Established in California during the 1940s by two brothers, the McDonald’s restaurant became a popular teen hangout in the first flush of post-war affluence. To feed these youthful bodies, the brothers reduced the menu to the perennial favourite – hamburgers, applied assembly line techniques to food production and expanded to four restaurants by 1953. Taking note of the brothers’ success, in 1955, Entrepreneur Ray Kroc bought the right to franchise the McDonald’s System. Renamed the McDonald’s Corporation in 1960, Kroc focused his marketing effort on the family meal and children, spending heavily on television advertising which promoted the smiling clown face of its child-friendly brand mascot, Ronald McDonald. Today, the McDonald’s franchise exceeds 30,000 restaurants globally and serves over 50 million people in more than 121 countries each day.
GOALS AND OBJECTIVES
1. McDonald’s vision is to be the world’s best quick service restaurants experience. 2. McDonalds is committed to maintaining and developing the best food products in the quick service restaurant market. 3. In order to deliver this, the company has made a number of commitments to food safety and nutrition. 4. Lead the Quick Service Restaurant market by a program of site development and profitable restaurant openings, and by attracting new customers. Increasing sales through promotions will enable them to continue their program of expansion. 5. McDonalds have an objective to continual enhance and improve their menu. This will
better satisfy their customers and give customers more reason to visit. Many ideas for new items on the menu come from the franchisees responding to customer demand. Consumer tastes change over time and McDonalds has to respond to these changes.
"McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile."
CORE COMPETENCY AND SUSTAINABLE COMPETITIVE ADVANTAGE
McDonald’s core competency is providing convenience when people need and want to eat fast food at prices that are competitive and provide best value for the customer’s money. One of McDonald’s competitive advantages is its focus on consistency of quality, production of food and use of raw materials all around the world. The world recognition associated with the brand McDonald’s itself is also one of McDonald’s competitive advantages.
There are many variations observed in the demand trends for McDonald’s in Pakistan. The trend followed by the high income group is relatively stable and they comprise a very small percentage. The changes in the economy have very little effect on the demand trends of McDonald’s that is being followed by this high income group. Other reasons for these variations are: McDonald’s is a brand that is mostly perceived by an average Pakistani customer to be a place which is visited on some occasion or once in a while. The main reason for this is the low disposable income that people have because of the inflation and some other unemployment reasons. On the other hand McDonald’s lovers such as college students, working individuals, kids and families fond of spending a lot on fast food restaurants make it a place to be visited very frequently. One of the reasons is high disposable income by blue collar individuals. Another reason is the attraction for McDonald’s by kids as well as those who love it for every reason. There are also global issues which affect food demand for McDonald’s e.g. bird flu and cow diseases in western countries brought down demand for McDonald’s some years ago as it was a known fact that they get their meat from international suppliers in order to maintain quality. The demand also fell because of the security issues that affected demand for McDonalds, e.g. suicide attacks on western establishments a year ago. One of the reasons for the decrease in the demand trend for McDonald’s is the hostile attitude of the general public in Pakistan towards all the Western restaurants and multinational companies. Therefore the demand trends for McDonald’s have declined because of the some of the ill activities that have been observed during past some years regarding McDonald’s.
Like many other nations people in Pakistan are becoming quite health conscious. Fast food restaurants are giving rise to problems related to heart and others such as obesity and excessive cholesterol that are making people very conscious. Therefore it has been observed that to avoid such problems people have changed their eating patterns and are spending less on restaurants such as McDonald’s.
Key Success Factors:
McDonald's Pakistan has an aggressive plan to expand in all other cities of Pakistan and is rapidly growing with the focus to provide friendly and a quick service restaurant experience to its customers. There are many key success factors due to which McDonalds is successful in the market. We have been successful in identifying a few: All the franchises of McDonalds in Pakistan are owned by Lakson Group of Companies. Apart from the fact that LGC is one of Pakistan’s biggest corporations, their management allows not only standardization of quality but a more uniform and effective marketing strategies in order to sustain in the market. Therefore McDonald’s being its part had to continue to strive to maintain its standards in the local region. Many McDonald's restaurants have included a playground for children and advertising geared toward children, and some have been redesigned in a more 'natural' style, with a particular emphasis on comfort: introducing lounge areas and fireplaces, and eliminating hard plastic chairs and tables. This has given a new outlook to the McDonald’s as a quick service restaurant that is still not be seen on other fast food restaurants. McDonalds doesn’t offer just burgers. Their well diversified menu is also one of the key success factors as most of McDonald’s competitors are quite specialized: KFC in chicken, Pizza Hut in pizzas etc. When it comes to eating out during Ramadan in any fast food restaurant, the name that clicks to the customers is McDonald’s. The reason is the affordable deals that they offer, that seem to beat all others when it comes to prices. Another advantage that McDonald’s has on its competitors is the location of its franchises. Its main advantage is that it is located in vicinity that is easily approachable. Secondly it has got in its surroundings other very attractive places
to be visited by people who want to enjoy their life to the full. These places are a source of attraction not for the services they provide but for McDonald’s as well. For example one of its outlets has been opened in Park Towers in Karachi so as to attract the shoppers who visit it very frequently. Another strategic location that McDonald’s has acquired is at the Clifton beach. This has forced many others nearby restaurants and one of the very famous cuisine restaurants with the name of Kublai Khan to get closed. Same is the case in Rawalpindi/Islamabad where McDonald’s holds an important strategic location. The customers that are driven to the Cinepax are automatically attracted towards McDonald’s.
Product life Cycle Analysis:
In the Pakistani market McDonald’s has been placed in the growth phase as it is still growing and has the potential to grow further. There are many strategies that have been employed in the other countries but are still to be made a part of the McDonald’s franchises in Pakistan. Following are some of the strategies that can be made a part of the Pakistani market so as to increase its market growth: a) McDonald’s in Pakistan can introduce breakfast in its menu to cater to the needs of those who are in a hurry to get to office in time. This will give them an edge on its competitors and its growth will increase.
b) To gain advantage in the local market, McDonald’s should introduce coffee at all the franchises. c) To maintain its brand image as a twenty four seven customer restaurant, McDonald’s must make its timings more flexible to the needs of those who are usually very busy with their work schedules.
According to BCG Matrix McDonald’s is a star. The reason for this is its high market growth and high market share in the Pakistani market. On the other hand KFC and Pizza Hut are the cash cows because of their low growth rate and high market share. During past some years KFC and Pizza Hut have lost their market growth because of the fact that they lost their standard war to their competitor i-e McDonald’s. Another direct competitor of McDonald’s is Subway. According to BCG Matrix it is a dog. Some of the reasons that are responsible for its low market share and low market growth are the less expansion strategies being followed by the company. Secondly they are not focusing at all on all the major cities, rather they are only focused on the target segments of Lahore and Karachi.
