Develop new products and services D1.HCS.CL6.07 Trainee Manual Develop new products and services D1.HCS.CL6.07 Trainee Manual Project Base William Angliss Institute of TAFE 555 La Trobe Street Melbourne 3000 Victoria Telephone: (03) 9606 2111 Facsimile: (03) 9670 1330 Acknowledgements Project Director: Chief Writer: Subject Writer: Project Manager/Editor: DTP/Production: Wayne Crosbie Alan Hickman Nick Hyland Alan Maguire Daniel Chee, Mai Vu, Riny Yasin The Association of Southeast Asian Nations (ASEAN) was established on 8 August 1967. The Member States of the Association are Brunei Darussalam, Cambodia, Indonesia, Lao PDR, Malaysia, Myanmar, Philippines, Singapore, Thailand and Viet Nam. The ASEAN Secretariat is based in Jakarta, Indonesia. General Information on ASEAN appears online at the ASEAN Website: www.asean.org. All text is produced by William Angliss Institute of TAFE for the ASEAN Project on “Toolbox Development for Front Office, Food and Beverage Services and Food Production Divisions”. This publication is supported by Australian Aid through the ASEAN-Australia Development Cooperation Program Phase II (AADCP II). Copyright: Association of Southeast Asian Nations (ASEAN) 2013. All rights reserved. Disclaimer Every effort has been made to ensure that this publication is free from errors or omissions. However, you should conduct your own enquiries and seek professional advice before relying on any fact, statement or matter contained in this book. ASEAN Secretariat and William Angliss Institute of TAFE are not responsible for any injury, loss or damage as a result of material included or omitted from this course. Information in this module is current at the time of publication. Time of publication is indicated in the date stamp at the bottom of each page. Some images appearing in this resource have been purchased from various stock photography suppliers and other third party copyright owners and as such are non-transferable and non-exclusive. Additional images have been sourced from Flickr and are used under: http://creativecommons.org/licenses/by/2.0/deed.en http://www.sxc.hu/ File name: TM_Develop_new_products_&_ser_250713.docx Table of contents Introduction to trainee manual........................................................................................... 1 Unit descriptor................................................................................................................... 3 Assessment matrix ........................................................................................................... 5 Glossary ........................................................................................................................... 7 Element 1: Analyse market ............................................................................................... 9 Element 2: Evaluate market trends in food production and/or food and beverage service ............................................................................ 47 Element 3: Create products or services based on market analysis and within budgetary constraints .......................................................................... 63 Element 4: Monitor sales performance of products and services .................................... 89 Presentation of written work ............................................................................................ 99 Recommended reading................................................................................................. 101 Trainee evaluation sheet ............................................................................................... 103 © ASEAN 2013 Trainee Manual Develop new products and services © ASEAN 2013 Trainee Manual Develop new products and services Introduction to trainee manual Introduction to trainee manual To the Trainee Congratulations on joining this course. This Trainee Manual is one part of a ‘toolbox’ which is a resource provided to trainees, trainers and assessors to help you become competent in various areas of your work. The ‘toolbox’ consists of three elements: A Trainee Manual for you to read and study at home or in class A Trainer Guide with Power Point slides to help your Trainer explain the content of the training material and provide class activities to help with practice An Assessment Manual which provides your Assessor with oral and written questions and other assessment tasks to establish whether or not you have achieved competency. The first thing you may notice is that this training program and the information you find in the Trainee Manual seems different to the textbooks you have used previously. This is because the method of instruction and examination is different. The method used is called Competency based training (CBT) and Competency based assessment (CBA). CBT and CBA is the training and assessment system chosen by ASEAN (Association of SouthEast Asian Nations) to train people to work in the tourism and hospitality industry throughout all the ASEAN member states. What is the CBT and CBA system and why has it been adopted by ASEAN? CBT is a way of training that concentrates on what a worker can do or is required to do at work. The aim is of the training is to enable trainees to perform tasks and duties at a standard expected by employers. CBT seeks to develop the skills, knowledge and attitudes (or recognise the ones the trainee already possesses) to achieve the required competency standard. ASEAN has adopted the CBT/CBA training system as it is able to produce the type of worker that industry is looking for and this therefore increases trainees chances of obtaining employment. CBA involves collecting evidence and making a judgement of the extent to which a worker can perform his/her duties at the required competency standard. Where a trainee can already demonstrate a degree of competency, either due to prior training or work experience, a process of ‘Recognition of Prior Learning’ (RPL) is available to trainees to recognise this. Please speak to your trainer about RPL if you think this applies to you. What is a competency standard? Competency standards are descriptions of the skills and knowledge required to perform a task or activity at the level of a required standard. 242 competency standards for the tourism and hospitality industries throughout the ASEAN region have been developed to cover all the knowledge, skills and attitudes required to work in the following occupational areas: Housekeeping Food Production Food and Beverage Service © ASEAN 2013 Trainee Manual Develop new products and services 1 Introduction to trainee manual Front Office Travel Agencies Tour Operations. All of these competency standards are available for you to look at. In fact you will find a summary of each one at the beginning of each Trainee Manual under the heading ‘Unit Descriptor’. The unit descriptor describes the content of the unit you will be studying in the Trainee Manual and provides a table of contents which are divided up into ‘Elements’ and ‘Performance Criteria”. An element is a description of one aspect of what has to be achieved in the workplace. The ‘Performance Criteria’ below each element details the level of performance that needs to be demonstrated to be declared competent. There are other components of the competency standard: Unit Title: statement about what is to be done in the workplace Unit Number: unique number identifying the particular competency Nominal hours: number of classroom or practical hours usually needed to complete the competency. We call them ‘nominal’ hours because they can vary e.g. sometimes it will take an individual less time to complete a unit of competency because he/she has prior knowledge or work experience in that area. The final heading you will see before you start reading the Trainee Manual is the ‘Assessment Matrix’. Competency based assessment requires trainees to be assessed in at least 2 – 3 different ways, one of which must be practical. This section outlines three ways assessment can be carried out and includes work projects, written questions and oral questions. The matrix is designed to show you which performance criteria will be assessed and how they will be assessed. Your trainer and/or assessor may also use other assessment methods including ‘Observation Checklist’ and ‘Third Party Statement’. An observation checklist is a way of recording how you perform at work and a third party statement is a statement by a supervisor or employer about the degree of competence they believe you have achieved. This can be based on observing your workplace performance, inspecting your work or gaining feedback from fellow workers. Your trainer and/or assessor may use other methods to assess you such as: Journals Oral presentations Role plays Log books Group projects Practical demonstrations. Remember your trainer is there to help you succeed and become competent. Please feel free to ask him or her for more explanation of what you have just read and of what is expected from you and best wishes for your future studies and future career in tourism and hospitality. 2 © ASEAN 2013 Trainee Manual Develop new products and services Unit descriptor Unit descriptor Develop new products and services This unit deals with the skills and knowledge required to Develop new products and services in a range of settings within the hotel and travel industries workplace context. Unit Code: D1.HCS.CL6.07 Nominal Hours: 50 Element 1: Analyse market Performance Criteria 1.1 Target markets are identified in accordance with enterprise marketing and merchandising policies 1.2 Analyse market competition 1.3 Client requirements are monitored informally in order to evaluate market trends and client needs 1.4 New products and services are identified 1.5 Opportunities to improve sales and services are identified 1.6 Product and service range is monitored to identify the demand for individual items and seasonal variations 1.7 Product and service range is planned Element 2: Evaluate market trends in food production and/or food and beverage service Performance Criteria 2.1 Identify and access information sources on market trends in food production and/or food and beverage service 2.2 Evaluate market trends for relevance to the enterprise current and potential markets 2.3 Identify and access relevant information to assist development of new products or services © ASEAN 2013 Trainee Manual Develop new products and services 3 Unit descriptor Element 3: Create products or services based on market analysis and within budgetary constraints Performance Criteria 3.1 Incorporate relevant market trends into food service and menu planning 3.2 Develop products and services to take account of market trends 3.3 Develop products and services to take account of enterprise operational constraints or limitations 3.4 Construct products and services to meet profitability targets Element 4: Monitor sales performance of products and services Performance Criteria 4.1 Evaluate new products and/or services in consultation with stakeholders 4.2 Analyse products and services in terms of business objectives 4.3 Adjust products and services based on feedback and profitability 4 © ASEAN 2013 Trainee Manual Develop new products and services Assessment matrix Assessment matrix Showing mapping of Performance Criteria against Work Projects, Written Questions and Oral Questions Work Projects Written Questions Oral Questions Element 1: Analyse market 1.1 Target markets are identified in accordance with enterprise marketing and merchandising policies 1.1 1,2 1 1.2 Analyse market competition 1.2 3,4 2 1.3 Client requirements are monitored informally in order to evaluate market trends and client needs 1.3 5,6 3 1.4 New products and services are identified 1.4 7,8 4 1.5 Opportunities to improve sales and services are identified 1.5 9,10 5 1.6 Product and service range is monitored to identify the demand for individual items and seasonal variations 1.6 11,12 6 1.7 Product and service range is planned 1.7 13,14 7 Element 2: Evaluate market trends in food production and/or food and beverage service 2.1 Identify and access information sources on market trends in food production and/or food and beverage service 2.1 15,16 8 2.2 Evaluate market trends for relevance to the enterprise current and potential markets 2.2 17,18 9 2.3 Identify and access relevant information to assist development of new products or services 2.3 19,20 10 Element 3: Create products or services based on market analysis and within budgetary constraints 3.1 Incorporate relevant market trends into food service and menu planning 3.1 21,22 11 3.2 Develop products and services to take account of market trends 3.2 23,24 12 © ASEAN 2013 Trainee Manual Develop new products and services 5 Assessment matrix Work Projects Written Questions Oral Questions 3.3 Develop products and services to take account of enterprise operational constraints or limitations 3.3 25,26 13 3.4 Construct products and services to meet profitability targets 3.4 27 14 Element 4: Monitor sales performance of products and services 4.1 Evaluate new products and/or services in consultation with stakeholders 4.1 28 15 4.2 Analyse products and services in terms of business objectives 4.2 29 16 4.3 Adjust products and services based on feedback and profitability 4.3 30 17 6 © ASEAN 2013 Trainee Manual Develop new products and services Glossary Glossary Term Explanation Data Pieces of information, facts Demand The desire customers have for a product or service Environment The internal and external influences on a business External environment External environment refers to the area outside the business over which the venue has little or no control Feasibility Capable of being done, effected, or accomplished Internal environment Environment within the business Lifecycles The expected useful life or period of demand for a product or service Market The potential range of customers Needs Something customers are unable to do without Product The totality of goods or services that a company makes available Service The provision of accommodation and activities required by the public Stakeholders A person or group that has an investment, share, or interest in something, Statistics The science that deals with the collection, classification, analysis, and interpretation of numerical facts or data SWOT Analysis An analysis of elements both internal and external to the company and their likely impact on the organisation Table d’hôte Set menu Target market segment The desired category of potential customers to a business Trends The general course or prevailing tendency Wishes The way in which our customer would prefer to satisfy a specific need, but they may not have the resources to meet these wishes © ASEAN 2013 Trainee Manual Develop new products and services 7 Glossary 8 © ASEAN 2013 Trainee Manual Develop new products and services Element 1: Analyse market Element 1: Analyse market 1.1 Target markets are identified in accordance with enterprise marketing and merchandising policies Introduction This manual focuses on the development of new products and services in which to offer an organisation’s intended market. It is normal practice for businesses, regardless of industry, to develop and introduce new products and services. This may include improvements to existing offerings or complete changes of direction. Many new products and services introduced to a market are a direct result of changes to what the customer needs and wants and what the competition is offering to meet these needs, in relation to what you are offering. When developing products and services, there are many factors that need to be considered, both inside and outside the organisation. Whilst it is essential to introduce new products and services that will be profitable to the organisation, it will not be successful unless: It is unique when compared with competitor’s offerings It provides value for money The customer views the product or service as valuable in their eyes. This section will explore the need for change and how to identify target markets ripe for change. A changing environment ‘A rolling stone gathers no moss.’ This saying is known by most people. This one phrase sums up the purpose and importance of change in a business. As the world evolves, society evolves and any business, regardless of the industry it belongs to, must in turn adapt to ensure that it provides an ‘offering’ that will attract customers to the premises. Business practice in the last 20 years has changed dramatically with organisations now required to operate in a more complex and fast changing environment. © ASEAN 2013 Trainee Manual Develop new products and services 9 Element 1: Analyse market In a global economy where technology ensures information is instant, with new competitors, new products and changing customer needs and wants, organisations need specific strategies for future growth. This inevitably leads to making changes to the existing model of operation in some format. As mentioned, these changes may be minor or major. It doesn’t mean changing a successful formula, but ensuring what is offered is not only relevant to today’s market and consumers, but will be attractive in the future. Management needs to focus on more than just the internal strengths and weaknesses of an organisation. They need to factor in external influences that not only direct where future growth will proceed but the rate, and breadth at which it will proceed. An organisation not only needs to anticipate the extent of external influences such as political, social and cultural constraints, but needs to ensure plans are flexible enough to cater for these variables. The next section will explore the need to analyse the entire market, including internal and external environments of an organisation, and the influences they have on the need for change. Change management Change is inevitable. Change is not an activity that takes place once a business is in decline. Instead there should be a constant focus on ensuring that not only are you providing something that the customer wants, but that it is better than what the competition is offering. This constant need to monitor and change accordingly is reflected in the term ‘continuous improvement’, which is routinely mentioned throughout this manual. Organisations are in constant competition with ever changing businesses, with existing and potential customers increasingly being given a greater range of choices. In essence change management will not just rely on previous successes as a means for planning for future growth, nor will they rely on previous failures as a means for avoiding future failures. Whilst change is often a necessary and positive activity, it can promote uncertainty, uneasiness and concern for staff. It is therefore essential that management play an active role in encouraging and promoting inclusion in the change process. Improving customer service The hospitality industry is always associated with customer service. Many people see hospitality organisations, whether hotels or resorts, as a place to relax and take a break from their normal everyday stresses. As we know, there are a wide variety of customers who frequent a hospitality organisation, for many reasons. They may be customers utilising: Accommodation – leisure, business or residence 10 © ASEAN 2013 Trainee Manual Develop new products and services Element 1: Analyse market Food and Beverage –restaurants, bars, functions, room service, banquets Leisure facilities – pools, spa, sauna and gymnasium. Regardless of their visit it is important that they receive quality service. Quality service is being able to use a combination of products and services as a combined offering that, at a minimum, meets the expectations of the consumer. Quality customer service is not just associated with 5 star hotels, it is a fundamental aspect of all hospitality businesses, whether budget or luxury. Quite simply customer service is important to any business in any industry. It is about ensuring customers leave your premises pleased with the experience they received. The customer The whole purpose of change and the subsequent need to produce new products and services is based around the needs of customers. So what is the definition of a customer? A customer can be seen as: A person on the receiving end of what the business offers Someone who is willing to pay a fair price for a quality product and wants to be neither over-charged nor underserved The reason the company is in business Someone who has certain needs and wants them filled and who, if we cannot fill them, will go to a competitor who will. The quality of service is realised by the customer and is interpreted and perceived by him or her. This means that quality of service is not defined by those who deliver it. The point from the above is there is really not one ‘thing’ called a customer. Customers are all individuals and come with individual needs and expectations. These needs will be explored in more detail later in this manual. We must actually act in a manner that acknowledges that without them the business ceases to function, and we have no jobs. The old saying ‘it’s the customers who pay your wages, not the boss’ is true. It has been so often used it risks becoming ignored. However, if you have ever worked in an establishment where trade has been going down, staff hours have been reduced and others are being laid off, you’ll know what it truly means. Unfortunately, all too many premises and staff members only realise how true this saying is when it’s too late when customers are voting with their feet and spending their money somewhere else. It is a very sobering exercise to see how many other hotels, clubs, restaurants and bistros there are for the customer to choose from. Most other places offer a similar product so it is often the service, the standard, level and how that service is delivered, that differentiates one place from another. © ASEAN 2013 Trainee Manual Develop new products and services 11 Element 1: Analyse market The Customer is … You may have seen what follows on posters and postcards around the place. Sometimes it’s hung up in staff rooms and sometimes it graces the walls of the manager’s office. It is a pretty good description of who the customer is and sends us a fairly clear message about how we should treat them. The customer is not dependent on us, we are dependent on them: The customer is not an interruption to our work; they are the sole reason for it The customer does us a favour by walking in or phoning up; we don’t do them a favour by serving them The customer is part of our business, not outside it The customer is not a statistic. The customer is a flesh and blood human being with feelings and emotions The customer is not someone to argue with or match wits with The customer brings us their wants and needs and it is our job to satisfy them The customer is deserving of the most courteous and respectful attention we can give them The customer is the lifeblood of our business, because without them there is no business. Identify market segments Any hospitality organisation, like in any business in any industry, cannot be everything to everyone. It must break down the potential audience into segments, each with similar characteristics of some manner, and then choose these segments to be the focus of their efforts. As each hospitality organisation caters to a range of types of customers, known as target market segments, the challenge lies in being able to provide an offering to meet their individual needs. We have to recognize each type of customer and treat them as individuals. Benefits of market segmentation Market segmentation has numerous benefits. It provides you with a much more detailed and accurate description of the market place. By forcing you to think about exactly who your customers are, you get a more up to date impression of what is an ever-changing market. This helps you get the best fit or match between your product and the customer. 