INTERNATIONAL MARKETING 1 Table of Contents 1 Introduction

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Table of Contents
1 Introduction ………………………………………………………………………………………………….. 2
1.1 McDonald’s ………………………………………………………………………………………… 2
1.2 Kentucky Fried Chicken ………………………………………………………………………. 3
2 Market Entry Mode …………………………………………………………………………………… 5
2.1 McDonald’s Entry Mode ………………………………………………………………………. 5
2.2 Kentucky Fried Chicken Entry Mode …………………………………………………….. 6
3 Products Selling …………………………………………………………………………………………. 7
3.1 McDonald’s Products …………………………………………………………………………… 7
3.2 Kentucky Fried Chicken Products …………………………………………………………. 9
4 Marketing Strategy ………………………………………………………………………………….. 11
4.1 McDonald’s Marketing Strategy ………………………………………………………….. 11
4.2 Kentucky Fried Chicken Marketing Strategy ………………………………………… 13
5 Comparing Both Marketing Strategies ………………………………………………………… 13
6 Conclusion ………………………………………………………………………………………………. 14
7 Reference………………………………………………………………………………………………… 15

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1 Introduction
1.1 McDonald’s

Figure 1: McDonald’s Logo
Source (McDonald’s, 2018)
McDonald’s is an American fast food company, founded in 1940 by the brothers
Richard and Maurice McDonald, in San Bernardino, California, United States. They
rechristened their business as a hamburger stand, and later turned the company into a
franchise. In 1955, the businessman “Ray Kroc” joined the company as a franchise
agent and proceeded to purchase the chain from the McDonald brothers. McDonald’s
had its original headquarters in Oak Brook, Illinois, but moved its global headquarters
to Chicago in early 2018 (McDonald’s, 2018).
Furthermore, McDonald’s is considered the world’s largest restaurant chain by revenue.
Mcdonald’s is serving over 69 million customers daily in over 100 countries across
approximately 36,900 outlets. However, McDonald’s is known for its hamburgers but
they also sell cheeseburgers, chicken products, french fries, breakfast items, soft drinks,
milkshakes, wraps, and desserts. Moreover, in response to changing consumer tastes
and a negative reputation of the unhealthiness of McDonald’s food, the company has
added to its menu salads, fish, smoothies, and fruit. Furthermore, McDonald’s revenues
come from rent, royalties, and fees paid by the franchisees, as well as sales in company
operated restaurants. Additionally, according to a BBC report published in 2012
mentioned that McDonald’s is the world’s second-largest private employer (behind
Walmart) with 1.9 million employees and 1.5 million of whom work for franchises.
Figure below shows the number of countries Macdonald’s is operating in. Nevertheless,
McDonald’s is known for its slogans “I’m Lovin’ it” (BBC, 2012).

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Figure 2: Countries where McDonald’s operating.
Source (Fox News, 2018)
1.2 Kentucky Fried Chicken

Figure 3: KFC Logo
Source (KFC, 2018)
Kentucky Fried Chicken also known as “KFC”, is an American fast food restaurant
chain that specializes in fried chicken which was founded by Colonel Harland Sanders
and headquartered in Louisville, Kentucky. KFC is the world’s second-largest
restaurant chain as measured by sales, after McDonald’s, with almost 20,000 locations
globally in 123 countries and territories. Moreover, KFC chain is a subsidiary of Yum!
Brands which is a restaurant company that also owns the Pizza Hut, Taco Bell, and
WingStreet chains. Moreover, Colonel Sanders identified the potential of the restaurant
franchising concept, and the first “Kentucky Fried Chicken” franchise opened was in