CUSTOMER ANALYSIS (a) SEGMENTATION:
The customers of McDonald’s have been segmented on the basis of AIOD into four categories, based on the product attributes that fulfill needs like ‘fast’ food, ambience, status symbol and hygiene.
Activities Student, working; Adventurous, Energetic.
Interests Sports, Entertainment , Fashion, Music, Recreation. Entertainment , Recreation, Fashion, Music, Socialization. Sports, Entertainment , Fashion, Music, Recreation. Home, Recreation, shopping, Fashion,
Student, working/selfmade businessmen; working on projects. Student, working; Hanging out, Adventurous.
Opinions Influenced by peer pressure, Energetic, Impulse buying. Ambitious, Future business and social issues, Politics.
Demographics Age: 16-24 years old. Marital status: Single; Heavy users
Working women/men, house-wives; Shopping, Club memberships.
Age: 20-35 yrs old. Marital status: Single and Married. Light to medium users. Energetic, Age: 16-25 yrs Impulse old. Marital buying, status: Single; influenced by light to medium peer users pressure Planned Age: 25-45 yrs purchasing, old; Marital Authoritarian status: Newly , Strong married, Full views, Nest; Light Politics, users Future
busines s and social issues.
This segment of customers enjoys the Quick Service Restaurant (QSR) facet of McDonald’s and has its needs fulfilled. Since McDonald’s competes rigorously in the market on the quick delivery attribute, the customers expect their food to be delivered to them fast, both at the outlet, and at home (home delivery). A large majority of this segment is composed of students whose activities are adventurous, enthusiastic, energetic, and recreational and revolve around sports, clubs, hangouts and shopping etc. This segment thus targets the market that indulges in impulse buying and is influenced by peer-pressure. These customers are heavy user of the product at hand. A minority of newly working people are also included in this segment.
This segment enjoys the unique ambience provided by McDonald’s in Pakistan. Since the regular consumers of this product belong to the upper-middle class, they prefer having a meal with the level of customer service and a tinge of sophistication that the outlets provide. The customers of this segment are students as well as working class. These people enjoy recreation and socialization activities. They have strong views about the current affairs and the future business and social issues.
The people of this segment perceive the use of this product as a status symbol and basically comprise students and new-working class. These customers like being
seen at the right places and like to associate and socialize with people of the same class. These customers are enthusiastic about entertainment, fashion, music and sports. They have fickle opinions and subject to change because of peer pressure. They follow fads and indulge in impulse buying.
This segment comprises people who are concerned with hygiene and how the food is prepared and served and also the cleanliness of the environment where they eat. It comprises of middle-aged people mostly housewives and working women/men. These are light users and make purchases once in a while, probably as a substitute rather than a first-choice. These people are authoritarian, have strong views about politics, business and current affairs. They make planned purchases and weigh their options before they make a buying decision.
We have used perceptual maps to analyze the positioning of various QSRs in Pakistan. The attributes for perceptual mapping include customer satisfaction, pricing, popularity; market Share, sophistication and availability.
SWOT ANALYSIS Strengths:
McDonalds has been able to maintain its market share in the QSR market of Pakistan since 1998 and this is actually the major strength of McDonalds that has made it so popular. Other major strengths are listed below:
The reputation of the various products each season has made it possible for the company to attract customers having different tastes and to try out the season specialties. A major strength is the various deals that McDonalds offers so that it could be made affordable. Recently McDonalds offered a deal for Rs.85 only, containing a beef burger along with a drink. McDonald’s offers many flavors of Mcflurry ice cream from a mix of M&Ms to Oreo cookies. The M&Ms flavor was introduced about a year back and is still popular among the M&Ms lovers. McDonald’s has also customized its meal according to the tastes of Pakistan. People in Pakistan do not eat bacon so McDonalds does not offer such sort of meals in the country.
The social responsibility acts of McDonald’s are commendable. It has been able to maintain a reputation as a socially responsible and aware enterprise all over the world. Its practice of going green and serving in an environment friendly way has made it possible for McDonald’s to gain fame.
On 27th March’ 2008, McDonald's announced that it is giving further backing to Rainforest Alliance certification by offering a cup of tea with a conscience in all of its 1,200 restaurants in the UK. In Pakistan however, McDonald’s has not yet come up with an effort that can show the company’s goodwill towards the masses here. Like KFC, McDonald’s should also involve itself in educational and social activities so that people should know that McDonald’s isn’t yet another business oriented corporation aimed at just making money but it actually cares.
The equal employment opportunities regardless of race, color, sex, national region, age, disability etc are offered to people. People looking for jobs can also upload their CVs online.
McDonalds has gained recognition worldwide. The chain is present all over the world in more than 122 countries. In Pakistan a large number of franchises are present, majority of them in Karachi and Lahore and McDonald’s is regarded as a symbol of value and quality for your money.
Good communication and friendly environment:
McDonalds has always ensured a friendly environment to offer to its customers. Children love going there, having a happy meal and the toys that they get as a gift. Play places also serve as a significant attraction where children can go and make friends and play. Employees are also very polite and they are always ready to serve you in every best possible way that they can.
McDonald’s offers its clients, especially children to celebrate their birthdays there. One can invite friends, they decorate the party area, various party games are organized along with face painting activity etc. Children are provided with an opportunity to celebrate their day in the way that they want.
Partnership with Coca Cola:
McDonalds and Coca Cola are official global partners. Coca cola is a big brand name serving people all over the world with beverages.
Partnership with telecom companies:
McDonalds offered special deals to its clients with up size meals who are the users of a particular company such as Warid and Ufone.
McDonalds needs to develop more and more products to stay in the competition. After the opening of international QSRs in Pakistan, many local QSRs have also been opened in various cities. The tastes are a bit different but they too are offering chicken and cheese burgers, drinks and fries at competitive prices. This situation requires McDonald’s to be more innovative and price competitive.
In Pakistan, McDonald’s rarely advertises at TV, however billboards often show off juicy McDonald’s burgers but this could affect its popularity in future. It definitely needs to advertise more to reach the target and the potential customers.
The service at McDonald’s drive-ins has been subject to criticism all over the world and a lot of people complaint that the orders are either missing some of the items or are entirely wrong. The service time at the drive ins is also subject to great variations and needs to be improved.
McDonalds can broaden its market by offering meals at more competitive prices in comparison to other local QSRs such as AFC, Al Maida etc. This way it could get hold of the potential customers too.
Opportunity to be innovative:
McDonalds could make itself more innovative by offering deals that appeal more to Pakistani consumer’s e-g it can introduce desi flavors in the present products such as Barbeque, Tandoori, Masala and other spicy tastes which are staple of the country.