12 © ASEAN 2013 Trainee Manual Develop new products and services Element 1: Analyse market It enables more effective and efficient marketing. Market segmentation helps us make the best use of the resources at our disposal (such as less waste, a greater chance that we can sell what we produce), as we focus more on providing what the research has determined is likely to sell, rather than wasting time, money and effort on stuff we just hope will sell. In this way, market segmentation provides more certainty about our actions. It forces assessment of the competition. Many business operators are so busy with the actual day to day operation of their business (ordering stock, taking deliveries, doing the banking, serving customers, doing the books, interviewing staff, preparing ads etc.) that they often don’t have the time to look in depth at what is presently going on in the marketplace. Looking at the marketplace helps identify who our competitors are and what they are offering; What initiatives have they come up with? Where are they posing a threat to our business? What are the services, facilities, expertise, and competitive edges that they’ve got that we need to be aware of so that we can take some sort of mitigating action? Are there new players emerging? Or are there established ones closing down, expanding into new fields or moving into new premises? What are the implications for us? It enables us to better position ourselves in the marketplace. Because of all this new knowledge that you have based on your market research, you can select where in the marketplace you want to be. Do you want to be seen as ‘expensive, but the best’, ‘cheap’, ‘value-for-money’, ‘people with a wide range of products’, or ‘people with the knowledge and expertise to back up their products’? It will give you a definite direction in what you are trying to portray to the public. This a better alternative to just opening up an establishment with no defined image that can turn eventually into a negative image. You may find that you discover some unfilled demand in the marketplace that you can capitalise on. This niche could be a profitable ancillary market, or a substitute for your existing business. Generic market segments There are many ways to identify different segments of potential customers. The types of potential target markets is limitless. Each organisation will break down the potential market to suit their needs and to help identify the potential of each group. For the purpose of simplicity, in general, organisations may identify market segment categories such as: Age Infants, children, teenagers, mature adults, senior citizens. © ASEAN 2013 Trainee Manual Develop new products and services 13 Element 1: Analyse market Social background Ranges from the upper crust of society to people of more modest upbringing. Economic background High income earners through middle to low income earners. Cultural background Variety of religious beliefs and customs. Special interests Purpose for their holiday, sporting interest, athletes. Physical and mental abilities These people may have a physical or cognitive limitation. Dietary needs Any group within the community, including those with particular nutritional or dietary needs and interests. Hospitality market segments Hospitality organisations may create the following categories: Business Business travellers can comprise: FIT (Free Independent Travellers) who arrange their own accommodation Member of a corporation which has a special rate with an organisation Conference or event guest within a hotel. Leisure This market is travelling for relaxation purposes and may include: FIT (Free Independent Travellers) Tours /coach groups Honeymooners Families Elderly. 14 © ASEAN 2013 Trainee Manual Develop new products and services Element 1: Analyse market Religious This market is travelling to participate in a pilgrimage or religious celebration. Sporting This market is travelling to participate in sporting events, tours or competitions. Tourism market segments Outbound tourists An outbound tourist is where a local tourist goes to a region away from where they reside and where the business is. This normally means the tourist is either leaving the town, city or country. This type of tourist would be beneficial to travel agents and transport companies. Inbound tourists An inbound tourist is where a tourist from another location comes into your region. This normally means the tourist is coming into your area. This type of tourist would be beneficial to accommodation venues and tourist attractions. Domestic tourists A tourist who travels within a country. They are natives and you can easily promote your product and/or service to them. International tourists A tourist who travels to or from another country. Conducting promotional activities can be harder as they may come from various countries, speak different languages and have different needs. Identifying target market segments As mentioned, a hospitality organisation cannot be everything to everyone, therefore it must select the most appropriate segments from the entire potential market in which to focus its efforts and to tailor their products and services around. It is important that the needs and wants of these target market segments are identified to understand they are going to receive ‘value’ from our offering. These needs will be explored in more detail in Section 1.3 of this manual. Target markets When you have identified the market segments you wish to attract, these become your target markets. Note that in most cases, there will be more than one target market. © ASEAN 2013 Trainee Manual Develop new products and services 15 Element 1: Analyse market Also, don’t get the impression that you should have only ‘a few’, and don’t get the idea that target markets are small in number. You can have lots of them and they can be big or small. The term ‘target market’ describes a group that you have identified whose needs and wants are similar, and who you have decided you want to service. As we have said above, development of a demographic profile needs to be done for every target market you have identified, so the establishment needs to: Identify and describe each target market that it has Match customer demographic characteristics to each target market. Where your establishment has a marketing plan, these target markets or market segments will probably be listed there. Many target markets relate to specific products or services you offer. The decision about what will be a market segment is an in-house decision. An example of target market segmentation As an example, one business may see the customers who come into its coffee shop as one generic target market, and profile those people. Another establishment may elect to segment these customers into: Hot drink buyers Cold drink buyers Hot food buyers Cold food buyers Food-related merchandise purchasers Product (non-food) merchandise buyers. Further segmentation can include eat-in and takeaway, as well as office and party catering. Benefits of establishing target market segments The analysis and collection of information in relation to different target market segments will guide: Products and services offered – range, brands, options Prices charged; to match the ability to pay Where advertisements are placed How advertisements are targeted – which age groups, gender, ethnic backgrounds Considerations in relation to staff hired – language skills, blend of male and female, blend of appropriate age groups. 16 © ASEAN 2013 Trainee Manual Develop new products and services Element 1: Analyse market 1.2 Analyse market competition Introduction As stated in the introduction to this manual, the world is an ever changing place, and these changes will have various effects on a business. Development of a successful organisation is an on-going exercise, and involves monitoring of the internal and external environments, the integration of findings into future planning and the introduction of new products and services. What is market analysis? Market analysis provides us with the information necessary to understand what can cause changes in our operational environment. A prime objective of this activity is to gain a more insightful and detailed view of the organisation and where it sits in the overall business and other settings. Market analysis is a fairly generic term that describes an activity that we are constantly conducting in order to target the right person with the right product or service at the right time in context with the workings of the market, our environment and our competition. The purpose of this research is to help determine what competitive advantages you have over your competitors so that you can exploit them. This research helps you to identify your USPs (Unique Selling Points) in either product or service (or both). A USP is something your store offers that no-one else does – this makes it unique. The marketing approach says that this USP should be highlighted in all of your advertising so that customers get to know that they can only get this particular service, produce, facility or advice at your store and nowhere else. The intention is that this USP will act as a motivator for customers to buy from you. Current market situation Information on the current market position is normally drawn from a database of information that the organisation constantly updates. This includes information on the market, product, competition, current strategies and macro-environment. Market situation Total market characteristics - size, growth, trends Customer needs, perceptions and buying behaviour Products - service characteristics Prices Customer service and distribution © ASEAN 2013 Trainee Manual Develop new products and services 17 Element 1: Analyse market Channels - principal channels used, stock turnovers, profit Communication - principal methods of communication used. Competitive situation Industry structure – type of competition, marketing methods, new entrants, mergers, competitive arrangements The geographic market in which they compete Their current marketing performance Their competitive position (growing, contracting) Strengths and weaknesses, and vulnerabilities of each significant competitor Their objectives and competitive strategies Industry profitability – financial and non-financial barriers to entry, relative performance of individual companies, volume, source of and cost of investment, effect and return on investment of changes in price. Product situation For each product/service that the organisation offers, sales, profits, contribution margins and growth should be displayed. Product lifecycle and expected demand over the product’s life should be considered. Growth of the product/service should be contrasted to total market growth. Current strategies Current product, price, place and promotional strategies should be included. Current people, processes and physical evidence strategies should also be included. Situation analysis Most businesses undertake a SWOT analysis to gain an understanding of what is happening both external and internal to the business and the effect it will have on the business. This process ultimately tries to identify: Strengths – what the business does well Weaknesses – what the business can improve upon Opportunities – where the business can take advantage of potential opportunities Threats – where the business may become disadvantaged, weakened or susceptible because of external events or situations. Strengths and weaknesses in the internal structure, operations and ability or capacity may appear in terms of: Finance (cash flow, debt, equity rates, level of assets, profitability, capital available 18 © ASEAN 2013 Trainee Manual Develop new products and services Element 1: Analyse market Production – plant and equipment, quality control, R & D, patents, production methods Marketing – customer base, price structure, distribution, location, promotion, product range Personnel – staff size, key personnel, morale, leadership, communication Other – any others that are relevant to your specific organisation. Opportunities and threats that may externally face the organisation can include: Competition – new competitors, import competition, aggressive competitors State of the economy – inflation, interest rates, credit availability, unemployment Government policy – taxation, imports and tariffs, legislation Technology – new technology, changing cost structures, obsolescence, new products Suppliers – mergers/monopolies, prices, distribution, competition Other – any others that are relevant. These will be explored in more detail later in this section. Analysis of external environment The external environment refers to the area outside the business over which the venue has little or no control. It normally has the greatest effect on the need for change. It can relate to changes in technology, changes in legislation, state of the economy, political situations, and competition in the marketplace. Service deficiencies caused by external factors may be harder to control. However, steps should be made to understand them and make changes where the organisation has some control. External environment impacts include: Changes in the competitive environment As competitors introduce new services and facilities, the nature of our industry is such that we are often forced to respond and match their offerings or introduce something else in opposition to it. The key here is we have to know what the competitors are doing. We have to monitor their advertising, visit their premises and talk to our suppliers about what the opposition is doing. We then have to take some action to exploit an opportunity or mitigate any potential negative impacts. Whichever way we go, we have to realise ‘knowledge is power’ only if we act on it. Knowledge on its own is next to useless. As part of this analysis, it may also be prudent and instructive to undertake a similar analysis of your competitors so that you have a better understanding of the total opposition ranged against you, and the marketplace in general. When analysing the competition, it is useful to gather evidence of the following: Location and distribution area that they have established Target markets they appear to have set © ASEAN 2013 Trainee Manual Develop new products and services 19 Element 1: Analyse market Product and service mix Packaging or presentation Access Continuity Their promotional mix – what they do in terms of advertising, when and how An objective assessment of the quality of their product/service. For example; ’Are they providing good quality, costs, variations, reliable service, acceptable trading hours, value-for-money?’ Their pricing structure – ‘Do they give discounts, trade-ins, a wholesale and retail structure?’ Their level of customer service – ‘What do they provide? Are their staff good at selling and service?’ Their market share – ‘How much of the (local) business do they have?’ Economic climate Monitoring the media and discussion with our finance facility will help identify the state of the economy. There is no doubt the state of the economy is extremely influential on trade and we have to be prepared to respond to the emerging economic climate. At times we can offer indulgent, extravagant, high-roller packages, whilst at other times we need to focus on low cost, value-for-money deals. Trends in customer preferences Whether we lead the pack or follow the opposition (or a combination of the two), we must respond to customer preferences. Advent of E-business More and more people are using the ‘Net’ to access information and make bookings. We need to tap into this emerging but already substantial market and establish a website (making sure it is someone’s responsibility to keep it updated weekly) which illustrates our property and describes our services, facilities etc. We also need to exploit the opportunities this medium presents for reservations and various other activities such as retail sales (internet sales), take-away sales,a forum for questions and feedback and a platform for information dissemination. Markets Markets are complex and rapidly changing with new and more complex customer demands, products and services. Internationalisation is increasing and international competition is intensifying in many markets. To ensure the right quality, companies must be better at understanding their environment and building-up the competence and ability to change before, or at the same time, as the outside world changes. 20 © ASEAN 2013 Trainee Manual Develop new products and services Element 1: Analyse market The luxury of lagging behind global changes has evaporated. International customers expect the same standards here as they receive in any developed country overseas. Environmental issues The demand for quality in the outer environment will place greater demands on how companies conduct their business, which sources of energy they use, and how they design their products. More establishments will seek to portray publicly their environmentally friendly image. This may mean they subscribe to organisations such as ECO-Buy or Green Globe. Most organisations appreciate there are cost savings to made from ‘going green’, as well as marketing potential and the obvious effect of reducing the impact of the business on the planet. Most businesses today will seek to demonstrate that they align with triple bottom-line principles, taking into account not only the financial goals of the organisation but also social and environmental responsibilities too. Technological development Technological development has played a key role in the structural changes in the service sector. Boundaries between transportation, communication, travel-service and hospitality industries are disappearing as airlines (and others) begin to provide direct reservations, tours, conferences, car and accommodation arrangements, in-flight telephone service, and electronic retailing package delivery services in competition and collaboration with thousands of other service units. Many customers are looking for seamless service – a one-stop shop for all their holiday and travel needs, and technology is providing the means for this to be done. Technology has also impacted on operational service delivery via computerised reservations systems, online reservations, hand-held ordering systems in restaurants, bar code scanning and the growing trend for customers to do their own checkout and payment after selecting goods. Analysis of internal environment Once management have had a thorough look at the external environment, the focus must be internally focused. The internal environment is the environment within the business. It can include the level of staff available, the policies and procedures of the organisation, the skill and knowledge levels of staff, the opening hours of the business, the facilities available within the venue. In theory, a property has control over these internal factors because it is in a position to influence them. Any aspects of the internal environment impacting service can be identified, changed and improved a lot easier than impacts caused by the external environment. © ASEAN 2013 Trainee Manual Develop new products and services 21 Element 1: Analyse market Possible reasons for change coming from within the internal environment could include, but are not limited to: Substandard products – products may be outdated, inferior or in need of replacement or renovation Equipment – faulty equipment or new equipment which staff are not familiar with Marketing – the wrong message is being delivered to customers giving them unrealistic expectations Staffing – staffing levels may not be appropriate (under/over staffing), wrong mix of staff (experienced and new staff) Recruitment – people with insufficient knowledge, skills and attitudes have been employed Training – staff are unaware of what to do resulting in inconsistency Management – lack of controls, standards, guidance and support Financial support – limited availability to funds required to provide necessary products and services Changes in management style – changes in management may entail a variation in orientation to service or the setting of some directions in relation to service. What was acceptable under the previous management may not be acceptable to the new management. This doesn’t mean that what was done before was wrong, it just means the new approach is different. Note too, changes in management often herald changes in client focus, and the creation of new and different target markets which, by their nature, often demand a change to service standards, techniques and styles Organisational restructures. The trend is to reduce middle level management and with that comes new responsibilities for all concerned. As the organisation restructures, whether for efficiency reasons or as a result of declining profit, new roles for all staff in relation to customer service will emerge. Staff and managers will have their responsibilities enlarged, or their focus altered. To state the obvious, the industry is very much a dynamic one. Summary of a SWOT analysis A SWOT analysis is only a summary of your audit and should be covered in one page. SWOTs are usually drawn up in a easy and simple to read format as demonstrated below. Strengths Location close to main highway Excellent customer service Includes bed and breakfast Four star restaurant 22 © ASEAN 2013 Trainee Manual Develop new products and services Element 1: Analyse market Canoeing, bush walking, yoga Strong reputation quality Good word of mouth Packages include combination meals/activities, discounts during summer. Weaknesses Prices non-competitive during peak period Business seasonal Limited capital Lack of control of restaurant. Opportunities Increasing leisure Increase in stress and anxiety Renewed concern for peace and nature Increasing number of business Conventions held away from city Increasing desire to escape from suburban life More people travelling on weekends. Threats Competition situated geographically closely Pricing in peak season of competition cheaper Limited financial lending Competition have years of experience. By having this information at hand, any new products and services that may be considered for introduction can be identified more easily. © ASEAN 2013 Trainee Manual Develop new products and services 23 Element 1: Analyse market 1.3 Client requirements are monitored informally in order to evaluate market trends and client needs Introduction Another important part of analysing the market to determine the potential success of new products and services is through a thorough understanding of the needs of target market segments and trends that are affecting the hospitality industry. By understanding the range and types of needs that customers have, it helps to identify which products and services will be required to satisfy these needs. Understanding customer needs Before we can tailor our products and services to provide an offering that the guest wants, we first need to find out what the guest actually wants. Many businesses make the mistake of providing an offering they THINK the guest wants, but what is offered doesn’t meet their needs. Therefore research of what the customer wants is an essential activity. This is the essence of marketing. The marketing perspective on a business says everything we do must be customer-focused. To identify exactly what this focus needs to be we have to obtain information on customer needs and wants by undertaking some basic market research. The focus on any continuous improvement should be targeted at using any research towards strengthening and improving customer service. Customer needs, wishes and expectations Customer service revolves around us meeting or exceeding customer needs, wishes and expectations. It seems appropriate, then, to identify what these mean. Needs These underlie wishes and expectations and are the things customers are unable to do without. They may be in a foreign town and simply cannot do without a bed for the night, a meal or beverage. Generic customer needs Whilst every customer to the organisation has their own individual needs, there are a number of generic needs that staff must address when providing quality customer service. These needs include: Value for money ‘Offering’ – reflecting what was advertised Expectations met or exceeded (see below) To feel respected which is why we use “Sir” and “Madam” 24 © ASEAN 2013 Trainee Manual Develop new products and services Element 1: Analyse market To feel welcomed. This is why we give all our customers a warm, genuine and sincere smile and welcome. We really are pleased to see them To be served by friendly staff which is again why we smile and why we spend that extra few seconds with them, talking about how their day went and so on To be dealt with in a prompt and courteous manner which is why we don’t keep them waiting at reception, the bar, for room service, meals etc. To receive assistance when necessary which is why we have excellent product and local knowledge and why we look for opportunities to pass this on to them whenever we can, even without their having to ask To be in comfortable, clean surroundings which is why we make sure the facilities, rooms, grounds and equipment are spotless To feel remembered and recognised which is why we use the customer’s name as often as we can To be heard and understood which is why we listen to complaints and adopt the role of their advocate whenever there is a complaint, problem or dispute. We want to fix their problems, not create new ones. Specific target market needs A hospitality and tourism business will have customers from a number of different target markets, each with their own specific needs. It is important that staff recognise the needs of each target market and tailor their service accordingly. The following are different target markets and their specific needs: Business – computer and internet access, newspapers, executive lounges, laundry services, business or executive centre, business and news channels. Businessmen are more likely to frequent a hotel bar and eat in the restaurant Women – hairdryers, larger mirrors, healthier food options, specific bathroom amenities, fashion magazines, bath. Businesswomen are more likely to use the gym and eat room service Family – interconnecting rooms, costs, entertainment options, child care facilities, children’s television programs, package deals and safety Leisure – cheaper rates, local attractions, concierge services Elderly – single beds, medical facilities, suitable food options and cheaper rates Groups – need for large allocation of rooms, cheap rates, meeting rooms, specialised menus, bus access and parking. Wishes These refer to the way in which our customers would prefer to satisfy a specific need, but they may not have the resources to meet these wishes. They may wish to stay in the luxury suite, dine at an internationally renowned, 5-star, fine dining restaurant and drink expensive wines, but they haven’t got the money to pay for it so they settle for something else. © ASEAN 2013 Trainee Manual Develop new products and services 25 Element 1: Analyse market Expectations Customers know they can’t afford the luxury mentioned above, but as a result of our advertising and their previous experiences with us, they know they will get a clean and satisfactory room, wholesome food at value-for-money prices and a good range of drinks at fair prices to pick from, all delivered with great service - so they elect to stay and dine with us. Our big problems start when what the customer actually experiences is at odds with their expectations. Customers have perceived expectations of what level of service they expect when visiting a venue arising from: The company’s image or reputation in the market Past visits Advertisements and promotional messages Competing hotels Industry standards Comments from family, friends and colleagues Price charged for the offering. Understanding needs, wants and expectations Identifying needs, wants and expectations of the external customer are varied and are not the same for everyone. In fact, the needs for the same customer may change on a daily basis. It is important that staff remain aware of the satisfaction of customers and look for ways to improve the experience for all customers. In reality, most customer needs are quite simple and easy to accommodate. It may relate to needing more pillows or towels, steak cooked a certain way, accommodation with a specific view or a need for wake up calls or taxis. Quite often customers will let you know of their needs through the use of direct questions. However, some customers will not let you know if their needs are unmet and will leave a venue disappointed with little or no prospect of a return visit. Staff must be pro-active and try to anticipate the needs of guests where possible. This can be achieved through: Observation – quite often the body language of a customer will indicate their true feelings. They could be looking around for staff to serve them, angry or frustrated, or simply disappointed in what has been provided Asking questions – offer recommendations or if they want things done a certain way Putting yourself in the shoes of the customer – ask yourself ‘What would I like if I was in their position?’ If guests have arrived from a long flight and look tired, a speedy check in service is vital. You may also want to arrange room service dinner for them whilst they are checking in so they can eat quickly and go to bed sooner. 26 © ASEAN 2013 Trainee Manual Develop new products and services Element 1: Analyse market 1.4 New products and services are identified Introduction Once a hospitality establishment has conducted a range of research activities as identified, it will have a fairly clear understanding of what ‘new’ products or services can be introduced to give the establishment a competitive advantage or at least to provide greater value to customers. Each organisation will come up with new or improved offerings that will be unique to its mission and goals. The range of products and services that can be introduced, however, are limitless and either can be invented from scratch or may be a modification or copy of an offering that already exists in the market place. The hospitality industry is normally viewed as a ‘service industry’. However, very few services are truly pure services, so products are defined to include services as well. Products and services usually run on a continuum, with both types usually involving some element of the other. In hospitality the product/service offering is combined to meet customer needs and consists of the following elements: A tangible product/products Environment Services. Most products in the hospitality industry are combinations of tangible and intangible elements. The food and beverages provided by the establishment are tangible elements, while the friendly or efficient service is an intangible element. The gaming machines provided at a casino are tangible entertainment, while the thrill or dream of winning is intangible. Products What is a product? The need-satisfying offering of a firm Customers buy benefits, not features Customers do not buy products for their own sake but rather to solve problems or enhance their lives The product should only be developed after a need has been identified and a target market chosen to serve Product decisions include quality, warranty, features, brand name, packaging and labelling, product line decisions and product positioning In product development, opportunities are sought from your external environmental analysis and end user research © ASEAN 2013 Trainee Manual Develop new products and services 27 Element 1: Analyse market The benefits of your product help define the industry you are in, your customers and competitors These benefits also help to identify sustainable competitive advantage flowing from product differentiation. Because goods are physical things, when you buy them you own them, and you can see, touch and easily compare them to other similar goods. Types of hospitality products Whilst each hotel may be different some examples of products provided by hotels, as a minimum, include: Guest rooms Comfortable bed Extensive range of television channels Access to movies High speed internet access Free local calls Use of local smart phone Amble space Sound proof rooms Individual cool /heating controls Alarm clock Coffee maker or complimentary coffee Iron and ironing board Full length mirror. Bathroom Bath Shower Full range of amenities Hair dryer. Hotel facilities Gymnasium Pool & spa Golf course /recreation Business facilities Bar Restaurant Transportation services 28 © ASEAN 2013 Trainee Manual Develop new products and services Element 1: Analyse market Executive lounge Access to public transport. Services A service is any activity or benefit that one party can offer to the other which is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to the product. On the other hand, a service is a deed performed by one party for another and the customer generally cannot keep it. A service is used, consumed and experienced all at once. Pure services are activities or benefits characterised by: Intangibility Inseparability Perishability Variability. Intangibility Because it is not physical goods that you can see, it becomes more difficult to know exactly what you are buying. Hence, increased risk and uncertainty is involved in the purchase decision. Buyers often resort to word of mouth or use price as a guide to quality. With products, when you buy them you can see them and of course you own them. A service, on the other hand, is a deed performed by one party for another. When provided with a service, the customer cannot keep it. It is experienced, used and consumed all at once. You cannot hold on to a service and it is more difficult to know exactly what you get when you buy it. Service companies aim to compensate or reduce this lack of tangibility by placing some emphasis on tangible elements such as staff uniforms, decor of premises and visual symbols and colours in an attempt to provide evidence of their ability to deliver satisfaction. Inseparability Goods are usually produced, stored and then consumed, whereas services are produced and consumed in the same place at the same time. Sometimes called the ‘moment of truth’, this moment provides management with a unique opportunity to collect direct feedback from its source. Perishability A product not sold today can be stored and sold tomorrow with little additional cost incurred. Services cannot be produced in large, economic quantities and then transported to customers, avoiding or balancing extreme situations of peak demand or oversupply. © ASEAN 2013 Trainee Manual Develop new products and services 29 Element 1: Analyse market Variability With a manufactured product, quality control can be built into the production process. Service products vary because: Services are people based and employee performance varies It is difficult to monitor the service product when the customer is present during production or the service is on a one to one basis. Types of hospitality services Whilst each hotel may be different some examples of services provided by hotels, as a minimum, include: 24-hour Concierge Valet Parking 24-hour Room Service Signature gift and sundry shop Daily newspaper delivery Business services Laundry and dry cleaning services Complimentary shoeshine service Limousine and rental car service Car detailing Local tours Interpretation services Travel agent services Restaurant and theatre bookings. 1.5 Opportunities to improve sales and services are identified Introduction The last sections focused on analysing both the internal and external environments and trying to understand how they will impact not only on the current business model and operations but on future endeavours. It also looked at the nature of products and services and considerations when identifying new products or services. Resulting from this analysis, a range of potential opportunities may be identified or it may necessary to generate new ideas on how to improve the operations. 30 © ASEAN 2013 Trainee Manual Develop new products and services Element 1: Analyse market It is important to realise that a manager, whilst they may have responsibility for the success of the organisation, can rely and utilise ideas and support from their team to come up with creative and innovative ideas. Any changes made in the workplace to improve work must be targeted at specific needs. Ways to determine if there is an opportunity for improvement The need to identify opportunities for improvement is especially important when new products and services are introduced as new opportunities may become apparent as they are implemented into the market place. It also reinforces the need for new or modified products or services. Many staff see something that needs improving but do nothing about it. They simply keep on doing what they have always done even though they can see it is ineffective, inefficient, wasteful or dangerous. Many of them persevere with the way things are and see themselves as martyrs for doing so! As a responsible supervisor you cannot afford to adopt this attitude or take this approach. The keys to contributing to workplace improvements and getting other staff involved in the process are to be proactive and lead by example. On this basis, methods to identify workplace opportunities for improvements include: Observing what occurs in the workplace It is important when observing workplace practice to: Observe at different times of the day. There may not be a problem in reception at 3:00PM but there could be one at 8:00AM. Observe at busy and quiet times, day and night, normal trade days and times when you are very busy Observe different staff. Some staff struggle where others don’t and identifying this is a legitimate thing to do. Often the solution is simply training but any situation where staff are having difficulties can also point to potential problems relating to: The initial selection process. Perhaps the process is not selecting the best staff Induction. Perhaps not enough information or training is provided at the start Poor layout. A redesign of the workplace may fix the problem Lack of equipment. Perhaps more equipment is needed Faulty equipment. It may be the staff are competent but the equipment is letting them down Lack of staff numbers. Perhaps the problem relates to insufficient staff being rostered on to cope with peak demands. © ASEAN 2013 Trainee Manual Develop new products and services 31 Element 1: Analyse market Develop and use a checklist to guide what you observe Most properties will use a checklist for OHS inspections so it makes sense to develop an ‘improvement checklist’ to help guide and take notes about workplace practice which may be able to be improved. Involve workers in your observations The importance of involving staff will be identified later in this section but using them in observations has several benefits: It demonstrates your willingness to collaborate with staff and include them in the process It provides a different perspective on what is observed as well as contributing another orientation as to why it is occurring Workers in the area are usually best placed to make recommendations about what needs to be done to fix any identified problems. Analysing documentation To determine if the statistics indicate a need, such as: Decreases in revenue and downturns in profit margins Excessive overtime being paid Too much wastage Poor productivity figure Trend Failure to attain targets set for the business High levels of staff turnover Instances where there is a lack of compliance between establishment and legal requirements and actual practice. Being advised by management/owners This includes being advised of the need for improvement based on their observation and analysis of workplace activities and performance. This also embraces advice from management regarding new business directions the business is aiming to take (such as new target markets, new performance targets or new expected profit figures). Monitoring the external business environment This aims to identify if an opportunity is evolving or a threat developing in terms of what the competition are doing. A threat causing a need for improvement may be the opening of a new venue down the street. An opportunity may be the closure of a venue across the road. 32 © ASEAN 2013 Trainee Manual Develop new products and services Element 1: Analyse market Making ‘improvement/continuous improvement (CI)’ a standing topic in every staff meeting Raising the question of improvements regularly at staff briefings Developing a CI team within your department Placing posters around the workplace to encourage staff to ‘Think Smarter’ or similar Providing a ‘Suggestion Box’ for staff to drop in their suggestions for improvement Having an open door policy which encourages staff to come to you at any time to discuss a topic for change Implementing an ‘Improvement Award’ to be given to every staff member who comes up with an idea for change which results in substantial improvement to a work practice, service or product. Involving staff Involving staff in all or some stages of the analysis process is likely to achieve better results. It has several benefits including: It demonstrates your willingness to collaborate with staff and include them in the process It shows you value their experiences and opinions It provides a different perspective on what is observed as well as contributing another orientation as to why it is occurring Workers in the area are usually best placed to make recommendations about what needs to be done to fix any identified problems Staff will be the people who will need to implement the change. Therefore getting them on board, having a degree of ownership and enthusiasm toward the required change is paramount. Generate a range of ideas or solutions A manager must not only be open to ideas but must encourage enterprising behaviour and risk taking. One of the cornerstones of this approach is the generation of new business ideas. When you have identified an area for improvement the next step is to generate ideas on how to improve things The ideas and possible solutions must be specific to that identified need or opportunity. There needs to be a total focus on the issue and all its allied flow-on areas. Common techniques to generate ideas include: Talking to colleagues and supervisors to gain their insights, to learn from their experience and to determine the impact of the issue on them and their area © ASEAN 2013 Trainee Manual Develop new products and services 33 Element 1: Analyse market Looking at what happens in other venues. This can mean: Using your network of industry contacts to visit other venues and see what they are doing there. Talk to supervisors, managers, owners at other properties and learn from their experiences Contacting industry peak bodies to obtain information about relevant ‘best practice’ Reading industry literature Using creative thinking techniques. Creative thinking techniques The generation of ideas for change and improvement can be achieved through using a range of creative thinking techniques. Remember when generating ideas, that the involvement of staff is instrumental in generating a variety of ideas. These techniques are: Brainstorming Brainstorming is a useful tool to get as many ideas as possible in the given time available. The general topic is presented and then people are asked to contribute their ideas in a free-flowing manner. One person acts as the recorder and writes down all the ideas shouted out. No judgement, criticism or comment is made about the potential, possible use or applicability of any of the contributions. They are simply quickly written down for later consideration. After all suggestions have been made and recorded and no more suggestions are forthcoming, each suggestion is then further expanded on. This is done initially by the person contributing the initial suggestion and then discussed, considered and evaluated by all. Suggestions may be voted on and prioritised whilst some will be deleted from the list. The suggestions which emerge as the ones with the most support will be further evaluated and worked on. Visualising This involves thinking about a problem or opportunity and producing a mental image of what is desired, required or intended. This mental image is then used to guide the more concrete and physical aspects of the change. The benefits of visualisation are it is a relatively quick activity, it’s cheap and the ‘end result’ can be easily changed. Making associations Linking products or services to other ‘things’ can generate new ideas. This involves identifying one or more items or services, and asking people to freely link them to whatever pops into their mind. Once again, as with brainstorming, no ideas are rejected or criticised, but with this approach people are asked to further explain their contributions perhaps mentioning how things would work and the benefits which would flow. 34 © ASEAN 2013 Trainee Manual Develop new products and services Element 1: Analyse market Telling stories The telling of stories to a focussed and captive audience is another way of generating ideas. The story may be true or fictional. True stories, especially ones related to the venue or industry, have more impact as people (staff and customers) relate better and more intimately to them. The idea is to recount a story with a point. The story must convey a problem or opportunity along the lines of the one being addressed by the improvement process. For example, if the requirement is to develop an improvement to service levels, then the story must focus on customer service. Lateral thinking Where new ideas are being sought, the use of lateral thinking can be an effective tool. Lateral thinking is a problem-solving tool which adopts an alternative way of viewing the problem in that the problem is approached from a number of different aspects rather than focussing on just one angle. This may result in people thinking of alternative perspectives from which to view the problem or opportunity. The venue may have previously only utilised a ‘property perspective’ while lateral thinking will encourage a ‘customer perspective’. Where a customer perspective was already the norm, lateral thinking may begin looking at different types of customers based on their demographics or other characteristics such as attendance patterns, buying behaviour, or payment option. This approach may also involve developing new uses for a product rather than the traditional use so as to create a new market for an existing product. It can also embrace bringing the techniques and strategies from another area or industry into the melting pot of deliberations. For example, a hotel may draw on the examples and thinking employed by a restaurant or the retail industry. Lateral thinking may mean a venue takes its usual focus away from highlighting price and begins to concentrate its efforts on, for example, taste, value-for-money, uniqueness, brand status, ease of use, no wastage and environmental concerns. Six thinking hats In 1985 Edward de Bono developed what he saw as a better method of thinking using the metaphor of six coloured hats – white, red, black, yellow, green and blue. Each coloured hat refers to a way of thinking and de Bono suggested that, in order for any issue to progress, all those involved in the discussion needed to be wearing the same coloured hat at the same time. In addition, because no single hat is right or wrong (they each represent different types of thinking), they allow for consideration of a range of thoughts on any one topic thereby enabling what de Bono calls ‘cooperative thinking’. The white hat focuses on information, including hard facts and soft information such as rumour and personal experience. The red hat is tied to and permits emotions, feelings and intuition to be considered. © ASEAN 2013 Trainee Manual Develop new products and services 35 Element 1: Analyse market The black hat is the critical thinking hat, making judgements and deciding if things are right or wrong. The yellow hat relates to values and beliefs. The green hat is the productive hat asking for ideas, alternatives and possibilities. The blue hat is all about process control and organising the other hats. The hats are used by initiating discussion and asking people to put on, for example, their yellow hat. During the discussion, only references from the yellow hat perspective are entertained. If someone contributes creative thinking ideas, their input may be met with ‘We’re doing yellow hat currently but we’ll move on to green hat shortly’. Alternatively, the group may decide ‘We need some red hat thinking on this topic now’. Using relevant knowledge In addition to the above creative thinking ideas, there is always the need to apply relevant knowledge to a situation where workplace improvements are being considered. This knowledge may be fact-based, experiential or obtained from a number of different sources across a variety of knowledge classifications. Technical knowledge In some cases, but certainly not all, especially within the people business that is the hospitality industry, there can be a valid need to apply specific technical knowledge to suggestions, recommendations and contributions. The point in applying technical knowledge is to define the likelihood of success or acceptance of a particular improvement. For instance, the concept being proposed may be excellent from every conceivable angle but assembling the technology and resources to implement the idea may prove too expensive, physically too large or aesthetically unpleasing. In another instance, the concept, which may have resulted from a free-wheeling brainstorming or similar session, is impeccable and exactly fits the requirements for the need to improve but the technology has not yet been developed to allow its implementation. Service-based knowledge This is a very important consideration in the hospitality industry and one that appears often overlooked at the expense of other considerations that seemingly have little to do with true, traditional customer service. Application of this knowledge forces you to consider how any improvement or change is likely to impact on the customer, and how that impact will flow on to customer satisfaction, revenue, repeat patronage and the delivery of a service standard in keeping with what the venue requires. There is often a trade-off between service and other business imperatives. This is not to suggest venues devalue service but it merely reflects the highly competitive and lean nature of many operations. 