Marketing Management

World of Pancakes, the way to bring the Dutch Original Pancake House to Singapore

Shinya Kumamaru Frans Bastiaan van de Loo Xiao Ruan Zheng Wei

Executive summary In this project, we studied the market viability of opening a Dutch Pancake House (DPH) in one of Singapores most popular shopping malls VivoCity. We initially conducted a market survey among VivoCity visitors to get their insights on the proposed business venture. We also conducted segmentation analysis to segment our potential customers under different criteria, and found the young couples, working professionals, family with kids, and tourist optimal to be targeted. Based on our market survey insights and competition analysis, we decided to position ourselves as an international pancake house (World of Pancakes) that offers reasonably priced original pancakes. While we can capitalize on the novelty of this dining concept in Singapore, this advantage likewise poses as a challenge as there is still little public awareness on our product offerings. Thus, to promote our restaurant, we shall mount advertisement campaigns, relying on both the power of the new and traditional media, coupled with other promotion strategies such as special menu offerings and peak and off-peak dining discounts.

Product Description Who has not heard of pancakes? That thin, flat, round cake prepared from a batter, and cooked on a hot griddle or frying pan. i Pancakes are very much liked in both western countries as well as in Asia. The more popular form of pancakes is the American-style pancakes or "flapjacks", which are usually served for breakfast. However, the most common type of pancake eaten in Singapore is the Indianstyle pancake such as the "dosa" and "roti prata," which are eaten as a regular meal, i.e. lunch or dinnertime.ii Among the lesser known member of the pancake family is its Dutch relative, the "pannenkoeken."iii Dutch pancakes are thicker than the French crepes and slightly thinner than the American pancakes while size-wise the Dutch pancakes are the largest of its kind. Overall Dutch pancakes are heartier, heavier and higher in calories and thus better positioned to serve as proper meal.iv The unique taste also makes it very suitable as a dessert (e.g. fruit pancake with ice-cream).

The concept of a Dutch Pancake House (DPH) comes from the Netherlands where pancake houses are popular destinations for families, groups of friends and even for dates, where diners will have at least one to two pancakes as a full meal. The interior of the archetype DPH is to be a cozy restaurant setting with wooden furniture and dim lighting to emphasize the comfortable and homey setting.

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Market Segmentation & Targeting The market segmentation for the DPH process was based on concept testing and analysis of the market situation of the restaurant location, which is VivoCity)v With VivoCity being Singapores largest mall and the gateway to Sentosa, the expectation is that the DPH will be able to a considerable number of VivoCitys visitors. Targeted marketing should be adopted to ensure that the DPH will be an enduring eating establishment at VivoCity. Based on VivoCity's market-research conducted, the key distinctive benefits of our product will be directed to the following segments of VivoCitys visiting population: 1. Young people who are dating or with friends (segmented by age and marital status) Our pancake house can be an attractive gathering or dating place for those in a relationship, as our survey indicates that those in a relationship are more inclined to have pancakes for dinner and lunch than those married with kids and single (Exhibit 1 & 2). Further, based on the existing restaurant categories within VivoCity, Dutch pancakes will be a unique option and thus can be appealing to the youth and those who are in, or want to start, a relationship when they dine out for exotic foods.

2) White collar workers (segmented by employment status) Those working in nearby offices should be the main target customers during lunch break as well as dinner hours during weekdays.

3) Families with children (segmented by age and family size) Our market research shows that those who are married with kids are more likely to eat pancakes for dessert than any other group (Exhibit 3).

4) Tourists (segmented by customer type) Finally, since VivoCity is the doorstep to Singapore's most famous tourist spot, Sentosavi, the tourist segment holds a great potential. Singapore is known to the outside world as the food and shopping mecca but more so for its relatively cheap and wide selections of food available in this small island. On a daily basis, the food court at the third level of VivoCity, which greets visitors taking the monorail to Sentosa, is always teeming with tourists who prefer to fuel up their stomachs before and after their day-long (which usually reaches until early evening) sojourn to Sentosa.

