McDonalds Australia Holdings And Well-Known Australian - Case Study Example

McDonalds Australia Holdings: Marketing Plan Student’s Name Institutional Affiliation Course Name Date of Submission Introduction Fast food industry is one of the fastest growing industries in Australia. Today, fast food has become part of Australian food culture with a significant proportion of the Australian population eating out in joints and restaurants (The Sydney Morning Gerald 2015). The growth of fast food industry has attracted both domestic and overseas firms that are establishing ventures in the country in large numbers to take advantage of the opportunity. McDonalds Australia Holdings is of the largest fast food chains in Australia. McDonalds Australia Holdings is a subsidiary of American fast food company, McDonalds and opened its doors in Australia in 1971 (Bloomberg Business 2015). Since then, McDonalds Australia Holdings has expanded its stores to all major cities in Australia, including Sydney, and Melbourne mainly through franchising. As at the close of 2015, McDonalds Australia Holdings had about 2,647 branches in Australia. The company provides a variety of products that includes desserts, salads, hamburger, smoothies, breakfast, dinner, drinks, and favorites (IBIS World 2014). The restaurant also provides snacks, coffee, and baked pastries. The firm has over 8,000 employees that effectively make it one of the leading employers in Australia (The Sydney Morning Gerald 2015). This paper presents a marketing plan for McDonalds Australia Holdings that will help it achieve a sustainable competitive advantage in the Australian fast food market. Value Analysis Value Proposition Value proposition is a statement that describes how a firm uses products to solve customer problems (Cant, Strydom and Jooste 2009, p. 17). For a company to succeed in a market, it must ensure that it provides good value for its customers as this helps build loyalty. Accordingly, to succeed in the Australian market, McDonalds Australia Holdings has ensured that it differentiated itself from competitors by providing its customers with unique offering to its customers (Euromonitor International 2015). The company’s value proposition include convenience location, fast and efficient services, quality menu items, wide range of food choices, comfortable seating, affordable pricing and good value offerings and distinct products. These value proportion appeals to the company’s diverse customers, thus giving it a competitive edge over rivals in the industry. Despite the value proportion, McDonalds Australia Holdings products are facing a major challenge of shifting consumer needs and wants. The restaurant’s main product offerings are junk foods that are associated with adverse health conditions, such as obesity (IBIS World 2014). Therefore, because Australian consumers are increasingly becoming health conscious, most Aussies might find it uncomfortable eating McDonalds Australia Holdings in future a trend that pose a threat to the growth of a company. Ansoff Growth Matrix for McDonalds Australia Holdings Ansoff matrix is a strategic planning model that helps management in developing appropriate future growth strategies (Ansoff 1980, p. 131). Markets New market Development Expand further to more cities and towns in Australia Diversification Diversify product offering by introducing healthier meals, such as natural fruit smoothies and yoghurt Existing Market penetration Product quality improvement Introduce healthier meals Increase customer loyalty Product development Technological advancement. (Introduce online shopping). Introduce social media advertising Existing New Products and services PESTEL Analysis Political Factors Political factors are one of the external factors that affect the operation of McDonalds Australia Holdings. Australia enjoys being a modern democracy enjoys strong political stability that makes the country suitable for McDonalds Australia Holdings to conduct business. However, political bickering usually witnessed between political parties in the run-up to elections creates uncertainty (IBIS World 2014). The government laws and regulations, such as tax laws and laws regulating fast food affect the operations of the company. Economic Factors The state of Australia economy has a huge impact on the performance of McDonalds Australia Holdings. Australia’s GDP expanded by 1.1 in the first quarter of 2016 and is expected to increase and this creates a favorable business opportunity for McDonalds Australia Holdings (IBIS World 2016). The expansion of the economy signifies an increase in the purchasing power of the Australians and this coupled with the fact that Australia is a middle income economy indicate huge business opportunity for McDonalds Australia Holdings (IBIS World 2016). However, the performance of McDonalds Australia Holdings might be affected by high unemployment and inflation rates of 6% and 2.5 respectively. Social Factors Social factors affect the operations of McDonalds Australia Holdings. The first social factor that affects the company’s operations in Australia is the changing consumer needs and preferences. Australians are increasingly becoming health conscious and demand healthier foods, which will affect the performance of McDonalds Australia Holdings (NHMRC 2014). Secondly, although Australia’s population is relatively large as it has about 20 million people, the fact that the population is aging poses a threat to McDonalds Australia Holdings since the majority of the company’s customers are children and the younger generation (IBIS World 2014). Additionally, most Australians increasingly prefer to shop online, a trend that is expected to impact the operations of the company. Technological factors McDonalds Australia Holdings’ operations