been able to grow in size as their whole product is mediocre at best.

It is Sarto’s belief that the existing unwritten code of business activity, where each chain stays within their founding geographic market place, will remain in the foreseeable future.

Local Competition ● Stella’s: This is an upscale Italian restaurant that has a limited selection of pasta dishes.

Although the selection is limited and pricey, the dishes are quite good. ● Peri Pasta: An Italian restaurant with a decent pasta selection, however quality is

inconsistent. ● Niccolo: An upscale restaurant with a large wine selection and good salads. Everything

else is mediocre at best and over-priced. Service can often be poor. Sarto’s do not see the competitors changing their marketing strategy or product offer in the foreseeable future.

Growth and Share Competitor Stella's Peri Pasta Niccolo Average Total

Price $25 $19 $22 $22.00

Growth Rate 8% 5% 7% 7%

Market Share 16% 10% 12% 13% 38%

Growth and Share Analysis Potential Customers Market Analysis Individuals Take Away Family Total

Growth 2009 2010 2011 6% 12,000 12,720 13,483 10% 9,000 9,900 10,890 12% 25,000 28,000 31,360 9.27% 46,000 50,620 55,733

2012 14,292 11,979 35,123 61,394

2013 15,150 13,177 39,338 67,665

2.4 Service Offering Sarto’s has created gourmet pastas that are differentiated and superior to competitors. Customers can taste the quality and freshness of the product in every bite. The following are characteristics of the product. ● Sarto’s dough for the pasta is made with Italian semolina flour. ● Cheeses are all imported. ● Vegetables are organic and fresh with three shipments a week. ● Meats are all top-shelf varieties, organic when possible.

At Sarto’s, food is not a product; the experience of dining is a service. Sarto’s prides themselves on providing service that is on par with fine dining. Sarto’s will ensure that all aspects that are involved in the delivery of satisfaction to the customer will work using an integrated approach.

At a Glance – The Prototype Sarto’s Store: ● Location: an upscale mall, suburban neighbourhood, or urban retail district. ● Design: bright and clean. ● Size: 110–160 m2. ● Employees: 7–10 full-time plus casuals ● Seating: 35–45. ● Types of transactions: 80% dine in, 20% take away.

2.5 Keys to Success Location, Location, Location. Sarto’s site selection criteria are critical to success. Jeff Hardy, former director of Real Estate, Coffee Club, helped us identify the following site selection criteria. ● Daytime and evening populations. ● Shopping patterns. ● Car counts. ● Household income levels.

2.6 Critical Issues Sarto’s Gourmet Pasta is still in the speculative stage as a franchise concept with one store starting as the prototype. Its critical issues are the following. ● Continue to take a modest fiscal approach; expand at a reasonable rate, not for the sake

of expansion in itself, but because it is economically wise to. ● Use of the phone ordering system to underpin the direct selling activities in take away

food.

3.0 Marketing Strategy Sarto’s advertising budget is very limited, so the advertising program is simple. Sarto’s will do direct mail and local advertising, with inserts in the BMag likely to be the most successful of the campaigns. Lastly, Sarto’s will leverage personal relationships to get articles of Sarto’s in the BMag. Previous friends who have had their restaurant featured in the BMag have seen a dramatic increase of sales immediately after the article was published in the BMag.

3.1 Mission Sarto’s Gourmet Pasta’s mission is to provide families with the finest pasta meal and dining experience. We exist to attract and maintain customers. When we adhere to this maxim, everything else will fall into place. Our services will exceed the expectations of our customers.

3.2 Marketing Objectives 1. Maintain positive, steady, growth each month. 2. Generate at least $45,000 in sales per month. 3. Experience an increase in new customers who are turned into long-term customers. 4. Realise a growth strategy of one store per year.

3.3 Financial Objectives 1. A double-digit growth rate for each future year. 2. Reduce the overhead per store through disciplined growth. 3. Continue to decrease the variable costs associated with food production.

3.4 Target Marketing The market can be segmented into three target populations: ● Individuals: people that dine in by themselves. ● Families: a group of people, either friends or a group of nuclear relatives dining

together. ● Take out: people that prefer to eat Sarto’s food in their home or at a different location

than the actual restaurant.

The Sarto’s customers are hungry individuals between the ages of 25 and 50, making up 53% of Graceville (Graceville Chamber of Commerce). Age is not the most defined demographic of this customer base; all age groups enjoy pasta. The most defined characteristic of the target market is income. Gourmet pasta stores have been very successful in high rent, mixed-use urban areas. These areas have a large day and night population consisting of business people and families who have household disposable incomes over $40,000. Combining several key demographic factors, Sarto’s arrives at a profile of the primary customer as follows: ● Sophisticated families who live nearby. ● Young professionals who work close to the location. ● Shoppers who patronise the high rent stores.

3.5 Positioning Sarto’s Gourmet Pasta will position itself as a reasonably priced, upscale, gourmet pasta restaurant. Graceville consumers who appreciate high-quality food will recognise the value and unique offerings of Sarto’s Gourmet Pasta. Patrons will include singles and families, ages 25–50. Sarto’s Gourmet Pasta positioning will leverage their competitive edge: ● Product. The product will have the freshest ingredients including homemade pasta,

imported cheeses, organic vegetables, and top-shelf meats. The product will also be developed to enhance presentation, everything will be aesthetically pleasing. ● Service. Santo’s will only employ experienced cooking staff who can create meals that

customers will find outstanding to the taste. By offering a superior product, Sarto’s will excel relative to the competition.

3.6 Strategy Pyramids The single objective is to position Sarto’s as the premier gourmet pasta restaurant in the Graceville area, commanding a majority of the market share within five years. The marketing strategy will seek to first create customer awareness regarding their services offered, develop that customer base, and work toward building customer loyalty and referrals. The message that Sarto’s will seek to communicate is that Sarto’s offers the freshest, most creative, reasonably priced, gourmet pasta in Graceville. This message will be communicated through a variety of methods. The first will be direct mail. The direct mail campaign will be a way to communicate directly with the consumer. Sarto’s will also use ads and inserts in the BMag. This will be particularly effective because the BMag is a popular local paper that is consulted when people are looking for things to do in Graceville.

