Marketing Strategies of Chipotle Mexican Grill Restaurant in Ohio - Research Paper Example

? Marketing Plan of Chipotle Mexican Grill Restaurant in Ohio AFFILIATION: Table of Contents Table of Contents 2 Marketing Plan of Chipotle Mexican Grill Restaurant in Ohio 3 I.Executive Summary 3 II.Situation Analysis 4 III.Market-Product Focus 6 IV.Marketing Program Strategy and Focus 7 V.Financial Projections 9 VI.Implementation Plan 10 VII.Evaluation 11 References 12 I. Executive Summary 3 II. Situation Analysis 4 III. Market-Product Focus 6 IV. Marketing Program Strategy and Focus 8 V. Financial Projections 9 VI. Implementation Plan 10 VII. Evaluation 11 References 12 Marketing Plan of Chipotle Mexican Grill Restaurant in Ohio I. Executive Summary Chipotle Mexican Grill Restaurant has been present in the market since 1993 and has been successfully meeting the needs and demands of its customers. It went public in 2006 when McDonald’s divested its non-core business restaurants and Chipotle was one of them. Since then, it has been following a focused marketing strategy for expanding into various regions locally and internationally. It has competitive edge in the market as it is the only company that is offering healthy and nutritious food items along with fast-casual dining experience; the main target market of the company is young generation aged in between 16-30 years who are looking for delicious meals at economical prices. Although it has successfully earned a good reputation in the market but there are many avenues that are unexploited by the company. One attractive segment is of old people aged above forty years who are looking for healthy food along with a pleasurable dining experience. The marketing plan for this target market is designed especially for Columbus, Ohio region where no fast-food restaurant is targeting this segment. In order to reach and satisfy this market, the marketing strategy along with implementation and evaluation plan is discussed so that the company can easily implement it. The most effective way of fulfilling the needs of old people is to offer them affordable meals by marketing them on the online mediums as these people are technologically savvy. If the plan is properly implemented, then there are high chances that the company can successfully penetrate in this market. II. Situation Analysis Brief Introduction of Chipotle Mexican Grill Restaurant Chipotle Mexican Grill was started by Steve Ells in 1993 in Colorado with the aim of providing exceptionally high quality fast-food items that are made from fresh and premium ingredients. Presently, Chipotle Mexican Grill Inc. is a chain of restaurants that are located in Canada, United Kingdom and United States. The name of the restaurant was derived from chipotle which is the Mexican Spanish name of smoked and dried jalapeno chili pepper (“Unique Corporate Culture drives results”, 2008) The specialty of the chain is in the burritos and tacos offered to the customers along with use of natural and organic ingredients and assembly-line production. The company is listed on the New York Stock Exchange and it went public in 2006 when McDonald’s divested all of its non-core business restaurants (“About Us”, 2012). The mission of Chipotle Mexican Grill Restaurant is defined as Food with Integrity that highlights its focus on using only pure and organic ingredients and serves the customers with naturally raised meat; it gives the restaurant a competitive edge over all other restaurants present in the market (“Food with integrity”, 2012). It is among the pioneers who developed the concept of fast-casual dining restaurants. Currently, it is present in more than 1200 locations in about 43 states including France, Ontario, England, Washington and Toronto. According to Brandau (2012), the chain earned net income of US$215 million in the year 2011 and had a workforce of about 30,940 employees. The chain is run by a board that comprises of four directors along with a chairman (Steve Ells) and is headquartered in Denver, Colorado (“About Us”, 2012). SWOT Analysis SWOT Analysis is important for every organization as it helps it in analyzing its capabilities and opportunities along with threats that will ensure that it is able to counter the challenges and take the business in the right direction (Sikdar & Vel, 2010). The detailed SWOT analysis of Chipotle Mexican Grill Restaurant is as follows: Strengths The company maintains its ownership in all the restaurants. Strong financial position allows it to undertake its various growth plans effectively Low cost of advertising as it relies heavily on Word-of-mouth and Internet marketing Customer base is strong as all customers are loyal to the brand Cordial relations with the suppliers especially organic ingredients Competitive edge in providing healthy food items Weaknesses Labor costs are increasing at an accelerating rate Sales get seasonal during few months Expansion strategy ensures that it enters into market with extremely diversified tastes to meet the requirements of the market Opportunities Consumers are becoming health conscious so there is growing trend of healthy and organic food items Online ordering process will become the norm with the advancements in technology Increasing demand of diversified food concepts Restaurant design that is sustainable is gaining popularity Threats Barriers of entry are low so competition can get intense in future Food prices are increasing which can result in high production cost Economic downturn can cause recession Consumer tastes and preferences are changing on frequent basis Natural disasters and climatic conditions