Chapter 6
Marketing Apex-Pal

POSITIONING FOR COMPETITIVE ADVANTAGE
SERVICE QUALITY COMMENTS
RECOMMENDATIONS TO IMPROVE SERVICE QUALITY
EFFECTIVE COMMUNICATION OF PROMOTIONS TO CUSTOMERS
CURRENT MARKETING STRATEGIES
RECOMMENDATIONS FOR MARKETING STRATEGIES

Sakae Sushi adopted a mass-market strategy to reach the largest number of possible customers. According to its CEO Douglas Foo and Assistant Vice-President (AVP) of Marketing and Communications Joyce Lee, the company chose this strategy because of its vision to be at the top of a diner's mind whenever he or she wishes to dine at a sushi restaurant. Just as customers instinctively recall McDonald's or Starbucks whenever they think of getting a hamburger or coffee, they should also instinctively think of Sakae Sushi whenever they yearn for Japanese food in general, and sushi in particular.

In addition, mass marketing allows Sakae Sushi to buffer itself in bad times. As Sakae Sushi practises mid-market pricing, the upper and lower tiers are also included in the target market. This helps Sakae Sushi to ensure that its revenue will not be drastically affected by external factors, such as when there is a downturn in the economy. For instance, during a downturn, when customers become more price-sensitive and lower tier customers decide to eat at home

more often than dining out, Sakae Sushi can still count on upper tier customers to bring in the revenue.

Sakae Sushi also adopts geographical segmentation when devising its promotional strategies. Its marketing strategies are customised according to the locality in which a particular Sakae Sushi outlet is sited. For instance, outlets located in the Central Business District and city areas have marketing campaigns to target the working executives, while those in the suburban areas appeal more to families and students.

POSITIONING FOR COMPETITIVE ADVANTAGE

A survey of 210 respondents was conducted to gauge if consumer perceptions were in line with Sakae Sushi's own positioning (See Appendix A). Respondents indicated that the two important factors that influenced their decision to dine at a particular Japanese restaurant were food quality and price. The results of the survey were compared to other competitors, and summarised in the perceptual map of Figure 6.1 below.

Food Quality and Price

Sakae Sushi's competitive advantage lies in its ability to offer quality Japanese cuisine at affordable prices. The survey shows that consumers indeed perceive Sakae Sushi to be positioned in the bottom right-hand corner which corresponds to relatively good food quality and low prices. Hence, Sakae Sushi can be said to be successful in delivering what it has initially set out to offer to its customers, that is, quality food at low prices.

However, the perceptual map above also shows that Sakae Sushi has two close competitors, namely Ichiban Boshi and Sushi Tei. Both brands are perceived to be providing quality food, even though their prices are relatively more expensive compared to Sakae Sushi's. Still, they could be strong competitors since some Sakae Sushi customers, feeling a little richer when the economy is flourishing, may be attracted to cross over.

Price and Service Level

The respondents in the survey rated service level as the third most important criterion in choosing a Japanese restaurant.

As consumers are getting increasingly sophisticated in their demands, it is important to look at the perception of service level provided at the restaurants, since it is one of the salient attributes which determines consumers' choice.

Sakae Sushi is still perceived to be a strong brand which provides a high level of service at a low price. However, Figure 6.2 above shows that the relatively new entrant, Ichiban Boshi, has become a serious competitor. Consumers perceive it as providing a relatively higher level of service with prices that are not significantly more expensive than Sakae Sushi's. To ensure that it maintains its market leader position and to remain the preferred sushi outlet, there is a need for Sakae Sushi to improve on its service quality.

SERVICE QUALITY COMMENTS

The quality of service provided by the service staff in the restaurant outlets plays a critical role in ensuring a pleasant dining experience for customers. As customer demands become increasingly sophisticated, there is a need to identify the service gaps in Sakae Sushi so as to design service initiatives to motivate service staff to provide a superior dining experience for customers.

Communicating Promotions to Customers

Lee identified the lack of communication between service staff and customers as the most significant service gap. This has led to a low level of customer awareness of on-going promotions in its outlets. As all Sakae Sushi outlets carry different promotions to attract their own customers, there can be individually targeted special offers or giveaways available only in some outlets. There were instances when customers were displeased that they were not informed of promotions beforehand and did not benefit from them.

