THE BURGER WAR

In 1984 McDonald’s spent more than one fourth of a billion on television advertising which is like almost 29,000 dollars an hour. And of-course it was selling a lot to get that kind of money back.

How did this mammoth enterprise get started??

The story begins with the coffee shop, an institution then popular in America which was usually a mom-and-pop institution with a counter and six to seven tables having a range of food and drinks available.

ENTER McDonald’s

McDonald’s was born when Kroc succeeded in launching an offensive attack against the local coffee shop. Later Ray Kroc rapidly expanded its operation to do it on a national scale.

Kroc just made an obvious choice by looking at “what is the most popular item on the coffee shop menu? The hamburger and its second cousin, the cheeseburger”!

More than anything, early expansion of the chain allowed McDonald’s success and its dominance in the developing burger industry. Even today McDonald’s outsells Burger King, Wendy’s and Kentucky Fried Chicken combined.

There are few other factors for the success story to be complete:

v  Company’s strict standards and procedures

v  Its fanatical devotion to cleanliness

v  Intense training given to franchise owners at McDonald’s Hamburger University

Burger King’s Way

The first chain to apply an effective strategy against McDonald’s was Burger King.

After McDonald’s became the largest national fast food chain, they were no longer on the defensive, they were on the offensive.

Offensive principle of finding a weakness in the leader’s strength and attack at that point felt to Burger King. McDonald’s strength was the hamburger, its uniformity, instant delivery and the inexpensiveness.

The weakness inherent in this strength was that it was an assembly line that McDonald’s used to deliver inexpensive hamburgers quickly. For getting anything special you had to wait in a separate line. So in early 70’s Burger King came up with a strategy to exploit this weakness. “Have it your way” said the ads, “without the pickles, without the relish.”Or any-way you wanted it.  At the burger king, the advertising promised, you would not be treated like an outcast if you asked for something special.

 

The battle of the burgers

Burger king has turned again and again to the middle of McDonald’s line. The classic offensive strategy is of exploiting a weakness inherent in a leader who has overextended his line.

The other classic commercial was one that implied that burger king hamburgers taste better because they are flame- broiled as compared with McDonald’s hamburgers, which are fried. “Broiling vs. Frying” instantly captured the attention of the public and the lawyers at McDonald’s who promptly filed suit.

It was the best thing that could happen to burger king. This issue caught the attention of television networks and dozens of TV stations and newspapers around the US. The sales of Burger King shot up by 10 percent.  Meanwhile, as Burger King was busy launching these offensive attacks, another chain was using a different marketing warfare strategy.

Flanking McDonald’s

Founded by a former Kentucky Fried Chicken vice president, Wendy’s after a late start came on fast with a flanking move at the adult end of the burger market. Wendy’s started making its pitch to grownups. No free hats or balloons and have it your way meant “Without pickles, without relish, and without kids.”

Even the smallest burger over there was a quarter-pounder which was shaped square so that it sticks out of the bun. “Hot-N-Juicy” was the advertising strategy that drove the adult burger idea into the public’s consciousness. You could not give your kids a burger like that.

The most important in helping Wendy’s Sales was the fact that the slogan captured the essence of Wendy’s Strategy: the bigger burger for the adult-size appetite.

The low-end guerrilla

No burger war discussion is complete without the mention of White Castle.  This small chain continues to do its business exactly the same way as it has always done. A nostalgia burger is another way to look at the product’s appeal.

There is more than one way to sell a hamburger, as long as you use appropriate strategy. So White Castle peacefully co-exists with their big aggressive neighbours.

The war on burgers has seen many ups and down, many players have come in, tried different strategies and sustained in market in various ways. The war teaches us that marketing strategies can’t be fixed, neither with time, nor with any environment. The marketing strategies have to keep on evolving as the market evolves. So in the nutshell, there are many ways to sell your product, you just need to have to the context right.

Reference: Marketing Warfare –by Al Ries and Jack Trout

 

~Preetdeep Kaur

MBA Batch of 2012

DoMS IIT Madras

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CULT(URAL) MARKETING

I am my editor’s biggest nightmare and my editor is my biggest asset. I have the liberty of committing horrendous crimes while writing yet eventually the article comes out clean, thanks to the filter called EDITOR. I sometimes wonder why do people commit such mistakes, first reason can be that the person might be naive to the semantics of the English language, he is excused. Second reason, which better suits me, is that I am too casual to take care of rules and structuring norms in sentences. The second reason has something to do with the culture also, like Indians are considered to be ‘nay – nay sayers’, Australians are considered generally brash, Canadians are considered to be quieter than their Glorious American counterpart, Scandinavians are thought to be warm and friendly etc. There are different PERCEPTIONS about various nationalities.

