Chic-fil-A: Situation & SWOT Analysis

Subject: Marketing
Pages: 8
Words: 2467
Reading time:
9 min
Study level: PhD

Executive summary

Marketing is an integral part of an organization’s management; it creates business for a company and offers insightful information necessary for developing and innovating effective business strategies. The hospitality industry is highly competitive with the new player entering the market and the old players developing new approaches to business. Chick-fil-A Inc is one of the most reputable fast food companies in the United States with over 1500 outlets; to remain competitive; the company needs to develop a strategic marketing approach. External and internal situations affect the success of a marketing strategy adopted by a company thus, before embarking on a certain marketing strategy, the company should undertake a situational and S.W.O.T. analysis. The analysis will assist the company to understand its strength and opportunities offered by the market as well as threats and weaknesses it has to consider in its marketing plan. This report takes a situational and S.W.O.T. analysis of Chic-fil-A Inc for marketing strategy development.

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Introduction

An effective marketing strategy is developed after an understanding of conditions prevailing in a certain market segment; it aims at yielding high results at the minimum cost possible. The initial stage of a marketing strategy development is an analysis of internal and external factors that are likely to affect marketing campaigns. It involves taking a situational analysis as well as S.W.O.T. (Strengths, Weakness, Opportunity, and Threats) analysis of the external environment and the company respectively. The hospitality industry is undergoing massive changes where new approaches to marketing have been implemented by different players; to remain competitive in the field, a player needs to develop an effective marketing strategy. Chic-fil-A Inc is the second-largest chicken and chicken products seller in the United States of America (Paley 46). For the company to maintain its leadership role, it has to develop effective marketing strategies.

History of the organization

Chick-fil-A Inc. dates back to 1946, when Truett and Ben Cathy, opened a restaurant called Dwarf House in Hapeville, southern Atlanta. It is a private company based in Atlanta whose name was coined after an invention of a sandwich in the 1960s called Chick-fil-A; in 1964, Dwarf House was registered under the name of the sandwich came to be the company known today. Currently, the company has more than 57,000 employees working in over 1500 outlets. According to published returns of 2009, the company’s sales revenue amounted to $ 3.2b representing an 8.6% rise over the previous year’s.

The restaurant specializes in fast foods with some branded products like Chic-fil-A sandwiches and other fast food for the entire family (Chick-fil-A Company Website).

Situation Analysis

Under situation analysis, the report will consider internal Situation Analysis and external Situation Analysis separately:

Internal Situation Analysis

A company’s internal strategies and policies determine the success it will get in the market; it determines the competitiveness in the changing business trend. Chic-fil-A has implemented a number of strategies in the efforts of positioning its products in the market. Some of these strategies are seen in:

Customer Market Situation

The company’s target market is mostly the middle class and upper-class young people, children, and young families: it offers quality products with different pleasant tastes. The company’s target market is influenced by the tastes and differentiation of products; to be competitive and tap a large market, the company keeps on innovating new products that surpass the expectation of their customers. To get the target market, the company ensures it has established its outlets in a strategic location and advertises for them in a place where the market target is likely to get the message like in clubs, theaters, internet, through social media, magazines, and in televisions.

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Children and young people have the tendency of testing new products thus the company has to keep innovating new tastes, at the same time this age of people are more concerned about the costs of products thus the company uses a psychological pricing approach (Fred 45).

Marketing Mix Situation

The company adopts a 4Ps (products, prices, place, and promotions) marketing mix to position itself in the changing markets. Products from the company are constantly being improved in the efforts of creating a brand identity and product differentiation. The company has branded some products and combinations of ingredients for its products to remain unique and attractive to customers. One major advantage that the company has is its locations; it is located in places where its target customers are likely to be found like in shopping malls, airports, major towns, close to high learning institutions, and picnic areas.

Chick-fil-A’s target customers are sensitive to change in prices; they need to have value for the price they pay for products. In the efforts of maintaining its cost law, Chick-fil-A has devised a number of efficient ways of reducing costs. The company uses a psychological pricing model to ensure that the target population thinks that the commodities are cheap than those of the competitors.

