Group-Assignment International MKGT PDF

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MKTG3060 International Marketing Report: Grill’d Healthy Burgers

Figure 1. Grill’d Company Logo (Grill’d, 2017-a)

Blayne Alexander | C3207196 Isabella Felicio-Lyndon | C3183858 James Vargas | C3203498 Nicola Kralic | C3252222 Stephanie Walker | C3253278 1

Executive Summary This report presents an exploration and assessment of the opportunity to enter the international marketplace by burger chain Grill’d, through evaluating its current market position within Australia. For a foreign venture, the emerging market of Thailand was chosen, as it boasts millions of potential customers and a booming technological industry, perfectly aligned to position Grill’d for international success. Internal analysis of the burger chain, including its marketing mix, customer situation and environment reveals strengths and weaknesses of the business that have been identified to largely influence success in penetrating a foreign market and establishing a profitable market share. This analysis paired with a thorough international review further leads the report to offer a recommendation of entrance strategy best catered to the vastly different cultural and economic climate of Thailand.

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Table of Contents Executive Summary

Page

1. Introduction

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2. Current Situational Analysis

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a. Internal Analysis i. The Organisation ii. Capabilities and Resources iii. Marketing Assets b. Market Customer Situation i. Target Market ii. Industry Market c. Marketing Mix i. Product ii. Price iii. Place iv. Promotion v. People vi. Processes vii. Physical Evidence 3. Destination Market Analysis

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a. Macroenviroment b. Competitor Analysis i. Industry ii. Competitors c. Market Customer Situation i. Target Market ii. Size and Growth Trends iii. Culture Analysis 4. Opportunity Identified

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a. Adaptation vs Standardisation i. Consumer Behaviour Theory ii. Cultural Environment b. Revised Marketing Mix i. Product ii. Price iii. Place iv. Promotion v. People vi. Physical Evidence 5. Conclusion

(22)

6. References

(23)

7. Appendices

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1. Introduction Founded in 2004, Grill’d was a restaurant like any other but by 2017 has become a burger chain like nothing else. Boasting an impressive health-oriented menu and effectively distinguishing itself from current competitors such as McDonalds, Grill’d has captured a considerable market share. Fast becoming a beloved fast food burger chain, with over 100 locations Australia-wide, the company is ready to make its next move. Having now dominated the Australian market, there is an opportunity for Grill’d to adapt its burger chain model to a foreign market and begin the company’s international success.

Thailand is often referred to as the gateway to Indochina, creating obvious appeal for Grill’d as an international venture. In recent years the food service sector has become highly competitive with restaurant operators steadily rising, supported by minimal entry barriers and a shift in customer behaviour as modern urban families eat out more regularly. However, of most significance is the thriving tourism industry within Thailand. Fueling the economy from increased food consumption and promoting investment into construction of restaurant venues, the tourism sector has many global food chains looking towards Thailand as the answer to achieving low risk profitability.

Yet when exploring such a critical venture, it is important to understand the capacity Grill’d has to achieve a profitable market share and how best to structure an entrance to ensure a positive and lasting impression. Thailand, whilst offering an attractive business market also presents a culturally and socially dissimilar environment, which must be considered when adapting the business model.

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2. Current Situational Analysis a. Internal Analysis i. The Organisation Grill’d opened its doors in 2004 with the unique proposition of ‘making burgers done good’; today, there are 125 Grill’d franchises in existence. Simon Cowe (founder), decided to open the restaurant after complaining to mate, at the pub, about not being able to find a good burger (Shaw, 2013). Grill’d focuses on three slogans to convey its message to consumers; ‘Be Good’, ‘Do Good’ and ‘Feel Good’. The ‘be good’ aspect refers to having produce farmed locally, from paddock to plate. ‘Do good’ refers to Grill’d’s charitable approach to business, giving back to the local community once a month. The ‘feel good’ aspect refers to bringing customers the freshest and healthiest burgers. This creates value to the customer and initiates competitive advantage within the hospitality industry.

