Professional Documents
Culture Documents
Coursework on
MANAGING MARKET
Coursework Title
MACRO ENVIRONMENT
&
MARKETING MIX
1
: Macro Environment and Marketing Mix
McDonalds: Marketing Management
1. INTRODUCTION
In the year 1937, two brothers named Richaard and Murice in California started the
operation of McDonald’s as a drive in retaurant (Scribd, 2009). At present,
McDonlads is serving fifty four million people each day among one hundred and
twenty countries trhough its thiry thousands local restaurants. According to The
Times 100 (2009), during the year 2008 McDonalds operated 31,667 restaurants over
120 countries which can be divided into sex segments. Those are: United States,
United Kingdom, Asia Pacific, Africa, Canada, Middle East and Latin America. At
Present, McDonalds is the number eight famous brand around the world
(Datamonitor, 2009).
Resturant and franchisee resturants operated under the direct and indircet supervision
of McDonalds company are the main source of McDonalds’ revenue. (Scribd, 2009).
Around eight thousands resturants of McDonalds are monitored by the company
itself, franchisees operate around eighteen resturants of McDonalds (Abdullah, 2009).
Apart from that, all other McDonalds resturants are being operated just by using
McDonalds affiliation. The revenue of McDonalds are generated from mainly two
sources: 1) from the sale of McDonalds directly controlled restaurants and 2) rent and
fees from affiliates and franchisees of McDonalds.
The mission of McDonalds is "be our customers' favorite place and way to eat”
(McDonalds, 2009). The vision of McDonalds is to create a net benefit for the
employees of McDoanlds, for the community of McDoanlds as well as for the
biodiversity and the environmnet. McDoanlds is fulfilling their vision by by
maintaining a supply system that yields high quality as well as high profits
(McDoanlds, 2009)
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: Macro Environment and Marketing Mix
McDonalds: Marketing Management
The most common methods used for macro economic environment analysis is PEST
analysis. PEST anlayis do the environmental analysis from the following points of
view:
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: Macro Environment and Marketing Mix
McDonalds: Marketing Management
2. A. Political factors
Political factor mainly refers to government policy. For example, the degree of
According to Oxford University Press (2009) political factors mainly deals with the
following issues:
Good and Services for which Govt would give business permission.
The extend at which Government would subsidising firms.
Government’s priority in terms of business support.
McDonalds are operating their business around 120 countries. Each of the country has
its own government policies regarding business operation. McDonald’s operations are
always influence and affected by the state policies of each of the country (Abdullah,
2009).
Recently the regulation on business especially on food business has been increased all
over the world. Apart from that, the introduction of GST in European country may
affect the business of McDonalds (Scribd, 2009). In order to get rid from this
problem, McDonalds should give more priority on their service. McDonalds need to
differentiate themselves to reduce the effect of this political issue (Scribd, 2009).
The ethical concept among people varies from country to country which has a direct
impact on political and legal environment. For example, the issue of Halal and Haram
is common among the Muslim people and to the Muslim oriented countries like
Middle East (Abdullah, 2009). McDonalds need to change their supply chain and
distributor in order to cope with this.
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: Macro Environment and Marketing Mix
McDonalds: Marketing Management
2. B. Economical Factors
Interest rate, tax rate, economic growth, exchange rate, those are the factors related to
economic environment. (Hollensen, 2007).
As the McDonalds primary target market is upper and middle upper class that are less
sensitive to price while the target market may respond to the price (Scribd, 2009).
Reduction is the sales volume of McDonalds can be a good example of depression in
the European Market.
Yoke (2008) recommended that McDonalds would be able to get rid from recent
economic depression by taking some initiative. Those initiatives include proper
monitoring of interest and unemployment rate, developing good relations with
consumers. Yoke (2008) also concluded that McDonalds can use the current
economic forces in order to estimate the future sales rates. Because it would help
McDonalds to plan for their internal strength, for example planning about employee
numbers.
