Strategic Marketing of Hamburgers - Literature review Example

Running Head: Strategic Marketing Plan Strategic Marketing Plan: Hamburgers Name Student ID Course Lecturer Date Introduction A hamburger refers to a sandwich comprising of a patty of cooked ground meat, such as beef, chicken, turkey or pork usually put inside a hamburger bun that is sliced. Hamburgers are usually served with bacon, lettuce, onion, tomato, condiments, cheese and pickles. The word Hamburger originates from the second biggest city in Germany, Hamburg from where most people moved to the US. Louis Lassen was the first person to make and sell a hamburger in the United States in 1900 (Gazdziak, 2006). Normally, Hamburgers are sold in fast food joints. Some of the big fast-food chains that sell hamburgers are McDonalds from the United States and Burger King in Australia. The paper will contain a Strategic Marketing Plan for hamburgers. Relevance of mission Given that this is a new business idea, the mission for the hamburgers’ strategic marketing plan will be to create awareness of the product among customers. In marketing new products or services, creation of awareness constitute the main task for the marketing team of an organization. Creating customer awareness is crucial since it will inform customers about the hamburgers, their price and the value of buying them. SMART objectives The strategic marketing plan spans for a period of two years and will aim at achieving several objectives. The main objective of the plan is to create awareness of the hamburgers among middle-class people within the next three months. Hamburgers are usually associated with people with high socioeconomic status, but the business intends to make hamburgers whose price will be affordable by the middle-class people. Despite the low price, the business will ensure that quality is maintained in order to easily attract customers. Another marketing objective of the plan will be to establish the business in the fast food industry. The industry is dominated by large food chains such as Burger King, McDonald’s and KFC and thus, the business’ strategic marketing plan seeks to seize a customer base and gain popularity in the next two years. After the business has established itself in the fast food market and created awareness of the hamburgers among potential customers, it will then seek to increase its sales. At the moment, the sales are a bit low since it is a new business. Hence, the marketing plan aims at increasing the company’s sales of hamburgers by 12 percent by the end of the second year. Hierarchy of objectives Corporate strategy determines the type of businesses, which a company should engage in (Karami, 2007). The corporate strategy of the business will be operating a fast-food joint for vending hamburgers. According to Karami (2007), business-level strategy creates a competitive advantage in a business segment. Thus, selling hamburgers at an affordable price and providing high quality service will constitute the company’s source of competitive advantage. Functional strategy functions at levels such as finance, marketing, and operations to ensure each component of the company has policies for backing up the business (Karami, 2007). The functional strategy for the business will be setting the price for and marketing the hamburgers. Industry analysis The hamburgers will operate in the fast-food industry. The Porter’s five force analysis is used to determine the industry’s attractiveness by identifying the forces that influence it including barriers to entry, bargaining power of suppliers, bargaining power of buyers, threat of substitutes and level of rivalry. Barriers to entry Barriers to enter the fast-food industry are many. Drawing from Franchise (2013), several multinational fast-food chains, such as McDonald’s, Burger King, KFC, Domino’s and Pizza Hut dominate the industry. These global chains have a strong brand recognition and customer loyalty indicating consistent service and quality. Additionally, major market participants, such as McDonald’s, adjust their marketing orientation in order to match local social norms and cultures which strengthen their brand name and avoid consumer alienation. New participants in the fast-food industry struggle to contend with incumbent companies, since customers know their brands and campaigns for advertising are expensive. Moreover, new entrants do not have economies of scale like existing chains, which they have enhanced over time and use them to stay competitive in the industry. Bargaining power of suppliers Supplier power in the fast-food industry is limited due to competitive worldwide supply chain. There are many farms that supply top-quality ingredients for use by the food chains. The farms provide Tier suppliers with products that they transform into foods for McDonald’s to prepare and serve (Datamonitor, 2012). It is hard for suppliers to exercise considerable control over fast-food companies because of their large in the industry. Bargaining power of buyers Buyer power in the fast-food industry is moderate. According to Dibb & Simkin (2008), the competitiveness of the market increases the power of buyers