1

Burger KingPHILIPPINES

2

Florida based Burger King Holdings Ltd operated and franchised fast food hamburger restaurants through its subsidiary , Burger King Corporation. It ran 11300 restaurants in 69 countries and was the second largest hamburger restaurant chain in the world.

In philippines , PERF restaurants Inc was the franchise holder of Burger King and operated out of 23 locations wh were located in the National Capital Region. In philippines , it was facing a tough competition with the leading home-grown brands , Jollibee and the world’s largest brand , Mc Donald’s. Although burgers, chicken and fish, sides and desserts were offered, the company’s unique selling proposition was its range of Whoppers. Burger King’s brand awareness in the philippines was pretty low. The company’s current communication efforts had not been able to increase brand awareness. Mr. Kim Tan, vice president, Marketing, had to take decision about the value proposition, communication strategy of the company amongst host of other marketing decisions, within next 3-4 days.

overview

3

ProblemsCommunicating Burger

King’s value proposition to its target market was a major problem for the company despite having a list of strengths such as superior products , higher quality , great ambience etc. The company’s current communication efforts had not been able to increase brand awareness.

ReasonsThe company had lower visibility due to

less no. of stores. It also had low accessibility due to the same reason, as pointed out in the focus group discussion.

The company’s offerings did not include kid meals, chicken and non-burger main items. Rice was not served as aside option to buy which was served at Jollibee and McDonalds. In philippines it was common to offer rice along with the food.

There was also a negative perception that Burger King didn’t cater to the local Filipino taste. As reported in the FGD, many respondents didn’t appreciate the absence Filipino flavored products.

Problems faced and their reasons

Fast food had become one of the fastest growing industries in metro manila due to :oRapid urbanisation o Increase in disposable income of the populationoGrowing preference of Filipinos for quick-value

meals in a clean and cool environment

METRO MANILA FAST FOOD MARKET

Major players in fast food market of metro manila : Jollibee Mcdonalds Burger king Kfc Wendy’s Chow king Greenwich

Some smaller niche players are also there, such as –

Brother burgerMax’sGoldilocksTokyo-TokyoHotshots

COMPETITIVE LANDSCAPE

OUR BRAND COMPETITORS

JOLLIBEE Operating for 32+ years 600 domestic outlets ( key strength) 30 international outlets Expanded market through acquisition of

other fast food restaurants and bakeries Products :

American – burgers and fried chickenFilipino – palabok and lumpia

Emotional attachment from filipinos – “langhap sarap” meaning “savoring happiness”

Target market- filipino family in home country and abroad

Committed to community programs such as “ maAga ang Pasko”, a donation drive of used clothes and toys that were annually distributed to street children and orphanages.

MCDONALD’S First opened in 1981 Multi-billion peso company with 250 outlets in

Philippines. First one to Operates 24/7 Products:

Burgers Cheeseburgers Burger mcdo Big mac Quarter pounder w/cheese

Chicken Chicken mcdo McChicken sandwich

Friesdessert

Target market- Filipino family with a taste for American fast food.

Strong marketing campaign Received multiple awards for “lolo”

campaign in 2003 Key strength – ability to market itself

as the recognised global leader in hamburger chains

Quite visible with a good choice of location and appealing advertisements

Limitation – its non- Filipino taste

KFC Has been in philippines for more than 2

decades. Most popular product – KFC original

recipe fried chicken Major strength – brand recall when it

came to fried chicken Major weakness – absence of legitimate

hamburger in the burger segment However, they were attempting to cater to

a new crowd of chicken burger lovers with their line of zingers and chicken fillet sandwiches .

WENDY’S Opened first outlet in Philippines in 1983 31 outlets in the country Target market- similar to Jollibee and

McDonalds but also those who prefer healthier fast food

Products- American fast food (burgers and fries)Unique salad bar ( key strength)The baked potato ( unique item)

Key weaknesses – lack of visibilty in terms of

No. of outletsMarketing promotion

PIZZA PARLORS Pizza - among the top fast food items Pizza parlour industry second to the

burger industry Notable franchises-

Shakey’sPizza hutGreenwich

Only Greenwich comparable to burger king in terms of price as others commanded a higher average purchase price

Acquired by Jollibee to enter into pizza

segment

GREENWICH

Major weakness – always located near a jollibee or chow king outletDid not cater to the burger segment ( absence of hamburger on their menu)

OTHER BURGER JOINTS New fast food restaurants that had

burger as their main food such as brother burger and hotshots

Too few outlets at the moment , even if they are popular

These players are in premium burger segment, serving high end quality burgers at premium pricing .

