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Floats like a butterfly, stings like a Jollibee?


What brands from the Philippines are well-known globally? San Miguel beer is a global brand from the land of pinoys, although many people think it comes from Spain. That is pretty much where the list stops, however Jollibee is an upcoming contender as a global brand and cultural ambassador from the Philippines. Jollibee is a fast food restaurant and also the name of its mascot which is a big bee in a chef’s hat.

Jollibee dominates the Philippine fast food market, where it currently has 1079 stores. It also has 121 stores in other countries including US, Vietnam, Indonesia and Brunei. It started in 1978 as an ice cream parlor and has since expanded its menu to serve hamburgers, spaghetti, hotdogs, chicken, palabok, burgersteaks, and fries.

McDonalds entered the Philippine market in 1981 and many assumed the Big Mac would soon dominate the market. Surprisingly, McD’s ended up getting stung by the bee. Jollibee has secured a 65% market share and is out pacing McDonalds at its own game. Jollibee accomplished this by local adaptation of the menu and by positioning the food chain as a family restaurant. Jollibee attributes this success in part to its internal branding which focuses on "great taste and happiness" which includes "value for money, the happiest store experience, and the haven for kids.”

Where was the first Jollibee in the United States? It is situated right in Daly City California, a city located just south of San Francisco. This was a particularly wise location to choose as Daly City is jam-packed with Filipinos who naturally head to Jollibee anytime they are struck with nostalgia for the Philippines.

Jollibee now faces a conundrum. Filipinos like their burgers sweet and juicy, spaghetti that makes Ragu look sugarless, fatty pork served with pork cracklings, and mango deserts. These dishes might satisfy cravings for the pinoy community, but if it wants to expand in the US beyond its current half dozen stores it will have to beat McD’s on its own turf by creatively modifying its offer.

Jollibee already slightly modifies its menu with its Jollimeal, a rice dish where the topping is tailored to local markets. Nonetheless, it seems a better and easier route for it to pursue expansion through other brands. This is a strategy it is driving towards with its house of brands that include Greenwich Pizza, Delifrance (French Bakery), Chowking (Chinese), and Red Ribbon Bakeshop.

Goldilocks, a Philippine bakery and restaurant that does $50 MM business in the US, seems better poised for US expansion than Jollibee. Goldilocks’ bakery and cafeteria combo keeps it from directly competing with the fast food giants and its wider menu allows it to introduce a greater variety of cross-over foods. However, rather than targeting the average Americans, it seems Goldilocks is better suited to attracting other Asians, like Chinese and Koreans, as it’s bakery style of cakes and sweet breads better cater to their palate. This could be a worthwhile niche market as its stores are based in California in neighborhoods with a sizable Asian population. And focusing on this niche market is less risky than challenging in the competitive fast food business that Jollibee faces if it mainstreams against McDs.

Take Aways
Local brands: Brands in local market are strong contenders and are not to be underestimated. Local managed brands often have the advantage of intimate knowledge of consumer tastes and consumer preference through local pride.

Dominant brands: Dominant brands from mature markets do not always dominate when entering foreign markets. Local tastes often differ and it would be wise to partner with local experts to modify the brand offerings so it is better tailored to local affinities.

Beach head strategy: Emerging market brands can easily establish a beach head in foreign countries by targeting areas with a high immigrant population. However, to sustain success in foreign markets a beach head strategy needs to be followed up with a successive change in strategy to enable the brand to go mainstream. Some brands have an easier path to succession as their expansion strategy may place it in an uncontested market, where as other succession strategies place the contender in highly competitive markets where entry might not be too attractive.

Brand Architecture: A house of brands strategy is inherently less efficient than a branded house. Yet, pursuing a house of brands strategy may be the only real option when faced with modifying your entry in local markets where your strategy would have to be completely different and therefore would not reflect the strengths and meanings of the original brand, and would possibly even dilute the original brand in its home market.

Related Websites
- Jollibee website
- Goldilocks web

Sources:
Jollibee corporate documents.

- Continental Cuisine, Dipayan Baishya. Knight Ridder Tribune Business News. Washington: Aug 17, 2005. p. 1

- Give Me Your Tired, Your Poor, Your Beloved Products. By: Esfahani, Elizabeth. Business 2.0, Oct2005, Vol. 6 Issue 9, p29-30, 2p, 1 chart, 1c; (AN 19319805)

- Jollibee. By: Sudhaman, Arun. Media Asia, 12/17/2004 Supp Asia's Top, p34-35, 2p, 4c, 4bw; (AN 17164063)

- A busy bee in the hamburger hive. Economist, 3/2/2002, Vol. 362 Issue 8262, p62-62, 1p, 1 chart, 1 graph, 1bw; (AN 6266544)

- US Census, Texas Becomes Nation’s Newest “Majority-Minority” State, Census Bureau Announces (Accessed 3/22/2006) Site

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