“CHOCOLATE LOUNGE”

Marketing 210 project Presented to : Micheal Kfoury On January 8, 2007

By : Patricia Bakalian Rami Chahine Marc Maalouf Hiba Razzouk

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Table of contents :
I.Executive summary II.Current marketing situation : 1)market description & market
segmentation 3)concerning sales volume III.Product review: 1)introduction to our
product 2)mission statement 3)Environmental mission statement 4)positioning of our
product in the market IV.Review of competition: V.Distribution Channels 1)
Supplier to company 2)Company to customer VI.Threats and opportunities: SWOT
analysis VII.Objectives and issues : How to become effective market leaders
VIII.Marketing strategy : Produce an effective marketing mix 1)Product 2)Place
3)Promotion 4)Price IX.Action programs : X.Budgets : XI.Controls XII.Final thought
:

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I.

Executive summary:

In Lebanon, the service industry is highly saturated with restaurants, cafes,

pubs, and nightclubs. In order to enter such a market, you need to introduce a new
idea. With “Chocolate Lounge”, it is exactly what we intend to do. “Chocolate
lounge” brings with a new concept and idea, in which it’s general idea is
CHOCOLATE and mainly all its products are chocolate based. Our lounge will have a
transforming nature between the day and the night. In the day it is mainly a café
and a restaurant, where our customers would have breakfast or lunch, and also
study or conduct business meeting in a calm atmosphere. However, during the night,
our lounge radically transforms into one of the hippest pubs in town, where the
best music is played and the most exquisite drinks are served. What we serve and
our general idea is mainly enjoyed by people seeking a place to study or a classy
and lively pub; such people are mainly categorized as students and working adults
in their 20s 30s and 40s. With our “more for more” strategy, we limit our
atmosphere to high class. We offer “more” products, better quality, and an
innovative, new idea, for prices maximally getting to an expensive 50,000 L.L a
couple, yet fully compensated for with our services. We recognize our competitors
fully, and understand their strengths and the threats they pose on us, and
consequently we developed a well understood SWOT analysis that helps us in turn
recognize our own strengths, weaknesses, opportunities and threats.

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II. Current marketing situation:
1) market description & market segmentation The Lebanese services market that we
are entering is characterized by high qualities standards of life, highly educated
labor force and high saturation. This dense market is full of local restaurants
and cafes that shape the Lebanese social culture, as well as of the international
investors that find in the Lebanese market an appealing atmosphere. However,
“chocolate lounge” is unique in its various aspects of specializations, a new idea
and concept. Our target market consists of various age groups ranging from
students to young professionals. But with our lounge’s changing nature, our
customers also change between the day and night. During the day, our lounge
welcomes mainly students and customers who are seeking a place to just relax and
have an exquisite and exceptional chocolate snack in a soothing setting. During
the night, with the lounge turning into a high profile pub, our customers are
adults (above 21 years old ) who are seeking a place to enjoy good music with
distinctive drinks in an “à la mode” ambiance. Their social class ranges from
middle class to upper class. Our customers will be discovering a new and unique
experience amongst the traditional concepts that exist on the Lebanese soil.
Customer needs are the core of our philosophy in which every employee makes sure
that they are taken care of. We ensure that every customer, regardless of their
spending power, is satisfied with their choice that is highly considered. Our main
goal is to achieve a healthy relationship with the customers. The political
situation in Lebanon is likely to affect our sales for we already are suffering
from the economic dilemma in the country. We conduct business according to a very
specific mission statement that consists of 5 commandments and also respect our
environmental mission statement that consists of 4 commandments.

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Our product is not just an ordinary one but rather an inimitable one which
positions chocolate lounge as a niche in the market. Our lounge can serve 150
seated comfortably customer , so we are estimating to receive every day around 300
customers during our first year of our operations. Our target customers are quite
numerous , there are thousands of university students in Hamra , as well as
working adults ( in their 30’s and 40’s ) in the same area. 2) Concerning Sales
volume : Because we are entering a market with fierce competition, we shouldn’t be
expecting big profits during the first year because “Chocolate Lounge” needs time
to build his loyal customer base . With time its sales will increase if all
principles will be met. We are expecting sales of 2000$ /day during the first year
. Some might think that 2000$ of sales /day are quite large , well not really ,
after conducting market research and asking professionals in this field , we found
that this is a really reasonable number to expect if the product is high in
quality. The next year of operations will surely be more flourishing for
“chocolate lounge”, sales are expected to increase to 4000$/day , it’s in this
year that profits start to appear in the books of “chocolate lounge”. This is of
course only an estimate.

