Marketing Analysis on the Johnny Rockets Group Management - Research Paper Example

Table of contents Part Executive summary----------------------------------------------2 Franchising-------------------------------------------------------2 SWOT Analysis-------------------------------------------------2 Overall strategies------------------------------------------------4 Part 2 Segmentation-----------------------------------------------------4 Goals of the organisation---------------------------------------9 Marketing objectives--------------------------------------------10 Differentiation----------------------------------------------------10 Marketing mix----------------------------------------------------11 Promotional budget----------------------------------------------12 Bibliography------------------------------------------------------14 Part 1 Executive summary A) The Johnny Rockets Group management has decided to open a Paramus, NJ restaurant, or select a more suitable location for further expansion. This report attempts to analyse the strategies that can be put in the marketing plan in order for the organisation to remain a leader in the fast food industry. The main objective is to increase corporate business by 10 percent which requires an initial investment of $875 000. There are different segments in this new location and it has been observed that the as far as marketing is concerned, Johnny Rockets should take into consideration the marketing mix which includes the four Ps namely; product, price, promotion and place (distribution). The most viable strategy in obtaining this feat is differentiation where the organisation seeks to be unique in its operations. B) Franchising Franchising is an act of leasing the trade name of one particular organisation to the other smaller players in the market who may need to use the names of established organisations in the market (Cant 2000). The main advantage of franchising to Johnny Rockets Group is that it will earn profits from these organisations since they will be paying money for using the trade name of the group. It also means that more fast food outlets will be operational which makes the organisation to grow as well as appeal to various customers. Growing popularity of the trade name will help the organisation generate more revenue from increased sales. SWOT analysis C) A SWOT analysis is a useful instrument for helping managers to identify internal strengths and weaknesses of a business and external opportunities and threats facing it,” (Strydom J. p 31). Basically, SWOT stands for strengths (S), weaknesses (W) while on the other hand the external environmental factors are regarded as either opportunities (O) or threats (T). This analysis is very important to the managers as it allows them to focus on key strategic issues based on the notion that an effective strategy fully utilises the strengths and opportunities of a business and strives to minimise the weaknesses and threats. The table below shows the analysis of the environmental factors affecting The Johnny Rockets Group. Strengths -The brand strength allows the organisation to position itself as the restaurant of choice for flavorful, fun, family-friendly casual dining in the area. -offers trademark meals -offers quality services - its target markets are patrons of “Americana,” those cultural touchstones that have become part and parcel of American culture -the organisation has considerable financial reserves Weaknesses -The organisation mainly specializes on casual dining services. -There are weaknesses in the operations of the franchises. It can be noted from the above table that the strengths outweigh the weaknesses which is an advantage to the organisation Opportunities The emergence of social networking sites such as Face book and Twitter grant a unique opportunity for Johnny Rockets to build their brand recognition and offer promotions and discounts for frequent patrons or “followers,” thereby reinforcing brand loyalty and tapping into new target markets. The people living in the desired location are rich. Threats - Johnny Rockets is heavily dependent on agriculture, whose supply is highly susceptible to adverse changes in weather and natural disasters. - Johnny Rockets’s reliance on heavy, fatty, and ultimately unhealthy food is a major threat. -the market is characterized by competition. -the casual dining market is becoming saturated. D) Overall strategies Establishing business in a new environment is often challenging and it requires certain strategies to be put in place. It is important to divide the market so that the marketers will be able to identify the needs of the potential customers and be able to satisfy them. Differentiation is another strategy that can be put in place in a bid to make the organisation unique from other competitors in the market. Part 2 A Segmentation Marketers need to know the needs and wants of the customers so that they will be able to satisfy those needs and wants. However, there are many different needs and wants in the consumer market and it will almost be an impossible task to be able to satisfy these. Against this background, it can be noted that it is imperative for the marketers to divide the market into various groups with similar needs and wants. This is called market segmentation. Thus, market segmentation can be defined as “the process of dividing a total market into market segments or target market for consumers with common needs or characteristics and selecting one or more segments to target with distinct marketing mix” (Strydom 2004:61). Basically, geo-demographic segmentation converges geography and demographics of a particular group of people in an identifiable area. In most cases, people who live in the same area are assumed to have similar socioeconomic characteristics. In some instances, they use similar transport and shopping options hence they tend to live together in an identifiable geographical area. There are various segmentation variables such as age, gender, lifestyle, and geography and these are used as yardsticks upon which