Fast Food Marketing. Analyzing the changing consumer diet behavior towards healthy eating habits

Evaluating innovative marketing strategies for global fast food restaurant chains to satisfy the new demands


Seminar Paper, 2020

38 Pages, Grade: 1,3 (German system - excellent)


Excerpt

Table of Content

Index of Tables

Abstract

1 Introduction
1.1 Reasons for innovative marketing in fast food industry
1.2 Definition of the problem and purpose of the paper
1.3 Terminologies
1.4 Structure and approach of the paper

2 Literature review
2.1 Factors affecting consumer diet behavior
2.2 Common marketing strategies of global fast food restaurant chains
2.3 Influence of changing consumer diet behavior on global fast food chains
2.4 Intermediate result

3 Empirical Findings
3.1 Methodology
3.1.1 Research approach
3.1.2 Research design and strategy
3.1.3 Data collection
3.1.4 Research Hypothesis
3.2 Description of the industry and companies
3.3 Case study of McDonald’s Corporation
3.3.1 Public criticism on McDonald’s
3.3.2 Marketing Strategies of McDonald’s
3.4 Case study of Just Falafel
3.4.1 Public recognition on Just Falafel
3.4.2 Marketing strategies of Just Falafel
3.4.3 Reasons for the failure of Just Falafel
3.5 Confirmation of hypotheses

4 Discussion, recommendations, implementation
4.1 Results from literature review
4.2 Findings from empirical approach
4.3 Compare and contrast the results
4.4 Answers to the research questions
4.5 Recommendations of new marketing strategies

5 Conclusion

Reference List

Index of Tables

Figure 1: Types of secondary data (Saunders et al, 2009)

Figure 2: Number of McDonald’s restaurants worldwide (Lock, 2020)

Figure 3: McDonald’s website for customer satisfaction survey (McDVOICE, 2020)

Figure 4: McDonald’s healthy menu options (Compiled by the author, 2020)

Figure 5: Negative Comments with less than 3 stars (Compiled by the author, 2020)

Abstract

Consumer diet behavior has been changing towards the direction of healthy diets due to the rise of health concerns from both private persons and public institutions. The shift of customer demand makes a negative impact on the business of global fast food restaurant chains due to the low nutritive value of fast food, which is portrayed with negative image. In order to survive in the competitive fast food industry, the corporations need to change their common marketing strategies to adapt the new customer needs to maintain physical health. The goal of the paper is to offer recommendations to the executive and management teams of global quick service restaurant chains on what marketing strategies they should use to maintain existing consumers and capture future customers.

The paper firstly illustrated the influence of consumer healthy eating habits on global quick service restaurant chains through various academic resources in literature review. Subsequently, the author has conducted a multiple case study approach with two companies that are either currently or used to be operating business globally to raise the validity and reliability of the research. The final results generated suggested that the changing consumer diet behavior affects the companies significantly through selfconsciousness resulted from government policies and mass media influence. Furthermore, the innovative marketing strategies for global fast food restaurant chains will be focusing on introducing and customizing healthy meals on menus, maintaining customer and employee relationship simultaneously, participating in sustainability and CSR programs as well as promoting through digital marketing.

1 Introduction

With the rapid development of fast food industry since the 1950s, different restaurant chains have become popular gradually in the United States and later on expanded globally. Within only four decades from 1970s to 2000s, the U.S. customers’ spending increased from $6 billion to over $110 billion U.S. dollars (Royer, 2001). Since fast food is not only convenient and timesaving for consumers, but also inexpensive for the quick service restaurants to invest in, global fast food brands have started to expand their chains internationally. For example, McDonald’s Corporation first began with developing its inter-continental markets within North America in 1970s, and now it has operated over 100 chains in five continents (Mujtaba & Patel, 2007).

However, the expansion of fast food industry has caused health-related problems worldwide (Popkin, 2006). Fast food is considered as a type of food that is energy-dense and unhealthy, whereas consumers have raised higher awareness towards potential health risks as a consequence of fast food consumption (Kearney, 2010). The factors of increasing awareness, alongside with educational improvement and media influence, have resulted in the change of fast food consumer behavior towards healthier food worldwide. Thus, these main reasons causing the change of consumer preference on food consumptions have made a negative impact on global fast food industry, which has raised the level of difficulty in terms of fast food products and promotion (Islam & Ullah, 2016). Therefore, it is necessary for global quick service restaurant chains to transform their traditional marketing strategy of promoting their products into one that is attractive and matches with healthy diet concepts.

