Marketing Management and the Fast Food Industry - Assignment Example

Marketing management and the fast food industry BY YOU YOUR ACADEMIC ORGANISATION HERE HERE HERE Marketing management and the fast food industry Executive summary The fast food industry is currently experiencing downturns in profit or in customer volumes due to the current economic conditions of the UK region. Because of this, competitive activities in this industry are driving other fast food competitors to use new positioning strategies, remain more focused on pricing, and ensuring the delivery of a sense of brand value to consumers in their unique marketing strategies. This report highlights the potential marketing strategies for today’s fast food companies to remain viable in a difficult market environment. The marketing strategy Thomadsen (2007) offers information about McDonald’s and how the competitive activities of similar companies like the multi-national Burger King can make McDonald’s lean more toward differentiation strategies. When companies like Burger King begin changing pricing to create new value menu products and satisfy the growing consumer demand for frugal eating, McDonald’s removes their promotional emphasis away from pricing and focuses more on the consumer or their personal lifestyles. The marketing mix is important for companies in the fast food industry and they must consider price flexibility on behalf of the different segments of markets to determine whether a customer will remain loyal to one brand or defect to a lower-cost competitor. Since these companies create products which are generally similar in scope and variety, differentiation in the pricing area of the marketing mix is very important for strategic focus. Since this industry is known for being highly saturated by competitors (Euromonitor Intl., 2008), pricing is going to be a consideration which can be compared by similar menu prices by competition in comparison to the business’ own profit expectations. Also related to the marketing mix, a quality marketing strategy for this industry is to focus on place, in terms of how customers perceive the convenience of the location and also the demographics in a certain location. For example, if a new London McDonald’s were to be opened, the business would want to consider the likely volume of customers who will be patronising the store. It would not make sense to spend the operational funds to create a state-of-the-art McDonald’s with technological advancements if the local regional community appreciated tradition and an agricultural mindset. Therefore, in terms of the place, the products provided in-store require research conducted on the local consumers to determine menu options and the actual profit potential and feasibility of building a new McDonald’s in this region. The company leadership at McDonald’s also tends to support this idea of being consumer-driven (Annual Report, 2008). Differentiation strategies through promotion (as a competitive tool) are the most important area in today’s fast food industry. Creating a lifestyle connection with consumers, such as identifying market segments that appreciate fast food for its flavour, would require changing promotional materials to make one business appear tastier than their competition. This is why competitor analysis, as part of a total environmental analysis (SWOT or PEST Analyses) would be important to identify which tactics are being used by like competitors and then creating competitive solutions to make the business more fitting to consumer values or beliefs. This is also why psychographic segmentation should be considered for companies like McDonald’s or KFC to decide whether product-based promotion is important or focusing on positioning based on consumer personality traits. Gaining a solid psychographic profile for each restaurant in this competitive environment would rely on interviews or surveys about perceptions of a particular brand or even the industry as a whole. Wilson and Gilligan (2007) offer that understanding consumers’ actual needs is one of the most fundamental aspects of a successful marketing strategy. Research can accomplish this, such as with focus groups or surveys, however direct face-to-face contact with customers can be effective as part of customer relationship management. Having a representative from the company, as another promotional tool, to create external sales and promotional booths to highlight fast food industry changes could be of benefit as part of a marketing strategy concept. New and innovative cooking ingredients, sandwich combinations, or even technological changes which highlight the convenience of the new face of the restaurants can bring marketing success. This is a multi-billion dollar industry, in multiple international marketplaces, therefore the benefits of these types of promotions can differentiate one business as being more customer focused than a competitor. At the same time, such a promotional booth could allow customers a sample of new product offerings to judge their relevance, flavour, cost, or any other factor which the fast food competitor wishes to research and part of a R&D focused business. Thomas (2009) offers another example of McDonald’s and their ingenuity in coming up with new ideas to meet consumer demand through marketing. The business is using recruitment tools as a marketing strategy to reposition the business from being thought of as “the McJob” to a more sophisticated career option. This could be an important part of the marketing strategy for fast food companies today as a means