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5) Female. Among all the target segments, women of varying age and status are more positive towards our product and are assumed to play a key role in the decision making process of the their dining groups in deciding where to go for a bite.vii Product Positioning Our survey results show that the important attributes in choosing a place to dine at VivoCity are the quality of food, speedy service, dcor of restaurant, and menu selection (Exhibit 4). In terms of pricing, more than 70% of respondents indicated that their willingness to pay for our food is over S$10 (Exhibit 5), illustrating that potential customers regard us as more expensive than food courts but less expensive than fancy restaurants". The sheer expectation that a sufficient amount of customers will find their way to our restaurant is unrealistic as 81.25% of the respondents never heard of Dutch pancakes. Due to the great unfamiliarity with Dutch Pancakes and the indication that only 55% of respondents are likely to visit our restaurant, we are faced with a major hurdle. This can be addressed by not positioning ourselves as solely serving Dutch pancakes. Dutch pancakes should therefore no longer be the sole product offered but become a flagship product. The product line breadth is to be extended to all western style pancakes (American, German and French) and a limited line of Asian-style pancakes. Similalry, the product line depth shall be shortened (instead of 30 varieties of Dutch pancakes only 15). As such the proposed restaurant will no longer be a copy of a typical Dutch Pancake House but will instead, bank on the familiarity among the potential customer base with Western and Asian pancakes, while maintaining some unique features of the DPH such as coziness and warm ambiance. Thus the positioning statement should be "World of Pancakes, We make the original like nobody else ".

Below is the summary of our positioning strategy: Who are we? Why buy us? First and only truly international pancake house in Singapore. Restaurant that serves all kinds of international pancakes in over 20 combinations with tastes ranging from sweet to savory. Quality is guaranteed because we employ a Pancake chef from the Netherlands. We are the only ones who serve the original ones.

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Why not the competitors? -

We can serve the dishes in a short time, thanks to our strategy to concentrate on pancake dishes. Our unique menu selection can cater to a wide variety of customers needs; lunch, dinner, and snacks & desserts. Our restaurant interior and exterior is designed to emphasize the coziness and homey setting with wooden furniture The reasonable price range for lunch and dinner: Food court < hearty pancakes < Regular Western Restaurant

In terms of competition, with regards to competitors selling pancakes would face direct competition from Strictlypancakes.viii However, location-wise Strictlypancakes does not form any competition. We thus have to look primarily at competitors at VivoCity. Here the biggest competition would come from Swensen's which, among other things, offers American pancakes (Exhibit 6) and White Dog Caf which falls in between casual dining and a quick bite. A place such as the Mussel Guys Restaurant and Brotzeit are also a potential competitor but would be relatively slower in food preparation making it a less viable option for those who are looking for quick lunch and/or dinner. This shows that we are a niche player in the market and we have some flexibility to set prices. On the other hand, the disadvantage of our positioning lies in advertisement. The advertising is crucial since our service is so new and unique to the market that we first need to raise awareness of the pancakes as a good lunch and dinner alternative in the minds of potential customers. This could be an extra upfront cost for us. Marketing Mix Strategy The primary objective of our advertising and promotion strategy is to create a favorable awareness on pancakes as a viable lunch and dinner alternative while banking on the potential interest of 98% of the respondents in visiting the World of Pancakes.ix Pricex Our survey result shows that over 70% respondents were willing to pay at least $10 for a full-meal pancake at our restaurant. If we set this as the price floor for our full-meal pancake, we need to be aware of other factors that may affect our pricing strategies. y White Collars: This segment may find our pancake prices higher than the nearby hawker centres, food courts and franchised fast food restaurants. However, the premium is justified by the comfortable and quieter setting compared to the hustle and bustle of the mass market food centres. y Couples: When considering a dating place for lunch or dinner, couples take food prices of VivoCitys other western restaurants as their references. This gives us more leeway to adjust the
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pancake price between $12 to $15, about 80% cheaper than competitors pricing such as Swensens. y Family: This group of customer is more interested in our snack and dessert products, with the majority of them willing to pay less than $10 for dessert pancakes.

Product Playing on product versatility as our strength and considering customers willingness to pay, we design different products for each targeted groups. y White Collars: Savory pancakes lunch time set-meals for $10 in medium portion are suitable for working professionals who are both price conscious and on the go . y Couples: Large and sweet pancakes good for two people are ideal for dating couples. Since they also tend to stay longer at our restaurant, they may also order extra dishes like dessert and fruit juices. Therefore, even though we set the pancake price at the minimal $10, we can make profit from couples more flexible purchasing power, i.e. not limited to set-meals. y Family: Healthy and tasty dessert pancakes to cater to family groups according to the customer preference shown from the market survey.