Why am I talking about cultures here? Today my Prof shared a personal experience with us, while visiting Japan to learn about work culture there he came across a middle level manufacturing firm operated by a man of age 77 at that time. They had a floor manager, a lady, in her mid forties; you might wonder at this moment what is so strange in that, but there is, there is something unusual about this lady. The lady I am telling you about came back to the company after a break of 13 years-,when she had left the company she was working as a ‘foreman’. She wasn’t on a sabbatical these 13 years, she wasn’t working in any other company, so where was she? The lady took a leave on Pregnancy grounds and was busy raising her children back at home, when she considered her kids to be mature enough to be left alone, she decided to come back to the organisation. A colleague of my Prof asked the Grand Old Man of the company, why has she been given a promotion to manager when she had left as a foreman 13 years ago? That Wise man said, “Raising kids and managing a family is a great job in itself, this lady is well equipped with that experience and that experience will help her manage the plant”. In which part of the World do you think this is possible to happen?

Japan is going through a tough time right now. They were facing financial hardships since the global meltdown, Banks were keen to bring about changes in the market scenario and the USP of Japan ‘Quality’ was under question (thanks to multiple automobile call-backs by Toyota) and now a devastating Earthquake and tsunami. Even in this hour of hardship, their leaders sound optimistic, they are raring to get back and get going. I salute their determination and pray for normalcy and better days ahead.

Now let’s get back to the discussion on the cultures and behaviours, when we assess the BEHAVIOUR there are two different aspects to it.

The first one is a fallacy called STEREOTYPING, when we stereotype nationalities we tend to become subjective and try to put our own prejudices, this leads to the phenomenon of categorising and labelling on people. Stereotyping is damaging because we don’t take into account the individual regional differences. Once under the stereotyping cycle we end up ‘not providing’ chance to someone else to prove wrong the stereotype.

The second aspect is ANALYSING CONSUMER BEHAVIOUR. This is poles apart from the stereotyping effect. Every country and every region inside its territory has different set of likes and dislikes. When planning for marketing and sales strategy these factors need to be taken care of.

From whatever I have read till date I can recollect some instances of how culturally adapted marketing strategies did wonders and how culturally not-adapted marketing strategies bombed. If my will to complete this article sustains I will try to include some start-ups on the basis of culture.

India, My Beautiful country in partnership with its perpetually pissed and angry neighbour China has FORCED the world to think of ‘large population’ as an untapped market (I wonder why I see less of family planning advertisement now). Liberalisation made organisations across the globe take notice of India. MNCs started flooding the Indian market. The Indian middle class accepted the foreign electronic products and automobiles almost immediately.  Though ‘Case studies’ were made about products and companies which were sensitive in one form or the other and needed to be Indianised.

McDonalds had to face the cultural shock when people realised that McDonalds offers ‘Beef’ in its menu. Serving No-vegetarian food in a predominant vegetarian society and serving beef on top of that was not a good idea. Cow is considered a sacred animal in India. McDonalds had to scrap off the beef part of their menu. Second wave of change came when the taste buds of Indians were not responding the way McDonalds would have expected! So what did they do? They ‘Indianised the Menu’ and this Indianisation was done not only on the national level but also on the regional level also. McDonalds was not alone in doing this, Dominos, Pizza Hut, Café Coffee day, Barista etc. were forced to put things like Paratha Pizza, Pizza do Pyaza, Chicken  Chettinad sandwich and many more variants.

In a similar segment of Food, Kellogg’s entered India. Kellogg’s wanted people who CONSUME puri-bhaaji, paranthas, idli-vada, Dosa in their breakfast to change to corn flakes. Kellogg’s misread the initial trends, the initial spike in sales was contributed to ‘Curiosity buying’, the middle class did give the brand a chance, but the chances were not repeated. Kellogg’s has made some inroads into the market thanks to the product called biscuits. Kellogg’s tried many other variants. In fact they kept on pumping their other best-selling brands into the Indian market.

I have previously said that automobiles had an easy foray into the Indian market as compared to these foreign food products. The statement is true with the exception of Mercedes Benz E-class, Mercedes opened their plant in 1995 and thought India being just a DEVELOPING market will accept their model which was one step behind the model sold in Europe. The Indian Upper Middle class rejected the idea, by 1997 Mercedes was using only 10% capacity of about 20000 cars. They failed to tap the pace of expectation growth of Indian;, India might have been growing at some modest number but the mindset started flying much earlier and much higher.

