Diversification Analysis

Marketing 3300
Professor Mark Cunningham
By: Kelly Corsi

Food is Essential to life, therefore make it good.

-Truett Cathy

Executive Summary
Background
It all started in 1946, when Truett Cathy opened his first restaurant, The Dwarf House
Grill, in Hapeville, Georgia. Credited with inventing Chick-fil-A's freshly breaded boneless
chicken sandwich, Truett pioneered the establishment of restaurants in shopping malls with the
opening of the first Chick-fil-A restaurant at a mall in suburban Atlanta in 1967. Since then,
Chick-fil-A has steadily grown to become the largest quick-service chicken restaurant chain in
the United States with over 1,850 locations in 41 states and Washington, D.C. In 2013, annual
sales were over $5 billion. The company is still privately held and family owned even after the
passing of Truett Cathy this past September. With 46 consecutive years of positive sales growth,
Chick-fil-A has set itself apart by influencing the community, pioneering innovations, and most
importantly its delicious products, including the ever-popular Chick-fil-A Chicken Sandwich.

SWOT Analysis
Chick-fil-A has several strengths, including loyal raving fans, fresh products, and
company culture. Chick-fil-A is known for its hand breaded chicken products in the chicken
restaurant industry. The company has been widely recognized across the southern region of the
United States. However, the marketing problem Chick-fil-A now faces is low recognition in
regions outside of the south. Chick-fil-A needs to expand to other regions of the U.S. in order to
continue their growth in the market and to ensure that the company remains a strong competitor
among other growing chicken restaurants chains.

Diversification Analysis/ Recommendations

Chick-Fil-A could penetrate their current market by expanding across the U.S. or even
internationally. Also, Chick-Fil-A has become a healthier option in the fast food industry in that
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they now offer Grilled products and a variety of freshly made salads. One recommendation I
have as a current employer/marketing director is that Corporate should try allowing a healthier
breakfast menu and incorporating the new grilled sandwich and nuggets as part of their breakfast
menu. And they could market to consumers on how breakfast is the most important meal of the
day.

Company ProfileChick-Fil-A Inc, headquartered in Atlanta, Georgia, is the nation's largest quick-service
chicken restaurant chain. The first Chick-Fil-A was established in 1967 in Atlantas Greenbrair
Mall by the companys founder, Truett Cathy. Chick- Fil-A reached record sales of $5 billion in
2014. While Truett invented the boneless chicken breast sandwich and first introduced the
chicken nugget concept, Chick-Fil-A serves nutritious and freshly prepared food products.
Chick-Fil-A serves the communities through freestanding buildings with drive-through lanes and
mall-based locations. The company is also licensed to airports and schools. Trademark products
include the Chick-Fil- A Southwest Chargrilled Salad, Cool Wrap, Original Chicken Sandwich
and a line of recently introduced breakfast items. The company also offers catering services with
large trays of menu items to expand growth in sales. (http://www.chick-fila.com/Company/Highlights-Fact-Sheets)
Chick-Fil-A attributes its growth over the past 30 years to dedicated franchise owners and
the companys emphasis on product quality. The company advertises through its signature cows,
featuring ads where cows try to convince consumers to eat more chicken, or "Chikin" as the
cows spell it. In 2008, Chick-Fil-A spent $13,161,000 in general promotion advertising. (ChickFil-A spends most of its advertising budget on network TV, but cable TV and spot TV also make

up a large portion of advertising spending. (http://www.chick-fil-afoundation.org/about/ourhistory)

Chick-Fil-As mission statement 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 lives by its mission statement through their corporate culture and sponsorships. The
most important core value of making a positive influence on the companys communities and the
people in them. The company wants to develop leaders out of their employees. The WinShape
Foundation is a prime example of how to help kids in need through homes, camps and
scholarships. Chick-Fil-A is also a proud sponsor of the Big 12 Conference, as well as the ChickFil-A Bowl and Chick-Fil-A Kickoff Game. Chick-Fil-A has kept a steady increase in sales
since 1967, when the first Chick-Fil-A restaurant was opened. The rapid and constant increase of
sales shows that Chick-Fil-A is doing well and growing quarterly. Along with an increase in
sales, Chick-Fil-As number of restaurants has continued to rise each year. Also, the Chick-FilA company owns most of its restaurants, but licenses the restaurants out to franchises for a fixed
annual income supplemented by a share of the in-store sales profit. This concept allows stores
to open at a lower cost and attracts a higher number of franchises, resulting in the spread and
growth of Chick-Fil-A restaurants. (cfahome.com)