III. Product review:

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1) Introduction to the product : Throughout history, chocolate has always had the
connotation of being joyful, comforting and special as a symbol of diverse human
emotions and has always been a part of our lives .Chocolate is prestigious,
romantic, nostalgic, sexy, and an object of fantasy and addiction for children and
grownup “children”. Nowadays the sale of chocolate is being made in a way that
contradicts its warm, joyful and sensual character. Today we are going to unleash
chocolate from its cage. We introduced a new chocolate culture concept and a
chocolate bar experience in the Lebanese market that incorporates each aspect of
chocolate in our everyday hectic life. “Chocolate lounge” is a lounge that turns
into a pub during the night allowing customers to enjoy a unique experience of
exquisite chocolate gourmet products. Our lounge exposes people to a wide range of
chocolate products: hot drinks , alcoholic drinks, desserts , sandwiches and
bites. During the day “chocolate lounge” is a place to turn free time into quality
time ,during the night a pub that creates a comforting and chilling ambiance. 2)
Mission statement : “Chocolate lounge” mission statement : “Establish “chocolate
lounge” as the premier purveyor of the finest chocolate to customers ,the best
store and lounge in Lebanon and ensure a continuous strive towards perfection and
precision in excellent quality .” 1- Create exclusive chocolate based products
that each one will eventually become a representation, a symbol in people’s minds
of our company . 2- Our purpose is to integrate chocolate in our customers’
everyday life 3- Establish an addictive product that would make our customers
always come back for more of

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our exclusive atmosphere and product. 4- Be known for our unique customer
relationships and make them our priority in our work. 5- Ensure an appropriate
atmosphere for each specific time of day (a chill-out café during the day, and a
hip pub during the night) 3)Environmental mission statement: “ “Chocolate lounge”
is committed to an environmental role in all facets of our operations” This
mission will be fulfilled by accomplishing these steps: 1- Guarantee a clean and
healthy environment at the workplace following the highest level of hygiene. 2-
Try to use in our operations environmental friendly products (recyclable papers ,
cups …) 3- Encourage partners to participate in environmental activities, share
our mission 4- Ensure to maintain good social and environmental responsibility.

4) Positioning in the market: Positioning is how the company is seen through the
eyes of its consumers by emphasizing on our beneficial differences in our
customers minds. The position of the product is the set of impressions, feelings,
and perceptions that customers have for the product. Through a new concept, we
offer “more” benefits with a price exceeding our competitors’ because the products
we will be offering will be unique in the market. We are adopting “more for the
more “strategy so we can attack our competitors’ position, and attract highly
classed Lebanese customers who like similar highly priced pubs/restaurants . Our
aim is to give our served customers the greatest value for an appropriate price.

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Our positioning statement: To college students, working people, groups of friends,
“Chocolate Lounge” is the lounge and pub where you can turn your free time into
quality time while enjoying your favorite and finest chocolate products.
“Chocolate Lounge” is the first of its kind in Lebanon, a shop during the day and
a pub in the night; it is the place to be all day long.