different products are developed on the premise that people with similar interests and income levels tend to live in the same areas hence it would be easier to reach them. Against this background, The Johnny Rockets Group management has underscored to open a Paramus, NJ restaurant, or select a more suitable location for further expansion. This analysis seeks to outline in detail the characteristics of the four target segments as going to be discussed below. Since its inception, on June 6, 1986 in Melrose Avenue—the heart of West Hollywood, CA, Johnny Rockets has positioned itself as the restaurant of choice for diners looking for tasty, familiar foods in a fun, casual, family-friendly atmosphere (The Johnny Rockets Group, Inc. (b)). The borough of Paramus located in Bergen County NJ embodies many of the qualities any astute restaurateur would want for a new location. The suburb has about 50,000 residents; a median family income of $97,294; a number of transportation hubs; and is less than 25 miles from New York City, the nation’s largest market (“Zip Code Tabulation—07652;” “Zip Code Tabulation—07656”). The target markets are analysed as follows: Working-Class, Upper-Middle Class Families with a Casual Lifestyle: 1. The market trends of this segment show that it is comprised of laid-back, unassuming families who have higher than average incomes. The targeted consumers can afford to buy food from the restaurants since they have more money to spend. Johnny Rockets’s fun, familiar atmosphere is the best fit for their lifestyles. 2. The main advantages this market segment will bring to business is the steady flow of income since the people targeted have more than average incomes. Business is guaranteed of getting some revenue since the sales are expected to be above average where the consumers can afford the products offered. 3. The segments needs include the fun and familiar environment that befits their desired lifestyle. The target segments also need the American staples which come in various delicious dishes. 4. The primary geographic markets are comprised by segment members who are evenly distributed. There are a lot of transport hubs and these people are not far placed from the location of the restaurants. 5. Market research through primary sources of data collection from the targeted markets can be used to gather information about the segment members. The needs of the customers can be identified through the use of questionnaires or even interviews. Social networking sites can also be used to gather the interests of the customers. Teenagers and Young Adults: 1. The market trends of this segment include the young people who are always looking for a fun place to hang out, without making too much of a dent in their already slim wallets. Age is the major determinant of this segment. These are not particularly wealthy but they just need a place where they can relax while eating something that meets their financial status. 2. The main advantage of this target market is that they will significantly contribute towards the revenue generated by the organisation. At least, the firm will be guaranteed that a certain percentage of the sales will come from this target segment. The other advantage is that the customers are readily available which is a positive step for the growth of any business. 3. The good food and friendly ambiance of Johnny Rockets have proven to be a perfect spot for parties, dates, and just a Friday get-together for kids and singles in the neighborhood. Basically, these are the major needs of this segment which is comprised of young people. 4. Geographically, these targeted consumers are not distantly spaced since they live within the same vicinity. There is a good network of public transport or they can alternatively walk to the restaurant since it is located near the area they stay. The aspect of geographical location is very important as far as targeting the consumers is concerned. 5. Interaction with the target segment will help generate knowledge about their needs as far as fast food is concerned. Middle-Aged Couples Looking for a Retro Feel 1. The market trend for this target segment shows that is mainly comprised of people in their late 40s, 50s, and early 60s. Johnny Rockets provides that temporary respite, taking them back in memory of their past. A few hours of those priceless times of youth are what these people need in their life and the trend is the same with many people of that age group. 2. No matter how old we may get, and how the future almost never fails to offer better possibilities, there is something irresistible about the past. For middle-aged couples, they will always have this nostalgia of reviving their memories of the past. The advantage of this target market is that they will always make an effort to go to the restaurants of their choice like in this case Johnny Rockets. Business will be assured of getting steady flow of income given that this target market will buy something. 3. This segment needs something that will make them revive their memories of the past. Products including sandwiches and pastries, cookies, cakes, and pies are some of the products that will appeal to this segment. As long as the targeted consumers get something that will make them remember their past, their needs would have been satisfied. These also just need a family environment to relax away from home. 4. The targeted consumers are also evenly distributed in the Bergen County area which has a significant number of residents who have proven to be loyal to the Johnny Rockets brand for over 20 years. The Paramus location is ideal in that it is in close proximity to the targeted consumers and there is also a good network of transport which means that moving from point A to B is made relatively easier. 