Advertisement and promotion We will capitalize on the power of new media as well as rely on time-tested traditional advertising methods to reach out our potential customers and to communicate our product benefits.xi

The online advertisement will be conducted through hungrygowhere.com and groupon, mainly targeting younger generations who frequently surf the web. In terms of promotion, we will offer online coupons for couples (one of our main targets) with special date set menus (pancake + drink). Also, the data provided by the VivoCityxii (Exhibit 7) shows that prime times for Shopper visitations to VivoCity are 12 noon to 3pm and 6pm to 9pm, and prime dates are Friday, Saturday and Sunday. To encourage customers to eat at our restaurant at non-prime dates and times, we will issue more attractive discount coupons for non-peak periods.

Other advertisement methods are to rent ad space at the MRT and distribute flyers outside the office near VivoCity during peak lunch and dinner hours and distribute pancake samples. Tourists will be targeted through coupons in tourist maps.

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APPENDIX Exhibit 1: Cross tabulation(Count of would you consider eating Dutch Pancakes as your dinner)
Row Labels N Y Grand Total Relationship 36.36% 63.64% 100.00% Married no kids 0.00% 100.00% 100.00% Married with kids 85.71% 14.29% 100.00% Single 52.63% 47.37% 100.00% Total 57.78% 42.22% 100.00%

Exhibit 2: Cross tabulation(Count of would you consider eating Dutch Pancakes as your lunch)
Row Labels N Y Grand Total Relationship 36.36% 63.64% 100.00% Married no kids 0.00% 100.00% 100.00% Married with kids 71.43% 28.57% 100.00% Single 40.00% 60.00% 100.00% Total 47.83% 52.17% 100.00%

Exhibit 3: Cross tabulation(Count of would you consider eating Dutch Pancakes as dessert)
Row Labels N Y Grand Total Relationship 45.45% 54.55% 100.00% Married no kids 0.00% 100.00% 100.00% Married with kids 21.43% 78.57% 100.00% Single 31.58% 68.42% 100.00% Total 30.43% 69.57% 100.00%

Exhibit 4: Top 3 factors in choosing restaurant in VivoCity

Factor in choosing restaurant in Vivo city Quality of food Speedy Service Interior design of restaurant Menu selection Count 38 27 15 15 % 28% 20% 11% 11% Factor in choosing restaurant in Vivo city Friendly service Kid friendly Others Total Count 14 8 7 136 % 10% 6% 13% 100%

Exhibit 5: Willingness to pay matrix per gender and relationship status

Gender Female Male Grand Total Relationship status In a relationship Married no kids Married with kids Single Grand Total 10 to 14 40.63% 33.33% 38.30% 10 to 14 45.45% 66.67% 64.29% 10.53% 38.30% 15 or more 31.25% 26.67% 29.79% 15 or more 27.27% 33.33% 14.29% 42.11% 29.79% 5 to 9 28.13% 33.33% 29.79% 5 to 9 18.18% 0.00% 21.43% 47.37% 29.79% less than 5 0.00% 6.67% 2.13% less than 5 9.09% 0.00% 0.00% 0.00% 2.13%

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Exhibit 6: Positioning map

Uniqueness in Menu

Mundane Expensive
Casual dining (i.e. Swenson s)

Unique
Fancy restaurant dining (i.e. Brotzeit German )

Price

Reasonable

White dog Cafe Foodcourt

Pancakes for All

The Mussel Guys Restaurant

Exhibit 7: Vivo city shopper visitation patterns, 11 months to Nov 2010

Day of Week
Monday Tuesday Wednesday Thursday Friday Saturday Sunday

Share
12.1% 11.8% 11.9% 12.2% 16.0% 18.7% 17.3%

Time of Day
Midnight to 3am 3am to 6am 6am to 9am 9am to 12 noon 12 noon to 3pm 3pm to 6pm 6pm to 9pm 9pm to midnight

