Table of Contents I. INTRODUCTION3 II. MARKET STRATEGY4 A. Product5 B. Price5 C. Place5 D. Process5 E. People6 F. Physical evidence6 G. Promotion6 III. ENVIRONMENT7 A. Macroenviroment7 B. Microenvironment8 IV. CONSUMER BEHAVIOUR9 V. MARKET TARGETING & POSITIONING10 A. Segmentation10 B. Target market12 C. Market positioning12 VI. CONCLUSION13 VII. References14 INTRODUCTION This report aims to identify various factors for success in the quality take-away food market.
This will be accomplished by comparing two food service companies with a similar strategy – Crust Gourmet Pizza Bars and Real Burger World (RBW) – ended up with remarkably different results from the following aspects; marketing strategy, the environment, consumer behavior and target market and positioning. MARKET STRATEGY The foundation of both Crust and RBW was animated by a similar desire to provide a gourmet or higher quality take away food in the competitive fast food industry. Though, they came up with slightly different plans and implementations. |Crust Gourmet Pizza |Real Burger World | |People |• Founder : previous experience as a manager of |• One of the founders : successful experience in | | |a Pizza Restaurant |starting up a business | | |• Training and management support for their |• General manager replaced because of his lack of| | |franchises |experience in the industry | |Process |• Long |• Long | | |• Preparation in view of the customers |• ‘guest’ burger, customer invited to suggest a | | | |menu item |Physical Evidence |Dynamic, fashionable and modern : upmarket look |Typical burger shop | | |for upmarket target | | |Product |• High quality and fresh |• Real, natural and wholesome ingredients | | |• Broad choice from traditional to original |• Choice more or less diversified | | |taste (‘Asian touch’) |• Dynamic menu with gourmet burgers, handmade | | |• Product on demand |fries | |Price |Restaurant prices, more expensive than the |Slightly above competitive brands (1? ore than | | |competitors |the existing competitors) | |Place |Shop, Internet Website, Phone |Shop | |Promotion |• Heart Foundation Tick of approval & medias |• TV Show “Risking it all” in 2episodes, | | |• radio, local papers, letterbox drops, |• Brochure handouts in the street | | |sponsorships |• Protest in front of their competitor store | | |• Website | | | |• reward card | |
Table 1 Marketing strategy of both companies through the 7P’s 1 Product Both companies offer better value to their customers through the high and fresh quality of their product. This is the main advantage that differentiates themselves from their competitors. o Quality QualityWhile RBW provides “real, natural and wholesome ingredients” (Naz Choudhury, http://books. google. com. au/ ), Crust, sensitive to the new trend of healthy food, provides not only high quality food -with premium ingredients such as prosciutto, tiger prawns or smoked salmon- but also healthy food with six Heart Foundation Pizzas. o Variety They both offer a broad choice from traditional to original taste (‘Asian touch’ for Crust).
What seems an advantage for Crust over RBW, and pizza restaurant is that Crust customers can compose their own pizza, though a common doing in the pizza fast food industry. 2 Price Because it is not trying to be cheaper than or as affordable as its competitors, unlike RBW, Crust chooses a clear different position from its competitors. Crust gets a premium price based on the product differentiation. 3 Place The place for the first shops gives an indication on the position of the firm. While Crust established their first shop in a suburb where people may have more time to wait for a longer process, RBW had their first shop in a dynamic street, in the city and a close walk from its competitors.
Also Crust developed a delivery service with as many ways as possible to make their product available to overcome their geographic limitation. 4 Process Due to their position as higher and fresh quality food, both of these companies need a longer processing time for their product, than its competitors. Though, Crust found a way to compensate. The preparation in view of the customers increases the interaction between the staff and the customers and is visually exciting. This tactic is a way of creating delight for customers. A good point for RBW is the ‘guest’ burger. The customer is invited to take part in the creation of menu items. 5 People
People working for the company are important since they contribute to the image of the firm. Crust understood this well, they made it an important part of their plan. They provide training and management support for their franchises to preserve brand identity and so, the atmosphere of the first shop. On the contrary, RBW showed an mistake from the start, the first General Manager of the store had no experience in the fast food industry. 6 Physical evidence The look of the store conveys the marketing message of the firm. It has to be in adequation with what the firm claims to provide, that includes also the differentiation from their competitors.
