Differentiation
& Positioning
Group 5 Case Study
Group Members
Mauricio Gonzalez
Bui Thi Huy
Chantharas Kanchanakool
Nina Krapf
Vincent Tenchavez
Julia Vassiljeva
Outline
I.Fastfood Turns Healthy
II.Repositioning for a global
future
A. Analysis/Key Issues
B. International Marketing
Strategy
III.Globalization
Fast Food Turns Healthy
By: Thuy
Fast Food History
• Fast Food : Term for food that can be prepared and
served very quickly
• Fast food history depended on the location, uniqueness
and various culture.
Ex : 1. Ancient Romans  Bread and Olive stands,
2. East Asian  Noodle Shops
3. Middle East  Flat bread and Falafed
Fast Food History
Nowadays, fast food became one of the world’s
fastest growing industry.
WHY : People love fast food because it tastes
GOOD and is reasonably priced.
Fast Food Industry
Top 10 Global Franchises for 2008
Subway
KFC Corp.
McDonald's
Dunkin' Donuts
Domino's Pizza LLC
Curves
RE/MAX Int'l. Inc.
Sonic Drive In Restaurants
Pizza Hut
UPS Store, The/Mail Boxes Etc.
Data taken from ENTREPRENEUR.com
http://www.wikinvest.com/image/Fast_Food_Industry_M
arkets.jpg in 2007
Subway
• Subway restaurants, commonly known as Subway,
started in July, 1965
• Primarily sells sandwiches and salads called “sub”
• The owner is Doctor’s Associates, Inc. (DAI), and has
over 30, 016 franchised units in 88 countries as of
October 2008
• SUBWAY = Jared Diet at the year 2000
The Jared Diet
• Jared saw the new healthier sandwiches and
decided it was time to go on diet.
• For lunch: it would be a six-inch turkey, no mayo,
no oil, and hold the cheese.
• For dinner: a foot long veggie sub, a bag of baked
potato chips and beverage.
Subway
• Subway is the third largest fast food
operator globally after Yum! Brands
(35,000 locations) and McDonald's
(31,000 locations).
• The first international location opened in
December of 1984 in Bahrain.
Revenue
Employees
▲ USD 9.05 billion (2006)
167,823 (2003)
Repositioning for a
Global Future
By: Mod
Early Days and Dash for
Growth
Simple principles…
SPEED
QUALITY
CLEANLINESS
During it’s golden years
in the 80’s
Expansion of new stores both in
the U.S. and globally
Up to March 2007, over
31,000 McDonald’s
restaurants operating
in more than 119
countries around the
world
McDonald’s in the
orld
Dollars in millions
Total revenue and Net income of
McDonald’s from 2000 to 2008
25,000
22,787
23,522
20,895
19,117
20,000
17,889
15,000
14,243
14,870
15,406
16,154
10,000
4,313
5,000
3,544
1,977
1,637
2,279
893
2,602
2,395
1,471
-
2000
2001
2002
2003
Total revenue
2004
Net incom
2005
2006
2007
2008
Year
McDonald’s Cannibalization
However…
Because of its lucrative business,
it caused
cannibalization
Loss of profitability
Campaign 55 was
launched but
failed.
Competition
Focus on expansion
failed to notice its competitors
Other brands overtaken McDonald’s in terms of
customer’s appeal, quality, speed and cleanliness
In 2001 according to the
American Customer
Satisfaction Index Survey,
McDonald’s ranked
almost at the bottom
In 2002
McDonald’s was at a loss for the first
time in 48 years
Store-opening
programmes cut from
1,000 in 2002 to less than
400 in 2003
Solution?
Reduction of price
But it’s not just about the price
Customers look for varieties and
become more health conscious
Some local brands offer
adaptation in local taste
Comparison
In 2004 The Subway brand was only becoming
recognized in the UK. But in the US and Canada it
has overtaken McDonald's as the number one fast
food chain, and sells almost 2,000 sandwiches a
minute from 21,052 outlets in 74 countries. The
holding company's profits are not disclosed as it is
privately owned, although it says global sales in
2002 were $5.7bn (£3.2bn). By 2008 it has become
trendier among teenagers than McDonald’s.
Litigation and Health
McDonald’s has been taken into
court over the allegation that their
food can lead to obesity.
Analysis/Key Issues
By: Julia
Changes in the Environment
•
•
•
•
•
•
Increasing price of raw materials
Regulatory issues
Agitations by social organizations
Recession
Competition
Increasing fuel prices
Changes in the Competition
• Product innovation, customer satisfaction,
and differentiated promotions are of utmost
importance – now more than ever.
• Product range is becoming
wider:
Coffee War Between
McDonald´s and Starbucks.
• Value against price; innovation
against tradition; selectiveness
against ubiquity
Market Share FFHR 2008
Changes in the customer wants
and needs
• Convenience and time are priorities
• Placing orders through internet is preferred over
telephone, which shows consumers´ inclination
toward convenience.
