Nathan's Famous is an American fast food corporation known for its beef hot dogs. This marketing plan evaluates potential international markets for Nathan's to expand into. Based on the research, Australia is identified as the most attractive country due to its high annual meat consumption, GDP per capita, and fast food expenditure. The main competitors in Australia are McDonald's and KFC. The recommended entry mode is franchising with local Australian investors to limit risk while gaining market understanding. In the future, Nathan's could establish company-owned locations to fully realize the benefits of global expansion.
2. Table of Contents
Executive Summary.........................................................................................................................0
1 Company Analysis ........................................................................................................................1
1.1 The Company ...........................................................................................................................1
1.1.1 Brand Image ......................................................................................................................1
1.1.2 Human Resource Management............................................................................................1
1.1.3 Corporate Social Responsibility (CSR) ................................................................................1
1.2 Organizational Structure ............................................................................................................2
1.2.1 Internal Analysis ................................................................................................................2
1.2.2 Target Market Profile and Product Categories ......................................................................2
1.2.3 Financial Information .........................................................................................................3
1.2.4 International Business Activities .........................................................................................4
1.2.5 Marketing Overview...........................................................................................................4
1.2.6 Industry Analysis ...............................................................................................................5
1.2.7 Competitor’s Table.............................................................................................................6
1.3 Conclusions and Recommendation.............................................................................................7
2 Global Market Search ...................................................................................................................7
2.1 Country Selection......................................................................................................................7
2.1.1 Criteria Selection................................................................................................................7
2.1.2 Country Comparison ..........................................................................................................8
2.2 Country Evaluation ...................................................................................................................9
2.3 Conclusions and Recommendation.............................................................................................9
3 Market Analysis ............................................................................................................................9
3.1 PEST Analysis..........................................................................................................................9
3.1.1 Australia ............................................................................................................................9
3.1.2 Germany..........................................................................................................................10
3.1.3 Brazil ..............................................................................................................................11
3.2 Competitive Analysis ..............................................................................................................12
3.2.1 Main Competitors.............................................................................................................12
3.2.2 Globalization ...................................................................................................................13
3.3 Country Selection....................................................................................................................13
3.3.1 Criteria Selection..............................................................................................................13
3.3.2 Country Side-By-Side Comparison....................................................................................13
3.3.3 Evaluation and Country Selection......................................................................................14
3.4 Conclusions and Recommendation...........................................................................................14
4 Marketing Plan............................................................................................................................15
4.1 Market Entry Mode.................................................................................................................15
4.2 Marketing Mix: Four P’s .........................................................................................................15
4.2.1 Product/Service................................................................................................................16
4.2.2 Price................................................................................................................................16
4.2.3 Promotion........................................................................................................................16
4.2.4 Placement........................................................................................................................17
4.3 STP Process............................................................................................................................18
4.3.1 Segmentation ...................................................................................................................18
4.3.2 Targeting .........................................................................................................................18
4.3.3 Positioning.......................................................................................................................18
3. 4.4 Conclusions and Recommendation...........................................................................................18
References......................................................................................................................................19
Appendix........................................................................................................................................21
4. 0
Executive Summary
This marketing plan has been developed for the American fast food corporation Nathan’s
Famous, a company known for the best beef hot dogs in the world. Nathan’s is interested in
expanding globally, so this analysis will look at potential international markets that the company
is not already in and evaluate the top country that the company should enter. With limited time
and money to spend on food, the fast food industry has been the perfect solution for many
families. Although, for the most part, the food is not very healthy, the industry still generates
billions of dollars worldwide yearly. Therefore, the industry is in the mature stage of the life
cycle and appears as if it will remain for many years to come.
Based on the research in this analysis, the most attractive nation for Nathan’s Famous to enter
next is Australia. This country has high annual meat consumption per capita, high GDP per
capita, and high fast food expenditure per capita, which makes it attractive for a meat-selling,
fast food company like Nathan’s. The main competitors in this market are McDonald’s and KFC,
which are also major competitors in their home market. Therefore, Nathan’s should market its
products at competitive prices in order to gain market share in Australia. The recommended
entry mode is franchising with local Australian investors because this the business model used in
a limited number of other foreign markets. In addition, it limits Nathan’s risk as well as allows
the company to gain understanding of this Western market. In the future, Nathan’s could
establish company-owned locations in order to fully reap the benefits of globalization.
5. 1
1 Company Analysis
1.1 The Company
1.1.1 Brand Image
Nathan Handwerker, a Polish immigrant, founded Nathan’s Famous in 1916 in Coney Island,
New York.1 Nathan’s began selling hot dogs and crinkle-cut French fries that were developed
and seasoned by his wife, Ida. Despite its small-scale start, Nathan’s opened its second restaurant
in 1957, which was followed by two more restaurant openings within the next twelve years.
Nathan’s Famous became a publicly traded company in 1993 and started expanding their
operations through co-branding. From 1999-2006, Nathan’s had acquired a few food chains,
including Kenny Rogers Roasters and Arthur Treacher’s. Nathan’s also expanded their
operations into international locations using a franchise model to limit the risks involved with
opening a new store.2
Figure 1: Nathan’s Famous Logo3
1.1.2 Human Resource Management
The core values of Nathan’s Famous are to deliver unparalleled service, high-quality products,
and excellent value that exceed customer expectations. Their mission is “to be the premier
provider of brand name quick-serve food, offered through restaurants and a variety of other retail
environments”4. Nathan’s is able to achieve this by focusing on customer service. By providing
guests with memorable experiences, Nathan’s builds customer loyalty and is able to keep guests
coming back for more food products.5 Furthermore, Nathan’s Compensation Committee, which
is selected by the Board of Directors, has the responsibility of assessing executive officer
compensation plans, guidelines, and programs.6
1.1.3 Corporate Social Responsibility (CSR)
Nathan’s Famous undertakes its social responsibility by partnering with KaBOOM! in a
campaign called “Ready. Set. PLAY!” This initiative is targeted towards children and hopes to
promote active play across the United States (U.S.). Nathan’s realizes that an active lifestyle is
on the decline throughout the country and this leads to an increased risk of developing obesity.
