Marketing Plan: McDonald's North America - Research Paper Example

?Marketing Strategy The marketing strategy of the company is based on building the company brand. Branding is a very effective strategy to increase the customer retention rate. A branding strategy works better when a company has a long presence in the market since it takes time to build up brand value. McDonald’s has been in business since 1955 (Encyclopedia, 2005). The success of the McDonald’s brand is based on getting as many customers to return to the store. McDonald’s serves nearly 64 million customers daily. To spread the McDonald’s brand the firm has penetrated as many countries as possible around the world. The company currently has a global presence in 118 countries. Mission McDonald’s mission statement is to be their customer’s favorite place to eat (Aboutmcdonalds, 2011). The mission of the company is achieved by offering a wide variety of products at low prices that provide value to the customers. The firm is also able to achieve its mission by offering its customers a McDonald’s location near their homes. McDonald’s is the industry leader in both sales and number of outlets with 2010 sales of $24 billion and over 33,000 stores worldwide (Annual Report: McDonalds, 2010). The employees of the company are well trained to provide its customers with an excellent level of service that will keep them coming back for more. Marketing Objectives The marketing objectives of the company are to continue growing the brand of the company, to satisfy the needs of its customers, and to maintain its leadership in the fast food industry. McDonald’s invests millions of dollars each year to ensure its marketing objectives are met. The annual advertising budget of McDonald’s is approximately $2 billion (Chicagobreakingbusiness, 2010). No other company in the fast food industry spends as much on advertising as McDonald’s does. The growth of the firm is highly dependent on the ability of the marketing department of attracting interest from investors around the world to purchase its franchises. The company earns a royalty of 12.5% of all sales generated by its franchises (Thefranchisemall, 2011). Financial Objectives One of the financial objectives of McDonald’s is to maximize shareholder’s wealth. The executive managerial staff of McDonald’s has achieved that goal by effectively implementing an organic growth model. An organic growth model can be defined as expansion of a firm’s operations from its own internally generated resources, without resorting to borrowing or acquisitions of other firms (Businessdictionary, 2011). The firm operating results have been outstanding with the company achieving sales growth for eight consecutive years. The appreciation of the company’s common stock is evidence that the company has increased the wealth of its shareholders. Appendix A shows the price movement of McDonald’s common stock during the past five years. McDonald’s common stock is traded in the NYSE under the symbol MCD. The price of the MCD common stock as of September 23, 2011 was $87.37 (Nyse, 2011). During the last five years the price of McDonald’s common stock has more than doubled. Another financial goal of the company is to increase its sales internationally. The aggressive expansion plan the company implemented decades ago has helped the company achieve that goal. Target Markets McDonald’s has a large target market. The firm has a product that can be consumed by people of all ages. The company over its long history has realized that the best way to build its customer base is by targeting young people including children. McDonald’s is the most effective company in the fast food industry at adverting for children. The Ronald McDonald character is beloved by American children. The company has done a great job at using this character in its children advertising campaigns. Customers that have a need to eat outside on a daily basis are the main target of the company. Everyone that has a full time job and eats outside at lunchtime on weekdays is a prime target of the company. College students and the youth are targeted by McDonald’s due to their tendency for eating at fast food restaurants. Positioning The firm is positioned as the market leader in the fast food industry. Being the market leader has many marketing consequence because the firm is the main target to all competitors in the industry that are motivated to steal market share away from McDonald’s. The market position of the company is advantageous because the firm gets lots of return customers that are going to visit the store irrelevant of the marketing efforts of the firm. From a marketing standpoint the company has to position itself as an attractive food alternative that provides many benefits to its customers including low price, value, quick service, and greater availability than the competition. Strategies The marketing strategies the executive management team develops must consider both the short and long term. The use of promotions and special offers can help attract customers in the short term. The company does not have in place an adequate customer rewards program. Burger King’s BK rewards program is an excellent example of the type of program McDonald’s needs to bring more customers back to its stores. The long term marketing strategy of the company should continue to be focused on building the brand value of the firm. Marketing Mix The marketing mix is composed of four components: price, product, place and promotion (Marketingteacher, 2011). McDonald’s focuses on all four components in its marketing initiatives. The firm has been able to capture the largest market share in the fast food industry by flooding the market with over 33,000 stores. The company uses friendly and attractive colors in its locations to provide a great aesthetic look for its customers. All McDonald’s are recognized by its classic logo, the Golden Arches. McDonald’s has one of the lowest pricing structures in the fast food industry. The firm provides great value through its one dollar menu. The product variety of the company is outstanding with over 100 different food items in its menu. The firm uses many different promotions to attract customers by aggressively advertising through mass media channels including television commercials. Marketing Research The use of market research is used by the company on a recurrent basis in order to determine changes in the customer’s preferences. During the 21st century the marketing research showed a tendency towards customers eating healthier meals. The company eliminate saturated fats from a lot of is food offerings and it added lots of new healthier food products based on the findings from its marketing research. Marketing research is also used by the company to identify the best domestic and international locations to place its franchises. Controls The marketing department of the organization needs to have control mechanisms in place to determine the effectiveness of its advertising campaigns. This can be achieved by obtaining feedback from its customers and by using interactive marketing mechanisms to retrieved data. For instance the company could use the services of Hulu.com to test its new commercials prior to spending millions of dollars on marketing campaigns on major television networks such as CBS, TNT, and NBC. Hulu.com offers television programming that can be stream using the website. The programs include commercials from advertisers. The commercials have the capability of obtaining instant feedback from the customers by pressing a few buttons on the system. Implementation The implementation plan of the marketing department requires a lot of planning. The company cannot afford to waist its $2 billion advertising budget on ineffective campaigns. The best way to optimize the marketing budget of the company is by hiring the best marketing talent to work for the company. Recruiting people with solid marketing backgrounds is the best way to increase the chances of successfully implementing McDonald’s marketing objectives. All marketing projects must be audited after implementation to evaluate the results of each initiative. Marketing Organization Companies such as McDonald’s have been able to differentiate themselves from the competition by becoming marketing organizations. There are plenty of restaurants in the United States offering hamburgers in their menus. McDonald’s has become better and more popular than other players in the industry because its marketing department has been able to build an image and reputation as the best hamburger experience in the world. Contingency Planning McDonald’s marketing strategy is highly dependent on its ability to offer a stable price structure to its customers. The company operates in the food industry. One of the issues with the acquisition of raw material goods is that the prices of food commodities often fluctuate. The company can implement contingencies to ensure the firm obtains a stable price of its key raw materials. For instance the majority of McDonald’s customers order fries either by default because they are included in the food combos or by choice when the customers order individual items. A way to control the price of acquiring potatoes is by acquiring future potatoes commodity contracts. A future contract is a financial arrangement in which a company purchases the option to acquire a good or commodity at a predetermined price at a future point in time. The company has to also make contingency plans to prevent lawsuits. A lawsuit can hurt the corporate image of the company. A proactive approach is the best strategy to deal with lawsuit contingencies. When the lawyers of the company determine that the chances of losing a lawsuit are probable it is better to settle out of court to prevent the bad publicity and potential damage to the brand value of the firm. References Aboutmcdonalds.com (2011). Student Research. Retrieved September 23, 2011 from http://www.aboutmcdonalds.com/mcd/our_company/mcd_faq/student_research.html Annual Report: McDonald’s (2010). Retrieved September 23, 2011 from http://www.aboutmcdonalds.com/etc/medialib/aboutMcDonalds/investor_relations3.Par.56096.File.dat/2010%20Annual%20Report%20%28print%29.pdf Businessdictionary.com (2011). Organic Growth. Retrieved September 23, 2011 from http://www.businessdictionary.com/definition/organic-growth.html Chicagobreakingbusiness.com (2010). McDonald’s looks for new global marketing chief. Retrieved September 23, 2011 from http://archive.chicagobreakingbusiness.com/2010/05/mcdonalds-looks-for-new-global-marketing-chief.html Encyclopedia.com (2005). McDonald’s Corp. Encyclopedia of Chicago. Retrieved September 23, 2011 from Marketingteacher.com (2011). Marketing Mix. Retrieved September 23, 2011 from http://marketingteacher.com/lesson-store/lesson-marketing-mix.html Nyse.com (2011). McDonald’s Corporation. Retrieved September 23, 2011 from http://www.nyse.com/about/listed/lcddata.html?ticker=MCD Thefranchisemall.com (2011). McDonald’s Franchise. Retrieved September 23, 2011 from http://archive.chicagobreakingbusiness.com/2010/05/mcdonalds-looks-for-new-global-marketing-chief.html Yahoo.com (2011). Basic Chart – McDonald’s Corp (MCD). Retrieved September 23, 2011 from http://finance.yahoo.com/q/bc?s=MCD&t=5y&l=on&z=l&q=l&c= Appendix A: McDonald’s Five Year Common Stock Price Chart (Yahoo, 2011). Read More