What future challenges does YUM face in China?

Yum, which known as the parent company of restaurant chains, such as KFC, Pizza Hut, and Taco Bell. Since they opened the first KFC restaurant in Beijing in 1987, nowadays they become one of the most successful Western restaurant groups in China. However, Yum still faces some challenges. Many analysts believe that they have to solve problems including market burden, rising competition, food safety issues and slowing economic growth.

Market burden

In the United States, fast food restaurants, such as McDonald’s, KFC and Burger King, people consider them as junk food. With the lower price compare to other restaurants, people who go to these fast food restaurant most likely to be lower middle class. Thus, they struggled with targeting the middle class because of the increased wealth gap. To be more concise, consumers would not go to KFC because they are wealthy enough to other places, having decent food. On the contrary, with limit income, people who come to KFC or McDonald’s usually would satisfy with a fast food combo. In China, it has been developed so rapidly that wealth gap also growing between the middle class and upper class. It is a vicious circle that people go to KFC, spending 5 to 10 bucks, eating junk food. That is why obesity problem becomes more and more serious in China. Nowadays, customers are well educated than before. They started to realize that they should avoid having fast food. Thus, Yum has to understand and learn what people like to eat and consider to develop and adjust menu.

Rising competition

As information and sources become more accessible and convenient, more and more small restaurants start to appear. Other restaurants chain also saw the success of what Yum did and began to expand their restaurant to China. In my opinion, if Yum will not make any change in the future, they may fail and lose their competitiveness. Thus, Yum had a very aggressive program for product development. Generally, Chinese customers expect more variety than customers in the United States. According to the Yum, they introduce more than 85 new products within a year. In addition, they develop the different product for different regions because people live in different places have different dietary habits. From my perspective, Yum did a very great job on product development, yet still, they need to focus on what are people’s needs. I would say that design a signature meal rather than changing items frequently.

Food safety

The constant problem which China always has is food safety issue. This problem in China, where overall system sales fell, and store declined because of the food safety scandal. I still remember that KFC and McDonald’s meat supplier was shown in a TV news report reusing meat and the story was shocked that they use meat which falls to the factory floor and mixing fresh meat with expired meat. Even if they announced that they had already switched the meat suppliers. This negative story caused a huge impact on brand image. Driving Chinese consumers away from KFC restaurants. Yum had a numerous loss because they relied on KFC as a high revenue percentage. Unlike the United States, always pay a lot of attention to food safety issue. Customers trust the quality provided by restaurants. In China, Yum mush establishes their own supply chain and stick to rules of quality control. Instead of losing consumers and market share, they should truly face the food safety issue. Although it may take a lot of effort and internal cost, brand image, and reputation are more important than other factors in the long run.

 

 

What is the Secret to McDonald’s Global Branding Success?

With a product that’s served in over 117 countries, feeding millions of customers every day, McDonald’s branding success is undeniable. The key to McDonald’s branding and marketing success is segmentation and experimentation.

Segmentation

McDonald’s main focus is the US, where they spend most of their budget and trial more new products and innovations. The American audience is their largest – Americans spend more money at McDonald’s than any other fast food restaurant in the country. In the US, advertising normally targets children. In Japan, the advertising campaigns are more varied when approaching the demographics, sometimes they focus on children but they also target adults. One advertisement used McDonald´s as a fetish object with sexy girls promoting the burgers, something you would never see in the US. Although a multinational giant, McDonald’s adapts its business and menu to the different countries they operate in. They respect cultural differences and every country has its own policy of developing menu items.

Testing

Experimentation is vital, and it is often carried out by adding or deleting the food from menus according to latest consumer trends and local popularity. In Japan, apart from the traditional menu, you can find seasonal and limited-time items such as “The Teri Tama Burger”, served during spring or “The Tsukimi Burger”, served during Tsukimi season (in the autumn). In the US there is the popular “McRibs”, just available for a short time each year. This is a good example of adapting to customers’ tastes, vital when talking about marketing. Experimentation is vital, and it is often carried out by adding or deleting the food from menus according to latest consumer trends and local popularity.

The Secret Sauce

It is true that the marketing and branding strategy of McDonald’s is based on uniformity, no matter where in the world, you will always be able to order the most iconic menu items such as the Big Mac. The same kind of atmosphere and experience mean that your expectations will be fulfilled because you know what you can expect from the restaurant. Despite its geographic variety, the brand is actually very consistent, with a lot of attention to detail to ensure the values are applied globally.

