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Marketing Services: MK Restaurant Case Study

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Updated: Jul 6th, 2020

Introduction

There is fast growth in the service industry globally. The service industry is supportive of the manufacturing industry and other industries in global economics. However, the sector is also the most competitive globally because large profits are drawn from the sector, hence attracting many investors.

One of the industries in the sector is the hotel and restaurant industry. This has been the fastest growing industries in all parts of the world. As mentioned, this is also a highly competitive industry especially for incomers. The industry has well established players, for instance Mcdonalds who often give a cutting throat competition to a firm that have the ambition of becoming proficient performers in the industry.

Nonetheless, there are small entrepreneurs who have managed to enter the industry. An example of such a firm is the MK Restaurant (Itthiopassagula, Pattersonb and Piyathasanana, 2009). This player has even posed to be a leading competitor to the giant players. This firm is found in Thailand. It began as a small restaurant but has managed to sprout throughout the country with over one hundred branches.

One of the key success factors for MK Restaurant is marketing. This firm has heavily invested in crafting and modeling the marketing function in every operation. Successful marketing strategies have led to what the company is today. The way a firm invests in the marketing of services brings a majorly substantial difference in competition and growth (Lovelock, Patterson and Wirtz, 2011).

This paper looks into the marketing services in MK restaurants. It draws powerful marketing lessons from the way the company has executed the marketing functions to gain the glory it has today.

Lessons made from the Success of MK restaurant

More often than not, many small service firms or restaurants start their operations and end up collapse within an unusually short time (Park and Kim, 2001). There are many reasons for this among them being that these firms lack mastery of the business environment and market entry and management strategy. This strategy is what keeps the firm in the industry by enabling it to resist competition from established companies.

It also enables the small firms to gain a fair share in the market, hence survival and growth. MK is one such firm. The company has managed to gain a sizeable face in the restaurant business despite starting from a small beginning. Thus, a number of lessons can be learnt by both small and medium organizations on MK success strategies in business. All the lessons are accrued to the marketing initiatives and implementation (Itthiopassagula, Pattersonb and Piyathasanana, 2009).

MK had a terrific brand extension strategy which is the reason why its brand gained access to the competitive Thai market. Martínez and Chernatony (2004) note that brand extension holds the brand image and brand identity, and that this is successful if it is well articulated. MK started operating a single brand and assessed the performance of the brand. Many leading companies in the world have used their leaders as the first resources in branding (Van Riel, Lemmink and Ouwersloot, 2001).

The leadership of MK restaurant was the first principal source of branding. MRS. Mekto, who is one of the owners of the MK Restaurant, established a remarkably healthy relationship with customers. She was so popular to the customers because of the way she treated them. This even led to her being nick named ‘Aunty Tongkam’ by the customers. This gave the restaurant its popularity with the customers helping to spread information about the restaurant and its services.

Mekto was kind, generous and had friendly characters that were the greatest boosters in the initial branding of the restaurant. Therefore, this leadership was responsible for fetching more customers using the other customers. Customers acted as agents of the restaurant by spreading the news about the services of the restaurant. Passionate leaders are the pace setters of the brand of the company as has been with the MK Restaurant. Branding begins with the first step at the early stages of a business (Sharp, 1993, Sheinin, 1998).

In marketing, brand diversity is a marketing tool which can help a company to capture the different needs of customers. Different categories of customers exist, and their needs can only be addressed by crafting or coming up with products or brand that suit their needs (Swaminatham, Fox and Reddy, 2001). The MK Restaurant has been a master of brands since its inception. The company has been introducing different product models as it discovers new pools of customers and new needs.

The recent outlet models that have been produced by MK Restaurant have been outstanding. These are the MK Trendy and the MK Gold. These models were produced with the aim of serving the Middle and the High class customers who have identified themselves with the restaurant and its products. To identify gaps in the market which the company can take advantage of, the company holds discussions with its customers.

The company has put its customers at the center of their business, which is what most marketing experts recommend. All these products have varying rates of returns to the company. The best thing is that all the needs of customers are catered for in the range of product offerings by the company (Itthiopassagula, Pattersonb and Piyathasanana, 2009).

According to Walker, Johnson and Leonard (2006), service quality is the determining factor of sustainability of a company which is doing business in the hotel or restaurant sector. For MK Restaurant, the maintenance of service quality in all its chains of restaurants has been one of its objectives.

The company has more than 250 branches spread all over Thailand with an employee capacity of approximately 12, 000. For a business with such an enormous capacity, maintaining service quality for customers is not an easy exercise. However, the company has done well in this, and this example can be beneficial if it is aped by other service organizations aiming to gain market access and sustenance. It has a robust system of monitoring customer satisfaction and the perceived quality of services offered.

