Please respond to each peers discussion post.
Samantha: Chick-fil-A has become a household name in the fast-food industry and that is due to their differentiation strategy compared to their competitors. Chick-fil-A dominates the competition in three key areas: customer service, powerful marketing and values & authenticity. According to the text, “A differentiation strategy seeks to create higher value for customers than the value that competitors create, by delivering products or services with unique features while keeping costs at the same or similar levels, allowing the firm to charge higher prices to its customers” (Rothaermel, 2020). With over 2.400 restaurants around the country and each restaurant earning an average of about $4.8 million a year, Chick-fil-A is obviously doing something right.
When visiting most fast food chains, one can expect that customer service won’t be the highest priority with most employees being teenagers and receiving minimum wage. However, Chick-fil-A is known for their friendly staff and service and are known to respond to customers by saying “my pleasure,” instead of “you’re welcome” or “no problem.” Employee’s have even gone so far as to change a customer’s tire!
Chick-fil-A’s “Eat Mor Chikin” slogan is still going strong nearly 25 years after its launch (Comm,2021). Chick-fil-A uses traditional and digital media for their promotional and advertising strategy. The most popular marketing strategy Chick-fil-A uses illustrates cows urging customers to eat some other animal. This is an unusual approach for a food chain, however highly effective.
Chick-fil-A’s corporate purpose is, “To glorify God by being a faithful steward of all that is entrusted to us and to have a positive influence on all who come in contact with Chick-fil-A.” Chick-fil-A is closed on Sunday’s for employees who could set aside one day to rest and worship if they choose. However, this religious stance has created controversy as well for the fast food chain with the LGBTQ+ community. Prior owner, Truett Cathy was known for sticking to his rule of keeping the business closed on Sundays as a way of “honoring God,” and consumers took that as homophobic, as per its evangelistic roots. However, “Chick-fil-A does not have a political or social agenda, and we welcome everyone in our restaurants. We are proud to be represented by more than 180,000 diverse team members nationwide, and we strive to be a positive influence in our local communities”(Greenfield,2021). The result is that while the company might lose some revenue, it also gains authenticity. Customers can see that this is a business that cares about more than earning money and these factors are what differentiates Chick-fil-A from their competitors.
Petrena: Low-cost leadership is based on a company developing operational excellence: supply chain advantages such as unique relationships with suppliers, volume that gives them access to lower costs, logistical advantages, optimized processes, manufacturing IP, or business model efficiencies – which allow the company to have a lower cost than the competition, which in turn allows them to offer a lower price and still make a profit. In other words, it’s a strategy to be successful in the market by offering a lower price. Usually, low-cost startups are service businesses. These are jobs that you do yourself, like housekeeping, dog walking, plumbing, computer programming, etc.
Building cleaning, housekeeping services are one of the best low cost, low entry services to start in 2020. The spread of the Coronavirus has urged people to keep their surroundings clean and have become more conscious of cleanliness nowadays. The small business that I researched is “Joy’s cleaning services”. It is a small cleaning company that offers cleaning for homes and offices. To stand out from the competition they have come up with ways to think outside of the box and get creative. They created a website and advertise on the local social media platforms such as Facebook, Instagram, twitter, etc. They also advertise in local neighborhoods that has numerous apartment building, condos, townhouses, and offices by mailing and distributing flyers with information about their services. On their website they offer Covid-19 disinfectant spraying of their client’s home and business. They have all the services that they offer displayed with pricing and their clients get to choose from their own unique home cleaning needs. This includes Eco-friendly cleaning (upon request), deep cleaning, flexible scheduling, and professional and experienced staff. Clients also get the option of booking weekly or Bi-weekly and will receive a 20% discount. They also offer promotional sales on Groupon and other local websites.
The cleaning industry is a very low entry, easy access market. Because of the small financial startup costs and licensing requirements, virtually anyone can start a cleaning business. In fact, it can be a very lucrative business with a competitive edge, because they have a lower operational cost and are able to sell their services for a higher margin to make more of a profit. This company is considered a cost leader company.