to show customers that the business is committed to quality staff care and its commitment to better working environments. If used properly, this could be a differentiation strategy which is linked to the product itself, creating consumer connection in the process and helping to build loyalty to the brand. Tilling, Harman, Leivers and Williams (2009) describe the current consumer behaviours leaning toward a trend in healthy eating. Customers are not just acting on a fad trend but have incorporated lower-fat intake into daily consumption through a variety of household and restaurant foods (Wong, 2006). This could be attached to the packaging of the products as part of a new branding strategy where healthy eating information is even on the more unhealthy products. This could again reinforce the company’s commitment to responsible business and give consumers a proverbial one last chance to change their dietary eating habits. Other restaurants in this industry could benefit from a marketing strategy similar to this as differentiation if required. Competitor actions toward this same healthy eating trend might create the need for a secondary differentiation strategy just in case. Harvey (2009) describes that the amount of food wasted in the whole of the UK and the United States, daily, could feed 1.5 billion people. The fast food industry could utilise a marketing promotion where a certain portion of sales revenue would go toward a food donation organisation in support of consumers being more efficient with food. A Clean up Your Act campaign sending a consistent message about food waste might get consumers thinking about global events and promoting a social change in the process, with the fast food company taking the lead among competition. This would be the public relations end of this marketing strategy for the fast food industry so that doing business with the fast food company feels more like a partnership than a casual business transaction. This would be part of the branding strategy which would take several months, but the end result could be more brand loyalty over competition especially if this strategy is unique among competition. Fortunately, in terms of distribution and logistics, there is already a strong infrastructure for delivering product and for the end consumer, generally the in-store food experience. A new restaurant looking to move into this market would have ample supply of products based on the existing transportation network in the UK. This gives more quality suppliers of fast food products to choose from as well, so as to diversify the company’s product offerings (product line in this case). This is important for the marketing budget as a wide distribution strategy can be adopted rather than a narrow, structured distribution strategy which would only be available if the current supply chain was limited. Fortunately for today’s fast food companies in the UK, the existence of quality suppliers gives opportunities for strategic alliances, B2B cost savings initiatives, or any other win-win business scenario in which costs are watched and both team members benefit. A good marketing strategy for the fast food industry also involves understanding the business’ own strengths and weaknesses, through an industry-wide SWOT analysis. This would not only give insight into competition, but in how the business can better streamline their systems and processes to ensure high enough levels of inventory at the stores. There would always be cost issues to consider and finding areas to cut costs is a solid marketing objective, especially if the company is looking to set up a strategic alliance with suppliers and promote their commitment to efficiency or cost savings. Conclusion A quality marketing plan in this industry involves understanding competition, knowing what customers genuinely value in terms of product, quality and pricing, and then setting up an appropriate method to get the product to consumers and to promote it effectively. Efforts of competition have the potential of causing the fast food business to change strategies to regain consumer sentiment or higher brand loyalty. This really points toward the fast food industry being competitively-volatile, but that successes are available to innovative fast food companies through the use of unique positioning strategies. Bibliography Annual Report. (2008). McDonald’s Corporation. http://www1.mcdonalds.com/annualreport/index.html. (accessed 6 Aug 2009). Euromonitor International. (2008). Something for everyone: Concepts continue to merge as operators reach out to new markets. http://www.marketresearchworld.net/index2.php?option=com_content&do_pdf=1&id=1873 (accessed 6 Aug 2009). Harvey, Fiona. (2009). Our guilty secret; The food wasted each day in the UK and the US alone could be enough to feed 1.5bn people. Financial Times, London. 18 Jul, 14. Thomadsen, Raphael. (2007). Product positioning and competition: The role of location in the fast food industry. Marketing Science. 26(6), 792-804. Thomas, Joe. (2009). More than a McJob. Marketing, London. 15 Jul, 1. Tilling, J., Harman, J., Leivers, J. and Williams, D. (2009). Do consumers want more healthy options at fast-food restaurants?. Marketing, London. Jun 10, 24. Wilson, R. and Gilligan, G. (2007). Strategic marketing management planning implementation and control. Wong, Vivian. (2006). Examine the relationship between the Promotion of Healthy Eating and the Food that is consumed. The International Journal of Urban Labour & Leisure. 7(2). http://ijull.co.uk/vol7/2/wong.pdf (accessed 7 Aug 2009). Read More