36 © ASEAN 2013 Trainee Manual Develop new products and services Element 1: Analyse market When considering whether or not to compromise or reduce service standards, it may be worth obtaining feedback from your customers about how this will change their buying behaviour with you. In some cases, they may be more than happy to exchange a reduced level of service for speed, reduced incidence of errors, lower prices or some other bonus. In other situations, service such as personal one to one attention, getting to know the needs and wants of the customer and meeting them may be paramount above all else. Information from different work areas No department or section within a venue exists in isolation from other departments or sections so it makes sense to include people and contributions from other areas within the property when seeking to generate ideas for improvement. There is a dual benefit in seeking input of this type. First, people from these areas have some understanding of the way the business, as a whole, operates and so can integrate this knowledge and understanding with the idea for improvement. In this way, the change can be viewed more realistically within the workplace context. The second benefit is people from outside the department or section can see the situation with a fresh pair of eyes. As the adage goes ‘Sometimes you can’t see the wood for the trees’, and the same can well apply within the venue. It is possible for staff to get ‘store blind’ meaning they can’t see, even if they look at, what other people notice straightaway. This new, or alternative perspective, can be the very thing which triggers improvement or provides the basis for an alternative approach which itself generates the eventual solution. Information from colleagues Within the property there exists a huge reservoir of experience, talent and expertise. This pool is your colleagues. Regardless of whether they have been with the organisation for 12 days, 12 months or 12 years and regardless of whether they are office staff, reception staff, waiters, bar attendants, room attendants, cleaners or managers, they all have something to contribute. Two heads are better than one, so just imagine the potential provided by 100 heads. Two alternatives exist when seeking ideas from this group: Present the general problem or opportunity and ask for their input Present a targeted potential idea or solution which has already been formulated and ask for feedback on that. The timelines which apply to making the improvement may dictate which option is used. And a word of warning – don’t prejudge contributions from your colleagues. It is very easy to form an opinion about a certain staff member or group of colleagues and, on that basis, determine the contribution will either be worthless or valuable before you even see what it is all about. As we never know everything there is to know about anyone, this prejudgement can be fatal. © ASEAN 2013 Trainee Manual Develop new products and services 37 Element 1: Analyse market Just because someone is new to an organisation doesn’t mean they can’t think creatively, draw together strands others can’t or generate fresh conclusions from established and given facts. As we’ve said elsewhere, if you are going to ask people for help or ask them questions, then listen to what they tell you. Don’t jump to conclusions, presume or presuppose. Information gained from books and videos Books, videos and other sources of information may be invaluable in providing initial impetus for improvement, or for supplying support for suggested improvements. Literature used, especially magazines, will normally be trade-related and focus on aspects of the industry generally deemed to be of importance or merit. Magazines or journals are especially useful in providing details and information on new release items and products as well as supplying the latest in industry trends, statistics and observations. Videos tend to provide more specialist information and focus on one aspect, or one angle of an idea. Useful videos can be commercially produced or those available from suppliers and support industries who use them either as promotional or training tools. Review ideas for relevance and practicality When you have captured ideas and information relating to them your next step is to review and evaluate these ideas. Your personal observations, research and meetings with various people including staff, management customers will have identified areas where improvement is needed. The information gathering phase will have generated information to allow you to make legitimate and rational decisions about the options which were generated. The review phase should include evaluating the alternatives to determine which ones remain as viable alternatives and which ones should be discarded as inappropriate. The review phase should include representatives of all those you regard as ‘stakeholders’ in the topic which is the focus of your considerations. This could include management, customers, staff from the area itself, staff from allied areas, suppliers etc. In order to conduct a truly inclusive review and evaluation you should: Distribute material captured during the previous phase to all relevant stakeholders Allow time for them to digest and question this material Convene a number of meetings to discuss and air issues arising Assess the options using all the information and knowledge obtained against criteria which must include: Relevance – specifically to the situation being considered. There must be an almost laser-like focus on the issue to avoid debate being side-tracked to peripheral and often unimportant issues If there is a belief that other areas genuinely need to be considered then the nature of the improvement needs to be reframed, or another separate issue needs to be established for its own research or consideration 38 © ASEAN 2013 Trainee Manual Develop new products and services Element 1: Analyse market Practicality. Any change for improvement must meet the ‘practicality’ criterion. There are many elements to ‘practicality’ which will carry different priorities in different venues and different settings. Elements of practicality which need to be taken into account include: Impact on other existing house protocols, policies and procedures. The fact an improvement will impact on other areas of the business doesn’t mean you shouldn’t proceed with the improvement, it just means you have to be aware of the need to take action in these other areas to implement, accommodate and integrate the improvement Impact on layout – where there needs to be substantial changes to venue layout this adds another layer of complexity and expense to a solution Staff ability – where staff currently do not possess the technical skill or knowledge required to implement the improvement, this may signal a need for training or the need to hire trained staff. Where staff have to be trained or hired this can involve a time lag in the implementation of the improvement or change Cost – this is always a consideration. Cost relates to cost of purchasing resources, staff training or opportunity costs. No improvement, it seems, is possible without cost of some sort and no improvement can be implemented without due thought to the expense it will involve Impact on service delivery taking into account service speed, quality, access to products or choice. 1.6 Product and service range is monitored to identify the demand for individual items and seasonal variations Introduction Once new products and services have been identified it is important to identify the demand for specific items and any seasonal variations that may affect it. Before we can explore the expected demand of specific products and services in the short term or based on seasonal influences, is it important to consider the expected lifecycles of new products or services. This helps us to identify when new offerings will be in its greatest demand during its life cycle and expected changes that need to be made in times where demand may have diminished, for various reasons. Product and service lifecycles When deciding on the introduction of products and services it is important to understand how long they will have a positive and profitable impact. Most products and services will have some lifecycle. This lifecycle is divided into four stages: Market introduction © ASEAN 2013 Trainee Manual Develop new products and services 39 Element 1: Analyse market Market growth Market maturity Sales decline. Market introduction In market introduction, sales are low as a new idea is first introduced into the market. Additional promotion at this stage is advised to inform potential customers of the benefits, use and location of the new product or service. At the introduction stage there are usually large losses in anticipation of future profits. Expenditure is high and it takes time for customers to learn of the product/service and for costs to be recouped. Market growth At this stage, industry sales are growing fast. Industry profits rise and then start to fall. An innovative company begins to make larger profits as more and more customers buy the product or service. However, competitors notice this opportunity and enter the market. Some imitate or copycat the products or services and some attempt to improve on the offering or to refine it. This is the time of highest profits for the industry, but also a time when individual profits decline as competition increases. Market maturity Market maturity occurs when industry sales level off and competition becomes even tougher. Many aggressive competitors have entered the market for profits, unless an oligopoly situation has developed. Industry profits decline throughout the market as competitors cut prices and more is spent on promotional costs to increase or maintain market share. Less efficient competitors cannot sustain this price competition and are forced to withdraw. To enter the market at this stage is both difficult and expensive. Late entrants bypass earlier stages of the lifecycle, including the profitable market growth stage, and have to compete with experienced and established competitors who fight hard to defend their revenue and market share. Decline During sales decline, new products or services begin to replace old. Price competition from dying products or services increases but companies with strong brands should continue to make profits until the end of their lives. This is usually, either because they have successfully differentiated their offering, or successfully established their brand name in the mind of the customer. Variations in product and service lifecycles Product and service lifecycles are different lengths for different offerings. An offering with a greater comparative advantage over its competitors will move more quickly through the earlier stages of the lifecycle and will rapidly increase its sales. If an offering can be tried on a limited basis, without much risk to the customer, then it can usually be introduced more quickly. 40 © ASEAN 2013 Trainee Manual Develop new products and services Element 1: Analyse market Shorter lifecycles This is where technology changes quickly and competitors are able to rapidly imitate, meaning some markets move quite rapidly into maturity. These shorter cycles can have an impact on the overall profitability of innovative organisations. The increasing speed of these lifecycles mean that if companies want to remain competitive, they must continue to develop new product ideas and must aim to make the most of the market growth stage when profits are high. Sales of some offerings are heavily influenced by fashions and fads. Fashion-related products tend to have shorter lifecycles. What is currently popular can shift suddenly. Marketers must be prepared to modify offerings quickly according to the currently accepted popular style. Identifying demand for individual products and services Before individual products and services can be selected for implementation it is wise to understand and identify the degree for demand for items. Many organisations will conduct some kind of market demand analysis to determine the level of demand that may exist and the level of expected profitability this demand may attract. There are many ways in which to check demand for specific products and services. Naturally if they are in existence at the moment, often in competing properties. Ways to identify demand includes: Observation – you may be able to observe the patronage of specific items by sight. This can include the popularity of specific menu items or themed cuisine, through to popularity of bars or spas Conduct a trial run – this may be a ‘limited offer’ or ‘special promotion’ Place an advertisement to identify the level of interest in a products Sales records. Whilst this will certainly be the most accurate measurement of demand, this may be hard to access if it only exists in competing properties Suppliers. They will be able to provide information as to where their products have been placed, the volume of business and trends Industry associations. They will be able to provide information relating to sales statistics Journals and articles. They may contain informational articles and reviews discussing the popularity or success of products or services recently introduced into the market Other hotels in the chain. Many hotel chains are made up of a large number of properties. These hotels can discuss the success and failures of new initiatives Competitors. You may have contacts with other hotels who may be willing to share information Feasibility study. Conduct a study into the interest in specific items or services. © ASEAN 2013 Trainee Manual Develop new products and services 41 Element 1: Analyse market Understanding seasonal demand Many hospitality businesses will have different degrees of demand at different times of the year. Naturally beach side or ski resorts will have easily identifiable seasons in which changes in demand can easily be identified. That said, not every product or service sells at the same pace throughout the year. There are bound to be peaks and troughs on the sales graphs with the coming of different seasons and different months. Also different target market segments will have different times for demand. For example, business trade is higher on weekdays whilst the leisure market will peak over weekends. It is important to look at the demand of each individual target market segment plus the overall level of demand of the customer base as a whole. Ways to identify seasonal demand include: Analyse historical data Review sales figures The level of demand for specific products and services at different times Identify expected peak times Identify expected low demand times. It is quite common for hospitality organisations to change products and services at different times of the year to maintain demand by a wide variety of market segments. 1.7 Product and service range is planned Introduction Once ideas for products and services have been identified as a concept, further thought must be given to how it is to be introduced into the market. Product or service management includes a wide range of management activities, ranging from the generation of a new idea for a product or service to eventually introducing it into the market and providing ongoing training and support to staff and customers. Every hospitality business conducts product and service development, whether it's done intentionally or unintentionally. When a new product or service is introduced into an organisation, there are a number of considerations that need to take place to ensure that it is successfully implemented to ensure the greatest impact and possible advantage to the organisation. In many cases, when a specific product or service is introduced it has a wider impact on existing products and services by creating new opportunities or challenges which need to be overcome. This section will explore a number of considerations that must be given in relation to choosing products and services for implementation into the market. 42 © ASEAN 2013 Trainee Manual Develop new products and services Element 1: Analyse market Product considerations There are many aspects of a ‘product’ that must be considered when introducing it to the market. Some of these have been identified below. Product line decisions Individual product or product line compatibility Product line – a set of products that are closely related Product line depth and breadth Convenience, impulse, emergency, staples Shopping Unsought, newly unsought, regularly unsought Specialty. Packaging Opportunity to promote the product Opportunity to protect the product Improve the basic product. Warranties Warranty - what the seller promises about the product and expressed warranty (over and above the law) Covered by both common and statutory laws Goods must be of merchantable quality and fit for the purpose. Branding Provides identification and differentiation Makes shopping easier for the consumer Acts as a cue and a source of information to the customer Develops a relationship with the customer Adds value to the product in the customer’s mind (brand equity) Gain good shelf space - widespread distribution Consistent quality is guaranteed Price can be high enough to support branding. Brand rejection Brand non-recognition Brand recognition Brand preference © ASEAN 2013 Trainee Manual Develop new products and services 43 Element 1: Analyse market Brand insistence Individual versus family versus generic brands. Developing new products and managing existing ones to meet market conditions, and eventually to plan for their successors, is an important part of operational strategy. Service considerations As service is an important element of a hospitality offering, there are specific considerations that must be taken into account. The four characteristics of services and their implications are provided in the following grid. Service Characteristics Considerations Examples Intangibility Must reduce customers’ perceived risk. Build relationships, clean environment, friendly service. Provide physical evidence. Inseparability Service provided in customers’ presence. Opportunity for direct feedback. Importance of staff training, selection and recruitment procedures Perishability Aim to balance supply and demand as services cannot be stored. Just-in-time inventory control, Quality Management principles Variability Service is performed for each customer. Importance of staff training and quality assurance Each individual product or service may require a different target market and a different strategy. Even those companies which manage one product only have to alter it because of technological improvement, changing tastes and preferences in the market place. 44 © ASEAN 2013 Trainee Manual Develop new products and services Element 1: Analyse market Work Projects It is a requirement of this Unit that you complete Work Projects as advised by your Trainer. You must submit documentation, suitable evidence or other relevant proof of completion of the project to your Trainer by the agreed date. 1.1 To fulfil the requirements of this Work Project you are asked to conduct a market analysis of a hotel of your choice, based on an existing hospitality establishment. As part of this project you are required to: Identify four key target market segments Identify the main needs of each of the target market segments Conduct a brief SWOT analysis Identify five new products or services that may appeal to the target market segments. These examples will be the basis of work project questions in Sections 1 – 4 in this Manual. Therefore choose carefully. Identify five examples of how sales or services may be improved for existing offerings Explain how you can identify possible demand for your new products and services. © ASEAN 2013 Trainee Manual Develop new products and services 45 Element 1: Analyse market Summary Analyse market Target markets are identified in accordance with enterprise marketing and merchandising policies A changing environment The customer Identify market segments Benefits of market segmentation Generic market segments Hospitality market segments Tourism market segments Identifying target market segments. Analyze market competition What is market analysis? Current market situation Situation Analysis Analysis of external environment Analysis of internal environment Summary of a SWOT analysis. Client requirements are monitored informally in order to evaluate market trends and client needs Understanding customer needs Understanding needs, wants and expectations. New products and services are identified Products Types of hospitality products Services Types of hospitality services. Opportunities to improve sales and services are identified Ways to determine if there is an opportunity for improvement Generate a range of ideas or solutions. Product and service range is monitored to identify the demand for individual items and seasonal variations Product and service lifecycles Variations in product and service lifecycles Identifying demand for individual products and services Understanding seasonal demand. Product and service range is planned Product considerations Service considerations. 46 © ASEAN 2013 Trainee Manual Develop new products and services Element 2: Evaluate market trends in food production and/or food and beverage service Element 2: Evaluate market trends in food production and/or food and beverage service 2.1 Identify and access information sources on market trends in food production and/or food and beverage service Introduction In section 1 of this manual, the focus of research has been based on understanding the market. This includes customers, both potential and existing, the forces impacting an organisation by both internal and external environments and different opportunities that may present themselves for the development of new products or services. This section will focus on a different but also very important research direction – that of understanding trends affecting the industry as a whole, different businesses within the industry and customers themselves. Understanding trends of the industry is vital in ensuring that what you are seeking to provide to the market is not only fresh and relevant but is in demand. Regardless of types of trends being researched, the basic options for gathering information have been identified below. The keys, however, to this step are to: Be proactive Keep an open mind Using a variety of sources Recording what you find. Types of information sources There are a number of sources that will be a great starting point to get an overview of the industry as a whole and the trends that may impact a business and the selection of new products or services they are thinking of introducing. Colleagues, supervisors and managers These people are your first-line sources of information. You should feel free to ask them questions whenever you need to find information. Get to know them and actively seek out their opinions, experiences and views. They can help you find out what is happening, where the business is heading, what they think of the industry and its various stakeholders and what they intend doing personally. © ASEAN 2013 Trainee Manual Develop new products and services 47 Element 2: Evaluate market trends in food production and/or food and beverage service Talking to these people demonstrates your interest in the industry and the more you talk to them the easier it will become to ask subsequent questions. Representatives Many suppliers have sales representatives who call on the business on a regular basis. Sales representatives, known also as ‘sales reps’ or just ‘reps’, visit the business for public relations (PR) purposes or to introduce new products. These PR calls are courtesy visits where they don’t actually ask for anything but simply call in and ‘have a chat’. This talk can be useful in finding out what is happening at other businesses, trends in the industry, new products, blackout periods and impending price rises. They are an excellent source of information, certainly about their products, but also about the industry in general because they visit so many businesses and speak to so many staff. Developing your own industry network As a member of the hospitality industry, it is vital to build your industry network. This involves reaching out to all people in all aspects of the industry and discussing industry happening, trends and current information. The more people you meet and the more information you accumulate provides you with a sound understanding of the industry and will help your career progression. To develop a useful and representative network of contacts you will need to make deliberate attempts to target and talk to people you respect within the industry including owners, managers and others. Make yourself known and visible and keep yourself ‘in the loop’ which means: You need to contact your network when you find out something you think they might need to know. This highlights the two-way nature of the concept of networking You need to occasionally contact them just to ‘keep in touch’ even when there is nothing specific to pass on to them. Often they remember something they need to tell you and your call demonstrates you value them as a contact. Conferences and seminars You should attend these whenever possible and make an effort to attend a major one at least every two years. Let your employer know you are interested in attending and keep an eye in the media and trade publications about events that are coming up. Conferences and seminars are extremely useful because they are: A great source of industry contacts. It is beneficial to begin ‘networking’ as soon as possible Good sources of new ideas, new products and new industry thinking A good opportunity to share and test ideas. 