abhishreshthaa
Abhijeet S
McDonald's Corporation (NYSE: MCD) is the world's largest chain of hamburger fast food restaurants, serving more than 58 million customers daily.[3] In addition to its signature restaurant chain, McDonald’s Corporation held a minority interest in Pret A Manger until 2008, was a major investor in the Chipotle Mexican Grill until 2006,[4] and owned the restaurant chain Boston Market until 2007.[5]
A McDonald's restaurant is operated by either a franchisee, an affiliate, or the corporation itself. The corporation's revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants. McDonald's revenues grew 27% over the three years ending in 2007 to $22.8 billion, and 9% growth in operating income to $3.9 billion.[6]
McDonald's primarily sells hamburgers, cheeseburgers, chicken products, french fries, breakfast items, soft drinks, shakes, and desserts. In response to obesity trends in Western nations and in the face of criticism over the healthiness of its products, the company has modified its menu to include alternatives considered healthier such as salads, wraps and fruit.
as derived from ongoing market research, the McDonald’s
Marketing department can ascertain information key to
determining the correct marketing mix.
1) Which products are well received
2) What prices consumers are willing to pay
3) What TV programmes, newspapers and advertising
consumers read and view
4) Which restaurants are visited
Accurate research is essential in creating the right marketing
mix which will help to win customer loyalty and increase sales.
As the economy and social attitudes change, so do buying
patterns. McDonald’s needs to identify whether the number
of target customers is growing or shrinking and whether their
buying habits will change in the future.
Market research considers everything that affects buying
decisions. These buying decisions can often be affected
by factors wider than just the product itself. Psychological
factors are important, e.g. the image a particular product
conveys or how the consumer feels when purchasing it.
These psychological factors are of significant importance to
the customer. They can be even more important than the
products’ physical benefits.
Through marketing, McDonald’s establishes a prominent
position in the minds of customers. This is known as
branding.
Market research seeks information
about the market place
Competition
(what is the competition offering?)
Economic changes
(e.g. rising living
standards)
Technological changes
(e.g. new food
production techniques)
Legal changes
(e.g. changes in laws
about packaging)
Social changes
(e.g. changes in
patterns of eating out)
McDonald’s
Page
Services Talking Point Apprenticeships
Glossary I.T.
Marketing Construction
Marketing at McDonald’s
Meeting the needs of key audiences
There are a limited number of customers in the market. To
build long-term business, it is essential to retain people once
they have become customers.
Customers are not all the same. Market research identifies
different types of customers. For example:
A parent with two children Visits McDonald’s to give the
children a treat.
Children Want to visit McDonald’s as it is a
fun place to eat.
A business customer Visits McDonald’s during the day
as service is quick, the food tastes
great and can be eaten in the
car without affecting a busy work
schedule.
Teenagers Are attracted by the Saver
Menu which is affordable, and
the internet access available in
restaurants.
These examples represent just a few of McDonald’s possible
customer profiles. Each has different reasons for coming to
McDonald’s
Using this type of information McDonald’s can tailor
communication to the needs of specific groups. It is their
needs that determine the type of products and services
offered, prices charged, promotions created and where
restaurants are located.
In order to create a marketing strategy that will enable
the needs of the key market to be met, the strengths and
weaknesses of the organisation must first be identified and
analysed.
The analysis will examine the following parts of the company’s
business:
• The company’s products and how appropriate they are for
the future
• The quality of employees and how well trained they are to
offer the best service to customers
• The systems and how well they function in providing
customer satisfaction e.g. marketing databases and
restaurant systems
• The financial resources available for marketing.
Once the strengths and weaknesses are determined, they
are combined with the opportunities and threats in the
market place. This is known as SWOT analysis - strengths,
weaknesses, opportunities, threats.
The business can then determine what it needs to do in order
to increase its chances of marketing successfully.
Strengths
(Internal)
Weaknesses
(Internal)
E.g. the brand,
and detailed
market
research
to create
the right
marketing mix.
McDonald’s
has been
around for a
long time.
(therefore
important
to keep
innovating).