When promoting its products, the company uses both pull and push methods of promotion it embarks on massive campaigns to support new commodities and has device unique advertising methods that are memorable to the target customers thus increasing its sales. One of the most interesting marketing plans in the company is the recognition of the importance of the Christian roots and faith to the organization which while not seeking to impose their faith on the team members and the clients but to influence them through their exemplary lifestyles, services, and products. In line with this recognition, the company does not operate on Sundays.

Supplier situation

Chick-fill-A requires fresh and reliable supplies of farm produce; in the move of ensuring there is constant supply, the company has developed strong company-supplier relations and operates a farm. It ensures that it has effective supply chain management; it adopts an integrated supply chain system. In the fast-food industry, there are low threat levels from suppliers because there is quite a substantial number of various sellers’ supplying the same products; Chic-fill-A also enjoys vertical integration based on its ability to supply its own input needs (Chick-fil-A Website). Profitability levels in the industry are not so dependent on the suppliers and therefore the bargaining power of suppliers can be said to be weak. Chick-fill-A’s has established a health link with its suppliers; the link is a win-win benefit, where the managers aim at establishing suppliers who can be relied upon for quality, quantity, and in time delivery (Risland and Samano 87)

Resources and Capabilities Situation

Chick-fill-A’s has a number of resources that need to be managed in an effective manner to yield better results; its resources range from experienced employees to physical resources. To ensure that the company has utilized its resources effectively, the management has devised the best practice of resource combination strategies. Employees with different capabilities are blended together to offer a chance for innovation, invention and create good business environment. With its large capital base, the company ensures it has adequate working capital that it can take opportunities given by the market to expand further. The company’s strong brand name is a resource that managers use to develop more commodities; with a strong brand name them brand extension is possible to the benefit of the company.

In terms of capacity, the company has financial and human resources capacity to develop and extend to different areas in the world. The management team is well educated and experienced that it can manage other firms established by the organization effectively. Though the company has remained in one line of fast food, it has the capacity to diversify its service to others areas in the hospitality industry.

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External Situation

Competitive Situation

The hospitality industry in the United States is highly competitive with players like McDonald, Starbucks, and Ken-chic coming out with new products to remain competitive. Chick-fill-A Inc. has been able to distinguish itself from other fast food restaurants by developing unique and identifiable characteristics; one of the most distinguishing features that the company has adopted is the Closed-on-Sunday Policy. The policy is aimed at appreciating the spiritual way of life of its people and as well gives its employees’ quality time to rest and enjoy with family; customers see this moves as ethical thus, they be attracted to the company for that reason (Chick-fil-A Company Website).

The company has embarked on massive innovation and inventions; they are the market driving forces especially when the target market is concerned. Other than inventing new products and service delivery methods, the company has developed production and operation activities, for instance it has invested in high touch technological systems to guide the sales support team. Manual tasks have been automated enabling the company to carry out its daily transactions. Efficiency levels at the organization are high as compared to other fast food outlets. The company’s mission and vision statement is people centered thereby providing a solid ground to expand business operations. Technological innovations have seen the company automate many of its operations to increase service delivery.

Quality assurance is among the company’s objectives of becoming the leading fast food company in the delivery of products and services. Employees are highly trained to ensure that they maintain high levels of integrity in the delivery of services.

Macroeconomic environment

The world is recovering from financial crisis that were believed to have originated from the United States: In the US, inflation is forecasted at 1.1, while the GDP growth rate and unemployment are estimated to stand at 2.4% and 9.8% respectively. The company is faced with hard economic time although there is hope that the dry spell with be over. A number of competitors in the market who are coming to with unique ways of targeting customer and devising new products.; they are offering a threat to Chick-fil-A however the challenge has been taken positively where the company has developed its own products development and differentiation methods. The United States fast food industry is face with negative publicity by healthy concerns organization, they are advocating against eating of junk foods and they are running advertisements against them over local media stations. This move is seen as a counter move against Chick-fil-A products however, the company has responded by offering fresh and quality products.

