Value Proposition of Network Companies Providing Restaurant Services in Russia: Analysis and Evaluation

Value Proposition of Network Companies Providing Restaurant Services in Russia: Analysis and Evaluation

Elizaveta Fainshtein (National Research University Higher School of Economics, Russia) and Elena Serova (National Research University Higher School of Economics, Russia)
DOI: 10.4018/978-1-7998-3115-0.ch008

Abstract

The purpose of the chapter is to recognize how customers perceive the value proposition content of network companies providing restaurant services. This is theoretical and empirical research in equal measure. The chapter presents the results of the restaurants value proposition study in Saint Petersburg (Russia) according to industry data and identifies the target audience key needs and industry characteristics in the market, semantic core formation, and clustering in order to identify the main criteria affecting the value proposition formation. The study was conducted among 16 chain restaurant holdings located in St. Petersburg, using statistical data based on the marketing statistical tool Google KeyWord Planner analytic database. The results made it possible to highlight key criteria of the value proposition by which consumers make their choice. This approach will allow standardizing decision-making systems on the possibility of identifying the innovative potential of the company's transition to a qualitatively new level of service and use of production resources.
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Introduction

Innovation management, value proposition development and competitive strategy were classified as three main elements of the company's marketing system. Although a huge number of different research papers provided empirical support for the marketing strategy, most of them were based on market analysis and focused on innovative ways of presenting a company's product, enhancing the competitive advantage in the industry (Foss & Saebi, 2018). In the context of business modeling theory, researchers (e.g. Karmarkar & Pitbladdo, 1995; Morris et al., 2005; Chesbrough, 2010; Teece, 2018; Geissdoerfer et al., 2018) suggest that the simultaneous construction of the interrelated development of all three elements (innovation management, value proposition development and competitive strategy) would provide a list of competitive advantages. One of the recent streams of marketing research is related to the value proposition, especially in conditions of fierce competition and an unstable economic situation. For these firms the formation of a company's value proposition and innovative management have become hot topics. Currently, the development of innovative tools has developed significantly because of their relevance and because they can be implemented among companies immediately at the strategic level within the company, not only in the external marketing policy.

For service providers, innovation in business models is thought to be more profitable than selective innovation in products or processes (Arora & Singer, 2006; Sorescu et al., 2011). Sustainable business models based on a strategically sound value proposition can have the additional advantage of reducing risks and increasing sustainability in the long run (Clinton & Whisnant, 2019), creating opportunities for creating a competitive value proposition and increasing consumer demand (e.g. Chkoniya & Mateus, 2019; Fjeldstad & Snow, 2018, Snihur & Wiklund, 2019). The Fjedstad and Snow (2018) approach is based on five key elements (customers, value proposition, offer of services, value creation mechanisms and value assignment mechanisms), one of which is value proposition. This position is fully consistent with this study, which shows that a clear definition of the business model makes it possible to understand what to focus on when building a strategy and shaping a service with a customer-oriented approach and provides consistent guidance for managers. To realize these benefits, organizations are increasingly interested in implementing sustainable solutions.

However, many strategic innovations in management systems fail, making mistakes in forming a value proposition in the business model (Bocken et al., 2014; Chesbrough, 2007). This has serious managerial and economic implications for companies, as well as consumer perceptions of a company’s brand (McGrath, 2010). In other words, most organizations do not have clearly focused strategies. They compile long lists of desired results, completely ignoring the need to focus on and clearly coordinate resources (Rumelt, 2012). All this leads to significant delays in making sustainable decisions internally regarding further business planning (Mitchell and Bruckner, 2004; Bocken et al., 2014). Despite the importance of these administrative problems, the causes of failure have a knowledge gap that needs to be eliminated.

The main research question is what the criteria are for choosing a company providing services, from the point of view of consumers, for the formation of an optimal value proposition. The answer to this question fills the gap in research related to the formation of value propositions and the basis of the enterprise strategy, considered from the perspective of consumer choice. In this chapter, the strategic choice is analyzed from the point of view of the value proposition and key criteria by which the consumers make their choice using the example of a chain of restaurants in St. Petersburg (Russia).

Key Terms in this Chapter

Chain Restaurant Business Management: Entrepreneurial activity area aimed at making a profit and satisfying the needs of consumers through the provision of services to provide customers with food and drinks in a specially designated place, which corresponds basic hygiene and legal requirements.

Cluster Analysis: Multidimensional statistical procedure that collects data containing information about a sample of objects, and then organizes the objects into relatively homogeneous groups.

Knowledge Management: Strategy that transforms all types of intellectual assets into higher productivity, efficiency and new value.

Innovation Management: Preparation and adoption system of strategic decisions aimed at the formation, support and development of the technological company’s potential by introducing new products, production processes and economic relations.

Competitive Strategy: Comprehensive plan of strategic management actions that helps company increase or maintain its position relative to other players in the market.

Customer-Oriented Approach: Individualized approach of meeting the needs of each individual client by creating high value, focused on long-term relationships.

CHAID Analysis: Relationship identification method of quantitative and / or qualitative ordinal signs of the studied values in order to build a predictive model based on a hierarchical data segmentation system by the type of decision tree structure.

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