MARKETING PLAN OF MCDONALD`S
Presented To : Sir Mannan khan
Presented By : Brain Hackers
Group Members : Somia Iqbal
36
Irum Ajmal
15
Fahad Sattar
18
Ather Waqas
05
Hammad Lodhi
10
ACKNOWLEDGEMENT
We are grateful to our teacher MR.Mannan Khan for teaching us curriculum of marketing. His versatile knowledge in marketing field and unique teaching style has developed our knowledge and cleared many marketing concepts. We are all the most grateful to him for assigning this project, which has further
helped us in evaluating many interrelated dimensions of marketing.
We are also thankful to all other members Hammad Lodhi, Ather Waqas, Fahad, Irum Ajmal,and Somia Iqbal who have rendered their whole hearted support at all times for successful successful completion resource of information for our project project was internet internet and most of of this project. The basic resource the Information was gathered from McDonald’s site.
Introduction McDonald's is the largest chain of fast food restaurants in the world. On 15 May 1940 the first McDonald’s inaugurated in United States. It has now a total of more than 31,000 outlets worldwide. McDonald opened its doors in September 1998 at Lahore and now operating in seven major cities having network of 20 restaurants. Ronald McDonald is a clown character used as the primary mascot of the McDonald. The clown inhabits a fantasy world called McDonaldland. In recent years McDonaldland has been largely phased out, and Ronald is instead shown interacting with normal kids in their everyday lives. Many people work full-time making appearances in the Ronald McDonald costume, visiting children in hospitals. Since August 2003, McDonald has been officially recognized as the "Chief Happiness Officer" of the McDonald's Corporation.
“The
smile known around the world”
Ronald McDonald
Environmental analysis External environmental analysis •
Political and legal
McDonald's has been involved in a number of lawsuits and other legal cases, most of which involved trademark disputes. The company has threatened many food businesses with legal action unless they drop the Mc or Mac from their trading name. McDonald's has defended itself in several cases involving workers' rights. In 2001 the company was fined £12,400 by British magistrates for illegally employing and over-working child labor in one of its London restaurants. In 1999 McDonald’s was nominated by Business Ethics Magazine for its prestigious Business Ethics Award . However, the magazine decided not to grant them the award due to animal welfare issues and concerns. •
Economical
The Wall Street Journal reported in the July 24, 2009 that sales for McDonald’s fell below expectations. The decline is recent. According to the same article, April sales figures for McDonald's were 7 percent more in 2009 compared to 2.6 percent in June. Profits came in at $1.09 billion compared to $1.19 billion one year ago. Although that income number is still substantial but it is also a $10 billion drop in sales. McDonalds are the market leaders in fast food. The target markets are high. McDonalds have high incomes but low cost.
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Social
As a prominent example of the rapid globalization of the American fast food industry, McDonald's is often the target of criticism for its menu, its expansion, and its business practices. In response to public pressure, McDonald's has sought to include more healthy choices in its menu and has introduced a new slogan to its recruitment posters: "Not bad for a McJob". McDonald's announced on May 22, 2008 that in the U.S. and Canada they will be introducing cooking oil for its french fries that contains no fats. “McDonald's spends more on advertising than any other brand in the world, It runs more playgrounds than any other private entity in the world are the issues that McDonald's did not deal with in the report on Corporate Social Responsibility •
Technological
McDonald keeps on focus on improving the pieces of equipments that have the highest environmental and greatest energy-saving impact. McDonald’s has long-term relationship with all suppliers, built up over many years of shared growth and development. This enables the company to engage in discussion and dialogue to find solutions to common challenges. McDonald’s also asked its partners that the appliances to be supplied should be equal or better in efficiency that they hold cost at maximum five percent extra capital cost of their standard equipment. •
Environmental
“We believe the choice of refrigerant must be evaluated on an applicationby-application basis, considering all relevant factors such as environmental protection, health and safety, energy efficiency, life cycle cost and local codes”, By McDonalds
Issues against McDonalds are such as they annually produce over a million tons of packaging, used for just a few minutes before being discarded. What environmental effect does the production and disposal of all this? Are they responsible for litter on the streets, or is that the fault of the customer who drops it.
1) Internal environmental analysis •
Resources (Capital)
McDonald’s average franchise has yearly revenues of $2.2 million with an average margin of 6%-8%.
