The Current Positioning of McDonalds and How It Can Be Maintained in the Future - Case Study Example

Introduction The report focuses on the current positioning of McDonalds and how it can be maintained in the future. The report discusses the environment of the industry followed by the SOSTAC M’s framework. This discusses the situational analysis, objectives, strategies, tactics, action plan and the control of the tactics. The study shows that McDonalds been able to maintain its position as the number one fast-food brand but it will not be able to do so for long. This is because the customers are becoming more health conscious and are more demanding. Keeping this in mind, the firm has to make major alterations in its positioning and promote more health foods so that it can increase its market share in the different segments (Schmeltzer 2004). This can be done by tactful use of communication strategies. However, the firm has to keep a tab on the communication process to make sure that they are making a positive effect. Lastly there is the conclusion of the report is given. Environment The fast food industry has become very competitive with innumerable chains of fast food entering the industry. These chains are now spreading globally thus making the competition stiffer. Managing such chains has become tougher as culture, religion, tastes and preferences have to be considered. The industry uses innovative marketing techniques to attract customers and competitive in the environment (Leonhardt). McDonalds is world’s leading fast-food chain with more than 30,000 restaurants across the world. It is present in110 countries and serves 46 million people everyday. Over the years the firm has grown manifolds and has been able to maintain its position over generations. It is still one of the top fast-food brands and amid tough competition from giants like KFC, Burger King, Pizza Hut etc; it has been able to maintain its name and promise (McDonalds, 2008). Situational analysis Though there is tough competition in the market, the positioning of the brand has been such that it has been able to stay at the top. Firstly, even though the market is huge, According to Dev (2005), the firm has been able to cater to the different segments of the market by molding products and deals by understanding the changing trends and habits of its customers across the globe and this has been the main strength of McDonalds. Also, at the same time it is able to maintain a wide menu choice (Schmeltzer 2004). Thus customers know that when they enter the restaurant, irrespective of the country they are in, they will be able to get something of their preference (Dev 2005). Another strength has also been able to make strategic alliances with key suppliers which have enabled them to keep prices low and has been achieved mainly due to the use of latest technology. As Doyle (2000) claims this also helps a lot in the competitive market as the prices are very competitive and the competition has a tough time keeping up with them. McDonalds has also positioned itself as a fast and quick service restaurant however, lately due to the realization that fast food is fattening and is producing fat generations, there have been problems in the image of the brand .McDonalds has to be more health conscious and introduce healthier products (Gelder). McDonalds has been positioned as an ‘experience’ and not just a fast food chain. When the customers come in they are greeted by cheerful employees who are more than eager to help them. As Doyle (2000) claims, then the whole environment along with the color scheming of red, yellow and white has been made cheerful. The children who come in have a play area and special gifts to keep them attracted (Dev 2005). Customers may be in any country but when they enter a McDonald’s restaurant, they have the same experience (Gelder) and this has been another strength for the brand that it incorporates taste preferences and is also able to maintain consistency. This has been achieved due to the relationship building with the franchisees. McDonalds is the only fast-food chain in the world which has so many outlets spread across the world (Schmeltzer 2004). As Gelder claims, this is something the competition may have difficultly in achieving. Thus McDonalds has positioned itself as reasonably priced, easily available brand. It is present in nearly every country in the world with products molded to suit the respective markets. (Leonhardt). The environment of the restaurants adds to the whole experience coupled with exceptional service and cleanliness which together makes the positioning of the brand strong (Grier, S et, al. 2007). However the competitive position of the brand is being threatened due to the fact that competition is becoming more health conscious and McDonalds is being threatened legally as it faces many legal charges for causing obesity. This is greatly affecting the competitive position of McDonalds and would be devastating unless something is done about it quickly. Objectives McDonalds to date has been the top fast-food brand and the objective is to maintain its position at this slot. However, with the changing environment and the increasing health consciousness of the people, this doesn’t seem to be true in the future (Leonhardt). Till now the basis of the competitive differential of McDonalds has been the ability to cater to a market niche in such a way that the competition is not able to come close to them. McDonalds has always focused on the children’s market and has used promotional tools which have kept the children hooked to the brand and the experience as a whole (McDonalds, 2008). For the children, McDonalds has designed special promotions and meals which attract the children to the restaurants (Schmeltzer 2004). This is something the competition like Burger king and KFC have not been able to achieve to such an extent. McDonald’s targets children especially from age 3-7 years by offering them Happy Meal with different options in the happy meal also like cheese burger and nuggets and it come with a packet of fries and a drink of the child’s choice. The Happy Meal’s box is shaped like a house and has attractively colored designs on them of kids that are happy (McDonalds, 2008). There is also a premium with the meal which is a toy of a very good quality. To make children come again and again, McDonalds has a weekly toy and sometimes the toys have a theme so they come again for it. The competition also has a premium toy but none have been able to match that of McDonalds (Gelder).The restaurants have big play areas for the children also which most of the competition cannot compete with. Also, the music of the restaurant is pleasant and cheerful which sets the mood of the children and they enjoy coming to the restaurants. They cajole their parents to go and therefore McDonalds not only gets the children as their customers but also the parents (Dev 2005). McDonalds also offers summer activities, there are birthday party areas in the restaurants, mascots that attract the kids and attractive posters and labels that make it more interesting for the children to come to the restaurant (McDonalds, 2008). The birthday party arrangements are very well organized like there are magicians, games, face painting, goodie bags etc. the managers of the restaurant take special interest in the arrangements and conducting of the party thus adding to the whole experience(Grier, S et, al. 2007). The advertisements of McDonalds usually feature children and there are special advertisements for Happy Meals. There are also billboards with attractive slogans and colors that attract the children. “I’m lovin it” is a tag line that children adore and are attracted to it (McDonalds, 2008). McDonalds has been targeting children from the very beginning and the result is that generations have grown with the brand. From the Happy Meal they gradually shift towards other products trying out new things. Today the children 20 years ago have grown up and they are so addicted to the brand and the whole experience over the years that they still like the brand (Gelder). The promotional tools and promotional strategy used has been exceptional and it is something that the competition cannot copy. Thus this strategy has worked as a competitive differential for the brand and continues to do so (Keegan, 2004, pp. 140-164). Strategy To achieve the objective of retaining the top position in the fast-food industry in the long run, McDonalds has to alter its positioning and reassess the changing needs of the target market. The firm has to be more health conscious and deal with every segment in a different way. The firm has to target increasing the market share in every sector by using promotional tools to keep their position intact. The segmentation of the market has been done after a lot of research and thoughtfulness keeping in mind the needs and requirements of the consumers. There are many types of segmentations that McDonalds has. Geographical/culture segmentation With its global expansions, McDonalds has to keep in mind the tastes and needs of its global customers. According to Dev (2005), every country has their own culture and food preferences and when culture and tastes mingle they have to change their products according to the products that the customers in that region like (Grier, S et, al. 2007).For instance in India, beef is prohibited because of their religion thus there are vegetarian burgers and chicken burgers called “Maharaja Mac” available there (McDonalds, 2008). There is abundance of Muslim countries in Asia and Muslims are prohibited ham due to religious reasons thus in the Muslim countries hamburgers are not available. In some countries spicy food is preferred, thus there are products that are spicy to cater to the tastes and preferences of the consumers. Thus keeping the geographical region in mind and at the same time the culture of the specific region the products are modified for the customers (McDonalds, 2008).McDonalds should enter new markets with the same strategy. At the same time the brand has to localize more like celebrate local special days, introduce more local tastes and change the menu more often so that the customers get attracted. In the Asian market, the customers have not become as health conscious as in the west, thus McDonalds should test market healthier options in the west first and later introduce them in the east (Leonhardt). Age McDonalds also segments its markets based on the age of its customers this is because every age