Confidential

CONFIDENTIAL

"Confidentiality released by writer in May 1997,•’ .J)

POSITIONING OF FAST FOOD SHOPS

IN HONG KONG :

A CASE STUDY ON

WENDY FOODS LIMITED

HO LIK-SHING, ADOLPHUS

and

WONG HON-SHING, GARY • n力冬’ 黄漢成

MBA PROJECT REPORT

Presented to

The Graduate School

In Partial Fulfilment

of the Requirements for the Degree of

MASTER OF BUSINESS ADMINISTRATION

TWO-YEAR MBA PROGRAMME

THE CHINESE UNIVERSITY OF HONG KONG

May 1992

Dr. Charles Steilen ！ . Advisor s fS ‘ 5 八 7。： \ . C、义\ 347964

-.延機

2”瑜i同1)1

：.^ n 'iV^x Page yiii

舞 ABSTRACT

The fast food industry in Hong Kong is growing rapidly in recent years. With the addition of some of the foreign giants entering the territory, in order to compete successfully, one need to find a distinct position in the mind of the customers.

Wendy's is the most aggressive one among the new entrants. They advertised on TV, radio, and press, and held a "Chinese name for Wendy's" competition.

The objective of this project is to develop a positioning strategy for Wendy's

To position a company or a product, first，some possible competitive advantages are to be identified. Then, the right advantages are to be selected as its position and signalled effectively to the market.

According to one of our customer surveys, the most important criteria for choosing fast food shops are Cleanliness and Tidiness, Taste of Food, Quality, Good

Value for Money, and Convenience.

On the other hand, from our competitor overview and customer surveys, we

found that the five market leaders — McDonald, Cafe De Coral, Fairwood, KFC, and

Maxim's, all have their strength in the criteria. McDonald, the close competitor of

Wendy's, is strong in all criteria and they have a very strong association with

Hamburger. Cafe De Coral and Fairwood are strong in Convenience. KFC and

Maxim's are strong in Cleanliness and Tidiness, Taste of Food, and Quality of Food.

From our customer survey on Wendy's, we found that Wendy's is very strong

in Cleanliness and Tidiness. So, we recommended this as their primary position. Pageut

TABLE OF CONTENTS

ABSTRACT ^

TABLE OF CONTENTS ^^

LIST OF FIGURES vii

LIST OF TABLES viii

ACKNOWLEDGMENT ix

Chapter L INTRODUCTION 1

Project Objective ^

Methodology . . . • ^

IL LITERATURE REVIEW 3

Positioning ^ Importance of Positioning 3 Positioning Task ^ Identifying Possible Competitive Advantages 5 Selecting the Right Advantages 6 Effectively signalling to the market the firm's position 6 Formulation of Positioning Strategy for Wend's Food 6 Page yiii m. INDUSTRIAL ANALYSIS OF FAST FOOD INDUSTRY IN HONG KONG 8 p

Restaurant Industry 8 Fast Food Industry 11 Demographic Trends . 14 Geographic Trend 14 Income Trend Household Size 16 Age Trend Household Expenditure Pattern 18 Implications 18

IV. COMPETITOR ANALYSIS 20

Overview 20 Cafe-De-Coral 23 History 23 Business Strategy 23 Marketing Strategy . , 24 Operations Strategy 25 McDonald 27 History 27 Business Strategy 27 Marketing Strategy 28 Operations Strategy . 28 Fairwood 29 History 29 Business Strategy 29 Marketing Strategy 30 Operations Strategy 31 Maxim's 32 History . 32 Business Strategy 32 Marketing Strategy 33 Operations Strategy 33 Kentucky Fried Chicken 34 History 34 Business Strategy 34 Marketing Strategy 34 Operations Strategy 35

- > I-

Pagey

Wendy's 36 History • • 36 Business Strategy ••‘ 36 Marketing Strategy 36 Operations Strategy 38 Comparison of Various Competitors 39 Cafe de Coral 39 McDonald 39 Fairwood . 40 Maxim's 40 Kentucky Fried Chicken 41 Wendy's 41 Implications 41

V. RESEARCH DESIGN 42

Objectives • . 42 Research Methodology 42 Focus Group Study 43 Descriptions 43 Findings - - 44 "Questionnaire on fast food shops" Survey 45 Descriptions 45 "Questionnaire on Wendy's" Survey 46 Descriptions 46

VI. FINDINGS AND ANALYSIS 48

"Questionnaire on fast food shops" Survey 48 Findings 48 Analysis 51 "Questionnaire on Wendy's" Survey 53 Findings 53 Analysis 55 Discussions with Crew Members and Customers 56 About the Shop 56 About the Menu 56 About the Food 57 Implications 57 Page yiii

VII. RECOMMENDATIONS FOR WENDY'S 58

身 Position Target Customer 邻 Pricing 60 Distribution ^^ Advertising

Areas for Improvement 61

VIII. LIMITATIONS AND SUGGESTIONS 62

Limitations for the Study 62 Suggestions for Further Research . 63

APPENDIX 64

1 Questionnaire on fast food shops - 64 2 Data of "Questionnaire on fast food shops" 70 3 Questionnaire on Wendy's 75 4 Data of "Questionnaire on Wendy's" 79 5 Test on Different Samples 83

BIBLIOGRAPHY 85 Fage vii

LIST OF FIGURES

Figure 3.1 Total Receipts of Restaurant Sector (1982-1990) 8

Figure 3.2 Receipts Index of Restaurant Sector

(1984-1990) 9

Figure 3.3 Regional Distribution of Restaurants (1989) 10

Figure 3.4 Number of Fast Food Shops (1982-1989) 11

Figure 3.5 Number of Employees in Fast Food Industry

(1982-1989) -——11

Figure 3.6 Total Costs in Fast Food Industry (1982-1989) • . 12

Figure 3.7 Total Revenues in Fast Food Industry

(1982-1989) 12

Figure 3.8 Total Profits in Fast Food Industry (1982-1989) 13

Figure 3.9 Population Distribution by District Board

(1981 & 1986) 14

Figure 3.10 Monthly Household Income (1981 & 1986) 15

Figure 3.11 Average Household Size (1981 & 1986) 16

Figure 3.12 Population by Age Group (1981 & 1986) 17

Figure 6.1 Importance of various Selection Factors 49

Figure 6.2 Customers' Perception on Selection Factors (Survey 1) 50 Figure 6.3 Customers' Perception on Selection Factors (Survey 2) 54

/ Page yiii

LIST OF TABLES

Table 3.1 Household Expenditure Pattern (1984-1985) 18

Table 4.1 Market Share & Number of Outlets

of Various Fast Food Shops 21

Table 4.2 Advertising Spending of Various

Fast Food Shops (1990) 22 Page yiii

ACKNOWLEDGMENT

We are greatly indebted to Dr. Charles Steilen for being our project advisor.

During the past year, through his helpful guidance and assistance, we have managed to proceed our project in the smoothest manner.

We would also like to take this opportunity to express our sincere thanks to the

director, Mr. Hano Maeloa, the manager-corporate, Ms. Natalie K. Sudirman, and

the shop manager, Mr. Teddy K.W. Fung, of Wendy's Food Limited, for their

support and cooperation throughout the course of our project. Page yiii

CHAPTER I

INTRODUCTION

According to Allies and Jack Trout, the developers of positioning theory, the

50's was the "product era"，the 60，s and 70，s were the "image era", and the 80，s was the "positioning era". However, a lot of companies in Hong Kong are still concentrating their efforts in products and images, rather than focusing on positioning.

The fast food industry in Hong Kong was growing rapidly in recent years and the industry has received much press exposure in 1992.

In the beginning of the 90，s’ some overseas giants such as Wendy's, Jack In

The Box, and Hardee's, all set up operations in the territory in order to get a share

of the pie. However, how much they can obtain from the local giants such as Cafe

De Coral and Fairwood, and some other overseas giants such McDonald and KFC,

is still a question.

Out of all the new entrants, Wendy's is the most aggressive one. They

advertised frequently on TV and Radio at the start up and they organized a "Chinese

Name for Wendy's" competition. So, we have chosen Wendy's as a focus for this

positioning study. Page yiii

Project Objective

The objective of this project is to develop a positioning strategy for the Wendy

Food Ltd.

Methodology

The project will start with a look at the theories of positioning and the steps in working out a position for a company. Then, a study on the industrial trends will be conducted in order to gain an overview of the fast food industry in Hong Kong.

After that, we will take a look at the major competitors of Wendy's in the market. We

defined the competitors as those chained, self-service fast food shops. The competitors

to be considered are Cafe De Coral, Fairwood, Kentucky Fried Chicken (KFC),

Maxim's Fast Food, and McDonald. (They are denoted as the "fives" in this report).

By doing this, we can identify the strengths and weaknesses of the competitors, and

determine how Wendy's can compete with them.

We will then look at the customers' criteria in selecting a fast food shop by a

questionnaire survey. We can then identify the areas that a fast food shop should be

concentrated on, in order to satisfy and attract customers.

Moreover, customers' attitudes towards the "fives" and Wendy's will be

identified by questionnaire surveys. By doing this, we will have a picture of the

positions of all these fast food shops in the minds of customers.

Finally, we will look at the relative strengths, weaknesses, and customers'

attitudes of Wendy's, and suggest how Wendy's should position itself. Page yiii

CHAPTER II

LITERATURE REVIEW

Positioning

According to the developers of the concept of positioning, A1 Ries and Jack

Trout, "Positioning is not what you do to a product. Positioning is what you do to the mind of the prospect. That is, you position the product in the mind of the prospect."

Positioning is the act of designing the product's image and value offer so that

the target customers understand and appreciate what the product stands for in relation

to its competitors.

A product (or service) position involves the set of associations with the

product. It is created over time, often from a large assortment of sources such as the

product design, the advertising, the price, the store in which it is bought, and who

uses it. However, as mentioned, emphasis should be put on how are these sources,

when combined together, form a position in the prospect's mind.

Importance of PositioniTip

Positioning is strategically important because it can take years to create, is Page yiii difficult to change, and affects business success and competitive strategy.

The advantage of solving the positioning problem is that it enables the company to solve the marketing-mix problem. The marketing mix is essenti^y the

working out of the tactical details of the positioning strategy.

There are many successful positioning examples in United States as well as

Hong Kong which can demonstrate the importance of positioning in various industries.

In United States, enormous share of mind is enjoyed by Coca-Cola and Pepsi. Hence

7-Up links its product to what was already in the mind of the prospect, the "Uncola"

position established 7-Up as an alternative to a cola drink. Up to now, it still holds

the third position despite of the keen competition. The other classic example of

successful positioning in U.S. was the Avis Rent-A-Car, which positioned itself as the

No. 2 in rent-a-car against Hertz. The campaign ended the thirteen years of money-

losing in Avis.

In Hong Kong, Perrier has been successfully positioned as a high-priced

premium water by aggressive advertising and exclusive distribution. Rejoice Wash &

Go shampoo, though was not the first one to introduce 2-in-l shampoo, ranks at the

top of customers' mind as a 2-in-l shampoo and becomes the market leader soon after

launching. Again the Head & Shoulder shampoo showed reasonable progress because

of its position as a "dandruff killer". For the positioning of company, 7-11 and

Welcome also successfully placed their positions as the most convenient store and the

lowest priced supermarket respectively. Pages

Positioning Task

The positioning task consists of three steps : a) identifying possible competitive advantages, b) selecting the right advantage(s), and c) effectively signalling to the market the firm's positioning concept.

Identifying Possible Competitive Advantages

According to Michael Porter, there are two basic types of competitive advantages : cost leadership and differentiation. The company's task is to examine its costs and performance and to look for improvements. Whenever the company can do better than its competitors in these aspects, it has achieved a competitive advantage.