Opportunities
(External)
Threats
(External)
E.g. increasing
numbers of
customers
looking for
food that is
served in a
quick and
friendly way.
New
competitors.
Changing
customer
lifestyles.
Page
Services Talking Point Apprenticeships
Glossary I.T.
Marketing Construction
Marketing at McDonald’s
Marketing Objectives
A marketing strategy must be created in order to determine
the means by which a set of clear objectives may be met.
Objectives communicate what marketers want to achieve,
guide marketing actions and are used to measure how well a
plan is working. They can be related to market share, sales,
reaching the target audience and creating awareness in the
marketplace.
Long-term objectives are broken down into shorter-term
measurable targets, which McDonald’s uses as milestones
along the way.
Results can be analysed regularly to see whether objectives
are being met. This type of feedback allows the company to
change plans and allows flexibility.
Once marketing objectives have been established, the next
stage is to define how they will be achieved. The marketing
strategy is the statement of how objectives will be delivered.
It explains what marketing actions and resources will be used
and how they will work together.
The 4Ps
At this point the marketing mix is put together.
The product life cycle
Sales
Time
Decline
Maturity
Growth
Development Introduction
i. Product
The important thing to remember when offering menu items to potential customers is that
there is a huge amount of choice available to those potential customers with regard to how
and where they spend their money.
Therefore McDonald’s places considerable emphasis on developing a menu which customers
want. Market research establishes exactly what this is.
However, customers’ requirements change over time. What is fashionable and attractive today
may be discarded tomorrow. Marketing continuously monitors customers’ preferences.
In order to meet these
changes, McDonald’s has
introduced new products and
phased out old ones over
time, and will continue to do
so.
Care is taken not to adversely
affect the sales of an existing
option by introducing a new
option which will cannibalise
its sales (trade off).
McDonald’s knows that sales
of products on its menu will
vary at different points in their
life cycle as is illustrated on
the graph to the right.
Page
Services Talking Point Apprenticeships
Glossary I.T.
Marketing Construction
Marketing at McDonald’s
The type of marketing undertaken and the resources
invested will be different depending on the stage a product
has reached. For example, the launch of a new product will
typically involve television and other advertising support.
At any time a company will have a portfolio of products, each
in a different stage of its cycle. Some of McDonald’s options
are growing in popularity while arguably the Big Mac is at
the ‘maturity’ stage.
ii. Price
The customer’s perception of value is an
important determinant of the price charged.
Customers draw their own mental picture
of what a product is worth. A product
is more than a physical item; it also has
psychological connotations for the customer.
The danger of using low price as a marketing
tool is that the customer may feel that a low
price is indicative of compromised quality. It is
important when deciding on the price to be fully aware of the
brand and its integrity.
A further potentially adverse consequence of price reduction
is that competitors match the lower prices resulting in
no extra demand. This means the profit margin has been
reduced without increasing the sales.
iii. Promotions
The promotions aspect of the marketing mix covers all types
of marketing communications.
One of the methods employed is advertising, sometimes
known as ‘above the line’ activity. Advertising is conducted
on TV, radio, in cinema, online, using poster sites and in the
press for example in newspapers and magazines.
What distinguishes advertising from other marketing
communications is that media owners are paid before the
advertiser can take space in the medium.
Other promotional methods include sales promotions, point
of sale display, merchandising, direct mail, telemarketing,
exhibitions, seminars, loyalty schemes, door drops,
demonstrations, etc.
The skill in marketing communications is to develop a
campaign which uses several of these methods in a way
that provides the most effective results. For example, TV
advertising makes people aware of a food item and press
advertising provides more detail. This may be supported by
in-store promotions to get people to try the product and a
collectable promotional device to encourage them to keep on
buying the item.
©2008 McDonald’s Corporation
All trademarks are the property of McDonald’s Corporation and its affiliates.
Page
Services Talking Point Apprenticeships
Glossary I.T.
Marketing Construction
Marketing at McDonald’s
It is imperative that the messages communicated support
each other and do not confuse customers. A thorough
understanding of what the brand represents is the key to a
consistent message.
The purpose of most marketing communications is to move
the target audience to some type of action. This may be to
buy the product, visit a restaurant, recommend the choice to
a friend or increase purchases of the menu item.
