FRANCHISING IN VIETNAM: CUSTOMERS' MOTIVATION TO VISIT BURGER KING

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CONTENT

AbstractChapter 1: IntroductionChapter 2: Literature review What is Franchising? Burger King in Hanoi Why Burger King established in Hanoi? What is motivation? The role of customer motivations in food industry How to measure the customers' motivationsChapter 3: Research questions and Methodology Research questionsRelated methodologyRelevant data required and collection methodsAccessibility, reliability, validity and ethicsChapter 4: Findings .........................................................................................References

ABSTRACT

This paper explores customers motivations to visit Burger King. Qualitative aspects such as locations, promotion programmes and services are examined in details. The research is carried out by surveying 73 customers of 5 Burger King Stores in Hanoi, Vietnam. Based on the survey's results and prior works both in Vietnamese and English in this topic, we found that the majority of Vietnamese customers at Burger King are students and young adults who are more open to new experiences. Additionally, there are different factors that affect customers motivations to attend a franchise outlet in Vietnam in recent years. It is hoped that as a result of this research, we can prove that Vietnamese entrepreneurs need to understand more about their customers needs and wants by changing some of their business aspects in order to attract more customers to come. It is achieved by researching the locations that stores are established and asking customers' views as well as their feedbacks. Whilst the study is limited to one region in Vietnam and focuses on one franchise, some of the proposed ideas apply equally well to other brands in the same market sector. These include practitioners, consumers and researchers in terms of enhanced value and satisfaction.

CHAPTER 1: INTRODUCTION

Along with the development of Globalisation and opening economy, "Franchising" is no longer a strange word with international retailers. Lindblom and Tikkanen (2010) stated that franchising is an increasingly popular business expansion strategy and has important impact worldwide.Moreover, while the franchise phenomenon has become a mainstay strategy of international business expands and development, it is quite new to the Vietnamese economy. The most familiar franchising form in Vietnam, nowadays, is business format franchising, running businesses under the protection of the same company brand name, mostly, foreign companies. In details, this franchising form is noticeable in the fast food industry (Roy et al., 2008). Although franchising is still in its early stage in Vietnam (Micheal et al., 2014), it is attracted by many people and there are a lot of different reasons that give them motivation to visit (Wanching and Jingxue, 2011). However, customers rarely come to these franchising restaurants. As Odile and Grard (2008) stated in their study field about the concept uniformity in business format franchising, fast food franchises are operating in assembly functions, the employees are required to do the same task and style day after day, and also products and services are delivered ordinary, Vietnam is one of the most popular examples. Therefore, this is one of the several reasons that makes franchise brands in Vietnam less attractive to customer than other countries.The purpose of this study is to discover the reasons why Vietnamese customers choose fast food restaurants by examining the case of Burger King. The specific objectives of this study are to identify the factors that affect Vietnamese customers motivations such as ages, genders, position etc., to find a new business strategy for franchising brands in Vietnam and to apply a customer motivation framework to a customer service study.

CHAPTER 2 LITERATURE REVIEW

WHAT IS FRANCHISING?According to Stokes and Wilson (2010), franchising is considered as a business method consist of the rights to use a firm's brand name, products, services or technologies in return for a requirement fee commonly based on sale. Franchisees will take responsibility for particular processes such as manufacturing, supplying and selling while the franchisor takes account into the brand name, marketing and running applicable training to make sure the franchisees can deliver the same quality with the franchisor (Johnson et al., 2007). Gale (2009) presented three common types of franchising: A business Format: franchisors allows someone to use their business name or trademark as well as selling products or services, in return for fees and royalties (e.g. Burger King, Mc Donalds, Pizza Huts, KFC, and so on). A manufacturing Format: a small independent business, having an opportunity to cooperate with a franchise organisation. For instant, a successful independent hairdresser joins with L'Oral. A Product Franchise: a franchising agreement where a manufacturer allows retailers to sell goods or products being produced by its factory (Coca-Cola, Pepsi, Vinamilk, Nestle', etc.).BURGER KING IN HANOIToday, with over 13,000 outlets in 79 countries, Burger King is extending its market to many Asian countries. Now, Burger King has established 29 outlets in Vietnam and has become the second largest fast food hamburger chain in the world. In Hanoi, there are about 5 Burger King restaurants at the moment. One of them located in BigC supermarket, the others are on the ground floor of IPH Plaza and crowded street.