On the other hand, the company should also look for competitive advantages in its

suppliers, distributors, and customers. For example, the advantages that the

company's product can provide its customers is a competitive advantage.

David Aaker suggested seven approaches to position strategy :

1) By Product Characteristics or Customer Benefits

2) By Price Quality

3) By Use or Application

4) By Product User

5) By Product Class

6) By Culture Symbols

7) By Competitors

Companies can use these approaches as hints when looking for competitive Page yiii advantages.

Selecting the Right Advantages

After the company has identify a number of competitive advantages, it should select the most suitable one(s) for positioning. Some of the advantages may not be so clear-cut, may conflict with other, may not be consistent with the company profile, or may not be perceived the same way by customers.

Effectively signalling to the market the firm's position

After the company has chosen the suitable advantage(s), it should find the most effective way to position itself or its products. It happens often that customers are not aware of these advantages and need to be remind of. In this over-communication society, if a advertisement is not effective enough, no matter how strong the advantages are, the company or product may still do not have the desired position in the customers' mind.

Formulation of Positioning Strategy fpr Wendy'g Food

Basing on the above framework, it is necessary to first identify the competitive

advantages of Wendy's Food before the formulation of its positioning strategy. It can

be done by a subjective competitor analysis and an objective one basing on the

customers' perception. Therefore, a subjective competitor analysis on Wendy's Food Page yiii and other five market leaders was done in chapter IV。And the competitor's positions perceived by the customers was then found by customers' surveys as summarized in

chapter V and VI. Afterwards, the right or the most suitable advantages is(are)

selected for Wendy's positioning strategy. To know which advaiitage(s) should be

selected, both the recent market trends and the customer's attitudes should be taken

into consideration. The industrial analysis done in chapter HI has summarized some

important market trends. And again the customers' surveys in chapter V and VI

illustrated some useful customers' attitudes for Wendy's positioning strategy.

Eventually, the selected position for Wendy's should be effectively signalled

to the market. A brief recommendation for Wendy's in chapter Vn then laid out the

ways for Wendy's to achieve the chosen position in the market as well as the

customers' mind. Pages

CHAPTER III

INDUSTRIAL ANALYSIS OF FAST FOOD INDUSTRY IN HONG KONG

Restaurant Industry

During 1982 to 1990，the restaurant industry in Hong Kong has been growing steadily as Figure 3.1 below illustrates. The total receipts have grown by an average annual compound rate of approximately 14%.

I^swesa

Total receipts of Restaurant Sector (1982-1990) 60-1Tota l Sales Receipts ($ 000,000,000) —

/ 43.3A 38.7 fffflfj 40 ' iiii：；； 28 ：；：：：：；. j…丨 30 ：：：：：：：：：：：：：：：：：：：：： … 22.3醒 iiiiiii丨；；丨；丨； 19 ^ a ：：：；；；： ;;；;；!：：丨 20-…估X•纟出丨丨••丨問丨丨• •；;；；；：；- •；；；；；；； •-

/ ^ II11[II( ：：：：：：：：：：：：：：：：：：：：：：：：：：：：：：：：：：： ::::::: ：：：：：•：

10 — • ！ I! ！ i I ： • ‘ ‘ i ‘ ‘ ‘ i * ‘ • ] I ISI ！ II - • I I «111 ] • • • • SI. U ^ I. • • • •-

0 ^S」^^^ ^S)啡 J ^ffl^ ^^^ ^^ ^^〉^^

1982 1983 1984 1985 1986 1987 1988 1989 1990 Extracted from Government 8tati«tlo« Page yiii

Of the different types of restaurants operating in Hong Kong, fast food shops exhibited the strongest growth. Figure 3.2 showed the relative growth of their index of receipts. (Taking quarterly average of Oct 84 - Sep 85 = 100)

Ftgim3.2

Receipts Inde(1984-1990x of Restauran) t Sector

300 T- 250- “；;：^^•… 200 •.… 150 1 — • . • • - • _ ••睡 50- 0 1——I——I——I——I——i——I— 1984 1985 1986 1987 1988 1989 1990 Entire Rest. Sector 97 101 109 128 147 170 190 Chinese Restaurant 97 101 109 130 146 166 184 Non-Chinese Rest. 98 100 105 121 143 170 196 Fast food shops 90 103 119 137 170 217 255 Bars 92 102 112 123 129 136 160 Others 100 103 | 112 128 135 153 161

• Entire Rest. Sector 一— Fast food shops

Extracted from Government Statistics (Quattrly mragt raotlpU of Oot 84 - 8»p 88 • 100) Page yiii

The total receipts of restaurant sector in 1989 (in millions) among different districts are summarized in Figure- 3.3 below. Other than the densely populated business areas, some industrial areas like Tsuen Wan, Shum Shui Po and Kwun Tong

also expose a considerable amount added up to 25% of the total receipts.

figure

Regional Distribution of Restaurant

Easter(1989n ) 6137

Mong KoK z ^^^ Soui^h^ern

SjmW:："" 3302 'UZLlZJ^ Shum Shut Po Central & Western 2561 2923 Extracted from Government Statistics Page yiii

Fast Food Industry

According to Figure 3.4, the number of fast food shops has grown from 576 in 1982 to 951 in 1989, with an average annual rate of 7%. In the meantime, the number of employees in fast food industry grew much faster. Figure 3.5 showed that it has grown from 5,600 to 16,000 with an average annual rate of 16%. It obviously

demonstrated the growing size of the fast food shops by looking at the average number of employees per a fast food shop. It has grown from 10 in 1982 to 17 in

1989, with almost a 70% increase in the shop's size.

Ftgm3.4

Basics Statistics of Fast Food Industry - 1 Noabcr of m Food Shop* 1200-1 F I —

1000 -wa' •；抛:y A r^' • :j___l 1982 198S 1084 IMS 1086 1M7 1088 1889 Extrsated tram QoMrmnnt 8latl»tlo«

Basics Statistics of Fast Food Industry - 2 Numb«r oi Employe— (Thou—n

1BS2 1084 1088 1980 1087 1088 IMfl 198S SiExtnnM frani OowmMnt mMtollGa i Page yiii

Within the same period, the total costs and the total revenues of the fast food industry depicted in Figures 3.6 & 3:7 have almost grown in the same average annual rate of about 22%.

Figure 3^6

Basics Statistics of Fast Food Industry - 3 4000-1Tota l Costa (Millions) 3334 3500 (CziTi

iilli1982 1983 1984 1985 1986 1987 1988i 198 9 Extracted from Government 8tati«tle«

Ftgisr€3.7

Basics Statistics of Fast Food Industry - 4

6000-j Total Revenues (MlUions} —

3735 4000 ； 3059

2337 ^^ ^^ 17M ^m

鄉 ••圖 1074 ^fflM 1-__耀躍_圓_漏|

1982 1983 1984 1985 1986 1987 1988 1989 Extracted from Qowrnment 8tati«tic« Page yiii

However, with reference to Figure 3.8 below, the total profit rose in a steeper slope. With an average annual growth rate of 25%, it grew from 83 millions in 1982 to almost fivefold, 401 millions in 1989. In addition, basing on Figures 3.7 & 3.8， the profit margin of fast food industry has grown from 9.2% to 10.7% in the same period.

Basics Statistics of Fast Food Industry - 5 600 TTota l Profits (Millions) 401

H 叫；齒隱雷._...

Q ^^ R^-^ ^^^

1982 1983 1984 1985 1986 1987 1988 1989

Extracted from Qovernment Statistics Page yiii

Demographic Trends

Geographic Trend

During the recent decade (80's), the population in Hong Kong has been diffused to some newly developed towns such as Shatin, Tai Po and Tuen Mun.

Figure 3.9 showed that the population among the above 3 districts has been doubled in five years since 1981，and the trend seemed to be continuing in the next decade.

Population Distribution by District Board

Central & Western ：：：：： Wan Chai - h(( h、h i：：： Eastern - n n n^ i n n Kfu n (f f < f /777 i i Southern i ：：： Kowloon City - ( n n n n t nn u i m u < i \ : Kwun Tong - m n n t n n t n n i n m n f n n i rn n 7TT\ n f ： MongKoK -…⑴川；； i Sham Shui Po - {u i n f u u i u i i u n u f n nr^ : Wong Tai Sin - n i n m n n n n i < m ~'： Yau Ma Tei -"⑴ r川—:::::: Islands -日： North - H i …广“、 Sai Kung -曰： SKatln -nnn'Annunnufm : : : : Tai Po -7777}nf^ \ j ；； • Tsuen Wan - n n n n n n n i n n n n n u n ( n n m i ^zzt Yuen Long - mun i Tuen Mun ,厂!•”卩•w 卩卩j •w」j j j j j 0 100 200 300 400 600 600 700 800 (Thousands) I I 81 Census 86 By-Census

Extracted from Government Statistics Pate 15

Income Trend

Referring to Figure 3.10, over 50% of households lied in the income range of

HK$ 1,500 to 5,000 in 1981 census. However, by 1986，nearly 50% of households lied between HK$ 3,000 and 8,000. It illustrated that the monthly household income as well as the average living condition have a considerable growth in past decade.

Figmre 3.10

Monthly Household Income

：： Unde600-99r 6009 -rVrV 卩 I =？' i : 1000-1499 丨• ~‘ 1500-1999 丨二；- 2000-2499 丨 2500-2999 -…""…Jjjjllua \ ‘ ： _： 3000-3999 -…"、“""…

Number of Households (Thousands)

ZH 81 Census WA 86 By-Census Page yiii

Household Size

Figure 3.11 clearly indicated that the average household size has gradually decreased in 25 years from 4.4 in 1961 to 3.7 in 1986.

FtgmiM Average Household Size (Number of Persons)

11961 1966 1971 11976 1981 1986 Extracted from Government Statistics Page yiii

Age Trend

Undoubtedly, Hong Kong has faced an ageing problem in past decade. The number of teenagers has been reduced considerably from 1,061,000 in 1981 to

825,000 in 1989, approximate to 19% decrease. Whereas the people over 30 years old has been increased especially those who was over 50 years old. And the age group 30-

39 was becoming more and more important in Hong Kong. Details has been shown

in the following Figure 3.12.

Ftgm 3.12

Population by Age Group (1981-1989)

1200 nThousand s ——* 言HZ；：

1000- 1•〜〜‘二二二：：：：：：： • “ ：：：一 10 _ 19

800……二] 二：二……+20-29

^^^^^<3. 30-39

600 - ••…；•二；二•.… 一• 40 - 49

分 50 - 69

400--~1981 1 1981 3 1981 5 198-I 7 19819 Over 60

0- 9 829 845 849 830 826 10 • 19 1016 964 907 878 865 20-29 1110 1163 1179 1177 1140 30 - 39 671 780 880 986 1078 40 - 49 529 616 506 530 589 50 - 59 486 508 621 532 630 Over 601 529 565 610 | 668 718 Extracted from Government Statistics Page yiii

Household Expenditure Pattern

Table 3.1

Monthly Percentage Monthly Percentage Expenditure Spent on Expenditure Spent on Group ($) Foodstuffs (%) Group ($) Foodstuffs (%)

Below 1,000 6,500-7,500“41.5 1,000-1,500 57.7 7,500-8,50040.3 ~1,500-2,000 55.4 8,500-10,00038.7 “2,000-2,500 55^ 10,000-12,000 36.5

2,500-3,50012,000-15,000 32.7

3,500-4,500 49.5 15,000-20,000“ 3L8 4,500-5,500 46.5 20,000-25,00027.5 5,500-6,500 44.0 | Over 25,000 20.1 |

With reference to the above table, which was extracted from the household expenditure survey 1984-85, nearly half of their expenditure spent on foodstuffs. And the percentage that spent on foodstuffs has fallen as the monthly expenditure increased.

