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NORTHUMBRIA UNIVERSITY LONDON CAMPUS

MK4003 Relationship Marketing in a Global Context

Dimitra Zafeiris
Stundent no: 15045422

Word Count:

Due Date: 30th of August 2016

Table of Contents:
1. Relationship Marketing Literature Review(500)..700.
2. Case Study(1750).
2.1 Nandos
2.2 Context analysis
2.2.1 Customer Analysis.
2.2.2 Internal Business !!!!
2.2.3 External Context ..
2.3 Identification of Key Influences (at least 5)
..
3. Relationship Marketing Recommendations(750)
...
3.1 Key Relationship Marketing Issues...
3.2 Recommendations.
.
4. Refrences

1. Relationship Marketing (RM) Literature Review


Marketing is an organizational function and a set of processes for creating, communicating,
and delivering value to customers and for managing customer relationships in ways that
benefit the organization and its stakeholders (AMA, 2014).
At the moment, the world around us is changing and innovating constantly at a rapid pace.
Over the past two decades, the market has developed in such manner that stepped away
from the traditional marketing approach, as consumer behaviour became less and less
attracted to this type of proposition.
Because of the high level of competition, constant innovation in technologies and high
globalisation level, business strategies also need to adapt and evolve in order to be
successful in such an environment (Miller & Friesen, 1983).
Taking the above into consideration, a new paradigm flourished, respectively that of
relationship marketing. Relationship marketing has different focus, for example on profitable
retention that in detriment of the traditional approach with focus on volume; an emphasis
on customer value that in detriment of an emphasis on product features; a long term
perspective that in detriment of a short term one; a high level of customer contact - against
a moderate engagement; and also general concerns with relationship quality compared to
concern with product quality.
Today, organisations tend to use a mixture of both approaches in their strategies;
nevertheless, relationship marketing is becoming the more appropriate proposition.
RM introduces the external perspective focus that lies in the stakeholder relationships,
creating reliable and strong relationships by generating value through trust, loyalty and
commitment. An appropriate tool for measurement of these types of stakeholder
relationships is the Six Markets framework that is able to accurately analyse and generate
effective strategies (Payne & Holt, 2001). In addition, the same framework can evaluate
markets such as internal, customer, supplier, recruitment, referral, and also the influence
market (Christopher, Payne, & Ballantyne, 1991).
Organisational success and value, tended to focus on its financial aspect, profit,
nevertheless, Lev (2001) states that by engaging in a strategy based on the companys
relationships in order to generate long-term value with both internal and external
stakeholders, the organisation becomes more profitable.
Relationship Marketing has been the subject of numerous literature reviews, having been
defined as a process by Perrien and Richard (1995), as a set of interactions by Gummesson
(1994), and also as an entire philosophy, a strategic organisation by Benamour and PrimAllaz (2000).
In addition, Porter and Millar (1985) underline the long-term dimension of RM, emphasising
the need to develop sustainable competitive advantage towards achievement of
organisational success.

Traditional marketing has its emphasis on short termed goals, like that of acquiring new
customers. This focus may be out of date, as Payne et al (1999) find that the acquisition of a
new customer costs are 5 times bigger than that of maintaining the old relationship for a
longer term. Furthermore, Smith (2005) states that one of the most important emphasis
should be towards maximisation of loyalty, creating value on the longer term. Reichheld
(2001) and also Zineldin (2001) have similar findings regarding the more successful focus of
relationship marketing, that of long term loyal relationships.
Moreover, as the business environment is seen more and more as a web of relationships,
current developments in the field discuss 3 models and theories of internationalization and
market entry strategies.
The Uppsala model has its base on specific company factors, the competitive market factors
do not have much influence and the decision making is made accumulative, as Vahlne
(2009) states. The model has its criticism, as to being deterministic (Reid, 1981) but also
regarding the development of firms, that, when following the model, will bring individuals to
no strategic options/choices (Andresson & Kheam, 2000).
One other model is the transaction-cost model that has its focus on transactions,
encountering operational difficulties between parties, the model having its basis mostly in
outsourcing, including as unit of analysis the transaction itself (Gilroy, 1993).
The network model is a dynamic model based on inter-organizational and interpersonal
relationships (Coviello & Martin, 1999), having focus on the network created, from the inward
internationalization towards outward internationalization. The model has its weaknesses, as
found by Malhotra et al (2003), as to not being a predictive model due to being mostly
qualitative in nature and thus not easily tested.
Uppsala, eclectic paradigm and transaction cost analysis : (Whitelock, 2002)

