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Burger King Marketing
Burger King Marketing Mix
Introduction
Based in Miami, Florida, Burger King is one of the worlds best known fast food restaurants (it is the second largest company in the world). The company’s 40,000 plus employees helped it earn over $190 million dollars in 2008. Its success is reflected in a 28.4 percent increase in net profits for FY 2008.
Currently Burger King operates in about 71 countries worldwide, but it all began in Miami where the first restaurant was opened in 1954, and began to grow exponentially after the introduction of the Whopper sandwich in 1957. The firm became a publicly traded company in 2006.
Product
· As a fast food hamburger restaurant (FFHR) chain, Burger King produces, hamburgers, cheeseburgers as well as Fries, Salads, Hash browns, Onion rings, Coffee, Juice, Shakes, cookies and pies.
· Burger King sets itself apart from competition with its “have it your way” theme which allows individualize each orders with many options including fries or onion rings, cheese, bacon, mustard, ketchup, mayonnaise, lettuce, tomato, pickles, and onion.
· The nation's No. 2 burger chain will add Starbucks Corp.'s Seattle's Best Coffee to all its U.S. restaurants in a phased roll-out that begins in the summer of 2010. Under the effort, more than 7,000 Burger King Restaurants will begin selling the coffee along with iced varieties that also come with a choice of plain, vanilla or mocha flavors and whipped toppings.
· Burger King has signed a licensing deal with ConAgra Foods Lamb Weston which will result in offering a retail line of microwaveable Burger King Brand French fries at select retailers in the United States, including Wal-Mart.
Price
· Burger King recently joined McDonalds in offering a $1 double cheese burger. Some of its franchises claimed the price reductions cut into profits. Burger King has reportedly ended its unpopular (among franchise owners) $1 double cheeseburger promotion.
· Burger King plans to sell slushy drinks for $1 leading into the summer in order to offer an alternative to McDonalds $1 summer drink.
· The company also will continue to sell its new premium burger, the Steakhouse XT, for $3.99 through mid-September, with another national television ad splash planned in August.
Place
· Burger King operates its business via franchises, under a franchise arrangement, the franchisees invest in the equipment, signage, seating and decor, while the company owns or leases the land and building. The company generates revenues from three sources: sales at company restaurants, royalties and franchise fees and property income from those franchises that lease or sub lease property from the company.
· Burger King occupies primary locations.
Promotion
· Burger Kings Big Value Menu $1 Talent Show invites customers to display their talent via videos they submit with the goal of winning a menu item.
· The company has coined the term “next best move” to feature scheduled promotional tours with stops in urban communities around the country. The effort is augmented by a special website where Participants can describe community service contributions.
· Burger King is backing its biggest product launch of the year, the Tendercrisp Premium Chicken burger, with a promotion theme encouraging consumers to “cheat on beef”'. The campaign began in March of 2010 using ads created by Crispin Porter & Bogusky.
Process
· A Burger King strategy has focused the customer segment that spends the most money at its restaurants. These young men and women visit fast-food burger chains on average almost 10 times per month.
· The company has employed a combination of “loss leader” promotions” coupled with upsells of more expensive menu items, specifically higher-margin French fries and soft drinks.
· Recently Burger King has concentrated on adding restaurants and entering new strategic markets. They have added over 400 new restaurants in the last three years.
· The company seeks to further growth and popularity via its innovative marketing promotions such as the King television commercials.
Physical Evidence
· Burger King, based in suburban Miami, Florida, operates more than 11,900 restaurants in all 50 states including 107 in Alabama, 122 in Arizona, 336 in Michigan and 547 in its home state of Florida.
· Burger King has an internet presence via its website BK.com. The site provides company information such as a video history of the company, press releases, and stock information.
· The company is in the process of reinventing its image via key changes in its decor. Its new restaurants will feature modern, box-like architectural lines and urban-industrial building materials, including corrugated metal.
People
· John W. Chisley is Burger Kibgs Chieg Executive Officer and Executive Chairman of The Board. He has served in the CEO capacity since 2008.
· Alexandra Galindez the director of multicultural marketing for Burger King and in charge of implementing its “Next Best Move” initiative, which seeks to strengthen its standing in urban communities by conducting a national tour to community basketball courts in 41 markets.
· In 2009 Black Enterprise magazine named Burger King one of the "40 Best Companies for Diversity."
· Burger King pairs its “have it your way” theme with speedy customer service. To facilitate fast service Burger King takes customer orders on a continual basis. After an order is taken, the customer then moves down the line where another employee is preparing the order. Meanwhile, the original employee is taking another customer's order. Customers also get their own drinks while they are waiting for their meal.
