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BK’s major strategy in Vietnam is to extend as fast as possible its fast food population by opening new stores, at the speed of 3-4 restaurants per month.
More bigger product for reasonable price strategy
BK is trying to make new product suitable with Vietnamese’s taste and budget (new kinds of meat other than beef)
BK is conducting several price-cutting promotion to attract new consumers to “taste” the Whopper.
Appealing place decoration – distinctive environment. Its new restaurants will feature modern, box-like architectural lines and urban-industrial building materials, including corrugated metal, along with red flame on black background.
In Vietnam, BK continues to conduct several sale discount to celebrate the opening of new restaurant.
Burger King has an internet presence via its facebook fanpage. Burger King to Deal With Vietnam Market Bargaining power of customer:
Buyer information availability: high, young fast food eaters are well informed about different brands of fast food.
Buyer price sensitivity: high, people are wildly attracted to promotion events.
Differential advantage (uniqueness) of industry products: quite high (according to review article online, BK’s Whopper is perceived to provide more satisfying experience than other fast food).
For people having fast food habit, the average frequency of eating in fast food restaurant is twice a month. People of 24-29 age group has the highest percentage of eating in fast food restaurant. Hanoi consumers are more frequently seen in fast food restaurant than HCMC. Burger King to Deal With Vietnam Market Competitive rivalry within an industry:
Average price of other fast food chain brand in Vietnam:
• 50.000 – 70.000 VND: Phở 24
• 70.000 – 90.000 VND: Lotteria and Jollibee
• 90.000 – 110.000 VND: KFC, Pizza Hut and BBQ Chicken
Other than foreign fast food, there are Vietnamese fast food chain: VietMac, Pho24. Burger King to Deal With Vietnam Market Burger King to Deal With Vietnam Market First restaurant in Ho Chi Minh City in 2011 – at the airport.
BK’s offers in Vietnam haven’t got much variances comparing to original Whopper so we will not analyze specific products as BK’s SBU in Vietnam.
Fruit salad (new BK product) also not introduced in Vietnam.
BK burger chain is franchised into Vietnam to Blue Kite Food and Service Co. Ltd. in 2011. First restaurants are based in Ho Chi Minh and Da Nang International Airport. Then 8 other locations opened shortly around Ho Chi Minh city. In Hanoi, 2 locations are opened in 2013. How Burger King comes to Vietnam ? Operation: The franchises of Burger King played a major part in expansion of the parent company from the early 1960’s till date (more than 90%, compared to McDonalds 30%).
Primarily, the company operated with major investment from franchises and minimal from the company, so the decisions and relationship with franchises was crucial. Burger King Marketing Strategy Geographic segmentation
Saigon:the biggest city in Vietnam with highly energetic population.
Hanoi: the second biggest city in Vietnam and also its capital with rather conservative population.
“Have it your way” –
Burger King positions itself as a brand for young men and young families. Where the King stands? Demographic segmentation
Students: Affluent students whose income (from part-time jobs or from parents) is more than $500 (top 10%).
White-collar workers: Middle and upper-income workers whose earning is more than $1000 per month.
Children from rich family with busy parents: Children from big cities with wealthy but busy or lazy parents. Where the King stands? Fast food life cycle in Vietnam
Currently, BK Vietnam is in introduction stage with the plan to extend as much restaurants as possible in Vietnam. The introduction stage applies for: fast food product (which comes along with fast food culture in Vietnam)
Vietnamese people is in the process of trying and experiencing fast food culture.
Fast food culture has been introduced to Vietnamese people from 1997 by the appearance of KFC’s restaurant but still the population of young people consuming fast food is low and increasing slowly. Burger King to Deal With Vietnam Market Threat of substitute products
Quick meal providers are the most formidable competitors. Other competitors are home-made bring-along meal or meal at home; or meal provided at office.
Ease of substitution: easy, however depending on taste and situation and availability of home-made meal. Burger King to Deal With Vietnam Market Threat of new entrants
New entrants into fast food market can be: Subway, McDonalds, and some oncoming Vietnamese owned fast food. The following incumbents will decide the possibility of a profitable entrant:
Capital requirements: cost of hiring space for new restaurant in Vietnam is high (due to high real estate price), which can amount to 25% of total revenue. For franchisees, they need 250.000 - 500.000 USD to be franchised by a famous brand.
Customer loyalty to established brands: fast food brand in Vietnam create little brand loyalty.
Industry profitability: promising but undecided. KFC needs 7 years of net loss before reaping any profit. Burger King to Deal With Vietnam Market Bargaining power of customer:
Vietnamese people prefer traditional quick served meal than fast food due to lower cost and more familiar taste.
Vietnamese people interest on a fast food brand is decided by 4 factors: 1st is price; 2nd is promotion channel; 3rd is location; and 4th is product.
Buyer switching costs relative to firm switching costs: buyer switching cost is none. Firm can switch to more adaptive product with some cost to do research and testing. Burger King to Deal With Vietnam Market Bargaining power of supplier:
For BK franchisee in Vietnam, supplier can be: raw material supplier – meat from Australia (rely on tax on imported agriculture product); BK international (supplying management and financial resource).
Employee: good supply of young workers to be serving staffs; newly graduate from business schools also seeking for management jobs in restaurant and fast food industry. Burger King to Deal With Vietnam Market
Most Referred Fast Food Brands in Vietnam Burger King to Deal With Vietnam Market Competitive rivalry within an industry:
BK is in fast food industry, which is illustrated as below:
Sustainable competitive advantage through innovation: fast food providers in Vietnam are improving and streamlining their products and service to suit Vietnamese taste and habit. BK has experience of changing and making variance to their products to fits local interest.
Powerful competitive strategy: BK is well-known as world’s second largest fast food chain, with strong management and marketing expertise.
Firm concentration ratio: high, in large cities, in crossroads or entertainment places (counting the other local quick meal provider then the density is very high) Burger King to Deal With Vietnam Market Burger King to Deal With Vietnam Market Burger King to Deal With Vietnam Market Technology: The company was set-up on the basis of the oven called ‘Insta-broiler’ for cooking burgers. Insta-broiler has created a tasty and fast beef for BK’s Whopper Burger.
Burger King utilize the social network (twitter, facebook) to make their image widely available for everyone. Burger King Marketing Strategy Product: Whopper is BK’s signaling burger offering special flame grilled beef and sesame seed bun, along with mayonnaise, lettuce, tomato, pickles, ketchup, and sliced onion.
French salad, soft drinks and coffee are complementary. Burger King Marketing Strategy Established in US in 1953.
Revenue: 2,33 bil USD
Net profit: 107 mil USD
Total asset: 5,58 bil USD
Equity: 1,45 bil USD
Personnel: 34.248 staffs
(2012 Wikipedia figures) Burger King – Quick look Presentation Outline Quick look of Burger King International
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Burger King marketing strategy on corporate level
Product life cycle – Fast food culture in Vietnam
Burger King’s Strategic Orientation
Segmentation and Positioning Burger King’s Franchising Activity In Vietnam
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