BSBMKG515 Conduct a Marketing Audit

Assessment

To achieve competency in this unit you must complete the following assessment
items. All tasks must be submitted together. Tick the boxes to show that each task is
attached.

 Task 1. Marketing Plan Review ☒

 Task 2. Conduct a Marketing Audit and Report ☒

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Student’s Julia Carolina Moraes Student’s
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name Contrucci de Souza ID
Qualification Diploma of Marketing
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Task 1 Marketing Plan Review

Assessment description and requirements

In this Assessment Task, you are required to prepare for a marketing audit by
developing a plan outlining how an internal and external audit can be conducted
within the case study organisation. You will need to review the case study marketing
plan provided with this assessment (Appendix 1), and describe a plan that outlines the
scope, approaches, and timelines for the audits. You will need to clearly identify the
type of marketing audit and format to be used in conducting the audit and collecting
information.

Procedure
1. Using the case study information provided to you (Appendix 1), complete the
following steps by providing dot-point written information to describe:
a. the purpose of the marketing audit, including details about micro and
macro factors that may affect the marketing operations
b. the scope of the marketing audit that is required
c. the methodology required to be used in conducting the audit and when the
audit could occur for the organisation
d. the participants to be involved in the conduct of the audit and what their
involvement would require (their role)
e. the main characteristics of the marketing audit and how they meet the
audit priorities for the organisation
f. the format of and the main elements to be included in the marketing audit
g. write a marketing audit plan, ensuring you present information according
to standard report format, this includes:
o title page
o introduction
o body
o conclusion

Specifications
You must provide:
● a completed marketing plan review, with written information as outlined above
Your assessor will be looking for:
● evidence that you analysed and identified the needs of the case study
● evidence that you have analysed the marketing activities of the organisation
Task 2 Conduct a Marketing Audit and Report

Assessment description and requirements

Using the plan for the organisation developed by you in Assessment Task 1 and the
Marketing Plan (Appendix 1), you need to:
 identify relevant criteria for internal and external marketing audits
 conduct the audits and
 collate the information collected in light of the audit requirements.

Procedure
Using the case study information provided to you (found in Appendix 2), complete the
following steps by providing written information to:
1. Conduct an external audit by describing in both qualitative and quantitative
terms the criteria to be used in the external marketing audit, including:
a. external macro-environmental factors that meet audit requirements
including:
i. economic factors
ii. demographic factors
iii. technological factors
iv. political/legal factors
b. external micro-environmental factors that meet audit requirements,
including:
i. market characteristics
ii. customer needs
iii. competitor factors.

2. Conduct an internal audit.

a. Identify the criteria to be used in the internal marketing audit, including:
existing research data; internal sales data; supply chain management and
logistics.
b. Describe the organisation conducting the marketing in terms of functional
efficiency and internal interface with the organisation.
c. Describe the marketing systems in terms of marketing information,
planning and control.
d. Describe the marketing productivity in terms of profitability and cost
effectiveness.

3. Write a marketing audit report, ensuring you:

Present information according to standard report format, which includes:
o title page
o introduction
o body
 o conclusion and recommendations

N.B. Your report must compare the assumptions from the Marketing Plan with the
actual findings of your audit.
Specifications
You must provide:
● a completed marketing audit report, with written information as outlined above.
Your assessor will be looking for:
● evidence that you analysed and identified the needs of the case study
● evidence that you have analysed the marketing activities of the organisation.

The Appendix is on the next

page.
Appendix 1 – Case Study Information and
Marketing Plan
Appendix 2 – Additional Case Study
documentation
 APPENDIX 1
Case study information

Excerpt from letter of appointment

Ready-made marketing engages you to conduct a marketing audit on their client,
Sarto’s Gourmet Pasta.
● The audit is to cover macro and micro environmental factors, and the internal
marketing operations including the marketing organisation, systems and
productivity.
● Sarto’s will make available existing research data, internal sales data and details
of their supply chain logistics. Your audit is to research the Graceville trading
area and its place in the wider Australian community, while specifically targeting
the pasta restaurant trade.
● Priority of the audit is to uncover the key factors that have inhibited the client’s
ability to achieve the objectives of the market plan.
● The audit is to make findings in relation to the marketing plan, culminating in a
report that compares the marketing plan assumptions with actual findings. It is
expected that the report will follow the outline of the marketing plan.

Meeting with Rose Ready of Ready-Made Marketing

You met with the owner of Ready-Made Marketing, Rose Ready, who explained that
their client had agreed to the marketing audit but wanted an external person, like you,
to conduct it, so that all points of view could be canvassed from an independent
perspective to minimise the chance for subjectivity.
Rose explained that Sarto’s has not achieved the anticipated business objectives, and
the hope is that your audit will uncover why this has happened by investigating the
macro and micro environmental factors affecting the business, as well as the internal
and external influences. The timing of the audit is right in fitting in with the planning
cycle and the availability of relevant data.
Rose stressed that they were looking for a variety of methodologies to be used in the
marketing audit including one-on-one interviews with the key participants, use of
customer focus groups that she could facilitate and research of data available for
market research firms and government agencies.
To assist you with the marketing audit, Rose gave you a copy of the marketing plan
(which begins on the next page) and also provided research data for you to use in your
report, sourced from:
● Australian Bureau of Statistics data
● IBSA World market research
● Australian Treasury reports.
Rose also outlined the key participants, apart from herself, that could be involved in
the audit process. These included:
 Mario Sarto – owner, who could provide reasons behind the decisions and
directions given
 Eric Yeung – accountant, who could provide financial data on costings and
profitability
 Adriana Como – sales and promotions, who could help with the internal
operational problems with the marketing process.
 Marketing Plan
Sarto’s Gourmet Pasta
December 2015

Table of Content

1.0 Executive Summary............................................................................................................ 8

2.0 Situation Analysis............................................................................................................... 9
2.1 Market Summary......................................................................................................... 9
2.2 SWOT Analysis........................................................................................................... 11
2.3 Competition............................................................................................................... 12
2.4 Service Offering......................................................................................................... 13
2.5 Keys to Success.......................................................................................................... 14
3.0 Marketing Strategy........................................................................................................... 16
3.1 Mission...................................................................................................................... 16
3.2 Marketing Objectives................................................................................................. 16
3.3 Financial Objectives................................................................................................... 16
3.4 Target Marketing....................................................................................................... 16
3.5 Positioning................................................................................................................. 17
3.6 Strategy Pyramids...................................................................................................... 17
3.7 Marketing Mix........................................................................................................... 18
3.8 Marketing Research................................................................................................... 18
4.0 Financials, Budgets, and Forecasts...................................................................................19
4.1 Break-even Analysis................................................................................................... 19
4.2 Sales Forecast............................................................................................................ 19
4.3 Expense Forecast....................................................................................................... 20
5.0 Controls............................................................................................................................ 21
5.1 Implementation Kmstones........................................................................................ 21
5.2 Marketing Organisation............................................................................................. 22
5.3 Contingency Planning................................................................................................ 22
1.0 Executive Summary
Sarto’s Gourmet Pasta will be the leading gourmet pasta restaurant in Graceville, leveraging
the rapidly developing consumer demand for pasta and a growing customer base. The
signature line of innovative, premium, pasta dishes include pesto with smoked salmon,
pancetta and peas linguini in an alfredo sauce, and fresh mussels and clams in a marinara
sauce. Sarto’s Gourmet Pasta also serves distinct desserts and beverages including alcohol.
Sarto’s Gourmet Pasta will reinvent the sit-down and home-delivery pasta experience for
individuals and families, with high discretionary income by selling high quality, innovative
exotic products at a reasonable price, designing tasteful, convenient locations, and providing
industry-benchmark customer service.
In order to grow at a rate consistent with our objectives, Sarto’s is offering an additional
$500,000 in equity. Existing members will be given the first option to subscribe to the
additional equity to allow each of them to maintain their percentage of ownership. The portion
not subscribed by existing members will be available for prospective new investors.
Note: This marketing plan has been prepared for Trans-Australian Financiers by M. Sarto in
conjunction with Ready-Made Marketing, as part of an application for finance. Ready-Made
Marketing have recommended a marketing audit be done each year to assess the effectiveness
and achievements of the plan, and make adjustments where required.
2.0 Situation Analysis
Sarto’s Gourmet Pasta is close to entering their third year of operation. The restaurant has
been well received, and marketing is now critical to its continued success and future
profitability. The store offers an extensive offering of gourmet pastas. The basic market need is
to offer individuals, families, and take away customers fresh, creative, exotic, attractive, pasta
dishes and desserts. Sarto’s uses homemade pasta, organic vegetables, and premium meats
and cheeses.

