This document summarizes a case analysis for Red Lobster. It analyzes Red Lobster's current macro environment and industry situation. It identifies strengths, weaknesses, opportunities, and threats for Red Lobster. It analyzes marketing problems facing management, including an inability to reposition the brand and excessive promotional menu items. Alternative strategies are proposed, including an "experiential" innovative menu and improving the restaurant atmosphere. The strategy implementation and outcomes are outlined.

1. MKT460: Red Lobster
Case Analysis
MacKenzie Walters,
Yanxuan Li,
Jeff Malnor,
Nicholas Stachurski,
Lydia Zhang,
Shuang Chen

2. Agenda
 Analyze and record the current situation
 Analyze and record problems and core elements
 Identify marketing problems facing management
 Recommendation and Contingency Plan

3. Macro Environment
Industry Situation
Organization SWOT
Marketing
Strategy

4. Macro Environment
 The growth rate of restaurants declined in 2007, and in
2008 sales were down on average by four percent.
 The recession of 2008-2009 threatened Red Lobster’s
business because restaurant sales declined significantly.
 The cultural trend for Red Lobster was the atmosphere of
casual to special occasions dining.

5. Industry Situation
Potential
Entrance:
Low
Premium-casual
dining
Buyers
Power:
High
Substitutes:
High
Suppliers
Power:
Low

6. Organization SWOT
Strength:
First-mover
advantage with
Red Lobster’s
domination in the
market
Weakness:
Mass-produced
and frozen food
and loss of focus
in its target
segment
Opportunity:
Re-position the
brand and set up
consistent pricing
Threat:
Other Premium
casual restaurant
take the market
share away

7. The Marketing Strategy
 Pre-2004:
Provide extensive price promotions to its customers
 Post-2004:
Provide fresh and premium product with clear branding
image

8. Problem Analysis
 Before 2004, Red Lobster lost focus on their specific target
market.
 If Red Lobster gains 2,000 new experiential customers, losing
2,000 indulgent customers and frugal customers…
1. Number of customer changed * Annual average spend per
customer= Additional Revenue
2. Alcohol Margin * Extra Revenue on Alcohol + Food Margin *
Extra Revenue on Food = Additional Profit
3. $102,222,92 Additional Profit

9. Marketing Problem Facing
Management
 Problem: Unable to re-position Red Lobster as a company
1. Causes:
a. Loss of focus on target market
b. Perceived as low quality
c. Unclear value proposition
2. Symptoms
a. Loss in seafood industry market share
b. Loss of customers

10. Marketing Problem Facing
Management
 Problem: Excessive use of promotional menu items
1. Causes
a. To originally attract customers with low price
b. To convey affordable position to other chains
2. Symptoms:
a. Perception of low quality
b. Customer loss
c. Negative attitudes toward company as a whole

11. Alternative Strategies
 “Experiential” Innovative Menu
1. Provide new dishes monthly and seasonally
2. Lower risk option
3. Intrigues experiential customer base
 Improve Restaurant Atmosphere
1. Hiring and training of personable employees
2. Clean and modern feel
 Create New Managerial System
1. Demonstration by culinary expert
2. Manager involvement with customer
3. Limitation: High expense

12. “Experiential” Innovative Menu
 Implementation: Create seasonal menus
 Integration of chef and marketing team
1. Develop new menu items
2. Advertise new direction
3. Visually attractive menu
 Distributed to all locations varying by geography by January of
2015

13. “Experiential” Innovative Menu
 Outcome
1. Understanding consumer preferences by region
2. Potential increase in the seafood market share
3. Measure success by tracking sales after implementation
 Response if strategy does not work
1. Utilize the information gathered on customer preferences
toward a new strategy
2. Low risk

14. Unexpected Market Changes
 Competitor changes
1. Continue to provide extraordinary service and innovative
items
 Economy downfall
1. use the same managerial team to focus on low cost options
for the innovative menu

15. Interactive: Question 1
 How has Red Lobster’s positioning changed over time?
Write out a positioning statement (Hint: For (target
segment), Red Lobster is (single most important claim)
among all (competitive frame) because (single most
important support)) for (a) pre-2004, and (b) post-2004. Do
the current ads reflect the repositioning that Lopdrup and
his team envisioned when their efforts began in 2004?

16. Interactive: Question 2
 What were the most effective elements in Lopdrup’s
repositioning plan (initiated in 2004)?

17. Interactive: Question 3
 Compute restaurant profitability under the following
scenario: The mix of patrons shifts with the restaurant
gaining 2000 new unique Experiential customers, but losing
1000 Indulgent customers and 1000 Frugal customers.

18. Interactive: Question 4
 Should Lopdrup make Experientials the target segment and
modify Red Lobster’s positioning accordingly? If so, how
should he change its marketing mix (i.e., the 4 Ps)?