1.

Executive Summary

This report consists of the main marketing strategies of the Nandos restaurant
franchise and how it targets and positions its products to meet the needs and wants of
their potential customer. The research shows that Nandos had successfully built itself
as one of the well-known chicken restaurant around the world. The marketing strategy
of the Nandos includes three parts such as: segmentation, targeting and positioning.
Nandos using demographic, geographic, psychographic and behavioral segmentation.
Development of effective marketing strategy will help to the Nandos to attract many
customers and noticeably increase sales. Nandos chose a segment, which is
categorized as generation x, to offer a right composition of products and services to
attract that segment. This segment consists of people who have good income and
purchasing power. The perceptions of this segment are: good quality, healthy food and
convenience. Positioning part of Nandos company shows how their products/services
differentiate from competitors offerings. Marketing mix includes 4ps i.e. product, place,
promotion and price. This strategy is very important factor for the Nandos to achieve
their goals and objectives.

2.0

Introduction

One of the largest franchise restaurants Nandos has come into the market during
the year of 1987. The founders of Nandos, Robert Brozin and Fernando Duarte had
bought a restaurant called Chickenland in Rosettenville, southern Johannesburg in the
year of 1987. The restaurant was then named after Fernando himself, and his son, who
is also called Nando. Soon, restaurant became very popular with its legendary recipe of
peri-perichicken, which simply means pepper-pepper, and was adopted by
Portuguese travelers from Mozambiques cuisine. In the year of 2013, Nandos had
successfully spread out all over the world and opened over 900 th stores worldwide. As a
Nandos CEO and founder in Malaysia and Singapore, Mac Chung Lynn has brought
Nandos to Malaysia in 1998. First, it opened in Klang valley and other main city
centers. Currently there are 38 branches in Malaysia, which have attracted many
customers with its unique recipe Portuguese flame-grilled peri-peri chicken. Mac
Chung Lynn got impressed by Nandos, when he first tried fried chicken in London. He
was studying architecture degree in London and dreamed about opening Nandos in
Malaysia. Therefore, he decided to bring the brand and promote Nandos unique flamegrilled chicken in Malaysia. In term of expansion, Fanny Chai (Regional Marketing
Manager Nandos) planned to bring Nandos products to the east coast which in Sabah
and Sarawak and set up restaurants there. She also claimed that the company will help
people, who live in places where Nandos is lesser known, to learn more about its
products by providing some interesting talks and video presentations. This report shows
what is positioning and demonstrates how Nandos positions its product in the market.

3.0

Nandos marketing concepts

3.1

Segmentation

There are different categories of segmentation, primarily categorized into demographic,

geographic, psychographic and behavioral segmentation. Demographic segmentation is
one of the most important segmentation. It consists of the target markets age, gender,
occupation and income. Nandos takes these factors into consideration when they
gather information for their target market. Geographical segmentation is whereby the
region of the customers is taken into consideration. This is where regions, countries,
city/towns, population density and climate of the region are noted down before Nandos
decide to launch their product into their targeted market. As Nandos is a multinational
company, they might have to alter their products, advertising schemes and promotions
to meet the individual needs of the targeted region. Psychographic segmentation
consists of the lifestyles of the targeted market, attitudes and social class. In this
particular segment, target market is often affected by the social class they associate
with and also societys perception about products. Behavioral segmentation, though
closely related to psychological segmentation, it is differentiated by the customers
wanting value for the money they spend to their loyalty to the particular brand.

3.1.1

Demographic

Age group under the demographic segmentation is a one of key factors that can
contribute to Nandos product creation. Due to their variety of products, Nandos tend to
cater to a very large age segment, primarily from children (7-12) and teens (13- 21) all
the way till working adult (22 - 40) and the baby boomer generation (40 - 60).
Focusing on the children, Nandos has a special set menu for the kids called the little
Grown-Ups meal. This particular menu omits the spicy option and allows the kids to
enjoy the chicken without being spicy. It comes with one side dish with a choice of either
fruits or vegetables and a choice of either soft drinks or orange juice. This shows that
Nandos takes into consideration that many children do not eat spicy food.
Other products on the menu are catered more to the older audience between the ages
3

13 and above (13 -60). This is where they make the option of how spicy the customer
wants to be available in contrast to the kids menu.

