Table of Contents

Table of Contents..............................................................1 4 Literature Review...........................................................3 4.1.Introduction................................................................3 4.2.Evolution of Marketing.................................................4 4.2.1.The Production Concept............................................4 4.2.2.The Product Concept.................................................5 4.2.3.The Selling Concept..................................................5 4.2.4.The Marketing Concept.............................................5 4.2.5.The Internal Marketing Concept.................................6 4.3.Product Life Cycle........................................................7 4.4.The BCG Growth- Share Matrix.....................................7 4.5.Situation Analysis........................................................9 4.6.Marketing Mix...........................................................10 4.6.1.Product..................................................................10 4.6.2.Product Quality.......................................................10 4.6.3.Packaging...............................................................11 4.6.3.1. Functions of Packaging........................................11 4.6.4.Promotion..............................................................12 4.6.4.1. Sales Promotion..................................................13 4.6.4.2. Pricing................................................................13 4.6.4.2.1. Factors influencing the pricing Strategies..........13 4.6.4.3. Pricing Strategy..................................................13 4.6.5. Distribution...........................................................15 4.7. Franchising..............................................................15 4.8.Customer Relationship Management (CRM).................15 4.8.1.Shift from product centric to customer centric..........16 4.8.2.The shift from 4Ps to 4Cs ........................................16 4.8.3.Customer Retention................................................17 Hart and Johnson (1999), "... customers are loyal when they have been consistently satisfied over time". 5% increase in customer loyalty can produce profit increases from 25 % to 85 %. .............................................................................17 4.8.4.Pareto Principle: 80/20 Rule.....................................17

4.9.Benefits of CRM ........................................................17 4.9.1.Importance of customer satisfaction leading to customer retention..........................................................19 4.10.Service Encounter....................................................19 4.10.1.Understanding Customers Service Expectations.....19 4.11.Customers Perceptions towards KFC and McDonald. . .20 4.12.Ways adopted by companies to maximize customer value..............................................................................23 4.12.1.Branding...............................................................23

Literature Review
4.1. Introduction

This chapter aims to focus on the importance of marketing strategies, which enable organizations to stay ahead of competitors. The ability to develop effective and winning marketing strategies is to become more responsive and adaptable to the market will perhaps more than ever before, differentiates the winners from the losers. The following are five key avenues that have been developed throughout the literature. To investigate how both companies are adopting product differentiation strategies in order to increase market share. To analyze how both companies are integrating customer relationship management to retain customers loyalty. To identify the ways adopted by both companies to maximize customer value. To identify the service encounters between the employees and customers. To examine the different perceptions of customers towards KFC and Mc Donalds. What about the research questions and hypotheses? You need to look for literature for these also.

4.2. Evolution of Marketing Kotler (1999), states that the competing concepts under which organizations can choose to conduct their marketing activities are: Production Concept Product Concept Selling Concepts Marketing Concept Internal Marketing Concept. 4.2.1. The Production Concept Kotler and Keller (2009, p.58), observed that the Production Concept holds that customers will prefer products that are widely available and cheap. A research by Khermouch (2003 cited Kotler and Keller 2009,p58) showed that Marketers also use the production concept when a company wants to expand the market, (Lamb et al. 1994,p.9) argues that a production orientation falls short because it does not consider whether what the organization produces most efficiently also meets the needs of the marketplace.

4.2.2. The Product Concept Armstrong and Kotler (2005, p.13) define the Product concept as efforts undertaken by organizations to offer the most quality, performance, and features and that the company should therefore devote its energy to make continuous innovative features. Kotler (1999, p60) also adds that under the Product Concept, managers are so caught up in a love affair with their product that they do not realize that the market may be less turned on. This idea is closely linked to Levitt (1960) idea of marketing myopia where companies are more preoccupied with the products that they produce rather than the markets they serve.

