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A Marketing Segmentation Analysis of Burger King

Essay by   •  March 16, 2018  •  Research Paper  •  1,620 Words (7 Pages)  •  559 Views

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A Marketing Segmentation Analysis of Burger King

Author’s Note:

Introduction

The subject of the current paper is Burger King which is one of the international fast food retailers. Its global presence allows it compete globally with leaders of the market such as McDonald’s and KFC. However, when entering a new market, the company needs to identify and evaluate its target audience there. In this report customer segmentation market analysis is performed, then potential customer segments are analyzed and finally the most preferable option is recommended.

Burger king background

Founded in 1953, Burger King (BK) has survived through countless changes and transformations throughout its history (Di Muro, 2015). For the purposes of the current paper two aspects of BK’s operations are of the most interest: its targeting strategy and its global expansion plans.

Market Segmentation: As the first BK restaurants appeared in the US, BK mainly targeted male audience 18-35 years old (Kelso, 2012). It was reflected in its advertising which featured sexist jokes and “male” humor (Di Muro, 2015). However, in the run of numerous transformations, BK’s focus started to shift to a more general perception of its target audience which now included women and children. However, kid’s targeting has not become BK’s key strategy (Di Muro, 2015). At the moment BK mainly targets young adults of both sexes who appreciate tasty food, fast service and modern-looking interiors (Kelso, 2012, Di Muro, 2015).

International Presence: Under the new CEO Daniel Schwartz, Burger King has significantly changed the company’s development goals (Di Muro, 2015). Among other measures, a cost saving policy was adopted, product offering was changed, and promotion has become less aggressive and male-oriented(Di Muro, 2015). International expansion has become one of the key targets of the company with the emphasis laid on developing economies such as China, Russia and Brazil. Despite the fact that most developing economies experience economic difficulties and business environment is not always welcoming, BK sees in it a good opportunity to enter the market until the competition becomes too tough(Miller, 2016).

New Markets: Geographical Location

In order to identify the market for segmentation, it is necessary evaluate several options to choose the most appropriate one. For the purposes of this analysis BK’s global presence was evaluated in terms of number of restaurants in a particular country (see App.1) and two potential markets were identified: Russia and Argentina which represent countries following the regional leaders but having a huge gap with them in terms of sites opened. The third optional market is India since BK explicitly stated its interest in this market but attributed its slow entrance to local specifics of business and tastes (Miller, 2016). In Table 1 comparative analysis of these options is presented.

Table 1. Evaluation of Potential Market Locations[1]

Russia

India

Argentina

Total Population

146,3 million

1254,02 million

43,59 million

Average Monthly Salary

47054.00 RUB (784,2$)

8165,7 INR (119.8$)

26566.00 ARS (1,672.32$)

Ease of Doing Business

40

130

116

Inflation Rate

10,7

3,41

40,5

Market Growth

47% in 2011 to 54% in 2015 in total value sales of consumer foodservice in Russia

the Indian market for chain restaurants was an estimated $2.5 billion in 2013 and is expected to grow to $8 billion in 2020[2]

CAGR of 6%

Competition

High

High

Medium

Local Tastes

None

No beef

None

As a result of this analysis, India is considered to be the most appropriate market for entrance and development. It represents a huge and most young population (65% of the population are younger than 35 years) can boast low inflation rates and high fast food market expected growth rates.

Market Segmentation

Market segmentation aims at identifying and analyzing subgroups of buyers who have similar characteristics (Goyat, 2011). It is a vital tool which allows companies allocate their resources properly and develop a comprehensive adverting strategy (McDonald& Dunbar, 2012). For the purposes of this paper a customer segmentation framework was applied which includes several customer characteristics such as demographic, behavioral, etc.

The three customer segments identified are young men between the ages of 20 -35years from the west India region who occasionally eat fast food for a change, teenagers from the north east India regions from ages of 15-25 years who eat fast food regularly because it is cheap,and women from south India regions (middle-income)women in this region are between the age of 20-35years who care about their health but can eat fast food to try something new. In the next section attractiveness of each segment is estimated.

Segment Attractiveness Assessment

In this section a segment attractiveness assessment framework is applied to estimate which of the segments is more preferable (McDonald& Dunbar, 2012). The assessment factors are segment profitability, growth, size and competition.

Profitability of the segments should be evaluated by the comparison between expenditures involved to cover this segment and profits which can be gained in this segment. However, without internal company data it is only possible to make some assumptions and appoint scores relying on them. As for Segment 1, it belongs to the richest region in India with the highest disposable income rates which may imply that this segment’s profitability is rather high. Segment 2 is located in a rather poor region but customers may visit the restaurant more often as they try to cut their costs by doing so. As a consequence, accumulated profit can also be rather high. As for the 3rd Segment, it is located in a rather well-off region but its customers are not heavy users and are not likely to spend a lot of money on their rare visits.

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