This is done using in-store questionnaires, which are placed at each table in the store. The company also conducts a marketing survey of each chain store. This is usually conducted on an annual basis by an external and professional market research company. After the research is conducted, a customer satisfaction index is produced.

The index is based on a number of criteria, among them the taste of the food, freshness, staff etiquette, delivery timing and staff courtesy. This is done for each branch. The senior staffs at the region and branches monitor the reports and use the findings in the reports in implementing new policies on products and services. Ongoing developments are panned basing on the reports. The general analysis of the reports is done at the headquarters after which the report is availed to all branches.

All staffs are issued with a copy of the report. Brilliant suggestions from customers are experimented using pilot projects to determine their true worthiness in applicability. Customer experience in the company is derived from the customers themselves whish is why the company continues to enjoy an influx of customers (Huber, Hermann, Morgan, 2001, Ryu, Lee and Kim, 2012).

For any company to keep at bay with its competitors, it must have mechanisms of monitoring competition. The company noted its early competitors and thus adjusted its activities accordingly. As it opened many branches, new competitors emerged. These are international restaurant chains like Chester’s Grill, Macdonald’s, Fuji and Pizza. These became chief competitors for MK, and the firm hired a research firm to help in monitoring the competitors.

All aspects of competition in the food chains of their competitors are monitored and a report produced on a quarterly basis. MK has quality assurance teams which ensure that the four notable features of brand personality are strictly adhered to and improved. These features are abbreviated as QCQS – quickness, cleanliness, Quality and service. Brand personality in the restaurant industry rests in these features. Also, MK has managed to best competition through first class innovation.

The company has come up with a number of innovations which have even gone past the expectations of customers. These innovations have utilized the latest technologies and have improved service delivery in the restaurant.

For examples, the hand-held personal digital assistants and the radio frequency ID, electronic pots are eliminating the use of preservatives in its food. For instance, this was the first restaurant in the entire country to use personal digital assistants in transmitting orders from customers directly to the kitchen (Itthiopassagula, Pattersonb and Piyathasanana, 2009).

The restaurant business calls for medium-contact-service where the service providers must be in frequent contact with customers. The overall experience of customers in MK is obtained from the frontline employees. These employees are highly motivated. They are well trained thus highly professionals they are also friendly with interactive skills of engaging customers. With the knowledge, that staffs form part of the marketers or advertisers of a company, MK conducts quality training on its staffs.

They are trained on diverse aspects of service to customers. The acquisition of a quality staff is related to its recruitment policies and mechanisms. MK recruits young people from the poor or suburb regions of Thailand. It also hires fresh graduates. All these categories of people are deemed as being uncontaminated.

They have a high morale and positive perceptions thus receptive to training. With a high turn over rate of employees in the restaurant industry, this strategy has served the company well and can be adopted by companies which have the dream of thriving in the market (Itthiopassagula, Pattersonb and Piyathasanana, 2009).

MK’s positioning

Market positioning is an attribute of marketing which entails the entire market strategizing processes and implementation. A well positioned firm will gain the loyalty and trust from customers and have long-run sustainability. When the performance of MK is assessed a number of characteristics can be singled out which are supportive of the current positioning of the company in the restaurant industry (Bojanic, 2007).

In Thailand, MK is one of the market leaders -competing even the international restaurant chains. Aware of the competition in its line of business, the company has been working to master the competitive environment in the restaurant industry. MK identifies its potential competitors and adjusts its market moves in relative to the moves made by its competitors.

The firm considers the multinational restaurant chains operation in Thailand as its greatest competitors after outdoing the local restaurants in the local market. The multinational restaurant chains are the leading players in quick services; therefore, MK has adjusted accordingly by opting for full-service restaurant segment. A firm with exceptional marketing strategies can develop options quickly by observing the opponent or competitor (Bowen, 1997).

This is what MK has done. Using its motor, which is ‘warmth’, MK has chosen to invest in building its brand in the market. MK invests heavily in marketing communications with the aim of strengthening the brand of the company. A lot of funds have been invested in advertising. It has a high budget set for advertising. The firm has successfully executed television advertisements. Over 25 advertisements have been successfully aired.

It ensures the advertisements carry messages that broaden the image and the quality of its brand. Its aggressiveness in making full use of marketing communication techniques like advertising has helped the company to survive in the crowded industry with a hugely diverse market.

It has also helped the company to resist competitive pressures from the most experienced companies like Macdonald’s. Resisting competition and adjusting to competition are two related strategies in marketing. The strategies have been given attention by MK and have contributed to building the brand of MK and putting the company at a dominant position relative to the competitors (Itthiopassagula, Pattersonb and Piyathasanana, 2009).

