MKT9115M Chloe Baker - 11215989

Global Relationship Marketing

Lincoln Business School

Postgraduate Master Programme

Module Code - MKT9115M

Consultancy report for ‘Nando’s’: German Market

Submission Date: 27th April 2015

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Word Count: 3721

Contents:

Page 1: Introduction

Page 1 – 8: Task 1. Outline the strategic importance to your organisation of

adopting a stakeholder perspective for business activity in global markets and

the country of your choice.

Page 8 - 12: Task 2. For the vast majority of marketers, a key relationship that

needs to be built is with customer markets. Drawing on conceptual frameworks

from the first part of the module, you are asked to propose and justify a strategy,

or strategies, designed to build customer retention in your chosen market.

Page 12 – 15: Task 3. Identify the other key relationships that will need to be

built in your selected country. These relationships and networks relate to

concepts from the second part of the module. Analyse the reasons why you have

selected these organisations and indicate the ways in which you intend to build a

strong presence in your business network.

Page 15 – 15: Conclusion

Page 16 – 18: Reference List

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Introduction

Companies are always looking to expand, whether it be in the country they

already have firms in or whether their plans are bigger and they are looking to

expand across seas. Companies can expand internationally but it costs a great

deal therefore it is important that companies put in the time a commitment to

the project at hand. (Hollenson, 1998) Countries are developing greater

openness to international trade since the 1960’s, so it is becoming an inevitable

way for businesses to grow. (Uncatd, 2012) Moving into other countries means

that businesses will gain more trade, have more customers and in the long run

gain a larger profit. Companies will first have to make the decision of whether

they want to internationalize, decide which markets to enter, decide how to

enter the foreign markets, design the global marketing programme and the put

the programme into action. (Hollenson, 1998) Alongside this, globalisation may

lead to other resources and new business ideas. In this report, I will be

discussing the best way for the company, Nandos, to expand into Eastern Europe,

specifically Germany, where Nandos is not currently available.

Task 1:

Nandos is a chain company that is becoming very popular in the countries that it

is currently available and they have already internationalised. They sell

specifically chicken, along with sides, but their main selling point is the chicken

and the sauce that comes alongside it. In 1987 two South African men founded

the company, and this is where the first restaurant opened. Although being

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founded in Africa the food is Portuguese, and the sauce that comes along side the

chicken is the ever-popular peri-peri. (Nandos, 2014) The sauces that are

available which are known for their distinguished flavour and are only available

under the Nando’s branding, are not only available in the restaurants now but

also supermarkets, along with flavourings and salts. The restaurant uses a

service of being seated, however when ordering the food the customer is

required to go to the counter and order their chosen meal, then help themselves

to cutlery, a drink, and a selection of sauces. This method of service has been

labelled ‘fast casual’ and means a much quicker visit by each customer, meaning

the customer turnover is greater than that of a restaurant with a full service

method. More customers per day therefore result in a higher intake of capital.

(Brown 2013) When entering the restaurant, customers are asked if they have

been to Nandos before, if not then the way the restaurant works is explained.

(Nandos, 2014) This method that Nando’s uses is considered very modern but

evidence in recent years says it works. A report by a market research company,

The NDP group, in 2014 said that the growth of these types of restaurants in the

US went up by 10% over 2013, also stating that there was only a 2% growth in

total restaurants. There are also a greater percentage of customers revisiting

these types of restaurants with 69% of customers going back and specifically to

Nando’s, 80%. (NPD, 2014)

Nando’s current most popular stakeholders are mainly the younger generation.

Many reports say that when walking into a Nando’s it is filled with 18 to 25 year

olds. It seems to be a trendy place to eat as well as selling unique food, with many

celebrities being spotted at the restaurants and tweeting about their

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experiences. (Rawstorne, 2013) Nandos can currently be found in 14 countries,

these countries however do not seem to cover Eastern Europe, (Nando’s, 2014) I

have therefore chosen Germany as a worthy country for Nandos to expand their

company into.

My first thought for the expansion of Nando’s to Germany was because it is not

currently available in Germany or any many European countries for that matter.

The only European countries Nando’s can currently be found in are Ireland and

the UK. (Nando’s, 2014) In the European countries that Nando’s is currently

available, the company in recent years has done very well. Opening in the UK in

1992, by 2012 Nandos took a profit of £419.5 million (Brown, 2013) and now

have 315 restaurants across the country. Germany is one of the biggest countries

in Europe and central to other European countries. Germany has a huge tourist

base. Places such as Berlin see millions of overnights stays, a report by visit

Berlin in February of 2014 stated that there was 26.94 million overnight stays

and 11.32 million guests. (Koschell, 2014) Having these sorts of figures means

the demand for places to eat out is greater, as when visiting other countries

either on holiday or as a traveller, people need places to eat, as usually, cooking

is not a common way for tourists to go about eating. With Nando’s being in other

countries already, the name is recognisable, and tourists may find comfort in

eating somewhere they are familiar with. Berlin as of late also seems to be a

trendy place to travel, with younger people often visiting for sights of the Berlin

wall and other attractions that the city has to offer as travelling markets such as

‘interailing’ are growing popular. Young travellers are often also on a budget.

