Marketing Concepts And Communications Mix: A Case Study On Chipotle

Identifying and Explaining Marketing Concepts, Marketing Mix, and Components of Marketing Communications Mix

Chipotle is an American fast food casual restaurant chain in the United States, United Kingdom, Canada, Germany and France. The restaurant chain is known across for its specialty food Tacos and Burritos. The company is currently listed on the New York Stock Exchange. The company focuses on using naturally grown ingredients and serve naturally raised meat in all other restaurant chain. The restaurant chain was founded by Steve Ells in July 1993. At Present the store has a net income of US $475.6 million and includes a staff of 45,000 employees as in 2015. The stores are located in more than 2000 locations (Chipotle: Thesis Unchanged.2015).

Chipotle manages the restaurant in six different regions which combines into one reporting segment. The revenue growth is earned by repeating customers visit to the existing restaurant. Once the restaurant enters into the thirteenth month it is known as the comparable restaurant. The company compares the performance by dividing the restaurant into two categories called as: comparable restaurant and new restaurant. CMG is undergoing a change in the overall development model. The restaurant is successful in their respective market and it is planning to expand in abroad as well. However the process of growth at Chipotle is slow and steady as they don’t want to make mistake in the global market by damaging its name. International growth expansion has a huge growth opportunity for the future (Ho, Liang, Chan and Ma, 2014).

Overall the company is a well recognized brand in USA, UK & Canada. It is seen that the company has increased a chain of loyal customers through its positive brand image. They are being using naturally raised meat and ingredients that distinguish them from the other brands. The strength of Chipotle is in its brand image which they have maintained through establishing company owned restaurant instead of franchise.

There high priced menu is a problem while competing with the other brands. The high price is due to the natural ingredients and naturally raised chicken.  The customers get limited choice whereas the competitors are consistently increasing their menu size.  The restaurant has a high presence in USA & Canada only.

There are lot many expansion opportunities for the restaurant in near future. They need to tap the growing market especially Asia. They should add new products to the menu while coordinating with the expansion plan.  With growing health consciousness, they should strive for adding more healthy products to their menu.

Analyzing the Relationship between Marketing Environment, Organizational Decision Making and Consumer Behavior

There is an intense competition from the international companies that is causing a serious threat in global market. The volatility of raw material is a serious threat to the company while ensuring price stability. Economic instability is causing a threat to the restaurant chain (Woolverton and Dimitri, 2010).

Chipotle’s mission is to create a distinguished market name by understanding the values by ensuring that food comes first. Their focus is to recruit the top performers to give best experience to customers. They believe in maintaining high standards by using naturally raised meat and using natural ingredients in preparation of food. However Chipotle should strive for adding healthy menu. This will help them in gaining a competitive edge over the other fast food brands (Giovannucci, Barham and Pirog, 2010).

 Strategy & Segmentation, Targeting and Positioning (STP)

The primary objective of the company is to create a competitive place over the other brands in the market. This includes both cost leadership and product differentiation.  The fast food chain is widely recognized similar to McDonalds. Millions of people enjoy having their meal at this chain. Unlike other fast food chain Chipotle employees prepare and cook food in the restaurant. Employees at Chipotle do not reheat and assemble frozen food and serve freshly cooked vegetables to the customers (Dowling, 2015).

The product differentiation is based on offering higher quality food with a high level of perceived value compared to the other industry.  They believe in using high quality ingredients by using classic cooking methods. The open kitchen floor plan is a unique concept that adds a different kind of experience with customers. There customer segment includes a mass market of consumers that frequently visit the restaurant for their lunch and dinner needs (Aaker, Kumar and Day, 2008). The restaurant is not meant for specific group or demography. Chipotle’s primary value propositions are derived from their customizable menu and relative price value. The restaurant is playing a primary role in delivering the value proposition to the customers by providing unique experience (Kwortnik Jr, 2010). The current strategy of the company is to develop the market in an effective manner where they have focused resources more efficiently in order to gain the market advantage.

