1.0 Executive Summary

This report consists of the main marketing strategies of the Nandos restaurant franchise and how it targets and positions its products to meet the needs and wants of their potential customer. The research shows that Nandos had successfully built itself as one of the well-known chicken restaurant around the world. The marketing strategy of the Nandos includes three parts such as: segmentation, targeting and positioning. Nandos using demographic, geographic, psychographic and behavioral segmentation. Development of effective marketing strategy will help to the Nandos to attract many customers and noticeably increase sales. Nandos chose a segment, which is categorized as generation x, to offer a right composition of products and services to attract that segment. This segment consists of people who have good income and purchasing power. The perceptions of this segment are: good quality, healthy food and convenience. Positioning part of Nandos company shows how their products/services differentiate from competitors offerings. Marketing mix includes 4ps i.e. product, place, promotion and price. This strategy is very important factor for the Nandos to achieve their goals and objectives.

2.0 Introduction

One of the largest franchise restaurants Nandos has come into the market during the year of 1987. The founders of Nandos, Robert Brozin and Fernando Duarte had bought a restaurant called Chickenland in Rosettenville, southern Johannesburg in the year of 1987. The restaurant was then named after Fernando himself, and his son, who is also called Nando. Soon, restaurant became very popular with its legendary recipe of peri-perichicken, which simply means pepper-pepper, and was adopted by Portuguese travelers from Mozambiques cuisine. In the year of 2013, Nandos had successfully spread out all over the world and opened over 900th stores worldwide. As a Nandos CEO and founder in Malaysia and Singapore, Mac Chung Lynn has brought Nandos to Malaysia in 1998. First, it opened in Klang valley and other main city centers. Currently there are 38 branches in Malaysia, which have attracted many customers with its unique recipe Portuguese flame-grilled peri-peri chicken. Mac Chung Lynn got impressed by Nandos, when he first tried fried chicken in London. He was studying architecture degree in London and dreamed about opening Nandos in Malaysia. Therefore, he decided to bring the brand and promote Nandos unique flame-grilled chicken in Malaysia. In term of expansion, Fanny Chai (Regional Marketing Manager Nandos) planned to bring Nandos products to the east coast which in Sabah and Sarawak and set up restaurants there. She also claimed that the company will help people, who live in places where Nandos is lesser known, to learn more about its products by providing some interesting talks and video presentations. This report shows what is positioning and demonstrates how Nandos positions its product in the market.

3.0 Nandos marketing concepts

3.1 SegmentationThere are different categories of segmentation, primarily categorized into demographic, geographic, psychographic and behavioral segmentation. Demographic segmentation is one of the most important segmentation. It consists of the target markets age, gender, occupation and income. Nandos takes these factors into consideration when they gather information for their target market. Geographical segmentation is whereby the region of the customers is taken into consideration. This is where regions, countries, city/towns, population density and climate of the region are noted down before Nandos decide to launch their product into their targeted market. As Nandos is a multinational company, they might have to alter their products, advertising schemes and promotions to meet the individual needs of the targeted region. Psychographic segmentation consists of the lifestyles of the targeted market, attitudes and social class. In this particular segment, target market is often affected by the social class they associate with and also societys perception about products. Behavioral segmentation, though closely related to psychological segmentation, it is differentiated by the customers wanting value for the money they spend to their loyalty to the particular brand.

3.1.1 DemographicAge group under the demographic segmentation is a one of key factors that can contribute to Nandos product creation. Due to their variety of products, Nandos tend to cater to a very large age segment, primarily from children (7-12) and teens (13- 21) all the way till working adult (22 - 40) and the baby boomer generation (40 - 60).Focusing on the children, Nandos has a special set menu for the kids called the little Grown-Ups meal. This particular menu omits the spicy option and allows the kids to enjoy the chicken without being spicy. It comes with one side dish with a choice of either fruits or vegetables and a choice of either soft drinks or orange juice. This shows that Nandos takes into consideration that many children do not eat spicy food. Other products on the menu are catered more to the older audience between the ages 13 and above (13 -60). This is where they make the option of how spicy the customer wants to be available in contrast to the kids menu.

3.1.2 Geographic

Region is one of the many factors that play a huge role in helping Nandos expand its business around the world. Cities/towns with a high population density would help in boosting the growth of Nandos, for example; UK has one of the countries that have most outlets of Nandos as of 2012, having more 250 outlets within the region itself. Within the region itself, Nandos is also able to alter their menu to the preferences of the consumer market. This would ensure that their products would be widely accepted by the targeted market.

3.1.3 PsychographicLifestyle of the target market is one such factor that has to be considered by the company. As according to the lifestyles of the target market, Nandos can determine which type of product would be more receivable and vice versa. In the menu, Nandos made a notation that some of their products would contain traces of wheat, eggs, dairy or nuts.