Major weakness – Lack of number in outletsWeak visibility

BROTHERS BURGER Opened in the philippines in 1999

13 outlets in total today

HOTSHOTS 15 outlets in philippines 8 in indonesia 1 in singapore

SUMMARISED COMPARISON

BURGER KING

JOLLIBEE

MCDONALD’S

WENDY’S

AGE IN THE PHILIPPINES

11 years

33 years

27 years

25 years

# OF OUTLETS (PHILIPPINES)

23 600 250 40

MAJOR PRODUCT/S

Burgers, fries, dessert

Burgers, local offerings, chicken, fries , and dessert

Burgers, chicken, fries, and dessert

Burgers, salads, desserts, and baked potato

ENVIRONMENTPOLITICAL FACTORS

Govt proposed policy- Allowing almost 100% foreign ownership in all sectors

Increased competitiion More investment like increase in franchises ECONOMIC FACTORS Increased Remittance In 2007 overseas remittances was 13.2% over the 2006

remittances Services boom and the resulting increase in net

disposable income Service output increased by 8.7% from last year Increase in demand and consumption of fast food

SOCIAL FACTORS Changing lifestyle and perception Increased foreigners and expats due to rise in service

economy-imbibing latest fashion, technologies, and world class taste and preferences

Increased educated and health conscious people Increase in no. of working women Average increase of 6.7% from 2006 to 2007 It has increased from 13,394,000 to 14,286,000 in 2007

TECHNOLOGICAL FACTORS Use of automated vertical grills, self service

kiosks ,automated french fries system Increased interactions with customers &reduced labour

cost POSSIBLE SUCCESS FACTORS Product, pricing, advertising, efficient service, breakfast

menus, value preposition, add on services, etc

Market Research FindingsA UAI Survey along with a focus group discussion was conducted by a team of Asian Institute of Management and following was a summary of the findings of the survey and group discussions.

• Pizzas and Burgers were the most preferred fast food items:-

The survey showed that an equal percentage (of 28.9%) of people preferred pizzas and burgers to other fast food items. Following figure depicts the percentage split among the respondents on the most preferred food items.Pizzas

BurgersPastasSandwichesSaladsOthers

Jollibee had the highest brand recall amongst the fast food brands:-

Advertising forms an important component of fast food operations. The items were generally bought on impulse and a well-advertised brand easily gained recognition. Almost half of the respondents recalled Jollibee when asked about fast food and only 2.2% recalled Burger King.

Brand Recall

Mcdonald'sJollibeeBurger KingOthers

REASONS FOR THE LESSER BRAND RECALL AND BURGER KING BEING A FOLLOWER.

Lesser visibility and accessibility of Burger King. Although higher-end (costly) burgers were good, the lower-end burgers were considered below-par compared to competitors such as Jollibee and McDonalds. Burger King did not have much variety in the kids’ food.

Food quality, price and service were the primary factors taken into consideration before choosing a restaurant:- There were various factors that people looked for, while choosing a fast food restaurant. The most important factor in decision making was the food quality, service and price. Below graph shows things people look for in a restaurant (on scale of 5)

Food Quality Price Location Convenience

Promotions Offered

Ambience Service0

0.51

1.52

2.53

3.54

4.5

Jollibee led in all the main factors like quality, value for money, menu and the service provided:-

In the average ranking of brands on the basis of quality, value for money, menu and service it was concluded that Jollibee lead in all factors. Following cluster graph shows the average ranking of brands on the aforementioned factors.

Quality Value for Money

Menu Service0

0.51

1.52

2.53

3.54

4.5

McDonald'sJollibeeKFCBurger KingWendy's

Jollibee and McDonald’s were neck-to-neck in convenience, ambience and cleanliness:-

In the average ranking of brands on the basis of convenience, ambience and cleanliness, it was found that Jollibee and McDonalds were neck-to-neck.

Soft drinks and Fries were the two main supplementary food items that people liked to have with their fast food meals:- Out of a list of sides, people preferred soft drinks and fries along with their fast food meals. The figure below showed the percentage of people who like to have other things with their meal at a fast food restaurant.

Soft Drinks

Ice Cream

Fries Desserts Soup/Salad

Ice Tea0

102030405060708090

01020304050607080

44

6470

3 3 2 2

0ther Add On Services That People Desire At A Fast Food Restaurant

Add On Ser...

FOOD AMBIENCE ADDITIONAL SERVICES

VALUE FOR MONEY

0

10

20

30

40

50

60

70

8071

26

47

17

Attributes People Like About Burger King

0204060

18

65 62

4 3

What are the services/changes people like to be offered at burger king

Services/Changes

Large variety and cheaper prices were what people want from Burger king.

