The Opportunities and Challenges of Chili Grill and Bar - Assignment Example

Global marketing – strategy and practice Contents Contents 2 Executive Summary 3 Introduction 3 The opportunities and challenges 4 Global marketing strategies 6 Strategic positioning and recommendations 9 Conclusion 10 References 12 Executive Summary The global business environment exposes the organization to increased opportunities in terms of marketing goods and services, expanding market shares and exploring emerging market needs. While global marketing prospects are alluring, the key challenge lies in understanding the new markets and trends that shape the consumer decisions. There is growing need for market research and analytical insight of regional trends that shape customer needs and behaviour. The report provides a deeper understanding of the strategic marketing position for Chili’s a chain of restaurants in the US. Chili’s Grill and Bar offers its customers with exotic Mexican and Texan food through a chain of restaurant outlets all over America. The business development strategies consider exploring the UK markets in future. While the restaurant chain has been successful in establishing a strong market presence in the States, the UK market presents new challenges in the form of food culture and consumer habits. The report analyzes the market strategies of the retailer and recommends fresh strategic moves that can help Chili’s explore the UK markets with specific focus on the city of London. Introduction Organizations constantly seek new market opportunities for pursuing its growth objectives. However, international marketing strategies face the primary challenge of entering new markets and this challenge involves the vital decision of where, how, and when to enter. Decisions related to global marketing strategies are often complex considering the wide range of social, economic, political, and technology based factors that impact market viability and approach. Doole and Lowe (2008) in their works on international marketing strategy observed that globalization for firms “should be the route to maximizing performance by introducing, where possible, standardized marketing programmes and processes, but at the same time, adapting certain operational activities to local needs in order to maximize short term revenue generation” (p187). The vital strategic consideration while entering a new market is deciding on how and where to adapt as per the needs of the local market segments. The opportunities and challenges London presents a lucrative market for those in the food business owing to its demand for fast food and restaurant services (Horizon News, 2011). London is a vital business destination attracting large numbers of tourists every day. According to recent reports by PWC (2013) the UK bars and restaurants business is worth over £40 billion since consumers constantly seek new tastes and brand names continue to drive the choice of consumers. The food service sector in UK comprises of fast food services, restaurants, hotels, pubs, leisure, and catering services (Keynote report, 2012). Eating out has become a trend over the past few decades owing to scarcity of time to cook meals at home, tight schedules and increased propensity to spend on outside food. Hence the industry faces increased opportunities in terms of market growth and expansion. The choice of global markets is based on an extensive research of the market opportunities and consumer trends that drive industry performance (Doole and Lowe, 2008). Chili’s already has established its presence in the European markets of Germany and some Asian countries (Chilis website, 2013). Chili’s could have considered other European markets for global expansion, but the choice of London was based on its importance as a global business destination and the extensive market scope the city offers in terms of variety of cuisines and number of food services. While the London market offers extensive business development scope, there are number of challenges that might impact business viability. Among the key market challenges facing the restaurant business in London is the increased market competition with well known brands having a established and loyal customer share. Competing with larger and well known global brands in the food service industry is one of the key challenges facing the entry of Chili’s in London market. Marketing strategies and business models will have a strong impact on the success of this chain of restaurants in the UK. According to Keynote reports (2011) adaptation to local tastes plays a vital role in promoting sales and customer loyalty. The management must have a deeper understanding of cultural, social, economic, political and legislative factors impacting the scope of business development goals. A significant challenge facing the restaurant business in any part of the globe is economic downturn that has led to less number of people spending on luxuries. The global recession accounted for the loss of sales from 3.84 billion in the year 2008 to 3.69 billion in the year 2009 (Keynote reports, 2011). Similarly cultural and social factors shape the tastes, food habits and preferences of the locals. Each culture has its own unique characteristics that vary greatly from one country to another. A deeper understanding of the various social norms and customs shaping the customer preferences is an important pre-requisite. Growing health consciousness among people across all walks of life has led to vast changes in lifestyle and food