48 © ASEAN 2013 Trainee Manual Develop new products and services Element 2: Evaluate market trends in food production and/or food and beverage service If you can’t attend them, then make sure you read about them in the trade magazines or make contact with someone who has attended. Product launches You are in a good position to attend many of these by the virtue of being in the hospitality industry. Sales representatives may give you an invitation or an invitation may be given to all staff at your workplace. These events are good networking opportunities and they also provide product knowledge about the product being launched. Trade magazines Different sectors within the hospitality industry will have their own publications. Hotel school publications Tourism and Hospitality educational providers around the world often have a dedicated research or on-line library containing latest information specific to industry. Cornell University School of Hotel Administration http://www.hotelschool.cornell.edu/research/chr/pubs/. Newsletters These usually come in electronic form and are mostly free of charge. They are often produced by industry suppliers or support services and made available as a marketing tool. They commonly contain a significant advertising component but also contain useful information that can be readily applied to working life. Examples include: Ehotelier – http://ehotelier.com/hospitality-news/archive.php Restaurant Hospitality – http://restaurant-hospitality.com/newsletters/ Hotel Resource – http://www.hotelresource.com/Newsletter-index.html Hospitality Sales & Marketing Association International – http://www.hospitalitynet.org/organization/17001014.ht ml ‘Daily News for the International Travel and Tourism Industry’ – www.traveldailynews.com/ ‘e-Global Travel Media’ – http://www.eglobaltravelmedia.com.au/mailindex. Brochures Most suppliers and service support industries provide various forms of printed information that can assist with information in relation to: Product information Services provided Contact details for their business. © ASEAN 2013 Trainee Manual Develop new products and services 49 Element 2: Evaluate market trends in food production and/or food and beverage service Advertisements Whether in the newspaper or in other formats (brochures, TV, flyers) these are an excellent source of information about new products and services, changes to existing products, process, special deals and offers. Reference books There are many reference books available covering many areas of the tourism and hospitality industry: www.lonelyplanet.com www.travelguideuniverse.com.au www.roughguides.com. Internet Some of the above ‘written material’ sources are internet based. However, the internet is a great source of much more. You should develop a list of favourites and bookmark them for ready reference. These might include: Suppliers – there are many suppliers who will have their own websites. Industry associations. Global Examples: The Air Transport Association (IATA) – www.iata.org World Tourism Organisation – http://www.unwto.org International Hotel & Restaurant Association – http://www.ihra.com/ World Hotel Association – http://worldhotelassociation.com Regional Examples: ASEAN Tourism – http://www.asean-tourism.com/ Pacific Asia Travel Association – http://www.pata.org Country Examples (Indonesia): Association of Indonesia Tours and Travel – http://www.asita.org Indonesia Hotel & Restaurant Association (IHRA) – http://www.ihraonline.com Government bodies: Asian Hospitality & Tourism Association – http://www.asianhta.org Specific properties. It is worth subscribing to any information services, newsletters etc. they offer as they are usually free. It should become standard practice for you to do a ‘net search’ whenever you are looking for something, seeking inspiration or wanting to check things out. 50 © ASEAN 2013 Trainee Manual Develop new products and services Element 2: Evaluate market trends in food production and/or food and beverage service Government bodies The ASEAN region, whilst working collectively to achieve a primary purpose of attracting tourism to the region as a whole, each participating government will also have their own websites and departments in which to collect information. They have been identified below. BRUNEI Tourism Development Division Ministry of Industry and Primary Resources Jln. Menteri Besar, Bandar Seri Begawan, Brunei Darussalam Tel. (673-2) 382822 Fax. (673-2) 382824 Email: info@bruneitourism.travel Website: http://www.bruneitourism.travel/ CAMBODIA Ministry of Tourism 3, Preah Monivong Blvd, Phnom Penh, Cambodia Tel. (855-23) 213911 Fax. (855-23) 426107/217503 Email: dgpro@camnet.com.kh Website: http://www.tourismcambodia.com/ INDONESIA Ministry of Culture and Tourism Jl. Medan Merdeka Barat 17, Jakarta 10110, Indonesia Tel. (62-21)3838157 Fax. (62-21) 3849715 Website: http://www.budpar.go.id http://www.my-indonesia.info LAOS National Tourism Authority of Lao P.D.R. Lane Xang Avenue, P.O. Box 3556, Vientiane, Lao P.D.R. Tel. (856-21) 212248 Fax. (856-21) 212769/2127910 Website: http://www.tourismlaos.gov.la/ MALAYSIA Ministry of Tourism Menara Dato' Onn Putra World Trade Center, 50480, Kuala Lumpur, Malaysia Tel. (603) 2693 5188 Fax. (603) 269 0207/2693 0884 Email: tourism@tourism.gov.my Website: http://www.tourism.gov.my MYANMAR Ministry of Hotels and Tourism No. 77-91, Sule Pagoda Road, Yangon, Myanmar Tel. (95-1) 285689 Fax. (95-1) 289588/254417 Email: dht.mht@myanmar.com.mm / mtt.mht@mptmail.net.mm Website: http://www.myanmar-tourism.com/ http://www.myanmartourism.org/ © ASEAN 2013 Trainee Manual Develop new products and services 51 Element 2: Evaluate market trends in food production and/or food and beverage service PHILIPPINES Department of Tourism DOT Building, T.M. Kalaw Street, Agrifina Circle, Rizal Park Manila 10004, Philippines Tel. (632) 523 8411 Fax. (632) 521 7374 Email: deptour@info.com.ph Website: http://www.wowphilippines.com.ph/ SINGAPORE Singapore Tourism Board Tourism Court, 1 Orchard Spring Lane, Singapore 247729 Tel. (65) 736 6622 Fax. (65) 736 9423 Email: stb_sog@stb.gov.sg Website: http://www.yoursingapore.com/ THAILAND Tourism Authority of Thailand 1600 New Phetchaburi Road Makkasan, Ratchathewi, Bangkok 10400, Thailand Tel. (662) 250 5500 Fax. (662) 253 7437 Email: center@tat.or.th Website: http://www.tourismthailand.org VIET NAM Viet Nam National administration of Tourism 80 Quan Su Street, Hanoi, Viet Nam Tel. (84-4) 822 8744 Fax. (84-4) 942 4115 Email: binhvnat@hn.vnn.vn Website: http://www.vietnamtourism.com This section has identified a wide range of information sources from which to gather information about trends in the industry. It is essential to keep up to date with industry information by being an active member of the industry. 2.2 Evaluate market trends for relevance to the enterprise current and potential markets Introduction It is important to not only understand the needs of target market segments, as identified in section 1.3 of this Manual, but in society as a whole to ensure that any information collected about potential customers is kept current. It is so easy to operate on out of date information, and it is truly amazing how quickly, yet seemingly without any obvious indication, potential and existing customer demands change. This means it is a must to access information about these changing needs and to relate that data to our customers and their needs. These can be caused by media articles, personal experience and anecdotes from others. 52 © ASEAN 2013 Trainee Manual Develop new products and services Element 2: Evaluate market trends in food production and/or food and beverage service There is a need to keep alert to information that indicates these changes. The usual sources are personal observation including talking to customers, suppliers and members of your various networks, the media, trade magazines, consumer groups and other stores. When these changes are identified, the key is to take some sort of action to exploit opportunities and to minimise any potential adverse effects. Types of industry statistics and trends Industry statistics Industry statistics are popular amongst both employees within the hospitality industry as well as consumers. Statistics prove a ‘snapshot’ of important information which can be examined and applied to improve business operations, attract new markets or build confidence in the eyes of a consumer. Whilst there are endless statistics that can be researched, some of these include: Types of tourism and tourism businesses Types and demographics of customers Top destinations Hotel occupancy percentages Reasons for stays Current industry information Destination countries Departure months Length of stay Type of organisation for the trip Transport mode Accommodation type Expenditure Popular tourist attractions. General industry trends Once again, understanding of current industry trends helps operators within the hospitality industry gain an understanding of what may take in the future. This helps to determine strategy and develop a competitive advantage over competitors. Current trends, which are again endless, may include: Great comparison-shopping by consumers Tourism and hospitality related applications (‘apps’) Women-only floors with appropriate amenities Quick, affordable bursts of fun in lieu of longer excursions or breaks including unusual one-off experiences and mini-vacations Countries such as Myanmar becoming more attractive to Western travelers © ASEAN 2013 Trainee Manual Develop new products and services 53 Element 2: Evaluate market trends in food production and/or food and beverage service App creators are looking for new ways to break through language barriers Websites offering personalized activities and tours offering an eclectic mix of opportunities Forward-thinking hotels and airlines are using RFID and NFC, combined with customer phones, to smooth and speed up the experience Hotels are also enabling guests to use NFC-equipped smartphones as room keys Booking agents to overlay the social graph, asking users to sign in with their social media accounts for the opportunity to hand-pick desirable seating arrangements As the middle market shrinks in the developed world, more brands will find ways to provide special service to customers with the means to spend. VIP treatment is becoming common at amusement parks. Tourism patterns There may be events that can markedly change the pattern of tourist activity – either dramatically increasing or decreasing trade. Some impacts can be very short-term, while some are ongoing. Causes may be acts of terrorism, the price of petrol, campaigns to promote certain geographical areas or events, seasonal factors (the beach and the snowfields, for example), a pilots’ strike and the state of the economy. Technology In just about all products and services, there are quantum leaps in technology that have the potential to have implications for us. New technology can mean changing cost structures, obsolescence, and new products. Changes in technology can present new opportunities for us to incorporate technology into the operation of our business. Examples include the introduction of debit payment cards or EFTPOS (Electronic Funds Transfer at Point of Sale), computer-based accounting packages, security and surveillance equipment and POS (Point of Sale) equipment. Changes in technology also enable us to provide new services such as computer-aided demonstrations, high-tech diagnosis and Internet connections that allow transmission of digital images. Changes in technology also mean that new products, or at least variations on existing products, are continually coming onto the market. This means we have to: Keep up to date with new products Staff need appropriate training in regards to product knowledge Advertising has to be revised. Customers are also aware of the latest trends and advances in technology. The Internet and pay TV are some factors influencing their awareness. Organisations need to monitor these changes in technology and ensure that they provide products and services that reflect these advances while matching identified customer needs. 54 © ASEAN 2013 Trainee Manual Develop new products and services Element 2: Evaluate market trends in food production and/or food and beverage service Leisure time There has been a supposed increase in the leisure time that people have available to them. However, many seem to think that despite all the labour-saving devices and the shortening of the working week, people in fact have less leisure time available to them. This means you have to find out whether leisure time is a significant factor for your customers: Do they have time to play? If so, how can you service that need? What sort of leisure activities are they interested in? When? Is there an opening for you to sponsor them or their club? Can you access the others who engage in that leisure activity? Alternatively, can your business do something that introduces some aspect of leisure into the busy working lives that they have? Environmental issues These issues seem constant, but there appear to be changes within this category as different issues gain currency, public interest or political worth. Air pollution, recycling, solar and wind power, water consumption, saving the whales and the dolphins, and lowering greenhouse gases are all examples of what can classify as current environmental issues, as is energy pricing. It is also important that the establishment can demonstrate that it is environmentally sensitive. Flyers and notices around a hotel explaining what they are doing to protect the environment can be beneficial. The business may also join various environmental groups as part of their contribution to the environment, and register to join the various environmentally oriented organisations that exist. These may focus on energy saving, recycling, lowering emissions and correct waste disposal methods. Discount operators The marketplace is a dynamic environment and one constant element is the existence of discount operators. These businesses regard price as their prime selling tool and attract sales simply by virtue of offering the lowest selling price. Hospitality businesses need to be aware of the existence of these operators so that they can take appropriate action to compete. Appropriate action may be to meet the process offered by the competitors, but it is preferable to compete on another platform rather than pure price. Where two businesses compete just on price, both tend to lose. Alternative action can include: Promoting the other services you offer – excellent service, high levels of product knowledge, home deliveries, after sales service, friendly staff, warm environment, over the phone service, lay-bys, gift-wrapping, interest free periods © ASEAN 2013 Trainee Manual Develop new products and services 55 Element 2: Evaluate market trends in food production and/or food and beverage service Stressing the value and quality components of your products and services. Rather than asking people to consider price, ask them to look at status, durability, the fact that your products are well-known and respected, they have wonderful guarantees and warranties and that people can feel comfortable in buying and using a recognised, national/international brand Presenting your extensive product range. You may decide that you have an outstanding and incomparable range: that is what you must promote and make people aware of Providing your specialist knowledge. You may have outstanding knowledge, experience and expertise in a certain area and that may be the hook to hang your hat on. Nowhere else can people get such exceptional information than from you! Offering a range of products at different price points to cater for all groups at a range of buying levels. Price points are the selling prices you have goods available at so that different target markets are attracted. Traditionally, but by no means in all cases, there are three price points: One at a low level (basic product) One at a medium level (basic product with some options/better quality) One at the top level (best product, all options, best quality). Having these three options gives choice to customers and encourages customers to think along the lines of ‘good, better, best’ Bundling. Instead of competing head to head on price, you might decide to price bundle so as to cloud actual selling prices and make it more difficult for customers to compare just on price alone. Price bundling is where you offer for sale a number of things at an all-up price, and don’t sell them individually priced Offering giveaways. This may be pretty close to competing on price, but it is different. In this option, you give customers a free XYZ. To sum up, when you know that discount operators are in your trading environment, you need to do something intelligent to meet that threat. Customer demands The key to knowing about changing trends, from a marketing perspective, is that this information needs to be related to customer-focussed concerns. Your market research will have identified the areas and issues that are important to your various target markets, so profiling the business’s customers requires that you relate these to the products and services you are offering. The point being that you need to be able to identify, understand and explain how your products meet the specific classifications of customer demands that exist within your different market segments. These customer demands may vary according to: Personal preference Health factors 56 © ASEAN 2013 Trainee Manual Develop new products and services Element 2: Evaluate market trends in food production and/or food and beverage service Age Cultural group Dietary issues Price Contemporary eating habits Media influence Cultural and ethnic influences Seasonal and popular influences Major events and festivals. Quality demands Changing trends have revealed several customer orientations to quality. While there appears to be a constant customer demand for quality products and services, there is an emerging appreciation by customers of value for money quality. Staff members, regardless of organisational type or position, can benefit from actively conducting research about their industry. Any small piece of information, when applied correctly, can make all the difference on a customer’s experience with your organisation. 2.3 Identify and access relevant information to assist development of new products or services Introduction One of the major steps in relation to the introduction of products and services is to undertake a series of development activities to help facilitate the smooth and successful implementation of new or improved offerings. As mentioned, every hospitality business conducts product and service development, whether it's done intentionally or unintentionally. This section will explore some of the steps associated with product and service development. New product and service development New product and service development is risky, both financially and in terms of human resources. Design, research and development costs, as well as promotional and staff training costs, can be expensive if the new product fails. A new product or service may fail for many reasons. Not offering a unique benefit or underestimating the competition are common mistakes. Sometimes the idea is good but there are design problems or the costs too much to offer. Not moving fast enough means competitors copy your offering and beat you to the market place. Alternatively, rushing an offering to market at the expense of developing a complete marketing plan can mean the offering is doomed to failure. © ASEAN 2013 Trainee Manual Develop new products and services 57 Element 2: Evaluate market trends in food production and/or food and beverage service The risks in new product and service development include: Developing a new product or service first and hoping it will sell Financial risks - market research, staff consultation, market trial/testing Duplication from competitors. Even if a patent or copyright is protecting your product, competitors only need to vary the prototype slightly to have an acceptable imitation that does not infringe copyright The time taken to develop new products or services, particularly in fast moving industries. To be able to move quickly and in order to avoid expensive new product or service failure it is wise to follow an organised new product or service development process. These steps include: 1. Idea generation 2. Screening 3. Idea evaluation 4. Development - technical and commercial 5. Commercialisation. Idea generation New ideas can come from a variety of sources including the company’s own analysis of external opportunities and analysis of present or future buying behaviour patterns. Other new ideas can come from: Company’s own sales or staff Trade associations Government agencies Advertising agencies Industry associations Customers who have a need and approach the establishment directly Hierarchy of needs. Finding new ideas should not be left to chance. Companies need a formal procedure for seeking new ideas. Screening Screening should consider how attractive the new product or service will be both in the short term and the long term. Screening should involve how successful the product and service will be throughout the duration of the lifecycle. Additionally, criteria should be used that includes a resource analysis (strengths and weaknesses), a long run analysis and a review of the company’s objectives. 58 © ASEAN 2013 Trainee Manual Develop new products and services Element 2: Evaluate market trends in food production and/or food and beverage service Idea evaluation To evaluate ideas a process called concept testing is used. This involves obtaining ideas from customers about how well a new product or service matches their needs. It is important to aim to make estimates of likely costs, revenues and profitability. Market research can be used to help identify the size of potential markets. In this step, enough information should be gathered to ascertain whether there is an opportunity, whether it matches the company’s resources and whether there is a basis for developing a competitive advantage. Development In the case of a new service offering, the company should develop details of what training, equipment and the like will be necessary to deliver the service idea. It is desirable to test models or prototypes that lead to revisions in specifications before the company commits itself to full-scale production. Sometimes market testing is utilised at this stage. Commercialisation At this stage, the product emerges from the new product or service development process to be placed on the market. It is here that the strategic market planning mix is finalised. © ASEAN 2013 Trainee Manual Develop new products and services 59 Element 2: Evaluate market trends in food production and/or food and beverage service Work Projects It is a requirement of this Unit that you complete Work Projects as advised by your Trainer. You must submit documentation, suitable evidence or other relevant proof of completion of the project to your Trainer by the agreed date. 2.1 To fulfil the requirements of this Work Project you are asked to research and identify five trends that may affect a hospitality sector of your choice. You are also required to explain where this information was sourced. 2.2. To fulfil the requirements of this Work Project you are asked to explain how you can evaluate market trends. 