McDonald's revenues by geographic segment in 2005 •
Europe ... $7,072 (35% of total company revenues) United States ... $6,955 (34%) Australia/Asia-Pacific ... $2,815 (14%) Latin America ... $1,327 (6%) Canada ... $948 (5%) Other ... $1,343 (6%)
Resources (people)
"McDonald's approach” as McDonald's has thousands of restaurants in all over the world, and each one is essentially the same. If employees in one location find a way to make their processes more efficient that can save even a small amount of money, the corporate savings is significant when multiplied by all the sites worldwide.
That is the beauty of common processes as Blakeslee explains."When you consolidate everything, you begin to leverage resources".
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Organizational structure and culture
Cultural Differences Offers managers solid diversity training, including workshop designed to help managers that they have full advantage of what everybody brings & also want to ensure that people at all levels of McDonald’s bring their energy and creativity into the work environment.
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Product Development
McDonald is developing its products by taking customer in confidence through
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Healthier Foods
Food Quality and Nutrition
Larger Menus
Kids
Training
Welcome Meetings are the first stage of training that also set out the company's standards. The majority of training is floor based, or "on-the-job" training or classroom-based training sessions. McDonald’s also has its own “HAMBURGER UNIVERSITY ”. McDonald’s offers its mangers the solid diversity training program. Training competencies are also extend to McDonald’s QUALITY MANGEMNT programs.
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System and processes
Employees are the key ingredient in any organization that’s play a vital role each day in shaping our over all image through their performance. By realizing our people strength we provide the best employment experience to our employees in order to achieve the goal of giving the world’s best quickservice restaurant experience to our valued customers by using latest technology.
Customer Segmentation and Market Analysis •
CUSTOMER SEGMENTATION
There is no single way to segment a market. Different segmentation variables have to be tried, to find the variables that most accurately reflect the market’s structure (who will/will not buy). The segmentation of McDonald outlets and its products is base on demographic segmentation, geographic segmentation, and psychographic. •
Demographic Segmentation: “It is based on age, sex, family size, marital status,
Income, occupation, education, religion, race, Nationality….” The marketers have done segmentation on demographic basis. Most of the deals offer in McDonald are according to normal family size of four or five, it is economically reasonable for upper middle class and also for upper class families. Besides these deals it also offers different meals fit for youngsters, students, for small parties and celebrations… •
Geographic segmentation “State or regional, population density (rural-
suburbanUrban), community size (under 5k, 5-10k, 1020k....per sq Km), climate, distance from a point.” There are at least 31,000 McDonald can be found in 120 countries and territories around the world serving nearly 54 million customers each day. In Pakistan, on geographic bases marketers have targeted big cities. As in Lahore, Karachi, Islamabad, Pindi, Multan etc. The taste and quality is according to the people of region in which it is offered. They have more then one outlet in single city, like in Lahore. People of different areas in a city can get the same quality and price from different sales outlets.
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Psychographic segmentation “Segmentation on the basis of the market’s Knowledge of, attitude to, or opinion of a product.”
The offerings are according to the lifestyle and social classes of people. Like in Lahore, there is trend of eating out, so it is best match for their style. There is wide band of their loyal customers.
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MARKET ANALYSIS “Ask an experienced marketer what will determine the success or failure of a promotion and they’ll often quote an age old industry rule: 70% audience, 20 % offer, 10% creativity. Or, to express it another way, by correctly analysing, and segmenting your customer database to ensure that the right offer reaches the right people, you have a 90% chance of success before you even start work on the creative.”
Since 2003 McDonald is practicing two types of strategies to maintain with rapid change comes in consumer preference as well as coping with changes in demographic and spending styles. In United States they expand their business introducing product variety and renovation in the already opened restaurant instead of opening new restaurant. Whereas in Asia they expand their business by exploring new markets. They offer the host country’s culture rather imposing their home country’s culture there, this is the main business strategy that makes it one of the most successful international fast food chains. Their market in Asia as well as in Pakistan is growing rapidly. In Pakistan they are opening their outlets in more cities, due to increase in demands.
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Competitor Analysis
The emergence of food chain has pressured industry participants to continually add features and cut prices. Although McDonald’s is a market leader in its food and beverages industry but it is now facing tough competition from the new entrants. It has to continuously update the business strategies to compete with young new comers.
Following are the major McDonald’s hamburger’s Competitors,
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KFC
In the late 1960s, KFC was stabilized in the US and the owners turned their focus to international markets. By 1971, KFC had established 2,450 franchises and 600 company-owned restaurants in48 countries. PepsiCo acquired KFC in 1986 along with Pizza Hut and Taco Bell shortly after. Today KFC is severing about 8 million customers globally. They have more than 11,000 restaurants in more than 80 countries around the world. KFC is biggest competitor of McDonald in chain of fast food.