are also affected by technological factors. The high technological adoption in Australia especially internet usage is one of the technological factors that affects McDonalds Australia Holdings. Currently, more than 70% of Aussies have access to the internet (Bloomberg Business 2015). Besides, a significant number prefer to shop online instead of physical stores and these factors affect the operations and strategies adopted by the company. Environmental Factors The operations of McDonalds Australia Holdings in Australian market are affected by the environment laws on pollution. The food industry is one of the leading polluters of the environment. In response, the Australian government has responded by enacting laws that requires food companies to cut down their carbon emissions and keep the environment clean (Euromonitor International 2015). AS such, McDonalds Australia Holdings will be forced to invest more on R&D to ensure compliance with the laws. Legal Factors The legal factors that affects will affect the operation of McDonalds Australia Holdings in Australia include consumer laws, environmental laws and employment laws (IBIS World 2016). Porter’s Five Forces Model Porter’s Five Forces model is a strategic analysis tool that helps a company understands the level of competition in an industry and the right business strategy to adopt. The five competitive forces include rivalry among existing competitors, bargaining power of suppliers, bargaining power of buyers, threat of new entry and threat of substitute (fig. 1) (Porter 1998, p. 4). Source: Roy (2011) Rivalry among Existing Competitors (High) Competition among existing competitors is high. The Australian fast food industry has many large and well established firms that McDonalds Australia Holdings has to compete against, including Subway, KFC, Fast Eddys, Pizza Capers, Collins Foods Ltd, Domino’s Pizza Enterprises Ltd, Foolish takeaway, Uncle Tony's Kebabs and Pizza Haven to name but a few (Euromonitor International 2015). The level of competition is high because the products and services as well as prices have little differentiation. Bargaining Power of Buyer (High) McDonalds Australia Holdings must deal with the high bargaining power of buyers in the Australian fast food industry. Because it is easy to switch from one restaurant to another caused by low switching cost, customers have a strong bargaining power over prices (IBIS World 2016). Besides, there are numerous fast food restaurants in the industry that customers can choose from; this also gives customers a strong bargaining power. Additionally, availability of many substitutes in the market, such as bakeries, as well as foods cooked at home, this gives customers greater bargaining powers. As such, McDonalds Australia Holdings must focus on building customer loyalty to succeed in this industry. Bargaining Power of Suppliers (Low) Suppliers have huge influence on McDonalds Australia Holdings. However, the fact that there are a large number of suppliers of fast food products means that the supplier power is weak. Besides, the fact that McDonalds Australia Holdings suppliers are not vertically integrated coupled with the fact that there are abundant of meat, flour and other raw materials lowers the powers of suppliers in the market (IBIS World 2016). Threat of New Entrants (Moderate) The threat of new entry is moderate. The large fast food firms have consolidated the industry, thus creating a barrier to entry of new firms. Currently, McDonalds Australia Holdings, Subway Systems Australia together controls 60% of the total Australian fast food market (Euromonitor International 2015). The two firms have consolidated the industry, thus creating barrier to entry. However, the fact that it requires a moderate capital to enter the industry makes it relatively easy to enter the industry. Threat of Substitution (High) The threat of substitution is high. There are numerous products that can be used as direct substitutes for restaurant foods. These include food cooked at home, bakeries and artisanal foods (IBIS World 2016). Segmentation, Positioning and Targeting Segmentation Market segmentation is very critical to the success of a company. Market segmentation allows a company to identify its target market so as to ensure that it is served best (Cant, Strydom and Jooste 2009, p. 34). Therefore, based market analysis, McDonalds Australia Holdings market will be segmented demographic, psychographic and behavioral segments. With regards to demographic segmentation, the products will be targeted at children, students and families. For children, McDonalds Australia Holdings will provide a variety of meals and products, such as toys. Families will be provided with meals in the form of drive-through and takeaways to suit the diverse needs of customers. As for students, the restaurant will make an environment that is suitable for students for hanging out with colleagues, such as providing free internet services, which they can use for browsing, social networking and research as they dine at McDonalds Australia Holdings. With regards to psychographic segmentation, McDonalds Australia Holdings will provide products that are convenient and suits the lifestyle of Australian customers. As Aussies are increasingly becoming health conscious (NHMRC 2014), other than the junk foods, the restaurant will also introduce new product offerings, such as fresh fruit smoothies and yoghurt. Additionally, the restaurant will be made a place for relaxation and entertainment. On behavioral segmentation, the restaurant will target special occasions, such as kids’ birth day parties. Positioning In order to win the Australian fast food customers, McDonalds Australia Holdings will position itself as a “healthy meal” restaurant. Currently, most Australian