With Nando’s offering food considered better than the fast food market at not

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that higher of a price, the food is affordable and decent. Having Nando’s in Berlin

therefore brings together the market of young travellers, as they tend to be the

same as the younger people that have visited Nando’s before.

Germany is an MEDC. Its cities such as Berlin are popular places for both

business conventions and science and politics meetings. On average 354 events

are held in the city each year, resulting in 10.6 million participants taken from

statistics in 2013. Following this, it is now seen as one of the leading convention

destinations in the world. (Visit Berlin, 2013) Not only does this follow on from

the reasoning’s to supply Nando’s to people visiting Germany, but demonstrates

the rising economy of the country and the flourishing of it’s businesses and

residents. In 2013 their gross domestic profit was $3.730 trillion with a

population of over 80 million and it is seeing a steadily growing capita. (The

World Bank Group, 2015) Nearly 50 million of that population is in employment.

(Statistisches Bundesamt, 2015) Having a large number of people in employment

means a greater circulation of capital. Bringing Nando’s to Germany where

people are earning and therefore spending will more than likely result in a surge

of customers who want to eat out. Proof of this comes from statistics that say in

2012 the top 100 chain restaurants in Germany saw a 3.1% sales increase. (Van

Til, 2013) Of the 80 million that make up the population of Germany, 6 and a half

million of these in 2013 were able to use the Internet. (Internet World Stats,

2014)

It is worthwhile to take into account not only customers but also employees.

Nando’s makes a huge deal of their employees, and in 2010 in the UK they were

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labelled the best big company to work for. (Nando’s, 2014). On their official

website it says, ‘We have a saying at Nando’s and it’s simply this: “Nando’s is not

just about the chicken. It’s never been just about the chicken. It’s about the people

who make the chicken.’ (Nandos, 2014) There are now over 8000 people

employed by Nandos solely in the UK, most which also fit into the other popular

stakeholder bracket of being 18 – 25. (Brown, 2013) Nando’s seems to boast of

the importance of their employees and with their being so many it would be

apparent that they are one of the main stakeholders of the business.

Another reasoning for the choice of Germany was a personal matter and where

the idea stemmed from. At University I currently live with German students who

have a greater network of other German citizens. After discovering that Nandos

was not available in Germany, I advised the people I knew to try out the

restaurant and report back. Being the perfect candidates for the research, as

young students are Nandos primary customers, the experience would be taken

into great consideration. The feedback was very positive and the people who

visited the restaurant wished the restaurant were available in Germany. This

was a renounding response from the German students and other German

students they know who now visit Nandos on a regular basis.

The current market for fast casual restaurants in Germany is as follows. Firstly,

they are becoming increasingly popular. ‘The real growth in the ranking came

from the 14 fast-casual brands on the list. Collectively, these 14 brands grew sales

an impressive 13.5 percent over 2011, with units up 9.5 percent’. (Van Til, 2013)

There aren’t however any Piranesi restaurants available. After researching, there

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are chicken restaurants available, but none that are popular along with being

specifically Pyrenees. Most of the restaurants on offer that sell chicken seem to

be the more common style of American and none of these have adopted the fast

casual way of service. There are three fast casual restaurants that keep popping

up after researching that seem to be the most popular, two being Italian and the

other being a bakery. (Van Til, 2013) This therefore suggests that there is a gap

in the market for a Pyrenees style of restaurant that will coincide with the

growing popularity of fast casual restaurants in Germany. There are also no

hugely dietry or religious requirements of Germany that would mean the food

could not be sold of have the opportunity to be consumed in said country.

Task 2

Stakeholder loyalty is of great importance. Retaining customers who visit a chain

and are loyal to the company is crucial for the success of a business that wants to

spread. Relationship marketing concentrates on out of all the company’s

stakeholders, mainly its customers. (Bruhn, 2013) The word ‘relationship’ is of

most importance when considering this method. The company wants to build

one with its customer. This is of importance when often now we see a great

majority of businesses, especially with a recognised name, receiving a large

percentage of their customers being ones that have visited before. This section

will be covering how Nando’s can continue its already successful customer

retention in the restaurant industry when entering Germany using relationship-

marketing techniques.

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The strategy that I propose Nando’s uses when entering Germany is to introduce

a loyalty scheme. The first step of doing this is ensuring that the customer has

the best experience possible when first visiting a chain; a first impression is the

most important impression. This can firstly be done via internal marketing.