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Pizza Hut
PepsiCo decided to spin off two restaurants into an independent, publicly held company called Tricon Global Restaurants, Inc. Then in 2002 Tricon acquired Long John Silver and A&W All-American Food Restaurants where they, shortly after, changed their Tricon name to Yum! Brands, Inc. Although as compared to McDonald’s it has more number of franchised restaurants but revenues are low due to McDonald’s big size.
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YUM!brands
YUM!brands Includes KFC, Taco Bell, Pizza Hut, and Long John Silver’s American Food Restaurants. China market is dominated by YUM! brands. It serves as a biggest competitor while entering into the china market. While McDonald’s run its business under one flag. YUM! Has splits its resources into variety of brands generating high revenue. •
SWOT Analysis
SWOT analysis is the main ingredient of management as well as marketing functional analysis. It is process of overall evaluation of company’s strengths (S), weakness (S) and prevailing opportunities (O) and threats (T) in the company’s competitive environment. Now we will conduct McDonald’s SWOT analysis in Pakistan.
STRENGTHS By strength we mean internal potential of company. While evaluating strengths of McDonald’s we will deal with company’s micro environment. McDonald’s micro environment is consisting of the following elements.
1-
Image
2-
Full filling Customer’s Expectation
3-
Innovation
4-
Human Resource Satisfaction
IMAGE MCDONALD’S IS THE FASTEST GROWING FOOD CHAIN OF THE WORLD. IT IS A NUMBER BRAND OF THE HALF OF THE WORLD. IT HAS CREATED A POSITIVE STRONG IMAGE IN ITS CUSTOMER MINDS. CUSTOMERS ARE AMUSED BY THEIR CLEANINGS, HIGH SPEED SERVICE DELIVERY AND CUSTOMER FRIENDLY ATTITUDE.
FULL FILLING CUSTOMER’S EXPECTATION Another greatest strength of McDonald’s is its product value. To fulfill customers expectation when they walk in their franchise becomes their strongest marketing element in Pakistan.
INNOVATION McDonald’s keeps on bringing innovation with quality in its products. People get used to of experiencing new taste and variety
HUMAN RESOURCE SATISFACTION They give importance to the employees’ satisfaction. They believe that to build strong employee-customer relationship they have to keep their employee satisfied and happy with different incentives other than pay roll.
WEAKNESS
By weakness we mean prevailing internal system weakness of the company and negative factors in environment that affect badly the company’s core business.
a. Over exposure b. Customer trends c. External Environment
OVER EXPOSURE People of Pakistan always want something new or that is different from others. But in McDonald’s scenario, you can find its outlets everywhere in in big cities of Pakistan. This over exposure may become boring for certain class of people in Pakistan. This over exposure induce customer to move on to something new which is not as crowdie as McDonald’s. McDonald’s has lost the element of uniqueness by opening so much franchise.
CUSTOMER TRENDS Customer trends changes rapidly. when customer sees no further advancement or innovation in company’s product they move on to some other brand.
EXTERNAL ENVIRONMENT Threats and opportunities prevail in any company’s external environment. Following diagram shows that company’s external environment
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Technology; technology works as a benchmark for organization success. Politics: politics plays vital role in effecting organization repute. Law: every organization need to work under state regulation, no one can work beyond the legal boundaries of business limited by state legal authority
THREATS With so much franchise dealers a threat of bond collapse exist. Another threat would be lack of growth opportunities available. As the market is very saturated so it is hard to grow more with the same product line. Another concern can be a treat which is of health conscious people who thinks McDonald’s products make them fatty.
OPPORTUNITIES: There are a lot of unexplored market niche available in Pakistan. All they need to do proper marketing of their product. Earlier they used kids as their brand ambassadors. They should expand their target market by targeting health conscious adults, men and women.
Marketing objectives Some of the marketing objectives are as follows: •
To make reasonable profit.
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•
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McDonald’s main objective is to provide quality-oriented food and high customer satisfaction. To make at least 20% profit every year and keep on improving the sales and percentage of profit in preceding0 years. McDonalds has a wide distribution network retailer and Franchise system through out many countries.
General Marketing Strategy
TARGET MARKET Demographic Factor : •
Age – from 18-50 Years
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Social Class – Middle, Upper middle & Upper Class.
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Income – Rs. 10,000/- and above
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Gender – Male and Female
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Geographic factor :
Country – Pakistan
City – Karachi, Lahore, Islamabad etc.