3.1.4 BehavioralBrand loyalty amongst the consumer market for Nandos product range is very valuable to the company. This benefits the company as word-of-mouth amongst the society spreads faster than advertisements, thus creating a larger, more potential market for Nandos to market its product. With brand loyalty, Nandos can be ensured that they have a sustainable market to launch their products to.

The table 3.1.5 shows the market segment for Nandos peri-peri chicken SegmentsVariablesGeneration YGeneration XBaby Boomer

GeographicLocationMalaysiaMalaysiaMalaysia

DemographicAge

Income

OccupationChildren(7-12) Teenagers(13-21)

Parents support, pocket money

Kids, studentsWorking adults(22-40)

Medium High

Junior managersAdults(40-60)

High

Business owners

Psychographic

Lifestyle

Personality

Attitudes

Active, seek for vitamins, tasty food

Active, quick, immature mind

PositiveActive, healthy food

Active, quick, cautious, profit seeking

Positive-NeutralLess active, healthy food

Less active, cautious, dominant, smart consumption

Neutral

BehavioralBrand loyaltyStrongStrong-WeakWeak

4.0 TargetingAfter making an analysis of Nandos target market for their product, we are able to identify their consumer markets. With this analysis, Nandos would be able to determine which market is suitable to go on with. This particular segment of the market is known as the target market. It is important for an organization to design their marketing strategies around a specific target market so that they are able to push the products to the consumers. This allows the organization to be closer to their consumers, being able build brand loyalty and customer satisfaction (Piercy & Morgan, 1993).The segment that has been identified is the segment that called generation X. This segment in particular has a sustainable amount of income that can support their needs and wants. According to the demographic analysis that was made, age groups become an indication for the company about which product to market to that certain age group. Categorizing the consumers into target markets would prove an opportunity to Nandos, this is because with the information they gained about the age groups, they can produce new products that suit the targeted consumers and improve on the existing products. For example, with Nandos targeting the children denomination (ages 7-12), the company can improve on their existing Little Grown-Ups menu with adding more choice of side dishes or drinks. They can even add more choices of main dishes to that menu so that the kids have more choice.

4.1 Values by generation X:1) Contain a variety of healthy food such as: vegetables, eggs, fruits.2) Minimum amount of oil, as it can influence on body and organism condition.3) Comfortable place to sit, not loud music, facilities such as bathroom, baby room.4) Affordable price5) Short waiting time

4.2 Nandos peri-peri chicken in the market (Perceptual map)

5.0 PositioningPositioning is the strategy, which goals are to occupy position in the minds of consumers and enable them to form the best image about product. According to Brown (2013), Nandos successful positioning is based on the number of factors such as producing unique peri-peri sauce, which does not use any restaurant in the world, special meals for kids - Little Grown-Ups and decorating each restaurant to match with traditions in different countries, where located Nandos . Nowadays, Nandos is best known as the world's only one home of the famous peri-peri sauce (Niven, 2007). Moreover, peri-peri sauce became a competitive advantage for Nandos restaurants as this method of cooking differentiates Nandos from other casual dining restaurants, which are oriented on chicken dishes. Thus, Nandos marketing strategy uses product differentiation. It brings a great success to the restaurant chain in the year 1990, when they start to spread around the world (Appendices 1). Nandos positions itself as a brand that located above fast food, but below fine dining (Pharmy, 2007). When Nandos entered the global market, it faced with many competitors, such as KFC and Kenny Rogers Roast Chicken. Despite the fact that these restaurants are chicken oriented they offer different product and services for customer. First difference is in cooking method, where Nandos using flame-grilled and marinated in peri-peri sauce method, which is good for health. Moreover, Nandos are the only one producer of peri-peri sauce and customer can choose spice rating, which starts from Lemon/Lime, Mild, Hot and Extra Hot. On other hand, KFCs cooking method based on producing crispy coat chicken, which is cheaper than Nandos, but more harmful for health, because contains gluten. Next, Nandos differentiating factor is unique design of each restaurant. Nandos decorates its restaurants in accordance with each markets model. As different markets have different preferences, Nandos decided to use each countrys local resources and style, while expanding globally. Therefore, each outlet has different style and design, with references to the local culture and this also became a competitive advantage among other restaurants. KFC restaurants design is less attractive as they oriented on takeaway and fast dining service. Another difference is kids meals. Nandos offers special meals for kids that called Little Grown-Ups, which is not only tasty, but also health concern. Also, they provide so called Nandos Fun Pack with games to play and special cards with information about the Nandos inside. KFCs kids meals provide less variety of dishes, but include small toys inside each meal. However, Nandos main advantage is spicy peri-peri sauce, which made Nandos brand so popular. This is a unique selling proposition, because other competitors do not offer the difference. Nandos delivers this position to the customers and responses were very positive. But before this most difficult problem was informing customers about this feature. In fact, that peri-peri sauce is originally from South Africa, and not so famous in other countries, Nandos company settled many open seminars about feature of their restaurants, because before that people had no idea what is peri-peri sauce and why they should go for Nandos brand. These seminars allowed people to come and listen to the stories about how Nandos was born and learn more about their features. Nandos positioning statement sounds like: Wake up Your Taste Buds with Peri-Peri. Nevertheless, it position by the fact, that they provide unique taste of peri-peri sauce and at the same time arouse passion and pride, while eating at the Nandos.

