Hot Dog Cart Business in the United Kingdom - Essay Example

? Marketing Strategy Table of Contents Table of Contents 2 Executive Summary 3 Introduction 4 Porter’s Five Forces Analysis 5 SWOT Analysis 8 GenericStrategy 9 Ansoff’s Matrix 10 Marketing Objectives 11 Strategic Communication 12 New Marketing Mix 13 Conclusion 15 References 16 Appendices 18 Executive Summary The project deals with the introduction of hot dog cart business in United Kingdom. In the first part of the project an introduction of the concept of the business has been given. The next portion of the project continues with the industry analysis of the UK fast food industry followed by the SWOT Analysis of the business. Then the strategies which should be implemented in the new market have been suggested to the business using porter’s generic strategy and Ansoff’s matrix. The business has been recommended to follow cost leadership strategy in order to implement the growth strategy of market extension. Finally a proper marketing mix has been suggested to the company in order to achieve competitive advantage in UK fast food industry. Introduction The project deals with the introduction of the American Hot Dog Cart in the United Kingdom. It will also reflect the plans for implementing the strategies, promoting the products in the new market and driving the sales. The American hot dog carts provide quality hot dogs in the most reasonable prices. The carts are good quality gastronomic equipments designed in the best way to attract and serve the customers with best hot dogs. These light weight carts are easy to be moved from one place to another and facilitate serving multiple locations in a short period of time. These carts supply food to a large number of people every day. The high demand of hot dog in America drives this business due to the attractive price offerings. Porter’s Five Forces Analysis United Kingdom is the country having the highest consumption of fast food in the world. The country possesses different cultures which has a huge impact on the success of the fast food industry there. Porter’s five forces analysis will help to analyse the structure of this industry. (Source: Larsen, 2009) Bargaining power of buyers There is a popularity of hot dog among maximum consumers in the country. There are many companies offering hot dog in the fast food industry. These companies make huge investments for the promotion of their brands. The availability of this product by a large number of companies has strengthened the bargaining power of the buyers. The buying power is also strengthened because of the insignificant switching costs. Thus the bargaining power of the buyers is high. Bargaining power of suppliers The supplier of a business is an important element of its ability (Ahlstorm and Bruton, 2009). An important input required in the fast food industry is the supply of food. The food supply market in UK is concentrated. The suppliers of raw meat, farmers etc. are the main suppliers in this industry. These suppliers have reduced their dependency on the fast food companies because of the availability of other kinds of profit seeking food service customers. It is very significant for the fast food companies offering hot dogs to maintain their existing suppliers as they offer good quality marketable food at low cost. This increases the supplier power in UK market. Thus the bargaining power of suppliers is very high. Threat of new entrants The legal framework in the UK provides barrier to the new entry to some extent. However, this kind of barrier to the new entrants is limited to a particular extent. It becomes very difficult for a new entrant to make profit in the fast food industry and perform well initially because of low consumer loyalty and the barriers to the entry in the industry. The cost related to the setting up of a new chain the market is low and in the recent years there have been many new entrants. This is a serious threat to the existing players in the industry. Thus the threat of new entrant is high. Threat of substitutes The substitutes of fast food products like hot dogs include the other forms like frozen foods, various ready to eat foods etc. The price of the hot dogs in the fast food category is cheaper than the other forms of food products and services. It is due to this reason that the substitutes do not challenge their prices. The fast foods like hot dogs have to face various criticisms related to the health issues of the consumers whereas the retail foods promise to the consumers of being safe and healthy. The wide range of product offerings by the substitutes increases the threat of these substitutes to some extent. Thus as a whole, the threat of the substitutes to fast food industry is moderate. Rivalry of the existing firms The intensity of rivalry among the existing firms is an important determinant in this analysis (Martin and Thomson, 2005). The competition in the fast food industry is very high. Rollover is one of the leading hot dogs supplying company serving a large number of consumers regularly in the industry. There are other strong competitors in the market providing tough competition. These dominant companies have a control over a larger share of the total fast food industry. These companies have the ability to hold the share because of the high marketing being done by them. The location of the fast food restaurant acts as the most important element in the competition in the industry. Thus, the rivalry among the existing firms is high. SWOT Analysis The SWOT analysis helps the companies to realise the alignment of various organisational issues (Ansoff, 1965 and Mintzberg et al., 1998). SWOT analysis will help to analyse the strength, weakness, opportunity and threat related to the hot dog cart business. Strengths One of the biggest strengths of hot dog cart business is that it provides very quick service. The advantage is that a lot of time is saved. The foods are offered at affordable prices. The prices are low and the quantity is more, hence it gives the value for money to the customers. Moreover the consumers do not have to travel long distances to have the food. These advantages boost the sales and facilitate the business. Weaknesses The hot dog