BUSI 520 MMGP Group 3 Taco Bell | BUSI 520 - Strategic Marketing Management
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BUSI 520: MMGP Group 3 – Taco Bell MMGP Purpose & Scope The purpose of this paper through a collaborated effort by group members is to identify and analyze a particular company’s products or services with the goal of applying various concepts of marketing management to propose potential adjustments to its current marketing management strategies. Upon completion of research and analysis, the group provides insight as to how Taco Bell’s internal and external environment relate to various concepts of marketing as presented in this course. Some of the areas specifically covered in group analysis included the evaluation of consumer markets, the competition, market segments, product positioning, and product branding. Additionally, insight into Taco Bell’s service initiatives and customer satisfaction, adaption methods for product pricing, and the use of various channels for promoting the brand and products were helpful in evaluating the company as it relates to its market peers today. Concluding points of discussion offer suggestions and potential opportunities as to how Taco Bell can improve its current strategic and operational methods for marketing its products or services, both domestically and globally. Background Information To effectively obtain a complete understanding about how Taco Bell’s vision aligns with its marketing strategies, gathering information about its key products, business locations, promotional incentives and price profiles helped to define various target audiences. Additionally, obtaining an understanding regarding the consumer groups, and how internal and external processes and programs effectively used operational and consumer market data to address and improve performance helped to better understand the overall success or areas to improve performance in managing marketing strategies. Old 4 Ps: Product, Place, Promotion & Price
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Product. Taco Bell maintains a wide variety of Mexican-style food products, including several assortments of tacos, nachos, salads, burritos, quesadillas, and related side and desert items. It is dedicated to expanding their menu choices to motivate increased business to its restaurants. For example, the introduction of Freeze frozen fruit drinks, along with happy hours, have helped increase business before and after the traditional rush hours of lunch and dinner. On average, Taco Bell introduces a new product every five weeks, which in turn becomes about 5% of menu sales. In addition to being very creative and consistent with developing new offerings, the variety of menu selections at an affordable price, helps to encourage consumers to think of Taco Bell when considering today’s fast food options. Price. Because the main target market today is the Millennials, pricing is a significant strategical aspect for Taco Bell. The marketing executives understand very well the importance of using pricing strategies in marketing promotions to Millennials as many are just entering the new workplace with limited cash resources at their disposal. Low cost and perceived value is important to this demographic. Promotion. Taco Bell is incredibly active in promotions; the company was awarded the Advertising Age Marketer of the year for 2013. The current promotion is called a Big Box Meal that includes an assortment of items and a drink. In strategically marketing to the Millennials, the marketing executives have incorporated the use of technology and targeting demographic groups in using social media engines such as Twitter, Vine, Snapchat, and Facebook. Place. In general, the discipline of site selection for strategically placing product involves understanding factors that impact consumer behavior such as traffic flow, population density, local demographics, per capita income, location, and visibility (Killifer, 2013, p. 25). Although the place where product for sell is important, having a logistical system that manages both internal and external factors is very important to the success of moving goods. Taco Bell’s logistical
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system helps it successfully maintain supply and demand of its products by maintaining two-way communication with delivery partners and ensuring on-time deliveries (YUM! Brands 10-K, 2017, p. 5). Rather than being constrained by physical location, the logistical system provides a centralized network system for retrieving timely and easy access information for supplier discounts and delivery methods with lower freight costs, in addition to providing leverage with dedicated and collaborative suppliers. New 4 Ps: People, Processes, Programs & Performance People. Taco Bell is a people driven business, both internally and externally. Unlike the majority of fast food industries moving to cut labor costs and eliminate jobs, Taco Bell embraces technology, but not job cuts. The consensus