Transcript What Is Fast Food?

DIFFERENTIATION and POSITIONING
Marketing Management
Group 8
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Gift
M987Z225
Chang
M987Z221
Van
M987Z256
Steve
M987Z229
Martin
M987Z208
Tommy
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Contents
• Introduction
 Fast food and the Industry
 Subway
 Mc’Donald
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4P’s Analysis
Differentiation and Positioning-Subway
Globalize the Brand-Mc’Donald
Franchise
Global Marketing Strategies and Challenges
Conclusion
Q&A
What Is Fast Food?
Denifition: the term given to food that is prepared in
quantity by a standardized method and can be dispensed
quickly at inexpensive restaurants for eating there or
elsewhere.
Menu: Burgers
Sandwiches
Fried chicken
Pizza
Kebab
Salad
Fact About Fast food Industry
• Food which is cooked in bulk in advance, kept warm or reheated to
order, and sold ready-to-eat from an outlet.
• Outlets may be stands or kiosks, which may provide no shelter or
seating, or fast food restaurants.
• Franchise operations which are part of restaurant chains have
standardized foodstuffs shipped to each restaurant from central
locations.
• Common menu items : fish and chips, sandwiches, pitas,
hamburgers, fried chicken, French fries, chicken nuggets, tacos,
pizza, ice cream, and some "slower" foods like chili, mashed
potatoes, and salads.
• Value meals are a common merchandising tactic to facilitate
bundling, up-selling, and price discrimination.
• Major brands : Subway and McDonald’s
• Trends : beginning to health concerns about the world ecology and
people's health.
Fast food industry
• White Castle, established in 1921, is considered to be
the first fast food chain.
• McDonald’s introduction of the "Speedee Service
System" in 1948 established modern principles of the
fast food restaurant.
• Wendy's, founded in 1972, is credited with pioneering
the use of the “drive-thru”.
• Nowadays, fast food became one of the worlds fastest
growing industry.
Subway is a fast food franchise that primarily sells submarine sandwiches,
salads and personal pizzas. It is founded in 1965 by Fred de Luca, owned
and operated by Doctor's Associates, Inc. (DAI) based in Milford,
Connecticut. Subway is one of the fastest growing franchises in the world
with approximately 31,835 restaurants in 91 countries as of September
2009. It is the largest single-brand restaurant chain globally and is the
second largest restaurant operator globally after Yum! Brands (35,000
locations).
Many restaurant analysts attribute Subway's fast growth to the growing
health concerns by restaurant customers, a trend that Subway has taken
advantage of in its marketing. In 1999, an Indian University student named
Jared Fogle lost 245 pounds (110 kg) with a diet made up mostly of Subway
sandwiches combined with exercise. The story is used by Subway as a large
part of their marketing campaign to this day. Fogle has emerged as a
spokesman for Subway, furthering their image as a health-conscious
restaurant chain.
The McDonalds brothers in Pasadena, California started McDonalds
in 1937.
McDonald's Corporation is the world's largest chain of hamburger
fast food restaurants, serving nearly 47 million customers daily. At
one time it was the largest global restaurant chain, but it has since
been surpassed by multi-brand operator Yum! (KFC, Taco Bell and
others) and sandwich chain Subway.
Each McDonald's restaurant is operated by a franchisee, an affiliate,
or the corporation itself. The corporations' revenues come from the
rent, royalties and fees paid by the franchisees, as well as sales in
company-operated restaurants. McDonald's revenues grew 27%
over the three years ending in 2007 to $22.8 billion, and 9%
growth in operating income to $3.9 billion.
4P’s Analysis
Products
Product: Primarily
comprises of vegetarian
and non-vegetarian
burgers - hamburgers,
cheeseburgers, chicken
products, French fries,
breakfast items, soft drinks,
milkshakes, and desserts.
Product: Healthier
sandwiches
Prices
Price: Suitable with
cost and for every
body
Price: Differential
pricing strategy with
value pricing
Places
Place: found in 119
countries and
territories around the
world
Place: around the
world - 84 countries
Promotion
Promotion: the prime
focus is on targeting
children – happy
meals with toys, lucky
draw.