IV. Review of competition:

Because the market is saturated with likes of our café we find ourselves facing
many competitors that also bring a special concept into the market. Our
competitors are all cafés , pubs and lounges in the area surrounding our store :
Tamaris , Dunkin Donuts , Starbucks , Lina’s sandwiches , toffee coffee , Casper &
Gambini’s … in the cafés and restaurants business , and many other pubs that are
located in Beirut (Gemmayze , Monot street … ) in the nightlife business .
Starbucks Starbucks is an American coffee shop that went worldwide .Its success is
due to what they call as the Starbucks experience. They have more than five
branches in Lebanon. Three that may affect our business: Hamra, ABC Achrafieh and
Rawcheh. Starbucks is known for his coffee blends its wide variety of beverages
(hot and cold: cappuccino, frappuccino, espresso…). As for its prices, Starbucks
offer high quality products at high prices ( Hot Chocolate with whipped cream at
6000L.L ). Starbucks is known worldwide and its name consists a main attraction
for customers, so as for promoting their products and stores in Lebanon, not much
work is locally required because its international fame. 8
Dunkin donuts: Dunkin Donuts is a worldwide chain offering beverages, donuts and
other baked goods. Dunkin Donuts has many branches in Lebanon; Bliss’s branch is
our main threat, in which it attracts most of AUB’s students who form an important
part of our target customers. Dunkin Donuts uses a “less for the same strategy”.
It offers a good quality of coffee for cheap prices. As for promoting itself,
Dunkin Donuts relies on significant advertising; in addition to its advertising
campaigns that Dunkin Donuts launches each year, it also sets professional
competitions allowing customers to contribute to Dunkin Donuts image, as well as
its healthy environment. Toffee Coffee: Toffee coffee is a coffee shop that serves
university students (mainly LAU). It is located in Koraytem, about 300 meters from
the lower campus gate of LAU. Students may have their coffee and donuts in the
morning before or between classes .They also serve bites and sandwiches ( baguette
sandwiches ) and a wide variety of beverages (warm and cold ) .In addition toffee
coffee provides students a quite and relaxing place appropriate to study. Their
prices are considered average for university students (hot chocolate with
marshmallows at 4750 L.L. ). As for promotion, Toffee coffee mainly depends on
word of mouth inside the university and distribution of flyers at the gates.

Casper & Gambini’s : Casper and Gambini’s’ is one of the leading restaurants in
Lebanon , they are serious competitors of “Chocolate lounge” because they target
high profile customers , serve delicious

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sandwiches and have entered significantly lately the coffee industry by being an
award winning coffeehouse . Its Branches in ABC Achrafieh and Down Town pose a
threat to our lounge because of their near location .Prices are considered high,
parallel to high profile customers, they position C&G as a high class restaurant
(Hot Chocolate is priced at 5000L.L). Their products consist of diversity of
sandwiches and multiplicity of beverages. Regarding promotion, C&G sponsors many
events and rely on Public relations to promote itself.

Club Social : Club Social is a pub/lounge that opens its doors around 6 pm every
night, people can go hangout, listen to good music, have a fine drink and eat a
byte. Club social is the closest pubs that constitute a threat to our lounge,
because we will be providing at night a similar ambience, but quite different
products, our variety of drinks will contain chocolate-based products, a service
that not any competitor offers in Lebanon. Club social is located in Gemmayze, and
targets a large part of our night customers. Regarding promotion, club social
organizes events such as live bands playing and movie projections. It’s prices
range from 10000 L.L. to 25000 L.L for the drink , which is considered average ,
typical , in the nightlife industry in Lebanon.

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V. Distribution channels:
1) Supplier to company: 1-We decided to choose Max Brenner as our Chocolate
supplier . Max Brenner ‘s chocolate are famous for their finesse and good taste 2-
Drinks will be prepared by our own barmen, ingredients will be bought from
suppliers such as: FATTAL & Fils who supplies drinks like Absolute and Dewars. 3-
Our sandwiches will be homemade by our Chef , who will make sure that sandwiches
will be of high quality .Ingredients will be provided by local markets but will be
controlled by a quality control supervisor.

2) Company to customer: Like every bar/coffee shop our services will be provided
in house, no home delivery system will be implemented. In order for people to
enjoy our services they can call on our number to make reservations .They can also
come directly to the place and they will be seated on the free table of their
choice, or sit on the bar for a quiet drink. For any additional information,
customers can call on the info/reservation line, no website is needed for us right
now to launch our business, a website will be created later on in the upcoming
years. “Chocolate lounge” will create its own database of customers, occasionally,
we will ask customers for their numbers in order to update our phone number
database, this will continuously allow us to update our loyal customers on the
latest happening events and promotions in the “Chocolate Lounge”.

