Just because you\'re the biggest contender, doesn\'t mean you\'ll win every figh
ID: 378311 • Letter: J
Question
Just because you're the biggest contender, doesn't mean you'll win every fight. Burger King as the "little guy" compared to market leader McDonald's has established an appealing reputation through social media.
In 1954, James McLamore and David Edgerton founded the Burger King Corporation in Miami, FL. From its beginnings, the burger chain followed a simple concept of providing "reasonably-priced, broiled burgers served quickly." After early challenges, the entrepreneurs were able to expand their five-store chain into a national success story of more than 250 locations making it the third-largest fast-food company in the US. This achievement brought the company to the attention of Pillsbury, who in 1967 purchased the company. In all, the company has changed ownership five times. In 2014, in a $12.5 billion deal, Burger King merged with Tim Hortons, a Canadian-based donut coffee chain, to form Restaurant Brands International.
Burger King has an advertising budget only one-fourth the size of McDonald's. As a result, BK has followed the advice of Allen Adamso, of branding firm Landor Associates, who believes that social media can minimize the advantages of size. Adamso says, "Good content travels so powerfully that every year the playing field gets more level." And that's exactly what Burger King has done.
As you read in the vignette of Sara Bamossy as The Pitch Agency at the beginning of Chapter 13, there was a surprise for the record 4.4 million pay-per-view audience for the Floyd Mayweather-Manny Pacquiao fight in 2015. Entering with the Mayweather entourage was the King, the Burger King cahin's robed mascot. The millions of people worldwide who viewed the fight (and the King) turned to social media and created a huge buzz on Twitter and Facebook. The $1 million that Burger King paid for stunt was minuscule compared to what the company would have had to spend for a 30-second Super Bowl ad and much more effective in terms of publicity. The King's busy schedule was not complete. He was seen at the Belmont Stakes horse race with the famous racing trainer Bob Baffert. Bob's horse, American Pharoah, became the first Triple Crown winner in almost 40 years. The appearance fee was $200,000 and once again put Burger King in the spotlight of pop culture.
Recently, Burger King gained attention of the media by asking its rival McDonald's to join together to make a McWhopper in support of World Peace Day. The new hamburger would consist of six ingredients from each burger and be sold exclusively for one day at a pop-up shop in Atlanta. Proceeds would go to charity, and the theme of the event would have been: "What does peace taste like?" Television outlets focused on the proposal, and the story went viral on social media. However, the offer was not warmly received by McDonald's, and the event never took place. Nevertheless, the McWhopper buzz generated $182 million in earned media exposure and 8.9 billion media impressions for Burger King.
Although gaining customers' attention is vital to brand success, that success can be fleeting. Burger King will continue to be limited by its smaller promotion budget. Competition for customers' thoughts in the world of social media is fierce. And there's no guarantee of buzz turning into revenue growth.
MARKETING RELATED QUESTIONS:
1. What is decision facing Burger King?
2. What factors are important in understanding this decision situation?
3. What are the alternatives?
4. What decision(s) do you recommend?
5. What are some ways to implement your recommedation?
Explanation / Answer
1. Burger King has shown commendable growth from its five-store chain to the third largest fast food organization in the US. We know that in the highly competitive fast food industry, marketing is one of the most crucial factor for getting customer attention and generating sales and revenue. However, Burger King is using an advertising budget which is only one-fourth the size of McDonald's. In order to gain customers’ attention and compete with the big names, the company is using social media platforms and it is providing it a huge attention. So, the decision facing Burger King is how to covert this customer attention into sales and revenue growth. In addition to it, BK also needs to decide that whether it should increase its advertising budget.
2. The factors that are important in understanding this decision situation is that the company has a fixed proportion of budget which it can spend on the promotions and advertisements. The company is known for its reasonably priced burgers. If the company increases its advertising budget, then in order to cover the cost, it will need to increase the product price which can impact its sales. In addition to it, the company should also understand that only gaining customers attention and media coverage is not sufficient as it cannot guarantee revenue. So, the company needs to develop a cost-efficient promotional and sales strategy.
3. Different alternatives available to the company is to continue its social media advertising along with the print and broadcasting media. The company can also utilize sales promotion strategies like advertising campaigns, contests, coupons, etc. The company can also experiment by offering some healthy food items to capture the increasing segment of health conscious population. It would help to boost the brand image of the company.
4. In my opinion, the company should focus on boosting its brand image by offering healthy food items in its menu. The company can look for options that can be added in its breakfast menu. Besides, it should also focus on strong ad-campaigns.
5. The recommendation needs to be implemented after thorough market research and strategy planning. The company needs to identify the actual needs and preferences of the potential customers and develop its operations and marketing strategy accordingly. Initially, it can test its new items on some selected stores and based on the results it can proceed further. Besides, the ad campaigns should be developed accordingly for increasing the customer awareness regarding company’s new product offerings.
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