1.1 Reasons for innovative marketing in fast food industry

In order to retain existing customer segment and attract new ones, it is important for global fast food restaurant chains to adapt new marketing strategies that are easier to combine with a healthy diet. For instance, two of the top ten most valuable fast food brands in 2019, McDonald’s and Burger King, have joined the Children’s Food and Beverage Advertising Initiative and promised to reduce unhealthy advertising to the youth (Lock, 2019). This action taken by the two quick service giants have not only enhanced their corporate social responsibility of caring for the future generation, but also have lessened the major concern of parents who are not willing to take their kids to fast food restaurants due to the potential health risks (Harris, Schwartz, & Brownell, 2010).

In addition, some of the global fast food restaurant chains have developed a marketing strategy aiming at adding healthier food options to their menu. For example, McDonald’s has developed kids’ meals, a package which includes more nutrient-rich options for the youth (Harris et al., 2010). Wendy’s, the first fast food chain who launched fresh salads into its menu in 2002, has set an example for the other giants to introduce healthy dietary options in their restaurants as well (LeBesco & Naccarato, 2008). These examples have shown that there are still huge potentials of innovative marketing strategies for global fast food restaurant chains to explore and use.

1.2 Definition of the problem and purpose of the paper

Due to the increasing customer awareness towards healthy eating habits resulted from growth in education and influence from mass media, it becomes more and more difficult for global quick service restaurant chains to promote their products since fast food is considered to be a cause of health burden (Kearney, 2010). To save the diminishing customer base of global fast food restaurant chains due to the healthy diet trend, it is necessary to transform their marketing strategy into one that satisfies the shifted demand. This paper addresses the potential threats to global fast food industry resulting from the changing consumer behavior towards healthy eating habits and away from processed food as well as the opportunities for fast food brands to develop innovative marketing strategies in response to the new demands.

The paper intends to help the marketers and executives from global fast food restaurant chains who demand for innovative marketing strategies to enhance their customer base under the influence of healthy diet trend. The author will analyze the marketing strategies of two contradictory cases of global fast food restaurant chains, the reasons behind the success and failure and what improvement they should or could have done to survive in the competitive fast food market. The case study could be a useful reference for other quick service chains who have planned to expand internationally.

The basic thesis of the paper is that global fast food restaurant chains can use innovative marketing strategies to retain and capture new customers in response to the changing consumer demand towards healthy eating habits. In the conclusion, the result of the work will be summarized, and the following research questions will be answered:

1. How does the global trend of healthy diets make an impact on the consumers of global fast food restaurant chains? What are the threats for fast food industry?
2. What are the common marketing strategies and tools the global fast food restaurant chains use, and how should they be transformed responding to new customer demands?

1.3 Terminologies

According to Maslow’s hierarchy of needs, food is one of the physiological needs and one of the most basic elements for a human being to survive (Zalenski & Raspa, 2006). Food plays an essential and important role in obtaining various nutritional contents, which directly leads to different health outcomes. A healthy diet means that the dietary pattern of a person has a positive physical impact on one’s body and mind. In contrary, consumption of diet that is both energy-dense and nutrient-poor leads to further development of diseases such as obesity and diabetes (Jaworowska, Blackham, Davies, & Stevenson, 2013).

Fast food is identified as a homogeneous category of food that is easily and quickly prepared, ready to be distributed within minutes, and can be consumed by customers in a short period of time. The original idea of fast food is to be eaten anywhere at any time, and does not necessary require tableware (Grumett, Bretherton, & Holmes, 2015). The restaurants who serve fast food are quick service restaurants, which are also known as fast food restaurants. The author will interpret the paper using both terms, where the meanings are identical.

Although fast food is created to be convenient for both restaurants and customers by shortening their preparation and dining time, global fast food chains have been accused of providing low-quality nutrition and causing negative health conditions such as obesity and diabetes by scientific journals (Hearst, Harnack, Bauer, Earnest, French, & Oakes, 2013). In addition, a report by the World Health Organization in 2017 has illustrated that by changing dietary behavior into a healthier one can lead to a significant decline in obesity, a major cause for chronic diseases (Donazar-ezcurra & Burgo, 2017). This has caused both developed and emerging economies such as the U.S. and the P.R.C. to introduce healthy-diet policy throughout the whole country by means of mass media and improved education (Kearney, 2010).