Anita: A local restaurant in San Diego called Kindred is known for some of the most delicious vegan food in the area. As they would say in Microeconomics, a restaurant competes in a monopolistic competition market. This means that to succeed, they must be different and “stand out among its many competitors” (Young, Erfle, and Keat, 2014). Kindred is a Vegan restaurant that has applied the generic strategy of differentiation. Thus, differentiation is not only strategic but economical for Kindred to succeed in San Diego. I must imagine that due to their business strategy, post-COVID-19, their establishment still exists with a second restaurant on the way.
Veganism is a growing industry, having grown from “$14.44 billion in 2020 to $15.77 billion in 2021” and is forecasted to continue growing (Kim, 2022). With an increase in industry, San Diego also saw a rise in vegan restaurants and bakeries. Around the same time Kindred opened, so did other vegan eateries around SD, such as Café Gratitude, followed by Hazel and Jade, Grains, and Dona Jean.
What has made Kindred successful is that they have truly created a “higher value for customers than” that of their competitors by delivering services with “unique features while keeping costs at the same or similar levels, allowing the firm to charge higher prices to its customers” (Rothaermel, 2020). Furthermore, they appeal to vegans and non-vegans, featuring a death-metal theme to spark anyone’s curiosity and craft cocktails. Who would have thought planet and animal consciousness mixed with death metal and eclectic artwork would match. Kindred is described in an article as “the first of its kind in the county when opening its doors in San Diego in January 2016” (Vegan San Diego, n.d). SanDiego Mag even called out how a “traditionally “soft” word like “vegan” does well with a buddy descriiptor like “death metal” to make people realize this isn’t your acoustic guitaring, meditative friend’s restaurant” (Body, 2015). What a differentiation from other Vegan eateries in San Diego such as Café Gratitude, Loving Hut, Peace Pies, Grains…! There is a clear difference in the more peace and love-themed competitor names alone. Moreover, that difference is most evident in the experience Kindred creates for its customers.
Now, one can argue that they offer a focused differentiation, but I think their approach is much broader. They are not appealing only to vegans but foodies in general and making Vegan food just another type of food vs. one for the meatless hippie.
From a cost-to-value perspective, Kindred has cracked a code. Meat products are typically more expensive than plant-based products. So, with Kindred competing in the space of meatless and meat-eaters alike, they can keep their internal costs lower than the steakhouse next door but price their product similarly. The food and drink there are exceptional and have changed many people’s perceptions of vegan food. The customer perception of Kindred’s value is high, even if their costs are low.
Vicky: In business, operational effectiveness should be highly regarded. According to Sorescu et. al. (2011) efficiency refers to doing things the right way and operational effectiveness is about producing desirable results by operating in a manner that maximizes organizational objectives such as long-term profits or extent of target market reached. Managers must come up with business strategies that details the goals and actions managers are to take when competing in a single product market (Rothaermel, 2020).
Redbox is an American video rental company that specialize in kiosks dispensing DVD rentals that are very affordable and this include DVD, Blu-ray, 4K UHD rentals and video games rental. I choose this company because I see that Redbox exercises cost leadership business strategy. A cost leader strategy “seeks to create the same or similar value for customers by delivering products or services at a lower cost than competitors, enabling the firm to offer lower prices to its customers” (Rothaermel, 2020) Redbox delivers its products to consumers at a super low cost that the business is able to charge $1.50 for movie rentals, $2 for Blu-rays, and $3 for video games. The rental company focuses on delivering services to consumers at a very effective and low cost by placing kiosks dispensing boxes at locations that consumers can have easy access too. Moreover, Redbox does not have to worry about employing too many workers. As Sorescu et. al. (2011) pointed out, Redbox has reinvented the retail concept and made it to where not much employees are needed, other than those needed for occasional restocking. By placing automated kiosks in convenient locations such as grocery stores, gas stations, McDonalds, and other retail stores, Redbox would only need to hire a few workers for restock meaning the business would not have to hire a lot of staff which will keep operating costs down.