Implications

According to the above statistical data, the fast food industry in Hong Kong is blooming in recent years. However, the growth of those large fast food chains is far more obvious. The risei n the average number of employee per shop has illustrated that many small-scale fast food shops have been displaced by those large well- developed fast food chains. And because of the economy of scale that existed in the Page yiii operation of those large fast food chains such as bulk-buying, materials and labour control, the industry profit margin-exhibits a little growth in spite of the similar increase in costs as well as revenues.

As the large family concept is broken, the new generations in Hong Kong have smaller household size, and hence，the number of household increases. Such increase drives the government to develop the new towns such as Tuen Mun, Shatm, Tai Po,

Yuen Long, Fanling and Sheung Shui. As the population shifts into those new town

areas, the fast food industry is also developed there. Many large chains took this

chances to expand their shop's network. In the meantime，the fast food industry also

viewed the industrial regions such as Kwun Tong and San Po Kong as potential

markets because of the high traffic during lunch and dinner times.

Although the monthly household income doubles during 80，s，the living

standard has no obvious change because inflation rate is also doubled. They are quite

price-conscious and prefer the low price foods such as those in the fast food shops.

It can partly explain the rapid growth of fast food industry in recent decade. On the

other hand, it also implies that the worth of position the fast food shops in the high

price segment is sceptical.

As the number of middle-aged adults (30-49) in Hong Kong is increasing and

the number of teenagers is decreasing, special attention should be paid in the future

development of all fast food shops in Hong Kong.

港中：太.學圆書耗徵.翥 t J Page yiii

CHAPTER IV

COMPETITOR ANALYSIS

Overview

Since the first fast food shop has been established in the September of 1969， the fast food industry grew extremely fast in this two decades. However, the fast food industry in Hong Kong has only accounted for 8%-9% of the restaurant industry/

The growing trend seemed to be continued when comparing the 20% in Japan and

35% in United States/ During the growing period, the competition has become keener and keener. And most of the successful players were the fast food chains. Five major chains which amounted to 65% of the total market share were selected for analysis. Table 4.P showed the relative market share and the number of outlets of the five market leaders.

^ Figures are extractedfrom Economics Weekly, vlO, n24. ppl2’ 21 May. 1992.

2 The market shares are extracted from page IJ of South China Morning Post. SCMP (Money) dated 4 Aug. 1991 ： page 1.3 ofSCtdP (Business) dated 14 Aug, 1989 ： and Hong Kong Economic Journal. vl4. nlO. pp70-73, Jan 1991. The number cfoutka an txa-actedfrom page 1 of SCMP (Business) dated 26 Oct, 1991: page 14 of SCMP (Money) dated 18 Nov, 1990 ： Hong Kong Economic Journal, vl4, nlO, pp70-73, Jan 1991 ； The Book of New Issue of Fairwood Holdings Limited, Sep 1991 ； and Maxim's companf record, 19 Feb. 1992. Page yiii

Table 4.1

" 广 Market Share Number of Outlets

Cafe De Coral 22% 84

McDonald 20% 犯 ~ Fairwood 11% 70

Maxim's 9% ^

Kentucky Fried Chicken 2% 12

Those key players has spent much efforts to compete in this market. Referring to the Hong Kong ADEX Year End Media Expenditure Summary, the above five players accounted for over 96%，and McDonald itself has accounted for almost 60% whereas Cafe De Coral has accounted for 22% of the total advertising spending of the fast food industry. It seemed that the market share was positive related to the advertising spending of the company. Also the main advertising medium was TV which has accounted for over 85% of the total spending. Table 4.2 was listed for reference.

4 Page yiii

Table 4.2

1990 Advertising Spending ($ in thousands) TV Radio Print Others Total Company Spending

McDonald 51,937 7,369 60,682 Cafe De Coral 19,872 T! m 2,017 22,110 Fairwood 7,904 237 3898,728 Kentucky Fried 7,177 "“ 119 150 7,446 Chicken Maxim's 14 14 Industry Media 88,239115 4,152 102,619 Spending

Following pages were brief descriptions of the major players according to their market shares. Page yiii

Cafe De Cpral

History

The market leader, Cafe De Coral was first established in 1969 and it is the first company to provide Chinese fast food to the masses. However, the concept of

self-served fast food shops was introduced in 1974. Afterwards, it has undergone a

rapid growth. And now it has over 3,000 employees, a yearly turnover of over $600

millions and yearly profit of over $70 millions/ And recently, it lost 1 % share from

23% in 1987 to 22% in 1990?

Business Strategy

Cafe De Coral, in recent years, has made several moves in order to diversify

its business from fast food to other eateries.

The first move was made in 1989 by making a joint venture operation with the

Katokichi group of Japan, to introduce medium-priced Japanese-style food outlets

under the name of Kichitaro. Unfortunately, the joint venture has been terminated

after one year trial giving a $1.25 millions lose to Cafe De Coral. In May 1990, Cafe

De Coral made a $14 millions deal to purchase Fortune Source Ltd，which operated

the Ah Yee Leng Tong soup-cum-specialty restaurant chain. And the chain grew

healthily and was then expanded to present 13 outlets.^

^ Exaraaedfrom Econoima Wedcfy, vlO, n24, ppl2, 21 May. 1990, 5 Extractedfrom the 1991 Annual Rtpon of Cafe De ComL 6 Extracted from page 1.2 cfSCMP (Money) dated 4 Aug, 1991. Exaraaedfrom Corponae, vl. nIO. ppX-33. Jun 1991. Page yiii

In August 1991，Cafe De Coral spent a further $100 million to takeover another Italian food chains, Spaghetti House, which had 12 outlets and more than 10 years business experience.^

In addition, Cafe De Coral had strong eagerness to enter the institutional

catering sector. It had already two institutional contracts, one with Hong Kong

Polytechnic in Hunghom and another with the YWCA on Macdonnell Road in the

Mid-Levels. At present, Hunghom facility was registering a turnover of $30 million

and that the YWCA had a turnover of $10 million/

Meanwhile, Cafe De Coral also intended to enter the ready-to-cook eateries'

market. And it successfully launched in the "Barbecue Packs" together with Park'n

Shop.®

Other than diversification, Cafe De Coral also employed geographical

expansion strategy. Though it was in vain when Cafe De Coral firstly expanded its

base of operations to Taiwan and Singapore in the early eighties, it still wanted to

move into other regional markets. And the company was looking to franchise its

cooked-food operations in Macau, Singapore, Shenzhen, Taiwan and North America.

It also tried to negotiate with Japanese retailers in setting up a Chinese restaurant chain

in Japan. However, it would not franchise its operations in Hong Kong owing to the

small market size.^

Marketing Strategy

Cafe De Coral put great efforts in the product innovation. It has introduced

many innovative products to the market such as Sizzling Steaks, Hot Pots, Hainanese Pate 25

Chicken Rice and Chicken Sets. And those products were then imitated by its competitors.^ ‘

It also adopted a heavy and clearly defined multi-media advertising strategy

with the main advertising theme of "A Hundred Points of Excellence" in the

promotion campaign. And it was successful by the statistical records that over 60

million customer visits were estimated for 1990.7

The main selection criteria for Cafe's outlets was the traffic flow. Since the

population grew rapidly in those fringe areas like the new towns and public housing

estate. Cafe intentionally chose those areas for geographic expansion. In facing the

skyrocketing of the rent and the labour shortage. Cafe developed a "Super Express"

mini-shop strategy to tailor the white-collar segment in commercial areas such as

Central and Tsimshatsui. "Super Express" was a small shop with less than 10 staff and

mainly dealt with the take-out services.了

Operations Strategy

The main direction of Cafe De Coral operations was on the cost control. Cafe

De Coral always kept a reasonable cost structure with 35% for raw food, 21% for

salaries, 11% for rent, 12% for profit and 21 % for other expenses such as advertising

spending.^ In order to stabilize the rental expenditures, it often made a six to nine

years leasing terms. In addition, it viewed the stagnating property market in Hong

Kong after June 4，s event as an opportunity to buy more own shops for further

expansion.® In order to further lower the operating costs, a new processing facility at

7 8 Earactedfirom 1991 Amual Rqiort of Ca$e De Coral Uadted. Extractedfront Contai^nuy News Wedcfy, n45. pp5l. 6 Oct, 1990. Page yiii

Fo Tan, Shatin was commenced in 1991 to centralize and automate the food processing system. Those cost control ways made Cafe De Coral has a higher profit margin (12%) than the industry average (10%).^

Cafe De Coral strived to achieve total quality excellence in its daily operations by not only centralizing and automating the food processing system, but also managing each branch as a profit centre on its own. Each branch management has right of control over cost, and a direct responsibility to make it profitable.'

To effectively counter increased staff turnover due to the tight labour market,

Cafe has taken the initiative to provide most equitable welfare benefits industry-wide.

And it followed a strict screening policy in staff recruitment to select the candidates

with the right knowledge, skills for the job and the attitude that can contribute to a

unified corporate culture.^ ‘�

Page 27

McDonald

History

The first McDonald in Hong Kong was established in 1975. After those years of development, there were 50 outlets in Hong Kong including those five "Top Ten

Selling Branches". In 1986, McDonald started to franchise its operation to Hong

Kong people and now at least 5 are operated by local people. Although McDonald accounted for more than 90% of local hamburger sales, the company still thought the market demand was strong and it was only lacking of suitable sites. And McDonald grew in double digits in the last six years.^

Business Strategy

Since McDonald was a global company, the Hong Kong operation was mainly

responsible for the education of the public and the stimulation of the whole market for

McDonald's food and American's life style. Thus the Hong Kong operation sought

to expand the market such as breakfast hamburger and evening hamburger.

Meanwhile, McDonald has tried to bring the American's style further to Hong Kong,

by introducing the first "Drive Through" restaurant in Fairview Garden in New

Territories,

•9 Exa-aaedfrom page 9 访 SCMP (Business》dated 3 Jm, 1990. Page 28

Marketing Strategy

McDonald put a strong emphasis on the family and the whole concept of the

"McDonald Experience" in its advertising campaigns. It tries to give a definite personality to the experience of eating in a McDonald's restaurant. The other key element in target marketing was to make the children fed welcome and special in the

McDonald's Environment. In turn, the children drew the whole family to come to

McDonald.'

Hence, the McDonald's special environment should be maintained in every detail. A little defect in the shop could destroyed the whole perfect environment which was built up by the extremely heavy advertising.®

In addition, in order to further appeal to the young, McDonald also introduced in-store promotions focusing on discount prices for quality toys such as the Ronald

McDonald character merchandise.^

Operation Strategy

Like other operations elsewhere, Quality (Q)，Service (S)，Clean (C) and Value

(V) were the operation guidelines for McDonald. And the innovative management

style gave certain degree of aid to achieve the goal of QSCV.

In Hong Kong operation, part-time employees were extremely important. Thus

McDonald used Electronic Time Clock to facilitate the planning and auditing of the

employee's shifts/。

20 Extraaed from page 3 cfSCMP (Cornpumr dL Tedwobgy Post) dated 4 Dec, 1990. Page yiii

FairwQQif

History

Fairwood was founded in 1972 by the relatives of Cafe De Coral's owner.

Thus Fairwood and Cafe De Coral had similar menus, similar store decorations

(yellow), the names had similar meanings in Chinese (Big Happiness & Happiness

Together) and similar advertising slogan (Infinity is the Challenge & Go For 100 Per

Cent). However, the market share of Fairwood has risen from 8.5% in 1987 to 11% in 1990. Also, the compound growth rate of turnover from 1987 to 1990 of Cafe De

Coral was 76% whereas of Fairwood was 114%. Both the gain in market share and

the high growth rate could be an imply to the better performance than Cafe De Coral.

