Industry Market Audit
... example, restaurants and shops catering to foreign cuisines and tastes. On the other hand, the rural population of Australia is more traditionalist, by necessity rather than by choice. Geographical isolation and socio-economic disadvantage have kept Australia's rural areas from benefiting from new products and new consumer trends, including foodstuffs, In short, although the country is vast, the population is concentrated in well-defined clusters around the state capital cities and the coastal areas around them. New South Wales is the most populated state, with Victoria second, followed by Queensland, Western Australia, South Australia, Tasmania, Australian Capital Territory, and the Northern Territory. Customer Needs Healthy eating will continue to be a major trend among Australian consumers. This will continue to have an impact on consumer foodservice and so companies involved in the fast food are expected to continue diversifying their menus toward healthier, low-fat options. The trend towards the traditional takeaway sales appears to be slowing. There is however a very strong growth from higher quality fast food outlets, such as Nando's, which is associated with the trend towards more nutritious products. These outlets tend to attract a far higher proportion of eat-in customers, than say McDonald's. There is an increasing consumer demand for convenience. Convenience is a major selling point of these companies as the population is more career orientated than previous years, and do not have the time for food preparation. Degree of Segmentation Fast food customers are highly segmented. Consumers can be segmented into— • Children • Tweenagers • Teenagers • Young adults • Middle aged adults • Single person households • Couples living alone • Young family households • High income disposable families • Nested families • Empty nested families • Ethnic populations • Travelers Competitors Competition Identification and Size The two largest takeaway food companies in Australia are “McDonalds’s Corp” with an average sales growth of 11.2% and a market share of 34.7%, and “Yum! Brands Inc” with an average sales growth of 8.0% and a market share of 16.2%. Table 5 identifies the different competing companies and their percentage of market share between 2001 and 2003. Table 5 showing major brands of chained fast foods outlets, the global brand owner and shares in 2001-2003 is shown in ‘Appendix 1’ Product Range The different product range in fast foods retailing include: • Bakery products (eg outlets selling filled rolls; subs; bagels; sandwiches; croissants; brioches, doughnuts, other sweet pastries etc); • Burgers (all outlets in which beef burgers or burgers constitute the main offering); • Chicken (all outlets in which chicken constitutes the main offering); • Ice cream (includes ice cream parlours; outlets selling frozen yoghurt, juices etc); • Fish (all outlets in which fish constitutes the main offering); • Latin American (eg outlets selling tacos etc); • Middle Eastern (eg outlets selling kebabs etc); • Asian (eg outlets selling noodles, dumplings, sushi); • Pizza fast food (in order to be classed as fast food pizza units, ie as opposed to 100% home delivery/takeaway pizza units, pizza – generally sliced or packaged – must be available at a counter, ready for immediate consumption); • Convenience stores (includes only convenience store outlets that provide an on-site foodservice facility within the retail store for consumers, offering hot/cold prepared foodservice only; excludes all other retail purchases from convenience stores); • Other fast food restaurants (eg local specialities, soup-to-go, emerging formats etc). Positioning § Ability to attract local support If located in a residential area, to service at least 600 households. § Having a clear market position That market positioning projects a clear and consistent image of the company. § Experienced work force The ability to attract and keep high quality staff to ensure high standards of customer service. § Ability to control stock on hand The use of tightly monitored stock control systems. § Access to multi skilled and flexible workforce To be able to operate for long hours in a family business situation. To have access to reliable relief staff. § Production of goods currently favoured by the market To be aware of the specific needs of the local clientele and stock the appropriate goods. § Proximity to key markets To be located in an area that has a high volume of passing traffic. § Attractive product presentation To continually examine the store layout to maximise sales. § Easy access for clients To have ample parking and convenient access to the premises. § Production of premium goods/services To offer products of a consistent and high quality nature. Industry Competitiveness Trends This industry is subject to a high level of competition which has been exhibiting an increasing trend in recent years. An example of this is the recent concern regarding the fat content of traditional takeaway food and the rising demand for healthier alternatives. In addition to numerous new 'health' operators entering this industry such a Boost Juice, the industry has also experienced a change of focus in the menu items of traditional operators. This has intensified competition with 'health players' and has forced other operators to re-evaluate their own menus. 