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burger king analysis
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VIEWPOINT
This case was analyzed from the point of view of Burger King’s Marketing
Executive.
TIME CONTEXT
The case happened in September of the 2010.
STATEMENT OF THE PROBLEM
• What measures could Burger King do to dethrone McDonald’s as well as hold off
the challenge of a number of other chains that were growing in size and
competitive power?
• How to reimage Burger King from creepy to hip?
STATEMENT OF THE OBJECTIVES
• To boost the image/brand image of the company.
• To provide measure(s) to improve the company’s performance in the market.
AREAS OF CONSIDERATION
STRENGTHS
1. Strong market position.
a. BKC is the world's second-largest Fast Food Hamburger Restaurant (FFHR)
chain as measured by the total number of restaurants and system-wide sales.
The company’s specialty is burgers and fries which it sells through over 12,150
flagship fast-food restaurants. The company leverages its strong market position
to gain economies of scale and increase its bargaining power.
b. BK has more than 12,150 restaurants in all 50 states and in 76 countries and
U.S. territories worldwide.
2. Strong brand equity.
a. Burger King has fantastic brand equity, and it's already a competitive concept in
America due to its long history, its size and its muscle," restaurant industry
consultant Allan Hickok said.
b. Burger King serves one of the world’s favorite and well-known brands including
the Whopper sandwich, the Tendercrisp Chicken Sandwich, Chicken Tenders
and the BK Veggie Burger. In 2005, Brandweek magazine ranked Burger King at
15 among the top 2,000 brands of the US. Overall, the company’s established
brand image has enabled it to penetrate various global markets and compete
with regional player effectively.
c. Burger King’s Whopper is known for its quality and it is the best known brand in
fast food. The Whopper (and by extension, Burger King) presents a well
integrated “package”, where product attributes, benefits, values and personality
are distinctive, positive and mutually reinforcing.
d. The most notable aspect of Burger King is the extent to which its identity is tied to
a magnet menu item, the Whopper.
◦ BK is prominently identified as “The Home of the Whopper”, and the two
are inexorably linked.
◦ BK’s menu is “Whopper-centric”.
◦ The BK marketing model is essentially “brand as ‘star’ vehicle”, with the
Whopper as the anointed star.
◦ The Whopper is a well qualified image leader (a true “signature product”)
for Burger King in several respects:
◦ It has a proprietary name with compelling image-oriented as well as
attributes oriented associations.
◦ It offers a distinctive product experience (flame broiled, big, prepared to
order) versus its main competition.
3. Strong brand financial performance.
3G Capital. Because of the popularity and capability of financing
firms/companies by buying shares, BK should allocate and plan well the profit that they
will get from 3G Capital.
4. High quality products.
a. BK quality assurance starts from the initial stage. BK ensures that products are of
the highest quality during receiving deliveries as well as during restaurant
operations; consistent checks are made to guarantee customers receive the best
quality, wholesome, safe food.
5. Wide variety of food products.
The company’s products and services are categorized under the following
different segments:
o Sandwiches
o Hamburgers
o Cheeseburgers
o Salads
o Hash browns
o Coffee
o Juice
o Cookies
o Pies
o Shakes
o Fries
o Onion rings
o Soft drinks
WEAKNESSES
1. Heavily concentrated in the US.
a. Though the company operates in 65 countries, its operations are heavily
concentrated in the US and Canada. About 65% of its restaurants are located in
the US and Canada. Concentration of operations in one geographic area
increases company's exposure to local factors such as adverse economic
situation, labor strikes and changes in regulations that can affect its operations.
b. Concentration of operations in one geographic area increases company’s
exposure to local factors such as adverse economic situation, labor strikes and
changes in regulations that can affect its operations.
2. Few corporately owned stores.
a. Not enough corporately owned stores mean it relies heavily on franchisees to
execute its brand promise.
