Red Lobster

Introduction

Red Lobster is one of the oldest chains in bring sea good to people. It competes in a demanding casual Dining industry and is known for bringing cheap, frozen, mass-produced sea food to consumers. However, customers are ever the more requiring more from them like better dining experience, fresher and healthier food. Lopdrup faces the challenge to change this image and is in the middle of renovating all 690 branches. She also has to make the decision as who should be our target consumers the “experientials” or our “frugals” who are one-third of our customer base and should she continue with the renovations.

Recommendation

Red Lobster Segmentation strategy should be target Experientials. Exhibit 1 below shows that experientials bring in the most revenue in our restaurants. Hence we should focus on making them regular customers and increase the check size by introducing new wines.

The Positioning should be redefined keeping in mind that our new target customers are Experientials. They can afford to spend more for quality of food, service and ambiance. However we definitely do not want to alienate our frugals who have highest volume of customers (Exhibit2).

Promotion strategy - First after the minimal price increase, we would want to continue with the all u can eat promotions to keep attracting frugals and indulgents who are the second higher revenue generator. Second, they should create loyalty programs to attract experimentals to generate the feeling of prestige in dining at Red Lobster.

On Pricing, we can demand higher price owing to the fresh and healthy menu. They can also charge higher owing to the fact that they are providing better ambiance. However, I would advise very minimal price increase, so as not to discourage other customers.

For the Product strategy, Menu should be updated frequently to give the feel of fresh and new items. As alcohol sale has higher margin than food, increasing the wine selection by letting the restaurants...