Ch. 7 Business Marketing

Even though businesses produce consumer products they are consumers, too. These products that are purchased are called overhead, they are necessary in keeping the business operating. Businesses that consume products do it out of need unlike and not want. For Hard Rock Cafes the products needed to keep their business running come from several suppliers. Like general consumers, HRC also shop around and compare prices. One of the largest suppliers to domestic HRC’s is Sysco. Sysco produces goods for food service based companies such as meat, cleaning supplies, napkins, aluminum foil, straws and plastic cutlery. By offering a wide variety of products and services to restaurants Sysco can offer a restaurant discounts based on the quantity and frequency of orders.

Hard Rock also consumes services to improve its business like training for its staff. Safety and alcohol training comes from an outside company paid for by HRC. Many times these trainings are required by law but even when they are not HRC chooses to invest this knowledge to its entire staff. Another service HRC purchases in public relations. Hard Rock public relations agencies vary by region and product line but each category has one. The PR company for the Northeast region cafes is different from the PR company for the Las Vegas hotel and Casino.

Supplies for restaurants are expensive. Hard Rock is eager to save money by using less. One way HRC cuts back on waste are by requiring its staff to ask if patrons need napkins and plastic silverware when they pick up to go orders and using smaller inexpensive bags. This is also marketed as better for the environment but is usually out of need to cut cost.

Uniforms are another way HRC loses bug bucks. The purchase of uniforms for the company is a contracted service HRC invest in. New full time employees are given too uniforms for free. Some employees are will stay with the company for many years providing great customer service; others may leave shortly after they’ve been hired. No employees are required to return their uniforms. After seeing high turnover in the restaurant industry some other chain restaurants require uniforms to be returned when the employee leaves or the cost will be taken out of their last check. There are many components of operating a restaurant. They are expensive but necessary. HRC is an example of a company that is doing it right and making money doing it.

Ch. 8 Segmenting and Targeting Markets

Hard Rock International (HRI)  produces different products for different population segments and as the HRI product line grows so does the variety of segmenting markets. For a long time cafes were the cash cows for the brand because they housed the rock shops and merchandise that was sold for large profit margins. The target market for cafes are vacationing young to middle aged married people with and without dependent children.

Souvenirs such as pins and glassware have been marketed to repeat buyers with a collecting habit. Collectors are frequent buyers and they are willing to pay higher than market value for products. Their personality for collection is a sought after trait for marketers. Pin and glassware enthusiast often obtain valuable merchandise particularly city branded items though trading and selling. For example a collector from California may desire a city branded hurricane glass from Fiji but doesn’t want to travel there to get it so the collector will buy t from another collector via the internet.

 Collectors are emotionally attached to the product and brand. They are heavy users or consumers because of the high volume and frequency of their purchases. HRI tries to create heavy users by offering loyalty programs. Pin enthusiasts have their own rewards program (The Pin Club), separate from HRI other frequent buyer program (The All Access Program).  With the Pin Club Card, customers get 10% off every purchase and can preview and purchase specialty pins before they arrive in stores.   

Hard Rock LIVE! is another new product from HRI. Hard Rock LIVE are music venues which have arena style concerts. This product’s target market changes depending on the artist or group playing at the venue. A very established artist like B.B. King will attract an older crowd and an underground rock band would attract young unmarried people without dependents. This particular group has a large disposable income. They are highly involved in music, they frequent music blogs and use social media to follow their favorite bands.

HRI has built new properties where gaming is allowed and many of the new properties also have casinos. Building a resort that include services such as infinity pools, tennis courts, spas, and music venues is a strategy to appeal to a higher end consumer. By having Vegas style shows and gaming, HRI is showing the world that they have the same level of quality as other high end gaming resorts.

Hard Rock wants to move out of the restaurant category and into the gaming and resorts industry. Hard Rock International (HRI) is developing its global image as a luxury brand aimed at tourist seeking a nontraditional yet luxurious experience.

Ch. 11 Developing and Managing Products

Hard Rock International has a 40 year history with many new products and product lines. Early in its existence tee shirts and pins and glassware were the big sellers at every Hard Rock. In the past 10 years, Hard Rock has expanded its company from restaurants to hotels and casinos. The brainstorming for these ideas came from corporate marketer but the success came from loyal consumers.

The launch of Hard Rock brand hotels and casinos were risky investments but if successful would be lucrative. There was definitely brainstorming about the location of the first hotels because location is everything. The first locations were Biloxi, Chicago, Vegas, San Diego, Tampa, Orlando and Hollywood, Florida. All these had casinos by other companies surrounding them except San Diego and Chicago (San Diego and Chicago have no casinos). Building hotels in these places where there is already a demand is logical. There would be little test market analysis because Hard Rock would be fulfilling a need for casual accommodations near higher end hotels. Even if there were already hotels in in these areas adding competition can result in high profits.