Coca Cola bought the brand ThumsUp and forayed into the Indian market. What helped them? They inherited an established distribution network. The Brand had to fight internally with ThumsUp, ThumsUp remained market leader for many years to come. The Indian taste buds found coke ‘less fizzy’. Similar case is with CitiBank and Whirlpool, they had tremendous products but they were not adaptable to the new playground called INDIA.

When Whirlpool entered the Indian market it found a very peculiar taste prevalent in india, there were very few takers for the models with capacity more than 165 litres.

To end this article I want to say two more things.

  1. I have to apologise for not incorporating start-ups on the basis on culture variation in India. I will do it very soon.
  2. Segmentation of customers has gone to an altogether different level because of these prevalent cultural differences. Major market research companies have incorporated various techniques for segmenting the customers across the globe. Segmentation can be seen to be happening on the basis of SEC (socio – economic class) and type of city one resides in. I would recommend everyone to appreciate these differences and how they shape market trends. Products can be a huge success and an outright failure just because of the fact these differences. In fact we should be proud of Late Mr. C.K. Prahlad who gave the theory of the fortune at the bottom of the pyramid, which revolutionized the perception of marketers. On the other hand the theory gave a chance to the lesser fortunate section to savour the luxuries of life ‘What if they come in small sachets’.

~ Saad Bin Hamid

MBA Batch of 2012

DoMS IIT Madras

Does endorsing many products lead to dilution of celebrities’ appeal?

After 3 days of contemplation, I chose this topic to write my next blog, moment I decided on it, I knew I would be on the ‘yes’ side of the debate. Take example of Amitabh Bachchan and Shah Rukh Khan -the two most ubiquitous faces of Indian advertisements they promote anything and everything under the sun,\: garments, cosmetic creams, medicine, cars, colas, candies, sim cards, insurances etc.  Just when I noticed there was no advertisement featuring these two in this cricket world cup, I saw Khan promoting his own film Ra one.  So should not this type of overexposure; dilute brand appeal of celebrity him(her)self as people keep seeing the same face over and over again with every other product? Also look at Bachchan, who endorses Himani cream which is a mass product. Yet how can the audience accept him endorsing Parker; will it not lead to miscommunication? Initially my answer to these questions was yes as I thought there should be consistency in types of products a celebrity endorse and limit on number, so as to maintain credibility of the celebrity.

But while conducting literature survey on celebrity endorsement in India, I found that each endorsement undertaken by these two benefited  the brand. While stagnant brands like Boroline and Ddabur Chawanprash got new interest, Parker became aspirational brand for many, and i10 became a well recognized brand very quickly. This case is also applicable to few other celebrities like Dhoni and Sachin. Appeal of these celebrities cuts across the classes in the nation and association with these celebs bring benefits to the brand.

While analyzing this, I came across two reasons: one, predominant hero worship in our culture; probably it was this reason that Coke had to rope in Aamir Khan for its promotion, while it used to reframe from using celebrities at other places across globe. Secondly humble and dignified conduct of these celebs in public  attributes which are widely appreciated in our culture.

So the number of products and the type of products that a celebrity can endorse entirely depends on the appeal of the celeb but his appeal does not depend upon them (probably case models would be different; blog on that some time later). In case  celeb over exposes himself a market feedback will instill him at his right place, guess Invisible hand working. J

~ Varun Joshi

MBA Batch of 2012

DoMS IIT Madras

Colour me Green!

Among the fraternity of colours, GREEN seems to be the most clichéd one! Green Revolution, Green IT, Green Planet! Green Minds?? Green Humans?? Who knows?

Color it Green

Today I tend employ Mr. Green of this colour kingdom to describe another buzzword in Marketing- Green Marketing. Of course the compensation remains a secret between the employer and the employee! Jokes apart, Green Marketing is the marketing of products/services that claim to be environmental-friendly without any harmful effect on the ecological balance of Earth. Thus, it incorporates initiatives of making a clean product, one that leaves no detrimental footprints on the ecological equilibrium of Earth.

Green Marketing is not just a ‘catchphrase’ but an institution in itself. Followers of this school of Marketing not only focus on the product concerned but also look at the holistic Marketing approach. This could manifest in the form of only-online Marketing communication to save paper or the use of print-ads only on recycled paper.

The entire model revolves around the Environment-Conscious customer who is ready to part with some extra dollars for the name of ‘Green’. Some are ready to walk the extra mile – though the number is pretty low now- to leave a Greener Tomorrow for the next generations to come. All Green Marketing techniques target this psyche of the customer by differentiating through greener technologies, cleaner processes. Going Green is a part of CSR of many firms now!