2.1 Market Summary

Sarto’s Gourmet Pasta possess good information about the market and know a great deal
about the common attributes of our most prized and loyal customers. Sarto’s Gourmet Pasta
will leverage this information to better understand who is served, their specific needs, and
how Sarto’s can better communicate with them.

Market Analysis

2.1.1 Market Demographics

The profile for Sarto’s Gourmet Pasta's customer consists of the following geographic,
demographic, and behaviour factors based on a local Chamber of Commerce report:
● Overview Graceville:

○ Large % of families.
○ Area growing at 10% per year.
○ Household income – increasing steadily.
○ Regional distribution – Graceville growing faster that the city and state at 7%.
● Geographic:

○ Our immediate geographic target is the area of Graceville with a population of

130,000.
○ A 30 km geographic area is in need of our services.
○ The total targeted population is estimated at 46,000.
● Demographics:

○ Male and female.

○ Ages 25-50, this is the segment that makes up 53% of the Graceville market
according to the Graceville Chamber of Commerce.
○ Young professionals who live close to the location.
○ Have attended secondary and have further education.
 ○ An income over $60,000.
○ Eat out several times a week.
○ Tend to patronise higher quality restaurants.
● Behaviour factors:

○ Enjoy a high quality meal without the mess of making it themselves.

○ There is value attributed to the appearance or presentation of food.

2.1.2 Market Needs

Sarto’s Gourmet Pasta is providing its customers with a wide selection of high-quality pasta
dishes that are unique and pleasing in presentation and utilises top-shelf ingredients. Sarto’s
Gourmet Pasta seeks to fulfil the following benefits that are important to their customers.
● Selection – A wide choice of pasta options.

● Accessibility – The patron can gain access to the restaurant with minimal waits and can
choose the option of dine in or take out away. There is a planned ‘Park ‘n Ride’ to be
built adjacent to the property providing parking for patrons at night.
● Customer service – The patron will be impressed with the level of attention that they
receive.
● Competitive pricing – All products/services will be competitively priced relative to
comparable high-end pasta/Italian restaurants.

Above all, Sarto’s believes that quality tasting food, an exotic assortment and range of pastas,
in a family-based dine-in environment is the key to our customer’s needs and wants.

2.1.3 Market Trends

The market trend for restaurants is headed toward a more sophisticated customer. The
restaurant patron today relative to yesterday is more sophisticated in a number of different
ways.
● Food quality – The preference for high-quality ingredients is increasing as customers are
learning to appreciate the qualitative differences.
● Presentation/appearance – As presentation of an element of the culinary experience
becomes more pervasive, patrons are learning to appreciate this aspect of the industry.
● Selection – People are demanding a larger selection of foods, they are no longer
accepting a limited menu.

The reason for this trend is that within the last couple of years the restaurant offerings have
increased, providing customers with new choices. Restaurant patrons no longer need to accept
a limited number of options. With more choices, patrons have become more sophisticated.
This trend is intuitive as you can observe a more sophisticated restaurant patron in larger city
markets such as Sydney or Melbourne where there are more choices available.
Sarto’s strongly believe that customers are more interested in exotic taste than any other
issue. This will be why they shop with us and become loyal patrons.

2.1.4 Market Growth

In 2008, the global pasta market reached $10 billion dollars. Pasta sales are estimated to grow
by at least 10% for the next few years. This growth can be attributed to several different
factors. While not all pasta is ‘good for you’, particularly the cream-based sauces, pasta can be
very tasty. Sarto’s sees no real substitute for what it provides – ‘Impossible to substitute this
taste and offer’, according to Sarto’s owner and founder, M. Sarto.
Another variable that is contributing to market growth is an increase in the number of hours
our demographic is working. Over the last five years the number of hours spent at work of our
archetype customer has significantly increased. As the number of work hours increases, there
is a high correlation of people that eat out at restaurants. This is intuitively explained by the
fact that with a limited number of hours available each day, people have less time to prepare
their meals and eating out is one way to maximise their time.

2.1.5 Economy
Based on economic forecasts, Sarto’s Gourmet Pasta assume that interest rates are coming
down and that this reduction will create more disposable income and more money available
for families to eat out. In terms of available credit, Sarto’s assumes that this will not change in
the foreseeable future and will not be a threat to the potential sales. The same assumption is
made about employment levels, where Sarto’s assumes that unemployment levels remain the
same at 5.1%.

2.1.6 Political
From research carried out, Sarto’s identify that the government focus and emphasis in future
legislative direction will be about ‘work/life balance’, which Sarto’s see a positive for their
business model. Sarto’s, as a business operating in Australia, will abide by the law in all its
dealings and comply with legislation that impacts on its business activities.

2.2 SWOT Analysis

The following SWOT analysis captures the key strengths and weaknesses within the company,
and describes the opportunities and threats facing Sarto’s Gourmet Pasta.

2.2.1 Strengths
● Strong relationships with vendors that offer high-quality ingredients and fast/frequent
delivery schedules.
● Excellent staff who are highly skilled at food preparation.
● Great retail space that is bright, clean, and located in an upscale mall, suburban
neighbourhood, or urban retail district.
 ● High customer loyalty among repeat customers.
● High-quality food offerings that exceed competitors offerings in quality, creativity and
presentation.
● Ready supply of organic food in the area not like other states.

2.2.2 Weaknesses
● Sarto’s name lacks brand equity.

● A limited marketing budget to develop brand awareness.

● The struggle to continually appear to be cutting edge.

2.2.3 Opportunities
● Growing market with a significant percentage of the target market still not aware that
Sarto’s Gourmet Pasta exists.

● Increasing sales opportunities in family business.

● In the expansion, Sarto’s will have the ability to spread overhead over multiple revenue
centres. Sarto’s will be able to spread the management overhead costs among the
multiple stores, decreasing the fixed costs per store.

2.2.4 Threats
● Competition from local restaurants that respond to Sarto’s Gourmet Pasta’s exotic
offerings.

● Gourmet pasta restaurant chains found in other markets coming to Graceville.

● A slump in the economy reducing customer’s disposable income spent on eating out.

2.3 Competition

National Competition
● Pasta Buzz: offers consumers their choice of noodles, sauces, and ingredients, allowing
the customer to assemble their dish as they wish. Food quality is average.

● Pasta Bite: has a limited selection but the dishes are assembled with high-quality
ingredients. The price point is high, but the food is quite good.

● Pasta Mia: offers pasta that is reasonably fresh, reasonably innovative and at a lower
price point. The company was sold a few years ago, and consequently the direction of
management has been stagnant lately and has resulted in excessive employee turnover.

● Verdi Pasta: has medium-priced pasta dishes that use average ingredients, no creativity,
and less than average store atmosphere. Sarto’s is not sure how this company has been
able to grow in size as their whole product is mediocre at best.
It is Sarto’s belief that the existing unwritten code of business activity, where each chain stays
within their founding geographic market place, will remain in the foreseeable future.

Local Competition
● Stella’s: This is an upscale Italian restaurant that has a limited selection of pasta dishes.
Although the selection is limited and pricey, the dishes are quite good.
● Peri Pasta: An Italian restaurant with a decent pasta selection, however quality is
inconsistent.
● Niccolo: An upscale restaurant with a large wine selection and good salads. Everything
else is mediocre at best and over-priced. Service can often be poor.

Sarto’s do not see the competitors changing their marketing strategy or product offer in the
foreseeable future.