1. Internally, there is a high degree of price competition within and between the various product segments of this industry. Participants also compete via service, promotions and location. § Price: Due to the nature of goods retailed by this industry, price is possibly the greatest competition point. Operators in this industry aim to offer consumers value for money. § Service: Despite effectively being 'fast-food', consumers demand a minimum level of service from operators. In particular, consumers will be critical of the time it takes to have their order fulfilled. § Advertising: Promotional deals are a large part of this industry with operators often competing with each other on the basis of who offers the best value for money. A large number of promotions are based on providing 'meal packs' or 'dinner packs'. § Location: Operators should aim to be located in high customer traffic areas such as shopping strips, shopping centres etc. In addition to influencing the volume of sales, the location of the establishment will also affect the type of customers. For example, establishments located near city corporate offices will be popular with office workers during lunch hour, while stores located in outer suburbs will be utilised more by school children, residential families, etc. 2. Externally, takeaway food retailers face strong competition from supermarkets, which have expanded their product range to include takeaway meals. Supermarkets have also placed increased emphasis on the preparation of Meal Solution products. Many of these products are direct substitute meals for the traditional takeaway meal served by most of the major participants. Further competition comes from the production of relatively low-cost restaurants (mainly Asian), which offer value and variety, particularly when compared with the major chains. Takeaway Food retailers also face competition from Convenience Stores operators such as 7-Eleven. Operators in this industry also provide a number of takeaway and fast food items such as pies, sandwiches and chips. In the fast food industry, or any industry it is important to take into consideration internal and external factors impacting on the organization. Internal factors include those such as customers, creditors, suppliers and competitors. These elements create the task environment. Suppliers provide the materials to create the product, which is then sold to a consumer. It is important to listen to the wants and needs of a customer. Competitors are other organist ions with rival products, this creating competition and urges organizations to keep up to date with rivals. creditors supply the money to allow for purchasing of products, its important to maintain good relations with creditors so the organization is always able to provide the customer with the products. (pacific rim ) On the other hand there is the macro environment, it is the flow of goods and services, matching the demand of consumers with the supply from producers. It is important to understand the objectives of the society the organization operates in. ( 4) it is important in the food industry to understand the changing and varied taste of consumers, and to match this with a product to satisfy most. The main elements of this environment outside of an organizations control are outlined below. Economic conditions set the potential buying power of that country, a country must have enough income to purchase that product. Developed countries have high purchasing power and want. ( 2 ) This is to say you are not going to target fast food to a 3rd world country where there is not enough money to live, let alone purchase a large pizza from pizza lovers, or chips from KFC. This can cause problems as it can be difficult to reach growth objectives. ( 2 ). If you don’t have the sales you cant reach the goal, it is important to analyze the economic market to produce a product that is able to sell. Size of population, household sizes and numbers, age, occupation, employment, income all make up another key factor, the demographics of a society. ( 2 ) “people make up markets” ( 3 ). These factors allow a organization to define a target market, creating a customer profile. ( 5 ). understanding customers, their wants and ability to purchase. can reveal the market potential. You would not place a McDonalds or a hungry jacks in a low populated area with low income and far from other major towns as it could not provide for sales to cover cost and cause a business to collapse. It is correct marketing that leads to sales. Technological factors reflect an organizations knowledge of production. Competitiveness relies on an understanding of current development in ability of producing goods. ( 1 ) to keep up with in a market you have to have the technology to produce the same quality of goods at the same pace. If McDonalds developed a faster more nutritious way to cook chips, hungry jacks would then have to develop a way to match if not beat this to keep in the playing field. This involves implementing the right technology to create the desired product, if you are unable to achieve this you can not keep up with the market. It can be costly and time consuming. The restraints on a society can be caused to legal and political issues. It is fundamental that an orginsation operates within the legal framework of the society in which they operate. The laws of a society govern its functioning. ( 1 ). This can affect marketing as it sets out the type of products which can be marketed, the content of approached used and the media to do this. ( 2 ) As fast food is global it is important that large franchisee such as Kentuky fired chicken, give the right image in each country and in order to achieve this they must understand the legal environment. What society reflects as acceptable. You would not go into an Arab country that bans the display of woman’s faces, and use an advertisement with a woman as the attraction. This would not be reflecting that country’s value, therefore receiving negative publicity. It takes research of that country to achieve the desired