of the Taco Bell C-level is “As a business that’s fueled by the energy and passion of people serving people, our team members are our front line and biggest brand ambassadors” (Spyrou, 2017, para. 7). This leads the company to build the company from within and enhance corporate acceptance within the community to ensure that processes are operating effectively. Processes. The Taco Bell team takes the marketing process seriously. Their cutting edge social media data collection system allows Taco Bell to anticipate change, design and implement effective marketing programs to help them maintain a proactive competitive position in the marketplace. Programs. Taco Bell utilizes various traditional and social media tools to implement and drive its strategic marketing activities. Although traditional TV and radio ads are used, the central focus is on social media as it is most effective in reaching and communicating with consumers. Marketing programs also consist of the use of YouTube through which Taco Bell has published a series called “Taco Tales” which has had almost 2 million views within the last 3 months. Some
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promotional programs that target the consumer that are likely to participate in contests have proven to positively boost sales and generate positive publicity in the marketplace. Performance. In regards to measuring how well marketing strategies are performing, Taco Bell adheres to the corporate standard to monitor and ensure that business activities conform to ethical, social, and environmental standards and corporate objectives, as overseen by the parent company YUM! Brands. Ethical standards include a code of conduct and employee practices. The social aspects relate to food quality and safety, lower calorie offerings, and nutritional improvement. The environmental attributes consist of Leadership in Energy and Environmental Design (LEED) certification for new facilities, reductions in energy and water consumption, and an increase in recyclable content (YUM! Brands CSR, 2015). Understanding how well various store locations and products are performing helps management to make better decisions as to which markets invest in. Scanning the Market Environment Based on a recent survey of 10,000 U.S. consumers, covering 20 different consumer industries, Taco Bell scored 71 percent for overall customer experience and satisfaction compared to its peers, with the average for the fast food industry in whole at 76 percent (PR Newswire, 2017). In addition to employees embracing the corporate vision, understanding how technology, culture, demographic and economic trends can impact consumer tastes and preferences provides vital information for predicting consumer purchasing behavior. Demographic Trends. According to InfoScout Taco Bell, the consumer demographic is mostly low-income families and adolescents ages. Africans Americans make up a good majority of Taco Bells consumer. They mostly followed by Caucasians, and they are followed by Asians. The last group is Hispanic who prefers authentic Mexican food to fast food Mexican (Taco Bell, Consumer, 2016). Amongst the sexes males consume more Taco Bell than their female
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counterparts. The target age groups range from 24-34-year-old. These tend to be your non- college young adult's age ranges. InfoScout projects that many of Taco Bells consumers purchase the product through food stamps or government assistance (Taco Bell, Consumer, 2016). Data also reveals that Taco Bell’s consumers between ages 18-34 years old value eating healthy, but continue to enjoy having a taco or two. Current Economic Trends. United State consumers spend an average of 48% on their total food expenses outside of the home. Taco Bell came up with a “value pricing” strategy to sell menu items for $1 (Muller, 1999). By doing this, Taco Bell made it possible for consumers to save money while enjoying consumption of a range of menu items, from a variety of breakfast to dinner options. Specifically, in regards to Taco Bell’s breakfast menu, research shows that when “considering” $1 breakfast options, 81 percent of Americans say that they should be given more choices. Overall, Taco Bell’s consumer market values quick and convenience of food items at a great value, however today’s consumer is not willing to sacrifice the quality of taste, even at a bargain price. Technological Changes. Technology can be a very transformative force for a company for better or worse. If used correctly, it could leverage a company with a strategic advantage over its competitors. Failure to adapt quickly could be fatal in most rapidly changing markets. Taco Bell has made a number of changes in the realm of technology over the years. They have developed an advanced system and “They work out of a high-tech room called the Fishbowl that’s lined with wall-size mission control-ish screens providing real-time info about the always churning online conversation about the company” (Ringen, 2016, p. 116). As the consumer environment has evolved, Taco Bell did not become complacent by just using traditional marketing such as television and newspapers. Its willingness to take chances in conjunction with clever marketing allowed for Taco Bell to continue its growth well into the turn