segment has its own tastes and preferences. For example they have The Happy Meal which caters specifically to the age bracket between 3 and 7 year olds. McDonalds also targets teenagers and has designed its meals for their liking (McDonalds, 2008). It is also modifying some of its restaurants to include sophisticated music systems and internet facilities in restaurants for the target market. The firm should focus on other age groups like the teens more and less on the younger age bracket. McDonalds also targets older people with the maximum target market of about 40 years or so (Meleo 2008). Gender McDonalds has also segmented its market according to gender. Today, women have become more conscious of their health and consider fast-food as unhealthy. To cater to this segment, McDonalds has introduced salad bars in a few outlets and now has started introducing it in other restaurants also (Leonard). This is a very critical segment as they are quite health conscious and could influence other segments also. McDonalds should focus on this segment more by introducing entirely new health products which would change the image of the brand. Income segmentation McDonalds tactfully markets its products to the middle class as its core target market. The focus is on those who can afford to buy the meals which have been priced reasonably and within their budgets (McDonalds, 2008). Segments based on Lifestyles In today’s fast-paced world where people take 2 jobs, they do not have the time or inclination to cook at home. McDonalds also targets this segment by offering them fast service and reasonable prices. They also target school going children who like to ‘hang out’ in restaurants (McDonalds, 2008). This is also a very important segment and steadily there should be meals that are healthier for this age slot. Segmentation based on spending behaviors Those who are price conscious are target as McDonalds offers special deals and upsized meals etc. also, those who shop a lot are targeted as they like to stop for a while and eat. Also, there are some who appreciate the environment of the restaurant and they are targeted as McDonalds provides a happy, cheerful and clean environment (McDonalds, 2008). For this segment, health is not a priority and thus focus should be more on price and the environment rather than healthier meals. The tactics plan The marketing communication mix of McDonalds has been working exceptionally for the company. McDonalds has used a combination of advertising, personal selling, sales promotion, public relations and direct marketing for the promotion of the brand and its image (Keegan, 2004, pp. 130-164). Advertising The advertising mainly focuses on the young children. The TV commercials that we see, the print advertisements, the billboards etc all focus mainly the younger children (Meleo 2008). This has worked for the firm to date but the firm should also focus on other segments of the market as parents are now becoming conscious of the children’s diet and they are discouraging their kids to have fast-food. As per Dolak (2008), targeting other segments would pave way for new markets. When new products are launched there is a lot of advertising for them too. Personal selling McDonalds has a well trained staff and when they interact with the customers, they are very friendly and make them feel welcome and thus customers are encouraged to come more often (Grier, S et, al. 2007). However, there are customers who do have complaints because of incorrect order or delay of order; they should also be given equal importance so that they do not bad mouth the brand. Some countries experience this may be because rules are not stringently followed (Leonhardt). Sales promotion McDonalds often introduces new deals, upsized meals, toys for children, dinner with celebrities etc which are all part of the sales promotion. Such deals keep the customers attracted and they like coming in for more. The deals keep changing and new ones are introduced regularly (Meleo 2008). However, the toys given to children serve as both good and bad. this is because the children over time have grown to expect a toy with every Happy Meal and they do not consider it ‘free ‘ anymore and would demand a toy if they won’t get one. This feature has added a permanent expense for the company. The firm should concentrate on outdoor activities and below the line marketing which have turned out to be more effective (McDonalds, 2008). Public relations. McDonalds keeps good public relations with its customers. The customers are asked to fill in customer comment cards and there is a data bank of customers that are both online and walk-in. McDonalds involves itself in corporate social responsibility issues like global warming where it supports several NGOs, supports the education of poor children and has been very active in times of Olympics like advertising with the theme and decorating the restaurants in the spirit of the event. This has helped in building a positive image of the firm as a good corporate citizen (Leonhardt). However, focus should be more on the real issue which is that fast food is causing obesity and the firm should work on issues and image building that improves its image in that area. This can be done by improving the products, having health