The campaign consists of three stages: design day, in which children draw their vision of an ideal
playground; the plan, in which designs are completed and preparations for building have started;
1
http://www.nathansfamous.com/story/extended_history
2
http://search.proquest.com.ezproxy.rollins.edu:2048/hooverscompany/docview/230597563/abstract/B29DDD25A0E34585PQ/1?accountid
=13584#
3
http://www.nathansfamous.com/assets/logo-0ae3f64df541bc3d0d77e8ebf98a86fd.png
4
http://www.fundinguniverse.com/company-histories/nathan-s-famous-inc-history/
5
http://www.fundinguniverse.com/company-histories/nathan-s-famous-inc-history/
6
http://media.corporate-ir.net/media_files/IROL/11/113414/NATH_Updated_Compensation_Committee_Charter_9.14.pdf
6. 2
and, build day, in which volunteers help construct a new playground. Nathan’s and KaBOOM!
are able to create active opportunities to youngsters across the country. Nathan’s is concerned
with generating value for its shareholders, but is also concerned with promoting an active
lifestyle. Therefore, Nathan’s promotes both transparency and ethical behavior in its activities.7
1.2 Organizational Structure
1.2.1 Internal Analysis
Nathan’s Famous (NASDAQ:NATH) is a publicly traded parent company that operates in the
food-service industry. The company sells a variety of branded products, such as beef hot dogs
and crinkle-cut French fries. Nathan’s started with its first restaurant in Coney Island; however,
since then, the company has expanded greatly and currently sells hot dogs throughout the U.S.,
Canada, and a small number of other countries.8
Like any company, Nathan’s does well in some specific areas, but needs to make changes to
excel in the food-service industry. There are also some opportunities that may help improve their
operations and some threats that may hinder their ability to compete on a global level. Table 1
illustrates a SWOT Analysis for Nathan’s Famous.
SWOT Analysis
Strengths High-quality service
Wide sales network (restaurants,supermarkets, online)
Continues to expand globally
Increased year-to-year revenue
Hosts a competitive eating cost annually in Coney Island
Continues to expand its sale of products through third-party operators
Weaknesses Low number of restaurants in the Midwestern U.S.
Lack of marketing (when compared to other industry giants i.e. McDonald’s)
High costs
Low net income
Opportunities Increasing market due to increased need for quick food options
Expand restaurants to other countries in Western Europe and East Asia
Increase their co-branding operations
Threats National economic instability
High degree of competition from otherfast-food retailers
Entrance of new fast-food businesses to the American market
Changes in consumers’ tastes and preferences
Table 1: Nathan’s SWOT Analysis
1.2.2 Target Market Profile and Product Categories
Nathan’s Famous utilizes a unique strategy in order to expand their operations. Nathan’s focus is
on confined market settings, including shopping centers and airports. The company likes to focus
on small, flexible units with low start-up costs in order to deliver quality food at a reasonable
price. It also sought after forming alliances with companies that already generated significant
traffic in their stores, such as Home Depot. Figure 2 shows Nathan’s wide array of products,
7
http://www.nathansfamous.com/kaboom
8
http://www.lexisnexis.com.ezproxy.rollins.edu:2048/hottopics/lnacademic/
7. 3
including beef hot dogs (can be topped with chili, cheese, etc.), crinkle-cut French fries (can be
topped with bacon, chili, cheese, ranch, etc.), hamburgers (can be topped with bacon, cheese,
etc.), Philly cheesesteaks, chicken tenders, chicken sandwiches, chicken wings, corn dogs, hot
dog nuggets, and onion rings. Some Nathan’s locations sell Arthur Treacher’s products, such as
fish ‘n chips, shrimp ‘n chips, clam ‘n chips, fish sandwiches, clams sandwiches, and lobster
salad sandwiches.9 Nathan’s also retails numerous meal replacement items in grocery stores,
such as French fries, onion rings, chicken strips, pickle spears, condiments (ketchup, mustard),
and beef hot dogs. By being available through a number of different channels, it gives Nathan’s
the opportunity to connect with a wide array of customers.10
Figure 2: Nathan’s Product Categories11
1.2.3 Financial Information
Nathan’s Famous, Inc. is a publicly traded company, so it must disclose its financial information
after each quarter as well as at the end of the year. Table 2 illustrates the Net Income obtained by
Nathan’s Famous for the last three years.
Financial Information for Nathan’s Famous, Inc.
Year
Total Revenue
(in millions of $)
Number of Full-
time Employees
Number of
Locations
Net Income
(in millions of $)
Gross Profit
(in millions of $)
2012 66.222 219 304 6.158 10.263
2013 71.543 161 308 7.468 11.782
2014 82.927 210 329 8.327 12.449
Table 2: Net Income for Nathan’s Famous, Inc.12
9
http://www.nathansfamous.com/restaurants/menu
10
http://www.fundinguniverse.com/company-histories/nathan-s-famous-inc-history/
11
http://franchise.nathansfamous.com/assets/images/hero-menu.jpg
12
http://www.sec.gov/Archives/edgar/data/69733/000143774914011106/nath20140330_10k.htm
8. 4
1.2.4 International Business Activities
Nathan’s currently serves up hot dogs in approximately 300 restaurant locations in eleven
countries (Figure 3). The brand is well established in the United States, especially in the
Northeast and Southeast. Nathan’s sells its products in over 40,000 retail stores around the
world. Nathan’s has huge potential to expand into untapped markets in Asia, Africa, and South
America, which could further increase their international business activities.13
Figure 3: Nathan’s International Restaurant Locations14
1.2.5 Marketing Overview
Nathan’s Logo (Figure 4) consists of their famous hot dog topped with mustard, with the caption
of “America’s Favorite Hot Dog”. This caption signals the brand’s association with the United
States, as well as some other Central American countries. The hot dog image below can signal
the high-quality Nathan’s strives to deliver to all of its customers globally.