Crust chose distinctive colours and a high class decor just as a gourmet firm would do. It gives satisfaction to customers who would expect greater value. On the other hand, though they hired professionals to design their store, RBW appeared to have missed the upmarket look and ended up looking like any other burger shop. 7 Promotion By earning the Heart Foundation Tick of approval, they consolidated their image differentiation, got the media attention as a short term promotion but also undoubtedly a long term promotion through this kind of sponsorship. They also use radio, local papers, letterbox drops, and sponsorships. Those tactics are important to build a strong brand identity.
Crust is omnipresent so that they stay in potential customer’s minds. They developed a Website to go along with the technology orientated society and targeted customers. The use of a reward card is a way of retaining profitable customers. Whereas in the case of RBW, it is appearing in a TV show, the firm benefited from a priceless mass promotion to make their brand known. Nonetheless, they didn’t sustain themselves to this level and came up with only short term promotion. Protesting in front of their competitor store can be regarded as a desperate move to attract customers. From the analysis of these parameters, we can say that Crust has a well more developed strategy than RBW.
When RBW’s main (unique) advantage is the higher quality food, Crust has developed a more complex strategy around the higher quality and healthy food and the service cape, regarded as a key to success. ENVIRONMENT This section discusses external and internal factors affecting Crust’s and RBW’s business. Four factors were chosen to outline their success/failure – Demographic forces (macro), socio-cultural forces (macro), corporate culture (micro), and competitive environment (micro). Macroenvironment are fairly common to the two firms as Australia and UK have similar cultural background and economic level. The factors which led these two firms to contrastive results could be found in microenvironment. [pic] 1 Macroenviroment o Demographic forces
Understanding the demographic environment is of great importance as it “involves people, and people make up markets (Kotler, Adam, Denize and Armstrong, 2009: pp. 89)”. Changes in household types are beneficial trend for fast-food industry. The important demographic trend for fast-food industry is changes in household types. Increased number of one person, childless couple households increases the demand for convenient, ready-to-eat meals. Dual-income families made quality food affordable. The two firms targeted those new-type households. o Socio-cultural forces Businesses exists within society, therefore businesses can be influenced by society.
To keep up with social changes may provide businesses with competitive advantages. The increased health awareness in society led the changing trend in consumer preferences to better-taste, fresher fast-food which perceived as healthier. Crust and RBW met this consumer trend. Another socio-cultural force is the trend towards choice. Both firms dealt with this trend by offering broad range of menu. 2 Microenvironment o Corporate culture Strong corporate culture helps to develop strong brand because people, internal and external to the company, can share similar values. Strong brand equity enables businesses to establish firm customer base and brand royalty, which in turn give businesses long-term growth and profitability.
Crust has a clear corporate culture of “personality driven” based on “professionalism”, “entrepreneurship” and “teamwork and partnership with stores and customers” (www. crust. com. au, 2010). This is expressed to customers through store presentation and service, which serves as physical evidence to the customers. On the other hand, RBW’s culture was based on co-founders’ friendship. The business built on friendship can be fallen into amateurism resulted in various operational problems, which could reduce customer satisfaction. o Competitive environment Fast-food industry is highly competitive market and the competition is complex. Players in the market have to compete with huge multinational organizations such as McDonald’s, Subway and Pizza Hut as well as thousands of local take-away stores.
To provide greater customer value and satisfaction than competitors, strategic analysis of competitive environment is crucial for businesses. Crust identified a gap in the pizza market in Australia, and then develops the strategy to fit them into the gap. Differentiation against competitors is the key factor to be successful in competitive market. Reflecting the tough competitive environment, crust aims to grow slowly and steady through good relationships with the stores and the customers (www. crust. com. au, 2010). RBW didn’t take it seriously compared to Crust because RBW were confident with the products and believed that consumers choose them once they tried their burger. The location choice for the first store was made by financial reason rather than strategic point of view.
