BACKGROUND

Market Information

Present from the early 2000s, up to now, America's fast food giants in Vietnam are racing to
expand market share and spread nationwide. After a long time, consumers are familiar with
brands such as KFC, Lotteria or Jollibee, Subway ... until 2013, the Vietnamese fast food market
welcomed new faces from the US such as McDonald's. Earlier, at the end of 2012, the second-
ranked brand in the world, the American Buger King, also officially entered Vietnam through its
franchise partner. Vietnam's food service industry has expanded greatly compared to 10 years
ago. There are currently about 540,000 stores, including 430,000 street stalls, 80,000 restaurants
but only about 7,000 fast food shops[1]. There are so many options if a customer intends to use
the food service. However, the fast food industry is in the red light. In 2017, there was a big
alarm about the decline of many major fast food chains in Vietnam, including Burger King,
Subway, Popeyes, and Carl’s Jr. Although maintaining the position of KFC and Lotteria in 2017,
low-value sales growth was recorded [2].

Company Information

The name of the company that is focus in our research is the MacDonalds. MacDonald’s is an
American fast food company, founded in 1940 as a restaurant operated by 2 brothers called
Richard ad Maurice McDonald in San Bernardino, California, United States[3]. They started their
business as a hamburger stand, and after that the company changed as a franchise, with the
golden arches’ logo being introduced in 1953 at a location in Phoenix, Arizona. Ray Krothe a
businessman joined the company as a franchise agent and proceeded to purchase the chain from
the McDonald brothers in 1955[4,5].

McDonalds is the world’s largest restaurant chain by revenue, serving over 69 million customers
daily in over 100 countries across 37.855 outlets as of 2018[6]. McDonalds is best known for its
hamburgers, cheeseburgers and french fries, they also feature chicken products, breakfast items,
soft drinks, milkshakes, wraps and desserts. The company has also added some healthy food[7]
(12) to its menu for example fish, smoothies, fruit and salads. The fast food industry is booming
all over the world, and chains like McDonald’s and Burger King are leading the market with a
total value of $ 651 billion. However, there is a rare place where the big boys cannot take off:
Vietnam. In 2014 when McDonald's opened its first store in Vietnam, there were long lines of
people waiting for hours to buy the first BigMacs. But that image did not remain long, after 4
years of joining the market from the ambition to open dozens of stores across the country,
McDonald's currently has only 17 stores [8].

PROBLEM DEFINITION / OBJECTIVES OF THE RESEARCH

McDonald’s does not perform the best in Management Decision Problem (MDP) and Marketing
Research Problem (MRP). While MDP reflects the products high prices, the differences between
Vietnamese consumers’ tastes and the other ones, promotional advertising, MRP points out how
consumers do react when the price changes, their purchasing behaviors and McDonald’s
attractiveness. Hence, our general objective of this research is to find out ways to improve
McDonald’s MDP and MRP. To be more precise, our research has the following subsidiary
objectives:

To begin with, “from 2016 to 2018, the number of Vietnamese customers going to fast food
restaurants decreased by 31% while the number of them going to traditional street food shops
increased by 70%” (EU). Vietnamese food-servicing industry has about 540,000 stores, of which
430,000 are street stalls. Vietnam has more than 80,000 restaurants and 22,000 businesses selling
bar and cafe services. The first McDonald's store in Vietnam opened in Ho Chi Minh City on
February 8th. Accordingly, the price of a Big Mac will be sold at VND 85,000 (US $ 3.99) by
McDonald’s in Vietnam. At the same time, this price is lower than the price of a Big Mac in the
US, which is 4.62 USD, but still quite high, compared to other countries in the region. For
instance, a Big Mac costs only 7.40 ringgit (about 2.23 USD) in Malaysia; 27,939 Rupiah (about
2.30 USD) in Indonesia and 135 pesos (2.98 USD) in the Philippines. Moreover, the price of
3.99 USD per unit in Vietnam is higher than that in Singapore with 3.60 USD. Thus, fans of
McDonald's in Vietnam will probably not be satisfied with this price even though the price itself
makes a lot of sense for economists. A Burger that has nearly identical ingredients in different
countries but is priced differently, can be used to compare the value of two currencies. In
general, the price of food and drink at McDonald’s is relatively high, compared to the income of
Vietnamese people.

