This research market proposal is for Burger King for their marketing strategies to launch their new cafe in competition with McCafe of McDonalds. This report is an in depth analysis of its Internal and the External Environment that will influence Burger Kings success and fail. Burger King is well known thought-out to be a major fast food chains in the world.
This proposal explores the three key environment analyses that will impact Burger King:
The overall report is about PESTEL, Porters 5 Forces model, and SWOT analysis. These current strategies will determine the competitive and how successful Burger King is in the market before launching a new cafe and take into account the ,market analysis and situation.
Burger King is a global chain fast food restaurant which was founded in 1955 in United Sates in Florida owned by David Edgerton and James McLamore. By the year 2011, 12,400 outlets were opened by Burger King in 73 countries including New Zealand. Since its opening in 1955 the menu for the Burger King has evolved from basic offering of French fries, sodas, milkshakes, and burgers to more diverse and lager set of products. Between 2002 and 2010, Burger King targeted large products that carried large amounts of unhealthy fats to 18-34 male demographic. In 2011 Burger King moved away from male oriented menu to new menu items with packing and product reformulations (The Free Encyclopedia, 2012). Burger Kings franchise is one of the means of expanding its operation. Burger King acts as a franchisor laying down precisely procedures and rules for other franchisee to follow. To achieve volume growth Burger King associated itself with multinational expansion for a large saturated market place (Made Easy).
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Burger King is ranked second next to McDonald’s in terms of size and number of stores but their brand name is the most widely-recognized brands in the world which sets them apart from their competitor. Burgers Kings innovative and more food menu choices help them to be competitive in the market and maintain the customer it has. The main menu Burger King has is French Fries, cheeseburgers, and chicken and fish sandwiches, breakfast items, hamburger, onions rings, soft drinks, salads, desserts and etc. (Made Easy).
Political and Legal Issues
In New Zealand to conduct a market research first we will have to become a member of the Market and Research Social Research Society (MRSRS) which is a professional organization for any researcher who is interested in conducting a market research. This agency has set of regulations of professional behavior to abide by. There are policy act and principles that will have to follow when collecting, storing, and using and disclosing personal information (MRSNZ 2012).
The political and legal forces that will affect the Burger King for their marketing strategies will be the monetary and fiscal policies of the government where interest rates, tax legislation affecting the marketing system, a good example will be GST (Rix, 2004, p. 48) .
Other legal laws that will affect the Burger King will be Fair Trading Act 1986 in this act, if an employee makes a misrepresentation or misleading claim about the product, such a claim would be deemed to breach the act (Parliamentary Counsel Office, 2012).
For Burger king to open up a cafe in their restaurant they will have to comply with Food Act 1981 rules and regulations like food & safety regulations and, food fees & charges regulation (Ministry For Primary Industries, 2012).
The privacy act 1993 will requires Burger King to advice their customers of the intended purpose of information held about them after the market survey. These acts promote and protect individuals’ information privacy who will take part in the marketing survey and research (Parliamentary Counsel Office, 2012).
Ethics is basally the moral conduct of the business what is right or wrong. Ethics for Burger King will be the corporate social responsibility of towards society and commit itself in the code to encourage diversity among employees, franchisers, business sources, community involvement and sponsorships and prevent discrimination within the company. Other ethical issues Burger King will face will be:
Promoting ethical culture that values and respects all people
Acting with honesty and integrity ethical standards which encourage compliance with all laws and company policies.
Providing sponsorships, supporting local sporting teams, and helping young disable people in need.
Ethics like refraining from using company position, information, and property for personal gain.
Providing fair, timely, and full reasonable disclosures in the financial report with compliance to the law.
Holding itself responsible and accountable for the action it takes (Corporate Responsibility 2012)
Burger King will also have to consider about giving employment to disable people and also providing a car park space for them.
Social & Cultural Issues
Burger King will have to consider the beliefs, social values, lifestyles, behavior and buying preferences of the people.
New Zealand has many different races with different cultural, norms and values determine what is acceptable and what is not. When assessing the food requirements of a particular cultural or ethnic group Burger King will have to know the food requirement for each ethnic group. For example people with Hindu back group are mostly vegetarian so they will need products from Burger King that does not contain animal fat, eggs, or meat. As for Muslim community they will only eat halal certified foods so Burger King will have to consider these factors before opening up the café.
Burger King will also have to consider about people who put emphasis on quality of life rather than the quantity of goods. Some buys will look for safety, durability, and value in the foodstuffs they buy. Some buys will desire for more physical goods in the belief that these will lead to greater levels of overall satisfaction and happiness for example more environmentally friendly products and introduction of recyclable packaging (Rix, 2004, p. 44).