3. Inconsistent management and strategy. Changing Executives.
a. Management lacked focus and direction and has struggled with marketing mix
decisions. Franchises became confused and angered, service was slow and food
preparation wasn't consistent. Burger King lost its core product-flame broiled
burgers, made the way the customer wanted them.
b. Burger King Corp. was founded in Miami in 1954 by James McLamore and David
Edgerton, a year before Ray Kroc opened his first McDonald's in suburban
Chicago. The Whopper was introduced in 1957. In 1967, Burger King was
acquired by the food conglomerate Pillsbury. In 1988, Pillsbury was bought by
Grand Metropolitan PLC, a British conglomerate. In 1997, Grand Metropolitan
merged with Guinness to create Diageo. With each merger, even as Burger King
grew, it became a smaller piece of the overall company. Ultimately, it became an
afterthought. Soon after the merger, Diageo decided that Burger King no longer
belonged. In 2000, Diageo officially placed Burger King on the auction block. The
company was finally sold in 2002 to a consortium of private equity investors—
Texas Pacific Group, Bain Capital, and Goldman Sachs Capital Partners—for
$1.5 billion.
4. Narrow-based target market.
a. Burger King is pinpointing its target market, and is currently trying to hit a bull’s
eye with a new, focused marketing approach—to both consumers and potential
franchisees. BK’s primary target market is age 18 to 34 years old and 4 to 15
years old.
b. While Burger King’s consumer marketing will attempt to focus its efforts towards
more specific audiences—like children and ethnic markets—the company’s
marketing target is a lot narrower when approaching potential franchisees.
5. Confusing ad campaigns.
a. Ineffective ad campaigns were one of the problems facing BK. Burger king lost its
core product-flame broiled burgers, made the way the customer wanted them.
Many in store promotion also failed. They fail to efficiently promote products,
because they are too busy trying to promote “The King” character.
b. The Burger King "I like square butts" commercial. I found that offensive because
it was promoting a Sponge Bob kid's meal. I just didn't think that was appropriate
for little kids, especially when you know the real lyrics to the real song. In the
commercial, the Burger King icon was measuring the square butts of other girls.
A lot of people were offended over this commercial.
c. Ambassador to Spain because of a new ad campaign running in that
country for a product called
the “Texican Whopper”. Ambassador
Jorge Zermeno wrote to Burger King in
Spain to denounce what he
called “denigration” of the Mexican flag.
“This advertisement denigrates the
image of our country and uses
improperly Mexico’s national flag,”
Jorge Zermeno wrote in a letter to Burger King in Spain, the Reforma
newspaper reported on Monday.
The ambassador contacted the local offices of Burger King after he saw
the posters in Spain, Reforma said. The burger is only available in
Europe, according to the paper.
Mexico has strict laws prohibiting the defamation of the flag, Zermeno
said. He asked Burger King to cancel the ad campaign that “offends
Mexicans and Mexico.”
6. High prices.
a. Another thing that hurt them was the fact they didn't lower prices to keep
competing with their competitors this led to a below average sales growth.
OPPORTUNITIES
1. New product development, particularly around breakfast.
BK value menu featuring six items at less than $1, breakfast sandwiches, and
specialty burgers. To create a consistent brand image, BK needs to extend their menu
which will show the consumer that BK burgers are big, high quality, juicy and satisfying
burgers. BK needs to put the focus back on the food and show that it is well prepared,
satisfying and desirable.
2. Keep building its brand through ad campaign, such as the Whopper virgins.
BK can use the flamed-broiled and whopper in developing their brand image.
Consumers associate BK with food that ignites the senses. Consumer needs the
convenience of food and not a fast food that brand himself as cool but creeps the
people.
3. Expansion into emerging markets.
BK can expand to Asia wherein people are already into fast food restaurants.
High levels of consumer demand, coupled with relatively low levels of competition, offer
a lucrative opportunity for many franchisors to expand into emerging markets.
Expansion via franchising is an attractive option for companies looking to expand
abroad without incurring high costs. Additionally, international franchisees already
possess many inherent qualities needed to succeed abroad, like the ability to speak the
native language.
4. Wide-based target market.
BK can change their target market. Can extend their target market to families
which are the target market of McDonalds. If BK wants to close the gap with
McDonalds, they can use the “copy cat strategy”.
THREATS
1. Changing consumer habits towards healthier food choices.
Changing consumer habits towards healthier food choices is a large external
factor for a company that specializes in hamburger. A shift away from hamburgers could
hurt earnings and revenue.