2. Case Study
2.1 Nandos: Company Background 230
Nandos was founded by Robert Brozin and Fernando Duarte in Johannesburg, and
developed into being the popular casual restaurant that we see today (Nando's, "Our Brand
Story", 2016). The co-founders bought together a modest caf, Chickenland, after falling into
delight with the products they were serving, and made it their own, rapidly succeeding in
popularising the brand worldwide.
The first establishment was in South Africa in the year 1987, combining both Portuguese and
Mozambican motifs, thus bringing delight through their combined roller-coaster spices and
specialised fresh, not frozen flame-grilled, not fried chicken.
Its headquarter lies in Johannesburg, South Africa, nevertheless, it now operates in more
than 25 countries having 1,094 operating stores, with the set goal being to reach 2,000
locations (Nando's, "Nando's Statistics", 2015).
Every countrys operations function in its majority, autonomously, having a mixture of
franchises, and straight owned stores, all of them which receive the signature peri-peri
sauce, carefully bottled and made at a factory in the vicinity of Johannesburg (Times, 2015).
The company is undergoing global expansion, reaching new locations every day, for
example newly opened store in Suva City, Fiji (Pendleton, 2015).
Nandos promises a spice like no other, one that can flare up ardour in anyones soul, and
manages to personalise based on cultural preferences, offering additional flavours for
different places, such as the Mediterranean or Tangy Tomato options (Nando's, "Our Menu",
2016).
Country : Romania 200
Taking into consideration Nandos global expansion, Romania is a proposed market that can
represent an opportunity.
Fast food stores are a continuous attraction in Romania, and even though the economic
downturn affected many sectors negatively, the fast-food category has slightly increased in
2015, specifically in the no. of stores, volume of transaction and also in value sales, and is
forecasted to continue to do so over the next years (Euromonitor, 2016).
According to the 2016 Country Report on Fast Food, the rather low investment necessary to
develop new stores, the availability to engage in franchising, the strong recognition of brands
and the association with the Western lifestyle are all factors that are foreseen to enrich the
positive growth forecasted for the next period (Euromonitor, 2016).
Taking all of these factors into consideration, the marketing opportunity here is one of
existing market, where the prospect needs/wants are already satisfied and entry might be
challenging unless higher value provided.

Nandos is offering superior value through it being a healthier alternative in the fast-food
market, differentiating though not only the healthier version of fresh not frozen, flamed not
fried chicken, but also through their exotic spices, more specifically, Peri-Peri, therefore,
Nandos could perform well in the potential proposed market of Romania.

remained the same, if not, slightly increasing due to its positioning as leisure and
convenience.
2.2 Context analysis
Customer analysis:
The marketing strategy consists of the procedure of analysing positioning, market
segmentation and business targets as Kerin et al. states (2009).
-segmentation
There are a few categories that fall into segmentation, primarily categorized as
demographic, geographic, psychographic and behavioural segmentation.
Nandos has segmented its customers based on demographics as such: children
7yrs to 9yrs old, teens 13yrs to 21yr old, working adults 22yrs to 44yr old but also the baby
bloomer generation from 40yrs to 60yrs old. Any marital status or sexual orientation
included.
From a geographical perspective, Nandos has managed to make its presence felt in
many high density cities, across the world. Nandos can also accommodate specific
preferences according to location, through their local customisation process, respectively,
the ability to change the menu accordingly with the targeted markets acceptance and
need/want criteria.
The psychographic segmentation is that of the customers lifestyle. Menus are
created in such manner that accommodates the different lifestyles of such large age
segment. Nevertheless, it primarily offers a healthier alternative to fast food, being able to
touch upon the health conscious segment, through their flamed not fried, fresh not frozen
chicken. It is oriented towards middle to middle-high class income.
Nandos behavioural segmentation is partially based on its
Values transmitted are such as leisure restaurant, familiar and with a confortable
experience, one that is regularly visited.