Business Strategy

Since it was founded later than Cafe De Coral, it grew slowly in seventies. In

1981，Fairwood centralized the food processing preparing for the rapid expansion.

During eighties, Fairwood has undergone a rapid physical expansion, the number of

outlets increased from 6 in 1980 to 70 in 1992. And it had served over 100,000

customers per day in 1990.

After the rapid market penetration in the core fast food industry, Fairwood

extended its core business and diversify into other eateries like Cafe De Coral. In

1987 it opened its first restaurant in a Japanese department store which has

JJ M nuaeriab about Fairwood an extraaedfrom The Book cfNew bate of Fairwood Holdings Limited. Sq> 1991. Page yiii subsequently been supplemented by a further three outlets in another Japanese department store chain. In February 1991 Fairwood further diversified away from fast food with the opening of an Italian restaurant named Mario for the more up-market high spending groups, young families and white collar workers. In October 1991

Fairwood opened its first Thousand Island Food Plaza to offer customers different

cuisines including Chinese, Western, Thai and Japanese food. Until April 1992, there

were 5 Mario Restaurant and 2 Thousand Island Food Plaza.

In May 1991, Fairwood made a joint venture with China National Chemicals

Import and Export Corporation (SINOCHEM) and Beijing Suburb Tourism Industrial

Development Corporation by providing management services and expertise. It was

intended that by early 1992 a Fairwood Fast Food restaurant and a Thousand Island

Food Plaza will be opened in Beijing.

Marketing Strategy

A product development team, which was made up of the senior chefs,

marketing executives and the associate director of sales and operations, has frequent

meetings with senior management to review, update and improve the products offered

by Fairwood. Throughout its history, Fairwood has sought to be innovative in both

the development and presentation of its fast food products, for instance, Hot Pot Rice,

Chicken Fillet, Three Course Set-Dinner, Two Course Set-Lunch and soup without

adding MSG.

Fairwood spent much lesser in advertising when compared with Cafe De

Coral's spending. However, each restaurant was designed and decorated in accordance Page 31 with the Company's image. The same logos and colours were also used for the

company's fleet of trucks, the uniforms of staff and for all packaging and advertising.

The company believed that the widespread use of the company's logos and colours

served to promote the company and enhanced its reputation with customers.

The selection of individual sites and the decision of buy or lease the premises

were done by a small team of executives after analyzing the population trends, likely

pedestrian flow, competition and pricing. Fairwood now placed most attention on

opening restaurants in housing estates, the commercial districts and in new town areas.

Operations Strategy

Quality is most important in Fairwood's daily operations. Stringent quality and

hygiene checks for all produce, sauces and ingredients were performed in the central

processing facility to ensure good quality. In order to achieve consistency in

presentation and taste of all its products, Fairwood used homogenizing process in

producing standardized sauces and gravies.

To ensure competitive prices and to avoid dependence on a single source of

produce, Fairwood usually used more than one suppliers. A general rule for reference

is that no single supplier can account for more than 12% of the company's purchase

by value.

！I Page 28

Maxim，si2

History

The first Maxim's was opened in the Central 35 years ago serving authentic

European Continental Cuisines. And now, it has 254 outlets ranging from fast food outlets to opulent Chinese specialty houses, from grab-it-on-the-run cake and pastry shops to trendy international cafe shops, from restaurants featuring down-home

Cantonese cooking to Western exotica like Dutch and Caribbean cuisine.

Business Strategy

It is obvious that fast food market was less significant than the other restaurant business (fast food accounts for 9% of the restaurant sector). Maxim's, being so diversified and well developed, still noticed the fast food culture was growing rapidly in Hong Kong, so it developed over 40 branches providing Chinese and Western foods

and snacks throughout the Territories. Apart from this, Yummy Hut, renowned for

providing South East Asian and Cantonese foods.

Maxim's has a good position in institutional catering market, it already had

some contracts with some governmental canteens. In addition, Maxim's introduced

their Western food "Express Shops" in various commercial buildings and city's major

public complexes in order to meet the need of the office working group and the

modem-minded people.

12 AU materiab about Maxim's are extractedfiom Hong Kong Business, pp9^97, Sep 1989. Page yiii

Marketing Strategy

Maxim's almost ignored the advertising and promotion in their fast food outlets. It was because the products it offered were usually with relative higher price than other fast food shops, a low-profile would be helpful in building up such premium image.

The major tool used by Maxim's was location, which was one of the most vital factors in any food outlet's success. Part of their interlocking ownership of the company includes Hongkong Land scouted locations and offered priority on picking it up for Maxim's.

Operations Strategy

Maxim's took time to train employees with the intensive training programma

at the 6,000 square foot school in Wanchai. Thus the staff turnover rate was lowest

among other competitors.

By operating central kitchens and bakeries, and utilizing the bulk-buying

techniques available to major-scale consumers of meat, poultry and produce, the

company has effectively installed very close end-to-end cost and quality control. Page 28

Kentucky Fried Chicken

History

Kentucky has entered the Hong Kong market once in 1973. Unfortunately it was terminated in February 1975 due to its taste was unsuitable for Chinese, its prices was too high, lack of seating spaces and the public did not accqrt the American take- out concept. In 1985, Swire Marketing took the Asia pacific franchise again in a 10 years contract form. After the success in Malaysia, Singapore, Thailand, Philippines,

South Korea and Indonesia and careful market studies in Hong Kong, Kentucky entered Hong Kong market again. Up to present there were 12 outlets in Hong

Kong,

Business Strategy

Reviewing from the pass failure, Kentucky tried to customize its operation to the Hong Kong people/^

Marketing Strategy

Kentucky firstly positioned itself as a chicken expert. And it upgraded the

shops in order to attract the 16 to 39 years old young white-collars and executives

since they were easier to accept the American style and foods. However, some

13 Exaractedfrom page 1,3 qfSCMP (Business) dated 27 Oct’ 1990. Extractedfrom Hong Kong Economic JounuU, vl4, nJO,卯 70~73, Jan 1991. Page yiii localized food were introduced to suit the local market/

A low-profile localized advertising was employed to raise the image of

Kentucky into more restaurant like. It did not just copy the advertising in United

States, but rather made a new slogan to customize the Hong Kong people. Also

specific advertising campaigns were used when new products was introduced/

Operations Strategy

Knowing that Chinese were more concern with the freshness of food, Kentucky

introduced a 45 minutes re-cook practice, i.e., if the chicken were not sold in 45

minutes after cooked, then threw it away in order to make the chicken more fresh.

Also all chicken in Hong Kong's outlets were from United States to maintain the food

quality. In addition, more seating spaces was incorporated in the outlets to tailor the

habit of Chinese/ Page yiii

Wendy's^'

History

Wendy's was a new comer to Hong Kong. It was founded by Steve Thomas in United States 8 years ago. And the franchiseeo f Indonesian Wendy's has recently got the franchise in Hong Kong. They thought that Hong Kong people liked the

United States living style as well as the western foods. If Wendy's could make a quality differentiation to the customers, then it is highly probable to be successful in

Hong Kong.

Business Strategy

Wendy's positioned itself as a restaurant rather than a fast food shop. It aimed

to offer the customers high quality food with similar prices under a relaxing and

comfort atmosphere in the shop. Its primary target customers were the 15 to 35 years

old young white-collars and executives. However, the children and household were

still secondary target customers of Wendy's.

Marketing Strategy

An international menu was provided by Wendy's including hamburgers, fried

chickens, spaghetti, potatoes and rice. The Hong Kong franchisee selected the most

访 All nuaeriab about Weady 's an extracted fran Ae baeniew wiA Wendy 's Top iianaganem. Page yiii suitable foods to offer according to the market trends and the preference of the customers. The pricing of Wendy's.product were determined by a research held by

Wendy's itself, taking into account of the major competitors.

The first shop was located in Aberdeen because there was only one McDonald

there and the residents had a high disposable income. In addition, almost every fast

food shops chose Central or Tsimshatsui for their first shops, Wendy's intentionally

made it different from them. The next place for Wendy's shop was Tsimshatsui

because of its high traffic flow. However, the main criteria for Wendy's site selection

were the awareness of the name and the budget afforded by the franchisee for

choosing a residential areas to expand its chain further.

A multi-media advertising campaign was now undergone including TV, radio

and print ads. The main objective was to arise the awareness of Wendy's in

customers' minds. Wendy's hamburger was the best selling and rated as the top in

consumer surveys in United States. Therefore the main advertising message was to

deliver a better quality hamburger under similar prices. In order to support its high

quality, Wendy's was claimed as hamburger specialist and its beef are from U.S.

100% pure beef.

In the advertisements, it brought a little girl from the Wendy's logo alive in

order to make a clear identification of Wendy's shop. It also associated the Wendy's

first letter - (W) with McDonald's first letter - (M). Also a "Chinese Name for

Wendy's Competition" is held to fiirther arouse the awareness of Wendy's name. Page yiii

Operations Strategy p

A Wendy's International System was used as a guideline for franchisee. They were expected to follow it strictly especially the daily shop's operation. For examples,

the kitchen or cooking areas was highly restricted to the employees only and the

decorations of shop, tables, chairs and even colours (white, blue and brown) were

restricted. Despite of those restrictions, Wendy's International gave a full support to

franchisee in many other aspects.

Wendy's offered salary of $17/hour comparing to McDonald's $13/hour to

attract employees. The employees were firstly given a brief talk or by video to

familiarize with Wendy's operations. Then on-the-job training was used due to the

high turnover rate. Most employees were housewives in between 30 and 40 years old

and young ladies. Only a small portion of them were part-time staff. In selecting the

employees, courtesy was the most important factor instead of ages and education

levels. Page yiii

Comparison of Varionx Competitors

Cafe de Coral

Strengths Weaknesses

1. Largest Network 1. Similar Image with Fairwood

2. First Chinese Fast Food Shop 2. Conservative Management due to

Family Control

3. Each Branch Act as an Profit 3. Quality of Food Fluctuates

Center

4. Heavy Promotion and Clear

Advertising Theme

McDonald

Strengths Weaknesses

1. Strongest Position in American 1. Restricted Products

Style Food

2. Extremely Heavy Promotion 2. Lack of Outlet in Residential Areas

3. Good Quality Control

4. Focus on Business Districts

5. Focus on Family Customers and

Children Page yiii

Fairwood

Strengths Weakness

1 • Successfully Linking with Cafe De 1. Similar Image with Cafe De Coral

Coral

2. Most Innovative Product 2. No Focus Customers

3. Share the Advertising of Cafe De

Coral

4. Focus on New Town Areas

5. Good Quality Control and Supplier

Control

6. Aggressive Expansion

Maxim's

Strengths Weaknesses

1. Good in Institutional Catering 1. Conservative Management

Market

2. Focus on High Income People 2. Lack of Advertising Support for

Image Building

3. Good Relationship with Hongkong 3. Lack of Product Innovation

Land Page yiii

Kentucky Fried Chicken

Strengths ‘ Weaknesses

1. Good Position as An Chicken 1. Insufficient Outlets

Expert

2. Have Past Experience in Hong 2. Restricted Products

Kong

3. Focus on White-collar and

Executive

Wendy's

Strengths Weaknesses

1. Position as Restaurant 1. Lack of Market Experience

2. Newcomer may Arouse Interest 2. Restricted Products

3 • Commitment on Advertising and 3. Smallest Network - Only One Shop

Image Building

4. Support by Headquarters

Tmplications

According to the above analysis, Wendy's is hard to compete with the "fives"

by the number of outlets, the product variety and the promotion and advertising

efforts. Because of the license, the product line is limited in variety. The "fives" have

high turnover and large number of outlets so that they can afford a large

advertisement budget. It seems that Wendy's could takes advantage only if it could

create a distinct image and focus on specific customers' groups. Page yiii

CHAPTER V

RESEARCH DESIGN

Ot>j>Qtives

The objectives of the researches to be conducted are, first, to identify customers' criteria in choosing fast food shops, the positions of the "fives" and

Wendy's in the mind of customer, and to look for customers' suggestions for improvement on Wendy's.

