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Assessment Description

Choose 2 of the topics that have been covered in lectures 4-9 from the following list:

• Global strategy as business model change

• Target markets and modes of entry

• Globalising the value proposition

• Global branding

• Globalising the value chain infrastructure

• Globalising the supply chain

Select 2 organisations from any 2 service industries (4 organisations in total). For each organisation explain how they have applied your chosen theory(ies) and critically evaluate their approach and the reasons behind their successes/failures with respect to the theory.

Global Branding

Marketing is an important part of every business. Strategic marketing helps firms in reaching out to their targeted customers in the more effective manner. There are various industries which have broken the barriers of geography and marked their significant presence in the globe. This report throws light on two important marketing strategies adopted by leading firms. The two strategies are global branding as well as target marketing and modes of entry.

Global branding refers to brands that are recognized throughout the world. These brands are then known as global brands (Steenkamp, 2017). On the other hand, target market refers to the group of customer segments whose needs the company intends to fulfill. These are consumers towards whom the company targets all their marketing strategies. Every time a company wishes to enter another country, there are various modes of entry that the company can choose from. These entry modes are exports, franchising, wholly owned subsidies as well as joint ventures. This report has laid emphasis on the marketing strategy adopted by four leading firms belonging to fast food and hospitality industry.

Both fast food as well as hospitality are service sector industries which believe in providing an experience to the customer (Skaalsvik & Olsen, 2014). For this report the companies chosen are McDonald’s and Starbucks from the fast food industry. On the other hand, Marriott international and Accor hotels have been selected from the hospitality industry. Marriot group of hotels and McDonalds are global brands with a wide presence across the world. On the other hand, Starbucks and Accor hotels are leading organizations with a strong brand name owing to strategic selection of their target markets and appropriate entry strategy into various countries.

When any brand is globally renowned, then the strategy adopted by the organization is that of global branding. Brand positioning plays an important role in ensuring that the brand is globally known. This positioning refers to the image of the brand that consumers have in mind. Global branding has various aspects that play a very crucial role in the effective awareness of the brand across different parts of the world. These aspects include the company logo, the marketing strategy adopted by the company, the promotional tools of the company as well as the brand positioning approach adopted by the business

Target market for any company includes the set of customers whose needs the company aims to fulfill. It is essential that the company identifies and decides upon its target market in the early stages of operation (Vigneron & Johnson, 2017). It is imperative that every company aims at catering to its specific target market.

Target Market and Modes of Entry

Every time any organization aims to break its geographical boundaries and expand into newer areas of the globe, it is important the firm strategically decides upon its mode of entry. There are many modes through which a company can cater to an international market (Hitt, Li & Xu, 2016). These modes are as below:

Marriott international is an American reputed chain of hotels which specialize in hotels and other lodging facilities. The group of hotels is headquartered in Washington DC. The company owns over 6000 properties spread across 110 countries (Marriott, 2018). There are over 1.2 million rooms that operate under the brand name of Marriott hotels presently. The Marriott group has been working with a distinctive strategy of effective brand positioning. Their hotels run under the 30 distinct brand names targeted for 8 different kinds of customers. The hotels provide a similar look and feel irrespective of their geography. The level of customer service is top notch and is considered to be one of the most trusted brands in the hospitality industry. The presence of Marriott across the globe has made it a global brand.

All of its 30 brands have different logos and cater to a different target market. Today Marriott’s presence in different countries is marked by Franchising and management contracts. A management contract differs from a franchisee in the sense that under a management contract, the operational control remains with the Marriott group. Marriott also sells its franchises, the fees for which are different in different countries and different brands of the group.

Target market of the Marriott group of hotels is a massive group of customers. Different categories of these customers are catered through their different brand names (Wang & Chung, 2015). These target segments are as given below:

  1. Luxury and seasoned travelers
  2. High and middle income groups of people
  3. Business travelers
  4. Business professionals for upscale business conferences and meetings
  5. Special occasions (luxury weddings)
  6. Seasoned travelers
  7. Families and couples on their honeymoons.