They have strategically placed themselves in the market which has helped them to secure a competitive position in the market. They have added a competitive edge by producing quality food into their menu.

Factors that Determine Competitive Advantage

The interior of the restaurant is developed in a significant manner. This provides the customers with an excellent experience. The open kitchen is one of the key concepts that have helped them to gain confidence of the customers. The environment friendly interior of the restaurant has attained effective response from the customers (Werner, 2013).

Moreover the restaurant chain is focusing on providing social and online media platform to develop long-term relationship with the customers. Their customers are happy with the kind of service and experience they are providing which has provided a distinguished feature (Pride, 2013).

The major strategy of Chipotle is to develop effective relationship with the customers. This helps them to attain a significant market place.  The purpose of the relationship is to stand out in the crowd. The customer interaction helps them to create an ability to create a more connected and personal experience. Their aim is to maintain high level quality by managing the overall organization in an effective manner (Quesenberry, 2015).

The restaurant chain believes in implementing the desired strategy in an appropriate manner. This has helped them to attain a desired market place. It is necessary for a food chain restauarant to implement the necessary objectives so that they can earn a respectable position. They have maintained sizeable financial resources that have created their ability to secure a desired market place. They have leased out the stores which are operating internationally. They form out to be their physical asset. Their intellectual rights are well secured where the primary focus is to secure the taste of the food they are providing (Chipotle Mexican Grill. 2012).

• It absorbs 100 percent of the profit due to no franchises
• 60 percent of the ingredients are arranged from the local Chipotle farm which helps in avoiding immediate cost.
• They serve food with utmost integrity
• The management is innovative making it an effective organization.

The Above graphs depict the earnings and revenue of Chipotle. The estimation and actual earning in2016 4^th quarter is almost same. However for the 1^st quarter of 2017 EPS is expected to be more than 1. An increase in the disposable income of the consumers will directly affect the overall revenue. On an average the net disposable income of American is expected to increase which will help them to attain an effective market position. USA real GDP is projected to grow which will increase the spending power of every citizen. This will help Chipotle in gaining revenue in coming years. It is estimated that the Average revenue will increase by 2.2 percent in 2018-2024.

From company’s point of view they are consistently planning to expand the business functions in other countries which have helped them to earn huge revenue. At Present the store has a net income of US $475.6 million. The company has developed various distinct objectives to categorize its budget in order to earn sustainable profits.

Key Theories, Concepts, and Models Underpinning Business Communication

The restaurant chain is being controlled by centralized system. There is no franchise system, so all the profits earned by the company are their own. The company has developed itself as an independent fast food chain providing efficient quality food to the customers. Chipotle’s primary value propositions are derived from their customizable menu and relative price value. The company is currently focused on bringing economy of scale by developing a multifunctional dimension. This will help the company in its operations. They have created a cost leadership in the market by undertaking all the operations. This has helped them to seek added advantage over the other competitors. All the restaurant chains are being controlled from the center head and directions are being sent in order to attain sustainable growth.

Conclusion / Recommendation

It is recommended that the Chipotle must add new food to the menu as this will enhance the interest of the customers. Currently they are selling few products to their customers which are causing an issue in meeting the targets. It is however essential for brand to expand its menu so that the customers interest is developed. In highly competitive atmosphere it is essential for an individual to develop stratify in order to secure a significant market position (Whitten, 2016). They are current more active in USA & Canada only. With an increase in the amount of global competition they should strive to enter other markets as well. This will provide them with a competitive edge over the other fast food chains. It is significant for a brand to develop strategies in order to secure a safe place in the market. They should not confine itself to the USA or Canada. Moreover they should focus upon bringing down the price of the product. In a highly competitive atmosphere it is necessary for a brand to keep competitive price. There is already variety of products being provided by different food chain. Do it is suggested to focus on developing a price differentiation strategy that will help in attaining the objectives (Jargon, 2016).

