marketing plan of mcdonald's

ISLAMIA UNIVERSITY BAHAWALPUR

SUB CAMPUS RAHIM YAR KHAN

McDonald’s : Behind The Golden Arches

Presented By

Slinky City

McDonald’: Behind The Golden Arches

Formed

in 1954, McDonald's brand is the leading global foodservice retailer with more than 30,000

local restaurants serving nearly 50 million people in more than 120 countries each day. Our

rich history began with the founder Ray Kroc's vision and his commitment, transformed in

our talented executives, and will keep the shine on McDonald's arches for years to come.

McDonald's Mission

McDonald's mission is to be our customers' favorite place and way to eat with inspired people

who delight each customer with unmatched quality, service, cleanliness and value every

time ... we invite you to be the part of this winning team and give yourself an opportunity to

grow with the family of people striving to create smiles on the faces of millions of people

everyday.

www.slinkycity.tk 2 | P a g e

http://www.slinkycity.tk/


McDonald's Vision

McDonald’s vision is to be Estonia's "best" quick service restaurant, experience

supported by a set of core values and guiding principles.

McDonald's in Pakistan

Aiming to be the world's best quick service restaurant, McDonald's Pakistan opened its doors

in September 1998 at Lahore and presently operating in six major cities with a network of 20

restaurants. With a strong belief in the Ray Krock phrase when you are green you are

growing, McDonald's Pakistan has an aggressive plan to expand in all other cities of Pakistan

and is rapidly growing with the focus to provide friendly and quick service restaurant

experience to our customers.

Lakson Group of Companies

McDonald's Pakistan is a part of the Lakson Group of Companies, with a Head Office in

Karachi and a regional office at Lahore. Lakson Group also owned, Lakson Tobacco Co.

Colgate Pakistan Ltd, Century Insurance Ltd. Express Newspaper, Cyber Net and various

others businesses.

The Team

To realize the McDonald's service vision, we believe in strengthening our team and ensure to

deliver the right skills and knowledge to the right person for getting the right job done. Our

strength for making our strong team players to shine under the Golden Arches lies in the

People Practice and Development Program, we focus to deliver.

Business Model Franchise Model – Only 15% of the total number of restaurants are owned by the

Company. The remaining 85% is operated by franchises. The company follows a

comprehensive framework of training and monitoring of its franchises to ensure that

they adhere to the Quality, Service, Cleanliness and Value propositions offered by

the company to its customers.




Product Consistency – By developing a sophisticated supplier networked operation

and distribution system, the company has been able to achieve consistent product taste

and quality across geographies.

Act like a retailer and think like a brand – McDonald’s focuses not only on

delivering sales for the immediate present, but also protecting its long term brand

reputation.

FIRM CUSTOMERS

All Population of Pakistan are our customers

Customer Perception and Customer Expectation Customer perception is a key factor affecting a product’s success. Many potentially

revolutionary products have failed simply because of their inability to build a healthy

perception about themselves in the customers’ minds. McDonalds being an internationally

renowned brand brings with it certain expectations for the customers.

Customers expect it to be an ambient, hygienic and a little sophisticated brand that respects

their values. The customer’s expect the brand to enhance their self-image. Customer

responses obtained at the Vile Parle, Mumbai outlet confirmed the fact that they connect

strongly with the brand. However, fulfilling some of the customer expectations like a broader

product variety provide McDonald’s a great scope for improvement.


Target Segment What is McDonald’s for me?

A Family with children A treat to children, a fun place to be for the children.

Urban customer on the move Great taste, quick service without affecting the work schedule

Teenager Hangout with friends, but keep it affordable.



Segmentation, Targeting and PositioningMcDonald’s uses demographic segmentation strategy with age as the parameter. The main

target segments are children, youth and the young urban family.

71%

59%52%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Biscuits Burgers & Pizzas Fruit Juices

% of kids who influence what FMCG brand their family buys

As shown above, kids reign supreme in FMCG purchase related to food products. So to

attract children McDonalds has Happy Meal with which toys ranging from hot wheels to

various Walt Disney characters are given (the latest in this range is the toys of the movie

Madagascar). For this, they have a tie-up with Walt Disney. At several outlets, it also

provides special facilities like ‘Play Place’ where children can play arcade games, air

hockey, etc. This strategy is aimed at making McDonald’s a fun place to eat. This also helps

McDonald’s to attract the young urban families wanting to spend some quality time while

their children have fun at the outlet. To target the teenagers, McDonald’s has priced several

products aggressively, keeping in mind the price sensitivity of this target customer.