As McDonald is dependent of truck for moving their raw materials from the
warehouses to the outlets and offering of the Mc delivery service, the cost of fuel is
also important factor for McDonald’s business. Fuel price fluctuation and fuel crisis
in near future need to be considered in the strategic marketing planning of
McDonalds.
Bryson (2008) reports that the financial crisis of 2008 has affected the plans of
McDonald's Corp. to introduce coffee bars in its 14,000 restaurants in April, 2009.
The company is unable to obtain financing for the construction from its bank, Bank of
America. The problem may delay the introduction of the coffee bars until the summer
of 2009 at the earliest. Although the McDonalds stock price has held up relatively
well amid a global recession, company officials are preparing for a more difficult
economic climate (Janet, 2009)
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: Macro Environment and Marketing Mix
McDonalds: Marketing Management
2. C. Social factors
Social environment deals with the issues like cultural aspect, health and safety issues,
trend or population growth and their age distribution, people’s view about their career.
(The Decision Group, 2009). When the market is interested in convenience, they are
more likely to buy fast food; if the market's secondary values suddenly shift and
become interested in fitness and health, they will be less likely to buy fast food
(Scribd, 2009).
In some countries (like Indian & Pakistan) fast food lovers are much defined, there is
a kind of people who prefer other specialty cuisine healthy food restaurants. It is for
that they have to pay attention to the social mobility for not losing a possible market.
McDonalds is Working within many social groups and its increasing employments.
For example, in United Kingdom lots of international students are working with
McDonalds. McDonald helps them to adjust their working time with their class time
at university.
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: Macro Environment and Marketing Mix
McDonalds: Marketing Management
2. D. Technological factors
Technological advances in recent years have been rapid and have affected almost all
ares of life (CIPD, 2009). All of the companies are recently more concerned about
technological changes as the rate of technological changes will continue to increase in
near futuer (CIPD, 2009)
In order to keeping up with technology few years ago McDonald's installed EFTPOS
machines in their stores, this additional service provided by McDonald's increases the
value of the experience to the consumer (Datamonitor, 2009). Moreover McDonalds
has installed latest and expensive technology, having long lives to keep up with the
fast technology change (Business Teacher, 2009).
McDonalds spend much on research and development activities to improve its process
in order to deliver better value to its customers (Scribd, 2009).
McDonalds maintains quality standards through assurance labs around the world. A
quality assurance board, including the McDonald’s technical, safety and supply chain
specialists, provide guidance on all aspects of food quality and safety (Datamonitor,
2007).
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: Macro Environment and Marketing Mix
McDonalds: Marketing Management
2. E. Legal Factors
There are mainly two main areas of the law that must be considered by any business:
environment law and consumer protection (The Times 100, 2009)
In last few years McDonalds is facing some legal issues, for example, illegal working
hours to employees in some countries like United Kingdom (Scribd, 2009). They are
allowing international students to works more then 20 hours though they are allowed
work only for 20 hours. Apart from that¸ there are also complain against McDonalds
for unsatisfactory safety condition, sewage flooding at kitchen and selling of food
which were dropped on floor, which is like breaking health and safety rule (Scribd,
2009).
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: Macro Environment and Marketing Mix
McDonalds: Marketing Management
2. F. Natural Factors
The following natural factors play a vital role in the decision of McDonalds:
9
: Macro Environment and Marketing Mix
McDonalds: Marketing Management
As mentioned by Kotler, Armstrong, Saunders & Wong (1996), marketing mix is the
set of controllable tactical marketing tools that the firm blends to produce the
response it wants in the target market. The marketing mix consists of everything the
firm can do to influence the demand for its product. The many possibilities gather into
four groups of variables known as the four P’s: product, price, place and promotion
(Hollensen, 2007).
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: Macro Environment and Marketing Mix
McDonalds: Marketing Management
3. A. Products
Product doesn’t means only the good offered by the company to the customer, it also
includes the services associated with the sell or distribution of that product (Wong,
1996).