McDonalds is one of the leading players of the fast food industry. The company was founded in 1940 in California. Presently it is serving over 69 million customers on a daily basis through over 40000 outlets spread across 100 countries of the world. The chain has garnered immense attention and customer base owing to its fairly priced burgers and very quick service. Today, McDonalds has become a global brand due to the similar taste and only slightly differentiated food options (Crawford, 2015). There is a fun fact that in the year 2016, one McDonalds opened every 14.5 hours. The brand has ensured that all their outlets carry the same logo with a large oval shaped logo. The company owners have made it a point since the very beginning that the logo is visible from a large radius around the store. The colors chosen are yellow and red which are largely attractive. McDonalds has become a global food. It is considered the safest food option to consume by tourists.

Marriott International

Out of the many modes of entry, McDonalds has chosen franchisee option as well as company owned outlets in various countries across the world. This entry style ensure that the values, look & feel, culture, brand logo and company name is same as that of the original company. The franchisor charges a fixed fee from the franchise every year. This works well for both the parties as it offers independence of business and the strong brand value to the franchisee and franchisor gets to spread its brand name across different parts of the world without actually being there.

McDonalds target market has widened with the advent of changing lifestyles. The fast paced lives has allowed the shift into the fast food culture. Hence the target market of McDonalds includes office goers who may wish to pick up a quick snack, school and college students who prefer less expensive foods as well as families with children who are targeted consumers of happy meals at McDonalds (Sachdeva, 2015). McDonalds has made a significant mark on the world map and is expected to grow even further. The major reason behind the success of the brand is its ability to customize and mold its food products as per the needs existing in the country of operations. Immense credit behind McDonalds becoming a global brand goes to the owners who have creatively designed the logo in the manner that it is the most recognized logo in the world. The ‘I’m loving it’ tagline that accompanies all of McDonald’s promotions is largely well known, creative catchy and easy to remember. Hence the large reach and the intensive presence across the world, makes McDonalds one of the largest global brands of the world.

Accor hotels is a renowned name in the hotel industry. The group is based in France and currently operates in over 95 countries. The Accor group has over 3700 franchised hotels running under its brand name. The group of hotels has not becoming a global brand with its immense presence across different parts of the world as well as consistency in its customer service.

Accor group has been widely indulging in franchisees, management contracts as well as wholly owned subsidiaries. There is an Accor hotel that opens up at some part of the world every 36 hours (Accor hotels, 2018). Accord group has introduced different brands under the same umbrella in order to target a wider customer segment. The various brands of the Accor group are specified in the image above. The economy hotels are aimed at targeting lower income groups and youngsters travelling with less budget. Mid-scale hotels are targeted towards families on vacations and people who travel frequently for work. Lastly, their upscale and luxury hotels are targeted to high income groups, luxurious weddings and for celebrity stays during important events (Salvioni, 2016).

McDonalds

Accor group of hotels is a leading global brand owing to number of hotels and rooms offered by the brand across five continents. The widespread reach of the brand is as given below:

Region

Number of Hotels

Number of Rooms

Number of countries

South America

288

45495

8

Europe

2852

321266

32

Middle East

102

31662

12

Africa

93

14036

18

Asia Pacific

777

157185

20

The branding of Accor groups is creatively done and every brand has a unique logo, tagline and promotional strategy. All these brands have created a niche for themselves and hence have a unique positioning of their own.

Starbucks is an American coffeehouse chain which was founded in Washington in 1971. At present the company operates in over 24000 locations across the globe spread across 62 countries. Starbucks has been well positioned by the brand as one of the leading coffee chains across the globe. Starbucks has become such a global brand that instead in certain places it is becoming synonymous to coffee. The brand offers hot and cold beverages and few snack options. Starbucks has indulged in a rather creative positioning by offering comfortable couches and Wi-Fi enabled outlets to ensure that people spend quality time in the place. Starbucks has a tendency to customize its products given the local demands of the country in which the brand chooses to enter.