“Mc Donald’s mein hai kuch baat” projects McDonald’s as a place for the whole family to

enjoy. When McDonald’s entered in Pakistan it was mainly perceived as targeting the urban

upper class people. Today it positions itself as an affordable place to eat without

compromising on the quality of food, service and hygiene. The outlet ambience and mild

background music highlight the comfort that McDonald’s promises in slogans like “You

deserve a Break Today” & “Feed your inner child”. This commitment of quality of food




and service in a clean, hygienic and relaxing atmosphere has ensured that McDonald’s

maintains a positive relationship with the customers.

After segmenting the market, finding the target segment and positioning itself, each company

needs to come up with an offer. The 5 P’s used by McDonalds are:

1. Product

2. Place

3. Price

4. Promotion

5. People

6. Process

7. Physical Evidence

Product: How should the company design, manufacture the product so that it

enhances the customer experience?




Product is the physical product or service offered to the consumer. Product includes certain

aspects such as packaging, guarantee, looks etc. This includes both the tangible and the non-

tangible aspects of the product and service.




“Our clear strategy is to bring the customers in initially and provide a range of entry-level

products so that they can try new items and graduate to the higher rungs.” ---

Vikram Bakshi,

Managing Director,

Northern Region, India

•McDonald’s product includes vegetarian and non-vegetarian items.

•Also involves combo.

•Cares for customer’s sentiments towards religion and Culture.

•Separate cooking area and equipments.

•Takes dietary concern-Burger King healthier Kids' Club.

Co- Branding:

McDonald’s has major tie-ups with various companies as their co-

branding Statergy.

Few of Them are listed Below:




What are the strengths and weaknesses of the PTCL?

Strengths

MacDonald’s has a strong global presence with its nearest domestic competitor being

only half its size,

McDonald’s is the market leader in both the domestic and international markets.

MacDonald’s benefit from cost reduction through economies of scale because of

its enormous size and its huge global presence allows it to diversify risk involved

with the economic performance of specific countries.

In international markets, MacDonald’s is well placed to expand and take

advantage of long-term economic growth.

MacDonald’s also has a strong real estate portfolio. The company’s outlets are

located in areas that are highly known for visibility, traffic volume and ease of access.

MacDonald’s also has exceptional brand recognition. This strong brand recognition

creates significant opportunities for the company.

MacDonald’s is able to generate more sales because of its brand recognition. Through




aggressive market planning, MacDonald’s has been able to recapture its youth market once again.

Weaknesses

The food industry is really saturated. As a result of this, MacDonald’s has to deal with

the prospect of looming market saturation, which could make it difficult to add new

outlets.

The market is forecast to grow by around 2% per year. There is also an

increasing price competition driven by too many competitors, which reduces the

company’s ability to increase revenue.

Nevertheless, the swift of the company’s focus from a value menu to a more diverse

one has recently limited the negative effect of the intense price competition that was

traditionally taking place among the industry leaders.

Lack of product innovation is another weakness of McDonalds.

The last break-through for McDonald’s was the Chicken McNugget in 1983, but

again the company’s new strategy seems to have successfully dealt with the problem

through the popularity of its new salads and other new products.

Opportunities

MacDonald’s sold its Donatos Pizzeria back to its founder in 2003 and discontinued

Boston market operations outside of the US.

The company will instead focus on Chipotle Grill which is the company’s most

successful non MacDonald’s branded chain of restaurants.

Also to increase profitability the company has slowed its expansion of McDonald’s

restaurants so as to refurbish and change the image of current restaurants and adding

new features such as Internet access.

McDonald’s still has plans for more international expansion.

McDonald’s still needs to penetrate in many countries especially in Europe, Asia

and Latin America.

Changing trends in eating habits toward more health eating, seen as a threat to

McDonalds can also be seen as an opportunity.




McDonalds introduced new premium salads and Fruit n’ Yogurt Parfaits in the US

which lead to growth in 2004 and the same products will probably bring some

more growth in foreign markets.

Threats

McDonald’s is exposed to changes in the global economy.