2.3. To fulfil the requirements of this Work Project you are asked to outline a step by step approach or strategy for developing the products and services you mentioned in the Project activity in Section 1 of this Manual. 60 © ASEAN 2013 Trainee Manual Develop new products and services Element 2: Evaluate market trends in food production and/or food and beverage service Summary Evaluate market trends in food production and/or food and beverage service Identify and access information sources on market trends in food production and/or food and beverage service Types of information sources. Evaluate market trends for relevance to the enterprise current and potential markets Types of industry statistics and trends. Identify and access relevant information to assist development of new products or services New product and service development. © ASEAN 2013 Trainee Manual Develop new products and services 61 Element 2: Evaluate market trends in food production and/or food and beverage service 62 © ASEAN 2013 Trainee Manual Develop new products and services Element 3: Create products or services based on market analysis and within budgetary constraints Element 3: Create products or services based on market analysis and within budgetary constraints 3.1 Incorporate relevant market trends into food service and menu planning Introduction One of the areas of a hotel in which new products and services may be introduced is in food and beverage operations. This includes both front of house (restaurant) and back of house (kitchen) operations. This section will explore: Different aspects for consideration when planning menus Common food trends that have been identified in different parts of the world. Types of menus The specific types of menus offered in establishments will depend on: The establishment’s hours of business Types of customers, and their reasons for dining Time constraints Skill of the staff. Overall, it could be argued that menus are reasonably similar in that they offer the diner a choice of different dishes to eat. From a structural point of view, however, they differ slightly, and can include the following types: Table d’hôte French term used to describe what is more commonly known as a set menu. One or more dishes can be offered per course. It can also feature an all-inclusive price per person. This type of menu also allows for some dishes to be preprepared, and is therefore appropriate in an environment where cost of labour and food is an issue. © ASEAN 2013 Trainee Manual Develop new products and services 63 Element 3: Create products or services based on market analysis and within budgetary constraints Table d’hôte menus can be presented in the following ways: Verbally Menu card Board (chalk, illuminated, printed etc.) Illustrations. À la carte This term is commonly referred to but rarely applied. To serve a true à la carte menu means that the kitchen should be preparing all dishes when ordered specifically by the customer. In other words, cooking for a particular dish should not begin until the order is placed in the kitchen. The concept is also expanded to suggest that the diner will create his/her own meal from the card. As à la carte menus generally require more well-trained staff, the number of establishments offering this type of service has fallen dramatically; particularly after the recession of the 1980s. À la carte menus are usually presented in a printed or written form to the diner. Banquet Banquet menus, also known as function menus, are similar in structure to table d’hôte menus in that they are usually menus with limited choices and fixed prices. They are ideal for larger groups of people who intend to dine at the same time. These functions may be celebratory, that is: Wedding Birthday Business-based conferences Seminars. Dishes selected for banquet or function menus are specifically geared to satisfy the greatest number of people, and avoid (as a general rule) using exotic ingredients, or dishes that may be inappropriate from a medical or religious perspective. Banquet menus are normally pre-organised, although menu cards are sometimes placed on the tables to indicate the menu to the diners. Types of service Due to the large diversity of cultures that can accumulate due to modern tourism, it can be difficult to define what should be served and when. Many people, when they travel, want what they eat at home to be available wherever they go. The following services should be used as an approximate guide only. 64 © ASEAN 2013 Trainee Manual Develop new products and services Element 3: Create products or services based on market analysis and within budgetary constraints Breakfast Normally served from 6.00 am. - 10.00 am Western (European and American) styles of breakfast are broken down below. Continental ‘Continental’ is a term used to describe what might be available in France or Germany i.e. Continental Europe as opposed to England. Type of bread or pastry such as croissants, baguettes, and toast served with a preserve or honey, finished with coffee. English breakfast Hot breakfast which can include fried bacon rashers, eggs (scrambled, poached or fried), grilled lamb cutlets, grilled tomatoes, fried mushrooms, kedgeree (curried fish and rice), fried kidneys, livers, toast. The cold part of the English breakfast includes the continental breakfast as well as cereal, selection of juices, tea and/or coffee. American Similar to English, except hot cakes/pancakes are also served with whipped butter, maple syrup and sometimes with bacon rashers. Eastern Asian styles of breakfast whilst not served in the mainstream include simple rice-based dishes such as congee (rice porridge), broths, fish, fruit etc. Morning tea Morning teas are normally served between 10.00 am - 11.00 am. British in origin, a traditional morning tea will include a selection of sandwiches, scones with jam and cream, small cakes, pastries and fruit plates. These are accompanied by tea made in pots. Brunch Brunch is a combination of lunch and breakfast, and is usually served between approximately 9.00 am to 12 noon. Similar foods to an English breakfast are quite often served, although sliced meats, cheeses, and other slightly more substantial food is served. Lunch Lunch is normally served between 12 noon - 3.00 pm. It is more often than not considered a utilitarian meal. In other words, it serves to satisfy hunger, and get the diner back to work. From a menu planning perspective, most lunch diners are usually on tighter schedules, i.e. less than one hour. © ASEAN 2013 Trainee Manual Develop new products and services 65 Element 3: Create products or services based on market analysis and within budgetary constraints The actual food served has to reflect this. Few diners have more than two courses during this period. There are no hard and fast rules governing what can or cannot be served at the lunch table. However, pasta, salads, light grills, seafood and sandwiches are popular choices. Afternoon tea Served between 3.00 pm. – 5.00 pm, it is similar to morning tea, although there is sometimes more emphasis on cakes. High tea High teas are served from 5.00 pm - 6.30 pm. Rarely conducted in Australia, high teas consist of snacks, tea, cheeses, seafood or egg dishes. Dinner Designated the main meal of the day, dinner is normally served any time between 6.00 pm. – 10.00 pm. More relaxed than the lunch meal, it is quite normal for diners to allocate up to three hours for dinner. The actual dishes presented can often be more elaborate, and diners will quite often eat three or sometimes four courses in one sitting. The type of food served is similar to the lunch menus, except meat, game and seafood main courses are more predominant. Supper Usually served from 10.00 pm, the food is both simple and easy to prepare. Hot and cold dishes include soufflé, sandwiches, smoked salmon, desserts, coffee, chocolates and snacks. Menu constraints Menu length The number of dishes offered per course as well as the numbers of courses themselves will be influenced by the following factors: Cost to maintain each dish on the menu Ready availability of ingredients Time available to prepare ingredients. It makes little sense to offer dishes that either do not sell well, or are time consuming and expensive to create. The number of dishes offered on a menu has to be based on the above factors. 66 © ASEAN 2013 Trainee Manual Develop new products and services Element 3: Create products or services based on market analysis and within budgetary constraints In this context, it is quite suitable for some establishments to offer up to 100 different dishes, whereas others will struggle with 20% of that number. Most menus these days offer menus in a three or sometimes four course format. These will normally include the following: Starters Main course Dessert Cheese. Modern day menu layouts Menu layout should be appropriate to the type of establishment or situation. For example, a leather bound multi page menu may be considered suitable in more formal dining rooms but be unnecessarily extravagant in a corner milk bar. By the same token, a chalk board or illuminated menu would look equally inappropriate in a fine dining establishment, but be perfectly appropriate in a casual dining environment. Some of the better restaurants will have a manageable menu comparable to the number of staff in the Kitchen Entrée 6 or 8 offerings. Mains One or two of each of the main foods: Beef, Lamb, Chicken, Fish, Seafood, Vegetarian options. Side orders Potato dish (hot) Green vegetable (hot) Salad (cold). Desserts Chocolate flavoured Citrus flavoured Hot dessert Cold dessert (ice cream). Cheese plate Cheddar, brie, blue cheese. © ASEAN 2013 Trainee Manual Develop new products and services 67 Element 3: Create products or services based on market analysis and within budgetary constraints Coffee selection Italian style predominately but Greek and Turkish styles may also be offered. Most places only offer one style of menu; International Hotels with multiple food outlets may offer several forms of menu. Menu balance When determining the actual content of the menu – in terms of courses to be offered and in terms of dishes within each section – there is a need for ‘balance’. Balance means many things. Balance can mean different things to different people, and different people place the emphasis on different aspects of the menu, dishes and related areas. It can embrace: Balance in terms of prices Offering something along a variety of price points so that all pockets are catered for. Bear in mind, however, that some venues deliberately set high prices in order to give the impression of prestige, or price out those who they may consider unworthy of, or unfit to dine in their establishment. Balance in terms of ingredients Offering something that suits everyone. Where the premises is not a restaurant specialising in a certain food item (e.g. beef, seafood, vegetarian), then there is a need to make sure that we provide for those who want steak, fish, chicken, pasta etc. Balance in terms of cooking styles Ensuring that not all dishes are deep fried, or grilled, but offer a selection of cooking methods to cater to suit personal preferences including roasts and wet dishes. Balance in terms of complexity and simplicity It is great to offer menu items with complex sauces but it is also important to offer a range of items that are beautiful in appearance and tasteful to the palate by virtue of their simplicity. Balance in terms of traditional dishes and new experiences Many premises will seek to provide a selection of dishes that can be seen as time-honoured along with a choice of new dishes perhaps featuring novel ingredients and fresh cooking or presentation approaches. This is especially the case where a chef has a ‘signature dish’ that people travel long distances to experience. 68 © ASEAN 2013 Trainee Manual Develop new products and services Element 3: Create products or services based on market analysis and within budgetary constraints Balance in terms of taste Presenting a variety of taste sensations that enables those seeking a spicy dish, a creamy dish, or a sour dish to be accommodated. Final menu considerations Establishments may use the following means of deciding on the final composition of their menu: Personal likes and preferences of the owner/manager Some dishes will find their way onto the menu simply because the owner likes it and has always felt there is a market for it. Equipment available in the kitchen Some dishes can’t be produced unless the right equipment is available, and very few kitchens are able to contain all items of cooking equipment. Staff skills There are doubtless many dishes that require a certain level of experience and expertise. Not everyone can cook everything and the industry is currently experiencing a shortage of trained and experienced chefs. Historic records Previous sales will be a good indicator of what should be kept on your menu and what dishes could be replaced: A regular analysis of actual sales can be an illuminative undertaking to determine what is selling well, what isn’t and exactly how many of each item is being ordered sold. Market research This can include proactive questioning of patrons: Simply factoring in the ‘by the way’ feedback that is received from customers at the completion of their meal, or Asking them as they are leaving; this can be an accurate indicator of what they think about current offerings Ask them what they believe should be changed. Seasonal offering Enterprises will change their menus as the seasons change to offer regular variety and to take advantage of cheaper items that are in season: Many establishments prefer a set core of menu items supplemented by ‘house specials’ that vary daily or weekly to provide variety Many establishments change their menu every three months: As well as having additional special short-term menus for occasions such as Christmas, Valentine’s Day, Mother’s Day, St Patrick’s Day etc. © ASEAN 2013 Trainee Manual Develop new products and services 69 Element 3: Create products or services based on market analysis and within budgetary constraints Staff numbers More kitchen staff will generally mean more alternatives can be offered: Where there are very few staff this means that generic cooking styles must be used and there is less scope for the more complex dishes Many dishes in such a kitchen will be prepared in advanced rather than being ‘cooked to order’ so as to speed up service. Contractual requirements There will be instances where franchise operations are required by the terms of their contract to have certain dishes on the menu. Demographic considerations It is also useful to consider the demographic of the dining public that is being attracted to the venue. This accepts that young people and older people are likely to prefer different dishes and men and women may also have different tastes. Consideration of the eating public also has implications for serving sizes, and the inclusion of national dishes. Some establishments will acknowledge the likelihood of children dining with them, and feature a separate Children’s menu, or a Children’s section on their normal menu. Where the business has a strong local ethnic population, their likes and dislikes may also be reflected on the menu. Local produce Local produce may also be a prime consideration when planning a menu. This may be in order to: Promote a local industry or product Take advantage of lower costs involved in buying local Cater to tourists who may be seeking a taste of the local region. When deciding on menu items to be included on the menu, menu suggestions must be balanced in terms of cost and variety and to reflect the type of enterprise and regional location. Commercial venues must operate at a certain profit level to remain viable, and control of food cost is a critical aspect of this. 70 © ASEAN 2013 Trainee Manual Develop new products and services Element 3: Create products or services based on market analysis and within budgetary constraints 3.2 Develop products and services to take account of market trends Introduction As mentioned in Sections 1.3, 2.2 and 3.1 of this Manual, the importance of understanding trends is vital to ensure that any new product of service that you consider introducing has a unique place in the market and is in fact needed and seen as value to the end user. As mentioned previously, there is no point introducing a product or service if the end consumer does not want it. Understanding trends Trend Analysis is the practice of collecting information and attempting to spot a pattern, or trend, in the information. Each organisation will have their own way to collect and analyse information to determine which products and services are not only popular and in demand now, but will also be in the forseeable future. Any hospitality manager must not only understand current trends but also try to predict future trends that may impact on the existing market or potential markets in the future. Every organisation will have its own ideas as to what is the ‘next big thing’ customers want. Regardless of what trends may indicate, you must be able to produce a product or service that is seen as modern, fresh, innovative but more importantly, of ‘value’. It is important to remember that customers will decide what they want to spend money on. The business itself may have ideas about what they consider to be in trend. One good way to see if a product or service is ‘trendy’ is to observe its popularity in other hotels or hospitality organisations. If a number of hotels are doing it and it is working, then obviously it is popular at this time. That said, you can’t ask all customers their opinion. As stated before, it is vital to keep up to date on industry news through a variety of information sources as identified in Section 2.1 of this Manual. Examples of global food and beverage trends Whilst it is essential to understand general menu planning for a commercial operation, it is also vital that those who are creating menus also have a grasp of the current food and beverage trends from around the world. On the following pages are examples of food and beverage trends that have been identified in various parts of the world. © ASEAN 2013 Trainee Manual Develop new products and services 71 Element 3: Create products or services based on market analysis and within budgetary constraints F&B trends – Global Source: http://lowfatcooking.about.com Here are the top 10 trends: 1. Quick Fix: People want to eat at home: 77% of all dinners were eaten there, but people want less hassle in the kitchen. Easy to prepare and ready to eat are key ingredients for most of us. We should expect to see more ultra-quick foods, bagged salads and side dishes. 2. Drive-and Go: More of us are ordering take-out from full-service restaurants.Take-out sales from these restaurants account for almost 10% of sales. More than half of Americans eat this way during the week. 3. Inherently Healthy: Consumers are increasingly choosing naturally healthy foods such as fruit, vegetables, salads, nuts and yogurt. 4. Fancy: People are choosing premium, gourmet foods. Fish, in particular, is undergoing something of a gourmet makeover. 5. Farm-Friendly: Organic and natural are hot and so is fair trade. Expect cocoa to follow on the heels of coffee and tea. 6. Layering of Flavors: Flavoured oils and vinegars, pairings of fruity and tangy flavors, Asian, Central American and Latin American flavors are in vogue. 7. Grazing: Healthier snacks in vending machines, singleserving snacks, nutrition bars, diet bars, energy drinks and mineral waters are ‘in’. 8. Low, No, and Less: Demand for low calorie and light products will continue to grow. Watch for allergen-free claims on food labels. 9. Doctoring Through Diet: Nearly two-thirds of shoppers tried to manage or treat a condition through diet. 72% of this effort addressed heart health. Next to low fat, whole grains were the most influential food label claim, influencing 62% of shoppers. Dairy products with cholesterol-lowering sterols, antioxidant-rich chocolate are making an appearance. Expect more functional foods to appear. 10. Global Gangbusters: Health and convenience rule. 72 © ASEAN 2013 Trainee Manual Develop new products and services Element 3: Create products or services based on market analysis and within budgetary constraints F&B trends – America Source: http://restaurant-hospitality.com/ Trends The Pie’s the Limit: Move over cupcake, make way for pie, as pies in all sizes move from the state fair to seriously craveable fare. Decadence is endless with everything from savoury, sweet, individual deep-fried pies, bite-sized minis and even pies blended into shakes. New Mom & Pop Shops: Realizing the time is now, and if you‘re going to do it, you might as well do it your way. Partners are opening self-financed and self-built restaurants. These are small places with fewer than 40 seats, designed by friends or family. You’re the One: Single-purpose restaurants are serving variations on one thing. Don‘t be surprised to see the Peanut Butter Palace, French Dippity Dog or even the Big Biscuit, serving biscuit sandwiches and Eggs Benedict, opening soon. Shrink Wrapped: Traditional meals are going the way of the fun-size snack. Smaller portions are perfect for smaller wallets and eating on the run. Look closely for mini pizzas and bagels, two-bite hot dogs, mini tacos or burritos, cake truffles, even pot roasts and pot pies, all downsized. Small is big. Marketing 101 Night & Day: Restaurants and high-end quick-service operators are joining with farmers, artisans and specialty purveyors, reinventing the food hall. Restaurants are also expanding by opening quick-service windows which is opening a ‘window’ of opportunities. Desert Menu: Restaurants are abandoning descriptive market jargon (like cooking method, sides or adjectives), instead highlighting only the key ingredients. You may not know exactly what you will be getting, but trust us, it‘ll be good. Talk Dirty to Me: In search of simplicity and pure flavors, chefs are abandoning sauce. Instead, they are using powders, crumbles, dustings and ‘dirt’ crafted from cookie crumbs, dried mushroom powder, dehydrated beets etc. Fire it Up: Extending way beyond wood-fired pizza, restaurants all over are roasting vegetables directly in embers and slow-roasting whole animals or large cuts of meat over wood-burning fires. Haute Dogs: Hot dogs are the new burger as chefs reimagine them with boutique-style sauces and gourmet toppings. Hot dogs will escape from specialty stands and venture into restaurants as chefs dress them up. This wiener is a winner. Ahhhh Veg Out: Even meat-minded chefs are vegging out as flexitarianism goes mainstream. Meatless Mondays and vegetable-based tasting menus are gaining traction as guests realize it‘s not all about the meat on the plate. It’s Fry Time to Eat Your Veggies: It‘s the revenge of the dreaded vegetable as we discover that veggies everyone loves to hate can taste really good when fried. New favourites include fried cauliflower, Brussels sprouts chips and kale chips. Chefs Are Going Soft: Soft serve plays hardball as chefs and restaurants dress it up in designer duds. Look for savoury soft serve, soft frozen fruit, high-end interpretations and cocktail-driven creations. © ASEAN 2013 Trainee Manual Develop new products and services 73 Element 3: Create products or services based on market analysis and within budgetary constraints Press Junk-It: Munchies are moving to the forefront as chefs reinvent junk food in gourmet ways. We‘re waiting to see what talented chefs come up with as they reinterpret favourite junk treats. Pop Goes the World: And chefs follow suit with spiked, salty, sweet and savoury popsicles in exotic and alcoholic flavors. Pop rocks! Cultural Integration: Yogurt moves from snack to staple as it takes leading roles in sauces, dips, spreads and desserts. Expect to see it in new forms, including sundried, freeze-dried, smoked and pressed, as well as cultural variations like skyr (from Iceland) and labne (from Lebanon). Swede Inspiration: Thanks to Noma and Nordic innovation, northern ingredients and culinary trends are headed south. Our Daily Bread: Chefs are reconsidering the bread basket and serving special housemade breads with intention and attention, including special plates and butter service. Going Belly Up: Goat and lamb belly gain on the ever-popular pork as prices rise and chefs and guests look for the next favourite ingredient. There‘s no such thing as a belly flop. Hot ingredients for next year include: Pimento cheese Necks (lamb, beef, goat, pork) Whey Kumquats Smoked oils, butter, cumin Hay Popcorn Hummus Pretzels Honey. F&B trends - Australia Sources: www.thinkingaustralia.com, www.watoday.com 1. More people taking to street food with more dining and food trucks and street vendors. 