McDonalds Products and Marketing - Assignment Example

McDonald’s: A Look at Products and Marketing Index Index………………………………............................................................................1 Introduction……………………………….................................................................2 Products and Services…………..……………………...............................................2 The ‘Boston Matrix‘………….………………………………..................................4 Market Segments…………………………………………………………................5 The Ansoff Matrix………………………………..…................................................8 Strategic Options…………………………….………………………………...........9 Conclusion……………………………….................................................................10 List of References………………………………......................................................11 McDonald’s: A Look at Products and Marketing Introduction The McDonald’s corporation is a long standing successful operation that depends on franchising as an organizational structure and a stellar branding approach in their marketing. They hold a dominant position in their market share and the revenue generated is more than the following seven competitors combined. McDonald’s has been at the top of the list of competitors since Ray Kroc created this style of restaurant operation. Products and Services According to the McDonald’s corporation, their products are broken down into five categories. The following is a list of those categories: Breakfast, Core Menu, Salads, Premium Sandwiches, and Snack/Desert [McDonald‘s Product, 2009]. There are also a few items available for sale that are part of the branding of the corporation in the form of t-shirts, mugs, and other such items. One of the more popular items is the ‘Happy Meal Toy’, which has obtained a status as a collectible item. Therefore, the item is not only of interest to children, but to adults who become involved with this type of collecting. According to the annual report of 2007, the three most important products of the year were the Snack Wrap, the introduction of McGriddles in Japan, and the McCafe concept which is working toward selling a great deal of coffee in the form of specialty coffees and lattes [p.11]. Revenue was increased in Argentina by the introduction of ’El Placer del Momento’ which were designed around a rotating flavor schedule [p. 15]. The most successful ‘Happy Meal Toy’ campaign of 2007 was the tie in with Shrek the Third, in which 115 countries had participating McDonald’s franchises [p. 17]. With creative products and items that are created specifically for the markets within a country, such as a snack wrap that has shrimp as a protein base for Japan [15], McDonald’s has a consistent record of using The ‘Boston Matrix’ Stars McLattes Snack Wraps Question Marks Salads Breakfast Items Big Mac French Fries Core Menu Items Cash Cows Dogs The McDonald’s corporation does not publish its product sales figures, therefore it is not possible to build an accurate Boston Matrix. However, with information gathered from the 2007 Annual Report, a representation of what those figures could look like is made within the above matrix. McDonald’s has determined that proprietary information will not be released in any form even for use by students in a research project [Student, 2009] According to the report, Big Macs, French Fries and the rest of the core menu are responsible for 75% of the total revenue [2007 Annual, 2008 11]. Examples of where some of the products might possibly fit into this type of a matrix are used in the above grid. It is very difficult, however, to judge which items might be considered a dog. McDonald’s doesn’t allow products to remain on the menu that do not meet sales expectations. Since the core products continue to produce such a large percentage of the profits, the company is able to put into development new products and good decisions when a product doesn’t perform without too much of a financial risk. Market Segments McDonald’s is the leading organization in its category of restaurant style operation. Of the top seven competitors in the fast food industry, McDonald’s holds the top position with 19% of the revenue going to the corporation. The second top contributor in this category is Doctor’s Associates, Inc., which is the operating corporation of Subway Sandwich shops holds a 10% share, followed by Yum Brands, Inc. at 9%, a company which operates KFC, A&W, Long John Silvers, Pizza Hut, Taco Bell, and Yum restaurants. The category of the Fast Food Restaurant is dominated by McDonald’s at 19%, but only 45 % of the market is held by the top seven competing corporation, which leaves 55% of the market for a variety of restaurants that