and customers tend to be price sensitive without switching cost amid providers. However, major players try to lessen buyer power by offering a range of products that meets the needs of the entire market, instead of one particular segment. For instance, McDonald’s use “Happy Meals” to target children and take-away coffee and breakfast options to target professionals. Customer loyalty and strong brand name reduces the bargaining power of buyers in this industry (Datamonitor, 2012). Threat of substitutes The threat of substitutes in the fast-food industry is moderate. Substitutes are available since people can buy food almost anywhere. Nevertheless, convenience is the component that adds value to the service, hence reducing substitutes’ threat. Quick service restaurants have no comparison for those customers who want hot meals within a short time. With several differentiated players and different service offerings, consumers are able to choose the ideal value option (Spain, 2010). Level of rivalry Competition in the fast-food market is very stiff. Though Burger King and McDonald’s are almost duopolies in the burger market segment, many independent operators and global chains fragment the whole market. Competition is principally cost-based with companies constantly investing in services and products processes to destabilize competitors. Costs of exit are low and firms increase their capacity through franchising. The most prevalent weapon for competition is branding. For instance, in 2009, McDonald’s used more than $650 million on international advertising (Spain, 2010). According to Bamford & West (2010), prospectors are innovative, look for new business opportunities, grow and take risks. To implement the prospector strategy, organizations should encourage flexibility and creativity. Defenders try to bar new competitors from entering their market. Due to their narrow focus, defenders seldom require to make key adjustments to their structure, operation and technology. Analyzers try to retain their present businesses and be innovative in novel businesses. They have tight financial and accounting controls, low costs, creativity, high flexibility and efficient production. Reactors lack a consistent structure-strategy relationship. Instead of formulating a strategy to match a given environment, they respond to opportunities and threats in the environment in impromptu fashion. Based on Porter’s five force analysis of the fast-food industry, several conditions are necessary to ensure a strategic fit amid defender/prospector/analyzer/reactor strategies. The business will need to carry out extensive marketing of its hamburgers, offer fair prices, have several reliable suppliers, ensure high quality service and differentiated hamburgers and develop its brand. Industry and market attractiveness Macro and micro level analyses of the fast-food industry highlights several aspects. First, at the micro level, the business has adequate and qualified workforce to produce quality hamburgers, render excellent service and market the hamburgers. The business’ greatest weakness is a weak brand name, which is yet to be known by customers in the fast-food industry. Strengthening the brand name will be a hard task due to the existence of strong brands, such as McDonald’s and Burger King. Another weakness is that hamburgers are considered unhealthy foods, which makes it hard for the business to convince customers into buying them. At the macro level, as consumers get used to new technology, fast-food companies are using media such as Facebook to interact with customers. For instance, the highly liked brand for fast food on Facebook is McDonald’s (CNBC, 2012). Moreover, governments and environmental lobbyists are requiring fast-food companies to go “green”, especially in their packaging, using recyclable packaging materials (Greenpeace, 2012). Enhanced environmental awareness amid consumers presents fast–food firms with an opportunity for positioning themselves as environmentalists to earn customer loyalty. Vu et al. (2013) assert that, fast-food firms are expected to comply with legislation and regulations affecting the industry, such as the Minimum Wage policy, taxation, opening hours and workplace safety. Authorities are also becoming concerned about obesity among children associated with the fast food industry and regulations on targeting children have been tightened. Moreover, many fast-food firms are under pressure to provide healthier food choices in their menus due to increased consumer awareness on healthy lifestyles. This includes providing low calorie foods and burgers with salads. In dealing with the strategic challenges presented by the fast food industry, the business will have to ensure that its hamburgers have correct nutritional content, and it abides by legislations relating to employment, taxation and working hours. Moreover, the business should engage in extensive promotion of its hamburgers to strengthen its brand name and use recyclable packaging for take-away customer orders. Marketing research and strategic decision-making Marketing research refers to the objective and systematic hunt for and assessment of information