Executive Summary
Chipotle suffered a significant loss in sales and net income because of the E Coli outbreak in some of the company’s restaurants. In this report, a new marketing plan has been developed to remove panic among the customers about the company’s food safety, making the lost customers come back to the company’s restaurants.
1.0 Introduction
Chipotle, an American fast-food restaurant company, is going ahead with the vision to change the perception about fast food and to “show that food served fast [doesn’t] have to be a ‘fast-food’ experience (Reuters, 2017). It is a big restaurant company operating in different parts of the world, including the United States, Canada, England, and France; etc. “Food with Integrity” is the mission of Chipotle to acquire the vision described above. Under the “Food with Integrity” mission, Chipotle takes different actions. It ensures fresh ingredients for production by collecting the elements from the local farmers instead of managing them from the mass of industrial producers (Anon, 2017). It also makes partnerships with the farmers to further ensure environmentally sustainable phases in the firming process. It wants to provide flavorful foods without hampering the environment and society as a whole. Chipotle also ensures that its meat is collected from ethical sources (Kline, 2016). Done with these activities, Chipotle has been able to increase its total revenue and net income. Although the virus scandal that came out in 2015 caused a massive reduction in sales volume, chipotle has overcome the bad situation somewhat (Taylor, 2017). Chipotle needs a marketing plan for its further growth and development that can show a pathway to regain its goodwill and customers.
2.0 Current Marketing Situation Analysis
For analysing the market condition of chipotle, we are going to conduct a SWOT analysis. SWOT analysis is a technique that identifies the strengths, weaknesses, opportunities, and threats of an organisation and helps the organisation to improve more (Dalavagas, 2016).
2.1 Strengths of Chipotle:
Fast Growing Company: Chipotle experienced quick growth from the year of its going public. It had nearly 510 restaurants in 2006. By the time today, the number of restaurants had quadrupled, which means that it had earned substantial goodwill, customer loyalty, and customer preference (Reuters, 2017). As a result, the revenue and net income of chipotle was going to increase day by day to a great extent.
Strength of Financial Condition: Chipotle maintains a strong balance sheet without debt and pure cash flows. It reported on 1st January 2016 that its cash and investment were over $1 billion. As a result, it can continue business under some unfavourable conditions. It has the enduring ability of a bad market situation as it does not have to pay any interest to creditors. For taking a low price advantage, the management of chipotle is planning to repurchase some shares by budgeting an additional $300 million (Dalavagas, 2016).
2.2 Weakness of Chipotle:
Quality of ingredients: Refreshed and quality ingredients are collected through the complex supply chain by chipotle. Considering the social and environmental needs, chipotle collect ingredients from the small farmer rather than from the industrial producers (Dalavagas, 2016). Accidentally, cold outbreaks, extensively covered by the media, hurt the safety issue of Chipotle products. The panic about the safety issue should be removed from the customers (Kline, 2016).
U.S. market dependency: Almost all the restaurants of Chipotle are in the US. As chipotle is a big company, a slight slow in the US economy results in a considerable decrease in its revenue. This is a vital weakness that can be recovered by establishing businesses outside of the U.S. (Dalavagas, 2016).
2.3 Opportunities of Chipotle:
Expanding stores: As the financial condition of chipotle is excellent, and it has the capacity to expand its stores. Then it will be able to increase its customers and spread its image to the areas the stores will be established. It will have more sales volume, and thus net income will be higher. A note to be mentioned is that chipotle has already planned to increase its restaurants by the number ranging from 220 to 235.
New Product Sale: Customers are sometimes bored of eating the same types of product. Chipotle can bring some changes to the existing products or bring completely new products to the market, appealing to the customers of restaurants. This variation in the products and new product innovation will support acquiring competitive advantages, creating good images over its competitors.
2.4 Threats of Chipotle:
Safety issue: Because of Coli outbreaks, Chipotle has lost many customers’ faith in the products produced by it, which caused a robust decline in revenue and income. The management of Chipotle has taken some steps to regain the trust of the customers by maintaining quality standards beyond the industry (Little, 2016). As the administration is trying their best to protect their foods from something unwanted, it can be asserted that the company will not face any problem with food safety in the future.
Competition: The number of firms in the “fast-casual” industry is increasing tremendously, which is a threatening fact for Chipotle. Some of the other restaurant companies are also providing diet-friendly foods to the customers. Some local small firms offer quality foods at a low cost by the natural benefit of collecting raw materials from the land. Chipotle faces massive competition with the other firms regarding price, quality, service, and convenience (Little, 2016).