5. Sources about these particular consumers can be obtained from them verbally where they are asked what they want included in the menus. During the contemporary period, market surveys can also be done online through the use of the internet. Questionnaires can be used online to gather all the necessary information about the needs and interests of the consumers. Busy workers on the go 1. The market trend shows that a cosmopolitan population called Bergen County, and the greater New York metropolitan area home, the Paramus location is a diverse area with different people including workers. This target market is rich with potential customers who would just need to buy some food while at their work places. 2. The advantage is that even going into its 25th year, different people already know that Johnny Rockets makes great food that a lot of people love. There are always people who will come and buy food whilst they are at work. This is a major advantage to the organisation given that it can enjoy large numbers of buyers during the day which greatly contributes to the revenue generated. 3. The needs of the customers for Johnny Rockets includes the need for offering a service for busy professionals on the go to pre-order items for quick pick-up or delivery for breakfast, lunch, or just a quick meal during their busy day. They do not have more time to waste hence the need for fast and efficient services while at the same time retaining quality. 4. The primary geographic area covers the Bergen County and the issue of location is not a big problem since orders can be placed on the website, or through a dedicated phone line, to ensure efficient service and let busy professionals get the food they love (without the wait). These professional can also walk to the restaurant depending on their proximity to the location of the restaurant. 5. Johnny Rockets takes pride in its delicious menu of American staples. Its core products include traditional burgers and fries, milk shakes, and malts. Facilitating products including sandwiches and pastries, cookies, cakes, and pies are also on the menu. The organisation gets information about its potential customers mainly through the use of the internet or through personal selling where the customers interact with the workers. Social networking sites such as face book and twitter can be effectively used to get the information about the customers. B. Goals of the organisation Each market segment has particular goals that are meant to be achieved as far as business is concerned. 1. Basically, goals of each organisation are meant to spell out the direction upon which the organisation will operate. The marketing strategy of business consists of the decisions regarding the four marketing instruments and the target market in a specific environment at a particular time. Segmentation of the market is meant to ensure that these segments will stimulate business in various ways. Marketers have the first hand information about the needs and interests of the consumers hence they are better positioned to satisfy them. If the marketer is in a position to identify the needs of the customers, then he is able to create more business for the organisation which will positively contribute to revenue generated. The main goal of any business is to make profits hence the need to clearly define these goals as they are meant to give direction to the ways businesses ought to operate. Development of corporate segment is mainly concerned with identifying the needs of a particular segment then try to fulfil each of them profitably. Likewise, careful approach to each segment can stimulate business in various ways. 2. Marketing objectives Basically, a marketing objective is what you want to achieve through your marketing during the time frame of the plan. In this particular case, the objective of Johnny Rockets is to increase corporate business by 10 percent and this requires an investment of $875,000, an initial franchise fee of $49,000 (for the right to use the Johnny Rockets name and trademark, training, site assistance, and other services) and set-up costs totalling $875,000 (for leasehold improvements, furniture, fixtures, signs, equipment, inventory, and similar expenses). In as much as the objectives are quantifiable as shown in the figures shown above, they can be achieved given that people will be working with real things in business. It also becomes relatively easier for business to achieve its objectives when they are specific. This would give the management focus to concentrate on the core values of business which increases the chances of achieving the set goals. For instance, a 20% growth rate was assumed from year to year—the projected growth rate from 2010 to 2015—per a statement released by Johnny Rockets management (The Johnny Rockets Group, Inc. (b)). Where there is a specific time frame for the project, the objectives are likely to bear fruitution given that everything is clearly outlined in the plan. There is direction which shows that the organisation is moving towards the attainment of set objectives. Another strategy that can be used to ensure that the organisation achieves its set goals is to ensure that they are reachable and attainable. In this regard, it is imperative for The Johnny Rockets Group to ensure that these set objectives are not overstated since this will give them the opportunity to revisit the plan and fine tune it towards the available resources. Ranking the objectives in order of their importance is one sure way of achieving the organisations objectives. This will give the organisation the opportunity to concentrate on issues that are pertinent towards the attainment of set goals. Positive growth of the revenue generated is the major indicator that can be used to show the success of business. 