The company’s aggressive international expansion has left it extremely vulnerable

to other countries economic slowdown.

Foreign currency fluctuation is also another problem global companies like

McDonalds.

The Fast food industry is becoming an increasingly competitive sector.

MacDonald’s keeps up with competitors through expensive promotional

campaigns which leads to limited margins to gain market share.

McDonald’s is attempting to differentiate itself, with new formats and new menu

items, but other fast food industry are doing the same too.

McDonald’s, just like other fast food industry, often receives bad press because of

its link obesity.

Increased concern such as this has led the Food Standards Agency and the

Department of Health in the UK to review the advertising of ’junk’ foods such as

McDonalds to children.

Top Competitors for MacDonald’s include: Yum! Brands, Inc, Wendy’s International,

Inc. Jack in the Box Inc, and Burger King Corporation.

Promotion: What is the suitable strategy and channels for promotion of the product?




The various promotion channels being used by McDonald’s to effectively communicate the

product information are given above. A clear understanding of the customer value helps

decide whether the cost of promotion is worth spending.

There are three main objectives of advertising for McDonald’s are to make people aware of

an item, feel positive about it and remember it. The right message has to be

communicated to the right audience through the right media. McDonald’s does its

promotion through television, hoardings and bus shelters. They use print ads and the

television programmes are also an important marketing medium for promotion.

Some of the most famous marketing campaigns of McDonald’s are:

“You Deserve a break today, so get up and get away- To McDonald’s”

“Aap ke zamane mein ,baap ke zamane ke daam”.

“Food, Folks, and Fun”

“I’m loving it”.

• Target customer – Children’s

• Awareness about products among People

• Use of Different Media like Television, hoardings and bus shelters

• DDB Needham and Leo Burnett agencies appointed for the advertisement

• Description of Products on Paper Mats placed in the trays.

• The placing of the pamphlets and banners in and around the outlets

• 80-20 Menu Board

• Lucky Promotion strategies

An activity, such as a sale or advertising campaign, designed to increase visibility or sales of

a product.

•McDonalds, for years has maintained an extensive promotion strategy with highest spending

on marketing amongst all its competitors.

Advertising:

Focus on overall experience.

“Brand globally and act locally”.

Overall it is doing what it does the best – marketing. Intensive advertising aimed at children.




Paper mats on trays ensure that no new scheme goes unnoticed. 80-20 menu boards

marketing tool.

• Sponsors sport events with their logos advertised in these events. Significant use of

billboards and signage.

• Image of portraying warmth and a real slice of everyday life has become a trademark and

has created many memorable commercials.

Campaigns…

“I’m lovin’ it” is an international branding campaign which was launched in 2003 and has

proved to be its biggest success.

“aap ke zamaane mein baap ke zamaane ke daam” is a highly localized campaign which

aimed at attracting the masses through its happy price menu.

HOW DO THE CUSTOMERS LEARN ABOUT THE FIRM’S PRODUCT AND SERVICES?

Majority of the customers learn about the firm’s product and services from the newspapers

ads, franchises and TV commercials.

WHO ARE COMPETITORS?

Only KFC and Pizza Hut is our major competitor in Pakistan.

HOW WOULD YOU IMPROVE THE FIRM’S COMMUNICATIONS ACTIVITIES?

More focus on service delivery time because of customer don’t have much time today.

Use electronic media for promotion.




Placement:

•Located at prime locations

•Evenly spread in NCR

•Almost in all big cities

•At residential areas, malls, Multiplexes

WHAT IS THE NEED OF CHANNELS FOR THE PRODUCT AND SERVICES OF THE McDonald’s?

Firm point of view

Easy availability of product and services to the customers

Easy availability for providing basic services and value added services

Easy complaint handling

To cover target market

Customers Point of view

Easy availability of Product and Services

Time and Money saving

Fast Service System and Resolve Conflict

HOW WOULD YOU IMPROVE THE CHANNEL ACTIVITIES?

Try to convert your traditional channel into remote channel.




Price: What should be the pricing strategy?

Pricing includes the list price, the discount functions available, the financing options

available etc. It should also take into the consideration the probable reaction from the

competitor to the pricing strategy. This is the most important part of the marketing mix as this

is the only part which generates revenue. All the other three are expenses incurred. The price

must take into consideration the appropriate demand-supply equation.

