Marketers rack their brains to compose the variable ingredients to construct their stunning “recipes”—conceptual frameworks, which are made up of the marketing mix, in an effort to deliver the differentiated products or services that can outshine their competitors’.
Currently few companies could afford to set aside the marketing mix and audaciously break into the market. Having a bird’s eye view of those prominent companies’ evolutionary histories , namely Coca Cola, Nike, Fuji, and Virgin, their iconic brands, one of their success indicators, work hand in hand with creative and effective execution of the marketing mix.
The Marketing Mix
McCarthy (1960, pp.7-8) first put forward classification of four basic ingredients: product, place, price and promotion. With the progression of time, dimensions of the marketing mix have been nourishing, as ideas of “personnel promotions”, “storage facilities”, “display” and so forth have been presented successively (Lipson and Darling, 1971:p.17; Borden, 1975:pp.72-75). The Four Ps of the marketing mix have been prostrated as the cornerstone or convincing “paradigm” in the business practice, thanks to their well-known “validity” (Grönroos , 1989: pp.52-60, Grönroos,1994: p.5).
However, over preoccupation with the marketing mix would possibly isolate marketers from customers owing to its dependence on “mass marketing” ,which indicates that customers are the superficial “numbers “for the marketers and marketers may loose touch with the “real customers”(Grönroos,1994: p.4). Furthermore, acting as the simplified remedy for the marketing problem, the marketing mix “paradigm” makes the seller occupy the dominant position and the buyer inferior standing, which can hardly apply to the marketing of service (Grönroos, 1994: p.6). The burgeoning service industry gave birth to the relationship marketing (Gummesson, 1991: pp.60-67). Establishment and fulfilment of “promise” play a pivotal role in the relationship marketing, which nurtures the quality interaction between marketer and customer (Reichheld et al., 1990: pp. 105-111).
Despite these drawbacks of the marketing mix, the effective orchestration of its elements is proven to be applicable to attain the “set objectives” under many circumstances. (Baker, 2007:p.329). The aim of this essay is to elaborate on the contribution the marketing mix makes to an organization’s brand equity through in-depth analysis of the outstanding paragon, Yum! Brands, China Division.
Aaker(1991,1996:p.103) once indicated that connotation of brand equity is multifaceted, which consists of “brand loyalty”, “brand awareness”, “perceived quality”, “brand associations” and other proprietary brand assets. The name of product is deeply imprinted with the “value” conferred by the brand equity (Yoo et al., 2000:p.197). Thus, the brand enjoying relatively high brand equity more probably wins “customers’ positive and strong association” (Yoo et al., 2000:p.196).
In terms of the functionality of brand equity, it enriches brand alternatives, enhances the preference to pay the “premium prices”, intensifies the “marketing communication effectiveness” as well as the “brand licensing” opportunities and strengthens capabilities towards the marketing competition and price fluctuation (Keller, 1993:pp.4-8; Simon and Sullivan, 1993:pp.28-37; Smith, 1992:pp.13-16; Yoo et al., 2000:p.196). An unparalleled brand, as the intangible asset, consists of such features as name, design, symbol which indentifies the “product” of a particular organisation that has a lasting differential advantage (Doyle, 1999:p.292).
At the first mention of fast food, Chinese people would instantly shortlist a bundle of names with KFC topping on their lists, due to its immense brand power. According to the ranking of 50 Best Chinese Quick-Service Companies in 2009, Yum! Brands, China Division with the annual profits of ¿¡2.88b and strong momentum of expanding its business empire in China’s second and third tier cities, surpassing another tycoon McDonalds, ranked the first, thanks to its two household brands, KFC and Pizza Hut (Anonymous, 2010). In compliance with Yum! Brands’ global vision to define “global company that feeds the world”, Yum! Brands, China Division is also committed to creating traditional Chinese quick-service restaurant chain, East Dawning, which is targeted specially at those diehards of traditional Chinese food (Novak, 2009) .Furthermore, China Division became one of the stakeholders of Little Sheep, a popular Chinese hot pot concept, with 27% proportion of share in 2009 (Novak,2009).The above efforts imply China Division’s ambition to develop diversified customer bases and make it elastic towards its competitors’ challenges. In 2009, the four brands synergistically contributes to its operating profits growth of 25% in China (Anonymous, 2009).What underpins their astounding performances is its China Division’s superb mastery of the marketing mix.
