Assignment on Strategy Marketing Management

Overview of the company

McDonald’s is a large corporation in the fast food industry and headquartered in Oak Brook Illinois. In 1954 McDonald business was started by Raymond Kroc in San Bernadion, California. The majority of the restaurants are owned through individual franchises. McDonald’s, leading sector in the field of global food service which has 31,000 local restaurants, located in 118 countries and serves more than 58 billion people worldwide. McDonald has valued as one of the valuable brand globally with universal recognition and with worth more than $25 billion. The brand of McDonalds is one of the well known and popular brands in the world and in order to differentiate the company from its many competitors continuous marketing, public relations and promotional activities are undertaken to promote the brand image of McDonald’s. In all the countries approximately 75% of the restaurants, are operated by local men and women. The most favourite foods which are all considered world famous are Big Mac, Quarter Pounder with cheese, Egg McMuffin, French Fries, Chicken, hotcakes, muffins, bagel and McNuggets. Recently, the company profit has declined to 2.3% and thus there is a great need to look at the marketing strategies adopted at McDonalds and further innovative strategies are suggested to improve their profit and productivity.

Task 1: – Planning principles and range of tools and techniques

Prepare a clear and accurate outline of the planning principles and processes involved in developing a marketing strategy which you think the enterprise must adopt on the part of recovery, with appropriate supporting examples.

Corporate level strategy: In order to develop corporate level strategies, we need to understand the current strategies of an organization. McDonald current corporate level strategy was “continue to drive success in 2008 and beyond by leveraging key consumer insights and our global experience, while relying on our strengths in developing, testing and implementing initiatives surrounding our global business drivers of convenience, branded affordability, day part expansion and menu variety” (McDonald's, 2008, 25). Several strategies also adopted by McDonald which includes better operation of restaurant, variety in menu, customer preference at priority, choice of beverage, 24hours operation, reinvesting the ongoing restaurant. The goals of the company are “one hundred percent total customer satisfaction”, customer level satisfaction goals are “Your food will be hot”, “Your service will be fast and friendly”, “And your drive-thru orders will be double-checked right”, “If you're not satisfied, we'll make it right. Or your next meal is on us. Guaranteed”. In spite of several strategies adopted, the company’ sales has declined significantly due to number of problem faced in operating the restaurants such as the employee relationship, environment was neither customer friendly nor employee friendly, too much communication between the employees while serving the customers. These problem certainly decrease the customer value, thus to maximize the profit and increase the customers, the focus should be on the restaurant operations at maximum but at the same time customers should be given high priority. Customer line of service also should be improved as only one person is involved in serving the customers. Employees uniforms with are not clear reference to their position and thus pose confusion. In addition, effective leadership and communication is also lacking and the only communication occurs between the customers and employees were with reference to placement of orders. There is no effective leadership within the organization. With reference to functional strategy, there is a delay in customer service, therefore, no feedback in terms of double-checking orders. This has to be improved by providing more employees and effective training in terms of communication, leadership and management. Effective training and recruitment program for the employees of both current and future will help to achieve less staff turnover ratio.

To increase the sales and guest counts at McDonald, the strategy, is to make day part expansion initiative and moreover through drive-thru pick up window, the efficiency will increase and the persons who want to much during night time, opening the restaurants during late hours will helpful and in turn increase the profit and customers visit. With reference to geographic location strategy, it has opened many restaurants locally which “are the core of their competitive advantage and make them not just a global brand but locally relevant one” (McDonald’s 27). Organizational restructure is also another important strategy, where the McDonald should upgrade and remodel its franchises. In order to further increase the profit, company has opened up a café, which is McCafe’s “with the expectation that the gourmet coffee shop would move it closer to its goal of doubling sales at existing U.S restaurants over the next decade” (Peter & Donnelly, 2007, 253)

Building better brand transparency is one of the marketing efforts of the McDonald’s strategic plan. Recognition of brand image is key goal of the McDonald. McDonald’s increasing the experience of the customers “Across their markets, they are making is easier for customers to enjoy a great McDonald’s experience. They are introducing drive-thrus to the increasingly mobile populations in China and Russia, while in the U.S. and Canada, greater drive-thru efficiency and double drive-thru lanes enable them to serve even more customers quickly” (McDonald's, 2008, 13). It has planned to include 100 McCafes in Germany and new kitchen operating system has been installed to deliver the food at high quality and worldwide it has also started renovating its firm. With new menu selections, the company also delivered a great value to the customers “By serving a locally relevant balance of new products, premium salads and sandwiches, classic menu favorites and everyday affordable offerings around the world, they create value for customers and satisfy their demand for choice and variety” (McDonald's, 15). As increase in brand image globally, five factors of customer service adoption would increase their net income and their sales. In addition the remodeling and upgrading initiatives would certainly help the company to get more customers as they customers will experience pleasant and friendly place to dine out. In order to improve their brand image, sponsorship program could be initiated and though this has already been done by McDonald during 2008 Olympics in order to publicize the brand image, this effort has to be increased further.