SWOT Analysis
Strengths

Product quality
Brand Recognition through
Advertising (Cows)
Continuous Growth in Sales

Opportunities

Opportunity for people who want to

start their own business

Weaknesses

Closed on Sundays
Menu is very specific
Low recognition in regions outside of
the South

Threats

Increased competition

Have marketed grilled chicken and

given people healthier options to those
who choose them. New products such
as Grilled, New Thrive Farmers
Coffee, and Desserts
They can dominate the chicken
restaurant industry if they apply
advertising strategies successfully. As
well as involvement in the community
and sponsorships.
Mobile Payments

Utilizing too many advertising dollars

on too many products at the same
time.
Policy Changes

Strengths:

Chick-Fil-A is very well known for having such a good chicken sandwich, which
differentiates them from competitors whose brands are centered on plain chicken.

The Chick-Fil-A Cows advertising campaign has become popular and has built
recognition among chicken restaurants and differentiation compared to fast food chains
that serve beef or burgers.

Chick-Fil-A has had a continuous increase in annual sales over its entire lifespan. And
expects to grow in double in the next five years.

Chick-Fil-A holds the largest market share in the chicken restaurant market.

Weaknesses:

According to a tradition that started with the first Chick-Fil-A restaurant, Chick- Fil-A is
not open on Sundays. This guarantees that every Chick-Fil-A in the nation is closed for
52 days out of the year in addition to observed holidays. Not only does this directly
affect sales, but it can potentially decrease brand acceptance and recognition.

During lunch-serving hours, every meal is chicken. Chick-Fil-A offers salads and
different sides during the day, and it offers meals that include bacon, ham, and sausage
during breakfast hours. Customers may feel like they are limited in their choices and
those that want something besides chicken are forced to order a side item or go to
another restaurant.

Chick-Fil-A started and grew in the South. While the company is expanding, it is still
heavily concentrated in the South. Chick-Fil-As presence in the western and midwestern regions is very little to none at all.

Opportunities:

Chick-Fil-A is a franchise. This means that there are opportunities for individuals in
every part of the nation to open restaurants. This will increase reach and frequency for the
company. Also, because all of Chick-Fil-As franchises are still run under certain rules
and restrictions set by Chick-Fil-A Corporate, the consistency and quality of the products
can help build brand acceptance and attract new customers.

The foundation of Chick-Fil-As menu is the chicken sandwich. Chick-Fil-A recently

added to their menu, including the change to the original chicken sandwich recipe, the
spicy chicken sandwich, and currently the grilled chicken sandwich as a healthier option.

Chick-Fil-A is heavily involved with the sponsorship of college athletics, especially

college football. The Peach Bowl was recently renamed the Chick-Fil- A Bowl. ChickFil-A has and will have many successful advertising opportunities during the college
football bowl season.

 Additionally, Chick-Fil-A has become more innovated by adding the Mobile Digital
Payment option for customers to use for their smartphones. And there release of new
reusable containers.

Threats:

Chick-Fil-A originated in the South, but has begun to spread outwards to reach more
customers. However, Chick-Fil-As primary competitors, KFC and Popeyes, were also
originated in the South. Both of these companies maintain strong brand loyalty among
customers in the southern region. Also, Chick-Fil-A and its primary competitors will
likely be expanding in a similar direction, so there will be increased competition
throughout the market.

Chick-Fil-As primary and secondary competitors offer menus that include chicken, but
also offer other options. The expansion of competitors menus, along with the
introduction of products that are very similar to Chick-Fil-A could possibly make ChickFil-As menu look very limited to consumers.

If franchise policies are not followed by the franchises, it could devalue the brand and
damage the image of the company. They have the most market share of the chicken
restaurant market.

Diversification Analysis-

Markets

Current

Products

Current

New

Market Penetration:
Breakfast Business

Product Development:
Thrive Farmers Coffee Rollout
Online and Mobile Payments

New

Leverage Chicken for

Breakfast
Market Development:
Focus on Advertising
Healthier Options-Grilled
Sandwich, Grilled Nuggets
and Nutritious Salads

Diversification:

Differentiated Menu
Spring-Frosted Lemonade (Ice cream
and Lemonade)
Smoothies

Market Penetration: Current products in the current market

Chick-fil-A has a popular breakfast menu that helped elevate sales by 3.6% last year.
(http://www.bizjournals.com/atlanta/news/2014/07/16/analyst-chick-fil-a-may-grow-faster-thanmcdonalds.html?page=all )This is crucial at a time when demand for breakfast is at an all-time
high. Farmers Thrive Coffee is currently new at Chick-fil-A and continues to compete against
Starbucks and Dunkin Donuts in coffee sales. The only way breakfast will continue to grow is to
have more advertising and suggestive sampling.