SWOT ANALYSISSTRENGTHS

◦Food quality – rated 3.99 on a scale of 5 , better than almost all other fast food joints

◦Brand name- “burger king” is a brand name associated with burger

◦Authentic American taste- value differentiator that could be leveraged in attracting the trendy and westernised Filipino youth

WEAKNESSES◦Limited number of outlets- regular

customers of burger king had to switch to other fast food joints, if they did not find an outlet in vicinity

◦Limited choice in menu- should offer varied type of products like its competitors

◦Not suited to Filipino taste – had a bit more American flavour to its products

◦Higher prices- jollibee and mcdonalds had cheaper products

OPPORTUNITIESSpending on fast food is increasing

Urbanization Increase in no. of working women

Increase in the no. of people who came to fast food joints for different services like phone charging and mobile phonesTHREATSIncrease In concern about healthIncrease in no. of outlets of other fast food chainsCORE COMPETENCIESExcellent supply chain, good service standards, good quality products, innovative side orders, excellent ambience, tech-savvy outletsPOINT OF DIFFERENTIATIONAMERICAN FLAVOR AND AMERICAN FACTOR IN PHILIPPINESBurger kings strong association with American flavor and the authenticity maintained was ,hence, a “POINT OF DIFFERENTIATION”TARGET MARKETTeenagers and young adults up to the age of 35, studying or working from metro manilla.

THE 4 Ps

4 Psproduc

t

priceplace

promotion

PRODUCT

Burgers

•Beef •Chicken •Fish

Side order

s

•French fries •Onion rings•Criss-crossed French fries

Cold and hot

drinks

•Sodas•Hot chocolate•Lemonade•Ice-tea•Hot coffee

Desserts

•Hershey’s chocolate pastries•Ice creams•Sundaes•fudge

Burger king’s menu

Highly preferred and

unique

Burger king also introduced breakfast menu New offering – burger shots (many small

sized burgers in a single order ) Apart from burgers, the whopper sub brand

was a unique sub brand associated with burger king

Burger king also offered various chicken sandwiches which were highly sold

Most of the desserts were supplied from other major brands .

PRICE

Expensive compared to all its competitors Burger starting from 50 PHP

Price could go up to 250 PHP

Average price of a meal – 175 PHP

PLACE

Sold its products only through its 23 outlets in metro manila.

No home delivery on phone Options with consumers- eat here or

take away Most outlets located in malls with

high footfall, premium malls which attracted A and B income segment customers ( richest customers)

PROMOTION

Constraints

• Spent lesser than McD and Jollibee due to the sheer scales that they currently command in Philippines.

• Outlet visibility was a natural form of increasing brand awareness – difficult with only 23 outlets

Keeping the constraints in mind, company advertised through following modes : Direct mailers sent to customers via

mails and network marketing used Communication through facebook Team sponsorship - Had its logo

printed on jersey of a famous local basketball team

Advertisements in newspaper and magazines

Small banners and kiosks an malls to show direction to outlet

Discount coupons ( up to 100% discount coupons used ) – coupons awarded to winners of events sponsored by burger king

Communication messages used Common message rode on the WHOOPER – “

Angry whooper , and it’s cool to be angry” Other messages such as photographs of

basketball players wearing burger king jerseys were used

Most messages showed a meal – a sumptuous burger with coke, fries and dessert

ANNEXURE

KEY RESPONSES:◦Burgers will be the dominant fast food

preferred by people ◦People thought of big king size burger when

thinking of burger king◦Fried chicken is an important offering ◦Visibility and accessibility of burger king are

low.◦Low-end burgers were considered as “not worth

it”

◦High-end burgers were considered “worth it”◦Burger king has maintained the American taste,

not adapted to Filipino tastes.◦Jollibee offers better toys for kids ◦Kid’s meals offered weren’t good enough◦Credit card payment available at burger king

was appreciated◦Cell phone charging facility – major attraction ◦Burgers preferred to be served with chips

◦Home delivery service which is not available is very important

◦Filipinos like Filipino breakfast – should introduce breakfast with Filipino flavour

◦Free internet – major attraction ◦Burger king’s old policy ( not existing now) of

unlimited drinks was highly appreciated and still remembered – offering be started again

◦Burger king should increase its visibility – currently low

◦Suggestions given were for the introduction of drinks other than aerated drinks.

QUESTIONS

1. Despite having strengths such as superior products, higher quality, great ambience, etc., burger king’s brand awareness in the Philippines was pretty low. Analyze the situation that may help Mr. Kim Tan, Vice president , Marketing of burger kings, Philippines. What is the role of local culture in this context ?

2. Should Tan retain the main point of differentiation, its American flavour as its core equity? Suggest Tan on continuation of current positioning and communication of its value proposition.