BUS 230 PRINCIPLE OF MARKETING

Appendix 1 Company Cases

Company Case 1

Chick-fil-A: Getting Better before Getting Bigger

Chick-fil-A is dominating the U.S Fast-food market. Whereas McDonald's. Subway. Burger King. And Taco Bell trudges along at the top of the heap. Chick-til-A has quietly grown from a Southeast regional favorite into the largest chicken chain and the eighth-largest quick-service food purveyor iii the country. The chain sells significantly more food per restaurant than any of its competitorsthree times that of Taco Bell or Wendy's and more than four times what the KFC Colonel fries up. And it does this without even opening its doors on Sundays. With annual revenues of $8 billion and annual average growth of 16 percent. The chicken champ front Atlanta show s no signs of slowing down.

How does Chick-til-A do it? By fOCUsing on customers. Since the first C hick-til-A restaurant opened for business in the late 19605, the chain's founders have held tenaciOUsly to the philOsophy that the most sustainable way to do business is to provide the best possible customer experience.

Applying Some Pressure

Chick-l-A founder S. Truett Cathy was no stranger to the restaurant business. It was owning and operating restaurants in Georgia in the 1940s. The '50s. And '60s. He was led by his experience to investigate a better and faster way to cook chicken. He discovered a pressure fryer that could cook a chicken breast in the same amount of time it took to cook a fast-food burgerdeveloping the chicken sandwich as a burger alternative. He registered the name "Chick Fill A Inc." and opened the first Chick-fil-A restaurant in 1967.

The company began expanding immediately. Although at a much slower pace than the market leaders. Even today. Chick~ til-A adds only about 100 new stores each year. Although it now has more than 2.200 stores throughout the United States. that number is relatively small compared to KFC's -4100, McDonald's 14000. and Subways: 27000. Chick-l-a's controlled growth ties directly to its "customer first" mantra. As a family-owned operation. the company has never deviated from its core value to "focus on getting better before getting bigger." The slow-growth strategy has enabled the ability to "get better."

As another way to perfect its business, the company has also stuck to a limited menu. The original breaded chicken sandwich remains at the core of Chick-l-a's menu today "a boneless breast of chicken seasoned to perfection. Hand-breaded. Pressure cooked in 1009 'rened peanut oil and served on a toasted. buttered bun with dill pickle chips." In fact. the

Company's trademarked slogan"We didn't invent the chicken. Just the chicken sandwich"has kept the company on track for decades. However, it has carefully and strategically added other items to the menu. It's the iconic chicken sandwich in all its varieties that primarily drives the brand's image and the company's revenues. This focus has helped the company give Customers what they want year after year without being tempted to develop a new flat or of the month.

Getting It Right

Also, central to Chick-l-A's' mission is to "have a positive influence on all who come in contact with Chick-l-A." Although seemingly a tall order to ll. This sentiment permeates every aspect of its business. Not long ago. Current Chick-l-A CEO Dan Cathy was deeply affected by a note that his wife taped to their refrigerator. In a recent visit to a local Chick-l-.\ store. She had not only received the wrong order. She had been overcharged. She circled the amount on her receipt. Wrote, "Hi, be back when you get it right" next to it. And posted it on the fridge for her husband to see.

That note prompted Dan Cathy to double down on customer service. He initiated a program by which all Chickl-A employees were retrained to go the "second mile" in providing service to everyone. That "second mile" meant not only meeting basic standards of cleanliness and politeness but going above and beyond by delivering each order to the customer's table with unexpected touches such as a fresh-cut flower or ground pepper for salads.

The experience of a recent patron illustrates the level of service Chick-til-A's customers have come to expect as well as the innovative spirit that makes such service possible:

My daughter and I stopped at Chick-fil-A on our way home. The parking lot was full. the drive-thru was packed, but the love we have for the chicken sandwiches and waffle potato fries. 'So we decided it was worth the wait as we walked up the sidewalk. There were two staff members greeting every car' in the drive-thru and taking orders on little tablets. A manager was making his rounds around the building outside smiling and w .l' \ ing at car-s as they were leaving.

When we came inside, the place was packed. 'We were greeted immediately by the cashiers. Seth happened to take our order. He had a big smile. Wonderful manners. I spoke clearly and had great energy as a teenager! He gave us a number and said he'd be right out with our drinks. We were able to sit at a table as the other guests were lea\ ing, and before we could even get settled, our drinks were on the table? While Seth started to walk away. Our food was delivered by another very friendly person. Both my self and my IS-year- old daughter, commented on how fast it all happened. We were so shocked that we started commenting on the large groups arriving behind us. And began watching in amazement. not only inside but outside.'