Product Development: New products in the current market

Grilled Chicken Sandwich and Nuggets are new products in the current market. Salads
and Coffee are new products in a new market that CFA hopes consumers will purchase the new
coffee at breakfast along with the original products. Chick-fil-A has a menu that is different
enough to set it apart from fast food competitors. Popular items include its signature chicken
sandwich and waffle fries. However, Chick-fil-A also offers healthier options, desserts, and
catering. One way that these products will be successful is by the new mobile and online app to
make each customers experience more remarkable and convenient.

Market Development: Current products in a new market

Chick-fil-A has few restaurants in the Northeast therefore they have plenty of room for
growth. These states are heavily populated, which could mean big sales for Chick-fil-A.

Diversification: New products in a new marketChick-fil-A has a dessert menu but one way they could expand in a variety of ways is by
having smoothies or even frozen lemonade. This could be successful because it would be
leveraging two of their original products-Ice Cream and Chick-fil-A freshly squeezed Lemonade.
This could be something neat for the company to try for the spring.

Recommendations and OpinionsOne plan is to promote the healthier meal options and catering trays by continuing to
advertise through top media outlets. I think creating an awareness to consumers about choosing
Chick-Fil-A over competitors is important because of the healthier choices, including emphasis
on the removal of all artificial trans fats from the menus and condiments. Also, allowing
customers to sample new products such as Frozen Lemonade, the Chick-fil-A Grilled Sandwich,
and Coffee. My plan to emphasize the party platters for social events can also be used through
the strategy. We can promote these features while continuing to use our eat more chikin award
winning -ad campaign. I also plan to increase our sponsorship events. I also want to promote
more sports related events in hopes of attracting our target audience. The plan is to increase
Chick-Fil-A advertising during basketball games. Basketball is a commonly liked sport in the
northeast. While we currently sponsor the Big 12 Conference in college football which is
primarily Southeastern based, we can now attract our Northeastern target audiences through
basketball. By sponsoring college basketball events and college football events, we can reach a
larger audience. Sponsoring sporting events gives us the opportunity to promote our tailgating
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and social event catering trays. Social networking is also essential for our promotion. Chick-FilA has a Facebook page that can be accessed through www.facebook.com/ChickfilA. This social
outlet is continuing to grow in our society, which is why we need to continue our efforts to
connect with our consumers over the web. Chick-Fil-As page consists of 3,114,978 people.
Since it is a goal to now expand into the northeastern region of the U.S., the target
audience is taken under consideration while viewing Chick-Fil-A users who live in this region.
The new target audience enjoys spending time with family and sponsoring sport teams. Also, this
target audience agrees that nutritional value is most important in a meal.

ConclusionFrom humble beginnings, hospitality, and hard work Truett Cathy, the founder of Chickfil-A has created the largest fast food chicken company that has evolved into a billion dollar
business and continues to grow today. With new was of innovation, products, and healthier
options Chick-fil-A continues to expand. In a few years, Chick-fil-A will be more in the north
and continue to grow international. From growing profits to growing people into leaders this
company has changed the chicken fast food industry and the world for the better.

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Works Cited
http://www.businessinsider.com/report-chick-fil-a-is-bigger-than-kfc-2014-7#ixzz3KzQzpHAr

http://www.chick-fil-a.com/Company/Highlights-Fact-Sheets

www.cfahome.com

http://www.chick-fil-afoundation.org/about/our-history

http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=6&ved=0CEAQFjAF&ur
l=http%3A%2F%2Fwww.swlearning.com%2Fpdfs%2Fchapter%2F0324226217_1.PDF&ei=i0u
BVLjsLJCpyAS1sYKYDw&usg=AFQjCNGAZwXqYGLZA-s9NId148Vx7nF-aA

http://www.bizjournals.com/atlanta/news/2014/07/16/analyst-chick-fil-a-may-grow-faster-thanmcdonalds.html?page=all

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