Burger King in Trung Hoa StreetBurger King BigCView from Burger King IPH Plaza Unlike most of Burger Kings in the US and Europe countries, most Burger King restaurants are located in busy areas such as large supermarkets, main streets, movie theatre, shopping malls or center plaza and tourism destinations in order to attract more customers. Its outlets are not only situated in attractive places with modern and unique design, there also have play ground for children in some restaurants. All Burger King chains have very huge and eye catching electric signboard with its familiar logo so customers can easily recognise from a far distance. Moreover, there is no 24-hour Burger King restaurants in Vietnam and the opening time is 8 or 9 a.m and they will close at 10 p.m or 11 p.mBurger King in Vietnam has changed some of its features in order to suit Vietnamese customers. Although Burger Kings recipe remains unchanged, the taste and menu in Vietnam include other dishes. For example, the ket-chup tastes a bit overly sweet to the traditional version, beef and chicken meats are sourced from the countryside in Vietnam, its disserts sides and snacks are not the same, and no diet coke is available. Especially, beside its main Burger menu, There is the dominance of rice dishes in the Burger King menu, chicken soup can all be served with rice because rice is the main food that Asian people eat everyday. Another differences is instead of using paper box for take-away food, the restaurants often use plastic bag. Finally, the price will be based on the country currency to suit with Vietnamese customers budgets. The price is from around 70,000 VND (~ 2) to 300,000 VND (~ 9) per meal.

WHY BURGERKING ESTABLISHED IN HANOI?Franchise has developed for a few decades in developed countries. It covers almost every fields and brings vast profit. However, it is still a relatively new concept in Vietnam (Binh and Andrew, 2011; Vietnam Franchise World, 2011; Russin&Vecchi, 2013). As VOV Economic News (2014) stated, since early 2013, there are over 200 franchising brands in Vietnam, and above 60% of them have operated successfully. In addition, there are around 300 restaurant and fast food chains that are operated in Vietnam, such as KFC, Burger King, Mc Donald's, Lotteria, Pizza Hut, and Subway, which account more than 40% of the market share in the industry.According to Chief strategist of Global Investment Strategist, Benjamin Shepherd (20130, Vietnam has a relative modern and stable infrastructure, with more than 90% of it enjoying access to electricity and a strong demographic profile with more than 60% of its 86 million people under the age of 35 and in their prime working years. As the advantage of its low cost labour, exports Jumped 15.4% from 2012. Wages for unskilled workers in Vietnam are about 32% of those in China and 43% of levels. In addition, The economy is steadily recovering (Fiachra MacCana, 2014). Since Vietnam opened its economy to integrate into the World market and joined in the World Trade Organisation (WTO) in 2007, it is predicted that the franchise business in Vietnam will grow much faster in the future (Hung, 2011) and will become one of the most potential market for foreign franchisors make investments beside other Southeast Asia countries. In other hand, with the population of seven million people in Ho Chi Minh City and six million people in Hanoi, both of the cities will be the ideal locations to operate their franchise branches. Following the previous successful fastfood chains like KFC or Mc Donalds, Burger King has appeared in Vietnam market, first is in Ho Chi Minh city in 2012 and then Hanoi in 2013 with 10 stores allocated in the city center. Burger King comes to Vietnam with the ambition of becoming the most popular fastfood chains and finding an opportunity to complete with the other branches.

WHAT IS MOTIVATION?There are severial theories that contribute to an understanding of motivation. According to Kanfer (1990) and Jaclyn (2010), these include the theory of intergrative motivation introduced during the social-psychological period (Self Determination Theory) and the cognitive-situated period (Intrinsic and extrinsic motivation). In other words, motivation is generally referred to the factors influencing a persons choices among alternative options of action.Motivation will be defined in different ways and with different categories or subjects. For example, motivation in academic studying will be explained why people do what they do in stead of choosing an alternative option (Jere, 2010. Motivating students to learn, 3th edit.p.3) or as a hypothetical construct that explanations about people motivation to involve in particular behaviours at certain times (Beck, 2000). Another theories of motivation are also defined by Wigfield and Eccles (2000), they explained the theory of achievement motivation as peoples beliefs about how well they will do and which extention they will use to value the activity in order to achieve those tasks. As many previous works asserted that motivation is affected by both external (social, culture, technological, etc.) and internal factors (peoples interest, age, gender, lifestyle, etc) (Jang, 2005; David, 2001; Plant et al., 1998; Bernard, 1992) and people's motivation is different from each other, and it will continuously from one decision making process to the next (Jang, 2005). Kanfer (1990) wrote in his motivation theory handbook that motivation could not be observed directly. What we can observe and analysis is the continuing stream of people behaviours that determined by both environment and genetics, through their effects on personality, beliefs, abilities, skills and knowledge. In the study about food festival in Texas written by Chang and Yuan (2011), they found out that there is a complexity relation between food and tourism. In other words, food is the most attractive factor that gives customers motivations to come or visit one place. In Maslows hierarchy of needs (1943), he asserted that people are motivated to achieve certain needs and once one need is fulfilled, a person will seek to fulfil the next one, and so on. He also noted in his hierarchical levels within a pyramid (1943, 1954) that only one in a hundred people become fully self-actualised because our society rewards motivation primarily based on esteem, love and other social needs.