If the service staff are able to inform customers about on-going promotions before they place their orders, this will greatly enhance the service quality provided at Sakae Sushi, and will in turn encourage customers to utilise the promotions to enjoy greater savings or earn other benefits. By doing so, Sakae Sushi will have successfully communicated to its customers that it is a Japanese restaurant offering quality cuisine at affordable prices — an image that is in line with its desired positioning. The above steps will eventually translate into greater customer loyalty and ultimately convert happy customers into Sakae Sushi ‘evangelists’ in the long run.

Handling Difficult Situations

Sakae Sushi has implemented several initiatives to train its service staff in handling difficult situations. Firstly, the Service Quality Manager from Apex-Pal International oversees the service quality provided at all Sakae Sushi outlets. The main duties include gaining insights into the demands of customers and training staff to handle difficult situations. The goal is to ensure that the quality of service provided by the service staff is in line with the expectations of customers in order to create a pleasant dining experience in Sakae Sushi.

Secondly, basic training by Apex-Pal has equipped service staff with the necessary skills to handle various situations that may arise. For instance, service employees are provided with answers to a list of frequently asked questions (FAQs) by customers so that they can provide immediate responses to customer queries. Apart from being quick with answers, the demeanour of its service staff is also important, as they represent Sakae Sushi and are at the forefront of the company's dealings with customers. Hence, service staff are given service scripts to aid them in their interaction with customers, and are trained to show appropriate body language in their interaction with customers.

Thirdly, Sakae Sushi firmly believes in ‘not letting customers leave Sakae Sushi unhappy’, and tries to instil this belief in its employees. When this belief is clearly communicated to the service staff, they will understand the importance of serving customers well. Furthermore, this belief also functions like a motto which guides service staff in their interactions with customers.

Most importantly, Sakae Sushi empowers its staff to go the extra mile for customers when necessary and this is extremely important when doing service recovery in retaining customers.

According to the TARP research¹ an impressively high retention rate of 82% will be achieved if customer complaints are fixed quickly and on-the-spot. Moreover, customers who experience a service failure but have it resolved to their full satisfaction are more likely to make future purchases than customers who have no problem in the first place, according to the service recovery paradox.

Currently, service staff are encouraged to settle all issues on-the-spot and the level of empowerment that service staff is given is dependent on their position. According to Lee, managers of outlets are authorised to waive the bill of a meal on a case-by-case basis if these managers feel that customers have raised serious concerns.

However, recognising that customers are a valuable asset is not enough. Lee also added that there is much room for improvement in terms of handling difficult situations to restore relationships and improve satisfaction. In order to show that it really values its customers, Apex-Pal has a full-time service quality manager to look into customer complaints and to learn how it can continuously improve its service and ensure that customers leave their outlets as happy customers. The company tries to respond to all feedback and complaints within 24 hours. The service quality manager takes care of feedback and complaints. She visits the outlets to check that things are done properly, looks for ways to continuously improve the system, and even handles all calls after office hours and during weekends.

¹ Christopher Lovelock and Jochen Wirtz, Services Marketing: People, Technology, Strategy 6th ed. (New Jersey: Pearson Prentice Hall, 2007), 395.

² Ibid., 396.

RECOMMENDATIONS TO IMPROVE SERVICE QUALITY

In response to the two most significant issues raised during our research, initiatives pertaining to human resource management and marketing will be proposed. The recommendations seek to provide new insights and suggest possible courses of action which can be undertaken to enhance the service quality at Sakae Sushi.

Lee mentioned that most outlets are under-staffed. Hence, service staff are often pressed for time and are unable to communicate promotional information to customers. In this regard, Sakae Sushi is constrained by the financial budget allocated by its parent company, Apex-Pal International. The following recommendations seek to address the issue from other perspectives.

EFFECTIVE COMMUNICATION OF PROMOTIONS TO CUSTOMERS

Communicate Clear Goals

Service staff are the first point of contact between Sakae Sushi and its customers; they are critical in that they represent the ‘face’ of Sakae Sushi that the public sees and the service quality that Sakae Sushi promises to deliver. Good service provided by such staff will be remembered but poor service will not be easily forgotten. The company therefore needs to identify the service goals that it wants to achieve and communicate such goals clearly to its service staff.

