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0 Executive Summary

This report consists of the main marketing strategies of the Nando’s restaurant
franchise and how it targets and positions its products to meet the needs and wants of
their potential customer. The research shows that Nando’s had successfully built itself
as one of the well-known chicken restaurant around the world. The marketing strategy
of the Nando’s includes three parts such as: segmentation, targeting and positioning.
Nando’s using demographic, geographic, psychographic and behavioral segmentation.
Development of effective marketing strategy will help to the Nando’s to attract many
customers and noticeably increase sales. Nando’s 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 Nando’s company shows how their products/services
differentiate from competitor’s offerings. Marketing mix includes 4ps i.e. product, place,
promotion and price. This strategy is very important factor for the Nando’s to achieve
their goals and objectives.

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2.0 Introduction

One of the largest franchise restaurants – “Nando’s” has come into the market during
the year of 1987. The founders of Nando’s, 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-peri”chicken, which simply means “pepper-pepper”, and was adopted by
Portuguese travelers from Mozambique’s cuisine. In the year of 2013, Nando’s had
successfully spread out all over the world and opened over 900 th stores worldwide. As a
Nando’s CEO and founder in Malaysia and Singapore, Mac Chung Lynn has brought
Nando’s 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 Nando’s, when he first tried fried chicken in London. He
was studying architecture degree in London and dreamed about opening Nando’s in
Malaysia. Therefore, he decided to bring the brand and promote Nando’s unique flame-
grilled chicken in Malaysia. In term of expansion, Fanny Chai (Regional Marketing
Manager Nando’s) planned to bring Nando’s 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 Nando’s 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 Nando’s positions its product in the market.

3.0 Nando’s 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 market’s age, gender,

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occupation and income. Nando’s 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 Nando’s
decide to launch their product into their targeted market. As Nando’s 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 society’s perception about products. Behavioral segmentation, though
closely related to psychological segmentation, it is differentiated by the customer’s
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 Nando’s product creation. Due to their variety of products, Nando’s 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, Nando’s has a special set menu for the kids called the little
Grown-Up’s 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
Nando’s 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
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 Nando’s expand its
business around the world. Cities/towns with a high population density would help in

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boosting the growth of Nando’s, for example; UK has one of the countries that have
most outlets of Nando’s as of 2012, having more 250 outlets within the region itself.
Within the region itself, Nando’s 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, Nando’s can determine
which type of product would be more receivable and vice versa. In the menu, Nando’s
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 Nando’s 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
Nando’s to market its product. With brand loyalty, Nando’s can be ensured that they
have a sustainable market to launch their products to.

The table 3.1.5 shows the market segment for Nando’s “peri-peri”
chicken

Segments Variables Generation Y Generation Baby

X Boomer
Geographic Location Malaysia Malaysia Malaysia
Age Children(7-12) Working Adults(40-
Teenagers(13- adults(22- 60)
21) 40)

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Demographic Income Parents Medium – High
support, High
pocket money

Occupation Kids, students Junior Business

managers owners
Lifestyle Active, seek Active, Less active,
for vitamins, healthy food healthy food
tasty food

Psychographic Personality Active, quick, Active, Less active,

immature quick, cautious,
mind cautious, dominant,
profit smart
seeking consumption

Attitudes Positive Positive- Neutral

Neutral
Behavioral Brand Strong Strong- Weak
loyalty Weak

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4.0 Targeting

After making an analysis of Nando’s target market for their product, we are able to
identify their consumer markets. With this analysis, Nando’s 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 Nando’s,
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 Nando’s targeting the children denomination (ages 7-12), the
company can improve on their existing Little Grown-Up’s 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.

2) Minimum amount of oil, as it can influence on body and organism condition.
3) Comfortable place to sit, not loud music, facilities such as bathroom, baby room.
4) Affordable price
5) Short waiting time

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4.2 Nando’s “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), Nando’s 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-Up’s” and decorating each restaurant to match
with traditions in different countries, where located Nando’s . Nowadays, Nando’s 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 Nando’s restaurants
as this method of cooking differentiates Nando’s from other casual dining restaurants,
which are oriented on chicken dishes. Thus, Nando’s marketing strategy uses product
differentiation. It brings a great success to the restaurant chain in the year 1990, when
they start to spread around the world (Appendices 1). Nando’s positions itself as a
brand that located above fast food, but below fine dining (Pharmy, 2007). When
Nando’s 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 Nando’s using flame-grilled and marinated in “peri-peri” sauce
method, which is good for health. Moreover, Nando’s are the only one producer of “peri-

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peri” sauce and customer can choose spice rating, which starts from Lemon/Lime, Mild,
Hot and Extra Hot. On other hand, KFC’s cooking method based on producing crispy
coat chicken, which is cheaper than Nando’s, but more harmful for health, because
contains gluten. Next, Nando’s differentiating factor is unique design of each restaurant.
Nando’s decorates its restaurants in accordance with each market’s model. As different
markets have different preferences, Nando’s decided to use each country’s 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 kid’s meals. Nando’s
offers special meals for kids that called “Little Grown-Up’s”, which is not only tasty, but
also health concern. Also, they provide so called “Nando’s Fun Pack” with games to
play and special cards with information about the Nando’s inside. KFC’s kid’s meals
provide less variety of dishes, but include small toys inside each meal. However,
Nando’s main advantage is spicy “peri-peri” sauce, which made Nando’s brand so
popular. This is a unique selling proposition, because other competitors do not offer the
difference. Nando’s 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, Nando’s 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 Nando’s brand. These seminars allowed people to come and listen to
the stories about how Nando’s was born and learn more about their features. Nando’s
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 Nando’s.

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6.0 Marketing strategies of Nando’s (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 Nando’s 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 (Nando’s Malaysia, 2013), with chicken as their main ingredient. By
offering these several types of products, Nando’s provides a range of choices for their
customers. The main marketing strategy that Nando’s uses - is product branding.
Product branding is one of the ability of professional marketers to create and lead
brands (Armstrong & Kotler, 2012). Nando’s branding was first created via their Peri-
Peri sauce. The Peri-Peri sauce differentiates Nando’s from their competitors greatly as
Nando’s is the only restaurant that offers this sauce.

In addition, Nando’s 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 (Nando’s
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 Nando’s product is
mainly affordable to their customers. One of the pricing strategies that Nando’s uses is:
Major Pricing Strategy, which includes Customer Value-based Pricing and Competition-
based 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
seller’s 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

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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
Nando’s, 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 Nando’s
products are in between their two main competitors, KFC and Kenny Rogers Roasters,
where some of Nando’s products are more expensive than KFC’s products and some of
Nando’s 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 company’s
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,
Nando’s 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
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 production-
distribution process (Armstrong & Kotler, 2012). As a franchise organization, Nando’s
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.

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Nando’s 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 Nando’s, 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 Nando’s property experts before any lease agreement for any
premises. In Malaysia, Nando’s 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 Nando’s 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 Nando’s uses is the Push
Strategy, where advertising and sales promotion are used to attract customers attention
towards the product.

Nando’s uses funny and interesting advertisements to promote themselves (Dhesi,

2013). Apart of that, Nando’s often have promotions, like discount vouchers, for their
customers occasionally, and sometimes for certain festive seasons like Hari Raya
(Pharmy, 2007).

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7.0 Conclusion

In conclusion, Nando’s could clearly segment their customer into demographic,

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

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Appendices

1. Nando’s annual report UK 2012.

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2. KFC MENU

3. Nando’s Menu

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