The Fast Food Industry
The Fast Food Industry
TOC o “1-3” h z u Executive Summary: PAGEREF _Toc513314151 h 3Background History of McDonald’s and Burger King: PAGEREF _Toc513314152 h 3McDonald’s: PAGEREF _Toc513314153 h 3Burger King: PAGEREF _Toc513314154 h 4Marketing Theory: PAGEREF _Toc513314155 h 5Comparative Study: PAGEREF _Toc513314156 h 6Burger King: PAGEREF _Toc513314157 h 6McDonalds: PAGEREF _Toc513314158 h 7Recap: PAGEREF _Toc513314159 h 8Conclusion: PAGEREF _Toc513314160 h 8Part A: PAGEREF _Toc513314161 h 8Part B: PAGEREF _Toc513314162 h 11PRIMARY RESEARCH: PAGEREF _Toc513314163 h 12Survey 1-10 PAGEREF _Toc513314164 h 12Bibliography:13
Executive Summary:This research task will be done to compare the marketing strategies of the two fast food franchises, McDonald’s and Burger King. I will be looking at the different advertisements and promotions that these two franchises make use of to promote their businesses and compare them to each other through primary and secondary research. I made use of questionnaires as primary research and I used the internet and the text book as secondary research. Once I have determined which marketing strategy is more successful, I will then give some ideas as to what the least successful company can do to improve their marketing strategy.
Background History of McDonald’s and Burger King:McDonald’s:McDonald’s is one of the biggest franchises worldwide if not the biggest, the first McDonalds on South African shores opened on the 11th of November 1995, after Carter Drew was able to win a court dispute to stop the local rival at that time from taking the trademark in the country. This opened the door for Carter Drew to open the first South African McDonalds, he was also appointed as the president of McDonalds SA. Since this day of great celebration, over 200 stores across all the provinces of South Africa have been opened, meaning that no one is ever too far away from a McDonalds. McDonalds has been in a bracket of their own since opening the first one opened and are currently serving over 8 million people a month. McDonalds was owned by the Vice President, Cyril Ramaphosa, for a long time and the rapid expansion was due to him.
Burger King Worldwide have been around since 1954 and were looking for a way to expand into South Africa, this way came in the form of Grand Parade investments, an investments company based in Cape Town, Burger King Worldwide formed a partnership with Grand Parade Investments and this enabled Burger King South Africa to be started. The first Burger King in South Africa opened in May 2013 and was an immediate success with the public, this enabled them to open more store all around South Africa branching to Gauteng and Kwa-Zulu Natal first. Burger King has always been second to McDonalds, due to the fact that McDonalds has been around for longer, this is the same story in South Africa due to the fact that McDonalds was here way before Burger King. Burger king now has 28 stores in South Africa and is continuing to grow.
Marketing Theory:Marketing is an integral part of any business as it is in everything the business does or plans to do. It is seen as one of the eight business functions and it falls in the micro environment meaning that the business has full control over it. A big part of marketing falls into the marketing mix which consists of the four P’s of marketing; Product, Price, Promotion and Place. These four factors are crucial in securing success for the business as it is due to these factors that the business will create a competitive advantage. Product is the first of the four P’s and it is any good or service that the business offers the public. For the product factor, a lot of research needs to be conducted to ensure that they are aware of the needs of customers so that they can manufacture a product or service that can meet these needs. Creating such a product will increase the life cycle of a product which is crucial as it means that the business will continue having sales for a longer period of time. The life cycle of a product is made up of the introduction phase, growth phase, maturity phase and then either the decline or rebirth phase. Each of these phases require their own advertising in a certain amount for example the introduction phase requires a lot of initial marketing as it is where the customers view your product for the first time. The Price factor is next as it is the function that determines how much the customer will have to spend in order to obtain the product or service. This aspect is crucial as it will determine whether or not the customer will buy your product, the right price is key because if you were to overcharge on your product or service, customers won’t even think of buying your product and if you undercharge you could end up making a loss which can be detrimental to your business. The next factor is Promotion, this is the most important factor as it is where your product gets viewed by the customer, and it is seen as the business’ form of communication with the public. The Marketing strategies fall into this factor and are; advertising, sales promotions, personal sales and publicity, and each of these strategies contribute to influencing customers into buying the product or service that your business is offering. The last P is for place and it has to do with how the product will get to the consumer. A distribution channel has to be chosen and a location has to be picked, this will make access to your product convenient for the consumer and they will likely spend more.