Developing casinos would take expertise found outside the Hard Rock company. In 2006 Hard Rock had two established casinos in high traffic gaming cities; Vegas and Biloxi. After seeing high profits at both properties, naturally the company would want to develop new properties. A large amount of capital and the right locations would be needed to have success in the new market. In 2006, The Seminole Tribe from Florida purchased Hard Rock International for 965 million dollars. The Seminole Tribe had many years of experience with casinos and provided both the capital and the know how to develop Hard Rock’s casino business internationally.

After 40 years Hard Rock has is taking larger risk by developing new product lines to add profit to their bottom line. Since 2007 Hard Rock international has added seven hotel and casino properties with seven more coming soon.

Breakfast with Santa

Click here to see what Hard Rock Cafe does for the holidays!
Breakfast with Santa

Ch. 16 Integrated Marketing Communications

To bring attention and interest to its products, Hard Rock Café advertises to its target market: tourist. This can be tourist traveling internationally or domestic. These tourists may know the concept of HRC but need another reason to buy into the brand. In order for HRC to gain tourist dollars they have to build an interest in the brand. HRC knows it target market will do research before they make decisions on where they will dine out, what hotels they will stay at and what activities they will do while on vacation.

Knowing that research will be done is a helpful tool. With information on what popular web sites are used to gather information before making a purchase, HRC can directly advertise on those web sites. For example, to bring attention to a new product line like hotels and casinos, HRC will advertise on travel planning web sites such as expedia and hotwire.com. An average traveler will start their travel planning from several months to a year in advance to “shop around” and find the best prices. Over those months travelers will see many Hard Rock ads and learn more of what perks Hard Rock has to offer.

After tourists are interested in staying at a Hard Rock hotel and resort, Hard Rock must create a target market desire and action. By using glamorous photos, descriptions of the resort and special incentives Hard Rock will create a desire with the consumer making a stay at a Hard Rock property their #1 choice. By continuously pairing the hotel with the casino Hard Rock is creating a desire for something the consumer did not plan of buying.

Eventually, Hard Rock wants the consumer to make a purchase. Depending of the time of year, location and length of stay vacation packages can be several thousand dollars per person. Since it’s a large purchase, consumers may wait for prices to come down, wait for an all-inclusive package that will save them money of air fare or adjust their vacation dates to off peak times. At some point Hard Rock will advertise discounted rates for their vacation spots in order to increase purchases.

Chapter 10 Product Concepts

Each Hard Rock Café has its own retail store called The Rock Shop. The Rock Shops are specialty stores with rock ‘n’ roll themed souvenirs including accessories, apparel, pins and glassware. The product lines with the most depth are apparel and pins. There are many items in each product line. Hard Rock adds to the depth of their product lines to keep the buyer interested in its products and to penetrate new buyers. Some of the most popular items are seasonal pins.

Seasonal pins are made in limited quantities and sold for a limited time. They are made for an event or holiday such as earth day or Thanksgiving. Adding seasonal pins is a way Hard Rock attracts buyers with different preferences. Along with pins, apparel has wide variety of options.

The classic white tee shirt with the Hard Rock brand on the front has always been a big seller. By adding the cafe location to the shirt, adds a feature and a new selling point. Instead of a giving a loved one a souvenir from their vacation, the souvenir becomes an exclusive gift they can’t get anywhere else.

 After guests leave the Rock Shop with their branded souvenirs, they become walking advertisements for the Hard Rock Cafe. They are willing to pay specialty store prices at the Rock Shop because there are only a few Rock Shop locations in the area. The consumer enjoys being a part of a company with high brand equity. They are loyal to the brand because of its quality and global brand awareness.

Ch. 18 Sales Promotion

Companies spend six times more gaining customers than keeping them. One way a business can attract a new customer is with coupons. The goal of the coupon is to introduce the customer to a product and have them repurchase. 85% of coupons can be found in newspapers and magazines; these coupons are called freestanding inserts (FSI).

Hard Rock Café is a part of the 15% of coupon distributors that does not use FSI to gain new customers. HRC sets up its coupons for guests that have already made a purchase. When a guest spends $20 or more at any café, their receipt has a survey code. After they go on line and complete the survey, the guest can print a $5 dollar coupon. This is a great way to gain customer loyalty because the guest knows after their first purchase they will continue to receive $5 off their next purchase.

In addition to coupons HRC has a frequent buyer program; the All Access Card. For $25 a guest can purchase this card and use it at any HRC worldwide. The benefits include a $20 rebate (which can only be used at the café), priority seating and $5 off every time you spend $100. All purchases are added up on the card. Each dollar spent is a point, points never expire and the discount is kept on the card. The All Access Card can be purchased at any café and at hardrock.com.

The goal for any retailer is to get a consumer to repurchase their product. The downside of both of these promotions are guest will never know that they can get a $5 coupon if they never go to a Hard Rock. Since HRC does not use FSI they are not penetrating new markets. While the All Access Card is $25, most frequent buyer programs are free to sign up for and offer similar dollars for points strategy. This may turn people off from buying it and may limit repeat purchases.