customers have become health conscious and are trying to avoid eating high calorie foods (Euromonitor International 2015). Therefore, the only way to win large number of customers is to differentiate from competitor by positioning as a healthy place to eat out. Marketing Mix Product Product is a fundamental marketing mix element that McDonalds Australia Holdings will consider to ensure its success (Cant, Strydom and Jooste 2009, p. 7). For many years, McDonalds Australia Holdings has been serving Aussies with junk foods with high calorie contents. However, eating such high calorie foods have been linked to high obesity rates in Australia (NHMRC 2014). Therefore, to win Australian market and remain competitive, McDonalds Australia Holdings will have to introduce healthier meals. First, the company will achieve this by minimizing the amount of calories and salt in its menu. Secondly, the company will focus on introducing healthier meals such as natural fruits to form part of its product offerings. Additionally, McDonalds Australia Holdings will introduce vegetables which are not only healthy, but is also experiencing growing demand among Aussies. Price Price is another important marketing mix element that will be considered to ensure success. Because price is one of the factors that customers consider when making purchasing decisions (Bowman and Gatignon 2010, p. 11), McDonalds Australia Holdings will ensure that the prices charged are affordable for its products. In this respect, the prices charged will be slightly lower than those charged by main competitors, such as KFC and Subway so as to attract many customers to McDonalds Australia Holdings brand. Place To succeed in Australian market, McDonalds Australia Holdings will ensure that the products are made easily accessible to customers (Bowman and Gatignon 2010, p. 19). To achieve this, the company will open up more stores in all major cities and towns in the entire Australia. The new restaurants to be opened up will be beautifully decorated and will be equipped with free Wi-Fi and meeting place for customers. In addition to the stores, McDonalds Australia Holdings will consider making the products available online, where customers can order and the company delivers them to their doorsteps. Promotion McDonalds Australia Holdings will engage in aggressive promotional campaign to create enhance brand awareness as well as persuade customers to buy the products. For this purpose, the company will use a variety of communication tools to advertise its products, which will include television, social media, newspapers, billboards, website and road shows. Additionally, McDonalds Australia Holdings will consider using direct sales promotion, as well as exhibitions to promote its brand to the Australian populace. Analysis of Competitors McDonalds Australia Holdings operates in a highly competitive Australian fast food market. Some of its main challengers include Subway, KFC, Fast Eddys, Pizza Capers, Collins Foods Ltd, Domino’s Pizza Enterprises Ltd, Foolish takeaway, Uncle Tony's Kebabs and Pizza Haven (IBIS World 2016). Nonetheless, McDonalds Australia Holdings still maintains leadership controlling about 40% of the total market share (Euromonitor International 2015). This is because the company provides a variety of quality meals that satisfies the needs of consumers. The restaurant is also known for convenience, an attribute that gives it an edge over rivals. However, the company should focus on introducing healthier meals and better service quality to enable it beat its rivals. Conclusion McDonalds Australia Holdings has a strong brand in the Australian fast food industry. However, the changing lifestyle of Australian consumers that are increasingly becoming health conscious pose a huge threat to McDonalds Australia Holdings whose product offerings are still largely junks with high calorie content. Therefore, to succeed in this market, the restaurant should consider introducing healthier meals such as natural fruits as part of its product offerings. Additionally, the company will have to charge affordable but competitive prices, as well as ensure that the products are made easily accessible to customers. Moreover, McDonalds Australia Holdings will have to engage in aggressive promotional campaign to ensure its success. References Ansoff, H. I 1980, "Strategic issue management," Strategic management journal 1, no. 2, pp. 131-148. Bloomberg Business 2015, Company overview of McDonald's Australia Limited, viewed 4 July 2016 http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapid=11312749 Bowman, D., & Gatignon, H 2010, Market response and marketing mix models: Trends and research opportunities. Now Publishers Inc, Mason, OH. Cant, M. C., Strydom, J. W., & Jooste, C. J 2009, Marketing management. Juta and Company Ltd, Delhi. Euromonitor International 2015, Fast food in Australia, viewed 4 July 2016 http://www.euromonitor.com/fast-food-in-australia/report IBIS World 2014, McDonald's Australia Holdings Limited - Profile company report Australia, viewed 4 July 2016 http://www.ibisworld.com.au/enterprisefull/default.aspx?entid=202 IBIS World 2016, Fast food services in Australia: Market research report, viewed 4 July 2016 http://www.ibisworld.com.au/industry/default.aspx?indid=2005 NHMRC 2014, Obesity and overweight, viewed 4 July 2016 https://www.nhmrc.gov.au/health-topics/obesity-and-overweight Porter, M. E. (1998). Competitive strategy: Techniques for analyzing industries and competitors. Free Press, London. Roy, D 2011, Strategic foresight and Porter's five forces. GRIN Verlag, Berlin. The Sydney Morning Gerald 2015, McDonald's sales reach $4b in Australia, viewed 4 July 2016 http://www.smh.com.au/business/retail/mcdonalds-sales-reach-4b-in-australia-20150313-143gru.html Read More