Growth and Share

Competitor Price Growth Rate Market Share
Stella's $25 8% 16%
Peri Pasta $19 5% 10%
Niccolo $22 7% 12%
Average $22.00 7% 13%
Total 38%

Growth and Share Analysis

Potential Customers
Market
Analysis Growth 2009 2010 2011 2012 2013
Individuals 6% 12,000 12,720 13,483 14,292 15,150
Take Away 10% 9,000 9,900 10,890 11,979 13,177
Family 12% 25,000 28,000 31,360 35,123 39,338
Total 9.27% 46,000 50,620 55,733 61,394 67,665
2.4 Service Offering
Sarto’s has created gourmet pastas that are differentiated and superior to competitors.
Customers can taste the quality and freshness of the product in every bite. The following are
characteristics of the product.
● Sarto’s dough for the pasta is made with Italian semolina flour.

● Cheeses are all imported.

● Vegetables are organic and fresh with three shipments a week.

● Meats are all top-shelf varieties, organic when possible.

At Sarto’s, food is not a product; the experience of dining is a service. Sarto’s prides
themselves on providing service that is on par with fine dining.
Sarto’s will ensure that all aspects that are involved in the delivery of satisfaction to the
customer will work using an integrated approach.

At a Glance – The Prototype Sarto’s Store:

● Location: an upscale mall, suburban neighbourhood, or urban retail district.

● Design: bright and clean.

● Size: 110–160 m2.

● Employees: 7–10 full-time plus casuals

● Seating: 35–45.

● Types of transactions: 80% dine in, 20% take away.

2.5 Keys to Success

Location, Location, Location.

Sarto’s site selection criteria are critical to success. Jeff Hardy, former director of Real Estate,
Coffee Club, helped us identify the following site selection criteria.
● Daytime and evening populations.

● Shopping patterns.

● Car counts.

● Household income levels.

2.6 Critical Issues

Sarto’s Gourmet Pasta is still in the speculative stage as a franchise concept with one store
starting as the prototype. Its critical issues are the following.
● Continue to take a modest fiscal approach; expand at a reasonable rate, not for the sake
of expansion in itself, but because it is economically wise to.
● Use of the phone ordering system to underpin the direct selling activities in take away
food.
3.0 Marketing Strategy
Sarto’s advertising budget is very limited, so the advertising program is simple. Sarto’s will do
direct mail and local advertising, with inserts in the BMag likely to be the most successful of
the campaigns.
Lastly, Sarto’s will leverage personal relationships to get articles of Sarto’s in the BMag.
Previous friends who have had their restaurant featured in the BMag have seen a dramatic
increase of sales immediately after the article was published in the BMag.

3.1 Mission
Sarto’s Gourmet Pasta’s mission is to provide families with the finest pasta meal and dining
experience. We exist to attract and maintain customers. When we adhere to this maxim,
everything else will fall into place. Our services will exceed the expectations of our customers.

3.2 Marketing Objectives

1. Maintain positive, steady, growth each month.
2. Generate at least $45,000 in sales per month.
3. Experience an increase in new customers who are turned into long-term customers.
4. Realise a growth strategy of one store per year.

3.3 Financial Objectives

1. A double-digit growth rate for each future year.
2. Reduce the overhead per store through disciplined growth.
3. Continue to decrease the variable costs associated with food production.

3.4 Target Marketing

The market can be segmented into three target populations:
● Individuals: people that dine in by themselves.

● Families: a group of people, either friends or a group of nuclear relatives dining

together.
● Take out: people that prefer to eat Sarto’s food in their home or at a different location
than the actual restaurant.
The Sarto’s customers are hungry individuals between the ages of 25 and 50, making up 53%
of Graceville (Graceville Chamber of Commerce). Age is not the most defined demographic of
this customer base; all age groups enjoy pasta. The most defined characteristic of the target
market is income. Gourmet pasta stores have been very successful in high rent, mixed-use
urban areas. These areas have a large day and night population consisting of business people
and families who have household disposable incomes over $40,000.
Combining several key demographic factors, Sarto’s arrives at a profile of the primary
customer as follows:
● Sophisticated families who live nearby.

● Young professionals who work close to the location.

● Shoppers who patronise the high rent stores.

3.5 Positioning
Sarto’s Gourmet Pasta will position itself as a reasonably priced, upscale, gourmet pasta
restaurant. Graceville consumers who appreciate high-quality food will recognise the value
and unique offerings of Sarto’s Gourmet Pasta. Patrons will include singles and families, ages
25–50.
Sarto’s Gourmet Pasta positioning will leverage their competitive edge:
● Product. The product will have the freshest ingredients including homemade pasta,
imported cheeses, organic vegetables, and top-shelf meats. The product will also be
developed to enhance presentation, everything will be aesthetically pleasing.
● Service. Santo’s will only employ experienced cooking staff who can create meals that
customers will find outstanding to the taste.

By offering a superior product, Sarto’s will excel relative to the competition.

3.6 Strategy Pyramids

The single objective is to position Sarto’s as the premier gourmet pasta restaurant in the
Graceville area, commanding a majority of the market share within five years. The marketing
strategy will seek to first create customer awareness regarding their services offered, develop
that customer base, and work toward building customer loyalty and referrals.
The message that Sarto’s will seek to communicate is that Sarto’s offers the freshest, most
creative, reasonably priced, gourmet pasta in Graceville. This message will be communicated
through a variety of methods. The first will be direct mail.
The direct mail campaign will be a way to communicate directly with the consumer. Sarto’s will
also use ads and inserts in the BMag. This will be particularly effective because the BMag is a
popular local paper that is consulted when people are looking for things to do in Graceville.
The last method for communicating Sarto’s message is through a grassroots PR campaign. This
campaign will leverage networking relationships with people on staff of the BMag to get a
couple of articles written about Sarto’s. One will be from the business point of view, talking
about the opening of the restaurant and the people behind the venture. This is likely to be run
in the business section. The second article will be a food review. In speaking with many
different retailers and restaurateurs, significant increases of traffic followed articles in the
BMag. Because of this level of effectiveness and low/zero cost, Sarto’s will work hard to get
press in the BMag.
Sarto’s also believe that the local patrons far prefer to receive information from the restaurant
via flyers in the letterbox.

3.7 Marketing Mix

Sarto’s marketing mix is comprised of these following approaches to pricing, distribution,
advertising and promotion, and customer service.
● Pricing – Sarto’s pricing scheme is that the product cost is 35% of the total retail price.

● Distribution – Sarto’s food will be distributed through a take away model where
customers can phone in their order and come to the restaurant to pick it up, come into
the restaurant, place the take out order and wait for it to be completed, or come in and
dine at the restaurant.
● Advertising and promotion – The most successful advertising will be adverts and inserts
in the BMag as well as a PR campaign of informational articles and reviews also within
the BMag. Promotions will take the form of in restaurant entertainment and ‘free meal’
giveaways. Heavy emphasis on promoting the brand and not just advertising products.
● Customer service – Sarto’s philosophy is that whatever needs to be done to make the
customer happy must occur, this investment will pay off with a fiercely loyal customer
base who is extremely vocal to their friends with referrals.

3.8 Product development

It is envisaged that new products will be developed on a regular basis in thine with menu
changes which is targeted at every three months. The plan for product testing is to offer ‘free
meals’ to regular customers, staff and their families. By getting feedback from these people,
changes can be made or products ‘canned’ so that only tested and proven products make it
onto the menu list.
3.9 Marketing Research
During the initial phases of the marketing plan development, several focus groups were held to
gain insight into a variety of patrons of restaurants. These focus groups provided useful insight
into the decisions, and decision making processes, of consumers.
An additional source of market research that is dynamic is a feedback mechanism based on a
suggestion card system. The suggestion card system has several statements that patrons are
asked to rate in terms of a given scale. There are also several open ended questions that allow
the customer to freely offer constructive criticism or praise. Sarto’s will work hard to
implement reasonable suggestions in order to improve their service offerings as well as show
their commitment to the customer that their suggestions are valued.
The last source of market research is competitive analysis/appreciation. Sarto’s will continually
patronise local restaurants for two reasons. The first is for competitive analysis, providing
Sarto’s with timely information regarding other restaurant's service offering. The second
reason is that local business owners, particularly restaurant owners, are often part of an
informal fraternal organisation where they support each other's business.
Access to ongoing market research will be achieved via the publications from the Restaurant
Association which Sarto’s has become a member of recently.
4.0 Financials, Budgets, and Forecasts
This section will offer a financial overview of Sarto’s Gourmet Pasta as it relates to the
marketing activities. Sarto’s will address Break-even Analysis, sales forecasts, expense
forecasts, and how those link to the marketing strategy.

