Americana Group - Research Paper Example

? Americana Group Table of Content Executive summery 4 Marketing Analysis 5 Marketing environment analysis 5 Political Factors 5 Economical factors 6Social factors 7 Technological factors 8 Impacts of market trend on marketing strategy 9 Marketing Strategy 10 Strategic options available to the Firm 10 Recommendation for best option 11 Marketing Goals 13 Transactional or Relational 13 Marketing Programs 15 Skills, Capabilities and Knowledge Analysis 15 To develop the strategy 15 To source externally 16 Recommendations and implementation 17 Reference 20 Executive summery This paper represents the analysis of marketing strategies and market environment of Americana Group. The company based in Kuwait and operates in Middle East and North Africa region. It operates under food industry and its main businesses are operating food and beverage outlets like restaurants and manufacturing different food products. The company registered in Kuwait Stock Exchange and publicly traded as FOOD.KW. It has successfully developed a distribution network of over 1300 outlets in MENA region and it is one of the leading franchisee operators in the world. This business operates under the banner of most successful leading brands in the world like Pizza Hut, KFC, TGI Friday’s, Krispi Krema and Costa Coffee and Signor Sassi. The company has successfully understood the tastes and preferences of Middle East people regarding food products. This competency has helped this company to come up with 6 popular food brands. These products are offered in the company’s home country. The company has been successfully running this food business through effective marketing strategies with respect to changes in the market environment. A detailed analysis of market environment and marketing strategies will be done throughout this paper to assess the current strategies followed by the company. This analysis required also review of external environmental factors that have major influence on the business. This analysis will help to develop recommendation for best suitable strategies for the company. Most effective strategy will be selected after analyzing all possible strategic options for the company. Skills, capabilities and knowledge of the company for developing marketing programmes or activities will be reviewed to find out the requirement of outsourcing of external knowledge sources. Marketing Analysis Marketing environment analysis Marketing environment has major influence on a business. Trend in marketing environment is one of the most important factors to consider for a business or marketer. There are some important factors of marketing environment of business. These are political, economical, social and technological. So, detailed analysis of each of these environmental factors is needed to assess the current overview of marketing environment of Americana Group. Marketing environment has major influence on American group and changes of each of these areas leads to change in the strategic decision with respect to marketing of the products and brands operated by the company in Middle East and North Africa region. Therefore, PEST analysis would provide detailed overview of this market. Political Factors American Group deals with the franchisee business of leading international restaurant chains and manufacturing consumer food products. Generally, political and governmental factors impact on food business in any country in a higher extent because food business deals with the most important needs of human beings. This business also has higher risk with respect to hygiene factor. Governments of Middle East countries have several food policies applicable for food businesses and they need to strictly adhere to policies. Apart from the specific food policy, there are several rules and regulations imposed by different countries for domestic as well international business. It is very important for any company operates in this market to comply all concerned rules and regulations of different governmental agencies for successful operation of business in home country as well as international business in the foreign markets. The governments of MENA countries show their sincerity to keep up this region on the forefront of tourism industry. This has positive impact on the restaurant business like Americana Group. On the other hand, political disturbance and volatility in terms of modification in policies like taxation, foreign trade, social welfare policies etc for business create negative impact on the existing business because the businesses need to readjust with the frequent changes. This leads to change in business policies and strategic decisions for short term as well as long term goal of the businesses. But, overall scenario shows that the political environment is quite viable for restaurant and food manufacturing business of American Group. Economical factors A business has strong influence and impacts by the economic factors of a country. When economic condition of a country is in a stable or growth phase then the businesses operate in that region or country also seems to be performed well. So, revenue or profit of a business like America Group depends on the income level, purchasing power and improve in the living style of people of each country where it operates. Growth of restaurant food business depends on the consumption power and consumption trend of food products of the people of each country where the company operates. Main economical factors that have substantial effects on business are interest rate, monitory policy, inflation, liquidity, disposable income of people of MENA region. This region has reported significant growth in terms of gross national production in last decades and this has positive influence on the increase in disposable income and purchasing power and consumption trend of people. Modest growth rate of the major regions like Dubai, Kuwait, Abu Dhabi is 2.9%. The company has focused on the urban areas and cities of all Middle East countries so that it can access potential customers with higher consumption power and modern food habits. These are key important factors of restaurant business like