Controversies and legal cases
Burger King legal issues and Burger
King (Mattoon, Illinois)
Burger King has been involved in several legal disput es and cases, as both plaintiff and defendant, in the years since its founding in 1954. Disputes involving these many legal topics have affected almost every aspect of the company's operations. Depending on the ownership and executive staff at the time of these incidents, the company's responses to these challenges have ranged from a conciliatory dialog with its critics and litigants, to a more aggressive opposition with questionable tactics and negative consequences. The company's response to these various issues has drawn praise as well as accusations of political appeasement from different parties over the years. Controversies and disputes have arisen with groups such as People for the Ethical Treatment of Animals (PETA), governmental and social agencies, and unions and trade groups over various topics. These situations have touched on legal and moral concepts such asanimal rights,[82] corporate responsibility, ethics, and social justice.[notes 28] While the majority of the disputes did not result in lawsuits, in many of the cases the situations raised legal questions, dealt with legal compliance, or resulted in legal remedies such as changes in contractual procedure or binding agreements between parties. The resolutions to these legal matters have often altered the way the company interacts and negotiates contracts with its suppliers and franchisees, or how it does business with the public.[85][86][notes 29][notes 30]Further controversies have occurred during the company's expansion in the Middle East. The opening of a Burger King location in Ma'aleh Adumim, an Israeli settlement in the Israeli-occupied Palestinian territories, lead to a breach of contract dispute between Burger King and it's Israeli franchise due to the hotly-contested international dispute over the legality of Israeli settlements in the Palestinian territories in accordance to international law. The controversy eventually erupted into a geopolitical dispute involving Muslim and Jewish groups on multiple continents over the application of, and adherence to, international law. The case eventually elicited reactions from the members of the 22-nation Arab League. The Islamic countries within the League made a joint threat to the company of legal sanctions including the revocation of Burger King's business licenseswithin the member states' territories. A related issue involving members of the Islamic faith over the interpretation of the Muslim version of canon law,Shariah, regarding the promotional artwork on a dessert package in the United Kingdom raised issues of cultural sensitivity, and, with the former example, posed a larger question about the lengths that companies must go to insure the smooth operation of their businesses in the communities they serve.A trademark dispute involving the owners of the identically named Burger King in Mattoon, Illinois, led to a federal lawsuit. The case's outcome helped define the scope of theLanham act and trademark law in the United States. An existing trademark held by a shop of the same name in South Australia forced the company to change its name in Australia, while another state trademark in Texas forced the company to abandon its signature product, the Whopper, in several counties around San Antonio. Legal decisions from other suits have set contractual law precedents in regards to long-arm statutes, the limitations of franchise agreements, and ethical business practices. Many of these decisions have helped define general business dealings that continue to shape the entire marketplace.Burger King Franchises
Burger King Franchises
When Burger King Corporation began franchising in 1959, it used a regional model where franchisees purchased the right to open stores within a geographic region. These franchise agreements granted BKC very little oversight control of its franchisees and resulted in issues of product quality control, store image and design, and operational procedures. During the 1970s, structural deficiencies in Burger King's franchise system became increasingly problematic for Pillsbury. A major example was the relationship between Burger King and Louisiana-based franchisee Chart House, Burger King's largest franchisee group at the time with over 350 locations in the United States. The company's owners, William and James Trotter, made several moves to take over or acquire Burger King during the 1970s, all of which were spurned by Pillsbury. After the failed attempts to acquire the company, the relationship between Chart House and Burger King soured and eventually devolved into in a lawsuit. Chart House eventually spun off its Burger King operations in the early 1980s into a holding company called DiversiFoods, which in turn was acquired by Pillsbury in 1984 and absorbed into Burger King's operations. As part of the franchising reorganization segment of Operation Phoenix, Donald N. Smith initiated a restructuring of future franchising agreements in 1978. Under this new franchise agreement, new owners were disallowed from living more than one hour from their restaurants – preventing corporations from owning franchises. Franchisee were also now prohibited from operating other chains, preventing them from diverting funds away from their Burger King holdings. This new policy effectively limited the size of franchisees and prevented larger franchises from challenging Burger King Corporation as Chart House had. Smith also sought to have BKC be the primary owner of new locations and rent or lease the restaurants to its franchises. This policy would allow the company to take over the operations of failing stores or evict those owners who would not conform to the company guidelines and policies. By 1988, parent company Pillsbury had relaxed many of Smith's changes, scaled back on the construction of new locations and stalled growth. Neglect of Burger King by new owner Grand Met and its successor Diageo, further hurt the standing of the brand, causing significant financial damage to BK franchises and straining relations between the parties. A Burger King franchise adapted to operate in the historic district of Oaxaca, Mexico By 2001 and after nearly 18 years of stagnant growth, the state of its franchises was beginning to affect the value of the company. One of the franchises most heavily affected by the lack of growth was the nearly 400-store AmeriKing. By 2001, the company, which until this point had been struggling under a nearly $300 million (USD) debt load and been shedding stores across the US, was forced to enter Chapter 11 bankruptcy. The failure of AmeriKing deeply affected the value of Burger King, and put negotiations between Diaego and the TPC Capital-lead group on hold. The developments eventually forced Diaego to lower the total selling price of the chain by almost $750 million dollars (USD). After the sale, newly appointed CEO Bradley Blum initiated a program to help roughly 20 percent of its franchises, including its four largest, who were in financial distress, bankruptcy or had ceased operations altogether. Partnering with California-based Trinity Capital, LLC, the company established the Franchisee Financial Restructuring Initiative, a program to address the financial issues facing BK's financially distressed franchisees. The initiative was designed to assist franchisees in restructuring their businesses to meet financial obligations, focus on restaurant operational excellence, reinvest in their operations, and return to profitability. Individual owners took advantage of the AmeriKing failure; one of BK's regional owners, Miami-based Al Cabrera, purchased 130 stores located primarily in the Chicago and the upper mid-west region, from the failed company for a price of $16 million (USD), approximately 88 percent of their original value. The new company, which started out as Core Value Partners and eventually became Heartland Foods, also purchased 120 additional stores from distressed owners and revamped them. The resulting purchases made Cabrera the largest minority franchisee of Burger King, and Heartland one of the company's top franchises. By 2006, the company was valued at over $150 million (USD), and was sold to New York–based GSO Capital Partners. Other purchasers included a three way group of NFL athletes Kevin Faulk, Marcus Allen and Michael Strahan who collectively purchased 17 stores in the cities of Norfolk and Richmond, Virginia;[74] and Cincinnati-based franchisee Dave Devoy, who purchased 32 AmeriKing stores. After investing in new decor, equipment and staff retraining, many of the formerly failing stores have shown growth approaching 20 percent.