Research Methodology

In order to identify the customers' criteria in choosing fast food shops, which is important for all later researches, first of all, a focus group study was conducted.

In fact, these criteria are some of the factors which comprise the position of a fast food shop in the mind of customers.

Next, with the criteria in hand, descriptive researches had to be carried out in order to identify the positions of Wendy's and the "fives", and the rankings of the

criteria. Basically, there are two ways to carry out a descriptive research — by

questionnaire or by observation. In this case, questionnaire is a more appropriate Page yiii method. Observation is limited in limited in scope to information about behaviour and certain demographic/socioeconomic characteristics, while questionnaire is much more versatile. Also, questionnaire provides greater control over data-gathering activities,

and the responses will be more objective and accurate.

Structured, Undisguised questionnaires was used in which all questions and

responses were standardized. Fixed alternative questions was used mostly so that

responses were limited to stated alternatives. However, open-ended questions were

also used when appropriate.

"Questionnaire on fast food shops" survey was conducted to identify

customers' perceptions towards the positions of the "fives", according to the criteria

identified in the focus group study, and to identify the relative importance of the

criteria to the customers.

Then, "Questionnaire on Wendy's" survey was conducted to compare Wendy's

customers' perceptions towards Wendy's position relative to the "fives".

Finally, we talked to some of the crew members and customers on their

suggestions for improvement for Wendy's.

Focus Group Study

Descriptions

Two focus group meetings were held. There were 6 members in each group

and each of meeting last for approximately 1 hour. The demographics of the two

groups were : Page yiii

Group 1 : CUMBA students, Aged 23 - 27

Group 2 : Executives/white collar. Aged 26 - 33

Findings

From the two meetings, the following attributes concerning customers' criteria

in choosing fast food shops were identified :

- quality of food

- taste of food

- price

- value for money

- distribution, easy to find one

- variety of food

- cleanliness and tidiness of shop

- service provided

- "fast" ™ whether you can finish a meal quickly in it

- innovative in food provided

- advertisement and promotion

- image

- customer profile — whether customers perceive they "fit" the shop，such as

age, occupation, income

- meal type suitable for — breakfast, lunch, tea break, dinner

- number of customers — someone avoids too many customers, someone views

many customers mean good shop Page yiii

"Questionnaire on fast food shops" Survey

Descriptions

With the attributes identified in the focus group study, "Questionnaire on fast food shops" was designed to measure the positions of the "fives". (Please refer to

Appendix 1 for the copy) It is a structured, undisguised questionnaire with one open-

ended question.

For question no. 1 to no. 11，Likert method of summated ratings was used to

measure respondents' attitude towards the "fives", based on some of the identified

attributes. A scale of “ 1 “ to "6" was used so that there would not be too many nor too

few choices for the respondents. Also, this avoided the problem of "central tendency"

as there was not a central number. On the other hand, the question on quality and

taste were intentionally separated so as to avoid the association between them by the

re^ondents.

Question no. 12 and no. 13 were used to identify respondents' perception of

customers profile of the "fives". Question no. 14 was used to identified the types of

meal which the "fives" are suitable for. Question no. 15 was used to measure

respondents' perceived number of customers of the "fives". Question no. 16 was used

to measure the respondents' frequencies of purchase at the "fives".

The open-ended question, question no. 17, was used to identify some other

attributes that respondents associate with the "fives" but were not covered in the

questionnaire.

Likert method of summated ratings was used again in Question no. 18 to

• . ‘ Page yiii measure the importance of different attributes to respondents when they are choosing fast food shops. -

Throughout the whole questionnaire, the item "Fast Food Shops" was added to the "fives" to identify the respondents' attitudes towards all fast food shops.

Convenient sampling method was used. We asked our classmates to distribute the questionnaires to and to collect them from their friends and relatives who dined in the "fives".

"Qiip^tinnn^tire OH Wendy's" Survey

Descriptions

"Questionnaire on Wendy's" was designed to measure the position of Wendy's.

(Please refer to Appendix 3 for the copy) It is also a structured, undisguised

questionnaire with one open-ended question. In order to minimize the interruption to

the customers, the questionnaire was intentionally shortened.

Question no. 1 to no. 11 from the "Questionnaire on fast food shops" were

retained, with the addition of the item "Wendy's" for each question. The "fives" were

included in the question in order to compare the response of this sample with those

in "Questionnaire on fast food shops". On the other hand, because Wendy's has only

one shop, the Aberdeen shop, during the survey, the question, "It is easy to find

one", was eliminated.

Question no. 11 to no. 13 were similar to question no. 12 to no. 14 in the

"Questionnaire on fast food shops". However, as mentioned, only answers to Wendy's Page yiii were collected in order to minimize the interruption to customers. Also, as the items in these questions are quantifiable/ comparison with other fast food shops are not essential.

The open-ended question, question no. 14，was used to identify some other attributes that respondents associate with Wendy's but were not covered in the

questionnaire.

Convenient sampling method was used. The survey was conducted by personal

interviews with customers in Wendy's Aberdeen shop. The survey was conducted on

one weekday and one weekend, in order to capture respondents of different

demographics.

J Page4S

CHAPTER VI

FINDINGS AND ANALYSIS

"OuestioimaiTe on fast food shops" Survey

150 questionnaires were distributed, 142 were collected, and 97 were considered successful. The data of the research result is included in Appendix 2.

Findings

From the answers to question no. 18, the relative importance of different

attributes to respondents are identified and shown in Fig. 6.1 in the following page.

As shown in the figure, the 5 most important attributes are:

- Cleanliness and Tidiness

- Taste of Food

- Quality of Food

- Good Value for Money

“ Convenience Pale 49

",.,. 4.1

~ Importance of various Selection Factor selection Factor

Cleanlines &Tidines ; 5,13 Taste of Food ~ 4.94 Quality of Food ~4.92 Good Value for Money 4.8 Convenience Time Saving 4,81 : P::do;;:;:e :/,55 Variety of Menu Shop's Image 4.18 ~ Innovation of Food ~ 3,94 Number of Customers 3~2 Advertising &Promot

3 a5 4 t5 5 5,5 Average Rating Scores Page yiii

From the answers to question no. 1 to no. 11，the positions of the "fives" in the mind of respondents are identified and shown in Fig. 6.2.

Figm 6.2

Customers' Perception on Selection Factors (Survey 1)

Poor Food Quality ^ ^、"^y/ ^ ®ood Food Quality

Expensive _^ ！ Not Expentlw

Poor Value for Money ^ ^ ^ ^ Pof Money

Narrow Food Variety ^ ^ Q ° ^ Wide Food Variety

Not Ct«an 4 Tidy ^ ^ ^ ^ 。丨* 了•办

Poor 8«rvic« 1 ^ f 丨 ^ $ Qood Service

Cuttomert Do Not ^ 免 \\ \ ^ ^ Cuttomert Like the Food Lite Th« Food \

Finith • Mm丨 Slowly 1 ^ ^ ^^ ^ Finish a M«al Quickly Food Not Innovttiv* 1 2 5 8 Food Innovatlw —H、 8«ldom AdV0rtl«« 1 2/ /3 、、、、、、/t 5 « Froqutnt Adv«rti«o and Promote f V ~ and Promote Hard to Find On« 1 2 >5} 6 Easy to Find One

——~ Fast Food Shops Cafe-De-Coral — Fairwood Maxim'8

Kentucky Fried Chicken McDonald Page yiii

Respondents thought that Cafe De Coral, Fairwood, and KFC were most suitable for age range 15 to 25. Mmm's was considered to be suitable for age range

26 to 35. McDonald was considered to be suitable for a wider age range, under 26.

Cafe De Coral, Fairwood, and McDonald were considered to be most suitable for income range 4,000 to 7,999. Maxim's and KFC were considered to be most suitable for income range 4,000 to 11,999.

Cafe De Coral, Fairwood, and Maxim's were considered to be most suitable for lunch. McDonald was considered to be most suitable for tea break, while KFC

was considered to be most suitable for lunch and tea break.

The rankings for numbers of customers and frequencieso f consumption were

the same. The rankings are: McDonald, Cafe De Coral, Fairwood, Maxim's, and

KFC.

32% of respondents associated Cafe De Coral with "100 Marks" while 12%

of them associated Fairwood with "Infinitive Marks". 12% of them associated

Maxim's with "Cakes" and 43% of them associated KFC with "Chicken". 28% of

them associated McDonald with "Hamburger" while 19% of them associated it with

"Uncle McDonald".

Analysis

Considering the five most important attributes for choosing a fast food shop -

Clean and Tidy, Taste of Food, Quality of Food, Good Value for Money, and

Convenience, McDonald is the best in the mind of respondents out of the "fives". So,

it will be very hard to challenge the position of McDonald. Page yiii

In terms of Cleanliness and Tidiness, McDonald has got the highest score.

Maxim's has got the second highest, and KFC has got the third. However, their scores are quite close to each other.

In terms of Taste of Food, McDonald's score is obviously higher than the others. Maxim's has got the second highest, and KFC the third.

In terms of Quality of Food, McDonald has got the highest score. KFC has got the second, and Maxim's the third. The scores are quite close to each other.

In terms of Good Value for Money, McDonald has got the highest score and

Maxim's has got the second.

In terms of Convenience, McDonald's score is obviously higher than the others. Cafe De Coral has got the second highest, and Fairwood the third.

If we take the market share and the respondents' frequencieso f consumption

of the "fives" into consideration, we can see that although Maxim's and KFC has got

quite high scores, their market share is a lot behind Cafe De Coral and Fairwood.

One major reason is that the distribution of the former two are much weaker than the

later two. Also, as Convenience is the fifth highest criteria, the number of outlets and

their location are very important. On the other hand, Maxim's and KFC are

considered quite expensive by the respondents, and so this may also be one of the

reasons which affect their market share.

McDonald is very successful in targeting the low-aged customers, which

induce the purchase by the whole family as children usually dine with their parents.

McDonald and KFC are quite successful in positioning by product. Hamburger

and Chicken. So, it will be hard to challenge their position by product. Cafe De Coral

is quite successful in positioning by their slogan, "100 Marks", which is position by Page yiii quality. However, whether they can achieve that is a problem as respondents considered them as having low quality. Fairwood and Maxim's do not have a very clear position. Maxim's has even got a rather unrelated position — "Cakes"：

"Questiopnaire on Wendy's" Survey

50 successful interviews were conducted. The data of the research result is

included in Appendix 4.

According to the calculations in Appendix 5, for some of the questions in

question no. 1 to no. 10, there is a statistically significant difference in the responses

provided by the respondents in the two questionnaire surveys. So，in order to retain

the integrity of the analysis, we did not use the results in questionnaire survey 2

directly to project the public perception of Wendy's and compared it to the "fives".

This is mainly because of the unique demographics of customers and the fast food

market in Aberdeen. However, we have considered the results of this survey as a

preliminary study.

