Caroline Gras
70754163
5/11/2016
To: Daniel Schwartz, CEO of RBI
From: Caroline Gras (70754163)
Subject: Burger King: Developing a Marketing Mix for growth
Date: 04/11/2016
Burger King was founded in 1953 by Keith Kramer in Florida. The iconic
BKs Whooper burger was introduced in 1957.
In 2015, Burger King was present in 85 countries with 13 667 restaurants
and is the second fast-food chain in the US in terms of selling volumes.
However, Burger King was facing a fierce competition as the brand was
challenged by other fast-food players such as Wendys, Jacks in the Box,
Sonic Drive-In or even KFC. Furthermore, the fast-food industry was
challenged by the apparition of a new concept: fast-casual chains that
emphasized quality over low prices.
This paper will examine Burger Kings current marketing mix in order to
understand how the company could overcome new challenges raised by
direct and indirect competitors to be more profitable and to allocate
resources in a more effective way.
Issues
All around the world in more than 100 countries, Fast-food chains are
present, and in the US alone, 200 000 restaurants can be found! Not
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surprisingly, in 2014, Fast-food industry generated a $160 billion revenue
with an 8.6% growth rate.
However, in 2015, Fast-food industry was facing significant challenges that
threaten profit margins as well as the whole business model of Fast-food
chains.
The first issue the industry has to deal with is the rise of consumers
awareness about health concerns. Consumers habits are shifting towards
more healthy food habits and more healthy lifestyles where high fat
processed food is not welcome. Although in 2015 fast-food chains are
trying to offer healthier products, fast-foods image still remains negative
in consumers minds.
A second very important issue is the market saturation, especially in the
US, and the fact that competitors have very similar offers. The
combination of these 2 factors resulted into resulted in a very fierce
competition between actors that tried to develop new products and
concepts to gain competitive advantage.
The third issue is the emergence of a new kind of competitors: fast-casual
chains. This segment is growing very fast (+10.5% in 2014 compared to
2013) and chimes with consumers concerns about health as fast-casual
chains offer fresh and qualitative food.
Thus, in 2015, the whole fast-food industry had to reinvent itself to remain
profitable. Burger King, as one of the most famous fast-food chain in the
world had to deal with those issues in order to distance itself from
competitors and to reduce the gap with the industry leader, McDonalds.
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Analysis
Burger Kings core competency is flame-broiled hamburgers instead of
grill-fried ones. This competitive advantage has differentiated Burger King
from its competitors. Moreover, Burger King allows customers to customize
their burgers with various options to their liking, as shown by the Have it
Your Way campaign. As a fast food chain, Burger King offers hamburgers,
cheeseburgers, chicken and fish sandwiches as well as Fries, Salads, Hash
browns, Onion rings, Coffee, soft Drinks, salads and desserts. Restaurants
also proposes breakfast items, a Kid menu and Value menu. The brands
signature burger is the Whooper.
In international markets, some adjustments are made to the menu. For
example, in Australia, some burgers feature beetroot.
BK prices are quite high compared to McDonalds and Wendys. However,
the company tried to lower its prices to be more attractive by launching
special promotions and value menu. The brand tried to maintain a balance
between value and premium products, but more budget-friendly offers
could be expected.
In 2015, BK had restaurants in the 50 states and in 85 countries all over
the world. However, 50% of its restaurants were in the US and only a very
few outlets existed in Africa and Eastern Europe. Concerning outlets
themselves, Burger King began a remodeling campaign to upgrade
restaurants in a more modern way, in order for people to spend more time
inside. However, even if sales improved from 10 to 15% in upgraded
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restaurants, only 20% of Canadians and US outlets had been renovated in
2015.
Ineffective ad campaigns were one of the problems facing BK. Indeed, for
several years the company had been suffering from several marketing
controversies. Nevertheless, the company had one real advantage as it
had been using web viral ads since 2003.
Recommendations
BK has to build a constant brand image and differentiation. Even if
competitors such as McDonalds tend to diversify a lot offering many
varieties, BK should focus on its core products, burgers, and its brand for
consumers to figure out the real flavor of the franchise.
However, it does not mean that BK shouldnt launch new products, but
those products should be consistent with the brand and its quality
standards.
In order to attract more at women and to adapt to the healthy trend,
Burger King should offer more diet friendly products and some
vegetarian options. It could be a low-calorie sider, a vegetarian burger,
garden salads, grilled chicken or fish sandwiches
Concerning the place, BK should continue the outlets upgrading to make
the brand experience coherent and pleasant all around the world. It has
been proven that this operation would increase profit by at least 10%s. In
order to strengthen its presence internationally, Burger King should allocate
at least 50% of its budget to international expansion as 50% of sales are
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made outside North America. First, BK should win back market shares over
Europe and Asia, then they should invest and open new restaurants in
less-saturated high potential markets such as Eastern Europe or MiddleEast.
Burger King needs to make a great effort on promotion, to make their ads
less confusing and offensive, and more appealing. BK needs to have a
more consistent message in its communication efforts and increase its
social media presence in ways that will engage and connect with
consumers. To do so, I recommend Burger King to adopt an advertising
strategy that focuses more on products qualities such as generosity &
flame-grilled patties and to implement a funnier strategy on social media
where the audience is younger.
1000 words
Appendix
SWOT
Strengths
Weaknesses
Established market share
Unhealthy high calorie food
Historical brand awareness
Perception of better ingredients
and better burger, particularly
WHOPPER
50% of the restaurants in the
US
No menu items that stand out
besides the Whopper
Presence in 85 countries
Lower capital requirements as
compared to competitors as
only 52 owned restaurants
High prices compared to
McDonalds and Wendys
Marketing controversies
Ineffective and no clear
messaging in advertising
Wide variety of products
Flame-broiled patties
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Opportunities
Increasing interest in healthy
food & Increasing in eating
chicken trend product
development opportunities
People now want more
convenience and comfort.
Increasing in social media
trends promotion
opportunities
International expansion
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Threats
Changing consumer habits
towards healthy lifestyle and
healthy eating
Emergence of new competitors
Fierce competition
Saturated product category
Competitors Map
