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Red Lobster
Red Lobster
Marketing Management
RED LOBSTER
BACKGROUND
Red Lobster is a casual dining chain restaurant that serves affordable and fresh seafood to
mainstream America. Bill Darden, who found the restaurant in 1968, started Red Lobster from
its early focus on affordable and top quality seafood to become, more than 40 years later, one of
America’s oldest and largest national full-service casual dining chains with 694 locations that
spread within US and the highest market share among casual dining seafood chains.
When Kim Lopdrup, who had worked in the chain restaurant business for 25 years, took over as
President in 2004, Red Lobster’s consumer survey showed that the top three attributes when
choosing a seafood restaurant are freshness, quality, and taste of the seafood. Lopdrup realized
that Red Lobster was lagging the seafood competition in these three attributes. He felt that a
major change in positioning was needed. He succeeded to shift perceptions and reposition Red
Lobster in the consumer’s mind from frozen to fresh through three following phases:
1. Operational excellence
This phase involved some basic operational improvements which were focused on
simplifying operations and reducing costs while providing high quality product, and
delivering superior value for the mass market.
2. Re-positioning around “freshness”
This phase was focused on developing a mindset for the customer that Red Lobster products
are fresh. They changed the cooking platform with de-emphasizing all the fried items and
introducing wood-fried grilling.
3. Re-modelling the restaurants
This phase was focused on re-modeling the restaurant to create a comfortable seaside
atmosphere. It also gave customers clues to all senses that the seafood Red Lobster provides
is fresh and of top quality.
The strategy brought much better condition for Red Lobster. In 2010, they can increase 14 % its
guest satisfaction since 2004 to 78%. Furthermore, they had a significant extra capacity that can
accommodate 50% more in guest counts. Staff morale was up and turnover was down. They
were in a right track a growth restaurant at that time, according to the Wall Street analysis.
In July 2008, Red Lobster’s marketing team identified purchase behavior of its segments through
market research study. They divided the segments become 5 behaviors: experientials, indulgents,
traditionalists, eclectics, and frugals. From the results, they also found almost a quarter of their
customers would be described s experientials. The people in this group actually have very high
culinary standards, and they have really high expectations for service and atmosphere. But they
still prioritize the relationship with someone else who they care about. Experientials are the best
customers for a casual dining chain and were particularly profitable because they are more likely
to order desserts and appetizers and wine, and they are less price sensitive.
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Individual Paper 1 – Achmad Husni Thamrin
Marketing Management
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Individual Paper 1 – Achmad Husni Thamrin
Marketing Management
The positioning of Red Lobster as the approachable and fresh seafood may not meet the
expectation of the experientials since they have very high culinary standards and high
expectations for service and atmosphere. Red Lobster needs to provide a higher standard of
service to its customers. The positioning as a providing of excellent dining experience is
necessary to build in every customers mind. The promotion through advertising and
sponsorship of special event may support its image as an upscale restaurant. They could
reduce the price promotions since this group is less price sensitive. Based on this character,
Red Lobster may increase the price a little bit to provide what customers want.
Fresh and best quality seafood should be still provided in the menu. They may need to add a
better and higher priced wine and food selection. They could offer the special wine menu to
customers to compliment the wine of the day or slightly more expensive dishes and desserts
to attract more people from the experiential group. Finally, the remodeling of interior and
exterior of restaurants is still a good idea because people from this group really appreciate the
comfort atmosphere and pleasure restaurant.
RECOMMENDATIONS
Focusing on the experientials as the new Red Lobster target customer is the best action to
respond to the segmentation study. As one of the best customers for a casual dining chain, this
group can give more profitability if become the biggest proportion in percentage of customers.
To increase the business in this group, Red Lobster needs to focus to serve this group because of
its unique characters compared to other groups.
Although the action will increase the cost in the promotion and place, Red Lobster will offset it
from the higher revenue.The communication between customers and company also will be more
efficient and effective. Considering this, focusing on one profitability segment is a better option
for Red Lobster than staying in the ongoing strategy.
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