industry cannot cater to the changing tastes and preferences of the consumers always. The hot dog is generally cooked before packaging. The oil content in this kind of preparation is very high. It may lead to various health issues. Opportunities The time crunched customers like the quick service provided by the hot dog cart business. The satisfying appetite is available at affordable prices. The hot dog cart business uses equipments which are attractive and provide quality hot dogs to the customers. All these advantages facilitate the business to expand its operations by the proper utilisation of the opportunities. Threats The ready to eat food products are in an increasing demand in the fast food market. The consumers do not have to make much effort in preparing the food. There is an increasing threat from these food products as the substitutes of hot dogs. The reduction in the demand of the hot dogs will pose an indirect threat to the hot dog cart business as well. Generic Strategy According to Porter (1980, 1985 and 1991) the businesses should adapt some specific generic strategies in order to achieve competitive advantage in the market. Research scholars like Eldring (2009) and Grant (2010) state that a single strategy implementation might not allow a business to sustain in the competitive market environment. Thus the companies should implement a mix of the generic strategies. The three strategies suggested by Michael Porter are: Cost Leadership: A business follows this strategy in order to become a cost leader in the market. The volume of the business and the sales are two significant factors for achieving cost advantage. Differentiation: The business should select some specific attributes which are important for the customers and should position them in a unique manner to achieve success in the market. The business in turn gets benefitted by the premium price. Focus: Here, the business selects a particular segment in the industry in order to achieve competitive advantage in the market. The hot dog cart business should try to achieve cost advantage based on the low cost strategy. It should try to provide quality service to the customers at affordable prices. The cost leadership strategy involves the strategy of being the leader in respect of cost in the market. The business is planning to enter into a new market. In order to achieve competitive advantage in the new market, it is very important for the hot dog cart business to offer good appetite food at attractive low prices to the customers. The business should make good amount of investment in technology that will bring down the costs. Ansoff’s Matrix Research scholar such as Mintzberg et al (2009) has stated that the companies should bring changes in the product portfolio in order to adapt to the changes of the consumers demand. The Ansoof’s matrix is an important marketing tool which helps to determine the product as well as the market growth strategy (Venture navigator, 2006). The Ansoff’s matrix has been used here to reach to the strategic option of market expansion of the hot dog cart business into the UK market. According to Ansoff’s matrix there are four growth strategies which consider different ways to sell the existing and new products in the existing as well as the new market. They are: (Source: Ansoff, 1987) Market Penetration: In this strategy the business achieves growth with current products in the existing market only. In this strategy the business aims to increase the market share. Market Extension: In this strategy the business tries to achieve growth by targeting the current products in the new market. Product Development: In this strategy the business achieves growth by developing new products targeted to the current market. Diversification: Here the business grows by developing new products targeted to the new markets. Hot dog cart business should adapt the objective of market extension in order to introduce this concept in UK market. If the business serves the customers with low priced foods then it can achieve competitive advantage in the new market segment. As the core competencies of the business are related to the specific food products in the new market, so the growth strategy of market extension is a good strategy. The strategy of market extension as a market development strategy involves more risk than the market penetration strategy. If the business is preferred and accepted by the consumers in the UK market then it will provide huge profit. Marketing Objectives The marketing objectives of the business are evaluated on the basis of SMART approach. The specific objective of the business is to achieve a strong position in the new market within next 5 years by implementing proper marketing and promotional strategies. The measurable objective of the business is to minimize the cost structure and implement all the marketing and promotional strategies in a cost effective manner. The achievable objective of the business is to achieve the financial break even position by increasing the sales volume and minimizing and controlling the operating expenses. The realistic objective of the business is to achieve a remarkable position in the new market by the optimum utilisation of the resources. The time bound objective of the business is to fulfil all the objectives mentioned above within a time period of 5 years. Strategic Communication Hot dog carts business needs to identify the target market before making any marketing communication plan otherwise it will result in the wastage of resources in attracting the non potential customers. The market should be segregated on the basis of the income level, demographics, education level etc. in order to make an effective communication plan (Berkowitz, 2011). A customer profile should be created for targeting the customers in the new market. Customer profiling for hot dog cart business has been shown in Appendix 1. It is clear from the analysis shown in Appendix 1 that the segment 1 will be the target market for hot dog cart business in order to enter in the UK market. It should plan the market communication strategy based on the needs and the demands of the customers lying in that segment. The young generation prefer fast food. They have the