3.1.2

Geographic

Region is one of the many factors that play a huge role in helping Nandos expand its
business around the world. Cities/towns with a high population density would help in
boosting the growth of Nandos, for example; UK has one of the countries that have
most outlets of Nandos as of 2012, having more 250 outlets within the region itself.
Within the region itself, Nandos is also able to alter their menu to the preferences of the
consumer market. This would ensure that their products would be widely accepted by
the targeted market.

3.1.3

Psychographic

Lifestyle of the target market is one such factor that has to be considered by the
company. As according to the lifestyles of the target market, Nandos can determine
which type of product would be more receivable and vice versa. In the menu, Nandos
made a notation that some of their products would contain traces of wheat, eggs, dairy
or nuts.

3.1.4

Behavioral

Brand loyalty amongst the consumer market for Nandos product range is very valuable
to the company. This benefits the company as word-of-mouth amongst the society
spreads faster than advertisements, thus creating a larger, more potential market for
Nandos to market its product. With brand loyalty, Nandos can be ensured that they
have a sustainable market to launch their products to.

The table 3.1.5 shows the market segment for Nandos peri-peri
chicken
4

Segments

Variables

Generation Y

Generation

Baby

Geographic

Location
Age

Malaysia
Children(7-

X
Malaysia
Working

Boomer
Malaysia
Adults(40-

12)

adults(22-

60)

Teenagers(13

40)

-21)

Demographic

Income

Medium
Parents

High

High

support,
pocket money
Occupation

Lifestyle

Psychographi
c

Personality

Junior

Business

Kids,

managers

owners

students
Active, seek

Active,

Less active,

for vitamins,

healthy

healthy

tasty food

food

food

immature

Active,

Less active,

mind

quick,

cautious,

cautious,

dominant,

profit

smart

seeking

consumptio

Active, quick,

Attitudes

Positive
Positive-

Behavioral

Brand

Neutral
Strong-

Strong

loyalty

4.0

Neutral
Weak

Weak

Targeting

After making an analysis of Nandos target market for their product, we are able to
identify their consumer markets. With this analysis, Nandos would be able to determine
which market is suitable to go on with. This particular segment of the market is known
as the target market. It is important for an organization to design their marketing
strategies around a specific target market so that they are able to push the products to
the consumers. This allows the organization to be closer to their consumers, being able
build brand loyalty and customer satisfaction (Piercy & Morgan, 1993).
The segment that has been identified is the segment that called generation X. This
segment in particular has a sustainable amount of income that can support their needs
and wants. According to the demographic analysis that was made, age groups become
an indication for the company about which product to market to that certain age group.
Categorizing the consumers into target markets would prove an opportunity to Nandos,
this is because with the information they gained about the age groups, they can produce
new products that suit the targeted consumers and improve on the existing products.
For example, with Nandos targeting the children denomination (ages 7-12), the
company can improve on their existing Little Grown-Ups menu with adding more choice
of side dishes or drinks. They can even add more choices of main dishes to that menu
so that the kids have more choice.

4.1 Values by generation X:

1) Contain a variety of healthy food such as: vegetables, eggs, fruits.
6

2)
3)
4)
5)

4.2

Minimum amount of oil, as it can influence on body and organism condition.

Comfortable place to sit, not loud music, facilities such as bathroom, baby room.
Affordable price
Short waiting time

Nandos peri-peri chicken in the market (Perceptual map)

5.0 Positioning
Positioning is the strategy, which goals are to occupy position in the minds of
consumers and enable them to form the best image about product. According to Brown
(2013), Nandos successful positioning is based on the number of factors such as
producing unique peri-peri sauce, which does not use any restaurant in the world,
special meals for kids - Little Grown-Ups and decorating each restaurant to match
with traditions in different countries, where located Nandos . Nowadays, Nandos is best
known as the world's only one home of the famous peri-peri sauce (Niven, 2007).
Moreover, peri-peri sauce became a competitive advantage for Nandos restaurants as
this method of cooking differentiates Nandos from other casual dining restaurants,
which are oriented on chicken dishes. Thus, Nandos marketing strategy uses product
7

