Question 1: Analyse the advantages and the disadvantages of each of the three options that Carlos Vega identified.
The three options identified by Carlos Vega are to expand the pizzeria by adding another story at the existing location, move to a nearby large building with more space or turn focus to selling sauce jars. The advantages of the first and second options are that it will likely increase the footfall of customers in the restaurant and boost revenue. The major disadvantage is that the competition will still have an edge because Vega does not have parking space or liquor license. So, the increase in sales revenue due to expansion may not justify the additional investment. The advantage of focussing on the sauce business is its growth in sales revenue as the sauce has been well accepted in the locality. The margins in sauce business are higher. The main disadvantage in the sauce business is that the segment is dominated by large players and is very price-sensitive. Moreover, geographical expansion of the business will become a big challenge as Vega is new in the business and there is no brand recognition in larger consumer’s mind.
Question 2: Based on your analysis of question 1, write a short memo to Vega explaining which of the three options he should pursue and why.
Message:
Of the three options of business expansion available, Mr. Carlos Vega should pursue focussing on the sauce business without selling off the existing business. The existing business has a steady source of income. The sauce business is worth exploring, but not at the cost of the current business. There is no experience in the sauce business, which is highly competitive and price sensitive. So, it is necessary to first test the waters, and then swim. To grow the sauce business, the firm can outsource production, and focus on marketing and distribution.
Question 3: Suppose that Vega chooses to relocate his business. Should he expand his analysis of potential sites beyond the central business district of Guttenberg? What criteria should he establish for screening potential sites?
Vega should definitely expand his analysis to potential sites beyond the central business district of Guttenberg because parking is an unending issue in the area unless you make really large investments. Even if the large investments are made, there is no guarantee that revenue will grow in proportion to the investments made because of the competition and no liquor licence with Vega. The key criteria to screen potential sites should include population density, availability of parking space, number of restaurants and commercial office spaces in the vicinity.
Question 4: Suppose that Veg chooses to focus on selling his red sauce. Work with a team of your classmates to brain storm ideas for a unique selling proposition (USP).
The red sauce market is competitive and price sensitive. So, Vega needs to differentiate to attract customers. The localised flavour of the sauce is in demand and well accepted by people. So, Vega should leverage this to market the red sauce. The packaging and marketing activities should be centred on localisation. The packaging should use traditional colours and images with a local tag line. Vega can have testing counters in supermarkets to attract customers to the unique flavour of the sauce.
Question 5: If Vega focuses on marketing his red sauce, what steps should he take to protect the Jersey Italian Gravy brand name he has been using?
Vega needs to get a copyright licence on the brand name “Jersey Italian Gravy”. The copyright will ensure that duplicate products do not enter the market and the competitors do not use the same name to advertise their products. To protect the brand image of “localness”, the firm should centre its marketing campaigns on the traditional values and beliefs of the local people. This will touch the emotional cord of the prospective customers.
