Table of content

NO GUIDELINES/MARKETING CRITERIA PAGE

1.0 Provide a brief overview of the retail group/brand that 2-6

you chose for this assignment.
2.0 Analyze the market situation of retail industry in your 7-8
country.
3.0 Identification of opportunities (SWOT analysis) on the 9-16
industry.
4.0 Identification competitors and marketing objectives. 17-19

5.0 Highlight the marketing plan of your chosen retail 20-27

brand.
6.0 Identify and discuss the new product or service idea 28-32
and future marketing strategy of your chosen retail
brand.
REFERENCE 33

Page 1 of 33
1.0 TASK 1

Provide a brief overview of the retail group/brand that you chose for this assignment.

Brief Overview of McDonald

McDonald's is a huge multinational restaurant chain. There are restaurants all

over the world that are willing to sell you a Big Mac and fries. Indeed, you would

probably be hard-pushed to find a country that does not contain a few McDonald's

restaurants somewhere within its borders. The company is now so big that you could be

forgiven for thinking that it has always existed. But it hasn't. It was started in the first half

of the 20th Century by two brothers - neither of whom was named Ronald.

The First Burger

Reports differ about when Richard and Maurice McDonald opened their first

restaurant. Some would state that the Airdrome in Arcadia, California was the very first,

opened in 1937. Others claim that it all began in 1940 with the McDonald's Barbecue

restaurant in San Bernardino, California1. What is not in dispute, however, is that both of

the above were false starts. They were both the kind of American restaurant where cars

park around a central hub (where the food is prepared) and it is delivered to the waiting

customers by 'car hops'.

In 1948, the brothers became disaffected by this style of restaurant, the pressures of a full

menu, and the hassle of managing staff, and so decided to scale down the operation. They

developed the idea of an 'assembly line' whereby a reduced menu (consisting only

ofhamburgers, cheeseburgers, french fries and drinks) could be cooked cheaper and

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quicker, which would hopefully lead to a higher turnover of customers. And so it was, on

12 December, 1948, that the new revamped McDonald's Restaurant opened, and Richard

McDonald cooked the first McDonald's hamburger.

During the next few years, the restaurant went from strength to strength, and the building

had a slight redesign. The brothers had a slender yellow arch built at each end of the

building, looping over it but not yet joined together to make the now famous 'M'.

The First Franchise

In 1954, Ray Kroc was a salesman for a company that made milkshake mixers. He

noticed that the McDonald brothers had bought eight of the company's mixers for their

restaurant. Believing that if he could persuade the McDonalds to open more restaurants,

he would be able put eight mixers in each of them, he paid them a visit. Again, reports

differ about what happened when he talked to the McDonalds. Some believe that he

presented the idea of franchises to Dick and Mac, others argue that franchises already

existed, and that Kroc merely managed to talk his way into running the franchising

operation. Whichever was the case, the end result was the same, and Ray Kroc managed

the franchising of the McDonalds' restaurant concept.

The organisation of the franchise was this: anyone who wanted to open a McDonald's

restaurant would pay Kroc around a thousand dollars for the honour of doing so, and then

1.9% from the annual takings of the restaurant. He would then pass 0.5% of the takings

onto the McDonald brothers, keeping the other 1.4%. Kroc opened his first franchise in

Des Plaines, Illinois in 1955. Whether or not this was the first franchise of the

McDonald's restaurant, it was definitely the first opening of the McDonald's Corporation.

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The Buy Out

By 1961, Ray Kroc was running the whole show. The only thing the McDonald brothers

did was run their one restaurant, and they received their 0.5% from the larger company.

The greater expansion of the McDonald's brand was not something they were really

interested in. Ray Kroc, on the other hand, was. He wanted to put a McDonald's

restaurant in every state in America - which he would eventually do, and much more. He

wanted to created a HamburgerUniversity where potential restaurant managers could be

taught how to manage a McDonald's restaurant2. He measured every product, weighed all

the ingredients, and tasted burgers in every outlet to ensure that precisely the same food

was served in every McDonald's restaurant. But Dick and Mac McDonald were happy as

they were, and had no concern for the company Kroc had formed from their restaurant.

So Kroc offered to buy them out, which he did at a cost of 2.7 million dollars. It is

estimated that if the McDonald's had continued to receive their 0.5% it would have been

worth around two hundred million dollars by the year 2000.

The Clown

In the early 1960s, Kroc decided that the chain could make more money if it appealed to

children, and so the company sponsored a kids' TV show called Bozo the Clown. When

that show got cancelled in 1963, the actor that played Bozo, Willard Scott, was hired to

appear in three adverts as the McDonald's restaurants new mascot: Ronald McDonald.

