Nando's International - Strengths and Weaknesses of the Business Based on Service Industry - Case Study Example

Nando’s International Case Study Table of Contents Introduction 2 Brief Overview of Nando’s International 2 Service Industry 4 Main Competitors 5 Product/Service Offering 5 Characteristics of Service Industry 6 Product 6 Price 7 Place/positioning 7 Promotion 8 People 8 Process 9 Physical/Evidence 9 Problems Experienced 10 Recommendations 11 Conclusion 12 Reference 14 Introduction Organisations are controlled by philosophies and ideologies of people who started the organisation. The success of many of the organisations is the contributions of the stakeholders, and other numerous interested parties. Organisation develops over a long period with some succeeding while others fail to fulfil its goals. An example of organisation that is successful is Nando’s International that was established in South Africa. Thus, the aim of this report is to analyse and discuss Nando’s International within the context of its history and development, product/service offerings, characteristics of service marketing, challenges, and some recommendations. Brief Overview of Nando’s International Fernando Duarte and Robert Brozin established the organisation after they bought a small Portuguese cafe in Johannesburg – South Africa. Brozin tasted his first best chicken in this cafe, and he decided to purchase it, behind his mind was the feeling of passion, courage, pride, family and integrity associated with the products offered by the cafe. Brozin was motivated and decided the business would be successful and may expand to oversee countries; and actually, his inspiration resulted in the organisation expanding to many continents. Brozin also knew that marketing was important and thus was a crucial component in Nando’s International strategy. This resulted in the employment of experienced Josi McKenzie in 1992, and she became a marketing director. She introduced and focused on brand equality with the help of irreverent style of advertising. She achieved this through combining humour and culture of any country that they have selected (locations of the outlets) (Wits Business School, 2004). By 1996, Nando’s International entered Southeast Asia markets, specifically Indonesia, Malaysia, and Singapore. In 1997, eight outlets were outside South Africa - even though only one of them was profitable (Wits Business School, 2004). However, in 1995 Brozin established Nando’s International and employed Mike Denoon-Stevens who was a development strategist (Wits Business School, 2004). His main role was to develop an infrastructure; he formulated different methodologies that focused on such markets as United Kingdom, Australia and Canada. The numerous strategies and methodologies ensured that the local markets would be understood and developed products and services based on that market. To fulfil successfully its obligations, Nando’s International championed the use of critical masses in that they favoured between five and fifteen outlets in each country. By 2000, Nando’s International had 258 outlets in which 147 were in South Africa, and also at this time, Nando’s International had expanded to 15 countries (Wits Business School, 2004). In 2000, Nando’s International introduced a strategy that determined the way the organisation selects outlets countries, and the relationship between the organisation and partners. Between 1997 and 2003, the marketing strategy was based on championing the brand. Thus, they formulated specific strategies based/depending on countries; this cemented the brand image f Nando’s International. McKenzie and Denoon-Stevens were influential in the way the organisation developed. They introduced the concept of 80% service, 20% product (Wits Business School, 2004). To succeed in a competitive market, Nando’s International identified out-of-the ordinary elements that made them unique, this propelled organisation accomplishment. Nando’s International realised that location was/is most critical element to success. Before deciding the location of the outlet, Nando’s team analyses the area and pinpoints the most appropriate part/location. They also encourage and champion communication through designing the interior of their outlets. Even though the products are expensive, usually value is added to mitigate risks associated with such pricing strategies. The results were evident in that between 1997 and 2002; the turnover had doubled, operating income before taxation had improved substantially while the earnings per share had increased from 2.86 to 6.34 (Wits Business School, 2004). In fact, by 2003, Nando’s International outlets had increased to 450 stores with 186 of them being located in South Africa. Between 1997 and 2003, the number of international outlets had increased from 27% to 60% (Wits Business School, 2004). Generally, the success is attributed to hubbing growth strategy and correct positioning. Service Industry Nando’s International is in fast food industry. The tremendous growth in the fast food industry has attracted numerous competitors into the market. Fresh healthy food and salads has continuously been embraced in the fast food industry, and this applies to all fast food providers. Generally, the fast food industry is associated to segment of fast casual or quick casual. This is relevant in the case of Nando’s International in that the outlets are located in areas where consumers can access fast foods easily. Moreover, the relationship between the staff and consumers incorporates a lot of intangible approach, a factor that Nando’s International has maximised. This can be understood through the provision of Nando’s International that 80% product, 20% service methodology (Wits Business School, 2004). Main Competitors In every market, competition is a major aspect that marketers and producers have to contend with. In the same case, Nando’s International is in the same environment in which there are producers and competitors who have been in the market for a long time. Nando’s International has two major competitors who are Kentucky Fried Chicken and Steers, and McDonalds (Wits Business School, 2004). These competitors are common in South Africa but in other countries or outlets, there are other competitors. The two competitor’s outlets have built their markets but Nando’s International is this new in this environment. Thus, to neutralise the superiority of these two competitors, Nando’s International services and products are of high quality and speedy service. They believe on best rather than biggest, a factor that has made them to succeed in a competitive environment, and a factor that they associate David with Goliath. Thus, Nando’s International has continued to profit and proper in the same environment that is crowded by numerous competitors (Wits Business School, 2004). Product/Service Offering The core product that is offered by Nando’s International