The last method for communicating Sarto’s message is through a grassroots PR campaign. This campaign will leverage networking relationships with people on staff of the BMag to get a couple of articles written about Sarto’s. One will be from the business point of view, talking about the opening of the restaurant and the people behind the venture. This is likely to be run in the business section. The second article will be a food review. In speaking with many different retailers and restaurateurs, significant increases of traffic followed articles in the BMag. Because of this level of effectiveness and low/zero cost, Sarto’s will work hard to get press in the BMag. Sarto’s also believe that the local patrons far prefer to receive information from the restaurant via flyers in the letterbox.

3.7 Marketing Mix Sarto’s marketing mix is comprised of these following approaches to pricing, distribution, advertising and promotion, and customer service. ● Pricing – Sarto’s pricing scheme is that the product cost is 35% of the total retail price. ● Distribution – Sarto’s food will be distributed through a take away model where

customers can phone in their order and come to the restaurant to pick it up, come into the restaurant, place the take out order and wait for it to be completed, or come in and dine at the restaurant. ● Advertising and promotion – The most successful advertising will be adverts and inserts

in the BMag as well as a PR campaign of informational articles and reviews also within the BMag. Promotions will take the form of in restaurant entertainment and ‘free meal’ giveaways. Heavy emphasis on promoting the brand and not just advertising products. ● Customer service – Sarto’s philosophy is that whatever needs to be done to make the

customer happy must occur, this investment will pay off with a fiercely loyal customer base who is extremely vocal to their friends with referrals.

3.8 Product development It is envisaged that new products will be developed on a regular basis in thine with menu changes which is targeted at every three months. The plan for product testing is to offer ‘free meals’ to regular customers, staff and their families. By getting feedback from these people, changes can be made or products ‘canned’ so that only tested and proven products make it onto the menu list.

3.9 Marketing Research During the initial phases of the marketing plan development, several focus groups were held to gain insight into a variety of patrons of restaurants. These focus groups provided useful insight into the decisions, and decision making processes, of consumers. An additional source of market research that is dynamic is a feedback mechanism based on a suggestion card system. The suggestion card system has several statements that patrons are asked to rate in terms of a given scale. There are also several open ended questions that allow the customer to freely offer constructive criticism or praise. Sarto’s will work hard to implement reasonable suggestions in order to improve their service offerings as well as show their commitment to the customer that their suggestions are valued. The last source of market research is competitive analysis/appreciation. Sarto’s will continually patronise local restaurants for two reasons. The first is for competitive analysis, providing Sarto’s with timely information regarding other restaurant's service offering. The second reason is that local business owners, particularly restaurant owners, are often part of an informal fraternal organisation where they support each other's business. Access to ongoing market research will be achieved via the publications from the Restaurant Association which Sarto’s has become a member of recently.

4.0 Financials, Budgets, and Forecasts This section will offer a financial overview of Sarto’s Gourmet Pasta as it relates to the marketing activities. Sarto’s will address Break-even Analysis, sales forecasts, expense forecasts, and how those link to the marketing strategy.

4.1 Break-even Analysis The break-even analysis indicates that $45,000 will be needed in monthly revenue to reach the break-even point.

Break-even Analysis Sales Fixed Costs Variable Costs Total Cost Profit Variable Costs

35000 25650 15050 40700 -5700 43%

40000 25650 17200 42850 -2850 43%

45000 25650 19350 45000 0 43%

50000 25650 21500 47150 2850 43%

55000 25650 23650 49300 5700 43%

Costs Sales

4.2 Sales Forecast

The first year will be used to get the restaurant up and running. By year two things will get busier. Sales will gradually increase with profitability being reached by the beginning of year two. Year 1 - $450,000

Year 2 - $591,000

Year 3 $814,500

4.3 Expense Forecast Marketing expenses are to be budgeted so that they are ramped up in the first year. Restaurants typically have increased business in Autumn. This generally occurs because during the summer, when the weather is nice and it does not get dark until late, people tend to eat out less. Annually approx. $25,000 Ongoing sales forecasting will be to use the services of Ready-Made Marketing who will advise on all aspects of the marketing function that Sarto’s will be engaged with. Ready-Made Marketing will also be given access to the marketing cost data so that they can periodically examine and validate marketing costs in line with industry benchmarks.

Profitability outcomes budget Profitability outcomes Average Price Gross Profit % Pasta $ 22.00 55% Beverages $ 6.00 70% Overall 65%

5.0 Controls The purpose of Sarto’s Gourmet Pasta’s marketing plan is to serve as a guide for the organisation.

5.1 Implementation Milestones The following milestones identify the key marketing programs. It is important to accomplish each one on time, and on budget.

Milestones Advertising

Start Date

End Date

Budget

Manager

Department

Marketing plan completion

1/01/2016

2/01/2016

$0

Mario

Department

Banner ad campaign #1

1/02/2016

4/01/2016

$3,754

Mario

Department

Banner ad campaign #2

1/10/2016

1/01/2016

$4,900

Mario

Department

Manager

Department

Total Advertising Budget

PR

$8,654

Start Date

End Date

Budget

Other

$0

Other

$0

Total PR Budget

$0

Direct Marketing

Start Date

End Date

Budget

Manager

Department

Direct mail campaign #1

1/10/2016

1/04/2016

$1,689

Mario

Department

Insert campaign #1

1/10/2016

1/04/2016

$2,252

Mario

Department

Direct mail campaign #2

1/10/2016

1/01/2017

$2,205

Mario

Department

Insert campaign #2

1/10/2016

1/01/2017

$2,940

Mario

Department

Total Direct Marketing Budget

$9,086

Totals

$17,740

5.2 Marketing Organisation Mario Sarto, the owner, is primarily responsible for marketing activities and has the authority and responsibility over all company activities that affect customer’s satisfaction. This is in addition to his other responsibilities. Ready-made marketing have been engaged to provide marketing services as required, and some outside resources for graphic design work, and creativity are also to be utilised. Feedback will come from in-store feedback forms and local customer surveys

5.3 Contingency Planning Difficulties and risks: ● Problems generating visibility. ● Overly aggressive and debilitating actions by competitors. ● An entry into the Graceville market of an already existing, franchised gourmet pasta

restaurant. Worst case risks may include: ● Determining that the business cannot support itself on an ongoing basis. ● Having to liquidate equipment or intellectual property to cover liabilities.