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of the century. Over the years, Taco Bell has continued to progress technologically in ways to reach more customers. With the millennial audience as their target, Morrison (2013) posits that “Taco Bell experimented with social media in ways other companies in its category have not” (para 7). With the growth technology in others sectors such as the smartphone market, a new wave of innovations was ushered in. Taco Bell saw an opportunity to reach more of its customers using a mobile app. “Heartland Payments System announced that its Heartland Omni-Channel Commerce Engine (XCE) is powering Taco Bell’s mobile ordering and payment app, which has seen 3 million downloads” by 2015 (PYMNTS, 2015, para 1). Customers today are able to see menu’s and choose their orders through the Taco Bell mobile app. Taco Bell’s ability to stay aware of the technology trends will keep its consumers engaged and gain new consumer’s acceptance. Consumer’s Tastes and Preferences. Understanding how to keep consumers engaged and loyal to Taco Bell’s brand depends on the timeliness and quality of consumer information as it relates to purchasing behavior. In analyzing consumer markets, Kotler and Keller (2016) described various consumer characteristics and psychological processes that impact consumers’ purchasing behavior. Based on various consumer reviews for Taco Bell’s fast food products and services, the common theme appears to be that consumers demand consistency in quality, service and accommodations (Yelp, Taco Bell, 2017). And, as consumer’s discretionary income, lifestyle and values for nutrition change, so does the type of food choices and purchasing behavior that ultimately impact a fast food business, such as Taco Bell’s bottom line. Social and Cultural Factors. Taco Bell, rather than trying to assimilate to Mexican culture, has differentiated themselves by marketing as a restaurant that sold American food, going as far as to add French fries to the menu. Taco Bell even modified the names of their items to acknowledge their differences from real Mexican food (Yo Quiero Taco Bell 2017). In addition
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to recognizing the need to differentiate from the traditional expectations for Mexican fast food restaurants, Taco Bell has acknowledged it must pay attention to consumers’ way of life changes. Market Analysis Analyzing Consumer Market Cultural Factors. Culture is the determining factor of a person’s wants and desires (Kotler & Keller, 2016). As a result, Taco Bell has picked up on that trend and was able to set up shop all over the United States and beyond. According to Taco Bell’s website, they have restaurants in Spain, Korea, Japan, United Kingdom, India and El Salvador just to name a few (www.tacobell.com, 2017). Since 1960, the international presence Mexican cuisine has been expanding all over the world (Pilcher, 2008). Prior to fast food restaurants like Taco Bell, if you wanted a dozen tacos you had to wait a long time. Taco Bell was able to analyze the market and succeeded in creating fast food tacos for the consumers (Pilcher, 2008). Tacos are easily recognized and can be found anywhere (Herrera, 2010). Of course, this is based on the culture of which the restaurant is located. Social Factors. Like all major corporations, Taco Bell has a team of workers who focus on reaching new segments of the market. This act involves having a working knowledge of each segment that’s targeted. As some social trends (Social factors are family, friends, roles and status and reference groups) change, so does the behavior of some consumers. Being aware of these changes and the behavior of your targeted segment is a part of that working knowledge. Kotler and Keller (2016) explain that “consumer behavior is the study of how individuals, groups, and organizations select, buy, use, and dispose of goods services, ideas, or experiences to satisfy their needs and wants” (p. 157). Taco Bell has seen the opportunity for growth in the millennial generation market, the budget conscious crowd, and the healthy eater’s segments of society
