Its no secret that for a long time Burger King has played second fiddle to McDonald's in the fast food space. It seems that no matter what it does, it is impossible for BK to take the number one spot from McDonald's. Meanwhile, I read an article recently that explained how the biggest profit margins for fast food chains are now found during breakfast, a segment that McDonald's crushes the competition in, rather than lunch or dinner. In fact, Subway in the past month has recognized this development and produced new breakfast offerings themselves.
So how does BK revise its strategy to try to compete and gain market share in the most profitable segment from the market leader McDonald's?
Check out its recent advertisement for a new breakfast sandwich below
Watch Burger King's New Breakfast Ad
Very interesting strategy in my opinion. Openly admitting that they've copied McDonald's signature McMuffin and simply made it cheaper. BK has found a way to profit off of the widespread brand recognition and equity the McMuffin has built.
Interestingly enough, McDonald's official response to the ad: Imitation is the finest form of flattery.
What do you think? Good strategy or not?
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Cost Leadership or Product Differentiation? A question as old as “To Be or Not to Be?” Overall cost leadership is a rare competitive advantage that is not sustainable across time. With the exception of Wal-Mart, companies that use cost leadership will see their competitors imitate their technologies to an extent that price competition will just be detrimental to all firms in the market.
ReplyDeleteHowever, product differentiation is far more sustainable and more unique. Product differentiation over service or brand can build brand equity and brand value for an organization. It can protect an organization from price wars; a central factor that drives out the value of a market in the maturity phase of the product life cycle. So in my eyes, this is not the best idea for Burger Kings. Price competition is just a call to war…and with McDonalds a lot bigger…Burger King can only lose.
As a general rule of thumb, most advertising professors and professionals recommend not calling out direct competitors in ads. It happens a fair bit here in the US, though.
ReplyDeleteI think you nailed the potential benefits right on the head. Everyone knows about the mcmuffin. No one thinks of it as super-fancy food, but it's solid - and it's quick, and it has great recognition.
So in the short term, I get it. I think the way to take Andy's comments one step further is to ask: What will happen as a result? How will McD respond? If these ads to spark sales, and therefore take sales away from McD, McD can easily respond by lowering prices and removing BK's "advantage." At that time, will BK have established itself in the industry - a breakfast industry that is now slightly less profitable due to competition? Or will people just return to McD? Either way, it's not great news for McD...