Al Burger Getting the Bugs Out

Presented By: Neeraj Singhal (Roll No. 32)

• Burger Bugs Killers Inc. – 17 years old Miami Based Company• Industry: Pest Control• Company Stats:

– Revenue (1984) $ 25 million, – Service Accounts – 12,000 Resturants & Hotels in 43 states– No. of Service Specialists – 400

• Industry Size (Annual Sales): $ 2 billion• Main Competitors:

– Orkin - $ 213 million annual sales– Terminix - $ 160 million annual sales

• Area of operation: Niche Segment – Charges premium• Company’s USP: Superior Brand Promise

- ‘Unconditional Promise to Eliminate (not control) Roach & Rodents’- ‘ No payments due until Rodents eliminated’- ‘Promise to refund entire money if Company fails, along with 1

year’s service by another Exterminator of company’s choice

About the Company

1. Identify the elements of Marketing Mix of Al Burger

2. Justify marketing implications of each of these mix elements

Discussion Questions

• The tools available to a business to gain the reaction it is seeking from its target market in relation to its marketing objectives

Review of Literature – Marketing Mix

• Traditional Marketing Mix: 4 P’s• Expanded Mix for Services: 7 P’s

Blend of the mix depends upon:

- Marketing objectives- Type of product- Target market- Market structure- Rivals’ behaviour- Marketing position- Product portfolio

- Product lifecycle

Review of Literature – Marketing Mix Elements

PEOPLE PHYSICAL EVIDENCE

PROCESS

Employees

Facility design Flow of activities

Customers Equipment Number of steps

Communicating culture and values

Signage Level of customer involvement

Employee research Employee dress

Other tangibles

PRODUCT PLACE PROMOTION PRICE

Physical goodfeatures

Channel type Promotionblend

Flexibility

Quality level Exposure Salespeople Price level

Accessories Intermediaries Advertising Terms

Packaging Outlet location Salespromotion

Differentiation

Warranties Transportation Publicity Allowances

Product lines Storage

Branding

• Traditional Marketing Mix: 4 P’s

• Expanded Mix for Services: 7 P’s

Blend of the mix depends upon:

- Marketing objectives- Type of product- Target market- Market structure- Rivals’ behaviour- Marketing position- Product portfolio

- Product lifecycle

Product

Marketing Mix Elements: Product

The Core Service

(Reason for being in the market)

- Pest Elimination

Facilitating Services

(Facilitation in providing services)

- Employee Hiring

- Employee Training

- Supporting routemen against losses beyond control

Supporting Services

(used to enhance the value of core service and to differentiate from competitors)

- Promise to refund entire fees for poor customer service

InteractionAccessibility of Service

Consumer Participation

The Service Concept

Augmented Service Offer

Product: Branding, Quality, Warranty, Post transaction service

• Brand Promise: ‘Elimination’ and not just ‘Control’ of Pests

• Quality: Burger’s Quality-Control system is extraordinary – e.g. Routemen are assigned ‘Service Accounts’ for a day which can be managed professionally unlike other companies who assigns 18-20 Service accounts a day for its Routemen

• Maintenance\ Post Transaction Service: After sales reviews by senior managers, customer feedback, Guarantee of eliminating Pests – if company fails promise of refunding last 12 monthly fees along with one year’s free service from other company

Implication:• Brand promise helps in product differentiation and position

company in ‘Niche’ segment

Marketing Mix Elements: Product

Price

Marketing Mix Elements: Price

Price: Quality-Price Relationship, Consumer’s Perceived value, Discounts

• Niche Service Provider: Company guarantee’s pest elimination, accordingly Charges premium price for superior service. Charges 4-6 times more the services provided by competition

• High Customer’s Perceived value: Customers have high respect for Al Burger company and its employees.

