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Marketing Strategic Analysis: Goody's SA case study
 

Marketing Strategic Analysis: Goody's SA case study

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Strategic Analysis of Goodys SA ...

Strategic Analysis of Goodys SA

The aim of this assignment is to provide an analysis of Goody’s S.A., the leading fast food chain in Greece, from a strategic marketing perspective. After briefly presenting the profile of the company, the assignment analyzes the external and internal environment, paying attention to the factors that affect their business, as well as the sources of its competitive advantages. Following these, a hypothetic case is analyzed, whereby a new low-cost retailer enters the fast-food industry in Greece.

Company profile
Goody’s is the leading fast-food chain in Greece, and belongs to Vivartia Group. The company was founded in Thessaloniki by Mr. John Dionisiadis, who opened the first Goody’s store in 1975. The first store in Athens was established in 1981. In 1994, Goody’s entered the Athens Stock Exchange, while in 1997 the company started expanding its business to foreign markets, and specifically in Portugal, Bulgaria, and Cyprus. Nowadays, the company operates approximately 180 fast-food stores in Greece, 6 in Cyprus, and 1 in Bulgaria, occupying about 5,000 employees in total (Vivartia, 2014).

The scenario of the case discussed in this assignment suggests, a new low-cost retailer enters the fast-food industry in Greece, which obviously affects the business of Goody’s. Within this context, there are two ways in which the company could respond. The first is to continue following a differentiation strategy, focusing on the different nature of the products it offers, compared with the low-cost competitor (as well as other competitors). According to this strategy, companies offer products and services, or product and service features that consumers perceive as unique (Gamble et al., 2010). More specifically, and also taking into consideration Greek consumers’ emphasis on eating healthy foods, the marketing campaigns of Goody’s shall emphasize on the fact that the food products offered by the company are made of fresh and high-quality materials and ingredients, and for this reason their cost is higher than that of low-cost competitors, and the new one that has emerged in specific. The campaigns may also go even further and talk about quality control mechanisms employed by the company, so as to ensure that the quality of food products offered by Goody’s is really high, thereby safeguarding human health. Last but not least, Goody’s shall also promote its long history and presence in the Greek market, which have made it trustworthy and reliable in the minds of Greek consumers, as well as the innovative home-delivery service that no other fast food chain of this type offers. Following a differentiation strategy, Goody’s would also support the way it has been positioned in the Greek market for so many years.

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    Marketing Strategic Analysis: Goody's SA case study Marketing Strategic Analysis: Goody's SA case study Document Transcript

