Red Lobster Case Solution

1. Red Lobster was initially positioned as “affordable seafood. Red Lobster was categorized as a casual dining restaurant, where the average cheque would come out to be between $8-$20. It was a full-service restaurant that also offered beer and wine. Red Lobster had targeted consumers who lived in non-coastal regions and could not afford seafood because it was expensive and also inaccessible. The positioning that helped Red Lobster in catering to this consumer category was providing “top quality seafood at affordable prices.” However, there was a dissonance in the minds of the consumers when it came to the positioning of Red Lobster;”, the positioning in the mind of the consumers was “frozen, cheap seafood.” They also began perceiving the quality as low, as the prices were affordable and the portion sizes were large. Hence, Red Lobster fell into the category of restaurants providing frozen seafood that was being produced on a large scale. Furthermore, the fact that Red Lobster had many fried fish options on the menu as well as in the environment and ambience of the restaurant, consumers began to perceive it as low quality. Moreover, it was majorly attracting a group of consumers “frugal”, who were not very interested in dining out, were looking for cheap dining out options and did not dine out that frequently. This is where there was a need to change the positioning of Red Lobster and the perception it had in the minds of the consumers.

The restaurant then aimed to shift the positioning from frozen to fresh. The restaurant then moved to a more “upscale” look. The shift was from a casual setting to a more special restaurant but which was still affordable and not as expensive as a fine dining restaurant. The positioning was to also target consumers for their special occasions and not just the regular family dine out. Red Lobster, now, also was targeting a specific consumer segment; "the experiential". These consumers had high standards when it came to food and service but they were also viewed as more profitable as they took dining as an experience and would indulge in the whole experience by ordering appetizers, desserts and wine.

Hence, there was a shift from cheap, mundane and mass producing to a somewhat upscale, more sophisticated if not exclusive restaurant. Red Lobster now aimed to give a better and more pleasant dining experience to its consumers but wanted to remain approachable and affordable at the same time.

2. Segmentation research for Red Lobster was beneficial as it allowed the restaurant to identify the different types of consumers that were visiting and which would be the profitable ones. With the previous positioning, the consumer base of the restaurant majorly consisted of frugal; people who were not that fond of dining out were price sensitive and not frequent diners. Another segment that was a part of the consumer base was Indulgent; this group was motivated by sales promotions like all you can eat and were fond of eating any and everything. It was also motivated by large portion sizes and shellfish, in particular, hence it fits the bill when it came to Red Lobster's previous positioning. Another group that was an apart of the consumer base for the restaurant was a traditionalist. Traditionalists were those who dined out majorly for eating food and not the experience, they did not dine out that often and only stuck to the favorites and did not venture into trying something new. With this type of composition of the consumer base, it was likely that Red Lobster was staying afloat but not with much profitability and the sales were eventually seen to be declining.