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Sonic Research

Essay by   •  March 4, 2011  •  2,870 Words (12 Pages)  •  995 Views

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An external orientation recognizes the fallacy of the assumption that products, such as food and beer, will forever sell themselves; many companies or firms think that if they only could maintain their production and technological superiority. Looking outside, to the external environment, helps the company to the business environment results in major priority given to determining customer's needs and wants. How this may be changing as evidenced by shifts in buying patterns, and adapting products and services accordingly. The external focus also permits more responsiveness to other external forces that may factors, such as major competitive thrust, changing governmental laws, and regulations, economic conditions, trade union forces, and the like. ( Porter's five forces model) With such an external orientation, attention will more likely be directed to location new opportunities brought about by changing environmental conditions, rather than being engrossed with internal production. Such an orientation is more geared to meeting and even anticipating change, and like it or not the environment for doing business today is more and more dynamic today. Externally oriented firms usually have the advantage.

Sonic, which specializes in made to order fast food, is know for its specialty menus and personal carhop service. Sonic started as a hamburger and root beer stand in 1953 in Shawnee, Oklahoma, and has grown to more than 3000 drive --in 28 states, and northern Mexico, mostly located in the Sunbelt of the United States. Sonic is the largest chain of drive in restaurant, more than 750,000 people eat at sonic every day.

To study sonic the Porter's Five Forces Model is a great tool to understand Sonics success in a constantly changing fast food environment.

MICHEAL PORTER FIVE FORCES MODEL

MARKET ADVERTISING

Someone once said that "change is constant" and being a consumer oriented company, Sonic could not agree more. Their customers are changing. Baby boomers continue to lead age demographics trends. Now a days with the Latino population representing one, if not the fastest growing consumer segments. Two income and single parent families keep pressure on leisure time and make convenience factors ever more important meal choices. And parents are reasserting their role in decision-making when it comes to what their children eat. Advertising mediums are changing as well. Cable viewers continuous to increase, now exceeding the share commanded by the networks, and the Internet relentlessly pushes the boundaries of communication constantly forward.

To be successful in this constant change ambient, Sonic and its franchisees have continued to expand their reach to customers, increasing expenditure on TV and radio to about $110 million in 2003, up from $100 million the previous year. With so much money in advertising Sonic is a major sponsor college and professional sports on the major cable sports channel such as ESPN and TNT, as well as heavily advertising on a different niche such as USA, TLC, and MTV networks. All this advertising allows a matrix of products to specific customers in a myriad of ways. Second, cable advertising has proven to be especially effective in reaching different clients in many developing markets. Sonic also has targeted the internet to connect with potential shoppers of all ages, in a two way interaction which helps define consumer wants and needs.

To be successful in the fast food business, it's essential that companies deliver on its brand promises and maintain top of the line awareness about an ever-changing environment. In other words you have to build good strong relationship with your costumers. This reflects on their costumer loyalty, by having the strongest costumer return in their market, and in 2004 Sonic was able to obtain the highest rate of growth in same store sales in five years. This speaks volumes of their advertising and good product.

COMPETITION OR THREATS OF NEW ENTRANTS

Evidence suggests that companies often find it difficult to identify new competitor. Identifying new entrants is important because they can threaten the market share of existing competitors. "One reason new entrants pose such a threat is that they bring additional production capacity" "resulting in less revenue and lower returns for competing firms." (Hitt, Ireland,Hoskisson P.53) The major competition of sonic comes from Mc Donald's, Wendy's, and Burger King, and now a day's alternative food such as SUBWAY is taking some of the market share from Sonic as well. Although sonic is located mostly in the southern part of the United States and Northern Mexico, they cannot help feel the competition from all the big players, and vice-versa. For example Mc Donald's opened its firs drive-thru in Oklahoma in order to compete with Sonic in their owned market.

SUPPLIERS OF SONIC

Sodexho is one of the leading food and facilities management Services Company in the United States. Every day, more than 100,000 employees work hard to ameliorate the quality of life for its and customers all over the U.S.A., Canada, and Mexico. They offer a full range of outsourcing solutions to the corporate, healthcare, education, government, and defense markets, including food services, housekeeping, grounds keeping, plant operations and maintenance, and integrated facilities management.

Ð''The people of Sodexho touch the lives of millions of men, women and children each day. Their customers range from college faculty and students to children entering school for the first time; medical professionals and hospital staff to patients and their families; corporate executives to company employees of every job description." (http://www.sodexhousa.com) Regardless of the background, occupation or personal needs of their clients, their goal goes well beyond the food services they provide. Their priorities are to improve the quality of daily life for all the people they serve.

COMPETITION FROM MCDONALDS

Americans now spend more money on fast food than they do on higher education, personal computers, software or new cars. They spend more on fast food than on movies, books, magazines, newspapers, videos and recorded music - combined.

The rapid growth of the fast-food industry has been driven by fundamental changes in the U.S. economy. The hourly wage of the average American worker steadily declined until last year. Women now a day are entering the work force in record numbers, often motivated less by feminism than by a need to help pay the bills. In

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