February 28th, 2012Research Brief:Leveraging Marketing Research to Help Solve Managements Decision ProblemBy: David SchwartzMSBA, MBA, MSc.

For each of the restaurants listed , please indicate whether you are eating from there more often, less often, or about the same frequency as a year or so ago.How Did Consumers Answer The Question Below?The Answer Provides A Leading Indicator For Future Market Share Growth.

Marketing Research HighlightsManagement Decision Problem (MDP), Market Research Problem (MRP), and ComponentsHypotheses and Desired OutcomesStatistical AnalysisKey TakeawaysRecommendations

What should Wendys do to improve its service and brand orientation in order to increase their market share?Management Decision ProblemTo determine the various needs of fast food restaurant patrons and the extent to which the current offerings are satisfying those needs.Marketing Research Problem Is there a particular demographic profile that more frequently visits fast food restaurants?How well do existing fast food establishments meet the consumers requirements?ComponentsMDP MRP Components

Demographic: Ideal Customer Profile

Hypotheses Desired Outcomes

Hypothesis 1: The visitation frequency of patrons depends in part on the demographic of the customer.Statistical Analysis: Crosstabs Wendys Restaurants (Visitation Age Vs. Groups)Key Takeaways: Wendys Eating There More Often Exceeds Less Often by 14.5%Target Age Group: 1824 and 25-29 Less OftenTarget Age Group: 30-34 Same

VariableChi-Square (Sig.)Age0.062HHI0.484Gender0.634Employment Status0.450Education0.214Marital Status0.582

Statistical Analysis: Crosstabs McDonalds Restaurants (Visitation Vs. Age Groups)Key Takeaways: McDonalds Less Often Exceeds More Often by 6.4%Target Age Group: 1824 Less OftenTarget Age Group: 35-39 Same Hypothesis 1: The visitation frequency of patrons depends in part on the demographic of the customer.

Statistical Analysis: ANOVAKey Takeaways: Males: 25-39 eat at fast-food restaurants more frequently (on average)Females: 18-24 eat at fast-food restaurants more frequently (on average)Target Age Group: 35-39 Same Frequency: All Restaurant PatronsSplit Analysis: Male & FemaleVariables:Age GroupVisitation Hypothesis 1: The visitation frequency of patrons depends in part on the demographic of the customer.

Hypothesis 1: The visitation frequency of patrons depends in part on the demographic of the customer.Frequency: All Restaurant PatronsSplit Analysis: Male & FemaleVariables:Employment StatusVisitation Key Takeaways: Males: Full- and Part-time employed males eat at fast food restaurants more frequently (avg.) Females: Couldnt reject the null hypothesisStatistical Analysis: ANOVA

Hypothesis 2: Wendys meets the customers overall performance requirements at least as good as the market share leader. 1 2 3 4 5 6 7 8 9 10 TerriblePerfect Now, taking into account everything that you look for in a fast-food restaurant, how would you rate each of the following:

Hypothesis 2: Wendys meets the customers overall performance requirements at least as good as the market share leader.Statistical Analysis: Paired T TestTest: Paired T TestIs there is significant difference in the means between Wendys and McDonalds regarding total performance?

Key Takeaway: There is a is significant difference in the means between Wendys and McDonalds regarding total performance.

Statistical Analysis: ANOVAWendys: Total Performance by Age GroupMcDonalds: Total Performance by Age GroupTest: ANOVAThe difference in the means between Wendys and McDonalds regarding total performance.

Key Takeaway: Somewhat surprisingly, consumers perceive that Wendys overall performance is significantly higher than McDonalds (on average). McDonalds largest group (18-24 year olds) scored them the lowest (on average).