APPENDIX 2 Additional Case study information Excerpt from letter of appointment Ready-made marketing engages you to conduct a marketing audit on their client Sarto’s Gourmet Pasta.  You are to use various methodologies to obtain the widest possible view of Sarto’s marketing operations including interviews with the key participants.

Excerpt from meeting with Rose Ready of Ready-Made Marketing Rose stressed that they were looking for a variety of methodologies to be used in the marketing audit including one-on-one interviews with the key participants, use of customer focus groups that she could facilitate, and research of data available for market research firms and government agencies. You met with the owner of Ready-Made Marketing, Rose Ready, who explained that their client had agreed to the marketing audit but wanted an external person like you to conduct it so that all points of view could be canvassed from an independent perspective to minimise the chance for subjectivity. When you asked for an opinion why she thought that the client had not achieved the objectives, Rose replied that there was no one big issue, but that many little factors had an accumulative affect on the overall result. You were wanted to understand the micro-environmental factors impacting on Sarto’s including the buyer and consumer behaviour, competition and market demand and so asked Rose a series of questions. She spoke for a while about Ready-Made Marketing’s role with the owner Mario Sarto and the fact that he made all the decisions relating to the marketing, and mostly without any consultation with them. Rose accepted the position but feel that it was not always in the best interests of Sarto’s business or its customers. For instance, Mario had rejected the idea of converting the take away ordering system to the new internet based technology. Her own experience was that the staff, while being very competent cooks, were not skilled in telephone sales anyway. Rose was particularly disappointed that Mario did not take up the offer to engage a freelance PR specialist that she introduced to him after Mario’s friends at Bmag left the magazine. There was no write up of the business at all for the entire first year. Rose indicated that Mario believed that all the business needed was the delivery of regular flyers in local letterboxes, but according to Rose the feedback from the surveys showed that the majority of customers thought that flyers were mostly junk mail anyway.

Rose had hoped to get information from the accountant about marketing costs but that just did not happen.

Meeting with Mario Sarto and the accountant Mario was happy to meet with you to discuss the business and marketing performance of Sarto’s Gourmet Pasta and invited his accountant, Eric Yeung, to the meeting to help with answering some of the financial questions. When asked for an overview of the performance of the business, Mario explained that it has been very difficult from the start. He spoke about the fact that the government had not built the ‘Park & Ride’ parking area as planned and had stopped the project for another year. This Mario said had a big impact on people having access to the restaurant at night. Mario also explained that Stella’s, one of his local competitors, had built a large 30 seat outdoor eating area and that it seemed to be full every time he went past and looked in. Also one of the franchise chains, Pasta Bite, had opened up in the adjacent suburb giving the local customers greater options in pasta. All this new activity had put pressure on sales, which lead Mario to drop prices on pasta products. The accountant confirmed what Mario had said with the statement that pasta gross profit % was only 45%. Mario explained that his strategy to deal with the slow sales was to make the flyers more single product promotion rather than promoting the band and the assortment offer. As far as Mario was concerned advertising and promotion should be directed at getting next week’s sales and nothing more. When Mario spoke about the flyer, Eric said that there had been a huge increase in flyer unit costs. He believed it was the short print runs and the use of full gloss colour that was causing it. Mario explained that he needed the high gloss to show his pasta to the best advantage and short print runs because he was offering different ‘specials’ every week. Eric then said that according to the figures, it was the take away business that was really growing not the family groups and family group specials that Mario was targeting with his advertising in Bmag. It seemed that these family sit down specials were bringing down the profitability of the business. Eric explained that he received all the financial information about the business in preparation for Sarto’s tax returns. He then produced the actual sales for 2016 which showed. Segment

Budget – 2016

Actual – 2016

Individuals

120,000

121,000

Families

150,000

112,000

Take away

180,000

203,000

Total

450,000

436,000

When you asked about new product development and forecasting sales Mario said that it was too expensive to get market research done and so just used the accountant’s tax figures and his own ‘gut feel’ to determine the sales forecast.

Mario’s response to your question about charging different prices for deliveries, was to say that it just good business to charge the rich folk that lived in the gated estate more because they could afford it.

Meeting with Adriana Como Adriana was in charge of the sales and promotions for Sarto’s but worked as a supervisor in the kitchen as well. You asked her about issues she was facing in terms of the sales and marketing operation. She admitted that her skills and qualifications were more in kitchen management than sales, but Mario had asked her to carry out this function. She said one of the biggest problems was that the phone ordering system was constructed in the kitchen next to the cook with the most responsibility to compile and check every meal. She said it created real logistics problems in dealing with take away orders. When you asked about new product development, she went on to explain that new products were developed based on Mario’s assessment of how exotic the new product was or how easy it was to make. Mario felt that testing new products by giving them away was too costly and counterproductive to increasing sales. In a comment about accessing research data, she explained that there was plenty of research available in the Restaurant association’s monthly magazine, but Mario just left that for magazine for the staff in the lunch room and never consulted it. Another issue was that there was no real coordination between the timing of the promotional flyers and the preparation in terms of having sufficient stock purchases. Mario and the printer would create a new weekly specials flyer, and sometimes the first she knew about it was when the customer would present at the restaurant ordering one.