Breakfast and special noon meals:
Now in Pakistan most the trend of women going to work and opting for profession is increasing as a result of which they are running short of time to carry out all the home chores along with their work. McDonalds can offer deals to such market by catering them in the morning for breakfast. During the office hours people mostly go out for their lunch to restaurants. McDonalds can avail this potential market too.
Growing dinning out Market:
In Pakistan the dining out trend is increasing especially in youngsters and upper middle class. McDonalds has the opportunity to grasp this market quite well. It is already doing well by serving them but it could arrange various activities for the people of this age.
Dine in Cafes:
McDonalds can open up with small-sized cafes for the teenagers in their universities and colleges.
McDonalds has opened coffee shops by the name of McCafe’s in UK. Pakistan can serve as a new potential market for these cafes.
More health conscious customers:
With increasing awareness about food and the importance of a balanced diet, people are opting for low calorie food e-g salads and food with high fiber content. To remain in the scope, McDonalds needs to serve this market as well as the present customers, this could be posed as a threat to McDonalds. Subway is offering its low fat veggie and chicken sandwiches at prices almost the same as McDonalds. For McDonalds diet meals could be a way out of this situation. Until now, McDonald’s in Pakistan has nothing to offer to health conscious customers.
Foreign as well as local competitors:
In the growing market QSR market of Pakistan McDonalds competitors are entering not only from other countries but from within the country too. Their competitive prices could be a reason due to which McDonalds can lose its share in the Pakistani market.
Changing customer styles:
Pakistani culture has been changing for years now with new technologies and trends. People who are not brand loyal move with the changing times. Some competitor can easily enter into the market and make better offers to its consumers by focusing on their needs and the satisfaction that they want. To remain competitive, McDonalds needs to be innovative and should change along with the Pakistani consumer styles.
In general terms the government policies do not affect the company much nor do the changes in the government influence the organization of the company. Mostly what company obligation to the government is the paying of different taxes which include payroll taxes and business taxes. McDonald’s enjoys an added advantage in countries where consumer protection laws are not very strong. In countries like US, where the consumer protection laws are very strong, there are great costs associated with a breach in quality or service in the form of litigations and lawsuits.
There are many factors which can affect the operation of a company. In Pakistan McDonalds offer the food at higher rates in comparison to the local food restaurants. Most of the people in Pakistan fall in the category of middle class and it is not affordable for them to have McDonalds at regular basis. Due to layoffs and other economic downturn of the current recession period the profits of McDonalds might have dwindle as people consider it as a luxury to go and eat out at some foreign QSR.
When McDonalds entered the Pakistani market people were not very much into fast food eating style but now the business has been influenced by the changes made in the
society especially changes in the eating habits among young people who helped in the acceptance of the fast food idea but also the rapid change of way of life which is very quick now as everyday people are running out of time, QSR is the way out for them. This in turn has helped the company to grow and to increase its profits. As McDonalds offer Hilal food majorly so there are no religious, ethical or cultural issues associated with the operations. A negative aspect of a social factor happening in Pakistan is sometimes the fact that many times anti Americans feelings rising for different reasons may a lot or a little affect the company by boycotting Americans goods. For the rising importance of corporate social responsibility recently McDonald's has announced that it is giving further backing to Rainforest Alliance certification by offering a cup of tea with a conscience in all of its 1,200 restaurants in the UK.
Pakistan is a developing country and new technology gadgets and techniques are always welcomed. McDonalds’s introduced new food production techniques in Pakistan which were later adopted by the local QSRs. Food made with the help of machines is considered more hygienic. However, the continuous developments in the technology sector needs McDonalds to be updated regularly but as in Pakistan food making technology is still in the development stage so McDonalds has an edge over others in this regard. It is natural that technology has helped McDonald and especially its employees as they have to serve quick services. Computers and smart cashiers are used by the employees so they would not get confused and they are provided with customized database management system.
COMPETITOR ANALYSIS PIZZA HUT:
Pizza Hut is a global fast food chain, a subsidiary of Yum! Brands Inc. , the world’s largest restaurant company. It was founded in Wichita, Kansas, USA in 1958 and is running its operations in about 91 countries worldwide. It’s one of the major competitions of McDonald’s in the Pakistani QSR industry. It started its operations in Pakistan in 1993 with a single outlet at Boat Basin, Clifton, Karachi. Today it operates in nine cities of Pakistan with 38 outlets. The cities include Karachi, Lahore, Islamabad, Peshawar, Faisalabad, Multan, Rawalpindi, Sialkot and Hyderabad. Pizza Hut serves a large variety of starters, soups, salads, sandwiches, Pastas and deserts.
When we talk about strategic objectives, Pizza hut says: We want to satisfy our customers by offering them “The best”. Diversification of the products that they offer has always been a focal point of strategies at Pizza Hut. The strategies at Pizza hut are guided by principles like Cleanliness, Hospitality, Accuracy, Maintenance, Product quality and Speed (CHAMPS). Since it’s a global chain, the strategies are based upon customizing the services, advertising and marketing activities according to the countries that they are operating in. Customer service and satisfaction have of course always been a vital aspect of the strategies. Another important feature of the Pizza Hut’s strategies are the 3 Fs (Fun, Friendly and Familiar).
Problems and Weaknesses:
At one time, the biggest marketing problem Pizza Hut faced was lunch. As compared to McDonald’s, its restaurants had virtually no lunch time sales, and neither did any of it’s pizza competitors. The reason, of course, is that it takes 20 minutes to cook a pizza from scratch in a traditional pizza oven, and most people won’t spend that long at lunch time waiting to be served. By using a new, continuous-broiling technology adapted from burger business, Pizza Hut developed a personal pan pizza that could be served in less than 5 minutes. It was quick, tasty and moderately priced. And Pizza hut rolled it out to all 4500 stores worldwide and locked up the pizza-lunch business almost everywhere, almost overnight. One of the weaknesses of Pizza hut that it hasn’t overcome yet is it’s price. Local chains are constantly springing up, offering lower prices and similar recipes. Most people don’t mind giving a lower price for slightly different taste because of which the sales at pizza hut at are suffering. Growing awareness about eco-friendliness has forced a lot of the food chains to maintain practices that conform to international environmental standards. For example McDonald’s is introducing coffee beans grown in environmental friendly conditions in order to appeal to the people who are conscious about environmental friendliness. In the Pizza selling restaurants, organic pizzas are the new concepts that are appealing to the masses to these days. It’s a phenomenon that highlights the health conscious attitude as well as environmental friendliness. Pizza Hut on the other hand has not come up with any strategy in this area and if it doesn’t even in the future, it is going to lag behind the chains that offer healthier food.