Though the adverts were a success, Willard was less so, and appeared in no more adverts

after the first three. But the character was established, and many other actors have donned

the wig since.

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The Expansion

The McDonald's chain continued to grow. The Big Mac was created in 1968. Having

covered the States, the franchise expanded overseas, with the first restaurant opening in

Australia in 1971. The Egg McMuffin (the first breakfast product from McDonald's) was

invented in 1973. The three thousandth restaurant of the chain, the first in Britain, was

opened in London in 1974. 1979 saw the creation of the Happy Meal, which continues to

this day to sell well to children, and adults who want the promotional toys. A restaurant

was opened in Russia, and hailed as an emblem of the new friendship between the two

superpowers, in 1990.

The Charity

The McDonald's Corporation's charitable efforts started in 1974, when the first Ronald

McDonald House was opened in Philadelphia. It was originally the brainchild of Fred

Hill, a member of the Philadelphia Eagles American football team. The house is a place

for parents of severely ill children, who have had to travel a distance, to stay while their

child is being treated at the nearby hospital. Since then, Ronald McDonald Houses have

been established in several countries, and the Ronald McDonald Houses Charity has

funded efforts to help children around the globe. It also provides scholarships for

underprivileged students from ethnic minorities.

The Problems

The McDonald's chain has not been without its problems. There was the famous McLibel

case - the longest running libel case in British legal history. And Jose Bove dismantled a

restaurant in France, in order to make a point about globalisation, of which McDonald's

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had become a prominent symbol. Also the discovery that some beef products were used

in the preparation of their french fries, which resulted in the company

paying compensation of ten million dollars to Hindus, sikhs, and vegetarians. There have

been various criticisms of the McDonald's Corporation, ranging from the source of their

meat, to the treatment of workers in the restaurants, the fact the RMHC scholarships are

not available to Native Americans, and some concerns about the healthiness of their food.

There is also the occasional accusation that in order to keep all the cattle for the

hamburgers, McDonald's has to tear down vast chunks of rain forest; however,

McDonald's insist that all their produce is sourced locally, and that there is not a single

massive herd that would require the removal of rainforests.

The Future

McDonald's has, so far, weathered all of these problems, and has continued to expand

into more and more countries. No doubt, barring any major setbacks, the McDonald's

Corporation will continue to grow, finding ever more remote locations to place franchises.

Only time will tell if they continue to adhere to Ray Kroc's four guiding principles of

quality, service, cleanliness and value.

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2.0 Task 2

Analyze the market situation of retail industry in your country

Market Analysis of McDonalds Company

Market Trends

Fast food culture has become a way of life or trend in the world. Malaysian adults

eat at take-away restaurants around 98 percent. Philippine, Taiwan and Malaysia have the

highest percentage of fast food restaurant consumers in the world compare to America

which count 97 percent (ACNielsen, 2005). This is due to the busy life styles and ease of

access of variety of fast food restaurant. Consumers have been spending less of their

budgets on the grocery store while more and more of their food money is ending up in

cash registers at the restaurants and fast food outlets (Kara, et. Al., 1999). Around 59% of

Malaysian eating takes away every week. Even the state of one's health has become

primary concerns for consumers, but it does not affect the way consumers choose to eat.

It has become a part of their life to eat fast food, particularly in Hong Kong, Malaysia,

and United State.

McDonalds will be able to increase their target markets in Malaysia as this

trend has become part of their consumers' life. This is also inducing the competition of

fast food industry as Malaysia is a prospect market for fast food industry. McDonalds can

perform better than its competitors if they can fulfill Malaysian customers who prefer

convenience location as it account for 54 percent of Malaysian prefer convenience

location to eat (ACNielsen, 2005).

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Market Size and Growth

As fast food becomes a trend in Malaysia, the number of expenditure used by the

consumers has increased by nine percent and ranked third in terms of expenditure. The

fast food market size is increasing from year to year and it reaches 2,058.8 in 2007.

McDonalds Malaysia company share also increase in the year 2007 by 400 plus. The

number of households purchase on fast food reach 356,482,100 by year 2007. The fast

food sector is expected to experience the fastest growth between 20 to 30 percent per

annum (Malaysia Market Opportunities Report, 2000). McDonalds already has 184 stores

in Malaysia, and McDonalds plan to open ten to fifteen new outlets each year (Business

Times, 2009). Even though it is still far away compare to KFC outlets in Malaysia which

count for more than 390 outlets, this trends and growth is good indicators for McDonalds

to increase their market share in Malaysia.