Burger King will also have to take in to the account the trends of male and female member within the household, especially about their purchasing power and decisions. Each gender will have different taste that will influence their buying (Rix, 2004, p. 44).
For Burger Kings new Café I will have to use Porter’s 5 forces model, SWOT and PESTEL Analysis to investigate the strengths, weaknesses, opportunities and threats of launching the new café. This situation analysis will summarize the Burger Kings current situation and will scan the external environment for strengths and weaknesses and environmental opportunities and threats.
Strengths are business capabilities, competitive advantages and competencies.
Weaknesses are business limitation.
Opportunities are environmental trends to which business plan can be matched.
Threats are environmental changes that would affect business operations or direction. Environmental analysis is very important in planning process as it enables us to collect the necessary information to assist management in decision making process. (Rix, 2004, p. 428)
SWOT Analysis is a tool that Burger King can use to identify their “internal strengths and weaknesses and opportunities and threats, and then develop strategies to deal with their situation” (Rix, 2004, p. 428)
(S) Strengths of Burger King will be the customer loyalty, market share, organizational efficiency, and product. Burger King is the second largest fast food hamburger restaurant in the world. Burger King has a strong brand equity when talked about wide selection of menu items, fast and efficient service, and innovative products. All this strong brand equity will favor and will help Burger King in their opening of the new Cafe and they also will get good customer loyalty. (Made Easy, 2012).
(W) Weaknesses of Burger King over the years that contributed to its decline were its weak marketing campaigns. If Burger King has weak marketing campaigns then they will not able to communicate with their customers. Another weaknesses Burger King will face is the heavily relies on franchisee rather than corporately owned stores. Each franchise will try to sell and promote their product for customer loyalty and this can be a major drawback for Burger King in launches their new cafe (Made Easy, 2012).
(O) Opportunities for Burger King will be their expansion strategy for new product development, particularly around breakfast in their new café. Burger King can set example for other franchise on how a café should be operated. Opportunity like edifice its brand though advertisement campaign and expansion into up-and-coming markets can improve financial aspects of the business. (Made Easy, 2012).
(T) Threats one of the biggest threats Burger King will face will be from McCafe of McDonalds which is the largest fast food chain restaurants. The competition among within these two companies will be characterized by price wars for the market share. This will make Burger King to heavily promote their product which will cost money and time. Other threats Burger King will face is consumers changing attitude and behavior towards eating healthier food choices. Now day’s consumers are more conscious about their health issues which may result them not buying for Burger King. Increasing labor cost will also put pressure on Burgers Kings finance (Made Easy, 2012).
Use strengths to take advantages of opportunities
Take advantage of opportunities by overcoming weaknesses or making them relevant
Use strengths to avoid threats
Minimize weaknesses and avoid threats
Source: Have, S. T., Have, W. T., & Stevens, F. (2003). Key Management Models. Great Britain: Biddles Ltd,Guildford & Kings Lynn.
According to (Have, Have, & Stevens, 2003, p. 187) as shown in figure1Burger King can use “SO” and “WT” strategies meaning that they will able to do what they are good at. They will also able to steer the business clear from competencies in opportunity. If Burger King decides to use “WO” strategies then they will able to take on opportunity despite not having the requisite strengths, which means they will have to borrow or develop the required strengths to outmaneuver the competition. “ST” strategies if used by Burger King mean that they will bust or buy their way out of trouble. For example these strategies will make Burger King to fend off smaller café by means of expensive price wars, multiple channels of promotions and with insurmountable marketing budgets.
PEST Analysis is at tactical planning means to evaluate the impact of the external environment like Political, Economic, Social and Technological factors on an organization (Haughey & MPM, 2002). Burger King will have to use PEST Analysis is a vital ingredient in their planning process.
(P) Political is factors like trade restriction, environment regulations, tax policy, and employment laws that Burger King will have to comply. New Zealand government also has legislation that governs the dissemination and preparation of the financial information so Burger King will have to comply with legislation when preparing annual report.
(E) Economic factors are inflation rate, exchange rates, interest rates, and economic growth. Burger Kings cafes survival will depend on how New Zealand economic is doing. For example people must have money to spent and they should willing spend it.
(S) Social is factors like emphasis on safety, cultural aspect and population age distribution. “For example McDonalds sells soft drink made from an Amazonian beery in Brazil, milk shakes flavored with durian in Singapore and Malaysia, and in south East Asian it is aphrodisiac” (Bartol, Tein, Matthews, & Sharma, 2008, p. 79). Burger King will have to identify will menu will people of New Zealand will desire. Also any changes in socio cultural trends will shift the demand of a partially product mean.