Pizza Hut has the first mover advantage in the pizza chains because of which it has developed a strong customer base which is one of its strengths. In the Pakistani QSRs industry, the delivery service of Pizza hut is clearly a competitive advantage that it enjoys. Pizza hut’s delivery service is one of quickest and the pizzas delivered are oven hot in the real sense of the world. Pizza Hut is often referred to as ‘Pizza Innovation Leader’ because it is constantly coming up with new varieties of pizzas to appeal the different audiences and at the same time, people at the pizza hut have a really good idea about which varieties are appealing to the customers and they are thus retained in the menus The first mover advantage is an advantage that Pizza hut was born with but time, Pizza hut has been successfully creating competitive advantages like a traditionally strong brand name for itself and the quality service that it provides.
KENTUCKY FRIED CHICKEN (KFC):
KFC, founded and also known as Kentucky Fried Chicken, is a chain of fast food restaurants based in Louisville, Kentucky. KFC is a brand and operating segment, called a "concept", of Yum! Brands since 1997, when that company was spun off from PepsiCo as Tricon Global Restaurants Inc.. KFC has more than 11,000 restaurants in more than 80 countries. KFC came to Pakistan in 1996 with the first branch opening in Karachi and later in Lahore. The Franchisee was a Pakistani owned and operated, Dubai-based Company the Cupola Group, which owns licenses and its own restaurant throughout Pakistan and the middle-east.
KFC has the strategic objectives of expansion along with profits and sales growth. KFC has also been applying its strategies at improving services and making them more and more customer friendly. It has not only been customizing it's menu according to the
countries that it has been operating in, it has also been trying to cater to different ethnic groups like African Americans and Hispanics. Such types of strategies are focused on increasing the customer base by better customization of products. Other than the traditional eat-in restaurants, KFC has also been expanding into non-traditional facilities like shopping malls, hospitals, universities, stadiums; office buildings etc and a number of strategies have been formulated to aid this kind of expansion.
Problems and Weaknesses:
The advertising campaign of KFC does not specifically appeal to any segment. It does not appear to have a consistent long-term approach. The U.S. has enormous changes in its demographics. Only in US, single-person households increased from 12% in 1970 to 25% in 1995. With this kind of dramatic change, KFC does not have a proper approach to its target market.
The increased health concerns of the masses has put KFC at a great disadvantage because of the word 'fried' attached to it's brand name which gives an instant idea that the food would be oily and unhealthy.
Another weakness of KFC is that of the lack of a corporate direction because it has been a part of four different parent companies till now namely, Heublein Inc., R.J Reynolds, Pepsi Co. and Yumm! Brands Inc. The corporate functioning of these companies has been pretty different from each other because of which a strong culture could not be established at KFC and it had long been struggling with it.
Because of the nature of the chicken segment of the fast food industry, innovation was never a primary strategy for KFC. However, during the late 1980's, other fast food chains, such as McDonald's, began to offer chicken as a menu option. During this time, McDonald's had already introduced the
McChicken while KFC was still testing its own chicken sandwich. This delay significantly increased the cost of developing consumer awareness for the KFC sandwich.
A very strong financial background is one of KFC’s competitive advantages. KFC has been functioning as a multinational corporation for several decades. As a result, the company is familiar with the logistical and quality problems which accompany operating an international food operation, and has demonstrated that it can work with host countries and businesses within the host country to develop a strategy which works in the most cost effective way.
With the passage of time, KFC has developed another very important competitive advantage for itself- Environmental Friendliness. In March 2009, the first eco-friendly green KFC was opened in Northampton USA. The restaurant is designed according to environmental goals that include cutting energy and water consumption by 30 percent and reducing CO2 emissions. Operations at the new site are also expected to reduce waste and the amount of rubbish sent to landfills; the restaurant composts and recycles other waste, grease and used cooking oil. Other than this, in an effort to reduce its packaging by 1,400 tons, KFC is now switching from cardboard to recyclable and biodegradable paper wrapping for some of its products.
Subway is a restaurant franchise that primarily sells submarine sandwiches and salads. It is owned and operated by Doctor's Associates, Inc. (DAI). Subway is one of the fastest growing franchises in the world with approximately 30,052 restaurants in 90
countries as of April 2009. It is the second largest restaurant operator globally after Yum! Brands (35,000 locations) Subway restaurants are known for their sub sandwiches and salads. The Subway restaurant chain is the fastest growing restaurant chain in the world surpassing even McDonald's. Subway has the second most stores of any chain restaurant system in the world after McDonald's, and the most locations in North America of any chain. Subway was founded in 1965, however the franchising started in 1974. In Pakistan, subway has restaurants at 30 locations, including Karachi, Lahore, Gujranwala, Islamabad, Sialkot and Multan. Majority of the restaurants are located in Lahore and Karachi.
The strategic objectives of Subway focus on creating a global strategic plan to enable Subway Restaurants to succeed internationally. Other than this subway is intent upon introducing the concept of ‘healthy fast food’. Sandwiches of Subway have been included in diet plans by experts. Jared Fogle, an obese college student who weighed 425 pounds introduced a weight loss plan called the subway diet and lost 245 pounds in 11 months. Subway’s stand regarding obesity in children is not new to its customers. Strategies at Subway are not only about a really ambitious increase in franchises all over the world but they are also about making the food more and more appealing to the health conscious customers because health conscious attitudes, according to the experts, are here to stay now.
Problems and Weaknesses:
One of the major problems that can be identified with Subway right now is related to the franchises. Although Subway has long been named as the number one franchise opportunity by The Entrepreneur magazine but it seems that Subway has developed a myopic focus regarding the franchises. Subway has regional managers who have the opening of new franchises as their sole aim and their bonuses and incentives are tied to the opening of new franchises.
These managers at Subway even don't care if the new franchises are detrimental for the existing ones and because of this; many of the franchises are becoming a victim of internal competition or cannibalization. For example, in Lahore alone, Subway has 20 outlets. Instead of this, Subway could have targeted Cities like Faisalabad and explored a new market. Franchise owners believe that Subway has been irresponsible with allocating the franchises and uses bloated store sales projections as part of their sales pitch for encouraging new franchises. • The opening up of a lot of new stores in close proximities are also resulting in decline in sales per store because of which the franchisees are not very satisfies with Subway.
The environment at the Subway stores cannot be compared with that of McDonald's, KFC or Pizza Hut. The Stores are small and suffocating and do not even provide the necessary privacy to the people eating there. Subway has no standard size for any of its store because of which the sales oriented Franchisees try to fix them at as smaller a place as possible. This is tarnishing the image of Subway as an international brand.
The quality of the sandwiches and standards of cleanliness at Subway are going down day by day due to the greater and greater autonomy that franchisees enjoy. The Subway at Rawalpindi was recently closed down due to quality issues as well.
There is a dire need of a system to integrate the large number of Subway franchises and to ensure that the original Subway practices are being followed there. The management of the franchises is one part of their operations that Subway has not handled well.