Research reports In trying to understand the macro factors affecting Sarto’s, Rose researched the following reports to obtain findings on the demographic, economic, ethical, geographic, political/legal, social/cultural, technological influences. You looked through these research reports that Rose Ready had given you to discover the following. Australian Bureau of Statistics (ABS)  ABS statistics on age distribution – Findings are the same as the marketing plan.  ABS statistics on growth rates – Findings: Growth in young families with a government incentive on new births and an increase in retirees.  ABS statistics on regional distribution of the population – Findings: Increasing in the Graceville area but were mostly retirees.  ABS statistics on the population size – 130,000. Australian Treasury report  Treasury’s current interest rates – Findings: Rising incrementally throughout the year.

 Treasury’s current levels of credit availability – Findings: Tightening on credit card limits.  Treasury’s current unemployment levels – Findings: Unemployment falling due to more opportunities created by mothers leaving the workforce. IBSA World – Market research 2014  IBSA World industry report on strategies adopted by each of the major competitors – Findings: Expansion by the chains into interstate markets – Price war created due to reducing sales and fight for market share.  IBSA World industry report material shortages – Findings: Drought conditions in most states sees local produce from Queensland being sent to Sydney creating local shortage.  IBSA World industry report on market demand – Findings: Steady.  IBSA World industry report evolving needs and satisfactions being sought by the buyers in this market – Findings: Growing need for healthy options like salads, and more information on ingredients.  IBSA World industry report substitutes for this product – Findings: Supermarkets introducing a range of pre-packaged ‘heat & eat’ pasta products.  Household Income survey – Findings: Steady, no change.  Political and legal – Findings: Employees working longer with emphasis on economic growth. New legislation relating to labelling on take-away products delivered to consumers.

Focus Group You organised a focus group from the local community and from some of Sarto’s regular customers. The following consensus was reached among the participants.  Group want convenience products and more healthy options.  Take away and eat at home was the preferred dining option rather than eat out.  Pasta products should be designed to be low fat. Tomato-based sauces rather than cream.  Customers want to order via the internet and not be stressed out by the phone system with its delays and difficult to understand accents and noise.  Customers prefer fewer flyers which they saw as ‘junk mail’, and the flyer should be more informative about the ingredients and offer a full menu.  Some customers questioned the ethics of Sarto’s Gourmet Pasta, who charged more for delivery into the neighbouring ‘gated estate’ than to every other home delivery customer.  Comment ‘They may be great cooks, but they don’t know how to handle telephone sales’.

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Content

Sarto’s Gourmet Pasta – Task 1 BSBMKG511 – CONDUCT A MARKETING AUDIT JÚLIA CAROLINA MORAES CONTRUCCI DE SOUZA

2017

s 1. INTRODUCTION.................................................................................37 2. PURPOSE........................................................................................... 38 2.1 GENERAL MARKETING AUDIT PURPOSE.....................................38 2.2 SARTO'S GOURMET PASTA MARKETING AUDIT PURPOSE...........38 2.3 SARTO'S OBJECTIVES.................................................................38 2.3.1 SINGLE OBJECTIVE........................................................................38 2.3.2 MARKETING................................................................................... 38 2.3.3 FINANCIAL..................................................................................... 39 2.4 SARTO'S GOURMET PASTA - SCENARIO AND TIMING.................39 3. SCOPE............................................................................................... 40 4. METHODOLOGY.................................................................................41 4.1 PESTLE AND FIVE FORCE ANALYSIS...........................................41 4.2 SWOT......................................................................................... 41 5. PARTICIPANTS...................................................................................43 6. CHARACTERISTICS............................................................................ 44 6.1 Comprehensive..........................................................................44 6.2 Systematic.................................................................................44 6.3 Independent.............................................................................. 44 6.4 Periodic...................................................................................... 44 7. ELEMENTS......................................................................................... 45 7. 1.1 ENVIRONMENT............................................................................. 45 7.1.2 ECONOMIC FACTORS.....................................................................45 7.1.3 TECHNOLOGICAL FACTORS...........................................................45 7.1.4 SOCIAL FACTORS..........................................................................45 7.1.5 POLITICAL-LEGAL FACTORS...........................................................46 7.2 STRATEGY..................................................................................46 7.3 ORGANISATION..........................................................................46 7.4 SYSTEMS.................................................................................... 46 7.5 PRODUCTIVITY...........................................................................46 7.6 FUNCTION.................................................................................. 47 8. REQUEST........................................................................................... 49

1. INTRODUCTION The presented document is a marketing audit plan requested by Rose Ready, owner of Ready-Made Marketing, for the restaurant Sarto's Gourmet Pasta, her client. In order to obtain an independent third-part perspective of the current marketing activities performed by the restaurant, Mario Sarto, owner of Sarto's Gourmet Pasta, insisted on an external auditor.

2. PURPOSE 2.1 GENERAL MARKETING AUDIT PURPOSE As previously stated, the main purpose of a marketing audit is to review the current marketing activities of an establishment. This is done so that: 

environmental factors - macro, micro or both - which could be affecting the business can be investigated.

In general terms, macro-environmental are aspects which cannot be controlled by the business, such as economic, demographic, technological, political-legal and social. Consequently, the micro-environmental factors are: market, competitors, customers, suppliers, dealers and distributors. 

marketing activities can be mapped;

The mapping of marketing activities consists of analysing closely the internal processes and how those operations contribute to the failure or success of the company. 

support new advisement for marketing strategy

Based on its findings, a marketing audit can be the foundation for a new marketing strategy that will correct faulty or overlooked processes leading to an improvement of the business's productivity, systems and profit.

