Measuring & Interpreting Brand Performance - Nandos Fast Foods - Case Study Example

Executive Summary Nandos is a brand that sells fast foods and it is constantly competing with its competitors for market dominance. The management of the brand is looking for ways to boost its current situation in order to maximize its market potential. The small brand franchise is known for selling its signature spicy chicken menu which happens to be the main attraction for majority of the customers. The franchise was dated back in the late 80’s where it was created by two gentle men in South Africa, Robert Brozin and Fernando Duarte were there names. Fernando named the today franchise Nandos after his son’s name. Back in those early years the company had a hard time in its operations but overcame them all to be the giant that it is today. In the market according to the statistics collected in the report, Nandos has quite a huge margin to beat in order to be at par with its competitors. The deviations are high but surprisingly have a large population of customers who go there for the first time in these joints of fast food but later lose them to other franchises. There is need for Nandos to come up with a strategy to retain the customers in large numbers before it is too late. It attracts all sorts of people but seem to separate them in the long run due to the high prices its products go for in the market. An issue like this can be sorted out with proper planning considering the franchise gives people a more welcoming feeling of family than the others. To proof that it has been discovered between the listed competitors in the report many single people in relationships as well as couples enjoy going to the Nandos fast foods more than the rest meaning it has these family like aura in it that can be used to their advantage. Table of Contents Executive Summary 1 Brand Performance 3 Challenges 4 Cost: 5 Lack of Variety: 5 Lack of convenience: 5 Tribalism: 5 Benefits 5 Retain existing customers: 5 Acquire new customers: 5 Move customers’ up-segment: 6 Build relationships. 6 Create brand advocates. 6 Adjust pricing levels. 6 Reduce promotional and advertising costs. 6 Duplication of purchase Law 7 Awareness And Salience 8 Implications of Brand Salience 9 1)Creating an identity for the brand: 9 2)Coming up with proper brand meaning: 9 3)Giving positive feedback: 9 4)Good brand relationship with the customers: 9 Demographics And Segmentation 10 Conclusion 11 References 13 Brand Performance Nandos as a brand seems to be the last performing in the market compared to the rest of the listed brands. The brands clearly show differences and patterns that can be noted from the statistics given from the Table 1. They are Mc Donalds, KFC, Hungry Jacks, Subway and Nandos. Nandos being a small franchise in this case according to the data collected can be said to be experiencing double jeopardy. Double jeopardy is the effect where small brands/franchise acquire small market share and also do not win much of their few customers loyalty compared the big brands thus having two bad lucks at the same time! (Collier, 2012) It is clear Nandos is experiencing this because it has the lowest market share of only 6% and average purchase frequency of 1.1 while the Mc Donalds has the largest with 38% and 2.4 respectively. In this market the consumers are divided into two that is heavy buyers and light buyers. (Allen, 2007) Light buyers are those that do not much of the products which are vice versa for the heavy buyers. Due to the double jeopardy it can be concluded that Nandos experience a lot of heavy buyers unlike Mc Donalds who receive a lot of light buyers because of their focus to penetrate the market, no wonder the large market share. (Sicard, 2013) For Nandos at least having more of heavy buyers mean they have more loyalty from their few customers than compared to Mc Donalds. (Smith, 2005) Mc Donalds has a 38 % market share while Nandos has only 6% in the same market and the rest lay in between. The figure shows Mc Donalds has a strong influence in the market than Nandos which has the least meaning it has minute control over the market. In the brand penetration column Nandos appears the last with 23% while Mc Donalds has 75% the difference is huge meaning consumers prefer to buy Mc Donalds brand more than for Nandos brand. On the average purchase frequency among the listed brands Mc Donalds and KFC carry the day with Subway and Nandos dragging behind. Nandos average purchase frequency is below 1.5 that is 1.1 showing that the tendency of consumers buying Nandos products is very low. Nandos leads in the category buying rate where it obtains 8.6 points with the rest of the brands following behind. Here the consumers opt to buy Nandos products for the first time in this market than any other brand in fact Mc Donalds being the last in their minds according to the table. SCR- Share of Category Requirements in