INTERNATIONAL They rechristened their business as a hamburger

INTERNATIONAL MARKETING 1 Table of Contents 1 Introduction …

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…………………………………………………………. 3 2 Market Entry Mode …………………………………………………………………………………… 5 2.1 McDonald’s Entry Mode ………………………………………………………………………. 5 2.2 Kentucky Fried Chicken Entry Mode …………………………………………………….. 6 3 Products Selling …………………………………………………………………………………………. 7 3.1 McDonald’s Products …………………………………………………………………………… 7 3.2 Kentucky Fried Chicken Products …………………………………………………………. 9 4 Marketing Strategy ………………………………………………………………………………….. 11 4.1 McDonald’s Marketing Strategy ………………………………………………………….. 11 4.2 Kentucky Fried Chicken Marketing Strategy ………………………………………… 13 5 Comparing Both Marketing Strategies ………………………………………………………… 13 6 Conclusion ………………………………………………………………………………………………. 14 7 Reference………………………………………………………………………………………………… 15INTERNATIONAL MARKETING 2 1 Introduction 1.1 McDonald’s Figure 1: McDonald’s Logo Source (McDonald’s, 2018) McDonald’s is an American fast food company, founded in 1940 by the brothers Richard and Maurice McDonald, in San Bernardino, California, United States. They rechristened their business as a hamburger stand, and later turned the company into a franchise. In 1955, the businessman “Ray Kroc” joined the company as a franchise agent and proceeded to purchase the chain from the McDonald brothers. McDonald’s had its original headquarters in Oak Brook, Illinois, but moved its global headquarters to Chicago in early 2018 (McDonald’s, 2018). Furthermore, McDonald’s is considered the world’s largest restaurant chain by revenue. Mcdonald’s is serving over 69 million customers daily in over 100 countries across approximately 36,900 outlets. However, McDonald’s is known for its hamburgers but they also sell cheeseburgers, chicken products, french fries, breakfast items, soft drinks, milkshakes, wraps, and desserts. Moreover, in response to changing consumer tastes and a negative reputation of the unhealthiness of McDonald’s food, the company has added to its menu salads, fish, smoothies, and fruit. Furthermore, McDonald’s revenues come from rent, royalties, and fees paid by the franchisees, as well as sales in company operated restaurants. Additionally, according to a BBC report published in 2012 mentioned that McDonald’s is the world’s second-largest private employer (behind Walmart) with 1.9 million employees and 1.5 million of whom work for franchises. Figure below shows the number of countries Macdonald’s is operating in. Nevertheless, McDonald’s is known for its slogans “I’m Lovin’ it” (BBC, 2012).INTERNATIONAL MARKETING 3 Figure 2: Countries where McDonald’s operating. Source (Fox News, 2018) 1.2 Kentucky Fried Chicken Figure 3: KFC Logo Source (KFC, 2018) Kentucky Fried Chicken also known as “KFC”, is an American fast food restaurant chain that specializes in fried chicken which was founded by Colonel Harland Sanders and headquartered in Louisville, Kentucky. KFC is the world’s second-largest restaurant chain as measured by sales, after McDonald’s, with almost 20,000 locations globally in 123 countries and territories. Moreover, KFC chain is a subsidiary of Yum! Brands which is a restaurant company that also owns the Pizza Hut, Taco Bell, and WingStreet chains. Moreover, Colonel Sanders identified the potential of the restaurant franchising concept, and the first “Kentucky Fried Chicken” franchise opened was inINTERNATIONAL MARKETING 4 Utah in 1952. Furthermore, KFC popularized chicken in the fast food industry, diversifying the market by challenging the established dominance of the hamburger and by branding himself as “Colonel Sanders”, he became a prominent figure of American cultural history, and his image remains widely used in KFC advertising. However, the company’s rapid expansion overcome the aging Sanders. Therefore, he sold it to a group of investors led by John Y. Brown Jr. and Jack C. Massey in 1964. Additionally, KFC was one of the first American fast food chains to expand internationally, opening outlets in Canada, the United Kingdom, Mexico, and Jamaica in 1960s. Throughout the 1970s and 1980s, it experienced mixed fortunes domestically, as it went through a series of changes in corporate ownership with little or no experience in the restaurant business (Dawson, 2015). In the early 1970s, KFC was sold to the spirits distributor Heublein, which was taken over by the R.J. Reynolds food and tobacco conglomerate; and that company sold the chain to PepsiCo. After that the chain continued to expand overseas and in 1987 it became the first Western restaurant chain to open in China. Then, PepsiCo turned its restaurants division as Tricon Global Restaurants, which later changed its name to Yum! Brands. KFC’s original product is pressure fried chicken pieces, seasoned with Sanders’ recipe of 11 herbs and spices. The constituents of the recipe represent a notable