ii. Capabilities and Resources Grill’d have implemented marketing capabilities to ensure they stay ahead of competitors. Through adaptive marketing capabilities, Grill’d has extensive understanding of their market, identifying and capitalising on emerging opportunities (Hooley. et.al, 2017). Grill’d achieve this through market targeting; identifying alternative opportunities. One example, is the addition of the ‘Veggie Vitality Burger’, providing more variety for vegetarians (Grill’d, 2017-a). This is an emerging diet trend; 14% of Australians avoid red meat, another 10% are eating more nonanimal sourced foods than this time last-year (Waldhuter, 2017). Grill’d have utilised this information to create value for their vegetarian customers.

Organisational resources are extremely important to businesses, they are building blocks to a company’s competitive positioning; they allow competitive advantage (Hooley. et.al, 2017). Grill’d has many intangible resources making it difficult for competitors to mimic; these are hard to understand and replicate (Hooley. et.al, 2017). One resource that competitors cannot

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replicate is Grill’d’s competitive position in the marketplace; a brand that “actually engages with the local community” (Dowdy, 2017). This is a point of difference for Grill’d, their ‘Local Matters’ project sees each restaurant donate directly to local charities each month (Grill’d, 2017-a). By appealing to millennials’ charitable side, with 84% of franchises making a donation in 2014, Grill’d are creating value in their services not just by selling burgers, but with their ‘feel good’ mentality (Dowdy, 2017).

iii. Marketing Assets Grill’d have numerous marketing assets they have employed to create competitive advantage in their industry. One customer based marketing asset is their relationship with customers and local community members. Grill’d strive to deliver quality food while giving back to the local community, this promotes a feeling of happiness and wellbeing when customers purchase (Grill’d, 2017-a). Perceived benefits outweigh perceived costs; consumers see value added to the community and themselves, through eating at Grill’d. Brand and purchase loyalty is an effect of consumers seeing value and trusting Grill’d, leading to a greater market share (Arjun & Morris, 2001).

Grill’d possess key supply-chain assets that create competitive advantage. Grill’d has a great relationship with suppliers, local Australian farmers (Grill’d, 2017-a). Each of their ingredients is sourced locally meaning their supplier network must be well-developed. This helps to secure supply of raw ingredients and ensure they have everything available no matter what time of year.

b. Market Customer Situation i. Target Market Grill’d’s primary target market is the generation of the Millennials. This generation falls between 1982-2004 and are the most misunderstood according to Forbes (Hyder, 2014). Their secondary target market is those with different dietary requirements such as low sugar, low carb, vegan, vegetarian, paleo, gluten free and dairy free. There are rising numbers of consumers eating less 7

meat, the largest group are 18-24 year olds with a third actively choosing to eat less meat due to health concerns (Marsh, 2016). As Grill’d’s primary target market is the Millennials, it is evident they have catered their menu to accommodate these different eating habits.

Grill’d take on an undifferentiated target marketing strategy though communications. This can be seen as all of their media messages contain the same promotional message to different target markets (Kolb, 2006). This is evident on Grill’d’s Facebook page, where most of their advertising takes place (reaching 163,000 people), and TV advertisements. Posts frequently feature different types of Grill’d burgers (see Appendix A for further segmentation of Grill’d’s primary target market).

ii. Industry Market Size and Growth Trends Australia has moved from the classic fast-food burgers to a more premium end burger which has aided the fast food burger industry drastically (IBIS World, 2017). Some of the economic drives that have caused this shift is the health consciousness of consumers and their growing incomes (IBIS World, 2017). According to IBIS World Grill’d is one of the major players in this space with an estimated revenue this financial year of 319.2 million dollars and a market share of 4.6% (IBIS World, 2017). It has been reported that the health trend that is spreading throughout Australia will not go away as less healthy offerings have declined drastically (IBIS World, 2017). Furthermore, it has become evident that consumer tastes are drastically changing, moving towards fast casual dining experience which Grill’d has offered (IBIS World, 2017). Australians are also demanding natural, organic and locally sourced food products as there has been a 40% increase in eating more fresh fruit and vegetables, and a 23% increase in cutting down on fats (IBIS World, 2017). According to this data Grill’d are ahead of the game with significant room to expand.

