McDonald’s is a large corporation with restaurants all over the globe. The aim of this marketing report is to identify the main issues and points connected with the operation of this company. In order to reach this goal, research will be divided into two phases – situation analysis and objectives analysis.
Marketing strategies were the object of the research in the investigations of a great number of authors. This issue was discussed in works by Gummeson (2002), McCracken (1990), Kanji (2002), Gilligan and Wilson (2003). Some of the researchers (for instance, Gummeson) are focused on the 4Ps strategies (Place, Promotion, Product, Price), and others (e.g., McCracken) are just concentrated on paying special attention to attract customers’ attention to strengthen business excellence (Kanji 2002). This theoretical background will help conduct a deep research on the matter.
In this research the method of SWOT analysis is used taking into account:
All these features are applicable to McDonald’s.
3.1. Marketing Report Phase 1 (Situation Analysis).
3.1.1. Competitor Analysis.
The major competitors of McDonald’s are Taco Bell, Starbucks, Burger King, Wendy’s and KFC. They have been constantly trying to win their share of fast-food market. Moreover, each of them tries to win the competition and become the leading company in this field. For example, MacDonald’s is able to compete with all these large corporations. Concerning coffee offers, this company can contend for customers even with such a famous company as StarBucks, due to MacCafe. The problem is that in this competition McDonald’s loses its revenue due to the decline of prices which is aimed to attract more customers.
The major competitors are Pizza Hut, Kentucky Fried Chicken (KFC) and Subway.
1) Pizza Hut. It is a large and developed global fast-food chain, which is represented in more than 90 countries worldwide. It serves soups, sandwiches, salads, starters, deserts, depending on the country. The objectives of the company are guided by the principles of diversification, accuracy, hospitality, cleanliness, product quality. The main competitive advantage of the company is a wide customers’ base and famous brand name. The major weaknesses are that Pizza Hut does not serve products in the lunch time, and that their prices are too high.
2) KFC. This global fast-food restaurants chain has more than 11 thousands restaurants in about 80 countries worldwide. The main strategies of the company are improving their services, making them affordable for the customers, customizing. The main competitive advantages of KFC are strong financial background, the role of multinational company, environmental friendliness. The weaknesses are that KFC’s advertising does not appeal to any customers segment and that KFC’s brand “fried” seems to the customers, like their food is oily and unhealthy.
3). Subway. It is the global restaurants chain that serves mainly salads and submarine sandwiches. It has more than 30 thousands restaurants in more than 90 countries worldwide. The strategic plan of the company is to make their brand recognizable internationally. The competitive advantages are: 1) locating restaurants in not traditional locations, such as universities, health clubs, hospitals; 2) Subway’s products are compatible much, as their sandwiches and salads appeal much more to the customers’ tastes than burgers, fries, and chicken. The weaknesses are that Subway’s standards of cleanliness and products’ quality are going down, as their sales, as many new restaurants were opened recently.
3.1.2. Market Analysis.
Nowadays the market of fast-food in the USA is presented by the following products:
The main companies which offer fast-food menus are MacDonald’s, Taco Bell, Starbucks, Burger King, Wendy’s, and KFC. Each of these companies has a marketing strategy of its own, which helps it move forward and from time to time appear to be the leading company in terms of sales of some products.
Although many new companies appear in this market day by day, there are big companies that are operating with a big share of market, such as Subway, McDonald’s, Pizza Hut, KFC. Pizza Hut’s restaurants are represented in more than 90 countries worldwide, KFC has more than 11 thousands of restaurants worldwide, and Subway has about 30 thousands of restaurants worldwide.
3.1.3. Environmental Analysis.
Environmental Analysis of the company includes such important factors:
1. Political and legal. They may vary from country to country.
2. Economical. The major of them is the limited purchasing ability in some Asian and African countries.
3. Technological. They are new technologies that may be significant to meet the needs of customers.
4. Socio-cultural factors. These are some national and cultural preferences, tastes, demands of the customers that McDonald’s should take into account.
5. Environmental factors. McDonald’s should take climate change and some more environmental factors into account.
7. Customer tastes that may vary from country to country.
8. Products. The menus vary from country to country. For example, in some tropical markets McDonald’s serves guava juice, and in Asia – soup.
