The current research presents the analysis of the fast food market in terms of the brand performance. The first section of the paper presents the competitive environment and the specifics of purchasing preferences for the brands. Among the key brand performance metrics of the five fast food brands there are the brand penetration and the market share. These metrics define how many of the customers ever tried the brand and how many of the purchases happen in the specific chain, correspondingly. The category buying rate, the average purchase frequency and the duplication of purchase data are analyzed with regard to the intensity of the purchases within each particular brand and the customer propensity to switch across brands. Another specific metric of the loyalty is the number of sole buyers.
The market features five brands of different sizes. This is a repertoire market, where customers normally tend to switch brands. The smallest brand, Nando’s, attracts the heavy fast food buyers and features low brand loyalty, in accordance to the ‘double jeopardy’ law. In particular, Nando’s customers also eat in other restaurant chains, in proportion to the market shares of those chains.
The second section of the paper presents the two polar concepts in terms of brand performance tracking. These are brand attitudes and the brand salience. The former is not particularly suitable for the brand measurement purposes, as they tend to be situational. The latter measures how often customers think of the brand in the buying situation. Since Nando’s is a very small brand, it has to improve the brand salience by reinforcing the brand awareness and recognition with a number of marketing cues.
The last section of the paper is related to the demographic profiles of the brand users. The variables studied are gender, relationship status and the income level. Although there are some differences between the customer profiles in some brands, they are not dramatic. This is explained by the fact that the customers are rather attached to the category and have no particular preferences towards one specific brand. This means that a small brand like Nando’s cannot gain from targeting any particular segments, but needs to work with mass marketing methods and aim to attract as many customers as possible.
Analysis of the Brand Performance Measures
One of the patterns found in the brand performance data is that “big and small brands differ greatly in how many buyers they have” (Ehrenberg, Uncles & Goodhardt 2002). As the smallest brand, Nando’s suffers from the so-called “double jeopardy” effect (ibidem): its market share is only 6%, and the average purchase frequency is also lower than in the leading brands. Another observation is that Nando’s customers are actually the more frequent category buyers. Its share of category requirements is lower than the penetration, which implies that consumers who went to Nando’s went to other chains more often. Overall, the fast food customers tend to switch brands. Nando’s was a particular case, along with Subway: the brands had no sole buyers during the analyzed period. By contrast, McDonalds clients make as much as 43% of their category purchases in McDonalds, and there are 24% of the sole buyers. Large brands with such high loyalty are sometimes called “reinforcing” brands (Jarvis & Goodman 2005).
Choice of Strategy to Boost the Market Share
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The Nando’s brand features the lowest market share and very low loyalty. Given the specifics of the “repertoire” market with no particular loyalty to the brand, the goal to double the average purchase frequency within a year is almost impossible to achieve. Instead, the marketers should focus on the acquisition strategies which would bring more clients to the brand. The same conclusion was tested empirically by the authors of the Dirichlet model. By confirming that “[the brand purchase frequency] hardly differs among the brands” in different types of categories, they concluded that “a marketing plan which aims at increasing sales by getting existing buyers to buy much more of the brand” is unrealistic (Goodhardt, Ehrenberg, and Chatfield 1984). It is worth to mention that the Dirichlet model is only valid for specific markets that feature no rapid changes in market shares and no brand groupings. It is the case in the fast food industry.
The Duplication of Purchase Law and the Nando’s Competitive Environment
The duplication of purchase data shows that the average duplication in this market is rather high, 48%, meaning that around half of the customers have also tried other brands during the given period. The duplication of purchase data also shows that average duplication decreases with the decrease of the brand’s size. This is an illustration of the Duplication of Purchase Law, formulated by Sharp, which states that “a brand’s customer base overlaps rival brands in line with its market share” (TRL News Blog n. d.).
The law is observed in many cases, yet there are some deviations as well: KFS and Nando’s share many more customers between them than it could be anticipated from their market shares. Namely, as many as 79% of Nando’s customers have eaten in KFC, and 39% of KFC customers also chose Nando’s. This can be related to the close location of the restaurants in these two chains.
The interpretation for the fast food market is that if McDonalds has the 38% market share, then a similar proportion of the Nando’s customer base also eats in McDonalds. Smaller brands share their customers more intensely than larger brands. The second implication is that any brand’s buyers tend to buy from other brands in the category.
Awareness and Salience
Brand Salience and Brand Attitude Measures
Whereas brand attitudes are often associated with the customer affinity, there are a number of disadvantages in the attitude-based marketing approach. First, an attempt to build consistent brand tracking by measuring attitudes could trap the Nando’s marketers, as the metrics are often situational and unstable. Research showed that the “attitudinal responses were highly variable for individual consumers between time periods” (Sharp, Sharp & Wright 1999). Second, measuring attitudes could represent the general attitude to the category. For instance, engagement and loyalty metrics among the USA fast food consumers have been dropping dramatically in “three generational cohorts” (Rassikoff 2014). Finally, the attitudes tend to describe previous buying experience, not the intention to buy.
In this view, brand salience is a concept that could define the brand performance more effectively. It is defined as “the propensity of the brand to ‘stand out’ from memory in buying situations” (Romaniuk & Sharp 2004). Thus, this measure accounts directly for situational preferences and defines how the brand is positioned to be chosen within the category. Brand salience is particularly important for Nando’s with their small market share, as this metric is considered “the most important characteristic any low-involvement brand can possess” (Rosenbaum-Elliott, Percy & Pervan 2011). Brand salience is related to market dominance and brand equity: studies showed that “market share was primarily influenced by the brand salience” (ibidem). In practice, measuring brand salience is associated with the top-of-mind awareness of the brand in the buying situation. The ability of the brand to ever “show up” and not be “screened out” (Daye 2010) from the memory in the buying situation is critical for the small brand performance. There is a closed loop between brand presence, the advertising volume and the salience: “The more marketing activity and display there is, the more noticing the brand gains. Seeing the brand around can reinforce its memorability and salience” (Ehrenberg, Barnard & Scriven 1997).
