Strategic Marketing Plan

Strategic Marketing
Plan

Table of Contents
Executive Summary Page 1
Current Marketing Situation Page 2
Figure A1.1 Financial Standing 5yr Term Page 3
Market Description Page 4
Potential Market Segment Page 4
Product Review Page 6
Figure A1.2 Customer Need & Our Solutions Page 7
Competitive Review Page 8
McDonald’s “Angus Third Pounder” Page 8
Financial Overview and Nutritional Facts
Burger King’s “XT Burger” Page 9
Financial Overview and Nutritional Facts
Jack in the Box’s “Sirloin Cheeseburger” Page 10
Financial Overview and Nutritional Facts
Channels and Logistics Page 11
Chart of Corporate Owned Restaurants vs. Page 11
Franchise and Licensed Restaurants
Franchise Information Overview Page 12
Franchise Information: Training and Support Page 12
SWOT Analysis Page 13
Strengths Page 13
Weaknesses Page 14
Opportunities Page 15
Threats Page 15
Objectives and Issues Page 17
1st Year Objectives Page 17
2nd Year Objectives Page 17
Issues Page 17
Marketing Strategy Page 18
Position Page 18
Product Page 18
Price Page 18
Distribution Page 18
Figure A1.3 Shows Domestic Map of all CKE Page 19
Restaurants (USA)
Marketing Communication Strategy Page 20
Promotion Mix Page 20
Advertising Page 20
Personal Selling Page 20
Sales Promotion Page 20
Public Relations Page 20
Direct Marketing Page 21
Market Research Page 21
Market Organization Page 22
Action Programs Page 23
Research Page 23
Test Page 23
Improve Page 23
Budgets Page 24
 Strategic Marketing Plan

Controls Page 24
 Strategic Marketing
Plan

I. Executive Summary

Carl Karcher Enterprises, Inc. (CKE) Restaurants is a California based

holding company that operates through franchises and licenses for
Carl’s Jr., Hardee’s, Green Burrito, and Red Burrito concepts
[ CITATION Car11 \l 1033 ] . A feature product for Carl’s Jr. and
Hardee’s, the Six Dollar Burger was and still is the pioneer of premium
Black Angus burgers in the Quick Service Restaurant industry.
Following the introduction of the Six Dollar Burger in 2001, many
other fast food chains emulated the concept; competitors include
McDonald’s, Burger King, Jack in the Box, and Wendy’s.

The launch of CKE’s Six Dollar Burger into a mature market received
positive reviews, which resulted in the introduction of a full line of Six
Dollar Burgers featuring different variations of the “Original” such as
Hawaiian Teriyaki, Guacamole, Portobello Swiss, etc. Our premium
Signature Six Dollar Burger line offers a competitively unique
combination of top quality ingredients and convenience at a value-
added price. We are targeting nonspecific segments in the consumer
market, taking advantage of the opportunities indicated by higher
demand for better-quality and higher-priced offerings in the QSR 1
industry [ CITATION Chr09 \l 1033 ] .

The primary financial objective in the next year is to increase blended

sales by an additional 2.3%, comparable to the increase in fourth
quarter sales of fiscal 2011 [ CITATION CKE11 \l 1033 ] .
Furthermore, “for the fiscal 2012, the Company expects capital
expenditures to be between $60.0 million and $70.0 million”
[ CITATION CKE11 \l 1033 ] .

1
QSR is an acronym for Quick Service Restaurants.
 Strategic Marketing Plan

II. Current Marketing Situation

CKE was founded in 1966 by fast food pioneer, Carl Karcher, with the
intention to provide customers with an affordable, high quality fast
food meal, styled around the “emerging car culture of Southern
California during and post World War II” [ CITATION
Placeholder1 \l 1033 ] . Carl’s Jr. and Hardee’s introduction and
overwhelming success of the signature “Six Dollar Burger” in 2001 and
beyond confirms the chain’s “constant emphasis on product innovation
and representing a desire to satisfy the tastes of young, hungry
consumers” [ CITATION Placeholder2 \l 1033 ] .

Research shows that there are approximately more than 50,000 fast
food chains scattered all across America, and over 500,000 worldwide
[ CITATION Jul11 \l 1033 ] . With the emphasis in America, about
twenty five percent of Americans eat fast food on a daily basis, and
will spend over $110 billion per year on fast food [ CITATION Eri09
\l 1033 ] .

“The Quick Service Industry (QSR) is one of the largest components of

the over 440 billion dollar restaurant and food service industry, and is
one of the most competitive industries in the world” [ CITATION
Wik11 \l 1033 ] . With steep competition, the CKE Company still
manages to be a leading competitor in the fast food hamburger
segment, alongside chains like McDonalds, Burger King, and Jack in the
Box. While McDonald’s is the industry’s leading firm with the most
global exposure, Burger King and Jack in the Box remain steady
competitors in the Quick Service Industry. Most recently, Carl’s Jr. and
Hardees concepts have incorporated a Mexican food element, Green
Burrito and Red Burrito respectively, to reach out to families by giving
them two options to choose from, as opposed to just a “regular”
hamburger joint.