Employees that supply excellent service are likely to obtain greater customer

satisfaction. Having employees that work for a large company on a minimum

wage perform to their best however is difficult, but with reward schemes this is

possible. Having staff meet targets and then being rewarded for meeting such

targets can be very effective, not only with the staff but the management also.

(Donaldson, Toole, 2002) The staff can be given goals, which if reached are

rewarded. The chain with the most goals reached can then have their

management be rewarded. Encouraging this will not only ensure a livelier and

happier working environment, but positivity results in a greater customer

experience. Using the companies own products as prizes is a hidden advantage

with this method, as the employee may invite guests along to enjoy their prizes

with them, which could potentially result in the gaining of another loyal

customer. The employees need to feel appreciated, and rewarding them is a

sound and cost effective way to do so which results in them being more

enthusiastic and happy in front of the customer. It can be found on the Nando’s

website that employees have their own specific section and account, as well as a

commemoration page. (Nando’s, 2014) This is an online method that should be

brought to Germany as again, better treatment of employees results in greater

customer service.

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When ensuring that a customer’s first visit is excellent, the most important

aspect is the quality of the product itself. (Donaldson, Toole, 2002) With Nando’s

the product is food, which often is the easiest product to get wrong. Ensuring

therefore that staff has a knowledge of the product on sale is crucial. The chefs in

the kitchen should cook the food with care and the front of house staff should

know when a dish is not up to the correct standards. This will insure that when a

dish eventually reaches a customer, it is to a standard that they would enjoy and

desire to eat the food again. Satisfying a customer will result in them not looking

for a similar product elsewhere. (Hougaard, Bjerre, 2003) Having a higher

quality product will also improve the enthusiasm of the staff, if the employees

enjoy the product they will be more inclined to sell it to others. A good customer

experience also affects referral markets. Referral markets is the consideration

that the expansion of a company will come about due to word of mouth. With

that word of mouth being positive, the company will grow. (Marketing Schools.

Org, 2012)

Once the customer has enjoyed their first visit to Nando’s and plans on returning,

it is then of importance to build on that fresh relationship. This can be done with

rewards, promotions and offerings. Loyalty cards are a fantastic way to bind a

customer to a business. (Hennig – Thurau, Hansen, 2000, 54) Once they have

been advised to take a loyalty card and have done due to the satisfaction of their

visit, having the loyalty card may speed up the time in-between their next visit

and also increase the number of visits. Most loyalty cards work in the fashion of

when purchasing a product, you receive points, these points then enable you to

purchase that product again for free. The more often the customer visits, the

higher amount of money spent, and the quicker that customer is going to receive

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free products, which in hindsight should persuade them to visit to company

again and feel rewarded. Loyalty cards such as this work well when the product

is consumption. If using a loyalty card when buying a car, the customer would

buy that car once and more often than not, they won’t be buying another in the

near future. When selling food the product has gone before the customer has

even left the facility, unless the establishment offers take away. This means

therefore that the customer is able to purchase the product over and over again,

yet will never have too much of it.

Using loyalty cards have an added bonus of getting to know your customers,

providing a company with the ability to monitor customer behaviour. A company

is able to see which customers are spending more, which are bargain hunters

(some can cost the business rather than benefit it) and what are the most

popular products. (Marketing Donut, 2015) Requiring this information can help

the company offer more to their most loyal customers and also improve their

stock. If a dish is being brought into the company yet it is proven unpopular, the

business can discontinue that product and replace it with something they can

advertise as something new for old and new customers to try. Loyalty cards also

give businesses an opportunity to be more personal with their customers. The

details of each customer with a loyalty card are taken when registering the card.

This supplies the company with the customer’s mobile number, home address

and email address. Having these details means the company can personally

promote to these customers, using their details to send them advertisements and

promotion offers in a friendlier, less aggressive manor. Being able to address the

customer by their name makes the customer feel special, more so than if they

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were to watch an advert of television. These methods of advertising are also

hugely cost effective, especially when using someone’s email.

Many people are now owners of smart phones, especially young people, Nando’s

most common customer. With smart phones we have the use of apps. These apps

can be used in coalition with the loyalty card. Customers are able to link their

loyalty cards with the app on their phone, meaning the points they have available

are visible. Apps are also able to send notifications; therefore if a customer has

points to use, the app can send them a reminder. This could help with not only

retention of customers but also the bringing back of older customers who

perhaps haven’t used the company for an extended period of time.

Task 3

As well as customer retention being of importance there are other key markets

that need to be taken into consideration. Diagram 1 is a model that shows these.

In order for

Nando’s to work

effectively when

expanding to

Germany it

should consider

these markets as

of the same

importance of

Diagram 1, The Six Markets Model, Christopher et al, 199112

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that of the customers, even when the customer is the sole of a successful

business.