Comparative Study:Burger King:In the fast food industry there is a lot of competition, so marketing strategies of these different franchises have to very good to ensure they’re creating competitive advantage and growing their market share. Burger King makes use of the Marketing mix to ensure that they’re competing with the likes of McDonald’s and their mix is as follows:
Product: Burger King sells a wide variety of burgers, going from the Whopper burger, which made the company as famous as it is today, to the different chicken and fish burgers, they also sell a selection of sides like mozzarella sticks and chips. They sell milkshakes cold drinks and deserts. All of these various food items fall part of Burger Kings product base and what they are aiming to sell.
Price: Burger King South Africa pride themselves in having reasonably priced fast food that is served at a high quality and standard. Although they are seen as being more expensive than McDonald’s, they justify the extra cost in their quality of food as well as size. Some of their meal options are quite cheap and they are good value for money and food items such as these is what allows them to compete with McDonalds in the fast food industry of South Africa
Promotion: Advertising is crucial to Burger King, as they need to make use of its power to take away some of the market share of McDonalds because of the fact that McDonalds has been in the country for a long period of time in comparison to Burger King. Fast food companies rely on their sales promotions to draw customers in and a new recent promotion that Burger King has brought in is that you can now get two whoppers for only R55, this was also advertised on television as they felt that it was the best way to reach their target market. Promotions such as these push up sales tremendously and they slowly increase market share. In order to reach more people, they advertise across media platforms such as television, online as well as billboards on the roads.
Place: Franchise location is key for Burger King because the fast food industry relies heavily on convenience rather than preference, this is why Burger King has 28 stores nationwide. With the fast food stores opening close to one another is to eliminate the convenient choice because now both Burger King and McDonalds are convenient, allowing the customer to base their choice on promotions or preference thus creating a level playing field.
Burger King’s marketing mix is allowing them to compete with bigger industries such as McDonalds on all aspects of business in South Africa and this competition works in favour of consumers as they get the choice of two great brands.
McDonalds:McDonald’s is seen as a massive franchise worldwide and it allows people to see a brand that they trust and know well. This alleviates some of their marketing pressure as their products are being advertised through customers communicating McDonald’s promotions amongst themselves. With this being aid, McDonalds still make sure to focus a lot of energy into their marketing mix so that they can stay on top, the marketing mix is as follows:
Product: McDonald’s product range is similar to that of Burger King, as they also have burgers, either beef, chicken or fish, they sell milkshakes ice cream and other sides like chicken nuggets and chips. McDonalds aim for high taste with their food items and pride themselves in their fries that they serve with their burgers. The wide variety and good tasting food allows them to sell vast amounts of food and thus taking a huge part of the market.
Price: McDonald’s pride themselves in being the cheapest fast food outlet with the most taste. They have chosen to go with cheaper food items and this allows them to become affordable and to expand their target market as low income groups can afford their products as well. They make use of psychological pricing to trick customers in thinking that some food items are cheaper and this allows for an increase in sales. Another strategy is price bundling where they sell a “family meal” at a cheaper price allowing people to feed more people for less money.
Promotion: McDonald’s spends a lot of capital on advertising across all media’s, they have big billboard signs up everywhere creating the desire for their product within their target market. They also make use of television adverts to ensure that the promotion is seen as well as the price of the promotion. The biggest promotion they have is the Big Mac meal for R39.90 as it is a decent meal for a very low price. This promotion had to be extended due to the popular demand and it allowed McDonald’s to increase sales which in turn allowed them to spend more money on adverts. McDonalds also introduced the share box, which is seen as a family meal for a reduced price. This differentiates McDonalds from Burger King as families would rather spend less on a family meal at McDonalds then go to Burger King and have to buy individual meals which cost more.