4.1 Break-even Analysis

The break-even analysis indicates that $45,000 will be needed in monthly revenue to reach the
break-even point.

Break-even Analysis
Sales 35000 40000 45000 50000 55000
Fixed Costs 25650 25650 25650 25650 25650
Variable Costs 15050 17200 19350 21500 23650
Total Cost 40700 42850 45000 47150 49300
Profit -5700 -2850 0 2850 5700
Variable Costs 43% 43% 43% 43% 43%

Costs
Sales

4.2 Sales Forecast

The first year will be used to get the restaurant up and running. By year two things will get
busier. Sales will gradually increase with profitability being reached by the beginning of year
two.
Year 1 - $450,000 Year 2 - $591,000 Year 3 $814,500

4.3 Expense Forecast

Marketing expenses are to be budgeted so that they are ramped up in the first year.
Restaurants typically have increased business in Autumn. This generally occurs because during
the summer, when the weather is nice and it does not get dark until late, people tend to eat
out less.
Annually approx. $25,000

Ongoing sales forecasting will be to use the services of Ready-Made Marketing who will advise
on all aspects of the marketing function that Sarto’s will be engaged with. Ready-Made
Marketing will also be given access to the marketing cost data so that they can periodically
examine and validate marketing costs in line with industry benchmarks.

Profitability outcomes budget

Profitability outcomes Average Price Gross Profit %
Pasta $ 22.00 55%
Beverages $ 6.00 70%
Overall 65%
5.0 Controls
The purpose of Sarto’s Gourmet Pasta’s marketing plan is to serve as a guide for the
organisation.

5.1 Implementation Milestones

The following milestones identify the key marketing programs. It is important to accomplish
each one on time, and on budget.

Milestones

Advertising Start Date End Date Budget Manager Department

Marketing plan 1/01/2016 2/01/2016 $0 Mario Department

completion

Banner ad 1/02/2016 4/01/2016 $3,754 Mario Department

campaign #1

Banner ad 1/10/2016 1/01/2016 $4,900 Mario Department

campaign #2

Total Advertising $8,654

Budget

PR Start Date End Date Budget Manager Department

Other $0

Other $0

Total PR Budget $0

Direct Marketing Start Date End Date Budget Manager Department

Direct mail 1/10/2016 1/04/2016 $1,689 Mario Department

campaign #1

Insert campaign #1 1/10/2016 1/04/2016 $2,252 Mario Department

Direct mail 1/10/2016 1/01/2017 $2,205 Mario Department

campaign #2

Insert campaign #2 1/10/2016 1/01/2017 $2,940 Mario Department

Total Direct $9,086

Marketing Budget

Totals $17,740
5.2 Marketing Organisation
Mario Sarto, the owner, is primarily responsible for marketing activities and has the authority
and responsibility over all company activities that affect customer’s satisfaction. This is in
addition to his other responsibilities. Ready-made marketing have been engaged to provide
marketing services as required, and some outside resources for graphic design work, and
creativity are also to be utilised.
Feedback will come from in-store feedback forms and local customer surveys

5.3 Contingency Planning

Difficulties and risks:
● Problems generating visibility.

● Overly aggressive and debilitating actions by competitors.

● An entry into the Graceville market of an already existing, franchised gourmet pasta
restaurant.

Worst case risks may include:

● Determining that the business cannot support itself on an ongoing basis.

● Having to liquidate equipment or intellectual property to cover liabilities.

 APPENDIX 2

Additional Case study information

Excerpt from letter of appointment

Ready-made marketing engages you to conduct a marketing audit on their client Sarto’s
Gourmet Pasta.
 You are to use various methodologies to obtain the widest possible view of Sarto’s
marketing operations including interviews with the key participants.

Excerpt from meeting with Rose Ready of Ready-Made Marketing

Rose stressed that they were looking for a variety of methodologies to be used in the
marketing audit including one-on-one interviews with the key participants, use of customer
focus groups that she could facilitate, and research of data available for market research firms
and government agencies.
You met with the owner of Ready-Made Marketing, Rose Ready, who explained that their
client had agreed to the marketing audit but wanted an external person like you to conduct it
so that all points of view could be canvassed from an independent perspective to minimise the
chance for subjectivity.
When you asked for an opinion why she thought that the client had not achieved the
objectives, Rose replied that there was no one big issue, but that many little factors had an
accumulative affect on the overall result.
You were wanted to understand the micro-environmental factors impacting on Sarto’s
including the buyer and consumer behaviour, competition and market demand and so asked
Rose a series of questions.
She spoke for a while about Ready-Made Marketing’s role with the owner Mario Sarto and the
fact that he made all the decisions relating to the marketing, and mostly without any
consultation with them. Rose accepted the position but feel that it was not always in the best
interests of Sarto’s business or its customers. For instance, Mario had rejected the idea of
converting the take away ordering system to the new internet based technology. Her own
experience was that the staff, while being very competent cooks, were not skilled in telephone
sales anyway.
Rose was particularly disappointed that Mario did not take up the offer to engage a freelance
PR specialist that she introduced to him after Mario’s friends at Bmag left the magazine. There
was no write up of the business at all for the entire first year.
Rose indicated that Mario believed that all the business needed was the delivery of regular
flyers in local letterboxes, but according to Rose the feedback from the surveys showed that
the majority of customers thought that flyers were mostly junk mail anyway.
Rose had hoped to get information from the accountant about marketing costs but that just
did not happen.

Meeting with Mario Sarto and the accountant

Mario was happy to meet with you to discuss the business and marketing performance of
Sarto’s Gourmet Pasta and invited his accountant, Eric Yeung, to the meeting to help with
answering some of the financial questions.
When asked for an overview of the performance of the business, Mario explained that it has
been very difficult from the start. He spoke about the fact that the government had not built
the ‘Park & Ride’ parking area as planned and had stopped the project for another year. This
Mario said had a big impact on people having access to the restaurant at night.
Mario also explained that Stella’s, one of his local competitors, had built a large 30 seat
outdoor eating area and that it seemed to be full every time he went past and looked in. Also
one of the franchise chains, Pasta Bite, had opened up in the adjacent suburb giving the local
customers greater options in pasta.
All this new activity had put pressure on sales, which lead Mario to drop prices on pasta
products. The accountant confirmed what Mario had said with the statement that pasta gross
profit % was only 45%. Mario explained that his strategy to deal with the slow sales was to
make the flyers more single product promotion rather than promoting the band and the
assortment offer. As far as Mario was concerned advertising and promotion should be directed
at getting next week’s sales and nothing more.
When Mario spoke about the flyer, Eric said that there had been a huge increase in flyer unit
costs. He believed it was the short print runs and the use of full gloss colour that was causing
it. Mario explained that he needed the high gloss to show his pasta to the best advantage and
short print runs because he was offering different ‘specials’ every week. Eric then said that
according to the figures, it was the take away business that was really growing not the family
groups and family group specials that Mario was targeting with his advertising in Bmag. It
seemed that these family sit down specials were bringing down the profitability of the
business.
Eric explained that he received all the financial information about the business in preparation
for Sarto’s tax returns. He then produced the actual sales for 2016 which showed.