outcome. This ties in with keeping with the natural environment. The natural resources which create the inputs needed. An organization must go to measures to protect the environment. ( 3 ). In an ever growing society that relies on fast foods it is important they that the organizations create environmentally friendly products, reduce, recycle and re-use. They must make effective use of energy and low pollution rates. It is important they reduce landfill and pay great attention to their waste. If this is not achieved organizations can be slandered as wasteful and receive negative publicity. As the environment is beneficial to the whole society organizations must do their best to show there concern, to reflect the importance of forest, to implement a wide use of renewable resources. This satisfying the customer as they know their product is not damaging their environment. It can be costly to an organization to create environmental friendly products and timely to sort wastes, but the overall benefits are priceless. This can aid to the socio-cultural elements of a society. These are the values and norms of a society, the beliefs and behaviors associated with the demographic trends characteristic for that given geographic area. Involves monitoring trends and shifts for demand. ( 1 ) it is an understanding of the culture of that environment, enabling a organization to keep with operation but allow adapting for that environment. Organizations such as McDonalds stick to their operating procedures but allow for adaptation in different countries, such as marketing methods or menu modification. Again turning to Arab countries were pork is banned they adapt to this change and take it off the menu but still offer other products. As food is of importance to every society it is important to understand your particular markets taste and wants from food, how high the place the nutrition value of their foods. You must provide your customer for what is important to them. For example the success of boost is due to its nutrition value and context, but there was a huge out cry when it was found there was high content of calories, causing boost to review their products and defend their company. So when meeting the needs of a society you must understand it to its full, the legal aspects, demographic and just the basic values and behaviors expected. The food industry is ever changing and developing to meet the ongoing demand s of society. Marketing Mix Audit The table below provides a comparison of the marketing strategies used by some of the major players in the fast food industry. Table 1 HOW MAJOR FAST FOOD COMPANIES MAKE USE OF THE MARKETING MIX MAJOR PLAYERS PRODUCT PLACE PRICE PROMOTION McDonalds Burgers, fries, soft drink, ice cream. With a new focus on ‘healthy’ meal Options such as sandwiches and Salads. Menu includes breakfast and lunch/dinner options. 725+ locations in Australia Cheap take-away, with health options being more pricey eg. cheeseburger-$1.85 and deli choices $4.95 Internet, television, Radio, coupons, Billboards etc Pizza Hut Pizza, soft drink, garlic bread, ice cream, ‘meal deals’. Menu includes dinner options only. Pizza Hut were unwilling to disclose that information. More pricey take-away, especially if you get home delivery. 1 large pizza from $ 9.95 pick up Television, flyers, coupons Red Rooster Chicken, chips, burgers, soft drinks etc. Menu includes lunch/dinner options 230 locations in Australia Middle price take-away. $3.95 meal deals. Television, billboards, coupons, Hungry Jacks Burgers, fries ‘fast food’ with a new Emphasis on ‘healthy’ meal options much like McDonalds-chicken baguettes etc Menu includes breakfast options (selected outlets) and lunch/dinner options 300+ locations in Australia Slightly pricier than McDonalds, Whopper $6.15, salad $5.95 and chicken baguettes $4.95 Television, radio, billboards, coupons, magazines, Subway Rolls, salads, sandwich wraps, cookies. Menu includes breakfast and lunch/dinner options 700+ locations in Australia More pricey due to the ‘healthy’ label, about $8 for a foot long sub. Television, posters, coupons, radio Table 1 above clearly demonstrates that the major fast food companies within Australia bear many similarities. The forms of promotion used by all the fast food companies audited were very similar. There is a trend towards healthier fast food options in many of the stores, with the prices for these items typically being higher than for the traditional fast food offerings. McDonalds has the most outlets in Australia. Subway is coming a close second, which provides further evidence for the increasing interest in healthy options when eating fast food. PIZZA LOVERS MOOROOLBARK-SELECTED FOR INTERVIEW The industry player selected for an in depth interview was the Pizza Lovers store in Mooroolbark. The owner of the store, Dan Kuylk defined the target market of the store as being determined by the areas in which the store operates. The areas have many younger families, so therefore the target ages are between 15-50 years. The approach used to market Pizza Lovers to the target market is described as ‘blanket’ advertising through the local area with pamphlets. The store also relies on main road exposure and word of mouth, promoting inexpensive fast food. The consumer needs Pizza Lover’s aims to meet through the marketing approach are • appealing to people on a budget • appealing to those that want a fresh-tasting option • appealing to people’s lazy side-the pizzas are so quick and cheap you don’t have to think about whether or not to cook dinner The marketing approach used, in reference to the four p’s is: Price: Cheap, the main way Pizza Lover’s competes is on price Product: Though the product is similar...