3.1.4. Internal Analysis.
Internal analysis of the company includes such factors:
1. McDonald’s resources and capabilities. The company has tangible and intangible resources. Tangible are financial, physical, organizational and technological. Intangible are: humans, reputation, innovation assets.
2. Value, Imitability, Rarity, Organization. McDonald’s have been trying to meet the needs of customers, based on their lifestyle, tastes, value systems, culture.
3. Good supply chain and network worldwide.
3.1.5. Customer Analysis.
The target group of customers of the McDonald’s brand is currently huge. The main two subgroups are young people (14-23 years) and young children with their parents. The next position is held by the business people having virtually no free time for life, girls who are trying to eat healthy but do not have sufficient funds to afford expensive restaurants, and a group of people anxious about environmental issues and willing to make a small contribution to assist children in difficult situations. Besides, the company is able to attract hungry people walking and having rest outdoors.
The customers of McDonald’s can be subdivided into subgroups, based on their interests, needs of “fast” food, ambience, status and hygiene (see Table 1).
1. “fast” food. This group of customers enjoys the quick service of McDonald’s, both at outlets or home. They enjoy a system of home delivery, and are heavy using group. The majority of them are students, who just hang out with friends, are interested in entertainment, outdoor activities, social networks.
2. Ambience. This segment needs a good service in the restaurants. They are interested in socialization, and the majority of them are students and working category.
3. Status symbol. This group perceives McDonald’s as a well-known brand. Most of them are students and workers.
4. Hygiene. This group of customers is much concerned of the way of food preparation, cleanliness. Among these group are mostly middle-ages men/women, working and housewives.
1) MacDonald’s is a corporation which has been growing internationally. It owns more than 31 thousands restaurants in 120 countries all over the world. The majority of restaurants are located in the USA.
2) Marketing strategies of the company are aimed at reducing costs, encouraging new groups of customers, and leading at the market of fast-food.
3) The company actively participates in charity campaigns.
4) MacDonald’s has been trying to adjust the quality of ingredients to the modern health standards.
5) The company earns revenue as a property investor.
6) Famous brands which are promoted mainly on TV to make it recognizable.
7) McDonald’s is a large socially responsible community.
8) The menus are culturally adapted for every country.
9) The restaurants are located in crowded places.
1) Advertising is more children-oriented.
2) The high rate of employee turnover.
3) Price competition results in low revenue.
4) Lack of innovation.
1) MacDonald’s can grow with the help of innovative products.
2) Social responsibility can be increased by “green” energy and packaging usage.
3) Using mobile messages and tablet applications to promote its products.
4) Building restaurants in luxurious location to attract rich customers.
5) Provide some optional menu items for people prone to allergies.
1) Foreign currencies fluctuations can be unsuitable for pricing of the products.
2) Decreasing the price for successful competition.
3) Health critics including media.
4) Kids-oriented criticism.
5) Rapidly growing competitors.
6) Every customer is highly appreciated – everyone is allowed to observe food preparation process and control the quality of ingredients.
3.2. Marketing Report Phase 2. Objectives and Strategy Development
3.2.1. Marketing Objectives
Every marketing strategy includes a set of objectives, which are determined according to the company’s goals. Objectives are a set of the main rules that are desired to be achieved, which identify the effectiveness of a marketing plan. Marketing objectives can be related to sales, market shares, their ability to reach the target audience and awareness in a marketplace. The objectives can be long-term or short-term. Every objective is related to some marketing actions and the resources which should be used to make the objectives work together.
The main marketing objectives of the company are:
d) Customer Satisfaction.
3.2.2. Targeting and Positioning.
The Corporation uses a differentiable marketing strategy which is developed for each target segment separately. McDonald’s company segments its customers according to different criteria, such as gender, age, income, lifestyle, and education.
The target audience of McDonald’s is extensive enough. The company constantly conducts various advertising campaign to expand the group of potential customers.