Key TakeawaysMDP: What should Wendys do to improve its service and brand orientation in order to increase their market share? MRP: To determine the various needs of fast food restaurant patrons and the extent to which the current offerings are satisfying those needs.Wendys has 14.5% more Eating There More Often than Less Often over the past year.McDonalds has 6.4% more Eating There Less Often30% of McDonalds largest customer group (1824 year olds) are eating at McDonalds less often.Females in the 18-24 age group visit fast-food restaurants significantly more than the females in other age categories.Full- and part-time employed males visit fast-food restaurants significantly more than males in the other employment categories.Consumers perceive that Wendys overall performance is significantly higher than McDonalds (on average). McDonalds largest group (18-24 year olds) scored them the lowest on performance (on average).

10 Recommendations Wendys should try and exploit McDonalds various weaknesses once deeper insights are gathered.Wendys should specifically target the 18-24 year old segment (females in particular).Given the management decision problem, it is important for Wendys to better understand the consumers evolving food preferences.Detailed customer satisfaction insights would be more beneficial that merely having a rating for total performance.The current survey doesnt address key areas such as service, price, comfort, and store cleanliness.The next version of the survey should include some opened ended questions in order to more deeply probe the consumer on recent market dynamics.The current survey touched on recency and frequency, but it didnt include questions on spend. The next survey should ask questions that will help Wendys determine the companys next innovation.The current survey doesnt provide enough focus on critical areas such as customer preference and attitude.Now that we know important pieces of the what, the next survey must also address the how.

The End

*To launch this evenings presentation, I thought it would be fitting if we went right to the most critical question that is plaguing Wendys which is

What steps should Wendys management take in order to turn around their business?

To get a better feel for Wendys challenge, I provided a question from Wendys 2008 Commitment Study, which asks the consumer if their visitation at particular fast-food hamburger restaurants is increasing, decreasing, or staying the same.

In order for Wendys to increase visitation, it is important that management understands the consumers motivation behind their answer to this very important question.

In many ways, this single question opens the door to understanding the steps that Wendys management should take to grow market share.

The purpose of tonights presentation is to begin solving Wendys visitation puzzle, so that management can more effectively grow market share.***The first step for our review is going to be to determine if an association exists between visitation and various demographics factors such as age and household income.

This is a critical first step to solving the visitation puzzle, because it will help management develop an ideal customer profile to target offerings, marketing communications, and so forth.*In addition, there are two hypotheses we will be testing.

The first hypothesis is. The visitation frequency of fast-food restaurant patrons depends in part on the demographic of the customer.

The second is.. Wendys meets the customers overall performance requirements at least as good as the market share leader.

So why are these hypotheses important to test? They are important to test because quality and visitation are key drivers for market share. *Before we get to the key takeaways from this slide, I want to give you the background to the test that was run. Wendys visitation levels were tested to see if there was an association between any of the six demographic factors that are listed on the left hand side of the slide.

Only one factor was moderately significant, which was age.

Here are the important takeaways for management

Overall, 14.5% of Wendys customers are eating more frequently at the restaurant versus less frequently. This is obviously a critical step in growing market share.

A significantly larger than expected number of 30 34 year olds are eating at Wendys on a regular basis. This is good news for Wendys, and it could be evidence that previous initiatives such as the companys 10 imperatives have made an impact.

A larger than expected group of 18 to 24 year olds are eating less often at Wendys. This is an important piece of Wendys puzzle that will be further addressed in the slides that follow.*When you compare visitation versus age for McDonalds, the results show that 6.4% of McDonalds customers are eating less frequently at the restaurant versus more frequently. Over time, this will lead to market share losses for McDonalds.

It is also important to note that a larger than expected number of 18 to 24 year olds are eating at McDonalds less often than a year ago. This is McDonalds largest segment, and it is a tremendous opportunity for Wendys to try to take some of McDonalds customer base.

*Take a look what happens when we analyze visitation by age and gender. You will notice the following:In general males aged 25 39 are the heaviest consumers of fast food.The coveted 18 24 year old group is heavily weighted toward females, and this age group eats out more frequently than any other group of females.*Finally:

As expected there is a significant difference in visitation by males who are employed, but it is a bit unexpected to see that employment status was significant for females. ******