A Problem Of Rivarly Through The Advertising

A Problem Of Rivarly Through The Advertising Is competitive advertising a good way to present your advertising of your product to the public? Diagnosis of the problem The problem is that the companies compete with each other through advertising and in the advertising they tend to criticize their competitors. Comparative advertising. When they start advertising in this way the start a chain reaction. The first company makes the first advertisement which criticizes the second company and they will react on this with a lawsuit. The third company will profit from this with their own advertising and lawsuits. And this results in bad advertising and a lot of lawsuits. If you look at this case you see that Burger king started with a comparative advertising. Burger King compared their hamburger with the hamburger from Mc Donalds. Mc Donalds reacted with a lawsuit. This gives Mc Donalds and Burger King free publicity witch resulted in Wendys reacting with their own lawsuit. Although this war of words give the companies free publicity it also creates negative publicity. The lawsuits also generates bad publicity and will reverse the effect the advertising had in the first place. The lawsuits creates costs which results in a higher selling price for the costumer. The costumer will not appreciate this and will buy less hamburgers (in this case). Which result in less profit for the company. In this case the companies in the end profited from the advertising war. But as I said in the last paragraph this is not always the case. The three companies showed an increase in sales after everything was over. People say that bad press is better than no press at all. After this case you can ask your self the question whether the companies had planned this war of words. I think that this is possible but highly unethical. I think that it is unethical because you mislead the customer. They get fooled by the information put forward by the fast food companies. In my opinion companies should be honest and ethical in their promotion. This is not the case here. I think it is not ethical to criticize a product from another company to promote your own product. Competitive advertising is in my opinion not the best way to advertise the product. I think that advertising should be positive. If you compare your product to that of an other company you give the advertisement a negative ring to it. You say that you are better that the competition. But you make the customer think about the competition at the same time. It is better to use only your own product and promote it through advertisements focusing on your own company and product. A positive advertising has more effect on the public than a negative one. In Belgium it is not yet allowed to use comparative advertising. This is with the intention to protect consumers but also competitive companies against unlawful advertisements. In Belgium it is seen as unethical and misleading to use comparative advertising. This is why something like the hamburger wars would not occur in Belgium. In Belgium they use positive advertising to promote their products. Fast food in Belgium Fast-food restaurants are defined as restaurants that are specialised in food that may be prepared and served quickly. Fast food is designed for ready availability, use or consumption. Food such as hamburgers, pizzas or fried chicken, that is prepared in quantity by a standardised method and can be dispensed quickly at inexpensive restaurants for eating there or elsewhere , are usually recognised as fast-food restaurants. Next to that we also consider the traditional Belgian Chips shops and the healthy fast-food restaurants as major competitors for Burger King. Sandwich bars (e.g. Panos), soup bars, Asian or other foreign food (e.g. WokAWay, pita, pizza, Thai or Chinese etc ) are getting more and more popular in Belgium. Still Mc Donalds and Quick would remain the biggest competitors in the fast-food industry of Belgium. Both of them are strongly present in Belgium, Food is a major component of the Belgian culture. This is evidenced by the fact that they spend about 20 percent of their disposable income on food and beverages. The Belgian fast-food franchising market is growing at an estimated annual rate of about 10 to 12 percent. Beside that, this sector is also one of the fastest growing sectors in Belgium (from 1997 till 2001). The fast-food concept is now beginning to provide an alternative format, especially for the lunchtime consumer, tourists and those on tight budgets. Strengths Mc Donalds Leader in Europe Ranked as 2nd in the hamburger market in Belgium. Mc Donalds restaurants highest concentrations are in the Flanders and the Brussels Central regions. Nowadays there are 56 restaurants in Belgium, of which 55 are local franchised (with a 24 franchise- owners in total). Play centres for young children Fast and friendly service, clean facilities, good food and an affordable price A strong brand image in the local community Environment-friendly (clean restaurant in-outside/ minimum fragrance and noise/ recycling, well checked detritus oil) Global knowledge Varied menu (hamburgers, salads, ice-cream, Mc Veggie, Happy Meal) Drive-in, Take-away Quick Market leader in Belgium and France The GIB Group has surpassed its original goal of having one Quick per one hundred thousand people in Belgium or one hundred Quick outlets for the Belgian population of ten million. Now 105 outlets. Quality of the ingredients (fresh bread, no genetically modified ingredients,) Application of the severe norms concerning food safety Respect for the environment (e.g. packaging) Total transparency against his customers A know-how in service for co-workers and partners Varied menu Quick Express service, which is a revolutionary concept that involves selling hamburgers on the streets to pedestrians Many Quick restaurants are located in the parking lots of hyper- and super-markets of the GIB group (GB) The use of Belgian meat for the hamburgers The benefit from their strong reputation of being