Marketing review of McDonalds
|✅ Paper Type: Free Essay||✅ Subject: Marketing|
|✅ Wordcount: 2290 words||✅ Published: 18th Apr 2017|
MC DONALDS is one of the leading food chain brands touching the lives of people every day. As a brand it started in California during the 1940s as a restaurant by two brothers Richard and Maurice McDonald, mainly it started as a popular teen hangout place. To feed the teens age people the brothers reduced the menu to only hamburgers, and then expanded their business to four restaurants by 1953.For further expansion after their success in 1955, the entrepreneur Ray Kroc bought the right to franchise Mc Donald’s as a globalized brand. After that he renamed it to Mc Donald Corporation in 1960, Kroc focused mainly on family meals for children, spending huge amounts heavily on television advertising. Today the McDonald family has exceeded to about 30,000 restaurants globally and serves over 50million people in more than 100 countries each day. Between 1969 and 2005 Mc Donald strategies were displayed on the business pages of the NEW YORK TIMES displaying repeatedly the American success story in the United States important news paper. However, the brand also faced much criticism in the news for the labor, environmental issues and its expanding empire. The critics mainly voiced concerns and anxieties about the problems of the youth labor, its impact on the community values and the healthy lifestyles of people.
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Marketing strategy is essential for the success of a product in a target market as argued by Philip Kottler (1988). Nowadays the completion in market has increased drastically. For company in global market to succeed should focus on the three basic core elements that are mission, vision and values. These help and are responsible for the successful growth and stable profit earning of the company. For a global corporationsike McDonald’s, establishing the three pillars takes more effort as diversity and culture be taken into consideration and respect.
Mission: to serve around the globe and to promote diversification of culture working in harmonized manner without any discrimination.
Vision: in order to be the customer’s priority choice The McDonald’s system leverages the unique talents, strengths, and assets of our diversity around the globe
McDonald’s is one of the companies that is nationally recognized for its diversity and got ample of awards in USA only including
PUSH-Excel Corporate Partner Award,
Corporate Achievement and Image Award,
Nullities Corporate Award, Corporate Vision Award,
Circle of Inclusion Award.
â€¢ It is a global brand having 31,000 restaurants in 120 countries which is famous both internationally and nationally. We are the biggest market with 14,000 restaurants.
â€¢ The cost reduction technique is use of economy of sale. It expands and takes risks with economical growth.
â€¢ ‘The Ronald McDonald House’ is one of the best active charity homes that are very famous.
â€¢ Most of revenues earned are by providing franchisee of the brand to various restaurants and by increasing fast food sales.
â€¢ It is a social responsible company that is more concern with society and environment.
â€¢ It blends and adjusts according to the global culture of the place where it is located.
â€¢ the advertisements are only focused on children
â€¢ Training amount always keeps increasing because of more number of people being employed for short time.
â€¢ Price competition with the competitors resulting in low revenue.
â€¢ Lack of innovative products.
â€¢ The product range can be increased by use of new innovative ideas.
â€¢ For other promotions it can use the green energy and fulfill the environmental factor along with social factor.
â€¢ Some of its location can be upgraded to increase customer numbers and the profit figures.
â€¢ Slow and gradual expansion can only help to increase the profit margin
â€¢ As all the prices are standard so fluctuation in monetary prices results in loss.
â€¢ As competition is increasing all people are reducing cost and increasing revenues.
â€¢ Market shares were decreased as money spent on advertisements was increased.
â€¢ The advertising marketing strategy only focuses on kids which are highly objectionable.
â€¢ Emergence of major fast food competitor’s burger king, Wendy’s, Taco Bell, KFC.
“Marketing Mix the set of controllable marketing variables that the company blends to produce the response it wants in the target market.” – Kotler et al
The four P’s of market are highly important and are responsible for the market development and brand recognition. The four P’s of marketing mix can be described as below:
Product has to vary according to the taste as in food and beverage industry the quality and taste of food matters a lot. It should be according to overall customer needs. All products have got their own life cycle from launch to growth phase and then to the decline phase but it should try to stay maximum in the growth zone to increase capital.
Price should be worth the value paying for the product and the most important it should be economical and according to customers need. Customer’s value for money should be kept in mind than only customer will contribute to increase your company sales.
Promotion is both ‘above-the-line’ and ‘below-the-line’. ‘Above’ is advertisement done such as TV and press adverts. ‘Below’ are other promotions such as special offers, value added and competitions. The skill lies in using a number of ways to build a campaign.