Findings

From the answers to question no. 1 to no. 10，the positions of Wendy's in the

mind of respondents, when compared with the "fives", are identified and shown in

Fig. 6.3 in the following page. Page yiii

Fifuniki

Customers' Perception on Selection Factors (Survey 2)

如 Poor Food Quality 1——I—— ^ od Food Quality

彳！ Expensive _‘ _ ~® Not Expensive

！如 Poor V_ for Money ^ ^ —— ——® Value For Money

術如 Narrow Food Variety , ‘ “~® Food Variety

甚 Not Clean 4 Tidy ^ ‘ ‘ Tidy

乂/^ 如 Poor service ^ M ? > ‘ od Service

气 Cu«tom«r« Do Not 1 2 \ ..][^ 5 ^ Cu«toiiier8 Lite the Food Lite Thft Food ^XVV^ 灿 Finish a Meal Slowly 1 ^ ^ y^ ^ ^ Fin a Meal Quickly

Food Not Innovative 1 2 ^ ^ Food Innovative

Seldom Advertise 1 V A « Frequent Advertise and Promote ^ ^ ^

Fast Food Shops

Cafe-De-Coral

Fairwood

—— Maxim's

McDonald

• Kentucky Fried Chicken

Wendy's Pate 55

Respondents thought that Wendy's was most suitable for age range 15 to 25, for income range 4,000 to 7,999, and for lunch.

16% of respondents associated Wendy's with "The beautiful girl in the advertisement" while 14% of them associated Wendy's with hamburger. However, another 16% of them associated Wendy's with "A girl's name".

Analysis

According to Fig. 6.3，Wendy's is very strong in its Cleanliness and Tidiness,

which is one of the most important attributes for choosing a fast food shop. It is also

quite strong in Variety of Food and Service. However, it is considered to be

expensive.

Although Wendy's stresses its quality, it turned out that customers did not

perceive it as having very high quality. Also, customers' perception of Wendy's

customer profile was very similar to the "fives".

Only 14% of customers associated Wendy's with hamburger, which is almost

half of those who associated McDonald with hamburger. So, it will be very hard to

position Wendy's by hamburger. On the other hand, 16% of customers associated

Wendy's with the beautiful girl in the advertisement, while another 16% associated

it with a girl's name. So, it will be hard for Wendy's to change the perception of a

common girl's name — Wendy, to a fast food shop's name. Of course, these position

measurements were made within one month after the Wendy's advertisement was put

out. Page yiii

^nissioTis with Crew Members and nij Customers

From the discussion with some customers and some of the crew members about customers' comments, the following areas for improvement were discovered.

However, it should be noted that the followings are just subjective comments and they

are subjected to the demographics of Aberdeen customers. Whether they are

representative of all customers in Hong Kong required further studies.

About the Shop

- The shop is quite small and packed and the washroom is also small.

- The shop is quite noisy, especially when it is crowded. One cause may be the

sound level of music.

- Someone brought in their dogs.

- The shop is quite cold.

- The tables are not laid out tidily

- If the first floor is fuU, one has to bring the tray upstairs. This is quite

inconvenient.

About the Menu

- The menu is in Chinese only.

- Names in menu are not self-explained. One has to guess what the real product

IS. Pages?

- There are not enough choices of drinks for children. For example, no milk and

milk shake are provided, so they can only choose soft drinks.

About the Food

- The meat for Hamburger is quite cold，when compared to the bread.

- The taste of bread is not that good.

- The taste of food does not fit Chinese. For example, there is no soy bean

sauce to serve with the rice.

- The dishes are quite small.

- The food is quite dry.

- Nothing Special — Hamburger is similar to McDonald, Potato is similar to

Oliver, and Chicken is similar to KFC.

Tmplications

In summary, the close competitor of Wendy's, McDonald, is very strong in

all the most important criteria. In addition, they can afford a large advertising budget

so that they can reinforce their strengths. On the other hand, Wendy's is rather weak

in all of these except cleanliness and tidiness. Also, currently, Wendy's is very weak

in number of outlets when compared to McDonald, Cafe De Coral, and Fairwood.

Furthermore, McDonald has a very strong position with hamburger, when compared

with that of Wendy's. So, Wendy's should find a distinct position, rather than similar

to that of McDonald, and effectively signal this to the public. Page yiii

CHAPTER VII

RECOMMENDATIONS FOR WENDY'S

Position

According to Questionnaire survey 2, at the time of report, there was not a clear position in the mind of their Aberdeen customers. The associations were the beautiful girl in the advertisement, a girl's name, and hamburger.

Because Wendy is a very common girl's name, it would be very hard to create a position by associating the name "Wendy" with "Wendy's fast food". However, the beautiful girl could still be used in positioning. On the other hand, as McDonald has a very strong association with "Hamburger" and KFC has a strong one with

"Chicken", it would be hard to position a fast food shop by these two products.

Although Wendy's is currently using Quality as its primary position, the results of the survey shows that customers did not perceive the same way. They considered

Wendy's quality was lower than McDonald. Also，native Chinese may not have the

expertise to compare the quality of Western food. Moreover, Wendy's, McDonald,

and KFC all have its own international quality standard. So, "Quality" should be used

as a secondary position in order to keep pace with the competitors' standard.

In view of the strength of Wendy's from Questionnaire survey 2, it can be Page yiii concluded that Cleanliness and Tidiness, Variety of Food, and Service are the most promising attributes for positioning-Wendy's.

However, as competitors such as Cafe De Coral and Fairwood do not have franchising restrictions, it would be quite easy for them to come up with what

Wendy's has got. With the relatively lower importance of variety of food in choosing fast food shops, variety of food should be used as a secondary position only. On the

other hand, service of fast food shops is limited. Usually the service of fast food

shops includes the ordering, refilling and table-cleaning. Since there will be turnover

in the well-trained crew members and fluctuation in the number of customers, so

although Wendy's emphasize service, it should also use it as a secondary position

only.

Cleanliness and Tidiness should be used as primary position for Wendy's. It

is considered very important by customers and Wendy's is doing very good at it.

However, as new shops are often cleaner and tidier than old ones, Wendy's should

continuously maintain this Standard in order to maintain the position.

Target Customer

The current major target customers are the 25 to 35 years old executives and

white collars. However, those customers usually consume fast food in the main

business areas during lunch time. Actually both the children under 15 and the students

ages between 15 and 25 are major customers of fast food shops. These two groups of

customers should be opportunities of Wendy's. In fact, by the observation throughout

the research in Aberdeen's shop, most of the current customers fall on these two Page yiii groups. Hence it is suggested that Wendy's should include these two groups as their target customers. In addition, this move can also help to build up the loyalty of the children and students so that they will continue to consume in Wendy's.

Pricing

Currently, the food in Wendy's is considered expensive and relatively poor value for money. A pricing research should be carried out to identify a proper price with emphasis on the value for money, as it is considered more important than the

price itself. Special priced set meals may be introduced in order to convey the idea

of good value for money. This can also induce trial.

Distribution

For expanding, the first step should be to open at least two new outlets in high

traffic business areas, such as Central and Tsimshatsui. The major target customers,

young executives, are located in these areas. As Convenience is considered very

important, outlets locating near the target customers have a strategic advantage. These

outlets, in turn, will become "cash cows" for financing the opening of other new

outlets.

The second step is to open outlets in developing new towns such as Tuen Mun,

Yuen Long and Tai Po. Though the "five" have already set up their branches in those

areas, the demand of fast food shops still exists the existing supply due to the rapid

rising in population of those areas. Moreover, less competition is existed in those I-

Page 61 areas when compared with the business areas.

Advertising

The advertisement of Wendy's should emphasis the primary position

"Cleanliness and Tidiness", and mention the secondary positions "Quality"，"Variety

of food", and "Service". The girl used in the current advertisement could be used to

associate and reinforce the primary position, as a girl is usually perceived as "cleaner

and tidier" than a boy.

Since fast food is a mass product, it is more suitable to build up the position

through the mass media. Hence TV and radio are chose as the main advertising

media. Moreover, the use of this two media can build up the desired position in a

shorter period despite of high costs incurred. The current media strategy is short-term

burst-out. However, to build up a desired position in the prospects' mind, a much

extended media strategy should be employed. Hence, an advertising campaign with

longer duration and lower frequency is suggested.

Areas for Tmprovement

As mentioned in chapter VI, section "discussion with crew members and

customers", there are a number of comments suggested by the customers. There are

comments such as size of shop, problem of different floors, lack of product

descriptions, size of dishes, and taste of food. Wendy's should look into these areas,

make improvements on these, and take them into account when they open new outlets. Page yiii

CHAPTER VIII

LIMITATIONS AND SUGGESTIONS

rimitations of the Study

The study exhibits limitations in several aspects. First of all，as Wendy's is a new fast food shop in Hong Kong, the market position and the image of Wendy's may not be well established in such a short period. Hence, it may be too early to conduct the customers' survey for the study.

At present, Wendy's has only one shop located at Aberdeen. To guarantee the respondents of the survey have tried Wendy's product, the survey on Wendy's is done inside the Aberdeen's shop. However, the population in Aberdeen is not representative enough to reflect the whole population in Hong Kong. Therefore, similar surveys is suggested to be done at other regions where Wendy's is going to has shops in.

Due to insufficient time and efforts, convenience sample design is adopted in the customers' surveys. It arises a problem of lacking of a clear picture on the

respondents whether they are target customers or not, neglecting the sample size.

The respondents of the surveys has limited amount falls in the categories of

blue collar and ages under 15. As they are also major customers of fast food shops,

the surveys can not effectively reflect the customers' perception of various Page yiii demographic characteristics.

.Siiggestioos for Further Research

As the timing of the customers' survey may be inappropriate, further researches are suggested to be done later until Wendy's has more outlets and more prospects try its products. In order to control the respondents' demographic

characteristics, random sampling method is suggested to be employed in further

researches.

1备港中文大舉勸省粹藏書-I Page yiii

APPENDIX 1

QUESTIONNAIRE ON FAST FOOD SHOPS

We are a group of two MBA students froi The Chinese University of Hong Kong. Currently, we are conducting a survey on Fast Food Shops in Hong Kong.

Please circle your answers to questions 1 to 11.

1. It offers food of good quality.

Fast Food Shops: Disagree 12 3 4 5 6 Agree Cafe De Coral: Disagree 12 3 4 5 6 Agree Fairwood: Disagree 12 3 4 5 6 Agree Haxii's Fast Food: Disagree 12 3 4 5 6 Agree McDonald: Disagree 12 3 4 5 6 Agree Kentucky Fried Chicken: Disagree 12 3 4 5 6 Agree

2. The food is expensive.

Fast Food Shops: Disagree 12 3 4 5 6 Agree Cafe De Coral: Disagree 12 3 4 5 6 Agree Fairwood: Disagree 12 3 4 5 6 Agree Maxim's Fast Food: Disagree 12 3 4 5 6 Agree McDonald: Disagree 12 3 4 5 6 Agree Kentucky Fried Chicken: Disagree 12 3 4 5 6 Agree

3. The food it provides is good value for money.

Fast Food Shops: Disagree 12 3 4 5 6 Agree Cafe De Coral: Disagree 12 3 4 5 6 Agree Fairwood: Disagree 12 3 4 5 6 Agree Haxii's Fast Food: Disagree 1 2 3 4 5 6 Agree McDonald: Disagree 12 3 4 5 6 Agree Kentucky Fried Chicken: Disagree 12 3 4 5 6 Agree Page yiii

4. It is easy to find one.

Fast Food Shops: -Disagree 12 3 4 5 6 Agree Cafe De Coral: Disagree 12 3 4 5 6 Agree Fairwood: Disagree 12 3 4 5 6 Agree Maxim's Fast Food: Disagree 12 3 4 5 6 Agree McDonald: Disagree 12 3 4 5 6 Agree Kentucky Fried Chicken: Disagree 12 3 4 5 6 Agree

5. It provides a wide variety of food.

Fast Food Shops: Disagree 12 3 4 5 6 Agree Cafe De Coral: Disagree 12 3 4 5 6 Agree Fairwood: Disagree 12 3 4 5 6 Agree Maxii's Fast Food: Disagree 12 3 4 5 6 Agree McDonald: Disagree 12 3 4 5 6 Agree Kentucky Fried Chicken: Disagree 12 3 4 5 6 Agree

6. It is clean and tidy.

7. It provides good services.

8. You like the taste of food it provides.

9. You can finish a meal quickly in it.

Fast Food Shops: .Disagree 12 3 4 5 6 Agree Cafe De Coral: Disagree 12 3 4 5 6 Agree Fairwood: Disagree 12 3 4 5 6 Agree Maxim's Fast Food: Disagree 12 3 4 5 6 Agree McDonald: Disagree 12 3 4 5 6 Agree Kentucky Fried Chicken: Disagree 12 3 4 5 6 Agree

10. It is innovative in the food it offers.

11. It advertises and promotes frequently.

Please put ticks in the appropriate boxes in questions 12 to 14.