Belgian Weaknesses Mc Donalds Has been a target for animal rights demonstrations over the past few years Has been the focal point of these economic frustrations resulting in protests, acts of vandalism Quick Only represented in few European countries and a few non-European countries (Belgium, France, Luxembourg, Hungary, Morocco, China) No/low market share (except in Belgium and France) No really relevance in international experience Opportunities Mc Donalds In the next two to four years: multiply the current 64 restaurants to over 100 this implies the creation of 3,600 new jobs. They want to be more present in Belgium in the future, with 70% of McDonalds new investment in the Flanders region. Quick Advertising stunts / promos (free Maxi menus for everybody who comes in cowboy outfit including horse) New receipts for the next years Cooperation with Kinepolis (Reduction for Kinepolis members) The Belgian retailer GIB is researching several options concerning the future of its fast food chain of restaurants Quick. GIB owns 57.9 % of Quick, and is reportedly looking for a strategic partnership for its ailing chain. GIB is considering several options: it could be an operational partnership, or a financial partnership, or even one that offers both aspects. Several names of other fast food companies are already circulating, including those of Wendys and Burger King of UK-based drinks giant Diageo. Threats Both will deal with the following threat ; growing fast food franchising. More and more fast food restaurants will have possibilities (opportunities), not only the hamburger restaurants. Mc Donalds Quick is market leader in Belgium with 105 outlets Mc Donalds had planned to have one hundred restaurants by the year 2000. But because of a combination of high real estate costs combined and significant difficulties in obtaining site permits this has not happened. The big obstacle remains the one of the labour cost issue. In labour intensive restaurants, the problems of job classification and minimum wages have the effect of increasing labour costs. Quick No awareness outside Belgium, France and Luxembourg No/low market share (except in Belgium and France) Less financial vehicles then their competitors Difficult years till 2002 (different years of crisis). 2002 was the year of recovery Despite the fact that Quick is the largest hamburger chain, American companies have set the pace in the Belgian fast-food market. Fast-food only represents about 5 percent of restaurants sales, which means that the Belgian fast-food sector still lags behind many of its European neighbours. This could be seen as an opportunity for expansion, as Belgium diversifies its traditional eating habits influenced by increased population mobility in a changing Europe. Next to that, Belgium has one of the highest percentages of inbound franchises as a proportion of franchise systems in the European Union, which helps to contribute to the strong competition present in the fast-food sector. Although the most popular fast-food items are hamburgers and pizzas, Belgians continue to have more healthy eating habits. There is a preference for sandwiches, soups, etc This is a result of the dioxin crisis of 1999; Belgians remain septic about food in general. Beside that Belgians are open for new eating concepts and are willing to support new fast food concepts. As the Belgians are having less time for lunch, a quick meal could be the ideal solution, taking into account their preferences. Articles promoting the health problems linked to fast food may have an important impact on social behaviour of the Belgian population (e.g. obesity, illness,). These well-known health problems are not really relevant for the Belgian consumer, because it is fact that the American eating behaviour is different from the Belgians, e.g less fat products, smaller portions, not as frequently visiting fast food chains. Also, Belgians are quite sensitive to the quality of food in general because of previous health dramas the last 4 years (BSE, Bird-plague, etc). It is important that people wont loose their faith in our quality labelled food. Environmental concerns are growing in Belgium; hence foods packaged in earth-friendly biodegradable materials make up a growing segment of the market. Next to that it is important for restaurants to state that the food they offer is not made from genetically modified ingredients. Operational problems increase because it is difficult to obtain planning permissions and licenses in Belgium. The labour costs are also excessively high. This results in a big disadvantage because fast food restaurants are labour intensive. It is of high importance to notice that Belgians believe in their Belgian national pride (as they are a small country). Belgians tend to perceive the United States as a culturally imperialist country. The biggest chance for a hamburger chain to enter the Belgian fast food market would be, offering a value added product in this market. Making each burger according to the customers wishes might appeal to this necessity. By doing this they distinguish themselves from other already existing chains like Quick and McDonalds Two possible niche markets might work; hamburgers at home and hamburgers booth on wheels for festivals (concept of hot-dog booth). This because home delivery is a service well accepted by the Belgians. Secondly, because Belgium is a festival country (Gentse Feesten, Rock Werchter, Beachrock, Pukkelpop, ). The two possibilities can give an added value to the fast food concept, taken into consideration that, extra precautions and new equipments will be necessary. Another possibility is positioning the hamburger restaurant near or at a petrol station or a railway station. The investigation ordered by Rik Daems, minister of Telecommunication and Government Organizations, pointed out some economical facts which might be of interest. One of this is the increasing importance of petrol stations within the Belgian out-of-home-market. The petrol stations are within that market one of the fastest growing segments. Shops, annexed