Segment Budget – 2016 Actual – 2016

Individuals 120,000 121,000

Families 150,000 112,000
Take away 180,000 203,000
Total 450,000 436,000

When you asked about new product development and forecasting sales Mario said that it was
too expensive to get market research done and so just used the accountant’s tax figures and
his own ‘gut feel’ to determine the sales forecast.
Mario’s response to your question about charging different prices for deliveries, was to say
that it just good business to charge the rich folk that lived in the gated estate more because
they could afford it.

Meeting with Adriana Como

Adriana was in charge of the sales and promotions for Sarto’s but worked as a supervisor in the
kitchen as well. You asked her about issues she was facing in terms of the sales and marketing
operation.
She admitted that her skills and qualifications were more in kitchen management than sales,
but Mario had asked her to carry out this function. She said one of the biggest problems was
that the phone ordering system was constructed in the kitchen next to the cook with the most
responsibility to compile and check every meal. She said it created real logistics problems in
dealing with take away orders.
When you asked about new product development, she went on to explain that new products
were developed based on Mario’s assessment of how exotic the new product was or how easy
it was to make. Mario felt that testing new products by giving them away was too costly and
counterproductive to increasing sales.
In a comment about accessing research data, she explained that there was plenty of research
available in the Restaurant association’s monthly magazine, but Mario just left that for
magazine for the staff in the lunch room and never consulted it.
Another issue was that there was no real coordination between the timing of the promotional
flyers and the preparation in terms of having sufficient stock purchases. Mario and the printer
would create a new weekly specials flyer, and sometimes the first she knew about it was when
the customer would present at the restaurant ordering one.

Research reports
In trying to understand the macro factors affecting Sarto’s, Rose researched the following
reports to obtain findings on the demographic, economic, ethical, geographic, political/legal,
social/cultural, technological influences. You looked through these research reports that Rose
Ready had given you to discover the following.

Australian Bureau of Statistics (ABS)

 ABS statistics on age distribution – Findings are the same as the marketing plan.
 ABS statistics on growth rates – Findings: Growth in young families with a government
incentive on new births and an increase in retirees.
 ABS statistics on regional distribution of the population – Findings: Increasing in the
Graceville area but were mostly retirees.
 ABS statistics on the population size – 130,000.

Australian Treasury report

 Treasury’s current interest rates – Findings: Rising incrementally throughout the year.
  Treasury’s current levels of credit availability – Findings: Tightening on credit card limits.
 Treasury’s current unemployment levels – Findings: Unemployment falling due to more
opportunities created by mothers leaving the workforce.

IBSA World – Market research 2014

 IBSA World industry report on strategies adopted by each of the major competitors –
Findings: Expansion by the chains into interstate markets – Price war created due to
reducing sales and fight for market share.
 IBSA World industry report material shortages – Findings: Drought conditions in most
states sees local produce from Queensland being sent to Sydney creating local shortage.
 IBSA World industry report on market demand – Findings: Steady.
 IBSA World industry report evolving needs and satisfactions being sought by the buyers
in this market – Findings: Growing need for healthy options like salads, and more
information on ingredients.
 IBSA World industry report substitutes for this product – Findings: Supermarkets
introducing a range of pre-packaged ‘heat & eat’ pasta products.
 Household Income survey – Findings: Steady, no change.
 Political and legal – Findings: Employees working longer with emphasis on economic
growth. New legislation relating to labelling on take-away products delivered to
consumers.

Focus Group
You organised a focus group from the local community and from some of Sarto’s regular
customers. The following consensus was reached among the participants.
 Group want convenience products and more healthy options.
 Take away and eat at home was the preferred dining option rather than eat out.
 Pasta products should be designed to be low fat. Tomato-based sauces rather than
cream.
 Customers want to order via the internet and not be stressed out by the phone system
with its delays and difficult to understand accents and noise.
 Customers prefer fewer flyers which they saw as ‘junk mail’, and the flyer should be
more informative about the ingredients and offer a full menu.
 Some customers questioned the ethics of Sarto’s Gourmet Pasta, who charged more for
delivery into the neighbouring ‘gated estate’ than to every other home delivery
customer.
 Comment ‘They may be great cooks, but they don’t know how to handle telephone
sales’.
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 2017
Content

Sarto’s Gourmet Pasta

– Task 1
BSBMKG511 – CONDUCT A MARKETING AUDIT
JÚLIA CAROLINA MORAES CONTRUCCI DE SOUZA
s
1. INTRODUCTION.................................................................................37
2. PURPOSE........................................................................................... 38
2.1 GENERAL MARKETING AUDIT PURPOSE.....................................38
2.2 SARTO'S GOURMET PASTA MARKETING AUDIT PURPOSE...........38
2.3 SARTO'S OBJECTIVES.................................................................38
2.3.1 SINGLE OBJECTIVE........................................................................38
2.3.2 MARKETING................................................................................... 38
2.3.3 FINANCIAL..................................................................................... 39
2.4 SARTO'S GOURMET PASTA - SCENARIO AND TIMING.................39
3. SCOPE............................................................................................... 40
4. METHODOLOGY.................................................................................41
4.1 PESTLE AND FIVE FORCE ANALYSIS...........................................41
4.2 SWOT......................................................................................... 41
5. PARTICIPANTS...................................................................................43
6. CHARACTERISTICS............................................................................ 44
6.1 Comprehensive..........................................................................44
6.2 Systematic.................................................................................44
6.3 Independent.............................................................................. 44
6.4 Periodic...................................................................................... 44
7. ELEMENTS......................................................................................... 45
7. 1.1 ENVIRONMENT............................................................................. 45
7.1.2 ECONOMIC FACTORS.....................................................................45
7.1.3 TECHNOLOGICAL FACTORS...........................................................45
7.1.4 SOCIAL FACTORS..........................................................................45
7.1.5 POLITICAL-LEGAL FACTORS...........................................................46
7.2 STRATEGY..................................................................................46
7.3 ORGANISATION..........................................................................46
7.4 SYSTEMS.................................................................................... 46
7.5 PRODUCTIVITY...........................................................................46
7.6 FUNCTION.................................................................................. 47
8. REQUEST........................................................................................... 49
1. INTRODUCTION
The presented document is a marketing audit plan requested by Rose
Ready, owner of Ready-Made Marketing, for the restaurant Sarto's Gourmet
Pasta, her client. In order to obtain an independent third-part perspective of
the current marketing activities performed by the restaurant, Mario Sarto,
owner of Sarto's Gourmet Pasta, insisted on an external auditor.
2. PURPOSE
2.1 GENERAL MARKETING AUDIT
PURPOSE
As previously stated, the main purpose of a marketing audit is to review the
current marketing activities of an establishment. This is done so that:
 environmental factors - macro, micro or both - which could be
affecting the business can be investigated.
In general terms, macro-environmental are aspects which cannot be
controlled by the business, such as economic, demographic, technological,
political-legal and social. Consequently, the micro-environmental factors
are: market, competitors, customers, suppliers, dealers and distributors.
 marketing activities can be mapped;
The mapping of marketing activities consists of analysing closely the
internal processes and how those operations contribute to the failure or
success of the company.
 support new advisement for marketing strategy
Based on its findings, a marketing audit can be the foundation for a new
marketing strategy that will correct faulty or overlooked processes leading
to an improvement of the business's productivity, systems and profit.

2.2 SARTO'S GOURMET PASTA

MARKETING AUDIT PURPOSE
In the case of Sarto's Gourmet Pasta, the main objective is to disclose the
reasons for which the restaurant is not achieving its anticipated business
goals, as previously stated by Rose Ready.

2.3 SARTO'S OBJECTIVES

2.3.1 SINGLE OBJECTIVE

According to the restaurant's marketing plan, prepared as part of an
application for finance to the Trans-Australian Financiers in December of
2015, page 17, Sarto's singled out the business objective of holding the
position of premier gourmet pasta restaurant in the Graceville area, where it
is located, commanding most of, much of the market share within five
years.
2.3.2 MARKETING
The marketing plan also emphasize, on page 16, the following marketing
objectives:
 Maintain positive, steady growth each month;
 Generate at least $45,000 in sales per month;
 Experience an increase in new customers who are turned into long-
term customers;
 Realize a growth strategy of one store per year.