-targeting
The target market is people aged 18-35, male and female, from middle to high income class,
mostly city dwellers, students and young professionals. (Wordpress, 2015)

The Nandos proposition characteristic is to provide customers a social, local-feeling


experience coming in, with friends or family, introducing concept like the Grown Ups Meal
targeting children coming with parents.
Also the company is aiming to generate a sport related competitive spirit amongst current
customers and attract future ones. (James Bayani, 2013)

-positionining
Nandos is positioning as a Portuguese flame grill peri peri chicken selling franchise,
advancing the perception of a healthy fast food restaurant in the minds of customers .
(Marcus, 2009)
Flame-grilled, not fried chicken concept, has been used as positioning point of differentiation
for health conscious customers, to gain advantage over other fast-food chains like
McDonalds or KFC. (CBN, 2011)
The service positioning strategy is to provide a quick service, and a sit down service rather
than waiting in queues, in a relaxed atmosphere, a form of social casual dining with the
feeling of being cared for, enforcing the idea of locality. (James Bayani, 2013)
Nandos do not offer much discounts as the competitors.
Internal/Business environmental analysis: SWOT analysis
Strengths
-Popular brand
-Specialised in chicken
-Peri-Peri
-Fresh, not frozen chicken
-Flamed, not fried chicken
-Franchise model allowed rapid growth
Opportunities:
-Expansion opportunities worldwide
-Innovate targeting more preferences

Weaknesses:
-Only chicken
-Avoidance of offers, higher prices when
compared
-Limited veggie choice
-Low level presence in small cities
Threats:
-Competition
-Growth in players bigger than demand

-organsation (revenue)
Organisation identity/culture/values/ beliefs

Nandos story has been promoted as a story started centuries ago when Portuguese
explorers set sails towards East searching for adventure following the spice routes, and the
Peri-Peri sauce it is been presented as an addictive spice like no other, to bring passion in
the soul.
However, the culture they are promoting is that is not just about the chicken, but a lot more
about the people who make the chicken. (Nandos, 2016)

- Financial capabilities/constraints

Restaurant market has been on the rise and Nandos has been growing at a rapid rate with
operating profits around 150 million pounds.
- Organisational strengths/weaknesses

-brand (brand positioning)


Brand identity/values/beliefs

- Current positioning/promise/personality

Nandos promise superior value, offering high quality chicken for low cost as their customers
seek quality and healthy food (Hayes, 2011). This strategy creates value for customers thru
product differentiation. Along that, the service differentiation can be seen with fast and
reliable delivery and well trained personnel. Also, there is an image differentiation with print
slogans and funny advertising to capture the attentions of current customers and the passing
by people on the street.
Their communication strategy uses the support of Discovery, social media, TV advertising
and print, aiming to build a consistent high position, which they are maintaining it monitoring
their consumer needs and competitors strategies. (Wilmington, 2011)
It has become one of the most popular restaurants worldwide with a list of celebrities
following, as Kanye West, Ed Sheeran, Robert Pattison and Wizz Khalifa.
- Current strengths/weaknesses/opportunities and threats

-competitors : Main competitors/Market share


- Their products/service
- Their strengths and weaknesses
- Opportunities and threats they pose

External environment analysis:PETSLE:


Political Factors:
From a political perspective, Romania is a member of the European Union since 2007
(Commission, 2007), therefore EU regulations apply, making it easier to..
The Romanian State is a Republic, sovereign, independent National State in transition to a
free-market economy with high growth in consumption and retail.
Personal income and corporate tax are both flat 16% (Administration, 2015).
VAT is 20% (Avalara, 2015).