One of the greatest competitive advantage that Subway was born with is it's healthy Menu. The salads and sandwiches appeal much more to the people as compared to fried chicken, burgers, fries and pizzas. With its advertising and promotion, Subway has long been highlighting its healthy food in advertising and promotions and with the passage of time, it has established itself as a healthy brand. • Another competitive advantage that subway enjoys is the fact that along with traditional locations, Subway restaurants can be found in more than 4,000 nontraditional locations such as food courts, health clubs, hospitals, universities, amusement parks or just about anywhere. In fact, Subway restaurants can even be found in automobile showrooms and Laundromats! This global presence is indeed a sustainable advantage for Subway and needs to be managed properly.
Subway's fresh food is also a competitive advantage because unlike it's competitors like McDonald's it allows it's franchisees to choose their own food suppliers, to ensure they can access the freshest ingredients.
Scenario Analysis is traditionally considered to be a tool that provides a means for considering multiple futures in relation to social, economical, political and technological changes. There are different types of scenarios that are used for specific situations and circumstances. For McDonald’s we have developed a number of scenarios keeping in mind the present socio-economic and political situation. These scenarios are aimed at identifying assumptions at a macro level. Amongst the STEEP (social, technological, economic, environmental and political) forces McDonald’s focuses mainly on the political, environmental and the social factors.
Like any other multinational companies, McDonald’s is exposed to any changes in the global economy e.g. inflation over past some years. The fluctuation of the foreign currency and its international expansion has left it as very sensitive to economic slowdown of other countries. The economic slowdown in some countries, particularly in most of developing countries has made the customers become price sensitive, and it
has a great impact over the buying behavior of the customers because of reduction in the purchasing power of customers. In order to cope up with the upcoming recession McDonald’s needs to focus on two major strategies: More for less (in terms of price) McDonald’s in developing countries like Pakistan should now focus on revenue growth by attracting more customers to the existing franchises rather than going for growth in terms of opening more and more franchises. In order to cut costs it can form associations with food companies and suppliers just like it has done with Coca-Cola. Other than this McDonald’s should start diversifying in low priced products like milkshakes and smoothies and introduce more variety in the existing range. For most people out there, McDonald’s is more of an experience rather than just an eating out occasion and McDonald’s has to focus on making the experience more and more fulfilling in terms of both value and price. It can also introduce a greater range of low priced snacks to cater to the recession driven public for whom McDonald’s is more of a status symbol.
Health Conscious attitude of People:
There are many social issues that can be thought of as potential threat to the company in present as well as in future. One of the concerning causes is the issue related to health conscious attitude of people. The fast food industry is often criticized because of its role in creating numerous health problems including obesity. Initially these fast food chains were thought to be the driving force for the unhealthy eating disorders. Nowadays, more and more customers are becoming aware of nutritional values and health benefits of products and services than before. Childhood obesity is also a major cause of cynicism regarding the fast food chains. The said situation has a great impact over the brand, due to the fact that children have the big share on the revenue of the brand. The said trends reduced the revenues, staff motivation as well as the interests of the shareholders of the company, and it can be showed in the strong protest by different
nutritional campaigners against the food being promoted by the company that have affected many lives, not only in the US but in other part of the world. These are still the potential source of threats for the company as the said events caused so much negative impact on the image of the brand that it pushed Disney to decide not to renew its contract with the McDonald’s. In order to cope with this situation McDonald’s will have to come up with greater variations in its menu for the health conscious people. McDonald’s will have to put greater emphasis on healthier food like sandwiches, baked potatoes and salads. The outlets in Pakistan serve a little more than the traditional McDonald’s burgers. They’ll have to introduce a healthier menu and then emphasize the healthy side of McDonald’s through aggressive promotion to cope with the health concerns associated with its products. McDonald’s should also come up with low calorie variations of all its burgers and make its fries healthier by using the right kind of oil.
One of the environmental factors surrounding McDonald’s is the fierce competition from the competitors. There are many players in the industry, and most of them are offering the same or similar products and services. The reason behind this growth is due to the improvement of the entire fast food industry in the world. There is an intensive price war, extreme battle of innovations and breakthrough and serious promotions and advertisements are being implemented by different players in the global fast food industry. Increasing competition has led to aggressive pricing policies amongst the large brands as well as pushed them to increase their menu diversification as well as product developments in order to increase sales and market share, thus maintain current position in the entire market. The start of new McCafe’s at McDonald’s is also one of the strategies to capture some of Starbuck’s market share. To keep hooked on with its current customers, McDonald’s need to focus more on the strategies that attract children to their store. This would not only help them in keeping their customers but would build on relationship with the new ones.
McDonald’s would also have to put greater focus on cutting costs because in these times of recession, a lower price is something that attracts a lot of customers. People at McDonald’s should study their entire value chain and cut costs wherever they can. Due to recession, a lot of fast food chains are losing their customer and in today’s competitive environment, the loss of one is the gain of other. By applying this strategy McDonald’s should see what is that factor because of which the customers are abandoning these brands and then provide these customers such alternatives that nobody else is providing.
HISTORICAL STRATEGIES AND ANALYSIS
We will now take a look at the strategies pursued by McDonald’s and it’s two major competitors- KFC and Pizza Hut all over the world so that we can see where these companies are headed in terms of strategic goals and objectives.
Hummer of a Summer PR strategy:
In August 2006, McDonald’s in US launched a PR effort by the name of ‘Hummer of a Summer’. This was a collaborative effort of General Motors and McDonald’s and focused on HUMMER- One of General Motors’ key divisions. To announce the program launch, McDonald's staged a three-mile long parade down Chicago's Michigan Avenue during lunch hour. Ronald McDonald led the parade on the hood of a HUMMER and was followed by the life-size versions of the trucks that will be available in the Happy Meals. The parade ended at the flagship McDonald's restaurant in downtown Chicago. Kids at the restaurant were also invited to go inside the vehicles. The kids were then treated to free happy meals.
There were also regional events and programs sponsored by local McDonald's restaurants and GM dealers. McDonald's Happy Meal and Mighty Kids Meal HUMMER line-up featured eight dynamic vehicles, capturing the power, excitement and unique styling that make HUMMER one of the most recognizable vehicles on (and off) the road. One of eight toy HUMMERS were packed in each "boy" Happy Meal ("girl" meals featured Polly Pocket). The full HUMMER lineup was represented, from the nowdefunct H1 to the H3T Concept pickup. This strategy proved to be quite popular with the kids and the way people at McDonald’s tried to cash the awe and charisma associated with the brand HUMMER was remarkable. The strategy proved to be a win-win one for both GM and McDonald’s because it not only attracted the kids to the happy meal even more than before but also magnified the iconic brand status that HUMMER has acquired over the years.