Global Product Marketing

When we look at the strategic differences between US McDonald’s and the Japanese version, we can appreciate the localized marketing strategies. For example, the name of the restaurant is adjusted for the katakana, the appropriate Japanese script for foreign words. In Japan, they call it ‘Makudonarudo’, (マクドナルド), a more appropriate and attractive sound in Japanese. Drink sizes and fries are much smaller than the ones in the US, and burgers are a bit smaller too, to suit eating habits. McDonald’s ensures the correct sizes before exporting for international target markets. Although McDonald’s offers its products everywhere in the world, being the most popular restaurant on the planet, the brand keeps recognizable with its original meaning and identity whilst catering to local tastes.

Innovation and Collaboration

For McDonald’s, globalization has meant embracing and engaging different cultures while at the same time retaining a strong enough brand to be immediately identifiable. But how can you ensure your brand transcends cultures and regional approaches to marketing? This is where online innovations really come into their own by bridging the cultural and physical gaps that can inhibit connection with a global audience.

 

Bad Global Branding in 2017


By: Natalie Filice, Katie Kirk, & McKenna McVicker

In today’s day and age, in nearly every market, consumers have witnessed advertisements, campaigns, and marketing strategies that have sparked the question, what were they thinking?? Like many years before it, 2017 marked some seriously questionable advertisements that left consumers puzzled on how blunders so obvious could have gone overlooked through various organizational departments and chains of command. In the Adweek.com article, Lessons Learned from the 5 Biggest Brand Fails of 2017, Kristina Monllos outlines how some of the biggest, most recognizable, and even iconic, global brands dropped the ball.

She notes that her biggest takeaways in the article is that brands need to understand the crucial importance of being culturally sensitive and the significance of having advertisements that don’t exploit certain groups of people for the benefit of the brand. Monllos outlines the learning opportunities for each of the internationally recognized brands. Without question her most valuable piece of advice, which is blunt yet accurate, is “don’t do what they did”.

Last year Pepsi ran, a now infamous, advertisement where supermodel Kendall Jenner abandons a modeling job to take action in a civil protest. During a time where police and civilian relationships are strained, enjoying a Pepsi amidst a public demonstration seems like the farthest thing from sensible. The commercial unfortunately came off as making light of the reasons that citizens protest. It’s clear that these masses protesting were doing so in order to bring attention to civil rights violations. Pepsi quickly realized their insensitivity, grasping that this dynamic mocked social struggles. The market leader removed the ad and publicly apologized, but not before going viral on YouTube first.

Dove, one of parent company Unilever’s most valuable brands, had a substantial blunder in October of 2017 through an advertisement that was posted on the Dove Facebook page. The online advertisement displayed an African American woman that was wearing a brown shirt. The ad depicted a quick transition of pictures where the woman removes the brown shirt. Once the shirt was off, the actor was then replaced with a Caucasian woman in a white shirt.   It seems hard to believe that something so overtly offensive and insensitive could have been approved through so many corporate channels. Dove explained that the ad was taken out of context, and that when shown on TV it was much less offensive and the message was made clearer. Regardless of and ad’s context, a brand should never leave such a mistake vulnerable to be taken out of context in that way.

The nature of today’s market is characterized by a consumer base and society that is interwoven and ultra-connected. Organizational information and brand image can be instantly communicated the world over. Although this can prove to have a positive impact on a company, these instantaneous connections can harm a brand image, a crucial component of an organizational strategy. News of an advertising blunder can go viral on the internet in moments and can leave a lasting negative impact on brand image.

 

 

Reference:

Lessons Learned From the 5 Biggest Brand Fails of 2017: Uber, Pepsi, Dove and More