 

Volkswagen's green initiative

Coke's Earth Day

Green Marketing is in vogue and it aims to satiate the small cluster of customers who are concerned about decreasing their carbon footprint. They prefer a recyclable carrying bag to plastic ones abound, prefer CFLs for lighting and want to use organic linen! At times, there is a tinge of Snob Value attached as well. These flag bearers of Green are very active but few, especially in a Price-sensitive market like India.

There is hardly any awareness among the masses per say and an extra rupee spent on Green theme seems dearer! Though certain responsible industry leaders have laid the foundation stone- by way of eco-friendly lighting, reduction of carbon footprint, launch of low-cost natural water-purifier (Tata Swach), use of bio-gas (at Taj Green Cove in Kovalam, which uses the waste generated at the hotel to meet its cooking requirements)- failure of initiatives like Samsung Guru Solar give contradictory cues. Low uptake of solar batteries and equipments (constricted only to areas devoid of electricity), high-cost CFLs and rampant use of plastic bags echo the thought that Green Marketing is yet to arrive in full swing in countries like India.

India is known for its diversity. When the examples cited above show scant regard in Indian perception about Eco-friendly or environment concerned activities, implementation of CNG in Delhi becomes the silver lining. With increase in awareness and change in public perception about Green measures, Green Marketing will strengthen its roots and gain the leading role on marketing stage- few notches higher than the support actor category it plays now. God willing, I mean customers willing an era will unfold when Coke has to re-introduce the original Green Packaging to appeal to the Green Customers.

GREEN Coke???!!! :0

~ Moupiya Niyogi

MBA Batch of 2012

DoMS IIT Madras

The Brand Almighty

Have you ever got your documents Xeroxed or have you Googled anything lately?Remember DALDA which was synonymous with vanaspati ghee? In some cases brands are not only larger the product but also larger than life!, People own a ‘Mercedes’ not a Mercedes Car. We are not used to call it an audio cassette player but a WALKMAN alike the mp3 player that’s called an iPod. Have you ever tried knowing what Crocin or Panadol is, or how many different medicines are available with the same salt and we are scared to even look at them without prescription? ‘Pampers’ for that matter; mothers want Pampers not diapers for their kids. Legos, though kids don’t play with them anymore but Legos had a commanding position in terms of block games. ‘BandAid’- people wanted BandAid not bandages. ‘Jeep’ was a model by Chrysler but we still call an open SUV as jeep. Thermos Flasks also join the same category. Tupperware, Lycra and Polaroid; Welcome to the world of Mighty Brands.

I wanted to write something about Brands and as soon as I started typing this line an idea came to my mind, let me first notice brands in my ‘very small’ room. Starting from my book shelf, there lie Pearsons, Wileys, PHIs Wharton School Publishing. Moving from there to my study table- there is Dell, Tropicana juice in a Tetrapak, Maggi Cuppa Mania with Delmonte sauce. On the clothes line hangs the Levi’s, Wranglers, Van Heusen, Peter England, Pepe and Lee; then in my almirah cloaked are the Adidas, Axe, Pepsodent, Rin… Okay this is too much of information to share about my brand preferences and there are many more that I couldn’t count at this moment. The basic idea is we are living in a BRANDED world.

To continue with the discussion, let us explore What a Brand is. Let me check with Mr. Phil Kotler…. Hmmmm…Mr. Kotler has used the definition given by the American Marketing Association and it goes like this “a name, term, sign, symbol or design, or a combination of them, intended to identify the goods or service of one seller or group of sellers and to differentiate them those from their competitors”  WOW!!! I’ll try to give you another definition. Basically what this definition is trying to say is that a Brand is something that helps you “Differentiably identify and assess attached promise of value and quality”. It means that a brand is a unique object that helps us identify a product/service and carries an inherent value proposition. We attach a certain quality proposition to a brand, if there is a logo or trade-name of let us say Wrangler jeans, the brand Wrangler commands a certain space in the mind of a customer. I would like to talk more about this VALUE proposition because this is one part of the definition that is a bit tricky. We understood that brand helps to identify a product, next it pertains to an object but value is something that has a paradox, similar to the chicken-egg paradox. Brand Is built upon value, the more perceived value a brand commands the better brand it is considered to be, on the other hand until unless a product doesn’t perform its brand value is not made. So if I can apply Zeroth law (refer Thermodynamics) here Brand means value; value is governed by performance/quality, hence a BRAND is based upon the performance of the product/service. So the conclusion is that a brand means performance or quality. Good brands have good quality or they perform well and bad brands do not perform well. Brands can have varying differentiating factors in terms of logo, tagline, colour schemes etc. which help a customer identify the brand easily, helps him connect to the brand. The manufacturer has some standardisation in terms of merchandising and supplementary products.

