McDonalds

Introduction

Today McDonalds is the worlds largest fast food chains serving 47 million customers daily.

McDonalds is the eighth most powerful brand in the world. ---source: Millward Brown Optimor

One of the most valuable brands, worth more than $25 billion.

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.

Brief History

Maurice and Richard McDonald(brothers) were inspired by a hot dog stand nearby, which always did brisk business while other businesses were struggling due to the great depression.

In 1937, the McDonalds brothers started a hot dog stand, called Airdrome in California .

Later, in 1940, they opened a barbeque restaurant in san Bernardino and called it McDonalds Barbeque.

Ray crock a distributor of milk shake machines expressed interest in the business, and he finalized a deal for franchising with McDonalds brothers in 1954.

He established a franchising company, the McDonalds system Inc. and appointed the franchisees.

Events

year Events1955 Ray crock opens his first restaurant and McDonalds corporation is

created.1957 Quality, service, cleanliness and value ( QSC & V) becomes

company’s motto.1963 Ronald McDonald makes debut.

1965 The company goes public.

1968 Big Mc is introduced.

1974 Happy meal is launched.

1996 McDonalds opens in India, the 95th country.

Marketing Mix(4 P’s)

ProductPricePromotionPlace

Product McDonalds emphasis is on developing a menu which customers

want. However, customers requirements change over time. In order to meet these changes, McDonald’s have introduced

new products and phased out old ones, and will continue to do so.

In India, McDonalds have provided a totally different menu as compared to its international offerings which includes ham, beef and mutton burgers.

India is the only country where McDonalds serve vegetarian menu as the majority of customers are vegetarian in India.

Even the sauces and cheese used in India are 100% vegetarian

PriceThis is the most important part of marketing mix as this is the

only part which generate revenue. All the other 3 are expenses incurred.

Low prices as a marketing tool can be a disadvantage as customer may feel that quality is being compromised.

In India McDonalds classified its products namely the branded affordability (BA) and branded core value products (BCV).

This has been done to satisfy consumers which different price perceptions.

Branded Affordability Products (BA)

• The BA products include McAloo tikki and Chicken McGrill burgers.

• BA products costs Rs20-30.

Branded Core Value Products (BCV)

• The BCV products mainly include the McVeggie and McChicken burgers.

• BCV products cost Rs 50-60

Promotion

The methods from which promotion of the product is done, are as follows:

One of the methods employed is advertising. Advertising is conducted on TV, radio, in cinema, online, using poster sites and in the press for example in newspapers and magazines.

TV advertising makes people aware of a food item and press advertising provides more detail.

Other promotional methods include sales promotions, point of sale display, merchandising, direct mail, loyalty schemes, door drops , hoarding etc.

Advertising ( A very strong promotional tool )

T.V

Radio

MagazineNewspaper

Cinema

Place

The place mainly consists of distribution channels. It is important so that the product is available to the customer at the right place, at the right time and in the right quantity. There are some value positions that McDonalds offers to its based on their needs.

It offers: hygienic environment Good ambience Great service Internet facility Dedicated areas for children. Like play ground, swings etc.

Play place for children to attract more children

Product mixVeg Menu Non Veg Menu Beverages Frozen Deserts

McVeggie Chicken Maharaja Mac

Cold Coffee soft serve cone

McAloo Tikki Mc Chicken Ice Tea Mc Swirl

Paneer Salsa Wrap Fiet-o- Fish Soft Drinks Soft serve

Veg Mc Curry Pan Chicken Mexican Wrap

Mc Shakes Flavor burst

pizza McPuff Chicken McGrill Hot serves Floats

Crispy Chinese

McDonalds MenuItems PriceMcVeggie 40 - 50

McAloo tikki 20 - 50

Paneer salsa wrap 20 - 30

Crispy Chinese 30 - 40

Veg McCurry pan 20 - 50

Pizza McPuff 20 – 30

Large fries 40 – 50

Happy meal 50 – 60

combos 30 – 70

Soft drinks 20 onwards

SWOT analysis

STRENGTHS

Larger market share.Considered as worlds most valuable brands, worth

more than $25 billion. Consistency of food. Fast service Good brand equityGoodwillCustomer satisfaction and intimacy.Product innovation.

WEAKNESS

• Unhealthy products are manufactured.• Their test marketing for pizza failed to yield a substantial

product. Leaving them much less able to compete with fast food pizza chains.

• High employee turnover in their restaurants leads to more money being spent on training.

• They have yet to capitalize on the trend towards organic foods.

• McDonald's have problems with fluctuations in operating and net profits which ultimately impact investor relations.

OPPORTUNITY

1. International expansion.2. Only serving 1% population of the world.3. Introducing healthier products ( like: fruits , salad ) to respond

to changing consumer tastes and preferences.4. Enter into breakfast category. 5. In today's health conscious societies the introduction of a

healthy hamburger is a great opportunity. They would be the first QSR (Quick Service Restaurant) to have FDA approval on marketing a low fat low calorie hamburger with low calorie combo alternatives. Currently McDonald's and its competition health choice items do not include hamburgers.