Accurately describe and critically evaluate the range of tools and techniques which this enterprise can use to produce a strategic marketing plan which will give the firm a leveraged position in the market place

In order to develop accurate marketing strategy, McDonald used customer perceptions analysis through ongoing market research to develop key information. The information needed in order to determine the correct marketing mix

• In the market, which are the products are received well
• The prices, consumers are accepting to pay for the product
• Most attractive programmes in TV, advertising and newspapers, consumers are willing to read and view.
• Most preferable restaurants of the consumer.

To create right marketing strategy, accurate research is essential, which will help to increase the profit of the firm and to win the loyalty of the customers. In today’s buying behaviour has changed rapidly due to change in the economy and social attitude. To design marketing strategy for McDonald’s, the firm has to identify, whether the target number of customers has grown or reduced and or whether any change in the buying habits of the customers in present and in future.

Industry and Market analysis

Today’s society is need for variety of foods with fresh, quickly delivered in the environment which is casual. This trend has been captured by McDonald and globally it could able to expand its business. However due to market saturation as a whole, and rise in cost of the labors, and competition within the fast food segment which all resulted in slash in the price and reduced the profitability overall. In order to prevent this trend and raise the profit, expanding its business worldwide will be another market strategy adopted by McDonald and almost 62 percent of the total revenue was received from the operations which are foreign.

PEST Analysis:

Political factors:

Through the state policies of individual countries, the international operations are struggling for example, health implications of fast foods are given high importance by the people in the United States and Europe and further indicated that consumption of these foods would pose chronic diseases like obesity, and increased cholesterol.

Economic Factors: Each organization has individual concern over the economic factors such as changes in the inflation rate and exchange rate and McDonald is also not excused and faced troubles with its branches and franchises. Now the concern of the company is to whether to initiate the new fast foods in foreign countries or to close the company due to these factors. Moreover this problem will also affect the general sales of the company and in addition, most of the raw materials for the McDonald received from the specific territory i.e., much is imported thus fluctuations in exchange rate will certainly affect the company’s operation.

Socio-Economic factors: McDonald has set up international marketing strategy where the initiation of menu based on the particular geographical areas culture. People with below the age of thirty five years are the frequent customers and moreover they establish good needs of the customers. In todays, world of multifaceted business, in order to survive we need to understand the international customer value through sensible market research and this has been well adopted by McDonald. In addition, considering the increase in health conscious of today’s consumer, McDonald should adopt to change the menu by providing low fat and low carb food items.

Technological factors: To their own products, McDonald created a demand and it has improved its marketing through wide use of technological factors such as advertising on television targeting more on younger generations, animated depictions of their characters like Hamburglar and Grimace, using celebrity to promote such as Justin Timberlake who has become endorser for McDonald product which is loving it campaign. Other technological factors like use of management value chain, inventory system which all easy payments for the customers and suppliers and vendors.

Define the Marketing Mix. Briefly describe each element of the mix for your chosen organisation.

Plan to Win, is the overall strategic plan of McDonald and moreover their strategy is to being a best fast food restaurant rather than being a big fast food restaurant. McDonald’s “strategic alignment behind this plan has created better McDonald’s experiences through the execution of multiple initiatives surrounding the five factors of exceptional customer experiences – people, products, place, price and promotion” (McDonald's, 2008, 25)

