What should you do if you are #2?

Number 2 Burger King has problems. Greg Brenneman is the ninth CEO appointed by Burger King in the past 15 years.

According to the Wall Street Journal on July, 13, 2004:

“Mr. Brenneman's arrival will come as Burger King struggles to maintain its place as the second-largest hamburger company, after McDonald's Corp. Nearly 20% of Burger King's units are losing money, and three of its 10 largest franchisees have filed for bankruptcy-court protection in recent years. Some restaurant-industry analysts project the company may shutter as many as 1,000 units in the coming years. At the end of last year, it had 7,904 units. Burger King has been steadily closing units as Wendy's International Inc. opens them. Wendy's has 5,761."

So, what when wrong at Burger King? They didn’t do what a #2 brand should do.

A #2 brand should never try to emulate the leader. And that is exactly what Burger King has been doing for decades. McDonald’s strength is with kids who love Ronald McDonald, happy meals, burgers, fries and the playground. Burger King has copied McDonalds with kiddie meals, a magical Burger King and playgrounds. Only to have the kids still flock to the real thing, the original, McDonalds.

A strong #2 brand needs to position themselves as the opposite of the leader.

Listerine: bad-tasting mouthwash
# 2 Scope: good-tasting mouthwash

Home Depot: messy, male-oriented
# 2 Lowe’s: neat, female-oriented

Coke: older people
# 2 Pepsi: younger people

Microsoft: proprietary-software
# 2 Linux: open-source software

Wal-Mart: always low prices, messy
# 2 Target: cheap chic, wide aisles, neat

Mercedes-Benz: big, comfortable cars
#2 BMW: smaller, “driving” machines

Republicans: conservative
# 2 Democrats: liberal
(Rank determined by which party is defending the White House)

One reason third political parties have never done well in America is because the two major parties are almost mirror images of each other. There’s literally no room for a third party.

Republicans are pro-business, Democrats are pro-labor. Republicans are pro-life, Democrats are pro-choice. Republicans are for less government, Democrats are for more government. Etc. Etc. Etc.

If Burger King were the mirror image of McDonald’s there would literally be no room for third-party hamburger chains. But in reality, third-part hamburger chains are flourishing.

Look last year’s per-unit sales of the top five burger chains:

In-N-Out Burger $1,976,900

McDonald’s $1,632,600

White Castle $1,308,300

Wendy’s $1,293,500

Burger King $ 987,100

All three third-party hamburger chains outsell Burger King by a wide margin. In-N-Out Burger by 100 percent. White Castle by 33 percent. And Wendy’s by 31 percent.

The hamburger chains that are doing well are the ones that are as different from McDonald’s as possible.

In-N-Out Burger from California, for example, only sells: hamburgers, cheeseburgers, French fries and drinks.

While Castle is focused on little square burgers affectionately known as “sliders.”

Wendy’s is focused on older kids, a positioning strategy which would have been ideal for Burger King.

Good luck, Mr. Brennenman. You’re going to need it.

Comments

[Tracy Wemett]

I remember loving Burger King as a kid...I didn't like McDonalds because I was a member of the "King's Club", complete with ID and special prizes everytime I'd get a kid's meal. I also remember liking it because I wanted to be "different" and not go to the same place everyone else went. #2 strategies aren't so bad...you learn from the mistakes of #1, while they spend lots of money bringing awareness to your market. Go Burger King, go!

[Larry Wuilczynski]

Why ar tehy loosing money. Maybe becasue of their ads depicting a human being being on an operating tabel being given a new arm that fits the new burger king hamburger. Man that is disgusting to use an amputee as a ploy to sell burgers. Has not anyone at Burger Kiing have any compassion for the some 400,000 amputees across America? Maybe this ad needs pulled and the CEO of Burger King needs a call from thehead of the FCC.

[Ricardo]

I'm not an american but I've been recently to California and saw several In-N-Out's.

I strongly disagree with your assessment that In-N-Out has chosen to differentiate itself from McDonald's. It was actually a joke for me how similar the two brands were.

[Kiki]

Mmm... In-N-Out

[Jerry Agbon]

I can see the logic in this argument, though it is not without its flaws, if done the right way, the audience would respond favorably and the reward would be great. However, if done the wrong way the backlash would be a killing blow.

This is a very sound strategy when rightly applied.

[Ankesh Saxena]

It is really a very sound techique and should also be consider as a tool to reinforce what an organisation has to. Generally, if the Brand #2 company took Brand #1 as leader and follow them then it could cause problems too ans as well loss of customer as a major threat. I very much agree that it sould be competitative. In India, we have personalised every thing and because of which expectation of customers have gone up and when they are not matched then problems like "switching" goes on.

[quanta]

Reminds me of the MBA Mantra - Every company needs a Long-term Sustainable Differentiating Advantage. Poseurs rarely get anywhere.

[johnza]

I love this entry. #2 positions have always intrigued me. In our playbook method, making yourself the different, challenger can be a great way to win what we call a "dragrace" (see http://marketingplaybook.com/2004/05/11/the_drag_race_play.html for more on this). If you do it right, as you suggest, by picking on the big guy, you have everything to gain and them everything to lose. Do it wrong and they may squish you.