Customer Loyalty to Fast Food Restaurants - Assignment Example

? Fast Food Restaurants Loyalty With the rapidly growing trend of fast food and eating out traditions, fast food industry has faced intensifying increase in competition. Numerous restaurants, ranging from Chinese to continental to Italian and French, have opened up around the globe. The increased liking for fast food had emerged owing to the globalization that led to numerous foreign food companies entering other countries' fast food industry, thus leading to the widening variety of food. Being a service providing industry, fast food restaurants give chief preference to building customer loyalty, considering the many substitutes their customers have due to the excessively available restaurants. Therefore, in Fast Food restaurants industry, customer loyalty is built, earned and retained with the following components; Product quality, Product attributes, Brand name, Store environment (relates to customer experience with the restaurant and restaurant's ambiance), Service quality, Price, Promotion, Trust and Satisfaction. In this industry, a loyal customer means the person who avail's a restaurant's services, is highly satisfied with them, has a pleasant customer experience with the place, trusts the restaurant to provide high quality good food, considers product/service attributes to be excellent, considers the product/service quality as high, considers price to be worth the product/service offering, rates promotional activities to be highly attractive and goes for the brand name created by the restaurant, like McDonalds (Nezakati, 13). For fast food firms, customer loyalty is when a particular customer revisits their restaurant again and again and repurchases their service. Moreover, these are the customers who visit the restaurant very frequently, for instance a customer who eats at the restaurant twice every week. They are happy customers who give a positive feedback when asked about the food and they give generous tips to the waiters. Customer loyalty is measured by the revenue generated from a particular customer, a regular customer whose name every waiter would know or who could be recognized by face (Rehman et.al., 1-2). For customers, customer loyalty is the high level of satisfaction they receive from dining in a fast food restaurant. For them, customer loyalty is a product of high quality product/service that completely fulfills the customer expectations and satisfy their preferences or needs. For customers, to be a loyal consumer of a fast food restaurant's food, it is essential for the restaurant to provide them with a complete service experience. The ambiance of the place must be pleasant and enjoyable. Food must be of high quality and most importantly it must be hygienic and worth every penny they pay for it. The service must be prompt and efficient as customers do not like to wait a lot when it comes to food and restaurant staff must be hospitable and helpful since many at times customers ask for suggestions from the staff as to what they should order and what is the best dish they serve. So in a nutshell, for customers to be loyal they must be provided a high quality food service as for customers, customer loyalty is what an organization earns from the absolute satisfaction of a customer. It is all about meeting customer expectations and living up to them (Rehman et.al., 1-2). To be more specific, companies and customers define customer loyalty by dividing it into two types; attitudinal loyalty and behavioral loyalty. Attitudinal loyalty is a state of mind a customer is in which displays a positive preferential attitude of the customer towards a company's products/services. It simply depends on the customers' liking, if they like a certain brand, like in this case if they love McDonalds, they will even pay a premium price to buy the product compared to its lower priced competitor, for instance KFC in this case. Behavioral loyalty is simply dependent on the customer's conduct without any consideration of their attitude or preference. Here, customer's re-purchasing behavior depicts the customer to be a loyal one (Peppers & Rogers). Customer lifetime value of every restaurant around the globe would be different. This depicts the amount a restaurant would spend on acquiring a customer parallel to the revenue generated from that customer. On average, worldwide fast food restaurants have a customer lifetime value of approximately $15 assuming the acquiring cost of a customer is $100 and the company earns $15 more from this customer (Best). To encourage retention and loyalty of customers, restaurants offer different kinds of meal deals. They provide customers with special deals on special occasions like Christmas, Halloween, Eid and Diwali etc. Discount vouchers are provided to customers to encourage them to return to the restaurant. To retain customers, they provide them with high quality service, they continuously take feedback and managers sometimes