the table places Nandos as having 13 % which is the least while Mc Donalds has 43% showing that the business women or men buying the brands would definitely prefer the other brands most especially Mc Donalds with the highest share than Nandos brand. Nandos and Subway on the last column of sole loyalty according to the figures given they read zero meaning their current consumers show no loyalty to their products while Mc Donalds leading then followed by KFC and Hungry Jacks respectively have their consumers show loyalty to them by always buying their products without fail. Challenges As the marketing director of Nandos franchise I would agree that going the consumer loyalty way would increase the company’s performance in 12 months possible where each month a 1% growth in market share is experienced. The main goal here is to woe customers into buying Nandos products and making them stick to the products no matter what happens in other words they become loyal to the brand. This strategy has its benefits as well as challenges and in looking at the challenges the following are explained; Cost: The brand loyal customers are known to spend a lot of money just to acquire the brands products. They do not care if the same product being bought is expensive in the market compared with that of other brands because of the loyalty they will be willing to add the extra cash thus not saving any. Lack of Variety: The brand loyal consumers tend to only buy the brand products meaning their restricted to what the brand has to offer meaning they cannot try out other products from other brands which give variety of products to choose from. Lack of convenience: The loyal customers of the brand at times become inconvenienced by the brands due to the fact they cannot go for the brands substitutes, they can be forced to travel long distances just to buy the brands product may be because the near stores have the products totally sold out. Tribalism: Brand tribalism refers to the act of the brand loyal consumers becoming familiar with each other and starts excluding others who are not loyal brand consumers. This behavior is bad because it forms a monochromatic group of consumers who do everything the same even look alike and just destroys creativity of diversity. Benefits The benefits of customer loyalty are so many compared to the challenges & that is why I find it viable some are mentioned below; Retain existing customers: It helps a lot because the brand management is able to know what the consumers need by carrying a study on them and in doing so cater their needs efficiently and effectively. Acquire new customers: This is done through loyalty programmes carried out by the brand’s company which attracts them depending on how exciting and rewarding they are to the target customers. Move customers’ up-segment: It is done by grading the rewards received by the consumer in order to move them from one spend level to the next. Build relationships. It is a plus for the brand to have good relations with the consumers so that one can win their loyalty. Create brand advocates. It is important to have true & dedicated fans for the brand. Through their positive talks about the brand it becomes more convincing to other people to trust the brand more thus building loyalty. Adjust pricing levels. Reducing the prices due to customer loyalty becomes a booster for the consumer to stay loyal to the brand because of showing favor in helping them save money. Reduce promotional and advertising costs. The costs obviously reduce because due to the customers loyalty there is very little need to woe others to the brand when already there brand advocates on the ground helping promote them. The loyalty consumer strategy is by far the correct way to start in the growth of the brand in the market share. The Nandos competitors in the fast food market are Mc Donalds, KFC, Hungry Jacks and Subway. In Table 2 the five fast food market brands have been illustrated showing their competitive structure. Mc Donalds has the highest penetration % with 75% meaning it is the leading fast food brand in the market. KFC, Hungry Jacks and Subway follow respectively but ranging around 40 – 48% not yet reaching 50% while Nandos is listed having the least penetration % with 23%. Nandos can be classified as one of the smaller brands in this market while Mc Donalds is one of the larger brands. Duplication of purchase Law Duplication of purchase law refers to the sharing of customers by a brand to other brands that have one thing in common which is selling similar products. The law in this case is that the large brands share most of their consumers with other large brands but less with smaller brands. Deviations occur in the duplication of purchase law and there brought about by the different needs a customer has as well as their wants. It is clear that in the real world there is no pure customer sole loyalty for any brand but what happens