was a marinated, flame grilled peri-peri chicken. Some other core products that were offered in the menu include chicken livers, prego steak rolls, Portuguese salads, filleted chicken breast burgers, French fries, and coleslaw salads (Wits Business School, 2004). Moreover, as the organisation continues to develop and explore into new markets, the company continues to introduce new products, and this makes them unique relative to their competitors. The success of Nando’s International is determined by the approach it introduces products and services. Services and other products can be termed as supplementary products and services. The supplementary product/service is the way the consumers are served. This includes grilling the chicken while the consumers watch on open flame grills. The aim of Nando’s International is to create a culture, tradition, and a way of life that is linked to the organisation. This can be understood through understanding views of McKenzie when she claims that the elements include peri-peri flavour, the irreverent personality, an inspirational element, the delivery of consistent quality, and the Nando’s creed. Moreover, other supplementary offerings include the cleanliness and hygiene of the store, friendliness of the store staff, and the quality of the takeout packaging. These supplementary services, products and approach have helped to ensure that the organisation gains market share while improving profitability and revenue. Characteristics of Service Industry Markets, specialists and marketing professionals use many different tactics to attract and retain their consumers. Different concepts are employed based on the environment or requirement, one of which is the marketing mix, and in the case of service industry is the 7P. It is crucial to ensure that the requirements of this concept are balanced to ensure that maximum marketing benefit is achieved. In the case of Nando’s International, the 7Ps plays a major role, and its impact includes: Product It is usually supposed to provide value for the consumer and in most cases must not be tangible. This means either improving on the product or service, or introducing a new product or service line. In the case of Nando’s International, the product offering can be in two terms either the tangible product or the intangible. The tangible product are the chicken, steak and spices to name some while the service is intangible and may include friendliness, hygiene etc. The product is an important component to any organisation since it brings revenue and forms the basis the organisational brand can be built on. Price Prince is the only component in the marketing mix that brings revenue to the organisation. This means that the pricing approach should be competitive and must entail profit. Some components that can be associated with pricing strategy are the offers, discounts and the like. Numerous exists that can be used to calculate the price of product. The price of Nando’s International products is high compared to their competitors. However, numerous services, value, and adds-on are include ensuring that the consumers can substantiate why the prices are high compared to the competitors. Even though the prices are high, many consumers appreciate the importance of Nando’s International offerings because the revenue and profits doubles while the number of outlets is increasing. Many people associate the price to the product; they assume that the higher the price the better quality is the product or services. This mentality actually is true in the case of Nando’s International and thus the success the organisation has achieved. Place/positioning This refers to the actual place where the consumers can access the product/service and how the service/product will reach that location. To achieve this, different strategies and approaches can be used that may include wholesalers, Internet and retailers. Positioning is usually associated with distribution channels, since distribution channels will ensure that the consumers can easily purchase a given product. Nando’s International understands that location is inherent in ensuring business succeeds. The organisation determines the countries that the outlets will be located through analysing country environment verses the offerings. For example, they determine those countries that consume chicken, the same way as people in South Africa. Moreover, the actual location of the outlets e.g. towns is based on accessibility and lifestyle of people in that environment. Infrastructure is important in localisation of an outlet, and hence Nando’s International chooses the appropriate location based on numerous environmental conditions, capabilities of the organisation and the number of consumers. Promotion This includes the different strategies or means that the consumers are communicated on, on what the company provides/offers. It means informing the consumers on the benefits of utilising certain product rather than another product. It includes communicating to the consumers on the use of the product/service rather than talking about its features. Promotion is an important concept in Nando’s International marketing strategy. McKenzie spearheaded promotion through the use of an irreverent approach of advertising. This approach was based on understanding local psyche, and employing humour relevant to that region to promote the products. Some example of such advertisements include in Australia “Ladies, your men won’t mind if you grab our nuts” and “Chickn. Whoops we’ve dropped an ‘e’” (Wits Business School, 2004). Thus, the promotional approach that is utilised by Nando’s International has seen the consumer base understanding of Nando’s has greatly improved. The irreverent approach has made many people to spread Nando’s International offerings through word of mouth, and this has contributed towards the success of the organisation. People In this case, people refer to the employees, customers, management and different stakeholders involved in accomplishing the requirements of the business. It means that the reputation of the organisation and brand is in the hands of people, and thus appropriate means should be in place that ensures these people fulfil their roles and be satisfied. Employees are the most important asset to an organisation since they convince the consumers to purchase a brand, sell the brand to the consumer, and ensure that the consumer is retained. Thus, the organisational stakeholders support the operations and contribute towards the success of an organisation. Moreover, the management should ensure that the goals are achieved, motivate appropriately the employees, and ensure that the value for consumer is achieved. This approach has contributed to the way that new employees are required and determination of the country or location of stores that the business is located in. Process This refers to the process and methods that is used to provide a