1

Cale Homuth, July 2014

Spicy Pie Research

1....Cover Page
2.Executive Summary
3..Introduction
4-6Kwegyirs Seven Questions
7-9.Market Analysis
10..Qualitative Research
11...Quantitative Research
12Obstacles/Challenges
12..Research Conclusions and Managerial Recommendations
13...Limitations
13..Reflection
14-15....Appendix



2

Executive Summary
Spicy Pie is a local restaurant serving the Fargo/Moorhead area with locations near
North Dakota State University (NDSU), Broadway downtown, Veterans Boulevard in
West Fargo and a store out west in Minot. The objective of this study is to better understand
and assess the arrival of the newest location at the corner of 40
th
Avenue South and 8
th
Street
South in Moorhead, Minnesota. As the location has yet to be built, and therefore, seen in
action, the main foci of this study include seven key questions as posed by business author
Victor Kwegyir concerning new businesses start-ups which will pre-empt a full market
analysis of the stores geographical location.
Additional information of import to Spicy Pie management concerning the Moorhead
location is a grand opening promotion including a short survey to quickly assess the main
areas for improvement and effort. This survey will offer a dollar amount off their next
purchase, a free menu item, entering into a drawing for a free pie, or anything of that nature.
It will likely be easiest to print up a stack of these to be delivered with their receipt or food at
their table rather than being included on the receipt.
Upon compilation of these analyses and a survey to gather potential information on
demography, customer needs and customer habits, a Moorhead location could quickly adapt
to unique challenges and opportunities in the new community. This primary research from
in-store customers is more tactful, efficient and fruitful than attempting data retrieval from
student groups during the summer or randomly canvassing the community as a whole. Other
potential options include researching at a city-wide event or outside of community
happenings where an influx of people may be accessed.

3

Introduction
Kwegyirs questions and the market analysis structure as borrowed from the United
States Small Business Administration (SBA) are macro-concepts to outline and direct the
functional micro-concepts of actual customer traffic when the new store is opened.
In regard to data gathering, quantitative data is present in the form of customer
surveys with a new store focus for a Moorhead baseline. Qualitative data is an imperative for
triangulation and reliable research findings, although acquiring persons for in-depth personal
interviews prior to the store being opened nor school being in session is bleak. Options for
qualitative data acquisition include the opportunity for a follow-up interview (brief and
motivated by merchandise or voucher giveaways) tacked on to the customer surveys or
hosting a focus group when school is back in session or with another group of interest to
Spicy Pie management.
Data that was readily available included competition analysis and customer group
assessments. Recommendations from this data are not wholly supported with empirical
evidence or logic, but nonetheless hold import for approaching the opening of a Moorhead
store. These recommendations stem from observations largely hypothetical by nature, but
provide educated plans of action for adaptation.
This report is to be fortified and modified following data collection of sufficient
volume after the stores opening and preliminary operation. Future recommendations and
courses of action are to be assessed and pursued on a per-case basis as seen fit by the
marketing department in conjunction with the management.


4

Kwegyirs Questions (as outlined in his book, The Business You Can Start: Spotting the Greatest
Opportunities in the Economic Downturn):
Is this product/service going to satisfy a market need?
o As these questions are largely for un-established businesses rather than
extensions of pre-existing businesses, this question (and others) are not
entirely relevant to our case. However, from a standpoint of the new market
being Moorheads community, we find it safe to say our product would be
satisfying a market need, as there is a plethora of pizza businesses (take-and-
bake, eat-in, carry-out, delivery and hybrids of the four) that are established
and still in business.
Who are my potential customers/where can they be found?
o As outlined further in the consumer group assessment in the qualitative
research section, Moorhead hosts three area higher education establishments, a
growing residential public and some area businesses with whom to forge
relationships with. These customers can be found surrounding the location on
8
th
Street South and branching even further into the southeastern portion of
Fargo, North Dakota and west Dilworth, Glyndon and Felton, Minnesota.
What competitors exist? Direct/Indirect? Local/National/International?
o Competitors are also outlined further in the competition analysis in the
qualitative research section of this report. These range from all sorts of pizza
preparations and styles, including pre-made pizza buffets all the way to take-
and-bake specific pizzerias. These host local, national and international
5