This resulted in direct competition with established fast-food brands such as McDonald’s and Burger King. CONSUMER BEHAVIOUR [pic] There is little difference between the fact that RBW and crust pizza are located in England and Australia respectively because both are industrialized nations and both are very similar culturally. As such, both are positively affected by the growing awareness of the benefits of healthier food, as well as an active desire for such food, especially in the age groups that both Crust and RBW caters to. There are three driving psychological influences on a customer to eat at crust pizza. The first is an aspirational one. The existing perception of high dining atering to educated, high earning professionals that crust has worked meticulously to build, and one of the results is that being seen to eat there is indicative of being a member of that particular demographic. [pic] Figure 3. Reasons for eating Fast Food http://shansenta. blogspot. com/2006_10_01_archive. html The second influence is the imperative and willingness to pay for high quality food by the more discerning consumers. The third is one of safety, in the sense that crust delivers on time, with the correct pizza, in the same quality as in the store due to its specially made base. While the time take is longer, customers are satisfied as it is what they expect. RBW’s customers have different set of influences due to its geographical location in a less well off part of London where price is a significant factor.
For the majority of consumers that frequent that particular part of London, the health benefits that RBW provided were not enough of an incentive to try the burgers. Also, it is the nature of burgers that they are quick. The reason for eating them is that it is a convenient way of eating and customers are unwilling to wait more than ten minutes for a burger that elsewhere they can get within one or two minutes. MARKET TARGETING & POSITIONING 1 Segmentation The basis of a long term marketing strategy, as well as the initial success of the business requires a target market to be identified and the business positioned satisfy the needs of the chosen market. |Crust Gourmet Pizza |Real Burger World | |Geographic segmentation |- Distributed around Australia ; NSW, ACT and |- Opened the first store in London in mid 2003 | | |Victoria – An expansion in |- Located in a street with other fast food stores| | |Singapore | | |Demographic Segmentation |- Targeting the age of 18-39 years old including|- Targeting the people with the age of 20-40 | | |families and high incomes including middle class|years old and high incomes | | |and upper class. Targeting | | | |consumers from diverse nationality | | |Psychographic Segmentation |- Targeting the people with a healthy lifestyle |- Targeting consumers with a healthy and busy | | | |lifestyle | |Behavioural Segmentation |- Targeting for the middle and upper class who |- Some of consumers would have negative attitudes| | |would have purchase occasions frequently |due to some failure on plans. | Table 2. Comparison of segmentation between Crust and RBW o Geographic Segmentation Most firms have national marketing programmes which adjust their products and promotions to satisfy the individual needs of geographic units. Geographic Segmentation can be the most important process which brings to light the difference between the case of Crust and RBW. For Crust, it is distributed in the main cities of Australia included Sydney, Melbourne, Queensland and Victoria. The stores are located in various suburbs.
This implies two factors of geographic segmentation being region and population density. This indicates a greater opportunity for the success of the company due to its location. On the other hand, the first RBW store was located in a street with other fast-food stores containing McDonald’s and Burger King. This evidently demonstrates that there is more competition and hence the potential of losing customers to the other major food chains. RBW would be forced to compete against eminent and familiar fast-food outlets. In this case, having just launched their first outlet, it would contribute to decreasing their earnings. o Demographic Segmentation
The Crust has targeted an age group ranging between 18-39 years of age. Additionally, they are more likely focussing on middle and upper class demographics. We can assume that RBW also has targeted a similar demographic of consumers to that of the Crust. This can be classified as demographic segmentation. Each business targets a specific demographic that they feel the product or service would be most likely to attract. With that, the company will be able to set out its goals, marketing strategies and prices according to that chosen demographic. It clearly shows that both the Crust and RBW have targeted appropriate level of consumers who would become big fans of the restaurant.
In addition demographic factor is very influential on marketing strategy because consumer usage and needs are variable since each individual has different taste desires in products depending on how old they are, what family life cycle they have or what occupation or income they have. o Psychographic Segmentation The Crust has an aim to change the perception of pizza from that of a cheap food to more of one that can be classified as a healthier choice. Accordingly, this will appeal to those people who have a healthy lifestyle or are conscious about their diet. This strategy would lead to further success in their business as not only will they be able to maintain the number of existing customers, they would also be attracting a new line of customers.
