Hence, it is recommended that in the short run, Pret can attract more diversified groups of customers by reviewing the menu and in the long run, can consider doing sub-branding which the new outlets providing meals-to-tables services and a more relaxed setting. With the proposed recommendations, Pret can expand its target markets into a broader segment which will help in increasing its sales. Contents Executive summary2 Structure of the Report4 A little about Pret4 Target Customers of Pret in Hong Kong5 Needs of Target Customers5 Positioning Strategy5 SWOT Analysis6
Good Strategy: Location & Store layout7 Store layout7 Characteristics of the Site8 Characteristics of the trading area9 Bad Strategy: Narrow Target Market9 Recommendation10 Benefits12 Conclusion12 Appendix15 References16 Structure of the Report This report will first briefly introduce Pret and its product offerings. We also look into the target market of Pret, recognizing the needs of the target group and how it all fits with the positioning strategy. To analyze the company’s strategies in depth, we will do a SWOT analysis. One good and bad strategy used in the operation will also be discussed.
Lastly, we will provide practical solutions and suggestions to help improve Pret’s business model. A little about Pret Pret A Manger is an internationally famous grab-and-go shop which offers sandwiches, filled baguettes, soup, juices, yoghurt, salad and desserts. It was founded by two university students of Polytechnic of Central London, Sinclair Beecham and Julian Metcalfe in 1986. The name ‘Pret A Manger’ (ready to eat) was stemmed from the phrase ‘Pret a porter’ which means ready-to-wear. By using the French name, the founders hoped to convey the idea of quality food and exquisiteness is being served to their customers.
This was not the only French influence that has the founders inspired. They have also modeled their operation similar to the form of ‘traiteur’, which is a catering business that designed for take-out food. Their sandwiches are considered ‘premium’, as their menu is made up of natural preservative-free ingredients to cater to customers looking for quality and health benefits. Therefore, Pret stores are normally found near the train stations of affluent areas such as the central business districts where people can conveniently buy a healthy meal.
These are places where there will be more of their target consumers. The company relies on its positive word-of-mouth. Thus, it does not have any advertisement or promotional activities that it carries out. Target Customers of Pret in Hong Kong In Hong Kong, Pret targets business men and women who are health-conscious and are exposed to international working environments, namely Central, Admiralty and Causeway Bay. Most of them would be between 22 to 50 years old who are highly educated as the majority would hold at least a Bachelor degree.
As a result of their high education, many are also environmentally conscious. With the above criteria, the target audience in HK consists mainly of expatriate workers and white collar adults of middle to upper class who associate themselves with having a western-influenced lifestyle. Interestingly, at the weekend, there are other groups of people such as tourists and young families, students and even elderly replaces Pret’s ‘normal’ customers. Needs of Target Customers The target group looks for fresh and convenient food which can be quickly grabbed off the shelf to the cashier and consumed instantly.
They also have corporate values where they are aware and emphasize the practice and importance of social responsibility such as being environmentally friendly. In order to satisfy their needs, Pret makes food that is free of obscure chemicals, additives and preservatives, and freshly made on the day. Also, its packaging is normally labeled as recycled and/or recyclable and the unsold food will be donated to local charities. Stores are found near to commercial buildings as well as MTR stations in the central business districts which provide convenience to the customers.
Positioning Strategy Pret’s mission statement positions itself as ‘Creating handmade, natural food, avoiding the obscure chemicals, additives and preservatives common to much of the ‘prepared’ and ‘fast’ food on the market today. ‘ and has vowed themselves to ‘offers great service to business workers in big cities’. Pret emphasizes the use of natural ingredients and sets itself up as offering high quality, fresh, healthy and often organic food, serving its customers including the vegetarians. It is widely-known that all their sandwiches are made on the day of purchase at each store.
This gives them an edge over their competitors, because consumers valued this practice greatly as it reinforces the concept of being healthy. The very simple, clean and modern design of the shop reflects the cosmopolitan background of the target customers. In order to synchronize with customers in terms of shared values, Pret incorporates sustainability and social responsibility into its business practice. One example is to ensure all of their source is traceable and has high level of animal welfare in collaboration with suppliers.
Pret’s positioning quickly allowed itself to be seen as radical and different and over the years established itself as a notable brand image across the world. SWOT Analysis Strength: Good location Almost all stores are located inside major business buildings such as Taikoo Place and The Center. The location enables Pret to reach its target customers very effectively. Weakness: Narrow target market The target customers of Pret are business people working in central business districts. Therefore, the customer base of Pret is quite limited, increasing the risk of over reliance on a single market.
