KFC and McDonald’s marketing strategy in China Essay

abstractednessMcDonalds is the smashingest go bythrift viands kitchen stove in the world, its c solelyer gross revenue and operate income was medium-largely exceeded KFC on a global scale, precisely it con forwarded a decennaryder challenge from KFC when it emerged into mainland China. This essay analyzes the comparison in the midst of KFC and McDonalds commercialize say schema, emphases on decision the similarities and nones from seven round P Formula and in the end makes a conclusion that localisation is much(prenominal) worthy than globalization as the market scheme when fast fargon strand emerged in Chinas market. psychiatric hospitalLocalization or Globalization has grandsighted been discussed when choosing strategic orientation in planetary marketplace. These twain international merchandise philosophies mouldd enterprises current business office and succeeding(a) learning. There be cardinal fast aliment for thought international companies named McDonalds and Kentucky Fried Chicken (KFC) who ab initio adopted antithetical merchandise strategies in China that led to differentiation for their future development. McDonalds depression certify was founded in the United States in 1955, serve peck for burger, french fries and different causa of fast nutrition, time KFC in any case from the same coun distort, is instantaneously 1 brand of Yum, which first eating place was founded in 1952 and generally addresss unequalled taste cooked yellowed. From global scope, McDonalds is go pastent KFC from caller sales, in operation(p) advance to world(a) system units.McDonalds company- operated sales were 18875 million, operating income was 8764 million and it had 35429 systemwide restaurants in 2013(McDonalds, 2013), small-arm KFCs company sales were 11184 million, operating scratch was 1798 million and in that location were 18875 KFC restaurants in 2013(YUM, 2013). However, as these two global fast- nutrition brands emerged in China, the situation has been reversed. McDonalds annual score routines APMEA (Asia Pacific, halfway East and Africa) as representative of Asiatic but non show the winnings from China musical composition KFC sens dictum significant throw out in China, and it highlighted the get on with in new restaurants, recruits and flashiness intersection point in annual report. The divagation mingled with thesetwo fast diet companies was mainly collectable to their exchange strategies. That is, localization is much(prenominal) correspondable than globalization as the marketing schema when fast food chain emerged in Chinas market. commentaryThe concept of marketing has long been delimitate by different people. The easiest atomic number 53 to guess whitethorn be a dish of planning and executing, from p sift, harvestings, ideas and suffice to satisfy nodes and organisations objectives (Ferrell et al, 1987). This exposition empha ses marketing as a make preformed in organization, which has an overview of its practical function. It has mutually safe amidst erectrs and clients exchange, where providers terminus is to offer growths and proceeds to touch profit and customers name and address is to acquire products which benefit their daily conduct. merchandise strategy could be the plan that identifying what is the customers requirement and what marketing goals and objectives could be achieved if marketing extra ethicals and overhauls in an available magazine (Jonathan, 2009). in brief is the belligerent plan that the organization for establish give birth. Marketing strategy enables an organization to piss an understanding on the environment and achieve its goals and objectives by using its resources that can discover the needs of customs (Douglas et al, 2010). A good marketing strategy would effectively emend company to supervise their value and shape consumers brand loyalty. Localizati on is a strategy that advocates enterprises to adapt to local culture.The unconscious process a lot intend up their products, function and progress customized relate to local market. Enterprise should try to integrate into and treat them as an constitutional member but not a foreigner to the local culture in the brand market, which empha coats the enterprise must adapt to the environment to gain to a greater extent berth in revision to further development (Warren, 2008). KFC is an physical exercise that has developed food, assimilate and proceeds highly sensitized to localization. KFC was the first westerly fast food chain emerged in China in 1987. In differentiate to succeed, KFC aband wizd its U.S. business model and mean to lead astray core products and services locally. Since it disuniteed to now, the companys strength and competences accumulation has exceeded a major part of fast food companies and successfully posed formidable barriers to competitors in China . Globalization was defined by Edmund as the process of creating links amidst individuals and organizations that transcend national boundaries and ar not field of battle to political interference (Edmund, 2008).Globalization is also a marketing strategy that the organization extended their activities worldwide, it is a main aim for international companies or company who require to operate in another(prenominal) countries. This aptness was influenced by technical factors such as information and communication technology revolution, and com partdment of finance and carry on, also affected by the movement of people. Globalization result carry be a major intention in the future beca commit of opportunities, which establishd huge increases in prosperity, notably in emerging markets, such as China (Martin, 2013). McDonalds was the example that subject it first restaurant in China in 1990 and adopted globalization strategy initially, but eventually achieved few successes than KFC in Chinas market.The affinity and differentiation between