In addition to adding variety and diversity to the menu, to gain market

share in this dynamic environment, CKE must carefully target specific
segments by providing customers with the best premium quality foods
and superlative personal service at very affordable prices, that
provides benefits valued by each customer group.
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Figure A1.1 shows varying financial findings for CKE Restaurants.

2011 2010 2009 2008 2007

Revenue $1,330.65M $1,418.73M $1,482.71M $1,534.63M $1,588.41M
Net Income $36.26M $48.20M $36.96M $31.08 $50.17M
Net Profit 2.72% 3.40% 2.49% 2.02% 3.16%
Margin
Stock Price N/A 8.36 8.30 13.12 19.77
(Close)
Sales in FY -0.8% -3.9% +1.7%
Current Assets $137,395 $145,855 $140,959 $161,005 $152,278
Shareholder’s $423,917 $236,175 $194,276 $145,424 $378,846
Equity
Advertising $67,524 $64,443 $66,911 $70,324
Costs
Operating $1,356,788 $1,339,238 $1,398,690 $1,446,307 $1,521,984
Costs and
Expenses
Dividends per 0.24 0.24 0.24 0.24 0.24
common share
Long Term $329,008 $357,450 $392,036 $178,055 $264,662
Debt & Lease
Obligations

[ CITATION Uni10 \l 1033 ] 2

2
Financial data collected using Mergeant, Hoovers and Business Source online databases.
 Strategic Marketing Plan

i. Market Description

One of our main products that have made us famous is the Six Dollar Burger, a
pioneer and original of its kind that was introduced into the market in
2001[ CITATION Bal08 \l 1033 ].

CKE’s market consists of people with the desire to consume quality foods at a quick,
fast casual restaurant, via drive-thru or sit in atmosphere, in the most convenient
way possible. Demographic studies help show the areas of density in which
consumers highly demand fast foods. Typically, QSRs flourish where they are heavily
concentrated and populated, working class neighborhoods whose citizens “tend not
to be rich or college-educated. Households earn under the $50,000 national average.
About half the people are minorities … slightly more than a third are high school
graduates; while about fifteen percent hold bachelor’s degrees … it is ethnically
diverse, densely populated people on a moderate income” [ CITATION Dev11 \l 1033 ]

Our target market for the Six Dollar Burger consists of young men in the age bracket
of 18 to 34. The burgers that we offer are served in large proportions and are meant
to successfully satisfy the appetites of “young, hungry guys” unwilling to forgo taste
and quality on a budget.

Additionally, our restaurants appeal to those who have a limited amount of time,
whether it is during a lunch or dinner break. We attract people in the workforce who
are constrained for time, yet still desire dine in style restaurant quality food made
and served quickly at their convenience. Our company’s main intent is to serve our
customers better quality food not typically found in “fast food chain”.

The market segments also worth pursuing are the moms and Millennials.

“Both of these segments represent a significant portion of quick-serve

spending, and each is driven by distinctive needs and desires when it
comes to their quick-serve usage … Millennials comprise the group of
about 80 million young men and women (and are) responsible for a huge
portion of the quick-service industry … There are nearly 32 million moms
in the U.S., and their purchasing power accounts for nearly $1.6 trillion in
annual spending … Millennials say, ‘Value Me’ and moms say ‘Help Me’.”
[ CITATION Den11 \l 1033 ].

Millennials, a specific group of consumers born during the eighties and nineties, are
young individuals who typically prefer to eat out more than cook for themselves,
Strategic Marketing
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and thus are likely to visit fast food restaurants twelve or more times a month,
generally spending most of their income on edible consumption [ CITATION Den11 \l
1033 ]. Historically, this generation of consumers is the most ethnically diverse age
group and is more conscience of creativity and innovations in where they eat and
what they eat; because of the high exposure to cultural differences and influences,
this group desires and expects bountiful options and is interested in a variety of
different products and experiences. “Ethnic concepts or those that feature unusual
items and ingredients have strong appeal” [ CITATION Den11 \l 1033 ]. Furthermore,
community engagement is the key to communicating with these individuals;
concepts adopted by them are through the use of social media and located based
tools to engage this group and maintain constant dialogue in order to listen and
fulfill their needs and wants.

Moms in the market are also an important market to pursue because they are the
primary decision makers for their families, mainly concerning what and where they
eat. This is important to note because they are the deciding factor as to how many
customers (families) our restaurants will be serving. Usually, moms choose
restaurants that appear to have a balance of value, wholesomeness, and
convenience. Most importantly, time is of the essence for busy moms; thus, they look
to QSRs for assistance in feeding their families and shaping healthier futures.
 Strategic Marketing Plan

ii. Product Review

Our signature product, the Six Dollar Burger, features 3:

 A half pound, 100% premium grade Black Angus charbroiled burger
patty
 A slice of American cheese
 Fresh ice berg lettuce
 Two slices of tomatoes
 A stack of onion slices
 A choice between sweet or dill pickles
 Ketchup, mustard, and mayonnaise
 Served on a toasted sesame bun