Population – Over 170 million
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Psychological factor :
Occupation – Executives, Students, Social workers.
Profession--- Cooks, Hotel Managers, Delivery Services.
MARKETING STRATEGY
The marketing mix is the combination of price, product, promotion and place that successfully markets a product to focus of McDonalds.
1. Product: Price must match the customers' idea of what the product is worth. 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.
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 cannibalize its sales. Some of McDonald’s options are growing in popularity while arguably the Big Mac is at the ‘maturity’ stage.
2. Price: 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. This means also the profit margin has been reduced without increasing the sales.But the Price of McDonalds is high enough that a person feels free to purchase the quality by paying extra as goodwill.
3. Promotions:
The promotions aspect of the marketing mix covers all types of marketing communications. One of the methods employed by McDonalds is advertising accompanied by the sales promotion and also by delivering the brochures to the consumers who came for purchase.
PROMOTIONAL OBJECTIVES
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To use push strategy.
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To enhance the brand name and proceeds sales.
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To develop a positive image of company.
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To design a promotional campaign in such effective manner so that consumer can switch over to use our brand from their present brand.
PROMOTIONAL STRATEGY:
Promotional Device: Magazines:
Websites. The Dawn, The News & Sunday Magazines.
Out Door Media:
Scotch print, point of purchase and banners for
introductory phase, Bill boards etc.
PROMOTIONAL INCENTIVES:
Consumer Distributor
Deals of minimum costs More sales commission will be given to franchise.
DOOR-TO-DOOR SELLING: It is compulsory for all the franchises of McDonalds that they must give the free home delivery of their product with minimum time. That’s Why McDonald and his some competitors have now large competition among services along with the primary objective of fast food selling.
Product Strategy ANALYZING CURRENT BUSINESS PRODUCT PORTFOLIO
BCG MATRIX: Growth share matrix which is a planning method used for portfolio and company’s strategic business evaluation. Strategic business units are classified as stars, cash cows, question marks or dogs. McDonald’s as a single business unit was a star that has high growth rate along with high market share, but now it has turned into cash cows. Cash cows is that strategic business unit in which has low growth rate and but it is enjoying high business share or product. McDonald’s Zinger Burger is an established fast food unit that now needs less investment to garb its market share as compared to other emerging business units.
RELATIVE SHARE
High
?
t k r a m
e
Low
h g i H
f
o ht w o r G
w o L
CASH COW
McDonald’s Zinger Burger
Dog
Product Concept and History Zinger burger was first introduced in 16th century in Latin America. Later on it established as a common food in USA. And now as every country has its unique food like Pakistan has “Roti, pulse, Rice etc.” same as USA has zinger burger as their common food and McDonalds introduced it in 1960s and now cashing it in different parts of world.
Features, Functions, & Benefits The immense growth of McDonald’s makes it loose the quality of R&D and quality maintenance department. Now they should develop a product quality research and development to grab more market share. Some benefits of this burger are that
It has perfect calories that a normal person should get in a day. I.e. 1600 calories.
It is enough large to fulfill the need of a person in hunger with vegetables n chicken.
The McDonald’s core competencies which make it stand ahead among its competitors in industry:-
McDonald’s Play Area: McDonald’s introduced the fun play area for kids, till now no competitor operate a play area up to its standards
Product Variety: McDonald’s keeps on changing a bringing innovation in to burger, salads, desserts, drinks and sandwiches variety.
Fastest Delivery: McDonald’s run the fastest delivery system worldwide
Happy Meals for Children: A toy with every happy meal is their unique features and attracts the
children the most.
Target Market(s): McDonald's target market is every segment of the demography. The segments of the demography are; family life-cycles, gender, age, Nationality, Income, Generation, Race etc. McDonald's has based its segmentation on demographic variables (this is why demographic forces are so important to monitor). Most of the segments McDonald's targets are broken-down into age and lifestyle stage; this is probably because they are easily identifiable and consumer needs and wants vary closely with demographic variables. McDonald's primary target markets are seniors, adults and teenagers, but the most heavily targeted segment is children. Some of the sub-groups they market to are:
Children
Parents of Small Children
Teens Business People (Free WiFi in some restaurants)
Estimated annual Sales: Estimated profitability: Market Growth Rate: McDonald's Corporation reported a 23% increase in profit for the fourth quarter, on strong global comparable sales growth driven by higher demand.
McDonald's net income for the quarter was $1.22 billion, up 23% from $0.99 billion in the same quarter last year.