to petrol stations have become strong values within the food service landscape. In these shops, the traditional assortment became broader with more (fresh) impulse articles that anticipate on the on-the-move eating behavior of actual consumers. (Bake-off, pizza, ) Belgium has one of the highest percentages of inbound franchises as a proportion of franchise systems in the European Union, which contributes to the strong competition present in the fast-food sector. Nowadays, Belgium has a high unemployment rate. This might be an opportunity for a new hamburger restaurant, knowing that each restaurant creates new job opportunities inside the region where it would implement (about 70 employees/ restaurant). There are three reasons why I think it is not a good idea for a new fast-food chain to enter the Belgian market. First because Quick and Mc Donalds are the key players in the hamburger market in Belgium. Second, the Belgian market is relatively small compared to other European markets such as Germany or the UK. Third, there are already too many fast food opportunities in Belgium. Nevertheless, if I really would like to play a significant role in the Belgian fast food market, I should think about some methods of strategy development. I could choose between internal development, M A or joint developments and strategic alliances. Mergers and acquisitions are out of the question, I assume that the key players, Quick and Mc Donalds, are not willing to give up their brand name to me a new fast-food restaurant. Joint developments and strategic alliances can be considered. My main reason for this strategy is the cost/risk spreading. The Belgian fast food market is very competitive and difficult. Therefore, I think that I should establish a joint venture, strategic alliance or partnership with other fast food chains in Belgium, e.g. with Panos or Carestel. Panos is present in the Belgian railway stations, known as Panos rail. Since there are just a few hamburger restaurants in the stations, it is an opportunity for me to be the first hamburger chain to be large-scale present there. Carestel, established on 40 different places along the high ways in Belgium and Luxemburg, offers breakfast, traditional Belgian meals, pasta, salads and sandwiches. Starting up a joint venture with Carestel would put me in a unique position to be present along the Belgian highways. The existing platform of Panos and Carestel can be used to accelerate the growth of the brand in Belgium and even across Europe. The size of Panos and Carestels operations and the availability of immediate locations will enable rapid development of a new fast-food restaurant in Belgium. The essence of a joint venture is the synergy effect of two different entities merging. Such an international business strategy will attempt to; solve many logistic problems such as access to good quality meat and other supplies, ease the access to the Belgium market, share risk with a local entity, and finally serve as a sign of commitment to the host government increasing goodwill. In addition, due to the complexity of many barriers to entry into Belgium, a potential partner with sufficient contacts/networks with government agency officials may smoothen the process of setting-up operations in the nation. The potential joint-venture partner should be large, well established, provide excellent distribution channels and have personal network access to government officials. It should also have modern equipment and a good management record. It is recommended that a partner is found by backwards integration. In other words, it is a good domestic meat supplier. In order to ensure total commitment and balance of power between the two partners, a 55/45 joint venture, with me as the dominant partner should be set-up. A joint venture will also significantly ease the entry to the Belgium market. In addition, local business customs and laws can be quicker understood and the local knowledge of culture, language and geography is beneficial for any entrant into a relatively unknown market. Concerning a joint venture with Panos rail, I see this concept more like one location where we are both present and where the consumer can choose between a sandwich or a burger. The reason for the shared site is only practical. Suppose a group of people coming for a snack but they have to be dining separately, is not nice. The consumer can choose in which section he wants to sit, even with a burger is should be possible to sit in the Panos rail area. The fact that the consumer is offered additional choices and varieties on one site is the major commercial advantage. For Panos this would be a unique opportunity to try this concept, and if the joint venture succeeds, Panos could implement this strategy in other European countries. Currently, they only have one franchise abroad, namely in the Netherlands along the A6 in a Q8 petrol station. I think that the best way of promoting my product when it is present at a railway station is in my opinion giving price reductions or free coupons to potential customers by combining the promotion with the train ticket. When a person buys a ticket they will get a coupon or something like that to persuade them to visit my restaurant and buy something. Concerning Carestel, situated along some petrol station on the Belgian highways, we can set up a joint venture. On the current sites of Carestel we could create a burger section and similar like in the railway stations, the dining area should not be separate. It is obvious that these restaurants only have to be established along the busy highways like E 19 Antwerp-Brussels, E 17 Antwerp-Ghent, E 420 Brussels-Charleroi, which is already the case for Carestel. In this case the promotion will probably be in the form of billboards present at the highway or at the sign of the petrol station. I will also try to establish an agreement with the petrol station for coupons and promotion related items to be placed at the counter to make the customers aware that I am there and to persuade them to visit me and try my products.