The primary audience is comprised of young people aged 14-25. At this age, young people are able to make decisions themselves, so the advertising campaign should be focused on them. The concrete groups of the target audience can be identified as men and women divided equally. What is involved in this segment of the target audience? At this age, most of the people are either schoolchildren or students in higher educational institutions. In McDonald’s they like quick service and taste of products, they rarely think about the danger of consuming fast-food. Basically, at this age, people do not have a permanent job because they study, so young people spend pocket money. For them visiting MacDonald’s means talking to friends while eating nice restaurant products. To sum up, a portrait of this group is as follows: a young man (woman) of 14-23 whose life is composed of entertainment and pleasure, without any desire to think about health. Another important target audience McDonald’s possesses is presented by children. Attractive advertisements lead children to restaurants with their parents, who often buy everything they want. Specifically to support this target group, company maintains cooperative relationships with the world-famous company Disney: brand toys put into children’s sets of food motivate them to visit the restaurant again. Children already have the information (advertised on TV) of such a funny restaurant with delicious meal where they also receive toys from their favourite Disney cartoon heroes. It is children who do not have their own funds at their free disposal but ask their parents about purchases. It implies that the age of this segment of the target audience ranges from 5 to 10 (13) years. Mainly mothers aged 26 to 45 and grandmothers come to restaurants with children. A part of income from this group is difficult to identify because children can influence their parents at all income levels, including education and lifestyle.
The company aims to expand its audience without focusing on youth and moms with kids. Every McDonald’s offers free Wi-Fi access. This service enables businessmen who wish to see the latest news, send an important letter, etc, in the restaurant to use their own laptops and at the same time enjoy a cup of coffee or eat a light salad. Especially for them, the company expanded its coffee menu, now serving a great variety of it. For busy people who do not have time for breakfast at home or even spend their mornings in traffic jams, the company has elaborated special breakfast offers. For drivers there is a special window for orders – McDrive. Another group of the target audience of McDonald’s is “smart and fashionable” young people (mostly girls aged 17-23) who monitor their healthh and figure. Today it is fashionable to go to fitness club and eat healthy food. For such people the company released a “light” menu, where fans of healthy way of life can find salads, yoghurt, cold tea, soda, instead of rolls of fish and chicken. Representatives of this group are students or young people working in low-paid jobs, as they are only at the beginning of their career path and have quite limited resources.
Recently, McDonald’s has tried to position itself as a company that cares about the environment, as well as participated in charity events. Since 2009, the company began to change its corporate colour from red to green to put focus on sustainability of its customers’ food. Thus, McDonald’s wants to attract its target audience comprised of people interested in the environment and charity. Such trends are clearly found among the present generation, it has become fashionable to think about the environment and take part in charity events. However, turning only this group into the target audience is not practical, and it leaves only the possible prospect for the company.
Nowadays, the company is going to reach a new target audience. These are people who come to spend time in the parks, at festivals, concerts, children’s parties and other events formatted as open airs, where a large number of hungry people are gathered.
3.2.3. Growth Strategies.
188.8.131.52. Growing internationally
MacDonald’s has a wide range of international opportunities. The company’s sales grow every year due to the well-developed strategy of promotion and advertising its products in many countries all over the world. Although the highest sales rate is presented by European countries, Asia is also significant for increasing McDonald’s sales. Culture-oriented menus are the main advantage for Eastern countries where there are special priorities in food dictated by cultural preferences.
The corporation has been continuously trying to develop new lines of products. The example is McCafe line-up which originated from Australia and grown popular in North America in the 21st century. Due to the coffee product line, McDonald’s turned into a very popular restaurant, especially among youth and busy people. Another modern trend which helps the company in growing is the salad product line. Vegetarian or simply fresh salads have recently become very popular throughout the world, and it brings high profits to MacDonald’s. Fresh salads menus help create the image of the company which takes care of customers’ healthy way of life.
184.108.40.206. Attracting children. Due to Happy Meals, Play Place and other attractions, children are anticipated to be lifelong cheeseburger lovers.