McMommy Blogging Society:
In December’ 2007, McDonald's opened up its kitchens to an army of mother bloggers, who will be reporting their allegedly unedited findings on McDonald's website, and their verifiably unedited findings on blogs around the Internet. The fast food giant's goal was to stem criticism that the restaurant's offerings are making the country obese by making their processes more transparent to the public. The burger giant apparently also was hoping that the program will help contradict stories of fattening, unhealthy
food that have been detailed in books such as "Fast Food Nation" and movies such as "Super Size Me." McDonald's equipped six mothers with laptop computers to record their impressions of its operations over the next few months. The moms were chosen by an independent company from a group of 4,000 applicants, and the blogs and journals were posted "unedited" beginning June 20’ 2007 on McDonald's home page, where it hoped to attract other moms interested in seeing the comments, officials said last week. Selected moms were expected to participate in as many as three "field trips" lasting two to three days, and received payment for "reasonable travel expenses." Nothing like this has ever been done on the internet by a fast food company before and McDonald’s intended to exceed the customer expectations by coming up with a new strategy that would astonish everybody and the campaign was indeed well received by the audience.
Tier Pricing Strategy:
For McDonald’s, tier-pricing is becoming part of its global strategy. To stay competitive in an era of food inflation, the US franchise is abandoning its ‘one price fits all’ approach. McDonald's has implemented a tier-pricing system in Taiwan, partitioning the island into three districts to counter the impact of food price inflation. The three districts are the rural south and east; the industrial north and west (plus three southern cities); and entertainment and high-rent districts across the island. Future prices will be adjusted according to income levels, the consumer price index and other factors for each district. In Japan, McDonald’s was also the first marketer to introduce tier-pricing, according to Tsao. “Japan was a good choice of model for us to follow,” he said. “The economic situation in Japan is similar to Taiwan. Both countries have crowded
restaurant sectors and face intense competition. Operating costs in Taiwan vary widely due to rent, labour and transportation.” In Taiwan McDonald’s is using the consulting firm, Revenue Management Solutions to analyze operating costs, customer demand, price sensitivity and Government price indexes to create a map of the price districts. For the menu-board price changes, McDonald’s is scattering price rises on different items rather than instituting blanket increases. Tsao said the reaction from Taiwan’s consumers had been mixed.
Strategy for increasing sales at existing restaurants:
McDonald’s has also focused on increasing sales at existing restaurants instead of opening new ones. To do so, McDonald's has remodeled many restaurants, kept stores open longer and increased menu options. Nevertheless, new McDonald’s restaurants are still opening around the world at a rapid rate - the company plans to open about 1,000 units in 2008, and continues to grow its new restaurants at a 1%-2% rate each year. McDonald's executives say they're adding features that will increase sales. Mr. Alvarez showed off a self-service kiosk where customers can place orders electronically. He recently watched customers use kiosks at a McDonald's in Tours, France. Mr. Alvarez says a top complaint of French customers about McDonald's is that they feel pressured to order, which keeps some families from coming in. Ordering at a kiosk, he says, "allows them to either control their kids or control their order."
Remodeling of locations:
An estimated 7,000 U.S restaurants will be rebuilt, relocated or refreshed as part of the far reaching plan to upgrade its public persona with updated restaurant designs intended to boost the bottom line. The redesign is risky and has many franchisees up in arms over the high costs of a makeover. But company officials believe the overhaul is needed. McDonald's, whose restaurants are visited by more than 40 million people every day, has moved aggressively over the past three years to revamp its menu and attract a new breed of customer. The traditional McDonald's yellow and red colors will remain, but the red will be muted to terra cotta and olive and sage green will be added to the mix. To warm up their look, the restaurants will have less plastic and more brick and wood, with modern hanging lights to produce a softer glow. Contemporary art or framed photographs will hang on the walls. The dining area will be separated into three sections with distinct personalities. The conne The "linger" zone will offer comfortable armchairs, sofas, and Wi-Fi ctions. focus is on young adults who want to
socialize, hang out, and linger.
Sponsoring the report cards:
For us it seems unthinkable that companies are allowed to extend their persuasive activities inside the walls of elementary schools, especially if they sell what could be called vice-products. An article appeared in August 2007 in Ad Age Daily which reported that McDonalds sponsors school children's report cards in Seminole County, Fla. The cover of the report card has the McDonalds logo, and (here it gets nasty) a 'good' report gets rewarded with a gift coupon for a Happy meal at McDonalds. From the company's perspective a very smart move: get you message to the captive target audience (I guess kids and parents HAVE to look at report cards), and apply two major conditioning procedures at the same time: - operant conditioning: the coupon is a 'reward' for performance - Evaluative conditioning: the McDonalds brand is associated with a positive event (at least if the rapport is good) This strategy was however not a very good move at McDonald’s part and After nearly 2,000 parent complaints about children health concerns, McDonald's ended its controversial report card advertising in Seminole County, Florida in January 2008.
McDonald’s Coffee Strategy:
McDonald's – who took some coffee ground away from Starbucks and Dunkin' Donuts last year – announced that they'll install coffee bars with Starbucks-like baristas in 14,000 U.S. locations this year. Along with drip coffee, McDonald's will be serving high-end coffee drinks like lattes and cappuccinos. Following the successful introduction of their premium drip coffee, this would seem to be a natural, next-step line extension, especially with so many locations to offer up product throughout the United States. It has also been reported that the McDonald's process will use a single machine that automatically steams the milk and combines it with the espresso, which cuts down on some of the drama and ceremony that comes with the preparation of a really well prepared espresso. And since selection and variety is also a category loyalty driver,
McDonald's is bound to have a more narrow selection on offer than the gabillion varieties available at Starbucks. However, there are two reasons to think that McDonald's might find the high-end coffee market surprisingly hard to crack. 1. The processes required to serve customized drinks are vastly different from the processes required to serve McDonald's tightly standardized menu. Running two distinct systems in a single retail location can be very difficult. Lengthening lines could alienate core McDonald's customers looking for reliably quick food. 2. McDonald's franchise model means it can't simply force the coffee bars on retail locations. Individual franchise owners have to decide that investing in the bars is in their best interest. While McDonald's claims that early market tests have proved quite promising, a consultant to some of McDonald's franchise owners told USA Today, "It is certainly the biggest potential mistake in the history of the system."
Global Best of Green:
McDonald’s has also been trying to show consumers its “greener” side with a new institutional marketing effort, “Global Best of Green.” McDonald’s around the world has taken a number of initiatives around the world as a part of this marketing effort which include the following. • • About 80 percent of packaging used by McDonald’s Europe comes from renewable resources. In Canada, switching from bleached white napkins to plain brown has saved $1.3 million annually, while reducing energy, wood and water use. • U.S. restaurant locations recycle about 13,000 pounds of used cooking oil per year, on average.
Using a fryer that requires less oil allows restaurants to cook the same product with 40 percent less oil, saving 4 percent in energy over other fryer models. U.S. locations completing an energy survey identify savings of $3,000-6,000. McDonald’s USA recognizes “Energy All-Stars,” or store managers that have provided examples for others.