3. Differentiation In a differentiation strategy, an organisation seeks to be unique from other competitors in the industry where it offers products or services that are valued by the customers. An organisation strives to select one or more products with attributes that are perceived as important by the customers and it attempts to uniquely position itself in the market in order to meet such unique needs. For instance, the Johnny Rockets can choose to customise its products and services such that the customers can enjoy self service of the products of their choice. Ultimately, the firm will be rewarded with a handsome price for being unique in the services it provides. Though Johnny Rockets’s menu seems like nothing more than comfort food on the surface, many of the offerings could quickly be turned to healthy meals with a few additions—ground chicken instead of ground beef; all natural fruit smoothies instead of malts; buns made of whole wheat instead of flour; etc. These healthier options can enable the company to attract a new, profitable market—the health conscious consumer. Many of these consumers have above average incomes; so, the higher prices of these offerings (these meals will be priced at a higher rate compared to the traditional offerings to compensate for the higher costs of ingredients) will fit comfortably into their budgets. The healthier options can be part of a larger differentiation strategy, allowing the Paramus Johnny Rockets to differentiate itself, command higher prices, and ultimately increase revenues. A differentiation strategy enables the company to distinguish itself in the market as a provider of exceptional service and quality, while commanding a higher price for its premium products. 4. Marketing mix As far as marketing is concerned, Johnny Rockets should take into consideration the marketing mix which includes the four Ps namely; product, price, promotion and place (distribution). In this regard, the pricing strategy will see the firm steadily generating profits though at a slightly lower margin given that they will be starting operating in a new environment. Through customized services, it is noble for the firm to charge slightly higher prices given the uniqueness of the products offered. With an average meal price of $9.75 per person and calculated fix and variable costs of $367,280 and $2.57 per unit respectively, the break-even units are determined to be 51,155. This is right in line with Johnny Rockets average diners per restaurant which is 52,000. Product: The product itself is the major thing that attracts the customers to buy it. The more attractive and unique it is from the other products in the market, the more attractive it becomes to loyal as well as other potential customers. The products should be readily available on demand so that the customers will not waste their time waiting. Promotion: Its important that the customers know that the firm’s products are the best in the fast food industry. Promoting various products for different segments can help attract more customers. For instance, price discounts can be given to regular customers where for example a customer will be entitled to get a discount on each fourth visit to any of the food outlets within a period of a week after buying consecutive meals. This will help create trust and loyalty among the customers. Distribution: The organisation will maintain the current margin that is offered to the distributors through franchises and will mainly rely on increased sales volumes to attract more customers. Consideration will also be given to increasing distribution outlets in the form of opening more fast food outlets across the Bergen County. Concerted efforts have to be made especially in creating a corporate rate package that includes access to the organisations Concierge Floor as well as the Business Center. This will enable the firm to stay in touch with the corporate segment where sales calls to local corporate offices to promote its corporate rate package will be encouraged. Having put all the ground work in plan to open a Paramus, NJ restaurant, The Johnny Rockets Group management has to begin planning for promotion at an early stage so that it is effective. 5. Promotional budget Planning is considered to be the starting point of any marketing process (Bates et al 2006). In other words, before you can do anything in business, you need to determine in advance what you want to achieve and this will help you to visualise the end result and set objectives accordingly. Therefore, we can say that planning is the process in which objectives are decided upon and the plans on how to reach them are put together. Against this background, it is imperative for the Johnny Rockets Group to set aside a promotional budget that is meant to generate interests among the customers. Opening a Johnny Rockets franchise in Paramus, NJ, an upper-middle class location in the New York City metropolitan area requires an initial investment of $875,000, an initial franchise fee of $49,000 (for the right to use the Johnny Rockets name and trademark, training, site assistance, and other services) and set-up costs totalling $875,000 (for leasehold improvements, furniture, fixtures, signs, equipment, inventory, and similar expenses. Basing on the figures above, The Johnny Rockets Group should spend at least 10 percent of the total costs to be incurred on investment on product media advertising to around. This translates into about $87 500 being set aside as the promotional budget for the new restaurant. Later, the firm may consider increasing product PR efforts in a bid to raise awareness of the product offered. Public relations is another effective communication plan that can be used by the above mentioned company whose ultimate objective is to attempt to make loyal customers through the provision of relevant information and knowledge to the customers. In actual fact, all communication efforts are meant to create brand awareness through providing relevant information to the clients. The combined effects of advertising, sales promotion, publicity and personal selling can be effectively used as viable tools in communication for Johnny Rockets Group. Bibliography Bates B. et al (2005), Business Management, fresh perspectives, Pearson SA Berry T. & Wilson D. (2001), On Target: The Book of Marketing plans. How to develop and implement a successful marketing Plan. NY. Palo Alto Software. Cant M.C. (2000), Marketing Management, 4th Edition Juta and Co Ltd, SA. Smith P.R. (1999), Great Answers to Tough Marketing Questions, Kogan Page, UK. Strydom J. (2004). Introduction to Marketing. 3rd Edition. CT. JUTA. Read More