The pact should complement Burger King's earlier deal with AOL Time Warner. Both are aimed at resuscitating flagging sales among today's tech savvy American youth. Yet while these efforts will raise the fast food chain's online profile, it is far more important that Burger King meets consumer demands for increased variety and healthier foods.
As Diageo unit Burger King faces up to the daunting task of becoming a stand-alone company in the declining fast food industry (its own 2001 profits fell 12% from $301 million to $264 million), it is pushing hard to revive interest among today's tech savvy youth population.
Last month, the restaurant chain entered into marketing pacts with DreamWorks and Nickelodeon aimed at pulling in more youngsters. It also struck a multimedia, multimillion-dollar, multi-year marketing deal with AOL Time Warner allowing Burger King customers to access special Internet sites and participate in various sports and music promotions using digital codes obtained from product purchases.
The eBay deal, scheduled to launch early next year, will allow Burger King customers to bid on rewards using points earned through buying Burger King products. The AOL alliance will allow Burger King to provide entertainment-driven rewards such as CDs and concert tickets. The program will be supported by online and offline marketing programs, including in-store promotions at Burger King restaurants across the nation.
Online loyalty programs are not a new idea. Coca-Cola's $20 million loyalty program for its sprite.com website allows teenagers to get RocketCash when they enter specific codes printed in Sprite bottle caps. RocketCash, a subsidiary of NetZero, is an online gateway that enables consumers to shop and buy online without a credit card.
Targeting youth population using online initiatives is important, and the eBay and AOL deals will certainly increase Burger King's online exposure. However, there are a myriad of more pressing issues that Burger King needs to address. These include growing consumer concern over food safety and health, and increased competitive pressure from the 'fast-casual' sector.
Burger King needs to combine marketing initiatives with heeding competitor trends and finding new ways to fulfill modern consumers' needs. It could take lessons from McDonalds, which plans to convert 12 more fast-food restaurants into sit-down diners following a successful trial in Kokomo, Indiana.