2.2 Consumer behaviour

In addition, consumer eating habits changed noticeably in the 1980s. There is now more concern about health and about fat and sodium content of foods. Moreover, adults are monitoring their weight. Consumption of poultry products such as chicken and turkey has increased, while consumption of red meats has declined. Lean meats with lower cholesterol content are a significant consumer preference. The method of food preparation-whether food is broiled or fried - has become another concern.

As a result of consumer interest in the nutritional and caloric value of foods, McDonald’s has reduced the sodium content in its foods about 15 percent since 1983. [1, p.27] Moreover, vegetable shortening is now used to fry its chicken and fish. Wendy’s offers baked potatoes as an alternative to French fries, and both Burger King and Wendy’s maintain extensive salad bars, while McDonald’s offers prepackaged salads.

There is a danger that consumers will say one thing and do another. Consumers demonstrated little enthusiasm for Hardee’s low-fat burger, called Lean One, and for McDonald’s McLean Deluxe burger. Although chicken is a popular menu entry, a number of chains have had poor results in selling it to consumers. A customer orientation requires the company to define real customer needs.

Aging baby boomers now in their forties and more established financially, are demanding higher-quality and higher-priced entries in the fast-food industry. Many baby boomers are part of double-income families, which eat out more frequently and desire to upgrade their restaurant selection. The hamburger industry, confronted with slow growth and the competition from family restaurants, has diversified its menu. Some hamburger chains have added salad bars, and nearly all offer some varieties of chicken, roast beef and fish. The hamburger industry has switched from beef tallow to 100 percent vegetable oil in the preparation of fries.

Some consumers, because of small children or for other reasons, find it more convenient to eat at home. Take-out and home-delivery services have rapidly emerged in the fast-food industry and seized market share away from the hamburger industry. Pizza restaurants have used home delivery as a competitive strategy. Chinese restaurants have also stressed their take-out food service. Even supermarkets have tried to compete, offering take-out food service, sandwiches, and salads.

One might theorize that when consumers eat out they desire to indulge themselves. However, it would be a mistake for the fast-food chains to discontinue testing healthful entrees. The baby boomers are growing older, and this trend in itself may make consumers more health conscious.

2.3 Managing changes

hamburger industry franchiser franchise

Success comes when managers act on their organizations’ specific capabilities and advantages. Today’s managers need to look beyond financial statements to ensure profitability. A strategy that is proclaimed and then not executed is worse than no strategy. Essentially, the role of management is to manage changes that might affect its organizations. Increasingly, a proactive rather than a reactive approach to events is welcomed. In order to accomplish these objectives, organizations need to understand past history and practices so that mistakes can be avoided. Managers must determine what they can do either differently or better than the competition. Facing intense competition, marketers are confronting different types of challenges and need to understand difficulties and interrelationships in changing economic environment.

Many of the triumphs and blunders of the hamburger industry come from the native nature of franchising.

Also, there must be a high degree of brand identity and loyalty to strict operational and quality standards. McDonald’s has met these two criteria, and this basically accounts for its phenomenal success.

The lessons learned from successes and failures in the hamburger industry must be considered.

First of all, organizational concentration is vital for segmenting markets. Hardee’s concentrated its operation in small towns in regional locations, thus avoiding direct competition with McDonald’s in its early stage. Strong market identification can be promoted and rigid operational controls implemented if the organization can group its forces in smaller geographical areas.

Secondly, high product quality and diversification is essential in a mature market. Service is still tied to customer satisfaction. Services such as order filling, preparation and speed of generating a final product must be standardized and controlled from unit to unit. In this way services maintain high standards in all locations and a quality image can be maintained.

Then, in the hamburger industry social movements dictate strategies. The social and cultural trend toward better nutrition has had a deep impact on menu changes, generating the addition of salads and potatoes. Wendy’s has had huge success in targeting the female market with the introduction of baked potatoes. This social movement has also had an impact on cooking methods. Fast-food organizations selling pasta and some types of oriental food have prospered.

Following this, continuous experimentation and long-term planning are necessary to maintain success. Store size and convenience in schools, corporate restaurants and other sites will need continuous monitoring. An important reason was that franchisees complained that a growing number of new products were created not so much to improve their businesses as to provide the franchiser with higher profit margins. Moreover, franchisees had no assurance that higher advertising fees would be returned to local markets. Continuous experimentation is necessary for growth, but the total organization ought to operate in harmony to be successful.