3
CKE Restaurants serve very many variations of the original Six Dollar Burger. Depending on certain regions
and locations, we offer fourteen different types of novelty Six Dollar Burgers.
 Strategic Marketing
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“Carl's Jr. proves once again that it can

make some of the best, if not the best
fast food burgers. ” [ CITATION Jin11 \l 1033 ] 4

Statistics of CKE & Six Dollar Burger

Price $3.99
2011 Sales $1.33 Billion
1 year sales (6.21%)
growth
2011 Net Income ($36.26 Billion)
2011 Net Growth ---
Market Capital $462.23 Million

Nutritional Facts for Six Dollar Burger

910 Calories 54g fat 21g

saturate
d fat
3g trans fat 125mg 2030mg
cholester sodium
ol
63g 3g fiber 45g
carbohydrate protein
s
Figure A1.2 shows the customer’s need and
how the Six Dollar Burger satisfies those needs.

4
Customer testimonial about a variation of the Six Dollar Burger, “Steakhouse Six Dollar Burger”.
All six variations of the Six Dollar Burger are readily available in
Carl's Jr., and Hardees (CKE's sister restaurant to CJ) and are
Served
charbroiled, made to order. Consumers are given the option to
either sit in and dine, which features semi-table service, or
in Product
through the drive-thru window which is open later, to satisfy the
appetites of those who prefer to eat later in the evening, and
Convenience
well into the night.
Through brand extension, customers receive more choices on
how their burgers are dressed. Our Six Dollar Burger line
consists of six different ways to have your burger.
Original Six Dollar Burger: Charbroiled 100% Black Angus half
pound Beef patty, two slices of American cheese, lettuce, two
slices of tomato, red onion slices, pickles, mustard,
mayonnaise, and ketchup on a toasted sesame seed bun.
Steakhouse Six Dollar Burger: Charbroiled 100% Black Angus
half pound Beef patty, A.1 steak sauce, crumbled blue
cheese, mayonnaise, crispy onion strings, Swiss cheese,
lettuce and tomato placed on a sesame seed bun.
Guacamole Bacon Six Dollar Burger: Charbroiled 100% Black
Angus half pound Beef patty, guacamole, two strips of bacon,
Variety
two slices of melted pepperjack cheese, lettuce, tomato, red
onions and Santa Fe sauce served on a toasted sesame bun. A Menu of
Western Bacon Six Dollar Burger: Charbroiled 100% Black
Angus half pound Beef patty, three strips of bacon, two slices
of melted American cheese, crispy onion rings, and tangy
barbecue sauce on a toasted sesame bun.
Low Carb Six Dollar Burger: Charbroiled 100% Black Angus
half pound Beef patty, two slices of American cheese, two
slices of tomato, red onions, dill pickles, mustard,
mayonnaise, and ketchup wrapped in fresh iceberg whole-
leaf lettuce.
Portobello Mushroom Six Dollar Burger: Charbroiled 100%
Black Angus half pound Beef patty, portobello mushrooms,
two slices of Swiss cheese, red onions, lettuce, two slices of
tomato, and mayonnaise on a toasted sesame seed bun.
The Six Dollar Burger is priced at $3.99, yet it rivals sit-in
Price
restaurant quality burgers priced above $6.
The Six Dollar Burger is modeled after a "dine in
Reasonable
experience burger" at a fraction of the cost, with the
addition of convenience and the option to eat wherever,
Burger at a
whenever; as opposed to eating in a crowded, loud and
busy restaurant.
Quality
Strategic Marketing Plan
 Strategic Marketing
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III. Competitive Review

Following the launch of CKE’s new, innovative Six Dollar Burger, targeting those who
care more for quality and fulfilment, other quick service firms replicated and resold
their versions of our half pound, Black Angus Burger. Introduction of McDonald’s “Black
Angus Burger” features, also, 100% Black Angus Beef on an artisan toasted bun, has
increased competitive pressure, especially from a globally recognized brand.
Competition from other internationally recognized brands is also a major factor. Key
competitors include the following:

 McDonald’s “I’m Lovin’ It”. The market leader in the quick service industry,
McDonalds offers many innovative menu options that incorporate convenience
and value priced items that iconize the American “diet” of burgers and fries, and
everything in between. Recently, it has introduced variations of the “Angus Third
Pounder” as well as other menu items. Globally recognized, McDonald’s
restaurants in other countries, but not in the United States, serve as a “hang out
spot” for locals trying to emulate the typical American persona and eat American
food. Variations of the Angus Third Pounder include “Deluxe”, “Bacon and
Cheese”, and “Mushroom Swiss”.

