Paper instructions:
Write a word paper in which you justify the importance of marketing research in developing Kudler Fine Foods’ marketing strategy and tactics. Include the following:

• Identify the areas where additional market research is needed.
• Analyze the importance of competitive intelligence and analysis regarding the development of Kudler Fine Foods’ marketing strategy and tactics.

Format your paper consistent with APA guidelines

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ABOUT KUDLER FINE FOODS

Who we are

Kudler Fine Foods is a local upscale specialty food store located in the San Diego metropolitan area. We have three locations (La Jolla, Del Mar and Encinitas). Each store has approximately 8,000 square feet of retail space located in a fashionable shopping center. We have the very best domestic and imported fare at every location. Visit one of our locations and browse our fine selection of:

• Bakery and Pastry Products
  
• Fresh Produce
  
• Fresh Meat & Seafood
  
• Condiments and Packaged Foods
  
• Cheese and Specialty Dairy Products
  

Our Mission

Our selections, coupled with our experienced, helpful and knowledgeable staff, merge to offer each customer a delightful and pleasing shopping outing.

We will provide this service because we shop the world for our products; purchase only the finest of products; are highly selective in acquiring our team members; and will go to extensive lengths to assure that Kudler Fine Foods is the purveyor of choice for customers aspiring to purchase the finest epicurean delights.

Our History

Our founder, Kathy Kudler, was the Vice-President of Marketing for a large defense contractor. Weary of the constant travel and the pressures of corporate life, Kathy was looking for other opportunities. As it happened, Kathy relieved her stress through gourmet cooking and on a shopping trip for ingredients for a gourmet meal, she suddenly realized there was an opportunity for an upscale epicurean food shop in La Jolla.

Kathy developed a business plan, obtained financing and six months later, on June 18, 1998, the first Kudler Fine Foods opened.

Within nine months the store was at break-even and was profitable for the year.

Sales & Marketing

Marketing Overview

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Kudler Fine Foods has experienced significant growth and is now focused on expanding the services, improving the efficiency of its operations and increasing the consumer purchase cycle as a means to increasing the loyalty and profitability of its consumers.

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Strategic Objective: Increase Loyalty and Profitability of Consumers

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Expanding Services (Revenue Increase) – Kudler is offering parties in the store to show customers how to prepare specialty foods. The draw for the consumers is to be trained by world-renowned chefs, local celebrities, other food experts, and even Kathy Kudler herself, and to be invited to exclusive, upscale events. The anticipated outcomes will be to increase the customer purchase rate of high margin food and beverage items and to get consumer to make an evening at Kudler Fine Foods part of their social network. This increased time in the store will increase the overall revenue per visit and increase the frequency of visits to the store. Consumers will receive multiple entries in high-ticket item contests by bringing a friend to the parties. While the firm’s preference is to have the events in-store, guests can have Kudler cooking classes at their home for a price premium. Programs such as this encourage consumer loyalty and word-of mouth marketing.

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Frequent Shopper Program (Revenue Increase) – Kudler’s new initiative is tracking purchase behavior at the individual customer level and providing high value incentives through a partnership with a loyalty points program. The customer purchase behavior patterns will help Kudler refine its processes and offerings to best satisfy their valued customers. Price is not the primary differentiating factor for Kudler consumers; these consumers are focused on quality and finding specialized items. Therefore, rather than providing everyday discounts to the customers for their purchase frequency like lower end markets, Kudler has partnered with a loyalty points program to provide customers with points which can be redeemed for high end gift items, airline first-class upgrades, or other specialty foods.

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Increased Efficiency (Cost Reduction) – Kudler’s is now in a position to focus on internal (both front line and behind the scenes) processes, and how those can be improved to deliver increased value to the customer. From a service perspective, Kudler is benchmarking Nordstrom department stores. In addition, the firm is developing employee training programs and integrating new software systems to facilitate the effort. Marketing has encouraged the purchasing department to find ways to reduce costs of ordering foods and minimize the amount of food to be stored, while also having a zero stock out policy. In response, purchasing has developed a supplier relations program and has solicited the help of marketing to help roll out the program.

