“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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