PM305 International Marketing:Analysis of Chipotle Mexican Grill

Introduction

Chipotle Mexican Grill is an American chain of fast foods situated in US, Canada, France and Germany. The food chain is specialised in making tacos and mission style burritos and this food chain is situated in more than 2000 locations (Akaka, Vargo and Lusch 2013). International marketing considers that a company is making more than one marketing mix decisions all through national boundaries. The objective of this paper is to analyze international marketing strategies and global market position of Chipotle Mexican Grill. The paper will also focus on conducting internal environmental analysis, marketing mix, ansoff matrix and risk factors evaluation of the selected company.

Situation Analysis

PEST analysis has a considerable role in explaining factors that pose operating challenges for Chipotle Mexican Grill.

Figure 1: PEST Analysis

(Source: Armstrong et al. 2015)

• Political- There is a threat of military invasion that is to be monitored by the restaurant along with other political factors before entering a market that includes trade regulations and tariffs associated with services, important employee benefits and industrial safety regulations (Armstrong et al.2015).
• Economical- The restaurant might use a nation’s economic factor like inflation, growth rate and economic indicators of the industry like restaurant growth rate and consumer spending in order to forecast growth trajectory. While operating in a nation, the food chain must be aware of economic growth rate, education level within economy and economic growth rate.
• Social- Shares beliefs and attitudes of consumer group have a considerable role in a way the marketers of Chipotle Mexican Grill understand consumers of a particular market and the way they design promotional message for the consumers of the industry (Cavusgil et al.2014). The restaurant must consider skill level and demographics of population, culture and leisure interests.
• Technological- Technological factors that are considered by the restaurant include technological impact on product offering, technological diffusion rate and value chain structure impact in service sector.

Porters Five Forces Analysis

Porter’s five forces analysis of Chipotle Mexican Grill will facilitate in analyzing its competitiveness and position within the market.

Figure 2: Porters Five Forces Analysis

(Source: Armstrong et al. 2015)

• Threat of new entrants- There are several alternatives for the restaurant in the market that does not indicate the market is saturated and new entrants will not enter (Chipotle 2017). This threat is moderate for the restaurant as because of brand loyalty and image the restaurant has competitive advantage over others.
• Threat of substitutes- Food has several substitutes in the market and Chipotle Mexican Grill has substitutes in the market in the form of Taco Bell and the food chains that serve food from all through the world. The restaurant faces high substitute’s threat despite offering perfect combination of affordability and convenience.
• Bargaining power of suppliers- The restaurant has moderate bargaining power as the suppliers tend to compete among themselves in consideration to quality and price (Czinkota and Ronkainen 2013). Considering the same, the restaurant must be cautious in selecting suppliers as they are vital in developing final product.
• Bargaining power of buyers- Buyers have high bargaining power for the restaurant as the restaurant’s job is to retain and attract buyers as there are numerous restaurants that address needs of quality and price of food with increased competition in the market (De Mooij 2015).
• Industry rivalry- There is high industry rivals in the market in consideration to food chains. As the restaurant is facing high rivalry in the industry from restaurants of different cuisines. As the restaurant is facing losses it is thing to rebuild its brand image through launching new marketing campaign.

Internal Environment Analysis

Value chain analysis is used to conduct internal evaluation of Chipotle Mexican Grill in order to gain competitive advantages along with creating and sustaining effective performance. Value chain serves as a tool of disaggregating a business in to strategically important activities (Grant 2016). In case of Chipotle Mexican Grill, major value adding activities include inbound logistics, outbound logistics, operations, sales and service along with marketing. Logistics function of the restaurant is to purchase food in behalf of its franchisee along with arranging delivery within restaurants. Logistics of Chipotle Mexican Grill include shipment and procurement of raw materials to the suppliers, shipment and procurement of finished goods among the distraction centres and suppliers along with warehousing at every distribution centre (Kraus et al. 2016). This also includes delivery to restaurants to every food, packaging along with operating supplies. In order to improve the logistics operation, the restaurant combines several food processing plants focused on just operation.

Figure 3: Value Chain Analysis

(Source: Armstrong et al. 2015)

Supporting activities of the restaurant can be considered as human resource development, procurement and associated technology (Knight 2015). The restaurant uses electronic procurement system and it had set logistics trend for the restaurants with online ordering process. It was also observed that more around 12% of the restaurant’s franchises ordered food supplier through electronic medium. Revamping the supply chain with technology and software made it simple in responding effectively and quickly to needs of consumers. Training all staff is provided to work in better manner that made the restaurant in gaining continuous consumer loyalty for attaining competitive advantages.

SWOT Analysis

Market Attractiveness- 12C Framework Analysis

12C framework serves as an analysis tool concerning international markets that considers explaining twelve facts as explained under for Chipotle Mexican Grill:

• Country- France is situated in borderline of North Atlantic Ocean and its social background is signified by an aging population along with increasing income inequality (Majaro 2013).
• Culture- Ethnic composition considers Nordics and Mediterranean ethnic composition and the major religion of people in the nation is Roman Catholic.
• Concentration- The nation is spread across cities and certain autonomous regions. Moreover, the big towns are situated in east and south coast with urban population percentage of 77% among total population (Mathews et al.2016).
• Consumption- The fast food market is threatened by substitutes from other fast food joints with its annual growth rate increasing slowly.
• Choices- Competition among fast food chains is strong because of several direct competitors that offer food for different consumer segments including children and health conscious consumers.
• Commitment- Trade system of the nation does not encompass any quantitative restrictions or vital licenses in order to trade with European Union member states other than special products (Onkvisit and Shaw 2015).
• Contractual Obligations- Regulatory and legal framework in the nation is comparable and transparent with other EU countries and is open to foreign investments.
• Channels- Easy access is provided to European and Latin American markets all across its geographical locations. The nation also has well constructed infrastructure with effective air, water and rail transportation.
• Currency- Currency of the nation is Euro with a considerable exchange rate and inflation rate of France amounting to 4.5% in 2016 (Skarmeas, Zeriti and Baltas 2016).
• Capacity To Pay
• Communication- Media landscape in France does not have any specific regulations which need to consider while operating in fast food market.
• Caveats- Four challenges might be faced by the market that includes low growth and increased competition.