In this case, Sakae Sushi has identified that there is a need to increase customers' awareness of promotions at the various outlets. Once such a goal has been determined by

higher management, it must be communicated to service staff at Sakae Sushi. Such communication may take place during monthly or weekly staff meetings held to update staff about their performance and to encourage them to improve service quality. The service staff need to be fully aware of such goals so that they will be motivated to work towards improving their customer service level.

There can be further empowerment of service staff to enhance their service level. For instance, an outlet manager can reveal the monthly sales performance of his or her outlet to indicate how the sales performance can improve if service staff take the initiative to communicate outlet promotions to customers. With the input of all service staff in the outlet, it is possible to jointly set a target for increase in sales in the following month. Service staff will then become clear of the roles required in their jobs, and be encouraged to carry out their tasks effectively since they played a role in goal setting.

Train Service Staff

Although the service staff at Sakae Sushi may be aware of promotions and are willing to share information with customers, they may lack the proficiency or confidence to do so. Sixty percent of the service staff at Sakae Sushi are Malaysians, some of whom may not be able to speak English fluently and communicate information clearly to customers. In addition, fearing embarrassment, they may not even attempt to interact with customers. Hence, it is extremely important to train service staff to become proficient in English and enhance their level of self-confidence.

To overcome the problem of language proficiency, managers of every outlet can prepare a script for the

service staff and encourage them to practise the script with one another whenever possible. With increased fluency, confidence levels will increase and service staff will eventually take the initiative to inform customers of special promotions.

Sakae Sushi can also increase the confidence of service staff through role-playing. During training, service staff may act out the role of customers and staff to familiarise themselves with the process. In addition, through feedback from fellow colleagues, they may be better prepared to answer FAQs and thus provide better customer service.

Two Malaysian service staff who were interviewed in May 2008 mentioned they encountered impatient customers who complained of slow service occasionally, even though they came in during peak hours and were duly informed that meals would take longer to be served. It is comforting to note that the service crew also mentioned that the company is well-prepared for such incidents and the company has already trained them to handle such customers.

Service Staff Initiatives

Special staff initiatives can also be put in place to encourage service staff to communicate promotions to customers. An instance will be the ‘3P’ initiative. Service staff are encouraged to share three on-going promotions with every customer when they are seated. Even though this may seem to demand more time from the already short-handed service crew, the ‘3P’ initiative makes it easier for service staff to communicate information in a quick and clear manner.

Repetition of the three promotions throughout the day will increase familiarity and shorten the time taken. With an explicit initiative put into place, service staff will be

encouraged to assume a proactive role in interacting with customers.

Enhancing the Ability to Handle Difficult Situations

We believe there are a few things that Apex-Pal can do to enhance its ability to handle difficult situations such as those mentioned earlier.

Communicating Beliefs

Sakae Sushi believes in ‘never let a customer leave Sakae Sushi unhappy’. This belief influences the way service staff deal with difficult situations. However, this belief can be slightly altered to encourage a more proactive effort in ensuring that customers have pleasant experiences at Sakae Sushi. When customers do not leave Sakae Sushi unhappy, it merely indicates that they are satisfied with the service they received. However, Sakae Sushi needs to foster close relationships with its customers and enhance its brand loyalty if it wants to be the preferred brand for Japanese food, and to ward off competition. Hence, customers should not be just satisfied or happy with the service, they need to be delighted with it.

By altering this belief slightly, positive results can be reaped. For instance, a new motto like ‘delighting our customers always’ can be adopted. With this, service staff are encouraged implicitly to go the extra mile for their customers. Service staff will eventually develop an eager attitude in resolving difficult situations, be more professional in dealing with difficult customers, and more effective in persuading and coaxing unhappy customers.

Training of Service Staff

The image portrayed by the front-line employees will, to a great extent, depend on the quality of their customer service skills. A positive approach from the service staff will help Sakae Sushi develop and secure long-term relationships with its customers. Service staff must be trained to listen actively, empathise with unhappy customers, read customers' body language and suggest effective solutions during conflicts with customers.

Similarly, role-playing during training will allow service staff to anticipate possible service breakdowns and coach them in handling such situations.

Greater Empowerment

Currently, only managers of Sakae Sushi outlets are given the authority to handle difficult situations and step in when crises arise. They are also empowered to waive the cost of a meal when necessary. Managers are usually busy and they may be unable to attend to a fuming customer there and then. Hence, junior staff should also be trained to handle difficult situations and unhappy customers can be appeased quickly without attracting the attention or affecting the mood of other diners.