The report describes different market strategy adopted by Chipotle in defining its objectives. Moreover it includes all the differential market strategy that the company has been following on the long term. It is evident that the company has done entirely well in previous years and it is necessary to develop more effective objective so that it can develop effective goals. CMG is undergoing a change in the overall development model. The restaurant is successful in their respective market and it is planning to expand in abroad as well. It is necessary to effectively implement the policies so that the goals can be attained in order to attain sustainable objectives.

Organizational Issues, Challenges, and Improving Communications

This is reflected well in the case study that Chipotle has earned a sustainable market position in all these years by focusing on its business plan. In this period of excess competition I would suggest Chipotle to expand its brand in the Asian market. There are lot many opportunities available in Asian market. Chipotle can explore the market opportunities available. Many international brands are consistently expanding business opportunities efficiently.

The menu served by Chipotle is very limited. I would suggest it to diversify the menu according to the local taste of customers. Brads like Pizza Hut and McDonalds have accepted the taste of customers in the different countries. It will help in attaining significant market share by penetrating in foreign market.

Lastly it is suggested that the brand need to focus on developing its strength by outreaching to the global customers. Currently the brand is active in USA & Canada. By exploring the foreign market it will be able to attain a desired market place.

References 

Aaker, D.A., Kumar, V. and Day, G.S., 2008. Marketing research. John Wiley & Sons.

Chipotle Mexican Grill. 2012. Online. Available at: https://uoinvestmentgroup.org/wp-content/uploads/2012/04/CMG-Update.pdf Accessed on: 30 March 2017

Chipotle: Thesis Unchanged.2015. . Online. Available at:  https://seekingalpha.com/article/3345135-chipotle-thesis-unchanged Accessed on: 30 March 2017

Dowling, K., 2015. The Impact of Social Media Marketing Campaigns on Consumer Perceptions of the Food Animal Industry (Doctoral dissertation, The Ohio State University).

Giovannucci, D., Barham, E. and Pirog, R., 2010. Defining and marketing “local” foods: Geographical indications for US products. The Journal of World Intellectual Property, 13(2), pp.94-120.

Ho, B., Liang, W., Chan, H. and Ma, P., 2014. STRATEGIC ANALYSIS FOR: Chipotle Mexican Grill.

Jargon,J.2016. Chipotle Plans Marketing Campaign to Win Back Customers. Online. Available at:  https://www.wsj.com/articles/chipotle-plans-marketing-campaign-to-win-back-customers-1452726402 Accessed on: 30 March 2017

Kotler, P., Hessekiel, D. and Lee, N., 2012. Good Works!: Marketing and Corporate Initiatives that Build a Better World… and the Bottom Line. John Wiley & Sons.

Kwortnik Jr, R.J., 2010. The Marketing of Experience.

Pride, W.M., 2013. Marketing 2014. Cengage Learning.

Quesenberry, K.A., 2015. Social Media Strategy: Marketing and Advertising in the Consumer Revolution. Rowman & Littlefield.

Werner, T.R., 2013. Tangy Temptation: McDonald’s and Marketing to a Foodie World.

Whitten,S.2016. Chipotle’s new marketing strategy: Extra saucy tweets. Online. Available at:  https://www.cnbc.com/2016/09/07/chipotles-new-marketing-strategy-extra-saucy-tweets.html Accessed on: 30 March 2017

Wilford, M., 2016. Understanding Beef as a Business: A Corporate Social Responsibility Analysis of Chipotle Mexican Grill.

Woolverton, A. and Dimitri, C., 2010. Green marketing: Are environmental and social objectives compatible with profit maximization?. Renewable agriculture and food systems, 25(02), pp.90-98

Chipotle Mexican Grill, Inc. (CMG),2017. IMAGE. Available at:

https://finance.yahoo.com/quote/CMG/financials?p=CMG Accessed on: 13 April 2017

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