As fast food becomes a trend in Malaysia, the number of expenditure used by the

consumers has increased by nine percent and ranked third in terms of expenditure. The

fast food market size is increasing from year to year and it reaches 2,058.8 in 2007.

McDonalds Malaysia company share also increase in the year 2007 by 400 plus. The

number of households purchase on fast food reach 356,482,100 by year 2007. The fast

food sector is expected to experience the fastest growth between 20 to 30 percent per

annum (Malaysia Market Opportunities Report, 2000). McDonalds already has 184 stores

in Malaysia, and McDonalds plan to open ten to fifteen new outlets each year (Business

Times, 2009). Even though it is still far away compare to KFC outlets in Malaysia which

count for more than 390 outlets, this trends and growth is good indicators for McDonalds

to increase their market share in Malaysia.

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3.0 Task 3

Identification of opportunities (SWOT analysis) on the industry.

McDonalds was founded by two brothers, Richard and Maurice McDonald in

1937 in California. This largest global fast food chained arrived in Malaysia 43 years

later in December 1980. McDonald Corp. gave their license to Golden Arches Sdn Bhd to

open McDonald's Restaurant in Malaysia. After twenty six years they now have 185

franchise outlets nationwide. McDonalds have created over 7000 job opportunity ever

since they arrive in Malaysia over the years. Their vision is “to be our customers' favorite

place and way to eat”.

McDonalds SWOT Analysis

Strengths

Strong brand name, image and reputation

McDonalds has built up huge brand equity. It is the no 1 fast food company by

sales, with more than 31,000 restaurants serving burgers and fries in almost 120 countries.

The image of McDonalds is recognized everywhere. This brand is in top ten of the most

powerful brand names in the world with Coca-Cola, Nokia or GM.

Large market share

McDonalds is considered as the largest player in size and global reach. When

Wendy’s or Burgers King are losing market share in 2006, McDonalds still increases its

market share. Market share of McDonalds in the recent time is about 19% while

Yum!Brands is 9% and both Wendy’s and Burger King is 2%.

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Specialized training for managers

McDonalds is very serious on training managers. This company has its own

program to train managers the most professionally, which is called Hamburger University.

As a result, McDonalds has many good managers who can help company development

well.

McDonalds Plan to Win

McDonalds customer – focused Plan to Win provide a common framework for its

global business yet allows for local adaptation. Through the execution of initiatives

surrounding the five elements of its Plan to Win – People, Products, Place, Price and

Promotion – McDonalds has enhanced the restaurant experience for customers worldwide

and grown comparable sales and customer visits in each of the last eight years. This Plan,

combined with financial discipline, has delivered strong results for company’s

shareholders.

Introduction of new production

McDonalds is considered the first one enter to fast food industry. It initiates to

other brand to enter this industry. As a result, when think about fast food, customers

always remember McDonalds first. In fact, in some big countries, especially in US,

McDonalds is the first choice of a large number of customers.

Technology Innovative

McDonald’s is keeping at the forefront of technology around the globe. For

example, In Brazil McDonald’s is currently studying the installation of Internet access

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terminals in some outlets as well as enabling customers to order online. This will create a

more efficient process that will reduce the amount of lag time between a customer’s

orders and pick up of the order.

Good marketing strategies:

No matter the continent, children and adults know the face of Ronald McDonald is

synonymous with the colossus restaurant chain. This results in wonderful marketing

strategies among management which conducts a very thorough market analysis, resulting

in much success around the globe.

Weaknesses

Unhealthy food image

McDonald's has been impacted by negative press like the documentary "Supersize

Me" by Morgan Spurlock in which he contributed our society’s obesity to McDonald's

and other fast food chains. In fact, each McDonalds dishes provides large amount of

calories but not too much nutrition.

Customer looses due to fierce competition

McDonalds has to compete with many strong brand name in fast food industry

such as Wendy’s, Burger King or Yum!Brands. This fierce competition makes

McDonalds loose a large number of customers who prefer favor of other brands.

Problem related to health issue

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 McDonalds use Trans - fat and beef oil in their food. Although it is not illegal, it

affects badly on customer’s health because Trans – fat is causes of some kind of cancer.

Consequently, a number of customers who care about their health stop eating at

McDonalds restaurants. It makes revenue of company decrease.

Legal action

McDonald’s has been involved in a number of lawsuits and other legal cases in

the course. For example, there are many case which involved with trademark issue.

McDonald’s force many others restaurant, company of just a coffee shop to change their

brand name because of keeping “Mc” letters.