differentiation. It brings a great success to the restaurant chain in the year 1990, when
they start to spread around the world (Appendices 1). Nandos positions itself as a
brand that located above fast food, but below fine dining (Pharmy, 2007). When
Nandos entered the global market, it faced with many competitors, such as KFC and
Kenny Rogers Roast Chicken. Despite the fact that these restaurants are chicken
oriented they offer different product and services for customer. First difference is in
cooking method, where Nandos using flame-grilled and marinated in peri-peri sauce
method, which is good for health. Moreover, Nandos are the only one producer of periperi sauce and customer can choose spice rating, which starts from Lemon/Lime, Mild,
Hot and Extra Hot. On other hand, KFCs cooking method based on producing crispy
coat chicken, which is cheaper than Nandos, but more harmful for health, because
contains gluten. Next, Nandos differentiating factor is unique design of each restaurant.
Nandos decorates its restaurants in accordance with each markets model. As different
markets have different preferences, Nandos decided to use each countrys local
resources and style, while expanding globally. Therefore, each outlet has different style
and design, with references to the local culture and this also became a competitive
advantage among other restaurants. KFC restaurants design is less attractive as they
oriented on takeaway and fast dining service. Another difference is kids meals. Nandos
offers special meals for kids that called Little Grown-Ups, which is not only tasty, but
also health concern. Also, they provide so called Nandos Fun Pack with games to
play and special cards with information about the Nandos inside. KFCs kids meals
provide less variety of dishes, but include small toys inside each meal. However,
Nandos main advantage is spicy peri-peri sauce, which made Nandos brand so
popular. This is a unique selling proposition, because other competitors do not offer the
difference. Nandos delivers this position to the customers and responses were very
positive. But before this most difficult problem was informing customers about this
feature. In fact, that peri-peri sauce is originally from South Africa, and not so famous
in other countries, Nandos company settled many open seminars about feature of their
restaurants, because before that people had no idea what is peri-peri sauce and why
they should go for Nandos brand. These seminars allowed people to come and listen to
the stories about how Nandos was born and learn more about their features. Nandos
positioning statement sounds like: Wake up Your Taste Buds with Peri-Peri.
Nevertheless, it position by the fact, that they provide unique taste of peri-peri sauce
and at the same time arouse passion and pride, while eating at the Nandos.

6.0

Marketing strategies of Nandos (4ps)

6.1

Product

According to Armstrong and Kotler (2011), a product refers to the goods and services
offered by a company to their target market. As a globally-recognized franchise
restaurant Nandos offers a variety types of products, such as main dishes, platters,
burgers, kids meals, specialized dishes, and a sauce served only in their restaurant, the
Peri-Peri sauce (Nandos Malaysia, 2013), with chicken as their main ingredient. By
offering these several types of products, Nandos provides a range of choices for their
customers. The main marketing strategy that Nandos uses - is product branding.
Product branding is one of the ability of professional marketers to create and lead
brands (Armstrong & Kotler, 2012). Nandos branding was first created via their PeriPeri sauce. The Peri-Peri sauce differentiates Nandos from their competitors greatly as
Nandos is the only restaurant that offers this sauce.
In addition, Nandos also provides delivery services for their customers, so that they can
enjoy their food, at home or at their workplace, other than in their restaurant (Nandos
Malaysia, 2013). This allows their customers to satisfy their cravings conveniently, such
that it is not necessary for them to go to the outlets if they are really too busy or lazy to
do so, since they can call for a delivery service.

6.2 Price
According to Armstrong and Kotler (2011), price refers to the sum of money that
consumers have to pay in order to acquire the product. The price of Nandos product is
mainly affordable to their customers. One of the pricing strategies that Nandos uses is:
9