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through this study. Taco Bell’s influence and attractiveness in these 3 areas can be seen directly in the millennial segment of the market. Personal Factors. In analyzing consumer markets, Kotler and Keller (2016) explain that personal factors have a direct impact on consumer behavior (p. 161). Of the many factors that influence consumer’s purchasing behavior, personal factors such as a change in disposable income, lifestyle, values or a critical life event can have a direct and abrupt effect on consumers’ purchasing behavior and product consumption. Consumers can choose from a variety of select favorites or customizable items for $1 in fulfilling Taco Bell’s mission to offer great tasting Mexican fast food options at a bargain price without sacrificing quality. Consumers’ personal lifestyle and values appear to have the most influence on Taco Bell’s consumer markets as corporate’s mission is to provide “food that’s customizable and fits your lifestyle, with a commitment to never compromise on flavor” (Taco Bell, Nutrition, 2017, p.1). Lifestyles are shaped partly by whether consumers are money constrained or time constrained (Kotler & Keller, 2016, p. 164). During a study regarding fast food chains such as Taco Bell using social media, Kolodinsky and Reynolds (2009) noticed that contemporary marketing strategies now employ lifestyle-based and product benefit approaches (p.2). In regards to lifestyle changes, such as the need to choose healthier fast food option in a fast-paced society, Taco Bell has embraced the need to hire their own nutritionist to cater refined products and services for the more “healthy” conscious consumer while maintaining market competitiveness. Psychological Factors. Kotler and Keller (2016) discuss the four key psychological processes: motivation, perception, learning, and memory (p. 165). In regards to the motivation of the consumer, Taco Bell attempts to motivate its customer base using innovative advertising, low prices, and flavorful Mexican-style food choices. To further motivate the consumer to respond, Taco Bell uses social media engines such as Twitter, Snapchat and Facebook to promote
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marketing campaigns with bright colors and focus on value, flavor, and fun to tap into the consumer’s selective attention perceptual process, giving the consumer instant access to these advertisements. Learning theory describes the changes in actions due to internalized knowledge. This theory shows marketers the usefulness of associating products with a compelling need. Taco Bell continually stresses the excitement, uniqueness, and low cost of their offerings. This repetitive, yet distinct message creates and maintains customer loyalty. Similar to the loyalty from the learned experiences with Taco Bell, marketers understand the value in using the memory component of the psychological process to create memorable and persuasive advertising to help facilitate the development of memory. The marketers at Taco Bell have created several extraordinary and remarkable advertising campaigns such as Fourth Meal and the Taco Bell Chihuahua. These marketing concepts may be slightly silly, but memories and new customers were generated. Success marketers understand very well that customer purchase activities are based on four psychological processes and acknowledge the substantial power that these processes have in regards to consumer behavior and the decision to purchase. Consumer Behavior Factors. Taco Bell is a Mexican fast food chain which puts emphasis on brand personality and aggressively targets young adults and teenagers in its marketing plan. Personality can be a useful variable in analyzing consumer brand choices. Brands also have personalities, and consumers are likely to choose brands whose personalities match their own. We define brand personality as the specific mix of human traits that we can attribute to a particular brand (Kotler & Keller, 2016.) Taco Bell hours of operations are indicative of the brands personality with consumers. Taco was one of the first fast food chains to offer late night service well before 24-hour drive-thru. Based on research, today’s consumers care less for
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design, and more for what a brand means to them personally. Taco Bell means to the consumer quick, convenient, and reasonable Mexican food at any time of the day. Analyzing Market Segments Variables for Segmentation. Market segments consist of two broad groups based on the needs and wants of customer (Kotler & Keller, 2016). Of these broad groups, one of the variables used by Taco Bell is through demographics. This is when a company divides the market into geographical units by nations, states, regions, counties, cities, or neighborhoods (Kotler & Keller, 2016). For example, Taco Bell was able to become popular in Los Angeles by tapping into markets made available by the geography of segregation and ethnic communities (Pilcher, 2008). Evaluation Methods for Attractiveness. Because Taco Bell was using social media to strategize their sales around, they came up with an innovative way of measuring the attractiveness of the target market using their smartphone app and social media together. Their social media platforms had a significant following. Taco Bell decided to go all in on the smartphone app and direct all their social media followers to download the app. Taco Bell used their social media interactions to promote the things that drove culture: food, music, sports, fashion, and