An Angus Third Pounder consists of:

 1/3 Pound Angus Beef patty  Whole leaf lettuce

 Premium bakery style bun  Red onion
 2 slices of American cheese  Pickles
 Tomato slice

Statistical Data of McDonald’s Angus Third Pounder and Corporation

Price $4.19
2011 Sales $24.07 Billion
1 year sales growth 5.85%
2011 Net Income $4.95 Billion
2011 Net Growth 8.69%
Market Capital $80,874.34 Million

Nutritional Facts of McDonald’s Angus Third Pounder

750 Calories 39g fat 16g saturated

fat
2g trans fat 135mg cholesterol 1700mg sodium

61g carbohydrates 4g fiber 40g protein

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 Burger King “Have It Your Way”. A strong competitor in the quick service
industry, Burger King offers many classic American fast food options ranging
from a variety of burgers, fries, and the like, mostly approached using the value
pricing mechanism. Also a global restaurant, Burger King serves as a place
people flock to experience an “American” lifestyle. Burger King’s market offering
of a premium burger takes shape as the XT line of top quality burgers. Variations
of the XT burger include “Smoky Cheddar Steak House XT”, “A1 Steak House XT”
and “Steak House XT”.

An XT premium burger consists of:

 7 oz. Charbroiled Pound  Tomato slice

Angus Beef patty  Whole leaf lettuce
 Corn crusted roll  Onions
 American cheese  Pickles

Statistical Data of Burger King’s XT burger and Corporation

Price $3.99
2011 Sales $2.5 Billion
1 year sales growth (6.85%)
2011 Net Income $1.34 Billion
2011 Net Growth (6.65%)
Market Capital $2,287.12 Million

Nutritional Facts of Burger King’s XT burger

640 Calories 33g fat 10g saturated

fat
1.5g trans fat 185mg 1260mg
cholesterol sodium
55g 4g fiber 33g protein
carbohydrates
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 Jack in the Box “entire menu served all day”. A main competitor in the quick
service industry, Jack in the Box serves a range of foods from very American
staples such as burgers and fries, to American versions of ethnic cuisines such as
eggrolls and tacos. The launch of Jack’s premium burgers took on a different
route; instead of using Angus Beef, they differentiated themselves by using
Sirloin beef patties which come two ways: Sirloin Cheeseburger or Sirloin Swiss
and Grilled Onion Burger. What distinguishes Jack in the Box is the intent to
satisfy customers without time constrictions on breakfast or lunch/dinner items;
all items on the menu are served throughout the day without restriction.

A Sirloin Cheeseburger consists of:

 1/3 lbs 100% Prime Cut  Peppercorn mayo

burger patty  Whole leaf lettuce
 Bakery style bun  Red onions
 American cheese  Pickle strips
 Tomato slice

Statistical Data of Sirloin Cheeseburger and Corporation

Price $3.99
2011 Sales $2.19 Billion
1 year sales growth 27.78%
2011 Net Income $1.34 Billion
2011 Net Growth 14.80%
Market Capital $1,181.25 Million

Nutritional Facts of Sirloin Cheeseburger

943 Calories 65g fat 21g

saturated
fat
2 trans fat 129mg 1989mg
cholesterol sodium
51g 2g fiber 40g protein
carbohydrate
s
 Strategic Marketing Plan

IV. Channels and Logistics Review

Six Dollar Burgers will be distributed by all retailers of the Carl

Karcher Enterprises, which includes Carl’s Jr. and Hardees. Hardees,
however, will address the burger as the “Six Dollar Thick Burger”.
CKE’s concept restaurants have expanded to forty two states and
fourteen countries, and are planning to continue growth in the global
market in order to gain brand recognition on a wider scale.

Carl’s Jr. Hardee’s Other Total

Corporate 423 466 1 890
Owned
Franchised 674 1,226 10 1,910
Licensed 152 207 -- 359
Total 1,249 1,899 11 3,159
(as of January 2011)

 Corporate Owned.
With a total of 1,249 corporate owned CKE Restaurants in circulation, we hold
total control and set all policies and procedures for each unit. Furthermore, our
corporation yields and retains all profits from each unit. Corporate owned
restaurants set the precedent and are prime examples of what the parent
company plans for the firm, such as price setting, new menu items, promotional
items, etc.

 Franchised & Licensed.

With a total of 1,899 franchised and licensed restaurants under the CKE parent
company, each unit must follow the mandatory guidelines provided. Franchisees
have an obligation to fill in terms of following procedures to sell the same
products advertised and marketed by the parent company. Guidelines include
menu items, operating procedures, promotional offers, and prices of goods sold.
The developmental process of beginning a franchise with the CKE company
begins with:

o Securing territory o Getting the Grand

o Submitting a Real Estate Opening approved
package o Opening your unit
o Committing to a Franchise
Agreement
o Developing a site
o Training your crew
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Franchise Information Overview5

Minimum Financial Requirements Net Worth: $1,000,000

Liquid Assets: $300,000
Experience Previous Franchise or Restaurant
Experience Preferred
Multi-Unit Development 3 Restaurant Minimum
Development Fee $10,000
Franchise Fee $25,000 (1st and 2nd)
$20,000 (3rd and 4th)
$15,000 (5th or more)
Total Estimated Initial Investment $1.3 million+
Royalty Fee 4% of Gross Sales

Unit Size 2,450 sq. ft. to 3,212 sq. ft. (w/o

playground)
Term of Franchise Agreement 20 years
Franchise Training 12 weeks

Franchise Information: Training & Support6

Before you open, we assist you through After you open, we continue to assist
the following: you with:
 Site selection  Field support: we have a team of
 Restaurant design franchise business consultants who
 Equipment ordering will assist you with your business.
 Construction  Operations: we provide you with
 Training periodic information on a variety of
items that helps you in operating a
new business.
 Franchise services: we are a phone
call/email away from any questions
you may have.
 R&D: a qualified staff of
professionals in our state of the art
test kitchen for ongoing research
and development.
 Marketing/Advertising: our
marketing team will support you
with your strategic advertising and
local store marketing.

