McDonalds Marketing - Case Study Example

McDonald’s Marketing Plan of Table of Contents Introduction 3 Objectives 3 Marketing Program 3 Product Strategy 3 Pricing strategy 3 Marketing Communication and Promotion Strategy 3 Distribution (Place) Strategy 4 Corporate Social Responsibility Strategy 4 Situational Analysis (SWOT) 4 Industry Analysis 5 Target Market Analysis 6 Customer Analysis (primary and secondary research) 6 Recommendation 7 Conclusion 7 References 8 Introduction The marketing plan of a company is involved with the development of the strategies of an organization regarding it business operations. The marketing plan helps the organization to identify and organize the required steps to achieve the desired results. It can involve a number of activities starting from product development to market diversification (Kotler & Keller, 2011). In order to ensure that the marketing plan is delivering the desired result, it needs to gather necessary information regarding the industry, the target customers, the target market, depending on which the company must design its upcoming marketing mix. In this marketing plan, the McDonald’s Dollar Menu has been discussed and a proposed marketing plan has been covered which will eventually lead to a high product acceptance resulting to higher sales of the products. Objectives The objective of this paper is to generate a report that will focus on the marketing plan of the McDonald’s Dollar Menu and will highlight on how the company can increase the market share for that particular product. The information regarding the consumer behavior will be gathered from the primary data collected from the customers. The secondary data regarding the industry and the market environment will be collected from credible sources. The objective of this report is to design strategic plan that will ensure that the Dollar Menu of McDonald’s will gain high consumer preference. Marketing Program This section discusses about the marketing mix of the company regarding the Dollar menu product line. Product Strategy The product strategy of the Dollar menu of McDonald’s is involved with the development of light snacking products. The product line includes products like Grilled Onion Cheddar, McChicken, BBQ Ranch Burger, McDouble, Vanilla Cone, Side Salad, etc (Hackthemenu, 2015). These products can be characterized under light snacks. The food products have been designed in such a way, so that they can represent small meals. Pricing strategy The pricing of the Dollar Menu item is the most prominent differentiating factor that the company has designed. Most of the products in the Dollar Menu list are priced around $1, while the rest are priced at around $2 (McDonald’s, 2015a). The pricing has been kept low to attract the customers who are habituated with street foods. This strategy has allowed the company to face the challenges posed by the street food joints that offer almost identical food items at low prices. Marketing Communication and Promotion Strategy The marketing communication conducted by the company is focused on television commercials and billboards and hoardings (McDonald’s. (2015a). Since, the dollar menu items are low priced and are targeted at the budget conscious mass consumers, the company should further widen its promotional activities by using social media platform. The social media marketing can be proved to be lucrative to attract the mass consumers. The central idea behind the promotional activities is that, McDonald’s is offering the best value for money for the customers. Distribution (Place) Strategy The Dollar menu items are offered all over the USA across the entire range of McDonald’s’ outlets in the country. In order to further boost up the sales of the dollar menu items, the company can increase the distribution network by introducing McDonald’s street joints and street stalls, which can compete with the street foods (McDonald’s, 2015b). This as a result can also help the company to gain access to a large number of target customers. Since, low price of the products clearly suggests that the company is targeting at the mass population, therefore, the dollar menu items being offered at McDonald’s street stalls can be lucrative for the company. Corporate Social Responsibility Strategy The corporate social activities of McDonald’s include operational activities with low carbon foot print and low resources wastage. The company ensures that all of its packaging is made from renewable materials and they do not put any negative impact on the environment. The energy consumption of the stores is kept to a minimum (McDonald’s, 2015d). Furthermore, the company can involve in CSR activities to help the poor and underprivileged countries to fight hunger by offering them subsidized food products. The CSR activities will help the company to improve its brand image and will be recognized as an ethical company. Situational Analysis (SWOT) The SWOT analysis will help to analyze the internal and external attributes of the company. Strengths: The strength of the company includes its high brand preference and leading position in the market. The company is best known for its burger items which are famous all across the country (McDonald’s, 2015c). Moreover, the company also holds a wide range of franchising operations in several parts of the world. McDonald’s have also developed several locally adapted food items to increase the brand preference in overseas locations like in India (Clark, 2014). Weakness: The business