habits. Statistical figures from DEFRA reports (2012) reveal that the obesity rates in England have increased by nearly 26 percent in England. The impact of this is evident in growing health issues and problems related to individual food consumption patterns. This has resulted in more people resorting to lifestyle changes and increased focus on consuming healthier food alternatives. Chilis will hence focus on serving different types of salads, sandwiches, and soups in addition to its regular menu items to cater to the health conscious needs of the customers. Global marketing strategies Globalization is rapidly gaining momentum across the world. This is made possible by the advancement of information technology and improved buying power. It provides growth opportunities for organizations across all industry sectors. Global penetration, through increased productivity, enhanced performance and improved technology innovations to gain competitive advantage, has become the order of the day. Global expansion as a whole is influenced by various factors like, social, economic, political and legal environment which are unique to respective markets. It becomes inevitable to understand these factors through extensive market research. Well defined strategies based on these research findings provide a basis for the companies for sustained growth. The primary objectives behind globalization of firm’s operations are economies of scale and market opportunities lure of profits and increased market shares market saturation in local markets responding to competitive market pressures Instead of formulating standard marketing strategies to global environment, some organizations, try to adapt to changing conditions and new opportunities by responding to the triggers within the environment. However, it is better to foresee and plan in advance than to succumb to the sudden changes in the market conditions. There is risk involved in every country in terms of political, legal and other social issues. Strategic planning always considers the changing environment that might negatively affect the company’s goals and objectives Business strategy is best described by authors Gary Hamel and C.K.Prahalad (1996) in their book ‘Competing for the future’, where they claim that “the firms need to go beyond the static analysis of fitting their environment and instead should stretch and leverage their resources to redefine both the company and its context. The key is not to anticipate the future but create it”. As stated earlier, the customers - their language and social behaviour, economic and political scenario and other legal factors are unique to different market regions. Common strategies for different market regions will not be effective. Hence the business enterprises must conduct an in-depth assessment and evaluation of existing conditions, predicted future behaviour of markets and market potential in the forthcoming years. As more and more organisations started entering the global markets, need for well planned strategies to meet the growing competition has raised. There is marked increase in the productivity levels of companies owing to the adoption of high end technology and innovative applications for producing goods and services. (Keegan, 2005) It is important to note that markets in the global environment are in different stages of development (Keegan, 2005). The various stages of economic growth and development are categorized into less developed, developing and developed markets on the basis of their gross national product (GNP). The economic growth and development of various countries have a direct impact on the social factors affecting the market environment. Understanding the social and demographic facts of the market, that they seek to penetrate, will facilitate in defining the consumer tastes, habits and preferences for various categories of goods and services. These parameters define the consumer needs, demands and their proportional buying ability. Whether domestic or international the underlying fact of marketing is, to make the presence felt in the penetrating market by satisfying consumer demands and needs. However, domestic marketing involves operations within familiar environment while the global marketing environment varies from one country to another. Exporting or selling of goods and services in a foreign country involves compliance to regulatory requirements, adapting to the consumer needs and preferences in the region and applying suitable strategy to market the products. The alternative strategies adapted by the firm under such conditions include – manufacturing/assembling of items in target country establishing a permanent presence in the foreign country to warehouse/distribute products licensing/franchising of firm’s products to local businesses outsourcing components from foreign countries (Bennett & Blythe, 2005) “In today’s challenging economy, it’s good time for cash-rich companies to expand into new markets or product lines through partnerships and acquisitions, and to look for bargains” (Piispanen, 2010). To be successful in a foreign market, it will be efficient to join hands with the local players, who have knowledge and expertise in that field. Mergers and acquisitions are proven strategies that can improve market expansion and growth. This strategy is highly effective in combining technological strengths, merging into the foreign economic system, and enhancing organizational capabilities. Through successful mergers and acquisitions the company can acquire business and technical