competitors with variable extensions of products beyond pizza, as Spicy Pie
does as well.
What distinctions does my product offer?
o Spicy Pie offers the Moorhead area a unique experience with hand-tossed
dough and New York style pizza. Spicy Pie excels beyond national and
international competitors with their remarkably fresh ingredients and
products, some of which are local. Additionally, Spicy Pie challenges more
local and small-operation pizzerias with competitive prices and specials the
smaller companies cannot afford or provide.
Can my product stand the test/take advantage of changing trends?
o Spicy Pie was established in 2010 with their first store on North Broadway in
Fargo, North Dakota. In the four years since, Spicy Pie has opened an
additional two stores in the area, at North Dakota State University and in
West Fargo, as well as a store in Minot as outlined in the executive summary.
For the first store leaving the state of North Dakota, the Moorhead store
would continue to adapt and improve to changing trends as it has in the four
years past.
Does the law of the land allow my business to be established?
o As aforementioned, Spicy Pie locations already exist and flourish in
accordance with local and national law. The store in Minnesota will still
maintain legality under new state statutes and ordinances.


6

What prices are consumers prepared to buy my product at? Profitable at any stage?
o Spicy Pies pricing, discount and promotional schemes have remained
successful at current locations and will likely transfer seamlessly to Moorhead.
However, there are opportunities for new offerings as seen effective and useful
to business after the location is up and running. These could include but
neednt be limited to college discounts/specials and relationships with local
businesses.
















7

Market Analysis
Industry Description/Outlook
Spicy Pie exists in a market where nearly 90% of the business is gripped by
national and international companies including Pizza Hut, Papa Johns and the like.
Therefore, of the remaining 10%, Spicy Pie aims to capture up to %20, or 1-2% of the
entire market. Consumers included are outlined in the consumer group assessment in
the qualitative research section of this report. As Spicy Pie is such a young company,
further projections and industry descriptions are still formulating during growth and
integration.
Target Market
Ideally, Spicy Pie would have no objections targeting the entirety of the
Moorhead community. However, in the interest of financial optimization, the higher
education establishments and local businesses would be the most efficient ways to
create lasting customer relationships while utilizing both traditional and new media
to introduce, promote and advertise the coming of a location to Moorhead. Therefore,
the entire market would be notified of the arrival of the store, and a store-wide
promotion would entice all customer groups to visit and kick-start the location.
Market Share Projections
As aforementioned, Spicy Pie recognizes a vast majority of the market is
occupied by huge competitors with clout nationally or internationally. Therefore, the
calculated projection for market share of the conservation 10% remaining would be
ideally 1.5-2% market share.

8

Pricing/Gross Margin Targets
Pricing schemes have already been established for Spicy Pie as a local
company. These would not change when opening an additional store; prices are
constant company-wide and would only vary in the event of a company-wide pricing
shift. Gross margins and discount/promotional schemes have also been established
and would be held constant until deemed variable for the location in Moorhead itself,
if that should occur.
Competitive Analysis
Market Share
Dominos, Papa Johns, Pizza Hut and comparable pizza chains
inevitably hold a vast majority of the Fargo/Moorhead company share with
their pricing flexibility and name recognition, amongst other bigger business
luxuries. The remaining 10% is fought over by local establishments like Spicy
Pie, Sammys Pizza, Deeks Pizza and more. This struggle results in a
conservative projection of 1.5-2% market share.
Strengths/Weaknesses
Spicy Pies strengths lie (according to consumer data) in their food
products themselves, unique locations, friendly staff with cordial customer
service and other amenities including alcohol, Spicy Pie gear, delivery and
more. However, these same strengths can also be devastating when not reliable
and consistent.
Spicy Pie locations have customer comment cards as well as internet
outlets to either post praise or vent frustrations about the location, food,
9

service and overall experience. Food not prepared consistently and not
delivered in a timely and cordial manner can be the difference between a five-
star review and an outraged patron. With consistent food product, delivered
hot with a smile, Spicy Pie has all the makings for offering (arguably) the best
pizza dining experience in the Fargo/Moorhead area.
Window of Opportunity for Entrance
As Spicy Pies location is currently being arranged for the locations
imminent construction, the opportunity for entrance is not as vitally
important as it would be for a new company opening its first doors into an
unknown market. Spicy Pie is aware of its competition and geographical
location, and is honing the unveil of a Moorhead store with this previous
knowledge to the best of its knowledge, experience and capabilities.
Regulatory Restrictions
From the viewpoint of moving forward with the Moorhead stores
arrival, governmental regulatory requirements for both building and food
service are being taken into account. From the customer viewpoint, assessing
and targeting the new market group in Moorhead can be as broad and creative
as monetarily able. These targeting techniques neednt be indirect, however;
direct mailers are expensive and old school, but new media, television,
billboards, radio and other traditional media may be utilized.