related seminars, educating customers about the health etc. this issue in the long run could otherwise bring the sales down sharply (Grier, S et, al. 2007). Direct marketing This is another area that the firm should focus on more. Direct marketing has become very popular. As per Dolak (2008), it is easier and cheaper to target customers with direct marketing. Those customers who buy online are entered in the database and they are mailed the new offerings regularly (Meleo 2008). Special deals should be offered to online buyers and efforts should be made to increase this base by educating the walk-in customers about this option. Advertising is very focused in direct marketing online and therefore is cheap too. Availing this could help the firm cut costs. Also, customer database is also sold, and the firm can avail this opportunity (Prancs). Measuring the marketing communication success Measuring the marketing communication plan can be tricky as there are so many customers, also many promotions and the market is global. Thus it is best that the database of customers is maintained. As per Dolak (2008), to know if a particular marketing plan has been a success, the communication with the online customers who had been marketed directly is much easier to measure. This is because their data and profiles can be maintained and research can be conducted on them before and after a promotion has been introduced (McDonalds, 2008). However, in case of the walk-in customers measuring the success of the marketing communication can be harder. They can be given customer comment cards, or interviewed individually to ask about the promotion and the product. The sales figures of the before- and - after marketing communication to see the impact of the marketing efforts that have been put in (Dolak 2008). The response of the customers is the key indicator of the success or failure of the marketing effort. Research firms should be hired to conduct an analysis and effect of the marketing communication so that the firm knows whether the communication strategy has worked or not (Meleo 2008). For instance, if McDonalds had introduced a new product for children with heavy advertising on TV, print and billboards, the number of children coming in to buy this product should be tracked and may be research could be conducted on some of them to see if they were there because they were attracted by the advertisements (McDonalds, 2008). The sales figures of this product should be kept in mind and monitored throughout the period the communication is run. If the sales drop and there are less children coming in even though the promotion is running with full force, then obviously the promotion has failed. If the promotion is able to increase the number of children coming in, then it can be considered a success (Meleo 2008). Conclusion McDonalds is no doubt the leading fast-food chain. It has built its image over decades with clever marketing communication and tactics. However, the competition is tough and increasing and the firm has to try out new and innovative ways to attract new segments (Meleo 2008). They can do so by improving their current mix of marketing communication and introducing innovative ideas to attract more customers. The firm has been able to establish its competitive position and has a competitive differential which has enabled it to be at the top (Prancs). However, this may not be so after a while as the customers are becoming more health conscious and the firm has to focus on features like direct marketing and public relations to build a better image and to be able to market its product more efficiently. References Dolak, D. 2008. Marketing Communication Mix. Accessed on 12th August 2008. Available at: http://www.davedolak.com/promix.htmYou are viewing page 1 Dev, C & Don E. Schultz, D. 2005. Mix into the 21st Century. Marketing Management, vol.14, no.1. Doyle, P. 2000. Value based marketing. Wiley, Chichester, 2000 Gelder, S. General strategies for global brands. Accessed on 13th August 2008. Available at: http://www.brandchannel.com/images/papers/GLOBALBRANDSTRATEGIES.pdf Grier, S. Mensinger, J, Huang S and Stettler, N. (2007). Fast-Food Marketing and Childrens Fast-Food Consumption. Accessed on 12th August 2008. Available at: http://www.marketingpower.com/content2018875.php Keegan, W. (2004). Strategic marketing planning: a twenty-first century perspective. International Marketing Review, vol.21, no.1, pp. 130-164. Leonhardt, D. McDonalds: Can it regain its golden touch? Accessed on 13th August. Available at: http://www.businessweek.com/1998/10/b3568001.htm McDonalds, (2008). Accessed on 12th August 2008. Available at: http://www.mcdonalds.com/usa/eat/features/dollar.html Meleo, Z. (2008). McDonalds and Childrens Health: The Production of New Customers. Accessed on 13th August. Available at: http://www.corporationsandhealth.org/mcdonalds_nov_07.php Prancs, L. Product branding affects kids more than taste, says research. Accessed on 12th August 2008. Available at: http://www.nutraingredients-usa.com/news/ng.asp?n=78848-mcdonald-s-branding-marketing-to-kids Schmeltzer, J. (2004). Market test for McDonalds. Accessed on 13th August. Available at: http://www.chicagotribune.com/business/chi-0406220331jun22,0,2027888.story Read More