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VI. SWOT ANALYSIS:
• STRENGTHS A new idea introduced to the market • WEAKNESSES A new concept, people
might not easily grasp it. • • Similar lounges have had successful experiences in
other countries The changing nature of the place will attract a high diversity of
customers, therefore a higher attendance • High quality products for a reasonable
price • Lack of experience in this specific concept. Although it is successful in
other countries, there is a possibility of failure in Lebanon. • Can attract
people looking for a place to study in, and people looking for fun at the same
time High number of employees to be able to cover day and night shifts , this will
cost us extra costs. We are facing too many competitors •

Targets a single social class

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OPPORTUNITIES • The expansion of the chocolate culture worldwide • The active
Lebanese night life • •

THREATS: The bad economical situation in the country The explosive political
situation

The rarity of daytime hangout places in Lebanon

The high influence of word of mouth in Lebanon, a bad first impression might cost
us a lot.

The enthusiasm of the Lebanese people to go out after spending their summer at
home because of the July war

Increasing taxes will increase our start up costs

The growing entertainment market

Competitors copying on the idea

VII. Objectives and issues:

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How to become effective market leaders ? To become effective market leaders we are
required to supply unique and exceptional services of high quality and that
provide the greatest value to our customers, this will create for us a competitive
advantage over our competitors. The industry we are entering is highly saturated;
we face many competitors, each in one of the products we serve. But by being
pioneers in Lebanon to offer a variety of chocolate based products, which is an
innovative service, we will establish ourselves as market leaders. We should
continuously come up with new ideas and new products , maybe try to let our
customers participate in creating them : by organizing competitions where
applicants have to create new chocolate based drinks , and the winner’s drink , or
mix , will be introduced on our menu and might carry his name . We should also
make sure that our customers’ needs and requirements are met, attained, because
customer relationships are the most important to start and to maintain a
successful business. When we promise to provide a adequate place to study, the
perfect place and atmosphere should be supplied. Being market leaders and
successful doesn’t depend only on customers, internal functions are essential to
the success of any organization. Management should stay aware and control all
internal tasks. Complete coordination of all departments is crucial, so is
continuous employee training and cautious employee recruitment. Finally, we should
also work hard on sticking to our mission’s statement principles to maintain this
market leader figure.

VIII. Marketing Mix:

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1) Product: “Chocolate lounge”, a high profile restaurant and pub, offers a wide
variety of chocolate products as well as hot and cold dishes for breakfast, lunch
and dinnertime. “Chocolate lounge” has an exquisite selection of hot and cold
chocolate drinks, which also includes a wide section for alcoholic drinks, in
other words all you can think or imagine of chocolate-based products. In addition
to what we are offering on our menu, we also ensure a good “chill-out” atmosphere
for our students’ customers who are looking for a place to study or read, or for
business men who are looking for a place to conduct business meetings. However,
that is all at daytime. During the night, our lounge goes into a radical
transformation, the relaxing music becomes the hippest music in town, and our
customers become adults (above 21) who seek to enjoy a good drink along with some
good music. Our lounge will be turning into an elegant pub. The variety of
products that we will be offering, the selection of beverages and cakes, is listed
in the menu attached with this project .With our lounge transforming from day to
night, what remains is our good service and our exclusive quality. Our lounge’s
character will be innovative, elegant and fascinating .During the day the lighting
will be bright creating a spacey place, right for relaxing, eating, reading
newspapers and studying. 2) Price: “Chocolate lounge” seeks to attract customers
who can afford to pay for our high quality. Our target customers are mainly middle
to high class people, who are looking for a new and innovative place to spend
their free times without the hassle of trying to find somewhere to just have fun.
Our lounge being exclusive by its chocolate emphasis, and unique with its changing
nature, can become synonymous for a good time and comforting atmosphere. And
because the

