About the Organization
Discuss about the Marketing Strategy Development for Chipotle Mexican Grill.
Chipotle Mexican Grill commonly known as Chipotle was founded by Steve Ells in the year 1993, with a vision of providing fast food which does not taste like a fast food. Fast food is perceived as a cheap and unhealthy but the core value of Chipotle is to use high quality grade ingredients, prepared with expertise cooking techniques and served at their restaurant which provides an experience of fine dining. Since their inception, they have expanded all over Canada, France, Germany, UK and USA with around 3000 fast food chains. Their value statement focuses on “Food with Integrity” which shows their commitments towards preparing food without any artificial flavors and colors, everything is natural coming straight from the farms. They also focus on building and nurturing a long term relationship with their suppliers and Farmers. Apart from this, they also recognize their responsibility towards the fertility of the soil and maintaining healthy livestock (Chipotle, 2017).
Chipotle belongs to the fast food industry and its biggest competitor is Panera Bread serving sandwiches and other fast food dishes (Oyedele, 2017). Chipotle always approached the market with the green marketing strategy ever since they have started. The reason for choosing their green marketing orientation approach is that fast food industry is flooded by cafes and restaurant who are involved in unhealthy cooking and serving practices. But Chipotle over the years have established them as a brand who believes in sustainability by maintaining healthy relations with their suppliers and serve all natural food. Their product offering includes Burrito, Salsa, and Carnitas etc.
Company: Chipotle has emerged as a fast food chain who serves food with integrity which means they make sure ingredients used are coming from the sources where no suppliers are exploited and the animals and soils are treated with respect. Their all natural campaign includes feeding the animals all vegetarian diet which is chemical free and giving them open space. Chipotle also suffer from food safety issues as the small farmers and suppliers who do not have sufficient resources and infrastructure to follow the safety norms. This questions their promise of providing healthy and safe fast food (Giammona & Patton, 2015).
Customers: The customers that are being targeted by chipotle are known as Millennials. This segment includes people of the age group of 23 to 36. Generally these segments are more inclined towards having fast food as an alternative to their meals in their working hours. The aim of Chipotle is to convince them to prefer quality over price. Their competitors such as McDonalds and Burger King are providing unhealthy eating options at very cheap prices. Chipotle wants them to switch to all natural fast food option (Jones, 2014).
5C’S of the Organization
Collaborators: Chipotle’s suppliers are local farmers who are supporting them in their Food with integrity initiatives. Their 30 million pounds of ingredients used in their preparation are sourced from these local farmers. In order to provide help these farmers to comply with Chipotle’s food safety norms they are planning to invest $10 million (Chipotle, 2017). The cheese and sour cream are made up from Pasture-Raised Cows situated in the US (Chipotle, 2017). Beef are supplied from local farmers. Pigs are fed with a vegetarian and chemical free diet. They are not even fed up with antibiotics and hormones. They are treated with responsible manner.
Competitors: Chipotle is facing some serious competition from Mexican Chain Qdoba. They have shifted the focus from fast casual look of Chipotle and are redesigning their stores by including mix and match seating and other aesthetic arrangements (Chamlee, 2016). Their another major competitor is Panera Bread who is another casual fast food chains serving fresh and chemical free natural food. Although they serve sandwiches and soups which are different from Chipotle’s Mexican serving. The stores presence of Panera Breads is more than the Chipotle’s. They have marked their presence in lower population market as compared to Chipotle.
Context: Chipotle is often trapped into many legal obligations due to their food safety issues. They have to close down their many restaurants due to the spread of E. coli illness in the Northwest of USA and Norovirus which was associated with their restaurants in Boston. Both these disease are Food-borne illness and have attracted many criticism and legal issues (Acheson, 2015). Social issues faced by Chipotle are due to their menu options which are just limited to Mexican Cuisines. In some countries there may be need for a customized menu in according to the taste and preferences of that area or country.
