KFC and McDonald’s are two of the most popular fast food chains in China. Both brands have been very successful in China, with KFC having over 4,000 outlets and McDonald’s over 2,000.
One of the keys to their success has been their marketing strategy. They have both tailored their marketing to appeal to Chinese consumers.
For example, KFC uses Chinese celebrities in its advertising and promotes itself as a family-friendly restaurant. It has also opened restaurants in rural areas, where there is less competition from other brands.
McDonald’s, on the other hand, has positioned itself as a more premium brand. It has used Western celebrities in its advertising and promoted itself as a healthier alternative to other fast food chains.
Both brands have also been very active on social media, which is extremely popular in China. KFC has even launched its own mobile app.
Overall, KFC and McDonald’s have been very successful in China thanks to their tailored marketing strategy. They have both managed to appeal to Chinese consumers and stand out from the competition.
On a global level, McDonald’s company sales and operate income handily surpassed KFC. However, once McDonald’s penetrated the Chinese market, it encountered stronger competition from KFC. This essay compares the marketing strategies of both fast food chains by utilizing the “Seven P Formula.” The result is that localization trumps globalization as the more appropriate marketing strategy for fast food chains emerging in China’s market.
KFC entered China in 1987, one year earlier than McDonald’s. By the end of 2002, KFC had opened 1,108 restaurants in China while McDonald’s had only 205 restaurants. From 2003 to 2007, KFC’s average annual growth rate was 20%, which was much higher than that of McDonald’s (11%). In China, KFC is not only famous for its chicken products but also for positioning itself as a high-quality restaurant. On the contrary, McDonald’s is often perceived as a “cheap eats” restaurant. Therefore, it seems that KFC has been more successful than McDonald’s in China.
One major reason for the success of KFC in China is that it adapts its marketing mix to the local culture. For example, KFC realizes the importance of face in Chinese culture. “Giving face” means to show respect and save someone’s dignity while “losing face” is considered to be shameful. To give face to its customers, KFC China has always attached great importance to the quality of its products and service.
At the same time, KFC China also provides customized products and services according to local needs. For instance, it offers congee (a kind of rice porridge) and soy milk for breakfast in China while westerners usually have bacon and eggs for breakfast. In addition, KFC China delivers food to customers’ homes on special occasions such as the Lunar New Year while McDonald’s does not provide such a service.
Another reason for KFC’s success in China is that it has localized its advertising campaigns. In China, KFC uses celebrities who are popular with the locals to endorse its products. For example, it has employed actress Zhao Wei and actor Huang Xiaoming to be the spokespersons of KFC in China. In addition, KFC China has also produced a series of commercials featuring Chinese characteristics such as traditional festivals and family reunion dinners.
On the other hand, McDonald’s China generally uses Western celebrities such as basketball star Kobe Bryant to promote its products. However, these Western celebrities are not very popular with the Chinese people. Therefore, KFC’s localized advertising campaign has helped to increase its brand awareness and sales in China.
Fast food company McDonald’s uses APMEA (Asia Pacific, Middle East and Africa) to represent Asia in its annual report but fails to show any profit from China. In contrast, KFC saw significant progress in China and chose to highlight this fact by featuring the progress made with new restaurants, recruits, and volume growth in their annual report. The difference between these two fast food companies is mainly due to their marketing strategies–that is, localization was more suitable than globalization as a marketing strategy when fast food chains emerged in China’s market.
KFC China’s localization strategy mainly reflected from three aspects: first, KFC was the first foreign fast food chain who established cooperative relationship with China when China started to open up. It had been set up in China for about 20 years before McDonald’s entered China. Second, KFC attached importance to the China’s situation and took actions to localize its products.
For example, it launched Chinese style hamburger which was based on pork rather than beef to satisfy Chinese consumers; it also developed congee and other breakfast food according to China’s eating habits. Third, KFC improved its service system and tried best to meet Chinese consumers’ expectation on service. For instance, it introduced drive-through service in China to provide more convenience for customers.
On the contrary, McDonald’s is a typical example of unsuccessful globalization. It was difficult for McDonald’s to enter China because of its cultural Arrogance. First, it ignored China’s long-term development strategy and opened too many restaurants in China at the very beginning which led to the saturated market soon and then the decline of sales.
Second, McDonald’s paid little attention to localization. For example, it continued to use beef hamburger as its main product when selling in China while Chinese traditional food culture prefer pork; In addition, it also failed to take effective measures to deal with SARS in 2003 which made it lost good reputation among Chinese consumers.
The marketing concept has been a point of contention for many people over the years. Ferrell et al (1987) provides one of the simpler definitions of it, calling it a process that covers everything from planning and execution to price, products and services. The aim is always to satisfy customers’ or an organization’s objectives.
This definition highlights marketing as a system within an organization that has a useful purpose. The provider’s goal is to offer products and services to make money, while the customer tries to buy items they need. Ideally, there is a give-and-take relationship between the two groups where everyone benefits from the exchange.
However, marketing is not selling and it cannot be performed without selling. It is the process of creating customers and managing customer relationships in order to achieve organizational objectives (Schultz et al, 1969).
The fundamental principle of marketing states that an organization must determine the needs and wants of target markets and deliver the desired satisfactions more effectively and efficiently than its competitors do (Kotler et al, 2009). The application of this concept has been successful as China’s economic reforms have progressed over the past three decades. China’s opening up to the outside world in 1978 marked a new era in China’s development.
China’s GDP growth rate averaged 9.5% per year from 1978 to 2005 (World Bank, 2005). China’s entry into the World Trade Organization (WTO) in 2001 further facilitated China’s integration into the global economy. China’s per capita GDP reached US$1,265 in 2005, up from US$155 in 1978 (World Bank, 2005).
During China’s economic reform process, many multinational corporations (MNCs) entered the Chinese market and established a presence in China. KFC and McDonald’s are two of the most successful MNCs operating in China. KFC entered China in 1987 and was the first Western fast food chain to open a restaurant in China.