Health is Wealth: Product: Food
offerings getting healthier due to
consumers´ increasing awareness
Bigger is Better: The size of items
on the menu is becoming bigger
every day, Combo meals are being
super sized
McDonald’s success factors
•
•
•
•
•
branded affordability,
menu variety and beverage choice,
convenience & day part expansion,
ongoing restaurant reinvestment
operational excellence
“We believe locally-owned
and operated restaurants are
at the core of our competitive
advantage, making us not just
a global brand but also a
locally relevant one”.
McDonald’s success factors
• Focus on being better, not just bigger
• Understanding consumers’ needs and
wants
• facilitating greater sharing and
adoption of best practices and new
ideas worldwide
• leveraging a strategic approach to
implementing initiatives to drive the
best bottom-line impact
International Marketing
Strategy
By: Vince
International Marketing
Strategy
McDonald's means different things to different
people and doesn't have one brand position.
McDonald’s wants to win
back the hearts of the most
important demographic to
have deserted McDonald's young adults.
International Marketing
Strategy
The first global campaign launched in Sept. 2, 2003:
ich liebe es (Germany)
i’m lovin’ it (US)
c’est tout ce que j’aime (France)
love ko ‘to (Philippines)
c’est ça que j’m (Canada)
вот что я люблю (Russia)
man tas patīk (Latvia)
International Marketing
Strategy
“i’m lovin’ it*” is all about the revitalization of the
McDonald's brand, with a global burst of instant
energy.
Larry Light
Chief Global Marketing Officer
*developed by Heye & Partners in
Unterhaching, Germany
International Marketing
Strategy
“i’m lovin’ it” is the centerpiece of a new
marketing strategy that will connect McDonald’s
with customers highly relevant,
culturally significant ways around
the world.
International Marketing
Strategy
- unprecedented in McDonald’s history as more
than 100 countries unite behind a single brand
message to the customers
- it’s a new way of thinking
about
and
expressing
McDonald’s worldwide brand
appeal to the consumer.
International Marketing
Strategy
Light has the budget for the fire-fight - $1.2B a
year. The bulk of it has gone on TV advertising.
Mcdonald’s also utilized:
-promotions
- public relations
- restaurant merchandising,
- and overall brand
communications initiatives
International Marketing
Strategy
Several of the English language spots feature vocals by
2003 Triple MTV Video Music Award Winner, Justin
Timberlake.
International Marketing
Strategy
Awareness of “i'm lovin' it" in McDonald's top ten
countries is 86 per cent;
89 per cent with young adults
87 per cent among "moms"
-no doubt aided by a menu with
healthier options.
Comparable second-quarter global
sales are up 7.8 per cent (2004), the
biggest Q2 jump since 1987.
www.brandrepublic.com
Globalization
By: Nina/Mauricio
Globalization
• Globalization means a trend toward
greater economic, cultural, political
and technological interdependence
among national institutions and
economies .
• Reduced barriers lead to freer trade
and flow of goods, capital, people,
services and ideas.
Driving Forces
Falling Barriers to Trade and Investment:
• GATT (General Agreement on Tariffs and Trade)
• WTO (World Trade Organization)
• Regional Trade Agreements (NAFTA, EU, APEC, …)
Technological Innovations:
• E-mail and videoconferencing
• Internet
• Company intranets
• Advancement in transportation technologies
Reasons why global strategies sometimes fail
in their objective to achieve a global
marketing advantage:
• Different cultures  people in different
countries don’t have the same ideas and
ideals concerning special topics, no
consideration of local cultural believes
• Resistance by local branches or
governments  increasing militancy of
local trade unions
• Different law guidelines
• Political unrest or war
Rationale behind mega mergers
and major acquisitions:
• Problems from one single company can
shift away due to merging  no longer
fighting the tide but swimming with
it….
• Opening new markets  boosting
customer retention and gaining new
customers in different geographic areas
Rationale behind mega mergers
and major acquisitions:
• Technology advantages  two or
more companies share their knowhow
• Cost advantages  sharing
facilities, know-how and employees
may lead to cost reduction
Problems occurring due to
mega-mergers:
• Eroding of shareholder value
• Loss of organization’s culture due to
integrating into another company
• Detriment of innovation  merged
company may become too inwardlooking
• Disadvantages for workers and
employees
• Worse working contracts
What are the critical success
factors in developing a
global brand? What
additional factors would you
consider to be necessary in
developing a successful
global e-business brand?
The critical success factors for develop a
global brand
alternatives varieties prices advertisements
ADAPTED according to the
CULTURE and CUSTOMS of the PLACE
…aditional factors to develop a global ebusiness brand
MAIN web page (global)
SPECIFICS web pages (country)
CONSOLIDATE and UNIFY
the GLOBAL IMAGE
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 challenge
UNDERSTANDING and
COMPREHENSION of WHAT
COSTUMERS WANT
the advice
ADAPTATION to the
CULTURE and CUSTOMS of
the PLACE
Thank you!