can threaten the business of those seven competitors, in particularly McDonald’s [McDonald’s (MCD), 2009]. [McDonald’s (MCD), 2009] The revenue table shows that McDonald’s revenue is almost twice that of Doctor’s Associates, Inc., and is more than Doctor’s Associates, Inc. and the following six competitors combined for 2007. McDonald’s is still the number one ranking Fast Food Restaurant corporation and there is not a reason at present for that to end. Having developed the organizational structure of the fast food restaurant, the McDonald’s corporation has had an advantage over its competitors and has created model of taste, branding and identity that has yet to be fully repeated. In using an approach that appeals to both children and adults, the loyalty crosses many generations. [McDonald’s (MCD), 2009] The Ansoff Matrix Market Penetration Core Menu Ronald McDonald Happy Meals Brand Trust Variety in Taste, Size and Price Product Development Premium Sandwiches Healthy Food Choices McLatte Enter new Geographical Locations Look into More ‘Green’ Packaging Avenues of Sponsorship Market Development McCafe (Designer Coffee Drinks McDonald’s Bistro (Upscale Food Choices) Diversification [From information gathered from the 2007 Annual Report] The information gathered for the Ansoff Matrix was developed from information that was available in the 2007 Annual Report [2008]. McDonald’s has a very solid Market Penetration. McDonald’s has spent years creating an identity and developing a taste that is geared toward a youthful palate, which creates a continuation of loyalty as the taste brings about a sense of nostalgia and comfort. In continuing to expand into other countries the company has developed ,looking into ways in which packaging can be more supportive to the environment, and in putting a presence in places such as Disney World (sponsoring rides and erecting ‘Fry Shacks’) McDonald’s continues to find ways to expand its operations and deepen its hold on the market. Products such as healthier menu options and approaches towards a more upscale market, such as Bistro choices and designer style coffee drinks shows that the company is constantly working on connecting to new markets. Healthier choices on the menu is a method to counterbalance reports that condemn McDonald’s for the high fat and caloric content in their products which is contributing to increasing obesity issues. Strategic Options McDonald’s has always stayed flexible with its menu, maintaining its popular core items, and adding items to stay engaged with current trends. In keeping with current beliefs on the need for healthier food sources, the corporation needs to continue to increase these options on the menu. As well, continuing to add items of a healthier nature that appeal to children, such as the apple slices and juice options, will allow for a continuation of attracting parents and their children in order to build brand loyalty. Considering the current economy and taking into consideration that McDonald’s is a recession proof form of business, increasing sponsorships and insertions into highly visible venues will help to promote further increases in sales [What Recession?, 2009]. Conclusion McDonald’s has a strong marketing strategy with a multiple areas of approach which reaches across generations and across the globe. If McDonald’s continues to stay current in regard to adding healthier choices to its menu and increasing its environmental responsibility efforts, along with a continuation keeping its prices low and its level of quality at a reasonable level, McDonald’s will continue to dominate the market. List of References 2007 Annual Report. (17 March 2008). “McDonald’s Corporation”. [Online] Available at http://www.mcdonalds.com/corp/invest/pub/2007_annual_report.html ?DCSext.destination=http://www.mcdonalds.com/corp/invest/pub/2007_annual_r eport.html McDonald’s (MCD). (20 February 2009). “Wikinvest” [Online] Available at http://www.wikinvest.com/stock/McDonald's_(MCD)#Market_Share McDonald‘s Product Images. (2009). “McDonald’s Corporation”. [Online] Available at http://www.mcdonalds.com/corp/news/media/multi/Prod.html McDonald’s Restaurants: Sustainable Packaging. (9 February 2009). Sustainable is Good. [Online] Available at http://www.sustainableisgood.com/blog /2008/03/mcdonalds-resta.html Student Research. (2009). “McDonald’s Corporation”. [Online] Available at http://www.mcdonalds.com/corp/about/mcd_faq/student_research.html What Recession? McDonald's Continues Its Global Growth. (28 January 2009). “Seeking Alpha” [Online]. Available at http://seekingalpha.com/article/116480- what-recession-mcdonald-s-continues-its-global-growth?source=feed Read More