2.2 SARTO'S GOURMET PASTA MARKETING AUDIT PURPOSE In the case of Sarto's Gourmet Pasta, the main objective is to disclose the reasons for which the restaurant is not achieving its anticipated business goals, as previously stated by Rose Ready.

2.3 SARTO'S OBJECTIVES 2.3.1 SINGLE OBJECTIVE According to the restaurant's marketing plan, prepared as part of an application for finance to the Trans-Australian Financiers in December of 2015, page 17, Sarto's singled out the business objective of holding the position of premier gourmet pasta restaurant in the Graceville area, where it is located, commanding most of, much of the market share within five years.

2.3.2 MARKETING The marketing plan also emphasize, on page 16, the following marketing objectives:    

Maintain positive, steady growth each month; Generate at least $45,000 in sales per month; Experience an increase in new customers who are turned into longterm customers; Realize a growth strategy of one store per year.

2.3.3 FINANCIAL On the same page, its financial objectives are described as:

  

A double-digit growth rate for each future year; Reduce the overhead per store through disciplined growth; Continue to decrease the variable costs associated with food production.

2.4 SARTO'S GOURMET PASTA - SCENARIO AND TIMING Close to entering their third year of operation at that point, the company believed that marketing was critical to its continued success and future profitability - once the store had been well received by the market with an extensive offering of individuals, families and take away gourmet pastas.

3. SCOPE As requested by Rose Ready, the marketing audit will gather both internal and external information about the company and its environment. Objectives, strategies, marketing organization, system and productivity will be under the scope of this marketing audit to better analyses the scenario in which is preventing Sarto's from fulfilling its business goals. In addition to that a detailed research of the Graceville trading area for the pasta restaurants, as well as its place in the wider Australia community, will also be done.

4. METHODOLOGY This marketing audit, with the impartial perspective in mind, will be composed of primary sources only combining both qualitative and quantitative evidence, such as data research from the Australian Bureau of Statistics (ABS), Australian Treasury report and IBSA World for the former, likewise one-on-one interviews essential parties of the company, both internal and external.

4.1 PESTLE AND FIVE FORCE ANALYSIS An external marketing audit covers issues such as Political, Economic, Social and Cultural, Technological, Environmental and Legal aspects in which the company is emerged. The PESTLE analysis includes:      

Political – stability of the government, global influence, potential changes to the legislation. Economic – economic growth, employment and inflation rates, monetary policy, consumer confidence. Social/Cultural – income distribution, demographic, lifestyle of the population. Technological – international influence, take up rates. Legal – taxation policies, employment laws, industry regulations. Environmental – regulation and restrictions.

Another common method for evaluating a business current market and perspectives is the Five Forces analysis, which assesses the potential for profitability in an industry and tends to focus on the single, stand-alone business unit rather than a single product or range of products. Its key areas are the followings: 





 

The threat of entry – in which time and cost of entry; specialist knowledge; economies of scale; cost advantages; technology protection and barriers to entry are evaluated. The power of buyers - in which the number of customers; size of each order; differences between competitors; price sensitivity; ability to substitute and cost of changing are investigated. The power of suppliers – in which number and size of suppliers; uniqueness of service; ability to substitute and cost of changing are considered. The threat of substitutes – in which the substitute performance and the cost of change are considered. Competitive rivalry – in which the number of competitors; quality differences; switching costs and costs of leaving market; as well as customer loyalty are examined.

4.2 SWOT Pondering both an internal and external perspective, the SWOT analysis will investigate the strengths, weaknesses, opportunities and threats of a business. Strengths and weaknesses are factors that can be controlled by the business.  

Strengths: the key elements that give the business advantage over its competitors in meeting the needs of the market. Weaknesses: the limitations faced by the business in implementing its marketing plans and strategies.

Opportunities and threats exist independent of the business, and are often beyond its control.  

Opportunities: the conditions of the environment in which the business operates which could benefit the organization if acted upon. Threats: barriers that prevent the business from achieving its objectives.

5. PARTICIPANTS After consideration, the key participants assigned to be interviewed during the audit are: - Staff    

Rose Ready (owner of Ready-Made Marketing) Mario Sarto (owner of Sarto's Gourmet Pasta) Eric Yeung (accountant at Sarto's Gourmet Pasta) Adriana Como (Sarto's sale and promotion staff)

- Regular customers - Local community

6. CHARACTERISTICS In order to better understand the marketing activities, performance and environment of Sarto's Gourmet Pasta, this marketing audit will attend to the four characteristics:

6.1 Comprehensive As requested by Rose Ready, the marketing audit will cover both internal and external environments, as well as its micro and macro factors. Objectives, strategies, function and systems will be under the scope of this marketing audit to better analyses the scenario in which is preventing Sarto's from fulfilling its business goals.

6.2 Systematic The steps to be followed are: - Marketing Plan Review - Search reports - compiling data from Australian Bureau of Statistics (ABS), Australian Treasury report and IBSA World. - One-on-one interviews with essential parties: Rose Ready (Ready-Made Marketing), Mario Sarto (owner of Sarto's), Eric Yeung (accountant at Sarto's) and Adriana Como (Sarto's sale and promotion staff). - Focus group - local community and Sarto's regular customers.

6.3 Independent As previously stated, an independent and external auditor assigned to this marketing audit. - Where is the store losing money? What is preventing it from achieving steady growth? - What are the sales numbers in total? What's generating profit? What's generating loss? - What are the current strategies to engage new customers? How are they retained?

6.4 Periodic As a way to measure the growth and evaluate the development of the implementations that will be suggested by this audit, it is suggested that the procedure should be periodically repeated every six months.