Promotion: new
image, new position,
Jared Fogle image
Subway - Differentiation and Positioning
New Positioning :
Subway needed a
makeover – a new
position in the market
place – that would
distinguish Subway from
its fat and sugarpurveying competitors.
Orientation: healthier
fast food, solve public
issue to satisfy
costumer’s wants and
increase sales
Subway - Differentiation and Positioning
Choosing a Differentiation and Positioning Strategy:
Identifying a set of possible competitive advantages to
build a position by providing superior value from:
Product differentiation: healthier sandwiches: less than seven
grams of fat. For lunch, a six-inch turkey with no mayo, no oil,
hold the cheese. For dinner, a foot-long veggie sub, a bag of
baked potato chips and a diet beverage.
Channels: the stories’ interiors were updated, talk shows every
where
Remake image by adding some healthier sandwiches, heart
healthy sandwiches.
Subway - Differentiation and Positioning
Identifying Possible Value Differences and
Competitive Advantage
Competitive Advantage: New product satisfy consumer
wants:
Healthier fast food: no oil, no mayo, fresh tomatoes…
Combine with walking person image in fact
Subway - Differentiation and Positioning
Choosing the Right Competitive
Advantages:
A difference is worth establishing to
the extent that it satisfies the following
criteria:
Important: healthy fast food sandwiches
suitable with lunch time and dinner time
to satisfy weight-loss strategy.
Distinctive: less fat and sugar purveying
competitors , fresh tomatoes, and
vegetables and use image of Jared by
eating diet and walking to lose weigh.
Communicable: talk shows, Jared Fogle
example
Subway - Differentiation and Positioning
Selecting an Overall Strategy
Value proposition is more for more: Jared generated
paid the chain and its franchisees a twofold dividend.
→ grow the sales
→ concern public health issue: obesity dawn of the new
millennium.
→ more people sign up as franchises
→ open new Subway stores
Developing a Positioning Statement
Positioning statement states the product’s membership
in a category and then shows its point-of-difference from
other members of the category.
Globalize the brand
How McDonald become a global brand
Adapting to the World Market:
Change in consumers thought
• Healthy food
• Upscale or fashionable
surroundings.
Competitors
• New products
• Fashionable places
• Healthy food
How McDonald become a global brand
Plan to win:
Back to basics:
• Pouring money back into
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existing store
Speeding Up service
Training employees
Monitoring Restaurants
to make sure they stay
bright and clean
Modern Interiors
Wireless Internet Access
How McDonald become a global brand
• Plan to win:
• Experimenting with new restaurants and
delivery concepts:
• Mc Cafe
• Mc Delivery (Singapore)
• Integrative Negotiation (Chinese Oil Co.
Sinopec)
How McDonald become a global brand
Plan to win:
New Slogan:
“It’s what I eat and what I do……..….. I’m lovin’ it”
Eating right and staying active
Providing more choices
Premium Salads
Mc Nuggets with white meat
Corn Cup
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How McDonald become a global brand
Localizing its
menu world wide
for example
China:
Green Pea Pies
Rice Burgers
Mint-flavored
Soda
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How McDonald become a global brand
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McDonald believed that McDonald success depended upon
McDonald franchisees' success : so since 1960s-2000s the
expanding of their restaurant is one of their important work
The early 1990s the company had established itself in 58
foreign countries and operated more than 3,600 restaurants
outside the United States
They did more to be a global brand such as they lunched
Halas menus in Arab and Kosher menus in Jerusalem
Sururb
They also established Hamburger University that only aim to
train franchisees and corporate decision-makers
Franchise
What is Franchise?
Franchise is a license granted by a company
(the franchisor) to an individual or firm (the
franchisee) to operate a retail, food, or drug
outlet where the franchisee agrees to use the
franchisor's name; products; services;
promotions; selling, distribution, and display
methods; and other company support.