2.3.3 FINANCIAL
On the same page, its financial objectives are described as:

 A double-digit growth rate for each future year;

 Reduce the overhead per store through disciplined growth;
 Continue to decrease the variable costs associated with food
production.

2.4 SARTO'S GOURMET PASTA - SCENARIO

AND TIMING
Close to entering their third year of operation at that point, the company
believed that marketing was critical to its continued success and future
profitability - once the store had been well received by the market with an
extensive offering of individuals, families and take away gourmet pastas.
3. SCOPE
As requested by Rose Ready, the marketing audit will gather both internal
and external information about the company and its environment.
Objectives, strategies, marketing organization, system and productivity will
be under the scope of this marketing audit to better analyses the scenario in
which is preventing Sarto's from fulfilling its business goals.
In addition to that a detailed research of the Graceville trading area for the
pasta restaurants, as well as its place in the wider Australia community, will
also be done.
4. METHODOLOGY
This marketing audit, with the impartial perspective in mind, will be
composed of primary sources only combining both qualitative and
quantitative evidence, such as data research from the Australian Bureau of
Statistics (ABS), Australian Treasury report and IBSA World for the former,
likewise one-on-one interviews essential parties of the company, both
internal and external.

4.1 PESTLE AND FIVE FORCE ANALYSIS

An external marketing audit covers issues such as Political, Economic, Social
and Cultural, Technological, Environmental and Legal aspects in which the
company is emerged. The PESTLE analysis includes:
 Political – stability of the government, global influence, potential
changes to the legislation.
 Economic – economic growth, employment and inflation rates,
monetary policy, consumer confidence.
 Social/Cultural – income distribution, demographic, lifestyle of the
population.
 Technological – international influence, take up rates.
 Legal – taxation policies, employment laws, industry regulations.
 Environmental – regulation and restrictions.
Another common method for evaluating a business current market and
perspectives is the Five Forces analysis, which assesses the potential for
profitability in an industry and tends to focus on the single, stand-alone
business unit rather than a single product or range of products.
Its key areas are the followings:
 The threat of entry – in which time and cost of entry; specialist
knowledge; economies of scale; cost advantages; technology
protection and barriers to entry are evaluated.
 The power of buyers - in which the number of customers; size of
each order; differences between competitors; price sensitivity; ability
to substitute and cost of changing are investigated.
 The power of suppliers – in which number and size of suppliers;
uniqueness of service; ability to substitute and cost of changing are
considered.
 The threat of substitutes – in which the substitute performance
and the cost of change are considered.
 Competitive rivalry – in which the number of competitors; quality
differences; switching costs and costs of leaving market; as well as
customer loyalty are examined.
4.2 SWOT
Pondering both an internal and external perspective, the SWOT analysis will
investigate the strengths, weaknesses, opportunities and threats of a
business.
Strengths and weaknesses are factors that can be controlled by the
business.
 Strengths: the key elements that give the business advantage over
its competitors in meeting the needs of the market.
 Weaknesses: the limitations faced by the business in implementing
its marketing plans and strategies.
Opportunities and threats exist independent of the business, and are often
beyond its control.
 Opportunities: the conditions of the environment in which the
business operates which could benefit the organization if acted upon.
 Threats: barriers that prevent the business from achieving its
objectives.
5. PARTICIPANTS
After consideration, the key participants assigned to be interviewed during
the audit are:
- Staff
 Rose Ready (owner of Ready-Made Marketing)
 Mario Sarto (owner of Sarto's Gourmet Pasta)
 Eric Yeung (accountant at Sarto's Gourmet Pasta)
 Adriana Como (Sarto's sale and promotion staff)
- Regular customers
- Local community
6. CHARACTERISTICS
In order to better understand the marketing activities, performance and
environment of Sarto's Gourmet Pasta, this marketing audit will attend to
the four characteristics:

6.1 Comprehensive
As requested by Rose Ready, the marketing audit will cover both internal
and external environments, as well as its micro and macro factors.
Objectives, strategies, function and systems will be under the scope of this
marketing audit to better analyses the scenario in which is preventing
Sarto's from fulfilling its business goals.

6.2 Systematic
The steps to be followed are:
- Marketing Plan Review
- Search reports - compiling data from Australian Bureau of Statistics (ABS),
Australian Treasury report and IBSA World.
- One-on-one interviews with essential parties: Rose Ready (Ready-Made
Marketing), Mario Sarto (owner of Sarto's), Eric Yeung (accountant at
Sarto's) and Adriana Como (Sarto's sale and promotion staff).
- Focus group - local community and Sarto's regular customers.

6.3 Independent
As previously stated, an independent and external auditor assigned to this
marketing audit.
- Where is the store losing money? What is preventing it from achieving
steady growth?
- What are the sales numbers in total? What's generating profit? What's
generating loss?
- What are the current strategies to engage new customers? How are they
retained?
6.4 Periodic
As a way to measure the growth and evaluate the development of the
implementations that will be suggested by this audit, it is suggested that
the procedure should be periodically repeated every six months.
7. ELEMENTS
A marketing audit should start with exploring the marketplace to determine
what changes are taking place and how they may affect the business. The
audit should then examine the business’s marketing objectives and
strategies, organisation, and systems. It is also possible that an audit may
look at key functions of the business that are fundamental to its marketing
performance.
A full marketing audit should have six major elements, each of which can be
conducted as a standalone process if a full audit is not required. The six
major elements are:

7. 1.1 ENVIRONMENT
The marketing environment is defined in terms of both the macro-external
environment surrounding the relevant industry, and the micro-external
environment in which the business operates.
The macro environment consists of factors which are generally beyond the
control of the business, such as economic, demographic, technological,
political-legal and social factors. The purpose of the macro environment
audit is to assess the environment, determine key trends and evaluate their
implications for the business.

7.1.2 ECONOMIC FACTORS

It is important for a business to understand the economic environment, not
only for its own benefit, but for the effect it has on potential buyers. Two key
elements of greatest concern are:
 inflation: the general rise in prices without a corresponding increase
in wages
 recession: a period when income, production and employment rates
tend to fall.
Both elements decrease the demand for goods and services. Demographic
factors Demographic factors are the vital statistics of the market population
including age, gender, race and physical location. The basis for any market
is people so these factors critically affect the behaviour of buyers.

7.1.3 TECHNOLOGICAL FACTORS

Technology is constantly and rapidly changing. It has become crucial for
businesses to adopt technological advances quickly and efficiently, to
ensure they are able to meet the needs and expectations of the market
efficiently.
7.1.4 SOCIAL FACTORS
Social change is the most difficult external variable to incorporate in market
planning. Social factors include attitudes, values and lifestyles which are
often unpredictable and quick to change. These factors influence the
products people purchase, what price they are prepared to pay, and how
and when they expect to be able to purchase the product.

7.1.5 POLITICAL-LEGAL FACTORS

Every aspect of business, and specifically marketing, is subject to
restrictions and regulations. It is crucial that we understand these laws and
abide by them, because failure to comply can have major consequences.

7.2 STRATEGY
The marketing strategy audit considers whether the business’ strategy is
positioned to handle both the opportunities and problems that face it. It
examines the goals and objectives of the business, then the marketing
objectives.
Questions to consider:
Are the business objectives clear, and do they lead logically into the
marketing objectives?
Are the marketing objectives stated clearly to assist marketing planning?
Can they be measured?

7.3 ORGANISATION
The marketing organisation audit looks at the effectiveness of the marketing
and sales function of the business, and the interaction between marketing
and other key functions of the business such as finance, purchasing and
manufacturing.
The structure of an organisation determines how it operates and performs,
and should present the hierarchy of roles and responsibilities required for
the business to function.
Functional efficiency examines the effectiveness of relationship and
communication between sales and marketing functions of the business.
Interface efficiency examines the interaction between marketing and the
other functions of the business, and how effectively these interactions.
7.4 SYSTEMS
The marketing systems audit examines the systems used to inform, plan
and control the marketing operation. This includes the procedures used in
systems such as sales forecasting, marketing planning, inventory planning,
order processing, and new product development.
The marketing control system incorporates the processes required to
monitor proposed plans and adjustments as necessary.