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Utah in 1952. Furthermore, KFC popularized chicken in the fast food industry,
diversifying the market by challenging the established dominance of the hamburger and
by branding himself as “Colonel Sanders”, he became a prominent figure of American
cultural history, and his image remains widely used in KFC advertising. However, the
company’s rapid expansion overcome the aging Sanders. Therefore, he sold it to a group
of investors led by John Y. Brown Jr. and Jack C. Massey in 1964. Additionally, KFC
was one of the first American fast food chains to expand internationally, opening outlets
in Canada, the United Kingdom, Mexico, and Jamaica in 1960s. Throughout the 1970s
and 1980s, it experienced mixed fortunes domestically, as it went through a series of
changes in corporate ownership with little or no experience in the restaurant business
(Dawson, 2015).
In the early 1970s, KFC was sold to the spirits distributor Heublein, which was taken
over by the R.J. Reynolds food and tobacco conglomerate; and that company sold the
chain to PepsiCo. After that the chain continued to expand overseas and in 1987 it
became the first Western restaurant chain to open in China. Then, PepsiCo turned its
restaurants division as Tricon Global Restaurants, which later changed its name to
Yum! Brands. KFC’s original product is pressure fried chicken pieces, seasoned with
Sanders’ recipe of 11 herbs and spices. The constituents of the recipe represent a notable
trade secret. Larger portions of fried chicken are served in a cardboard “bucket”, which
has become a well-known feature of the chain since it was first introduced by franchisee
Pete Harman in 1957. Furthermore, 1990s KFC has expanded its menu to offer other
chicken products such as chicken fillet sandwiches and wraps, as well as salads and
side dishes, such as French fries and coleslaw, desserts, and soft drinks, the latter often
supplied by PepsiCo. Moreover, KFC is known for its 3 slogans “Finger Lickin’ Good”,
“Nobody does chicken like KFC” and “So good”. The figure below shows the number
of KFC restaurants globally (KFC, 2018).

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Figure 4: (No. of KFC restaurant worldwide)
Source (Statista, 2018)
2 Market Entry Mode
2.1 McDonald’s Entry Mode
There are different modes of entry chosen by companies depending upon the degree of
resource commitment and the risks involved in the mode in a particular region.
Franchise is a less risker and cheaper mode of entry which is a best option for
McDonald’s as they had to adapt as per the local community preferences so they wanted
local business people to handle the business. Therefore, 80% of the McDonald’s
restaurants are franchised and has led to many years of growth, profit and risk reduction
(Nielson, 2013).

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McDonald’s franchising opened up a job market for the local people and provided
several growth opportunities to them. Regional franchise holders were capable of
building up a brand image for the company and made it successful in the long run. The
‘trans- national’ strategy of McDonald’s overseas provides high degree of local
responsiveness which helped McDonald’s serves a menu with assured level of quality
in the markets where it operates (Griffioen, 2011).
2.2 Kentucky Fried Chicken Entry Mode
KFC was concerned about the declining profitability in home market because of tough
competition and hence was willing to fund KFC for overseas expansion. In order to
reduce risk of overseas expansion, KFC encouraged franchising in complicated markets
but faced challenges in aligning corporate planning with franchisee’s short term
profitability. Therefore, KFC deployed other entry strategies like Joint Venture with
large scale poultry producer for Japanese market in early 1970s. As Joint Venture’s
helped KFC to manage sourcing, logistics problems and also helped addressing quality
of chicken and other supplies. Moreover, KFC also had entered foreign markets by
suing Greenfield as their mode of entry whereby establishing a company-owned foreign
subsidiary (Chan, 2015).
Furthermore, KFC encountered problems with aligning corporate planning with
franchisee’s short-term focus on profitability. Therefore, a joint venture was the solution
as 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 chicken and other supplies which will also ease the access
to a foreign market. Through joint venture; as a mode of entry, KFC can share risk with
a local partner which will led to a big commitment from the host partner in order to
increase the helpfulness and at the end it will also led to a win-win situation between
KFC and its partner’s (Hopkins, 2017; Sara, 2015).

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3 Products Selling
3.1 McDonald’s Products
McDonald’s ensures that it standardizes operations across its franchises to ensure a
standard McDonald’s experience anywhere in the world. Whereby aim’s that customers
in California would have the same experience if they visited an outlet in Paris.
Therefore, McDonald’s achieves this by reducing the amount of skill required in the
preparation of its product line. However, this has been done by breaking the process
into a series of repeatable actions to achieve the same result. Hence, by giving
instructions to workers off the streets and providing each location with the same frozen
meat products, McDonald’s can ensure that each worker follows the same procedure
and has an identical output at any McDonald’s across the region. Furthermore, for a
successful business in host countries McDonald’s had to customize its business strategy
to the local needs and tastes. Therefore, Regional strategy became important for
McDonald’s so they started their expansion in Asian countries as their culture is very
different from western world. (Cardoza, 2017).
Thus, McDonald’s adopted product localization and innovations for new offerings
based on local tastes and needs and in 1963 it introduced the “Filet-of-Fish” sandwich
in the Cincinnati area for Catholics who did not eat meat on Friday. This was the first
new offering added to the standard menu and went national the following year. After
that, the “Big Mac” was introduced in 1968 and the “Egg McMuffin” was developed in
1973 by McDonald’s. Also a Canadian franchisee invented The “McFlurry” in 1997.
However, McDonald’s uses chicken instead of pork and beef in India and also
introduced “Maharaja Mac, McAloo Tikki” which is suitable to local tastes and
tradition. Besides buying their ingredients where they operate, around the world the
restaurants also adapt the McDonald’s menu to local tastes, such as Germany serving
shrimp cocktail, Italy’s burger being topped with Parmigiano-Reggiano cheese,
Australia offering a guac salsa or a bacon cheese sauce as a topping for fries, and French
customers being able to order a caramel banana shake also the “McRaclette” is available
only in Switzerland. Nevertheless, as mentioned above that there are different products
for different customers in different location and with different food categories that are
produced by McDonald’s and the figure below shows some McDonald’s products
(Osswald, 2013).