5
This chart has been copied from the official website of CKE franchising opportunities.
6
This chart has been copied from the official website of CKE franchising opportunities.
 Strategic Marketing Plan

V. Strengths Weaknesses Opportunities and Threat Analysis

While CKE has many powerful strengths to build on, there are some
weaknesses that need to be assessed and improved upon, such as
weakening financial performance and the inability to move into the
global arena in a similar scale compared to our competitors. The major
opportunities available in reach is the growth of our brand concept
through restaurant development agreements, domestically and
globally, to regions with high demand for American fast food made
with quality yet have not been exposed to our chain before. On the
contrary, potential threats to face include high competition from more
recognized brand concepts, and strict laws and regulations, on a
regional, as well as global scale.

 Strengths. CKE Restaurants has four strengths to continue to build on internally

to better represent and communicate to consumers, thus creating lifetime
relationships.

o Strong Retail Network. All concept restaurants belonging, or in contract

with, CKE all exhibit strong retail networks. Each unit communicates
through a Corporate and Contractual Vertical Marketing System that
consists of a chain of producers, wholesalers, and retailers all acting as a
unified system. While corporate owned restaurants integrate successive
stages of the production and distribution cycles under a single ownership,
franchisees work with franchisors that link several stages in the
production to distribution process.
o Co-Branding with Green Burrito and Red Burrito. All Carl’s Jr. concept
restaurants have been co-branded with the Green Burrito, and Hardee’s
concept restaurants have been co-branded with the Red Burrito. This fuse
of different cuisines binds together the All American menu with a new
take on South American food items; we feel that this change will
encourage variety and diversity, and invite those who desire different
culinary tastes. CKE is in the business to please consumers’ taste palettes,
and by adding a new taste concept, studies already show increased foot
traffic in our stores due to promotional efforts to increase consumption in
South American entrees served in CKE Restaurants.
o Quick Service Software Design. Since 1997, CKE Restaurants have adopted
a technologically advanced way to measure demand of all menu items;
this technology is used to gauge the amount of products that will be
Strategic Marketing
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distributed from CKE’s regional headquarters to chain restaurants

surrounding the area, on a weekly basis. This process has been in use in
order to efficiently supply products to different locations and allocate
amounts of fresh and frozen goods in accordance to trends of specific
restaurants in certain regions [ CITATION All97 \l 1033 ].
o Franchise and License Agreements. CKE began establishing agreements for
the sale of franchise and license agreements in order to “accelerate the
development of its restaurant chains” [ CITATION Dat11 \l 1033 ]. In Fiscal
Year 2010, sixty six percent of running Carl’s Jr. Restaurants was owned
and operated by franchisee and licensed owners, which accounts to 802
restaurants. Furthermore, Hardee’s restaurants during the Fiscal Year
2010 had a total of 1,430 franchised and licensed operators which
accounts to seventy five percent of the Hardee’s system. By distributing
rights to the brand name and power, along with accordance to company
protocol, CKE’s license agreements guarantee franchise fees, in addition
to royalty and advertising fees. “Through franchisees and licensees the
company is partially protected from a temporary downturn in the
industry” [ CITATION Dat11 \l 1033 ].

 Weaknesses. With the integration of two main firms, Carl’s Jr. and Hardee’s, CKE
accounts for the fluctuating returns on both firms; the results of sales and scale
compared to competitors contribute to our weaknesses.

o Weakening Financial Performance. “CKE recorded declining efficiency in

FY2010. The revenues of the company declined at a compound annual
rate of change (CARC) of -4% from $1,524.6 million in FY2008 to $1,418.7
million in FY2010 … Carl’s Jr., the company’s largest business segment,
accounted for 60.1% of the total revenues in FY2010. Revenues from
Carl’s Jr. reached $852.5 million, a decrease of 3.8% compared to FY2009.
Further, revenues from Hardee’s segment declined by 5% and other
segment by 9.4%” [ CITATION Dat11 \l 1033 ]. Much of the decline in
revenues and financials are due to a failing economy on a federal scale, as
well as a regional scale. Since the majority of Carl’s Jr. Restaurants preside
in California, the economic stance of the state has driven down business
and caused a downturn in the financial position of the company. With the
dropping numbers, the company faces risks that would hinder growth
plans to expand.
o Lack of Scale Compared to Competitors. CKE does not have an
advantageous scale of operations in comparison to many of its
competitors, such as McDonald’s, Burger King, and Jack in the Box. The
majority of CKE’s competitors is significantly larger in size and generates
greater revenues. For example, McDonald’s recorded revenues of $24.07
 Strategic Marketing Plan

billion, Jack in the Box recorded revenues of $2.19 billion, and Burger
King recorded revenues of $2.50 billion – all significantly larger than
CKE’s revenue of $1.33 billion. The company could potentially be facing
grave disadvantages that may hinder growth in a fiercely competitive
market. “Lack of scale also reduces the bargaining power of CKE”
[ CITATION Dat11 \l 1033 ].