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Culture Analysis Culture can be synonymous for a group of people, an ethnic race, a diversity in demographics, ideologies and beliefs and attitudes (IBIS World, 2017). This can be analysed through Hofstede’s cultural dimensions; Power distance, individualism, masculinity, uncertainty avoidance, longterm orientation and indulgence, which has been explained in detail within the appendices.

Australians key traits seen through the Hofstede analysis show that they place a high importance on individualism and indulgence. This translates to a society which believes in their equal rights and the freedom to enjoy their leisure time. With a high score also in masculinity, this indicates a society driven by success and determination to succeed (see Appendix A for a detailed Culture Analysis).

c. Marketing Mix i. Product As Australians gain increasing awareness of the benefits associated with a healthy, they are becoming more particular in their diets and cutting out junk foods. Grill’d have taken advantage of this shift in behaviour, likewise jumping on the fitness bandwagon and offering healthy alternatives for burgers. As stated by Iancu, I. A. (2016) the marketing strategy needs to be based around products and/or service hence why Grill’d have taken the healthy product marketing strategy. The core benefit of Grill’d is always to satisfy the need or hunger of its consumers. Grill’d offer a generic and expected product that such as a plain burger that will satisfy the consumer needs and wants. But what Grill’d really pride themselves on is their augmented product by offering this wide range of healthy burgers and Grill’d (2017) showcases the new menu range featuring low sugar, low carb, gluten free, vegetarian, vegan, dairy free, paleo and good oil replacements. By offering these highly augmented products can target a wider range of audience in their market such as people with dietary requirements whereas competitors cannot.

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ii. Price Grill’d offers a menu predominantly within the $10-$15 price range. The major influence that affects the price of Grill’d products would be their competitors. Unable to beat McDonalds, Hungry Jacks, KFC, etc. low pricing, Grill’d instead opts for moderately priced products that focus on quality and health yet are able to still sit competitively within the market in the low to moderate price range. Grill’d is opting for a psychological pricing, meaning they are considering the health considerations of their customers thus reflecting in their prices as stated by Armstrong, G., Adam, S., Denize, S., & Kotler, P. (2011) offering a healthier alternative will always increase costs yet by emphasising through a visible kitchen in the restaurant that the burgers are freshly made with healthy ingredients allows Grill’d to comfortably and successfully place a higher price on their burger range. The price reflects Grill’d supply and demand perfectly, they understand they are not capable to sell low priced products and generate the demand to match, so the moderate pricing reflects that they are keeping up with the demand and able to generate enough revenue for the organisation. A price an increasingly health conscious society are willing to pay.

iii. Place Grill’d restaurants are a dine-in experience offering burgers waited to the table. As the product is a more premium product than most fast food restaurants, the dining experience must reflect this. Grill’d now boast with over 125 stores all over Australia as of the end of 2016, distributing all their offerings throughout these stores. To maintain the high quality products consistent throughout all their stores across Australia, they source all their suppliers from within Australia for their meat, bread, and vegetables, etc. To make sure the production stays consistent is because their entire Grill’d patties and spreads are prepared offsite and delivered exclusively to each store as stated by Grill’d (2017). With friendlier interior decorations and service, offering table service for orders and cleaning Grill’d paint the perception in consumer’s minds of a complete restaurant feeling, and consequently of better and healthier foods compared to fast