trade secret. Larger portions of fried chicken are served in a cardboard “bucket”, which has become a well-known feature of the chain since it was first introduced by franchisee Pete Harman in 1957. Furthermore, 1990s KFC has expanded its menu to offer other chicken products such as chicken fillet sandwiches and wraps, as well as salads and side dishes, such as French fries and coleslaw, desserts, and soft drinks, the latter often supplied by PepsiCo. Moreover, KFC is known for its 3 slogans “Finger Lickin’ Good”, “Nobody does chicken like KFC” and “So good”. The figure below shows the number of KFC restaurants globally (KFC, 2018).INTERNATIONAL MARKETING 5 Figure 4: (No. of KFC restaurant worldwide) Source (Statista, 2018) 2 Market Entry Mode 2.1 McDonald’s Entry Mode There are different modes of entry chosen by companies depending upon the degree of resource commitment and the risks involved in the mode in a particular region. Franchise is a less risker and cheaper mode of entry which is a best option for McDonald’s as they had to adapt as per the local community preferences so they wanted local business people to handle the business. Therefore, 80% of the McDonald’s restaurants are franchised and has led to many years of growth, profit and risk reduction (Nielson, 2013).INTERNATIONAL MARKETING 6 McDonald’s franchising opened up a job market for the local people and provided several growth opportunities to them. Regional franchise holders were capable of building up a brand image for the company and made it successful in the long run. The ‘trans- national’ strategy of McDonald’s overseas provides high degree of local responsiveness which helped McDonald’s serves a menu with assured level of quality in the markets where it operates (Griffioen, 2011). 2.2 Kentucky Fried Chicken Entry Mode KFC was concerned about the declining profitability in home market because of tough competition and hence was willing to fund KFC for overseas expansion. In order to reduce risk of overseas expansion, KFC encouraged franchising in complicated markets but faced challenges in aligning corporate planning with franchisee’s short term profitability. Therefore, KFC deployed other entry strategies like Joint Venture with large scale poultry producer for Japanese market in early 1970s. As Joint Venture’s helped KFC to manage sourcing, logistics problems and also helped addressing quality of chicken and other supplies. Moreover, KFC also had entered foreign markets by suing Greenfield as their mode of entry whereby establishing a company-owned foreign subsidiary (Chan, 2015). Furthermore, KFC encountered problems with aligning corporate planning with franchisee’s short-term focus on profitability. Therefore, a joint venture was the solution as the essence of a joint venture is the synergy effect of two different entities merging. Such an international business strategy will attempt to solve many logistic problems such as access to good quality chicken and other supplies which will also ease the access to a foreign market. Through joint venture; as a mode of entry, KFC can share risk with a local partner which will led to a big commitment from the host partner in order to increase the helpfulness and at the end it will also led to a win-win situation between KFC and its partner’s (Hopkins, 2017; Sara, 2015).INTERNATIONAL MARKETING 7 3 Products Selling 3.1 McDonald’s Products McDonald’s ensures that it standardizes operations across its franchises to ensure a standard McDonald’s experience anywhere in the world. Whereby aim’s that customers in California would have the same experience if they visited an outlet in Paris. Therefore, McDonald’s achieves this by reducing the amount of skill required in the preparation of its product line. However, this has been done by breaking the process into a series of repeatable actions to achieve the same result. Hence, by giving instructions to workers off the streets and providing each location with the same frozen meat products, McDonald’s can ensure that each worker follows the same procedure and has an identical output at any McDonald’s across the region. Furthermore, for a successful business in host countries McDonald’s had to customize its business strategy to the local needs and tastes. Therefore, Regional strategy became important for McDonald’s so they started their expansion in Asian countries as their culture is very different from western world. (Cardoza, 2017). Thus, McDonald’s adopted product localization and innovations for new offerings based on local tastes and needs and in 1963 it introduced the “Filet-of-Fish” sandwich in the Cincinnati area for Catholics who did not eat meat on Friday. This was the first new offering added to the standard menu and went national the following year. After that, the “Big Mac” was introduced in 1968 and the “Egg McMuffin” was developed in 1973 by McDonald’s. Also a Canadian franchisee invented