Red Lobster Harvard Case Solution & Analysis

Red Lobster Case Solution

red lobster case solution

red lobster case solution

Problem Identification:

The marketing team of Red Lobster had made a research study to expose some psychographic

segments. The new findings of the marketing team gave Lopdrup an insight about customer

segments. Lopdrup was surprised by the segmentation study and expected that this situation

could be an opportunity to enlarge that segment further.

The study reveals the new customer segment, Experiential, who were the prospect for the

company and expected as the best customers for a casual dining chain. Experiential also

considered as the most profitable customer segment. Therefore, in order to get the better results,

Lopdrup wanted to respond appropriately to this segmentation study.

However, Lopdrup required elaborating all options more profoundly which were based on some

considerations such as segmentations, positioning, promotion and etc. Furthermore, before

deciding he was confronted with the situation that whether Red Lobster should change its focus

to serve experiential and what strategies the company would need in order to shift its strategy to

attract the experiential segment.

3. Alternatives:

Staying in the current strategy (ongoing strategy):

Red Lobster should continue its going strategy together by attracting experiential segment group

without making any change. The management should not change its current strategy as it has

proven to be successful, however, the management of Red Lobster could include some

component that could help the company to attract the experiential. In addition, segmentation

should also be remaining the same. The company has currently four large groups of customers

and the current marketing and promotional strategy has helped a lot to bring many customers

from these segments. Therefore, changing its focus to new single segment would not seem

effective. The brand positioning around fresh seafood has been the reason for Red Lobster

success in every segment.

red lobster case analysis

red lobster case analysis

Focusing on the Experiential:

The management of the company should focus on the new customer segment of the market. The

company could implement new strategies to attract the large segment of experiential. The

company should also re-position its brand in order to effectively target the experiential group of

customers. This would require building new marketing and promotional strategies to satisfy the

need of the new market segment. It is expected that the experiential are the best customers to

target for a casual dining and have less price sensitive as compared to other segments. Therefore,

it would be profitable for Red Lobster to expand the business further around experiential.

However, this strategy would require investing heavily to rebuild the new business image.

4. Evaluation of Alternatives:

The first alternative is that the company should focus on its current market segment together

with attracting new segment. The company’s decision of staying on the ongoing strategy would

enable the company to increase its market share and profitability by targeting four segments of

the customers at once. In addition, it would not require investing heavily in making new

strategies. The company could attract experiential by its current positioning and marketing


Furthermore, the management of Red Lobster should focus on adding some key elements in their

current policy in order to effectively target and attract experiential. Adding special wine menu

could help the company to satisfy the desire of experiential. In addition, it would also enable Red

Lobster to continue expanding its business without making any significant change in its strategy

nor it would require re-positioning its brand image. The company would benefit to satisfy the

wants of both current customers and the new customers.

The second alternative is to focus on the new customer segment without paying attention to the

current segment. This would require developing and implementing new strategies to successfully

attract the new customers. In addition, the company would also require investing profoundly in

creating new brand image and to renovate its restaurant environment according to the

experiential. However, it would be difficult and challenging for the company to make the new

image as it would cause employees reluctance to change and turnover. The company had

recently changed and repositioned its brand image therefore, it would be difficult for the

employees to accept the change on such sudden basis.

Furthermore, the company would also be required to give up its significantly profitable business

and might lose loyal customers’ trust and attention and cased negative image in the market.

Moreover, experiential have high culinary standards and high service and atmosphere

expectation, therefore, the company would also change its restaurant’s atmosphere. Red Lobster

may also require new and high competent staff that could provide high standard of service to the

new customer segment. The new positioning would also need to build in the mind of experiential

so as to present the excellent dining experience. The new marketing and advertising strategies

would also need to be developing to target the experiential customers.

However, the company would be allowed to reduce its price promotions since experiential are

less sensitive to price thus, the company would be able to charge the desire prices. Finally, Red

Lobster would require adding more and special items in its menu card which may be create

complex situation for the company.

Therefore, after evaluating both the alternatives, it is concluded that the first alternative that is

staying on the ongoing strategy would be beneficial for the company to initiate. This alternative

would help the company to target all the four segments effectively and further increasing its

market share and profitability.

After analyzing the issues and evaluating proposed alternative, it is recommended to the

company that it should stay on its current strategy of focusing all the segments in the market.

Therefore, staying on the ongoing strategy is the best alternative for the company that it should

follow in order to lessen the chances of facing complex situation. By applying this strategy, the

company would be able to significantly increase its market share and to serve all the four

segments of the customers. However, the company would only require to add little components

its strategy to attract experiential such as add vine and other items in its menu card.

Furthermore, the company had significantly changed its previous brand image and focused to

provide high quality and fresh seafood item which is also acceptable by experiential. The current

strategy seems suitable for Red Lobster to carry out. In addition, it doesn’t require to further

invest in positioned the brand. Therefore, by staying on its current strategy Red Lobster would be

able to generate higher revenue and to become a major player in the sea food industry.

Red Lobster, 40-year-old chain of seafood restaurants, has just completed a market study to identify opportunities to change their target customer segment. The chain is in the final stages of the 10-year plan for the rejuvenation of the General Director Kim Lopdrup. When he took over as CEO in 2004, closing the chain restaurants and suffer lower same store sales and reduced customer satisfaction. But in 2010, even in a recession, the state of the circuit is improved. Recent market research study showed, surprisingly, that 25% of clients are Red Lobster "experientials," people who come to the "good evening" and not traditional customer core Red Lobster, which has come from the craving for seafood. If this news is Lopdrup do anything differently?
To increase their effectiveness, color cases should be printed in color. "Hide
by David E. Bell, Jason Riis Source: HBS Premier Case Collection 26 pages. Date Published: September 8, 2010. Prod. #: 511052-PDF-ENG

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