Opportunity: New target market Although they mainly focus on white-collar workers, it is observed that there are customers from other segments during weekends such as, tourists and young family visiting the store. Therefore, Pret can consider expanding its business to target new markets. Threat: Competition Although Pret differentiates itself in providing fresh and it still faces certain degree of intense competition from other direct competitors such as Oliver’s Super Sandwiches and indirect competitor such as Subway. Good Strategy: Location & Store layout
Pret has 323 stores in 4 countries, namely in UK, France, US and Hong Kong. Since Pret is a privately-owned company so it is very careful in selecting a suitable location to target on affluent business people. Hence, they are found mainly in the capitals or prosperous business centers like London, Paris and Washington. In Hong Kong, there are 13 branches, with 11 located in the central business districts like Central, Wan Chai and Causeway Bay in the Hong Kong Island. The other 2 branches are located in Kung Tong (APM) and Kowloon (Elements).
The location of Pret helps with its growth and expansion because the chosen locations are convenient and have offices nearby where many business people can be attracted. Store layout The design of Pret’s stores helps differentiate from its competitors. Often, there are none or only a few tables and chairs for customers to dine in as the target group is busy, particularly in the morning that they will prefer taking away the food and eat in their offices which is consistent with its “grab & go” concept. The store layout helps to attract passerby because of its clean design with pictures featuring the delicious food items on the wall.
In every Pret stores, fridges are situated on the periphery of the stores so that the view of the store will not be blocked. Pedestrians can easily see what food is available and be attracted to purchase. Also, customers have to walk pass the fridges in order to pay for their food. During that time, they are exposed to other food items and may want to make further purchase. Characteristics of the Site 1. Flexible Opening Hours (Exhibit A) As Pret locates in major business buildings and offices, such as the IFC and HSBC Commercial Building, Pret can be benefited from the crowd of business people during weekdays when they have to work.
Since nearby offices have different working hours and some may be closed on both Saturday and Sunday, Pret’s branches have different working hours and some may also be closed at the weekend, like the branch in City Bank Plaza (Central). The flexibility of the opening hours helps Pret to satisfy the target customers and save operation costs at the same time. 2. Highly accessible location Also, the stores are very close to MTR station, in addition, public transportations and parking spaces are close by.
For instance, Pret has stores right at the Central and Admiralty MTR stations and other stores very close to the MTR exits. Since the carrying capacity of MTR can reach 70000 an hour during peak hours and 4. 12 million per day, locating near to MTR stations can increase the foot traffic of Pret. As business people are rushing to their workplace particularly in the morning, they can conveniently shop at Pret. For the public transportations, buses, mini-buses, trains and even ferries are available because there are major bus terminus and piers like Admiralty Bus Public Transport Interchange and Central Ferry Pier.
Altogether, the public transport system in Hong Kong can carry 12 million per day which would bring in a lot of foot traffic to the surrounding area. Characteristics of the trading area 1. Nearby the entrance in high-end shopping malls Pret is mainly located in the upscale shopping malls in the business districts. Often, you will see Pret right next to the entrance. For example, in IFC, Pret is located at the area where people must cross Pret before they can get to the Exchange Square surrounded by many luxurious stores selling expensive clothes and cuisine, like Edible Arrangements.
In the trading area, there are fast-food outlets and bakeries available, like McDonald and Kee Wah Bakery who sell at a price that is below forty dollars per person. Pret, in fact, is the only grab and go store providing American food within the price range of $40 to $100. This position allows Pret to be the intermediaries between the premium stores and the low end of the catering industry, therefore satisfying customers’ desire to have food with moderate quality. Bad Strategy: Narrow Target Market
Through our observation (Exhibit B), we have noticed that Pret’s practice of serving the business segment as the sole customers brings a lot of drawbacks as there are many potential customers for Pret but they are currently being ignored. In the IFC Mall outlet, the majority of the customers were not to be considered in the category of the business segment as we have seen young families with toddlers, tourists, students and even some elderly couples who had spent as short as 15 minutes and close to an hour of their afternoon in the shop of Pret.
This trend was consistent with what we saw at the Central MTR outlet as many casual clothed individuals aged varied from 20s to 60s entered the shop. Although there are potential large number of customers to be explored by Pret but there might be a small factor that is preventing the full penetration of the market as we noticed that the majority of the workers at the cashier counter were ethnic minorities and they mainly communicated with the customers in English.
This would discourage those who are interested but are afraid to enter as they have insufficient amount of English and confidence to order. We understand that there are limitations to our suggestion of bad strategy as there are no secondary supporting data but as Pret has a relatively low awareness in terms of publicity so there are only a few reviews and opinions on the Internet that we can look into. As many stores of Pret are located in the central business districts which have little traffic at the weekends as most companies do not operate.
On one hand it is logical to shut down for the weekends but this is losing a potentially large amount of revenue not to mention that the rent Pret pays is especially high and also the lack of operation in the weekend doubles the operational cost for Pret. Recommendation As Pret is currently practicing the narrow segment targeting, the objective of our recommendation would be to expand the target market so that Pret could enjoy an increase in revenue. From our observation, the customers of Pret vary during the week.
At the weekdays, the customers consist solely of business people who fancy grab-and-go food and coffee whom have been targeted by Pret very successfully. However, there is a large, diversified customer group that replaces the business segment in the weekend. They are the tourists, young families with toddlers, secondary and university students and even the elderly. All of them prefer to dine in and chat while they are having a bite in contrast to Pret’s normal customers.