themselves roam around in the restaurant and talk to customers asking them for their feedback. In many places feedback forms are available at tables to get an insight on their views. All these measures are taken in recent times in this industry. Restaurants provide customers with loyalty cards/discount cards/membership cards to retain them. They communicate with them through email marketing and thank you cards etc. Ambience creates changes with different occasions like Valentine's day etc. to attract new customers. Good serving size is another way of acquiring and retaining food lover customers. Through social media particularly Facebook, restaurants communicate their new offers and new products. Websites like Food Panda has helped restaurants offer an Order online service. Drive-thru, take away services are very commonly used by restaurants these days. Loyalty programs are implemented by many restaurants which have special rewards for customers on earning points by purchasing their food (Yohn). Fast food restaurants must have a hospitable environment. They must greet customers with warmth and guide them thoroughly to make the right choice while ordering, leaving them highly satisfied and loyal. Quick service and consistently high quality food is another way of gaining customer loyalty and retention. The frontline staff communicating with customers must be courteous and must listen to customers complaints. Promptly solving customer complaints help build good relations with customers. Working on customer suggestions and improving service is a strong tool to develop good customer relations. Communicating with customers through social media pages and listening to their complaints, taking action and rectifying any issues highlighted by customers further develops trust in customers of the restaurant's service. Thus these are a few measures that could help restaurants improve customer relations (Yohn). Service Blueprint Typical Fast Food Restaurant (Singh, 21) McDonalds Blueprint There are three critical service encounters in this service. The first is remote encounters which includes online orders, mostly through Food Panda or other such websites. Second is phone encounters that is ordering through phones by calling on their landline. Lastly is the face to face encounter which is ordering at their franchises face to face to the service staff (Singh, 21). Service blueprinting is of an immense value to restaurants and other service firms. It is a visual representation of the business processes being conducted in the business. This visual representation helps in improving the business processes to further enhance their service offering, it helps cater to any problems in the processes beforehand as it is easier to spot any failures in the restaurant operations through blueprint. These further help reinforce customer-orientation in employees since it allows them to see their contribution in the entire food provision process at a restaurant and clearly defines their communication lines through the frontline and backstage feature in these prints. These prints benefits a service marketer by letting him see how and where to market the restaurant's service. It helps him see how and what features of a restaurant could be used while promoting the food chain and how around the restaurant promotional material like new offers or special deals etc. could be placed to capture attention of maximum customers entering and leaving the place (Bitner et. al., 5). Physical Evidence Service-scape or the physical environment in a restaurant plays a major role in this industry. For customers, ambience of a food place must be hygienic and attractive. It is obvious that the environment where the service is being provided is significant and thus plays a huge role in satisfying customers and better yet gain customer loyalty. Service-scape plays four major roles in a restaurant. First it is a package which displays the food service and quality which will be provided. The outer look of a food place matters as the outlet, its trays, ketchups, glasses, tissues, tables, chairs and the entire ambience is the restaurant's package. It acts as a facilitator since a well-designed outlet must have signs, postages direct customers, proper seating arrangement and proper ventilation help create a good ambience for dining in. It acts as a socializer as many fast food restaurants like McDonalds have play areas for children and comfortable seating arrangement, which helps customers eat at luxury and have fun by socializing with others. Lastly, it acts a s a differentiator since the outer look, color and ambience of a food place distinguishes it from other competitors, like McDonalds' red and yellow sets it apart from other fast food restaurants (Singh, 27). Service-scape is part of the customer's experience in a restaurant. If the environment of the restaurant is extremely warm, unhygienic and poorly designed, it could give a negative impression of the food chain. Also, this