Marketing Plan of McDonalds - Research Paper Example

Marketing Plan of McDonalds Marketing Plan of McDonalds INTRODUCTION McDonalds started its operation in 1955 as a self service restaurant and the brand is currently the leading global food service retailer with around 32,000 restaurants serving in more than 117 countries. The brand is famous for serving Big Mac, Quarter Pounder, Chicken McNuggets, world famous fries and Egg McMuffin (McDonalds, 2008). The main focus of the organization is to meet the customers’ need by providing them with what matter them the most. This is also highlighted in their mission statement that McDonalds would like to become customers’ favorite place to eat. Their long term goal is to be a number one quick service restaurant (Shaikh, 2009). SWOT ANALYSIS OF MCDONALDS Strengths The major strength or key for McDonalds is their strong global presence worldwide with its nearest competitor. The fast food chain is the market leader in both domestic and international market with its presence in around 117 countries (McDonalds, 2008). The renowned brand thus will face less difficulty in creating place in Vietnamese. The organization’s enormous size and global presence leads the firm to experience economies of scale, which helps in diversifying risk. Moreover, their strong position in international market aid in expanding their business and gain benefits from long term economic growth (Shaikh, 2009). This, economies of scale leads to lower cost making it easier to compete on price basis in different countries especially where price matters the most. They have the edge of introducing this fast food culture and creating a place in millions of peoples mind (Vijayarani, 2007). This gave McDonalds a strong brand recognition which helps in generating higher sales for the company and also opportunities in expanding (Shaikh, 2009). Another area of great benefit is the value of their product that is the customer knows what to expect once they enter McDonalds. Moreover, the company gives lot of emphasis on satisfying both employees and consumers. (Vijayarani, 2007). Weaknesses The food industry is not showing much growth in fact is one of the saturated industry’s currently which McDonalds business will be effected in terms of either no or slow growth. Plus this makes it difficult to expand further in terms of new outlets as not much left in the industry to explore. Furthermore, as the market is saturating the existing players have started competing on price as a tool to earn customers and revenue therefore, McDonalds have to deal with hefty price competition and can only survive if they provide something totally new to customers (Shaikh, 2009). Lastly, since it’s been a long time McDonalds is in market therefore it’s getting difficult to keep on innovating constantly and bringing up new product every now and then which is actually drawing customers away from McDonalds. (McDonald’s , 2008). Opportunities The brand can expand into other businesses such opening up coffee houses or ice cream parlors depending on the consumer preferences in the Vietnam market. Moreover, the changing trend and increasing diet conscious population can be another area of opportunity which can be captured by McDonalds by providing cholesterol free products, or items according to the preferences of such diet conscious population etc. Another area of growth could be catering to veterans according to the products which suit their need. Threat The major threat is the lucrative market which is attracting more and more foreign players to enter which can give tough time to McDonalds in terms of products and prices. Plus any changes in governmental laws regarding their operations in Vietnam can force the business to slow down. Furthermore, worldwide fast food is being condemned but the industry in Vietnam is still far from it thus anything of such sort can harm the business. Competitive analysis Currently there are three players present in the fast food industry of Vietnam: Kentucky Fried Chicken (KFC), Pizza Hut, and Lotteria. Among them Lotteria South Korean brand was the first to bring this new western style food culture in Vietnam in 1997. Among all the players KFC and Lotteria leads the Vietnam’s fast food industry (VietNamNet, 2009). In terms of highest number of stores KFC leads the race with 77 restaurants as of today with Lotteria being on number two with 67 outlets; in terms of turnover in 2009 Lotteria took the lead (Lifeinvn, 2010). A lot of foreign players plan to enter the market making competition intense and giving consumers options to select the best. Thus those catering to consumers according to their need will survive and rests have to leave. MARKET SEGMENTATION STRATEGY The economy of Vietnam is showing growth which makes it one of a lucrative market as the economy is growing even when the world around is in recession. According to the ministry of Planning and Investment the Vietnam economy grew at an average rate of 7.5% between 1996 and 2005. In 2007 the GDP growth was 8.5% even though economy slowed a bit in 2009 yet the government planned to achieve around 7% in 2010 (Vietnews, 2009). The fast food is currently on its boom in Vietnam and this started after 2000 which means the industry has lot of potential yet and as seen from above discussion that lot of foreign players are operating in the market but still a lot of foreign entries are due, proving that market has lot of potential. This is further seen from the figures which shows that in 2009 the fast food industry was expected to generate profit of around VND500 billion, portraying an increasing of 35-40 percent from last year (VietNamNet, 2009). Segments to Be Catered The major target market for fast food in Vietnam includes kids, teenagers and adults specifically below the age of 30 years. The market potentials are high because most of their population is young and this is highlighted from the figures, which shows that 65% of population is below the age of 25 years thus this shows that consumer base is huge (Vietnam Briefing, 2008). Generally worldwide the target market segmentations include teenagers, working males and females and family with children. But in case of Vietnam the target market for this industry is mainly youth, this was proven from the target market being catered by KFC who have divided the segment into 3 areas: 1) young adults between 19-29 years, 2) children between 4-14 years and 3) adult males who are single (Scribd, 2008). This provides an aid to McDonalds in bi-furcating their segment which can be teenagers, families with children and working people. Among them youth would be