Pizza Hut, KFC etc global brands. Growing economical condition of the Middle East countries are due to increase in the oil price. As, the company deals with international food brands, price of the products are comparatively high related to local restaurants and food business. So, development of county’s economy as well as individual disposable income leads to higher consumption of food of premium brands. Social factors Islamic religion plays important role in the culture of the Middle East countries. Food habit is one of most import factor among all social factors related to a food business like Americana Group. The company has been serving its best qualities of food products to the customers since its inception. The people also have got access of international taste and qualities through its offerings from leading international food brands. So, the company is also responsible for the change in the consumers’ food habits through its availability and offerings of leadings brands and its marketing strategies also influenced by the change in taste and preferences of the target customers. As a franchisee operator of several leading food brands, Americana Group needs to constant focus on the little change in the food habits. The company has been satisfying its priority customers through product differentiation and this helps the company. This strategy has helped the company to start manufacturing its own food product after successful understanding of the food habits of the people in this region. Most of the restaurants are concentrated to the major cities of this region as the major cities like Dubai, Abu Dhabi, Kuwait, Muscat etc are very cosmopolitan in nature and urban people has a growing trend of consumption of foods from the leading brands that the company offer. Change in consumption trend of food products lies with the change in consumers’ lifestyle. Again, lifestyle of community based people especially in the cities has a major impact of community culture. Social status also plays a major role in consumption trend (International Markets Bureau, 2012, p.2). Technological factors Technology is another important factor that has major impact on the strategies adopted by the companies. Companies develop marketing strategies to enhance the buying decision of the potential customers in a targeted market. Technology advancement and access of advanced technology by majority of people in a region helps a company to communicate with them. Communication refers to the advertisement and promotion of their new products through different mediums and receiving response from the potential consumers through different medium. Accessibility of advanced technology in a region also helps a company to reduce the cost of operation and invest that amount on research and development of new product differentiation very frequently which is very important for a food business like Americana Group. This is the reason the company has been increasing its portfolio of international brands of different food products. Use of latest technology in the restaurant business is also required to highlight USPs of different international fast food chains. For example, most of the franchised brands of Americana Group fast service in terms of customers’ order like Pizza Hut, KFC. So, accessibility of technology is very important and it has major impact on the strategic decision with respect to operating strategies. Many fast food brands consider fast service as their competencies and attract busy peoples’ attention towards their brand. So, technology plays an important role on strategies adopted by Americana Group. Impacts of market trend on marketing strategy It has been analyzed that there exists a huge demand for Quick Service, Casual Dining and Fine Dining categories and with change in consumers taste and preference. The fast food centers have gained a huge attraction and are expected to grow globally in the near future. Product life cycle of food product is very small because of the customers do not stick to a particular food product for a longer period of time. Recent trend in food market of Middle East and North Africa shows that taste and preference of the people in this area changes frequently especially for the food products. So, Americana Group, the leading restaurant operator in MENA region also needs to make changes in their marketing strategy for each of its franchised restaurant business. Pricing of products is one of the most important areas of marketing strategy. It needs to be changed with the change of each stages of product life cycle i.e. from introduction to growth followed by maturity and decline stage. Price decreases in a foreword trend of product life cycle due to decreasing trend of consumers’ demand of the product. Promotional budget of a new product is also high at introduction stage and cost of promotion is likely zero at maturity stage. The company needs to develop effective marketing so that it can efficiently use its marketing budget in development of new product which can retain market demand of an overall brand. Therefore, the company is ready to accept the changes in market trend and declining demand of existing products and focus on the new product development according the new trend in customers’ taste and preference. Apart from its franchisee business of international food brands it is also successfully manufactures and sells won food products in its domestic market. But, the lack of cultural diversity in this region is the key weakness of this business in terms of demand of verity of categories food products. It is also tough to develop new food products in a narrow segment of customers taste and preference. Marketing Strategy Strategic options available to the Firm Americana Group which is a Kuwait food company is one of the most successful groups of companies in the Middle East and North Africa (MENA) and operates in restaurants, consumer foods and other food related products. Since the group deals with the strategy of franchisee and owns many different brands along with its own brand in the MENA region. With stiff competition and high level of rivalry, companies are considering various strategic options in order to