technology (Jennings, 2015, para 6). Then Taco Bell blacked out all their social media p.s with a sign that read “The New Way To Taco Bell Isn’t On Facebook, It’s #OnlyInTheApp.” Taco Bell measured the effectiveness of their marketing campaign by the number of downloads of the smartphone app in the app store from their followers (Gaule, 2014, para 2). Analysis for Full or Specialized Markets. In a study evaluating how consumer values contribute to consumer’s purchasing and consumption behavior, Ha and Jang (2012) noted that even though there are no strict rules, for classifying restaurants into distinct categories, that they are often classified into either fast food casual dining or fine dining. These main classifications impact how marketing tailors and targets various market segments with potential to drive product
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sales and market sustainability. Specifically, as it pertains to market segments, each restaurant segment has its own characteristics and attracts target customers by providing unique attributes (Ha & Jang, 2012, p. 124). Research shows that successful marketing campaigns include competitive positioning strategies, whereas firms segment consumers by various needs or behaviors that help them target markets based on various consumer profiles (Gherghina, 2015). Full market coverage. In describing this level for target marketing, Kotler and Keller (2016) describe full market coverage when a firm attempts to serve all customer groups with all the products they might need. Furthermore, in strategically aiming to achieve full market coverage, Kotler and Keller (2016) explain that the firm ignores segment differences and goes after the whole market with one offer. It designs a marketing program for a product with a superior image that can be sold to the broadest number of buyers via mass distribution and mass communications (p. 264). Taco Bell’s specialized products appear to be marketed with a full- market strategy, including some specialized market segmentation approaches. Single-segment concentration. In targeting markets, single segmentation involves a case in which the firm markets to only one particular segment rather than the full market masses (Kotler & Keller, 2016, p. 265). This particular strategy conflicts with Taco Bell’s mission to feed the “masses.” Multiple segment specialization. As in the case with Taco Bell, the multi-segment strategy has the advantage of diversifying the firm’s risk because different groups of consumers have different needs and wants (Kotler & Keller, 2016, p. 265). In a study covering the U.S. overweight population, cluster analyses were used to identify different segments of US consumers based on food choices, activity, food knowledge, overweight, and other environmental variables, strategically identifying and targeted marketing distinguishable segments of the overweight
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population aimed at moving them toward more healthy weights (Kolodinsky, & Reynolds, 2009, p3). Selective specialization. This target marketing strategy consists of campaigns targeting certain groups, a sub-segment within the larger group or “super-segment”. In this case, a firm selects a subset of all the possible segments, each objectively attractive with the potential to be uniquely profitable (Kotler & Keller, 2016, p. 265). In selectively targeting a specific group, gender is often used as a segmentation variable in the fast food industry (Yelkur & Chakrabarty, 2006). Successful marketers understand the importance of tailoring campaigns to a specific market niche or a consumer group based on the product and corporate’s capacity to meet the consumer’s needs or demands. Market specialization. Once the marketing team has an understanding of the market or sub-market their campaign will be geared toward, they can further define how to customize their marketing strategies toward a specific potential consumer group. In this case, the firm concentrates on serving many needs of a particular customer group, and generally within a certain industry (Kotler & Keller, 2016, p. 265). Taco Bell’s current initiatives toward using 100% cage- free egg ingredients helps strategically capture the consumers who feel strongly about this issue. Product specialization. Unlike selling products to a specific targeted market or industry sector, in product specialization, the firm sells a certain product to several different market segments or consumer groups (Kotler & Keller, 2016, p. 265). Taco Bell’s mission and strategic objectives are to offer Mexican fast food, specializing in food products that are not only affordable and easily accessible but also meets the needs of “all” potential consumers (Taco Bell, Food, 2017). More specifically to the notion of “potential” consumers, Taco Bell is specialized because they do not offer everything to everyone. Taco Bell strategically customizes marketing