expertise to establish a strong presence in new markets and consumers. The observations in the previous paragraphs highlight the significance of understanding global markets, consumers and culture through a deeper insight into the various factors influencing the local consumption pattern. Market research and strategic planning are important steps towards achieving the desired business goals. Based on these observations the next section provides the strategic positioning and key recommendations for a successful market presence of Chili’s in London. Strategic positioning and recommendations The strategic positioning of Chili’s in London should focus on establishing its market space. The chain of restaurants opened in the UK market will position itself as a convenience dining service catering to the needs of people from diverse demographic profiles. The key to increased customer traffic at restaurants is convenience and quality (FoodServiceCentral website, 2012). Convenience relates to accessibility of services through high visibility and easy approachability. The restaurant will ensure high visibility through aggressive marketing communication plans that include billboards, print and other media. Easy approachability will be achieved through strategic positioning of outlets in high traffic areas such as shopping malls and business centres. Online order taking facilities will also ensure easy access to the restaurant services along with dial-in options. Cost is an important factor determining the choice and selection of eating out (Food Service Central website, 2012). The economic downturn had reduced public spending on luxury and premium food services. The industry witnessed growing demand for affordable meals and discount offers (Food Service Central, 2012). Moreover, the past few years have witnessed growing volatility in the prices of food items (UNCTAD, 2011). However, the demand for luxury and premium food services remains high with growing wealth and prospering businesses. While luxury and premium class restaurants cater to targeted customer segments, Chili’s prices will attract customers from all demographic profiles. The key recommendations for Chili’s are – Research customer tastes, preferences and trends driving the food service business. Adapt to local tastes and food culture in order to cater to the varying taste buds of the cosmopolitan population in London. Position its restaurant outlets in high traffic areas such as shopping malls, airports and petrol stations. Offer competitive rates on the menu card to cater to the pockets of increased number of customers. Focus on delivering high quality food and services to customers across all outlets. Maintain a pleasing ambience for increased comfort and satisfaction of the customers. Adopt aggressive marketing communication strategies to ensure high visibility and improved market presence. Provide online and mobile facilities to help customers order online for increased convenience. Keep a constant tab on performance and customer feedback to ensure long term business success. Conclusion London has a strong market in the tourism and leisure sector owing to its significance as a business capital and an important global destination for both tourists and businessmen. The demand for food and restaurant services is thus high. Chili’s has a strong market presence in US and its plans to explore the UK markets are a viable business development opportunity. The report has outlined the key aspects that must be considered while venturing into foreign markets. Cultural adaptation and understanding customer requirements is the key to achieving the desired goals and objectives. References Bennett, R. & Blythe, J. (2005), International marketing – strategy planning, market entry & implementation, 3rd edition, Kogan Page Ltd. Chili’s website (2013), About us, [online] available from http://www.chilis.com (accessed 5 March 2013). DEFRA reports (2012), Food statistics pocketbook 2012, Department for Environment, Food and Rural Affairs, Government of UK. Doole, I. and Lowe, R. (2008), International Marketing Strategy, Cengage Learning EMEA. Food Service Central website (2012), Take-away and fast food restaurants in the UK industry – Market research report now updated by IBISWorld, [online] available from http://www.foodservicecentral.com/doc.mvc/take-food-restaurants-industry-research-updated-ibisworld-0001 (accessed 1 March 2013). Hamel, G. & Prahalad, C.K. (1996), Competing for the future, Harvard Business School Publishing. Horizons (2011), Growth of new eating out brands evidence of demand for something healthy and different, [online] available from http://www.hrzns.com/news/growth-of-new-eating-out-brands-evidence-of-demand-for-something-healthy (accessed 1 March 2013). Keegan, W. J. (2005), Global marketing management, 6th edition, Pearson Education Asia Ltd. Keynote report (2011), Survival of the fittest: the evolution of the restaurant industry, [online] available from http://www.keynote.co.uk/media-centre/in-the-news/display/survival-of-the-fittest%3A-the-evolution-of-the-restaurant-industry/?articleId=615 (accessed 1 March 2013). Piispanen, M. (2010), Competitive intelligence for mergers and acquisitions, Thomson Reuters, Competitive Intelligence, volume 13, number 1. PWC (2013), Pubs and restaurants, [online] available from http://www.pwc.co.uk/hospitality-leisure/issues/pubs-and-restaurants.jhtml (accessed 1 March 2013). UNCTAD (2011), Price volatility in food and agricultural markets – policy responses, UNCTAD report. Read More