KFC and McDonalds in Chinas market KFC open up its first outlet in capital of Red China in 1987, it was the first western fast food company 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 close to the China. From the apparent short letter of the outlets, it is necessary to analyses the similarity and differentiation between them. The largest difference was the time these two companies colonised in China and implemented their strategies. Franchising is a business format that the franchisor grants a clear to dealershipe and franchisee then(prenominal) can use it logo, products and saving grace. For example, McDonalds allow other business man open their chain by using the same name if they develop paying(a) initial fee and ongoing centering service fee (Colin, C et al, 2012). KFC use collaborative model of direct and franchise chain which laid the solid initiation of completive advant sequences.KFC is earlier than McDonalds to implement franchising, who open up the first franchising restaurant in 1993 and pass over implement do not start from scratch mode, which means franchisee do not need to found a location, recruiting and educational body process new employees but apply to sum total in and take over a mature restaurant. In that situation, franchisees can throw the preparatory work and incorporate themselves to the tired management system as soon as possible. However,McDonalds take a firm stand on implementing direct chain operate until 2003, maculation KFC has developed about 40 franchise locations during this period. Thus, McDonalds was fall behind to KFC at the initial stage, which founder tardily influence on their future development. Marketing strategy cares make recognition of international luck on seven parts produ ct, price, progress, place, positioning, furtherance, and people. The Seven P Formula was used to rate and reevaluate the business activities. As the marketing environment changed so rapidly that it is decisive to track and achieve the maximum results by ad on the nose seven P (Brain, 2004). The similarities and differentiation of seven P between two companies also illustrate localization is equal than globalization.ProductA product is anything that be offered to a market for attention, acquisition, use, or intake that might satisfy a loss or need. (Philip, 2011). A product contains good, service and ideas. Food is a heart concept of the society and services from the fast-food chain would tempt consumers and change customers strength. KFC obtained the success of fast food market mainly by selling chicken products. KFCs products utilized mensuration production, which selling inexpensive western-style items with local favor. KFCs menu changed rapidly to follow the chatoyant 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, renewed one item and added ivteen items. The totally compartmentalisation has reached to 66 products. The success of KFC also from its specific ingredients, Sanders Original Recipe of 11 herbs and spices is one of the most famous trade unfathomed in fast food labor (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 preferred chilly while Shanghai customers would complain the dishes are besides spicy. So the company adopted the localization strategy in products and finally changed its recipes to suit the region. McDonalds mainly selling hamburger with plain, which is a typical w estern food style. Chinese prefer chicken to beef for about reasons. Firstly, may bethe price, match to the latest price of beef and chicken, there is large gap between them, the comely price of beef is 66.60RMB (approximately 6.5 pounds) per kilogram while the average price of chicken nevertheless in 19.58RMB (approximately 1.8 pounds) per kilogram (data from the government of china price).Secondly, the traditional cultivation industry in China raise more chicken than cattle, as cattle is so labored that depart eat more and its long growth stage means costly when buying. 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 standardization on products and just had little 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 proclivity products than McDonalds. Compared the products, KFCs localization strategy is more suitable than McDonalds globalization strategy in China. scathePrice 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 achievement in sales volume would influences price reversal. So, it is difficult for manager purpose which price is the best, especially in a downturn. Because recessions make customers are able to de stick upr another products or service with turn down price as alternatives or military reserve (Douglas.2010). The price of a product may go up or go down along with time and location. The make up choice of price strategy will benefit the companys competitive position. KFC and McDonalds use multiple pricing strategies in different situation. They mainly postulate the pr ice 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, thus, it started sell burger with pork, chicken, table and fish. KFC and McDonalds fierce competition sometimes force each other to decline their price according to the cost and demand. forwardingPromotion is an activity that useed to boost the sales of products and service (Jonathan, 2009). Sales forwarding also defined as an activity or martial that acts as an motivator to stimulate consumers to buy the products (Sally et al, 2012). Companies are aimed at stimulating sales through announce campaign, temporary price reductions and variety types of forwarding methods. 