7. ELEMENTS A marketing audit should start with exploring the marketplace to determine what changes are taking place and how they may affect the business. The audit should then examine the business’s marketing objectives and strategies, organisation, and systems. It is also possible that an audit may look at key functions of the business that are fundamental to its marketing performance. A full marketing audit should have six major elements, each of which can be conducted as a standalone process if a full audit is not required. The six major elements are:

7. 1.1 ENVIRONMENT The marketing environment is defined in terms of both the macro-external environment surrounding the relevant industry, and the micro-external environment in which the business operates. The macro environment consists of factors which are generally beyond the control of the business, such as economic, demographic, technological, political-legal and social factors. The purpose of the macro environment audit is to assess the environment, determine key trends and evaluate their implications for the business.

7.1.2 ECONOMIC FACTORS It is important for a business to understand the economic environment, not only for its own benefit, but for the effect it has on potential buyers. Two key elements of greatest concern are:  

inflation: the general rise in prices without a corresponding increase in wages recession: a period when income, production and employment rates tend to fall.

Both elements decrease the demand for goods and services. Demographic factors Demographic factors are the vital statistics of the market population including age, gender, race and physical location. The basis for any market is people so these factors critically affect the behaviour of buyers.

7.1.3 TECHNOLOGICAL FACTORS Technology is constantly and rapidly changing. It has become crucial for businesses to adopt technological advances quickly and efficiently, to ensure they are able to meet the needs and expectations of the market efficiently.

7.1.4 SOCIAL FACTORS Social change is the most difficult external variable to incorporate in market planning. Social factors include attitudes, values and lifestyles which are often unpredictable and quick to change. These factors influence the products people purchase, what price they are prepared to pay, and how and when they expect to be able to purchase the product.

7.1.5 POLITICAL-LEGAL FACTORS Every aspect of business, and specifically marketing, is subject to restrictions and regulations. It is crucial that we understand these laws and abide by them, because failure to comply can have major consequences.

7.2 STRATEGY The marketing strategy audit considers whether the business’ strategy is positioned to handle both the opportunities and problems that face it. It examines the goals and objectives of the business, then the marketing objectives. Questions to consider: Are the business objectives clear, and do they lead logically into the marketing objectives? Are the marketing objectives stated clearly to assist marketing planning? Can they be measured?

7.3 ORGANISATION The marketing organisation audit looks at the effectiveness of the marketing and sales function of the business, and the interaction between marketing and other key functions of the business such as finance, purchasing and manufacturing. The structure of an organisation determines how it operates and performs, and should present the hierarchy of roles and responsibilities required for the business to function. Functional efficiency examines the effectiveness of relationship and communication between sales and marketing functions of the business. Interface efficiency examines the interaction between marketing and the other functions of the business, and how effectively these interactions.

7.4 SYSTEMS The marketing systems audit examines the systems used to inform, plan and control the marketing operation. This includes the procedures used in systems such as sales forecasting, marketing planning, inventory planning, order processing, and new product development. The marketing control system incorporates the processes required to monitor proposed plans and adjustments as necessary.

7.5 PRODUCTIVITY The marketing productivity audit looks at key accounting data to determine where the company is making profit. It also identifies areas where marketing costs can be reduced, by measuring the profit contribution of different products and services. Questions to consider: Profitability Analysis – What products are profitable? How do products compare in terms of profitability? Cost-Effectiveness Analysis – What is the advertising spending? Where is this information available? What might be a more effective way of effectively marketing the organisation’s products?

7.6 FUNCTION The results of the audit processes above may indicate that an audit of an isolated marketing function needs to be undertaken. This can include reviewing advertising budgets and evaluating specific advertising or promotional approaches or mediums for effectiveness. 

Products

What are the buyers' knowledge and attitudes toward the company's and competitors' product quality, features, styling, brand names, etc? What areas of product and brand strategy need improvement? 

Prices

What are the company's pricing objectives, policies, strategies and procedures? To what extent are the prices set on cost, demand and competitive criteria? Do the customers see the company's prices as being in line with the value of its offer? What does management know about the price elasticity of demand, experience-curve effects and competitors' prices and pricing policies?

To what extent are price policies compatible with the needs of distributors and dealers, suppliers and government regulations? 

Place (Distribution)

What are the organisation's advertising objectives? Is there adequate market coverage and service? How effective are distributors, dealers, manufacturers' representatives, brokers, agents and others? Should the company consider changing its distribution channels? 

Promotion

Including advertising, sales promotion, publicity and direct marketing. What are the organisations advertising objectives? Are the objectives sound? Is the right amount being spent on advertising? Are the ad-themes and copy effective? What do customers and the public think about the advertising? Are the advertising media well chosen? Is the internal advertising staff adequate? Is the sales promotion budget adequate? Is there effective and sufficient use of sales promotion tools such as samples, coupons, displays and sales contests? Is the public relations staff competent and creative? Is the company making enough use of direct, online and database marketing?



Sales Force

What are the sales force's objectives? Is the sales force large enough to accomplish the company's objectives? Is the sales force organised along the proper principles of specialisation (territory, market, product)? Are there enough (or to many) sales managers to guide the field sales representatives? Do the sales compensation level and structure provide adequate incentive and reward? Does the sales force show high morale, ability and effort? Are the procedures adequate for setting quotas and evaluating performance?

How does the company's sales force compare to competitor's sales forces?

8. REQUEST After planning the marketing audit, and specifying all the points that we are going to review accurately. I send to Mario Sarto and other stakeholders the request to sign off the plans as acceptance and permission to proceed with the audit.

Sarto’s Gourmet Past – Task 2 BSBMKG515 – CONDUCT A MARKETING AUDIT JULIA CAROLINA MORAES CONTRUCCI DE SOUZA

Table of Contents 1. Introduction...................................................................................... 17 2. Executive Summary..........................................................................18 3. Main body......................................................................................... 19 4. Recommendations and Conclusion...................................................21

1. Introduction The purpose of this report is to unveil business and marketing aspects of Sarto’s Gourmet Past that are preventing the business to reach its objectives. To do so, this document describes and explains the findings resulted from the audit and the marketing plan analysis.

