Marketing ManagementGroup 8

DIFFERENTIATION and POSITIONINGDIFFERENTIATION and POSITIONING

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Contents

• Introduction Fast food and the Industry Subway Mc’Donald

• 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 sugar-purveying 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 whereRemake 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 StatementPositioning 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 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

How McDonald become a global brand

Localizing its menu world wide for example China:

Green Pea Pies

• Rice Burgers

• Mint-flavored Soda

How McDonald become a global brand

• 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

FranchiseWhat 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 WorkAn 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 chain-wider 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.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&ADesign 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, well-known 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

• What kind of product we will sell to customer, and dedicated to different market.

Price

• 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

• How the product is distributed is a decision influenced by how the competition is being offered to the target market.

Promotion

• 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

• 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

• Company will be absorbing a major competitive and increase its power to set prices.

Cross selling

• Company will buy and sell it to other customer.

Synergy

• Working together use the complementary resources to reach a financial benefit

Taxes

• 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

• The company have desire to keep prices high

Long-run factors

• 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