Unbalance meals

Although McDonalds tries to update its menu by healthy criteria, McDonald’s

meals are still unbalance. For example, there are many dishes with chicken (both grilled

and fried), bacon, beef, rib or egg. Besides, just several dishes are salad with vegetable

and fruit. Moreover, amount of fruit or vegetable is not much.

High employee turnover rate

Although McDonalds has many good managers as well as skillful employees, the

turnover rate is still high. Every year many of their employees are fired out of the

restaurants. Moreover, many others quit their jobs, especially part time employees

because of low salary as well as too high working pressure.

Action related to environmental issue

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 McDonalds uses HCFC – 22 to make polystyrene that is contributing to ozone

depletion. The company has to repair this weakness if doesn’t want to be criticized.

Dissatisfied Franchisees

Franchisees are beginning to become very dissatisfied with the fees that

McDonald’s are forcing them to pay. As the company continues to expand, they are also

increasing the amount of fees franchisees have to pay for the use of the notorious fast-

food brand. Many people are not very happy about this and as a result many franchisees

are selling their businesses.

Opportunities

Growth of the fast food industry

Fast food industry now is developing significantly. The change of lifestyle leads

to the change in people eating habit. In the past, if just workers, drivers or someone who

had to work busily and didn’t have enough time for a home meal choose fast food;

nowadays, almost people eat fast food and a major of them like fast food very much. It is

a huge chance for fast food brand to increase their revenues, especially McDonalds.

Conservation

McDonald should research green energies and green packaging solutions and

incorporate these finding as a part of their marketing strategies and advertisements.

Globalization, expansion in other countries

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 McDonalds has more than 31,000 restaurants serving in almost 120 countries. Of

the 31,000 restaurants, at least 14,000 are in US. However, now, because the care of

McDonalds about favors and cultures in each countries it enters, McDonalds can open

more restaurant in new areas such as China or India – the countries which culture

influences on people lifestyle deeply. They are very potential markets. The expansion of

these areas is big opportunities For McDonalds.

Appearance of freebies and discounts

Discounts given on every food item may help them gain more customers.

Moreover, a new trend is rising among customers that they like freebies and discounts,

even when they don’t need it or don’t use these freebies after.

Diverse tastes and needs of customers

Customer’s tastes now become more diverse. As a result, they require new format

of service in order to satisfy them. McDonalds, with new format of business such as

McCafe, it can attract new segment of customer; for instance civil service, who prefer

coffee as well as want to use Wi-Fi to work when drink coffee.

Growing health trend among the customers

Although people concern about how McDonalds influence badly on their health, it

is also a chance for McDonalds. This company can develop new products, specifically

fresh burger or healthy dessert.

Threats

Intensity competitors

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 Along with the development of fast food industry, there are many new fast food

brand enter to the market. It is nothing to say if there is no strong brand which can

compete with McDonalds. However, in fact, there are some and they are stronger

gradually, for example Yum!Brands, Wendy’s or Burger King. Although market share of

these brand are lower than McDonalds, they try to gain more customers from McDonalds.

Moreover, more casual dining restaurants increase their burger offering and decrease the

price. If we are not really hurry, we may choose this kind of restaurant instead of fast

food restaurants. They also become the competitors of McDonalds.

Public health crisis

With a growing number of obesity cases among Americans, fast food chains like

McDonalds will continued to be overshadowed by their previous products offerings, for

example Supersized Meal, no fruit or yogurt, slim salad selection. Besides, people

nowadays are facing heart problem more seriously. As a result, they require nutritious

and healthy food as well as lifestyle.

Economic recession

The company's revenue streams are diversified, but depending on the length of this

"recession", they will inevitably be negatively impacted by the trickledown effect.

Recession or down turn in economy may affect the retailer sales, as household budgets

tighten reducing spend and number of visitors.

Serious environmental issue

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 Environment is one of the hottest topics all over the world. Any action which

influence on the earth and human life is criticized strongly. Consequently, if McDonalds

keep using HCFC -22, it may lose customers, especially who really care about the earth.

In general, there are many fast food trends in Malaysia which has benefited

McDonalds as they are able to capture more market share and customers. Malaysian

would like to eat outside with the increasing of number of women workers. They

would like to look at convenience place to eat as McDonalds provide it for them. The

technology advance has improved McDonald's services efficiency as their customer able

to order through phone and online. The growing internet users in Malaysia supported for

this kind of service. 24 hours service will open a revenue window for McDonalds as

customers look for quick meal at late night.