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campaigns to meet certain target consumers that value its specialized products in competing for consumer’s choice in the Mexican fast food industry. Target Markets Identified. Taco Bell is undertaking a targeted market strategy called multiple segment specialization. One facet of multiple segment specialization is called selective specialization. (Kotler and Keller (2016) discuss, “With selective specialization, a firm selects a subset of all the possible segments, each objectively attractive and appropriate” (p. 265). The subsets Taco Bell has chosen in the U. S. are: Millennials, budget-conscious buyers, and the healthy eating faction. The Millennials are a focused group due to both the large population of this demographic and the amount of disposable income they possess. This target group typically does not want to eat a full meal, so they snack several times a day. Krol (2014) describes this habit as, “Some of this demand is due to low cost choices, and some is caused by cravings” (para. 6). Taco Bell has had a high level of success in these markets. The corporate-level recognizes that a large part of its customer base is the late-night crowd, which is typically Millennials. Taco Bell has also targeted the “budget-conscious consumers, one of its core groups. Taco Bell revamped its value menu to include $1 items after prices for some offerings climbed well past a buck” (Morrison, 2013, p. 15). Three basic forms of value pricing policies are typically used, as discussed by Hayes and Huffman (1995) as everyday value pricing, bundling, and special value pricing. Taco Bell has applied all three of these strategies with the realization of reaching their target. Target Market Needs. Taco Bell answers the target market need for Mexican food on the run. In a society that has become microwaved and on the move; quick on the run foods have become the staple diet of most Americans. Drive-thru has become the norm for most families, and
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fast food is a way of life. In a one block radius, there can be several fast food options within steps one another. In meeting the consumer’s desires and needs, Taco Bell has combined its consumers favorite snack food with traditional taco. The well-known Doritos-flavored tacos introduced last year have become a staple of the Taco Bell menu. With all of the craveable choice items, as American’s eat more fast food they have also become unhealthier, and the alarming cry for healthier fast food has become the call of the consumer. Taco Bell’s executives have recognized the change in consumer’s preferences by adopting healthier, lighter versions of its menu to answer the call for healthier options. Positioning, Competition & Branding Positioning in the Market Positioning Statement. According to Kotler & Keller (2016), a good brand positioning helps a company with its marketing strategy to clarify the brand’s essence, consumer achievements, and by showing its uniqueness. An appropriate positioning statement for Taco Bell would be: Taco Bell provides fast Mexican style food at better prices than any other Mexican restaurant. They provide this with good customer service and satisfying $1 menu items that range from breakfast to dinner varieties. Product Positioning. Kotler and Kotler (2016) describe product positioning as “the act of designing a company’s offering and image to occupy a distinctive place in the minds of the target market” (p. 275). Since February 2012, the 6,000-unit Mexican quick-service chain has actively courted a coveted group of consumers, the Millennials, with its "Live Mas" campaign. It also looked to move the brand away from its image as merely a late-night refueling station (Brandau, 2013, para 2).
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With the rise of competitors such as Del Taco, Taco Bueno in the Midwest, Taco Cabana on the West Coast, Chipotle, and Qdoba, Taco Bell has to work harder to differentiate itself from the pack. To do that, Taco Bell did three things to better position their brand outside the competition. First, management focused on basing their brand innovations around creating food experiences and not just innovation for the sake of innovating. They took a major step in this area with the release of the Doritos Loco Tacos. These tacos combine two known brands to create wildly popular menu items. It became hard to mention Taco Bell without at least alluding to the wildly popular Nacho Cheese and Cool Ranch Doritos Loco Tacos (Avant, 2013, p. 1). Even though the Doritos Loco Tacos lead the turnaround for Taco Bell after 2012, Taco Bell continues to create experiences by offering other special products like the Volcano Taco and the Cheesy Gordita Crunch. Taco Bell constantly does limited-time-only products and this keeps them with product news (Del, 2008, para 1). Secondly, in positioning their brand, Taco Bell released the Cantina Bell Menu. Taco Bell sought to move away from the perception of being “typical fast food” and “cheap and filling” to their targeted