KFC and McDonald’s marketing strategy in China Essay

AbstractMcDonalds is the greatest nimble aliment chain in the world, its go with gross revenue and break income was cosmicly exceeded KFC on a global scale, but it con comportmented a strong ch all(prenominal) in allenge from KFC when it emerged into china. This essay analyzes the comparison surrounded by KFC and McDonalds merchandise system, emphases on give awaying the similarities and differentiations from Seven P Formula and ultimately get throughs a conclusion that topical anestheticization is to a greater extent causal agencyable than globalization as the grocery store system when fast food chain emerged in mainland chinas market.IntroductionLocalization or Globalization has long been discussed when choosing strategic taste in world-wide grocery store. These both international market philosophies stoopd enterprises current circumstance and futurity development. There be deuce fast food international companies named McDonalds and Kentucky Fried Chi cken (KFC) who initially take different market strategies in China that led to differentiation for their future development. McDonalds head produce franchise was founded in the United States in 1955, serve commonwealth for hamburger, French fries and other type of fast food, piece of music KFC in any case from the kindred country, is now one(a) brand of Yum, which start-off restaurant was founded in 1952 and generally moves unique taste cooked chicken. From global scope, McDonalds is exceeding KFC from company sales, operate(a) proceeds to worldwide system units.McDonalds company- operated sales were 18875 million, operating income was 8764 million and it had 35429 systemwide restaurants in 2013(McDonalds, 2013), eyepatch KFCs company sales were 11184 million, operating meshing was 1798 million and there were 18875 KFC restaurants in 2013(YUM, 2013). However, as these two global fast-food brands emerged in China, the situation has been reversed. McDonalds annual re port uptakes APMEA (Asia Pacific, Middle East and Africa) as representative of Asian but non show the profit from China while KFC faecal matter saw signifi houset cash advance in China, and it luxuriouslylighted the progress in new restaurants, recruits and volume growth in annual report. The difference of opinion between thesetwo fast food companies was mainly due to their marketing strategies. That is, topical anestheticization is more(prenominal) suitable than globalization as the marketing outline when fast food chain emerged in Chinas market. descriptionThe concept of marketing has long been defined by different people. The easiest one to understand whitethorn be a mathematical operation of visualisening and executing, from scathe, harvest-tides, ideas and serve to accomplish customers and organizations objectives (Ferrell et al, 1987). This definition emphases marketing as a forge preformed in organization, which has an overview of its practical function. It has mutually beneficial between providers and customers exchange, where providers final stage is to offer harvest-festivals and wait on to achieve profit and customers remnant is to purchase harvest-homes which realize their daily life. Marketing strategy could be the plan that identifying what is the customers requirement and what marketing goals and objectives could be achieved if shell outing exposeicular goods and serve in an available time (Jonathan, 2009). Briefly is the competitive plan that the organization result convey. Marketing strategy enables an organization to have an understanding on the surroundings and achieve its goals and objectives by using its resources that can buoy meet the needs of springer (Douglas et al, 2010). A good marketing strategy would effectively improve company to supervise their value and puddle consumers brand subjection. Localization is a strategy that advocates enterprises to accommodate to local culture.The process often set up t heir products, services and promotion customized relate to local market. Enterprise should try to integrate into and conduct them as an inherent member but non a alien to the local culture in the object market, which emphasizes the enterprise must adapt to the environment to gain more space in stage to gain ground development (Warren, 2008). KFC is an good example that has developed food, drink and service highly allergic to localization. KFC was the start horse opera fast food chain emerged in China in 1987. In order to succeed, KFC abandoned its U.S. business model and aforethought(ip) to sell core products and services locally. Since it started to now, the companys strength and competences solicitation has exceeded a major part of fast food companies and successfully be formidable barriers to competitors in China. Globalization was defined by Edmund as the process of creating linksbetween individuals and organizations that transcend national boundaries and are not t ypesetters case to political interference (Edmund, 2008).Globalization is also a marketing strategy that the organization extended their activities worldwide, it is a main tendency for international companies or company who want to operate in other countries. This tendency was influenced by technical factors such as information and communication technology revolution, and doctrine of finance and trade, also affected by the movement of people. Globalization forget continue be a major tendency in the future because of opportunities, which created huge increases in prosperity, notably in emerging markets, such as China (Martin, 2013). McDonalds was the example that extended it scratch line restaurant in China in 1990 and adopted globalization strategy initially, but lastly achieved few successes than KFC in Chinas market.The similarity and differentiation between KFC and McDonalds in Chinas market KFC opened its first outlet in Beijing in 1987, it was the first western fast food co mpany at that time and now it has 4563 outlets, which can be regarded as the largest restaurant chain in China (YUM, 2013). McDonalds first restaurant opened in China in 1990, and now it has 2003 outlets all around the China. From the apparent distinction of the outlets, it is necessary to analyses the similarity and differentiation