12. Which age range do you think the followings are lost suitable for ？ (You can have lore than one choice in each row) ^======^1

Age Range

Under 15 15 to 25 26 to 35 Over 35

Fast Food Shops

Cafe De Coral

Fairwood ；

Maxim's Fast Food

McDonald

Kentucky Fried Chicken __==J==J Page yiii

13. Which income range do you think the followings are lost suitable for ？ (You can have more than one choice in each row) ’ Personal Monthly Income Range (HK$)

Under 4,000 to 7,999 8,000 to 12,000 to Over 4,000 11^ 15,000 15,000

Fast Food Shops

Cafe De Coral

Fairwood ^

HaxiB^s Fast Food

McDonald

Kentucky Fried Chicken I I 丨

14. Which purposes do you think the followings are lost suitable for ？ (You can have lore than one choice in each row) ^======^1

Purposes

Breakfast Lunch Tea Break Dinner

Fast Food Shops

Cafe De Coral

Fairwood

Maxim's Fast Food

McDonald

Kentucky Fried Chicken II I 丨

15. Please rank the following shops by the number of customers according to your own perception. A "1" stands for the highest number of customers, a "2" stands for the next highest, and so on.

Cafe De Coral — Fairwood — Maxim's Fast Food — McDonald — Kentucky Fried Chicken 一 Page yiii

16. Please rank the following shops by your frequency of consumption. A ”1" stands for the highest frequency of consuiption, a "2" stands for the next highest, and so on.

Cafe De Coral ‘— Fairwood — Maxim's Fast Food ___ McDonald — Kentucky Fried Chicken ___

17. Please write down what you will associate with the followings. . (eg. Someone will associate IBM with coiputers； Marlboro with red colour, Longines watches with James Bond, and Perrier with the shape of its bottle.)

Cafe De Coral

Fairwood

Haxii's Fast Food

McDonald

Kentucky Fried Chicken

18. Please rate the importance of following factors when you choose a fast food shop for meal. Please circle your choices.

Quality of Food: Not Iiportant 12 3 4 5 6 Most Important Price of Food: Not Iiportant 12 3 4 5 6 Host Important Convenience: Not Iiportant 12 3 4 5 6 Host Iiportant Variety of Menu: Not Iiportant 12 3 4 5 6 Host Important Good Service: Not Iiportant 12 3 4 5 6 Host Important Taste of Food: Not Iiportant 12 3 4 5 6 Host Iiportant Time Saving: Not Iiportant 12 3 4 5 6 Host Important Shop's Image: Not Iiportant 12 3 4 5 6 Host Important Good Value For Honey: Not Iiportant 12 3 4 5 6 Host Important Cleanliness & Tidiness: Not Iiportant 12 3 4 5 6 Host Iiportant Innovation in Food: Not Important 12 3 4 5 6 Host Important Advertising k Promotion: Not Iiportant 12 3 4 5 6 Most Iiportant Number of custoiers: Not Iiportant 12 3 4 5 6 Most Important Page yiii

Please put ticks in the appropriate boxes in question 19 to 22.

» 19. YODR SEX : Hale — Female _

20. YOUR AGE : less than 15 __. 15 to 25 — 26 to 35 — 36 or Above .__

21. YODR MONTHLY INCOME: Onder HK$ 4,000 __ HK$ 4,000 to 7,999 一 HK$ 8,000 to 11,999 一 HK$ 12,000 to 15,000 一 Over HK$ 15,000 __

22. YOUR OCCUPATION: Executive — Professional — White Collar _ Blue Collar — Student — Others (pis specify)

Thank You very luch for your cooperation. Page yiii

APPENDIX 2

DATA OF -QUESTIONNAIRE ON FAST FOOD SHOPS"

1. It offers food of good quality.

Fast Food Shops: 2.70 Cafe De Coral: 3.29 Fairwood: 3.11 Maxim's Fast Food: 3.84 McDonald: 4.28 Kentucky Fried Chicken: 3.72

2. The food is expensive.

Fast Food Shops: 2.90 Cafe De Coral: 3.47 Fairwood: 3.45 Haxii's Fast Food: 3.68 McDonald: 4«16 Kentucky Fried Chicken: 3.35

3. The food it provides is good value for money.

Fast Food Shops: 3.41 Cafe De Coral: 3.47 Fairwood: 3.45 Haxii's Fast Food: 3.68 McDonald: 4.16 Kentucky Fried Chicken: 3.35

4. It is easy to find one.

Fast Food Shops: 4.63 Cafe De Coral: 4.49 Fairwood: 4.15 Maxim's Fast Food: 3.50 McDonald: 5.21 Kentucky Fried Chicken: 3.18 Page yiii

5. It provides a wide variety of food.

Fast Food Shops: .3.76 Cafe De Coral: 3.95 Fairwood: 3.89 Maxii's Fast Food: 3.82 McDonald: 3.12 Kentucky Fried Chicken: 2.79

6. It is clean and tidy.

Fast Food Shops: 2.74 Cafe De Coral: 3.64 Fairwood: 3.58 Maxii's Fast Food: 4.41 McDonald: 4.62 Kentucky Fried Chicken: 4.26

7. It provides good services.

Fast Food Shops: 2.74 Cafe De Coral: 3.22 Fairwood: 3.16 Maxim's Fast Food: 3.63 McDonald: 4.17 Kentucky Fried Chicken: 3.74

8. You like the taste of food it provides.

Fast Food Shops: 3.03 Cafe De Coral: 3.42 Fairwood: 3.32 Maxim's Fast Food: 3.81 McDonald: 4.29 Kentucky Fried Chicken: 3.70

9. You can finish a leal quickly in it.

Fast Food Shops: 4.48 Cafe De Coral: 4.47 Fairwood: 4.43 Maxim's Fast Food: 4.47 McDonald: 4.98 Kentucky Fried Chicken: 4.34 Page yiii

10. It is innovative in the food it offers.

Fast Food Shops: .2.83 Cafe De Coral: 3.65 Fairwood: 3.69 Haxii's Fast Food: 3.34 McDonald: 3.32 Kentucky Fried Chicken: 3.17

11. It advertises and promotes frequently*

Fast Food Shops: 2.05 Cafe De Coral: 4.39 Fairwood: 4.21 Haxii's Fast Food: 2.58 McDonald: 5.26 Kentucky Fried Chicken: 3.89

12. Which age range do you think the followings are lost suitable for ？ (You can have more than

one choice in each row) =^^^======51

Age Range

Under 15 15 to 25 26 to 35 Over 35

Fast Food Shops ^ ^ ^ 0.44

Cafe De Coral ^ ^ ^ 0.31

Fairwood ^ ^ ^ 0.32

HaxiB^s Fast Food ^ ^ ^ 0.42

McDonald ^ ^ 0.19

Kentucky Fried Chicken 0.43 0.89 0.53 0,12

13. Which income range do you think the followings are lost suitable for ？ (You can have more than one choice in each ^

Personal Monthly Income Range (HK$)

Under 4,000 to 7,999 8,000 to 12,000 to Over 4,000 11,999 15,000 15,000

Fast Food Shops ^ ^ ^ 0.1。

Cafe De Coral ^ ^ ^ 0»12

Fairwood ^ ^ Q.47 0.13 0.12

Maxim's Fast Food 0.40 ^ ^ ^ 0.18

McDonald 0.65 0.79 ^ 0.25

Kentucky Fried Chicken 0.37 0.68 ^ 0.23 Page yiii

14. Which purposes do you think the followings are iQst suitable for ？ (You can have lore than one choice in each row) . •

Purposes

Breakfast Lunch Tea Break Dinner

Fast Food Shops 0.49 0.72 0.54 ^_

Cafe De Coral 0.52 0.77 ^^_

Fairwood OM 0.77 0.49 OM_

Haxim^s Fast Food ^ ^ ^liZ ^_

McDonald 0.65 0J2 ^ ^_

Kentucky Fried Chicken 0.10 0.53 0.62 0.28

15. Please rank the following shops by the number of customers according to your own perception. A "1" stands for the highest nuiber of custoiers, a "2" stands for the next highest, and so on.

Cafe De Coral 2.37 Fairwood 3.04 Maxim's Fast Food 3.39 McDonald 1.72 Kentucky Fried Chicken 4.08

16. Please rank the following shops by your frequency of consumption. A "1" stands for the highest frequency of consuiption, a "2" stands for the next highest, and so on.

Cafe De Coral • 2.59 Fairwood 2.95 Haxii's Fast Food 3.34 McDonald 1.82 Kentucky Fried Chicken 3.79

17. Please write down what you will associate with the followings. (eg. Someone will associate IBM with computers, Marlboro with red colour, Longines watches with James Bond, and Perrier with the shape of its bottle.)

Cafe De Coral

Fairwood

Maxim's Fast Food

McDonald

Kentucky Fried Chicken Page 74

18. Please rate the importance of following factors when you choose a fast food shop for meal. Please circle your choices.

» Quality of Food: 4.92 Price of Food: 4.55 Convenience: 4.74 Variety of Menu: 4.22 Good Service: 4.34 Taste of Food: 4.94 Tiie Saving: 4.61 Shop's Image: 4.18 Good Value For Money: 4.80 Cleanliness k Tidiness: 5.13 Innovation in Food: 3.94 Advertising k Promotion: 3.05 Number of custoiers: 3.32

19. YOUR SEX : Hale 451 Female 55^

20. YODR AGE : less than 15 01 15 to 25 531 26 to 35 431 36 or Above 41

21. YODR MONTHLY INCOME: Under HK$ 4,000 301 HK$ 4,000 to 7,999 401 HK$ 8,000 to 11,999 221 HK$ 12,000 to 15,000 6务 Over HK$ 15,000 2\

22. YODR OCCUPATION: Executive 81 Professional 141 White Collar 361 Blue Collar 41 Student 381

I Page yiii

APPENDIX 3

QUESTIONNAIRE ON WENDY'S

We are a group of two MBA students froi The Chinese University of Hong Kong. Currently, we are conducting a survey on Fast Food Shops in Hong Kong.

Please circle your answers to questions 1 to 10.