nature of following the social trend. Thus, this business will achieve competitive advantage in the new market by attracting the young generation. New Marketing Mix Marketing mix is the mix of a company’s different marketing plans (Belohlavek, 2008). Product The product strategy should be planned by the business in such a manner that the customers easily get attracted to it. It should always provide a differential advantage over its competitors in the new market (Hobbs, 2011). The quality of the products and services offered by the business should be reliable. Price The hot dog carts business should keep the price of its products minimum in the new market in order to achieve the cost leadership strategy as suggested in the porter’s generic strategy model. The low price offering by the business will help to attract the young generation. Place The place should be selected in such a manner that the product holds importance. As the target market of the business is the young generation, so it can plan to provide services in the college and the office park areas. The business will make a huge profit by providing services in the college areas. The business will use a mix of push and pull strategy for distributing the products. Promotion The business can choose the promotional strategy of sales promotion. It can provide discounts on the sales. This will act as a promotional activity to increase the volume of sales. It can also choose the promotional strategy of building public relations. It can provide some attractive offers to the top consumers of the business product. This will help to build consumer loyalty and also attract new consumers. It can provide attractive discounts during festivals and events. It can use the social media networking as an effective promotional strategy. The media calendar as shown in Appendix 2 will help to show the frequency of the promotional activities from January 2012 to March 2014. A promotional budget has also been provided in Appendix 3. People People play a significant role in the product delivery process as a product cannot be considered to be separate from the individual delivering it. The business requires efficient employees who will serve the customers in such a manner that their behaviour brings in more customers and helps to retain the existing ones. Process The business should at first understand the needs and demands of the targeted customers. It should then analyse the market and also the competition there to plan for a strategy which will help to achieve success. It should plan for a suitable promotional strategy which will help to attract the customers easily. The business should plan for selling the products in a systematic manner. The main objective of the business should be customer satisfaction. Physical evidence The carts providing hot dogs to the customers should be attractive. The behaviour with the customers should be very friendly so that they get satisfied by the quality food as well as the service provided. Conclusion The hot dog cart business has achieved a success in USA. The introduction of this concept in the United Kingdom has been a risky decision but will give a good amount of revenue in return if the business achieves competitive advantage in the new market. A proper implementation of different strategies and planning of marketing mix will help the business to gain a successful position in the new market segment. References Ahlstorm, D. and Bruton, G. D., 2009. International Management: Strategy and Culture in the Emerging World. Connecticut: Cengage Learning. Ansoff, H. I., 1987. Corporate Strategy. 2nd ed. London: Penguin. Ansoff, H.I., 1965. Corporate Strategy. New York: McGraw-Hill. Belohlavek, P., 2008. Unicist Marketing Mix. Houston: Blue Eagle Group. Berkowitz, E. N., 2011. Essentials of health care marketing. 3rd ed. Burlington, Massachusetts: Jones & Bartlett Learning. Eldring, J., 2009. Porter ?s (1980) Generic Strategies, Performance and Risk. Hamburg: Diplomica Verlag. Grant, R. M., 2010. Contemporary Strategy Analysis and Cases: Text and Cases. Hoboken, New Jersey: John Wiley & Sons. Hobbs, D.P., 2011. Applied Lean Business Transformation: A Complete Project Management Approach. Newcastle: J. Ross Publishing. Larsen, S., 2009. The Five Forces Model. [online] Available at: < http://blog.bootstrapbusiness.org/the-five-forces-model-18-02-2009.html> [Accessed 29 March 2013]. Martin, F. and Thomson, J. L., 2005. Strategic Management: Awareness and Change. Connecticut: Cengage Learning EMEA. Mintzberg, H., Ahlstrand, B. and Lampel, J., 1998. Strategy Safari: A Guide through the Wilds of Strategic Management. New York: Free Press. Mintzberg, H., Ahlstrand, B. W. and Lampel, J. B., 2005. Strategy Bites Back: Strategy is a lot more, and less, than you ever imagined. Upper Saddle River, New Jersey: FT Prentice Hall. Porter, M. E., 1980. Competitive Strategy. New York: Free Press. Porter, M. E., 1985. Competitive Advantage. New York: Free Press. Porter, M. E., 1991. Towards a dynamic theory of strategy. Strategic Management Journal, 12, pp. 95-118. Venture Navigator, 2006. 30 Minute Business Analysis ANSOFF Matrix. [online] Available at: < http://www.venturenavigator.org/content/business_analysis_ansoff_matrix> [Accessed 29 March 2013]. Appendices Appendix 1: Customer Profile Segment Age Group Annual Income Level Psychology Education 1 18-28 > $40,000 They do not give importance to the ethical trading and follow the social cues. They seek high school level or college level education. 2 28-45 $40,000-$75,000 They give importance to the fair-trade certified products and are willing to pay extra amount of money for these products. . They seek masters level education 45-65 >$75,000 They purchase products which will create and enhance their image in the peer group. Their purchasing behavior is not directed by the level of education. Appendix 2: A Media Calendar Jan 2013 Feb Mar April May June July Aug Sept Oct Nov Dec Jan 2014 Feb Mar 3 2 1 1 1 2 2 1 1 1 1 2 2 1 1 2 2 3 2 1 1 2 Appendix 3: Promotional Budget Particulars Amount (in ?) Sales Promotion 2,000,000 Public Relation Activities 2,000,000 Social Networking Activities 1,000,000 Activities to meet the objectives 4,000,000 Total 9,000,000 Read More