3.0 Objective
To regain the customer’s confidence and make them come back to its restaurants.
4.0 Strategies
Strategies are some policies that an organisation develops to achieve its objectives (Nathan, 2016). The strategies which will be helpful for the achieving purposes of chipotle are described below:
- Through persuasive communication, Chipotle can make the customers understand the safety of the foods they provide.
- For rebuilding the brand image, the company can campaign about the new food safety standards by creating public opinion.
- Public relations may be one strategy that can help rebuild the customers’ trust and get them back to the restaurants.
- Different marketing campaigns can be taken so that the customers feel lucky to come to the chipotle restaurants.
- Employ the staffs such as lawyers, lobbyists who can manage the congress to ban the use of numerous chemicals that are used in commercial farms to enhance the animal genetically
- Take pop-up exams on the company’s website about the hazardous chemicals used in farms to raise the animals and inform them about the chemicals.
- Provide the customers with leaflets that make the customers informed about the safety of the process they collect foods and the dangerousness of using chemicals in the animal while rising (Nathan, 2016).
5.0 Strategy & Segmentation, Targeting, and Positioning (STP)
Chipotle can go through the three stages named Segmentation, Targeting, and Positioning (Perner, 2017). At the first stage, chipotle will determine which types of customers have gone back from taking their foods because of safety issues. At the second stage, the company will prioritise the customers to make them aware of the current food safety standards. At last, the company will communicate with those customers and apply strategies to make the lost customers come back.
Segmentation indicates dividing customers by their different needs and characteristics. It helps the organisation to get the best output from the minor input (Perner, 2017). By the segmentation, Chipotle can define the area, characters, behaviours, etc., of the customers, which will be helpful to apply different strategies to the different types of consumers. Without the segmentation, it will be unwise for the organisation to make strategies and use these to all.
After the segmentation has been completed, one or more segments will be targeted to work on. This will depend on several factors, such as how the quality of foods other restaurants serve on that segment, how vast the part is, and how the company wants to convince the customers (Perner, 2017). Based on these factors, chipotle should develop strategies to make the customers come back to the restaurants of Chipotle.
The last Stage is positioning, which refers to implementing the target on the targeted segments. The target of Chipotle is to change the customer perception about food safety and make the customers return to its restaurants. For achieving this target, it is necessary to apply the strategies and tactics for the best output. Product, price, distribution, and promotion are some factors that should be given more importance to implement the targeting.
6.0 Tactics and Actions
A tactic is a specific decision which if implemented in action, is helpful to implement the strategies. An objective can be divided into several methods to be implemented, and a system can be implemented by some tactics. Different tactics are helpful to achieve other goals. To fulfil the aim of Chipotle, the following tactics can be effective:
- High-resolution DNA testing of the meats will ensure the safety of the product.
- Safety training programs for the crews will help manage food safety issues.
- Third-party appointment for auditing food safety is another tactic for ensuring safe food.
- New food handling and processing system can be developed for the safety issue.
- Collecting the lost customer’s email and sending information about the food safety of chipotle will be another good tactic for chipotle.
- Magazines, newspapers, radio etc., maybe a good advertising channel to regain the customers back.
- Chipotle management should have good relations with the existing customers and should provide information about its safety standard.
- Updated information should be provided on the company’s website to get informed about the safety issues quickly.
- Social media such as Facebook, Twitter can be an excellent tool to connect with people. By the use of these media, Chipotle can make an excellent public opinion about the company.
- Direct marketing campaigns can help to regain the trust of the lost customers.
- Educational campaigns with the advertisement of the company may be helpful to create positive public opinion about the company.
- Local farmers from whom the raw materials are collected can be trained in a way that the foods are raised safely.
- Employees can be employed for close monitoring of raising animals and producing foods.
- A strong management system should be developed throughout the company (Wohl, 2017).
7.0 Budget
Budget is the predetermined cost measurement for spending in the future to achieve objectives. It also measures the income of a project over the costs. The budget should be determined in detail so that no significant deviation occurs in the future. The Financial Condition of the organisation should be overlooked to make a budget plan. The tactics developed by the organisation have some costs. The organisation will determine these costs. Then the organisation will balance its capacity to the expenses. Sometimes, organisations face some unordinary charges that should be considered when making a budget plan (Schrank, 2017). The more the marketing plan is organised, the easier the budget estimation is. After the budget has been estimated, the organisation should start implementation of the marketing strategies and tactics. Chipotle has an excellent financial condition which is why costs for achieving the objective will be under the capacity of Chipotle. So it will be easy for chipotle to manage the costs and accomplish the purpose it has.