THE ROLE OF CUSTOMER MOTIVATIONS IN FOOD INDUSTRYJolene (2011) identified customer motivations as customer drives. It means if the business company or institution can offer the product or service that meets their customers needs and wants, their performance may have been accomplished through the consumption of the product or service. By identifying the motivations of customers, the company can recognise the kinds of people who can be their potential customers and having proper strategies that focus on, such as promoting events or special offering. Furthermore, with the increase in number of customer, expanding business will not be difficult, especially in Vietnam, most people know about a restaurant is through their friends, relatives or partners, in other words, Vietnamese people use words of mouth (WOM) as a way to express the information. When one people know about the restaurant and like it, then, there may be 10 people will know about it as well.Based on the review of previous research works, there are some determinants in relation to describe customer motivation such as promotion, quality, branding, physical environment, price and taste of products. For example, Kurniawan (2010) emphasised that the best way to build relationship with customers is by promoting products or services, because everyone is looking for the best suitable deal for them. According to Huang and Pi (2011), Promotion is the different activity forms for attracting and getting of customer purchase the product or service through sales promotions, relationship buiding and advertising. Besides, there is a significant influence to customer choices and purchase decisions through physical surroundings or environment. Lim (2010) mentioned in her study that decoration and design of the restaurant such as lightening, furnishing, sent, music and other environmental factors can create positive image about the business among customers and influence to their behaviour during the purchase.

HOW TO MEASURE CUSTOMERS' MOTIVATIONS?Chales (2011) stated that customers are motivated by "needs and wants". He also said that "these needs and wants build up internally, which causes people to desire to buy a product" (Chales, 2011. Fundamentals of selling: customers for life through service, p.112).In this research, by using survey questionnaire under multiple choices format, it is expected that the general motivations of customers for choosing Burger King such as to relax, to eat, to taste food, to hang out with friends, etc. could be found out.(Appendices 1)A survey research will be based on the survey of researchers Wangching Chang and Jingxue (Jessica) Yuan in 2011, in which the concept of VISITORS MOTIVATIONS TO ATTEND A FOOD FESTIVAL was developed using a set of 27 motivations for attending the Food Festival in a regional food festival in the state of Texas, USA in 2011.These 22 out of 27 motivational items will be grouped into 4 independent factors, namelyF1: Escape/Event novelty