6.0 Marketing strategies of Nandos (4ps)

6.1 ProductAccording to Armstrong and Kotler (2011), a product refers to the goods and services offered by a company to their target market. As a globally-recognized franchise restaurant Nandos offers a variety types of products, such as main dishes, platters, burgers, kids meals, specialized dishes, and a sauce served only in their restaurant, the Peri-Peri sauce (Nandos Malaysia, 2013), with chicken as their main ingredient. By offering these several types of products, Nandos provides a range of choices for their customers. The main marketing strategy that Nandos uses - is product branding. Product branding is one of the ability of professional marketers to create and lead brands (Armstrong & Kotler, 2012). Nandos branding was first created via their Peri-Peri sauce. The Peri-Peri sauce differentiates Nandos from their competitors greatly as Nandos is the only restaurant that offers this sauce.In addition, Nandos also provides delivery services for their customers, so that they can enjoy their food, at home or at their workplace, other than in their restaurant (Nandos Malaysia, 2013). This allows their customers to satisfy their cravings conveniently, such that it is not necessary for them to go to the outlets if they are really too busy or lazy to do so, since they can call for a delivery service.

6.2 PriceAccording to Armstrong and Kotler (2011), price refers to the sum of money that consumers have to pay in order to acquire the product. The price of Nandos product is mainly affordable to their customers. One of the pricing strategies that Nandos uses is: Major Pricing Strategy, which includes Customer Value-based Pricing and Competition-based Pricing.Customer Value-based pricing refers to understanding how much of value consumers would place on the benefits that they are receiving from the product, and setting the price according to the customers judgment on the value of the product instead of the sellers cost. Hence, the price of the product is put into considerations before the marketing program is set (Armstrong & Kotler, 2012). In Consumer-based pricing, the quality of the product and service is hugely put into considerations as these are the main benefits that consumers would get. This means taking the stand as a consumer while deciding on the appropriate price to be set on the product. For instance, in Nandos, their prices are set not only on the quality, like the taste of their food, but also their customer service. The ambiance of the restaurant may also have contributed to the prices and hence, their customers are actually paying for their overall experience while eating in the restaurant, instead of paying for their food only. This pricing strategy is also known as Good-value Pricing, where the product is offered with a correct composition of good quality and service at a reasonable price (Armstrong & Kotler, 2012). Competition-based pricing refers to the setting of prices according to competitors strategies, costs, prices, and market offerings. In this case, the prices of Nandos products are in between their two main competitors, KFC and Kenny Rogers Roasters, where some of Nandos products are more expensive than KFCs products and some of Nandos products are cheaper than Kenny Rogers Roasters products. This can be seen from the comparison among the prices listed in the three competing restaurants menu (Appendix 2)

6.3 PlaceAccording to Armstrong and Kotler (2011), place refers to the location of the companys activities in making the product available to their targeted consumers. Marketing channels are very vital in order to make a product well-known worldwide. On this basis, Nandos is deemed using the Vertical Marketing System, bounded by the Contractual VMS, to publicize their products.Vertical Marketing System is one of the distribution channel structure where the producers, wholesalers and retailers behave as a whole system, and Contractual VMS is a vertical marketing system of independent firms from different levels of production and distribution collaborating through contracts. This system is mainly used by the franchise organization, with a franchiser linking the several stages in the production-distribution process (Armstrong & Kotler, 2012). As a franchise organization, Nandos can be seen using this system such that the theme and design of the outlets, the products stated in the menu and the ingredients used for the preparing the food are similar, except that they vary only because of the different culture in the countries.Nandos also uses the Horizontal Marketing System. Horizontal Marketing System is a channel arrangement where two or more companies of a level collaborate to emulate a new marketing opportunity (Armstrong & Kotler, 2012). According to Nandos, two very critical factors must be put into considerations when choosing a site for the restaurant, the surrounding demographics and catchment area. The company uses a combination of trade area analysis, drive time analysis and demographic research to study sites before placement of the opportunity. Hence, franchisees are strongly encouraged to first acquire advice from Nandos property experts before any lease agreement for any premises. In Malaysia, Nandos franchise restaurants are mostly opened in shopping malls, with its first outlet in Bangsar, Kuala Lumpur in 1998. Currently, there are 49 outlets in seven of the states of Malaysia, and they are still expanding to more states such as Sabah and Sarawak, said Fanny Chai (Dhesi, 2013). To open a franchise restaurant in a shopping mall, the franchise would have to liaise with the shopping mall. Hence, it is precise that Nandos uses the horizontal marketing system.