2. Intense competition from McDonald’s, other restaurants and even retailers.
The company's competition in the broadest perspective includes restaurants,
quick service eating establishments, pizza parlors, coffee shops, street vendors,
convenience food stores, delicatessens and supermarkets.
3. Increasing labor costs putting pressure on bottom line margins.
4. The major competitor McDonald is way ahead in market share.
ASSUMPTIONS
Company
• The company generates revenues from three sources: sales at company
restaurants, royalties and franchise fees and property income from certain franchise
restaurants that lease or sub lease property from the company.
• The chain offers a range of burgers, sandwiches, salads and breakfast items. The
• Whopper sandwich is its largest-selling product. Burger King was the first fast-food
chain to introduce drive-thru service which now accounts for a majority of the
company’s business.
• Under the franchise arrangement, the franchisees invest in the equipment, signage,
seating and decor, while the company owns or leases the land and building.
• Franchisees pay the company service fees and rent for premises. The company and
its franchisees as well as affiliates purchase food, packaging, equipment and other
goods from approved suppliers.
Operations
• Burger King has more than 12,150 restaurants in all 50 states and in 76 countries
and U.S. territories worldwide. They support every franchisee by offering world class
support services, including training, operations, and marketing.
• Approximately 90 percent of BURGER KING(R) restaurants are owned and
operated by independent franchisees, many of them family-owned operations that
have been in business for decades.
The Industry
• The fast-food industry is a segment of the food service industry.
• Sales for just the hamburger part of this segment are growing rapidly.
• The phenomenal increase is facilitated by an annual 10% growth in the amount that
Americans spent on meals away from home.
• The fast-food industry is composed of numerous national and regional chains.
Competition
• McDonald's – Largest competitor in fast food hamburger restaurants in terms of
number of locations. Second largest competitor in fast food restaurants.
o “I’m loving it”
o Target: adults, children, and families
o Strengths:
Consistency
Familiarity
Happy Meals
McCafe
o Weaknesses:
Losing Hispanic market
Lacks product innovation
• Subway – Largest single brand competitor in fast food restaurants in terms of
number of locations.
o “Eat Fresh”
o Target: mothers with children and health-conscious adults
o Strengths:
Healthy alternative to fast food
$5 foot long
o Weaknesses:
Lacks variety vegetarian options
Lacks specialty drinks
• Wendy's – Third largest competitor in fast food hamburger restaurants in terms of
number of locations.
• Yum! Brands – largest Company in fast food restaurants in terms of number of
locations.
Sales
Burger King’s sales have been falling steadily over recent quarters and were
down 2.3% in the year to the end of June, while profits were flat compared to the same
period a year earlier.
Marketing
Advertising Campaign
Marketing strategyResult & Flaws(if any)
Have it your way
Focused on sending message that burgers are made according to customer requests not standardized
Battle of Burgers & Broiling Vs Frying
Focused on its USP (flame broiled burgers) & advantages over McDonalds
Market share increased from 4% to 8.7%
Search for Herb Disguised strategy
Campaign failed as the customers focused on “herb” rather than the productDistraction from the intended messageUncomfortable brand association with a nerd personality
We do it like you’d do it & Break the rules
Again focused on its USP
Confusing situations, bad humor and acting resulted in failure of campaign
BK Tee VeeTarget audience: teenage males
Failed campaign as existing customer segment (parents & commuters) didn’t like it
In 1982 'Battle of the burgers' and 'Aren't you hungry for a Burger king now?'
were the slogans used. In 1983 'Broiling vs. frying' and 1985 'The big switch'. All these
ads throughout the years helped increase market shares from 7.6% to 8.3% from 1983
to 1985. 'Search for herb' was a slogan used by BK about a person that has never
tasted a whopper burger, this campaign was supposed to increase market share by
10% but in reality only increased it by 1% it was a disaster. In 1986-1987 'this is a
burger king town' and 'best food for fast times' brought a lot of attention to the company.
In 1988 'We do it like you do it' was used often but a year later they came out with two
new slogans which confused the customer. In 1989 'Sometimes you gotta break the
rules' and 'BK tee vee' with MTV and Dan Cortese with 'I love this place'. This was
another huge setback for BK because people on the go and parents found this ad loud
and irritating. BK at this time has failed to establish a solid image that would differentiate
it from its competitors. Ads if anything only confused consumers as to what advantages
BK offered. In 1993 it had a market share of 6.1% were McDonalds had 15.6% and BK's
sales were growing slower than its rivals.
