Marketing Failure Case Analysis

Marketing Failure Case Analysis

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Marketing Failure Case Analysis

Marketing, Failure, Case, Analysis

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Abstract

This paper will attempt to analyze the failure of the marketing action of the restaurant called Passage 1901, located in the center of Baku. Once highly popular and predicted to one of the hotspots of Baku’s dining and food industry, Passage 1901 did not meet the expectation and failed miserably.

To correct the mistakes and return the former profitability, the restaurant management did a marketing strategy from 2015 till 2016 that had mixed impact on the restaurant profitability. The paper seeks to dissect the marketing strategy into its constituent parts and analyze the mistakes and misdeed made during the implementation.

Upon the incisive analysis of the marketing strategy, I will proceed to provide several recommendations in the framework of 4 Ps, product, price, place and promotion and explain how effective use of marketing strategy can help the company bring back the former profitability and customer base.

Introduction

Baku’s food and dining industry is one of the most vibrant parts of the economy, generating millions of dollars and employing thousands of people. As a matter of fact, world’s most famous food brands have established branches in book to take advantage of the booming food and dining industry with local KFC restaurant branch being the largest of its kind in the world.

The petrodollars flowing in and emerging middle and professional class have the main driver behind this exponential growth. The restaurant owner, in our interview, cited the same reasons for the opening of the restaurant in the city center. The growing purchasing power of the local population allowed international brands to move in and the owner of Passage 1901 wanted to carve out a niche for the restaurant and maintain a good position in the market.

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Passage 1901

Founded in 2007, Passage 1901 restaurant is one the largest restaurants in the country that employed over 50 people at the height of business operations (Illustration 1). The food and drinks offered at the restaurant ranged from a variety of local foods to European, Asian and American foods. 2007 was a year of great excitement in Azerbaijan as the first money from oil started to flow in and increase the purchasing power of the local population, who could afford to dine at restaurants with an affordable price.

The lower prices set by the management did indeed allow the restaurant to attract large number of customers initially and gain a reputable position in the market. Another competitive edge of the company lied in its conducive location, which was close to the city center, office buildings, major highways and could easily be reached from any part of the larger metropolitan area, said the director of the Passage 1901.

Combined with the increasing purchasing power, lack of market saturation and big players in the area, strategic and conducive location of the area and relatively cheap prices promised to make the Passage 1901 one of the most sought after and renown places in the city. Although this was not to be the case as the number of customers coming in to the restaurant in 2019 was the lowest figure over a decade, a factor which propelled the company management to downsize the operations and lay off some staff to be able to cover the increasing operating costs. Overall, the SWOT analysis for the restaurant could be summarized as follows:

Illustration 1. Source: www.azerbaijan360.az

Passage 1901 is located on one of the most historic and famous streets in the city. There was a special parking lot in front of the restaurant, so people had no problem parking. In addition, the Passage 1901 was very close to the subway exit, and there are many bus stations here. Therefore, it was very convenient for customers to go to the restaurant. In addition, in Passage 1901, both European and Baku cuisine took a very large place.

Not only locals but also foreign guests come here a lot. One of the reasons why many foreign guests come here is that the walls of the restaurant are covered with a special history of Azerbaijan. Some people describe this restaurant as a museum. The restaurant menu is mostly cheaper than expensive restaurants, because this restaurant is designed for people from all walks of life.

Azerbaijani restaurants are a bit old-fashioned compared to other countries. Many restaurants in Azerbaijan do not advertise themselves. They expect only customers who know them or passers-by to come in and eat. Because our restaurant is very old and has a customer base, they don’t spend a lot of money on advertising. The Buddha shows us weakly in the market, when people see a restaurant, mainly on social media, they are interested in it and want to go there.

In my interview, director mainly focused on the threats and underlined its role in the failure of the business, in particular, the food industry in Baku since 2015 has been going through transformations and evolutions. There were several threats to the successful business operations of Passage, said the director.

However, what has emerged as the biggest threat to traditional restaurants was the takeaway industry, especially with the entry of Uber Food, Wolt and other food take away companies that sought to erode the market dominance of the restaurant business. Another challenge to the restaurant was the branding problem.

Although the management anticipated the impact that take away food companies would have on the general food and dining industry, their failure to incorporate it into their marketing strategy and business plan led to the fall in restaurant profits and resulted in the firing of several employees.

Another threat to the company was the branding crisis that was becoming obvious in the food industry of Baku. By the time Passage 1901 was inaugurated, the food and dining industry was still at infancy and the customers uninformed and uninterested in restaurant branding.

However, as the time passed time and many more restaurants popped up across the city, customers became much more conscious of the term brand and started to have a discriminating and highly selective attitude when it comes to restaurant.

Long gone were the days when primary motive behind people’s restaurant decisions were location and the price and emergence of new type of urban sophisticate class with sophisticated brand awareness resulted in the decreasing customer numbers and threatened the viability of the Passage 1901, said the director.

No matter how many restaurants there are in Azerbaijan, our restaurant has the opportunity to bring itself to a better level by using the gaps. Our restaurant is far superior to many restaurants in Azerbaijan in terms of price, quality and service. Our weakness is that we only use social media like Instagram. However, if we use other social media in the future and allocate more budget for advertising, then we can increase our market share in Baku.

Marketing Plan and Actions Taken

As mentioned earlier, the restaurant management was not oblivious to the changing dynamics of the food and dining industry and seeing the decreasing customer numbers and falling profits, management decided to implement a specific marketing plan that would stimulate the customer interest in Passage 1901 and increase the profits.

The way to achieve these was re-branding, thought the management. Within the process of re-branding, company also sought to incorporate the restaurant to the takeaway food industry by signing agreement with one of the transportation companies mentioned above.

The management concluded that in order to rebrand the restaurant, there was an imperative for the fundamental overhaul of the business model of the company and the new mediums for communication and advertisement had to be put in place. The marketing plan was three-pronged, which will be explained below.

Changes in Menu and Prices: Ever since the restaurant become operational, the main modus operandi was to combine national and foreign cuisine and give the customers a variety of options to choose one from.

The director said that the rationale for offering a combination of local and foreign food was the assumption that people would still want to taste a local food in a fancy restaurant and the emerging middle class would also want to have an option to choose a foreign cuisine. In the new business plan, the idea was to put more focus on the foreign food and decrease the number of the local cuisine.

The new marketing plan also envisioned the mixing of foreign and local cuisine, cooking of local cuisine using foreign ingredients for local customers and dramatizing or maximizing the “Azerbaijaniness” of the local cuisine for the foreign clients. As a matter of fact, the change in menu has long been considered an integral and essential part of the rebranding in the restaurant industry (Egan, 2018)

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Marketing Failure Case Analysis

Marketing Failure Case Analysis

Marketing Failure Case Analysis

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