Fast Food Rulers in China - Research Paper Example

Fast Food Rulers in China al Affiliation) Kentucky Fried Chicken (KFC) In 1987, KFC was facing a fall in revenues in theUS market. The Yum Corporation, which is KFC holding company, decided to explore overseas market specifically the Chinese market. China is a country with the highest human population; this means that it offered a promising market for KFC. A market research carried out in China revealed that Chinese taste and preferences were different from that in the US market. As a result, the Yum Corporation decided to adopt a different strategic approach. The approach entailed the addition of dishes to KFC menu that conformed to the Chinese local delicacies. KFC offered food items common in most Chinese restaurants ( Lroche, Kalamas &Huang, 2005). This strategic approach depicts KFC as part of the Chinese community rather than a fast food joint selling low priced westernized food. The company capitalized on small Chinese cities and the establishment of a national business with food joints spread across the country. As a result, the company cut down some of it cost due to economies of scale and distribution of risk. KFC engaged the services of Chinese hotel managers to provide advice on the food tastes. It also established partnership with local food chains and employed more Chinese to operate its emerging branches. So far, the company commands 40% stake in Chinese fast food market with 3300 food outlets in the 650 cities in China. In 1999, KFC developed a distribution chain by building warehouses and managing a fleet of distribution trucks. The trucks were fitted with refrigerators that ensured the foodstuff remain fresh while transporting them from the farm to the restaurants. Though it was an expensive affair, it was vital for the company’s rapid expansion to other cities (Schroder & McEacher, 2005) The McDonalds On the other hand, McDonalds a key rival of KFC holds a 16% stake in the Chinese fast food market. Its approach was far different from it competitor. It chose to stick to its core strategy adopted in the US market. MacDonald menu had no additional dishes that matched the local taste. The layouts of MacDonald’s food outlet depicted a westernized culture. Its target market was the stylish wealthy status-conscious Chinese that sought to imitate the American lifestyle. The McDonald now boasts of 2000 outlets spread across the Chinese cities. It emerged as a global leader in the fast food industry, based on sales, market capitalization, number of employees and revenues (Shen & Xiao, 2014). Its success is attributable to the quality standards the company has maintained globally despite geographical limitation. McDonald has continually developed new menu items that attract new customers. Its marketing tactics are custom-made to meet cultural, economic and sociopolitical aspect of different countries. India’s Fast Food Market India is the second most populated country in the world with a population of close to 1.27 billion people. The youths and women constitute over 60% of the total population. Young people and women are the target market for fast foods in India. The fast food market in India has recently witnessed a dramatic growth due to the numerous entrants of multinational food outlets. The market growth is due to the burgeoning young population, working women and the rise in disposable income. The fact that services in fast food joints are timely and cost effective makes them popular among the masses. As a result, India offers huge prospects to local and international players. According to recent research, Indian fast food business grew by around 34% between 2011 and 2014 (Cheng, 2003). Huge international fast food chains are entering the Indian market through establishing partnership with local players. Established international food chains in the Indian market are expanding their operation to cover the extensive Indian subcontinent. Research has shown that a number of cities in India remain untapped by the fast food retailers (Watson, 1997). A number of food chains have put in place marketing strategies that will make their brand popular in these cities. In addition, they are aiming to provide reasonably priced and custom-built product to meet individual’s needs. There are a number of barriers that international food chain face in the Indian market. This pertains to cultural barriers, religious barriers, eating habits and low purchasing power. Nonetheless, globalization and economy liberalization has brought about major changes in terms of level of education, employment, and growth in national output. This has enhanced the purchasing power of a number of households in India and as resulted in increased sale revenues of fast food retailers (Witkowski, 2007). In India, most fast food retailers are unable to retain their customers. This is largely due to absurd menu options, non-competitive food prices and the lack of effective customer relation services. Some scholars attribute the failures to certain demographic features of the outlets such as inadequate floor space, lack of parking avenues, and entertainment features in the outlets that do not conform to Indian culture. According to recent research, India has one of the highest rates of obesity. This is due to the unhealthy eating habits associated with adoption of western fast foods. Fast foods have higher fat contents and refined carbohydrates. Unhealthy eating has been associated with certain lifestyle diseases such as diabetes and cardiovascular risks. Household perception on fast foods has changed considerably due to increased awareness of healthy eating. As a result, most international fast food retailers are diversifying their products to include some element of healthy eating (Lan & Khan, 1995). Indian food consists of different ranges that vary in the different parts of the country. Nonetheless, westernized food has affected the eating habits of most Indians. This is largely due globalization which has increased the level of awareness plus the changes in patterns of food consumption. In India, there is an increase in the demand for westernized food. Even with such increase, inculcating the western brand with Indian characteristics will give any new company a competitive advantage in the fast food market. As earlier stated, the cultural background of India shapes consumer tastes and preferences. Beef has less inclination in India since the Hindu culture depicts cows as sacred animals. In addition, pork is not popular among Indian consumers since the population comprises Muslims. International fast food retailers should take into consideration such issue in determining the most suitable strategic approach (Wang, Zhu & Terry, 2008). Conclusion As per the above analysis, the strategic approach adopted by KFC is best suited to the Indian market. The Chinese and the Indian market have many similar aspects. For starters, both are the most populated countries worldwide. This means they make up a considerable portion of fast food global market. Furthermore, KFC strategic approach on Chinese market was more successful than that of the McDonalds. References Cheng, T. O. (2003). Fast food and obesity in China. Journal of the American College of Cardiology, 42(4), 773-773. Lan, L., & Khan, M. A. (1995). Hong Kongs fast-food industry: an overview. The Cornell Hotel and Restaurant Administration Quarterly, 36(3), 34-41. Laroche, M., Kalamas, M., & Huang, Q. (2005). Effects of coupons on brand categorization and choice of fast foods in China. Journal of Business research, 58(5), 674-686. Schröder, M. J., & McEachern, M. G. (2005). Fast foods and ethical consumer value: a focus on McDonalds and KFC. British Food Journal, 107(4), 212-224. Shen, Q., & Xiao, P. (2014). McDonalds and KFC in China: Competitors or Companions?. Marketing Science, 33(2), 287-307. Wang, Z. J., Zhu, M., & Terry, A. (2008). The development of franchising in China. Journal of Marketing Channels, 15(2-3), 167-184. Watson, J. L. (1997). Golden arches east: McDonalds in East Asia. Stanford University Press. Witkowski, T. H. (2007). Food marketing and obesity in developing countries: analysis, ethics, and public policy. Journal of Macromarketing, 27(2), 126-137. Read More