Case Study for Service Marketing – Chipotle Mexican Grill Inc. Case Study

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Introduction

In the modern business world service marketing has become one of the critical function among the service providers in the efforts of attracting the new pool of customers as well maintaining the existing clients. This form of marketing is mainly focused on improving customer experience. However, the growing competition in the field of business has posed the marketers with the challenges on how to position their services in the market (Lovelock , Vandermerwe , Lewis , & Fernie , 2012). Service businesses such as restaurants are no longer operating in one nation. They have expanded their activities to other foreign nations hence stiffening the competition between the local businesses and the international restaurants (Tsiotsou, 2012). To evaluate and address the real nature of service marketing, this report seeks to use the case study of Chipotle Mexican Grill restaurants operating both in Australia and the USA.

Background Information

The Chipotle startup is founded on the brilliant idea of Steve Ells in 1993. The company was founded on the idea that the usage of high-quality ingredients would improve the customer experience. The company was incorporated in 1998 as the Chipotle Mexican Grill Inc. Chipotle operations are concentrated in the United States although it operates in other nations such as Canada, England and Australia. The major foods served by the company are tacos and burritos. Chipotle adopted this natural food to stay in the line of its mission statement of the company, Food with Integrity. The company major competitors in the market are Qdoba Restaurant Corporation, Taco Bell Corporation and McDonald.

Chipotle Service Marketing Analysis

Chipotle marketing strategy is very cheap and effective. The company uses the word of the mouth as the marketing strategy. The company uses this marketing technique to lower the advertising expenses and in return purchase the high-quality ingredients. Chipotle service delivery is very efficient which comprises both offline and online channels. Through online, the company uses post mate application whereby the customers can order the food. However, despite the company having the robust marketing strategies and improved service delivery customer satisfaction has remained the challenge. According to Chamlee (2016), American Consumer Satisfaction Index indicates that the Chipotle customer satisfaction has fallen by six percent. This attributed to the fact that majority of the Americans prefer current fast food restaurants to traditional foods. Similarly, the same scenario is experienced in Australia whereby some of the customers claim that Chipotle food is poorly prepared and tasteless.

Characteristics of the Service

Service marketing will require the marketer to focus on the characteristics of the services to arrive at the desired objectives (Wolak, Kalafatis, & Harris, 2008). The same challenges associated with product marketing may also occur for the service marketing (Wolak, Kalafatis, & Harris, 2008). Therefore, the marketers should focus on the unique characteristics of the service when designing a marketing plan and competition strategy. According to Moeller (2010) the characteristics which have been frequently used in service marketing are intangibility, Inseparability, perishability and variability. Similarly, Chipotle realized the importance of this concepts and thus have marketed their services both in the US and Australia based on the following characteristics.

Intangibility: Given the fact the service is intangible, Chipotle have overcome this problem through communication. The company has used the word of mouth as the advertisement campaign. This is done through the customer testimonials and referrals.

Inseparability: The service is inseparable from the owner. The only way the service provider can improve the satisfaction of the consumer is by providing the quality services (Jan, 2012). Chipotle achieves this by offering high-quality ingredient food.

Perishability: Service cannot be stored for the future use. This is one of the greatest challenge for the restaurants. Chipotle deals with this problem by engaging the few employees during off-peak periods and many employees at peak times.

Variability: Service provision depends largely on the human. This brings in the aspect of variability as different people will provide same service differently. To avoid this, Chipotle undertakes its employees through training to have consistency in service delivery.

Hofstede’s Inter-Cultural Perspectives on Consumer Behavior

According to Soares, Farhangmerh, & Shoham (2007) culture has the significance influence on the buying behavior of the consumers.  These impacts vary greatly for the businesses operating internationally. Similarly, Mooij & Hofstede (2011) noted that the impact of cultural dimensions largely influences the international marketing. This is because as the business continue to expand the cultural diversity globally among the consumers tend to vary. The impacts of culture are more evident to the businesses in the service industry than any other business. In the interaction between the service provider and the customer, the customer may term certain acts by the service provider as unacceptable. This will definitely prevent the customer from purchasing that service.  Furrer, Liu, & Sudharshan (2000) argued that the quality of service perceptions differ from one culture to another and thus it is the duty of the service provider to conform to different cultural perceptions among the business consumers.

 Similarly, Chipotle seems to suffer from the aspects of cultural perceptions among its customers in Australia. Australia comprises of a multicultural society, and thus the restaurants offers the variety of foods. For example, the availability of Italian, Turkish, French, Japanese, Thai, Chinese among many others poses Chipotle with the challenge of meeting cultural needs of all these consumers. In addition to these foreign cultures, Aboriginal Peoples of Australia have their own culture and thus the type of food they consume is different from that consumed by the foreigners. On the other side, in America Chipotle enjoy the positive cultural perception. The American people are obsessed with the fast casual food, the notion that gives Chipotle the competitive advantage. According to Ferdman (2015), the demand for the casual food has grown by five hundred and fifty percent, a growth which is ten times since 1999. This fast growth has contributed to the growth of Chipotle sales by four times. Therefore, it is clear that Chipotle has enjoyed favorable cultural perception in America. On the other hand, it has had a hard time meeting the multicultural demands of Australian people.

Diffusion of Innovation Theory

Diffusion theories entail how new ideas and information spread among the various groups of people. It majorly tries to examine how a new idea or innovation about a product will be likely to be adopted by the particular culture. On the other side,  diffusion of innovations explains how innovations are perceived by the consumers (Robinson, 2009). According to Everret (2003) diffusion of innovations greatly depend on of the core factors such as the qualities that contribute to the spread of innovation, the strength of the peer network and having the solid information on the needs various users segments.  The process of the diffusion of the innovation usually undergoes the various stages before the consumers can embrace and adopt the new idea fully. Moore (2009) argued that the stages that a new idea about a certain product should go through before it is fully embraced are innovators, early adoption, early majority, late majority, and laggards. For efficiency of the diffusion depends on the four main factors which this report discusses briefly below. Similarly, Chipotle applied these factors both in America and Australia to ensure that the consumers have full access to the company products information.