segments. “Crafted in conjunction with celebrity chef Lorena Garcia of “Top Chef Masters” fame, the menu features bowls, burritos, and quesadillas made with whole black beans, cilantro rice, citrus-and-herb marinated chicken, steak, and other high-quality ingredients” (Avant, 2013, p. 1). In fiscal 2012, when the “Live Mas” campaign debuted and was used to support such new products as Doritos Locos Tacos and the Cantina Bell platform, Taco Bell's U.S. same-store sales increased 8 percent (Brandau, 2013, para 2). In regards to choice, the third thing Taco Bell did to position its brand was to create a breakfast menu. With the breakfast wars being anchored by other companies such McDonald’s and Dunkin Donuts, Taco Bell entry into this market offered yet another choice for Millennials and parents. Even though there are points of parity between Taco Bell and its competitors Del
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Taco and Chipotle, the US-Mex fast food breakfast offering by Taco Bell is an optimal point of difference. “Taco Bell's positioning as the segment's largest Mexican brand, and its market leadership in value pricing, has poised it to capitalize on the morning meal” (Taco Bell, 2010, para 1). All of these efforts have positioned Taco Bell to get their target audience to “think outside the bun” in more ways than one. Understanding the Competition Broadly defined, Kotler and Keller (2016) describe competition as including all the “actual” and “potential” rival offerings and substitutes a buyer might consider (p. 11). As there are many fast food options available today, it is important for executives of Taco Bell to stay in touch with the fast food industry substitutes available to ensure that the products offered are attractive and strong enough to maintain brand loyalty as lifestyle changes occur. In researching market competitors of Taco Bell owned by Yum Brands, Inc., Chipotle Mexican Grill was among the list of strong fast food chains in competition of McDonald’s (Downie, 2015). As a major competitor to Taco Bell which is owned by Yum! Brands, Inc., Chipotle Mexican Grill, Inc. appears to be holding its own with a market cap of 13.9 billion as compared to Yum! Brands, Inc. with a combined market cap over 24 billion as of June 2016 (Investopedia, “CMG Stock Overview,” 2017). To maintain marketability and its competitive edge in the fast food service industry, it is important for Taco Bell’s executives constantly review the strengths and weaknesses of its primary competition. Kotler and Keller (2016) define a SWOT analysis as an overall evaluation of a company’s strengths, weaknesses, opportunities and threats within the market (p. 49). Specifically, within the Mexican fast food sector, Value Line’s SWOT analysis of Chipotle Mexican Grill, Inc. revealed some of its strengths consisting of rapid growth and strong financial health (Dalavagas, 2016). Chipotle is known to support family farms and local growers who behave responsibly towards
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animals and the environment (Kotler & Keller, 2016, p. 10). However, these strengths have been countered with Chipotle restaurants being heavily based in the U.S., a weakness that is impacted by and sensitive to U.S. consumer discretionary spending fluctuations (Dalavagas, 2016). And, unlike Taco Bell, Chipotle’s competitive strategy does not include emphasis on “lower-cost” value meals like it’s market competitors which makes it difficult to compete with primary competitors such as McDonald’s and Taco Bell (Dalavagas, 2016). Product Branding A critical characteristic of marketing a company is the ability to differentiate it from the competition. The creation and development of a brand is fundamental to a successful marketing strategy. The brand is the key component, the link that ties a customer to the company. Brand Elements. Ataman, Mela, and Van Heerde (2008) describe the brand elements as items that distinguish, separate, and characterize a brand. These devices may include: images, mottos, packaging designs, mascots, brand names, and distinctive sounds. Brand elements have an important function for the marketer. Natural competition will compel consumers to evaluate comparable companies to each other. Therefore, it is critical that the competing companies develop strategies to differentiate themselves from each other. Knowing the importance of brand elements, it should be evident that the choice of elements is critical. Kotler and Keller (2016) state “There are six criteria for choosing brand elements. The first three—memorable, meaningful, and likable—are ‘brand building.’ The latter three, transferable, adaptable, and protectable, are ‘defensive’ and help leverage and preserve brand equity against challenges” (p. 309). The Taco Bell marketing team has done a great job with selecting brand elements. The newly updated logo consists of block letters and the bell logo in black and white. The “TACO BELL” logo contains the flagship bell, and is meaningful and memorable; the bell represents the founder of Taco Bell, Glen Bell and the word taco. Current