Figure 4: Nathan’s Famous America’s Favorite Logo15
13
http://www.nathansfamous.com/story/extended_history
14
http://www.nathansfamous.com.my/images/nathans-map-deae1600e2773a4a561057252b62f3cc_900x477.png
15
http://pal-pac.org/wp-content/uploads/2014/01/nathans-hot-dogs.jpg
9. 5
Nathan’s Famous, Inc. is engaged in the marketing and sale of its branded products through
multiple channels of distribution. Nathan’s has followed co-branding and co-hosting initiatives in
order to further its growth in the food-service industry. The major channels of distribution
include: operation of Nathan’s Famous quick-service restaurants; franchise and Branded Menu
Program; Branded Product Program; and, licensing program.
Nathan’s is focused on market penetration of the brand. Their efforts have been focused on the
following: expanding the amount of locations using the Branded Product Program; expanding the
amount of native franchised Nathan’s restaurants; expanding the licensing program for packaged
goods through both geographic expansion and new product launches; and, operating current
company-owned locations. These potential strategies provide Nathan’s with the ability to
penetrate into new markets.16
1.2.6 Industry Analysis
The global fast-food industry is expected to grow through 2019, starting with over a 4% increase
in 2015. In addition, global consumer spending is predicted to rise at an average yearly rate of
4% over the next five-year period.17 Figure 5 on the following page is an industry analysis
utilizing Porter’s Five Forces Model.
Intensity of Rivalry: Competition between fast-food businesses in the world is extremely high
as there are many companies operating in both the United States as well as in foreign countries.
These companies also face competition from full-service restaurants because consumers have the
option to dine out if they have both time and money to spend. The major fast-food companies
with global operations are: McDonald’s Corporation (16.6% market share), Yum! Brands, Inc.
(11.1%), Subway (3.6%), and Burger King Worldwide Inc. (3%).18
Threat of New Entrants: The threat of new entrants is high because there are low barriers to
entry in this industry. A fast-food operation can begin with relatively little capital by renting
property and equipment. In addition, the new company does not need to have an existing
customer base. It would be wise for new entrants to cater to current trends, such as serving
healthy alternatives to differentiate themselves.19
Threat of Substitutes: Fast-food restaurants are clearly an option for someone who is always on
the go and needs a convenient place to get food. However, for those who have more time and
money to spend on food, there are more options for them to choose from. These people can
purchase food at grocery stores and cook at home. They may also choose to eat at full-service
restaurants in which their meals are made to order, as opposed to food that is cooked prior to an
order being taken. In addition, changes in consumer preferences, such as a demand for healthy,
quality options, have led to changes in purchasing behavior.
Bargaining Power of Suppliers: A company’s relationship with suppliers is extremely
important because it affects their net income. Supplies in this industry are dictated by the market
price of the product, so there is little bargaining power on the company side. Maintaining good
relations with suppliers is important in order for products to be delivered on time.
Bargaining Power of Buyers: Consumers do not have much ability to negotiate prices, but they
do have the ability to spread their opinion quickly through social media and word-of-mouth. If a
16
http://www.sec.gov/Archives/edgar/data/69733/000143774914011106/nath20140330_10k.htm
17
http://clients1.ibisworld.com/reports/gl/industry/industryoutlook.aspx?entid=1480
18
http://clients1.ibisworld.com/reports/gl/industry/majorcompanies.aspx?entid=1480
19
http://clients1.ibisworld.com/reports/gl/industry/competitivelandscape.aspx?entid=1480
10. 6
consumer believes that he/she received poor quality products and poor customer service, then it
is likely for the word to spread to the local population, which can negatively impact the business.
Figure 5: Porter’s Five Forces for Fast-Food Industry
1.2.7 Competitor’s Table
Nathan’s faces competition from a large number of competitors, including McDonald’s
Corporation and Yum! Brands, Inc. Table 3 is a competitor’s analysis for Nathan’s Famous. On
the following page, Figure 6 shows a positioning map for the fast food market.
Major Companies Nathan’s Famous McDonald’s Corporation Yum! Brands, Inc.
Ticker20 NATH MCD YUM
Market Cap (in millions of $)21 327 92,600 33,600
Revenue (in millions of $)22 82.927 27,400 13,300
Number of Full-time Employees23 210 440,000 539,000
Number of Locations 329 36,25824 40,31125
Net Income (in millions of $)26 8.327 4,760 1,050
Table 3: Nathan’s Famous Competitor’s Table
20
http://money.cnn.com
21
http://money.cnn.com
22
http://www.sec.gov/edgar/searchedgar/companysearch.html
23
http://www.lexisnexis.com.ezproxy.rollins.edu:2048/hottopics/lnacademic/
24
http://www.statista.com/topics/1444/mcdonalds/
25
http://www.yum.com/investors/restcounts.asp
26
http://www.sec.gov/edgar/searchedgar/companysearch.html
Rivalry
HIGH
Threat of
New
Entrants
HIGH
Buyer
Power
MEDIUM
Threat of
Substitute
s HIGH
Supplier
Power
MEDIUM
11. 7
Figure 6: Positioning Map
1.3 Conclusions and Recommendation
Nathan’s Famous offers customers high-quality products and high-quality customer service.
They offer a wide range of options, including hot dogs, chicken tenders, seafood, and crinkle-cut
French fries. However, in general, the fast-food industry is extremely competitive and offers
consumers with a wide array of substitutes. This may negatively affect Nathan’s ability to
compete with huge, global corporations, such as McDonald’s.
2 Global MarketSearch
2.1 Country Selection
2.1.1 Criteria Selection
Nathan’s is currently present in eleven countries in the Americas, Europe, Africa, and the Middle
East, so there is a wide array of nations that the company can select for its next market entry. In
order to limit the number of potential nations that Nathan’s Famous can enter, a Likert scale is
used to give ratings to the selected variables to assess the strengths and weaknesses of certain
countries. The countries that receive the highest scores from the ratings will be the top
contenders. Each variable is rated on a scale from 1 to 5, with 5 being the highest possible score.