McDonald’s came up with a very catchy punch line “Aap ke zamane mein ,baap ke

zamane ke daam”. This was to attract the middle and lower class consumers and the effect

can clearly be seen in the consumer base McDonalds has now.

McDonalds has certain value pricing and bundling strategies such as happy meal, combo

meal, family meal etc to increase overall sales volumes.

•Policy which caters to Indian customers

•Quite affordable products

•Heavily marketed “Happy Price Menu”

•Importance to brand and its integrity

Household Expenditures




Pricing Strategy:

Purchasing power pricing:-

In 1997 slashed prices for vegetable nuggets and soft serve cone. In September 2001, they

offered Veg surprise burgers for Rs 17.

March 2004 – Aap ke zamane mein, baap ke zamane ka daam.

Value Ladder strategy :-

a) Started offering value meals in a range of prices.

b) Ensure affordability and attract widest section of customers.

c) Brought the customer and provided a range of entry- level products.

d) Try those new items and graduate to higher-rungs.

e) E.g- if a customer starts with McAloo Tikki, he will finally graduate to McVeggie and so

in Non veg.

f) Helped its Volume business.

Value Pricing.

a) Happy price menu – Rs 20.

b) Economeal – Rs 49(save Rs 11).

c) McChicken & McVeggie Meal – Rs 75,Rs 65 (Save Rs 15).

d) Happy Meal for Kids – Rs 69,99,109 (toy free).

e) Big saving Meals – Combos Rs 109 – Rs 119(Save Rs 36).

f) A-la carte menu – Rs 45- Rs 65 (Veg) Rs 55- Rs 65 (Non Veg)

a) Desserts – Rs 12 – Rs 25.

b) Beverages – Rs 25- 50 ( a little costly)




HOW DO THE CUSTOMERS CHANNEL REACT TO THE FIRM’S PRICES?

Customers react positively due to Good quality of our product and services.

ARE THERE ANY ACTIONS THE FIRM TO SET ITS PRICES CONSISTENTLY WITH ITS STRATEGY?

McDonald’s rationalizes its tariff with the passage of time in order to beat the competitors.

Physical evidence:

Mc Donalds focuses on clean and hygienic interiors of is outlets and at the same time the

interiors are attractive and the fast food joint maintains a proper decorum at its joints.

Cleanliness, speed, quality and transparency of process is the biggest physical evidence.

• The interiors are attractive and more or less consistent throughout the world. A proper

decorum and strict standards of cleanliness are maintained at all the joints. Extra care is given

to make the joints children Friendly Family environment message throughout the world, just

the way of communication is adjusted to different countries.

Play areas are provided so that kids don’t Play areas are provided so that kids don’t

Become panicky. Counters are kept low and menus pictorially displayed so that children can

order for themselves.

• The physical appearance affects not only the impression outsiders have of a business

but also the way that business functions.




• Staff members

• Location & appearance

• Building maintenance

• Visible cues

Mcdonalds Tariq Road




Process:

The food manufacturing process at Mc Donalds is completely transparent i.e. the whole

process is visible to the customers. In fact, the fast food joint allows its customers to view and

judge the hygienic standards at Mc Donalds by allowing them to enter the area where the

process takes place. The customers are invited to check the ingredients used in food.

• Food manufacturing Transparent to customers

• Training to the licensees

• Invented the most efficient cooking equipment

• New methods of food packaging and distribution

• McDonald’s In Pakistan followed the same tradition

• Spent Rs.50 Crore - even before

People: How to converge the benefits of internal and external marketing?

McDonald’s understands the value of both its employees and its customers. It understands the

fact that a happy employee can serve well and result in a happy customer.

McDonald continuously does Internal Marketing. This is important as it must precede

external marketing. This includes hiring, training and motivating able employees. This way

they serve customers well and the final result is a happy customer.




The level of importance has changed to be in the following order (the more important people

are at the top):

1. Customers

2. Front line employees

3. Middle level managers

4. Front line managers

The punch line “I’m loving it” is an attempt to show that the employees are loving their work

at McDonalds and will love to serve the customers.

The employees in Mc Donalds have a standard uniform and Mc Donalds specially focuses on

friendly and prompt service to its customers from their employees.

Each outlet is headed by a Restaurant Manager . He is responsible for the daily

operation and customer interaction.