How Franchising Work
An individual who purchases and runs a franchise is
called a "franchisee”.
The franchisee purchases a franchise from the
"franchisor”.
The franchisee must follow certain rules and guidelines
already established by the franchisor, and in most cases
the franchisee must pay an ongoing franchise royalty
fee, as well as an up-front, one-time franchise fee to the
franchisor.
Advantage of Using Franchise
Corporate image - The corporate image and brand
awareness of the company is already established.
Consumers are always more comfortable purchasing
items from a familiar name or company they trust.
Training - The franchisor usually provides extensive
training and support to the franchise owner.
Savings in time - Since the franchise company already
has the business model in place you can focus on
running a successful business.
Global Marketing Strategies
& Challenges
Global Marketing Strategy
Strategies that are exercised not only
on certain countries, but on the
international level
Examples of Global Marketing
Strategy
Pricing
Starbucks coffee prices are more or less the same
where ever you go
Repositioning
Subway’s shift from unhealthy menus to health
conscious food and beverage selection
Differentiation
McDonalds diversifying their menus to local flavor
and preferences (Fried Chicken in Indonesia,
Teriyaki Burger in Japan, Maharaja Mac in India)
Some factors that may affect
Global Marketing Strategy
Culture
Eating habits and common practices of the local people are a huge factor to take into
account. For example selling Green Tea in countries in Asia will most likely gain
more profit, as when selling in the US, as most Americans prefer to drink Soda.
Religion
Certain religion prohibits eating particular types of food or other practices that are
generally excepted globally. Thus the most likely outcome is to substitute with menus
that are expectable.
Trend
as people are more conscious to their health and looks nowadays, fast food
companies adjusts with providing costumers with low fat consumables.
Political View
Some Countries with different Political View will sometimes forbid and some even
band certain product line or services ( Facebook in Iran, and pretty much everything
in North Korea).
Competition
A good strategy can work over certain period of time, but no thanks to the unrelenting
effort of rivaling companies, strategies must be constantly reviewed. What is
successful today may not be so tomorrow.
The Great Fast Food Challenges
The fast food industry is probably responsible for today’s
proliferation of franchising.
The fast food sector is a dynamic industry featuring a
high density of franchising, numerous chains are
expanding.
Competing and defending market share within the fast
food market has always been a challenging tasks, a
general trend toward healthier lifestyles eating and the
new low-carb craze.
Adopt local culture such as providing alternative
products to suit the local values e.g. local menus.
Conclusion
Differentiation and repositioning in the market is a very
successful breakthrough strategy to gain market shares
in order to create new trends in the market.
Localizing menu in the fast food industry is very useful
strategy to become a great player in the globalization.
Products and marketing targeted to healthier menu
selections.
Franchisee support with a low start-up cost and
consumer convenience.
Target virgin international markets using the brand
name.
Conclusion
Success Factors
Products and marketing targeted to healthier menu
selections, brand consistency, low start-up costs,
franchisee support, and consumer convenience.
More value for money-improving quality will increase the
value of the product.
Reposition themselves as an upscale fast food chainwider menu, better quality, fresh products, healthier life
style, ambience in convenient location
CONCLUSION
Success Factors
Make available foods with which the regional market is
more familiar.
Redesign all of their restaurants.
Provide a new services such as "R Gym" areas, Wi-Fi
areas, child play areas, etc.
Become more ecology conscious.
Q&A
Highlight the key issues of Mc’Donald that changes
in the environment, in competition and in customer
wants and needs.
Growth of competition: global economy.
Competitors provide more value pricing strategies.
Changing attitudes and habits of consumers.
The wants of customer in providing other services in dining, such as
internet connection as the digital era begin.
The effect of high working load so that customer choose a better
way of time efficiency they prefer such as delivery service and drive
thru facilities.
Consumers are becoming more health and ecology conscious.
Q&A
Design an international marketing strategy for the Chief Executive
that will address these issues, reposition the McDonald’s brand and
revive the firm’s fortunes?