Awareness & Salience Metrics
The awareness and salience metrics reflect that the Nando’s top-of-mind awareness is consistent with the market share of the brand. The overall awareness and the brand salience measured in the whole sample are higher. These results indicate that the brand has gained normal general awareness, as it is in the list of the fast food brands considered by the consumers. However, the figures for the actual brand users show that Nando’s users, when considering their purchases of other brands, scored close to the average 41 salience. They do not have better memory of the brand than of other brands in the category. Besides, awareness of the brand is higher than Nando’s actual market share: 38% know about the brand, while the penetration is 23%, and the market share is only 6%. Although people are familiar with the brand, some people never went to Nando’s, and some chose it only occasionally compared to other brands. This performance is related to the small size of the brand: “There are no strong and weak brands, there are only big and small ones” (Ehrenberg, Barnard & Scriven 1997). This can be related either to some objective reasons, such as the limited regional presence or inconvenient traffic location, or to other barriers such as lack of reinforcement campaigns.
Implications of the Salience Metrics for Marketing and Advertising Strategies
The fast food industry is clearly a “repertoire” market, when consumers choose almost randomly between the similar brands that “share typical characteristics” of the category (Rosenbaum-Elliott, Percy & Pervan 2011). An implication of the salience metrics is that “the number of people for whom the brand is salient differs greatly from brand to brand” (Ehrenberg, Barnard & Scriven 1997), while they generally show similar attitudes to different brands. As Nando’s is a small brand, its marketing strategy should aim to increase brand salience among the category users. In order to achieve this objective, it should work on the “quantity and quality of the memory structures” (Daye 2010). Quantity means that “the more memory structures the brand is linked to, the more likely it is to be thought of during the buying decision” (Widmer 2010). Quality means how strong and relevant the association to the brand is. Marketing campaigns should generate as many cues as possible to link to the brand name and evoke associations that Nando’s is a good fast food choice. Nando’s can use “multiple cues both at a single point in time and over different purchase occasions” (Romaniuk & Sharp 2004). It is particularly important to focus on the customers who never visit the chain or do it seldom. Among possible marketing cues that extend the links to the brand there are Nando’s recognizable logo, ads placed near the typical fast food locations, web banners, custom personalized advertising, promo coupons, promotional products such as cups, sunscreens, balloons for kids, pens, etc., commercials or tunes played in the supermarkets and other attended places, sponsorships of family and sports events. There are also cues related to the customer experience at Nando’s, such as distinctive client service, accents on the taste and the healthiness of the menu, original personnel uniform, etc.
Demographics and Segmentation
Analysis of the Customer Profiles
The available demographic metrics, along with the age, household size and other variables, are commonly considered to be associated with the level of the fast food consumption. In particular, USA-based empirical study summarizes that “the variables that have been found most important in prior studies, such as income, time value, age, and gender, continue to play the primary role in the food away from home demand” (Binkley 2005).
The data implies that Nando’s has very low deviation from other brands in terms of the gender structure, as its mean average deviation (MAD) is only 0.8. McDonalds, which has the highest gender difference and a higher share of male customers (40%), differs from the average value by only 4%. The low differences in the gender composition can be explained by the fact that the customer base structure of all brands reflects not only the brand preferences, but, primarily, the choice of the category.
Regarding the relationship status, Nando’s customer base features more differences from the average profile. The brand has more single customers (24% vs the average 20%) and less divorced/separated customers. This can be attributed to the fact that Nando’s has attracted younger customers. Among competitive brands, KFC and Subway have more family customers, and Hungry Jacks has more divorced/separated customers. Still the MAD in any of the brand does not exceed 3%, which again confirms the idea that this attribute results mostly from the category profile, not the brand positioning.
The income groups reflect slightly larger discrepancy between the brands. Considering that Nando’s has more single customers, the high household income means the higher earnings of a typical Nando’s customer. These deviations can be attributed to the brand pricing.
Overall, there is no evidence of dramatic differences in the customer profiles of Nando’s compared to other brands. Empirical research in different markets and categories provides “robust evidence that there is generally little difference between the customers of any two brands in a category” (East, Wright & Vanhuele 2013). This reflects the brand perception of the customers: typically, they first consider the choice of the category, while brand preferences play a secondary role.
Implications of the Customer Profiles for Marketing Strategies
The demographic profiles reflect low level of differences between the competing fast food brands. This is related to the type of the environment the fast food brands are working in. Since the category is for the mass market, it means that the best strategy is “to be all things to all people with a single, undifferentiated marketing program” (Michman & Mazze 1998). The fast food brands do not have enough functional differences: for instance, if some brands introduce new menu choices such as healthy breakfast options, the others replicate the move. Consumers do not choose the brands based on these differences, “lack of perceived differentiation” is observed for competing brands (Romaniuk, Sharp & Ehrenberg 2007). Instead, the main decision consumers make is whether to consider the fast food products as part of their menu or not.
Whereas many fast food brands practice market segmentation to cover different subsegments with their specific needs, implementing different marketing campaigns for all subsegments is neither feasible nor effective, as it could hinder the brand recognition. Creating different communications for many subsegments would mean significantly higher budgets. Since the “long-term success of all future marketing programs is affected by the brand knowledge” (Keller 1993), the critical factors of Nando’s marketing strategy are its effect on the brand recognition and the subsequent recall of the brand. Given the currently low market share, a viable strategy for Nando’s is to keep the brand communication consistent and wide to cover as many potential customers as possible , while developing differentiated product variants for many consumer groups.
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