M15 Marketing Project II

Marketing: Food Truck Vendor

Davine Williams

Mr. Rodney Ewing, MBA

MKTG101-00G-G1

October 4, 2018

Food Truck vendor

Food Truck industry is one of the fastest growing industries in the United States. There are approximately 3 million Food Trucks most of which are located in Portland, Chicago and Los Angeles. In 2011, the industry registered $630 million revenue and has grown by 7.9 percent between 2011 and 2016 (Aryouth, 2012). Though the industry is prospective, it has some drawbacks just like any other industry. Due to high fuel prices, Food Truck Vendors are experiencing a dip in profits. Also, some states such as Chicago have imposed strict regulation pertaining perimeters where food truck vendors operate. It is therefore important for vendors to conduct marketing environmental analysis and target market analysis before venturing into the business.

Marketing Environment Analysis

Environmental analysis is a strategic technique used by businesses to identify external and internal factors that affects them. Conducting environmental analysis will help Food Truck Vendors to identify opportunities that can be exploited in the industry and also threats. By understanding the business environment, Food Truck Vendors can align their strategies appropriately. The most common tool for evaluating external business environment is PESTEL analysis. PESTEL stands for political, economic, social, technological, environmental and legal factors. Porter’s Five Forces model can also be used to evaluate competitive environment of the business.

Regulatory

Regulatory analysis refers to legislative and political factors that have impact on the business. Before starting Food Truck Business, these factors must be analyzed to ensure that all compliance requirements are met. There are several licenses and permits that are expected of Food Truck businesses to have. They are mainly issued by state governments, therefore varies from one state to another. One of the most important legal business documents to start this venture is Employer Identification Number (EIN). IRS uses EIN to calculate and collect taxes, and can be applied through IRS website. Secondly, business license is needed to operate the Food Truck Business. This, however, varies from one city or state to another. Food Truck Vendor should also obtain a vehicle license. This may include commercial driver’s license depending on the jurisdiction. Other requirements are Health Department permit, food handler’s permit and seller’s permit (Myrick, 2018). These regulatory factors affect the operation of the business directly or indirectly and therefore should be complied.

Competitive

Competitive analysis evaluates the level of competition in the industry. It focuses on both direct and indirect competitors in the industry. Food Truck business direct competitors are those dealing with same cuisine and operates in the same area. For instance, in Chicago some of the most notable Food Truck businesses are Toasty Cheese, the Fat Shallot and the Baby Cakes. Toasty Cheese serves a variety of cuisine including sandwiches, soups, gourmet French fries and American cheddar on white bread. They operate on the street of Chicago. The Fat Shallot serves Sandwiches including cheddar grilled cheese and braised pork (Roaminghunger, 2018). The most common strength among these competitors is that they have been in the industry for long time and they have established strong business image. They have also created strong customer relationship which may make it hard for new entrants to penetrate the industry. However, with the right innovation and introduction of new products in the market, new Food Truck vendors can penetrate the market.

Economic

Prevailing economic factors impacts the profitability of Food Truck businesses. The soaring fuel prices in the United States and the rest of the world has caused uptick increase in food prices. According to Thompson (2017), high prices of fuel in the country are attributed to high demand which caused drastic shortages. High prices influence customers to cut expanses which directly affects Food Truck businesses.

Technological

Technology is very important to Food Truck business. Most of the industry players have turned to internet marketing and distribution in order to reach more customers. Innovativeness will ensure that the business compete favorably in the industry. For instance, integration of online order and delivery in the business will improve customer satisfaction and convenience hence building strong loyalty.

Social

Social factors such as cultures, traditions and lifestyles affect Food Truck Industry. Demographic trends also impact customer food choices. Most Food Trucks operate around residential and workplaces where target customers are found. Education also plays a major role as more people are becoming aware of healthier food choices in the market hence impacts Food Truck business.

Target Market Analysis

Target market analysis is a business technique used by organizations to identify potential customers and strategize on attracting them. Target marketing entails division of the market into segments where the organization can focus on particular group appropriate to its business. Some of the bases used to segment target market include geographic, demographic, psychographic and benefit sought and usage rate (Bell, 2018).

Demographic

Demographic segmentation refers to division of the market using customer quantifiable factors such as age, occupation, education, income and socio-economic among other characteristics. Food Truck Vendor business targets middle income and working class of the population in urban areas. Target areas include workplace and residential areas. Students are also major target for the business because they make up large percentage of population and are popular with fast foods. Demographic analysis is important to the business because it provides vital information regarding the population and menu items that they like most.

Geographic

Geographic segmentation involves division of the target market in terms of region, country, state or city. Food Truck business is a mobile business therefore will operate within different cities in the state. The business will be based majorly in the busy streets of Chicago where customers are accessible. Geographic segmentation helps the company to identify the most appropriate areas where the business will operate.

Psychographic

Psychographic segmentation technique utilizes customer lifestyle characteristics to identify common external influences that most customers are more responsive to. To measure the lifestyles; activities, interests and opinions (AIOs) of the consumer are used. Psychographic enables the business to identify underlying motivations that make the customers attracted to certain menu. This involves identifying the menu item consumed by a particular segment of consumers. Food prices and quality are key factors that drive customer preference to certain menu item.

Benefits Sought and Usage Rate

Benefit sought refers to the benefits that customers seek when buying certain items on the menu and usage rate is the frequency at which customers buy those items. Most food truck customers are millennials who are eager to experience cheap and new types of foods (Borham & Chung, 2018). Other benefits that consumers seek include quality and convenience. The business will therefore be innovative to come up with new food items and maintain high quality and the same ensuring affordability.

References

Aryouth, E. (2012). There Are About 3 Million Food Trucks in the U.S., Can Your Truck Make It? Retrieved from: https://www.foodbeast.com/news/there-are-about-3-million-food-trucks-in-the-u-s-can-your-truck-make-it/.

Bell, E. (2018). Five Types of Customer Segmentation and Examples of Implementation. Bridge

Borham, Y. & Chung, Y. (2018). Attitude and Visit Intention toward Food-Trucks: Targeting Millennials. Journal of Foodservice Business Research, 21(2),187-199.

Myrick, R. (2018). Types Of Food Truck Licenses And Permits Required To Operate. Mobile Cuisine.

Roaminghunger. (2018). Chicago Food Trucks. Retrieved on Oct. 2, 2018 from: https://roaminghunger.com/food-trucks/il/chicago/1/ .

Thompson, C. (2017). Rising gas prices are a growing threat to the American way of life. Business Insider.