(T) Technological are technological changes that creates new processes of producing products and services. For example new coffee machine which will give Burger King a competitive edge.
Porters Five Forces
Burger Kings competitive position in a particular market will depend on which marketing and management model is available to them. Burger King can use Porters industry structure and generic strategies models. Michael Porter five major forces determine the nature of the competition in market. This will set the profit potential and competitive parameters for Burger King as shown in Figure 2.
Potential EntrantsFigure 2: Porters Five Model Forces
Threat of new entrants
Rivalry among existing firms
Bargaining power of suppliers Bargaining power of buyers
Threat of substitute products or services
Source: Rix, P. (2004). Marketing A Practical Approach (5th Edition). NSW, Australia: McGraw-Hill Australia Pty Ltd.
Porter’s competitive analysis identifies five fundamental competitive forces that will determine the relative attractiveness of Burger King. (Rix, 2004, p. 434)
Threats of New Entrants if Burger King sees a strong probability of new firms entering their market, it will impact on how Burger King will operate. This risk is resolute by the extent of the industry’s barriers to entry. For example if profits are only earned through economies of scale than the threat of entrant will be less. Also if Burger Kings capital investment in the café is large and have product differentiation leading to customer loyalty, and high cost for customers to switch suppliers will also have barriers to entry by other firms. (Rix, 2004, p. 434)
Threat of Substitutes Goods if Burger Kings products are reasonably cost efficiently and easily substituted by other products that gives the same satisfaction with low cost will mean restrict profits to Burger King. Burger King might also lose their customers but there can use product differentiation to promote and get their customers (Rix, 2004, p. 434).
Buyers Bargaining Power if Burger King has a petite number on individually strong buyers then it will impact on their profit. The buyers can demand low prices, extended credit and very high levels of services. Other situations where products are homogeneous commodities and switching suppliers cost is low then the buyer’s strength is higher (Rix, 2004, p. 434)
Suppliers Command of Industry if Burger Kings key ingredients are supplied by a small number of individually strong suppliers than it can put pressure on Burger Kings profits. Suppliers can control and increase prices, can demand fast payment or gives priorities to other competitor when it comes to supplying stock which will limit Burger Kings profit potential (Rix, 2004, p. 432)
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Existing Competitors. Some of the major competitors for Burger King will face are Mc Cafe, Starbucks, and Wild Bean Cafe etc. When all this consists number of companies starts to be competitive, it will have significant impact on Burger Kings profitability. Other factors that will intensify the competition in the market will be for customer loyalty and market share. it might be bit hard for Burger King to compete with them but if they do a market research and get feedback from the customers and promote their product at the right place, at right time ,and at the right price than Burger King will be able to succeed in their new product launching (Rix, 2004, p. 432)
Porters Generic Strategies
According to (Rix, 2004, p. 434) Burger King should be seen as a considerably different or supply at the lowest cost for means. They can be concentrating on specific niches or supply to the entire market. Burger King can use three generic strategies as shown in figure 3
STRATEGIC TARGET Figure 3: Three Generic Strategies STRATEGIC ADVANTAGE
OVERALL COST LEADERSHIP
DIFFERERENTION Uniqueness perceived by the customer Low cost position
Particular segment only
Source: Rix, P. (2004). Marketing A Practical Approach (5th Edition). NSW, Australia: McGraw-Hill Australia Pty Ltd.
The three objective strategies are:
Overall Cost Leadership Strategies will make Burger King to become the lowest cost cafe in the market by precisely selecting manufacturing ability and invention level, eliminating unprofitable customers and products. These strategies will provide protection against competitive substitutes and rivalry’s (Rix, 2004, p. 435).
Differentiation Strategies will make Burger King to promote and develop real or perceived differences between those of its competitors and Burger King. This strategies will protect Buger King by developing a brand loyalty against their competitors so that the consumers don’t change suppliers (Rix, 2004, p. 435)
Focus Strategies will make Burger King to adopt differentiation strategies or cost leadership strategies. This will make Burger King to focus on a particular segment of the market. This will provide a means of defenses to Burger King (Rix, 2004, p. 436)
Burger King operates in a very extremely competitive environment where the threat of competitors to Burger King is very high. It is very important for Burger King to build a point of differentiation that will make Burger King apart from all other competitors because its competitors are employing almost the same strategies that Burger King is employing. Operational excellence, high standard service, its innovative and quality products is what Burger King is known for today. So in order to remain competitive, Burger King must differentiate itself from its competitors which can be done through differentiation of products. Buger King must be able to maintain its global perspective, explore new markets and take advantage of new opportunities with the help of its market expansion strategies. The changing consumer preferences and demands also need to be satisfied. In order to do that, Burger King must develop a diverse product line.
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