Prepared for: Mr. Paul Vorbach
University of Technology Sydney
Graduate School of Business
Subject Name: Marketing: Concepts and Applications (24746)
Prepared for: Paul Vorbach
Semester: Autumn 2004
MARKETING PLAN
Launch of a new health range within
Red Rooster Restaurants and increase market share in Australia
Group Members:
Susan Andonovski 10131338
Montri Ployjirachai 10197984
Amanda F. Ribeiro 10144830
Poon Han Wong 10010748
28.05.04
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UTS: Marketing, Concepts & Applications (24746) Page 28.05.2004
Prepared for: Mr. Paul Vorbach
Table of Contents
Executive Summary 3
1. Introduction 4
1.1 Overview: Red Rooster 4
1.2 Marketing Plan Scope: New Product Launch 4
2. External & Internal Analysis 5
2.1 Market Definition & ‘Broad Segmentation’ 5
2.1.1 Broad Strategic Market Definition: Shift towards Healthier Variety 5
2.1.2 Market Potential, Market Penetration and Market Demand 6
2.2 Market Research 8
2.2.1 Secondary Market Research 8
2.2.2 Primary Market Research 8
2.3 External Analysis 9
2.3.1 Macro-environmental Situation - PEST Analysis 9
2.3.1.1 Political Factor 9
2.3.1.2 Economic Environment 9
2.3.1.3 Socio-cultural Factor 10
2.3.1.4 Technological Factor 10
2.3.2 Porter’s Five Forces Analysis 11
2.3.3 Competitor Analysis 12
2.4 Internal Analysis – Company’s Competencies 14
2.4.1 Franchising 15
2.4.2 Mission Statement 15
2.4.3 Products 15
2.5 SWOT Analysis 17
3. Strategic Objectives & Issues 18
3.1 Target Markets: “Young Professional” and “Student” 18
3.1.1 Market Geographic Factors 18
3.1.2 Market Demographic and Lifestyle Factors 18
3.1.3 Passion Based Market Segments 18
3.2 Market Positioning 19
3.2.1 Business Performance 19
3.2.2 Market Attractiveness 19
4. Competitive Marketing Strategy 21
4.1 Competitive Advantage 21
4.1.1 Cost Advantage: 21
4.1.2 Differentiation Factors: 21
4.1.3 Marketing Advantage: 21
4.2 Offensive Competitive Strategy: Market Share Growth 21
4.3 Marketing and Financial Objectives 23
4.3.1 Short-term Marketing Objectives 23
4.3.2 Long-term Marketing Objectives 23
5. MARKETING MIX TACTICS 24
5.1 PRODUCT AND SERVICES 24
5.1.1 Product Quality 24
5.1.2 Meals and Sizes 24
5.1.3 Packaging 24
5.1.4 Labelling 25
5.1.5 Product Line Extensions 25
5.2 Pricing 25
5.2.1 Market Based Pricing 25
5.3 Place/Distribution 25
5.3.1 Channel of Distribution/ Sales Territories 25
5.4 Promotion: Integrated Marketing Communication Mix 26
5.4.1 Advertising: Awareness Building 26
5.4.2 Sales Promotions 26
5.4.3 Public Relations: Reference Group Experience 27
5.4.4 Direct and Online Marketing: Loyal Customers Contacting 27
6. Marketing Budget 28
6.1 Forecast Sales 28
6.2 Sensitivity Analysis 29
6.3 Break-Even Analysis 29
7. Implementation & Control Guidelines 30
7.1 Implementation Plan 30
7.1.1 Implementation Milestones and Activities 30
7.1.2 Development of Goods and Sevices 30
7.1.3 Employees Development and Reward s 30
7.1.4 Development of Sales Distribution Channels 30
7.1.5 Development of Systematic Supply Process 30
7.1.6 Development of Price Strategy 30
7.1.7 Development of Promotional Campaign 31
7.2 Performance Monitoring 31
7.2.1 Process Market Metrics 31
7.2.2 End-Result Market and Financial Metrics 31
8. REFERENCES 32
9. Appendices 34
Appendix No. 1: Roy Morgan QSR Marketing and Advertising Planning : April 2002 – March 2003 34
Appendix No. 2: Average Weekly Household Expenditure on Food and Non-alcoholic Beverage 37
Appendix No. 3: Australian - Market Lifestyle Factors 38
Appendix No. 4: Australian - Geographic Factors 45
Appendix No. 5: Australian - Demographic Factors 46
Appendix No. 6: Primary Research – Research Brief and Sample Questionnaire 48
Appendix No. 7: Primary Research – Summary of results 53
Appendix No. 8: Australian Political Environment: Democratic & Stable 63
Appendix No. 9: Government Efficiency 64
Appendix No. 10: Economic Efficiency 64
Appendix No. 11: Household Computer and Internet Access 65
Appendix No. 12: Adults Accessing the Internet 65
Appendix No. 13: Current market share per competitor and Sales Forecast for 2004 66
Appendix No. 14: Competitive Analysis 67
Appendix No. 15: Price Comparison – Fast food Competitors 69
Appendix No. 16: Buying Decision Forces - “Young Professional” 70
Appendix No. 17: Buying Decision Forces - “Student” 71
Appendix No.18: Red Rooster - PORTFOLIO ANALYSIS 72
Appendix No. 19: Recipe for Grilled Chicken 73
Appendix No. 20: Nutrition for whole chicken 74
Appendix No. 21: Menu for Red Rooster 76
Appendix No. 22: Salad Recipes 77
Appendix No. 23 Franchise Information 81
Appendix No. 24: Total Media Spend in Australia by QSRs 82
Appendix No. 25: Work Breakdown Structure and Gantt Chart 83
Executive Summary
Consumer foodservice transactions grew 18.7% reaching 2,733 million in 2001. These figures are forecast to grow 24.3% to 3,395 million in 2006, accounting for a sales value of AU$34,375 million. As such, the fast food retail industry currently accounts for almost one third of the overall transactions. Thus, indicating the potential growth in this particular industry.