Furthermore, these influences have affected and resulted in a shifting in the consumer behavior in fast food industry. The dietary habit among consumers of quick service restaurants has changed towards the direction of pursuing a healthy lifestyle, while customers have been giving more attention to health risks and thus the tendency to fast food consumptions have decreased. Thus, there is an increasing number of consumers choosing to stay away from fast food, which leads to an anti-consumption behavior (Farah & Shahzad, 2020). The change of consumer behavior resulted from the raise of awareness on health has led to a prospective threat to the global fast food restaurant chains (Geereddy, 2013).

The definition of marketing strategy, according to Michael Baker, the author of Marketing Strategy and Management, is the decisions and actions that a company makes and takes by responding to constantly changing market demand more efficiently than its competitors. In addition, McCarthy’s marketing mix is commonly adopted by marketers as a major component of marketing strategy (Baker, 2014). In order to keep a competitive position in the quick service restaurant market, the global players have responded by changing their marketing strategies for product and promotion to adapt to the current market needs. For example, Global fast food restaurant chains have been taking actions by improving the nutrition components of their offerings in order to capture the market demand towards healthy diets (Geereddy, 2013).

1.4 Structure and approach of the paper

The paper will first address the shifting customer needs towards healthier dietary behavior worldwide resulted from the increasing consumer awareness, growth of education as well as influence from both online and offline media, and how this changing consumer behavior has an impact on the global fast food industry. In the second chapter, the author will first conduct a literature review about global fast food restaurant chains, their commonly used marketing strategies as well as consumer behavior trends in the fast food industry to present the state-of-the-art knowledge and to give a common foundation for the second step, a multiple case study approach. The second part will be the analysis of the traditional marketing process the global fast food restaurant chains used for product and promotion, as well as how this marketing strategy should be transformed in response to the influence of healthy diet trend on consumer behavior.

The author has chosen a multiple case study approach analyzing two industrial cases, which will be interpreted in the third chapter. The first case will be a study regarding McDonald’s glocalization strategy, analyzing how McDonald’s has succeeded in the international environment and become one of the top global fast food leaders by implementing its “think globally, act locally” strategy on its menu items and promotion in its worldwide franchises, as well as how it markets its brand image to healthy fast food (Crawford, Humphries & Geddy, 2015). The second case study will be the failed global expansion story of Just Falafel, a vegetarian fast food restaurant chain established in the United Arab Emirates in 2007. Just Falafel has guaranteed to serve the “healthiest, nutritious, vegetarian food for the customers with the best and most fresh ingredients” (Jabeen & Katsioloudes, 2013). However, the transformation of its unique brand image as well as the weak maintenance of relationship with customers have finally made the restaurant chain fade away in the market. The methodology of conducting multiple case studies will be referred to the literature of Robert K. Yin, Case Study Research: Design and Methods, 2013.

In the fourth chapter, the author will discuss the results from the literature review in the first sub-section, which is about the influence of changing consumer diet behavior in the fast food industry and how the global quick service restaurant chains respond to that with changing marketing strategies. The results demonstrated from the analysis of the multiple case study from the previous chapter will be presented in the second sub-section. The author will compare and contrast both outcomes and offer recommendations to the global fast food restaurant chains regarding the innovative marketing strategies they can adapt to capture the customer demand resulted from the increasing health concerns.

2 Literature review

In this chapter, the author will conduct a literature review on the impact of changing consumer behavior towards healthy diet on fast food industry by analyzing the factors that cause the shift of demand as well as how the healthier eating habit has influenced the global fast food restaurants. The author will also analyze the commonly used marketing strategies adapted from the global fast food restaurant chains for product and promotion (Sagala, Destriani, Putri & Kumar, 2014).

2.1 Factors affecting consumer diet behavior

Consumer eating habit and dietary behavior can be influenced from both internal and external factors. Despite the influence from the individual side, other outer environments such as culture, society, industry and food marketing, governmental and global circumstances also have significant impact on global food consumption behavior (Afshin, Micha, Khatibzadeh, Schmidt & Mozaffarian, 2014). This section will focus on analyzing the most relevant factors affecting the shift of consumer behavior based on self-awareness in the fast food industry, which are governmental policies and mass media influences including both online and offline channels (Islam & Ullah, 2016).

