Case Background:

As of 2014, Wendy's (www.wendys.com) is the world's third largest quick-service hamburger company. The Wendy's system includes more than 6,500 franchise and company restaurants in the United States and twenty-seven other countries and U.S. territories worldwide. Wendy's restaurants offer a standard menu featuring hamburgers and chicken breast sandwiches, prepared to order with the customer's choice of condiments, as well as chicken nuggets, chili, baked potatoes, french fries, salads, desserts, soft drinks, and children's meals.

Dave Thomas, the founder of Wendy's, began his fast-food ca- reer in 1956 when he and Phil Clauss opened a barbecue restaurant in Knoxville, Tennessee. He put his restaurant experience to use in 1969 by opening his first Wendy's restaurant, naming it after his daughter. Thomas limited the menu to cooked-to-order hamburgers, chili, and shakes, charging prices slightly higher than rivals Burger King and McDonald's. The restaurants were decorated with carpet- ing, wood paneling, and Tiffany-style lamps to reinforce the relatively upscale theme. In the early 1970s, the company began franchising to accelerate expansion. It also founded its Management Institute to train owners and managers in Wendy's operational techniques. The first non-U.S. Wendy's opened in Canada in 1975. Wendy's went public in 1976, and by the end of that year, it boasted a collection of 500 restaurants. Its first national commercial aired in 1977. Two years later, the chain added a salad bar to its menu.

Dave Thomas retired as chairman in 1982 and took the title of senior chairman. Wendy's launched an $8 million TV ad campaign featuring Clara Peller asking, "Where's the beef?" in 1984, and its market share jumped to 12 percent. When McDonald's and Burger King responded with their own campaigns, Wendy's introduction of a breakfast menu (1985); new products, such as the Big Classic burger (1986); and the SuperBar buffet (1987) could not help reverse the erosion of the company's market share (down to 9 percent by 1987). With his honest demeanor and humble delivery, Thomas found an audience as Wendy's TV spokesperson in 1989. The company even attributed the rebound in earnings at the time to his appearances.

Wendy's reacted to growing concern about nutrition by introducing a grilled chicken sandwich in 1990. It also appealed to budget- conscious consumers with its ninety-nine-cent Super Value Menu. Wendy's had 4,000 restaurants by 1992, the same year it added packaged salads to its menu. The next year, high school dropout Thomas earned his diploma; his class voted him Most Likely to Succeed.

The death of Dave Thomas early in 2002 was a crushing blow to the company and a loss for the fast-food industry. Wendy's continued to perform well over the next three years, even after losing its founder, Dave Thomas. In November 2004, Wendy's decided to end its unsuccessful ad campaign featuring an everyman-type character, an "unofficial spokesman" called Mr. Wendy, because the campaign drew attention away from the food. This marks an ongoing dilemma for Wendy's: how to brand the company in the post-Thomas era. The company initiated a series of ads featuring still images of Dave Thomas in late November 2005 to commemorate the chain's thirty- fifth anniversary, but the long-term question of its identity remained. During 2005, it started a campaign built around the call to action "Do What Tastes Right," which underscores Wendy's thirty-five-year heritage of serving great tasting, high-quality food. It featured a variety of different types of ads that were matched to targeted audiences. Included were advertising that promoted specific menu items as well as executions that supported the Wendy's brand as a whole.

In mid-2006, Wendy's International, Inc., created a new area of marketing to lead innovation efforts for the Wendy's brand. The expanded role of Wendy's marketing department included the

establishment of an innovation and strategy group comprised of research and development, strategic insights and innovation, and operations innovation.

Wendy rolled out its strategic growth plan in October 2007 and identified ten imperatives for 2008. The imperatives are focused on "Doing What's Right for Customers." The ten imperatives build on Wendy's "Recipe for Success," which is focused on revitalizing the Wendy's brand, streamlining and improving operations, reclaiming innovation leadership, strengthening franchisee commitment, capturing new opportunities (e.g., international growth), and embracing a performance-driven culture.

In August 2008, Wendy's reached out to cash-strapped con- sumers with a trio of high-quality, signature sandwiches priced at ninety-nine cents. It introduced a ninety-nine-cent Double Stack cheeseburger and planned to promote this menu option aggressively, along with the company's popular ninety-nine-cent Junior Bacon Cheeseburger and ninety-nine-cent Crispy Chicken Sandwich. On September 29, 2008, Triarc Companies, Inc., the franchisor of the Arby's restaurant system, completed its previously announced merger with Wendy's International, Inc. The combined company was renamed Wendy's/Arby's Group, Inc. Triarc subsequently sold Arby's in 2011.

Shortly after its acquisition by Triarc, Wendy's undertook system- atic survey research in 2009 and 2010, interviewing 10,000 consum- ers. The findings indicated that consumers liked the idea of fresh food with as little processing as possible and familiar ingredients. These findings led to the reinvention of Wendy's core menu. Out went the traditional iceberg lettuce topped with tomatoes and onions, and in came four new salad varieties featuring eleven different greens and new ingredients like apples, pecans, and asiago cheese. In 2011, Wendy's turned its attention to french fries, switching from a mixture of potato varieties to only Russet potatoes, sliced with the skin still on, and sprinkled with sea salt. In March 2012, Wendy's introduced its new Spicy Chicken Guacamole Club that added even more flavors with a zesty ranch sauceand yes, guacamoleto create a big, bold tasty sandwich. More recently, Wendy's beefed up its burgers, switching to a looser grind of beef that made its burgers thicker and juicier. The company also refashioned its trademark square burgers with softer edges to give them a fresher, more appealing look. As of 2014, Wendy's brand transformation was being engineered with bold restaurant designs, innovative food, and improved customer service.

To survive the merciless fast-food industry, Wendy's conducted another survey. Wendy's wanted to study customer demographics and awareness of different competing fast-food chains; the satisfaction responses of consumers in terms of family orientation, comfort, price, quick service, healthy foods, cleanliness, and so on; and the patronage preferences of costumers in terms of eat-in or drive-through. The following questionnaire was used by Wendy's to obtain this information, and the data obtained can be downloaded from the website for this book. Based on the data collected and analysis of this study, Wendy's intends to improve its service and brand orientation.

Reference: Malhotra, N. (2014). Essentials of Marketing Research: A Hands-On Orientation (1st ed.). Pearson.

Instructions:

Answer the following questions please.

1. Wendy's has developed a new fish sandwich with a distinctive Cajun taste. It would like to determine consumer response to this new sandwich before introducing it in the marketplace. If a survey is to be conducted to determine consumer preferences, which survey method should be used? Explain your choice.
2. Discuss the role of experimentation in helping Wendy's determine its optimal level of advertising expenditures.