To begin the search for the next market entry, four variables were selected in order to determine
12. 8
the top three potential markets for Nathan’s. To limit the number of possible countries, two
variables, population and annual meat consumption per capita, helped limit the number of
countries available for selection. For population, a country needed to have at least 20 million
citizens because it makes sense to choose a country with a large population to enter since hot
dogs are relatively cheap products. Annual meat consumption per capita is also important; the
cutoff amount for this variable is 40 kilograms per person per year, which is slightly below the
world average. The next variable considered is Gross Domestic Product (GDP) per capita
because it serves as an indicator of the overall economic productivity of a nation. The final
variable considered is fast food expenditure per capita because it shows how much each person,
on average, spends on fast food each year and is vital for sustaining our business. Exhibit 1 in the
appendix shows the Likert Scale used for Table 4 shown in the next section.
2.1.2 Country Comparison
Nine countries are ranked on a scale from one to five in Table 4, which is based on the Likert
scale that appears in Exhibit 1. Exhibit 2 shows the nine countries weighted equally by the four
variables, each consisting of 25% of the total. The countries appearing in Table 4 are: England
(Eng.), Australia (Aus.), Japan (Jpn.), China (Chn.), Germany (Ger.), France (Fra.), Spain (Esp.),
Italy (Ita.), and Brazil (Bra.). The weighting used in Table 4 was determined by the importance
of each variable for Nathan’s new potential market entry. Population accounted for 40%, annual
meat consumption per capita accounted for 30%, GDP per capita accounted for 20%, and fast
food expenditure per capita consisted of the remaining 10%. The individual ratings were added
together and each country received an overall weighted rating.
Factors Wt. Eng. Aus. Jpn. Chn. Ger. Fra. Esp. Ita. Bra.
Population
(in millions)27 64.1 23.13 127.3 1,357 80.62 66.03 46.65 59.83 200.4
Rating (1-5) 1 1 3 5 2 1 1 1 4
Wt. 40% 0.4 0.4 1.2 2 0.8 0.4 0.4 0.4 1.6
Annual Meat
Consumption per
Capita (in kg)28
84.2 111.5 45.9 58.2 88.1 86.7 97 90.7 85.3
Rating (1-5) 3 5 1 1 4 4 4 4 3
Wt. 30% 0.9 1.5 0.3 0.3 1.2 1.2 1.2 1.2 0.9
GDP per Capita
(in thousands of $)29 41.79 67.46 38.63 6.81 46.27 42.5 29.86 35.93 11.21
Rating (1-5) 4 5 4 1 4 4 3 4 1
Wt. 20% 0.8 1 0.8 0.2 0.8 0.8 0.6 0.8 0.2
Fast Food
Expenditure per
Capita (in $)30
390.3 362.7 281.0 10.10 101.9 95.60 82.70 55.40 44.10
Rating (1-5) 5 5 4 1 2 2 2 1 1
Wt. 10% 0.5 0.5 0.4 0.1 0.2 0.2 0.2 0.1 0.1
Overall 100% 2.6 3.4 2.7 2.6 3 2.6 2.4 2.5 2.8
Table 4: Country Side-by-Side Comparison (Top 9)
27
http://data.worldbank.org/indicator/SP.POP.TOTL?order=wbapi_data_value_2013+wbapi_data_value+wbapi_data_value-last&sort=desc
28
http://chartsbin.com/view/12730
29
http://data.worldbank.org/indicator/NY.GDP.PCAP.CD?order=wbapi_data_value_2013+wbapi_data_value+wbapi_data_value-last&sort=desc
30
http://www.portal.euromonitor.com.ezproxy.rollins.edu:2048/portal/analysis/tab
13. 9
2.2 Country Evaluation
The evaluation of each country is based on its rating on the four variables with scores ranging
from the highest (5) to the lowest (1). The weights were determined based on the relative
importance of each variable for the company being analyzed. Population is one of the most
significant variables there is when considering international expansion, so it is given the most
weight. Since Nathan’s Famous sells meat products, it was also determined that this variable
should hold substantial weight. As seen above, the top three country’s overall scores are
boldfaced in the bottom row of Table 4.
2.3 Conclusions and Recommendation
Table 4 shows the top three countries with the highest total scores. These countries are Australia
(3.4), Germany (3), and Brazil (2.8). After this initial selection, more analysis on each of these
individual countries is needed to determine the one new market entry for Nathan’s Famous. After
determining the one country, a mode of entry and other important factors, such as the 4 P’s, will
be established for entering the new market.
3 MarketAnalysis
3.1 PEST Analysis
3.1.1 Australia31
Political Factors: Australia’s government type is a federal parliamentary democracy and a
Commonwealth realm, guided by the constitution that was effective starting in 1901. It is a
founding member of the United Nations (UN) in 1945. It belongs to a variety of international
organizations, such as the G-20, the International Monetary Fund (IMF), and the World Health
Organization (WHO).
Economic Factors: Australia has experienced continued economic growth of about 3.5% per
year for over 20 years. Australia also features low unemployment (5.7% in 2013), controlled
inflation for consumer prices (2.4% in 2013), low public debt (32.6% of GDP in 2013), and a
strong, stable financial system. The services sector is the biggest section of Australia’s economy,
accounting for 75% of jobs and 70% of GDP. Australia’s GDP purchasing power parity (PPP) in
U.S. dollars is $998.3 billion in 2013. Australia has minimal restrictions on imports, which has
helped increase productivity, stimulate growth, and make the economy more dynamic. The
exchange rate in 2013 was 1.031 Australian dollars (AUD) per U.S. dollar.
Social Factors: Australia’s population size was 23.13 million in 2013 with a 1.09% annual
growth rate (2014 est.). About 89% of the population lives in urban areas (2011), which consists
of cities including Sydney, Melbourne, Brisbane, Perth, Adelaide, and Canberra (capital). The
total school life expectancy is 20 years, while education expenditures only account for 5.6% of
GDP (2010).
31
https://www.cia.gov/library/publications/the-world-factbook/geos/as.html
14. 10
Figure 7: Australia Map
Technological Factors: Australia has a well-built infrastructure that can be accessed through
480 airports and 1 heliport, 38,445km of railways, 823,217km of roadways, and 2,000km of
waterways. Australia also has a well-developed telephone system consisting of 10.47 million
main lines and 24.4 million mobile cell phone users in 2012. Australia has 15.81 million Internet
users (2009).