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Figure 5: Some McDonald’s Products
Source (McDonald’s, 2018)

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3.2 Kentucky Fried Chicken Products
KFC primarily sells chicken pieces, wraps, salads and sandwiches. While its primary
focus is fried chicken, KFC also offers a line of grilled and roasted chicken products,
side dishes and desserts. Outside North America, KFC offers beef based products such
as hamburgers or kebabs, pork based products such as ribs and other regional fare.
However, KFC adapts its menu internationally to suit regional tastes, and there are over
three hundred KFC menu items worldwide. For example, some locations such as United
Kingdom and United States sell grilled chicken. Whereas, in Islamic countries the
chicken served is halal while in Asia there is a preference for spicy foods like the Zinger
chicken burger (Writer & Rothkrug, 2015).
Also, some locations in the United State sell fried chicken livers and gizzards and in
some Malaysian markets KFC has different limited-time products to cater to different
festive seasons such as Ayam Kicap Meletup for Eid al-Fitr seasons and Golden
Treasures for Chinese New Year in. Moreover, number of countries such as Japan,
Jamaica, Trinidad, Barbados, Ecuador and Singapore sell fried seafood products under
the “Colonel’s Catch” banner. Furthermore, the drinks that are offered by KFC are
different in different region and due to KFC previous relationship with PepsiCo, most
countries supply PepsiCo products, but exceptional areas include Barbados, Greece,
New Zealand, the Philippines, Romania, South Africa, and Turkey, supply the drinks
from Coca-Cola Company (Fox News, 2013).
However, number of Eastern European locations and Portugal the drink offered is beer
in addition to soft drinks. Furthermore, deserts is offered by KFC such as the Krusher
range of frozen beverages containing “real bits” like Kit Kat, Oreo and strawberry
shortcake. Also the Italian desserts offered by KFC are the Profiteroles, Tiramisu and
Tartufo. Moreover, KFC breakfast menu began to be rolled out internationally
including pancakes, waffles and porridge as well as fried chicken. Nevertheless, as
mentioned above that there are different products for different customers in different
location and with different food categories that are produced by KFC and the figure
below shows some KFC products (KFC, 2018).

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Figure 6: Some KFC Products
Source (KFC, 2018)

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4 Marketing Strategy
4.1 McDonald’s Marketing Strategy
Choosing a marketing strategy that can work for McDonald’s company they need to
address the product to the right customer and right market. Therefore, in order to
develop the suitable marketing strategy, it was important for any company to
understand the consumer market. The more one knew and understood about consumers,
the more effectively they can communicate and market to them. Furthermore,
McDonald’s business structure which is based on geographic structure of a region has
a major impact on its strategies. McDonalds has divided its functioning into 5
geographical divisions. Whereby, United States and Europe are the highest revenue
generators for McDonald’s, as United State region generate 65% and Europe region
generates 75%. Moreover, an important strategic approach McDonalds implement is
keep maintaining the major markets and simultaneously expanding the business into
other emerging markets which led to a big expansion for McDonald’s (Gerhardt et.
al., 2014).
However, it is known that different customers in different regions have different tastes
and demands, so to fulfil the requirements McDonalds have set up local geographic
units in different regions to adjust the product and services as per the taste of the local
customer therefore the units are sole responsible for producing, branding and marketing
in that region. Furthermore, using such geographical units McDonalds is able to have a
maximum hold of a specific region as well as it is able to satisfy the needs of the local
customers and promotes ‘maximum local development’. Nevertheless, customers in
different nations have different preferences for the food items hence McDonald’s keep
on launching different items in their menu for their regional local customers. China and
India are very good examples of this (McGee, 2015).
Therefore, McDonald’s key to success is the “think global and act local” business
strategy which helped it achieves competitive advantage in the fast growing fast-food
industry. Nevertheless, consumer behaviour was needed to be examined in order to
understand a consumer market and there are four aspects which are the ability of the
people to buy, consumer needs, buying motives and the buying process. For the ability
of people to buy McDonalds it is known that McDonald’s is affordable and their
customers are the ambitious middle, upper middle and affluent classes who were keen
to combine eating with fun. Yet, Children were the major influencers as they can