Key objectives of advertising are to make people aware of an
item, feel positive about it and remember it.
The more McDonald’s knows about the
people it is serving, the more it is able to
communicate messages which appeal to
them.
Messages should gain customers’ attention
and keep their interest. The next stage is to
get them to want what is offered. Showing the
benefits which they will obtain by taking action
is usually sufficient. The right messages must
be targeted at the right audience, using the
right media.
For example, to reach a single professional woman with
income above a certain level, it may be better to take an
advertisement in Cosmopolitan than Woman’s Own. To
advertise to mothers with families, it may be more effective
to take advertising space in cinemas during Disney films.
The right media depends on who the viewers, readers or
listeners are and how closely they resemble the target
audience.
iv. Place
Place, as an element of the marketing mix, is not just about
the physical location or distribution points for products. It
encompasses the management of a range of processes
involved in bringing products to the end consumer.
Conclusion
Once the marketing strategy is in place, various
responsibilities are given to different individuals so that the
plan can be implemented. Systems are put in place to obtain
market feedback which measure success against short-term
targets. McDonald’s has to ensure that this is done within the
confines of a tightly controlled, finite marketing budget.
NUMBER OF STORES
McDonald's Corporation is the world's largest chain of fast food restaurants, serving nearly 47 million customers daily through more than 31,000 restaurants in 119 countries worldwide.
Of the 31377 McDonald’s restaurants around the world, 20505 (65%) are operated by franchisees, 3966 (13%) are operated by affiliates, and 6906 (22%) are company-operated.
NUMBER OF EMPLOYEES
1.5 million worldwide –
(398,000 company staff,1.1
million franchisee staff)
COMPETITIVE ADVANTAGE
McDonald’s success lies in its utilization of technology, routinization of work, and general deskilling of labor
McDonald’s bases its worker control and efficiency on one principle: worker stupidity.
McDonald’s implements the Frederick Taylor method of installing managers and a system of predetermined activities called task management.
McDonald’s goal is to maximize its profits including all devious means
McDonald's maintains its competitive advantage by constantly creating new items to add onto its menu
McDonald's also realized the changing world we live in and the need for healthier food
MARKET SHARE
Strong brand name, image and reputation.
Large market share.
Strong global presence.
Specialized training for managers known as the Hamburger University.
McDonalds Plan to Win focuses on people, products, place, price and promotion.
Strong financial performance and position.
Introduction of new products.
Customer focus (centric).
Strong performance in the global marketplace.
Unhealthy food image.
High Staff Turnover including Top management.
Customer losses due to fierce competition.
Legal actions related to health issues; use of trans fat & beef oil.
Uses HCFC-22 to make polystyrene that is contributing to ozone depletion.
Ignoring breakfast from the menu.
Growing health trends among consumers.
Globalization, expansion in other countries (especially in China & India).
Diversification and acquisition of other quick service restaurants.
Growth of the fast-food industry.
Worldwide deregulation.
Low cost menu that will
attract the customers.
Freebies and discounts.
Health professionals and consumer activists accuse McDonald's of contributing to the country’s health issue of high cholesterol, heart attacks, diabetes, and obesity.
The relationship between corporate level McDonald's and its franchise dealers.
McDonald’s competitors threatened market share of the company both internationally and domestically.
PEST ANALYSIS
In general terms the government policies do not affect the company much nor do the
changes in the government influence the organization of the company.
McDonald’s enjoys an added advantage in countries
where consumer protection laws are not very strong
The international operations of McDonald’s are highly influenced by the individual state policies enforced by each government
Market leader.
Very high target market.
Low cost and more incomes.
The rate at which the economy of that particular state grows determines the purchasing power of the consumers in that country.
As McDonalds offer Hilal food majorly so there are no religious, ethical or cultural issues associated with the operations
For the rising importance of corporate social responsibility recently McDonald's has announced that it is giving further backing to Rainforest Alliance certification by offering a cup of tea with a conscience in all of its 1,200 restaurants in the UK.
Food made with the help of machines is considered more hygienic.
However, the continuous developments in the technology sector needs McDonalds to be updated regularly.