is that the brands compete with each other to have their customers frequently buy their products more often than for others. Reasons for deviations in the table could be customer preferences whereby they have their own specific choice of product they want which could vary from different brands. Another is the way the brands advertise themselves as well as promote the brand it will definitely send the rest of the competitive brands on their toes because consumers will tend to be drawn to the company if the adverts and promotion are attractive. Generally partitioning is what causes the deviations it forms the major functioning differences and similarities between brands. The major implications faced by the marketing manager of these brands in the duplication purchase law are coming up with brand innovations that give the brand a distinctive identity through sensory brand assets i.e logo etc. The second implication is distributing the innovated brand for all to see in order to make sales this can be done through advertisements or even physically making sure the products are readily available in the market for people to have a closer look at it. Awareness And Salience Brand attitude refer to the overall evaluation of a customer about the brand, in other words what measure does the customer have in liking/ disliking the brand and how convinced are they whether what the brand is selling itself as out there is true. Brand salience is that measures of thoughts a customer have of a particular brand in a buying situation. It refers to the memory of the brand by the consumer. In my opinion I would go for brand salience over brand attitude because when the consumer has the salience he/she can easily retrieve the memory of the brand product from the mind and buy the item unlike with attitude where you take time to evaluate the products & make decisions out of emotions which could be driven by swing moods thus not efficient. Brand salience has benefits that help in the growth of the brand in the market no wonder it is said to be the best option. Through salience the consumers become aware of the brand, they often start to buy the brands products, in the market they will always have it as a considered brand of their choice, become familiarized with it, begin to have a feel of brand assurance, develop positive attributes beliefs about the brand, it is also regarded as value for money, harbor’s intentions of buying it for future use, start to be a loyal customer, begin to take good thing s about it to other consumers of similar brands, note and recall its advertisements. In Table 3 the pattern being seen is similar to the other Tables whereby we have Mc Donalds leading almost in everything and Nandos lagging behind most of the time. It is evident that most people are paying their salience to the Mc Donalds brand from overall consumers who majorities have it in mind when they think of a fast food joint. In spite of that in the same Table 3 we see that Nandos customers at least stick to being salient to them whereby 43% of them are loyal which is similar to those for KFC and close to those of Mc Donalds with 48% being loyal. The performance of Nandos brand in the whole sample is not as expected because it ranges below average and it very disappointing compared to the rest of the listed brands. For its performance in the customer base data it is recommendable but still has plenty of room for improvement. Implications of Brand Salience Implications faced in the brand salience are as follows; 1) Creating an identity for the brand: It is a challenge if not handled with care, here identity brings about the image of the brand whereby it should be convincing to the consumer that with time they become believers of the brand. 2) Coming up with proper brand meaning: Serves the purpose of giving the customers confidence in the products as well as sets foundation for loyalty. 3) Giving positive feedback: Giving positive feedback in the right manner concerning brand responses – This boosts the brands public relations where the customer on receiving response from the company is treated with respect and catered for. 4) Good brand relationship with the customers: It is important for the brand to create a positive and accessible relationship with the customer so that the company can know what adjustments they can make to suit the customer needs and the customer can feel welcomed by the brands team on the ground. In building a brand salience there three major things that should known about its measure they are; a range of cues is need to come up with a memory structure for the brand, the brand should be aware of its competitors thus should not the measure of how often the consumers will remember its product than those of the competitors and the brand should pay more attention on how much consumers think of them than the evaluations they do-consumers- on the brand. The brand should focus more on