The opportunities that McDonald’s had are the low price of the company’s food

items means that higher-end customers can trade down to its offerings and the low price

point maintains the ability of lower-end customers’ to eat at McDonald’s even during

financially stressful times. You could also add that new, “healthier” food items make

McDonald’s more palatable to some customers on the Opportunities list: New, “healthier”

food items, like salads and oatmeal, make McDonald’s more palatable to some customers

who may have been a dissenting, and deciding, vote in restaurant selection.

In conclusion, in order for McDonald’s successful in tense competition,

introducing coffee and smoothies under the McCafe brand. Hence, it needs to keep

introducing new menu items for potentially untapped markets.

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4.0 Task 4

Identification competitors and marketing objectives.

McDonald s Objectives.

First, McDonald’s vision is to be the UK’s best quick service restaurants

experience. Secondly, McDonalds is committed to maintaining and developing the best

food products in the quick service restaurant market. In order to deliver this, the company

has made a number of commitments to food safety and nutrition.

Long-term objectives are broken down into shorter-term measurable targets,

which McDonald's uses as milestones along the way. Results can be analyzed regularly to

see whether objectives are being met. This type of feedback allows the company to

change plans. It gives flexibility. Once marketing objectives are set the next stage is to

define how they will be achieved. The marketing strategy is the statement of how

objectives will be delivered. It explains what marketing actions and resources will be

used and how they will work together.

McDonalds Competitors

In this 21th of century, the fast food industry is facing high intense of competition.

Rivalry is strong because competition is focusing on providing the best service and

product variety. Other competitors such as KFC, A&W and Burger King create an

intense rivalry among the fast food providers. Rivalry such as KFC is constantly

providing more choices ranging from fried chickens to burgers and to side snack such as

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potato wedges and salad. Moreover, competitors equal in size and power and growth in

the industry.

As a largest chain in the world, McDonalds has faced different kind of threat.

Serving billions of hamburgers has put a shine on these arches. McDonald's is the world's

#1 fast-food company by sales, with almost 34,500 restaurants serving burgers and fries

in 119 countries. (There are more than 14,150 Golden Arches locations in the US.) The

popular chain is well-known for its Big Macs, Quarter Pounders, and Chicken Mc

Nuggets. Most of the outlets are free-standing units offering dine-in and drive-through

service, but McDonald's also has many eateries located in airports, retail areas, and other

high-traffic locations. About 80% of the restaurants are run by franchisees or affiliates.

This part evaluates about the strategy that McDonald used compared with its main

competitor of the similar product. It identifies whether McDonald is a market leaders,

followers, nichers market challengers in its own type of products and the whole market's

position.

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Issues McDonald's Burger King KFC

Fried Chicken,

Main Products Burger Burger Burger

Fried Chicken, Wedges, Mash

Additional Products Porridge Curly Fries Potato

Market Shares

(Among all fast food

brands) 19.6% 2.1% 52.7%

United

Origin United States States United States

Outlets in the market

(End of year 2007) 176 20 402

Rank in Malaysia 2 3 1

Rank in World 1 3 2

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5.0 Task 5

Highlight the marketing plan of your chosen retail brand.

.The main objectives of your marketing strategy must ensure that the product

must fulfill the customers demand as well as maintain a long relationship with those

clients. To obtain this, businesses will need to initiate flexible techniques which reply to

the adjustment in customer perception and demand. It might also provide a product name

to your brand that will aid owners to run their business in markets in an efficient and

smooth way. First and foremost, the main objectives of the market strategy must be to

recognize whether target clients are pleased with the service and products provided

by the company.

Once you have developed and implemented the marketing technique, try to

recognize the feedback or comment of your clients and if some changes or development

is needed, apply it for the best customer satisfaction.

This aids business owners to recognize if your marketing technique needs to be

enhanced and how this technique can be improved in order to apply for effective action.

Prior to applying any marketing technique in your business, proper planning platform

should be organized by the members of the company or organization.

Marketing Strategy of McDonalds

McDonalds is one of the famous food chain all throughout the world known by

both the child and adult alike. It has increased it sales despite some issues being raised

against the company. To further increase sales on the business and improve its

performance, business strategies are done by person in-charge. It is in this stage wherein

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the company would improve what they lack thus making prospective customers to keep

on coming back and ask for more. It is said that McDonald has been able to use various

strategies to uplift and sustain their competitive advantage in the market.