In France, 10 restaurants that have committed themselves to an interactive software, EcoProgress, have reduced electricity consumption 11 percent over a few months.
McDonald’s Sweden is using CO2 detectors in 24 restaurants to adjust ventilation systems to the amount of customers in the store, reducing electricity use 15 percent annually.
McDonald’s Europe is serving salads in cardboard bowls instead of plastic dishes, and wooden coffee stirrers instead of plastic. In the U.S., decreasing the weight of polypropylene cold cups has decreased costs by 6 percent and saved nearly 1,000 tons of resin. Various anti-littering marketing campaigns have been implemented in Portugal, Italy, Switzerland, the UK, Australia, Germany and other nations. A variety of different waste and recycling bins have been tested in certain countries. A German model achieved a 90 percent recycling rate. Restaurants in Switzerland feature a separate receptacle for organic waste, which is sold to Kompogas, which ferments the waste into biogas.
Marketing Strategies for driving Sales:
KFC, which sold its first franchise in 1952, is modernizing its restaurants, improving the quality of its food, and focusing more on marketing--strategies that so far have pleased operators by driving sales. In addition, franchisees cite ongoing initiatives--like a move to plated meals, exterior design upgrades, and more resources on menu innovation--as providing momentum for further improvements.
Hiring the right people:
After KFC suffered from declining sales in 2000, the company brought Bachelder onboard in February 2001 as the chain's leader. Previously she was the top marketing executive at Domino's Pizza. KFC has incorporated an updated exterior design that features a larger image of its icon and founder, Col. Harland Sanders, "to create a focal point for customers from a long distance" in almost half of its stores with plans to debut the look system-wide in three to five years. Bachelder said the company is exploring dining room upgrades as well.
• KFC is good at taking advantage of any activity that might generate publicity. In 2008, KFC earned a lot of good PR, making a big deal out of moving its secret recipe to a new location, which was apparently not such a significant event. • In April 2009, KFC committed to fill 350 potholes in Louisville, KY. The only catch is that Colonel Sanders will be legally allowed to graffiti on the ground “Refreshed by KFC” stenciled drawings (KFC had assured the citizens of Louisville that it is street chalk, so it’s not permanent). • KFC has been changing its logo over time and their latest logo was revealed by constructing a giant logo made up of “6,000 red, 14,000 white, 12,000 eggshell, 5,000 beige and 28,000 black” tiles. They seem to have tried to capitalize on the popularity of programs like Google Earth.
• KFC franchises around the world are not doing as good a job at customized meals as McDonald’s, but it is still doing well. In India, for example, where a big chunk of the population is vegetarian. In order to capture that market, KFC at India has made the most extensive veggie menu in the world. • KFC is also planning on extending its menu and giving out a new product line of “Kentucky Grilled Chicken.”
KFC’s sales were suffering, so the company was hoping its new line of Kentucky
could help lift its bottom line. To help spread the
word, it joined forces with the promotional juggernaut called Oprah, who announced on her show downloadable coupons–good for a free 2-piece meal. KFC also sends out open letters to celebrities, offering to host their parties for free. Jennifer Lopez was offered to hold a VIP after-show party at a KFC fast food restaurant.
PETA, People for the Ethical Treatment of Animals, an organization founded in 1980 that is perhaps best known for tactics such as throwing red paint on fur coats and comparing the slaughter of livestock to the Holocaust. PETA has been on a fierce campaign against KFC, charging that the company treats chickens inhumanely, or at least allows its suppliers to. PETA has used media savvy, a stable of celebrity advocates and a sophisticated Internet operation to try to change the behavior of consumers and some of America's largest corporations, including fast-food chains. McDonald's, for one, made wholesale changes in the way it treats farm animals after animal-welfare activists, including PETA, highlighted abuses. Burger King and Wendy's
did the same after PETA launched campaigns called "Murder King" and "Wicked Wendy's." What makes the KFC campaign unique is that the chicken chain has refused to submit to PETA's demands, which include stopping the use of growth-enhancing antibiotics and using gas, rather than electric shocks and sharp knives, to kill chickens. As a result, company executives have been doused with fake blood, criticized by the likes of Pamela Anderson, Al Sharpton and the Dalai Lama, and continually subjected to the circuslike atmosphere of PETA protests at its restaurants.
Pizza Hut’s Marketing Strategies:
Pizza Hut has gone back to the basics with higher quality ingredients, stronger promotions, and new products with staying power. Following are some of the marketing strategies by Pizza Hut:
Pizza Hut going green:
Pizza Hut is now trying to appeal to the health conscious. In August, 2008 The Dallasbased Company has planned to launch a new “all-natural” pie made with organic tomatoes, toppings made without artificial preservatives and a multigrain crust. While customers are increasingly seeking options for more natural foods, they still love pizza therefore Pizza Hut's offering the natural. It allows them to stay on the cutting edge of food trends while delivering on the amazing Pizza Hut taste their customers expect and demand. Even the boxes the pizzas are delivered in are being made from 75 percent recycled material.
Pizza Hut rolls out Mobile Strategy:
In January, 2008 Pizza Hut introduced new cell phone services that let customers order from any of its 6,200 outlets nationwide via either text message or the mobile Web. As part of its bold strategy to tap into the mobile generation, the Dallas-based company aims
to earn half its revenues from orders originating from computers and mobile phones within five years. It is worth noting that Pizza Hut is not the first pizza place to offer mobile ordering services, but the company says its service is the broadest and most comprehensive.
Pizza Hut's leadership position in the digital space:
Pizza Hut has teamed up with up Warner Brother’s in its quest to gain attraction for the new market segment i-e the movie-goers by supporting the release of Terminator Salvation, a sequel to the Terminator movies. Pizza Hut and Warner Bros. Pictures debuted five minutes of exclusive Terminator Salvation footage that was available to be viewed on pizzahut.com, allowing anxious Terminator fans to feed their curiosity (and their stomachs) all in one stop. The Terminator Salvation footage from the film was available for fans to be watched from May 11 - 30 and featured a sneak peak from the movie before it hit theaters on Thursday, May 21. Alongside the exclusive footage, visitors had the opportunity to instantly win a number of great prizes, including a life size Terminator T-600 model, custom Terminator Salvation Xbox consoles, Terminator: Salvation video games, Terminator Salvation Action Figures from Playmates Toys(R), and other licensed products. Fans that had been made the new customers of Pizza Hut also had the chance to watch movie trailers, download wallpapers, and order all their favorites from Pizza Hut.
“Book It” Programs:
Pizza Hut has been a long time sponsor of the “Book It” program to encourage the book reading in American schools. This has been done as the corporate social responsibility to educate the children in the areas of the United States. Those who read books
according to the goal set by the classroom teacher are rewarded with Pizza Hut coupons good for a free Personal Pan Pizza or discounted menu items.