4.2.3. The Selling Concept The whole idea of the Selling Concept, as denoted by Armstrong and Kotler (2005, p.13) that customers will not buy enough of the companys products unless it undertakes a large-scale selling and promotion effort. However (Lamb et al. 1994, p.10) observed that sales orientation, as with a production orientation, is a lack of understanding of the needs and wants of the marketplace. Sales-oriented companies despite the quality of their sales force, they cannot sell goods or service if the market does not want them. Gary et al (1998) further pointed out that the key to business success for an organization adopting a Sales Oriented Approach lies in persuading potential customers to buy your goods and services through advertising, personal selling or other means.

4.2.4. The Marketing Concept Denison et al (1995) ascertain that Marketing-orientated companies are talking not just about satisfying present customer needs, but about anticipating the customer needs of the future and delivering them today.

Levitt (1960 cited Kotler and Keller 2009, p59) put forward that selling focuses on the needs of the seller; marketing on the needs of the buyer. Selling is preoccupied with the sellers need to convert his product into cash; marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering, and finally consuming it. Several scholars have found that companies that embrace the marketing concept achieve superior performance (1990 cited Kotler and Keller 2009, p59).

4.2.5. The Internal Marketing Concept In addition to Kotler (1991), Internal Marketing is the task of successfully hiring, training, and motivating able employees to serve the customer well, internal marketing must precede external marketing as it makes no sense to promise excellent service before the company staff is ready to provide it. According to Armstrong (2009, p.333) people are motivated is related to the strength how people behave and the factors that influence behavior in people. Gronroos (1981) noted that everyone in the organization has a customer and internal customers must be sold on the service and be happy in their jobs before they can effectively serve the final customer. (Berry 1981) As mentioned by Armstrong (2009,p.33) the best practice approach are best in any situation, and that adopting them will lead to superior organizational performance. The best practice approach, which was produced by Pfeffer (1998 cited in Armstrong, 2009) namely: 1. Employment security; 2. Selective hiring; 3. Self-managed teams; 4. High compensation contingent on performance; 5. Training to provide a skilled and motivated workforce;

6. Reduction of status differentials; 7. Sharing information.

4.3. Product Life Cycle To Guiltnan et Al (1996), the product lifecycle represents a pattern of sales overtime, with the pattern typically broken in four stages. The four stages are the followings: Introduction Growth Maturity Decline stage

As put forward by Guiltnan (1996), in this stage, sales growth stimulates many competitors to enter the market, and the increase of market shares becomes the major marketing task. During the growth stage, the challenge is to maintain supply and quality consistency while establishing brand identification and market position. ; McDonald (1996)

4.4. The BCG Growth- Share Matrix In one of his major works, B. Henderson (1970) has argued, "To be successful, a company should have a portfolio of products with different growth rates and different market shares. The portfolio composition is a function of the balance between cash flows. Armstrong and Kotler (2005,p.45) elaborates on using the Boston Consulting Group (BCG) approach, a company classifies all its strategic business units (SBUs) according to the growth-share matrix shown in Figure 1. On the vertical axis, market growth rate provides a measure of market attractiveness. On the horizontal axis,

relative market share serves as a measure of company strength in the market. The growth-share matrix defines four types of SBUs:

rate Market growth

High

Star

Question Mark Dog

Cash cow
Low

High Low Relative market share

Figure 1: Growth-Share Matrix

As mentioned by Armstrong and Kotler (2005, p.45) strategic business units (SBUs) are classified as stars, cash cows, question marks, or dogs. Therefore, they put forward that: Stars. Stars are high-growth, high-share business or products. They often need heavy investment to finance their rapid growth Cash cows. Cash cows are low-growth, high-share businesses or products. These established and successful SBUs need less investment to hold their market share Question marks. Question marks are low-share business units in high-growth markets. They require a lot of cash to hold their share, let alone increase it Dogs. Dogs are low-growth, low-share businesses and products. They may generate enough cash to maintain themselves but do not promise to be large sources of cash According to (Lamb et al. 1994,p.708); Stars: a star is a market leader and growing fast, Cash cows: It is in a low-growth market, but the product has a dominant market share

Question marks: This strategy needs a great deal of cash. Without cash support, they eventually become dogs Dogs: A dog has low growth potential and a small market share. Most dogs eventually leave the marketplace

4.5. Situation Analysis Situation Analysis is also know as SWOT analysis. To Evans and Berman (1995), Situation analysis investigates a firms strengths, weaknesses, opportunities and threats. Evans and Berman (1995) put forward that Situation analysis will recognise a company strength and weaknesses relative to competitors, search the environment for possible opportunities and threats, assessing the firms ability to capitalize on opportunities and to minimise or avoid threats and anticipating competitors responses to company strategies.