    • 1 | P a g e M.Sc in Marketing Management Strategy & Leadership in Marketing Stategic Analysis of Goody’s S.A SPYROS LANGKOS ID: 100285557 Tutor: Mr. Nikolaos Kitonakis Athens, March 2014
    • 2 | P a g e “ The challenge of the retail business is the human condition. “ Howard Schultz, CEO of Starbuck’s
    • 3 | P a g e TABLE OF CONTENTS 1. INTRODUCTION.........................................................................................................4 2. EXTERNAL ENVIRONMENT ANALYSIS................................................................5 3. MACRO ENVIRONMENT ..........................................................................................7 4. VALUE-CHAIN SOURCES OF COMPETITIVE ADVANTAGE.............................9 5. LOW-COST RETAILER ENTERING THE MARKET............................................11 6. APPENDICES ...........................................................................................................13 7. REFERENCES ..........................................................................................................16
    • 4 | P a g e 1. INTRODUCTION The aim of this assignment is to provide an analysis of Goody’s S.A., the leading fast food chain in Greece, from a strategic marketing perspective. After briefly presenting the profile of the company, the assignment analyzes the external and internal environment, paying attention to the factors that affect their business, as well as the sources of its competitive advantages. Following these, a hypothetic case is analyzed, whereby a new low-cost retailer enters the fast-food industry in Greece. Company profile Goody’s is the leading fast-food chain in Greece, and belongs to Vivartia Group. The company was founded in Thessaloniki by Mr. John Dionisiadis, who opened the first Goody’s store in 1975. The first store in Athens was established in 1981. In 1994, Goody’s entered the Athens Stock Exchange, while in 1997 the company started expanding its business to foreign markets, and specifically in Portugal, Bulgaria, and Cyprus. Nowadays, the company operates approximately 180 fast-food stores in Greece, 6 in Cyprus, and 1 in Bulgaria, occupying about 5,000 employees in total (Vivartia, 2014).
    • 5 | P a g e 2. MACRO-ENVIROMENTAL ANALYSIS PEST analysis Political and legal conditions The legal framework surrounding the Greek food industry is very strict, especially as far as store hygiene and quality of ingredients and materials are concerned. The National Ministry of Health conducts unexpected inspections in restaurants of all kinds, in order to identify whether they comply with health and hygiene rules, especially as far as the kitchen and restroom areas are concerned. At the same time, inspections are also made regarding whether ingredients and food products are kept in places where their freshness is enhanced, and of course regarding whether they have overcome their expiry date (Euromonitor International, 2013). Economic conditions Greek economic conditions are mainly characterized by the economic crisis that has hit the country since the second half of 2008. The most important consequences are the imposition of two packages of austerity measures, which have led to diminishing disposable incomes, the closing down of thousands of Greek companies, as well as the overall cash flow difficulties mainly caused by the limited loan offerings from Greek banks. As far as the fast food industry is concerned, sales declined by 12% in 2012, because of the turbulent economic conditions in Greece and despite the opposite predictions for the sector derived from the overall lower prices charged. Forecasts for the years to come are pessimistic, predicting that the sector will be in decline by a constant 5% at least until the end of 2017 (Euromonitor International, 2013).
    • 6 | P a g e Social conditions Greek consumers have seen their disposable incomes shrinking due to the economic crisis and the associated increase in unemployment rates, which have reached almost 30% nowadays. For this reason, Greek consumers have been very sensitive towards price issues, while in the case of food products they have also become very sensitive towards health issues, especially when it comes to make purchases for their children. This is the reason for which fast food has become less popular, since it is perceived as unhealthy. Home-deliveries have generally increased, due to increasing home gatherings made by Greek consumers, while students and professional favour more take aways (Euromonitor International, 2013). Technological conditions The expansion of the use of the Internet and the improvement in broadband connections is definitely the most important technological advancement in Greece during the last decade. Indeed, except for making Greek consumers become more informed regarding products and services, and thus more demanding, companies increasingly use the Internet to create their online sales and promotional platforms. Advancements in information and food-preparation technologies have also given the opportunities to food service providers to become more efficient both in terms of their costs and operations (Euromonitor International, 2013). Annual disposable income - (Euromonitor International, 2013
