Red Lobster’s President Kim Lopdrup

In this case, Red Lobster’s president Kim Lopdrup is facing a major challenge in deciding the company’s target segment and its future strategy. To make a rational decision, one need to first understand the evolution of its positioning and the implication of these strategies.

Kim Lopdrup first began his efforts in RL’s repositioning in 2014. When he first took over, the brand was very different from where it is right now. In terms of Product, RL belongs to the casual dining seafood chain. Although it was buying top ingredients, consumers generally categorized it into the low-end category where mass-produced, fried, and frozen seafood is served. Consumers were most suspicious about the freshness of its food, followed by its quality, taste and preparation. In terms of Price, it is considered as ‘affordable seafood’ to mainstream American consumers. Its average price ($19) was higher than other value focused chains within the casual dining category (range from $8 - $20) due to its higher seafood cost . It was ranked in the medium-low side within the seafood chain category and was slightly lower than those in the premium casual dining category. Its engagement in aggressive price promotion only resulted in the increase in sales in few stores. In terms of Place, RL’s stores provided a typical casual, comforting place to get food. And for Promotion, it launched a very successful advertisement campaign ‘Ignite the Craving’ and resulted in increased traffic in the stores. At the same time, RL grew more mature and stagnant. The percentage of its guest rating it as ‘excellent’ was stagnant at 64%, compared to 68% of its competitors. Kim Lopdrup decided to pursue an aggressive program to alter consumer perception of its products from ‘frozen’ to ‘fresh’ and extend the original value proposition (‘bring affordable seafood to mainstream America) beyond mere affordability to a food category that is ‘fresh’, and ‘approachable’. In accordance with Lopdrop’s new strategy, RL’s 4Ps changed overt time. For Product, his team de-emphasize fried items, introduced wood-fire grilling and developed a new daily menu around freshness image by featuring 5-8 fresh fish entrees which change daily. In addition, his team also featured the chef’s name on menu to improve perceptions of culinary expertise. For Price, the team did not raise price but scale back on its original extensive price promotions. It also cut off deep discounting and engage in timing promotion. To improve RL’s attractiveness in the actual stores (Place), it remodeled and tested restaurants to create a comfortable seaside atmosphere, give consumers the feeling of ‘fresh’ and ‘top quality’ and make consumers feel ‘special’ and ‘approachable’ at the same time. Lastly, for Promotion, it followed the 2004 ad model and showcased the new menu with an emphasis on ‘wood fire grilling’ and ‘fresh fish’ to drive traffic. Additionally, it revitalized legacy promotions to increase volume and Advertised its remodeling efforts through local newspaper.

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