Successful Delivery to Space:
In May 2001, the world's first space-consumable pizza had safely reached the International Space Station (ISS), where it was eaten by the astronauts living onboard. Despite the unusual delivery address, the pizza, called "the culmination of nearly a year of collaboration" between the company and Russian nutritionists, largely conformed to the familiar recipe served up by some 12,000 Pizza Hut restaurants worldwide -- crust, tomato sauce and cheese. However, the vacuum-sealed space pizza was topped with salami rather than the traditional pepperoni. Researchers found that pepperoni did not withstand the 60 day testing process, a company release rather cryptically stated. After delivery, the station crew baked the 6-inch ("personal pan") pizza themselves in the ISS oven. Pizza Hut, a division of Tricon Global Restaurants, pioneered the commercialization of space in July by paying to have its logo placed on a Russian Proton rocket. •
Promotion through Facebook:
As a company Pizza Hut launched the first Pizza Hut fan page on Facebook and in October updated the page to add more features, including an application that allows customers to order from Pizza Hut without ever leaving Facebook. Pizza Hut prides itself on being innovators in the category, so embracing the latest social media tools is something that’s in line with their company philosophy. •
In recent years, Pizza Hut has had various celebrity spokespeople, including Jessica Simpson, the Muppets, and Damon Hill and Murray Walker. Recent commercials have Queen Latifah providing the voiceover. Also in 1997, Pizza
Hut reunited "greatest of all time boxer" Muhammad Ali with trainer Angel Dundee in a sentimental made for Super Bowl commercial.
Pizza Hut Park:
Pizza Hut Park is a multi-purpose facility, featuring a 20,500-seat stadium in Collin County, Texas. It is expected that the stadium will make a significant amount of revenue by hosting mid-sized concerts, as well as various other sporting events, such as high-school football games. The stadium includes 18 luxury suites as well as a private 6,000-square-foot stadium club.
NEW STRATEGIES FOR KFC PAKISTAN
Get Rid of the ‘Fried’ Concept:
In today’s health conscious environment, it is essential for KFC to get rid of the negative connotation attached with its name because FRIED is one word that ticks off the health conscious faction these days. There are a lot of other ways to serve chicken like roasted, grilled and smoked chicken and in order to cater to a wider target market; KFC
Pakistan should expand in these types of chicken too. This would greatly contribute towards expanding KFC’s market share in Pakistan. It can even start offering Masala Chicken and Tikka to customize its menu to cater to the Pakistani market. This will be very useful because it can even attract those people who have a lot of money but are not into traditional fast food.
Expand into other meat types:
Many people think that it’s time KFC should start offering types of meat other than Chicken in Pakistan. Some fillet fish burgers are available in the menu but the choices are limited there. Specifically for the Pakistani market, Beef can be a very good option and beef burgers could be very popular because there is a general conception that beef is a lot more healthier than chicken. KFC can also play around with the fish items in it’s menu to cater to the more sophisticated audiences.
Variety in Menu:
The menu at KFC Pakistan needs serious revamping. The menu is very limited in terms of salads, desserts, drinks etc and one gets bored trying the same thing again and again. For example, KFC offers just two types of salads i.e Cole slaw and fruit salad. Menu extensions are also rare. Snacks and side orders also include little more than nuggets, rice and corn on the cob. There is a great potential for the variation and extension in the menu and the way Pakistani customers have been reacting to fast food in the last couple of years, we can surely say that it will be a success.
Coffee, Ice cream and Deserts- the new IN trend:
McDonald’s has been diversifying into coffee and beverages all around the world but outlets in Pakistan offer a little more than two flavors of milkshake and plain coffee. KFC Pakistan can take the lead by at least expanding into a few different types of beverages and take the lead. Other than this, KFC only offers a scoop of Walls ice cream at the moment as a desert. With chains like Gloria Jeans and Gellato affair which specialize
solely in coffees and deserts, KFC should recognize that there is a great deal of potential in the market for coffees and deserts and it can start by utilizing at least some of it.
Expand into snacks:
During these times of recession and purchasing power parity, one strategy that can be very beneficial for KFC is to develop a good, healthy and affordable range of snacks so that people who can’t afford a full mean at KFC can rely on such items. Going out is not always accompanied by eating out and KFC can develop itself as a place where people can come, enjoy, socialize, have a drink or maybe grab a bite to eat. If KFC is the first choice for somebody who wants to have a quick snack like Chicken strips or wings, than those people are surely going to chose KFC for a full meal as well.
KFCs in Pakistan rarely have fully developed drive-ins which most McDonald’s offers. Due to time constraints, drive-ins can be a great added advantage for any fast food chain that offers it. KFC can try to redesign its current outlets by adding drive-ins if feasible and should make sure that all future outlets have drive-ins and efficient drive-in services.
Increase the hours:
With the passage of time, late hour socialization is becoming a trend and one way to increase revenues is to increase the number of hours that the outlets remain open. But this can only be done after KFC gets rid of the concept that it only serves full fledge meals.
KFC Pakistan rarely goes for televisions adverts and billboard adverts are used whenever a new deal is out or there is an extension in the menu. Due to ongoing economic slowdown and health conscious trends, KFC needs to reassure its customers that it has all this in mind too. The most recent television advert of KFC used taste as an
appeal. Now KFC needs to advertise on TV as well as billboard and use health consciousness, safety and affordability as an appeal. This will assure the customers that KFC definitely knows what is going around and it will help them cope with it.
Corporate Social Responsibility:
Cupola group that owns KFC in Pakistan has been involved in a large number of corporate social responsibility acts in Pakistan from educating the poor and teacher’s training but it definitely needs to do more. Brands that support people in national calamities are always remembered. For example, KFC can earn a lot of goodwill by sampling directing its CSR efforts towards Swat IDPs or by helping earthquake or flood affected. KFC can also emphasize that a certain portion of revenues will be contributed for any specific problem and win people’s sympathies in this way.
Capitalize on social and national events:
KFC in our opinion should focus on becoming the national favorite brand. This can help KFC earn a lot of incentive from the government as well. KFC should come with special deals and discounts on national and social events like Eids, Pakistan day and Independence Day so that people can actually relate with the brand.
Utilize the Internet:
During the past decade, internet usage has increased drastically in the country. The youngsters are now at par with the global internet revolution and we will rarely find somebody who has not experienced online blogging and social networking. Twitter, Facebook, Orkut and My Space are as much popular in Pakistan as abroad. KFC should now regard internet as the new means of interacting with its customers. Until now, KFC has only been relying on minimal market research but we think now it’s time KF should focus on making itself as customer centric as possible by directly interacting with its customers through blogging and social networking because no feedback is as valuable as the one that your customer delivers to you himself.
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