Everyone behind the counter worked together. I used manners. And smiled. The teamwork was amazing. Then Ron. a gray-headed friendly titan. Made his way from table to table. He was checking on guests. giving drink refills. And trading coloring books for small ice cream cones with sprinkles for little kids. He checked on Us twice and filled our drinks once.

Recently. The company instituted the "parent's valet service." inviting parents juggling small children to go through the drive-through. Place their order. Park. And make their way inside the store. By the time the family gets inside. Its meal is waiting on placemats at a table with high chairs in place. But beyond the tactics that are taught as a matter of standard policy. Chick-fil-A also trains employees to look for special ways to serve, such as' retrieving dental appliances from dumpsters or delivering smartphones and wallets that customers have left behind.

Give Them Something to Do

Beyond high levels of in-store service. Chick-fil-A has focused on other brand-building elements that enhance the customer experience. The brand got a big boost when the Chick-fil-A cows made their promotional debut as three-dimensional characters on billboards with the now-famous slogan "EAT MORE CHIKlN." The beloved bovines and their self-preservation message have been a constant across Chick -fil - A promotional materials for more than 23 years. They've also been the lynchpin for another Chick-fil-A customer experience enhancing strategy engage customers by giving them something to do.

When it comes to giving customers "something to do." Chick - fil -A doesn't fool around, For starters. There's "Cow Appreciation Day"a day set aside every July when Customers who go to any Chick-til-A store dressed as a cow get a free entree. Last year. The 12th anniversary of this annual event. About 1.8 million cow-clad customers cashed in on the offer.

Another tradition for brand loyalists is to camp out prior to the opening of a new restaurant. Chick-til-A encourages. This. Ardent activity with its "First Hill" promotionan ofcially sanctioned event in which the company presents vouchers for a full year's worth of Chick - fil - meals to the rst 100 people in line for each new restaurant opening. Dan Cathy himself has been known to camp out with customers. They are signing T-shirts, posing for pictures. and personally handing coupons to the winners'. And whereas some customer-centric giveaways are regular events. Others pop up randomly. Take the most recent "family challenge." which awards free ice cream cones to any dine-in customers who relinquish their smartphones to a "cell phone coop" for the duration of their meals.

To keep customers engaged when they aren't in the stores. Chick-fil-A has become an expert in social and digital media. It's an app. Chick-fil|-A One. jumped to the number one spot on iTunes only hours after being announced. Nine days later. More than a million customers had downloaded the app. giving them the ability to place and customize their orders. Pay in advance. And skip the lines at the register. And in a recent survey by social media tracker Engagement Labs. Chick-fil-A was ranked number one and crowned the favorite American brand on all major social media platforms. Including Facebook. Twitter. And Instagram.

Every year as the accolades roll in. it is apparent that Chick- fil- 's customer-centric culture is more than just talk. Among the many competitors. Chick-fil-a was ranked number one in customer service in the most recent American Customer Service Satisfaction Index (ACS) for fast-fwd chains. Chick-fil-A took the same top spot in surveys by the Temkin Group and Consumer Reports. The most cited reason for these achievements was employees described as having a "pleasant demeanor." making eye contact. and saying, "please" and "thank you."

After decades of phenomenal growth and success. Chick- til-A is giving the cows a break. "The cows are an integral part of the brand. They're our mascot. If you will." say s Jon Bridges. chief marketing ofcer for Chick-til-.\. "But they aren't the brand. The brand is bigger than that." The cons haven't disappeared. They've just changed pastures. As the brand's promotional messages have shifted to tell engaging stories about the food. People. And service that makes the brand so special. It's a 'sky' move with Chick-fil-A growing faster than any other major fast-food chain. It begs the question as to whether such a drastic change in the brand's symbolism \\ ill sUstain its current growth for years to come or send customers out cow tipping.

Prior to this recent announcement. one estimate has Chick-fil-A on track to leapfrog Dunkin' Taco Bell. Burger King. Wendy's. And Subway to become the third-largest fast-food chain in the United States. by 3020. At that point. Chick-til- A "in trail only Starbucks and McDonald's. Clearly. All this growth is no accident. As one food industry analyst states. "It's about trying to maintain high levels of service. High quality. Not deviating dramatically. And giving customers an idea of what to expect. As long as Chick-fil-A continues to make customers the number one priority. We can expect to nd more and more access to those scrumptious chicken sandwiches.

Chick-lA

Specifically include the appropriate marketing terminology to support your answers.

1. Chick-l-A's complete marketing mix contributes to its success. Analyze Chick-l-A's marketing mix and explain why it works.

2. What has Chick-l-A done to enhance Customer Lifetime Value?

3. Which of the following is (are) practiced by Chick-l-A? Explain your answer(s).

A. Market Penetration

B. Market Development

C. Product Development

D. Diversication

4. SWOT: Identify a threat to Chick-l-A. How do you know?