Of late, the world has embarked on massive technological developments and invention. To remain competitive, companies need to adopt the systems in different sectors of their economy. Technology has been used in Chick-fil-A for efficiency creation, advertising, marketing, and integrating different processes. The hospitality industry has largely benefited from globalization and international trade; as people trade, increase the market base for hospitality industry and come with expectation that current situation could not have attained with the international corporation.

To respond to external macro-economic factors, the company ensures it takes advantage of opportunities as they arise and devise methods to mitigate against any loss that might be suffered because of external environment. To tap opportunities as they arise, the company maintains a healthy working capital where there is adequate funds to fund developmental projects as need arises. To mitigate against losses, the company embarks on massive market situation analysis to ensure that it develops an appropriate strategy (Ilan 90).

S.W.O.T Analysis

Chick-fil-A has a strong brand name in the United States hospitality industry; it is respected for its quality fresh foods that come with satisfying customer service. The strength of the brand name is one of the strongest marketing strength that the company enjoys. Customers are ready to interact with the company and trade with it since they are guaranteed of quality and satisfaction at any one time. The brand name allows for brand extension and brand identity as the established market can offer a chance for this. The company enjoys the strength of experienced management and junior staffs; they are able to read the signs of time and develop ways to become competitive. It is through the orchestrate team that the company has innovated and invented different products and processes.

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One major weakness that faces the company is its narrow approach in the market; the company only sells one line of products, fast foods, the sector of the economy has is facing challenges from advocators against fast foods consumptions. On its side, the company has failed to expand to other areas to cover-up the challenges offered by the market situation.

Globalization and international trade is offering an opportunity of expansion to the company; there are a number of countries that the company can diversify its processes to increase sales revenue. The company also faces the advantage of a youthful population; this is the target market for its products thus the population is offering good business to the company.

The company is facing threats of loss of business as advocators against consumption of junk/fast foods takes root; people might get the since of the adverts and be booed from buying junk foods from the company at the end the company will suffer loss of business. Globalization has offered an increased competition as more and more players venture in the market, the way forward is to keep the companies standards high to enjoy from customer loyalty (Kotabe and Helsen 26).

Strategic action Prioritization

Although the company is operating relatively well, some areas need to be improved to give it a competitive advantage even with the changing social-economic trends. It is important to analyses trends in the market that might affect the business negatively in the future and develop strategies to limit negative effects. One area that the company seems to be lagging behind is in diversity of its products; the company need to look for other sources of incomes as the move to negative advocacy towards fast foods is likely to threaten its future business operations. Some of the available opportunities include diversity to accommodation business, developing new products and services and diversifying to other regions (Hooley and Saunders 12-23).

Conclusion

Marketing in an integral part in product development as it creates awareness of the existence of a products or service in the market, it goes further than selling, advertising and creating awareness to include company-customer relations. Through marketing, a company learns the deficit that a certain industry has, and then endeavor to produce goods to meet the demand in the market. To develop an effective marketing strategy, an organization needs to undertake and elaborate situational and S.W.O.T. analysis. It is through the understanding of prevailing condition that it will make sound marketing decisions and approaches. Chick-fil-A successfulness in the hospitality industry has been attributed to its robust marketing team that utilizes the company’s internal strengths and opportunities offered by the market to remain competitive despite the highly competitive hospitality industry. One major challenge facing the company is negative advocacy against junk foods taken by healthy eating advocators. In the near future, the company’s business will be threatened thus strategic decisions needs to be made.

Works Cited

Chick-fil-A Company Website (2010). Home Page. 2011.

Fred, David. Strategic Management: Concepts and Cases. New Jersey: Pearson Education, 2008.Print.

Hooley, Graham, and Saunders John. Competitive Strategy: The Key to Marketing Strategy. New York: Prentice Hall, 1993. Print.

Kotabe, Masaki, and Helsen Kristiaan. Global Marketing Management.New York: John Wiley & Sons, 2004. Print.

Paley, Norton. The manager’s guide to competitive marketing strategies. London: CRC Press, 1999. Print.

Risland, Susan, and Samano Simone. Encyclopedia of Major Marketing Campaigns. Gale: Cengage Learning, 2007. Print.

Ilan, Alon. Chinese economic transition and international marketing strategy. Westport: Greenwood Publishing Group, 2003. Print.