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Product: Product is an important area and physical product or service provided to the customer. With reference to McDonald, providing a menu items to the customers who are potential there are huge choices available to the customers with reference how and where they put their money to buy those food items. McDonald’s wisely chose the menu items, based on the market research performed by them and gives special emphasis. As there is a continuous change in the market, thus, to meet the continuous changes, new products has been introduced by the McDonald and old products are phased out and this strategy will be continued to follow. However, due care is taken with reference to sales, when introducing new products as some time new product will cannibalize the sales of the firm. Moreover, McDonald also realized that the product sales on its menu would vary in their lifecycle at different point of time. With reference to the product, McDonald has incorporated the strategic plans in all geographical locations. McDonald has focused on chicken, breakfast, beverages and convenience and these are the important areas in the US as it has launched breakfast menu which contains Southern Style chicken biscuit and for lunch and dinner it has provided Southern Style chicken sandwich. New hot specialty coffee offerings on a market has been introduced. Tired menu approach has been used in Europe with features of premium, classic and every day affordable along with that “complement these with new products and limited time food promotions” (McDonald’s, 26). With global strategic plans, certainly the positive financial results could be realized in future.

Price: To charge the price for the product offered by the firm, the customer perception plays an important role. Sometimes, low price indicates the low quality of the product and it’s also general feel of the customers. Therefore price decision should be take care with no compromise of the quality of the product and when deciding the price firm should be aware of the brand and its integrity.

Promotion: In order to promote their product and publicize their brand image, McDonald used several marketing campaigns. In the year 2008, to promote McDonald brand, it offered foods such as Carmel, Banana Sundae, Rice sticks and Beijing Burger at the Beijing Olympics. On their packaging, they featured nine paralympic and Olympic athletes and through this McDonald has won as Backyard Burger. Brand image was also build through “With innovated marketing transporting ideas across borders and using I’am loving’ it to deepen their connection with customers who love their food and the unique McDonald’s experience” (McDonald’s, 2008, 17). Sherk movie was used to market their products as in 2007, as part of their Happy Meal, McDonald, distributed a choice between milk, fruit or vegetables by using Shrek movie.

Place: McDonald has branches all over the world and globally it could able to expand its business. The majority of the restaurants are owned through individual franchises. With reference to geographic location strategy, it has opened many restaurants locally which “are the core of their competitive advantage and make them not just a global brand but locally relevant one” (McDonald’s 27).

Task 2: – Marketing strategy options

Identify a particular company which you know and state what competitive advantage your chosen the company has over its competitors in its given market.

Competitor Company identified was: Burger King Versus McDonald. In comparison with Burger King, could able to deliver better products and service to the customers. As the company’s vision is to create hundred percent customers satisfaction through this could not be attainable and realistic goals, however this will motivate the employees to work efficiently to attain and reach the goal. The second goal of the McDonald is the ‘giving back to the community’ through this goal, the company could able to sets them apart from their competitors charities like Ronald McDonald’s House and Ronald McDonald Children charities and almost million of dollars have been utilized for this charity work. Other customer policy of the McDonald is related to Guarantee which states “your food will be hot, your service will be fast and friendly” and “you drive thru orders will be double-checked right, if you are not satisfied, well make it right or your next meal is on us guaranteed”. In addition customer service are focused on customer particularly maintain their time, quality of service than the speed. However, with reference to Burger king, there goals are not clear and moreover they do not provide pamphlets with relevance to the policies and goals of the company as McDonald does but their faster service and looking after the individual customers are the important elements. Organizational structure looks very similar, but McDonald has planning to remodel its structure and in terms of technology McDonald is far head the Burger king. McDonald advertising strategy was very powerful and there is a community involvement and service in advertisement but Burger king did not contribute to the community.

Explain how your chosen company can develop its Marketing Strategy by using Portfolio Analysis Techniques.

Strength:

• Well recognized brand
• Located all over the world with individual franchises
• McDonalds standard and conformed changes in large areas efficiently.
• In both the domestic and international market, McDonald’s leads the market.
• Due to huge global presence and enormous size, McDonald benefited from cost reduction due to economies of scale
• Real estate portfolio was very strong
• Location of McDonald was highly visible, ease to access and less of traffic volume.
• Enormous youth market due to aggressive market planning.

Weakness:

• Over the last 5 years, the company’s revenue growth has declined sharply from 13.6% to 7.5%.
• Secondly, particularly in Europe and Canada, the operating income has dropped to 12.6% and 1.5% respectively, thus it has to deal with the saturation of looming market.
• Increase price competitors due to growth of competitors company’s, thus difficult to increase their financial revenue.
• Another important weakness of McDonald was lack of innovation in the product

Opportunities:

• McDonalds has got number of franchise, thus less risk,
• Offers newer products
• Higher growth in China and Russia.