4.6. Marketing Mix Hills et al (1985) suggested, decision associated with product, price, distribution and promotion need to be completely blended in all decisions to maximize use of resources. The marketing mix must be attractive to the target market so as to attract customers Evans and Berman (1995). In referring to the Marketing Mix, Gronroos (1997) argues, marketing in practice has, to a large extent been turned into managing this toolbox.

4.6.1. Product A product is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need (Kotler et al 1999). KFC and McDonalds product mix or product assortment is the set of all products and items it offers for sale (Kotler 2003). Lusch (1987) define a product as a bundle of tangible and intangible attributes that a seller offers a potential buyer and that satisfies the buyers needs or wants. Convenience products are fast moving consumer goods that the customer usually purchases frequently, immediately and with a minimum of effort Kotler (2003). Being a franchise, both KFC and McDonald offer consistent standard and constant quality.

4.6.2. Product Quality Consumers have distinct goals in purchasing goods and services. To Evans ad Berman (1995), these buying objectives are important for the consumer: availability of items, reliability of sellers, consistency of quality, delivery, price and customer service. Consistency of quality refers to buyers interest in purchasing items of appropriate quality on a regular basis Evans and Berman (1995).

Kotler et al (1999) define product quality as the ability of a product to perform its functions: it includes the products overall durability, reliability, precision and other valued attributes

4.6.3. Packaging Packaging is the activities of designing and producing the container or wrapper for a product; Kotler et al (1999). As said by Brassington and Petitt (2003); Packaging not only serves a functional purpose, but also acts as a means of communicating product information and brand character Mc Kenzie (1997) found that the packaging design was becoming a vital element in developing a brand proposition to the consumer both in advertising and point-of-sale promotion.

4.6.3.1.

Functions of Packaging

To Evans and Berman, (1995); Packaging functions range from containment ad protection to product planning. Packaging is functional, it protects the product in storage, in shipment and often in use; (Brassington and Petitt 2003) Packaging also servers as promotional purpose. It needs to grab and hold the consumers attention and involves them with the product; (Brassingtion and Petitt 2003) This involvement of the user makes the packaging an essential element in branding, both in the communication of brand values and as an essential part of the brand identity; Connolly and Davidson (1996).

4.6.4. Promotion Promotion is any communication used to inform, persuade and or remind people about an organisations or individuals goods, services, image, ideas. Evans and Berman (1995). To Evans and Berman (1995), promotion planning focuses on a total promotion effort- information, persuading, and reminding. Evans and Berman (1995) highlighted that promotional is a key element of the marketing mix, for products with some consumer awareness, the emphasis is on persuasion: converting knowledge to liking.

4.6.4.1.

Sales Promotion

Dudley (1989) defines sales promotion as including all those activities and events which companies use to encourage customers and distribution channel buyers into making purchasing decisions other than by using advertising or personal selling methods

4.6.4.2.

Pricing

Price represents the value of a good or service for both the seller and the buyer Evans and Berman (1995). Price is the amount of money charged for a product or service, or the sum of the values that customers exchange for the benefits of having or using the product or service Kotler and Amstrong (1999).

4.6.4.2.1.

Factors influencing the pricing Strategies

Stokes (1995) suggests that Small Firms are subject to a variety of influences such as external factors relating to the specific industry and market situation, as well as internal variables of costs and management policies will be taken into account

4.6.4.3.

Pricing Strategy

Pricing may be based on costs, demand, completion or a combination of them. As put forward by Evans and Berman (1995), the four broad types of pricing strategies are: Cost-based pricing Demand-based pricing Completion-based pricing Combination pricing.

Evans and Berman (1995) said under cost-based pricing; a firm set prices by computing merchandise, service and overhead costs and then adding an amount to cover its profits goal.