The Strategies of Alibaba Group

Alibaba focused on the dominant wholesale trading market since it was established. Jack Ma, the founder of Alibaba, developed the company rapidly through financing capital with his advanced concept. When the development of company was blocked, he took a risk to invest heavily in YAHOO China to open market and boost popularity. As the captain of the Alibaba, Jack Ma realized the trend of online shopping so made a huge effort to promote the development of the internet in China. Through constantly participating in social activities, Alibaba gradually established the brand awareness. It never stops the innovation of technology to improve the experience of online shopping, such as communication between sellers and buyers, quality control, and unique brand promotions. Alibaba also led the revolutions of the delivery system and payment method which brought people better service that encourage them to shop online. Nowadays, Alibaba has been the monopoly of the market of online trading business. The most powerful strength of Alibaba is its brand awareness. In China, it has become the pronoun of online shopping. With more and more people joining in the online trading platform to make trades, Alibaba‘s growth will continue for the foreseeable future. The unique technology of payment method is another strength of Alibaba. It has even changed the lifestyle of many Chinese people, especially young generation, and increased their reliance on the Alibaba. However, there is still some weakness associated with Alibaba. The most significant one is an issue of fake and inferior products. Due to the free registration policy for sellers, morally corrupt and dishonest sellers can easily escape the punishment of selling pirated products. While the legitimate right and interest of consumers are undermined, the brand of a trading platform would also be affected. Another weakness of Alibaba is malicious negative feedback. Because the registration as a buyer is free without any need of proof, some sellers might hostilely attack their competitors by registering as a buyer and give negative feedback to competitors. Without strict censorship, sometimes this might cause unhealthy competition.

Strategies

According to the analysis of Alibaba, there are several strategies can be complemented to sustain the competitive advantage of Alibaba. An adequate credit guarantee system could be established to increase the user scale, and it also builds the foundation of customer loyalty. People will lose faith and patient if they buy a fake product from a trading platform. Similarly, a more strict censorship is needed to protect consumer’s right. Under strict market supervision, a consumer can build their faith and reliance on this industry which is the most important thing for an emerging market. In addition, Alibaba should try to distinguish it from substitutes and use their unique advantages, which are low cost and high efficiency, to compete with physical stores. It has the ability to draw in a large number of sellers and purchasers, so it can change the rules of the game to enhance its market position and competitive strengths.

What to Look Out For: 5 Traits of a Professional Project Manager

Your business requires finding the right project manager for critical success. A project manager generally handles your project from the beginning to the end, also ensuring the project is done on time, successful and on budget. So when you have a large project or a project you cannot handle personally, they are the key to a successful completion. Therefore, when you are hiring one, it pays to hire the right one for the job.

5 Traits of a Professional Project Manager

  • Ability to organize and assign

This is obviously the first trait you should look out for, before you hire. The project manager must have organizational skills, and meticulously systematic. He/she must be able to arrange the project’s data in a way that is understandable, and most importantly control and allocate roles to the team members.

  • Communication skills

A professional project manager knows how to communicate clearly and precisely, write clearly, has bargaining power. He/she must be able to communicate with everyone in a way that will be perfectly understood. They should also be able to speak professionally and affirmatively with the clients, and of course communicate with you too. In fact a project manager without a good communication skill is most likely to disappoint you in the end.

  • Competence and inspiring leadership

It is also important for him/her to be capable of managing the project with the available resources, stipulated budget, and perfectly on time. He/she must be a charismatic leader, full of life, and can inspire and motivate the team members during tough times. He/she must be an optimist and a visionary, always seeing an opportunity in every situation. They must also be capable of making good decisions always, and be willing to do what’s best for your project always.

  • Dwell on experience over certification

There are so many professional project managers out there that do not have the certificate. If you want a certified project manager, that’s totally fine. But if you overload your team with certified project managers with no good experience, you might regret it in the end. If you hire based on experience, you will get a great talent that some certified project managers don’t even have.

  • Look out for passion-driven managers

Project managers that are passion driven are driven to finish successfully. They are driven to fully satisfy you. They are driven to lead the project team successfully, and bring the best out of them. A professional project manager is in love with his/her work, and their top priority is to make sure everything goes smoothly as planned. Even if there is a hitch along the way, they will know how the best way to still move the project to success because that’s their main goal.

 

In all, whether your business’s project will fail or succeed, depends on the project manager you hire. Also hiring a good one is not luck, but rather the result of good preparation and knowledge.

The Global Branding Power of Vans: Taking SoCal Surf-Culture Worldwide through Celebrity Endorsements


By: Natalie Filice, Katie Kirk, & McKenna McVicker

The classic and immediately identifiable Vans “Old Skool” sneaker has proved to be a universal fashion staple for the past several years. Regardless of age, style, or social status, Vans has successfully transcended their brand from a solely surfer shoe, to an essential item that is found in almost everyone’s closet the world over. The brand is more prevalent today than ever before and has a prominent global presence. A presence that arguably has more of an impact today than during the shoes initial launch. The success of the iconic Vans sneakers have shown that the brand has landed on a strategy that is more than a “nostalgia-fueled, profit-boosting revival”.