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products we are offering are new to the market ,we can afford to increase prices ,
thus increase revenues on one hand , and on the second hand target those highly
classed people in the Lebanese society that are intrigued by new restaurants and
pubs that are quite expensive. Our prices will range from 5,000 L.L to 25,000 L.L
for drinks, and to a maximum of 50,000 L.L for a meal that would include a drink,
a sandwich and a dessert from our exquisite selection. On average our lounge’s
will cost a couple of people around 50,000 L.L if they intend to have lunch or
dinner, and would cost them according to how many drinks they order if they are
just around to chill out. The menu attached with this project gives us an insight
on the prices of our products 3) Place: We intend to open our first branch in
Hamra, as it is in the heart of Beirut, Lebanese city of students, with university
students roaming the area. The location will be between LAU and AUB, on Hamra main
street, as well as near the stores and banks .We chose Hamra as our location to
open our first branch because Hamra is full of hotels, many tourists wander its
streets, contains three important universities in Lebanon (AUB, LAU and Haigazian)
and is considered one of the busiest streets in Lebanon. Our strategic location
will allow us to be comfortable exposing our products to our target customers who
are actually looking for a place in this area like ours and are willing to pay
this amount of money for this new and unique idea. We are planning to rent a store
that is around 250m2, which make up two stories allowing customers a comfortable
stay .The lounge will be furnished by big and comfortable couches, and will also
be divided in sections, each section containing its couches and table that allow a
maximum of 6-8 people seated. Basically the first floor of our lounge will contain
the reception bar, where orders are

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taken, and tables that make up the dining area. The upper floor holds the actual
lounge with a larger number of tables, couches and sofas. It will also include the
bar that will serve the various alcoholic and non-alcoholic drinks. This upper
area will be the place where those who want to study and enjoy a calm atmosphere
during the day will dine. It is also the center of the lounge, in which at night
those who hit our bar will be served upstairs near the DJ and his set. Bathrooms
will be located in one of these two floors, preferably the upper one because the
first floor will be where the kitchen will be situated. Basically our lounge will
host around 150 comfortably served customers. 4) Promotion: We intend to promote
ourselves initially by “word of mouth” and by our huge and appealing sign and
decorations that should attract our customers. However, as business booms and we
position our selves accordingly in the market, we intend to broaden our marketing
strategy by launching an advertising campaign. We will post advertisements in
various magazines that aim towards students and working adults’ .By targeting at
first our target customers, we would keep our advertising costs low. Then later on
we would try to expand our customer base, we could then consider advertising on a
larger scope, and target more diversified customers on other branches. the
magazines that are read by students are OUTLOOK, MAINGATE, WHATS UP LEBANON ; the
costs of advertising in these magazines are quite low .And to get to our other
customers who are those working adults we will reach them through magazines such
EXCLUSIVE, LEBANON OPPURTUNITIES, THE GUIDE, EL BALLAD… Some competitions will
also be held to enhance our lounge’s liveliness. These competitions would include
bartender contests in which various bartenders would enter to perform some stunts,
create new drinks and the winner would have a drink named after her/him. This
would

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increase our lounge’s popularity and attractiveness, and vivacity.

IX. Action programs:

I In order for our project to be in full operating scale, a number of steps are in
need to be

taken. Assuming work must be started in the next month, that is if our project was
approved today, we should start in the first month by : • We need to choose a
proper location for our business, the right place to rent, compatible with our
budget and our needs. 2nd month : • Hire an interior designer and contractor to
make the proper arrangements and repairs in the chosen location. • In the mean
time we need to arrange a furniture supplier (local or foreign) and make the
necessary price negotiations and try to minimize our costs before signing the
contract and making the purchase, but certainly without forgetting our principles
that is to maintain the high profile character of our lounge . 3rd month : • Make
all the necessary installments : phone line ,electricity ,computers ,sound
system ,DJ equipment ,plumbing ,computers ,kitchen supplies and buy our plates,
forks ,knives ,glasses ,spoons etc… in order to complete our kitchen • Make all
the required arrangements with suppliers of ingredients and alcoholic beverages.
4th month : • Recruitment of employees starts , arrange interviews , meet
potential chefs and DJ’s to insure customer satisfaction and high quality .we
should recruit good employees , and 18
preferably choose experienced ones. • Hire and train employees to make sure their
capable of working under all circumstances (the pressures of a Saturday night for
example) so they won’t be any problems during first days of operations. As well as
the remaining necessary staff: valet parking ,cleaning staff, accountants… • Start
preparations for the opening of our lounge: announce the opening of the lounge
weeks before so that people can participate, ensure media coverage. The
announcement to customers will be made through students and nightlife magazines.
5th month • Organize every employee’s schedule between day shift and nightshift,
as well as number of work days per week. • Make sure the opening night goes as
smoothly as possible, first impressions are gold in this business. • • Create our
phone database to keep people updated on our future events. Perform necessary
auditing and maintenance to make sure all operations will go smoothly.