(www.euromonitor.com/consumer_foodservice_in _Australia)
Red Rooster has been in the industry for 30 years. It began its business humbly in 1972, with its first store in Perth, suburb of Kelmscott. In May 2002, Red Rooster was purchased by Australian Fast Foods. With currently over 290 stores nation wide Red rooster is preparing to propel towards the future, serving better food for Australians. Red Rooster continually strives to develop innovative products, adopt competitive prices and offer maximum satisfaction and convenience to customers. Recent development in Red Rooster enables it to launch a healthy range of fast food to the growing demand in the Australian population.
A generalised introduction of the conceptual idea of the market information and market position, together with the production scope and objectives is provided in section 1.0. Subsequently, in section 2, details of the market research, primary and secondary will be provided, in addition, competitive analysis and internal and external analysis is carried out. Section 3 describes the market condition in which the product will be penetrating. Section 4 accounts for the overall strategic decisions in which the organisation adopted in penetrating the required market. Section 5 will outline the marketing mix in terms of products, promotions, pricing and distribution strategy used in gaining the desired out come for the product launch. All information in regards to the project budgeting will be account for in section 6. The plan then will be concluded with a strategic implementation and control documentation for the products.
As such, the research which was carried out, indicated that the current Red Rooster chain of stand alone restaurants possess a relatively weak market position (refer to Appendix 13 and Section 2.1.2) and its traditional ideology has restricted its development. The company suffers from lack of market oriented strategy and promotion despite the company’s strong position in providing quality chicken products. With confidence, the results have prompted the need to launch a healthy product range of meals for the market.
The overall marketing strategy presented will highlight the critical issues in product quality, pricing, promotion and distribution to firstly draw new customers in to the products, maintain and reward loyal customers and capturing the competitor’s customers. The approach will only be possible with a systematic budgeting and proper layout of implementation plan.
The introduction of the Red rooster new health food into the Australian market is expected to help grow Red Rooster market share, provide customer value and offer customer satisfaction, 100% of the time.
1. Introduction
1.1 Overview: Red Rooster
The Kailis family opened the first Red Rooster store in the Perth suburb of Kelmscott in 1972. Myer purchased the business in July 1981. In 1992, Red Rooster bought the Big Rooster chain to expand into the eastern states. These stores were re-branded as Red Rooster. In May 2002, Red Rooster was purchased by Australian Fast Foods (AFF). Currently there are over 290 Red Rooster stores in Australia represented in New South Wales, Victoria, ACT, Queensland, Western Australia and the Northern Territory. Franchise owners, trading under the Red Rooster brand operate some stores in Queensland and the Northern Territory. These franchises undertake the same policies and procedures as company stores so that a highly consistent standard of quality products and customer service is maintained. As Red Rooster’s mission states that
“Red Rooster will be a leading Australian owned fast food company that is committed to providing innovative products that are consumer and lifestyle focused.”
This mission statement will be achieved by:
Ø Value The ingredients and nutrition information are provide to customers for their health and balanced diet (see Appendices 19 -22)
Ø Quality and hygiene Red Rooster Quality Assurance Officers often visit the suppliers to make sure that the ingredients are in the highest standard. In addition, there is no added MSG in any Red Rooster product.
Ø Efficient service Franchisees undertake the same policies and procedures as company chains so that a highly consistent standard of quality products and customer service is maintained.