 Opportunities. CKE can build on two major market opportunities.

o Growth through Restaurant Development Agreements. CKE has entered

into development agreements with companies, both national and global,
to expand its presence. We have merged with MDS Foods and Global Food
connection, the Americana Group, RWJP Star Enterprises, Star Foods
Investors Group with the intent to open new concepts in Pakistan,
Kazakhstan, Dallas, and Houston within five to nine years. “CKE entered
into 20 franchise development agreements, to build a total of 380
restaurants, consisting of 236 domestic and 144 international
restaurants. Also in FY2010, the company signed four development
agreements with new and existing franchisees to build a total of 106
restaurants domestically and internationally” [ CITATION Dat11 \l 1033 ].
o Increased Demand for High Quality Food Served With Convenience. CKE has
the opportunity to satisfy consumers’ wants for “bigger, better burgers”
made with top quality ingredients, filled with flavor, and offered at a value
added price. Consumers are gaining more than a flavorful bite with every
burger sold; instead, they are consuming a better burger offered at a
fraction of the cost compared to a sit in restaurant. In addition to that,
consumers are the controllers of time—they control when and where to
purchase their meals, and we control how quickly it gets from our
facilities to their hands. The increase of mothers in the work force,
nationally as well as globally, has marked an increase in the need for
convenient restaurants serving wholesome foods, priced with value in
mind.

 Threats. We face two main threats as a Quick Service Restaurant, competing

with several main stream concepts.

o High Competition. CKE competes with others on large scales, in terms of

international, national, regional, and local retailers also serving and
selling food products. “The company competes on the basis of price,
convenience, service and quality of food products. The company’s
competition in the broadest perspective includes restaurants, quick
service eating establishments, pizza parlors, coffee shops, street vendors,
Strategic Marketing
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convenience food stores, delicatessens, and supermarkets” [ CITATION

Dat11 \l 1033 ]. On a global stance, competitors like McDonald’s and Burger
King are prominent in the market, and have the potential to shut down
CKE’s market share and adversely affect its margins.
o Stringent Laws and Regulations. CKE headquarters reside in Carpenteria,
California, and the majority of Carl’s Jr. Restaurants, about eighty percent,
are located along the west coast, primarily in California. In addition to the
national economic slump, California’s economic woes far outweigh those
of the state, with record unemployment rates at twelve percent—an
additional three percent higher than the national rate. With that,
California’s laws and regulations on businesses have come down with an
iron fist, requiring businesses to go through a minimum of two years of
paperwork, licensing, registering, in addition to regulations regarding
restaurant operations by state and local department officials relating to
“health, food, preparation, sanitation and safety standards, federal and
state labor and immigration law, federal and state laws prohibiting
discrimination and other laws regulating the design and operation of
facilities, such as the ADA. Also, CKE and its franchisees must comply with
the Fair Labor Standards Act and various federal and state laws governing
employment matters, such as minimum wage, overtime pay practices,
child labor laws, citizenship requirements, and other working conditions.
Further, the company’s operations are subject to various federal, state
and local environmental laws and regulations that govern discharges to
air and water, as well as handling and disposal practices for solid and
hazardous wastes” [ CITATION Dat11 \l 1033 ].
 Strategic Marketing Plan

VI. Objectives and Issues

 First Year Objectives.

o CKE’s first year objective is to grow same-store sales in the short
run. By using market research via government studies, census,
etc., we plan to tap into domestic markets that have high
population densities where fast food consumption can potentially
be high due to a great demand in convenient stores in the area.
Our Projected Sales Revenue for the Six Dollar Burger is $26,
613,0007. Our goal is to sell 6,669,925 Six Dollar Burgers at the
rate of $3.99 per burger. By placing locations of CKE concept
restaurants, we plan to strengthen our brand recognition and
expand our revenues through creating and maintaining customer
relations with new consumers in the market.
 Second Year Objectives.
o CKE’s second year objectives are to protect the brand image for
the long run. By doing so, we will be carefully inspecting all CKE
concept facilities to ensure that there are consistencies with the
physical as well as internal structure of each unit, corporate as
well as franchisee owned and operated. By creating a strong hold
on our domestic locations, we will be able to generate strong
revenues which will enable the increase and surge into the global
market.
 Issues.
o In relation to our long term goals, the major issue we face is not
having the financial means to enter the global market with as
much power as competitor, McDonald’s. Furthermore, we face
risks pertaining to weak brand recognition on a global scale, due
to declining profits, and inability to expand on a larger scale. As we
head into the maturity phase of the product life cycle, it will be
increasingly difficult to find the means to grow into the global
market, unless charges are made via technological and
innovational advances, as well as strengthening the general core
of CKE through its subsidiaries.