Innovation: Some innovations spread faster than others. For example, Chipotle picked the different innovation from the other players in the industry. The goal of the company was to grow the business away from the competitors. The company achieved this innovative strategy by embracing top quality ingredients. In addition to the high-quality ingredients, Chipotle aims at offering the customers freshly prepared food unlike other restaurants such as Fluorescent Lighting and Formica Counters (Yohn, 2014). The perfection of new iinovation in Australia is advanced through offering free food.

Timing: This aspect entails aligning the innovation with the time so that it can gain the acceptance. To gain the acceptance and the adoption of its product by the consumers, Chipotle came up with chorizo to spice up its fast food (Munarriz, 2016). This innovation has been realized to improve the demand for its fast food. The timing in the United States is made when the demand of the food goes down whereas in Australia is adopted tourism season.

Social Structure: Social systems entails how the company new product will be perceived by the targeted market. The social set up among the American consumers did not affect the company innovation. This enabled the company to gain competitive advantage and stay ahead of the competitors. However, Chipotle has had diificult time in ensuring the penertration of its innovation in the Australian market. This has been due diverse cultures of Australian people.

Communication: Chipotle communication strategy is majorly based on the word of mouth. Whenever the company unveils a new product, the word mouth will spread among the company employees as well as the consumers. In addition to the word of the mouth, the company also uses social media networks to engage and exchange ideas with customers. In support Johnson (2016) advocated that Chipotle uses communication strategy to continue thriving in the market. 

Consumer Decision-Making Process

A consumer is an essential person in the business, and his or her satisfaction will determine the success of the company (Tejaswi & Seema, 2015). Chipotle realized the importance of this aspect and focused on high-quality ingredient fast food affordable to the consumers. Yoon, Cole, & Lee (2009) acknowledged that the businesses should understand the psychology of the consumer. This helps the consumer to make a decision of purchasing the company product in the event of making buying decision. Consumer decision-making process normally undergoes through five stages and it is highly effective if it is accompanied by the company promotional strategy (Kumar & Raju, 2013).  The consumer decision-making process is as summarized below:        

Source: http://2012books.lardbucket.org/books/marketing-principles-v2.0/s06-02-low-involvement-versus-high-in.html

Need recognition: Marketeers perfect this aspect by trying to stimulate the consumers to realize the need for the given product (Takhire & Joorshari , 2015). This drives the consumer to feel that there is a gap to be filled and hence starts the process of making the purchase decision. Chipotle, both in America and Australia stimulate the customer need by preparing fresh fast food unlike other restaurants in the market. To express the existence of the need among the consumers, Chipotle uses communication to pass information that they have an essentially new product.

Search for information: Once the consumer realizes the need to be fulfilled by a certain product, he or she engages in the inquiry process to learn more about the product (Lynch & Zauberman , 2007). This helps the consumer to get the answer whether the product can satisfactory meet his or her need. Chipotle helps the consumers searching for information by spreading the word of mouth.

Product Evaluation: During the information search stage, the consumer comes across various product alternatives of which he or has to make a decision which one to buy. Consumers use evaluation criteria to determine the aspects of the products at hand. For example, they consider price, quality, packaging and color among many other characteristics. Chipotle, stimulates the American consumers to purchase the business products by offering high-quality food. On other side, the Compant offers the afforadble price among the Australian consumers.

Selection:  At this stage, the customer has analyzed and evaluated all the risks associated with the various products. The consumer makes the product choice as well as the buying decision. This entails the customer determining which product they should purchase and where.

Postpurchase Evaluation: This is the final stage of the buying process whereby the customer evaluates his decision after the consumption of the product. If the customer is satisfied with the product, then he or she feels good about his her choice and may become the consumer of that product. However, if the consumer is not satisfied, he suffers from what is known as post-purchase dissonance. Chipotle ensures the customer satisfaction by offering high quality casual fast food.

Product Disposal: Some products such as electronic devices fall into this category. This because they may become outdated hence requiring no anymore customer consumption. In this scenario, the disposal will be both from the side of the customer as well as that of the manufacturer.

Value Co-Creation

According to Darmody (2009), co-creation avails the customer with an opportunity to enjoy highly valuable products offered by the company. To make this effective the companies cooperate with consumers in improving the values of their products. Chipotle ensures the creation of products among its food by preparing fresh food without any flavors. In the efforts to improve their customer experience in two selected countries, the company has set its standards higher than that of the competitors. In addition to offering the quality fast traditional food, Chipotle restaurants have provided a venue where customers can meet and share their meals.

Conclusion

Marketing is essential part for any business. Whether product marketing or service marketing the companies should set up, marketing strategies that will ensure the company targeted goals are achieved effectively. Chipotle has had a successful period in marketing its products. Unlike many other traditional fast food restaurants, Chipotle offers high-quality food at the affordable prices. In addition to high quality freshly prepared food, the company also provides an opportunity where friends can meet and share their meal together. This creates a third place for the consumers apart from home and workplace.  To achieve this success, Chipotle has focused on innovations and understanding customer needs according to their culture. This has enabled the company to expand its operations in other nations such as Canada and England in addition to America and Australia. However, the company service marketing in Australia seems to be limited due to culture diversity unlike in America where the company enjoyed successful marketing. Therefore, this report recommends that Chipotle should design the product that meets the needs of all cultural diversities.

References

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