between them. The largest difference was the time these two companies settled in China and utilize their strategies. Franchising is a business format that the franchisor grants a license to franchisee and franchisee then can use it logo, products and free grace. For example, McDonalds allow other business man open their chain by using the same name if they have stipendiary initial fee and ongoing management service fee (Colin, C et al, 2012). KFC use collaborative model of direct and franchise chain which laid the solid foundation of completive advantages.KFC is earlier than McDonalds to implement franchising, who established the first franchising re staurant in 1993 and continue implement do not start from scratch mode, which path franchisee do not need to found a location, recruiting and training new employees but apply to join in and shorten over a mature restaurant. In that situation, franchisees can omit the preceding(prenominal) work and incorporate themselves to the standard management system as shortly as possible. However,McDonalds insist on implementing direct chain operate until 2003, while KFC has developed about 40 franchise locations during this period. Thus, McDonalds was authorise behind to KFC at the initial stage, which have deep influence on their future development. Marketing strategy helps make recognition of international luck on seven parts product, terms, promotion, place, positioning, encase, and people. The Seven P Formula was utilize to evaluate and reevaluate the business activities. As the marketing environment changed so rapidly that it is vital to track and achieve the maximum results by c oif seven P (Brain, 2004). The similarities and differentiation of seven P between two companies also illustrate localization is suitable than globalization.ProductA product is anything that be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need. (Philip, 2011). A product contains good, service and ideas. fodder is a heart concept of the society and services from the fast-food chain would pull up consumers and change customers attitude. KFC obtained the success of fast food market mainly by selling chicken products. KFCs products utilized standard toil, which selling chintzy western-style items with local favor. KFCs menu changed rapidly to follow the changeable market as they followed product life cycle from introduction, growth to maturity and finally decline. Some products offered temporarily while other permanently. For example, since 24th of March in 2014, KFC started to use the new menus, which eliminated seven items, renew ed one item and added fourteen items. The totally variety has reached to 66 products. The success of KFC also from its particular ingredients, Sanders pilot burner Recipe of 11 herbs and spices is one of the just about famous trade recondite in fast food industry (Chartrand, 2001).The mystery ingredients mixed with local ingredients created a large amount of customers. The manager of KFC realizes that the customers in Sichuan, Hunan and Chongqin are preferent chilly while Shanghai customers would complain the dishes are too spicy. So the company adopted the localization strategy in products and finally changed its recipes to suit the region. McDonalds mainly selling hamburger with beef, which is a typical western food style. Chinese prefer chicken to beef for some reasons. Firstly, may bethe price, according to the latest price of beef and chicken, there is large gap between them, the average price of beef is 66.60RMB (approximately 6.5 pounds) per kilogram while the average pr ice of chicken only in 19.58RMB (approximately 1.8 pounds) per kilogram (data from the regime of china price).Secondly, the traditional cultivation industry in China hassle more chicken than cattle, as cattle is so heavy that will eat more and its long growth stage means costly when acquireing. Due to the price of raw materials, company would change their recipes to adapt the regions, which means products localization. By far, McDonalds menus have seventeen types of burger and four type of rice, others are beverages and dessert. And McDonalds insist on normalisation on products and just had small-scale change on some food, such as start to sell soy milk for breakfast from 2011. From the difference of the menu, it is obviously that KFC has more products and local appetite products than McDonalds. Compared the products, KFCs localization strategy is more suitable than McDonalds globalization strategy in China.PricePrice is the customer pays for a product or a service. It is the most important factor of marketing (McCarthy, 1975). Prices would affect companys marketing decision and organizations goal and the effect in sales volume would influences price reversal. So, it is baffling for manager decide which price is the best, especially in a downturn. Because recessions make customers are able to shift another products or service with level price as alternatives or substitute (Douglas.2010). The price of a product may go up or go down on with time and location. The right choice of determine strategy will benefit the companys competitive position. KFC and McDonalds use multiple pricing strategies in different situation. They mainly choose the price skimming strategy, the process of selling product or a service for a high price initially, then gradually reducing the price in order to access new market segments(Price , 2009) as their pricing strategy in China.The staple food in KFC contains ten units(six of burger, two types of roll and two types of rice ) in the latest menu, hamburgers price fluctuated around 14 RMB (approximately 1.3 pounds), while McDonalds have nine burger as its staple food and the price range from 6 to 16.5 RMB due todifferent meat. McDonalds mainly sell beef burger all around the world, but the high price is not suitable in developing country, and then, it started sell burger with pork, chicken, duck and fish. KFC and McDonalds jolting competition sometimes force each other to adjust their price according to the cost and demand.PromotionPromotion is an activity that designed to ascension the sales of products and service (Jonathan, 2009). Sales promotion also defined as an activity or martial that acts as an inducement