Starbucks has opened various outlets across the globe through opening wholly or majority owned subsidies, offering franchisees as well as entering into joint ventures with other brands (Garthwaite, Busse, Brown & Merkley, 2017). The aim is ideally to ensure protection of the original taste, culture and feel of the brand. The brand started the concept of writing the names of customers on their coffee cups which became a fad and took over social media platforms by the storm. The logo of the brand is well known and easy to recognize.

In order to promote the culture of sitting down and having coffee rather than a take away option, Starbucks target market includes youth (Age 25-40). Starbucks target the men and women of this age group with its contemporary décor and design. Starbucks has created the idea of a ‘third place’ besides people’s homes and offices. Starbucks also targets various office goers as the ambience of Starbucks’ outlets is largely suitable for conducting professional meetings owing to presence of Wi-Fi and various mobile and laptop charging points through all of their outlets. For specific products like ‘steamed milk’ and ‘babyccinos’, young children and teenagers are targeted who are often seen with their parents.

Conclusion

Global branding is the concept that involves brands have become globally renowned through their effective expansion plans across different parts of the globe. In the current era of globalization, the expansion of leading brands into foreign lands is not uncommon. Various companies have devised excellent marketing and communication strategies within their business and have made a significant mark in the world map. Once a company breaks its geographic barriers and enters into another country, it needs to decide upon strategies to cater to its international consumers (Armstrong, Adam, Denize & Kotler, 2014). These strategies are also known as various modes through which they enter into international markets. These strategies include exporting their products, licensing and franchising their brand, opening up wholly owned subsidies, entering into joint ventures or a combination of either of these. This report throws light on four leading brands of the service industry. These brands include Marriott group of hotels and Accor group of hotels (Hospitality industry) as well as Starbucks and McDonalds (fast food industry). These brands have created a significant mark in the world by their excellent entry strategies leading them to becoming global brands with a unique and highly efficient target market (Lee, Yao, Mizerski & Lambert, 2015).

References

Accor Hotels, 2018. ‘Our development strategy’. https://www.accorhotels.group/en/hotel-development/accorhotels-choice/our-development-strategy. Retrieved on 16 January, 2018.

Armstrong, G., Adam, S., Denize, S. and Kotler, P., 2014. Principles of marketing. Pearson Australia.

Crawford, A., 2015. McDonald's: A case study in glocalization. Journal of Global Business Issues, 9(1), p.11.

Garthwaite, C., Busse, M., Brown, J. and Merkley, G., 2017. Starbucks: A Story of Growth. Kellogg School of Management Cases, pp.1-20.

Hitt, M.A., Li, D. and Xu, K., 2016. International strategy: From local to global and beyond. Journal of World Business, 51(1), pp.58-73

Lee, A., Yao, J., Mizerski, R. and Lambert, C., 2015. The strategy of global branding and brand equity. Routledge.

Marriott, 2018. ‘Marriott brands’. https://www.marriott.com/marriott-brands.mi. Retrieved on 16 January, 2018.

Sachdeva, A., 2015. Evaluation and selection of differentiation as a strategy for McDonald’s.

Salvioni, D.M., 2016. Hotel Chains and the Sharing Economy in Global Tourism. Symphonya, (1), p.31.

Skaalsvik, H. and Olsen, B., 2014. Service branding: suggesting an interactive model of service brand development. Kybernetes, 43(8), pp.1209-1223.

Steenkamp, J.B., 2017. Global Brand Equity. In Global Brand Strategy (pp. 243-273). Palgrave Macmillan UK.

Vigneron, F. and Johnson, L.W., 2017. Measuring perceptions of brand luxury. In Advances in Luxury Brand Management (pp. 199-234). Palgrave Macmillan, Cham.

Wang, Y.C., Wang, Y.C., Chung, Y. and Chung, Y., 2015. Hotel brand portfolio strategy. International Journal of Contemporary Hospitality Management, 27(4), pp.561-584.

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