1. It offers food of good quality.

Fast Food Shops: Disagree 12 3 4 5 6 Agree Cafe De Coral: Disagree 12 3 4 5 6 Agree Fairwood: Disagree 1 2 3 4 5 6 Agree Maxim's Fast Food: Disagree 12 3 4 5 6 Agree McDonald: Disagree 12 3 4 5 6 Agree Kentucky Fried Chicken: Disagree 12 3 4 5 6 Agree Wendy's: Disagree 12 3 4 5 6 Agree

2. The food is expensive.

3. The food it provides is good value for money.

4. It provides a wide variety of food.

Fast Food Shops: Disagree 12 3 4 5 6 Agree Cafe De Coral: Disagree 12 3 4 5 6 Agree Fairwood: Disagree 1 2 3 4 5 6 Agree Maxim's Fast Food: Disagree 12 3 4 5 6 Agree McDonald: Disagree 12 3 4 5 6 Agree Kentucky Fried Chicken: Disagree 12 3 4 5 6 Agree Wendy's: Disagree 12 3 4 5 6 Agree

5. It is clean and tidy.

6. It provides good services.

7. You like the taste of food it provides.

•i

8. You can finish a leal quickly in it.

9. It is innovative in the food it offers.

Fast Food Shops: .Disagree 12 3 4 5 6 Agree Cafe De Coral: Disagree 12 3 4 5 6 Agree Fairwood: Disagree 12 3 4 5 6 Agree Haxii's Fast Food: Disagree 12 3 4 5 6 Agree McDonald: Disagree 12 3 4 5 6 Agree Kentucky Fried Chicken: Disagree 12 3 4 5 6 Agree Wendy's: Disagree 12 3 4 5 6 Agree

10. It advertises and promotes frequently.

Please put ticks in tbe appropriate boxes in questions 11 to 13.

11. Which age range do you think Wendy's is _ suitable for ？ (You can have more than one choice)

Under 15 _ 15 to 25 _ 26 to 35 — Over 35 —

12. Which Personal Monthly Income Range (HK$) do you think Wendy's is _ suitable for ？ (You can have more than one choice)

Under 4,000 — 4,000 to 7；999 _ 8,000 to 11,999 __ 12,000 to 15,000 一 Over 15,000 —

13. Which purposes do you think Wendy's is lost suitable for ？ (You can have more than one choice)

Breakfast — Lunch 一 Tea Break — Dinner — Page yiii

14. Please write down what you will associate with Wendy's. (eg. Someone will associate IBM with coiputers, Marlboro with red colour, Longines watches with James Bond, and Perrier with.the shape of its bottle.)

Please put ticks in the appropriate boxes in question 15 to 18.

15. YODR SEX ： Hale 一 Female —

16. YODR AGE : less than 15 一 15 to 25 __ 26 to 35 — 36 or Above —

17. YODR MONTHLY INCOME： Under HK$ 4,000 _ HK$ 4,000 to 7,999 _ HK$ 8,000 to 11,999 __ HK$ 12,000 to 15,000 一 Over HK$ 15,000 _

18. YOUR OCCUPATION: Executive — Professional ___ White Collar — Blue Collar — Student — Others (pis specify)

Thank You very luch for your cooperation. Pa^e 79

APPENDIX 4

DATA OF "QUESTIONNAIRE ON WENDY'S"

1. It offers food of good quality.

Fast Food Shops: 2.93 Cafe De Coral: 3.06 Fairwood: 3.40 Maxim's Fast Food: 3.86 McDonald: 4.13 Kentucky Fried Chicken: 3.93 Wendy's: 3.76

2. The food is expensive.

Fast Food Shops: 2.94 Cafe De Coral: 3.81 Fairwood: 4.00 Maxim's Fast Food: 4.43 McDonald: 3.66 Kentucky Fried Chicken: 4.62 Wendy's: 4.50

3. The food it provides is good value for money.

Fast Food Shops: 2»93 Cafe De Coral: 3.13 Fairwood: 3.46 Maxii's Fast Food: 3.66 McDonald: 3.93 Kentucky Fried Chicken: 3.80 Wendy's: 3.66 Page yiii

4. It provides a wide variety of food.

Fast Food Shops: 3.60 Cafe De Coral: 3.60 Fairwood: 3.60 Maxim's Fast Food: 3.31 McDonald: 3.53 Kentucky Fried Chicken: 2.93 Wendy's: 4.08

5. It is clean and tidy.

Fast Food Shops: 2.33 Cafe De Coral: 3.13 Fairwood: 3.13 Maxim's Fast Food: 4.46 McDonald: 4.66 Kentucky Fried Chicken: 3.68 Wendy's: 5.32

6. It provides good services.

Fast Food Shops: 2.43 Cafe De Coral: 3.00 Fairwood: 3.00 Maxim's Fast Food: 3.46 McDonald: 4.06 Kentucky Fried Chicken: 3.73 Wendy's: 4.30

7.、 You like the taste of food it provides.

Fast Food Shops: 2.93 Cafe De Coral: 3.20 Fairwood: 3.06 Maxim's Fast Food: 3.60 McDonald: 4.13 Kentucky Fried Chicken: 3.53 Wendy's: 3.80

8. You can finish a leal quickly in it.

Fast Food Shops: 4.60 Cafe De Coral: 4.40 Fairwood: 4.26 Maxim's Fast Food: 4.20 McDonald: 4.73 Kentucky Fried Chicken: 3.75 Wendy's: 4.78 Page yiii

9. It is innovative in the food it offers.

Fast Food Shops: '2.56 Cafe De Coral: 3.66 Fairwood: 3.66 Maxim's Fast Food: 3.20 McDonald; 3.73 Kentucky Fried Chicken: 3.60 Wendy's: 4.12

10. It advertises and promotes frequently.

Fast Food Shops: 1.87 Cafe De Coral: 4,53 Fairwood: 4.33 Maxim's Fast Food: 2.46 McDonald: 5.33 Kentucky Fried Chicken: 3.62 Wendy's: 3.42

11. Which age range do you think Wendy's is lost suitable for ？ (You can have lore than one choice)

Under 15 0.38 15 to 25 0.80 26 to 35 0.36 Over 35 0.12

12. Which Personal Monthly Income Range (HK$) do you think Wendy's is lost suitable for ？ (You can have tore than one choice)

Under 4,000 0.26 4,000 to 7,999 0.78 8,000 to 11,999 0.58 12,000 to 15,000 0.24 Over 15,000 0.20

13. Which purposes do you think Wendy's is lost suitable for ？ (You can have lore than one choice)

Breakfast 0.28 Lunch 0.72 Tea Break 0.54 Dinner 0.16 Page yiii

14. Please write down what you will associate with Wendy's. • (eg. Someone will associate IBM with computers, Marlboro with red colour, Longines watches with James Bond, and Perrier with-the shape of its bottle.)

15. YOUR SEX ： Hale 12% Female 281

16. YOUR AGE : less than 15 21 15 to 25 521 26 to 35 301 36 or Above 161

17. YOUR MONTHLY INCOME： Under HK$ 4,000 281 HK$ 4,000 to 7,999 321 HK$ 8,000 to 11,999 22% HK$ 12,000 to 15,000 141 Over HK$ 15,000

18. YOUR OCCUPATION: Executive 10 Professional 14 White Collar 24 Blue Collar 20 Student 24 Housewife 81

•t Page yiii

APPENDIX 5

TEST ON DIFFERENT SAMPLES

In the following table, the question number refers to the questions in the

Questionnaire for Wendy's, "mean 1" and "sd 1" refer to the mean and standard deviation of the answers to "questionnaire on fast food shops" survey, "mean 2" and

"sd 2" refer to the mean and standard deviation of the answers to "questionnaire on

Wendy's" survey, "z" refers to the z value calculated on the difference between the

two means.

Question 1

mean 1 2.70 3.29 3.11 3.84 4.28 3.72 sd 1 1.06 1.03 1.01 1.23 1.08 0.91 lean 2 2.93 3.06 3.40 3,86 4.13 3.93 sd 2 0.92 0.99 1.08 1.08 1.08 1.18 z -1.3 1.31 -1.5 -0.1 0.82 -1.1 Question 2

lean 1 2.% 3.47 3.46 4.05 3.42 4.51 sd 1 0.92' 0.80 0.86 1.02 1.19 1.08 lean 2 2.94 3.81 4.00 4.43 3.66 4.62 sd 2 1.58 1.42 1.36 1.65 1.44 1.57 Z -0.1 -1.5 -2.5 -1.5 -1.0 -0.4

Question 3

lean 1 3.41 3.47 3.45 3.68 4.16 3.35 sd 1 1.01 0.97 0.97 1.08 1.10 0.99 lean 2 2.93 3.13 3.46 3.66 3.93 3.80 sd 2 1.34 1.30 1.30 0.94 1.43 1.37 Z 2.19 1.62 -0.0 0.07 0.98 -2.0 _ _ ^ 4 Igkz H ^^^^寇^ MOM^^ ^ ^ 二 s sss 0 5 ss ^ klr ssr s-s s 金二任 ^ ss 61二r ^ ^L^n-L i A" ss 7 • 她 s^s ^

2 1 咖 iiir 2 1 二」_ 二 s ^L

igi2 1 r SI 淫 n- w ss- ss- 3^300 ss ^ ^ “ 2 1 L ^ 如 s n^ ss ^ 20210

= ^ 腿二广 L 3 1 o 4

o 3 1 1 Page yiii

BIBLIOGRAPHY

Books

Aaker, David A. Strategy Market Management. 2nd ed. John Wiley & Sons，Inc. ,1988.

Aaker, David A., and Myers, John G. Advertising Management. 3rd ed. Prentice-Hall International Editions. 1987

Churchill, Gilbert A. Marketing Research: Methodological Foundations. 5th ed. The Dry den Press International Edition. 1991

Kotler, Philip. Marketing Management: Analysis, Planning, Tmplementation and Control. 6th ed. Prentice-Hall International Editions, 1988.

Ries, Al, and Trout, Jack. Positioning: The Battle For Your Mind. 1st ed. revised, McGraw-Hill International Editions, 1987.

Periodicals

Contemporary News Weekly. n45, pp51, 6 Oct, 1990.

Corporate, vl, nlO, pp30-33, Jun 1991.

Economics Weekly. vlO，n24，ppl2, 21 May, 1992.

Hong Kong Business, pp94-97, Sep 1989.

Hong Kong Economic Journal. vl4, nlO, pp70-73, Jan 1991.

South China Morning Post (Business! ppl & 3，14 Aug, 1989. Page yiii

South China Morning Post (Business), ppl, 26 Oct, 1991.

South China Morning Post (Business). pp9, 3 Jan, 1990.

South China Morning Post (Business), ppl, 27 Oct, 1990.

South China Morning Post (Computer & Technology Post). pp3, 4 Dec，1990.

South China Morning Post ppl & 2，4 Aug, 1991.

South China Morning Post (Money). ppl4, 18 Nov, 1990.

-A Interviews

Sudirman, Natalie K., and Maeloa, Hano. Wendy Foods Ltd. Interview, 23 March 1992.

Fung, Teddy K. W. Wendy's Aberdeen shop. Interview, 6 April 1992.

• h

Others

Annual Report of Cafe De Coral Limited. 1991.

Maxim's Restaurant Limited. 19 Feb, 1992.

The Book of New Issue of Fairwood Holdings Limited. Sep 1991. ^ ？w r ？ ^ f 5 ？，-〔〜 y^^A^ff”务、〔、 .. .^得，^ 驚？需：？-广e ； .n、>?tl^� f %二一二赛-#^"5”气. 零覆蟹”：经資、i虐二黨寫、，；... v厂f ％，〜4s-^ 二’ n^ r J'r J^ 、丨善：二 , i'i^ ‘ f W r, M/ „ " f , iif 2 w ‘‘」」- ： ‘ J /t A ^ ."I > »V , - . . / . / , V . ： > 4: . • ^ ： , 「二 - .. . • . ... • ： . ： . ： ^ � .. / 、,... -一 . , ： , . , . . .“ •： ...

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