3.1.2 Germany32
Political Factors: Germany has a federal republic form of government and operates under a
constitutional document called Grundgesetz, which translates to Basic Law. This document was
established in 1949 after the Second World War. Germany continues to have relations with more
than 190 countries. It also is a major financial contributor to some international organizations,
including, but not limited to, the European Union (EU) and the North Atlantic Treaty
Organization (NATO). Germany is also a member of the UN, WHO, G-20, and G-8.
Economic Factors: The German economy is the 5th largest in the world in terms of PPP and is
also Europe’s largest economy. Its GDP PPP is $3.227 trillion in 2013; most of their exports
consist of machinery, automobiles, chemicals, and household equipment, benefitting from a
highly skilled and trained workforce. However, prior to the early 2000s, Germany experienced
high unemployment rates and low average growth. Reforms were passed in order to decrease
unemployment, increase average growth, limit hour worked, and establish a minimum wage of
$11 per hour. In 2013, the unemployment rate was 5.3%, an inflation rate for consumer prices of
1.6%, and an exchange rate per U.S. dollar of 0.7634 euros (EUR).
Social Factors: Germany had a population of 80.62 million in 2013 with a -0.18% annual
growth rate (2014 est.). About 74% of the population lives in major urban areas (2011), which
consists of cities such as Berlin (capital), Hamburg, Munich, and Cologne. German education
expenditures account for 5.1% of GDP (2010) and total school life expectancy of 16 years.
32
https://www.cia.gov/library/publications/the-world-factbook/geos/gm.html
15. 11
Figure 8: Germany Map
Technological Factors: Germany has a well-constructed, complex infrastructure consisting of
539 airports and 23 heliports of airways, 41,981km of railways, 645,000km of roadways, and
7,467km of waterways. Germany also has a well-developed communication system, with 50.7
million main telephone lines and 107.7 million mobile phone users in 2012; in 2009, Germany
had 65.125 million Internet users.
3.1.3 Brazil33
Political Factors: Brazil’s government is a federal republic and received its independence in
1822 from Portugal. Brazil’s constitution was last ratified in October 1988, but it has been
amended on multiple occasions. Brazil has three branches of government, which the U.S. also
has. Brazil is a member of many international organizations, such as the G-20, UN, WHO, and
World Trade Organization (WTO).
Economic Factors: Brazil’s economy is the largest in South America with a GDP PPP of $2.416
trillion in 2013. Well-developed agricultural, mining, manufacturing, and service sectors
characterize Brazil’s economy. The middle class is also growing very quickly as well as Brazil’s
presence in global markets. Reforms were passed to help slow down increased inflation, while
unemployment has dropped to historic lows. The income inequality has also declined annually
for more than a decade. Brazil attracts foreign investment due to its high interest rates. In 2013,
the unemployment rate was 5.7%, the inflation rate for consumer prices was 6.2%, and the
exchange rate per U.S. dollar was 2.153 reals (BRL).
Social Factors: Brazil’s population size was 200.4 million in 2013 with an annual growth rate of
0.8% (2014 est.). About 85% of the population lives in major urban areas (2011), which consists
of cities such as Sao Paulo, Rio de Janeiro, Belo Horizonte, Porto Alegre, Recife, and Brasilia
(capital). Brazil education expenditures account for 5.8% of GDP (2010) and about 90% of the
population over the age of 15 is able to read and to write.
33
https://www.cia.gov/library/publications/the-world-factbook/geos/br.html
16. 12
Figure 9: Brazil Map
Technological Factors: Brazil has an expansive and well-developed infrastructure that contains
4,093 airports and 13 heliports of airways, 28,538km of railways, 1,580,964km of roadways, and
50,000km of waterways. Brazil also has an extensive telephone system consisting of 44.3 million
main telephone lines and 248.324 million mobile cell phone users in 2012; Brazil’s number of
Internet users exceeded 75 million in 2009.
3.2 Competitive Analysis
3.2.1 Main Competitors
In Australia, the largest fast food operator was McDonald’s, which had a 25% market share in
2013. Fast food offers convenience, low prices, and long hours of operation, which has received
positive feedback from Australian consumers who are shifting from expensive table-service
restaurants to quick-service locations.34
In Germany, McDonald’s was the leader in 2013 with a 33% share of the market. Germans are
influenced by brand recognition, seniority, and product portfolios, which, for example, help
differentiate McDonald’s from Burger King. Germans’ eating habits are shifting towards
healthier, lighter options that do not contain unhealthy ingredients, which is important for a
company trying to enter this consolidated market.35
In Brazil, 32% of the market belonged to McDonald’s in 2013. However, Burger King and
Subway are two other strong competitors in this rapidly growing industry. Burger King is
expanding by building more stores in new cities that are not very exposed to the brand. These
changes will help the fast food industry grow in Brazil as well as other South and Latin
American countries.36
34
http://www.euromonitor.com/fast-food-in-australia/report
35
http://www.euromonitor.com/fast-food-in-germany/report
36
http://www.euromonitor.com/fast-food-in-brazil/report
17. 13
3.2.2 Globalization
Globalization illustrates how open one country is to other countries and cultures. The KOF
Globalization Index measures three dimensions: economic, social, and political. The higher the
measure, the more globalized a country is. Table 5 illustrates the top 3 countries as well as the
U.S. (home country) in terms of how globalized each is.
Country
KOF Globalization
Index (2015)
KOF Economic
Globalization (2015)
KOF Social
Globalization (2015)
KOF Political
Globalization (2015)
Australia 81.64 74.33 82.11 91.03
Germany 78.86 64.10 83.75 92.17
Brazil 59.74 50.96 44.24 94.23
U.S. 74.81 58.77 77.95 92.41
Table 5: Globalization Indexes37
As seen above, Australia is the most globalized out of the four countries at hand, whereas Brazil
is the least globalized.
3.3 Country Selection
3.3.1 Criteria Selection
To deeply assess the top three potential nations for Nathan’s Famous to enter, a second Likert
scale is used. The original four variables as well as four new variables are used to rate each
country. The first new variable is ease of doing business, which assesses 189 economies from 1-
189 with the low values being the best nations to conduct business in. The second variable is the
unemployment rate, which refers to the percentage of the labor force that is both without a job
and actively looking for work. The third variable is inflation for consumer prices, which
represents the yearly change in prices for the average customer. Both the unemployment rate and
inflation rate are measured in percentages. The final variable is the logistics performance index,
which illustrates a country’s efficiency on its ability to trade in a timely manner. It also accounts
for the quality of transport infrastructure and the ability to track shipments.