In addition, the price factor is not the only obstacle to the success of McDonald's in Vietnam. In
American culinary culture, they often prefer individual than shared meals. On the other hand,
Vietnamese people often like sharing food while McDonald's is not likely something to share. It
was such an ingrained habit in Vietnam that McDonald's business strategies failed to attract the
crowds with families and friends. Buffet is often preferred and fast food is just a stop for the
young traveling alone or those who have Western eating habits. This is also another reason why
McDonald's chain of stores lost in 2 years in Vietnam. According to Mr. Thue Thomasen - the
founder of Decision Lab, commented, perhaps for Vietnamese people, fast food is not something
that appeals to them. To illustrate this point, Hao Tran – A co-founder of Vietcetera website,
shared with CNBC: "Foreign fast-food chains are not popular in Vietnam as when Vietnamese
people eat goods, they can easily buy food like a bowl of pho. It seems that fast food giants
underestimate the local competitors that they will have to compete with. People in Hanoi and Ho
Chi Minh City - where McDonald's opening stores, have various options ". In 1997, KFC entered
Vietnam. Since the Vietnamese market had too many options with local food businesses, it had
to change the menu to suit the tastes of Vietnamese people.

For the case of future McDonald, Management Decision Problem can be: " Should the company
change the product or price to fit more with Vietnamese people?"

From the above concerns, the meaning of Marketing Research Problem is to determine what
were the mistakes of the last product campaign, how to turn them into strong points that can be
developed based on the national identity itself and what should be done to correct all the
mistakes defined. The initial statement of the Marketing Research Problem would be how to
improve the product’s strategy which would be analyzed later: price, package, favor. In details,
there are three important questions that McDonald need to find the correct answers for itself.

First is “How much is the product price to satisfy customers” this means they need to understand
how much money customers can pay for the product and find a way to adjust it.

The second question is “What should the dishes on the menu change to suit the tastes of
Vietnamese people?” which means they have to focuses on developing the product's flavor to
attract more customers and change a menu to influences consumer behavior through various
additional factors such as taste, culture and customer desires.

Finally, “How packaging design will attract more customers?”. Design packaging is the main
ingredient for McDonald's to attract their customers more. Colors, designs, shapes are the factors
that make a difference to make a difference between ourselves and other brands. According to
research, color is the first factor that affects the human mind. For example, red makes people
hungry so many fast food stores like McDonald's, KFC take red as the main color. So to attract
more customers, brands should conduct surveys to see how customers are impressed by the
design, color of product packaging.

APPROACH TO THE PROBLEM

Research Model

[8][9][10]

Research background/ literature review

Purchase intention
Purchase intention is the probability that a consumer will purchase a product or service.
To evaluate purchase intent, marketers use prediction models to help determine the likelihood of
future results based on historical data. Furthermore, the purpose of purchase intention is to better
understand the effectiveness of an offline or online media campaign and whether the money
spent on marketing initiatives will yield acceptable return on investment[11]. Additionally,
purchase intention is a measure of the attitude of the respondent towards buying a product or
using the service, the willingness of a customer to buy a certain product or a certain service[12].
Subjective norm
A broad definition of perceived or subjective norm is "the perceived social pressure to
perform or not to perform the behavior"[13]. But subjective norm is usually defined more
precisely, as an individual's perception or "opinion about what important others believe the
individual should do"[14]. This perception or opinion has been labeled as an individual's standard
belief, often multiplied by motivation to comply, as shown in the equation.
Attitude
Attitude is important part in making decision whether to buy the product or not.
Consumers have an attitude toward various products at same kind, it also describes intensity of
use of products by consumers. Researchers must understand different components of attitudes
and the complicated relationship between them to create the influence of product to consumer
. It can be defined at the feeling of a person, expresses (in)favorableness she or he has toward
[15]

a certain object [16]. Attitude includes belief to that product/ company, it can be either positive or
negative. Next is the affect that the product has on customers based on some beliefs and final is
a behavioral component, which describes actions people take as a consequence of belief. [17]
Familiarity
According to Alba and Hutchinson, familiarity is the experience accumulated by the customers
through direct and indirect factors such as communicating with sellers, advertising exposures,
samples, and consumption [18]. It is a crucial aspect regarding brand choices that improving
perceptual recognition of a brand, creating a positive reaction toward the brand, and increasing
the incentive of purchasing [19].
Consumer habit
Consumer habit is related to their behavior in term of selection, buying and using of good and
service that can satisfy their need. Consumer habit is one of most the factor influence
consumer. It helps the company to determine which product needs developing, which product is
out of date and needed removing[20] .Consumer habit constantly changes over time. People
.

always expect to see new things in the same product, which creates motivation for their
purchase decision. Researchers must understand the business trend to adjust their product and
 advertisement that met consumer habit

Reference
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