The “McFlurry” in 1997. However, McDonald’s uses chicken instead of pork and beef in India and also introduced “Maharaja Mac, McAloo Tikki” which is suitable to local tastes and tradition. Besides buying their ingredients where they operate, around the world the restaurants also adapt the McDonald’s menu to local tastes, such as Germany serving shrimp cocktail, Italy’s burger being topped with Parmigiano-Reggiano cheese, Australia offering a guac salsa or a bacon cheese sauce as a topping for fries, and French customers being able to order a caramel banana shake also the “McRaclette” is available only in Switzerland. Nevertheless, as mentioned above that there are different products for different customers in different location and with different food categories that are produced by McDonald’s and the figure below shows some McDonald’s products (Osswald, 2013).INTERNATIONAL MARKETING 8 Figure 5: Some McDonald’s Products Source (McDonald’s, 2018)INTERNATIONAL MARKETING 9 3.2 Kentucky Fried Chicken Products KFC primarily sells chicken pieces, wraps, salads and sandwiches. While its primary focus is fried chicken, KFC also offers a line of grilled and roasted chicken products, side dishes and desserts. Outside North America, KFC offers beef based products such as hamburgers or kebabs, pork based products such as ribs and other regional fare. However, KFC adapts its menu internationally to suit regional tastes, and there are over three hundred KFC menu items worldwide. For example, some locations such as United Kingdom and United States sell grilled chicken. Whereas, in Islamic countries the chicken served is halal while in Asia there is a preference for spicy foods like the Zinger chicken burger (Writer & Rothkrug, 2015). Also, some locations in the United State sell fried chicken livers and gizzards and in some Malaysian markets KFC has different limited-time products to cater to different festive seasons such as Ayam Kicap Meletup for Eid al-Fitr seasons and Golden Treasures for Chinese New Year in. Moreover, number of countries such as Japan, Jamaica, Trinidad, Barbados, Ecuador and Singapore sell fried seafood products under the “Colonel’s Catch” banner. Furthermore, the drinks that are offered by KFC are different in different region and due to KFC previous relationship with PepsiCo, most countries supply PepsiCo products, but exceptional areas include Barbados, Greece, New Zealand, the Philippines, Romania, South Africa, and Turkey, supply the drinks from Coca-Cola Company (Fox News, 2013). However, number of Eastern European locations and Portugal the drink offered is beer in addition to soft drinks. Furthermore, deserts is offered by KFC such as the Krusher range of frozen beverages containing “real bits” like Kit Kat, Oreo and strawberry shortcake. Also the Italian desserts offered by KFC are the Profiteroles, Tiramisu and Tartufo. Moreover, KFC breakfast menu began to be rolled out internationally including pancakes, waffles and porridge as well as fried chicken. Nevertheless, as mentioned above that there are different products for different customers in different location and with different food categories that are produced by KFC and the figure below shows some KFC products (KFC, 2018).INTERNATIONAL MARKETING 10 Figure 6: Some KFC Products Source (KFC, 2018)INTERNATIONAL MARKETING 11 4 Marketing Strategy 4.1 McDonald’s Marketing Strategy Choosing a marketing strategy that can work for McDonald’s company they need to address the product to the right customer and right market. Therefore, in order to develop the suitable marketing strategy, it was important for any company to understand the consumer market. The more one knew and understood about consumers, the more effectively they can communicate and market to them. Furthermore, McDonald’s business structure which is based on geographic structure of a region has a major impact on its strategies. McDonalds has divided its functioning into 5 geographical divisions. Whereby, United States and Europe are the highest revenue generators for McDonald’s, as United State region generate 65% and Europe region generates 75%. Moreover, an important strategic approach McDonalds implement is keep maintaining the major markets and simultaneously expanding the business into other emerging markets which led to a big expansion for McDonald’s (Gerhardt et. al., 2014). However, it is known that different customers in different regions have different tastes and demands, so to fulfil the requirements McDonalds have set up local geographic units in different regions to adjust the product and services as per the taste of the local customer therefore the units are sole responsible for producing, branding and marketing in that region. Furthermore, using such geographical units McDonalds is able to have a maximum hold of a specific region as well as it is able to satisfy the needs of the local customers and promotes ‘maximum local development’. Nevertheless, customers in different nations have different preferences for the food items hence McDonald’s keep on launching different items in their menu for their regional local customers. China and India are very good examples of this (McGee, 2015). Therefore, McDonald’s key to success is the “think global and act local” business strategy which helped it achieves competitive advantage in the fast growing fast-food industry. Nevertheless, consumer behaviour was needed to be examined in order to understand a consumer market and there are four aspects which are the ability of the people to buy, consumer needs, buying motives and the buying process. For the ability of people to buy McDonalds it is known that McDonald’s is affordable and their customers are the ambitious middle, upper middle and affluent classes who were keen to combine eating with fun. Yet, Children were the major influencers as they canINTERNATIONAL MARKETING 12 influence the decision making of parents as regards the choice of a restaurant (Han, 2008; Zhang & Zhou, 2012). Further, Happy Meal was used to reflect the fun element of the experience at McDonald’s and it were all about the simple pleasures of childhood, a time of excitement, joy, and being treated special. Beside, each Happy Meal there was themed an offer which is a set of collectible toys from that particular theme. In this deal the customer got a choice of a burger, a drink and a toy. Furthermore, it is known that McDonald’s is one of the largest advertisers amongst its competitors. By having an integrated brand promotion across the world, McDonald’s ensures high identification and a uniform brand image across the geographies and markets in which it operates. To sum up, we perceive that Happy Meals were a huge success for McDonald’s and also it is considered as a competitive advantage for the company as they are the only fast-food restaurants who provide such meal for kids. As Happy Meal can increase its profits and advertise more on Happy Meal (Corcoran, 2017; Ma, 2018). Figure 7: McDonald’s Happy Meal Source (McDonald’s, 2018)INTERNATIONAL MARKETING 13 4.2 Kentucky Fried Chicken Marketing Strategy The primary goal of developing a customer driven marketing strategy is to build a strong and profitable relationship with the customers for accomplishing short and long-term organizational goal. Therefore, this can be achieved through market segmentation, targeting and positioning. Furthermore, KFC uses demographic segmentation to serve the market as per customer needs and wants. The consumers of KFC are the young as well as young adults. Moreover, KFC used to serve the same menu all around the world which means that it was using undifferentiated targeting strategy. However, in recent times; following McDonalds, KFC has started localising its menu and giving it better acceptability in the market. Moreover it has transformed its positioning strategy from product based to value based in recent times and nowadays KFC is strongly positioned in the minds of consumers for its Chicken menu (Schlegelmilch, 2016). Furthermore, KFC customer are people from different age group, all who want to satisfy their taste buds with the finger licking delicious chicken menu. Yet, most of the customers can be defined as young adults who can shell out with a minimum amount of money to have a delicious meal. Moreover, KFC have different markets globally however although more than 50% of its sales come from Developed nations but those markets have stagnant growth rate and developing nations like India, China and many others have big potential for KFC. However, the market is still growing but fast food chains have low acceptance in developed markets because developed nations are becoming more health conscious (Kotabe & Helsen, 2014; Zhang & Zhou, 2012). 5 Comparing Both Marketing Strategies KFC and McDonald’s are facing a strong competition between each other but when it comes for their marketing strategy we can say that both companies are using similar marketing strategy as they are global companies but acting locally which means that they are producing different dishes and food for different locations and regions in order to meet local customer taste and preference. Moreover, when it comes for the promotions and prices it is known that McDonald’s is quite cheaper than KFC but this is only in some countries. For example, in Malaysia McDonald’s is cheaper than KFC while in the United Kingdom KFC is cheaper compared to McDonald’s. Despite the price for family meal, KFC is much more cheaper than McDonalds and this is because KFC offers a family meal while McDonald’s don’t therefore the family meal isINTERNATIONAL MARKETING 14 considered the competitive advantage for KFC whereas for McDonald’s the Happy Meal is considered their competitive advantage. 