It is natural that technology has helped McDonald and especially its employees as they have to serve quick services.
Computers and smart cashiers are used by the employees so they would not get confused and they are provided with customized database management system.
A McDonald's restaurant is operated by either a franchisee, an affiliate, or the corporation itself. The corporation's revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants. McDonald's revenues grew 27% over the three years ending in 2007 to $22.8 billion, and 9% growth in operating income to $3.9 billion.[6]
McDonald's primarily sells hamburgers, cheeseburgers, chicken products, french fries, breakfast items, soft drinks, shakes, and desserts. In response to obesity trends in Western nations and in the face of criticism over the healthiness of its products, the company has modified its menu to include alternatives considered healthier such as salads, wraps and fruit.
as derived from ongoing market research, the McDonald’s
Marketing department can ascertain information key to
determining the correct marketing mix.
1) Which products are well received
2) What prices consumers are willing to pay
3) What TV programmes, newspapers and advertising
consumers read and view
4) Which restaurants are visited
Accurate research is essential in creating the right marketing
mix which will help to win customer loyalty and increase sales.
As the economy and social attitudes change, so do buying
patterns. McDonald’s needs to identify whether the number
of target customers is growing or shrinking and whether their
buying habits will change in the future.
Market research considers everything that affects buying
decisions. These buying decisions can often be affected
by factors wider than just the product itself. Psychological
factors are important, e.g. the image a particular product
conveys or how the consumer feels when purchasing it.
These psychological factors are of significant importance to
the customer. They can be even more important than the
products’ physical benefits.
Through marketing, McDonald’s establishes a prominent
position in the minds of customers. This is known as
branding.
Market research seeks information
about the market place
Competition
(what is the competition offering?)
Economic changes
(e.g. rising living
standards)
Technological changes
(e.g. new food
production techniques)
Legal changes
(e.g. changes in laws
about packaging)
Social changes
(e.g. changes in
patterns of eating out)
McDonald’s
Page
Services Talking Point Apprenticeships
Glossary I.T.
Marketing Construction
Marketing at McDonald’s
Meeting the needs of key audiences
There are a limited number of customers in the market. To
build long-term business, it is essential to retain people once
they have become customers.
Customers are not all the same. Market research identifies
different types of customers. For example:
A parent with two children Visits McDonald’s to give the
children a treat.
Children Want to visit McDonald’s as it is a
fun place to eat.
A business customer Visits McDonald’s during the day
as service is quick, the food tastes
great and can be eaten in the
car without affecting a busy work
schedule.
Teenagers Are attracted by the Saver
Menu which is affordable, and
the internet access available in
restaurants.
These examples represent just a few of McDonald’s possible
customer profiles. Each has different reasons for coming to
McDonald’s
Using this type of information McDonald’s can tailor
communication to the needs of specific groups. It is their
needs that determine the type of products and services
offered, prices charged, promotions created and where
restaurants are located.
In order to create a marketing strategy that will enable
the needs of the key market to be met, the strengths and
weaknesses of the organisation must first be identified and
analysed.
The analysis will examine the following parts of the company’s
business:
• The company’s products and how appropriate they are for
the future
• The quality of employees and how well trained they are to
offer the best service to customers
• The systems and how well they function in providing
customer satisfaction e.g. marketing databases and
restaurant systems
• The financial resources available for marketing.
Once the strengths and weaknesses are determined, they
are combined with the opportunities and threats in the
market place. This is known as SWOT analysis - strengths,
weaknesses, opportunities, threats.
The business can then determine what it needs to do in order
to increase its chances of marketing successfully.
Strengths
(Internal)
Weaknesses
(Internal)
E.g. the brand,
and detailed
market
research
to create
the right
marketing mix.
McDonald’s
has been
around for a
long time.
(therefore
important
to keep
innovating).
Opportunities
(External)
Threats
(External)
E.g. increasing
numbers of
customers
looking for
food that is
served in a
quick and
friendly way.
New
competitors.
Changing
customer
lifestyles.
Page
Services Talking Point Apprenticeships
Glossary I.T.
