NOV. McDonald s Case Assignment By Audrey Tan Class: MKTG19439 Instructor: Monika Paquette

Transcription

1 NOV 10 McDonald s Case Assignment By Audrey Tan Class: MKTG19439 Instructor: Monika Paquette

2 Current Marketing Situation: Strengths: McDonald s dominates burger fast food global value share. o With a global value share of 49% in It also claims 3% of specialist coffee shops sales with McCafé. (Euromonitor International, 2010) As of 2010, the company had 36,318 outlets in 117 countries. McDonald s serves 64 million customers per day on average up four million from (Euromonitor International, 2010) High Margins o Due in part to high margins at franchised outlets (82%); McDonald s is one of the most profitable fast food operators. At 40%, gross margins are twice the industry average. (Euromonitor International, 2010) Strategic Menu Diversity o McDonald s blends core menu items with an individual market preference. (i.e. potato burgers in India). (Euromonitor International, 2010) A double-lane drive-thru with a 30-second guarantee. (Smith, 2010) 2

3 Eco-friendly packaging. (Anonymous, 2011) Modernizing the Dining Experience with the new décor. (Euromonitor International, 2010) Weaknesses: Unsuccessful market campaigning, costing millions of dollars (USD). (Hume, 1997) o The Arch Deluxe sandwich launched with over US$100 million in marketing ads and did the same for McDLT a few years ago. Unsuccessfully campaigned, both are now missing from the menu. Second in China trailing behind Yum! Brands. (Euromonitor International, 2010) Constant Target due to the fact that their status is a US-owned brand, making it a magnet for anti-us and anti globalization sentiments. (Euromonitor International, 2010) Sued in 2001 after revealing that beef extract was being added to the vegetable oil used to cook the French fries. Opportunities McDonald's is also testing a low-fat McVeggie burger at outlets in Vancouver and Toronto 3

4 made by Yves Veggie Cuisine of Vancouver. (Socio-Cultural Forces) (McDonald's Restaurants of Canada Ltd., 2002) Recession has favored McDonald's. Shares in McDonald's have risen, reaching an all-time high in August. (Economic Forces) (Anonymous, Business: Whopper to go; Burger King, 2010) Value at All Price Tiers o Focusing on offering everyday value on all price tiers helped make McDonald s recession- resistant and has now positioned the company for long-term growth in any economic climate. (Economic Forces) (Euromonitor International, 2010) Speciality Beverages o High-margin frappes and smoothies take share from coffee shops and drive sales across all counter-parts but McDonald s believes they ve barely scratched the surface, in US beverages. (Competitive Forces) (Euromonitor International, 2010) Threats New York City's trans fat ban is changing the definition of fast food. (Socio-Cultural forces) (Intini, 2006) The big-screen film release of Super Size Me (Socio-Cultural) (Intini, 2006) 4

5 Local Competition o Local competitors are often better equipped to meet unique market preferences. Those in Belgium, Greece, the Philippines and Brazil, pose particularly strong threats to business. (Competitive Forces and Socio-Cultural Forces) (Euromonitor International, 2010) (Euromonitor International, 2010) 5

6 Market Segments: Target Market Children Adults Seniors Demographic - Women and men - Women and men - Ages Ages None to low income - Mid to High Income - May have a family and kids - Student or employed Geographic - World wide - World wide with over 100 with over 100 countries and countries and on 6 on 6 continents continents - Within all - Within all urban, urban, suburban and suburban and rural regions rural regions Psychographics - Gregarious - Semi- Compulsive - Busy lifestyle Behavioral - Ease of access - Health with multiple conscious locations - Social - Social purposes purposes - Women and men - Ages Mid to High Income - Employed or retired - World wide with over 100 countries and on 6 continents - Within all urban, suburban and rural regions - Compulsive - Caring - Regular or ex-user 6

7 Issue Analysis: 1. Faces a great deal of monopolistic competitors (i.e. Burger King, Wendy s, etc.) 2. Reckless attempts to woo adults with new products almost yearly, costing them hundreds of million dollars in marketing. 3. Capped chance of sales growth in other countries due to limited variety and unwillingness to adapt to unique market preferences. 4. Health awareness on a constant rise will affect sales Recommended Alternatives: I suggest that McDonald s concentrate more on the adult and the seniors market because that segment will be the most profitable due to higher income rather than the children. According to statistics, they are higher populated as they are both referred to the Baby Boomers generation and the Generation X & Y. The Baby Boomers have the highest population with the most disposable income considering the fact that they are almost all non-working retirees, therefore, targeting them would be the wisest choice to gain the most profit. Product: Menu innovation, creating a more diverse menu accordingly to the countries ethnic trends. Customer service telephone number should be on their wrappers and containers 7