the most profitable segment as youth is the major fast food market who are easily attracted towards this area without much effort plus knowing major population is youth the quantity of customers is lot and there is not much concept of diet conscious people in Vietnam thus not much of effort needed in terms of providing a diet conscious menu. Secondly, the other important and profitable segment is working males and females who prefer quick service restaurant so as to grab food which will save time. Even though the main target market for McDonalds is kids who assure repeat sales also but in case of Vietnam’s market it has to be majorly youth who prefer a proper meeting place with a relaxing environment and a place to hang out. Discussing the demographics, most of their population is young and well educated who appreciate U.S. products therefore making it a lucrative market U.S. based fast food chains. But most of their population lives in rural areas which constitute 76.5% of total population which is difficult to reach but yet one of the potential markets that is still to be tapped (Taylor Nelson Sofres, 2008). Moreover in terms of earnings a rise is seen in last few years and this is supported by the research conducted by KFC Vietnam which revealed that average income of HCM city citizen was at 1,341,700 VND per month in 2003 and this is expected to show a sharp rise in next five years. This had a positive impact on growth of fast food sector as people are willing to spend and the research also identified that most of the customers visiting them belongs to upper-middle or upper class. (Scribd, 2008). Furthermore, in terms of consumers’ preference, family is preferred second as compared to work life mainly to live happily, therefore, for fast food working consumers could be one the profitable segment as they would waste less time on eating and more on earning (Taylor Nelson Sofres, 2008). But this does not means that the family values lack in this country importance is given in form of having pleasure time with family by earning more. The consumers of Vietnam are facing a changing trend in their habits where there preference towards dine out have shown an increase especially on some occasions like birthdays or other holidays. Moreover, the emerging trend towards consumption philosophy shows that Vietnam consumers are becoming more and more brand conscious, this does not mean that they are not price conscious anymore but preference towards branded items is rising which is why international fast food chains are also getting importance. With this their concern towards health related food is also increasing and are becoming more and more diet conscious (Taylor Nelson Sofres, 2008). The fast food lifestyle trend is taking a new turn with consumers giving importance to quality food, hygiene, convenient and time saving meals. From the lifestyle survey it is seen that six out of 10 urban consumers eat out daily highlighting a changing trend (Goliath, 2007). POSITIONING STRATEGY It is important for any fast food company to cater to their target market according to their need and culture. Positioning is about communicating a unique selling proposition to the target market in a way that they remember it. For Vietnamese there local food and culture is of great value therefore for McDonalds its necessary to provide their specialty in McDonalds style so as to capture the market with providing what is needed yet in different style. Worldwide McDonalds is referred to as one of the family restaurant unlike other fast food restaurants. Yet this does not mean that their target market is only families but the behind focusing on families is to bring in kids with parents due to which they reach parents wallet through kids marketing. Even then it does not mean they do not target teenagers but their brand positioning is based on the concept of being one of the family oriented restaurant. Thus positioning the brand as a family oriented will be a different concept as compared to other competitors. Moreover, the brand needs to differentiate itself from other fast food companies who are present in the industry since more than a decade and all these brands are targeting to youth mainly so McDonalds can position itself as youth family oriented place designed in a way to provide a comfortable environment for youth, families and kids. Moreover, even the concept of being diet conscious is yet not so developed in this market they can also position themselves as provider of healthy and hygienic food with local taste as Vietnamese are particular about their local food taste. PRICING STRATEGY Generally the consumers are price conscious but the trend is moving towards being more brand and quality conscious then showing concern towards pricing in urban areas. This change is mainly due to rising incomes and improving living standards which is forcing families to spend so as to relax and enjoy. The pricing strategy that should be used by McDonalds in such an environment should be Product Line Pricing and Promotional Pricing. Their product line pricing strategy is all about providing value meals or in other words bundled products deal that is a meal having burger and drink at a reasonable price which can be upsized by paying more. This form of pricing force consumers to select from the deals available and at the same time it gives them the feeling of value for money. Secondly, promotional pricing can be used on specific occasions so as to give consumer a feeling of being part of McDonalds on happy moments such as on birthdays, Independence Day, etc. these kind of pricing make consumers loyal but such strategy can rebound also especially in such market where consumers might feel that quality is being compromised so McDonalds need to assure that important components are not affected during such promotional pricing times. Above all this, initially to penetrate in the market McDonalds can start with penetration pricing that is providing free or discounted price during a particular time of the day so as to attract consumers. Apart from all that is discussed above the brand go through a rigorous pricing process before setting up the prices in a particular market where they select the objective, determine the demand, estimate the costs, analyzing competitors prices and then selecting the pricing method (Vignali, 2001). PROMOTIONAL STRATEGY Opting for right promotional strategy plays an important role in the success of business, its important to deliver right message on right time to correct audience. The purpose of the promotional campaigns should be to deliver the message correctly and should be delivered in a way that it should not confuse the consumers. The successful factor in McDonalds’ promotional strategy is their slogan: “Think Global Act Local” so as to associate consumer with the brand. Another most commonly promotion slogan is “I’m loving it” which is a way to connect with consumers. The main aim in terms of promotional activities of McDonalds is to promote the brand globally but advertise locally according to the culture, consumers’ attitude towards the products, etc. thus keeping in mind all the factors advertising should be done accordingly. Moreover, the mode of advertising should be selected after a thorough research as to which mode to be selected depending on the cost and viewership. Yet the common modes used by other players are Radio, television and print media. Apart from that from the tactics of competitors it can be identified that its important to associate McDonalds with other products and also sponsor events as this will create a place in consumers mind because the fast food industry is still in its early stages so consumers are not so aware of these western chains worldwide. Moreover, McDonalds can hold competitions for kids as they are there main target market and cooking competitions can be an option to establish a place in housewives. Additionally the consumers are attracted towards discount coupons from time to time for children meals or other products too. Apart from all this they can take part in helping communities in terms of developments or education programs, etc. Plus their association with Vietnamese favourite sport could be another tactic to capture a place in consumers mind and make them aware of what McDonalds is. OBJECTIVES AND ACTION PLANS The market has lot of potential for growth and yet lot of consumer base is untapped or not part of this fast food culture so McDonalds still have market to capture even after the existing players are present since more than a decade. McDonalds should capture a place in consumers mind as another option available for Vietnamese in fast food industry. This can be done through advertising before entering and after entering. Moreover, informative advertisement should be conducted which highlight their product line and the location of outlets nearby with helpline numbers if any. Secondly, the expansion plan need to be quick as the existing players have already opened more than 70 outlets thus they are present everywhere so for McDonalds to compete they need to be available near their customers. Therefore, there objective should be to open around 50 outlets in next 5 years of operations. This would only be possible if the brand is successful in creating a positive and healthy image in consumers mind. Because right positioning in mind of consumers will support the expansion plan correctly too. In terms of revenue creation in the first few years the objective should not be related to increment of revenue in fact it should be to capture market share. Once it is achieve revenue will itself increase and moreover, not only bring in customer but create loyal customers by providing quality food and service in less time. New products should be added in the menu according to the local taste. This can be achieve through extensive research which should be able to identify the local taste preference according to the targeted segments such as youth, kids, parents, etc. Catering to each segment according to their need would be a difficult task but can be a successful move as its not being conducted by any of the competitors. Apart from this addition of products for diet conscious people would be another area to tap and capture but for that it’s important to know the preference of such market. Additionally, to stay in competition and in consumers mind, events such as holding a singing competitions, cooking competition, lectures from nutritionist, etc need to be conducted which will not only capture the audience but will also aware them. Kids playing areas need to be included in each outlet so as to give them a leisure time once they are in McDonalds with availability of other additional services for adults also such as Wi-Fi within the outlets, proper sitting arrangement not to make it a congested place, etc. Entry in other areas such as opening up a coffee parlour but this can only be successful once the audience is ready for such places. This can be done by creating awareness regarding the hangout options available, relaxing places, etc. CONCLUSION The Vietnam fast food industry showing a boost in recent years prove to be one of the most lucrative market currently when the worldwide economy is slowing down this country’s industry is still booming. Moreover, lot of market is still untapped as the trend is changing towards having food out of home but yet not completed moved towards it therefore, lot of consumers still prefer food at home. The industry is showing growth because consumers are becoming aware of importance of relaxing and having food out of home even if cost more than eating at home. Plus the rising income is leading to rising standard of living due to which dine-out is becoming a status symbol for consumers who are becoming more and more brand conscious. Thus, for McDonalds being a renowned brand is a great opportunity to open up in such country where consumers are still welcoming western food brands and are still waiting for the entry of it. The warm welcoming is due to fewer options available with the consumers in terms of eating out. To capture the market it’s important to study the market thoroughly as consumers prefer local taste due to the still growing concept of dines out. Moreover, the trend of becoming brand conscious is still not fully applied therefore, price also plays an important role with such consumers but too low pricing will portray a low quality product thus appropriate pricing is necessary. Therefore, the market is huge for McDonalds to capture and knowing the strength of the renowned brand it does not seem a difficult task for them. REFERENCES Binh, N. (2009, May 07). Foreign giants dominate fast food market. Retrieved April 27, 2010, from http://vietnewsonline.vn/News/Business/6032/Foreign-giants-dominate-fast-food-market.htm Goliath. (2007, April). A fast food nation? Vietnam has rich cuisine traditions which stretch back a number of years. But, how will the nations rapid development eat into its dining habits? Is Vietnam already a fast food nation? Retrieved April 27, 2010, from http://goliath.ecnext.com/coms2/gi_0199-6556020/A-fast-food-nation-Vietnam.html Lifeinvn. (2010, April 07). For your dining pleasure. 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