Implication:

• Loss of renewed contracts: Company loses > $ 2million annually in un renewed contracts

• Cost of Service Guarantee: Company spends at $2K per month on reimbursing diners / room guests for reported pest sightings

• Limited Market: Company operates only a niche segment; which limits itself to enhance revenue

People

• People represent the business - Personnel Training, Commitment, Incentives, Inter-Personal behaviour, Degree of involvement, Customer contacts, Management culture, customer service

• Management Culture: Company promotes (a) ‘Open Honest’ culture. At Bugs Burger, ‘Mistakes are forgiven; liar are not’ (b) Routemen is treated no. 1 in the company – Employees are made to feel that they are critical to success of the company

• Strong Hiring Process: Elaborate personality & aptitude testing, polygraphic examination, Interview by Officials from Headquarter and shortlisted candidate interviewed by local service managers

• Employee Training: 5 months of intense training combination of both on the job and classroom training. Tests conducted by higher officials in Miami to check techniques they have been taught by field managers against the company standards

• Work life balance: Employees are given complete freedom to manage the clients as long as they are keeping the client premises ‘Pests free’ and running the account as their own business

• Employee Support: Service specialist don’t need to worry about losses from conditions beyond their control, they are compensated for such situations

• Degree of Involvement: Employees not punished for asking support / help in managing client. Top management roll up sleeves and come for help. It is not seen as ‘negative’ behaviour.

• Incentives: Employees are paid handsomely; performance linked - best in the industry

Marketing Mix Elements: People

• Implication:

• High Employee Engagement: Company policies, culture, training, freedom and incentive structure helps in maintaining high employee satisfaction. Employees have sense of ownership in running business.

• Low Attrition: High employee satisfaction results into low attrition rate of 3% which is the lowest in the non glamorous industry.

• High Customer Satisfaction: High employee engagement coupled with low attrition helps in ensuring the highest level of customer satisfaction.

Marketing Mix Elements: People

Process

• Process element consists of – Policies, Procedures, Customer involvement, Flow of activities

• Bugs / Pest Elimination promise: Pest elimination techniques / procedures / standards are set keeping customer promise in mind

• No compromise on Quality standards: Routemen are assigned nos. of clients which can be managed professionally without compromising service standards

• Strong Quality Control System: – Review of Sales Reports filed by routemen by managers– Customer care calls by District managers and not by any junior staff– Regular Customer visits by Regional directors, vice presidents– Customer complaint calls are routed directly to Miami Headquarter and not to

local offices or routemen – keeping local managers and service specialist behave honestly

• Customer Involvement: Regular feedback from customers on service quality and routemen behaviour.

Implication:• Standard procedures and strong quality control systems helps company

in keeping up the brand promise and fight competition

Marketing Mix Elements: Process

Q3: If you are CEO of Al Burger, what

measures you will take to increase

your sales in 2 billion $ industry.

Justify your decisions.

Discussion Questions

BCG Growth Share Matrix: Al Burger Position

BCG Growth Share Matrix

.

Al Burger position- Characterised by high growth potentialLow market share as compared to itsCompetitors

Industry size: $ 2billion annualCompetition:

Orkin Exterminating: $213 million PATerminix: $160 million PAAl Burger: $25 million PA

Al Burger Dilemma: How to move from Question marks to Stars category

Ansoff Product-Market Growth Matrix

• Market Penetration and Market Development, two recommended strategies for increasing sales of Al Burger

Market Penetration - Least risky way to grow

• Focus on Aggressive Advertising and Promotion: Al Burger should hire experienced Marketing staff and pursue aggressive advertising and promotion campaign to gain market share / new clients

• More efforts to retain existing clients: Company can achieve this by introducing loyalty programs for its existing clients; introducing loyalty based pricing

• Adopt Franchisee route to expand operations: Company should also adopt route of franchising to penetrate further into existing markets (same customer segment) / new geographies

Ansoff Product-Market Growth Matrix

• Market Penetration and Market Development, two recommended strategies for increasing sales of Al Burger

Market Development – Higher risk as compared to market penetration

• Develop new markets / Customer segment: Currently Al Burger service only Resturants and Hotels. It should expand its market to include Offices and Homes as new Customer segments

•Acquisition and / or Franchisee: Company can look to acquire companies and / or have franchisee model to enter into new markets segment

Thank You