2. Executive Summary The report shows the comparison between the marketing plan and the updated market research, to unveil what aspects of Sarto’s Gourmet Past current strategies are keeping the business from succeeding. The findings of the audit are portrayed in a table also containing what had been planned in the marketing plan, the analysis of the issues found and its suggested solutions. Within the methods used to investigate the business are: SWOT, PESTLE and the Five Force analysis, comprehending both internal and external aspects as well as micro and macro environments.

3. Main body The table below contains the planned objectives of the marking plan, the finding of this audit and its consequences and the recommendations suggested. The content is divided in internal and external aspects of Sarto’s Gourmet Pasta, in which were used the PESTLE, SWOT and Five Force analysis.

Planned Objectives

Findings

Consequences / Analysis

Recommendations

Internal - Weaknesses

Phone take-away system installed in the kitchen

Sarto rejected the idea of converting the phone takeaway ordering system into internet-based technology.

Other than optimize its time and resources, the use of new technology such as internet is crucial to avoid communication difficulties (accents and noisy environments)

 

Logistic problem reported by Adriana Como and by the Focus Group.

 

Part of being a business Sarto is centralizer and takes savvy is trusting your team’s abilities and opinions. By all decisions alone. shutting communication with his staff and deciding

Lack of communication with his team

everything by himself, Sarto is gambling his business success. Listening to his employees is fundamental.

Adriana Como has kitchen management background and skills, not sales and promotion.

For the business to succeed, every employee must be able to work in the best of their abilities, otherwise the day-to-day of the company becomes highly unproductive. That being the case, Adriana needs to go back to the kitchen and Sarto needs to hire a qualified sales and promotion staff.

Unethical pricing

Different prices for delivery depending on average income of neighbourhoods.

Sarto will lose most of his clients from the so called rich neighbourhoods with such strategy. Instead of pricing by economic status of each region, it is suggested a rate of delivery by distance.

Lack of effective strategy to develop new products

According to Adriana Como, the products were developed based on Mario's assessment of how exotic the new

It is suggested that the business creates a strategy to develop new products according to the wants of its

Wrong distribution of responsibilities

 

product was or how easy it was to make. On top of this, Mario felt that testing new product by giving them way was too costly and counterproductive to increase sales. With no previous idea of what your target market wants or expects from you, there is no point on investing on a strategy such as the one used by Sarto. In addition, every time a new product is developed it needs testing - on the contrary of what was stated by Sarto, free sampling is a very effective way to test a product's compatibility with the target market Ineffective promotion strategy

No real coordination between the timing of the promotional flyers and the preparation in terms of having sufficient

target market. To found out what that is, Sarto's can implement a suggestion box or a survey with its customers.

It is recommended that Mr. Sarto and his team get together to decide what should be the specials in a monthly strategy if he insists

on maintaining the flyer strategy. Sarto's decision-making process included the creation of a new weekly specials flyer without discussing or even preparing its team for it. In addition to a highunproductive way of running a business, is a wasteful, once the restaurant is not prepared to sale what is being promoted, as well as disrespectful to both customers and staff. Other alarming point to this topic is the narrow-minded persona of Mario Sarto, who even though having consulted Rose, from ReadyMade Marketing, and she advised him that flyers are expensive and counterproductive, decided to invest in this particular form of promotion

This, however, is not advisable, given the fact that their penetration is minimum. On a different perspective, Sarto's Gourmet Pasta can start a promotion strategy by offering its current clients of delivery and take-away the specials menu. Also, online marketing is more secure and risk-free method for his particular business.

Wrong positioning strategy

By ignoring its most lucrative business, the take-away, Sarto wasted investments advertising to the wrong target market.

It is suggested that Sarto invests in the take-away segment, in order to make profit to refine its restaurant to the first intended market.

When you asked about new product development and forecasting sales Mario said that it was too expensive to get market research done and so just used the accountant's tax figures and his own 'gut feel' to determine the sales forecast.

In order to analyse how a business is affected by sales and other events is fundamental to forecast. This way strategies can be changed so that the number are positive and the business profitable.

Is highly unproductive for a business to forecast its sales and strategies in anything other than research. It is recommended that Mario Sarto a more reliable strategy than his gut feeling.

Bmag magazine advertisement

Communication just with flyers

Marketing strategy fell through when Sarto's friend left the magazine. To ensure the publicity of the business, Rose Ready suggested to hire a freelance PR. The idea was rejected by Mario Sarto.

It is suggested that the business hires a PR to strategize the publicity.

Maintain positive, steady growth each month

Sales decrease

In the whole yearly sales of 2016 was $436,000. The reasons were that a lot of money was destined to the

It is recommended that the business focus its resources in its most profitable area take-away, which has

Generate at least 45.000

in sales per month Reduce the overhead per store through disciplined growth

flyers and that, in order to increased from $180,000 to position itself was $203,000. competitive, Sarto's Gourmet Pasta dropped prices.

A double-digit growth rate for each future year

Realise a growth strategy Just one restaurant of one store per month

Sarto's Gourmet Pasta is still struggling to make profit with only one restaurant, hence, the business is not ready to be a franchise.

In order for the business to be a successful franchise, it needs to be a profitable restaurant first. Therefore, it is suggested that Sarto changes its current way of running things.

That caused a problem for dine-in customers to park.

The reinforced suggestion is to invest in the take-away service and with the profit from that segment improve what has been holding the dine-in segment. In the case, for example, an adjacent place for parking.

External - Micro - Threat

Accessibility - Planned 'Park'n'Ride' to be built adjacent to the property providing parking for patrons at night

Government pulled back on the project

IBSA World - Market research

2014 - New legislation relating to labelling on takeaway products delivered to consumers Competitors Stella's, one of his local competitors, had built a large 30 seat outdoor eating area. Pasta Bite, other competitor, has opened up in the adjacent suburb giving the local customers greater options in pasta.

