Analyzing Customer Perceived Value In The Fast Food Industry

Customer Perceived Value in the Fast Food Industry

Examines the customer perceived value towards fast food industry.

In today’s competitive business environment, each and every organization intends to enhance the value of its products and services among customers. Generally, it is said that customers are the king of market and increasing customer satisfaction has become one of the major objectives of marketing organizations. In the process of customer satisfaction maximization, value is an important factor, which requires to be focused on. Moreover, customer perceived value plays a major role in the process of organizational decision making (Bowie, Buttle, Brookes, and Mariussen, 2016). In an industry, the products and services, which endures the highest customer value is likely to entice the people and attain more competitive advantage over against its competitors. Due to increase in international market competition, the organizations are seeking for new and innovative ways for enhancing their value among target audiences.

The below report examines the customer perceived value towards fast food industry. To analyze the customer perceived value of fast food restaurant, Monroe Model has been used in the discussion. Moreover, this model is used for evaluating Texas Chicken’s value proposition in comparison to its leading competitor, i.e. KFC. After this evaluation, a new value proposition is discussed and it includes a new implementation plan for Texas Chicken in Malaysia, so that it can enhance its perceived value among its target audiences.

Customer perceived value is an important factor for analyzing the effectiveness of the product and service delivery. It is an evaluated value, which a customer perceives to get by purchasing any product or service (Buttle, 2012). Customer perceived value denotes the difference between the advantages obtained as per the perception of customers and costs, which customers had to pay for that. The value that is perceived by the customers, determines the prices, which he/she wants to pay for a particular product and service. By the use of Monroe Model, customer perceived value of fast food industry in Malaysia is discussed in the below table;

Advantages of visiting fast food Outlets Save Time On Research and Writing Hire a Pro to Write You a 100% Plagiarism-Free Paper. Get My Paper	Customers’ sacrifices of visiting fast food restaurants
Monetary Benefits	Monetary
·         Customers are looking for affordable food offerings. ·         Discount and cash back offers on online payment. ·         Profitable vouchers	·         Higher prices for fast food products ·         Travelling cost to reach the fast food outlet ·         Higher delivery charges (Wirtz, and Lovelock, 2016)
Ease of Use	Health fallouts
·         Customers are looking for the food products according to their food taste and cuisines ·         A number of outlets for convenience ·         Customers have different demands, which belong to different groups and with demographic characteristics. ·         24*7 food availability ·         Online food delivery service ·         Fast delivery service has reduced the waiting time ·         They seek for  both take out and dine-in choices	·         Fast food products are not good for health as they contain higher calories ·         Fast food products may be detrimental for the health of customers ·          It may cause obesity, overweight and other chronic diseases (Abdullah, Mokhtar, Bakar and Al-Kubaisy, 2017). ·         Long term outcomes of eating outside are negative for customers
Quality	Additional Efforts
·         People prefer to buy the food products from the stores, which comply with the all the quality and food safety standards and policies (Sheehan, and Bruni-Bossio, 2015) ·         Quality of service delivery is good that is reducing the waiting time for dine-in customers ·         Standardized quality of food products and ingredients	·         Time spending on selecting most convenient and affordable restaurants ·         It is time consuming to visit the restaurants ·         In online food delivery, the customers need to wait for their food items ·         Travelling expenses
Social benefits	Social fallouts
·         There are different types food menus, which belong to different countries from all over the world ·         Fast food products from different food cuisines and cultural customs ·         Well trained staff and waiters, so that they can deal with international customers. ·         Better alternative for social gathering and family get together.	·         Health hazards due to over eating ·         The restaurants in the country do not have a well-maintained brand image ·         Non-compliance with health and safety standards ·         The customers are unable to find standardized food menu and food items all over the world (Hanaysha, 2016).

The above table indicates tradeoff between customers’ perceived benefits and sacrifices, which are made by customers to visit the restaurants. It indicates what the customers are looking for and seeking from fast food industry and current players. These benefits are like; convenience, monetary benefits, quality and social benefits. In context of convenience, they are looking for a variety of food menus and items, which appeal to their different and changing taste and preferences. They prefer to approach the restaurants, which are located in strategic and convenient locations and they are seeking for 24*7 food facilities. It improves the value proposition of the companies in the fast food industry (Covin, Garrett, Kuratko, and Shepherd, 2015).

Monroe Model: Evaluating Texas Chicken’s Value Proposition

There are some economic and monetary benefits, which customers perceive from this industry, like; affordable prices, cash back offers and discount, discount on first visits and loyalty offers for regular customers. With the changes in the economic environment, the buying behavior of customers has changed drastically and enhanced the value for money. However, the customers need to bear some additional costs, like; travelling costs. Furthermore, social benefits are the benefits, which are attained from the services, related to social status. In this way, the customer perceived social status of restaurant might be the first preference, while selecting the place for eating outside. From the above assessment, it can be said the customer perceived value of fast food outlets is very high and indicates that benefits are more than sacrifices, which are made by target customers (Graf, and Maas, 2008).

