Case 1 :

It was when Rajnish Raizada chose to overlook the cosy charms of a government job and launch himself to the rough and tumble of entrepreneurship that he turned to his best friends father, Surajit Roy for advice. Surajit was a Professor of Management in a famous business school and had provided his consulting services to many successful companies. Their conversation over the matter has been reproduced below.

Surajit: Hey Rajnish, Congratulations on your decision. You are young and have a long way to go. For an entrepreneur there are no limits to where you can go and you have age on your side. Rajnish: Well uncle, thanks for your good words. But the path of business is risky and frankly I would be lying if I did not say I was not a little scared. That is why I would love to your comments on my plans.

Surajit: The only thing I have heard so far is that you want to get into a restaurant business. You need to elaborate on your plans. By the way, why a restaurant? Why not something else?

Rajnish: Well, since I am starting off, I thought it was best to work on something that suited my personal interests. I have always had that weakness for tasty food and hence it was a natural choice. Secondly, I do not have a lot of money to spare and hence would like to start in a modest manner. Suraji: Oh Ok. What kind of a restaurant do you want to set up?

Rajnish: That is where I need your advice uncle. Frankly I do not have a clear idea on that. The only thing I know of is that it would be based here in Bhubaneswar. Here the rents are still on the cheaper side. I cannot afford the rents in bigger cities. That apart I would look forward to you.

Rajnish: May I request something uncle. Why cant we do a market study among consumers? Of course I cannot afford the services of a big research firm like A C Nielsen etc. We can start by doing one with your students. Can we offer this as a project to some of them? I shall pay for their conveyances and communication expenses.

Surajit: Sure, why not? I shall see if I can help you on that. Such studies might give you some exciting directions. There are certain limitation to such market studies though. Firstly, there is always the risk of human errors which would only be compounded by the fact that the study is being conducted by students. Secondly, even the most intelligently conducted market study would fail to capture what the customer really thinks. You might have noticed that most of the exit polls of late consuming crores of rupees are turning out to be duds. Sometimes, even the customer does not know or cant easily express what he or she wants. So if you rely too heavily on such research you would end up with a duplicate Venus Inn because that is the most popular restaurant of the city and customer perceptions are shaped by that.

Surajit (continued): You may consider the following options. You may choose to be the restaurant providing one or a very select number of products. This is something similar to what Mcdonalds does. They concentrate on burghers in which they have learnt to be the cheapest provider in most parts of the world. They do that by focusing on getting the maximum number of customers which they use to obtain economies of scale. If you choose this option, you have to look for items which are mass consumed. This strategy would not work if you want to offer exotic items like caviar or Moose Cheese.

Suraji: Frankly speaking, you may consider the caviar and moose cheese option also and set up a restautant that serves the best food items in the world regardless of prices. Well, they would be hugely costly and you need to be careful about the number of people in Bhubaneswar who would be able to afford them.

Surajit (continued): You can follow the above option with a modification. Please concentrate on a particular line of food. For example, you might choose to set up a restaurant that serves Italian food. There are only two other restaurants serving Italian food in the city. You may choose to prepare the same items or you may choose to adopt particular genres of Italian cuisine like Milanese or Neapolitan food. Then on the basis of the customers inputs you may choose to modify.

1. Pull out instances where the four concepts of marketing (Production, Product, Sales and Marketing concepts)have been applied in the above conversation. Justify your answer.

2. Pull out parts of the above conversation which are illustrative of Porters generic strategies?

3. There are significant areas of overlap between the fours concepts of marketing and Porters generic strategies. Discuss in the context of the above case.