• Delivery Crew Member carries basic operation of a restaurant. Ensures customer

satisfaction at the restaurants.In order to motivate there employees they give them

stars as per their performance.

• Stars as per their performance

• Gives employees larger role in decisions

• Philosophy of Quality, Service, Cleanliness and Value (QSC&V) is the guiding force

behind its service

• Customer always comes first

• Fast friendly service

• Provides clean, comfortable environment especially suited for families




Organizational Chart:

The McDonald’s Experience

Marketing in a services industry is becoming an increasingly complex challenge. The

paradigms of service marketing demand a passionate understanding of customer expectations

and perceptions, and linking them to product design & delivery as well as operational

planning. This is where McDonald’s has excelled due to its ability to successfully integrate

the customer’s perspective in its products and operations in a comprehensive manner. The

revamped menu in Pakistan is an example of McDonald’s strategy of integrating the

customer’s perspective in its products. And, the operational integration is evident from



Core Product

Supplementary Process

Service Delivery Process


McDonald’s emphasis on its suppliers as its customers as well as its treatment of its

consumers as co-producers of services.

The ultimate aim of Service Marketing is not just to become a Service Leader but to create a

Service Brand. The Service Delivery Process is the key to achieving this aim of Service

Marketing.

During the Service Delivery Process, each moment of interaction between the firm and the

customer, called “Moments of Truth”, helps understand the opportunities that a firm has to

win or lose the customer. For example, these “moments of truth” are created for McDonald’s

every time the guard at the McDonald’s outlet meets the customer, every time an attendant

takes down the order from the customer waiting in the queue, every time the cashier interacts

with the customer, every time the attendant helps the customer guided the customer towards

the table, every time the attendant cleans the table, etc.


Customer

Service Provider Service Delivery Points

“Moments Of Truth” – The Service Encounter



Managing these “moments of truth” is a great challenge in Service Marketing especially due

to customer’s involvement as a co-producer of services (e.g. McDonald’s self-service concept

wherein the customer not only collects the order but also cleans the table after consuming the

food). However, McDonald's has been able to create a great experience for its customers by

understanding the nature of the entire Service Delivery Process and the various stages in the

process that are exposed to the customers. Transparency in the processes at its outlet has

helped McDonald’s bring the back office in its outlet at the front so that the customer is able

to know the operations and provide feedback on service design improvements.

Internal Customer Focus is equally important as External Customer Orientation in order to

win these “moments of truth”. McDonald’s focus on its People and their service delivery

methods therefore plays a very important role in creating a successful Service Brand. The

quality and the consistency of the service delivered by McDonald’s have been greatly

enhanced by the combination of the factors mentioned above. This has helped McDonald’s

become Service Leader and a successful Service Brand. This is evident from the fact that

very few of its customers opt for take-home parcels or home deliveries while most of them

prefer to eat at the outlet and enjoy the McDonald’s experience.

McDonaldizing the Suppliers

McDonald’s has changed the nature of not only the food service industry but also the food

processing industry as well. McDonald’s realized that the battle between fast food chains

would increasingly be one of efficiency of supply, lower cost production and greater desire to

innovate. It pioneered with innovative and sophisticated food distribution and packaging

systems when the traditional food processors were unwilling or unable to supply food items

that McDonald’s demanded. They achieved amazing consistency by devoting more attention

than anyone else to field service and training at store level. Production was concentrated in

huge plants devoted exclusively to McDonald’s. McDonald’s also started with tiny suppliers

and grew with them displaying great loyalty.

Nowhere is the supplier loyalty more evident than in development of new, improved

products. Some of McDonald’s classic food items like Filet-o-Fish, French Fries, Chicken

Nuggets etc. are results of supplier innovation. Interestingly, it took KFC more than three

years before in finally introduced its own version of chicken nuggets. Thus supplier

technological expertise had given McDonald’s a product which was not a mere marketing

innovation but a technical one. McDonald’s attempted to squeeze labour out of the stores by




moving more preparation back into the processing plant, creating the opportunity to develop

unique products based on suppliers’ processing skills. For the first time, McDonald’s

suppliers became the focal point of new product development. This converted the fast-

food industry’s most fragmented distributed system into more efficient one which helped

McDonald’s reduce its inventory and manage costs effectively.