10

Qualitative Research
Although a majority of qualitative research arrives upon completion of research
project, the competition analysis and customer group assessments for Spicy Pie in Moorhead
were feasible and achievable beforehand. The combination of these analyses provides a
primary focus for store marketing and promotion in the new location.
Competition Analysis
Moorhead hosts or borders a myriad of pizza providers including but not
necessarily limited to the following: Blackbird, Caseys, Deeks, Dominos, Duanes,
Ginas, Gios, Godfathers, Goodfellas, Happy Joes, Papa Johns, Papa Murphys,
Pizza Hut, Pizza Patrol, Pizza Ranch, Rhombus Guys, Sammys, Santa Lucia,
Sarpinos, Xtreme Pizza and more. Of these listed 20 restaurants, only one (Papa
Murphys) sells exclusively take-and-bake pizza. The remaining 19 and Spicy Pie
included prepare the pie in-store. Roughly half of the restaurants also offer to deliver
their pizza to your home, and most every location allows take-out.
Customer Group Assessment
Target markets for Moorhead include variations on classic groups. Instead of
North Dakota State University (NDSU) students, now Minnesota State University
of Moorhead (MSUM), Concordia College and M-State (MSCTC) students are
relevant. Similarly, new businesses and organizations are now viable options for
forging relationships for group orders for the office, events and more. These future
clients should be approached and notified of the new locations imminent arrival, and
given menus and, if possible, promotional materials as well.

11

Quantitative Research
Starting with the first customer after the doors open, Spicy Pie Moorhead will be
dispersing customer surveys with every order to gather important formulating data as well as
create immediate customer relationships for the new locations clientele. These surveys are
short and offer only one free response question in order to gather largely graphical and
statistical data for analysis. Below is a viable option for such a survey:
Customer Survey
Was this your first Spicy Pie experience? (If no, please circle all locations visited prior to today.)
a.) No b.) Yes (i.) Downtown ii.) NDSU iii.) West Fargo iv.) Minot)
What brought you in to this location today?
a.) Drove by b.) Advertisement c.) Word of mouth d.) None of the above - ________________
After todays experience, how likely are you to return to here for business?
WONT NOT LIKELY MAYBE LIKELY WILL
Please offer any additional comments you would like us to hear from you.
We appreciate your input, good or bad!
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________

Attached to this survey should be an option for an interview via email with reward
of a free menu item, voucher, dollar off coupon or something comparable. This could yield
more subjective feedback, although most of these responses would likely be negative rather
than positive, but until a focus group could be assembled, this would be the most probable
and reliable form of qualitative feedback. Below in the appendix is an option for a focus
group study extension as well.

12

Obstacles/Challenges
Spicy Pie in Moorhead would be positioned in a new environment from the North
Dakota stores. On 8
th
Street, the nearby real estate is very similar to the West Fargo store
over Downtown and NDSU, which are heavily populated. This geographical challenge is
coupled with aforementioned customer groups, competitors nearby and other discussed
variables.

Research Conclusions and Managerial Recommendations
From an executable viewpoint, the options for marketing to Moorhead hinge heavily
on budget allocated. The 10% available is there for the taking, should the location be
introduced, advertised and promoted effectively to all of our consumers in relation to all of
our competitors. Externally this involves a myriad of marketing techniques including but not
limited to direct mailers and other traditional media as well as television spots, social media
postings and other new media. Internally this approach can utilize pre-existing customer
incentives including rewards program, comment cards, food specials and more, all of which
could also gather more research information on actual customers in store.
Eventually further information could also be gathered with the conduction of focus
groups, in-depth personal interviews, surveys and similar data-collection tools given to, most
efficiently, students at either Concordia College, Minnesota State University of Moorhead or
Minnesota State Community and Technical College. Students would be easily coerced for
either pre-existing class requirements for similar activity in a business or communications
course, or with the offer of Spicy Pie products upon completion of their involvement.