According to the health report from the World Health Organization (WHO) in March, 2020, overweight and obesity, which results in health risks, are fundamentally caused by excessive intake in energy-dense foods, which is reducible and avoidable by consuming less fats and sugar and more nutrition-rich ones such as fruit and vegetables. Health specialists have pointed out that fast food consumption is identified to be modern eating and drinking habits, which is also a major cause of increase in obesity (Farah & Shahzad, 2020). The WHO also has stated that the food industry should be responsible for the promotion of healthy diets around the world by offering more nutritious options for customers (World Health Organization, 2020). The organization has not only published the facts and figures regarding the causes to obesity and overweight, but also has offered validated recommendations to Heads of state and Government for carrying out policies that enhance the national health.

Now that the global efforts towards improving the undernutrition situation has been paid off with support of the World Food Program, government starts to focus on advancing educational policies. Although there is a limitation for educational policies to affect each individual’s own eating behavior, it does have an impact on raising consumer awareness on the diet related chronic diseases through schools, institutions and organizations (Mozaffarian, Angell, Lang & Rivera, 2018). Thus, consumer diet behavior has been affected by raise in self-conscience through education on health.

In addition to government policies, mass media has impact on the changing consumer behavior as well (Islam & Ullah, 2016). Social media, as an online channel of mass media, is defined as “websites which link millions of users from all over the world with same interests, views and hobbies” (Ioanäs & Ivona, 2014). Based on the statistics of global digital population in January 2020 by Statista, there are over 4.54 billion active internet users and approximately 3.8 billion active social media users, which is more than half of the world’s total population (Clement, 2020). Therefore, social media in general has significant impacts on online users, especially when the platforms have offered the opportunity for people to interact with each other actively through communication, which takes part of the users’ psychosocial experience ((McHale, Dotterer, & Kim, 2009). Thus, social media is one of the factors that affects consumers’ health behaviors resulted from both internal and external environment (Vaterlaus, Patten, Roche & Young, 2015).

The internal environment that influences the users’ health behavior can be selfpresentation on the social media platforms as they want to show the online community the person they try to become, such as posting healthy contents through their accounts. The external environment is that the social media becomes an information source, where people are able to learn about nutrition information and healthy diets through contents and hashtags (Vaterlaus, Patten, Roche & Young, 2015). For example, there are over 152 million people who post with “#healthy” and 72.4 million post with “#healthyfood” on Instagram, which shows how the social media is influencing the consumer diet behavior through its contents by March. 9th, 2020 (Instagram, 2020).

Despite social media platforms, traditional media such as television programs that offer relevant information and contents of healthy diets influence consumers’ dietary behaviors as well. A research regarding the impact on diet consumption behavior has shown that around 79% of the total respondents who are interested in TV health programs have started to concern about their health conditions and changed their eating habits to healthier ones (Suh, 2008). Therefore, mass media has huge impact on consumer diet behavior through both interactive and non-interactive platforms.

2.2 Common marketing strategies of global fast food restaurant chains

The evolution of marketing strategies has shifted from product-oriented to customercentric in the second half of the 20th Century (Baker & Hart, 2016). Ever since the 1990s, global fast food giants such as Domino’s Pizza and Burger King Corporation have focused on reaching as much customer satisfaction as possible through upgrading customer services. Domino’s emphasizes on its 30 minutes’ delivery time and Burger King provides a platform for consumer complaints and suggestions for further improvement (Kara, Kaynak & Kucukemiroglu, 1995). The major competitor of Burger King, McDonald’s Corporation, has been tailored their offerings to local customers in different countries based on their culture and eating habits, which is known as “Glocalization” (Crawford, Humphries & Geddy, 2015). For example, McDonald’s has launched veg nuggets and maharaja Burger with only chicken meat in Indian markets due to the major population’s religious belief, as well as teriyaki Burger on Japanese menus based on local consumers’ dietary preferences (Dixit, 2017).

With the constant development and improvement of the Internet and technologies since the late 20th Century, the common marketing strategies used by global fast food restaurant chains for promotion have been transforming gradually from traditional media to online platforms (Schwarzl & Grabowska, 2015). Starbucks, for example, has been using digital and social media marketing actively for over a decade, and it has received more than 36 million likes and followed by 35 million users on Facebook, 18 million followers on Instagram and 11 million followers on Twitter by March 10, 2020 (Starbucks, 2020). Starbucks has been using the online platforms not only for promoting the brand and the products, but also to be closer to the customers through communication and interaction (Taecharungroj, 2016).