Apart from Monroe Model, Hobrook’s value proposition framework can be adopted for further discussions. The below-table shows extrinsic and intrinsic values, which are perceived by customers regarding the services of Texas Chicken;

		Extrinsic Value	Intrinsic Value
Internal Analysis	Active	Effectiveness and efficiency ·   Variety of food products and different cuisines ·   24*7 availability ·   Strategic and convenient locations ·   Easy to find on internet and order by the use of mobile phone application ·   Offering home delivery services	Fun and leisure activities ·         Offers fun and leisure activities in the restaurants ·         Special space for children to play ·         Unique and attractive ambience (Hassan, 2012)
	Reactive	Quality ·   Fast food outlets are offering the food items, which are allowed by Malaysia food and safety standards (Mickey, 2009) ·      Better brand image ·   Use of fresh and healthy ingredients	Store attraction ·      Strategic location and layout of fast food restaurants ·      Attractive ambience ·      Unique theme restaurants ·      Effective hospitality service delivery
External Analysis	Active	Social Status ·      Self-esteem, while selecting the restaurants for visiting and eating outside	Ethics and Values ·   Food from different cultures and tastes ·   Support schemes for society and customers ·   Complied with all laws and regulations of Malaysia food acts.
	Reactive	Self-esteem ·      Self-image, which is related to the brand name of fast food organization.	Loyalty ·         Repeat intention to visit the restaurants ·         Finding the tastes and food products of their choice

In the above table, both extrinsic and intrinsic values are the values, which are offered by Texas Chicken and other restaurants of Malaysia to the customers. When, the customers go outside for eating, they can make the above perception and mindset regarding their food services (Gallarza, Arteaga, Del Chiappa, Gil-Saura and Holbrook, 2017).

For the evaluation of Texas Chicken’s existing value proposition, the outcomes from above tables can be used (Hu, & Xie, 2013). Value proposition is a commitment, which an organization delivers a value package to differentiate the decision process of customers to select them over its competitor. The value proposition for both Texas Chicken and KFC is stated below;

Formerly, Texas Chicken is the part of Church’s Chicken, which is based in America and specialized in fried chicken. It is also operating its business outside home country with the name of Texas Chicken. Now, the organization has covered over 1700 locations in more than 25 nations. Currently, it is the third largest chicken restaurant after Popeyes Louisiana Kitchen and KFC. The value proposition of the company includes that it delivers products within 20 to 30 minutes, which depend on the location that have been ordered. In this case, the organization provides free coupon if the product delivery is late. At Texas, the staff is well trained and neatly dressed. It provides a facility to return back the products, if customer feels that their product is not in shape (Texas Chicken, 2017). This organization is using various promotional and digital media strategies to approach the customers all over the world. It has strong image and expanding business globally. The company has created a strong brand image by offering fried and spicy chicken products. Now, the company is planning to modify its food menu by looking at the people’s eating habits and changing trends. However, the prices of its products are higher than KFC, but it is providing comfortable and clean ambience for customers.

Hobrook’s Value Proposition Framework for Texas Chicken

Since 1991, KFC, which is known as Kentucky Fried Chicken is an America Based fast food organization, which has specialization in fried chicken. The organization is second largest fast food chain, i.e. headquartered in Louisville. This fast food chain is the subsidiary of a Yum Brands that owns Tao Bell Chains and Pizza Hut. To attract more customers, KFC is implementing an effective and unique value proposition. Value proposition of KFC and Texas Chicken is different in some specific areas, but they are similar in other ways. Both of the organizations are operating their business in fast food industry and using some identical strategies to attain competitive advantage. The mission statement of KFC is to provide the food items, which are tasty, affordable and healthy than Texas Chicken.

According to the Texas Chicken, its products are more expensive than KFC’s fast food products. The value proposition of KFC organization relies on how better the products can entice the people by affecting their emotions. Moreover, the company is using an effective business strategy, which leads the organization to offer quality food products on affordable price. Although KFC is offering tasty chicken products, it does not have rich spicy taste like Texas Chicken (KFC, 2017). The people love to eat the spicy and crispy chicken at Texas Chicken. Furthermore, KFC has maintained a strong position in fast food restaurant industry and operating its business in international market. Currently, the company has its business operations in more than 105 countries. KFC is offering various products than Chicken, like; burgers, beverages and others.

