We live in a constantly evolving and complex world. Companies have to evaluate various strategies to ensure that they will be stable and profitable. Sometimes, even ventures that belong to the same industry use completely different approach. In-N-Out Burger is an example of the company, which has become successful by keeping to its traditions and rejecting the current trends in its industry. In this paper, I will evaluate the strategy of In-N-Out Burger and provide suggestions for the possible course of the company’s action.
Statement of Problems:
The textbook (Kotler and Armstrong) provides a useful case study, which poses several problems. First, it attempts to answer what makes In-N-Out Burger to experience high customer loyalty and low employee turnover even though the company’s strategy is different from the current industry trends. Second, the textbook (Kotler and Armstrong) poses an issue of whether In-N-Out Burger’s strategy is viable in the long-run.
Relevant Facts of the Case:
The textbook case study (Kotler and Armstrong) provides some information, which helps readers to have a better understanding of the issues that the company is currently facing. First, the company’s success seems to be largely dependent on its traditions. In-N-Out Burgers is developing at a slow pace, much slower than its competitors. For example, it took the company 40 years to move outside the state, while McDonald’s, launched the same year as In-N-Out Burger, was already present in many countries worldwide (Kotler and Armstrong). The company’s mantra states: “Keep it real simple. Do one thing and do it the best you can” (Kotler and Armstrong 34). The company’s slow growth and simplicity are often regarded as main determinants of its massive lines. Second, in 2006, one of the venture’s founders passed away (Kotler and Armstrong). Instead, in 2010, a 28 years old Lynsi Martinez became the company’s new president (Kotler and Armstrong). Thus, some analysts are wondering if she will be able to keep to the traditional strategy, which seems to be one of the primary determinants of the company’s success. Third, the company does not spend a lot on advertising; rather, it dedicates only 1 percent of its revenues to billboards and radio ads (Kotler and Armstrong). On the other hand, McDonalds spends 7 percent of its revenues on advertising (Kotler and Armstrong). The primary ‘advertisement’ of the In-N-Out Burger’s products is a word of mouth.
Having conducted research, I was able to find the following relevant information. First, despite the change in the company’s management, In-N-Out Burger is constantly growing. The venture’s sales increased by 4.6 percent in 2012 (Lubove). In addition, in 2013, the company was valued at 1.1 billion USD (Lubove). On the other hand, since there is not publicly available data, some people can speculate; thus, one investor valued the company at more than 2 billion USD (Lubove). Second, in 2012, the company did several pop-up event overseas (The Huffington Post). In-N-Out Burger’s products were sold out in 5 minutes in Singapore, even though, according to the consumer “the taste was 80 percent of how it is back in the States” (The Huffington Post).
Having read the case study (Kotler and Armstrong), I have several assumptions about the company’s operations. First, it seems that the president, Lynsi Martinez, does not want to change anything, but keep to the traditional strategy instead. Second, the company has developed a positive brand image, which might as well have much recognition and value abroad.
Identification of Alternative Courses of Action:
There are few strategies that In-N-Out Burger could consider. First, the company could accept current industry trends and open its restaurants in every state. Second, In-N-Out Burger could keep its traditional strategy in the US but also open few restaurants abroad. According to the article (The Huffington Post), the brand is very desirable and has much recognition globally as well. Third, the company could expand its menu to attract new customers to its existing restaurants, but keeps the expansion policy unchanged.
Evaluation of These Alternative Courses of Action:
In the first case, the company might have to sacrifice some quality, but it could enjoy higher revenues instead. Thus, In-N-Out Burger might find it to be a viable strategy, as consumers show much interest and loyalty to the company’s products. The second strategy could increase company’s profitability and have no effect on In-N-Out Burger’s quality. In addition, this strategy is consistent with the company’s traditions. The third strategy could increase the chain’s revenues, but the company might also lose some consumers as a result of less ‘exclusivity’.
I strongly believe that the company should follow the second strategy. The In-N-Out Burger should keep its slow expansion pace in the US, but it should enter some foreign markets as well.
Implementation of the Solution:
First, In-N-Out Burger should hold some of its pop-up events in various countries to assess the market. Second, it should advertise an expansion to the country that seems to be the most ‘ready’. Third, the company should analyze cultural differences, but also invite US professional to train new personnel. Fourth, the company should keep its exclusiveness and slow pace of expansion overseas as well.
In conclusion, I enjoyed analyzing the In-N-Out Burger case study, as it made me look at another, unorthodox approach to conducting business in a fast-food industry. It made me realize that it is important for the company to keep its identity, but also expand its opportunities at the same time. Once In-N-Out Burger management realizes it and embraces the change, the company might become the best global burger chain.
- Kotler, Philip, and Gary Armstrong. Principles Of Marketing. 15th ed. Prentice Hall, 2013. Print.
- Lubove, Seth. ‘Youngest American Woman Billionaire Found With In-N-Out’. Bloomberg. N.p., 2013. Web. 14 Sept. 2015.
- The Huffington Post,. ‘In-N-Out Burger’s Singapore Pop-Up Sells Out In 5 Minutes’. N.p., 2012. Web. 14 Sept. 2015.