Collecting Information about the 5C’s
Competitors Information: The competitor’s information can easily be analyzed with the help of industry reports and the competitor’s financial data present on their websites, helps Chipotle to collect the sales and revenue figures of the competitors. By conducting public polls, noting the feedbacks of customers on various social media sites and conducting customer rewards surveys can help to find out about the preferences of the customers. It helps them to know the gap between the services offered by the competitors against their services and what is the expectations and preference of the customers. Marketing research about the competitors help Chipotle to initiate discounts and attractive offers to woo customers and implement the necessary changes in their restaurants.
Information about other external factors: Chipotle in order to operate in other country have to analyze the external environment of that country. This can only be possible by exploring and reading the local laws governing that area. There are countries which have specific requirement regarding labelling and packaging the goods of the product. There are certain regulation like “Transparency in Supply Chains Act of 2010” which was passed in California to regulate the labor conditions. When Chipotle has to enter into the potential market segment, a deep extensive research is conducted about the customers segment and other factors that may affect the working of the organization. Marketing intelligence help Chipotle to be updated about the latest changes occurring in the business context by analyzing daily information posted on online media, print media and other sources.
Information about the Collaborators: The collaborators are individual who support the core function of the organization without actively taking part in it. The main collaborator of Chipotle is their local suppliers who provide them with raw ingredients for uninterrupted production. As mentioned above, Chipotle works with local farmers and suppliers to source natural raw material. They collect information in the local region of the farmers and suppliers present there and whether they are meeting their food and safety environment or not. They have certain requirement such as the animals should be pasture raised and they should not consume chemicals and other antibiotics. If the supplier meet their demand it creates a long term relationship with them.
Potential Market Segment: Chipotle unlike the conventional fast food restaurants don’t believe in providing unhealthy products at a cheaper price. Their menu offerings is certainly premium prices but they guarantee their Mexican food is all healthy and natural. The other potential segment available to them is organic food products. The reason for exploring this market segment is the potential risk of obesity and health issues associated with consuming fast food in Australia is continuously increasing. There are around 63% adults who are suffering from obesity and weight issues (AIHW, 2017). The market for healthy and chemical free products is continuously increasing due to the health awareness among the audience.
Organic meals are often misunderstood as something associated with only green vegetable but that will not be the case. The menu of Chipotle is only limited Mexican but their organic food range will consist sandwiches, burgers, cold pressed juices etc. Their competitor Panera Bread which serves sandwiches can compete with Chipotle’s all organic and natural burger. According to the data, Australian Audience visit fast food chains 51.5 million time per month, which had contributed in deteriorating health conditions of the individual (Campbell, 2016).
Value proposition: The value proposition of Chipotle’s organic food segment is the products will be organic and they will not only focus on local suppliers but also suppliers from some other country who can supply them organic grade products. The organic products requires individual to follow high food safety issues and resources which may or may not be available with the local farmers. Also like their food with integrity concept, the organic products will also follow the same value driven strategy of procuring ingredients for the preparation of organic food and final organic products will be fair trade marked, which means the customers will be ensured that the product they are buying has not been made up by exploiting the labor, animals and environment. This will help them to be responsible and accountable for the sustainable business practices and they actively participate in the long term growth of the organization (Foe, 2017).
The new market segment is organic food products and it will includes products such as organic fast food menu, cold pressed juices and packed organic munch on snacks. The product offering is not definitely unique but it is special as no fast food chains like McDonald’s and burger king have entered into this industry. Chipotle have the advantage of being a first mover in this market segment among the other competitors.
Choice of the target market: The target market will be college going students and corporate individuals who do not have time to consumer healthy and tasty meal option. They will include individuals of the age group of 17 to 38. The value proposition of Chipotle is better than its competitor as they have taken a healthy food initiative along with following proper guidelines of food safety standards. The Chipotle should position their organic food market in such a way that it clearly convey the idea behind entering into the business segment which was well-being of the people of Australia. The idea behind creating a brand value or the product value is to take into account the social interest and not the commercial interest of the individuals.