operations of McDonald’s are only based on the fast food industry. Therefore, the lack of differentiation may limit the sustainability of the company in the long run. The increasing awareness of the health concerns among the general public has also led to avoidance of high calorie food products. Opportunity: The company holds huge potential in the international market, particularly in the UK. The out-of-home eating habits of the consumers are increasing over the years owing the busy and hectic lifestyle. The company also has a good opportunity in offering healthy diets through offering food items with low calorific value (Clark, 2014). McDonald’s can also enter into coffee house industry, which can prove to be lucrative owing to its widely preferred brand image. Threats: The threats faced by McDonald’s are primarily on the grounds of competition posed by companies like Yum brands, Doctors’ Associates Inc., Wendy’s International, Burger King, KFC, etc (Spiderbook, 2015). All of these firms operate in the same industry and seek out for new ways to increase their market share. McDonald’s also faces threats from changing foreign exchange rates. Since, a significant portion of the company’s business operations is based on overseas locations, so the fluctuating exchange rates may lead of financial risks. Industry Analysis The cooperative environment: McDonald’s runs most of its operations through business cooperation like franchising. The franchisees are given the license to operate with the brand name of McDonald’s and are also given the permission to use their patented recipes. This as a result reduces the operational risk of the company. The company has thereby created a good cooperative environment where it can rely on third party companies to run its business in the overseas locations. The company also holds a business collaboration with Coca Cola, which allows it to stock beverages from the company (Gale, 2006). The competitive environment: The fast food industry is characterized by high degree of competiveness among the exiting firms. The existing firms like Burger King, Subway, Taco Bell, Yum, Pizza Hut, Domino’s, etc. operate in the same industry and cater to the same customer base (Statista, 2014a). This in turn increases the competiveness among them and they try to create differentiation in terms of brand image, product offering and customer satisfaction (Spiderbook, 2015). These companies often adopt aggressive marketing strategies through promotional campaigns, television commercials, billboards and hoardings. This as a result creates top of the mind brand recall among the consumers. The brand with the highest recall wins the highest consumer preference and thereby enjoys higher revenue. The Economic Environment: The economic environment reflects the affordability of the target customers (Aaker, 2010). The economic environment of the US is quite stable and the GDP (PPP) has been recorded to be $17.46 trillion (CIA, 2015). This indicates that the affordability of the customers in the US is quite high and they form the right target group for the company. Since, McDonald’s caters to the mass market by keeping the price of the products to an easily affordable level, so the customers with average disposable income is capable of buying McDonald’s’ products. The Social Environment: The social environment indicates the consumer behavior of the region. It has been stated that the trend of fast food consumption has increased gradually over the years. Moreover, the people have exhibited an increasing trend of out of home eating. This as a result can make the Dollar menu items successful (Gilbert et al, 2004). However, the people now-a-days are more concerned about their diet and they are eventually shifting towards low calorie foods (Young & Nestle, 2002). In response, McDonald’s have mentioned the calorific value of each item in the Dollar menu. This as a result helps the customer to easily make their purchase decisions. The Political Environment: The political environment in the US is quite stable and is less likely to hurt the business operations of the company. However, any drastic changes in the trade laws can disrupt the business activities of McDonald’s and hamper its cash flows. The US has good trade relationship with several countries which as a result, allows McDonald’s to expand its business in several overseas locations. The Legal Environment: The legal environment allows the company to operate under the protection of the law. This as a result, protects the company from threats such as patent infringements, illegal marketing activities by rivals, etc. The legal environment also allows the company to maintain a good standard of food in the country, thereby offering hygienic food products to the customers (CDC, 2015). The Technological Environment: The technological availability of a region largely influences the business operations and the success of the firm. The US is among the top technologically advanced countries and the availability of advanced technology has allowed McDonald’s to deliver higher value for the customers. Target Market Analysis Customer Analysis (primary and secondary research) The analysis of the target market has been conducted by gathering both primary and secondary data. The secondary data indicates that the target customers of the fast food industry is mostly the young and middle aged population, which belongs to an age group ranging in between 12-40 years. However, the product line has attracted much wider customer