Burger King = High Quality, High Price
McDonalds = Low Quality, High Price
Target Market
18-34, Value-Concius, skew Male:
• Looking for genuine burger
• Desires to be full
• Hate cheap tasting food
Kids 5_14
• Enjoy being engaged in the dining experience.
• Enjoy specialized kids meal.
• Enjoy familiar foods.
• A key part of the dining experience for families.
TRENDS
Spending Trends
• As of the end of 2008 the economic downturn, leads to lower consumer spending.
• Fast food restaurants become alternatives to full service restaurants because they
are cheaper
Lifestyle Trends
• Home cooked meals are becoming less prevalent
• Changes in lifestyle such as homes with two working parents, an aging population,
increased hours spent working, and an increase in commuting time are driving more
consumers into the restaurants.
Demographic Trends
• Demographic changes have been pushing consumers towards fewer meals, a
preference for less meal preparation time, and more frequent snacking in lieu of sit-
down meals.
• Low income neighborhoods have a higher density of fast-food restaurants.
Market Volume Forecast
In 2011, the global fast food market is forecast to have a volume of 86.4 billion
transactions, an increase of 7.6% since 2006. (Datamonitor)
Market Value Forecast
In 2011, the global fast food market is forecast to have a value of $125.4 billion,
an increase of 22.2% since 2006. (Datamonitor)
ALTERNATIVE COURSES OF ACTION
1. Play it safe strategy. Make some appealing advertisement that makes
fans feel important.
A market follower is a firm in a strong, but not dominant position that is content to
stay at that position. The rationale is that by developing strategies that are parallel to
those of the market leader, they will gain much of the market from the leader while
being exposed to very little risk.
The advantages of this strategy are:
• no expensive R&D failures
• no risk of bad business model
• “best practices” are already established
• able to capitalize on the promotional activities of the market leader
• no risk of government anti-combines actions
• minimal risk of competitive attacks
• don’t waste money in a head-on battle with the market leader
Advantages: Burger King fans will be flattered because BK management give them
importance and because of that, the loyalty of the fans will be lastly. At the same time,
they will attract more customers and the BK fans will be happy and feel important.
Disadvantages: Costly at the same time, it will need some time to be perfect before it
will appear to the media.
2. Continue making innovative products.
Advantages: More customers will get into them and because of that, their profit/sales
will increase.
Disadvantages: It will be costly and it will take several time of brainstorming if the
product that they will introduce will be a big boom to the customers/public.
3. Try to lower their price.
Advantages: Number of customers will increase at their sales/profit may be increase
due to the volume wise buying.
Disadvantages: This is partly hard to the management because this is new to them.
And it will have a fear attach.
DECISION CRITERIA
TIME COST RESOURCES RISKACA 1 2 (LONG) 2 (MODERATE) YES 1 (LOW)ACA 2 2 (LONG) 2 (MODERATE) YES 2 (MODERATE)ACA 3 1 (LONGER) 1 (LOW) YES 1 (LOW)
RECOMMENDATION
We recommend ACA 1: Play it safe strategy. Make some appealing
advertisement that makes fans feel important. It may take long but BK has lower risk
with this strategy. BK doesn’t have to be number one, they need to build first a constant
brand image and differentiation. They need to make their ads less confusing. They
should avoid creepy and offensive ads. If they want to earn more revenue, we suggest
that BK should copy the advertising scheme of McDonalds.
Specific recommendation:
• Focus on its two basic strengths – ‘flame boiled burgers’ and ‘food made the way
customers want’
• Do operation analysis of the in-store work and speed up the system e.g. introduction
of multiple counters for taking orders.
• Introduce and enforce centrally prepared detailed food preparation guidelines to
bring in uniformity and consistency in the taste, ingredient proportion and overall
quality of the food.
• Remodel the less aesthetically appealing stores
• Re-evaluate promotional offers. Introduce value meals with discount on bigger
orders
• Introduce home delivery facility wherever possible.