Importance of PLC in McDonalds

The requirements of customers change over time and thus the product offering has to be

changed accordingly. What is the fashion today may be out of market within few weeks.

Thus continuous innovation is required.

To counter these changes McDonalds has continuously introduced new products and has

phased out the old ones which were at the decline stage of their PLC. The introduction is

timed such that the new product does not cannibalize the product already in the maturity or

growth stage. Thus the secret lies in getting profits with different products in the different

stages of the PLC.

A perfect example of revitalising a product in decline phase

The French Fries have been an important part of the McDonalds menu worldwide. But now

it was in the stage of decline and was actually not generating proper return. In an attempt to




revitalize it, a new variant was introduced namely Shake Shake Fries. This is being served

with chatpata spice mix which has resulted in increase in the sales of French Fries and has

elevated it from to the decline stage. This is used to delay the decline of a well established

product which has the potential of generating further revenue.

McDonald’s

Name: Gender: M / F Age Group: a) Below 18 b)18-28 c)28-40 d)Above 40

Occupation: a) Student b) Business c) Service d) Housewife e) Any other

CONFIDENTIAL: This research questionnaire is only for to conduct the research on particular problem and your given information will be secured.

How often do you visit McDonald’s? Weekly Monthly Occasionally

Specify your satisfaction with McDonald’s according to the following?

Parameter Excellent Good Average PoorQualityPriceOutletTasteService

Through which media you are getting information about McDonald’s?

TV Newspaper Pamphlets Bill Boards other’s (specify)………..

Are you satisfied from the product and services of the McDonald’s?

Yes No

What is the first thing that strikes your mind about McDonald’s?

Burger Fun Service Value for money

What is the main problem you faced at McDonald’s? Long Queues Rude Behavior of Employees Congestion No problem Other’s

Do you want McDonald’s services in RYK?

Yes NoDoes the logo attract you?




Yes No

Which place you suggest for opening a McDonald’s here?

_____________________________________

Thanks for

your cooperation!

How often do you visit McDonald’s?

Weekly

Monthly

Occasionally

Specify your satisfaction with McDonald’s according to the following? (Quality)

60%30%

10% 0%

Excellent

Good

Average

Poor




Specify your satisfaction with McDonald’s according to the following? (Price)

30%

55%

15% 0%

Excellent

Good

Average

Poor

Specify your satisfaction with McDonald’s according to the following? (Outlet)

60%20%

15%5%

Excellent

Good

Average

Poor

Specify your satisfaction with McDonald’s according to the following? (Taste)

55%40%

5% 0%

Excellent

Good

Average

Poor




Specify your satisfaction with McDonald’s according to the following? (Service)

40%

35%

20%

5%

Excellent

Good

Average

Poor

Through which media you are getting information about McDonald’s?

85%

10% 0% 5% 0%

TV

Newspaper

Pamphlets

Bill Boards

Other’s

Are you satisfied from the product and services of the McDonald’s?

80%

20%

Yes

No




What is the first thing that strikes your mind about McDonald’s?

30%

20%15%

35%Burger

Fun

Service

Value for money

What is the main problem you faced at McDonald’s?

5% 5%

15%

70%

5% Long Queues

Rude Behavior ofEmployees

Congestion

No problem

Other’s




Do you want McDonald’s services in RYK?

100%

0%

Yes

No

Does the logo attract you?

95%

5%

Yes

No

CONCLUSIONS:

McDonald's views the relationship between franchisor, franchisee and supplier to be of

paramount importance to the success of the business. Ray Kroc recognised the need very

early on for franchisees that would dedicate themselves to their restaurants. He wanted

people who had to give up another job to take on the franchise venture, relying on their

franchise as their sole source of income and would therefore be highly motivated and

dedicated. Consequently, McDonald's will not offer franchises to partnerships, consortia

or absentee investors. The initial capital has to come from the franchisee as a guarantee of

their commitment. The selection process is rigorous to ensure that McDonald's only

recruits the right people.




References

1. “Marketing Management” –

2. “McDonalds – Behind the Arches” – John S Love

3. www.Mcdonaldsindia.com

4. Outlet Manager – McDonald’s Vile Parle

5. McDonalds Pakistan

6. Google

7. www.slinkycity.tk



marketing plan of mcdonald's

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