demographics. The secondary data also indicates that the younger population particularly the ones who are working professionals are quite attracted towards fast foods offered by companies like McDonald’s. This is mostly because of their busy schedule and lack of time to make food at the house hold. This as a result has made the Dollar Menu quite popular among the young population. This customer group exhibits a trend of daily consumption of outside food. Thus, offering a meal at a price around a dollar is quite attractive for the customers. The value proposition offered by the company is mostly in terms of value for money. The primary data gathered from interviewing the two customers of McDonald’s indicates the following findings. The customers always look out for the best value for money and despite of the affordability of the customers, they always try to visit places where they can purchase at the least possible price without having to compromise on the product quality. McDonald’s is one of the most trusted brands in the US and also holds the leading position in the industry in terms of market share, which creates a strong perceived value in terms of the quality of the product. Thus, the Dollar menu items provided the great value for money for the customers. The respondents also mentioned that it was quite easy for them to choose from the menu as the amount of calorie was clearly mentioned after each item. Thus, it can be stated from the analysis of the primary and the secondary data that the customers in the target market show sufficient preference for the fast food industry and their behavior also indicates that they are also attracted to the Dollar menu owing to the high value proposition. Recommendation It can be recommended for the company that it should increase the portfolio of the Dollar menu which as a result will further attract a lot of customers. The concept of Dollar menu is currently only available in the US. It should also be implemented in other countries where McDonald’s operate. This as a result will help the company to increase its customer base and at the same time, it will also help to improve the competitive advantage of the company. It is also recommended that McDonald’s can introduce Dollar Menu stalls in the street to compete with the street foods. This as a result will help the company to access a larger number of potential customers. Furthermore, the company can also introduce new products in their product line up of the Dollar menu, which are low on its calorific value. Conclusion The fast food industry is exhibits a highly competitive nature. The high attractiveness owing to steady growth and consumer preference has drawn several firms in the industry. The US market is dominated by McDonald’s, where the brand preference of the company is mostly due to the product quality and value for money offered by the company. The increase in competiveness in the industry has compelled the firms to seek out new ways to add value for the customers. The Dollar menu is the perfect example of value based marketing. The items offered in the dollar menu carry a low price tag, along with low calorific value. This as a result is an attractive proposition for the customers who consume fast food regularly. Thus, the dollar menu can improve the brand preference of McDonald’s and at the same time it will also increase its competitive advantage. References Aaker, D. (2010). Strategic Market Management: Global Perspectives. 6th ed. Oxford: Blackwell Publishing. CDC. (2015). Obesity Facts. Retrieved from http://www.cdc.gov/healthyyouth/obesity/facts.htm CIA. (2015). United States. Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/us.html Clark, W. (2014). Product Development Strategy for McDonalds. Retrieved from http://smallbusiness.chron.com/product-development-strategy-McDonald’s-12207.html Gale, S.F. (2006). McDonald’s USA: A Golden Arch of Supply Chain Food Safety. Retrieved from http://www.foodsafetymagazine.com/magazine-archive1/februarymarch-2006/McDonald’s-usa-a-golden-arch-of-supply-chain-food-safety/ Gilbert, G. R., Veloutsou, C., Goode, M. M., & Moutinho, L. (2004). Measuring customer satisfaction in the fast food industry: a cross-national approach. Journal of Services Marketing, 18(5), 371-383. Hackthemenu. (2015). The Dollar Menu. Retrieved from http://hackthemenu.com/McDonald’s/menu-prices/dollar-menu/ Kotler, P & Keller, K.L. (2011). Marketing Management. New Jersey: Prentice hall McDonald’s. (2015a). Dollar Menu and More. Retrieved from http://www.McDonald’s.com/content/us/en/food/meal_bundles/dollar_menu.html McDonald’s. (2015b). Our Company. Retrieved from http://www.aboutMcDonald’s.com/mcd/our_company.html McDonald’s. (2015c). How Do We Control Our Quality? Retrieved from http://www.McDonald’s.com.hk/en/food/learn-more-about-McDonald’s-food/how-much-do-you-know-about-our-food/how-do-we-control-our-quality.html McDonald’s. (2015d). Mission & Values. Retrieved from http://www.aboutMcDonald’s.com/mcd/our_company/mission_and_values.html Spiderbook. (2015). McDonald’s Competitors. Retrieved from http://spiderbook.com/McDonald’s-competitors.html Statista. (2014a). Market share of leading brands in the United States fast food industry in 2013. Retrieved from http://www.statista.com/statistics/196611/market-share-of-fast-food-restaurant-corporations-in-the-us/ Young, L. R., & Nestle, M. (2002). The contribution of expanding portion sizes to the US obesity epidemic. American journal of public health, 92(2), 246-249. Read More