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brand elements include notions of being simple, likable, and unforgettable. This simple and modern update caters to the young, trendy crowd, with the white background that can be easily changed to any color or pattern. The Brand Promise. With the use of social-media, customers, many in high school and college, proudly post photos of their Taco Bell meals to Twitter and Instagram (Lutz, 2014.) Taco Bell’s CEO Brian Niccol understands and appreciates this segment of the consumer, and has devised some key components to better cater’ to the Millennials. Because this target group is a key variable in computing the cost of the product, Taco Bell promises to keep prices low without compromising quality. Taco Bell executives understand that the majority of its consumers have limited cash resources so it must create prices strategically maintaining market share. Taco Bell has creatively and successfully capitalized on this price limitation. Although several fast food companies have adopted the “Dollar menu,” Taco Bell is well known for adopting this marketing strategy. There are a total of 11 items on the Dollar Cravings menu. The dollar menu concept sees quick revenue with less stress on the consumer’s pockets. It allows the consumer to enjoy their favorite brand while focusing still on cost efficiency. Taco Bell has effectively fulfilled its brand promise by offering menu options that better accommodate the need for fast food for the consumer with limited expendable resources. Packaging and Labeling. Good packaging is important because it has to catch the attention of the potential buyer. It serves as a “five-second commercial for the product (Kotler & Keller, 2016). Taco Bell spends up to $250 million a year for its packaging strategy (plasticsnews.com). The majority of Taco Bell’s packaging has the colors blue, white, black and yellow on it. A survey conducted on 100 U. S. fast food restaurants assessed that the six most used colors for logos are white, red, and yellow, black, green and blue (Dupont, 2014). The colors of
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the Taco Bell logo are blue, pink and yellow to appeal to young customers (tacobell.com, 2017). According to Kotler & Keller (2016), in reference to the Color Wheel of Branding and Packaging, color is an important part of packaging and has different meanings according to culture (Kotler & Keller, 2016). On the Color Wheel of Branding and Packaging, the color blue stands for the color of the sea and is associated with dependability, trust, competence and integrity. The color white stands for purity, innocence and cleanliness. The color black is seen as classic, strong and balanced and yellow is the color of the sun which equals warmth, joy and happiness. These colors combined on Taco Bell’s wrappers means that a consumer should depend on food that is prepared in a clean restaurant with strong classic tastes that you will be happy to eat. Similar to packaging, product labeling is another important aspect of product presentation. Product labeling performs three functions. It identifies the product, grades the product, as well as describes and promotes the product (Kotler & Keller, 2016). Product labeling must be consumer friendly and not a false representation of the product. In 2011, Taco Bell was sued for misleading consumers about what is in the beef for the tacos. It was reported that most of it was beef and the rest was from a secret recipe (Pilcher, 2012). Subsequently, Taco Bell labeling now includes nutritional information for their menu items that can also be found on Taco Bell’s website as well as in the restaurants. Services/Pricing Consumer Support Services Taco Bell’s quick service combined with great marketing and high-quality ingredients has helped it to differentiate itself from other fast food service restaurants in an overcrowded market. Taco Bell excels in drive-thru speed and accuracy. The drive-through is a huge source of revenue for them (Kotler & Keller, 2016, p. 406). To keep up with consumer demand, Taco Bell goes to great length to quality control its support services. Speaker technology advancements have been
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helpful in increasing accuracy and the time it takes to fulfill customer orders. Wireless headsets, digital noise cancellation headsets, and the increased market penetration of order confirmation boards all aided in the improving Taco Bells drive-thru locations (Improved, 2005, para 1). Menu boards with liquid crystal display screens and other high-resolution screens visible even in bright sunlight give customers an opportunity to confirm their order and the price before driving to the pick-up window as well (Accuracy, 2003, para 4). With these improvements, customers can depend on Taco Bell to get them their order quickly and accurately so they can get back to their b