Case: life in the fast lane fast food chains race to be number one

Limited menus, self service, takeout orders and high turnover have long been characterized fast food restaurants. Four market leaders incl. McDonalds, Burger King, Wendys and Taco Bell comprise about half of the fast food restaurant. In 2006 four leaders collectively assumed more than $50 bn market. McDonalds worlds leading food service retailer, in 2006 operated more than 30,000 restaurants in 119 countries, serving 50 mn customers each day. Fiscal year 2005, McDonalds achieved annual rev $20.46 bn. Chief competitor Burger King operated in 56 countries had 2005 rev were $1.94 bn with 11200 restaurants. Wendys 2005 revenues were $ 3.78 bn with 6,535 Wendys restaurants (plus other restaurants). While Taco Bell recorded $1.7 bn in 204 rev. with 6,500 locations in 2005. With more chains competing, marketing becomes increasingly important. Concluding 3 years revitalization effort, McDonalds was running its $500 mn I m lovin it campaign in 2006, which expressed the multifaceted aspects of the brand and connected to the consumers in a hip, relevant way. It had achieved remarkable level of consumers awareness. Ad Age Magazine recognized McDonalds as 2004 Marketer of the year. By 2010 McDonalds intends to double domestic system wide sales and triple franchisee cash flow as compared to 2000 levels. In order to achieve this 10 year growth plan, McDonalds new company brands- Boston Market, Chipotle Mexican Grill and Donatos Pizza will have to play a big role in the growth picture. Starting in 2002, Burger King introduced several new menus, chosen to be direct competition with McDs Big Mac, Quarter Pounder, and Egg McMuffin. Even though McDs long dominated the kids meal market with its Happy Meals, Burger King set its sights on the fast growing kiddies crowd. Burger King was armed with an $ 80 mn budget and new research ready to target kids. They picked a marketing agency exclusively specialized in kids marketing Inter public Group of Cos, Campbell Mithun. Burger King aimed to leverage the space between kiddies and adults. While not abandoning the very young crowd, Burger King centered its kids program on its Big Kids brand meals. Now, more than ever, marketing to consumers tastes is critical in competing in the increasingly intense fast-food restaurant war.

Location, Quality, Menu and Service Capturing and retaining market position is intuitively tied to keeping up with the changing preference of the American consumer. In a recent study conducted by Maritz Marketing Research, convenience of location, quality of food, menu selection, and then service are the most important influences on adults fast food choices. Surprisingly, low price was not among the top four reasons why American made their fast-food selections. Only 8% of those surveyed made a fast-food choice based on price. Adults under the age of 65 cited proximity of location as the most important factor in their fast-food purchase, with 26 percent of those polled stating it to be the chief criterion influencing their dining choice. After convenience of location, quality of the fast food itself was most important to consumers. This is interpreted to mean that not only do consumers want a superior product, but also they want a consistency in quality in each order at any location. Taco Bell recently shed its emphasis on low price for a focus on quality. The chain transformed its Extra Value Meals multi menu item combination package into Border Select meal platters by up grading and modifying the food offered and the image presented. Although this trend was ushered in by Taco Bell. Value pricing has become a part of almost every major competitors strategy. McDonalds offers its Extra Value menu. Wendys has 99 Super Value Menu that emphasizes variety by offering items that range from ready-to-go Side Salad to a Country Fried Steak Sandwich. Burger King and Hardees offer plans similar to that of McDonalds. Moreover customers are craving a variety of selections. According to 16 percent of American consumers, menu selection is the chief reason for choosing a fastfood restaurant. Knowing such important information, chains are offering diversified menus with unique items. In 2004 McDonalds introduced great-tasting new products including premium salads and a Salads Plus menu: Chicken McNiggets made with white meat: Fish McDippers: Chicken Selects: and new breakfast offerings like the McGriddle breakfast sandwiches. In August 2005, McDonalds was test marketing deli-style sandwiches, some toasted, at about 400 of its 13600 plus U.S. restaurateurs offer new items to avoid consumer boredom and maintain growth and market share. As a spokesman for Burger King said, We will stay with what we know best, but we have to add items to meet consumer preferences.