3.2.4. Selection of Competitive Advantage.
Leadership at the market is of high importance for every company. McDonald’s has a well-developed and established supply chain. The company purchases supplies in bulk to get lower price. Concerning the real estate, McDonald’s leases property and land to franchises. The well-known brand-name helps MacDonald’s maintain leadership at the market of fast-food. Furthermore, the company selects its customers very well: the menu is considerably oriented on children who become unhealthily addicted to such ingredients as sugar, soda drinks, fat, etc. Children like the atmosphere in McDonald’s restaurants, which is very friendly, and the attitude of the employees.
Another advantage that differentiates McDonald’s from its competitors is the marketing strategy of orienting on local tastes in food. It is no secret that the company has many restaurants all over the world serving food compatible with local tastes. The important factor is seasonal basis. At most of the markets McDonald’s sells hamburgers, chicken sandwiches, soft drinks, breakfasts, and desserts. In Asian countries it also serves soup. MacDonald’s takes into account that in India, for example, it is prohibited to eat beef, so it does not sell beef-based items. Additionally, the company sells McRice in Indonesia and beer in Germany.
3.2.5. Marketing Mix Program
When analyzing the strategies of every company, it is worth to remember that they should be developed according to the customers’ preferences. Undoubtedly, it should be taken into account that customers have a great choice to spend their money on. Consequently, the best idea is to develop a menu reflecting the wishes of the customers. It is precisely what McDonald’s does. Anyway, some customers’ demands which are popular, fashionable and attractive at some stage may vary from time to time in future, that is why marketing department of every company should monitor customers’ preferences continuously. To meet the changes in customers’ demands, MacDonald’s often presents new products at the market. They are supported with attractive TV-advertisements, which makes them popular and fashionable.
Price is a very important factor which has a very significant meaning for customers’ perception of products. All customer draw a certain mental picture of the product’s worth. When deciding to buy a product, customers think of it not only as of a physical item, but use much more diversified criteria. Products have a great psychological connotation for the customers. Then the question is: what is better for products – low or high price? If the price is too high, the customer may turn to competitor companies to buy fast-food. However, it is more important to keep the brand image. For example, if the company sets too low prices for its products, some of the customers may think that they are of compromised quality. Thus, concerning the food, the customer should not only be satisfied with taste or appearance, but also understand that they buy the fashionable brand.
Promotions are an integral aspect of mix marketing. The products of McDonald’s are always promoted on TV, newspapers, magazines, etc. There are also some other ways of promoting the products, such as direct mail, telemarketing, point of sale display, door drops, seminars, exhibitions, merchandising, etc. The marketing communication of the company is usually developed by designing certain campaigns, including combining the types of promotions. For example, TV-advertising can be combined with in-stores promotions which are able to encourage people to try the product. McDonald’s often uses such methods.
Not only physical location but also other places where the management of the company operates are crucial.
Every employee at McDonald’s wears a standard uniform, which looks very friendly to the customers and underlines prompt service.
The whole process of the cooking meals is visible to customers. Moreover, they can even be invited to check the ingredients and hygienic standards of the process. This mix marketing element makes the food manufacturing very transparent to the customers. It greatly increases trust in the company.
220.127.116.11. Physical evidence.
The trick here implies company’s intention to develop its mix marketing program in a way of spreading hygienic and clean standards. The interiors and products packages are created from the best ecological materials.
In order to grow their sales, get more of the customers’ satisfaction and respect, McDonald’s has to:
1) Improve their services;
2) Target on not youth only, but older people;
3) Go more globally, opening more restaurants in big cities of Asia;
4) Removing dangerous elements from playrooms fro children in the restaurants;
5) Better advertising.
After this marketing report is made, it is possible to draw the following conclusions:
1) McDonald’s is a fast-growing company with a great number of opportunities. It has wide perspectives to open new restaurants, attract customers of different age groups and advertise its products properly.
2) The company uses various marketing strategies for different target groups of customers.
3) Menus in McDonald’s are culturally oriented. It helps the company to increase sales each year by customizing products according to the tastes of specific cultures.
4) Children represent the main target group of customers in McDonalds’. The company aims to attract children, teenagers and youth to turn them into the regular customers.
5) According to our SWOT analysis, the main threat for McDonald’s is the growing popularity of its competitors. Competition as a process considerably influences prices at McDonald’s.
This marketing report helps draw many other conclusions which can be useful in writing subsequent researches related to these issues.