For instance, through education and the media people are increasingly gaining more awareness with regards to their diet and healthy living. With that in mind, the public will be less inclined to eat unhealthily and would begin to focus on maintaining a healthy diet. This is a clear indication that people would choose Crust rather than Dominos or Pizza Hut because of their marketing strategy. As well as in the case of RBW, they have tried to develop the idea that burgers, if served correct, can be considered as an extremely healthy meal and not simply another form of junk food. This also would appeal to the public to dine at RBW as it appeals to the present values the public upholds. o Behavioural Segmentation
One of the factors in behavioural Segmentation is purchase occasion. In the case of both Crust and RBW, they have targeted a demographic of high income earners and this has lead to an escalating chance of increasing their earnings. Since pizzas and burgers are the most favorable food for parties, gatherings and meals, the public is guaranteed to purchase these foods on a frequent basis. But consumers may have different attitudes towards Crust and RBW. The Crust has been well-known as a ‘personality driven culture’ whereas the RBW has negative aspects associated with their food chain since they failed with some launch tactics such as brochure handouts and a free burger day.
With knowledge of such aspects, the public will most likely respond accordingly and think twice about RBW and it’s few slip-ups. 2 Target market For target market there are several different strategies ; undifferentiated marketing, differentiated marketing and concentrated marketing. Firstly, undifferentiated marketing is to ignore the specific market segments and approach the whole market with one market offer. Secondly, differentiated marketing is a marketing that determines to target several market segments and design separate offers for each. Lastly, concentrated marketing is choosing one large market or few submarkets. It clearly shows that both
Crust and RWB are concentrated marketers since concentrated marketing provides a means for small firms to compete against other larger companies and to gain a foothold in the food industry. 3 Market positioning Market positioning is the final part of step, involving developing a positioning for the target market, followed by the marketing mix. Crust pizza positioned their stores to be attractive to the market outlined. The relatively high price per pizza reflects their positioning as a gourmet pizza restaurant, though offering delivery services as well to expand the reach of their business. The restraint ambiance and staff trained in customer service helps differentiate Crust as a higher class of dining than its competitors.
It’s certification by the national heart foundation also gives proof to its claims of healthy pizza, swaying those skeptical of those marketing gimmicks and again differentiating it from competitors. RBW however, positioned both physically and otherwise to be in direct competition with existing fast food outlets. Located in a part of London where price is the defining factor, it is similar in price to McDonalds, contradicting its projected image of gourmet burgers. Customers have also commented that the shop feels similar to burger king, losing the perception of healthy food, and thus customers. Unlike crust, it’s burgers are not certified as healthy, though it’s stating of nutritional values of its burgers is a positive move, similar actions by McDonalds and other fast food outlets dilutes the impact of that move.
Had it gone with its initial location at a more high priced part of London, the outcome may be very different. CONCLUSION In conclusion, there are a number of factors that determine the success or failure of a business such as those of a gourmet fast food such as RBW and Crust pizza. These factors range from the elements in the marketing strategy to the target market and market positioning, both planned and execution. The importance of these factors can be illustrated by the difference between Crust Pizza and RBW, given the similarity of their environmental and cultural factors. It is RBW’s failure to understand the nature of their product and the behavior and influences on their customers that lead to RBW’s eventual downfall.
Crust pizza, on the other hand, well understood these factors and created an appropriate strategy and focused on the correct target market to claim success. References INTERNET Crust website, http://www. crust. com. au/ Momentary Musings, http://shansenta. blogspot. com/2006_10_01_archive. html Wikinvest, http://www. wikinvest. com/stock/Wendy%27s_International_%28WEN%29 BOOK Kotler P, Adam, S, Denize S, & Armstrong, G. , 2009,. Principles of Marketing, 4th ed, Pearson Education. Australia, Frenchs Forest, NSW ———————– Figure1. Market shares of the Major Players in the Fast Food Industry http://www. wikinvest. com/stock/Wendy%27s_International_%28WEN%29 Figure2. Pie chart of Consumer behaviour on Frequency of Fast Food http://shansenta. blogspot. com/2006_10_01_archive. html