Brand Equity and the Marketing Mix
According to Yoo et al. (2000:p.196), if marketing effort could give rise to more favourable behaviour towards the “branded” products than the “unbranded” ones, positive relationship between marketing effort and brand equity would be established. Yoo et al. (2000:p.198) also suggest that creation and exploitation of the marketing mix is decisive in shaping dimensions of brand equity. For instance, Yum!Brands China Division successfully introduced the casual dining category Pizza Hut and KFC Home Service, making its products available around the clock whenever customer places an order(Anonymous,2008). Such intense distribution enables consumers to perceive more value for the two brands, subsequently resulting in the increased customer satisfaction and brand loyalty (Yoo et al., 2000:p.199).
Given that the marketing mix encompasses many elements, this essay primarily selects four perspectives: product, price, servicescapes, promotion tactics to demonstrate the intertwining relationship between application of the marketing mix and formation of brand equity.
Henry Ford (1908) once commented “A market is never saturated with a good product, but it is very quickly saturated with a bad one.” (Anonymous, 2006). Instead of technically importing its international menu and faithfully sticking to its cash cows such as New Orleans Roasted Burgers, Extra-tasty Crispy Burgers, Popcorn Chicken, and Pepperoni Lover, China Division has made considerable adaptation and innovation on its menu to cater to Chinese people’s tastes and flavour. Some specialties that could never appear on other countries’ KFC menus are Dragon Twister, and Beef Wrap with the Sichuan Sauce to name just a few(Anonynmous,2007). Additionally, the freshness and nutrients of the food are under the stringent supervision (Anonymous, 2010). From KFC’s official website, customer can be informed of products’ accurate composition of nutrition (Anonymous, 2009). Therefore, products are procured in a transparent manner, winning trust and loyalty from customers and generating repeat buyers.
Besides, its menu changes with the alteration of seasons and emergence of events and holidays. Pizza Hut Casual Dining Restaurant recently put forward 22 new courses before the upcoming autumn (Anonymous, 2010). This summer, KFC witnessed enormous profits made by its activity of watching World Cup and winning prizes through purchasing the bucket (Anonymous, 2010). In addition to its constant development of tangible products, Pizza Hut puts out a unique and added-value service, party-hosting. It would be in charge of preparing a theme party from the scratch, including designing and organizing (Anonymous, 2008).This move vindicates Miller’s et al. view (1998:pp.19-25) that shopping should not be considered as a mere product acquisition but a part of social relationship which provides their social identity. Guanxi or social networking plays an important role in Chinese society (Eric Tsang, 1998:p.64). Party occasion is an ideal opportunity to accommodate such need. Pizza Hut’s enticing service could spare people from worrying about the trivialities of throwing party and promote its products and brand value in the meantime. All moves carried out by Chinese division perfectly coincide with Yum! Brands’ philosophy-“feed the world”, both physically and mentally.
Yoo et al. (2000:p.200) once commented that price promotion in the form of “special sales”, “media-distributed coupons”, “package coupons”, and “rebates” would undermine brand equity in spite of the “short-term” returns. Subsequently, sales promotion could be easily emulated by the competitors (Aaker, 1991). Worse still, an inferior brand image could be displayed through the sales promotion (Yoo et al., 2000:p.200). However, KFC, Pizza Hut and East Dawning’s pricing strategies just run counter to the above theories. Every day, over three kinds of KFC food are on sale and coupons can be easily downloaded from its official website (Anonymous, 2008). As for Pizza Hut Casual Dining Restaurant, it recently put forward business set meal of ¿¡2.8 to attract those office workers with limited coffee break and keen on the balanced diet(Anonymous,2010). Such deed has now been warmly received by the target customers.