psychologically seems unpleasant to customers to eat in a weird or disturbing service-scape, thus putting them off and leading them not to re-purchase the restaurant service. It provides cues to customers about the service quality, character of service quality and the service itself, which customers consider before and after purchasing the service. Service-scape assists in providing efficient service to customers by paying its four roles mentioned above and create a good eating experience for customers so that they return to avail the service again (Singh, 23). Service-scape helps distinguish restaurants from each other. Mostly restaurants create the ambience based on the colors they use on their logos for marketing. Considering this fact, service-scape helps them maintain a distinct recognition of their brand in comparison to other competitors. For instance, McDonalds red and yellow is a part of its brand image and thus sets it apart from competitors displaying a high quality burger restaurant which people love to go to (Singh, 27). Speculation Fast food industry has numerous strengths and weaknesses. Firstly, this industry usually has a cost advantage, since setting up a food chain is a cheaper yet profitable business. Restaurants usually have a strong management owing to the relatively easy management requirements and decision-making compared to other businesses. This industry is highly receptive to innovation and thus promotes innovative food culture, helping it produce unique products. The industry has the pricing power as it could charge higher prices to customers despite many substitutes. Lastly it has financial leverage which allows it to expand the businesses and earn higher profits (Schermerhorn, 215). Coming to weaknesses, there is a huge margin of work inefficiencies, considering it’s a service industry where sometimes mishaps could happen often. Currently the industry has high debt burden, it is technologically outdated, the R&D and supply chain is weak and the industry faces high employee turnover. Numerous opportunities exist for the industry. The existence of fragmented markets provides the industry with numerous expansion opportunities. Financial leverage allows it to expand readily in other markets and products. Online marketing has opened up various opportunities to increase sales. Inclination towards innovation gives it an edge of producing unique products as much as possible and penetrate new markets. Inception of various new services assist the industry in meeting customer expectations better and diversify their customer base. Lastly, new technology adoption will help it better meet customer needs and help it build barriers against competition (Schermerhorn, 215). I believe that with the increased popularity of fast food and continuous concentration of these restaurants, the Fast food industry has a long way to go. Its progress over the past years has been immense and the fast food chains have been running quite profitably despite the intensifying competition. Yet the downside of this increased competition is that with more and more fast food restaurants opening worldwide, the industry would have such fierce competition that these restaurants would barely be able to maintain their present customer market-share. Increasing customer base would become immensely difficult and thus the industry would be taken over by a few giants like McDonalds and Burger King. In my opinion, I would not advise anyone to enter this industry. Although the industry is highly profitable and has low cost advantage, yet the increased number of businesses would eventually bring it to the maturity stage of product life-cycle and soon enough will proceed to the declining stage. Therefore, it would be best not to open a fast food restaurant, since the competition is extremely intense. Works Cited Best, Roger. Customer Lifetime Value. Marketing Metrics Handbook Blog. WordPress, 19 Feb. 2010. Web. 27 Nov. 2013. Bitner, Mary Jo., Ostrom, Amy L. & Morgan, Felicia N. Service Blueprinting: A Practical Technique for Service Innovation. Arizona State University: Center for Services Leadership (2007), 5. Working Paper. Nezakati, Hossain, Kuan, Yen Lee &Asgari, Omid.Factors influencing customer loyalty towards fast food restaurants.International Conference on Sociality and Economics Development. Singapore: IACSIT. IPEDR (2011): 13. Print. Peppers & Rogers. Customer Loyalty: Is it an Attitude? Or a Behavior?Peppers & Rogers Group, 1 Oct. 2009. Web. 27 Nov. 2013. Rehman, Abdul, Zia-ur-Rehman, Muhammad &Akhtar, Waheed.Factors affecting Brand Loyalty: a perspective of fast food restaurants. Saicon, 2011. 1-2. PDF File. Shermerhorn, John R. Management. USA: John Wiley & Sons,2011. 215. Print. Singh, Ankit. McDonalds and Subway. Services Marketing (2011): 21, 23, 27. PDF File. Yohn, Denise Lee.How to Keep ’Em Coming Back: Loyalty programsaren’t the only way to build repeat visits. QSR Magazine. Journalistic Inc., Feb 2012. Web. 27 Nov. 2013. Read More