2. The push for greater simplicity will also be seen in menu offerings. 3. More focus on frozen foods and meal times will keep evolving in line with our 24-hour lifestyles. 4. Expect to see more fast food, solo dining and breakfast on the move. 5. Health will continue to frame people‘s eating choices. 6. Alcohol consumption will become even more niche-focused with the rise in low and no alcohol beers and wines, micro beers and spirits and cocktails. 74 © ASEAN 2013 Trainee Manual Develop new products and services Element 3: Create products or services based on market analysis and within budgetary constraints 7. Healthy seafood will replace beef and lamb. 8. Entertaining friends at home will continue to rise. 9. Expect shoppers and food sellers to become more ecoconscious, so there will be a big focus on packaging and recycling. 10. More people eating organic chocolate as a low fat alternative. 11. More focus on gluten free foods. 12. More use of citrus as a cleanser. 13. Bad habits will continue such as the consumption of nostalgic comfort food that takes you back to your childhood. 14. Social networking will play a bigger role. Not just Facebook and Twitter but also the phenomenal growth in food blogs. 15. There is also the phenomenal growth in apps for iPhone users. 16. Rise of the so-called ‘flexitarian’ or ‘social carnivore’ who will only eat meat when they‘re out dining with friends. 17. Small plates, shared plates, mini-burgers and mini-desserts will become even more popular as people focus more on their health and waistlines. 18. More nutrition advice. 19. People will continue to demand ‘local’ produce although we can expect the definition of ‘local’ to expand. People want to know where their food is coming from, particularly meat. 20. More chic packaging and iconic budget brands. F&B trends – South Africa Source: www.whalecottage.com 1. More ordering of “retro cocktails and high-end spirits” and craft beers, away from mass-produced alternatives, at fine-dining restaurants, as restaurant patrons want to celebrate their increasing confidence in the year. Prediction is a greater focus on nonalcoholic cocktails in general, and cocktails for designated drivers in particular. 2. Restaurants are becoming mobile, moving location, without a fixed abode. 3. Technology in restaurants, to gain a competitive edge, including iPads with menus and winelists, and hand-held devices for payment at the table, will grow. 4. Greater use of social media marketing, location-based advertising and online reputation management. 5. The trend of ‘Tired of being poor’ could see restaurant patrons spoiling themselves with indulgences on higher-priced menu items. 6. Customers are demanding even greater value for money, and restaurants will have permanent value offers on their menus. © ASEAN 2013 Trainee Manual Develop new products and services 75 Element 3: Create products or services based on market analysis and within budgetary constraints 7. Restaurant chains will reinvent themselves with new branding and looks, as customers look for new and exciting places to celebrate the new found financial freedom. 8. Customers will be enticed back to restaurants with old favourites, new experiences and plenty of love. 9. Supermarkets are increasingly competing against restaurants, offering their customers family value for money eat-in ideas and products. Locally, supermarkets are taking customers out of restaurants and into the aisle. ‘Warmth and hospitality’ cannot be bought in a supermarket, and are points of difference for restaurants. 10. Restaurant menus will see a balance of healthy (starters) and indulgent (desserts) items. F&B trends – Asia Source: www.asiatatlerdining.com 1. Savoury and sweet pies as the one that will dominate in restaurants next year. 2. Mini-sized: "Small: mini portions, mini desserts”. 3. Bellies of goat and lamb will replace the overpriced pork belly. 4. Popsicles with unique flavours such as sugar-snap pea. 5. High-end junk food including munchies we grew up on are going to show up with interpretations done by chefs in the most unique ways. 6. Quality Homemade pastas. 7. Premium international beef. 8. Serious bar food created with care and thought. Ingredients is of course the key, but flavour and texture is the most important when it comes to bar food. 9. Sustainable seafood and reducing our carbon footprint. Whilst people are in search of rare and precious ingredients, alarm bells have rung for the limitation of today‘s food stock. 10. Texture and the return to real wholesome food, based on nostalgic pleasure. Food with real texture using exceptionally noble ingredients and prepared with precision is back. 11. Wine-friendly cuisine. 12. For those with a sweet tooth, the use of herbs and vegetables in the pastry kitchen. 13. Cupcakes and macaroons are here to stay. Thanks to their versatility, you can keep on changing them, making new flavours and shapes. 14. Chefs will continue on the quest for good products, products which are altogether healthy and tasty and come from production that respects the environment. 76 © ASEAN 2013 Trainee Manual Develop new products and services Element 3: Create products or services based on market analysis and within budgetary constraints F&B trends – India Source: Indian Restaurant Association 1. Healthful and flavourful foods 2. Use of fresh and authentic ingredients 3. New fusion ‘East meets West‘ concepts 4. More vegetarian options 5. Adding more and new spices 6. More quick service Asian (Korean, Indonesian, Japanese, Chinese) restaurants 7. Ethnic and regional cuisine 8. Restaurants with entertainment 9. Menu diversification – more choices 10. Multi-cultural menus 11. Back to basics 12. Chefs go casual, cheap goes ‘chic’ 13. Use of raw foods 14. Fast convenience foods. 3.3 Develop products and services to take account of enterprise operational constraints or limitations Introduction In Section 2.3 the steps associated with product and service development were identified. Once actual products and services have been determined, based on customer needs and trends, they need to be implemented in accordance with organisational requirements, constraints and possible limitations. This section will focus on the internal impacts and requirements associated with introducing products and services. Each organisation will have a range of enterprise operational requirements, constraints or limitations that will affect the implementation of products and services. Organisational requirements These will differ between businesses, products and services but may include: Access and equity principles and practices Maintaining ethical standards Meeting goals, objectives, plans, systems and processes © ASEAN 2013 Trainee Manual Develop new products and services 77 Element 3: Create products or services based on market analysis and within budgetary constraints Legislated obligations Management and accountability channels Manufacturer’s and operational specifications OHS policies, procedures and programs Quality assurance and continuous improvement processes and standards. Involve stakeholders Involving stakeholders in the process of identifying requirements can be time-consuming but it is beneficial in that it can help determine: Quantities of items to be obtained or prepared Timelines that apply Restrictions that apply – such as preferred supplier arrangements, budget, compatibility, space issues, compliance requirements Compliance issues that need to be addressed The needs of those who will be using the product Customer needs, wants and preferences Introduction and commissioning requirements Training required Financing arrangements. Capabilities and resources In Section 3.1 a range of capabilities and resource considerations were detailed in relation to implementing menus for restaurants. The use of resources are important activities in any business, especially when introducing new products and services. There is a need to make sure the organisation has the resources it needs to achieve its identified business objectives, while at the same time, ensuring that money is not wasted on resources that are not necessary or inappropriate to the task. Resources can encompass: Physical resources Human resources Financial resources Intellectual property. While the exact nature, type and quantity of resources required by an organisation will vary depending on the products and services being introduced, common resources requirements include: Location/premises Occupational health and safety (OHS) resources 78 © ASEAN 2013 Trainee Manual Develop new products and services Element 3: Create products or services based on market analysis and within budgetary constraints Plant/machinery Raw materials – used to produce the products or service Refurbishment requirements Staff amenities Stock and supplies – used to support the operation of the new product or service Storage space – for stockpiling items produced (where applicable) and for business records Technical equipment and software Staffing Training Training materials. Notification of new products and services It is essential that an organisation which chooses to introduce a new product or service to the market lets all relevant stakeholders know about it. These stakeholders, as mentioned above, include: Customers – they are the most important stakeholder as they will be the ones who will decide whether to make a purchase or not Owners – they will be funding the activities Managers – this will affect operational aspects and delivery Finance – they will need to determine budgets for new products Human Resources – they will need to construct training programs Sales and Marketing – they will need to sell the new ‘offerings’ to customers and inform media through public relations activities Staff – they will be the persons working with new products or providing new services Normally the introduction of products and services is a positive step and it is essential that everyone has a clear understanding of what is being introduced and their role in its introduction, implementation and operation. © ASEAN 2013 Trainee Manual Develop new products and services 79 Element 3: Create products or services based on market analysis and within budgetary constraints Communicate information about new products and services As mentioned above, there are many stakeholders who will need to understand the details of new products or services that are being introduced. This is essential to ensure that accurate product and service knowledge is not only understand but communicated with others. This product and service knowledge can therefore include: Details about physical products - where they are made, their characteristics, their price and availability, how to buy those products Information about the services that are available – including who provides the service, when it is available, how much it costs, what it involves, what it is like and how to book it Information on prices, specials, deals and packages – being able to explain how these benefit the customer, what savings they involve, when they are available, when the offer finishes, who is eligible for them and how to obtain them Details about the operation of the business. This may cover things such as facilities available, policies and procedures, opening and closing times for departments and services, what deposits are required with bookings, methods of payment accepted by the venue, peak and slow trading times, names of staff and management, contact details of the property, the quietest accommodation rooms, the location of the best seats in the restaurant and the number of rooms on each floor. Both employers and customers expect all staff working with new products and services, to have a substantial body of knowledge about them. Develop organisational policy, procedures and standards With the introduction of new products and services comes the need for standards to be introduced to ensure there is a consistent level of performance which must be reached and maintained. A policy is a statement about an issue in the workplace and says what the business intends to do about the issue. A procedure sets out step-by-step instructions on how to deal with an activity in the workplace. Organisational policy and standards for service may relate to: Organisational service culture and values Strategic goals of the organisation Service policies, guidelines and processes Ethical standards established by the organisation Legislation, codes and practice Technical standards. 80 © ASEAN 2013 Trainee Manual Develop new products and services Element 3: Create products or services based on market analysis and within budgetary constraints Effective communication of expectations After developing policies and procedures, certain expectations will come to light. With the aim of enhancing customer service quality, in both high volume and low volume situations, it is critical to share these with staff. Having developed the required customer service standards for your establishment, they need to be communicated to those who need to know them. Whilst most of the communication of standards will come from departmental managers and supervisors, staff can also communicate amongst themselves to ensure everyone understands exactly what is required and the procedures to follow to ensure the standards are met. Communicating customer service standards can come in many different ways including: SOPs Job descriptions Task sheets Orientation programs Formal meetings Staff briefings at the start and end of shifts Training sessions Observation and mentoring Informal communication during a shift. Communicating new approaches to service delivery The communication of new service delivery approaches may occur in various ways. The key to communicating these changes is that the communication must be planned. Your approach should follow these guidelines: Hold a formal staff meeting to inform staff of the changes. If staff have been actively involved in the development process then the changes made should not come as a surprise to them Remember it is important not only to explain the changes but also explain why they were necessary Give staff a hard copy of the new service approaches. Give them everything that is applicable to their area such as: Copies of plans Copies of standards Copies of policies Copies of procedures Explain the changes. Tell staff how the ‘new’ service delivery differs from the previous service delivery. Be specific – give real examples of ’what you used to do’ and what you will do in the future © ASEAN 2013 Trainee Manual Develop new products and services 81 Element 3: Create products or services based on market analysis and within budgetary constraints Give staff demonstrations (where applicable) of the new service delivery protocols so they can see what is involved and visually tell the difference between the old and the new This also gives them a clearer appreciation of what the revised service procedures are all about - actions speak louder than words Tell staff about the dates for introducing the new service procedures. Traditionally there will be a lead time where new procedures will be phased in Reassure staff they are not required to implement the changes ‘tomorrow’ Inform staff of the training being provided to support them in implementing the new requirements. Let them know when and where the training is happening, what it will involve and who will be leading it Encourage questions from staff about the changes. Answer them fully and honestly Make yourself available outside this meeting for staff to talk to if they have concerns regarding the changes Post new checklists relating to the changes in appropriate parts of the venue Include new policies, procedures etc. in operational manuals, induction programs and in-house training Schedule staff to attend sessions to obtain necessary training to assist with implementation of the changes Introduce the changes and monitor their implementation. Run through the new procedures at staff briefings and again at debriefings Provide feedback to staff as appropriate including additional training where necessary. Creating operational checklists A checklist is a type of informational job aid used to reduce failure by compensating for potential limits of human memory and attention. Checklists are essential when new products and services are introduced as many staff members may not be aware of what is expected or how activities should be carried out. It helps to ensure consistency and completeness in carrying out a task. A basic example is the "to do list." A more advanced checklist would be a schedule, which lays out tasks to be done according to time of day or other factors. Checklists are often presented as lists with small checkboxes down the left hand side of the page. A small tick or checkmark is drawn in the box after the item has been completed. Checklists can be developed reflecting: Job descriptions Policies Procedures Task sheets Recipes. As can be seen, the introduction of new products and services is not as simple as coming up with an idea. There is a great deal of time, thought and planning that goes into the process. 82 © ASEAN 2013 Trainee Manual Develop new products and services Element 3: Create products or services based on market analysis and within budgetary constraints 3.4 Construct products and services to meet profitability targets Introduction Naturally the introduction of new products and services normally is an expensive exercise, not just from a financial point of view. It can also take an added emotional toll on all involved in the exercise, as stress levels will increase. When deciding on new products and services they must be done in a way that is financially feasible in the long term. No business aims to introduce any new concept unless there is some financial benefit to it. This section will explore the number of financial considerations that must be carefully identified. Initial costs A great deal of cost is often associated with the introduction of new products and services. Some of the financial costs associated with the introduction of new products and services include, but are certainly not limited to: Closure of revenue generation outlets or rooms Refurbishment costs Purchase of furniture, fixtures and equipment Removal of old equipment Project management planning and implementation costs Purchase of new supplies including food, beverages, furnishings or amenities Employment of staff Training of staff Promotional materials and activities to make customers aware of new offerings Loss of productivity until people come ‘up to speed’ with how to deliver new products or services. The resources associated with the introduction of products and services are often limited by the budget available for this task. Management will determine the level of funding available for materials, plant, machinery, etc. and make an amount available through its budgets. The budgets may be a set dollar figure or a percentage of revenue. © ASEAN 2013 Trainee Manual Develop new products and services 83 Element 3: Create products or services based on market analysis and within budgetary constraints Establishing budgets Importance of budgets When people go into business they will be investing large amounts of money, on which they will want to earn some return. They will also be using the business as their way of earning an income on which they will live. They will do this by selling something to customers, spending part of the money collected from customers on the operating costs of the business, and keeping whatever is left as their profit, which is their income. Large amounts of money are likely to be involved – possibly several hundreds of thousands in setting up a business and hundreds of thousands in sales each year. All this money must be managed very carefully, or the business will not produce a good income for its owners and managers, and may even fail altogether. Budgeting is just a normal business practice in helping managers to look after the money invested in their business and the money going through it in revenues and operating costs What is budgeting? Budgets can be plans about the short-term future of up to a year. They can be expressed in money terms, or in terms of quantities of things such as goods in stock, number of seats, and number of customers to be served per day, number of desserts expected to be ordered. The plans should help managers achieve their business objectives. The objectives of businesses are about managing how well the investment and assets are being used, and about how well the sales effort contributes to the profitability of the business. A budget therefore is a statement of management’s planned outcomes for the business, expressed in dollars or quantities to achieve its objectives for a precise period of time. Budgeting for new products and services Where a new business is opened or a new product or service is introduced a budget will be prepared (known commonly as a ‘pilot budget’) that cannot use historical information to guide its formulation. Industry statistics may be used, as well as figures from other properties, or from elsewhere within the establishment. Understandably, these budgets are frequently at significant variance. Deciding on prices for new products or services Determining a fair and accurate price for any new product or service can be hard as no existing benchmarks may have been set. It is common for managers to have troubles setting pricing strategies for new products or services. Some use inappropriate approaches, for example, attempting to always be the lowest-priced player in the market, while others fail to change their approach to take advantage of market changes. 84 © ASEAN 2013 Trainee Manual Develop new products and services Element 3: Create products or services based on market analysis and within budgetary constraints The success of your products and services relies directly upon your ability to sell them, which in turn is dependent upon your pricing strategy. If your prices come in too low, you won't make a reasonable profit. Go too high, and you may weaken the demand for your offerings. So how do you get the right pricing model in place? There are a number of measures you can take to accurately price your product or service. By using creative judgment and an understanding of what motivates customers, you can increase your chances of attracting the target market segments to your offering. Pricing questions The following questions are designed to help you determine whether or not you have set accurate prices for your product or service: How do my customers perceive my product or service, in terms of price and value? How do my prices compare with my competitors? What values and benefits do my customers get from my product or service? Are my prices consistent with those benefits and values? What is the current supply and demand relationship of my product or service? Am I in an industry where the demand for my product or service has a short life cycle, and thus I need to cash in quickly? Do I have a product with a recognizable name that allows me the luxury of overpricing? Pricing considerations Price indicates ‘value’ Understand that a price suggests a certain value to a customer or target market segment. Setting a price that is either too high or too low can limit your business growth. It can also cause considerable issues for your sales and cash flow. No business wants to make a loss. Understand customer perception of ‘value’ You will be able to improve profit by understanding the value of your product to the target markets you are attracting or aiming the product or service to. The price of the product or service is your financial reward for providing the product; the value is what your customer believes the product is worth. Evaluate the benefits your product offers to your customers and how price affects their buying decisions. Consider fixed and variable costs Take into account both the fixed and variable costs involved in producing your product or service. Fixed costs, such as electricity, production costs or insurance, remain constant no matter what you produce or sell. Variable costs, such as wages and materials, rise with the amount you produce or sell. When setting a price, you must take in more money than just the production cost, so you can make a profit. © ASEAN 2013 Trainee Manual Develop new products and services 85 Element 3: Create products or services based on market analysis and within budgetary constraints Consider the competition Align your prices with those of your competition as far as possible. Never price your products too much higher or lower than your competitors without having a very good reason. If you do, you must have a clear identifiable factor which the customer can understand. Consider different price points Use different pricing tactics to attract customers while maximizing profits. These include offering special prices during promoted times; odd-value pricing, such as selling something for $9.99 rather than $10, selling products at a loss for the sake of attracting new customers, selling a unique product or service at a high price and starting a new product off at a lower price, increasing it as the product gains in popularity. 