Strategic Options- Ansoff Matrix Analysis

Ansoff matrix analysis of Chipotle Mexican Grill indicates that if the restaurant enters new cities within France rather than Paris this can fall under its market expansion strategy (Schmid, Grosche and Mayrhofer 2016). Moreover, if the restaurant expands their menus this can serve as an effective market penetration strategy.

Figure 4: Ansoff Matrix Analysis

(Source: Armstrong et al. 2015)

From analyzing the Ansoff matrix of the food chain certain strategic options for success of the business can be provided as described under:

• The restaurant must follow a market expansion strategy that can serve as a process of proving service or product to a broader consumer segment of a present market or within a new psychographic, geographic or demographic market
• The restaurant must offer its products to young adults and teenagers and they are an environment friendly generation and they are the major consumers of fast food. Moreover, it should also use social media that can be one of the major sources of Chipotle advertisement (Papadopoulos and Heslop 2014).
• The restaurant must enter new cities in order to have strong consumer network all through the France and must also enter within an actual competition with different fast food chains.

Market Selection and Entry Strategy

Chipotle Mexican Grill operates through franchisees all through the nations worldwide. This market entry strategy offers the company a cheaper way of expansion within other nations along with providing control over use of business operations and brands. In entering new markets, the restaurant has decides to open a subsidiary which can franchise and operate every outlet within the company’s territory (Papadopoulos and Heslop 2014). The level of investment made by the restaurant is committed to these markers differs across such distinct modes. However, in case of Chipotle Mexican Grill it is observed that it internationalizes expansion cost to a great extent based on type of governance in every market and develops the expansion path in and across several markets. The restaurant enters new markets through joint venture with local partner or through master franchising agreement.

Marketing Mix

Marketing mix of Chipotle Mexican Grill is analyzed in order to evaluate the actions, strategies or tactics employed by the restaurant for promoting is products or brand.

• Product- Product mix of Chipotle Mexican Grill includes fast casual Mexican cuisine, food with integrity; simple menu offering and its products also faced risk of imitation by its competitors. Strategies developed by the restaurant focused on its products include offering premium products at affordable prices along with offering healthy food options for health conscious people (Sapouna et al.2018). The restaurant offers meal like salads, tacos and fruit options in consideration to healthy eating. It also focuses on quality of foods through working with suppliers along with working closely with food experts that can ensure superior food quality. New products of the restaurant include sofritas and chorizo along with offering Mexican style sausage prepared from chicken and ground pork.
• Price- Chipotle Mexican Grill has rigorous pricing process which is employed in price determination for a particular market in every nation. The reason includes being capable to provide affordable prices to consumers along with being profitable for the restaurant. Localized pricing strategy is set in order to select the price objective, determining demand, choosing a pricing method and evaluating costs, prices and offers of the competitors (Papadopoulos and Heslop 2014).
• Place- Chipotle Mexican Grill offers its products in more than 119 nations. It opens its outlets in places that has increased consumer flows like in train stations, high streets, shopping malls, gas stations and in schools. Major focus of the restaurant is to make the environment gold standard for cleanliness and they have recalibrated their standards through constantly enforcing them. The restaurant constantly renovates, relocates and rebuilds its restaurants for offering the restaurant with a fresh edge (Onkvisit and Shaw 2015).
• Promotion- Chipotle Mexican Grill develops non-traditional marketing strategy in order to attract millennial. This is done by the restaurant through online marketing by means of web and social media advertising. It is observed that the restaurant’s current strategy is focused on less to no advertising, increased focus on food with integrity and is relied increasingly on word of mouth. New promotional strategies of the company are focused o offering promotional offers and introducing multi-program advertising (Tajeddini, Elg and Ghauri 2015).

Risk Factors

Certain risk factors have been identified in consideration to business operation of Chipotle Mexican Grill. There are several risk factors associated with conducting international business. As explained, Chipotle Mexican Grill attempts to adopt marketing development strategic option that is characters through moderate risks (Wu 2016). Government in few nations has considered decreasing FDI for several industries like aviation, retail and media. Considering this fact that entering in new markets requires the restaurant to completely focus on related political and socio-cultural factors. Moreover, the focus must be placed on decreasing the impact of the risk factors. A major risk that might impact a business in a new nation can be corruption and bribery by political companies along with corporate agencies.  Considering such risks the establishment and registration process might be for a long time if TRU did not address the minimum needs threshold.

Conclusion and Recommendations

The objective of this paper is to analyze international marketing strategies and global market position of Chipotle Mexican Grill. It is gathered from the paper that the restaurant might use a nation’s economic factor like inflation, growth rate and economic indicators of the industry like restaurant growth rate and consumer spending in order to forecast growth trajectory. In case of Chipotle Mexican Grill it is observed that it internationalizes expansion cost to a great extent based on type of governance in every market and develops the expansion path in and across several markets. Considering the position of Chipotle Mexican Grill, it is recommended to follow a market expansion strategy that can serve as a process of proving service or product to a broader consumer segment of a present market or within a new psychographic, geographic or demographic market.

References

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