Share
1.5% 1.2% 4.6% 13.0% 22.8% 22.7% 25.6% 8.6%

Total

100%

Total

100%

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Dutch Pancake House Customer Survey 1 Gender: 2. Age: 3. Marital Status: *Single Male/Female

*In a relationship

*Married, no kids

*Married with kids

4. Employment status: *Employee *Self-employed

*Student

*Retired

*Unemployed

5. How often on average do you dine out in a restaurant (excluding hawker center)? . times per month 6. Please select the top 3 factors that determines your decision to eat at a restaurant in a shopping mall: Kid friendly Menu selection Speedy service Dcor/interior design of restaurant Portion size Quality of food Unique taste Special offers/Discounts Friendly service Health Menu options

7. Have you ever eaten pancakes? 8. To what extent do you like pancakes (select one answer)? * Strongly Dislike *Dislike *Strongly Like 9a. Have you ever heard of Dutch/Holland Pancakes? 9b. If yes, have you ever tried them

Yes/No

*Neutral

*Like

Yes/No Yes/No

10. After seeing the picture (see next page) of Dutch Pancakes and the menu options: would you consider eating Dutch Pancakes as your: Dinner Lunch Dessert Quick snack Yes/No Yes/No Yes/No Yes/No

11.To what extent, would you like to try out eating in a Dutch Pancake House restaurant in VivoCity? *Not likely at all *Perhaps *Likely 12a. How much would you be willing to spend for a full-meal pancake 12b. How much would you be willing to spend for a dessert pancake . SGD .. SGD

13. What occasion would you find suitable to dine at the Dutch Pancake House (you can select multiple answers)? For a quick bite With family

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For a date with bf/gf or partner With friends/colleagues

I would not want to eat there

14. What do you think would be the best way to advertise the Dutch Pancake House? Please fill in

Special questions for those with children Would you consider having birthday part of your children in the Dutch Pancake house?

Yes/No

ENDNOTES
i There are archaeological evidences that the origin of the pancake can be traced back to as early as the prehistoric age and continued until the medieval period when it was then known as love bread, and the modern Christian era. In the present day, albeit known in different names in different parts of the world and varies in thickness, diameter and structure, the essence of pancake remains the same. http://www.dekonijnenberg.nl/?page=geschiedenis Jones, M. Feast; Why Humans share food, Oxford University Press, 2007 ii Other famous western pancakes are crepes which are thinner than its American counterpart and is offered by at least one establishment in Singapore. They are usually served with sweet fillings and toppings, the crepes are more associated as desserts. Crperie des Arts caters for the middle and higher lunch dinner segments. Besides wine they offer a range of French wines. iii In the Netherlands, its traditional pancakes are very popular so much so that its very existence is celebrated via the national 'Pancake Day'. http://www.pannenkoekdag.nl/ iv The way the Dutch pancakes are prepared is also different. A crepe or American pancake with for example bacon means that the pancake is served with bacon on top or on the side. A Dutch pancake however is cooked with the pancake which increases the taste of the pancake. Per piece a crepe (93.3 grams) has 109 calories, an American pancake (77 grams) 149 calories and a Dutch pancake (100 grams) 331 calories. http://caloriecount.about.com/real-french-crepes-recipe-r99289 http://caloriecount.about.com/calories-pancakes-plain-dry-mix-complete-i18290 http://www.calorielijst.nl/product/?calorie=9313 v The concept testing took place by showing pictures of different Dutch pancakes and asking respondents to what extent they would be willing to eat Dutch Pancakes. The results are in the Annex. vi Sentosa attracts more that 5 million visitors a year. vii In terms of gender, our research concludes that women like pancakes more than men, and women are also more inclined to have pancakes for lunch, dinner, and dessert than men viii http://www.strictlypancakes.com.sg ix Only 2.13% of the respondents expressed that they are not likely to visit the DPH x In the pricing no costs were included. However the actual costs of the ingredients and preparing the food are marginal. The prime expected operating costs are to come from rent, staffing and maintenance. xi The survey has also asked for suggestions on how to market our product. This section reflects some of these suggestions xii Mapletree commercial IPO prospectus, P440, http://www.mapletreecommercialtrust.com/data/resources/docs/Prospectus%20(Clean).pdf

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