In order to rate the eight factors, the criteria used in section 2.1.2 accounts for 80% of the rating,
while the remaining 20% is comprised of the four new variables. Exhibit 3 in the Appendix
shows the Likert scale used for Table 6 in the following section as well as Exhibit 4, which
illustrates equal weights based on the proportion used.
3.3.2 Country Side-By-Side Comparison
In the following table, the top three countries are compared based on specific criteria that affect
the fast food industry. However, half of the variables used come from the original narrowing
down of countries. These additions help illustrate the key differences of these three countries in
order for Nathan’s to continue its international expansion.
37
http://globalization.kof.ethz.ch/media/filer_public/2015/03/04/rankings_2015.pdf
18. 14
Factors Wt. Aus. Ger. Bra.
Population (in millions)38 23.13 80.62 200.4
Rating (1-5) 1 2 4
Wt. 32% 0.32 0.64 1.28
Annual Meat Consumption per Capita (in kg)39 111.5 88.1 85.3
Rating (1-5) 5 4 3
Wt. 24% 1.2 0.96 0.72
GDP per Capita (in thousands of $)40 67.46 46.27 11.21
Rating (1-5) 5 4 1
Wt. 16% 0.8 0.64 0.16
Fast Food Expenditure per Capita (in $)41 362.70 101.90 44.10
Rating (1-5) 5 2 1
Wt. 8% 0.4 0.16 0.08
Ease of Doing Business42 10 14 120
Rating (1-5) 5 4 1
Wt. 6% 0.3 0.24 0.06
Unemployment (in % )43 5.7 5.3 5.7
Rating (1-5) 3 5 3
Wt. 3% 0.09 0.15 0.09
Inflation for Consumer Prices (in % )44 2.4 1.6 6.2
Rating (1-5) 5 5 1
Wt. 6% 0.3 0.3 0.06
Logistics Performance Index (from 1-5)45 3.81 4.12 2.94
Rating (1-5) 4 5 1
Wt. 5% 0.2 0.25 0.05
Overall 100% 3.61 3.34 2.5
Table 6: Country Side-by-Side Comparison (Top 3)
3.3.3 Evaluation and Country Selection
Table 6 (see above) shows that the top country for Nathan’s Famous to enter next is Australia.
This is shown in the last row of the table by the boldfaced text. Australia had the highest overall
rating of 3.61, which slightly defeated Germany’s 3.34. Australians are transitioning toward
more fast food options in their daily lives due to greater convenience and cheaper prices, so it
makes sense for Nathan’s to pursue this growing market. Australians spend a greater amount on
fast food than the other two countries combined, so it illustrates that there is certainly demand for
these types of products.
3.4 Conclusions and Recommendation
After a detailed analysis, it has been determined that Australia is the next market that Nathan’s
will enter. Now that a country has been selected for entry, we must determine the mode by which
we will enter as well as address the marketing mix (4 P’s). Once that is complete, we will follow
38
http://data.worldbank.org/indicator/SP.POP.TOTL?order=wbapi_data_value_2013+wbapi_data_value+wbapi_data_value-last&sort=desc
39
http://chartsbin.com/view/12730
40
http://data.worldbank.org/indicator/NY.GDP.PCAP.CD?order=wbapi_data_value_2013+wbapi_data_value+wbapi_data_value-last&sort=desc
41
http://www.portal.euromonitor.com.ezproxy.rollins.edu:2048/portal/analysis/tab
42
http://data.worldbank.org/indicator/IC.BUS.EASE.XQ
43
https://www.cia.gov/library/publications/the-world-factbook
44
https://www.cia.gov/library/publications/the-world-factbook
45
http://data.worldbank.org/indicator/LP.LPI.OVRL.XQ
19. 15
the Segmenting-Targeting-Positioning (STP) Process in order to attract various groups of
consumers. This will help Nathan’s compete with its competitors in the new market.
4 Marketing Plan
4.1 Market Entry Mode
Given that 324 of Nathan’s Famous’ 329 restaurants are franchised, the ideal market entry mode
for Australia would be a franchise model. The benefits of franchising include low financial risk,
bypass tariffs and regulations, and gain local market knowledge. The risks include less control
over revenues and operations, and potential relationship issues. Nathan’s is seeking to expand
into more foreign countries, and can offer potential franchisees four major things. First, Nathan’s
offers a high quality, global brand with a 100-year heritage. Next, the company offers the best
beef hot dogs and crinkle-cut fries. In addition, the company offers a wide array of quality menu
items that are unique to the fast food industry. Also, Nathan’s business model is flexible, and can
be used in food courts, carts, food trucks, or freestanding buildings.46
4.2 Marketing Mix: Four P’s
Nathan’s should standardize its placement within the Australian market, so that it is convenient
for consumers to be able to access the company’s products. Nathan’s should standardize its
major menu items, such as beef hot dogs and crinkle-cut French fries, but it should also adapt to
Australian tastes and preferences. The country has started to turn toward healthier options, so
Nathan’s should consider adding salads and sandwiches to attract health-conscious customers.
Price should be adapted to the new market due to differences in exchange rate and in consumer
valuation of each particular product. Nathan’s also should adapt its promotional strategies to
effectively reach potential consumers. Although adapting advertisements and other promotions
to each market can be costly, it will be beneficial to encourage Australian customers to purchase
Nathan’s products in order to boost sales. Figure 10 shows the marketing mix and the extent that
each variable should be standardized or adapted to the Australian market.
Standardize Adapt
Product
Price
Promotion
Placement
Figure 10: Standardization vs. Adaptation
46
http://franchise.nathansfamous.com/the-nathans-famous-international-opportunity.html
20. 16
4.2.1 Product/Service
Australia’s fast food market has grown rapidly over the last decade, as preferences are shifting
toward dining out. Healthy eating has also been on the rise among Australians dining at fast food
restaurants. However, about a quarter of fast food expenditures comes from hamburger sales,
showing that fattening products are still widely consumed throughout the country.47 Therefore,
Nathan’s should standardize its existing products, including beef hot dogs, crinkle-cut fries,
hamburgers, chicken sandwiches, etc., in order to capture some share in this competitive market.