pertinent to identifying and solving marketing problems or making marketing decisions. The main purpose that is played by marketing research during decision-making is reduction of uncertainty or mistakes. The doubt of outcomes surrounding strategic decisions poses difficulties in making decisions (Stevens, 2006). Accordingly, marketing research will help the business eliminate uncertainty in the making of its strategic decisions by providing it with all the necessary market information. Based on this information, the business will be able to choose the best options for its hamburgers in terms of target, customer needs, and pricing, among others. Wierenga (2008) maintains that, product, promotion, distribution and pricing policies influence marketing decisions in a number of ways. First, product policies will guide marketing decisions relating to a product’s function, service, appearance and packaging. Additionally, pricing policies will influence decisions relating to profit margins, discounts and list price. Moreover, distribution strategies will direct the business in making decisions about market coverage, logistics, and levels of service and selection of channel members. Lastly, promotion policies will direct marketing decisions concerning advertising, media types and public relations. Segmentation, targeting, differentiation and positioning strategies Segmentation involves dividing a large market into groups consisting of customers who are inclined towards the same brands and products (Moore & Pareek, 2006). Market segmentation strategies will help the business in grouping customers in the burger market into groups, which will in turn aid in deciding the customer group to concentrate on. Moore & Pareek (2006) argue that, targeting involves devising various promotional schemes and marketing strategies in accordance with tastes of customers of a given segment. Targeting strategies will help the business to identify the needs of customers in their chosen market segment in order to produce hamburgers that meet the expectations and needs of that segment. Differentiation refers to a collection of meaningful differences defining and distinguishing a company’s product from those of its competitors (Moore & Pareek, 2006). The significance of differentiation strategies to the business is that they will act as a source of competitive advantage over other hamburger sellers. Positioning involves the creation of an initial impression of a product in consumers’ minds (Moore & Pareek, 2006). Positioning strategies will aid the business to create a view of the hamburgers in the target audience’s minds. Conclusion The objectives of the strategic marketing plan for hamburgers include, creating awareness among middle-class people, establishing the business in the fast food industry and increasing sales by 12 percent. According to Porter’s five force analysis of the fast-food industry, barriers of entry are many, threat of substitutes is moderate, bargaining power of buyers is moderate, supplier power is limited, and rivalry is stiff. The fast-food market is attractive, but for weak brand name, environmental legislation and a trend towards healthy lifestyles. Marketing research will help in strategic decision making by providing the necessary information. Segmentation, targeting, differentiation and positioning strategies will help the business in choosing the market segment to focus on and meeting the needs of that segment. References Bamford, C. E., & West, G. P. (2010). Strategic management: value creation, sustainability, and performance. Australia : South-Western Cengage Learning. CNBC. (2012). The World’s Most ‘Liked’ Brands. Retrieved August 12, 2013, from http://www.cnbc.com/id/45582325/The_World_s_Most_Liked_Brands?slide=8 Datamonitor. (2012). Global Fast Food. Retrieved August 12, 2013, from http://360.datamonitor.com/Product?pid=3DED8EE7-42A1-4EA5-A9EC-87AB5E740A02 Dibb, S., & Simkin, L. (2008). Marketing planning: a workbook for marketing managers. London: South-Western Cengage Learning. Franchise. (2013). Fast Food Industry Analysis 2013 – Cost & Trends. Retrieved August 12, 2013, from http://www.franchisehelp.com/industry-reports/fast-food-industry-report Gazdziak, S. (2006, August 1). Giving the BURGER its due: the hamburger's origins are somewhat shrouded in mystery, but there is no doubt as to its impact on American dining habits and culture. The National Provisioner. Greenpeace. (2012). Solutions to Deforestation. Retrieved August 12, 2013, from http://www.greenpeace.org/usa/en/campaigns/forests/solutions-to-deforestation/ Karami, A. (2007). Strategy formulation in entrepreneurial firms. Aldershot: Ashgate. Moore, K., & Pareek, N. (2006). Marketing: The Basics. Melbourne: Taylor & Francis. Spain, W. (2010, January 14). Fast-food outlook: Intense competition, margin pressures. Market Watch. Stevens, R. E. (2006). The Marketing Research Guide. London: Routledge. Vu, A., Bo, D., Brooks, J., Cheng, V., & Tsang, M. (2013). Burger King: Changing or Imitating? Analysis of Burger King's Re-strategy. Munich: GRIN Verlag. Wierenga, B. (2008). Handbook of marketing decision models. London: Springer. Read More