Inside the Marketing Strategy of the In-N-Out Burger Chain

By:
Nichole Fitzhugh
Ted Watterson
Cathy Nguyen
Chris Nguyen
Kieu Le

California State University, San Marcos

Marketing 302

Professor George Sharghi

May 5, 2011

Introduction
While cruising the freeway along the Sothern California coastline, it is becoming increasing possible to spot a giant sign with a yellow boomerang; this brightly illuminated boomerang is most associated with the infamous restaurant In-N-Out. It was founded by Harry and Esther Snyder in 1948, and established in Baldwin Park, California. Since then, the restaurant has continued to satisfy and entice customers from all over, including the East, West, North, and South coasts. Its popularity stems from its simple yet appetizing menu, which consists of three types of burgers: hamburger, cheeseburger, and the Double-Double. They also carry fresh cut fries, and three varieties of drinks, including milk, shakes, and sodas. In-N-Out’s arguably most unique item is its “spread,” also referred to as its special sauce. The Businessweek article, In-N-Out Burger’s Marketing Magic, outlines the restaurant’s marketing strategies. In-N-Out does not advertise on television, but relies on advertising through their billboards, bumper stickers, t-shirts, and satisfied fans. The yellow boomerang is wielded as an arrow to point in the direction of their restaurant. However, their most successful marketing strategies are how their real estate is strategically located to attract tourists. The signature colors of In-N-Out are red, yellow, and white. The red is utilized to color their roofs, yellow is used to decorate the band on the roof and the iconic zigzag in the logo, and white dons the employee uniform and building walls. Most of the In-N-Out buildings are homogenous to one another, as they were primarily planned via cookie cutter blueprints. The constructers would also purposely place massive signs out in the streets to notify tourists of the upcoming In-N-Out restaurant.