After conducting a comparative study of both fast food restaurants, i.e. KFC and Texas Chicken, it can be stated that both of the organization have various similarities in their value proposition. The major reason behind these similarities is their product and service offerings, because both companies are specialized in fried and crispy chicken (Hollensen, 2015). The companies are offering quality fast foods services on affordable prices with fast delivery services. The organization have expanded their business operations in various countries, like; Malaysia, Indonesia etc. Apart from these similarities, the comparison between both companies’ value proposition can be done by considering some specific factors, like; pricing strategies, side orders and products, restaurant environment and serving size and presentation. In context of pricing strategy, it can be said that Texas Fried Chicken is more expensive than KFC. Both organizations offer their own side orders, like; Cheesy Wedges from KFC and Mashed Potato from Texas Chicken. In addition to this, they are offering beverages also. In terms of environment, Texas Chicken won in comparison to KFC, because Texas’s ambience is comfortable, spacious and clean than KFC. Both of them are the winners in area of serving size and presentation, means the way of presentation is similar at both organizations (Covin, Garrett, Kuratko, and Shepherd, 2015). Furthermore, the companies are using their patented recipes to develop a difference to the customers. Thus, it can be analyzed that KFC and Texas Chicken are working to differentiate their value proposition from one another. The companies are using effective strategies and tactics to develop the value proposition. This analysis indicates that Texas Chicken is using an effective value proposition, but still the company needs to make some changes and improvements in its service offerings.

Value Proposition of Texas Chicken vs KFC

The value proposition of Texas Chicken is created on the basis of high quality food and speedy service delivery with a great consistency. However, the value offered by Texas Chicken is good in terms of service delivery, but there is still a scope of improvement. From the above sections, it can be stated that Texas Chicken is not only a popular fast food restaurant in the country, but it is also well-known for its pricing and promotion strategies (Hollensen, 2015). For promoting its services, the organization offers the opportunity to make a membership card, where customers can store points on every purchase. After collecting enough points, the customers can get discount on their next purchase. Affordable pricing strategies of the company have played a major role in gaining competitive advantage. Texas Chicken can gain more competitive position and advantage in Malaysia fast food industry by making some specific changes in its value proposition and strategies (Litvin, Goldsmith, and Pan, 2017).

The above diagram indicates the new value proposition for Texas Chicken, which includes organizational mission, key values, success factors and competitive positioning. Under competitive positioning, this organization is ensuring that it is maintaining a leading position in Malaysia fast food restaurant industry. It is seeking to expand its business in international market. It will assist the organization in increasing its customer base and generating significant revenues and profits (Nenycz-Thiel, & Romaniuk, 2012). When it is about the critical success factors, quality products and affordable prices are the major factors, which will increase the value of its food products and services. These are the major reasons behind the success of this company, as it is offering quality chicken products on more affordable prices than its competitors.

This new value proposition will assist Texas Chicken to match the value criteria of customers and gain more competitive advantage over its competitors (Osterwalder, Pigneur, Bernarda, and Smith, 2014). The organization can use various internal and external strategies to achieve this new value proposition of Texas Chicken. Under internal strategies, the organization will diversify its product range by including more food products and menus. In this process, market research can assist the organization in collecting the information about the competitors and market trends. Moreover, it is open new food outlets, so that more customers can reach to company’s products (Payne, Frow, and Eggert, 2017).

After developing this new value proposition, the organization will create an action plan, so that it can execute this in the practice. The company will use both internal and external strategies for implementing this value proposition. Under internal strategies, the organization will add some new products in its food menu and diversify its product range (Rashid, Rani, Yusuf, and Shaari, 2015). For ensuring a successful implementation of the products, Texas Chicken will conduct marketing research for understanding the Malaysian market and changing market trends. It will assist the organization to entice a large population. Apart from this, the company will also implement the external strategies, like; communication strategy, effective IMC plan and promotion strategies. It will adopt various digital and traditional media strategies, which will assist the organization in reinforcing the brand image among target customers (Schrempf, 2014).

Conclusion

The implementation plan includes all the activities that are needed to achieve business goals;

Act	Starting date	End Date	Responsible Person	Related Department
Establishing new mission	31/1/2018	–	Top level managers and Board	Top management
Developing a new value proposition	2/3/2018	–	Management and Board of Directors	Senior level management
Formulation of internal and external strategies	2/4/2018	–	Innovative people of the organization	All related departments
Implementation of internal and external strategies	2/6/2018	–	Marketing Executives	Marketing department
Evaluation and monitoring of value proposition	2/7/2018	–	Advertising managers and marketing executives	Promotion and Marketing department

Conclusion

In the limelight of above report, it can be concluded that value proposition is one of the most significant factors, which assist an organization in gaining competitive advantage. Texas Chicken is a leading fast food restaurant, which is developing its value proposition on the basis of quality food and pricing strategy. In this analysis, it has been founded that KFC is one of the most leading competitors, which have similar strategies as Texas Chicken. The value proposition of both companies is different from each other. They differ in terms of pricing, environment, presentation and side orders. The product range at KFC is diversified, but Texas Chicken has limited products for its customers. This is the major reason that KFC has covered as large market in fast food restaurant industry. Thus, the company needs some improvement in its pricing strategies and value proposition.

Texas Chicken is making efforts for improving its value proposition and developing new strategies for implementation of new proposition. This new proposition will enhance the position of company in the fast food industry. In this way, it can be stated that current strategies and value proposition is one of the critical success factors. The company has attained a leading position in the fast food industry and now gaining more competitive advantage over its competing brands.

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