X. Budgets :

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Budget for 2007/2008 nature costs rent/year 500$/m2 * 250 = salaries 15employees
*500 = salary of general manager 2000/month*12 = salary of a gourmet chef
2000/month*12 = cost of computers+ system cost of casher : casio cost of
redecoration + interior designer furniture Kitchen supplies Music installation+
equipment advertising ( flyers + ads in magazines ) inputs ( ingredients )
30000$/month*12 = electricity + water + phone bills 700$/month*12= team training
interest expense Miscellaneous expenses Employees uniform Total 200000 7500 24000
24000 2000 500 10000 5000 10000 10000 10000 360000 8400 2000 40000 10000 3000

726400 In our first year of operations , our total expenses will be 726400 $ . As
stated earlier that

on average our amount of sales / day during the first year will be 2000 $ , so on
average our total revenues will be :2000 * 350 = 700000 $ . So during our first
year we will only be suffering a loss of 26400$ . This loss is mainly due to the
high fixed costs of opening ,decorating the lounge and for the interest expense .

Budget for 2008/2009 nature rent/year salaries salary of general manager salary of
a gourmet chef maintenance of computers+ system advertising ( flyers + ads in
magazines ) inputs ( ingredients ) costs 500$/m2 * 250 = 200000 15employees *500 =
7500 2000/month*12 = 24000 2000/month*12 = 24000 2000 20000 40000$/month*12 =
480000

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electricity + water + phone bills Interest expense Pay back the loan Total

800$/month*12= 9600 40000 400000 1207100

In the upcoming year, sales will increase to 4000$/day , therefore our revenues
will be 1,400,000$ . The second year will yield for us a profit of 200,000$ . We
notice that the total expenses have increases although fixed costs of the opening
have been paid last year , but this year we had to pay back our loan and to
increase our advertising activities , without forgetting the increased amount of
inputs to match the increased demand of our products thus increased sales .

XI. Controls

Our aim is to make sure that we are taking corrective action and achieving our
objectives and goals. That is why a process of evaluation is needed from time to
time. A valid comparison between our goal and performance should be our main
concern. To evaluate and to maintain our company’s high performance, we have to
implement inventory audit checking and examine our quality of products and
services. This is why MIS (management information system) should be installed in
our company, to make sure a professional control system is on hand.

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The following tables summarize the control process that our company is going to
pursue:

What should be controlled Customer approval and satisfaction Sales analysis

Marketing and advertising ‘s response competitors

By which activity

How often

Suggestions and surveys

Monthly

Financial data Sales data Observation and response from the customers
Investigation and observation Training

Monthly 2 months

3 months

Employees

3 months

Performance and progress

Market research

3 months

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XIII.Final thought ( conclusion ) :
“Chocolate lounge” being a combination of a café, restaurant and a pub brings a
new idea to the business offering generally chocolate based products. We
introduced a new chocolate culture concept and a chocolate bar experience in the
Lebanese market that incorporates each aspect of chocolate in our everyday hectic
life. Our target customers are mainly middle to upper class university students,
as well as young professionals in their 30s and 40s. Our target customers are of a
high profile because in our lounge we implement a “more for more strategy”. We
also took into consideration the threats that our competitors pose on us. With our
marketing mix being intact and well developed, we also came up with an action
program that details our work in the up coming months. We also developed our
budgets for the years 2007/2008 and 2008/2009 considering all our expenses.

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