Part of its business strategy is its plan to phase out its Super Size French fries

and soft drinks as it tries to create a healthier image for itself. The Super Size option

is to be phased out in an attempt to slim down its menu amid increasing concerns and

issues being raised about obesity (Crouch, 2004). The company is also planning other

menu changes, such as switching to a cinnamon roll and a sausage burrito as its core

breakfast offering, while bagels would become an optional item. The company also has to

stop selling its 14 ounce McDonald’s Fruit n Yogurt Parfait and replaced it with a

smaller-sized version of the product (Crouch, 2004). All these changes in the menu are

part of its strategy to provide a range of choices that support a balanced lifestyle. The

company has also added that the simplified core menu would be rolled out to its entire

restaurant.

Furthermore, using the national rollout of its “made for you” platform as the

opportunity to re-evaluate its core brand attributes, the company has quietly formed a

global brand strategy task force that is looking for “long and hard” at the essence of the

Golden Arches (Howard, 1999). The group which will be led by new vp-brand strategy

has been meeting for several months and is anticipated to put forward its findings in fresh

consumer messages by mid-2000.

The slow-build will allow stores to work through an expected learning curve

for the new cooking system and avert major miscues as it attempts to deliver on the

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promise of hotter, fresher foods made to order (Howard, 1999). The group also is

evaluating all elements of the brand from menu, service, and restaurant décor to brand

icons Ronald McDonald.

Even though domestic sales have turned to healthy 5% level, the said company is

rethinking how to sustain growth in the face of both national and regional rivals.In the

past, the company’s marketing strategy has been criticized for being short-term focused

and there has been no over-arching umbrella strategy. With that, the charge is to bring

continuity and consistency to the brand strategy piece.

Strategies in other areas of the organization is also made like the three-wheeled

vehicle that is used to collect discarded cups and burger wrappings from the

neighborhood around the restaurant and the provision of good services to customer

which naturally begins and commences with hiring the right kind of people (Livesey,

1999).

Staffs are encouraged to smile, be optimistic and treat customers particularly

with respect, tell them what a person wants and follow up on the performance and

reward their behavior. The restaurant’s bathroom is not spared. Issues are raised on the

concerns about the said restaurant to be dirty and unhygienic. Customers want a clean

area especially the bathroom to make they feel comfortable. Strategies like this should

also be applied (Livesey, 1999).

McDonald’s has developed three strategies for sustaining the competitive

advantage. These are customer convenience, customer value, and optimal operations.

Together with the digital strategies, it will help create new and bold ideas for the

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company. The stores are characterized by the operations team as miniature manufacturing

facilities.

With its goal in improving the suite of its manufacturing systems (inventory

control, production planning, financial control, and point-of-sale order entry) that

supports the store, the team has developed ways of improving its overall operations.

Aside from offering hamburgers and French fries, the current trend in

McDonald’s extends in serving as a family retreat, and as a community center for

senior citizens. The means for the former one are its extensive indoor playgrounds and

promotional toys, while the invitational plays of bingo are for the latter one. As this trend

continues, an extension of more service-oriented technologies is needed. They can

conduct studies and surveys to better know which among the different alternatives serves

the company’s objectives the best. These might include robots taking orders instead of

humans, automated processes of food production, and the like.

Rather than choosing individual tools, they should think about the tools on the

horizon-geographical information systems, global positioning satellites, new media such

as teleconferencing, and the expanding flow of information through public networks like

the Internet. The adherence of the company to put WIFI technology in their stores

for instance has also become one of the attractive forces for customers.

For the achievement of customer value, focus should remain on real-time

information flow that allows instant corrections of the menu and prices in response

to customers’ preferences, competitive environment, and even the ingredients’

global commodities market.

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Marketing Strategy: 4P’s

After analyzing the market condition, finding the main factor, target segment as

well as understanding the demand of the market, every company requires coming up with

an offers or such kind of plan which speed up the development of the business.

For that, McDonalds 4P’s marketing strategy that follows product, place, price,

and promotion.

Product

The important thing to remember when offering menu items to customers is that

they have a choice. They have a huge number of ways of spending their money and

places to spend it. Therefore, McDonald's places considerable emphasis on developing a

menu which customers want. Market research establishes exactly what this is. However,

customers' requirements change over time. What is fashionable and attractive today may

be discarded tomorrow. Marketing continuously monitors customers' preferences.

In order to meet these changes, McDonald's has introduced new products and phased out

old ones, and will continue to do so. Care is taken not to adversely affect the sales of one

choice by introducing a new choice, which will cannibalize sales from the existing one

(trade off). McDonald's knows that items on its menu will vary in popularity. Their

ability to generate profits will vary at different points in their life cycle.