• Retain ice-creams even if the erstwhile menu is pruned. This is because the major
ice-cream brands in US such as Baskin Robbins do not have the kind of extensive
network of stores like Burger King. Hence it is possible to gain a huge chunk of
shares of ice cream market in the strategically favorable locations OR Enter into a
tie-up with ice-cream brands like Dunkin Donuts has done with Baskin Robbins at
some stores.
• Conduct an extensive audience analysis to assess the image of the company vis-à-
vis its competitors and based on it design the communication strategy.
• If its proved that many customers viewed it as a low quality product maintain low
profile temporarily to identify the root cause of bad image and address it. The causes
may be anything from bad service to constant image change, but it is necessary to
address it before launching another campaign
• Advertisements should be relevant and succinct. Creativity and humor are welcome
but no beating around the bush.
• Brand images tend to be sticky. Try to stick to a consistent brand image instead of
changing continuously which confuses the customers.
• Continue hands-on approach with franchisees. Establish a continuous feedback
mechanism from customers and franchisees and react on the feedback
ACTION PLAN
Strategy Marketing
OBJECTIVE SETTING
Play it safe strategy
BUDGET DECISION
Differentiation Strategy
MESSAGE DECISION OR MEDIA DECISION
Global strategyCampaign Evaluation
OVERALL EVALUATION
Along with these steps BK should also remember to inform, persuade, and to remind.
Strategy
Increase Market Share by:
• Re-positioning BK as a “progressively responsible” Fast-Food Hamburger
Restaurant.
• Increase corporate influence and initiatives over franchise operations.
• Streamlining business model to achieve a more product-centric focus.
• Expanding Globally through promotion of brand name.
Differentiation Strategy
• Green Team Campaign
• Recyclable paper products
Global strategyCampaign Evaluation
• Quality, Sustainability, Responsibility.
• Contemporary counter-front and open view into kitchen from anywhere in
restaurant.
• Restaurant Interior/Exteriors gives “Organic Feel”
• Focus on Freshness and Quality of Beef, Produce, Beverage.
Global Strategy
• Focus advertising efforts on new target market.
• Promote healthy BK Kids meals.
• Implement US Standards for emerging global franchises.
Marketing Strategy
• Change consumer attitudes
Change company’s perception of “unhealthy” and “creepy” to “healthy”
and “hip”
• Position Burger King as a destination
A place where you can be yourself with your friends and escape from
everyday stressors
Budget Decision
• BK has strong financial capabilities.
• You don’t have to make use of a lot of money just for the ads. Make it
simple and relevant to what you want people to remember when they here
the words “Burger King”.
Message Decision or Media decision
• Who is the target market?
o 18 – 34 years oll skew males.
o Don’t alienate women.
• Make use of frame boiled and whopper in order to develop a constant
brand differentiation.
Campaign Evaluation
• Was it a Success or Failure?
Final Statements
We figured Burger King to advertise the Whopper, but throughout the past years they
didn't do this. We figure the whopper or the flame broiled ads would have been more
productive and probably would have resulted in greater sales margin. I also feel that the
ads should have distinguished themselves from what other ads by letting the people
know that burger king wasn't just another standardized burger. Throughout the years,
BK tried to establish the market by becoming someone they weren't. I feel the ads used
by BK should have been simple and to the point. This would have caused less
confusion and more honesty with the customer; this is because you don't want to
advertise a pizza or a taco if you’re selling burgers. Other objectives BK wanted were to
target teens with the MTV approach. This also failed because people found it loud and
annoying. Then they tried a sit in type of restaurant, which also failed because people
want a fast food low price meal not a high priced, sit down meal. Advertising is any paid
form of non personal presentation and promotion of ideas, goods or services by an
identified sponsor. Advertising is a good way to inform and persuade the customer.
Advertising objectives are based on past decisions about the target market, positioning
and target mix. They tried to be someone they weren't with slogans like 'search for herb'
in 85 and many others like 'BK Tee Vee' trying to persuade the younger generation and
'Sometimes you gotta break the rules'. These slogans and more tried to persuade the
consumer. In reminding their customers BK has done a good job. They've at least
expanded nationally and internationally and always have commercials everywhere with
a juicy whopper on the screen, reminding the viewer that BK is the only place a
whopper is made.