7
These units were estimated by taking the total sales revenue for CKE and dividing it by 25, assuming that
every 25th customer purchases a Six Dollar Burger.
Strategic Marketing
Plan

VII. Marketing Strategy

CKE’s marketing strategy is based on a unique positioning of product
differentiation. Our promotional strategies go beyond the sale of ‘a plain old
burger’; we generate ad campaigns that feature the Six Dollar Burger with
physical appeal and desire for premium burgers, prepared better than
competitors. Our Six Dollar Burgers are publicized as “bigger and better”
because we guarantee top quality Black Angus beef, fresh cut vegetables, and
the concept of eating “restaurant quality food” on a fast food budget.
Consumers pay for value, but receive great rewards of premium menu items
sure to satisfy even the hungriest eater.

Though our primary target segment is the “hungry guy” age 18 to 34, the QSR
market of consumers includes every individual, no matter what age, race,
ethnicity, or region one may belong to. In order to appeal to all groups, CKE
will need to adopt a new way to promote its products, or push for an increase
in promotional items and deals.

 Positioning. Using product differentiation, we are positioning the Six

Dollar Burger as a one-of-a-kind burger that consumers will not be
able to find elsewhere, at the same value. We model our burgers after
“sit down restaurants” and offer our customers the same burger, at a
fraction of the cost, minus the noise and interruptions of a chaotic sit-
in restaurant.
 Product Strategy. All burgers in the premium Six Dollar line will be
supported by a quality satisfaction guarantee. Put into effect in 2005,
consumers are able to contact the restaurant in which the burger was
purchased and request a refund if they are unhappy with our services.
 Pricing Strategy. The Six Dollar Burger is sold at $3.99 per burger;
however some restaurant locations hold promotions and price the
item differently for a short period of time. We expect to send out
promotions and coupons to encourage potential customers to try the
product and become loyal to premium burgers at a very affordable, fast
food price.
 Distribution Strategy. CKE Restaurants operates under a corporate
owned, as well as franchisee-franchisor distribution channels1. In
terms of distribution channels, focusing on the process of
manufacturing of goods to the point where it reaches consumers is
met through creating main distribution centers in prominent domestic
regions, as well as international ones. Our goal is to evaluate our
presence in the QSR market and gauge the profitability of our
restaurant operation through delivering products from parent
 Strategic Marketing Plan

company to our subsidiaries. Our main mission is to “integrate the

buying functions of each chain so that all enjoy cost benefits ... we see
that with combined volume purchases come scales of economies and
reduced costs all across the board” [ CITATION Mil98 \l 1033 ]
Figure A1.3

Referring to the figure provided, in the areas of heavy concentration of CKE restaurants,
we are supplying our products and services to consumers at convenient locations in
which demand for fast food is growing. Further, it is evident that Hardee’s restaurants
are heavily concentrated in the east to south east region of the domestic United States.
Also, it is clearly evident that CKE has potential to penetrate the market with the launch
of more restaurants ranging from the west to the Midwestern states of the domestic
United States.
 Strategic Marketing
Plan

VIII. Marketing Communication Strategy

By integrating all messages in the media, CKE will strengthen the brand name and
recognition of the product, the Six Dollar Burger, and capitalize on the product
differentiation compared to similar items circulating in the market. Through using
all forms of the promotional mix, we plan to create long lasting, lifetime
relationships with our consumers.

In order to strengthen our brand recognition and equity, what is first and foremost
important is the consistency in which we present the CKE brand. Without a doubt,
our target market that we appeal to most is the male gender group within the ages of
18 to 24. Our marketing strategy through promotion has always been to appeal to
this core group using provocative, suggestive, and sexually appealing ads and
concepts. In this arena, “sex sells”. In addition to this, it is embedded our brand
reputation to use humor as a means of communication to our customers. By
generating controversial pieces of public display, we are able to instil in our
consumer a brand image and position that is truly memorable after watching or
seeing it for the first time.

o Case in point: Sex sells. Paris Hilton’s 2001 commercial for the Six Dollar
Burger consisted of the celebrity washing her Bentley in a black, leather
bikini, eating our premium burger. Following suit, we have been using
beautiful women as spokes-models for our Six Dollar Burgers, salads, and
Turkey Burgers.
o Case in point: memorably humorous. The commercial involving a farmer
shaking a cow and dancing to the song “milkshake” by Kelis was advertising
‘Hand Scooped Ice Cream Shakes’ at all CKE restaurants.