Major Pricing Strategy, which includes Customer Value-based Pricing and Competitionbased Pricing.
Customer Value-based pricing refers to understanding how much of value consumers
would place on the benefits that they are receiving from the product, and setting the
price according to the customers judgment on the value of the product instead of the
sellers cost. Hence, the price of the product is put into considerations before the
marketing program is set (Armstrong & Kotler, 2012). In Consumer-based pricing, the
quality of the product and service is hugely put into considerations as these are the
main benefits that consumers would get. This means taking the stand as a consumer
while deciding on the appropriate price to be set on the product. For instance, in
Nandos, their prices are set not only on the quality, like the taste of their food, but also
their customer service. The ambiance of the restaurant may also have contributed to the
prices and hence, their customers are actually paying for their overall experience while
eating in the restaurant, instead of paying for their food only. This pricing strategy is also
known as Good-value Pricing, where the product is offered with a correct composition of
good quality and service at a reasonable price (Armstrong & Kotler, 2012).
Competition-based pricing refers to the setting of prices according to competitors
strategies, costs, prices, and market offerings. In this case, the prices of Nandos
products are in between their two main competitors, KFC and Kenny Rogers Roasters,
where some of Nandos products are more expensive than KFCs products and some of
Nandos products are cheaper than Kenny Rogers Roasters products. This can be seen
from the comparison among the prices listed in the three competing restaurants menu
(Appendix 2)

6.3

Place

According to Armstrong and Kotler (2011), place refers to the location of the companys
activities in making the product available to their targeted consumers. Marketing
channels are very vital in order to make a product well-known worldwide. On this basis,
Nandos is deemed using the Vertical Marketing System, bounded by the Contractual
VMS, to publicize their products.
Vertical Marketing System is one of the distribution channel structure where the
producers, wholesalers and retailers behave as a whole system, and Contractual VMS
10

is a vertical marketing system of independent firms from different levels of production

and distribution collaborating through contracts. This system is mainly used by the
franchise organization, with a franchiser linking the several stages in the productiondistribution process (Armstrong & Kotler, 2012). As a franchise organization, Nandos
can be seen using this system such that the theme and design of the outlets, the
products stated in the menu and the ingredients used for the preparing the food are
similar, except that they vary only because of the different culture in the countries.
Nandos also uses the Horizontal Marketing System. Horizontal Marketing System is a
channel arrangement where two or more companies of a level collaborate to emulate a
new marketing opportunity (Armstrong & Kotler, 2012). According to Nandos, two very
critical factors must be put into considerations when choosing a site for the restaurant,
the surrounding demographics and catchment area. The company uses a combination
of trade area analysis, drive time analysis and demographic research to study sites
before placement of the opportunity. Hence, franchisees are strongly encouraged to first
acquire advice from Nandos property experts before any lease agreement for any
premises. In Malaysia, Nandos franchise restaurants are mostly opened in shopping
malls, with its first outlet in Bangsar, Kuala Lumpur in 1998. Currently, there are 49
outlets in seven of the states of Malaysia, and they are still expanding to more states
such as Sabah and Sarawak, said Fanny Chai (Dhesi, 2013). To open a franchise
restaurant in a shopping mall, the franchise would have to liaise with the shopping mall.
Hence, it is precise that Nandos uses the horizontal marketing system.

6.4

Promotion

According to Armstrong and Kotler (2011), promotion refers to the communication

activities of the features of their product with the targeted consumers and convinces
them to buy the product. The promotion mix strategy that Nandos uses is the Push
Strategy, where advertising and sales promotion are used to attract customers attention
towards the product.
Nandos uses funny and interesting advertisements to promote themselves (Dhesi,
2013). Apart of that, Nandos often have promotions, like discount vouchers, for their
customers occasionally, and sometimes for certain festive seasons like Hari Raya
(Pharmy, 2007).

11

7.0

Conclusion

In conclusion, Nandos could clearly segment their customer into demographic,

geographic, psychographic and behavioral segmentation. Therefore, Nandos could
easily meet their customers needs and wants and attract more customers to generate
profits. By using the targeting strategy, Nandos has chosen a segment which is known
as generate x, to understand and offer the right composition to attract that segment.
Positioning shows that Nandos produces unique peri-peri sauce to compete with other
restaurants; special meals for kids - Little Grown-Ups with the right portion and health
concern and also include little toy in each dishes. Next, Nandos decorates their
restaurants based on the culture of the country, local resource and style. Therefore,
Nandos has competitive advantages to compete with other restaurants in the global
market. Nandos uses the marketing mix model to decide on how to take a new offer to
the market. Moreover, Nandos use the 4 Ps to plans a new venture or evaluating an
existing offer to enhance the impact with target market.

12

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14

Appendices
1. Nandos annual report UK 2012.

15

2. KFC MENU

16

3. Nandos Menu

17