It is suggested that the business should find its Having his competition to unique selling proposition in improve their product or order to better position itself infrastructure led Mario Sarto in the market. In addition to to drop the prices of the that, it also needs to find a pasta products. more effective way to communicate it with its customers.

IBSA World industry report on strategies adopted by each of the major competitors: * Expansion by the chains into interstate markets * Price war created due to reducing sales and fight for market share

Saturation in the market.

As previously mentioned, the first recommendation is for the business to finds its unique selling proposition and change current strategies before becoming a franchise, even though the scenario is welcoming.

Threat of substitution Sarto's sees no real substitute for what it provides - 'impossible to substitute this taste and offer', according to Sarto's owner.

IBSA World industry report substitutes for this product Supermarkets introducing a range of pre-packaged 'heat & eat' pasta products

These are not good products for the health and the quality Again, highlighting the is not high. However, is easy importance of the take away to cook and people don’t service. have time for it.

Power of Buyers Another variable that is contributing to market growth is an increase in the number of hours our demographic is working. Over the last five years the number of hours spent at work of our archetype customer has significantly increased. As the number of work hours increases, there is a high correlation of people that eat out at restaurants. This is intuitively explained by the fact that with a limited number of hours available each day,

IBSA World - Employees working longer with emphasis on economic growth

IBSA World industry report on market demand - Steady As a consequence of the wrong interpretation of IBSA World industry report of market needs, the forecasts evolving needs and done for the business are satisfactions being sought by imprecise. the buyers in this market:

*Growing need for healthy

The recommendation is to better research the market without making use of assumptions or intuitions.

It is suggested that Sarto's implemented changes in their menu, such as healthier and salad dishes.

options like salads and more information on ingredients people have less time to prepare to prepare their meals and eating out is Power of Suppliers IBSA World industry report material shortages - Drought conditions in most states sees local produce from Queensland being sent to Sydney creating local shortage

Shortage of products due to climatological conditions impacts the cost - rising expenditure of supply purchase or substitution of such - or quality - lower quality substitute - of the product

It is suggested that the business rethinks its pricing if maintaining the quality of products or, which is cheaper, finding lower quality substitutes

External – Macro - Threat Demographics Age distribution (25-50) The segment represents 53% of the Graceville market Large % of families

No change   Growth in young families with a government incentive on new births and increase

 

 

in retirees (ABS)

Graceville is growing faster than the city and the state - at 7%

Increasing in the Graceville area but were mostly retirees (ABS)

Graceville's population is 130,000

No change (ABS)

Household income

Graceville is a good location, but the idea of a franchise could be a good option.

Make a good analysis of where would be the best place to build the franchise with a specific and structured plan.

Even though the average income hasn't change, the rise interest rates and the tightening on credit card limits may have a negative impact on that.

Steady no change (IBSA World)

Economy Based on economic forecasts, Sarto's Gourmet Pasta assume that interest rates are coming down and that this reduction will create more disposable income and more money available for families to

Rising incrementally throughout the year (Australian Treasury Report)

As a consequence, trying to save money, people tend not to eat out as much as they used to.

It is important that Mario Sarto keeps in mind that the economy is in a bad place right now, so if the main strategy is dropping the prices, there should also be a cut down in expenditure. Otherwise, there is no room

eat out. In terms of credit, Sarto's assumes that this will no Tightening on credit card change in the foreseeable limits (Australian Treasury future and will not be a Report) threat to the potential sales. The same assumption is made about employment levels, where Sarto's assumes that unemployment levels will remain the same at 5.1%

Unemployment falling

for profit.

Due to more opportunities created by mothers leaving the workforce.  

Focusing on the micro environment surrounding Sarto’s Gourmet Pasta, the five strengths of Porter analyses the level of competition within an industry and business strategy development.  







Supplier power: In a saturated market such as the pasta, the business become too reliable of its suppliers. Buyer power: Even though the interest rates are increasing and the tightening of the credit card limits, the household incomes haven’t changed, impacting on the families and Individuals leisure habits. Especially due to the increased number of hours worked, the take-away business has been showing growth potential to the customers, who, despite the change, will still afford ready meals. Competitive rivalry: Stella and Pasta Bite, the two main competitors of Sarto’s Gourmet Pasta, improved their infrastructure. The former built a 30-outdoors seating area while the latter opened another restaurant in the adjacent suburb. Threat of substitution: Sarto’s has a threat of substitution coming from the supermarkets, which are new selling frozen-ready pasta. However, this could be changed if the business forecasted the new products entering the marketing. Threat of new entry: The new entry product competing with Sarto’s is coming from the supermarkets, which are new selling frozen-ready pasta. To prevent being surprised by a new product, a business needs to maintain active and updated to its industry, so that a new competition can be fought with a new product or service.

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4. Recommendations and Conclusion The biggest and more urgent issue preventing Sarto’s Gourmet Pasta from reaching its planned objectives is its owner and founder, Mario Sarto. Firstly, by its management style, which is narrow-minded and centralizer. By not listening to his employees, guessing the future of his business, not considering the opinion and advices of Rose Ready, misemploying his staff, investing in both ineffective promotion strategies and unprofitable market segment, as well as not being up to date with the market trends, Mario Sarto has been a liability to his own business. In addition, Mario Sarto also was reluctant to invest in strategies regarding the business specials, its new product development and market testing, by stating that this was too expensive and the business didn’t have the resources. The main recommendation to this issue is for Mario Sarto to rethink its attitude towards its own business. Strategizing with his team, working as group, listening to experts regarding communication strategies and implementing changes on the menu, following the needs and wants of his target market. Another fundamental point is updating the new system of ordering for take-away. The most profitable segment needs to be catered, so that the other segments can grow from invested profits of the main one (take-away). Lastly, the franchise plan needs to be perfected attending to the needs of the market, as well as having clear and SMART objectives for the business.

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