Besides outlet managers, every staff member can be taught a trick or two in service recovery (within certain monetary limits). In this way, service breakdowns will be resolved in a much shorter time and dissatisfied customers can be won over promptly. Junior service staff should be given greater authority to deal with difficult situations swiftly. For instance, they may appease angry customers by giving them a complimentary dessert or waiving a portion of the bill. Such

small gestures will surprise unhappy customers and go a long way towards gaining customer loyalty.

Take Ritz Carlton Millenia (Singapore) for example. Every employee, regardless of seniority, is allowed to spend up to $2,000 to resolve customer complaints. Without having to go through the bureaucracy, if there is a valid reason, staff are authorised to use the amount. According to the Spring Singapore website, the result was an increase of 28.7% in total revenue per room between 1999 and 2002. In addition, the 36% in Repeat Guests is the highest in the Ritz-Carlton Group and is 10% higher than the industry average.

It may require some time and effort to draw up an effective service recovery fund system but it will definitely come in handy when a “crisis” arises.

CURRENT MARKETING STRATEGIES

Current promotional strategies are driven by costs, past sales performance and the type of customers at each outlet. As opposed to hard-sell, Sakae Sushi adopts subtle ‘remembrance’ promotions to remind customers about it. The most common form of promotional strategy used by Sakae Sushi is the tie-up with landlords and banks because it is seen as low-cost and offers the opportunity of strengthening relationships between working partners. Besides teaming up with landlords and banks, Sakae Sushi also collaborates with industry partners selling consumers products, such as Motorola and New Moon.

Nonetheless, Lee, who heads the marketing team at Sakae Sushi, does not limit her promotions to such tie-ups and indicates that whenever a good idea is proposed, she will source for financial support to carry out the promotion.

New Customer Relationship Management Initiative

Sakae Sushi recognises that it already has a large customer base and hence has moved away from above-the-line advertising. However, with intensifying competition, Sakae Sushi needs to retain its customer base, grow the value of these customers, and counter customer defections through a comprehensive customer relations management (CRM) system. A proper CRM system will allow Sakae Sushi to identify purchasing patterns amongst its diners and probable gaps in its product portfolio. While it may cost money in the short term, investing in an efficient CRM system will reap long-term gains.

On 1 June 2008, Sakae Sushi launched a new CRM system which allows them to do a monthly recall at the end of each month. This allows them to keep track of members (registered customers) who have not been to their outlets for the past one month and follow up with a card or a small gift to remind them about Sakae Sushi.

The new VIP programme gives members a rebate of 12% instead of 10% under the old scheme. The percentage of the rebate will increase to 14% once a valued customer hits a total bill of $300 for a month, and increase another 2% to 16% for the following month if they continue to spend that amount or more.

RECOMMENDATIONS FOR MARKETING STRATEGIES

Building Relationships

Besides reminding customers to patronise Sakae Sushi, the company can also make use of the CRM system to build

stronger relationships with its customers. For instance, armed with appropriate information about its customers, Sakae Sushi can surprise customers with birthday coupons and issue newsletters via direct mail or electronic mail to update customers about special promotional events. In doing so, Sakae Sushi can forge closer relationships and build emotional bonds with its customers. Such actions communicate clearly to customers that Sakae Sushi cares about its customers, is in sync with them, and thereby encourages them to dine at its outlets. Customers will then be converted to evangelists or ambassadors of Sakae Sushi.

Revamping Membership Cards

According to The Straits Times, interest in Japanese food is rising among Singaporeans and they expect to dine at Japanese restaurants more often. This is particularly so among the younger population who have embraced Japanese

food as part of their diet. According to our survey, shown in Table 6.1 above, almost 36% of Sakae Sushi's customers visit its outlets at least once a month.

Currently, Sakae Sushi has two types of membership cards — Sakae Junior Club and Sakae Sushi VIP Card. To entice regular customers to increase the frequency of their visits to its outlets, Sakae Sushi can take a leaf from the Thai food chain, Thai Express. On top of the 10% discount that customers can obtain from the current membership cards, Thai Express customers receive an additional 20% discount on their next bill if they make a second visit within seven days. If Sakae Sushi includes a promotional feature like this in its membership cards, it will encourage current customers to increase their patronage and help Sakae Sushi compete effectively by fending off strong competitors as well as new entrants like Ichiban Boshi.