Even though social media marketing becomes a more common marketing strategy for global fast food restaurant chains for promoting their products and company values, traditional marketing is still adopted by the majority of fast food brands in order to attract non-Internet users such as children and elders. Within only 3 years’ time, the total advertising spending of all fast food restaurants accounted for 4.6 billion U.S. dollars from 2009 to 2012, where 88% of the spending goes to television advertisements (Harris et al., 2013). A Statista report in 2019 has shown that McDonald’s Corporation has spent more than 50.6 million U.S. dollars on television advertising only in the U.S. in April 2019 (Guttmann, 2019).

In addition to television advertising, exterior marketing is also a traditional channel used by global fast food restaurant chains. Based on a report on the percentage of fast food restaurants in the U.S. who still uses outdoor marketing, 80% of the total 2,442 restaurants use exterior advertising and the chain restaurants adopt it more frequently than the nonchains for price promotions on their buildings or billboards (Bridging the Gap, 2012). This shows that traditional marketing is still a crucial strategy for global fast food restaurant chains to invest, especially the ones that generate higher income, even if digital marketing is an increasing trend for product and promotion.

2.3 Influence of changing consumer diet behavior on global fast food chains

Since consumer diet behavior has been shifting towards a healthier eating habit resulting from government policy and mass media influences, consumption in nutrient-poor, energy-dense food and beverages has been gradually reduced (Afshin, Micha, Khatibzadeh, Schmidt & Mozaffarian, 2014). As a result, the business of global fast food chains has been affected as the majority of their products contain higher calories and are considered as unhealthy (Momtaz, Alizadeh, & Vaghefi, 2013). According to a study on the percentage of adults in the U. S. visiting any burger fast food restaurant 2010 and 2016, it has declined from approximately 87 million to 74 million. Additionally, the percentage of adults visiting Burger King between 2001 and 2016 has decreased from 49% to 31%. However, the same statistics for visiting McDonald’s Corporation in the past six months in the U.S. has increased by 12 million by the year 2016. This is due to the chain’s constant financial investment in innovative marketing strategies for product and promotion (VALS™, 2017).

Due to the raising health concerns worldwide, the global fast food giants have been constantly accused of promoting products that have future negative health impact on young generations. For example, only in the year 2012, the fast food industry has spent more than $660 million U.S. dollars on advertising the products to children and teenagers up to the age of 18, and half of the spending was for the toys in children’s meals. The massive fast food advertisements on kids has been criticized by the society as these can lead to potential health risks on children and adolescents (Bridging the Gap, 2012). In response, McDonald’s and Burger King have volunteered to join the Children’s Food and Beverage Advertising Initiative (CFBAI), a program where the restaurants who participated promise to reduce both online and offline advertisements that do not benefit the children’s physical health (Harris et al., 2010). In addition, children or their parents in both restaurant chains are able to customize the kids’ meals, in which they will have the chance to choose a healthier meal combination such as fruit bags instead of fries (Wellard, Glasson, & Chapman,2012).

2.4 Intermediate result

The literature review on the effect of changing consumer diet behavior on global fast food restaurant chains has been conducted through various valid academic sources, including journals, books, papers and published reports. In this section, the author combines all the findings from the previous sections and summarizes the key takeaways for further discussion and foundation of recommendations in Chapter five.

The consumer diet behavior has been changing towards the direction of healthier eating habits under the influence of the increasing self-awareness of physical health. The selfconsciousness is resulted from the external circumstances, where the main factors are governmental policies and mass media influences (Afshin, Micha, Khatibzadeh, Schmidt & Mozaffarian, 2014). Governments from both developed countries and emerging economies have started to enhance educational policies by stating the importance about the healthy diets through schools, institutions and organizations (Kearney, 2010). The factor of mass media includes influences from both interactive platforms and noninteractive channels such as social media networks and television health programs.

[...]

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Details

Title
Fast Food Marketing. Analyzing the changing consumer diet behavior towards healthy eating habits
Subtitle
Evaluating innovative marketing strategies for global fast food restaurant chains to satisfy the new demands
College
Munich Business School University of Applied Sciences
Grade
1,3 (German system - excellent)
Author
Year
2020
Pages
38
Catalog Number
V1010366
ISBN (eBook)
9783346401090
Language
English
Tags
marketing, sales, social media, case study, fast food marketing, consumer behavior, diet behavior, consumer demand, strategy, marketing strategy, mcdonald's, just falafel
Quote paper
Li-en Lin (Author), 2020, Fast Food Marketing. Analyzing the changing consumer diet behavior towards healthy eating habits, Munich, GRIN Verlag, https://www.grin.com/document/1010366

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