Place: With over 200 stores countrywide, it gives McDonalds the advantage of being convenient because the customer is very likely to live near a McDonalds or drive past one on the way home from work. The location of McDonald’s franchises are strategically located in middle income group regions to ensure a continuous sales market.
The McDonald’s marketing mix is strategically thought out to combat the upcoming ideas of Burger King and to allow them to continue to be one of the biggest fast food franchises in the country.
With regards to the product factor, McDonalds has just enough to beat Burger King in a comparison because although Burger King has the bigger variety, the taste of the food at McDonalds is the key factor.
McDonalds comes out on top of Burger King with regards to the price factor as their products are seen as cheaper because they make use of pricing bundles as well as psychological pricing. They offer meals for lower income groups which allows them to expand their customer base.
The promotion factor is slightly edged by McDonalds as they offer the consumer better sales promotions on a more regular basis in comparison with Burger King, McDonalds also advertises a lot more than Burger King because the ratio of TV adverts is 4:1 in McDonalds favour meaning you are more likely to see a McDonalds advert than a Burger King advert and therefore more likely to remember the McDonalds advert.
The place factor is all about convenience and location and with over 200 stores countrywide, McDonalds is way ahead of Burger King in South Africa, customers are more likely to be closer to a McDonalds than a Burger King and will therefore go to McDonalds more often than Burger King.
Conclusion:Part A:I feel that McDonalds is more successful with their marketing as they are able to get more advertisements to the public which creates the desire within the consumer to buy the product, to emphasise this point I made use of surveys to see how the customers feel about the marketing of the two franchises McDonalds and Burger King. The following questions provided the most telling answers:
Based on the research done with a pool of ten consumers we can see in question 1 and 2 that 70% of people prefer McDonald’s over Burger King and majority of that preference is based on taste, this shows us that McDonalds is doing more in the product factor of the marketing mix as people are more inclined to choose the place with the better tasting product than the place with more variety. We can also see in question 4 that 80% of people see McDonald’s advertisements more than Burger King which is extremely telling in the promotion aspect when taken into consideration with question 5 and 6, because question 5 shows us that people are exactly divided when it comes to which adverts are more appealing but the McDonalds campaign is seen to be more convincing because when the adverts look the same, the adverts that you see more often will leave an impression on you. Question 7 shows us that customers think that McDonalds spends more on their marketing aspect which is true as their campaign is vaster than that of Burger King, hence why McDonalds is more superior in terms of marketing.
In order for Burger King to improve their marketing, they have to look at each factor of their marketing mix individually to ensure progress is made. For the production factor, Burger King should focus on enhancing the taste of their food items and less on offering a variety, this will cause customers to get a favourite item on the menu and then keep coming back for that item, creating customer loyalty. With regards to the price factor, Burger King could look to install a cheaper menu for a lower income group, this will allow them to expand their target market and increase their market share, because price is such a crucial factor they should also look into making use of different pricing strategies, such as competitive pricing, this will then allow the customers to choose their products based on their preference and not necessarily the cheapest franchise. The promotion factor is the most crucial factor of the marketing function in the fast food industry due to the high levels of competition. Burger King should look into spending some of their profits on additional advertising so that they can create a bigger awareness for their products and also their promotions, so that people are aware of when they can get a good deal on a meal from Burger King, they can also look to having promotions on top selling burgers monthly to ensure that customers keep coming back to see if their favourite burger is on a promotion. With regards to the Place aspect, with a few stores countrywide they can look into a delivery system to make it more convenient for their consumers and therefore increase sales, because if the customer can’t get to the store they won’t be able to buy, but if the store is able to come to them Burger King will see an increase in their sales, making their marketing mix more successful.
PRIMARY RESEARCH:Survey 1-10Bibliography:
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