    • 7 | P a g e 3. MICRO-EVNIRONMENT Porter’s Five Forces Bargaining power of buyers The bargaining power of buyers is high in the Greek fast-food industry. Greek consumers have the option to choose from a number of alternative providers for any reason. Their power is even higher, taking into consideration that they do not necessarily have to seek for a burger provider, but they may rather switch to different alternatives, such as traditional food choices which are more relevant to their culture. Bargaining power of suppliers The bargaining power of suppliers is also high in the Greek fast-food industry in Greece. Retailers have the option to choose from a number of alternatives, and shall easily choose to switch to one of them, if for some reason they are disappointed with their current one. Threat of substitutes The threat of substitutes is high in the fast-food industry in Greece. Indeed, there are a number of different fast-food options, if it is taken for granted that Goody’s mainly offers burgers. As such, Greek consumers may decide to purchase sandwiches, Greek souvlaki, pizzas, crepes, as well as bakery products, such as cheese pies. Of course, full-service restaurants may also be perceived as substitutes to fast-food retailers, although they are indirect ones.
    • 8 | P a g e Threat of new entrants There are significant barriers to entering the fast-food industry in Greece. One of this is the high cost of establishing a business in Greece, as well as the high risk derived from the turbulent economic conditions in the country nowadays. Except for that, Greek consumers have been loyal to Goody’s and other major brands, thereby making it even more difficult for a new company to enter the particular sector. However, given the diminishing consumer incomes, Greek consumers will increasingly seek for fast-food, and thus cheaper food options, thereby making the sector rather attractive. Competition Goody’s leads the Greek fast-food industry with a market share of 30.2% in the end of 2012. Everest S.A. is the most important competitor of Goody’s the company also belonging to Vivartia group and holding market share of 19.6% in the end of 2012. Independent operators represent 83% of overall fast-food outlets, while bakery fast food also imposes high competition, due to the value for money offered in terms of breakfast, coffee, and lunch on-the-go. Price and size of portion are the major critical success factors in the industry, together with new product development (Euromonitor International, 2013). Business environment - (Euromonitor International, 2013)
    • 9 | P a g e 4. VALUE-CHAIN SOURCES OF COMPETITIVE ADVANTAGE The major source of the competitive advantage of Goody’s is certainly its long presence in the Greek market, which has maintained the customer base and loyalty regarding the company within a national context. Except for that, and taking Porter’s generic value chain into consideration, the food products offered by the company are very tasty and perceived as of higher quality than competitive ones, and so is the service offered, especially nowadays that home-delivery service has also been added. Goody’s has also escaped from the traditional mode of a fast-food chain, also offering more complete meals for all tastes and all types of customers. Another source of competitive advantage is that Goody’s has established a store at almost every single big city and island in Greece. Moreover, the origin of the company itself is a source of competitive advantage, given that Greek consumers favour Greek companies, as a means of supporting them during the crisis. Together with the above, Goody’s is famous for offering a good working environment that keeps employees satisfied. Last but not least, the marketing campaigns of Goody’s also add value to the company, with the campaign “Argoudaki” being at the forefront. SWOT ANALYSIS Strengths - Greek company - Strong brand name - String customer base and loyalty - Wide variety of burgers and other food options - Many retail stores allover Greece
    • 10 | P a g e - International presence - Belonging to a powerful group - Its basic competitor belongs to the same group - Home- delivery service - Employee satisfaction Weaknesses - Relatively expensive with respect to competition - Diminishing market share since 2009 Opportunities - Greek consumers seek for cheaper meal solutions due to the economic crisis - Information technology advancements, which offer the development of different business platforms (e.g. online retailing) - Advancements in food-preparation technologies Threats - Fast food is generally perceived as unhealthy - Turbulent economic conditions in Greece - High corporate taxation in Greece - Diminishing consumers’ incomes - Strict health and hygiene regulations - Negative current and forecasted performance of the sector - Intense direct and indirect competition