In-N-Out also advertises through radio. It was first promoted through a catchy jingle: “In-N-Out, In-N-Out, that’s what a hamburgers all about!” Aside from radio, one of their most popular marketing strategies they accomplished was from their bumper stickers. In the 1980s, placing In-N-Out themed bumper stickers on a vehicle increased the restaurant’s reputation, as it showcased its fan’s adoration for the delicatessen. Beginning in 1984, Rich Synder, the son of Esther and Harry Synder, conducted a new promotional contest using the aforementioned bumper stickers. He would hand out these stickers to his customers, then route a “spotter” to find the stickers. Once the spotter spotted a bumper sticker, he or she would jot down the customer’s license plate number and enter it into a drawing. The prizes ranged from trips to Hawaii, to microwave ovens, video recorders, and In-N-Out t-shirts. Through this strategy, In-N-Out swelled in popularity and continued to flourish and prosper into the prominent restaurant it is known as today.
Analysis
How does In-N-Out implement the four “p’s”; product, price, place and promotion into its marketing strategy? In regards to product, after Rich Snyder had taken over In-N-Out as President of the company, he proclaimed that the menu would remain unchanged. There are only four food items on the In-N-Out menu: Hamburger, Cheeseburger, Double-Double and French Fries. In-N-Out compliments the food with the standard array of Coca-Cola beverages and three shakes: chocolate, vanilla and strawberry. The goal of In-N-Out is to only serve the freshest food available. What I mean in fresh is how they make their own buns, the old fashion way that takes about six to eight hours to rise. The milk shakes are made with real ice cream and the patties are 100 percent beef. The fries are made with fresh potatoes that are hand peeled to order. In a world where fast-food has become synonymous with packaged and processed foods, In-N-out makes everything the old fashion way. At In-N-Out burger, quality is a priority. When it comes to price, In-N-Out prices are considerably reasonable in comparison to their competitors. Pre-2008, you could buy a Double-Double for $2.95. Prices have risen over the years but only slightly due to inflation. Traditionally, most restaurants absorb the costs when food prices go up because they eventually fall back down, but this time around prices seem to be holding steady. For In-N-Out, they are safe with the prices rising because they have remained statistically reasonable to satisfy their loyal base of customers. In regards to place or location, In-N-Out owns and operates a world class patty making facility. This is another reason why they patties are considered fresh than distribute it to their retail stores. In-N-Out has realized that location is the key ingredient to success. The three key points to success in retailing is location, location, and location. The In-N-Out burger chain has used this strategy very wisely. They have opened stores that are most convenient for its target consumer base. Most all In-N-Out restaurants are located near freeways with big neon signs that can be seen from a mile away. They are strategically placed near freeways in an effort to attract customers and commuters just passing through. It has served to be an effective strategy.
Brand loyalty is a certain value that makes a consumer to allow them to keep buying a product or service over and over again also known as an elusive quality. In-N-Out Burgers is a great example of a business that plays a major role in Brand loyalty. The brand name is the customer's guarantee of his or her needs and wants that will get what they expect. As far back as most restaurants business goes to the main question asked when selling their product, how can I get people to purchase my product? This is still a very important issue in the day- to- day operations of any business but now they are asking a whole new question. In today's fast changing markets, where people are bombarded by advertisements everywhere and they are starting to realize that they do not need to stick with one product for life. However, they see that there are many substitutes available. As a result of this new type of market, most fast food restaurants started to put a large effort towards the development of Brand loyalty. In-N-Out Burgers provide Band loyalty through their customers by word of mouth and other campaigns advertised. Its importance in today's business market, most restaurants industry would advertise through coupons and commercials to allow their business to compete with their rivals. It takes Brand loyalty to explain how it motivates a consumer to purchase a given product or service. How does In-N-Out promote? At In-N-Out, customers can purchase not only a juicy burger but also T-shirts, bumper stickers, and caps. Because of the success of the T-shirts, Rich Snyder in 1989 began a mail-order catalog, which eventually included pins, key chains, mugs, and golf balls. Their big neon sign is another promotion sign that can attract customers. When people see the sign they think of In-N-Out and a double-double. They also have cookout trailers that are perfect for corporate picnics, parties, and other special events. This is also a great way of advertisement. Promotion is all about advertisement and how they can market themselves to the consumer. The phrase Brand loyalty refers to consumers sticking with a brand out of feeling of commitment for that brand. "Brand loyalty occurs when a consumer buys the same brand’s product or service repeatedly over time rather than buy from multiple suppliers within the same category"(Page 194, Grewal/Levy). In this case, In-N-Out Burgers shows a connection between how their customers feel when they purchase their burgers for a long time and are still very happy with it. That will allow customers to be more satisfied with the food and service which allow them to come back again. People enjoy the luxury of not having to scavenge around the eateries in search of a new product. Brand loyalty is also very attractive to most restaurants such as In-N-Out Burgers since they enjoy their work being easier and less costly. It is less expensive and less time consuming to keep old customers, rather than spend money and time advertising towards new ones. Thus, In-N-Out burgers have maintain their value customers and their menus have not changed since then due to the fact that their burgers are quality and essentially not necessary for them to change or add more items. Since the first restaurant opened in 1948, In-N-Out has had a commitment to their image and identity. From the design of the interior and exterior of each building, to the attitude towards advertising, In-N-Out sticks to it's 1950s era roots. It is because of this brand identity that In-N-Out has such a strong resonance in its loyal customers. Since the 1950s, In-N-Out has changed very little about the design, themes, and motifs of the brand as a whole. Employees still don the paper hats and red aprons in the white and red tiled restaurants. A neon sign reading “Quality you can taste” hangs above the register. These themes of the 1950s bring a feeling of “wholesomeness” to the restaurant. There are no happy meal featuring toys from the newest animated movie or advertisements for the newest cheese crunch crisp wrap. Instead, there is a tried and true menu, and a “secret menu” that is strictly word of mouth. It is this image of a simple olde time burger shop that appeals to those young and old. For some In-N-Out brings forth a retro image, to others, In-N-Out’s classic feel is a bite of nostalgia. “Staying simple and remaining focused on its core values had allowed In-N-Out to stay true to its loyal fan base.” (Perman. 2009) A huge part of In-N-Out brand identity is its marketing strategy, or lack thereof. In-N-Out’s underdog appeal comes to its approach on advertising. There have been very few radio commercials for In-N-Out and a lot less television commercials. Instead, In-N-Out relies more on a word of mouth approach to advertisements. T-shirts, stickers, and billboards are In-N-Out’s main forms of advertisements. To outsiders, In-N-Out is a burger shop that they have only heard about, a mystery that one must have to visit to understand. It makes sense that a company, who prides itself on vintage appeal and zeal, would shy away from advertising on Superbowl commercials and website ad-spaces. “Consumers felt a connection with In-N-Out's simple, almost quaint brand, and it was clear that [Founder] Rich Snyder knew the value in preserving that.” (Perman. 2009) It's this quaint connection that consumers feel towards In-N-Out’s brand that drives the company. Explaining In-N-Out’s appeal can be tricky."I can't really explain an In-N-Out burger. It's one of those niche things.” (Strasburg. 2001) Niche is definitely a key word to be used to describe In N Out, as the restaurant stands out like a sore thumb compared to the countless McDonald’s and Burger Kings. But really, It is In-N-Out’s uniqueness that makes It such a cult hit. As mentioned before, from the way that In-N-Out is designed, to how it handles itself in the market place, In-N-Out has carved themselves out to be a quaint and modest establishment. In-N-Out is not just a restaurant; it is a cultural icon for southern California while many other fast food chains are simply labeled as junk food. A true underdog in the fast food business, In-N-Out sticks to its roots and proves that authenticity can sometimes be the best thing for business.
Recommendations
How do you improve upon a marketing strategy that the In-N-Out Burger chain has seemed to have already quietly mastered? The chain has managed to build a loyal following of patrons without having to succumb to the mainstream corporate advertising approach. However, making a commitment to reach out to those consumers and possibly secure a new brand of customers in the area by promoting via local channels would not hurt their profits. In fact, it would likely remind those loyal patrons of all the reasons why they are so partial to the restaurant to begin with and entice those would be patrons that have never really been exposed to In-N-Out. It's recommended that the burger chain step outside of its comfort zone just a bit and consider promoting its brand in local media by means of television advertisements and local newspapers. They do not have to saturate the local television media market with advertisements like many of their competitors, but should definitely run television media ads sporadically to not only entice new loyalties but to celebrate the loyalties that already exist among their followers. Remind those of us who love their restaurants why we should keep coming back: simple menu, low prices, and great tasting food. The chain might also consider offering low profile promotions in local newspapers such as a free drink with your meal to persuade consumers come in to their restaurant as opposed to neighboring competitors' restaurants. They can retain their image of simplicity and anti-corporate mentality by avoiding getting too caught up in the mainstream marketing approach of forming strategic allies with the big corporations. They do not need to offer kids toys that promote major movie releases. They do not need to follow suit of their mainstream competition by pushing kid’s meals -junior's meals - or a supersize menu. In order to stay true to their image and who they are, while still reaching out to attract new patrons - both tourists passing through, and local customers - all they need to do is promote their product using local media avenues. Aside from that, the chain would be wise to carry on their operations "status-quo" because whatever they are doing is working and serving them well.