The competitive structure in the industry must be understood. McDonald’s and Wendy’s have achieved success with their price strategies. McDonald’s has distinguished itself with superior customer service and product consistency while offering low prices and high value to consumers. It has also chosen to target families and children. Its distinctive golden arches constitute a symbolic trademark and are memorable. One possible warning is that as the baby boomers mature they may become less inclined toward fried hamburgers and more favorably disposed to broiled hamburgers. Wendy’s has offered a high-price strategy, product differentiation and such services that have been viewed by an adult market as distinctive. Hardee’s has not developed a clear strategy and as a result, has experienced below-average performance in the industry. Burger King appears to have followed a strategy of being second best, as a close market follower of McDonald’s. White Castle has used a unique strategy in the product offering, cultivating a very small and distinct market with unusual services.

The hamburger industry is oversaturated with competitors, and unless there is careful planning, a shakeout is on the horizon. Even supermarkets with take-out foods are eroding the market share of the hamburger industry. This shakeout will particularly strike the hamburger segment, with ethnic food and casual dining organizations the winners.

If the hamburger industry with its franchise system is willing to succeed, there must be clear lines of communication and standardized operating procedures.

Conclusion

A distinctive work has been done to understand how food marketers use key components such as innovation, image and target-market segmentation, the physical environment and human resources.

At this point, the market positions of all participants described in the current course paper have become clearer. McDonald’s remains the leader of the hamburger industry due to image identification, with its golden arches and its trade character Ronald McDonald, wholesome environment, low prices and fast, quality service. Burger King, the first to provide drive-through window service and inside sit-down eating, is the second best even with good menu diversification because of lack of innovation, introducing new products only in respond to competitors. Wendy’s and Hardee’s divide the remaining market share. Wendy’s higher-priced hamburgers of high quality enticed the adult market concerned about healthy food. Hardee’s target-market segmentation and overexpansion made it recognizable and desirable in small towns. White castle showed the whole new way of selling hamburgers and became a significant competitor.

Besides, the main challenges confronting the hamburger industry have been announced. They include fierce competition between hamburger and non-hamburger establishments, health and dietary changes during the last decades, maturing population and raising popularity of family restaurants and take-out food. In response, managers of hamburger establishments propose a list of future actions, including maintaining low price strategies and cost-focus approach, value approach strategies and fast, superior custom service, as well as broadening menus and being proactive with new product innovations in order to distinguish from competitors. All the emerging trends must be considered immediately ― the response to consumer concerns for healthy food and sodium content of foods was slow. Finally, there always must be absolutely clear lines of relations between franchisers and franchisees.

The fundamentals for sustaining competitive dominance in the hamburger industry are identified. It is hoped that managers and students, by focusing in particular on these fundamentals, will now be equipped with a more powerful tool for duplicating success and avoiding failure.

References

1. Jacobson M.F. Sodium Levels in Processed Foods. Washington: Center for Science in the Public Interest, 2008.

2. Florman M. Fast Foods: Eating In and Taking Out. New York: Consumers Union, 1990.

3. Michman R.D., Mazze E.M. The food industry wars: marketing triumphs and blunders. Washington: Quorum Books, 1998.

4. Michman R.D. Lifestyle Market Segmentation. New York: Praeger, 1991.

5. Oxford Dictionary of Business and Management. New York: Oxford University Press Inc, 2009.

6. Businessdictionary.com, Businessdictionary.com, definitions, viewed 17 April, <http://www.businessdictionary.com/definition/franchising.html>

7. <http://www.businessdictionary.com/definition/gm.html>

8. <http://www.businessdictionary.com/definition/rexall.html>

9. InvestorWords.com, InvestorWords.com, Life cycle, viewed 20 April, <http://www.investorwords.com/2805/life_cycle.html>

10. Reference for Business, Encyclopedia of Business, 2nd ed., Market segmentation, viewed 20 April, <http://www.referenceforbusiness.com/encyclopedia/Man-Mix/Market-Segmentation.html>

11. Campaign 55, Notes from the Campaign 55 Trail, viewed 23 April, <http://www.phostar.com/historic/archive/1998/02c55.html>

12. Small Business, Small Business Advertising&Marketing, Bottom-up marketing strategy, viewed 23 April, <http://smallbusiness.chron.com/bottomup-marketing-strategy-46641.html>

13. Wendy’s Inc, Wendy’s Inc, Survey results, viewed 23 April, <http://www.wendys.com/food/frysurvey.jsp>

14. Academic Dictionaries and Encyclopedias, Academic Dictionaries and Encyclopedias, Baby boomer, viewed 28 April, <http://en.academic.ru/dic.nsf/enwiki/30157>

15. Weight Loss, Weight loss, Light foods, viewed 3 May, <http://weightloss.about.com/od/glossary/g/lightfoods.htm>

Размещено на Allbest.ru