Commitment to quality acts as a bait to customers. It helps in maintaining the customers. MK has emphasized on two aspects of quality – the quality of the services that customers get from their chains and the quality of the products which they offer. The firm has a team of staffs and a quality monitoring system in place that helps in achieving these goals.

Quality systems are truly substantial in either the improvement or maintenance of quality. High standard products accompanied by high standard services aid in solidifying the image of the company (Itthiopassagula, Pattersonb and Piyathasanana, 2009).

MK has an elaborate organizational culture that is embedded in service quality. Service quality cannot be an accomplished function if the employees are not fully involved. MK has a clear strategy of acquiring and maintaining their staffs. Their staffs help in adding value to quality service and the quality culture in all the chain restaurants (Itthiopassagula, Pattersonb and Piyathasanana, 2009).

Service-profit chain applicability to MK Restaurant

The service-profit chain aids in establishing a relationship between different factors, which combine to bring about a fully functional business. These factors are profitability, the satisfaction of employees, customer loyalty and productivity (Hesket et al, 1994).

Internal service quality in the firm leads to employee satisfaction, which is signified by the rate of employee retention and employee productivity. Internal service quality is reflected by job design, the selection and development of employees, rewarding and recognizing the workforce and equipping the employees with customer service tools (Hesket et al, 1994).

The employee productivity and retention leads to external service quality that focuses on customers. Here, we have customer satisfaction. This is achieved through designing and implementing services that meet the needs of customers. Customer satisfaction leads to customer loyalty that is seen through retention, referrals and repeat business. These developments result in profitability and a growth in revenue (Maglio, Kieliszewski, Schramm and Baumol, 2010).

MK has attained a high score is as far as the service-profit chain is concerned. The company has a legitimate recruitment system which ensures that it picks the best employees (Itthiopassagula, Pattersonb and Piyathasanana, 2009). The employees are sufficiently trained. This stands to explain why the customers have a high affinity for the services of the company.

However, there is some weakness in the internal service quality of MK. the rate of employee retention is not convincing. MK looses more than 20 percent of its employees annually implying a low rate of retention. Nonetheless, the recruitment system ensures that the restaurant gets a replacement of these workers who leave the company which keeps customer services intact. This works in support of the external service quality where the rate of customer satisfaction is high.

Other operational factors and activities help in ensuring that external service quality is well enhanced. These include branding and positioning strategies which the company uses. This is the reason why the company has a high customer loyalty translating to increase in the growth.

The service profit chain focuses on the customer and the employee as the key determinants of profitability. Well, when looking at from an objective position the service-profit chain fits the working of MK. However, a subjective analysis contradicts it a bit as there are other activities and control procedures and actions which combine to bring growth and profitability (Kamakura, Mittal, De Rosa and Mazzon, 2002).

Challenges that lie ahead of MK Restaurant

The MK Restaurant has bee rated as one of the best performing restaurants in the restaurant industry in Thailand. The Mastery of the local environment by the restaurant has been hugely supportive of the marketing activities of the Firm. The restaurant has, been smart in building its brand and designing rigorous activities and initiatives which saw the level of marketing position that the company enjoys today.

The company has faced quite a number of challenges. One notable challenge has been competition from the multinationals that joined the industry in the country. The other constraint has been retaining employees. This is a common problem in the entire industry and kudos to the recruitment policy and the culture of MK which have been useful in dealing with this (Castro, Armario, Ruiz, 2007, Han and Ryu, 2007).

As MK plans to expand into new markets in foreign countries, more challenges will get in its way. MK is used to operating within a familiar environment. When it gets out the country, it will face many setbacks most of which are associated with cultural marketing.

Familiarization with the conditions in the foreign market will be a problem. The company operates within a single culture. Problems of labor-force management will also be witnessed as the policy it uses may not be compatible within the labor market of foreign countries (Clair et al, 2011).

Also, product variations may be a problem in foreign business. The quality of products that are being offered by the company could not be acceptable to the new customers in the new destinations. Customizing its culture in the new country and destination may be quite strenuous especially so in the presence of multinationals which are used to cross cultural marketing and operation (Homer, 2008).

Conclusion

MK restaurant is one of the exemplary companies in Thailand. The company has managed to capture the market in an exemplary manner. It has excellent branding and market positioning strategies which have seen it grow so fast. It also applies the principles of the service-profit chain, though, not immensely. As it plans to expand into the foreign market, it is likely to be inhibited by cultural barriers.

Reference List

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Castro, CB, Armario, M Ruiz, M 2007, “The influence of market heterogeneity on the relationship between a destination’s image and tourists’ future behavior”, Tourism Management, Vol. 28 No.1, pp.175-87.

Clair, R et al 2011, “Engaging Cultural Narratives of the Ethnic Restaurant: Discursive Practices of Hybridity, Authenticity, and Commoditization”, Studies in Symbolic Interaction, Vol. 37.

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