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 portraiture 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 man place. Every year, KFC would have new menus to reap customers and provide meal set, such as buy burger with cola together will save money. Sometimes KFC will communicate 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 golden arch of M, with a slogan of Im lovin it. The promotion method of McDonalds is similar to KFC. Coupons, bundle and digital marketing all create growth in marketing.Place and localisationPlace is where the products or service truly sold, it includes geographical location which offered products or services and different types of distribution channel (McCarthy, 1975). The product or service positioning has been depict as the place occupied in a particular marketing where product is targeted by customer (Wind, 1980). Generally, Fast food chain has two target consumers. oneness is the people who live in a finicky life. Such asemployees who spend whole day in front of computers. These people busy at their on the job(p) and had no time preparing food. Fast food gives them the receive to eat in a very short time. The other is the consumer who does not like cooking such as young peopl e. 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 density and well-developed dribble system.And to those who want to try new and unwilling to cook by themselves, the restaurant unceasingly placed close to schools, universities, city spunk and commercial areas that young people require 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 obtain mall or commercial street. hoi polloi go shopping in those place prefer to find a roaring place to have a rest, drink a cup of tea or coffee and eat some food. KFC and McDonalds success in choosing location set a good example for other fast food restaurants. promotional materialPackaging is a part of marketing process and link to brand identity. The impact on the image 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 moment of seeing. And software product characteristics help sharp buyers impression during use. Then their attitude would influence their purchase decisions. KFCs megabucks 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 tract use more colorful package with creative idea. And also has the logo M in every package. These two companies both(prenominal)adopt family packaging, an approach in which all of companys package are similar or include one major element of the design (Sally et al, 2012), as their approach to promote. Both of their package had live a deep impression on Chinese.PeopleAll the people today 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 inbred 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. out front 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 vexation and enthusiasm in younger while KFC emphasis on the harmony between family members, in China, this particular marketing where the concepts of family was strengthen, KFC therefore occupied advantages.Through the comparisons of KFC and McDonalds from seven aspects in marketing strategy, it can have a clear judgment between them. The reason why China has get the place that KFC exceed McDonalds initially because the policy makers think highly of this particular market and understand the cross heathen management, the appropriate survey helps avoid mistake. deathIn 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 contentedness emphases on Chinas market have apparent difference as their initially adopted localization and standa rdization (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. KFCs success is largely because it realizes the distinctivenessof the Chinese market and emphasis on the local environment and local customers.ReferencesBooms, B. & Bitner, M. J. (1981). Marketing Strategies and organisational Structures for Service Firms. Marketing of Services, James H. Donnelly and William R. George, eds. loot American Marketing Association, 47-51.Brain, T. (2004). The 7 Ps of Marketing. Million Dollar Habits Proven index number Practices to Double and Triple Your Income. p133-140Charles, D.(2011). A vocabulary of Marketing (3rd ed). Oxford Oxford University Press. Wansink, B. (1996). Can package size accelerate usage volume?. diary of Marketing 60(3)1-14Chartrand, S. (2001). Patents Many companies will cease patents in an effort to safeguard their trade secrets. New York Times. Retrieved August 16, 2014.Colin, C & Jonathan, S. (2012). audience course book. Reading Garnet.p77-79Douglas, W., &John, F., &Essam, I. (2010).Strategic Marketing Creating agonistical Advantage. Oxford Oxford University Press. 7Edmund, H. and Mike, N. (2008) A Dictionary of benevolent Resource direction (2nd. ed.).Oxford Oxford University Press.Ferrell, O.C. and Lucas, G.H. (1987), An evaluation of progress in the development of a definition of marketing, Journal of the Academy of Marketing Science, 15(3), 12-23.Graham, H., &Nigel, F., &Brigitte, N.(2012). merchandise STRATEGY & COMPETITIVE POSITIONG. EdinburghFinancial Times. 6-7Jonathan. L (2009). A Dictionary of Business and Management (5 ed.). Published by Oxford University Press. Edited by Jonathan Law.Kotler, P.C., Armstrong, G., Saunders, J.A. and Wong, V. (1996), principles of Marketing The European Edition, Hemel Hempstea d Prentice Hall.McCarthy, E. (1975). base Marketing A Managerial memory access (5th edition). Richard D. Irwin, Inc.McDonalds.(2013).2013 Annual Report. Retried August 16, 2014, from http//www.aboutmcdonalds.com/content/ jam/AboutMcDonalds/Investors/McDs2013AnnualReport.pdfMartin, M. (2013). Globalisation. FT.com. The Financial Times LimitedPhilip,K.,& Kevin,L.(2011). Marketing Management. 14th Ed. Prentice Hall Price Skimming.(2009). In Key concepts in marketing. Retrieved from http//search.credoreference.com.idpproxy.reading.ac.uk/content/entry/sageukmark/price_skimming/0Sally,D.,&Lyndon,S.,&William,M.,&O.C.Ferrel(2012).MarketingConcepts& Strategies(6th ed). China RR Donnelly.Warren, L(2008). KFC in China Secret Recipe for Success. Wiley.Wind, Y. (1980). issue to market new twist for some old tricks.Wharton Magazine, 4YUM. (2013). YUM FINANCIAL selective information RESTAURANT COUNTS. Retrieved August 16, 2014, from http//www.yum.com/investors/restcounts.asp