Burger King has been on a slide with declining sales since 2008. In fact, last year Wendy’s completed its overthrow by surpassing Burger King in sales for the first time ever. The two firms sit behind McDonald’s, which has a clear lead in the market.
There is very little room for innovation in the hamburger market. In fact, Burger King has a history of copying innovations originated by McDonald’s. One Burger King advertisement even admitted that its new sandwich was “not original, but it’s affordable.” The newest example of Burger King’s imitation burgers is its Big King sandwich. The sandwich has identical ingredients to the McDonald’s Big Mac, right down to the Thousand Island-style dressing.
In a market with little room for innovation, advertising becomes key. Since there is no way to significantly differentiate your firm, you can resort to advertising to draw a larger share of the market. Burger King has botched several advertisement campaigns so badly that some journalists have ventured to call the firm a train wreck. A bad ad campaign can hurt sales according to Stephen Martin’s Industrial Organization in Context. When considering advertising, we must consider “a firm that operates over many time periods, and by advertising builds up goodwill that benefits it not only in the present but also in the future.” If a firm can build up goodwill that can benefit sales, a failed ad campaign – or, in Burger King’s case, an offensive ad campaign – can build up negative goodwill and be a detriment to sales. Worldwide Burger King has run several offensive ad campaigns in the past decade alone.
6 Comments
Does the fast food hamburger industry engage more in persuasion advertising or informative ads? It seems that if the products are generally the same thing that informative advertising would be the most beneficial. If the two hamburgers are the same, might as well consume the cheaper option.
It’s funny that you mention price because the “train wreck” article talks about Burger King restaurants in Europe that charged $190 for a burger. Burger King offered the gourmet burger at such an unusually high price to raise awareness about the quality of meat used in the chain’s restaurants. Perhaps this would fall under some kind of pseudo-informative advertisement. However, the public relations stunt proved wildly unsuccessful.
What role coupons? I get those for Hardees regularly, but have to admit that I don’t look for any for BK as I seldom drive past Wally’s World (even though it’s the closest retailer to where I live, off of Rt. 39). Are coupons “informative”? Or are they an attempt to discourage regular customers from trying rival stores? How else can a fast food restaurant advertise?
I have noticed that many fast food chains McDonalds and Burger King have expanded their menus to overlap. I would go to Burger King for a burger where as I would go to KFC for chicken. Do consumers view fast food regardless of the type of meat as interchangeable?
I think its interesting the way Burger King tried to attack other fast food chains. Given the relatively low quality of fast food compared to other kinds of restaurants, it seems like criticizing other fast food restaurants might serve as negative categorical advertising in general.
I wonder if positive ads last for the same amount of time as negative ads. Further, does each ad have the same amount of impact? I would think that a negative had has a prolonged impact that is more significant than a positive ad.
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