The reason behind their consistent low pricing strategy rightly conforms to the status quo of Chinese fast food industry where consumers are price-sensitive and major consumption segment is student and young people with finite disposable money (Anderson et al., 1998:pp.152-162).The theory proposed by Avlonitis (1980) appropriately backs up Yum’s pricing strategy that selling convenience goods should employ heavy advertising and competitive pricing policy to achieve product differentiation. As a consequence, one of the effective ways to appeal to Chinese people who are bombarded with hundreds of fast food alternatives is the competitive pricing strategy. Simon H. (1989:p.319) pointed out that sale effect of a price change shows up more quickly compared with other tactics, namely advertising. KFC and Pizza Hut have already benefited from this strategy and cultivated their respective regular customer base, as KFC targets at the mass consumers and Pizza Hut Casual Dining Restaurant is positioned as the refined business dining restaurant (Anonymous, 2008). Their varied price ranges are set accordingly, making China Division more flexible to the pricing competition.
Servicescapes refer to the physical settings of the point of sale, which involve three dimensions: ambient conditions, spatial layout and functionality and signs, symbols, and artefacts (Bitner, 1992: pp.66-67). These would influence not only the first impression on customers but also employee satisfaction, productivity and motivation (Becker, 1981).
KFC, Pizza Hut and East Dawning spare no effort to do the furnishing at their own points of sale in accordance with their respective bands’ images. As for KFC, warm bright yellow and red intrigue the customers’ appetite and lower personalized counter intends to make employees intimately interact with children (Cai, 1998). As to Pizza Hut, elegant oil paintings and sedate brown tables and wallpaper make customer feel serene in the cities’ forests of concrete(Cai, 1998). The consumer would be embraced with soft Chinese music and traditional Chinese table sets at East Dawning (Cai, 1998).Such highly identified decoration vividly exemplifies three different brands’ focuses. It would be no surprise to see the heavy “customer traffic” in those restaurants (Yoo et al., 2000: p.199). Good-image stores do invite more attention, contacts and visits from the prospective customers. Furthermore, positive word -of-mouth propaganda can come into being (Rao and Monroe, 1989:pp.351-356).
Advertising spending accounts for substantial investment for KFC and Pizza Hut, as the money channelled for advertising exerts “positive impact” on brand equity and perspectives (Cobb-Walgren et al., 1995). Besides, advertising would be conducive to generating favourable impression on brand equity, increasing “brand awareness” and creating strong “brand associations” (Shimp, 1997:pp.25-35). Although people would feel annoyed by interruption of commercials of KFC’s bucket and Pizza Hut’s Super Supreme when appreciating films, the intensely repetitive advertising would make KFC or Pizza Hut automatically top on their personal fast food alternatives when they are starved(Anonymous,2008). Subsequently, such habitual choice could elevate their brand equity (Hauser and Werfeldt, 1990:pp.398-404).
Besides advertising, KFC is also adept at making the most of sponsorship to enhance its brand equity, such as organizing national three-player basketball contest in conjunction with Chinese Basketball Association (Anonymous, 2004 ),which vividly showcases its dynamic brand image, and working in partnership with 2010 Shanghai World Exposition, (Wuyu,2009). Its “old enemy” McDonalds has never made foray in such field. However, the sponsorship does make a difference. For example, Fuji committed$7 million in sponsoring the 1984 Los Angeles Olympic Games, which just received refusal of sponsorship from Kodak (Desmond, 1997). According to Desmond (27 October, 1997), Fuji landed 50,000 new distributor outlets thanks to its sponsorship. Such marketing investment generated the enviable returns (Desmond, 1997). It is difficult to make accurate estimation on KFC economic returns from its sponsorship, but elevated social impact and subsequent enhanced brand value could be figured out. Additionally, China Division has been identified as the corporate with distinct social responsibility through doing Hunger Relief Programme with Chinese Children Fund and setting up fund for supporting the natural disaster relief and the financially-challenged students to further education (Anonymous, 2006). All these contribute to reputable brand image of Yum! Brands China Division.
Besides the above classical 4Ps, other elements of the marketing mix such as packaging and personal selling jointly nourish China Division’s brand marvel. The package as the “forefront” of brand strategy would communicate the value of “convenience”, “environmental consciousness”,
Relationships between the selected the marketing mix and brand equity have been excavated in this essay. Particular attention has been drawn to four aspects of marketing efforts made by Yum! Brands China Division. The establishment and enrichment of brand equity is achieved by thorough execution of the marketing mix. It is through fully capitalizing on the variable parts of marketing strategy accompanied with the utilization and exploitation of brand resources that brand owner can probably withstand the acid test and enjoy the everlasting prosperity.
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