Nathan’s should also consider adapting to local tastes. For example, incorporating salads,
sandwiches, wraps, and rolls could be beneficial to the franchisee because these segments
account for 34% of total fast food industry sales. Chain restaurants are also gaining popularity,
so it may be beneficial for Nathan’s to consider opening restaurants in major Australian cities,
such as Brisbane, Sydney, and Perth. It is important for Nathan’s to understand local consumer
preferences and tastes in order to capture significant market share and to gain repeat customers.48
4.2.2 Price
In Australia, there are almost 25,000 fast food locations that generate $15 billion annually. In
order to compete with major competitors, including McDonald’s and Yum! Brands, it is critical
to price products that both generate profit and draw millions of consumers. For example, a Big
Mac in Australia costs on average $4.32 (or AUD $5.30) as compared to the United States’
$4.79.49 As of 1st January 2015, the exchange rate was AUD $1 equals $0.81786.50 Since
Nathan’s operates mostly under a franchise model, individual owners set their own prices. The
franchisee in Australia should use a value-based pricing strategy that focuses on customers and
competition. This allows Nathan’s to illustrate that it is serving high-quality products with its
customers in mind. In addition, the price elasticity of demand tends to be relatively elastic, which
means that customers are responsive to price fluctuations. Since pricing will be determined by
independent franchisees, it is difficult to provide prices for individual products. However, based
on the price of a Coney Island beef hot dog, it would be logical for an Australian franchisee to
charge AUD $2.60, which was calculated by using the formula Ee=Eb(1+i1)/(1+i2). In this case, E
stands for exchange rate and i stands for inflation. With inflation rates of 2.4% in Australia and
1.5% in the U.S.,51 and an Eb= $0.81786, solving for Ee= $0.82511. Multiplying this exchange
rate by the price of a beef hot dog in Coney Island ($3.15) yields AUD $2.60. Using this same
exchange rate will be useful in calculating the prices of other Nathan’s products to be sold in
Australia.
4.2.3 Promotion
When entering a new market, promoting company products to local customers is crucial to
sustaining business. Nathan’s must create some form of promotion that connects local consumers
to the brand, while keeping their values in mind. Advertising on billboards in major tourist areas,
on television, on radio, on the Internet, and other print media will be important to inform
Australians about the brand’s products and values. Regardless of the form used, advertisements
should focus on Nathan’s high-quality products, excellent value, and exceptional service. In
47
http://rapstc.com.au/wp-content/uploads/2011/12/Fast-Food-Environmental-Scan-2014.pdf
48
http://rapstc.com.au/wp-content/uploads/2011/12/Fast-Food-Environmental-Scan-2014.pdf
49
http://www.economist.com/content/big-mac-index
50
http://usd.fx-exchange.com/aud/2015_01_01-exchange-rates-history.html
51
https://www.cia.gov/library/publications/the-world-factbook/
21. 17
addition, Nathan’s could offer samples of its branded products to give consumers a taste before
deciding to purchase them. Another alternative would be to give coupons to loyal customers who
visit a Nathan’s location every week/month to provide incentive for dining out regularly.
Promotional activities are important in order to drive customers to the business.
Australia is a western country that has some cultural similarities with the United States. The
Hofstede framework compares nations based on six dimensions: power distance, individualism,
masculinity, uncertainty avoidance, long-term orientation, and indulgence. Figure 11 compares
the United States and Australia based on these six characteristics. Both Australia and the United
States have low power distances, which means that citizens feel entitled to a certain degree of
power. In addition, both nations tend to be very individualistic and masculine-dominant, which
means that citizens are driven by competition, achievement, and success. In terms of uncertainty
avoidance, the U.S. scores lower than Australia, which means that Americans control future
events to a lesser degree than Australians. Both countries have low scores in long-term
orientation, which means that businesses focus their efforts on the short-term. Indulgence is
important to both cultures, which means that citizens work hard and play hard. In terms of
colors, Australians will have similar reactions to the green and yellow in Nathan’s logo:
cowardice, energy, fun, good luck, growth, happiness, jealousy, money, nature, peace, and repels
evil.52
Figure 11: Hofstede Model of U.S. and Australia53
4.2.4 Placement
In order to build brand awareness in Australia, Nathan’s Famous could begin by finding
franchisees in major cities. Since Nathan’s has an array of business models, franchisees could
select the model that fits their willingness to invest. For example, a franchisee in Melbourne may
select to operate a small food court in a shopping mall. This allows the franchisee to maximize
their potential revenue based on a limited amount of space. However, a second franchisee in
Sydney may decide to open a freestanding location because of the traffic generated by tourists.
52
http://www.informationisbeautiful.net/visualizations/colours-in-cultures/
53
http://geert-hofstede.com/united-states.html
40
91
62
46
26
68
36
90
61
51
21
71
Power
Distance
Individualism Masculinity Uncertainty
Avoidance
Long-Term
Orientation
Indulgence
U.S. Australia
22. 18
Therefore, Nathan’s provides an array of options for potential franchisees. Once brand awareness
is developed, Nathan’s can expand into smaller cities as well as establish more stores in large
cities, allowing it to compete with giants such as McDonald’s and Yum! Brands.
4.3 STP Process
4.3.1 Segmentation
The fast food industry attracts people of all ages because of convenience and low cost. In
Australia, people aged 45 to 54 years made up the largest market segment (21.2%), followed by
the 15 to 24 year old segment (20.2%). The segments with the lowest consumption rates of fast
food were aged 55-64 (13.9%) and 65+ years(6.5%), respectively. Therefore, Nathan’s should
focus on attracting younger people, ranging from 15-54 years of age because they make up about
80% of the fast food market in Australia. Since hot dogs are low price goods, economic class
does not play much of a role. If it did, then the focus would be on lower-income families. It is
important that Nathan’s illustrates that it serves high-quality products to people of all ages in
order to gain market share.