defining and communicating the cues to the consumers in order to increase the quantity and quality of the memory structures. In order to build a working brand salience there is need to connect a large range of cues to the brand which can possibly increase the consumer purchase of the brands products. For a Nandos advertisement I would expect the following cues to be present that is: logo, colors, attractive source, sources with high credibility, packaging, design, tag- lines, celebrity endorsements, expert sources and humor. Demographics And Segmentation Table 4 shows a demographic diagram on relationship status where it illustrates the customer profile of the listed fast food brands. Nandos according to the statistics given shows a difference among the other brand competitors where it leads in hosting single people, Hungry Jacks drags behind with a deviation of -3.3. KFC and Subway are more common with couples followed by Nandos and Hungry Jacks then lastly Mc Donalds. Hungry Jacks tops with the highest number of divorced consumers while Subway comes least on the list and Nandos follows behind as second last in the list with a deviation of -1.7. Table 5 illustrates demographics of the total household income, here we have the consumers who spend less than $ 50,000 in these food joints and Mc Donalds is leading in accommodating them while Hungry Jacks pulls behind with Nandos being second last. On those earning income between $ 50,000- $ 70,000 still prefer Mc Donalds more than the others but this time Nandos follows second on the preference list. For more than $ 70,000 earners KFC carries the day with more consumers while Nandos follows next and the least is Mc Donalds. From the studied table it shows that Nandos is an expensive brand that attracts a certain group of income earners but does not cater for the other group when it is supposed to be all rounded. Table 6 explains the demographics of gender; Mc Donalds seem to be the men’s favorite while KFC is the women’s best fast food joint. Hungry Jacks and Nandos have the same quantity of male and female customers using their brands. It is very clear in the table that females are the majority consumers of the listed brands. Implications faced due to the demographics and segmentation is such as the geographic segmentation which is broken down into sections of by climate, density, market size, world or states. In Nandos case I would say the implication comes in the market size issue where it has the most minimal market share among the competitive brands. Another is the demographic segmentation here age, income, gender and ethnic are factors. Psychographic segmentation is based on personality, motives and lifestyle then there is the benefit sought and usage rate. Conclusion The data given for each table has similar patterns where Nandos keeps on dragging behind and Mc Donalds is ever leading. From the report it is clear that there is need for brand performance of Nandos franchise. As the director of marketing manager after studying the current market trends of the brands I would recommend the things discussed above. References UK Essays. November 2013. Two Patterns Of Customer Loyalty And Brand Performance Marketing Essay. [online]. Available from: http://www.ukessays.com/essays/marketing/ two-patterns –of –customer –loyalty- and – brand – performance- marketing –essay-php?cref+1 [Accessed 26 May 2015]. Milne, George R., and Charlotte H. Mason. A Niche Share Approach for Assessing Brand Performance and Identifying Competitive Groups. Cambridge, Mass.: Marketing Science Institute, 1994. Hassell, Scott, and Energy Environment. An Assessment of the U.S. Environmental Protection Agency's National Environmental Performance Track Program. Santa Monica, CA: RAND, 2010. Sagar, Mahim. Brand Management. New Delhi: Ane Books, 2009. Ulrich, David, and W. Norman Smallwood. Leadership Brand: Developing Customer-focused Leaders to Drive Perrmance and Build Lasting Value. Boston, Mass.: Harvard Business School Press, 2007. Collier, Ben. IAd Production Beginners Guide : Create Motion-rich, Beautiful IAd Adverts for IOS Devices and Incorporate Techniques to Help Boost Revenue and Brand Awareness. Birmingham: Packt Publishing, 2012. Smith, Derek, and Brad Smith. Consulting Client Satisfaction: Leading Firms' Performance, Reputation, and Brand Awareness. HR Professionals ed. Peterborough, New Hampshire: Kennedy Information, 2005. Allen, Judy. The Executive's Guide to Corporate Events and Business Entertaining How to Choose and Use Corporate Functions to Increase Brand Awareness, Develop New Business, Nurture Customer Loyalty, and Drive Growth. Mississauga, Ont.: J. Wiley & Sons Canada, 2007. Careers in Brand Management. 2008 ed. San Francisco, CA: WetFeet, 2008. Schroeder, Jonathan E. Brand Culture. London: Routledge, 2006. Sicard, Marie. Brand Revolution Rethinking Brand Identity. Houndmills, Basingstoke: Palgrave Macmillan, 2013. Read More