7.5 PRODUCTIVITY
The marketing productivity audit looks at key accounting data to determine
where the company is making profit. It also identifies areas where
marketing costs can be reduced, by measuring the profit contribution of
different products and services.
Questions to consider:
Profitability Analysis – What products are profitable? How do products
compare in terms of profitability?
Cost-Effectiveness Analysis – What is the advertising spending? Where is
this information available? What might be a more effective way of
effectively marketing the organisation’s products?

7.6 FUNCTION
The results of the audit processes above may indicate that an audit of an
isolated marketing function needs to be undertaken. This can include
reviewing advertising budgets and evaluating specific advertising or
promotional approaches or mediums for effectiveness.
 Products
What are the buyers' knowledge and attitudes toward the company's and
competitors' product quality, features, styling, brand names, etc?
What areas of product and brand strategy need improvement?
 Prices
What are the company's pricing objectives, policies, strategies and
procedures?
To what extent are the prices set on cost, demand and competitive criteria?
Do the customers see the company's prices as being in line with the value of
its offer?
What does management know about the price elasticity of demand,
experience-curve effects and competitors' prices and pricing policies?
To what extent are price policies compatible with the needs of distributors
and dealers, suppliers and government regulations?
 Place (Distribution)
What are the organisation's advertising objectives?
Is there adequate market coverage and service?
How effective are distributors, dealers, manufacturers' representatives,
brokers, agents and others?
Should the company consider changing its distribution channels?
 Promotion
Including advertising, sales promotion, publicity and direct marketing.
What are the organisations advertising objectives?
Are the objectives sound?
Is the right amount being spent on advertising?
Are the ad-themes and copy effective?
What do customers and the public think about the advertising?
Are the advertising media well chosen?
Is the internal advertising staff adequate?
Is the sales promotion budget adequate?
Is there effective and sufficient use of sales promotion tools such as
samples, coupons, displays and sales contests?
Is the public relations staff competent and creative?
Is the company making enough use of direct, online and database
marketing?

 Sales Force
What are the sales force's objectives?
Is the sales force large enough to accomplish the company's objectives?
Is the sales force organised along the proper principles of specialisation
(territory, market, product)?
Are there enough (or to many) sales managers to guide the field sales
representatives?
Do the sales compensation level and structure provide adequate incentive
and reward?
Does the sales force show high morale, ability and effort?
Are the procedures adequate for setting quotas and evaluating
performance?
How does the company's sales force compare to competitor's sales forces?
8. REQUEST
After planning the marketing audit, and specifying all the points that we are
going to review accurately. I send to Mario Sarto and other stakeholders the
request to sign off the plans as acceptance and permission to proceed with
the audit.
Sarto’s Gourmet Past
– Task 2
BSBMKG515 – CONDUCT A MARKETING AUDIT
JULIA CAROLINA MORAES CONTRUCCI DE SOUZA
Table of Contents
1. Introduction...................................................................................... 17
2. Executive Summary..........................................................................18
3. Main body......................................................................................... 19
4. Recommendations and Conclusion...................................................21
1. Introduction
The purpose of this report is to unveil business and marketing aspects of
Sarto’s Gourmet Past that are preventing the business to reach its
objectives. To do so, this document describes and explains the findings
resulted from the audit and the marketing plan analysis.
2. Executive Summary
The report shows the comparison between the marketing plan and the updated market
research, to unveil what aspects of Sarto’s Gourmet Past current strategies are keeping the
business from succeeding.
The findings of the audit are portrayed in a table also containing what had been planned in the
marketing plan, the analysis of the issues found and its suggested solutions.
Within the methods used to investigate the business are: SWOT, PESTLE and the Five Force
analysis, comprehending both internal and external aspects as well as micro and macro
environments.
3. Main body
The table below contains the planned objectives of the marking plan, the finding of this audit and its consequences and the
recommendations suggested.
The content is divided in internal and external aspects of Sarto’s Gourmet Pasta, in which were used the PESTLE, SWOT and
Five Force analysis.

Planned Objectives Findings Consequences / Analysis Recommendations

Internal - Weaknesses

Sarto rejected the idea of

Phone take-away system
installed in the kitchen
 
Other than optimize its time
converting the phone take-
and resources, the use of
away ordering system into
new technology such as
internet-based technology.
internet is crucial to avoid
communication difficulties
Logistic problem reported by
(accents and noisy
Adriana Como and by the
environments)
Focus Group.

Part of being a business

Lack of communication with Sarto is centralizer and takes savvy is trusting your team’s
his team all decisions alone. abilities and opinions. By
shutting communication with
  his staff and deciding

Wrong distribution of
responsibilities
Unethical pricing
 
Lack of effective strategy to
develop new products
Adriana Como has kitchen
management background
and skills, not sales and
promotion.
Different prices for delivery
depending on average
income of neighbourhoods.
According to Adriana Como,
the products were developed
based on Mario's assessment
of how exotic the new
everything by himself, Sarto
is gambling his business
success. Listening to his
employees is fundamental.
For the business to succeed,
every employee must be
able to work in the best of
their abilities, otherwise the
day-to-day of the company
becomes highly
unproductive. That being the
case, Adriana needs to go
back to the kitchen and Sarto
needs to hire a qualified
sales and promotion staff.
Sarto will lose most of his
clients from the so called rich
neighbourhoods with such
strategy. Instead of pricing
by economic status of each
region, it is suggested a rate
of delivery by distance.
It is suggested that the
business creates a strategy
to develop new products
according to the wants of its
 product was or how easy it
was to make. On top of this,
Mario felt that testing new
product by giving them way
was too costly and
counterproductive to
increase sales.

With no previous idea of

target market. To found out
what your target market
what that is, Sarto's can
wants or expects from you,
implement a suggestion box
there is no point on investing
or a survey with its
on a strategy such as the
customers.
one used by Sarto. In
addition, every time a new
product is developed it needs
testing - on the contrary of
what was stated by Sarto,
free sampling is a very
effective way to test a
product's compatibility with
the target market

Ineffective promotion No real coordination between It is recommended that Mr.

strategy the timing of the promotional Sarto and his team get
flyers and the preparation in together to decide what
terms of having sufficient should be the specials in a
monthly strategy if he insists
 on maintaining the flyer
strategy.

Sarto's decision-making
process included the creation
of a new weekly specials
flyer without discussing or
even preparing its team for
it. In addition to a high-
unproductive way of running This, however, is not
a business, is a wasteful, advisable, given the fact that
once the restaurant is not their penetration is
prepared to sale what is minimum. On a different
being promoted, as well as perspective, Sarto's Gourmet
disrespectful to both Pasta can start a promotion
customers and staff. strategy by offering its
current clients of delivery
Other alarming point to this and take-away the specials
topic is the narrow-minded menu. Also, online marketing
persona of Mario Sarto, who is more secure and risk-free
even though having method for his particular
consulted Rose, from Ready- business.
Made Marketing, and she
advised him that flyers are
expensive and
counterproductive, decided
to invest in this particular
form of promotion

Wrong positioning strategy
When you asked about new
product development and
forecasting sales Mario said
that it was too expensive to
get market research done
and so just used the
accountant's tax figures and
his own 'gut feel' to
determine the sales forecast.
Bmag magazine Communication just with
advertisement flyers
Maintain positive, steady Sales decrease
growth each month
Generate at least 45.000
By ignoring its most lucrative
business, the take-away,
Sarto wasted investments
advertising to the wrong
target market.
In order to analyse how a
business is affected by sales
and other events is
fundamental to forecast. This
way strategies can be
changed so that the number
are positive and the business
profitable.
Marketing strategy fell
through when Sarto's friend
left the magazine. To ensure
the publicity of the business,
Rose Ready suggested to
hire a freelance PR. The idea
was rejected by Mario Sarto.
In the whole yearly sales of
2016 was $436,000. The
reasons were that a lot of
money was destined to the
It is suggested that Sarto
invests in the take-away
segment, in order to make
profit to refine its restaurant
to the first intended market.
Is highly unproductive for a
business to forecast its sales
and strategies in anything
other than research. It is
recommended that Mario
Sarto a more reliable
strategy than his gut feeling.
It is suggested that the
business hires a PR to
strategize the publicity.
It is recommended that the
business focus its resources
in its most profitable area -
take-away, which has
in sales per month

Reduce the overhead per

store through disciplined
growth
flyers and that, in order to increased from $180,000 to
position itself was $203,000.
A double-digit growth
competitive, Sarto's Gourmet
rate for each future year
Pasta dropped prices.
In order for the business to
Sarto's Gourmet Pasta is still be a successful franchise, it
struggling to make profit needs to be a profitable
Realise a growth strategy
Just one restaurant with only one restaurant, restaurant first. Therefore, it
of one store per month
hence, the business is not is suggested that Sarto
ready to be a franchise. changes its current way of
running things.