to stimulate consumers to buy the products (Sally et al, 2012). Companies are aimed at stimulating sales through advertising campaign, pro tempore price reductions and variety types of promotion systems. The brand would be intangible assets and goodwill of a company. The more successful it promote, the more it will creating brand loyalty from customers. KFC restaurant in China has a large logo of KFC and the depicting of Colonel which leave deep impression on Chinese. It has changed old logo to a new one, which stress on Taste and present youthful energy, friendlier and more welcoming. The promotions of KFC are varied from advertising in television to Internet, or distributing coupons in public place. Every stratum, KFC would have new menus to attract customers and provide repast set, such as buy burger with cola together will birth money. Sometimes KFC will send gifts as premiums to attract customers, especially children. It also distributes coupons in the street or can download app of KFC, then you can get small discount from the product. McDonalds logo is a friendly arch of M, with a slogan of Im lovin it. The promotion method of McDonalds is similar to KFC. Coupons, megabucks and digital marketing all create growth in marketing.Place and PositioningPlace is w here the products or service actually sold, it take ons geographical location which offered products or services and different types of statistical distribution channel (McCarthy, 1975). The product or service positioning has been described as the place occupied in a particular marketing where product is targeted by customer (Wind, 1980). Generally, Fast food chain has two target consumers. One is the people who live in a ill-tempered life. such asemployees who spend whole day in front of computers. These people busy at their working and had no time preparing food. Fast food gives them the chance to eat in a very short time. The other is the consumer who does not like cooking such as young people. KFC and McDonalds give them the chance to try new. Target on these consumers, these two companies has their special outlets placement strategy. In order to satisfy consumers who have a busy lifestyle, they open their outlets in cities, in which has a higher population tautness and well -developed transport system.And to those who want to try new and unwilling to cook by themselves, the restaurant always placed close to schools, universities, city centre and mercenary areas that young people study at and prefer to go. It has published in McDonalds official website for the restaurant development. McDonalds looks for the best locations within the marketplace to provide our customers with convenience. We build quality restaurants in neighborhoods as well as airports, malls, tollways, and colleges at a value to our customers.(from McDonalds official website), while KFC provides customers with the most convenient, desirable and accessible restaurant locations across the country, such as the outlets in the city centre of Beijing and Shanghai, where has shopping mall or commercialised street. large number go shopping in those place prefer to find a comfortable place to have a rest, drink a cup of tea or coffee and eat some food. KFC and McDonalds success in choosing lo cation set a good example for other fast food restaurants.PackagingPackaging is a part of marketing process and link to brand identity. The impact on the ascertain of product ultimately derived from customers perception of satisfaction. Package is a vital part of a product that making it more versatile, safer and easier to use (Sally et al, 2012). The customer would evaluate the product or service from the first upshot of seeing. And package characteristics help sharp buyers impression during use. Then their attitude would influence their purchase decisions. KFCs package adopted world class packaging with new logo which has character of KFC and the portrait of Colonel in the middle of front page. And the design is flexible to local market. McDonalds package use more colorful package with creative idea. And also has the logo M in every package. These two companies bothadopt family packaging, an approach in which all of companys package are similar or include one major element of th e design (Sally et al, 2012), as their approach to promote. two of their package had live a deep impression on Chinese.PeopleAll the people directly or indirectly involved in the service or production will concern in market when making marketing strategy. Customers, employees and other people are inseparable when production and consumption happened. It is essential to pay attention to those people (Booms et al. 1981). KFC in China targets on the concepts of family and group. The customers range from children to the elders. Before 2004, McDonalds insists on families centered on children, at the same time, attracted young person and young parents. After the year of 2004, the target market has been young people whose age between 4 and 30. McDonalds advocates the passion and enthusiasm in younger while KFC focus on the harmony between family members, in China, this particular marketing where the concepts of family was strengthen, KFC therefore occupied advantages.Through the compariso ns of KFC and McDonalds from seven aspects in marketing strategy, it can have a clear judgment between them. The reason why China has become the place that KFC exceed McDonalds initially because the constitution makers think highly of this particular market and understand the cross pagan management, the appropriate survey helps avoid mistake.ConclusionIn conclusion, KFC and McDonalds adopted different strategies for their development in China. The gross or net profit from their annual report shows that they both have success on operating and developing, but the content emphases on Chinas market have apparent difference as their initially adopted localization and standardization (globalization) in advent of China. It means the localization strategy of KFC adopted in China market is more suitable than globalization strategy. The great achievement of KFC in China is not an accident while McDonalds backward does not mean their strategy is not good. 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