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food stores. Alongside in store dining, Grill’d also offer online ordering, allowing customers to pre-order and reduce waiting times for their food which is picked up in store. iv. Promotion As a recently established organisation, Grill’d understand the importance of social media promoting their brand. Focusing on young adults as a target market Grill’d uses social media platforms such as Facebook and Twitter as a cost effective and captivating tool to capture market share and engage potential customers. This platform further allows Grill’d to communicate promotions and community work throughout their consumer base. Grill’d highly value the impact they have on the greater community and strive to be ethical role models within the market, willing to lead, support and help local clubs and foundations. They achieve this through their ‘Local Matters’ donation program, every 3 months, 3 different community groups are chosen, customers are given the opportunity to place bottle caps in jars representing the group they want to support, resulting in Grill’d donating money to each community depending on their popularity. Promotion deals such as the ‘2 for 1 specialty burger’ deal, furthermore help to appeal to price influenced consumers increasing consumer reach especially towards young adults with less disposable income. Through these promotional tools Grill’d is creating this fantastic brand image for the market by becoming the standout market leader in supporting the community. Creating the desire for consumers to come into Grill’d stores and help participate in giving back to the community, playing on the emotion of their customers to drive them into using their products and services. Promotion is such an important tool for Grill’d because as stated by Juneja, P. (2016) service offerings can be easily replicated so the

v. People Staff employed by Grill’d are ideally friendly, charismatic people who enjoy working in hospitality industry primarily young adults between the ages of 16-25. The employees at Grill’d become inseparable to the service because they are the ones simultaneously producing it and serving it to the customers. People are crucial to the offering of Grill’d because as explained by Grădinaru, C., Toma, S., & Marinescu, P. (2016) the people of an organisation can influence the quality of the service provided. Employee’s welcome guests warmly as they enter each

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restaurant and are responsible for creating an atmosphere every customer will return to whilst competent chefs man the grill to offer fantastic, healthy burgers for the customers to enjoy. People employed at Grill’d offer personality, atmosphere and experience to every Grill’d store.

vi. Processes Grill’d day to day processes are seating and serving people in their stores, then cooking and serving the customers their food. So their processes each day require much interaction between product, place and people. Grill’d must maintain their stores to high standards knowing that their surroundings are heavily influencing the customer’s experience. The service is served through their employees making every experience unique. As Grill’d maintain a high social media profile, they can receive plenty of feedback from their consumers allowing them to be able to react and alter their mix to suit their consumers. What sells their service to the market is their wide range of healthy burgers they offer and through the art and perfection of their chefs delivering delicious food.

vii. Physical Evidence The physical evidence of Grill’d is their wonderful wide range of healthy burgers. The wide range of burgers fulfils the need in the market of a healthy alternative for fast food. With the variance of their burgers such as vegetarian and vegan, they appeal to many consumers in the market. They even fulfil the needs of people with dietary restrictions such as gluten free and dairy free. While offering these great tasting burgers, it also continues to give back to the community helping consumers satisfy their need and giving to the least fortunate of the community. The other physical evidence Grill’d have is their stores where they offer their burgers and service. The physical evidence that Grill’d is quite visible to all consumers in the market and they know what Grill’d are known for.

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3. Destination Market Analysis a. Macroenvironment Through an investigation of the Macro environment which are forces a company cannot control which ‘indirectly affect company’s operations’ (Chand, 2016), through the use of a PESTEL analysis, it is determined. That the most substantial force which poses the highest threat to Grill’d’s international leap and success in Thailand is, the Environmental force. This is due to climate changes negative and growing effects on the environment, these effects can have a correlative effect on several other economic forces. For example due to the climate change leading to global warming, rice crops will be destroyed which are central to Thailand’s economy as it is one of the most ‘significant commodities in the agriculture sector’ (Oxford, 2016-a). This would impact Grill’d as the economy would suffer with possible results in inflation increases, price point increases and decreased NDI. Another element climate change can impact, is causing sea level to rise, which would result in Bangkok submerging, impacting a huge source of income for GDP as the loss of Bangkok will impact the tourism industry which would bring less foreign currency into the region and pose a threat to businesses survival due to less revenue from tourists.

A Macro environmental force which presents the most valued external opportunity is Technology. Thailand technology is booming and as superior and reliable infrastructure provides an opportunistic position for secure building sites transportation networks aiding the local supply chain. Another opportunity...