Threats:

• Due to high rates of obesity and chronic disease mainly from fast foods consumption, people are more health conscious
• Food safety is a big issue such as bacteria, e.coli, 41-150
• Due to increase number of competitors both globally, national, regional and local.
• another problem the company is facing the fluctuation in foreign currency
• Company is planning to change the menu items and new formats but the other competitors also performing the same

E-business marketing strategy: Making money for their stockholders is the real goal for McDonald and therefore the goal of the company is to development of long term sustainable growth for all stakeholders. Now, the McDonald has realised that they are in the stage of maturation particularly in the business cycle, and this assumption was based on the profit lose year by year. Thus, it’s time to reinvent the strategy of the corporation and need to start the business cycle over again. In order to retain its brand and revenue, the company has to rethink its strategies and some of the strategies are 1) Overall firms goal has to be changed to adapt the current environment 2) Advertising over the internet and make people to visit the website about happy meal, monopoly 3) Secondary advertising such as customer videos and employee videos in you tubes 4) Customer loyalty and brand awareness has to build. In order to attract the customers, website should be attractive with quality and in order to improve the website further to make people to visit, following could be incorporated in the website 1) using macromedia flash, 2) kid games, 3) for calculating nutrition information, online calculators could be provided 4) Map locators to show how we can reach McDoanlds with road and street names, 5)News link about the current products should be updated every month 6) Website should have click stream technology on the serve, so that every information is collected while visiting that particular page and the programs that have been installed on the computer. Through this e-marketing McDonald, which is secondary advertisement could build brand awareness and could use it for stockholders profitability.

Task 3: – Implications of changes in the marketing environment

How has globalisation changed the business environment for your chosen organisation? Provide examples to support your answer? In what way has the organisation responded to these changes? Recommend some measure which your company can use to adjust itself in the changing environment.

Today’s society is need for variety of foods with fresh, quickly delivered in the environment which is casual. Through the state policies of individual countries, the international operations are struggling for example, health implications of fast foods are given high importance by the people in the United States and Europe and further indicated that consumption of these foods would pose chronic diseases like obesity, and increased cholesterol. Wide use of Technology, such as use of information system, which includes, networking satellite, inventory control system, and supply chain management system will all improve the productivity and profit of the company. Change in consumer buying behaviour, more working women, increase in cost of raw materials, employees looking for long term stay, health benefits of the employees, pension scheme etc.

To overcome these change in business environment, the company has to change strategy such as uniformity in product, implementation of total quality management system, improving the quality, consistency and service, utilizing the information technology efficiently in all the areas of the business where it has adopted inventory control and management system. In addition, to attract the consumers the company also remodelled all the franchise and used effective secondary advertising strategy through e-commerce.

Recommendations

In order to draft the suitable recommendation to the company, the overall analysis of threats considering both the external and internal has to consider for further improvement. Thus, this will help to modify the existing strategy and which suits the goals of the organization. Further recommendation was based on the available resources and thinking widely.

• In order to achieve common goals, the managerial and organizational process should able to show coordination and integration between the employees, customers, vendors and suppliers.
• According to the environment situation, the organization should able to bring the flexible changes such as government restrictions, technology development, customer trends etc. Focusing on this strategy will help to increase the revenue and moreover if this was not focused then company needs to face many challenges in terms of revenue gaining.
• Although McDonald has technology, finance and structure, all that it needs to maintain these elements at long term.
• Due to incompetence franchise holder is being weeded and better and new people are placed newly thus leads to lose its vision and in order to revamp this the company has to set a training and managerial program for effective communication and leadership.
• Proper authorities who can handle the market environment smoothly with the government and other bodies would be essential as today company is expanding continuously.
• Company must follow the rules and regulations posed by the local government in order to survive.
• Well conducted market research is needed in order to penetrate to the particular market segmentation as there will be flexibility in the exchange rate and stocks.
• Relevant information (such as consumer behavior pattern, customer relationship management system) about the target market condition has to be collected before penetrating into the market, in addition information related to the individual customers also need to be analyzed.
• Communications which are cost effective, interactive and with real time effects should be utilized in order to track the suppliers and thus utilization of internet will be more useful and to correspond with respective headquarters, this will be more useful.
• Environmental regimes should be identified with respective market with relevance to waste disposal, use of Styrofoam materials, less usage of cups which are plastic

References

Viewed January 30, 2010