    • 11 | P a g e 5. LOW-COST RETAILER ENTERING THE MARKET The scenario of the case discussed in this assignment suggests, a new low- cost retailer enters the fast-food industry in Greece, which obviously affects the business of Goody’s. Within this context, there are two ways in which the company could respond. The first is to continue following a differentiation strategy, focusing on the different nature of the products it offers, compared with the low-cost competitor (as well as other competitors). According to this strategy, companies offer products and services, or product and service features that consumers perceive as unique (Gamble et al., 2010). More specifically, and also taking into consideration Greek consumers’ emphasis on eating healthy foods, the marketing campaigns of Goody’s shall emphasize on the fact that the food products offered by the company are made of fresh and high-quality materials and ingredients, and for this reason their cost is higher than that of low-cost competitors, and the new one that has emerged in specific. The campaigns may also go even further and talk about quality control mechanisms employed by the company, so as to ensure that the quality of food products offered by Goody’s is really high, thereby safeguarding human health. Last but not least, Goody’s shall also promote its long history and presence in the Greek market, which have made it trustworthy and reliable in the minds of Greek consumers, as well as the innovative home-delivery service that no other fast food chain of this type offers. Following a differentiation strategy, Goody’s would also support the way it has been positioned in the Greek market for so many years. Value Chain
    • 12 | P a g e Another response for Goody’s would be to slightly reduce its prices, as a means of becoming more competitive, without, however, altering the way it has been positioned in the market, as previously outlined. To do so, the company needs to combine its differentiation strategy with that of cost- leadership. According to this strategy, a company competes in the market by having lower production costs than its competitors, thereby being able to offer lower prices to its customers or increase its profitability margin (Joshi et al., 2005). Towards this end, Goody’s shall improve its operating efficiency, by investing in even higher food preparation technologies, as well as reduce operating costs by investing in more efficient information technologies, renewable energy sources, and overall better resource allocation. In this case, Goody’s will be able to support its positioning in the market, while at the same time offering more competitive prices than before, so as to close the price gap with the low-cost competitor and be consistent with the economic conditions in Greece and the diminishing incomes of Greek consumers. Types of shopping and growth of Internet retailing (Euromonitor International, 2013)
    • 13 | P a g e 6. APENDICIES A] Greece’s public debt (Euromonitor International, 2013) B] GDP growth in Greece (Euromonitor International, 2013)
    • 14 | P a g e C] The fast food industry in Greece - Sales by category (Euromonitor International, 2013)
    • 15 | P a g e D] Company competition (Euromonitor International, 2013)
    • 16 | P a g e 7. REFERENCES Anthony Rezitis & Maria A. Kalantzi (2010). Investigating market structure of the Greek food and beverages manufacturing industry: A Hall-Roeger approach, AGRICULTURAL ECOOMICS REVIEW, Vol 13, No 1 Research and Markets. Greece Food and Drink Report. Q1 2012. Available at: http://www.researchandmarkets.com/reports/1998934/ , accessed on 14-03-2014. N. Demiris, B. Giannoulidou, et al (2007). Food Industry in Greece. Ray Winger Gavin Wall (2006). Food product innovation: A background paper. FOOD AND AGRICULTURE ORGANIZATION OF THE UNITED NATIONS, Rome Koukoulis A. & Papadosifakis K. (Nov. 2010). Bachelor thesis: Analysis of Goody’s S.A. TEI of Crete. David J. Ketchen , Jr. & Alan B. Eisner. (2008-2009). Strategy. McGraw- Hill/Irwin Pepe Martinez (2012). The Consumer Mind: brand perception and the implications for marketers. Millward Brown. KoganPage.
    • 17 | P a g e Blythe Jim (2013). Consumer Behaviour. 2nd Edition. Sage Publications Ltd. 55 City Road. London. Kotler P. et al (2012). Marketing Management. 2nd Edition. Pearson Education Limited. Edinburgh Gate. Harlow. England Euromonitor International (2013), “Consumer lifestyles in Greece”, available at: www.portal.euromonitor.com , accessed on 06-02-2014. Euromonitor International (2013), “Fast Food in Greece”, available at: www.portal.euromonitor.com , accessed on 06-02-2014. Joshi, R. M. (2005), International Marketing, Oxford University Press. Euromonitor International (2013), “Greece: Country Factfile”, available at: www.portal.euromonitor.com , accessed on 06-02-2014. Euromonitor International (2013), “Technology, communications, and media: Greece”, available at www.portal.euromonitor.com , accessed on 06-02-2014. Gamble, A., Thompson, A., Jr., & Strickland, A. J. (2010), Crafting and executing strategy: the quest for competitive advantage: concepts and cases, 17th edition, Boston: McGraw-Hill/Irwin Publications. Vivartia (2014), “Goody’s”, available at: http://www.vivartia.com/?page_id=690, accessed on 07-02-2014.