13

Limitations
Based on the preemptive nature of this research project, a majority of the data
retrieval and subsequent adjustments will take place after the grand opening and first few
weeks of operation. This report does, however, compile and offer some cursory points to
consider when approaching the start-up of the Moorhead store. Throughout the construction
phase of the location, surveying could gather information and lead to more actions before the
store is opened, and once the store is up and running, the sky is the limit to adapting and
improving the Moorhead locations performance.

Reflection
Although no empirical data was gathered on the specific situation at hand with Spicy
Pie opening a Moorhead location, research was conducted into the nature of opening a new
small business location, and a process was established with direction and recommendations
to proceed both before and after the opening of the store.
From a functional standpoint, the marketing public can be most effectively broken up
into students, businesses and general public, and then can be efficiently targeted with both
students are businesses. The general public can also be targeted (at more cost) with a broader
marketing scheme. These actions should be executed considering competition in Moorhead,
the further grouping of consumer groups, and the macro-concepts of business start-up
outlined earlier in this report.
Moorhead, Minnesota appears it will be a viable and prosperous extension of Spicy
Pie in the Fargo/Moorhead area, accessing east of our current locations with a 56560 zip code
and (218) area code more recognizable to Minnesotan customers.
14

Appendix
Focus Group Discussion
Item I. Thank you and welcome to participants
-Identify focus group objective:
To identify methods to attract college students to Moorhead Spicy Pie location/delivery. This focus group was
non-randomly selected based on active participants and is expected to last near an hour in informal tone.
-Notify of focus group conditions:
Please respond openly in your own opinion; we will be recording this focus groups meeting, but anonymity is
granted in exchange for your honesty. If you do not consent to these conditions, please feel free to exit at this time
prior to our commencement.
-Invite to prepare:
Help yourselves to the food and drink provided as you wish now and throughout the entirety of this discussion.
Are there any questions we have prior to starting?
II. Introductions and getting acquainted
-Nametags and group warm-up:
Please fill out a nametag so we can better refer to one another, and we can get started by going around the group
and providing our names, majors, hometowns and your favorite food.
-First round of questions:
How do you structure eating with classes all day? Before, in-between, after, a hybrid?
What constraints play the biggest part in determining when/what you eat: time, money, taste, other?
Do you typically leave campus to eat or stay?
III. Pizzeria preference
-Hierarchical structuring:
What is your favorite pizza place and, if possible, what makes it your favorite?
Alternatively, what have placed other pizza places lower in your favor?
-Specifics:
What is your favorite pizza crust? Thin, thick, stuffed, pan?
What are your favorite toppings?
Do you typically dine-in, get delivery or carry-out?
IV. Restaurant spending attitude
-Macro:
How often do you eat out per week?
What makes you more likely to eat at a restaurant: friends, prices, convenience, time, other?

15

-Micro:
Where do you most often eat out when: in a hurry, having a Friday night out with friends, having a lunch break?
Do you like delivery options? Do you typically prefer to eat-in or take-out to avoid delivery charges?
V. Pricing threshold
-Macro:
How much do you typically spend a week on eating out?
Where is your perceived price ceiling for a meal from a restaurant? Whats a cheap meal? A spendy meal?
-Micro:
Do you utilize coupons, online and paper? Do you like following daily food and drink specials for restaurants?
What incentives make you frequent a restaurant more?
Please rank the following descending in order of importance: quality, price, brand/store.
VI. Thank you
-Thank you:
Thank you all for your time and honesty in conducting this discussion. As aforementioned, your responses are
anonymous. We appreciate you all assisting in our focus group. Please help yourselves to the remaining food and
drink before leaving! Have a great day.

All of the below were referenced for report direction, construction and execution:
How to assess the market potential of your new business idea.
Written by Darren Dahl, published by INC. Magazine, September 2011 electronically:
inc.com/guides/201109/how-to-assess-the-market-potential-of-your-new-business-idea
Starting and managing a business; your business plan marketing analysis.
Published by the United State Small Business Association, electronically: sba.gov/content/market-
analysis
How to research your market.
Published by Small Business of British Columbia, July 2011 electronically:
smallbusinessbc.ca/starting-a-business/how-research-your-market
Spicy Pie final research findings, an academic marketing research report.
Created by Kayla Knutson, Sean Kolodziej, Yazhen Li, Karysa Pederson, Hannah Pilger and Zehua
Zhuang of North Dakota State University in May 2014.