1.2 Marketing Plan Scope: New Product Launch
Australians are leading busier lives with less time to cook, as the lifestyles are changing for everyone. Growth in the number of younger, single occupant and non-family households has contributed to the decline in home cooking. This has led to the increase of fast food operators in Australia. In addition, the numbers of people who are more concerned with their health have increased significantly. To attract this market segment and provide more alternatives to the customer a new health range of products will be launched in May. Red Rooster is going to launch as follow;
Ø Grilled Chicken
Ø Fresh Salad variety
Ø Wholemeal Buns
Ø Fruit Juice variety
Consequently, we will focus on creating new-products’ awareness and increase outlets owned by the company and franchisees. Our aim is to accurately analyse the Australian fast food market, find relevant target segments and introduce the health range to dominated acceptance. Red Rooster intends to increase its market share up to 16% and become the market leader in health food in the Australian market.
2. External & Internal Analysis
As this part of our marketing plan constitutes the critical backbone of all our recommendations for the marketing strategy and subsequent marketing mix tactics, a comprehensive and rigorous analysis of the relevant market environment was critical. Therefore, we defined a broad definition of the market and conducted extensive secondary and primary research to ensure future success of our marketing strategy and recommended marketing tactics.
2.1 Market Definition & ‘Broad Segmentation’
2.1.1 Broad Strategic Market Definition: Shift towards Healthier Variety
Although the Australian eating out culture developed relatively late compared to the US and UK, it is today one of the most dynamic in the world in terms of growth and competition. To avoid a narrow market definition and, hence, its potential to restrict discovery of new market opportunities, Red Rooster has realised that it needs a broader strategic market definition.
According to the 2003 BIS Shrapnel Report, the foodservice market is defined as comprising all eating out establishments including restaurants, cafes, fast food outlets, hotels/pubs, clubs, institutional eating establishments, independent sandwich and hamburger shops, fish and chip shops, Asian food outlets, pizza stores, pubs, supermarkets, convenience stalls and catering. This entire market may be considered indirect competitors for Red Rooster, mainly if we take into account the changing eating habits of the Australians.
The Quick Service Restaurant sub-sector (QSR) represents about 30% of the Australian Foodservice market and comprises the direct competition market for Red Rooster. Roy Morgan (see Appendix no. 1) defines the main fast food chains which make part of the QSR market: KFC, Pizza Hut, Red Rooster, Pizza Haven, Nandos, Dominos, McDonald's, Eagle Boys Pizza, Hungry Jack's and Subway. Given the 11 different fast food product categories in the QSR industry, we can classify them according to temperature and perceived healthiness, as seen in Graph 1.
Graph no. 1: Strategic market definition of the fast food industry
Source: Adapted from Best, 2000 in Gudergan, S. P. (2001)
For purposes of comparison, the main direct competitors of Red Rooster are McDonald’s, Subway, KFC and Hungry Jacks. Each of them will be analysed in detail in the following section. Australians spend about 30% of their food budget on eating out. In 1999, Australian households spent an average of $127 each week on food and non-alcoholic beverages, of which $34 are spent on meals out, $19 on fast food and takeaway (ABS, 2000). For more details on household expenditure on food, see Appendix No. 2.
2.1.2 Market Potential, Market Penetration and Market Demand
The foodservice consumer market is worth approximately AU$ 24 billion, and is still recovering from two years of weak growth, in 2000 and 2001, due to the economic slowdown and the introduction of the Goods and Services Tax. The fast food market is worth about AU$ 7.3 billion and is estimated to keep growing in the following years.
Between 1998 and 2002, retail sales of fast foods increased at an annual rate of 3 per cent. In 2002, there was a slight recovery with an increase rate of 5 per cent, achieving AU$ 7 billion. Growth in fast food and takeaways is expected to average only 1.5 per cent per annum in the period to 2005 (at constant prices). However, the major chains are expected to grow at a rate of 5.7 per cent per annum with the introduction of new marketing strategies - such as more comprehensive menus and a proliferation of smaller stores in shopping centres, hospitals and convenience stores. Higher economic growth is expected to drive continued strong demand in 2005.
The food service industry served nearly 4.2 billion meals in 1998 or 222 meals per head compared with 216 in 1996, according to the Hotel, Restaurant and Institutional Food Service Sector Report (2000). There is a potential for substantial growth particularly if we look at the US, where consumers eat out twice as often as Australians. The report forecasts the number of meals served will increase by 4% annually over the next 2 years, benefiting restaurants, cafes and fast-food chains.
The most recent social trends that affect the foodservice market are:
Ø Australians are spending more time outdoors (Appendix No. 3);
Ø Eating out has been more and more associated with entertainment (HRI Food Service Report 2000);
Ø Customers are eating out more frequently - 2.25 times per week (Roy Morgan)
Ø Consumers are more conscious about a healthy diet, what has been translated in an increasing demand for healthier meals. (Bis Shrapnel Foodservice Report May/June 2003.)