86 © ASEAN 2013 Trainee Manual Develop new products and services Element 3: Create products or services based on market analysis and within budgetary constraints Work Projects It is a requirement of this Unit that you complete Work Projects as advised by your Trainer. You must submit documentation, suitable evidence or other relevant proof of completion of the project to your Trainer by the agreed date. 3.1 To fulfil the requirements of this Work Project you are asked to identify five food or beverage trends and how they can be incorporated into a restaurant environment. 3.2 To fulfil the requirements of this Work Project you are asked to explain some considerations or restraints that may apply when implementing your new products or services. 3.3 To fulfil the requirements of this Work Project you are asked to explain how the introduction of your new products and services can be profitable. © ASEAN 2013 Trainee Manual Develop new products and services 87 Element 3: Create products or services based on market analysis and within budgetary constraints Summary Create products or services based on market analysis and within budgetary constraints Incorporate relevant market trends into food service and menu planning Types of menus Types of service Menu constraints Modern day menu layouts Menu balance Final menu considerations. Develop products and services to take account of market trends Understanding trends Examples of global food and beverage trends. Develop products and services to take account of enterprise operational constraints or limitations Organisational requirements Involve stakeholders Capabilities and resources Notification of new products and services Communicate information about new products and services Develop organisational policy, procedures and standards Effective communication of expectations Creating operational checklists. Construct products and services to meet profitability targets Initial costs Establishing budgets Deciding on prices for new products or services Pricing considerations. 88 © ASEAN 2013 Trainee Manual Develop new products and services Element 4: Monitor sales performance of products and services Element 4: Monitor sales performance of products and services 4.1 Evaluate new products and/or services in consultation with stakeholders Introduction After new products and services have been implemented, a formal evaluation needs to analyse and assess the above information to determine operational effectiveness. Questions that arise can include: Did it work? What aspects worked and what didn’t? Did it deliver value for money? Were sufficient contacts or sales made? Did it come in on budget? Did the campaign idea achieve the stated objectives? To what extent? What feedback was received from customers and agencies? What implications does this have for future undertakings? What wouldn’t we do the same next time, and why? Evaluate new products and services to ensure that it meets targets All new products and services must be evaluated to ensure it meets the requirements for the targets and more importantly target customers. Such evaluation helps to make sure the efforts stays on track and forces suggestions to be based in reality. Analysing the effectiveness of products and services provided to customers is important at any stage of its lifecycle, but is essential when it is first introduced into the market. Any aspect of the introduction of new products and services can be monitored and evaluated with a view to improvement. © ASEAN 2013 Trainee Manual Develop new products and services 89 Element 4: Monitor sales performance of products and services Areas to evaluate These can include: The procedures or systems The workflow – that is the order in which things are done Whether or not there are gaps or overlaps in service provision The workload of staff – that is whether they are under-worked or over-worked at different times The time it takes to do a task or job Job design – that is whether jobs are challenging or interesting enough for staff Level of customer satisfaction with the service or product provided. Cost Level of interest created Demand patterns Ease of implementation Increase in sales or leads Return on investment. Getting feedback from stakeholders Feedback is also an effective way to determine whether or not new products or services have been successfully implemented. Feedback should be sought throughout the life of products and services, but more importantly as they are implemented into the marketplace, as it an important element in making decisions and determining the success of new products and services, either as a whole or as individual components. Feedback should be sought from all relevant stakeholders, not just the end consumer. This is important given that most stakeholders represent a cross section of the organisation. Everyone will be able to contribute constructive and useful information in relation to what has gone right, what needs to be improved or changed and suggestions on how to do so. The composition of relevant stakeholders will vary depending on the nature of what has been introduced into the organisation. Potential stakeholders may include: Owners of the business – who can share their vision and expectations as well as their intention for the direction of the business Site/property managers – including head office, as appropriate who will be able to contribute information relating to compliance with relevant policies as well as being able to assist with information about future direction of the business, financial and other limitations Supervisors – who will be able to contribute their thoughts on how successful the implementation has been, what is needed, how it will impact on operations and other practical matters 90 © ASEAN 2013 Trainee Manual Develop new products and services Element 4: Monitor sales performance of products and services Staff, teams and workgroups who can provide detailed input on how the implementation has rolled out, comments from customers, suggestions for operational improvement and input on what they believe needs to take place to improve workplace implementation of the new products or services Customers who should be asked their thoughts about the product or service being implemented Government agencies. Where compliance issues are involved, they can clearly explain what legislated obligations apply and provide advice as to how those obligations can be met. Methods to gather feedback Getting feedback from internal management and staff Staff must be actively encouraged to provide input. After all it is staff who are delivering the service or product and they are best placed to capture feedback from those who receive the service. Not including staff in this feedback process is a very dangerous thing to do. Not only do you risk missing out on vital information they have obtained from customers but you also send a message to staff that their input and opinions are not valued or valid. Excluding staff at this stage also makes it a lot more difficult to build commitment to any service delivery changes or initiatives which need to be implemented. Involving staff in this feedback process could include: Encouraging staff to feed back all relevant comments from customers. Most people won’t make a formal complaint (that is, in writing, or a verbal complaint to management) but will often make deliberate and pointed comments in front of staff. These must be reported back as they are central to improving service delivery. These comments are market research ‘gold’. You should recognise excellent examples of feedback Not shooting the messenger. If staff are to be encouraged to feed back negative criticism from customers, it is very important not to criticise them simply for delivering the bad news. Obtaining their feedback must not involve allocating blame or guilt Setting agenda items for staff meetings which include ‘customer service’. Every staff meeting should have a standing agenda item for ‘quality feedback’ in relation to service delivery so staff become familiar with the process and are used to doing it Developing appropriate documentation. The establishment should have documents for staff to complete in writing if they don’t feel comfortable with delivering verbal feedback Conduct regular meetings Conduct specific feedback sessions where the total intention of the meeting is to source, debate and record feedback Get staff to provide scheduled feedback when problems occur Gather thoughts during debriefing sessions at the conclusion of shifts. © ASEAN 2013 Trainee Manual Develop new products and services 91 Element 4: Monitor sales performance of products and services Getting feedback from customers An important step in monitoring and adjusting products and services is to seek feedback from customers on an ongoing basis, and to use this to improve establishment performance where applicable. There are several ways to seek feedback: From guest comment cards. These are traditionally left in guest rooms, but there is no reason the same principle can’t be used in just about any other area of the premises It is also acceptable to offer these cards to guests and customers and ask them to complete them and return them The key in using these cards is to make sure they are collected, collated, analysed and the findings are acted on Use an online option. This can include a ‘Tell us what you think’ facility or some other ‘Customer Comment/Feedback’ option Where this is used it is important that someone checks this on a regular basis and responds to the complaint/feedback etc. Simply using an automatic response message is not enough Observing customers – watching their body language or what items they select Direct communication from customer/guest to staff. This includes complaints, suggestions, and compliments offered by guests In some accommodation venues the manager is present at peak check-out times to farewell guests, wish them well, thank them for their custom and actively solicit feedback about guest thoughts on their stay Requiring front-line customer/guest contact staff to inquire about the customer experience. This entails being proactive in ascertaining how they enjoyed their meal or stay Staff should also be required to feedback any comments they have overheard as distinct from those comments made directly to them. This approach must also determine which aspects were good and which were bad. Many people can’t be bothered filling out a questionnaire, but are quite happy to spend a couple of minutes responding to verbal questions. Take feedback seriously Regardless of who provides the feedback it must be taken seriously. In brief, feedback must be: Asked for Respected, acknowledged and encouraged Allowed to happen Recorded Taken into account in future deliberations and planning. 92 © ASEAN 2013 Trainee Manual Develop new products and services Element 4: Monitor sales performance of products and services 4.2 Analyse products and services in terms of business objectives Introduction As mentioned in the last section, the use of feedback from all stakeholders is essential in getting valuable information from all persons involved in the planning, delivery and consumption of new products and services. This is very useful in being able to find out ways to improve the process. This section explores analysis of product and service performance against the business objectives the introduction of new products and services were trying to achieve. Types of business objectives The basic requirement when analysing the success of new products and services is its ability to reach its desired objectives of performance standards. Each organisation and their departments will have different performance objectives which reflect the operations and aims. Business objectives may be related to: Quantity – this is focused on numbers and may include number of rooms sold, meals served, revenue earned or customers served. It needs to remember it does not take into account the quality of service Quality – it focuses on the end product including efficiency and percentage of satisfied customers Time – this focuses on how quickly things can be done including how long it takes to deliver a meal, clean a room, check in a guest Sales figures – this may be in monetary figures or in terms of percentage Profitability - this focuses on the level of revenue, control of costs and amount or percentage of profits made Customer satisfaction – how many customers were satisfied in relation to level of complaints Service standards – the ability of products or services to achieve a required standard. © ASEAN 2013 Trainee Manual Develop new products and services 93 Element 4: Monitor sales performance of products and services Monitoring and evaluating implementation success of new products and services When analysing the success of new products and services into the market, there are a number of steps that can be beneficial to follow. Work out what needs to be monitored Not everything can or should be monitored and analysed all the time. Generally, things to be monitored include: Areas showing early warning signs that things are not going according to plan Areas of critical activity to the organisation – high revenue raising streams, areas subject to loss To intense legal scrutiny. Decide on methods or measures to use This is where you decide how to evaluate the success of product or service implementation. The methods chosen for monitoring and evaluating the success of new products and services are generally built into the planning process. It is a good idea when planning to keep in mind the reporting on the success or otherwise of new products and services. It is frustrating to set a goal but not be able to say whether or not it has been achieved. There are many tools or methods available to monitor progress or outcomes of work operations. See the toolbox: ‘ITXMGT001A Monitor work operations’. Some examples are: Reports – statistical, financial, written or verbal Obtaining customer feedback – verbal or written, individual or focus groups, structured or unstructured in format, surveys Using a pretend customer – getting someone to pretend to be a customer in your premises and then critically feeding back what it was like, what could be improved etc. Observation - walking about the premises and observing what takes place and what and how it could be improved Use of checklists to tick off whether or not required service points are being adhered to by front line staff when they interact with customers Brainstorming sessions where staff are asked to contribute any thoughts or ideas they may have about improving a particular aspect of service, or about introducing a new initiative Staff input and review – obtaining ‘grass roots’ input to potential and actual problems, and asking those directly concerned about how the situation can be resolved. 94 © ASEAN 2013 Trainee Manual Develop new products and services Element 4: Monitor sales performance of products and services Compare what is happening with what should be happening Here you review and analyse what’s actually happening. You may refer back to your original goals, objectives or targets and, using various tools, compare your progress against these targets. Sometimes you will realise your original target was unrealistic or there have been changes that require you to adjust your original target. Take appropriate action This involves making the necessary adjustments to the actual products and services themselves to improve the level of service, productivity or customer satisfaction. Depending on what is being monitored, involving staff in all or some stages of the monitoring process is likely to achieve better results. The types of action that can be taken will be explained in more detail in Section 4.3. 4.3 Adjust products and services based on feedback and profitability Introduction Naturally it is expected that any new products or services introduced in the market will have some initial problems or there will be the need to improve what is offered. This may not be a negative thing. In many cases, if a new product or service is successful, changes will need to be made to ensure increased demand is met. This section will explore some possible changes, but the range and variety of changes will depend on the individual circumstances. Possible changes to products and services As a result of input from all stakeholders and a comprehensive analysis of the performance of new products or services the following actions may need to be taken to improve the successful implementation of products or services: Removing the product or service if it is not successful Reducing or expanding the product or service range Amending product or service inclusions Changing or enhancing the promotional message Establishing additional or revised pre-programmed decisions to address shortcomings or problems Providing training to staff to improve service provision Revising the allocation of duties to staff © ASEAN 2013 Trainee Manual Develop new products and services 95 Element 4: Monitor sales performance of products and services Buying new equipment, or more equipment or different equipment Making changes to establishment policies and standard operating procedures (SOPs) Increasing staff numbers Changing operating/trading times Changing layout of the premises/department Organising more information for customers Changing prices to meet customer demands whilst still meeting financial expectations. 96 © ASEAN 2013 Trainee Manual Develop new products and services Element 4: Monitor sales performance of products and services Work Projects It is a requirement of this Unit that you complete Work Projects as advised by your Trainer. You must submit documentation, suitable evidence or other relevant proof of completion of the project to your Trainer by the agreed date. 4.1 To fulfil the requirements of this Work Project you are asked to explain how you can evaluate the success of your new products or services after they have been implemented into an organisation. 4.2. To fulfil the requirements of this Work Project you are asked to identify three objectives you would wish to achieve through the introduction of your new products and services. How can you measure actual performance against these objectives? 4.3. To fulfil the requirements of this Work Project you are asked to identify possible problems that may arise when implementing your new products and services and possible actions that can be taken to resolve or minimise these problems. © ASEAN 2013 Trainee Manual Develop new products and services 97 Element 4: Monitor sales performance of products and services Summary Monitor sales performance of products and services Evaluate new products and/or services in consultation with stakeholders Evaluate new products and services to ensure that it meets targets Getting feedback from stakeholders Methods to gather feedback Take feedback seriously. Analyze products and services in terms of business objectives Types of business objectives Monitoring and evaluating implementation success of new products and services. Adjust products and services based on feedback and profitability Possible changes to products and services. 98 © ASEAN 2013 Trainee Manual Develop new products and services Presentation of written work Presentation of written work 1. Introduction It is important for students to present carefully prepared written work. Written presentation in industry must be professional in appearance and accurate in content. If students develop good writing skills whilst studying, they are able to easily transfer those skills to the workplace. 2. Style Students should write in a style that is simple and concise. Short sentences and paragraphs are easier to read and understand. It helps to write a plan and at least one draft of the written work so that the final product will be well organized. The points presented will then follow a logical sequence and be relevant. Students should frequently refer to the question asked, to keep ‘on track’. Teachers recognize and are critical of work that does not answer the question, or is ‘padded’ with irrelevant material. In summary, remember to: Plan ahead Be clear and concise Answer the question Proofread the final draft. 3. Presenting Written Work Types of written work Students may be asked to write: Short and long reports Essays Records of interviews Questionnaires Business letters Resumes. Format All written work should be presented on A4 paper, single-sided with a left-hand margin. If work is word-processed, one-and-a-half or double spacing should be used. Handwritten work must be legible and should also be well spaced to allow for ease of reading. New paragraphs should not be indented but should be separated by a space. Pages must be numbered. If headings are also to be numbered, students should use a logical and sequential system of numbering. © ASEAN 2013 Trainee Manual Develop new products and services 99 Presentation of written work Cover Sheet All written work should be submitted with a cover sheet stapled to the front that contains: The student’s name and student number The name of the class/unit The due date of the work The title of the work The teacher’s name A signed declaration that the work does not involve plagiarism. Keeping a Copy Students must keep a copy of the written work in case it is lost. This rarely happens but it can be disastrous if a copy has not been kept. Inclusive language This means language that includes every section of the population. For instance, if a student were to write ‘A nurse is responsible for the patients in her care at all times’ it would be implying that all nurses are female and would be excluding male nurses. Examples of appropriate language are shown on the right: Mankind Humankind Barman/maid Bar attendant Host/hostess Host Waiter/waitress Waiter or waiting staff 100 © ASEAN 2013 Trainee Manual Develop new products and services Recommended reading Recommended reading Cagan, Marty; 2007 (1st edition); Inspired: How To Create Products Customers Love; SVPG Press Cooper, Robert; 2011 (4th edition); Winning at New Products: Creating Value Through Innovation; Basic Books Cooper, Robert; 2011 (1st edition); Product Development For The Service Sector: Lessons From Market Leaders; Basic Books Cooper, Robert; 2009; Generating Breakthrough New Product Ideas: Feeding the Innovation Funnel; Product Development Institute Inc. Karol, Robin; 2007 (1st edition); New Product Development For Dummies; For Dummies Sanders, Lawrence; 2011; Developing New Products and Services: Learning, Differentiation and Innovation (Marketing Research Collection); Business Expert Press Ulwick, Anthony; 2005 (1st edition); What Customers Want: Using Outcome-Driven Innovation to Create Breakthrough Products and Services; McGraw-Hill Urnan, Roman; 2010 (1st edition); Voice-of-the-Customer Marketing: A Revolutionary 5Step Process to Create Customers Who Care, Spend, and Stay; McGraw-Hill © ASEAN 2013 Trainee Manual Develop new products and services 101 Recommended reading 102 © ASEAN 2013 Trainee Manual Develop new products and services Trainee evaluation sheet Trainee evaluation sheet Develop new products and services The following statements are about the competency you have just completed. Please tick the appropriate box Agree Don’t Know Do Not Agree Does Not Apply There was too much in this competency to cover without rushing. Most of the competency seemed relevant to me. The competency was at the right level for me. I got enough help from my trainer. The amount of activities was sufficient. The competency allowed me to use my own initiative. My training was well-organized. My trainer had time to answer my questions. I understood how I was going to be assessed. I was given enough time to practice. My trainer feedback was useful. Enough equipment was available and it worked well. The activities were too hard for me. © ASEAN 2013 Trainee Manual Develop new products and services 103 Trainee evaluation sheet The best things about this unit were: ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ The worst things about this unit were: ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ The things you should change in this unit are: ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ ___________________________________________________________________ 104 © ASEAN 2013 Trainee Manual Develop new products and services