Historical Sales Data and Financials

Historically, Kudler Fine Foods has tracked information such as dollar value and profit margin per transaction, dollar sales and profit levels by day, and dollar sales and profit margins by item. However, in an effort to leverage the information to create a more intimate relationship with their customers, the firm is integrating a system to track customer purchase behavior over time. The firm is in the process of developing this system now.
The three department managers are encouraged to check with their counterparts at the other stores on the pricing, quality, and delivery of the merchandise they order. They are also encouraged to combine orders between their stores if they feel there would be a cost savings resulting from ordering a larger quantity of a particular item or multiple items.
Kathy also places purchase orders. Kathy’s purchases relate mostly to unique, capital, or repair items that might be required by an individual store or for items used by all three stores, such as bulk Purchase Orders or Receiving forms.
Prepared purchase order forms are either mailed, handed to supplier salesmen, faxed to suppliers, or sent by E-mail if acceptable to suppliers. Whatever the method used, a purchase order form is always filled out initially and becomes the key tracking and financial document for an order.

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Advertising

Advertisements are prepared for local newspapers by Kathy. Advertised specials are offered at all three stores simultaneously. Kathy coordinates the items on sale with the store managers from each store during her weekly operations review meetings to make sure adequate supplies of merchandise will be on hand. Merchandise can be shifted between stores should one store have a higher demand of an item than another store, time permitting.

Accounting

Accounting data is collected by the point-of-sale terminals (cash registers) that are used in each store at check-out to record all items, quantities, prices, taxes and totals for all daily sales transactions.

Inventory Management

Excess inventory is always a concern since it represents company monies being tied up in merchandise that is not moving or generating further income. Excesses can also lead to write-downs of the merchandise.
The department managers are responsible for maintaining high customer service levels for the items they sell, which means carrying higher levels of inventory, but not excessive service levels. Kathy’s policy is that adequate levels of inventory should be maintained to assure that stock-outs do not occur more than 2-3 times a year. This customer service level is discussed during Kathy’s monthly operations review meeting and adjustments to merchandise stocking levels made if warranted. A customer service level of 95% has been a general goal for a number of items carried. 95% means that 95% of the time a customer will find merchandise available in a store. 5% of the time there will be no merchandise due to a previous stock-out. The store decides on an item-by-item basis whether a rain check will be offered customers if an item is out of stock.

Forecasting

Forecasting which items to carry and how much to carry in the future has always been a challenge. Kathy and her department managers utilize historical data on which items and what quantities were sold in the last 2-3 years, especially on holidays. This provides an indication of which items and what quantities to carry in the future. Forecasts are basically an extrapolation of past history to the future. In an increasing sales market, the trend extrapolating forecast works fairly well. The difficulty has always been in determining the forecast’s turning points, from increasing sales to decreasing for example, since significant errors can occur at these points. This is a reoccurring topic in monthly operations review meetings in which monthly sales are reviewed for the last year and monthly forecasts prepared for the next three months, a quarterly forecast for the quarter after that, and for six months for the next six-month period after that. The accuracy of this forecasting method has not been as good as desired and has resulted in the obsoleting of some merchandise and in offering others at drastic discounts.

Merchandise Selection and Pricing

The Kudler stores are no different from any other store in that business success is geared to being able to provide total customer satisfaction. One way to satisfy customers is to offer a changing selection of gourmet foods as they become available since customers always appear to be demanding something new. Kathy considers one of her key responsibilities to be that of identification of new gourmet items that can be offered in her stores. To keep up with what’s available, Kathy monitors what other gourmet foods stores are offering, what’s being advertised in gourmet magazines, what is being shown at gourmet conventions, and what shows up on gourmet Web sites.
After finding some new and interesting items, Kathy usually obtains a small amount of each item and introduces them at one of her operations review meetings. The managers attending the meeting get to sample the items and to offer their comments, suggestions and recommendations on whether to offer the items or not.
In checking on all the new items, especially on what competitors are offering, Kathy is also in a position to determine what current selling prices for the items are. With this information, Kathy and her staff then discuss if and when merchandise prices should be changed and by how much.

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