For the first time in my life I am proud of my procrastination I didn’t complete this article yesterday and luckily I happen to listen to a great personality in a guest lecture, on a Sunday morning. He said that every human being is born with an inherent trust component, an infant is incapable of doing anything, in fact incapable of identifying his own mother. It will be true for every one of us that we don’t remember beyond a certain age of our life, say 4 years of age or 5 years of age. We were under the umbrella of complete trust. It is also true that parents do take every pain to make our lives better than they can possibly afford to. In that quest they try to give their best. I don’t know about what happened when I was an infant, but if I can share about my niece who hasn’t even attained the age of a year, she is possibly using as many brands as I might be using. From the cereals, milk powder, baby wipes, pampers, clothes, toys, shampoo, soap, hair oil, accessories, bed sheets etc. have a look at the website of Johnson & Johnson there are 6 verticals or 6 product lines, namely Baby’s Skin, Bath Time, Bed Time, Play Time, New Moms and Naturals. You might say these many verticals are available but why do people prefer them over some homemade solutions, I’ll tell you why, the reason is TRUST and Repeated quality delivery by the brand.

I don’t know if you noticed that one of the verticals in the above example is NATURALS, this is called emotional call towards the brand. They were soft and subtle, gentle on eyes, hair and skin now what is the next level, ‘Go Natural’.

We are talking about brands, and I would like to keep the discussion to Brands only, I’ll try to work on something called Brand Management later, when I myself have read substantially about that. Does Brands command a certain amount of supremacy over non-brands? Yes to a large extent, but there are fallacies that one needs to take care when branding a certain product. Mr. Phil Kotler has brought about instances in his book when taglines and logos can mean something very different in one part of the world and can deliver a very unintended and unwanted message in other part of the world. As he brought about the case of Electrolux, the tag line reads ‘Nothing Sucks like an Electrolux’ this might work on the British islands but if we take this to The U.S. … OMG!!! this will be an EPIC. Brands though are a phenomenon in itself, they have certain limitations and some challenges too. Brands face competition from Private labelsthat took birth just because they wanted to go ‘for a kill’ of brands. Second problem with brands is the stereotyping, this hampers the brand in the international outset of the business and sometimes ethnic and religious sentiments might get offended just because of the fact that the brand took shape in a certain way.

The Brand managers are not SuperHumans and it’s the product that creates the brand equity not the brand manager. Brand manager can only shape the growth, but the growth comes only from the product quality and value. This brings us to the threshold of a few more concepts like CRM, and customer loyalty. I wish to read about these in detail and share my viewpoints very soon.

~ Saad Bin Hamid

MBA Batch of 2012

DoMS IIT Madras

Marketing of Luxury Brands

Can you tell what do Rolls Royce, Cartllie’s, Hugo Boss, Capellini, Porsche and Chloe have in common?? Well all of them are luxury brands. Brands that come under luxury are associated with attributes like creativity, exclusivity, craftsmanship, precision, high quality, innovation and premium pricing. Marketing of luxury brands pose unique challenge to marketers as they will have to deal with a commodity that is highly desirable yet very exclusive.
A luxury product must provide best of the entire functional attributes expected of the product of that category: a Rolls Royce car’s functional attribute must excel any other car. Then luxuries must be integrated into the product in such a way that the basic function of the product gets hidden: polished wooden interiors, leather seats and other luxuries inside a car, just makes one forget that the basic need that car addresses is just the travel. Also the product should be aligned with values of the consumer: boisterous outlook may work in North India, but not in South as the people there prefer to keep it simple.
Now that we have defined our product, let’s move on to other P’s of marketing i.e. Price, Place and Promotion. All of these should essentially focus on exclusivity of the product. To start with it is essential that a luxury product should convey a story. For example, a furniture being a piece of antique which was once a possession of Duke of Edinburgh or a dish served at hotel which is prepared from the recipe book belonging to the Royal cooks of Maharaja of Mewar.
The distribution channel of these products should also have an air of exclusivity. That’s why luxury products are showcased at up market locations like five star hotels or luxury malls like DLF Promenade in Delhi and Thanks in Mumbai.
Finally pricing of these types of goods is never compromised, as any compromise in that front will dilute the brand forever.
Always remember, when it comes to the luxury goods, it is all about exclusivity and excellence!
For further reading:
http://www.management-hub.com/brand-luxury.html
http://www.businessoffashion.com/2010/01/in-india-luxury-brands-need-localised-strategies.html

~ Varun Joshi

MBA Batch of 2012

DoMS IIT Madras