External - Micro - Threat

The reinforced suggestion is

to invest in the take-away
Accessibility - Planned
service and with the profit
'Park'n'Ride' to be built
Government pulled back on That caused a problem for from that segment improve
adjacent to the property
the project dine-in customers to park. what has been holding the
providing parking for
dine-in segment. In the case,
patrons at night
for example, an adjacent
place for parking.

IBSA World - Market research

 2014 - New legislation
relating to labelling on take-
away products delivered to
consumers

Competitors

Stella's, one of his local

It is suggested that the
competitors, had built a
business should find its
large 30 seat outdoor eating
Having his competition to unique selling proposition in
area.
improve their product or order to better position itself
infrastructure led Mario Sarto in the market. In addition to
Pasta Bite, other competitor,
to drop the prices of the that, it also needs to find a
has opened up in the
pasta products. more effective way to
adjacent suburb giving the
communicate it with its
local customers greater
customers.
options in pasta.

IBSA World industry report

on strategies adopted by
each of the major
competitors:
* Expansion by the chains
into interstate markets
* Price war created due to
reducing sales and fight for
market share
As previously mentioned, the
first recommendation is for
the business to finds its
unique selling proposition
Saturation in the market.
and change current
strategies before becoming a
franchise, even though the
scenario is welcoming.

Sarto's sees no real
substitute for what it
provides - 'impossible to
substitute this taste and
offer', according to
Sarto's owner.
Another variable that is
contributing to market
growth is an increase in
the number of hours our
demographic is working.
Over the last five years
the number of hours
spent at work of our
archetype customer has
significantly increased. As
the number of work hours
increases, there is a high
correlation of people that
eat out at restaurants.
This is intuitively
explained by the fact that
with a limited number of
hours available each day,
Threat of substitution
IBSA World industry report These are not good products
substitutes for this product - for the health and the quality Again, highlighting the
Supermarkets introducing a is not high. However, is easy importance of the take away
range of pre-packaged 'heat to cook and people don’t service.
& eat' pasta products have time for it.
Power of Buyers
IBSA World - Employees
working longer with
emphasis on economic
growth
The recommendation is to
IBSA World industry report better research the market
on market demand - Steady without making use of
assumptions or intuitions.
As a consequence of the
wrong interpretation of
IBSA World industry report of market needs, the forecasts
evolving needs and done for the business are It is suggested that Sarto's
satisfactions being sought by imprecise. implemented changes in
the buyers in this market: their menu, such as healthier
and salad dishes.
*Growing need for healthy
 options like salads and more
information on ingredients

people have less time to

prepare to prepare their
meals and eating out is
Power of Suppliers

Shortage of products due to

IBSA World industry report
climatological conditions It is suggested that the
material shortages - Drought
impacts the cost - rising business rethinks its pricing
conditions in most states
expenditure of supply if maintaining the quality of
sees local produce from
purchase or substitution of products or, which is
Queensland being sent to
such - or quality - lower cheaper, finding lower
Sydney creating local
quality substitute - of the quality substitutes
shortage
product

External – Macro - Threat

Demographics

Age distribution (25-50) -

The segment represents
No change
53% of the Graceville
market  

Large % of families Growth in young families    

with a government incentive
on new births and increase
 in retirees (ABS)

Make a good analysis of

Graceville is growing Increasing in the Graceville where would be the best
faster than the city and area but were mostly Graceville is a good location, place to build the franchise
the state - at 7% retirees (ABS) but the idea of a franchise with a specific and structured
could be a good option. plan.

Graceville's population is
No change (ABS)
130,000

Even though the average

Steady no change (IBSA
Household income
World)
income hasn't change, the
rise interest rates and the
tightening on credit card
limits may have a negative
impact on that.

Economy

Based on economic Rising incrementally As a consequence, trying to It is important that Mario

forecasts, Sarto's throughout the year save money, people tend not Sarto keeps in mind that the
Gourmet Pasta assume (Australian Treasury Report) to eat out as much as they economy is in a bad place
that interest rates are used to. right now, so if the main
coming down and that strategy is dropping the
this reduction will create prices, there should also be a
more disposable income cut down in expenditure.
and more money Otherwise, there is no room
available for families to
eat out.

In terms of credit, Sarto's

assumes that this will no
Tightening on credit card for profit.
change in the foreseeable
limits (Australian Treasury
future and will not be a
Report)
threat to the potential
sales.

The same assumption is

made about employment
Due to more opportunities
levels, where Sarto's
Unemployment falling created by mothers leaving
assumes that
the workforce.
unemployment levels will
remain the same at 5.1%  
Focusing on the micro environment surrounding Sarto’s Gourmet Pasta, the five strengths of
Porter analyses the level of competition within an industry and business strategy
development.
 Supplier power: In a saturated market such as the pasta, the business become too
reliable of its suppliers.
 Buyer power: Even though the interest rates are increasing and the tightening of the
credit card limits, the household incomes haven’t changed, impacting on the families
and Individuals leisure habits. Especially due to the increased number of hours worked,
the take-away business has been showing growth potential to the customers, who,
despite the change, will still afford ready meals.
 Competitive rivalry: Stella and Pasta Bite, the two main competitors of Sarto’s
Gourmet Pasta, improved their infrastructure. The former built a 30-outdoors seating
area while the latter opened another restaurant in the adjacent suburb.
 Threat of substitution: Sarto’s has a threat of substitution coming from the
supermarkets, which are new selling frozen-ready pasta. However, this could be
changed if the business forecasted the new products entering the marketing.
 Threat of new entry: The new entry product competing with Sarto’s is coming from
the supermarkets, which are new selling frozen-ready pasta. To prevent being surprised
by a new product, a business needs to maintain active and updated to its industry, so
that a new competition can be fought with a new product or service.

ILSC Business College BSBMKG515 Assessment V1: 0117 Page 11 of 68

4. Recommendations and Conclusion
The biggest and more urgent issue preventing Sarto’s Gourmet Pasta from reaching its
planned objectives is its owner and founder, Mario Sarto. Firstly, by its management style,
which is narrow-minded and centralizer. By not listening to his employees, guessing the future
of his business, not considering the opinion and advices of Rose Ready, misemploying his
staff, investing in both ineffective promotion strategies and unprofitable market segment, as
well as not being up to date with the market trends, Mario Sarto has been a liability to his own
business.

In addition, Mario Sarto also was reluctant to invest in strategies regarding the business
specials, its new product development and market testing, by stating that this was too
expensive and the business didn’t have the resources.

The main recommendation to this issue is for Mario Sarto to rethink its attitude towards its
own business. Strategizing with his team, working as group, listening to experts regarding
communication strategies and implementing changes on the menu, following the needs and
wants of his target market.

Another fundamental point is updating the new system of ordering for take-away. The most
profitable segment needs to be catered, so that the other segments can grow from invested
profits of the main one (take-away).

Lastly, the franchise plan needs to be perfected attending to the needs of the market, as well
as having clear and SMART objectives for the business.

ILSC Business College BSBMKG515 Assessment V1: 0117 Page 12 of 68