COMPETITION Although McDonald's is the clear leader of the fast food industry in terms of revenues generated and restaurants established, it faces competition from other fast food chains, which are introducing new products themselves. Major direct competitors in the (hamburger-based) fast food industry include: Burger King Holdings is the second largest hamburger fast food chain. Although more of Burger King’s restaurants are franchised than McDonald’s restaurants, Burger King Franchise revenues trail behind that of its competitor, mainly due to the McDonald’s size advantage. Wendy's is the third largest hamburger fast food chain. It has a lower operating margin that McDonald’s, so it is likely to be more negatively impacted during a recession. Yum! Brands run Kentucky Fried Chicken, Taco Bell, Pizza Hut, Long John Silver’s, and A&W All-American Food Restaurants. Currently, Yum! Brands are dominating the China market, posing a challenge to McDonald's attempts
to enter the market. While McDonald’s Corporation focuses on its flagship brand, Yum! splits its resources among a wide variety of restaurants.
Geographical Scope With over 32,000 locations in over 110 countries, McDonald’s (NYSE: MCD) is the world's largest fast food restaurant chain. McDonald's operates its own restaurants and franchises its brand to local businesspeople (about 70% of the world's McDonald's restaurants are franchised. The company experienced a dramatic turnaround in 2003, driven by a two-pronged strategy. In the U.S., McDonald's focused on increasing sales at existing locations by renovating stores, expanding menu options and extending store hours. Internationally, McDonald's expanded aggressively, opting to franchise rather than operate its new locations, providing new income with little overhead. Both strategies have paid dividends - despite its size, sales have grown by a third since 2003. Domestically, McDonald's continues to perform well despite a pullback in consumer spending and is even benefiting as consumers trade down from more expensive eating options. At the same time, international operations are driving profit growth. A growing global middle class, particularly in emerging markets like China, India, and Latin America, represents a massive opportunity for McDonald's. McDonald's aggressive efforts to expand its global presence - most notably at the 2008 Beijing Summer Olympics - have produced strong comparable sales and profit growth.
McDonald's International Revenues
Geographic Region
US
Percent of Total Revenues
35%[8]
France, Germany, UK
21%[9]
Rest of Europe
14%[10]
Australia, China, Japan
8%[11]
Rest of Asia, the Middle East, Africa 8%[12
Consumer buying process: McDonald’s creates a frame work in peoples mind that McDonald’s is a place to get speedy and quality food to suffice the instant hunger. They scanned through their preferences and select McDonald’s as a medium to suffice their need
They have three options to get the desired product
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Go in the nearby restaurant and order your meal eat there! Take away your meal home by drive through option Call and get your meal home delivered, with the fastest delivery system ever offered.
Competitive Products
There are many products as a competitor of McDonald’s zinger burger, just like KFC also a well established brand providing a healthy burger with a competitive price.
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Direct Competitors
Direct competitors of McDonalds are KFC, burger king, yum burgers etc. And the competitors of McDonald’s zinger burger are zinger burger of kfc, big daddy of kfc etc.
Brand Strategy Brand: A name, term, sign, symbol, or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from those competitors.
What is brand? It’s who you are...and what you stand for.
Importance:
A strong brand is a heart and soul of an organization. we have a very strong example here: If we take two dishes of McDonalds and give it to a same person to eat. And one is in McDonalds packing and other is simple packing. After eating both dishes he will feel that McDonalds dish was better than the other in taste. It is just due to brand name.
Logo of McDonalds:
It creates a clear identity in the consumer mind. It also determines a set of associations and feelings.
Brand name selection: McDonalds brand name is short and simple, easy to spell, no negative imagery which is important for making good impact.
Branding Strategy: McDonalds use the line extension and brand extension strategies. As we have example of line extension, when McDonalds introduces a new dish or deal for their customers. And example of brand extension, when McDonalds introduces something new, such as ice-cream.
Pricing Price is the only one elements in marketing mix that produce revenue, all other elements represent cost. According to expert ‘’1% price improvements generates a 12.5% profit improvements”.
McDonald concentrates factors, when setting price: McDonald concentrate on value based pricing, they set the prices of their deals with buyer perceptions, they create beat image of their brand then set prices. they also using the value adding prices, by attaching a differentiate features and services. There are two main types of setting price.
1-skimming 2-Penetration McDonalds use the skimming strategy, because it produces the good quality that support high prices.
Integrated Marketing Communication plan 1-Advertising Activity: McDonalds advertises through print media in Pakistan and also use mass media in some other countries and also pay high cost for mass media advertising. McDonald's spend over two billion d McDonald's argue that their