compete in the competitive market. Americana Group dealing in food products tends to face more competition as with the introduction of more and more new food brands and with impressive promotional activities the consumers are willing to try out the new products and spent money on them. Thus before the market gets saturated it becomes important for Americana Group to pursued other strategies. Market development is an option made available to the company through which Americana Group can attain a competitive advantage and maintain stability in the market. It can alter its product or service and expertise itself in a particular type of products and new growth is created by way of expanding the sales of the particular product to a new segment of customers. In this case the future products tends to resemble the current as well as the past products, the future products are derived from the existing product and leverage multiple customers. This will help Americana Group to maintain its uniqueness of franchising and manufacturing food products. Consumers who are loyal towards the brand will be able to relate it with the previous product and boost up the sale. The company can enter the market by way of product differentiation strategy, low cost strategy or the focus strategy. It will help the company to create a sustainability and competitive advantage for its product in the market. The company deals with quick food services, processed food and manufactures its own consumer food and presently they are highly demanded by the target market but with change in taste and preference of the consumer market, the company should alter its strategy and adopt the product development strategy. At the entry level it is the most common strategy where the organization updates the product range for the current market. The risk involved in product development is moderate and thus the company will be able to increase the sales with the introduction of new or modified products into the market. Another strategic option available for Americana Group is that of diversification strategy. The business can diversify into new forms of businesses that make new products and also sell them to new market. It is a risky strategy as the product and the market involved re both new and might not create core capabilities. But the risk is worth if there are probability of getting high rewards and also has the potential to reduce the risk as it’s operates into more number of industries. There are many diversification strategies involved which includes horizontal diversification where the business develop new product and is able to satisfy the same clientele even when the new product is independent of the existing product; Second is vertical diversification where the business make the work of the suppliers or the customers; third is concentric diversification and finally diversification by conglomerate (Waters, 2006, p. 275). In addition to the above diversification related diversification and unrelated diversification are also two available strategic options for Americana Group. Recommendation for best option Analyzing the company and the strategic option made available to the firm, it would be recommended to implement the above strategic option so to achieve a competitive advantage and survive in the competitive market. To survive in the market it is necessary to adopt the strategic options and so the above said strategic options are recommended to Americana group to implement and achieve core competency and competitive advantage. However the best strategic option recommended to Americana Group is the first strategic option which is of market development where the company has the opportunity to offer the current product in a new market. The company manufactures its own brand and thus making the own brand available in other markets rather than serving only the Middle East and North African region, it will have the opportunity to publicize its products in the international market. The company takes franchise of some of the renowned brands and thus it will help the business to invest more in its own brand and create a brand name for its own product not only in MENA regions but also in other parts of the globe where the demand for the products are high. Second best strategic option for Americana group is that of product development strategy. As with change in consumers taste, preference and lifestyle habits, the quick service restaurants, processed industry might get saturated over the years. Therefore, with innovation and new product development the company will be able to achieve competitive advantage and survive on the challenging market environment. The new product will be offered to the existing market, i.e. in the Middle East, so that the risk is minimized and the company is able to earn profits bearing less cost of operation. The product can be anything with relation to its existing product line or something different from that of its product line. However it is advisable for the company to introduce product which falls under the category of the same product line as it dealt with. This minimizes the risk and if the product fails also it will not have much negative effect over the company and the people. Therefore with the adoption of market development strategy and product development strategy, Americana Group will be able to expand its products not only in the regions of Middle east and north Africa but also internationally. In order to survive in the market and gain competitive edge, market expansion is essential irrespective of new product or existing product. It will enhance the brand and create brand value in international market also. Marketing Goals Transactional or Relational The relevance of relational marketing and transactional marketing variables is well established in the marketing literature and are widely used. As companies have increasingly recognized the importance of interacting with the clients and customers’ as a result relational marketing has captured the central place in both theory and practice of marketing concepts (Fruchter & Sigue, 2005, p. 18). Transactional marketing goals are also known as the traditional marketing. The primary