The type of marketing undertaken and the amount invested will be different,

depending on the stage a product has reached. For example, the launch of a new product

will typically involve television and other advertising support. At any time a company

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will have a portfolio of products each in a different stage of its lifecycle. Some of

McDonald's options are growing in popularity while arguably the Big Mac is at the

'maturity' stage.

Price

The customer's perception of value is an important determinant of the price

charged. Customers draw their own mental picture of what a product is worth. A product

is more than a physical item, it also has psychological connotations for the customer. The

danger of using low price as a marketing tool is that the customer may feel that quality is

being compromised. It is important when deciding on price to be fully aware of the brand

and its integrity. A further consequence of price reduction is that competitors match

prices resulting in no extra demand. This means the profit margin has been reduced

without increasing sales.

Promotions

The promotions aspect of the marketing mix covers all types of marketing

communications. The methods include advertising, sometimes known as 'above the line'

activity. Advertising is conducted on TV, radio, cinema, online, poster sites and in the

press (newspapers, magazines). What distinguishes advertising from other marketing

communications is that media owners are paid before the advertiser can take space in the

medium. Other promotional methods include sales promotions, point of sale display,

merchandising, direct mail, telemarketing, exhibitions, seminars, loyalty schemes, door

drops, demonstrations, etc.

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 The skill in marketing communications is to develop a campaign which uses

several of these methods in a way that provides the most effective results. For example,

TV advertising makes people aware of a food item and press advertising provides more

detail. This may be supported by in store promotions to get people to try the product and

a collectable promotional device to encourage them to keep buying the item. It is

imperative that the messages communicated support each other and do not confuse

customers. A thorough understanding of what the brand represents is the key to a

consistent message.

The purpose of most marketing communications is to move the target audience to

some type of action. This may be to: buy the product, visit a restaurant, recommend the

choice to a friend or increase purchase of the menu item. Key objectives of advertising

are to make people aware of an item, feel positive about it and remember it. The more

McDonald's knows about the people it is serving the more it is able to communicate

messages which appeal to them. Messages should gain customers' attention and keep

their interest. The next stage is to get them to want what is offered. Showing the benefits

which they will obtain by taking action, is usually sufficient. The right messages must be

targeted at the right audience, using the right media. For example, to reach a single

professional woman with income above a certain level, it may be better to take an

advertisement in Cosmopolitan than Woman's Own. To advertise to mothers with

children, it may be more effective to take advertising space in cinemas during Disney

films. The right media depends on who the viewers, readers or listeners are and how

closely they resemble the target audience.

Place

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 Place in the marketing mix, is not just about the physical location or distribution

points for products. It encompasses the management of a range of processes involved in

bringing products to the end consumer.

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6.0 Task 6

Identify and discuss the new product or service idea and future marketing strategy of your

chosen retail brand.

Future Market Strategy

McDonald’s has been recognized as a highly flexible corporation. This company

feature has been evidenced by its vast product differentiation. This is one of the

company’s major strategies in entering foreign markets. Teriyaki burgers in Japan,

McPork Burgers and McTempeh in Indonesia, McSpaghetti in the Philippines and

McLox Salmon sandwiches in Norway are some of the concrete examples of McDonald’s

ability to modify its products based on international tastes and preferences which they

also done with their British market. While minor product changes are required for these

countries, vast changes would have to be done for Britain’s case.

Modifying the product or service is one example on how foreign firms are able

to distribute their goods effectively in diverse markets. Another is by modifying the

businesses’ marketing mix in order to fit global resources to local market conditions. In

order to do this, multinational companies can transfer their developed global brands into a

new market by means of changing their products’ formulation, prices or packaging. This

in turn will increase the products’ appeal to both consumers and retailers.

Doing this globalization strategy however, naturally requires considerable

investment. Still, this will make multinational companies at par with the local companies.

Another possible localization strategy is by developing new resources that are market-

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specific. This strategy is done when the multinational company acquired some local

brands, marketing them along with their global product brands (Arnold, 2003).

As McDonald’s typically serve beef burgers and non-spicy food items, the company

would have to drastically change its menu for the Britain market to provide

healthier menus for British people. For instance vegetable salads and chicken kebabs

were also served to cater to the health conscious population. These are some of the many

changes that McDonald’s did in order to gain entry to the Britain market. In addition to

product differentiation, regulation of the products’ prices is also a top priority.

Effective promotions and advertising were also integrated into the company’s

international strategy. One of these tactics include the company’s promotional offers of

various items like Internet cards, concert tickets, CDs, T-shirts, caps and international

trips . This promo had been done as the company collaborated with other organizations

including Coca-cola, Sony, MTV, and General Motors. Painting contests for children

were also conducted by McDonald’s.