4.3.2 Targeting
Targeting specific customers in the fast food industry can be difficult, so a concentrated
approach would not be efficient. However, it is possible to pursue a differentiated approach. For
example, Nathan’s could start selling healthier products, such as sandwiches and salads, to the
health-conscious segment, while it sells its main products, such as beef hot dogs, hamburgers,
and crinkle-cut fries, to a wide range of customers that don’t have time to cook meals. Since
Nathan’s specialty is hot dogs, they have to generate awareness that its hot dogs are the best in
the world. Once consumers realize this, then Nathan’s will have a customer base in Australia.
4.3.3 Positioning
Nathan’s should differentiate itself from large competitors, especially McDonald’s, by providing
Australians with food products that will bring them back multiple times. It is important to create
a strong brand image in order to establish brand loyalty. One possibility is to create some type of
rewards program that rewards frequent visitors with discounts or free meals. High-quality
products combined with exceptional service will help Nathan’s Famous establish itself in a very
competitive Australian fast food market.
4.4 Conclusions and Recommendation
Additional research is required to fully understand customer behavior in Australia. Price ending
reactions can be avoided due to the fact that franchisees will be in control of price strategies in
their respective restaurants. Nathan’s should follow a product development strategy, as it is
introducing a new product, beef hot dogs, into an existing fast food market. It is vital for the
company to differentiate itself in order to enter the Australian market successfully. McDonald’s
and Yum! Brands are two huge competitors in an already saturated fast food market, but
Nathan’s has the potential to gain market share by diversifying its products.
23. 19
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25. 21
Appendix
Exhibit 1: Likert Scale for Table 4
Factors 1 2 3 4 5
Population (in millions) 23.13-67.45 67.46-111.78 111.79-156.11 156.12-200.44 >200.45
Annual Meat Consumption
per Capita (in kg)
45.9-59 59.1-72.2 72.3-85.4 85.5-98.6 >98.7
GDP per Capita
(in thousands of $)
1.91-13 13.01-24.1 24.11-35.2 35.21-46.3 >46.31
Fast Food Expenditure per
Capita (in $)
4-81.26 81.27-158.53 158.54-235.8 235.81-313.07 >313.08
Exhibit 2: Equally Weighted Side-by-Side Country Comparison (Top 9)
Factors Wt. Eng. Aus. Jpn. Chn. Ger. Fra. Esp. Ita. Bra.
Population
(in millions)
64.1 23.13 127.3 1,357 80.62 66.03 46.65 59.83 200.4
Rating (1-5) 1 1 3 5 2 1 1 1 4
Wt. 25% 0.25 0.25 0.75 1.25 0.5 0.25 0.25 0.25 1
Annual Meat
Consumption per
Capita (in kg)
84.2 111.5 45.9 58.2 88.1 86.7 97 90.7 85.3
Rating (1-5) 3 5 1 1 4 4 4 4 3
Wt. 25% 0.75 1.25 0.25 0.25 1 1 1 1 0.75
GDP per Capita
(in thousands of $)
41.79 67.46 38.63 6.81 46.27 42.5 29.86 35.93 11.21
Rating (1-5) 4 5 4 1 4 4 3 4 1
Wt. 25% 1 1.25 1 0.25 1 1 0.75 1 0.25
Fast Food Expenditure
per Capita (in $)
390.3 362.7 281.0 10.10 101.9 95.60 82.70 55.40 44.10
Rating (1-5) 5 5 4 1 2 2 2 1 1
Wt. 25% 1.25 1.25 1 0.25 0.5 0.5 0.5 0.25 0.25
Overall 100% 3.25 4 3 2 3 2.75 2.5 2.5 2.25
Exhibit 3: Likert Scale for Table 6
Factors 1 2 3 4 5
Population (in millions) 23.13-67.45 67.46-111.78 111.79-156.11 156.12-200.44 >200.45
Annual Meat Consumption
per Capita (in kg)
45.9-59 59.1-72.2 72.3-85.4 85.5-98.6 >98.7
GDP per Capita
(in thousands of $)
1.91-13 13.01-24.1 24.11-35.2 35.21-46.3 >46.31
Fast Food Expenditure per
Capita (in $)
4-81.26 81.27-158.53 158.54-235.8 235.81-313.07 >313.08
Ease of Doing Business >41 31-40 21-30 11-20 1-10
Unemployment (in % ) >6.1 5.9-6 5.7-5.8 5.5-5.6 5.3-5.4
Inflation for Consumer
Prices (in % )
>5.6 4.6-5.5 3.6-4.5 2.6-3.5 1.6-2.5
Logistics Performance
Index (from 1-5)
2.94-3.18 3.19-3.43 3.44-3.68 3.69-3.93 >3.94
26. 22
Exhibit 4: Equally Weighted Side-by-Side Country Comparison (Top 3)
Factors Wt. Aus. Ger. Bra.
Population (in millions) 23.13 80.62 200.4
Rating (1-5) 1 2 4
Wt. 20% 0.2 0.4 0.8
Annual Meat Consumption per Capita (in kg) 111.5 88.1 85.3
Rating (1-5) 5 4 3
Wt. 20% 1 0.8 0.6
GDP per Capita (in thousands of $) 67.46 46.27 11.21
Rating (1-5) 5 4 1
Wt. 20% 1 0.8 0.2
Fast Food Expenditure per Capita (in $) 362.70 101.90 44.10
Rating (1-5) 5 2 1
Wt. 20% 1 0.4 0.2
Ease of Doing Business 10 14 120
Rating (1-5) 5 4 1
Wt. 5% 0.25 0.2 0.05
Unemployment (in % ) 5.7 5.3 5.7
Rating (1-5) 3 5 3
Wt. 5% 0.15 0.25 0.15
Inflation for Consumer Prices (in % ) 2.4 1.6 6.2
Rating (1-5) 5 5 1
Wt. 5% 0.25 0.25 0.05
Logistics Performance Index (from 1-5) 3.81 4.12 2.94
Rating (1-5) 4 5 1
Wt. 5% 0.2 0.25 0.05
Overall 100% 4.05 3.35 2.1