can impact the growth and production of organic ingredients Competitor Analysis In the fast-food industry, there is a long list of competitors as there are many domestic and international enterprises present in this market. However, for Chipotle Mexican Grill Restaurant, the direct competition is from fast-casual Mexican market that comprises of Baja Fresh, Moe’ Southwest Grill, Rubio’s Fresh Mexican Grill, Qdoba Mexican Grill and Panchero’s Mexican Grill (Ragas & Roberts, 2009). According to the customer surveys, Chipotle Mexican Grill was given eighth, third and first ranking in years 2009, 2010 and 2011 respectively; it is considered to be among the fastest growing restaurant chains in United States. It has been stated that all of its restaurants serve total of about 750,000 customers daily (“About Us”, 2012). III. Market-Product Focus In order to enter into Columbus, Ohio market, most of the fast-food restaurants target young people as it is evident from the demographics of the state that majority of its population constitutes of people within the age bracket of 16-30 years. Almost all of the large fast food chains have their headquarters in Ohio; for instance, Wendy’s Corporate headquarter is in Dublin, Ohio and White Castle in Columbus, Ohio (“Fast Food Restaurants in Columbus, Ohio”, 2012). Some other fast-food chains like Steak Escape, Max & Erma’s, Donatos Pizza, Bob Evans Restaurants, Cameron Mitchell Restaurants and Charley’s Grilled Subs are located in Columbus, Ohio as well. It is considered to be the best test marketing region for evaluating the acceptance of the restaurant by the target market (Dahlen, Lange & Smith, 2010). Considering the successful operations of Chipotle Mexican Grill Restaurant, it has been decided that it will target entirely new market with existing one of teenagers which comprises of older people as this market is often neglected by the fast-food restaurants. The profile of the target market is as follows: Gender: Male and Female Age Group: 40 years and above Income Level: US $40,000 per year Lifestyle: Passion for socializing, young at heart, adventurous, love to dine out, health conscious Occupation: Either employed in an organization or self-employed, businessperson and consultant After reviewing the situation analysis of the company, the marketing and product objectives are as follows: 1. To increase market share in Columbus, Ohio from 8 % to 10% by October 2013. 2. To create awareness about the importance of healthy and nutritious foods so that there is reduction of 5% in the number of people suffering from health related issues every year. 3. To increase the sales from existing outlet by doing heavy promotion for the older people so that it can rise to 15% market share from present 10% share. IV. Marketing Program Strategy and Focus The marketing program strategy and focus comprises of 4Ps (Product, Place, Price and Promotion) along with strategic positioning so that an organization has clarity about the mechanisms that will be employed to achieve the desired business objectives (Ernst, Hoyer & Rubsaamen, 2010). Each of the important elements of marketing program that will be targeted towards the new target market in Columbus, Ohio are discussed below to give detailed information about its marketing strategy: 1. Product – The company will offer the similar range of products for the old people but the ingredients used will be 100% preservative free and will be extracted from organic sources. Along with the normal food items, some healthy drinks and salads will be introduced in the second half of the year i.e. in May 2013 to provide healthy option to the target market. 2. Price – The price range offered to the customers will be competitive and they will be offered meals within their affordable range. The prices of the products will be in between $3 to $8 per meal. 3. Place – The first location where older people will be targeted will be on the outlet present on 488 S. High Street Columbus. The restaurants will be revamped to meet the requirements of these people who are looking for a soothing and sophisticated place for dining out. 4. Promotion – In order to attract more people on the outlet, the promotional activities will be designed in ways that will help the restaurant in increasing its sales at much higher level. Both the social networking sites and advertisements in newspapers will be used to create awareness about the restaurant’s aim of serving old generation people. Even the billboards will be used for posters that will show that the restaurant is an ideal choice for both young and old people. Since the old people like to read newspapers, the ads will be placed once every week in The Columbus Dispatch newspaper; the ad will be printed on the second page of the newspaper and will occupy ? of the page and the cost of ad is $1,500. The strategic positioning of Chipotle Mexican Grill Restaurant in Columbus, Ohio can be described as “to provide high quality food items that are developed with organic and fresh ingredients in an environmental-friendly way so that the company fulfills its corporate social responsibility effectively while ensuring alignment with its ‘Food with integrity’ slogan”. V. Financial Projections The main assumptions made in the financial plan are as follows: 1. The advertisements will be placed once every week in the newspaper and the cost of ad as per specification is $1,500 for first three months. 2. The website management will be outsourced and it will have yearly cost of $1,800 that will even include up gradation of the website content and advertising on online mediums such as social networking sites. 