Marketing Construction
Marketing at McDonald’s
Marketing Objectives
A marketing strategy must be created in order to determine
the means by which a set of clear objectives may be met.
Objectives communicate what marketers want to achieve,
guide marketing actions and are used to measure how well a
plan is working. They can be related to market share, sales,
reaching the target audience and creating awareness in the
marketplace.
Long-term objectives are broken down into shorter-term
measurable targets, which McDonald’s uses as milestones
along the way.
Results can be analysed regularly to see whether objectives
are being met. This type of feedback allows the company to
change plans and allows flexibility.
Once marketing objectives have been established, the next
stage is to define how they will be achieved. The marketing
strategy is the statement of how objectives will be delivered.
It explains what marketing actions and resources will be used
and how they will work together.
The 4Ps
At this point the marketing mix is put together.
The product life cycle
Sales
Time
Decline
Maturity
Growth
Development Introduction
i. Product
The important thing to remember when offering menu items to potential customers is that
there is a huge amount of choice available to those potential customers with regard to how
and where they spend their money.
Therefore McDonald’s places considerable emphasis on developing a menu which customers
want. Market research establishes exactly what this is.
However, customers’ requirements change over time. What is fashionable and attractive today
may be discarded tomorrow. Marketing continuously monitors customers’ preferences.
In order to meet these
changes, McDonald’s has
introduced new products and
phased out old ones over
time, and will continue to do
so.
Care is taken not to adversely
affect the sales of an existing
option by introducing a new
option which will cannibalise
its sales (trade off).
McDonald’s knows that sales
of products on its menu will
vary at different points in their
life cycle as is illustrated on
the graph to the right.
Page
Services Talking Point Apprenticeships
Glossary I.T.
Marketing Construction
Marketing at McDonald’s
The type of marketing undertaken and the resources
invested will be different depending on the stage a product
has reached. For example, the launch of a new product will
typically involve television and other advertising support.
At any time a company will have a portfolio of products, each
in a different stage of its cycle. Some of McDonald’s options
are growing in popularity while arguably the Big Mac is at
the ‘maturity’ stage.
ii. Price
The customer’s perception of value is an
important determinant of the price charged.
Customers draw their own mental picture
of what a product is worth. A product
is more than a physical item; it also has
psychological connotations for the customer.
The danger of using low price as a marketing
tool is that the customer may feel that a low
price is indicative of compromised quality. It is
important when deciding on the price to be fully aware of the
brand and its integrity.
A further potentially adverse consequence of price reduction
is that competitors match the lower prices resulting in
no extra demand. This means the profit margin has been
reduced without increasing the sales.
iii. Promotions
The promotions aspect of the marketing mix covers all types
of marketing communications.
One of the methods employed is advertising, sometimes
known as ‘above the line’ activity. Advertising is conducted
on TV, radio, in cinema, online, using poster sites and in the
press for example in newspapers and magazines.
What distinguishes advertising from other marketing
communications is that media owners are paid before the
advertiser can take space in the medium.
Other promotional methods include sales promotions, point
of sale display, merchandising, direct mail, telemarketing,
exhibitions, seminars, loyalty schemes, door drops,
demonstrations, etc.
The skill in marketing communications is to develop a
campaign which uses several of these methods in a way
that provides the most effective results. For example, TV
advertising makes people aware of a food item and press
advertising provides more detail. This may be supported by
in-store promotions to get people to try the product and a
collectable promotional device to encourage them to keep on
buying the item.
©2008 McDonald’s Corporation
All trademarks are the property of McDonald’s Corporation and its affiliates.
Page
Services Talking Point Apprenticeships
Glossary I.T.
Marketing Construction
Marketing at McDonald’s
It is imperative that the messages communicated support
each other and do not confuse customers. A thorough
understanding of what the brand represents is the key to a
consistent message.
The purpose of most marketing communications is to move
the target audience to some type of action. This may be to
buy the product, visit a restaurant, recommend the choice to
a friend or increase purchases of the menu item.
Key objectives of advertising are to make people aware of an
item, feel positive about it and remember it.
The more McDonald’s knows about the
people it is serving, the more it is able to
communicate messages which appeal to
them.