The first of these markets is the supplier/alliance market. This can be extremely

beneficial to a company, especially when the supplier is a well-known brand.

(Wakeam, 2003) If the company researches thoroughly what companies they

would like to approach to be their suppliers it can result in a business boom and

also take away the opportunity for competitive businesses having a popular

brand as their suppliers, reducing competition. (Wakeam, 2003) A supplier can

hugely affect the efficiency of a company, with the purchasing of goods being the

most dominant form of expenditure, and if the reliance of a supplier is not

received it could damage the companies daily business affecting their reputation.

(Ford, Gadde and Hakansson, Snehota, 2011, p.73) Companies need to be careful

that their suppliers will not betray them however. An example of this happening

was with Heinz and McDonalds, after working together for 40 years, Heinz was

bought by 3G Capital who control Burger King in 2013. (BBC, 2013) Burger King

now having what is considered the most popular sauce brand in the world,

meaning they have an advantage over McDonalds. When running a large-scale

business that supplies food and drink it is probably one of the easier businesses

to acquire alliances of popularity as the supplier has a constant outlet of sale. The

most popular soft drink company in Germany is Coca – Cola, they are also the

suppliers of Fanta, a brand that was born in Germany (The Soft Drink, 2015) It

would then be my advise that when entering into Germany, Nando’s sets out to

form a relationship with Coca – Cola, requesting that they are able to sell the

brand in their restaurants.

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Having previously mentioned internal markets and their importance when

strategising the customer market, and also referral markets in relation to this, a

company needs to also take into consideration its influence markets. Influence

markets relates to influences having an impact on action. Whether it be from

politicians, family or celebrities, the influence of one person to another could

lead to the purchase of a product. (Brown, 2013, pg.1) More commonly these

days, influence is seen on the web, therefore requiring businesses to use online

communities as a strategy. When relating this to influence marketing most of the

influences stem from social networking. (Brown, 2013, pg.2) On social

networking sites such as twitter, the common public are able to view live feeds

from celebrities, politicians or people they have a general interest in. This

results in fans feeling as if they are closer to the people that they follow, as they

are even able to reply to the well-known people’s ‘tweets’. Nando’s, as mentioned

earlier, have many celebrity endorses, who often take to twitter to report on

their time at, or comment on how much they would like a Nando’s. It is

important therefore that Nando’s have a twitter site, so when celebrities are

mentioning them, a link is given to their page, and Nando’s also have the ability

to tweet back. This sort of behaviour however may not be purely because a

group of celebrities all like Nando’s coincidentally. Nando’s offer what is referred

to as the ‘black card’. This card means that it’s owner and their five friends are

welcome to unlimited free Nando’s. The card has been give to the likes of David

Beckham, Jay Z and Ed Sheeran. (Bond, 2013) With these sorts of celebrities

being followed world wide, the importance of their influence on other customers

is crucial, and as long as it’s a positive one it will increase Nando’s business. Not

only does this card create influences from celebrities, but celebrities are seen to

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include Nando’s in there work, with Jay Z including Nando’s with his rider at the

Brit awards and Ed Sheeran and Example creating a video that was put on

YouTube that used the Nando’s name and received thousands of views. This is a

free, and extremely effective means of advertising, especially with it not being

limited to one country. A suggestion would therefore be for Nando’s to offer

these cards to well known celebrities in Germany who have a strong social media

following. It is also worthwhile taking into consideration the high amount of

Internet uses in Germany relating to the population, as I mentioned earlier.

Conclusion:

After much research it would firstly seem that Germany is a very suitable

country for Nando’s to expand into. The population enjoy eating out and a high

percentage of them are earning, therefore money can be spent on the products

that are on offer. A high percentage of the population also have access to the

Internet, the main source of Nando’s customer retention and advertising

methods. I feel that opening two branches in Germany’s more popular cities,

Berlin and Munich, would be a good way to start. The restaurants would be

popular not only with locals but with tourists and passers through also. With

Germany having a high employment rate I am confident that recruitment will be

an easy process as my research shows that Nando’s has already proved itself to

be an excellent company to work for. I feel that many of the marketing strategies

that are already in place by Nando’s work well, therefore these should be

continually used when globalising.

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[Accessed April 24th 2015]

Bond, Anthony (2013) After Prince Harry's Nando's visit: Ten things you

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casual-is-only-restaurant-segment-to-see-traffic-growth-in-2013-reports-

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Rawstorne, T, (2013) Why Nando's chicken isn't as wholesome as you

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April 2014]

Wakeam, Jason (2003) The Five Factors of Strategic Alliance. Ivey Business

Journal

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World Bank (2014) [online] The World Bank Group. Available from

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