Coop: Market Research Essay

MGT 453 The Chicken Coop
The Chicken Coop is a chicken restaurant established in **** by ****. Their focus has always been on offering quality chicken meals for value-based prices, and their competitors include fast food giant KFC. The company’s current goal is to halt and reverse the sales slump it is currently facing, and to create growth for itself in order to battle the current decline in market share and sales. The major problem with achieving this is that the company has no idea why sales are currently falling. There is conflict in the company both as to why this could possibly be happening and, therefore, how to find further information. One executive, McMichael, believes that the slump is sales is an issue of taste (current menu) and quality controls. Another executive, Wallace, believes that the major issue is of brand and how the company is perceived by consumers. Finally, the CEO Buckmeister is unsure of the exact issue, although he is nervous about making any major changes and believes that all the company needs are a more close eye kept on the store and some basic customer feedback. In total, the Coop has a rather daunting problem: limited money and an important investment decision on how to successfully research their problem in order to attain their goal of reversing their sales slump.

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There are three possible routes for facing this problem that have been suggested, in addition to the ever-present option of doing nothing. The first alternative was suggested by McMichael, and is focused on quality control. It would involve a taste test that would recruit loyal customers to come to the R&D center and sample the Coop’s food. The customer would also sample competitor’s food and would not be informed that this was a Coop-sponsored R&D project. Her plan would also involve a rigorous and systematic quality inspection program enacted by fake “customers” who could check things such as the quality of service and food, but could not necessarily do things like enter the kitchen. McMichael’s idea is mediumly pricey, with about $6000 for the taste test and an unknown variable cost for the quality inspection.

The second alternative was suggested by Wallace, and it was a 3-prong approach that focused on brand imaging. Wallace also wanted to do a taste-test, although he wanted to get a random sampling instead of loyal customers, and he also wanted to renovate the R&D facility to include a 2-way mirror for customer observation during the taste test. The second thing Wallace wanted to do was a Brand Image Monitoring Survey with random digital dialing to get a better understanding of the Coop’s brand image. Finally, Wallace wished to conduct a Customer Experience Study, where customers would be paid to go to different restaurants—with no knowledge that the Coop was sponsoring the study—and then fill out questionnaires about the service, food, and quality of the establishment. Wallace’s plan is the most expensive overall, with $45,600 price take on the CES program, $6000 plus R&D renovation costs for the taste test, and $20,000-$50,000 for the phone survey. Finally, Buckmeister’s suggestion was the very low-cost option to provide simple Feedback cards in his restaurants.

There were two options also suggested in order to increase sales within the company: co-branding and offering home delivery. While I think these are both good ideas, especially considering that the Coop has literally no breakfast share and that 49% of Coop customers take home their food anyways, I think that any major change should wait until the Coop has the proper research in order to tackle the problem. If the Coop jumps into something new without knowing the reason why their sales are slumping, it could fail catastrophically. I think the critical issues to look at when it comes to the three marketing research options are 1) how significant is the decline? 2) what is the most cost-effective option? and 3) what is/are most likely to be the underlying problem(s)? How significant the decline is important for establishing how much the Coop should be willing to invest in remedying the issue. The average decline in sales was about 6% per store. 6% of the Coops overall sales in 1994 would be 3.5 million, so the cost of the marketing research should be kept under this number as we do not want to spend more than we have lost. However, that is quite a large loss in sales, so I think it is safe to say that not only does this change warrant a more costly plan than the Feedback cards, but also requires it. Feedback cards are a good idea for a restaurant trying to maintain good quality, not reverse a large and unexplained sales slump. The second issue is what about cost-effectiveness. Wallace’s plan is clearly the most expensive, while Buckmeister’s plan is the cheapest.

However, cost-effectiveness is about how much value you get for your investment, and I believe in that case, both Wallace and McMichael’s plans are more cost-effective, as the information that their plans provide will be more in-depth, more relevant, and overall more useful in targeting a mysterious issue. Finally, what is/are most likely to be the underlying problem(s)? The unfortunate thing is that with this question, we are unsure where to begin, and the executives are making various difference educated guesses—but guesses all the same. In conclusion, I would recommend running several focus groups in order to ascertain a more certain direction for research into the underlying problem. As any sales issue is most certainly based on customer perception, I would prioritize the CES as it provides information on both customer perception and an indication of quality. I would also prioritize spending on brand research over taste research unless focus groups suggest otherwise, as people will not even get around to tasting the food if they are not interested in the brand of the restaurant or what it has to offer. Finding out the brand perception for the Coop as well as what customers themselves think could use improvement would be immensely helpful for the Coop. In conclusion, I believe that the Coop does need to invest some serious funds in remedying their sales slump and invest in some independent market research in order to successfully target the issue causing decreasing sales.

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