The Goldilocks Zone

That old trope about pencils in space

Stop me if you’ve heard this one…

During the space race, NASA discovered that typical ball-point pens don’t work in space. So, they invested a million dollars to develop a pen that would work in zero gravity, could write upside down and could withstand the extremes of outer space. The Soviet space programme encountered the same problem… but they solved the problem by using a pencil.

It’s an often-told story, Jon Steel even mentions it in Truth, Lies and Advertising, that demonstrates that for even the most complex of problems there is a simple smart solution. And it’s a delightful story, except for the small problem; that it’s complete hogwash! The fact is, NASA did not invest a million dollars into researching the pen. A private individual named Paul Fisher saw an opportunity and invested a million dollars of his own money to develop the pen. He sold the pens to NASA for $6 each, so not a bad investment on NASA’s part. Today Fisher still sells more than a million Space Pens a year, so not bad for Fisher either. And the Russians? Well, they quickly discovered that the graphite in a pencil breaks off when it’s used, sending tiny shards of the conductive material floating around in a zero-gravity environment where they end up in equipment, and oxygen systems and astronauts’ eyes. They bought Fisher Space Pens too.

The solution wasn’t as simple as just using a pencil. And it wasn’t as complex as investing large amounts of government money in to research with limited application. More often than not the truth is both simpler and more complex than the received wisdom. And this is especially true when it comes to China; brands tend to either oversimplify and assume that what worked in the US or Europe will work in China. Or they overcomplicate it and believe that China is still a riddle wrapped in a mystery inside an enigma and therefore the rule book must be torn up and rewritten.

Over the next few weeks, we’ll be sharing examples of brands who have either overcomplicated or oversimplified their approach to business in China. And we’ll contrast each one with a business that has found the sweet spot between complexity and simplicity and reaped the rewards.

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Subway: starting from a challenging position

First up, we’ll have a look at a brand that oversimplified their approach, and that is Subway.

Until recently Subway had more outlets in the US than any other fast-food chain. In 2010 the founder believed they could match the number of outlets McDonald’s has in China by 2020. A decade or so later they have 598 stores, compared with 3,787 McDonald’s outlets and more than 7,000 by KFC. Perhaps more damning; a 2018 survey by Cint found that just 1.03% of respondents visited Subway in the past year – the lowest result of all QSRs, behind far less well-known brands like Famous Famiglia and Moe’s Southwest Grill (which doesn’t appear to have any outlets outside of North America!)

Oversimplification: what worked there doesn’t always work here

Subway is positioned as a healthier alternative to other Quick Service Restaurants, and to most people in the west, the health attributes are clearly apparent; more vegetables, wholemeal breads, less red meats and fried food all immediately shout “health(ier)”. Their communications for a long time built credibility in weight-loss.

However, in China they have been unable to build the same credentials. A major barrier in is that here, a sandwich is not seen as inherently healthy; it is placed in the same category as a hamburger, regardless of what is between the bread. There is a distinct difference in understanding of healthy foods in China vs the west; where in America in particular, healthy is generally synonymous with low fat, while in China healthy means nutritious. So, while their communications have worked to educate people about the health benefits of wholemeal bread and the low fat content of their sandwiches, they have been largely unsuccessful in overcoming this initial disadvantage.

Secondly, Subway has not managed to build the brand cachet that its rivals enjoy. The huge shares of voice and celebrity co-operations of the larger chains have driven their brand recognition and preference with clear impacts on their respective businesses.

But the biggest reason for consumers rejecting Subway in China is the menu itself. Not only does it consist entirely of western favourites like Italian Sausage and BLT, but (sin of sins) it’s cold!

Contrast this with KFC. Its’ core offering of fried chicken is seen as a nutritious food, and tray mats, instead of promoting products, talks about nutrition. Their combos come with juice and sweetcorn rather than Coke and fries, so KFC owns the positioning of the less-guilty fast food. Furthermore, KFC have successfully adapted their menu to Chinese tastes with specifically developed lines like rice bowls, Beijing duck wraps, and soy milk. The same Cint research quoted above showed that more than 70% of respondents had visited a KFC.

What could Subway have done to overcome these challenges?

The obvious would be to adapt the menu to local tastes. Locally inspired flavours, ingredients, and menu items would clearly appeal more to local palates and would have instantly improved their chances of success.

Secondly, while their set up precludes Subway from cooking much food on premises, they do have ovens and the servers will offer to heat up a sub after it is made. A new, localised menu could include options that are heated as a default. Communications could talk about ‘freshly cooked’ rather than just fresh ingredients.

Speaking of communications, a pivot from “health” to “nutrition”, while unlikely to be enough to upset KFC, would better establish health credentials from the brand.

Currently, beyond the not-convincing-enough health messaging, Subway does not have a strong brand positioning. The consumption occasions; working late, having to grab something quickly before catching a train etc. are all negative experiences. Perhaps they could build more positive occasions around a positioning relating to the American spirit. Or, given their globally inspired menu items, a United Nations of flavours.

Finally, Chinese people are rarely in a hurry when it comes to food. So while a Subway can be an excellent option for those who have little time for lunch, that is not a consumer need that is very apparent in this market. To build more positive consumption occasions, Subway could take a leaf from Starbuck’s book create a version of their “3rd space” where people are happy to spend time. Doing business in China is certainly a difficult battle for any brand, and the cards are not stacked in Subway’s favour. It seems unlikely they could ever match McDonald’s in number of restaurants in China, but with some tweaks to the menu, their restaurants, and their communications it’s feasible they could capture a larger portion of the fast-food market.

Searchlight can help your brand navigate the complexities of China and find the Goldilocks zone between complexity and simplicity. Reach out to us at We work with both local startups as well as international brands that would like to do better in this market.

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