McDonald's sought to distinguish itself by introducing a range of
products, a new focus on store quality, and the new "I'm Lovin' it"
jingle. McDonald's new health focus involves new Go Active
Happy Meals for adults that include salad, bottled water. Other
health initiatives include new low-fat dressing, more salads, and
more nutritional information. So far the healthy initiatives have
stood have stood the company in good stead. McDonald's has
also worked hard changing and testing a new image before rolling
it out throughout the group. For example, McDonald's publicly
available revitalization plan explained how experiences in New
Zealand and France proved a fresh, sophisticated environment
could generate increases in sales and profits.
What do you consider to be the definition
of globalization? What forces are driving
its development?
Globalization is the increasing interconnectedness of people and
places as a result of advances in many sectors, such as economic,
cultural, political, religious, and social systems.
The majors that force Globalization in its development are :
falling costs : many sectors have fallen in the past 20 years and the
result is an increase in international trade, interaction and mobility, and
advances in technology.
Economic liberalization : the three leading capitalist centers-the USA,
Europe and Japan, represented by the G7, multinational corporations,
international financial and trade organizations (IMF, WB, etc), regional
organizations (EU, NAFTA, etc), the organizations of world trade, wellknown and eminent figures (e.g. George Soros) and the military block of
NATO.
Increasing income per head : as a countries income rises consumers
tend to shift their spending away from basic food and clothing products
and into manufactured goods which present a greater prospect for
international trade.
Identify the reasons why global strategies
sometimes fail in their objective to achieve a
global marketing advantage?
There are 4 factors that affected to achieve a global marketing
advantage :
Product
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What kind of product we will sell to customer, and dedicated to different
market.
Price
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Price will always vary from market to market. And it is affected by many
variables. So the segment of market will helps determine the price point.
Place
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How the product is distributed is a decision influenced by how the
competition is being offered to the target market.
Promotion
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Decide the effective global advertising techniques to identify which elements
or moments of an ad are contributing to the success of maximized
economies of scale.
What is the rationale behind mega mergers and major
acquisitions? How will they lead to global competitive
advantage?
The rationale behind mega mergers and major acquisitions are:
Economies of scale
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The combined company can often reduce duplicate
Departments or operations, lowering the costs of the company
relative to the same revenue stream, thus increasing profit.
Increased revenue / market share
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Company will be absorbing a major competitive and increase its power to set prices.
Cross selling
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Company will buy and sell it to other customer.
Synergy
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Working together use the complementary resources to reach a financial benefit
Taxes
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A profitable company can buy a loss maker to use the target's loss as their advantage by reducing their tax
liability.
The factors that will lead the mega mergers and major acquisitions to global competitive
advantage are :
Short-run factors
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The company have desire to keep prices high
Long-run factors
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To keep costs low, they will merge and reduce many factors such as transportations costs thus producing
and transporting from one location rather than various sites of different companies as in the past. Price
fixing with competitors created a greater incentive for companies to unite and merge under one name so
that they were not competitors anymore and technically not price fixing.
What are the critical success factors in developing
a global brands? What additional factors would
you consider to be necessary in developing a
successful global e-business brand?
The critical success factors in developing a global
brands are Marketing and Advertising. Many companies
have a customer focus. This implies to focus with
activities and products on consumer demands. So
marketing will make a strategy into categories based on
the goals of each product, and supported by successful
advertising.
The additional factors are competition, consumers and
media. It is important to determine competitors. brand
strategies and to find ways of flanking established
competition by choosing an alternative strategy. Also
company must understand what the consumers demand.
And media is one of the important thing to increase the
developing a successful of a brand, because media can
increase and decrease the image or the popularity of
products.
What are the main challenges that are faced by
international managers in managing and controlling a
global marketing strategy? What advice would you give
to a manager with this responsibility?
The main challenges in managing and controlling a
global marketing strategy : find an effective marketing
strategy based on the goals and produce the product
with 4 elements of SIVA(Sollution, Information, Value,
Access).
The advice : do some business research especially
about situation in competitor and find the effective
strategy to make a successful marketing.
Thank You