About 12 percent of adults feel that fast service is the basis of their choice of a fast-food restaurant. McDonalds strategy is to attract customers with price and keep them with service and become recognized as the service leader in the nation, according to the corporations U.S resident. To emphasize this aspect, McDonalds plans to extol its drive-through operations in a series of television ads, showcasing the speed at which the hard working staff diligently prepares the customers orders. Taco Bell too exalts service qualities in its source, with a mission summarized in the acronym FACT, which stands for Fast food, Accurate orders, Cleanliness, and food served at the right Temperature. Wendys has adopted the special acronym MBA, which stands for A Mop Bucket Attitude. This represents Wendys commitment to the traditional definition of customer satisfaction which places customer service (cleanliness, service, and atmosphere) before numbers and computers printouts. Wendys maintains that this commitment is a major reason for their success. Burger King has long recognized the importance of providing good service and also creating a favorable and memorable dining experience. In 1992, Burger King became the first fast-food restaurant to introduce table service and an expanded dinner menu in order to enhance the customers dining experience. At the stage of fast food that the United States reached in 1960. American chains have a substantial competitive advantage internationally. Marketing experts predict that it will be easier for established U.S. chains to expand overseas than at home. To illustrate, in 2004 McDonalds realized $6.74 bn in revenues from Europe and more than 50 percent of its restaurants were located outside the United States. Burger King focused on Japan as a wide-open market for its burgers and gave much attention to the Eastern European market. It opened restaurants in Poland, the former East Germany, and Hungary while at the same time established a training academy in London to service its European franchises. In 2005, Burger King arrived in Shanghai, China. Wendys had restaurants located in more than 50 countries outside the United States. Given the stiff competition in the fast line, the question remains whether McDonalds can continue to be the leader in the domestic fast-food race, as well as become the front-runner in the international fast-food race. The use of marketing research will be critical in achieving these goals.

Questions
Q1. Describe the marketing information needs of the fast food industry. Ans. The need of a fast food company especially in market development, market expansion or real estate departments consists of analyzing customer behaviors, their demographics which will classify them into different age groups to determine their tastes, preference in terms of quality, Menu, service, consumer awareness. The management must also know the stre ngths and weaknesses of their competitors so that it can customize its product as per customer need. Industry must choose appropriate site for its operation and must focus on its core competencies. It must position its product as most health conscious. To gather these marketing inf ormation needs marketing research is must be done. Q2. What role can marketing research play in providing the information needed? Ans. Marketing research plays very important role in providing the information as it is the first step in gathering information to collect customer feedback related to any problem, awareness of the brand. This information is generally concerning behavior, attitudes and motivations of a particular target group. This information is the source of decision makers for expansion. As a supplier of information its role is only effective if it enables companies to make useful marketing decisions. Research is conducted throughout the marketing process at each stage the reactions of the target public, after being analyzed, enable one to review the policies. It also gives insights of decisions of consumers to purchase and post purchase reaction of the customers. Q3. Give some examples of problem identification research that McDonald's can undertake to ensure their continued leadership in the fastfood industry? Ans. The fast food industry is a revolutionary industry, which has taken the world by storm. With fast food restaurants showing up, what seems like on every corner, it's interesting to analyze the competitive strategies companies in this industry use in order to survive. McDonald's, with more than 12,094 restaurants in US is certainly no exception. A good way to analyze the strategies is by using the Porter five forces competitive model. The Porter model looks at what strategies a company uses to effectively counter 1) the rivalry of companies in the industry, 2)the threat of new entrants, 3) the threat substitutes, 4) the bargaining power of customers, and5) the bargaining power of suppliers. Few problems can be identified as: TV advertisement has had the courage to say their opinion about one of the leading brands in the world of fast-food, Mc Donald's; Junk Food is a term describing food that is not healthy or have little nutritional content. Junk Food contains a large amount of fat. Fast food like hamburgers,

French fries from Mc Donald's. At the same time MC Donald should not forget economic environment, buyer concern and qualitative research techniques. Q4. Describe the kinds of problem/ solution research that Wendys might undertake to improve its sales and market share. Ans. Wendy must spend some dollars on R & D to find out different ways to improve its sales and market share. It can do it through exploratory research which includes qualitative research, should collect primary data both qualitative as well as quantitative. It can conduct focus group interviews. For descriptive research design it can conduct online or street survey. It can also conduct segmentation research which determine basis of target segmentation, select target market and create life style profiles and product image characteristics. In addition to it, it may conduct promotional, pricing and product research. Q5.Given the market potential overseas, should fast food chains conduct marketing research in foreign countries? What kind of opportunities and challenges will the fast food chains encounter in conducting international marketing research? Ans. Yes it must conduct its marketing research in foreign countries to expand globally. They may found lot of opportunities like they will get an opportunity to know the mindset of various nations, their needs, their taste, etc. But at the same time they may find few challenges in conducting International research which can be language barrier, cultural indifferences, legal policies, licensing, etc.