8.0 Control
An essential part of the marketing plan is controlling, which monitors whether the actions are going in the planned way. Everything, including objective, strategies, and tactics, will go astray if the proper control is not ensured. An efficient team should work for the management of all the activities to achieve the goals. Team members should have good communication and relations among themselves to feel happy to work within the team, transfer information quickly, and make decisions swiftly and efficiently. The team leader should be sensitive to all the activities assigned to them. Leaders should consult with the members of the teams before making any decision. Without proper control, the organisation will face losses instead of generating profit for the marketing plan (Jargon, 2016).
9.0 Conclusion
The E. coli outbreak in Chipotle reduced the revenue of the company, caused the customers to lose, and made the customer’s concern about the food safety of Chipotle. The above marketing plan has been developed to regain the trust of the customers and make the customers come back to its restaurants. Different strategies have been developed to achieve the objective. For managing these appropriately, some tactics have been developed so that the strategies can be achieved easily. Budgeting and controlling are two major activities to do for being successful in a marketing plan. This report has shown a marketing plan for overcoming a specific situation of Chipotle. Different marketing plans should be taken in various positions for the most effective marketing plan.
10.0 References
- Anon, (2017). Chipotle — Food with Integrity. [online] Available at: https://chipotle.com/food-with-integrity. [Accessed 29 Apr. 2017].
- Dalavagas, I. (2016). SWOT Analysis: Chipotle Mexican Grill, Inc.. [online] Valueline.com. Available at: http://www.valueline.com/Stocks/Highlights/SWOT_Analysis__Chipotle_Mexican_Grill,_Inc_.aspx#.WQRQYoiGPIU. [Accessed 29 Apr. 2017].
- Jargon, J. (2016). Chipotle Plans Marketing Campaign to Win Back Customers. [online] WSJ. Available at: https://www.wsj.com/articles/chipotle-plans-marketing-campaign-to-win-back-customers-1452726402. [Accessed 29 Apr. 2017].
- Kline, D. (2016). Here’s Everything Chipotle Has Done to Handle Its E. Coli Crisis; Is it Enough? — The Motley Fool. [online] The Motley Fool. Available at: https://www.fool.com/investing/general/2016/02/10/heres-everything-chipotle-has-done-to-handle-its-e.aspx. [Accessed 29 Apr. 2017].
- Little, K. (2016). One year after Chipotle’s health crisis started, the chain continues to struggle. [online] CNBC. Available at: http://www.cnbc.com/2016/10/31/one-year-after-chipotles-e-coli-crisis-chain-still-struggling.html. [Accessed 29 Apr. 2017].
- Nathan, R. (2016). Chipotle is Spending Big on Its Marketing and Promotional Programs – Market Realist. [online] Marketrealist.com. Available at: http://marketrealist.com/2016/02/chipotle-spending-big-marketing-promotional-programs/. [Accessed 29 Apr. 2017].
- Perner, L. (2017). Segmentation, Targeting, and Positioning–Consumer Behavior. [online] Consumerpsychologist.com. Available at: https://www.consumerpsychologist.com/cb_Segmentation.html. [Accessed 29 Apr. 2017].
- Reuters. (2017). ${Instrument_CompanyName} ${Instrument_Ric} Company Profile | Reuters.com. [online] Available at: http://www.reuters.com/finance/stocks/companyProfile?symbol=CMG.N. [Accessed 29 Apr. 2017].
- Schrank, A. (2017). Chipotle is hoping to put the 2015 E. coli scandal behind it. [online] Marketplace.org. Available at: https://www.marketplace.org/2017/04/25/business/chipotle-hoping-put-2015-ecoli-scandal-behind-it. [Accessed 29 Apr. 2017].
- Taylor, K. (2017). Chipotle has a ‘clean’ menu — but many customers are still terrified of E. coli. [online] Business Insider. Available at: http://www.businessinsider.com/some-chipotle-customers-are-still-scared-of-e-coli-2017-3. [Accessed 29 Apr. 2017].
Wohl, J. (2017). Chipotle’s Comeback Plan: Company-Wide Meeting and Marketing. [online] Adage.com. Available at: http://adage.com/article/cmo-strategy/chipotle-s-comeback-plan-company-wide-meeting-marketing/302134/. [Accessed 29 Apr. 2017].