Messages should gain customers’ attention
and keep their interest. The next stage is to
get them to want what is offered. Showing the
benefits which they will obtain by taking action
is usually sufficient. The right messages must
be targeted at the right audience, using the
right media.
For example, to reach a single professional woman with
income above a certain level, it may be better to take an
advertisement in Cosmopolitan than Woman’s Own. To
advertise to mothers with families, it may be more effective
to take advertising space in cinemas during Disney films.
The right media depends on who the viewers, readers or
listeners are and how closely they resemble the target
audience.
iv. Place
Place, as an element of the marketing mix, is not just about
the physical location or distribution points for products. It
encompasses the management of a range of processes
involved in bringing products to the end consumer.
Conclusion
Once the marketing strategy is in place, various
responsibilities are given to different individuals so that the
plan can be implemented. Systems are put in place to obtain
market feedback which measure success against short-term
targets. McDonald’s has to ensure that this is done within the
confines of a tightly controlled, finite marketing budget.
NUMBER OF STORES
McDonald's Corporation is the world's largest chain of fast food restaurants, serving nearly 47 million customers daily through more than 31,000 restaurants in 119 countries worldwide.
Of the 31377 McDonald’s restaurants around the world, 20505 (65%) are operated by franchisees, 3966 (13%) are operated by affiliates, and 6906 (22%) are company-operated.
NUMBER OF EMPLOYEES
1.5 million worldwide –
(398,000 company staff,1.1
million franchisee staff)
COMPETITIVE ADVANTAGE
McDonald’s success lies in its utilization of technology, routinization of work, and general deskilling of labor
McDonald’s bases its worker control and efficiency on one principle: worker stupidity.
McDonald’s implements the Frederick Taylor method of installing managers and a system of predetermined activities called task management.
McDonald’s goal is to maximize its profits including all devious means
McDonald's maintains its competitive advantage by constantly creating new items to add onto its menu
McDonald's also realized the changing world we live in and the need for healthier food
MARKET SHARE
Strong brand name, image and reputation.
Large market share.
Strong global presence.
Specialized training for managers known as the Hamburger University.
McDonalds Plan to Win focuses on people, products, place, price and promotion.
Strong financial performance and position.
Introduction of new products.
Customer focus (centric).
Strong performance in the global marketplace.
Unhealthy food image.
High Staff Turnover including Top management.
Customer losses due to fierce competition.
Legal actions related to health issues; use of trans fat & beef oil.
Uses HCFC-22 to make polystyrene that is contributing to ozone depletion.
Ignoring breakfast from the menu.
Growing health trends among consumers.
Globalization, expansion in other countries (especially in China & India).
Diversification and acquisition of other quick service restaurants.
Growth of the fast-food industry.
Worldwide deregulation.
Low cost menu that will
attract the customers.
Freebies and discounts.
Health professionals and consumer activists accuse McDonald's of contributing to the country’s health issue of high cholesterol, heart attacks, diabetes, and obesity.
The relationship between corporate level McDonald's and its franchise dealers.
McDonald’s competitors threatened market share of the company both internationally and domestically.
PEST ANALYSIS
In general terms the government policies do not affect the company much nor do the
changes in the government influence the organization of the company.
McDonald’s enjoys an added advantage in countries
where consumer protection laws are not very strong
The international operations of McDonald’s are highly influenced by the individual state policies enforced by each government
Market leader.
Very high target market.
Low cost and more incomes.
The rate at which the economy of that particular state grows determines the purchasing power of the consumers in that country.
As McDonalds offer Hilal food majorly so there are no religious, ethical or cultural issues associated with the operations
For the rising importance of corporate social responsibility recently McDonald's has announced that it is giving further backing to Rainforest Alliance certification by offering a cup of tea with a conscience in all of its 1,200 restaurants in the UK.
Food made with the help of machines is considered more hygienic.
However, the continuous developments in the technology sector needs McDonalds to be updated regularly.
It is natural that technology has helped McDonald and especially its employees as they have to serve quick services.
Computers and smart cashiers are used by the employees so they would not get confused and they are provided with customized database management system.
Last edited: