Key Factors Responsible for the Declining in Sales of McDonalds - Case Study Example

McDonald's must remain adaptable and agile with the ability to make rather quick design changes to appeal to the tastes of the public and keep up with rapid changes introduced by smaller rivals in the market. At some point, upon saturation in the market, he may return to a modified “multipronged” approach, and readdresses their desire to dominate the market, altering their product strategy to meet the specific needs of the market as dictated by their cultural and economic environments.

The key factors responsible for the decline in sales of McDonald’s:
Competition from players within the market such as Subway and the substitute products has increased. New entrants such as Subway with fresh salads and sandwiches are giving tough competition to McDonald's. Apart from this coffee outlets' product market is itself giving tough competition to McDonald, who got affected due to worldwide concern for Obesity.

Another key factor responsible for the decrease in sales is the changing customer preferences and tastes. Young customers form the major segment of the market. Customers seek variety and buy products that look trendy. They also show a high degree of brand preference. Youth are less interested in McDonald, as they perceive it to be an old formulation.

The company’s inability to handle its marketing mix properly is cited as another key factor for the poor performance of the brand. Food product outlets require heavy promotions. The company did not help enough consumption avenues to customers in improving sales.
As with a successful ad campaign, the company followed a planning process as outlined below:
(i) Identifying marketing objectivities
(ii) Communication effects
(iii) Processing
(iv) Exposure

Identifying marketing objectives: first firm has to decide upon the marketing objectives that it wants to satisfy and the role of advertising in meeting those objectives. McDonald’s advertising and promotion activities were minimal in the year 2004. Promotions were limited to banners and specific promotions. However, the fast food market was growing rapidly. This company realized that the burger is no longer an unmarked food product and has been accepted by consumers. The company has decided that it is the right time to improve its position in the market. The company identified that targeting the burgeoning middle-class homes, whose incomes are on the rise and whose attitude towards eating out is changing, can increase volumes.

Communication effects: any successful advertising campaign should establish communication effects in the minds of the consumer that encourage them to take action (purchasing a product). A company can select from four possible communication effects. They are category need, brand awareness, brand attitude, and brand purchase intention

Processing: McDonald then had to devise an advertising strategy to achieve its communication objectives. The company came up with the Big Mac campaign, which had short-duration teaser ads that highlighted the intention to buy its burger.
Exposure: the final step in an advertising program is to decide upon the original exposure of the ad campaign to achieve the desired impact on the target segment. Two aspects have to be decided at this stage media selection and media scheduling. Media selection refers to the identification of media through which the campaign has to run. Media scheduling refers to the taming and frequency with which the ads are exposed to the target audience.

McDonald's did not have a large enough retail presence to leverage the consumer product interaction and wanted to position the product as a home food item. Therefore the company decided that reaching the homes of consumers is the right option. Television is an effective medium to directly reach the homes of the people. The company decided to air advertisements of 10-sec duration frequently. Such short flash ads enable impulse buying.

McDonald's marketing objectives can be divided into five-fold, with each being as integral to our success as the next.
(i) Product Mission - Provide customers with the finest quality food in the most efficient time.
(ii) Community Mission - Provide community support through customer involvement.
(iii) Economic Mission - Operate and grow at a profitable rate through sound economic decisions.
(iv) Customer Orientation - identifying and determining the wants and requirements of customers through marketing surveys, forecasting, and research
(v) Integrating the marking planning and control with those of other departments keeping in view the ultimate goal of customer satisfaction. It may be noted that the customers expect satisfaction not only in terms of genuine and wholesome products and services but also several other considerations such as prompt and regular supply of production/services reasonable price, availability of efficient after-sales service, and so on.

McDonald's Company is concentrating on training and development of its organization to cope with the competitive market. The company’s highly structured training programs are conducted at four levels crew development program, restaurant management development program, mid-management program, and executive development program. Franchise owners also have to undergo full-time nine-month training before managing their restaurants. This training includes activities ranging from basic operations to the complete management of the restaurant such as recruiting, accounting, and administration. Read More