3. Within the amenities close to the outlet, there are six billboards and the restaurant will use three of them to display the new message of food for young and old people. The cost of each billboard is $300 per day. The posters will remain there for a week and later reminders will be sent in the form of flyers with Friday newspapers every week for first three months of this campaign. The cost of each flyer is $1 and 100 flyers will be inserted with the newspapers. 4. After these heavy expenditures on advertising for first three months, discount packages will be offered to attract more customers on the outlets and it will continue till the end of the year. The packages will be published in the form of posters within the store which will change at the end of each month and ads will be published once a month in the newspaper according to the agreed terms and conditions i.e. second page of The Columbus Dispatch, size ? and cost $1,500. 5. The direct cost of sales include the ingredients’ cost, transportation cost and back-end staff cost. 6. The management salaries comprise of the compensation of all board of directors along with Chairman. 7. There will be four staff members along with restaurant manager who will look after the business operations. 8. There will be no tax charges in the first three years of operations in Ohio.   First year of operations ($) Sales 156,000 Direct Cost of Sales 42,000 Gross Profit 114,000 Expenses   Management salaries 25,000 Staff salaries 13,000 Rent 4,000 Insurance 2,000 Utilities 1,500 Payroll Taxes 140 Business Travel 8,000 Depreciation 1,000 Marketing expenses Newspaper ads for initial promotion ($1,500 * 4 * 3) 18,000 Flyers ($1 * 100 * 4 * 3) 1,200 Billboards ($300 * 3 * 7) 6,300 Promotion posters ($100 * 2 * 9) 1,800 Promotion ads ($1,500 * 9) Website Management 1,800 Net Profit 30,260 VI. Implementation Plan In order to measure the effectiveness of the marketing program, the company has set certain short-term milestones to measure the performance of the restaurant in Columbus, Ohio (Packaged Facts, 2009). Some of the milestones identified by the company are as follows: 1. By the end of first month i.e. November 2012, sufficient advertising will be done to create awareness about the brand for older people. 2. In December 2012, the look of outlet will be changed so that it is appealing for the elders. 3. From February to May 2013, the business will continue with its new strategy and if the results will be positive, then it will consider including this market as part of its segmentation. 4. During summer vacations, contests will be arranged in which people will be given various gifts and prizes. 5. From September to October 2013, health related seminars will be held on weekly basis so that older people are well-informed about the alternatives for taking care of their health. VII. Evaluation The marketing efforts of the company will be reviewed monthly as the technological advancements take place on an ongoing basis and new products are introduced quickly as well. The initial source of evaluation for the company will be the difference in the estimated and actual sales of the product (Ferrell & Heartline, 2008). On the website, the customers will be allowed to give their feedback about the product features and the existing customers will be asked to participate in the survey of the computers. However, some of the evaluation tools that will be used to measure the performance are as follows: 1. Carry out customer satisfaction surveys and gather information from customer reviews on various blogs and review the customer feedback by selecting the users from Beta test market both current and potential ones. 2. The evaluation of direct sales and surveys and e-mails designed for follow-up purpose with products recently purchased will give a proper indication about the customer’s satisfaction level and how successful the product is in view of the customers. References About Us (2012). Retrieved November 26, 2012 from http://www.chipotle.com/en-US/company/about_us.aspx Brandau, M. (2012). Survey: Consumers name Chipotle favorite Mexican chain. Retrieved November 26, 2012 from http://nrn.com/latest-headlines/survey-consumers-name-chipotle-favorite-mexican-chain Dahlen, M., Lange, F., & Smith, T. (2010). Marketing Communications: A Brand Narrative Approach. 1st ed. United Kingdom: John Wiley & Sons Ltd. Ernst, H., Hoyer W.D., & Rubsaamen, C. (2010). Sales, Marketing, and Research-and-Development Cooperation across New Product Development Stages: Implications for Success. Journal of Marketing, 74(5), 80-92. Fast Food Restaurants in Columbus, Ohio (2012). Retrieved November 26, 2012 from http://millionairetips.hubpages.com/hub/Fast-Food-Restaurants-in-Columbus-Ohio Ferrell, O.C. and Heartline, M.D. (2008). Marketing Strategy. 5th ed. USA: Cengage Learning. Food with Integrity (2012). Retrieved November 26, 2012 from http://www.chipotle.com/en-US/fwi/fwi.aspx Packaged Facts. (2009). Consumers and sustainability: Food and beverage. Rockville, Maryland: Market Research Group. Ragas, M.W., & Roberts, M.S. (2009). Communicating corporate social responsibility and brand sincerity: A case study of Chipotle Mexican Grill’s ‘Food with integrity’ program. International Journal of Strategic Communication, 3(4), 264-280. Sikdar, A., & Vel, P. (2010). Getting the customer interested in your innovation: role of distribution and promotion strategies. Business Strategy Series, 11(3), 158-168. Unique Corporate Culture drives results (2008). Retrieved November 26, 2012 from http://managementcv.com/Sample_Documents/CMGCEOElls102809.pdf Read More