Marketing research concepts and methodology

Market Research

Because expansion is one of Kudler Fine Foods' immediate objectives, this gourmet food shop needs to research new locations that will be conducive to market success and to avoid costly investment mistakes.

Customers are the foundation of any successful business. Effective market research will help Kudler Fine Foods increase its sales and profits by understanding which locations will deliver access to its target audience and what store adjustments it may need to make to its gourmet food shop product lines and services to meet the needs of customers in different locations. Demographic, competitive and customer research will all benefit Kudler in making the right investment decision and executing a market strategy that is based on the voice of the customer.

When researching new locations, the first priority is to make sure that the demographics of the area meet with Kudler Fine Foods' target market segment characteristics such as level of income, education, age, family size, etc. The gourmet food market has close substitutes, namely groceries from larger supermarkets. Therefore, if the location does not have enough of the specific target audience who are likely purchases of Kudler's high-end goods, the chances of success will be lower because consumers in the area will continue to shop at supermarkets. For instance, a low-income family on a limited budget isn't likely to shop at Kudler Fine Foods because they simply cannot afford to do so.

Kudler will also need to understand the nature of competition in the local area, both direct (other gourmet food and specialty stores) and indirect (grocery and convenience stores) competition. All of these stores will be competing for the business of Kudler's target audience and too much competition will decrease its likelihood of success. With its newly gained competitive intelligence and analysis, Kudler needs use this knowledge to make sure that it will be able to offer differentiated products and services from the established competition at the right price points.

Currently, all of Kudler stores offer a bakery, meat and seafood, produce, cheese and dairy as well as wine. but, these may not always be the most profitable product lines for every location. Based on demographic and competitive research of a geographic location, Kudler Fine Foods needs to consider what types of products are the most appealing to a given location. For example, after researching a location, it may find that the location is desirable except for the prevalence of many specialty wine stores who would compete with its wine department. Even so, it may still have the opportunity to open a gourmet food store that excludes wine. Currently, Kudler has an Asian specialty produce department and a European-style bakery at all of its stores. After reviewing demographic data, Kudler may discover that a location under consideration has a large ethnic population and can use this information to revise the products it stocks to cater to unique ethnic food preferences in the community which may not necessarily be Asian or European.

In Kudler Fine Food's current situation, it already has three successful locations, La JaJolla, DelMar and Encinitas. In addition to looking at completely new tows, Kudler ought to explore whether or not these existing locations can support another gourmet food shop. It needs to consider the demand at its current stores and the potential demand of the entire town, once again based on demographics and competitive analysis. It may be possible to operate a new store in the same town without taking market share away from the existing location.