objective of the transactional form of marketing is to make sales and concentrates towards inward focused approach and short term transactions with the buyers. However witnessing the changing market environment with increasingly demanding consumers, the concept of relational marketing has managed to attract the attention of marketers to a great extent (Brito, 2011, p.66). Transactional marketing strategies focus mainly on getting customers to buy the products whereas the relational marketing strategies views sales to be the first step of building relationship by creating an in going customers. Thus the main purpose of relational marketing strategies is to enhance, establish, commercialize and maintain a longer term on the customer relationship so that the objectives of both the company and the customers are met. Thus it is advised to Americana group to adopt the marketing goal comprising of relational marketing strategies as it will enhance the relationship between the customers and the company and for longer prospect. It will enhance loyalty among the target customers creating brand value and brand image in the mind of the customers. Relational or relationship marketing reflects the need which is required to create a cross functional and integrated focus on collaboration. By applying the marketing strategy of relational marketing, Americana Group will be able to emphasis more on customer retention and maximize the lifetime value for its customer segment. This approach brings customer service, quality and marketing closely together. Therefore the objective of Americana Group should be to turn the new customers into regular customers purchasing the products at a regular interval and gradually convert the target market from strong supports to advocators of the company which would help in generating positive word of mouth and become an important reference source. In relationship marketing, one on one communication is used in order to earn the loyalty of the target audience and strengthen the relationship between the company and the customers. Relational marketing is a communication which takes place between person-to-person and also regarded as the most powerful tool but at the same time, time consuming marketing techniques adopted by marketers to attract customers retain old customers (Guion, Kent & Diehl, 2012). Therefore based on the above discussion it can be said that transactional marketing strategies aimed to create sales whereas the relational marketing strategy aims to create long terms relationships among its customers. Americana Group serves food products to its customers and hence it becomes increasingly important to maintain a healthy customer relationship with the target market. The goal for Americana Group is to retain the customers and make them loyal customers over a period of time and manufacturing products which are of high demand and quality. This can be done by one on one communication with the customers, enquiring them about the product they like and the new products that the customers want Americana Group to add on its product line. The communication process should be effective and take into consideration the demand of the product and act accordingly. Relationship marketing will prove to be a vital marketing tool when the company expands internationally. It will help to build in new customer and retain them for longer period adding to its brand value and brand image. Marketing Programs Skills, Capabilities and Knowledge Analysis To develop the strategy Americana Group is one of the most successful brands dealing in restaurants business and also manufactures its own consumer food and other food related product apart from franchising. Americana Group operates in 13 markets ranging from the Atlantic to the Caspian Sea and serves customers through its 13000 plus stores located in about 50 countries. This indicates the skills and capabilities of the company through which it has managed to operate successfully. Seeing the demand for brands like KFC, Pizza Hut, TGI Friday, Costa Coffee, Baskin Robbins are among the few brands which are franchised by Americana Group. The demand for the brand is always high and seeing the demand the company decided to adopt the franchise strategy which has resulted to be beneficial for the company. Secondly the company adopted the market penetration strategy and promoted its own brands which consist of Americana Meat, California Garden, and Koki, Lions chips, Gulfa and others into existing markets. The company was able to tap the demand for its existing product and also new product through extensive research and thus was able to capture the market share with its product capabilities, internal skills to produce product and knowledge about the market of its launch. However apart from the above strategy it has been recommended to Americana Group to adopt the market development strategy and product development strategy of creating new products and introduced in the existing market in order to avoid saturation of its product and introduce the existing product into a new market. Thus international expansion is recommended to Americana Group. To source externally In order to go for international expansion of source its product externally, sufficient amount of resources and capital would be required by the company to carry out effective expansion. The resources such as raw materials, production, latest technology along with proper service and packaging are important for the company and form a part of the resources needed by the company. Keeping in mind the success in the Middle East and North Arica region, it can be said that the resources and capabilities required for external sources are sufficient. But proper survey of the market where the company plans to expand is required because if the demand for the product do not exists than it will not be suitable or profitable for the company to invest and go for international expansion. It has become increasingly important for the companies to expand both internally and international in order to achieve sustainability and achieve a competitive advantage. Americana Group operates successfully in the Middle East and North Africa but before