F2: food

F3: Known-group socialisation

F4: External socialisation

The four factors were obtained by looking at the common factor (or name) that is common to some items. For example, the following items can be seen to belong to the factor Escape/event novelty:(7)To go out in the open air(8)For rest and relaxation(5)To have a change from my daily routineMost customers visitting Burger King may be motivated by different factors. The key is to rate each factor or item on a scale from 1 to 5 (1= less important to 5=most/very important) to differentiate between customers motivations level. For instance, a question could be: What is the factor that most motivates you to visit Burger King?1 = Not important 2 = less important 3 = Neutral4 = important5 = Most/very importantWith 22 items, the concept can identify that factors which are scored high on this survey can be considered highly motivate in visitting Burger King and those which score low are not motivate at all.chapter 3 RESEARCH QUESTIONS AND METHODOLOGYResearch questionsRQ1: What are the motivations that make customers visiting to Burger King?The answers are conducted by survey questionnaires by asking 63 Burger King's customers the reasons that motivate them to visit Burger King.RQ2: Whether customers profiles (genders, ages, social standard, etc.) affect the motivations of customers?The answers are expected to be related to the psychological process.Related methodologyIn order to answer these questions, positivist methods will be used for a social research. It will focus on measuring data, figures, and statistics in an objective way (Stella, 2014; Quinlan, 2011). Moreover, through a social research, this exploratory study will investigate around customers behaviours and thinkings after observing as well as seeking answers from Burger Kings customers. By using this method, we can know about customers' ages, genders, occupations, etc. to explore what is the typical customers group that often come to Burger King and why they come there.Relevant data required and data collection methodsPositivist methods will be used in this research, structured observation about 5 Burger King's locations in Hanoi and a four-page survey questionnaire in total 73 customers will be conducted. The survey was composed of two sections: Motivation item and demographic information. A set of 30 questions was extracted from food-ralated literature on visitors motivations to attend various types of franchising restaurants. Overall, there are about 66% of 73 respondents were women. The average age was 20 (men 27, women 20). Additionally, some information about the location, promoting programmes, and events will be collected through company's websites, electronic newspapers and articles. The survey questionnaire was sent directly to the participants email and through an online survey on google drive. Participants were selected randomly as they visited any Burger King restaurants in Hanoi.Accessibility, reliability, validity and ethicsSince the research is going to be conducted outside Burger King restaurants and the survey questionnaires are filled by customers, customers' permissions will be obtained by using the consent form based on the sample of Quinlan (2011). Also the participants have said that they would be willingly to do an online interview as well. The conformation has been attached in the appendices.In order to collect the customers' information, an explaination of the data purposes will be given, because this information will give them confidence that their information as well as this data will be kept in private, maintained anonymity and confidentiality.To check the content validity of the survey instrument, 5 Vietnamese students were invited to answer the trial in order to ensure the comprehensiveness and clairity of the questionnaire and its items. The survey was amended and revised according to their comments and suggestions. Five motivational items were specifically directed towards food-related experiences, and the remaining items were adapted from previous studies on food festival motivations, reflecting the common dimensions acknowledged by various researchers. Motivational items were mearured using a 5-point Likert type scale where 1 meant Not important and 5 meant most importantchapter 4 RESEARCH findings and DISCUSSIONSBUGERKINGS LOCATION DESCRIPTIONThere are 5 Burger King restaurants in Hanoi were selected for this study in order to investigate customers motivations. All 5 restaurants, located in the centre, amusement parks and crowded streets of Hanoi, Vietnam with beautiful views and attractive designs. This capital city has the population of over 6 million people and being surrounded by many schools, business buildings and offices. In 2012, Burger King was officially appeared and became one of the latest fastfood chains in Vietnam. After 3 years established in Vietnam, Burger King has not a wide known branch with Vietnamese people when compared with KFC or Pizza hut. However, it starts changing its strategy with wider range of foods that are suitable for Vietnamese customers tastes. By focusing on the younger customer groups, age under 18 and from 18-24, Burger King steps by steps, attracts more and more customers. MEASURES AND SAMPLINGA two-page survey questionnaires was employed for this study. The survey was contained of two parts: Attendees demographic information and motivation items. A set of 30 questions was extracted from food-ralated literature on visitors motivations to attend various types of franchising restaurants. A total of 73 questionnaires were collected during 2 weeks, and 9 of these were incomplete and still included from the data analysis process. The response rate for this study was nearly 88%. Motivational items were measured using a 5-point Likert type scale, labeled as 1 not important and 5 Most important.ANALYSISThe analysis of data was conducted by excel and in First, the respondents demographic informations were profiled in frequencies and percentages. Second, from 22 motivational items, using mean formula to rank the top five items based on their mean scores. Third, 22 motivational items were factor analysed using the pivot tables facility on Excel in order to describe the underlying dimensions of motivation associated with the customers demographic such as gender, age and income.

Table 1Descriptive profile of respondents (n = 73)

Variable Frequency (%)Gender Male 25 (34.25) Female 48 (65.75)Marital status Single 65 (89.04) Married 4 (5.48%) Other 4 (5.48%)Age Under 18 24 (32.88) 18-24 37 (50.68) 25-33 9 (12.33) 34-44 1 (1.37) Over 56 2 (2.74)Education High school 33 (45.21) College 2 (2.74) Bachelor degree 31 (42.47) Master degree 5 (6.85) Other 2 (2.74)Income (million) Less than VND 100 62 (84.93) VND 100 VND 200 8 (10.96) VND 200 VND 400 1 (1.37) VND 400 VND 600 1 (1.37) VND 600 VND 800 0 (00.0) More than VND 800 1 (1.37)

RESULTS AND DISCUSSIONDemographic profileFeatures of the customers who come to Burger King are displayed in Table 1. A large majority of the respondents were female (65.75%). About 89% of respondents were single, and there are a great number of children and young adults were attracted by Burger King, as 50.64% of them were from 18-24 and 32.8% were under 18. Also, 45% had completed their education with a highschool degree or higher. Lastly, because most of respondents were at the age of under 18 and from 18-24, there were a fairly low level of income, with over 84,93% appealing an annual income of less than VND 100 million.Important Motivation FactorsMost of the motivational factors had a mean score of 3 or smaller and the scores for each individual motivational factors are presented in Table 2. These motivations are the most importance reasons for attending Burger King restaurants.The most important reason for customers to visit Burger King was to hang out with their friends (mean = 3.26), followed by having a break from cooking (mean = 2.98). Coming to taste food was another popular reason to come to Buger King (mean = 2.85). The last two most important reasons were for dating and celeberating (mean = 2.81) and because of favourite foods in Burger King (mean = 2.80).Table 2Top five Burger King customer motivation (n = 73)RankMotivation MeanSD1 To hang out with friends 3.26 1.632 To have a break from cooking 2.98 1.643 For food tasting 2.85 1.604 For dating and celebrating2.81 1.705 There is my favourite food in Burger King2.80 1.60Respondents utilised a 5 point Likert-type scale to indicate the importance of each item for visiting Burger King restaurants ( 1 = not important, 5 = most/very important).

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