service and other essentials through a process of knowledge and to determine whether the service is helpful to the customers, if the consumers are informed in advance about the service, and if the service is provided in time. The entire Nando’s International process provides a means in which the consumer will be satisfied by the product and ensure that the consumer will purchase in the future. Loyalty of a consumer is important and thus the Nando’s International process helps to ensure that all activities of Nando’s are beneficial. The process starts from pinpointing the location to the actual cooking of the food then serving the consumers. Physical/Evidence This refers to the experience of utilising a given service or product. This means that if the service or product goes out to the consumer, it is important that the seller help the consumer to see what they are buying or not. To achieve this, numerous strategies exists, which may include the use of pamphlets, brochures etc. Providing evidence may sometimes be equated to promotion in that the consumers sees what is been sold or value for their money. Thus, Nando’s International provides products and services that can be appreciated easily by the consumer. Some of these components may include freshness of food, quality of food, service, menu variety, cleanliness, value for money, atmosphere, and cater for the whole family. Problems Experienced In any organisation, challenges are inherent and the organisation is required to formulate approaches that will ensure the organisation is successful. Even though Nando’s International is successful, numerous challenges prevent it from fulfilling its requirements. Some of these challenges include: Determination of the appropriate marketing mix for each country/outlet; consumers complain the product is expensive relative to the competitors while other sectors may not eat meat e.g. India and thus they are required to develop product offering that reflects the requirements of that region. Implementation of a strategy that had been customised for each target market; different markets requires products that reflects the requirements and dietary consumption. Nando’s International is forced to ensure the strategy that is formulated reflects the requirements of that market and that more consumers may be attracted towards the organisational outlet resulting increase in market share. Determination of geographic areas that the organisation can pursue; the fast food industry is large and many consumers require different tastes, and such scenario is difficult to determine the region that will be profitable or beneficial. Thus, choosing the most appropriate geographic region is a contagious issue and hence the organisation is required to utilise many resources to pick the appropriate geographic location. Maximisation of opportunities in those countries that they have outlets and ensure critical mass of stores on the ground is reached. Some countries are profitable; however, to succeed requires that a certain number of stores be reached. This means that the opportunities that Nando’s International has in any country will improve revenues. Recommendations Organisations have strengths and weakness that have to be developed in different frequencies. In the case of Nando’s International, the company has strengths or opportunities that they can maximise on while at the same time have weakness or threats that can be minimised. Thus, some recommendations that may be helpful for this organisation includes: The quality of the offerings is high and thus Nando’s International should maximise on this opportunity and increase the number of outlets in the countries that they are currently located. Nando’s International should introduce new strategies that will ensure the product can be purchased on line while information concerning the organisation can also be obtained from Internet (website). Other countries share the similar cultures and traditions, and thus the Nando’s International creed can form a basis in which new stores can be introduced. For example, Latin America is a ripe market that Nando’s International can introduce their products. It is highly anticipated that the produce will succeed because it succeeded in Southern Asia, which has different culture as that of South Africa. Creation and support of relationship marketing is important in ensuring the requirements of organisational stakeholders are fulfilled. Thus, it could prudent for Nando’s International to introduce relationship marketing to ensure their organisations access extensive market share doubled up with loyalty from the stakeholders e.g. consumers and suppliers. Different countries appreciate different requirements has illustrated by the United Kingdom and Asian countries. This means that most of the countries that Nando’s International set their outlets are mostly English speaking. Hence, it could be more profitable if Nando’s International penetrates those markets that speak different languages apart from only English. For example, French and Spain are some of the countries that predominately speak French and Spanish respectively, hence Nando’s International can maximise on this market segments. Globalisation is growing at a faster rate, and some policies and views should be changed to ensure that the organisational success could be achieved. Of example, Nando’s International basis of choosing a market is that they have similar food (chicken) culture, this mentality should be changed and introduce another policies that they can establish outlets in other regions without preference of chicken. Conclusion Businesses are established based on necessity or something that is a miss. Founders of Nando’s International appreciated the quality of chicken that was produced by a Portuguese cafe, and they decided to acquire it. With time, the single cafe has developed spanning to more than 450 stores by 2003. The revenues improved, profits doubled while the reputation of Nando’s International has improved. Some pioneers are McKenzie who specifically dealt with marketing and Denoon-Stevens dealt with infrastructural development. The business is based on service industry especially in the fast food sector. However, the major competitors are McDonalds, and Kentucky Fried Chicken & Steers. Some of the products and service offerings include the core product being marinated, flame grilled peri-peri chicken with other numerous products in their menu while the supplementary product is the actual serving process, friendliness, and cleanliness. The services industry is characterised by seven components that are product, price, place/position, promotion, people, process and physical/evidence. The organisation has continuously improved on their offerings and the business is tremendously expanding. Reference Wits Business School. (2004). Nando’s International: Flying High with a Global Chicken Brand, ECCH the case for learning. Read More