the market gets saturated the company needs to expand its product and introduce new and existing product to suit the changing consumers taste and preference and also expand the market and launch its product in new market where the demand for the product seems to be high. Therefore to successfully execute the strategy proper allocation of resources, skills are required. In addition knowledge about the current market trends and condition also plays a vital role in the success or failure for international expansion. Recommendations and implementation From the detailed analysis of marketing environment, available strategic options and transitional versus relational marketing, it can be said the Americana group has developed strong market presence and brand image in the Middle East and North Africa region. Marketing environmental analysis shows that there are also some external factors that might affect the business. Again increasing market competition from the local food business is also the result of decline its premium brands of food products. Though the company has developed effective marketing strategy with respect to the change of the taste and preference the people over there but the scenario shows market saturation in its current market. New product development is also tough in a saturated and competitive market. From the available strategic options, market development would be best strategic option and product development would be second best option for its future growth of business. So, an effective mix of both of these strategies can be recommended for the company so that it can access new potential foreign markets for its existing as well as new products. Market development is one of the most effective strategies for those companies that are successful, well penetrated in the domestic market for a long period of time. Americana Group is one of those companies which need to adopt market development strategy. The company can import its own manufactured products to the neighbor countries and can test the acceptance rate of the people over there. The company should taste a foreign market by importing its products first and then enter into that market for full business operation i.e. both production and manufacturing in the new markets. It will help the company to understand the barriers and risks in the foreign markets and take necessary changes in its market diversification strategies. The company needs to buy stake of the foreign businesses or make partnership with the foreign franchise holders of leading food brands like KFC, Pizza Hut etc to enter into target market. Then it should do partnership business for limited period of time to understand the market potential and the consumption trend of the customers of those businesses. Finally, the company can select the best potential market among the targeted markets and start both manufacturing and selling their own products along with the franchisee business. This would be the best cost effective strategy for the company to diversify into foreign markets. Risk of foreign investment would be minimized through this market testing strategy. The company can target the developing countries like China and India where the disposable income of people is increasing with the development of the economy. Purchasing power of people in the target market is the important factor for the company to get higher demand its own products as well as franchisee business of international food brands. Second best strategic option has been recommended is product development. Americana group has been facing tough competition from the local food businesses in the MENA region. Change in consumers’ taste and preference in the existing market is also another market threat of the company. So, it needs to more focus on innovation for new product development. The company could not develop for the franchised brands as the brands only have the rights of new product launch. So, the company can focus on its own production of food products and develop new products based on the demand of each of its new as well existing market trend. It also can make aware of the franchised brands about the change in consumers’ taste and reference so that they also can come up with new products for selling in those targeted region. Development of effective marketing strategy is also very essential with new product development. So, it needs to invest good amount for promotion of each of new product development. The company can also redesign its old products and introduce them with the new product. Again another option is that it can push a new product with the existing popular product line up to minimize the risk of lower demand. If a new product is not accepted much by its customers even then it cannot much affect the brand image and even a worst case scenario might be negligible with the crowd of popular products in a product portfolio. Market development strategy will help the company to boost its product development strategy through new product launch in a new market. Economies of scale will also increase through new product launch in the existing market as cost of production and cost of promotion will not much increase. Therefore, both the strategies will be most beneficial for future growth of Americana Group. Reference Brito, C., 2011. Relationship marketing: old wine in a new bottle? [Pdf]. Available at: < http://businessperspectives.org/journals_free/im/2011/im_en_2011_01_C.Brito.pdf> [Accessed on 10 September 2012]. Fruchter, G. E. & Sigue, S. P. 2005. Transactions vs. Relationships: What Should the Company Emphasize? [Online]. Available at: < http://www.biu.ac.il/soc/sb/papers/fruchter/2.pdf> [Accessed on 10 September 2012]. Guion, L. A. Kent, H. & Diehl, D. C., 2012. Relationship Marketing: A Strategy for Marketing Programs to Diverse Audiences. [Online]. Available at: < http://edis.ifas.ufl.edu/fy759> [Accessed on 11 September 2012]. International Markets Bureau. 2012. The Chilled Food Market in the Middle East and North Africa. [Pdf]. Available at: < http://www.ats-sea.agr.gc.ca/afr/pdf/5982-eng.pdf> [Accessed on 11 September 2012]. Waters, D., 2006. Operations Strategy. Cengage Learning EMEA. Read More