Introduction of breakfast meal.

THREATS

1. They entice children as young as one year old into their restaurants with special meals, toys, playgrounds. Children grow up eating and enjoying McDonalds and then continue into adulthood. They have been criticized by many parent advocate groups for their marketing practices towards children.

2. They have been sued multiple times for having "unhealthy" food, allegedly with addictive additives, contributing to the obesity epidemic in America.

3. More health conscious consumers.4. Increasing competition from local fast food outlets, like KFC,

dominos, King, Starbucks, Taco Bell, Wendy's etc.

Market Share : Competitors v/s McDonalds in 1997 &2002

2002 Market share 1997 Market share

McDonalds 7.3% McDonalds 7.8%

Burger king 7.0% Burger king 3.6%

Wendy’s 2.4% Taco bell 2.2%

Sub way 1.9% Pizza hut 2.1%

Taco bell 1.9% Wendy’s 2.1%

Marketing Strategies

Think global act localAdjusting price strategy Promotional strategies Demographic segmentation strategyInvolvement in local communities.

Think global act local

The company took various measures to adapt itself to the local market conditions. Even before entering a particular market, McDonalds invests a lot on researching the market and then developed its products to suit local tastes and tradition.

• When starting in India they learned that the local Hindu population considered the cow as sacred, so beef based products were not sold at there outlets.

Think global act local

• In India, to serve a large no. of vegetarians in the country, the co. started to sell vegetarian burgers called McAloo tikki, pizza McPuff etc.

• In all Islamic countries, as well as in Malaysia and Singapore, McDonalds offered ‘halal’ menu and the food was prepared according to the Islamic laws

• McDonalds thus used different names for the same meals in order to suit the market needs.

• In Taiwan, it served a toasted rice burger , a bun made of rice grain.

Adjusting price strategy

McDonalds adjusted its price according to the value of the currency of target country. When fixing the prices of its menu, it considered various factors like location and income distribution in the region. The prices was fixed keeping in mind its primary target group, the middle and upper class people. For the same reason, McDonalds started setting up stores first in the major metros of the countries into which it entered.

In some markets, the co. gave discounts on certain items from time to time, to promote a particular item or boost sales during lean periods.

Promotional strategies

McDonalds promotional activities worldwide were handled by DDB Needham and Leo Burnett and their partners in different countries. The promotions were planned in association with the local partners in different countries.

• “ I’m loving it,” adopted worldwide in 2003 as its first global advertising campaign.

• In India, it popularized “aap k zamane mein, baap ke zamane ke daam,” in Hindi, which emphasized the low prices.

• In UK it ran a promotion of ‘buy one get one free’ for Big Mac.

Demographic segmentation strategy

Uses demographic segmentation strategy with age as the parameter.

The main target segments are children, teenagers, young urban families.

Target market

children

youngsters

Target segment and positioning

• McDonalds was positioned as a family restaurant.• Extra care has been taken to make the restaurant

children-friendly.• McDonalds strategy is obviously to make eating- out

function the focus of these outings.• Focused on price penetration.• Aimed at 100% customer satisfaction for every customer

, on every visit i.e., service, quality food, accuracy in order taking, knowing needs.

• McDonalds not only highlighted the economic value but also the experiential aspects at their stores.

Involvement in local community

• In every country which McDonalds entered, it created employment opportunities for the local people, not only through direct recruitment into the company but also by giving business to local suppliers and entrepreneurs. Apart from having local owners, the company went in for local employees. Through most multinational company avoided hiring locals in the top management positions.

• The co. also undertook some corporate social responsibility initiatives in the different countries in which it operated .

• It also supported some social causes and gave financial aid. • It also tried to remain an environment friendly organization

in every possible way.

Introduction of Happy Meal

• In late 1970’s McDonalds was looking for new ways to attract the customers.

• Research indicated that children were strong influencers in the restaurant decision making process.

• This resulted in worlds first HAPPY MEAL – a combo meal for children featuring a free Walt Disney toy which attracted children across the globe.

Mission statement

McDonalds vision is to be the world’s quick serve restaurant experience. Being the best means providing outstanding quality, service, cleanliness and value, so that we make every customer in every restaurant smile.

Supply chain

Organizational structure

Restaurant manager

First assistant manager

Second assistant manager

Trainee manager

Shift running floor manager

Floor manager

Trainee floor manager

Training squad

crew member

Conclusion The last half of the twentieth century witnessed the

development of many fast food chains. None were as successful as McDonald’s at maximizing profit and minimizing cost. By keeping employee wages low and refraining from hiring full time workers, the company was able to save money on health care packages and employee benefits. In addition, McDonald’s was able to gain ground on its competitors in the 1970’s when a depression caused most other fast food chains to halt their growth. McDonald’s used its superior resources to continue to grow and expand. Now, the restaurant is perhaps the greatest symbol of contemporary American capitalism. When it comes to the environment, McDonald’s irresponsibility toward the effects of their business practices is highly evident.

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