8 Have the product look more presentable and portioned consistently instead of rushing to push the food out the window Modernizing the dining experience in all McDonald s locations for a more comfortable ambiance, setting their image to a more go-to spot rather than just another fast-food joint. Have peanut-free and/or gluten-free menu for those with special dietary needs. Place: Sell products within gas stations or install attachments to have a drive-thru window at gas stations selling their regular food items and baked goods. Airline food option, integrating some of their meals or snacks within the airlines. Price: Reduce prices for the healthier options menu (i.e. Salads, grilled chicken variety, etc.) Promotion: Have a clip on a popular television show or series Product placement within popular video games 8

9 Selection of the best alternatives: Product: McDonald s is well known, existing worldwide. Creating a more diverse menu for each largerevenue country, specifically scanning the country s socio-cultural forces and producing a wider variety accordingly would benefit the sales in a larger aspect. With that, adding a peanut-free as well as a gluten-free menu will also attract more people with special dietary needs worldwide. Lastly, McDonald s is known for its quick service, but with fast production often comes with consequences and here is where their product image comes into play. Since they are slowly targeting the older and more mature generation, those generations tend to base their experience through presentation rather than speed for a more memorable occurrence. As kids, the same Baby Boomers and X&Y-Generations most likely grew up with McDonald s as their fast food go-to place and if the franchise was to take more time into making their meals (i.e. consistency, neatly presented), these people will be brand loyal and will continue to come back. Place: The fact that McDonald s dominates the fast food share in the market, they can expand their franchises by branching off and creating a McDonald s-to-go section within the gas station store or even have a McDonald s drive through attached to the store. For the people with busy lifestyles, it creates a convenient and accessible place to purchase food while gassing up, satisfying their hunger pains. 9

10 Price: Although McDonald s prices are usually cheap especially with their value menu, a better price alternative for their healthier options menu (i.e. salads, grilled chicken, etc.) must be created. For the consumers coming into McDonald s for its cheap price, they wouldn t even take a glance at the healthier options menu due to the huge difference in prices. If McDonald s somehow finds a better place to market cheaper raw materials for the healthier options, it would help create a healthier economy and gain much more revenue in sales as well. Promotion: McDonald s is a very wealthy company and with the behavior trends constantly changing, people seem to lean more towards television shows/series as a pastime. Investing in some product placement ads within popular shows (i.e. X Factor, Grey s Anatomy, How I Met Your Mother, etc.) for specific market groups would help generate revenue. Lastly comes in video games. Its interactive and competitive aspects of a game whether it s for a computer or console explain why on average, each game is consumed for longer periods of time (30 hours per game), creating a great product placement within popular video games. (Michelle R. Nelson, 2004) 10

11 From Academic Database: Anonymous. (2010, September 4). Business: Whopper to go; Burger King. Retrieved November 1, 2011, from search.proquest.com.library.sheridanc.on.ca: bstract?accountid=3455 Anonymous. (2011, July 21). Maclean's. Retrieved November 2, 2011, from search.proquest.com.library.sheridanc.on.ca: bstract?accountid=3455 Euromonitor International. (2010, December 1). McDonald's Corp (Food). Retrieved November 2, 2011, from ntref=df098dba- 4c79-47a4-95ef- b5973e319808&q=mcdonalds+swot Intini, J. (2006, December 25). Healthier, whether you like it or not. Retrieved November 1, 2011, from search.proquest.com.library.sheridanc.on.ca/: bstract?accountid=3455 Hume, S. (1997, June 16). search.proquest.com.library.sheridanc.on.ca. Retrieved November 1, 2011, from Shine is off McDonald's Golden Arches as US promo fails [Campaign 55 price promotion]: bstract?accountid=3455 McDonald's Restaurants of Canada Ltd. (2002, April 29). McDonald's casting commuters. Retrieved November 1, 2011, from search.proquest.com.library.sheridanc.on.ca: bstract?accountid=3455 Michelle R. Nelson, H. K. (2004, September 1). Advertainment or Adcreep? Game Players Attitudes toward Advertising and Product Placements in Computer Games. Retrieved November 4, 2011, from Warc: ntref=7db893a1-7e18-4f44- b3bd- e6771d0f8685&q=subway+gta Smith, S. (2010, June 10). Still golden after all: McDonald's Restaurants of Canada [Ten marketers that mattered]. Retrieved November 4, 2011, from search.proquest.com.library.sheridanc.on.ca: nc.on.ca/docview/ ?accountid=