Furthermore, the advertising strategies of McDonald’s had been focused on

building an image of family comfort. Rather than just being an ordinary fast food that

serves quality meals, McDonald’s intends to appeal to the market by building a fast food

image where families can get together, enjoy and relax.

Overall, the international strategy of McDonald’s for Britain has been effective. In

general, the focus of these strategies was the customers. Customers play a significant

role to a business’ success or failure. Being an important business element, meeting the

needs and preferences of the consumers is the utmost priority of almost all businesses.

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McDonald’s has clearly shown the importance of this concept by adapting to the Britain

culture, its people and their tastes. By reaching out to the British market, McDonald’s

was able to successfully establish itself in Britain.

New Product

Recently, McDonalds are facing some critical challenges including the challenges

from KFC and King Burgers which always creating new product and new menu items.

The fast food giant recently revealed that sales are down 1.2% from a year earlier.

One of the reasons for this decline is that many American consumers are too worried

about money to even splurge on a Big Mac and challenges from other opponents.

Hence, McDonald's hopes three new menu items will get cash-strapped Americans back

in its restaurants. McDonald's CEO Don Thompson named three new products that he

hopes will lure customers back to fast food:

First is the Premium McWraps. McDonald's employees at headquarters call this

wrap the "Subway crusher," AdAge reported. The McWraps are already popular in

Europe, and flavors include Chicken & Bacon, Sweet Chili Chicken and Chicken &

Ranch. The brand hopes that these wraps, which are seen as healthier than a burger and

fries, will draw in the calorie-conscious millennial customer.

Secondly is the Egg White Delight. This sandwich is a yolk-free version of

McDonald's popular, core Egg McMuffin. It's another nod to the health-conscious, with

40 fewer calories than the original version. White cheddar instead of yellow gives the

sandwich an artisanal feel.

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 Last one is Blueberry Pomegranate Smoothie. This flavor is already popular in

Canada, Thompson said. McDonald's already offers strawberry banana and wild berry

flavors as part of its McCafe line. If the smoothies sell, they'll be great for business since

they're cheap to make, resulting in high margins for McDonald's.

New Service Idea

McDonald's is trying to reach dissatisfied customers by adding people to fetch

sauce packets and Happy Meal toys, according to a report by Julie Jargon at The Wall

Street Journal.

This is because, the restaurant chain found that one in five customer complaints

were related to customer service, and that number is increasing all the time, according to

a leaked presentation distributed to franchise owners. Hence, to help deal with the

problem, the company created a new position of "runner."

As a runner, the person will hand out cups and sauce packets, and fetch juice

boxes for Happy Meals. Furthermore, having the "runner" on hand will help clear up

confusion and free up time for the cashiers, who are supposed to tell every customer

"thank you" when they're done.

The company is also implementing a "dual-point" ordering system around the

U.S., which involves the customer ordering at one end of the counter and taking a

receipt with a number. When the number appears on a screen, his order will be ready at

the other end. However, one of the chain's biggest problems is high employee

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turnover. This is because most employees make a low hourly wage, they are less likely

to be loyal to the company or think twice about leaving.

Conclusion

These are some of the strategies involved in the company’s business strategy

which allowed McDonald’s to gain the Britain support. Despite these successes, the

company should take into consideration the growing level of competitiveness in the food

service industry.

In Britain, several foreign fast food chains offering similar products are also being

supported by the Britain consumers. Constant strategic change is then necessary to ensure

that the company would sustain their competitive advantage.

In conclusion, McDonald’s has been successful because of the value the company

gives for its customers. Hence, despite the controversial beginning of McDonald’s in

Britain, the company managed to adapt to its people’s cultural needs. Indeed,

McDonald’s is a learning organization, one that is willing to learn and open to change.

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7.0 Reference

1. http://naveed92.wordpress.com/2008/07/16/mcdonalds-objectives-and-marketing-

mixes/

2. http://h2g2.com/approved_entry/A3816740

3. http://businesscasestudies.co.uk/mcdonalds-restaurants/the-marketing-

process/conclusion.html#axzz2h2qhgnXw

4. http://sales-management-slides.com/marketing-strategy-of-mcdonalds/

5. http://beta.fool.com/makinmoney2424/2012/11/08/mcdonalds-strengths-

weaknesses-opportunities-threa/16000/

6. http://content.time.com/time/world/article/0,8599,1932839,00.html

7. http://www.mcdonalds.co.uk/content/dam/McDonaldsUK/People/Schools-and-

students/mcd_marketing.pdf

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