6 Conclusion In conclusion, McDonald’s and KFC are two of the biggest multinational companies in the fast-food industry and they are considered a strong competitors to each other. Moreover, in this report an introduction was given about the two mentioned above companies and in how many countries they are operating. Also it was discussed about the mode of entry McDonald’s and KFC are using for their global expansion to different countries and it was found that both companies are using franchising as their mode of entry to a new market yet they are using other mode of entry such as joint venture as well as Greenfield. Furthermore, this report also discussed about the products offered by the two multinational companies, McDonald’s and KFC where a brief introduction was given about their products with different food categories offered in their menu. Last but not least, a critical analysis was gives about the marketing strategy that both companies are using and a comparison of the marketing strategy of the two companies was also discussed earlier.INTERNATIONAL MARKETING 15 7 References BBC News. (2012). McDonald’s opens vegetarian venue. online Available at: https://www.bbc.com/news/business-19479013 Accessed 2 Sep. 2018. Cardoza R. (2017). 25 Craziest McDonald’s Menu Items From Around The World online Available at: https://www.eatthis.com/mcdonalds-food-around-the-world/ Accessed 10 Sep. 2018. Chan, T.S., (2015). Franchising of Us Fast Food Chains in Hong Kong: Entry and Expansion Strategies. In Proceedings of the 1989 Academy of Marketing Science (AMS) Annual Conference (pp. 163-167). Springer, Cham. Corcoran, N. (2017). The Rise and Fall of McDonald’s Happy Meals. online Consequence of Sound. Available at: https://consequenceofsound.net/2017/01/the-history-of-mcdonalds-happy-meals/ Accessed 15 Sep. 2018. Dawson, V., (2015). How colonel Sanders made Kentucky fried chicken an American success story. Smithsonian Magazine. Fox News. (2013). Unique KFC meals from around the world. online Available at: http://www.foxnews.com/food-drink/2013/08/12/unique-kfc-meals-from-around-world.html Accessed 16 Sep. 2018. Fox News. (2018). Countries without McDonald’s. online Available at: http://www.foxnews.com/food-drink/2013/08/08/countries-without-mcdonalds.html Accessed 3 Sep. 2018. Gerhardt, S., Hazen, S. and Lewis, S., (2014). Small business marketing strategy based on McDonald’s. ASBBS Proceedings, 21(1), p.271. Griffioen, H.A., (2011). The Effects of Cross-national Distances on Entry Mode Choice and Subsidiary Performance: An Analysis of China, India, Singapore and South Korea. Erasmus Universiteit. Han, J., (2008). The Business Strategy of Mcdonald’s. International Journal of Business and Management , 3(11), pp. 72-74. Hopkins, R.A., (2017). Determining Your Role in Global Markets. In Grow Your Global Markets (pp. 13-31). Apress, Berkeley, CA.INTERNATIONAL MARKETING 16 Kfc.com. (2018). Our Brand. | KFC. online Available at: https://kfc.com Accessed 5 Sep. 2018. Kotabe, M. and Helsen, K., (2014). Global marketing management. Ma, A.K., (2018). Multinational corporations: To change or not to change? That is the question. Journal of Cultural Marketing Strategy, 3(1), pp.21-30. Mcdonalds.com. (2018). McDonald’s Menu: Our Full McDonald’s Food Menu | McDonald’s. online Available at: https://www.mcdonalds.com/us/en-us/full-menu.html Accessed 18 Sep. 2018. Mcdonalds.com. (2018). McDonald’s: Burgers, Fries & More. Quality Ingredients.. online Available at: https://www.mcdonalds.com/us/en-us.html Accessed 19 Sep. 2018. McGee, L.W., (2015). Standardizing Marketing Strategies Internationally: A Model of the Issues and a Look at the Future. In Proceedings of the 1987 Academy of Marketing Science (AMS) Annual Conference (pp. 171-175). Springer, Cham. Nielson, S., (2013). McDonald’s global business model, the “three-legged stool”. Online Available at: http://marketrealist.com/2013/12/important-franchise-revenues-mcdonalds/ Accessed 20 Sep. 2018 Osswald, G. (2013). The Craziest McDonald’s Menu Items Around the World. online First We Feast. Available at: https://firstwefeast.com/eat/craziest-international-mcdonalds-menu-items/ Accessed 22 Sep. 2018. Sarah. (2015). Entry strategy of KFC into Chinese market. online Available at: https://wuqian7007.wordpress.com/2015/03/25/entry-strategy-of-kfc-into-chinese-market/ Accessed 15 Sep. 2018. Schlegelmilch, B.B., (2016). Global Marketing Strategy. Switzerland. Statista. (2018). KFC: restaurants worldwide 2017 | Statistic. online Available at: https://www.statista.com/statistics/256793/kfc-restaurants-worldwide-by-geographic-region/ Accessed 5 Sep. 2018.INTERNATIONAL MARKETING 17 Writer S. and Rothkrug E. (2015). 10 Unique KFC Meals from Around the World. online Available at: https://www.thedailymeal.com/10-unique-kfc-meals-around-world Accessed 20 Sep. 2018. Zhang, Q. and Zhou, L., (2012). Cultural adaptation pattern analysis of McDonald’s and KFC in the Chinese market.

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