4.6.5.

Distribution

To Evans and Berman (1995), distribution planning is the decision making regarding the physical movement of goods and services from the producer to the consumer. A channel of distribution can be simple or complex.

4.7. Franchising Franchising is a particular form of licensing of intellectual property rights (Adam and Mendelson 1986). Ayling (1987) considers franchising as a form of marketing and distribution in which the franchisor grants an individual or company, the franchisee, the right to do business in a prescribed manner over certain period of time in a specified place. According to Stokes (1995), this type of franchise goes beyond the supply of products and trade names, and covers many other aspects about how the business is run.

4.8. Customer Relationship Management (CRM) Picton and Broderick (2005); CRM is a view that emphasizes the importance of the relationships developed between an organization and its customers. It involves the strategic and tactical management tasks to achieve positive communications and long term customer relationships. Berkowitz (2006) defines customer relationship management (CRM) as the organizations attempt to develop a long-term, cost-effective link with the customer for the benefit of both the customer and the organization. Gronroos, (2007) further elaborated CRM plays an important role in maintaining existing or forming new relationships.

4.8.1. Shift from product centric to customer centric This is so because customers do not want merely quality product by equally, Service, Price, Quality, Action and Appreciation (Raghunath & Shields 2001).

4.8.2. The shift from 4Ps to 4Cs There has been a shift from four Ps to four Cs, this is so because the four Cs model focuses on consumer and on satisfying customers, it fits better from focusing on mass marketing to niche marketing (Roberts, J.H., 2000).

Figure 2.Source: From 4Ps to 4 Cs of Marketing Dinesh Bakshi.

4.8.3. Customer Retention

Hart and Johnson (1999), "... customers are loyal when they have been consistently satisfied over time". 5% increase in customer loyalty can produce profit increases from 25 % to 85 %.

4.8.4. Pareto Principle: 80/20 Rule 80 % of company sales comes from 20 % of existing customers. The strategy for sustained growth must focus on retention since as per Chattopadhyay (2001), when you focus on new customer acquisitions while current customers defect, you get a leaky bucket.

4.9. Benefits of CRM From various researches carried out, it was found that CRM benefits varied by industry as the process and technologies associated with CRM were tailored to specific industry structures (Lemon and Zeithaml, 2001). However, Thomas and Kumar (2004) refuted that findings in cross cultural, multi-industry study of CRM conducted showed that CRM benefits do not vary across industries or cultures.

(Richard and Jones, 2008) eventually associated CRM benefits with three components including relationship, value and brand equity. Seven core benefits were further identified by (Richard and Jones, 2008) to serve as value drivers in Figure 3: 1. Improved ability to target profitable customers; 2. Integrated offerings across channels; 3. Improved sales force efficiency and effectiveness; 4. Individualized marketing messages; 5. Customized products and services; 6. Improved customer service efficiency and effectiveness; and 7. Improved pricing.

Figure 3.Conceptual model relating CRM value drivers to customer equity (Richards and Jones, 2008).

Similarly, Swift (2001) identified the benefits organisations gain from CRM: 1. Lower cost of gaining new customers, as focus will be laid on existing customers 2. Increased in the number of long-term customers

3. Reduced costs of sales 4. Higher customer profitability 5. Increased customer retention and loyalty

4.9.1. Importance of customer satisfaction leading to customer retention Satisfying customers is essential and for that customer support is required. Various researchers as (Armistead and Clark, 1992; Christopher et al., 1991; Davidow, 1986; Lele and Sheth, 1987; Teresko, 1994) identified that customer support can provide competitive advantage. (Loomba, 1998) stated, as product differentiation becomes harder in many markets, companies are increasingly looking to customer support as a potential source of competitive advantage. It has been found that many organisations where there is a lack of management attention in terms of customer support fails, to satisfy customers and thus are unable to retain customers (Hull and Cox, 1994). According to Berry (1983) when a customer pays a price, he expects some specific thing with a specific quality and features.

4.10.