In the 1980s, during the brand’s infancy, Vans were the footwear of southern California surfers and skateboarders. In the GQ.com article, How Vans Got Everyone Wearing Vans Again, John Vorwald explains the success of Vans’ global branding strategy. What’s a huge contribution to global brand success of Vans? They’re multi-cultural, multi-generational, and embedded in pop-culture.

The global reach of Vans, as explained by Vorwald, is largely due to the brand capitalizing on the “de facto runaway” that has occurred in recent years. With a strong and active social media presence, Vans has captured internationally high-profile figures sporting their fashions, specifically the “Old Skool” sneaker. Major players, within all genres of the music industry, such as Kendrick Lamar, A$AP Rocky, Kanye West, and even Justin Bieber were all spotted sporting this sneaker. Hollywood box-office powerhouses like Ryan Reynolds and top athletes have all be seen with the “Old Skool” style, making it and international wardrobe must-have. Breaking all social norms, in 2016, Frank Ocean even sported classic “Old Skool” sneaker when visiting with President Obama at the White House.

With the combination of candid, street-style images blasted all over social media, major celebrity endorsements, and even high-profile design collaborations, Vans has set the stage of the sneaker game through organic trend setting. Popular sports-figures that are known for being in the forefront of fashion and who are renowned for their sense of style have all spoken to the value to brand brings.  Influencers like Nick Young and Jordan Clarkson have been seen embracing Vans and have stated that they wear the “Old Skool” style regularly, Clarkson commenting that he owns an astonishing 80 pairs. LeBron James commented that “it’s a shoe that really just goes with anything”.

This organic brand exposure is invaluable for Vans and has shown that even when more expensive shoe styles are trending, the classic “Old Skool” style is one that is iconic and here to stay.  Some of the biggest internationally-know celebrities in music, sports, and film continue to speak out on behalf of the brand. Capturing these stars and socialites wearing their styles, and also capitalizing on this popularity through social media in order to communicate this value to consumers, has enabled Vans to have a distinct competitive advantage in terms of their global branding strategy.

 

Value Pricing: When ‘Cost Plus’ is Irrelevant

Setting a price tag to an intangible tech product is a challenge for most companies. While it is easy to set price levels for manufactured goods just by calculating raw material, manufacturing, and logistic costs; it is far more complex to come up with a price in SaaS business models. One needs to think long term and be strategic when doing that.

The most common framework these days is estimating the monetary value created for the customer first, and then using this as an input to come up with a price.

Most SaaS companies utilize the 10x rule. They aim to offer an ROI of 10, by pricing their service at 1/10 of the value they create for the customer. This mindset helps their salespeople too, no decision-maker can say ‘no’ to 10x ROI!

This also explains why SaaS companies offer different price levels to different customers groups; geographically, demographically or economically. If the perceived value of a certain product is not same for different groups of customers, then they shouldn’t be getting different prices as well. Tinder, the most popular dating app, for example uses this method. Thanks to the huge amount of historical like/dislike data and other personal information such as age and gender, tinder assigns a different ‘market value’ or ‘attractiveness score’ to each user. When they want to upgrade to the premium, those with higher attractiveness will receive a cheaper price, simply because they don’t need the app as much as other people(less attractive ones) on the app need.

An Introduction to Dumping

US Congress defines dumping as an unfair trade practice, where imports sold in the US market is priced with less than 8% profit margin over the production cost. While it is not illegal to dump prices on a global scale (WTO is not regulating the prices), it is often an unwanted scenario and countries put heavy anti-dumping laws and tariffs to protect their economies.

Where a company has a cost advantage and sees a market with high prices being paid for a specific product, they can start exporting to that country and sell at price levels way below the market price – even if they are not making profits initially. The goal here is to bring the market price below what local producers can make any profits. This action will force local competition out of business, and when all competition is eliminated, the dumping company will bring the prices up again. On the long run, this is very dangerous for the economy of the host country and a method of exploitation.

 

As of 2006, there were 64 countries with anti-dumping laws. Globally, China gets most of the dumping criticism and European Union countries are actively taking measures against China to protect their economies.