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influence the decision making of parents as regards the choice of a restaurant (Han,
2008; Zhang & Zhou, 2012).
Further, Happy Meal was used to reflect the fun element of the experience at
McDonald’s and it were all about the simple pleasures of childhood, a time of
excitement, joy, and being treated special. Beside, each Happy Meal there was themed
an offer which is a set of collectible toys from that particular theme. In this deal the
customer got a choice of a burger, a drink and a toy. Furthermore, it is known that
McDonald’s is one of the largest advertisers amongst its competitors. By having an
integrated brand promotion across the world, McDonald’s ensures high identification
and a uniform brand image across the geographies and markets in which it operates. To
sum up, we perceive that Happy Meals were a huge success for McDonald’s and also
it is considered as a competitive advantage for the company as they are the only fast-
food restaurants who provide such meal for kids. As Happy Meal can increase its profits
and advertise more on Happy Meal (Corcoran, 2017; Ma, 2018).

Figure 7: McDonald’s Happy Meal
Source (McDonald’s, 2018)

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4.2 Kentucky Fried Chicken Marketing Strategy
The primary goal of developing a customer driven marketing strategy is to build a
strong and profitable relationship with the customers for accomplishing short and long-
term organizational goal. Therefore, this can be achieved through market segmentation,
targeting and positioning. Furthermore, KFC uses demographic segmentation to serve
the market as per customer needs and wants. The consumers of KFC are the young as
well as young adults. Moreover, KFC used to serve the same menu all around the world
which means that it was using undifferentiated targeting strategy. However, in recent
times; following McDonalds, KFC has started localising its menu and giving it better
acceptability in the market. Moreover it has transformed its positioning strategy from
product based to value based in recent times and nowadays KFC is strongly positioned
in the minds of consumers for its Chicken menu (Schlegelmilch, 2016).
Furthermore, KFC customer are people from different age group, all who want to
satisfy their taste buds with the finger licking delicious chicken menu. Yet, most of the
customers can be defined as young adults who can shell out with a minimum amount
of money to have a delicious meal. Moreover, KFC have different markets globally
however although more than 50% of its sales come from Developed nations but
those markets have stagnant growth rate and developing nations like India, China and
many others have big potential for KFC. However, the market is still growing but fast
food chains have low acceptance in developed markets because developed nations are
becoming more health conscious (Kotabe & Helsen, 2014; Zhang & Zhou, 2012).
5 Comparing Both Marketing Strategies
KFC and McDonald’s are facing a strong competition between each other but when it
comes for their marketing strategy we can say that both companies are using similar
marketing strategy as they are global companies but acting locally which means that
they are producing different dishes and food for different locations and regions in order
to meet local customer taste and preference. Moreover, when it comes for the
promotions and prices it is known that McDonald’s is quite cheaper than KFC but this
is only in some countries. For example, in Malaysia McDonald’s is cheaper than KFC
while in the United Kingdom KFC is cheaper compared to McDonald’s. Despite the
price for family meal, KFC is much more cheaper than McDonalds and this is because
KFC offers a family meal while McDonald’s don’t therefore the family meal is

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considered the competitive advantage for KFC whereas for McDonald’s the Happy
Meal is considered their competitive advantage.
6 Conclusion
In conclusion, McDonald’s and KFC are two of the biggest multinational companies in
the fast-food industry and they are considered a strong competitors to each other.
Moreover, in this report an introduction was given about the two mentioned above
companies and in how many countries they are operating. Also it was discussed about
the mode of entry McDonald’s and KFC are using for their global expansion to different
countries and it was found that both companies are using franchising as their mode of
entry to a new market yet they are using other mode of entry such as joint venture as
well as Greenfield. Furthermore, this report also discussed about the products offered
by the two multinational companies, McDonald’s and KFC where a brief introduction
was given about their products with different food categories offered in their menu.
Last but not least, a critical analysis was gives about the marketing strategy that both
companies are using and a comparison of the marketing strategy of the two companies
was also discussed earlier.

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