 Advertising. We will utilize television commercials, billboards, newspaper, radio,

and print ads.
 Personal Selling. All sales associates serving at CKE Restaurants will be required to
ask customers if they would like to try a Six Dollar Burger feature menu item, via
drive through and personal contact.
 Sales Promotion. With every launch of an introductory item, or a customer favorite,
we offer and circulate coupons, contests, cents-off deals, premiums, and use Android
and iPhone apps that offer coupons and free items as an incentive to increase traffic
into our restaurants.
 Public Relations. On our CKE Restaurants website, we chronicle our events and post
articles written for us, and about us. These articles include the progress of our
company, as well as the philanthropic advances we have made to contribute to the
improvement of society.
 Strategic Marketing Plan

 Direct Marketing. CKE will use direct mail and catalogs and online marketing to
expand our brand. Through creating a Facebook page and Twitter account, fans are
encouraged to follow our progress, keep up to date with promotional efforts, and
engage in dialogue, in order to inform and communicate to us what works and what
needs improvement. Furthermore, by using the “Happy Star” logo as a personality,
consumers are able to relate to the brand on a personal level, since he is responsible
for posting Facebook and Twitter updates.

i. Marketing Research

Through marketing research, we are investigating the best possible locations for
future CKE restaurants. The tools we are planning to assist in decision making
include Market Research for QSRs, Government Census data, and Index data. By
examining our current stance in the domestic market, we are able to verify which
regions have not been exposed to CKE concepts, and further analyze the demand
that region has for convenient, QSR restaurants. By finding areas in which we
are under-stored and under-represented, we are able to pinpoint possible
locations. Furthermore, the supply of kitchenware should match the demand of
consumers, i.e. consumer spending in the fast food market.

Through research provided by different companies and the federal government,

we are able to analyze the population density in certain regions, account for
differing demographics such as age group, income, education level, and socio-
economic levels.

The end goal of utilizing marketing research is to pinpoint locations that could
potentially generate increasing revenue where the demand for our products
exceeds the supply in the area.
Strategic Marketing
Plan

ii. Marketing Organization

Andrew F. Puzder
CEO

Jeffrey P. Chasney
Theodore Abajian
EVP, CIO, Strategic
EVP, CFO
Planning

Bradford R. Haley Richard Bruxton

E. Michael
EVP, Hardee's &
Murphy EVP, Real Estate
Carl's Jr.
President, CLO Development
Marketing
 Strategic Marketing Plan

IX. Action Programs8

The Six Dollar Burger will need to undergo some changes in order to meet consumer
demands on a larger scale. By doing so, we have created an action program that
enables us to research, test, and improve our products across the board.

i. Research. In this phase of the action program, we will be conducting

research on improving the “bun” aspect of the burger. According to many
consumers, our Six Dollar Burger is too hefty for the conventional sesame
seed bun used in our other burger lines. Therefore, to satisfy these demands,
we will research the best possible bun that complements the burger, and is of
the highest quality possible while holding our budget’s integrity.
Our approach is to find an artisan style bakery bun that is soft and chewy, and
substantial enough to hold a half pound burger patty, along with sauces and
fresh cut vegetables.
ii. Test. In this phase, we will test our market to see if the improvements we
have made on the buns affect the demand for the Six Dollar Burger, itself. We
will text these burgers in each region, domestically, before attempting to test
in international and global markets. Our goal is to create the perfect value
burger using top quality, premium ingredients that satisfies the craving for
an “American Man’s Burger”.
iii. Improve. By using market research and testing the products directly to our
consumers, we will determine the best possible way to make our burgers
truly “bigger and better”. Following, we will use Public Relations to inform
the public of the improvements made in order to cater to consumers’
demands, and launch promotional efforts to increase traffic into CKE
restaurants. Furthermore, the use of social media, such as Facebook and
Twitter, will be used in conjunction to showcase the new and improved Six
Dollar Burger, and enable fans to communicate their likes and dislikes in
order for us to continue to satisfy new demands.

8
The month to month was not used as a model for this action program primarily because it is irrelevant to
gauge by month the process it takes to tailor our product to meet consumers’ demand and reach “customer
delight” entirely.
 Strategic Marketing
Plan

X. Budgets
Projected revenue for the next year, in the sales of Six Dollar Burgers is
$26,613,000, with a total of 6,669,925 units sold. The unit sales price of each Six
Dollar Burger is set at $3.99 and holds a variable cost of $1.59 to produce. We
anticipate a year loss at less an $3.5 million. Break even calculations indicate
that:

Fixed Cost / Wholesale unit cost – Variable cost = Break-even point

$623,580,000 / $3.99 per unit – $1.59 per unit = 259,825,000 units

XI. Controls
Carl Karcher Enterprises is currently in the process of implementing new
measures in its corporate as well as franchise licensed restaurants to monitor
and control quality assurance in our products and services provided. Through
these programs, we will be able to ensure 100% satisfaction in service in person
to person contact between employees and customers, as well as products sold—
from the oven to the consumer’s hands. With our action plan in place, our goal is
to study the market of consumers and their reactions to the change in our
premium burgers, and thus react in a way as to improve our burger, and improve
our brand reputation.

Following the Domino’s Pizza model, we plan on publicly portraying what goes
on in test kitchens, real customers’ reactions to the changes made to the Six
Dollar Burger, and show the world how and what we plan on doing to improve
the Six Dollar Burger to be an even better product for the value paid. This public
campaign will be carried out by Public Relations, and place CKE in good lighting
with the domestic as well as global community to show that we are, at the root of
it all, a customer driven firm in the business of satisfying consumers’ hunger.

XII. Bibliography
 Strategic Marketing Plan

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