Service Encounter

After making a purchase decision, customers move on to the core of the service experience which usually includes with placing an order, requesting a reservation, process of obtaining a loan etc (Lovelock, C and Wirtz, J 2007). (Shostack L, 1985) puts forward that a service encounter is a period of time during which you, as a customer, interact directly with a service provider.

4.10.1. Understanding Customers Service Expectations Customers evaluate service quality by comparing what they expected with what they perceive they received from an organisation (Lovelock, C and Wirtz, J 2007).

However, if the service experience does not meet their expectations, customers may complain about poor service quality, suffer in silence, or switch organisations in the future. (Jaishankar.G et al 2000). In highly competitive service markets, customers increasingly expect service organisations to anticipate their needs and deliver on them (Karmarkar,U,2004). The levels of both desired and adequate service expectation may reflect word of mouth comments, and the customers past experience with this organisation.(Johnson R and Mathews, P 1997 ) As mentioned by (Normann, R. 1991) say that the perceived quality is realised at the moment of truth, when the organisations and the customer confront one another in the arena. It is the skill, the motivation, and the tools employed by the organisations representative and the expectations and behaviour of the customer, which together will create the service delivery process. Zeithaml,A,et al 2006) elaborates on the terms quality and satisfaction are sometimes used interchangeably. Some researchers believe,however,that perceived service quality is just one component of customer satisfaction, which also reflects price/quality trade-offs, and personal and situational factors. According to Bitner (1992), peoples reactions to an environment are dependent on their purpose for entering.

4.11.

Customers Perceptions towards KFC and McDonald

Consumer value plays a crucial role at the heart of all marketing activity as it refers to things of value that have been created for a specific market (Holbrook, 1999). Consumer value is a highly complex concept in that it integrates an array of possible product quality attributes, process-related attributes and less tangible sources of value, in particular, brand image (Schroder, 2003). For fast foods, product attributes may be further broken down into nutritional, sensory and hygienic quality.

The nature of food production and processing is becoming more important to consumers (Baltas, 2001; Bredahl et al., 1998), even if these aspects cannot be verified through the actual consumption of the food (credence attributes). Ethical production in terms of animal and human welfare, and environmental protection are key issues here (Harper and Makatouni, 2002; Wier and Calverley, 2002; Grankvist et al., 2004). Holbrooks (1999) typology serves as a mapping tool for generic consumer value and is highly applicable to the food context. For example, it highlights both functional consumer value (which might be interpreted as food safety and nutritional make-up) and ethics. It is the beginning of a new era that the fast food industry has gradually breakthrough the Mauritius lifestyle. Whether these fast foods have revolutionised Mauritius, today these products form part of our lifestyle and culture. People rely on their convenience to enhance their lives and productivity. The number of the fast food joints has increased drastically in the last few years, and today it is possible to find many international fast food chains such as: McDonalds, KFC, Burger king, Pizza Hut, next to local fast food brands. We can find fast food serving hamburgers, pizzas, Indian food, chicken, and many more. The price ranges from 75 Rupees up to 200 Rupees. Though many researchers and media report about the unhealthy nature of fast foods, people have developed a taste for fast foods. They have an increased interest for nutrition in fast food, as they have become more health conscious. Consumers want low calorie and light and low fat menu items. In this situation, marketers who manage fast food restaurants need to understand how their customers think of their menu items. Thus, the first step marketers should go through is to investigate consumers' perceptions of fast food menu items served by their restaurants. This is an important step to respond to consumers' new demands with respect to the increased health consciousness. Delivering superior value to customers is an ongoing concern of management in many business markets of today. Knowing where value resides from the standpoint of the