6.4 PromotionAccording to Armstrong and Kotler (2011), promotion refers to the communication activities of the features of their product with the targeted consumers and convinces them to buy the product. The promotion mix strategy that Nandos uses is the Push Strategy, where advertising and sales promotion are used to attract customers attention towards the product. Nandos uses funny and interesting advertisements to promote themselves (Dhesi, 2013). Apart of that, Nandos often have promotions, like discount vouchers, for their customers occasionally, and sometimes for certain festive seasons like Hari Raya (Pharmy, 2007).

7.0 Conclusion In conclusion, Nandos could clearly segment their customer into demographic, geographic, psychographic and behavioral segmentation. Therefore, Nandos could easily meet their customers needs and wants and attract more customers to generate profits. By using the targeting strategy, Nandos has chosen a segment which is known as generate x, to understand and offer the right composition to attract that segment. Positioning shows that Nandos produces unique peri-peri sauce to compete with other restaurants; special meals for kids - Little Grown-Ups with the right portion and health concern and also include little toy in each dishes. Next, Nandos decorates their restaurants based on the culture of the country, local resource and style. Therefore, Nandos has competitive advantages to compete with other restaurants in the global market. Nandos uses the marketing mix model to decide on how to take a new offer to the market. Moreover, Nandos use the 4 Ps to plans a new venture or evaluating an existing offer to enhance the impact with target market.

ReferencesMainmarketactivations (2013). Why Nandos Ranks As South Africas Most Successful Restaurants(Export). [online] Retrieved from: http://mainmarketactivations.wordpress.com/ [Accessed 19 October 2013].Armstrong, G. and Kotler, P. (2012). Marketing An Introduction. 11th ed. Edinburgh: Pearson Education Limited, pp.192-198.Dhesi, D. (2013). Nandos Wants More Chicky Ads. [online] Retrieved from: http://www.thestar.com.my/ [Accessed 19 October 2013].Nandosfranchise,( n.d.) A Nandos Franchisee. [online] Retrieved from: [Accessed 18 October 2013].Our Editorial Team (2013, May). Nandos Aint Chicken When It Comes to Marketing. African Marketing Consideration. [online] Retrieved from: http://africanmc.org/ [Accessed 17 October 2013].Nandos.com (n.d.) Full Menu. [online] Retrieved from : http://www.nandos.com.my/index1.html[Accessed 20 October 2013]. Turkington, T. ( 2011). Playing Chicken: Nandoas Founder, Robbie Brozin. [online] Retrieved from: http://www.wits.ac.za/ [Accessed 13 October 2013].Wootton, P. (2010). Business Profile: David Niven of Nandos. [online] Retrieved from: http://www.bighospitality.co.uk/ [Accessed 10 October 2013].Rawstorne, T. (2013). Why Nandos Chicken Isnt As Wholesome As You Think: Celebrities Love it. To The Middle Classes, Its Guilt-Free Fast Food .If Only They Knew The Full Story. [online] Retrieved from: http://www.dailymail.co.uk/news/article/ [Accessed 13 October 2013].Brown, M. (2013). Nandos Nation: Chicken That Conquered Britain. [online] Retrieved from: http://www.telegraph.co.uk/ [Accessed 10 October 2013].Mweb.com (2013). Nandos: The Tale of SAs Most Successful Restaurant Export.[online] Retrieved from: http://www.mweb.co.za/ [Accessed 9 October 2013]. Pharmy, A.A. (2009). NandosSouth African Brand Keeps It Hot. [online] Retrieved from: http://www.theedgemalaysia.com/management/149289-managerwork-south-african-brand-keeps-it-hot.html [Accessed 14 October 2013].Sharedpast,. (2013, July 1). Eating Nandos in Gaborone. Tangerine & Cinnamon Blog, [web blog] Retrieved from: http://tangerineandcinnamon.com/2013/07/01/eating-nandos-in-gaborone/ [Accessed 13 October 2013].Nicholls, L. (2012). Nandos Revealed as Britain Most Popular Casual DiningConcept. [online] Retrieved from: http://www.bighospitality.co.uk/Trends-Reports/Nando-s-revealed-as-Britain-s-most-popular-casual-dining-concept [Accessed 5 October 2013].

Appendices1. Nandos annual report UK 2012.

2. KFC MENU

3. Nandos Menu