Place refers to where the product is sold and to how it reaches there. This is called the supply chain .Mc Donald’s have around 30,000 stores worldwide operating all together by the way of company owned or franchise owned.
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 Competitors present globally
1. Burger King: is second to McDonald’s in competition of hamburger fast food chain. Although as compared to McDonald’s it has more number of franchised restaurants but revenues are low due to McDonald’s big size.
2. Wendy’s: is on third number of fast food chain competition across the world. It is severely affected by recession; it has quite small operation margins as compare to McDonald’s.
3. 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.
Strategic business units are classified as stars, cash cows, question marks or dogs. According to analysis initially when McDonald’s as a 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 is an established strategic unit that now needs less investment to garb its market share as compared to other emerging business units. In the BCG matrix Stars that depicts old traditional products are now enjoying a high market share without having too many changes as earlier. They have reached at sustainable market position, whereas McDonald’s continues with increasing more innovative food product that enjoys a great market share as well as shows a high growth rate. But there are a very few products which can be placed in dogs. With the passage of time strategic business units change their position. They complete their life cycle. A product may starts as a question marks then it succeeded and becomes stars. Then as time passes they turned into cash cows and when they reach to their maturity they ends up as dogs.
Growth of market
PROBLEMS OF MC DONALDS
1) CUSTOMERS MINDSET
Now in this present time, People are more concerned for their health they wish to be more fit and fine. Obviously, the reason for this increased awareness because all types of information are available and all reports and research have to link fast foods with the growing fatness. New to encourage people more about their health various diet programs have been introduced. This is a major problem as initially it gained reputation for supplying greasy unhealthy food.
2) HUMAN RESOURCE PROBLEM
The employee turnover rate is very high to manage them all together is a very difficult task as there is vast variety of culture and tradition. So lot of attention, focus and consideration is required to be given loyalty and hairworm is promoted to be the key success elements. Some persons working here may not work in harmony and create problem but overall company is able to blend all employers into global company culture.
3) LACK OF NEW PRODUCT LINE
The third problem that mc Donald’s faces is the lack of new product variety,mcdonalds from the last few years is just striving on its old products the customers now are getting bored with the same all food stuff ,where as the other brands are coming out with different new innovative products, due to this reason also mc Donald’s is getting less customer attraction .
A perfect example of revitalising a product in decline phase
One of the favorite food item of McDonalds is french fries. But afterreachingits maximum sales it enterd its decline phase.just to revatilize it a new product variant named shake fries with the entry of this new product the sales figure increased.
INTRODUCTION OF INTEGRATED MARKETING COMMUNICATION
However, despite of the established brand mc Donald’s management has to redefine its image globally and contrary to its past achievements; the marketing strategy of company is implementation the process of Integrated marketing Communication (IMC). The major area focused is advertising and campaigns for promotion of product and increase sales figure. Integrated Marketing Campaign is primary concerned on promotion of low calorie food as now people are fitness freak and are much cautious about fat and obesity. The company while trying something new thought of focusing on children food that gave it a bit bad .the company launched soon-to-be called’ McCoy’s Meals that was new and different from traditional meals and now it focused on health and nutition.In addition, the introduction of Integrated Marketing Communication implements a new horizon of customer satisfaction and integration along with new advertising methods.
MANAGING HUMAN RESOURCE
McDonald’s provides many opportunities equally to all employers. McDonald assures that there is no sex, age or gender discrimination while selection, training or promotion but all are treated enough on fair basis. All employees are encouraged for hard work on basis of their inner ability to work and how they perform.
The working environment and corporate culture maintained by McDonald’s is very legal i.e. free from all discrimination and harassments. Team work is the key to success for this company. All workers of the company are given rights to use the company handbook in case if they feel they are not been treated fairly do they are not satisfied with their services.
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New Product Line
McDonald’s have to innovate with new product line. It is suggested that McDonald’s should innovate some diversified products so as to again capture the market. Now for mc Donald’s to go back to its growth stage should rely on the test of marketing of its new product line. By this approach it will help McDonald’s new product to attain the star in future market.
They should identify the future target markets be careful and clear in initiating any advertisement campaign so they can affect the target customer’s minds strongly. They should target the old health conscious people instead of targeting kids and teenagers.
Total Quality Controls
The immense growth of McDonald’s has made the quality of their R &D to decline. Now they should develop tight quality control procedures so as to again increase their quality in the product so as to develop a huge market share.
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