customer has become critical for suppliers (Ulaga 2001). Hence the construct of customer-perceived value needs to be first assessed. In marketing, perceptions are more important than the reality, because its perceptions that affect consumerss actual behavior. (Kotler and Keller, 2009) Perception is the process by which we select, organize, and interpret information inputs to create a meaningful picture of the world (Berelson and Steiner, 1964). As such, fast-food restaurants have experienced intense competition in the recent years due in part to the saturation of a fast-food restaurant market and the worldwide economic downturn. With tighter profit margins and increasing competition, the fastfood restaurants success depends heavily on its ability to retain customers (i.e. restaurant patrons) by enhancing customer value or innovating service offerings (Min 2011). Indeed, the longer customers remained with a particular fast-food restaurant, the more profitable they became to the fast-food restaurant (Reichheld and Sasser, 1990; Lovelock and Wright, 2002). Fast-food restaurant enhance its competitiveness by relying on the customer perception of its overall service quality in comparison to other competitors (Min 2011). The results of the survey carried by (Min 2011) revealed that there were a total of 15 service attributes that were considered relevant to fast-food restaurant service quality. These salient attributes were identified based on importance ratings provided by the respondents who were being asked to indicate how important a given attribute is to them in gauging the level of their satisfaction with service quality. Myers (1999) suggested that importance ratings were one of the most straightforward but effective ways of measuring customer satisfaction and determining the relative importance of service attributes to service quality. Among the 15 attributes the one, which is considered the most important in forming a perception of fast-food restaurant service quality, is taste of food. The next four most important attributes were cleanliness of the fast-food restaurant, service response time, competitive price, and quality of prior service. These results are consistent with those of other service quality studies such as Crawley (1993), Babin and Darden (1996), Min and Galle (1996) and Miranda et al. (2005) indicating that facility atmospherics such as cleanliness of the fast-food restaurant can lift the mood of the

diners and may impel them to visit more. Similarly, Dijksterhuis et al. (2005) argued that subtle environment cues such as cleanliness of the fast-food restaurant might unconsciously affect the restaurant customers dining behavior. Also, as expected, competitive price turned out to be a central influence on fast-food restaurant service quality. This finding is congruent with that of Curry and Riez (1988) indicating that the price paid for the food significantly influences the customers service experience. On the other hand, word-of-mouth reputation, amenity, proximity to a highway/major road, safety, and health food offering were considered relatively unimportant.

4.12.

Ways adopted by companies to maximize customer value

4.12.1. Branding In consumer behaviour research, considerable attention has been paid to branding; indeed branding has been one of the most important marketing strategies in recent years. Some would say that successful branding has the potential to increase gross profit by up to 50% (Blumenthal, 1995). While brands are popularly associated with consumer non-durable goods or fast food (McDonalds), they in fact cover most if not all product types, including consumer durables industrial goods and services. As defined by the American Marketing Association, a brand is a name, term, sign, symbol or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those of competitors (Kotler, 1994). Branding is a significant marketing tool and is used to differentiate an organizations product(s) in the marketplace. Branding strategies are developed by the organization, for the product, in order to position and identify the brand with positive product benefits to attract potential customers, create brand awareness and to increase profitability (Assael, 1985; Doyle, 1989; Harris and Strang, 1985; Kapferer1992). The successful application of branding can create distinctiveness and value for the organization, its product and the consumer. Many generic and undifferentiated

consumer goods have been differentiated by means of branding and successful branding can achieve high market share and sales for an organization (Kotler, 1994; Shoebridge, 1993). According to Aaker (1991, p. 16) a successful brand possesses five categories of assets, which are: 1. name awareness; 2. perceived quality; 3. other proprietary brand assets; 4. brand associations; and 5. brand loyalty. Aaker (1991, p. 271) suggested that a successful brand should possess name awareness and this is defined as the ability of a potential buyer to recognize or recall that a brand is a member of a certain product category. Perceived quality is the customers perception of the overall quality or superiority of a product with respect to its intended purpose, relative to alternatives (Aaker, 1991,p. 88). As the level of perceived quality held by a consumer increases, the consumer would increase her confidence and understanding of the value of the product to her needs. Brand associations refer to anything that it mentally linked to the brand and this asset affects the processing and recall of information used by the consumer in reaching a purchase decision. The value of brand associations is that they can create positive perceptions and reinforce differentiation for a product or service based on attributes that are either tangible or intangible (Aaker, 1991).

I did not see the application of the guidelines, which I had sent. You are requested to re-do your literature review according to the guidelines. A literature review is definitely not a copy paste exercise of bits and pieces of marketing theories!