Marketing Management of Fast food - Assignment Example

Marketing Management. Section (a). Fast Food Market. Fast food restaurant are characterized by food supplied quickly after ordering and with minimum services. This restaurant usually cook the food in bulk in advance, they then supply this food to other chains from a central location. A good example is the McDonald, Noodles, Culvers, etc. in the fast food services are highly automated. In the year 2000 consumers spent 110 billion US dollars on fast foods. According to the National Restaurant Association the 2006 forecast consumer spending will amount to 142 billion US dollars. Competitors in the American fast food market include Wendy's, Jack in the Box, Pizza Hut, Tacos Bell, Kentucky Fried Chicken, Long John Silver's. In Canada fast food restaurant include Boston Pizza, Tim Horton and Swiss Chalet. In the UK fast food restaurants include included Easy Pizza, and Pizza Express. In this market the restaurant form chains which are in most cases centrally controlled, this restaurants have been criticised in the past that excess consumption of these foods will lead to obesity, the direct advertisements to children, the reduction of local cuisines and their lack to provide employment. Consumer behaviour is changing and the fast food industry is loosing market share to other restaurants that produce expensive meals to consumers, also the campaign against the consumption of these fast foods has led to a decrease in consumption. Advertising in the fast food restaurant is through television commercials, the print media, billboards and events sponsoring. Recently this food restaurant are now changing to internet advertising due to increased criticisms on television and media, Branding includes clothing, direct signs and posters. McDonald has sponsored the Olympic Games, FIFA world cup and NASCAR teams. Advertising plays a major role in marketing a product; advertising informs consumers on existing products, communicates the information about a product, stimulates the distribution of a product, increases product usage and finally builds brand preferences and loyalty through constant and consistent promotional campaigns. Fast food advertising in 2001 amounted to 635 million dollars for McDonald, 298 million dollars for Burger King, 179 million dollars for Tacos Bell and 148 million dollars for Pizza Hut. (http://www.ijbnpa.org/content/pdf/1479-5868-1-3.pdf) According to the fast food industry statistics the fast food industry is losing popularity due the constant campaigns, the campaigns are usually based on the fact that the food they produce cause obesity, the advertisement of junk food to children and this has led to countries introducing strict limitation on fast food advertisement and this has made them to advertise through the internet as an alternative to reach their customers. We there fore analyse the MacDonald restaurant to view their strategic planning on market throughout its historical development from a small restaurant to a multinational restaurant. Mc Donald Fast Food Restaurant. Mc Donald is the largest fast food restaurant in the world. It has dominated the American market and the rest of the world. The restaurant has many branches all over the world and they are similar in their services, staff uniform, menu, packaging and services with a smile. The principle of this restaurant is efficiency, calculability, uniformity and control through automation. It was founded in 1940 by Dick and Mac McDonald. This company has branches in 199 countries and serves close to 5 million customers dairy. In 2005 report, the company had a total of 45,777 employees, in the same year total revenue amounted to 20.466 billion US dollars and the net income to the restaurant amounted to 2.602 billion US dollars. The volume of food used every year are 32,000 tonnes of beef, 21,500 tonnes of chicken, 100 million eggs and 7,250 tonnes of cheese just to mention a few. Mc Donald and Dick ventured into the food business in 1937 by opening a hotdog stand in Arcadia California, they later expanded their business and in 1940 they opened their first McDonald restaurant. In 1948 when the demand for hamburgers increased introduced a streamlined assembly of hamburgers and this made it easier for them to meet the demand and reduce the price for the hamburgers. The restaurant has gone through expansion over the years by locating in many countries. (http://www.mcdonalds.com/corp/about/mcd_history_pg1.html) Section (b) Market segmentation is the process of grouping markets into smaller groups, these markets are referred to as niche or specialty markets. Variables used for segmentation include geographical variables, demographic variables, psychographic variables and behavioural variables. Geographic variables include segmentation into regions of a country or the world and climate differences. Demographic variables include age, gender, sexual orientation, family size, family life cycle, income, occupation, education, religion, social economic status and race and nationality. Psychographic variables include value, personality, life style and attitude. Behavioural variables include benefit sought, product end use, and readiness to buy stage, decision making unit, brand loyalty and product usage rate. According to George Day (1980), he describes the top-down and bottom-up model in the approach to segmentation. The top-down approach entails dividing the total population into segments. The alternative model was the bottom-up method which entails the creation of consumer profiles using a consumer data base. The next step is to cluster the consumers into various demographic, behavioural and psychographic patterns. According George successful market segmentation should be characterized by homogeneity of the segments, heterogeneity between segments, segments should be measurable and identifiable, segments should be accessible and actionable and the segments should be large enough to be profitable. In the analysis of the fast food market, market segmentation could be undertaken to allow more entrants into the business. The top-down and bottom-up model could be appropriate and the following can be undertaken. The use of demographic variables and this case the market could be subdivided according to age of consumers, the market will then provide new entries by firms which will provide goods to specific age groups. The fast food market could be subdivided into those producing ice creams to the kids and those providing food to adults. There could also be subdivision between those providing goods to high income earners, middle income earners and low income earners. This will ensure an increase in number of firms in the business. It is also possible to segment the market into the provision of food to different race and nationality. There will be the emergence of markets that produce foods that are cultural. Example those that produce Chinese foods, French food and African foods in a given area. This will encourage an increase in the number of firms in market if they are allowed to specialize. There should also be the introduction of restaurants that meet the needs of men and women, men like to eat heavy foods as compared to women. Therefore this would also be a solution to segmentation. Geographical variables for segmentation in order to increase the possibility of new firms joining in would include the division of markets into countries in such a way that each region needs are dealt with according to their needs. This will involve the division of the market into their various needs, the regions can be divided according to climate differences and this will ensure that more firms join the industry to meet the needs of a particular region. A good example is places where the climate is so hot and there is a need to provide fresh drinks, therefore specialisation should be introduced into the industry where each firm or restaurant produces a certain drink only. On the Psychographic variables, segmentation will be based on lifestyle which will involve the division of the market so as to cater for the different people with different lifestyles. An example of this is the youth and the elderly, the introduction of restaurant that for the youths and those for the elderly will increase the possibility of an increase in firms in the fast food industry. Under the behavioural variable, the market can be segmented according to benefits the consumers tend to be achieving. The fast food market will be set in such a way that it provides to the needs of each and every individual in the market, they should produce goods that meet the desires and preferences of the consumers. Segmentation can also occur according to religious and cultural needs, this will include Hindu, Christians, Islam's, etc. and this will serve the difference needs. Among the Islam there are those religious believes that a believer should not consume pork, this make them not to consume from this fast food restaurants and therefore if there was a segmentation that allows for the religious groups to get what they want then there would be an increased volume of restaurants in this industry. Conclusion. Market segmentation involves the use of a data base on consumer behaviour on a certain market. For successful segmentation there is the need to have a large segment. In this case the fast food market has a large market and therefore segmentation can be done. Segmentation variables will include Geographic, Demographic, Psychographic and Behavioural variables. The market should be subdivided according to brands and this will enable increased possibility of new entrants. References. George Day (1980) Strategic Market Analysis: Top-down and bottom-up approaches, Cambridge press, London. The International Journal of Behavioural Nutrition and Physical Activity, Retrieved on 24th August, available at: http://www.ijbnpa.org/content/pdf/1479-5868-1-3.pdf McDonald's corporation (2006): The history of McDonald. Retrieved on 24th August, available at http://www.mcdonalds.com/corp/about/mcd_history_pg1.html Read More