For the short term expansion, in order to attract the ‘weekend’ customers, we propose that Pret should redesign special sets into their menus and employ more local people for the branches at high-end mall namely the stores in IFC and Elements. The special sets should include a food, drink and dessert for one person, meals for three to four people as well as a kid menu. The different size of set in the menu should appeal to different types of customer in addition to a wider range of its fresh food.
Although most customers have basic English level, they may not be comfortable to speak in English. This discourages the potential customers to shop in it. Therefore, it is suggested that Pret can employ more local people who can speak both Cantonese and English, hoping to attract these customers as well. In the future, Pret can look to open up its business by serving a different segment of market in full time. This can be achieved by using sub-branding, in which the customers of the new stores would be tourists and families who have high-purchasing power.
It can also support the health-conscious families who want a healthy food for their kids. The interior design of the new stores should have a more relaxed setting which encourages the customers to dine in and spend sometimes in it having a chat. These stores would be located in the ‘honeypots’ which are the popular tourists attractions, for example, Stanley, Discovery Bay and Sai Kung to name a few. The chosen location ensures the high traffic flow especially with international people, as it is a tourist attraction as well as being a destination for a family outing.
The new store would also be more service-oriented as meals would be brought over to the table after being ordered at the counter. This allows Pret to practice its current positioning whilst serving a larger segment market to customers who share similar ‘laid-back’ style. Also, being in places where there would be numerous international people helps Pret to promote itself without much of advertising as they would be accustomed to the name and style of the shops. They would also be likely to choose Pret for their lunches as it is a cultural habit to have sandwiches at lunch.
Benefits The reason we have chosen to do sub-branding is because Pret can continue to serve its primary target market, the business segment and will not have to compromise its positioning in the consumer’s mind. Also, we believe Pret can achieve success just like the Mark & Spencer’s practice of sub-branding. M&S has divided its clothing lines into many brands, such as the ‘Indigo Collection’ for women’s casual wear, and the ‘Autograph’ which exhibits sophisticated and a confident style. The sales of both collections boosted 9% and 16% respectively.
All in all, we can see that sub-branding can help us successfully in targeting different type of customers and help boost our sales at the same time satisfying the needs of our customers. The practice of sub-branding would allow Pret to expose itself to a larger segment and increases its brand awareness. Sales would also be increased as the new stores would be opened seven days a week with very high traffic flow because of the locations they will be based in. Cost, of course, would be a large consideration for such an expansion. However, we believe that it is not a real concern for Pret.
Since the practice of opening new stores is very similar to its existing practice. Therefore, the cost incurred for opening new stores can be reduced greatly. Furthermore, the sub-branding model can provide us with a solid foundation for entering the catering industry in future. Conclusion In conclusion, Pret has a large potential market segment that they can tap into. By targeting a broader market segment based on different demographics by offering set meals, Pret could attract the weekend customers. Also, by opening stores in international-heavy areas, the company can also preserve their consumer base.
Finally, with sub-branding, Pret can reach the different market segments effectively. By following the recommendation, we are confident that our plan would help widen their expansion and strengthen their brand familiarity in Hong Kong. Appendix Exhibit A: Schedule Branches| Opening Hours| Lippo Center(Admiralty)| Monday-Friday 07:30- 19:00Saturday 08:30-16:30Sunday Closed| City Bank Plaza (Central)| Monday-Friday 06:30-19:30Saturday ClosedSunday Closed| Wan Chai North (Wan Chai)| Monday-Friday 07:30- 19:00Saturday 11:00-16:00Sunday Closed|
Exhibit B: Observation Time: 1600-1900 Date: 4th May 2013 (Saturday) Location: Central MTR branch & IFC branch of Pret Time spent: 1 hour in Central MTR branch and 2 hours in IFC branch Central MTR Branch: It is noticed that there were mainly two types of people that entered Pret. The first type of people were those that went inside the store and bought something to eat, and were out of the store within 90 seconds. Whereas the other group of people, went inside the store, but just looked around and did not buy anything. IFC Branch:
Similarly, in the IFC Mall outlet, it is observed that people who bought something to eat, either opted to ‘take-away’ their meal, or even if they stayed behind to eat what they have bought, it only took them 10-15 minutes inside the store. It is thought that Pret only caters to white collar workers who are looking for something healthy and convenient to eat but actually, there were other types of customers purchasing food at Pret. Instead of those workers, we saw many other groups of people entering Pret, such as young families with toddlers, tourists, students and also some elderly couples.
Similarities between the two outlets: The majority of the workers at the cashier counter were ethnic minorities and they mainly communicated with the customers in English. Limitations of the Observation carried out 1. Since our observation was carried out only for 3 hours and in 2 locations, the data collected might not be sufficient and representative enough. 2. Assumptions in the “Bad Strategy” were mainly based on the observation; therefore it might consist of some errors. 3. Since Pret is a privately-owned company, there is not much secondary information found on internet to support our observations.
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