Moreover, Romania has an open candidacy accession to the OECD, being forecasted to join
by the end of 2016 (MFA, 2015), having a general favourable assessment. By Romania
joining this organisation, Nandos will be able to avoid double corporate taxation while in this
market.
Therefore, Nandos should take this opportunity to expand and invest in Romania.
Economical Factors:
GDP (Gross Domestic Product) is $414 billion. GDP per Capita is $19,925 (Economics,
2016).
Currency used is the Romanian RON, standing at GBP1=5.19 RON (Converter, 2016).
Macroeconomics is stable, the growth is strong, being fuelled by the fiscal relaxation and by
improvements in the labour market, (Group W. B., 2016).
At 3.7%, Romania had one of the highest growth rates in the EU in 2015 (Group W. B.,
2016). The growth was primarily driven by domestic demand.
The forecasted annual average real GDP growth is 4.5% in 2016 and forecasted to be 3.4%
in the 2017-2020 period (Group T. E., 2016).
The economic overall freedom score lies at 65.6 (Foundation, 2016).
Technological Factors:
Romanian infrastructure is currently fairly extensive, having 103,671km of road, and
11,385km of rail.
Operational Programme (LIOP) investment package has been engaged, worth 9.5b from
the EU Regional Funds, to be invested in transport, environment and energy projects, thus
showing high potential of improvements.
Social Factors:
Romanias population is 19,353,643 (Worldometers, 2016)
The median age stands at 42.5, estimated in 2015. The growth rate is of -0.29%, 2015 est.
Urban population is of 60.8%.
The Romanian population is mostly of Christian religion, standing at 16,270,000 Christians;
70,000 Muslims; 20,000 unaffiliated; <10,000 Hindus and Buddhists (Center, 2015).
Local Factors:
Environmental Factors:

Need to identify 5 key influential factors/issues that are relevant to developing a


marketing strategy for the chosen brand in the international context. These factors need
to be drawn from the in-depth context analysis.

Unique Selling Proposition is that of selling non frozen, fresh schicken.


http://www.mbaskool.com/brandguide/food-and-beverages/6037-nandos.html

SWOT
Strenghts: Renowned Global chain with over
http://www.mbaskool.com/brandguide/food-and-beverages/6037-nandos.html

3. Recommendations 750

-260

Romania is a potential market for Nandos, as there is no fast-food brand that has
successfully positioned themselves as a healthier alternative, giving Nandos a good
opportunity to enter the Romanian market and perform well.
Loyalty and organisational profit are strongly linked one to another as Bhote (1996)
underlines, thus, generating lifetime value through customer long term relationships with the
brand (Galbreath, 2002).
The recommended first establishment location is in Bucharest, the capital of Romania, after
which expansion should be done gradually towards the 2nd, 3rd and 4th (Butler, 2016) biggest
cities in the country, respectively Iasi, Cluj-Napoca and Timisoara, thus covering the whole
country, respectively a radius of 238.391 square meters.
Nandos has to deeply understand the importance of internal and external stakeholder
relationships, as it is key towards the organizations success, as noted by Christopher et al.
(1991). By doing so, Nandos will have the opportunity to successfully expand in the
proposed market of Romania.
Nandos should also personalise based on cultural taste preferences and innovate
accordingly. Romanians appear to have developed a preference towards garlic and onions
(Advameg, 2013), and Nandos could exploit this taste preference through a wider variation
of sauces containing these ingredients.

In addition, Nandos can expand their product proposition, introducing more choices for
vegetarians and vegans, as this segment appears to be undergoing strong growth in the
Romanian market (Granato, Branco, Nazzaro, Cruz, & Faria, 2010) thus broadening their
potential customer spectrum.
Moreover, Nandos should position themselves as a healthier alternative on the fast-food
market, through their competitive advantage, that of offering grilled and not fried, fresh and
not frozen products, thus differentiating of other existing brands at the moment in the
Romanian market.
Another recommendation could be to introduce other animal meat products, such as the
Romanian favourite, pork (Trading, 2015). Religious factors are also taken into consideration
and the Romanian religious composition in 2015, is that of 16,270,000 Christians; 70,000
Muslims; 20,000 unaffiliated; <10,000 Hindus and Buddhists (Center, 2015), therefore
introduction of pork in the Romanian market can expand Nandos potential customer range,
free of cultural clashes.

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