Information about other external factors
Brand Positioning Statement: “Chipotle’s organic food servings is an initiative to maintain the well-being of individuals by offering them healthy and tasty food products all natural and organic”. Chipotle have always lived by the ideology of never compromising on the quality of the food served. Their organic food will provide a reliable source to feed the Australian audience and staying committed as usual to the farmers, suppliers and consumer for serving the best interest of every group.
Product: The products which are being offered to the market is organic and all natural fast food and meal options. The unique selling proposition of this segment is apart from being into the competitive fast food industry, rather than launching new product fast food product flavor or variety, they have recognized the value of going healthy. Their one segment will focus on serving their patent Mexican options and on the other hand the organic food product will serve all variety of fast food but more healthier and no added chemicals and flavors which will compete against fast food giants such as Burger King and McDonald’s (Bord Bia, 2014).
Price: There are many reasons identified behind the growing popularity of fast food and the most common reason is cheap prices. But the cheap price “tasty” fast food often ends up being an expensive affair for an individual’s health. The method of pricing that will be used in deciding the final price of the menu options will be cost plus pricing method. Chipotle is following a premium pricing method but as this product segment is new, the premium pricing will not be able to attract potential customer. In starting the profit percentage should be kept minimum and the prices should be competitive in comparison to the other fast food chains.
Place: Chipotle have been a late comer when it came to opening new stores in areas who have small population. These areas have a lot of scope and no chance should be missed to create a niche in this segment as the area sixe is small so it is easy to create a strong and loyal customer base by analyzing the demands properly. The organic fast food services can also be provided into food vans which will stand at prominent locations of Australia so that it can reach to a larger audiences.
Promotion: Chipotle’s new organic food segment has an added advantage as Chipotle is a very famous food giant and their new segment will get benefit of brand name. The aim of promotional activities is to make the potential customers aware about the new product being offered. The most common one being advertising on newspapers and health magazine. Providing discount coupons on purchase of something from the Chipotle stores can also pull customers to try out new product as well as their store sale will also increase. Involving into direct marketing is also an effective way to engage new customers. The last and the cost effective promotional activity is online marketing on social media websites such as Facebook, Twitter and Instagram. Short term sales promotion can also be used such as using Group on to provide special discount to visitors (Holtzhausen, 2010).
Information about the Collaborators
People: People include counter staff, store staff and chefs who are responsible in preparing the meal. The staff should provide the customers with memorable customer service experience which motivate them to visit the stores again and spread the word of mouth among other people. The competitive advantage to the business can be given by training the staff in providing premium customer experience. The chef and other supporting staff responsible in delivering meals should be trained to follow proper hygiene in preparation of the customer’s order (Nestoroska & Petrovska, 2014).
Process: It involves delivering the product to the customer. It includes fulfilling the expectations of the customers in every order they place. This will ensure their next visit and a chance to retain a loyal customer.
Physical Evidence: If the organic food is served in the restaurant, the ambience and seating arrangements should appeal the visitors. The packaging and preparation of the food product should be hygienic and healthy. The staff should neatly dressed and give personalized services to every customers (Business Queensland, 2017).
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Chipotle, 2017, PASTURE-RAISED DAIRY, Accessed from https://www.chipotle.com/pasture-raised-dairy on 24 May 2017.
Foe, 2017, The benefits of Fairtrade, Retrieved from https://www.foe.co.uk/living/articles/benefits-fairtrade on 24 May 2017
Giammona, C. & Patton, L., 2015, Chipotle's Biggest Strength Is Suddenly Its Biggest Weakness, Accessed from https://www.bloomberg.com/news/articles/2015-12-08/chipotle-s-greatest-strength-is-now-its-greatest-weakness-too on 24 May 2017.
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Oyedele, A., 2017, Chipotle's biggest competitor is a sandwich-and-soup chain, Accessed from https://www.businessinsider.in/Chipotles-biggest-competitor-is-a-sandwich-and-soup-chain/articleshow/57901123.cms on 24 May 2017.
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