“Offer quality food quickly to customer at a good value” is the core marketing
strategy of McDonalds. It represent that McDonalds not only focus on the quality of
the product, but also focus on the service of the product (Coffee, 2009).
The core and competitive items of McDonalds are Hamburger, Big Mac, Big N'
Tasty, Filet-O-Fish, Chicken McNuggets, Cheeseburger, Quarter Ponder with Cheese,
Mc Double, Chicken Selects Premium Breast Strips (McDonalds, 2009).
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: Macro Environment and Marketing Mix
McDonalds: Marketing Management
3. B. Price
Price is what customer pay to get the products (Saunders, 1996). 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 Times 100, 2009).
McDonald’s has a unique pricing strategy that falls solely on their many product lines.
Their Value Meals fall into the category of Product Line Pricing (Pappalardo, 2008).
McDonald's set an appropriate price for their product by looking at its competitors in
each country. McDonald's is attempting to localize marketing communications due to
the realization that it couldn't possibly appeal to all countries at the same time
(Coffee, 2007).
During the recession McDonalds started ‘Dollar Menu' in USA. The Dollar Menu was
created because McDonald’s recognized that the economy was in a decline and that
their competition was getting fiercer. The Dollar Menu satisfies the current
decreasing economy and has increased the pressure towards competitors. The
introduction to the Dollar Menu is by far the most economical product line that
McDonald has ever offered (Pappalardo, 2008)
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: Macro Environment and Marketing Mix
McDonalds: Marketing Management
3. C. Place
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 (The Times 100, 2009).
McDonald's focuses on store placement and are always looking for the best locations.
This strategy created some weakness in the last 10 years because it seemed that too
many stores were put in some areas, cannibalizing sales from the other McDonald's
(Armstrong, D., et. al., 2004 & Nelson, J., 2003.). The company has also made
convenience a focus, not only through how fast it serves customers, but also in the
location of its outlets. Freestanding restaurants are positioned so that you are never
more than a few minutes away by foot in the city or by car in the suburbs. In addition,
McDonald's is tucking restaurants into schools, stores, and more (Armstrong, D., et.
al., 2004 & Nelson, J., 2003).
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: Macro Environment and Marketing Mix
McDonalds: Marketing Management
3. D. Promotion
The promotions aspect of the marketing mix covers all types of marketing
communications. The promotion methods of McDonalds include advertising,
sometimes known as ‘above the line’ activity. Advertising of McDonalds is conducted
on TV, radio, cinema, online, poster sites and in the press like newspapers, magazines
(The Times 100, 2009). Other promotional methods of McDonalds include sales
promotions, point of sale display, merchandising, direct mail, telemarketing,
exhibitions, seminars, loyalty schemes, door drops, demonstrations, etc (The Times
100, 2009).
McDonald's, over the years, has also ran many promotions to increase traffic or
product sales. For instance, the most recent roll out has been the 2004 Chicken Selects
premium Breast Strips (Coffee, 2007). Many other promotions with food, toys,
collectibles, videos, and other prizes have been used by McDonald's restaurants over
the past 50-plus years. These promotions, some better than others, have helped to
keep McDonald's growing and gaining in the fast food world.
Recently McDonalds is planning to remodel its stores using bold colours. The
periodical described the new packaging of the company as crisp imagery and sharp
marketing copy. It adds that the full-colour photographs of ingredients remind
customers that it offers real food (Amy, 2009)
While promotion the image of McDonalds, the company mainly use newspapers and
magazine. For example, in United Kingdom, they commonly use newspaper and
magazine like London Lite, London Paper, Metro, The Sun, The City A M., etc
(Coffee, 2007). In Asia, McDonald is trying to promote their product mainly on
children in order to get optimum result from their advertising.
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: Macro Environment and Marketing Mix
McDonalds: Marketing Management
4. A. McDonalds: Strength
4. A. I. Global brand
McDonald’s has a well-established global brand that appeals to all age groups
and customer segments (Brennan, 2007). In 2008, McDonald's figured at the
eighth place in the top 100 global brands ranking of Business Week magazine
and Interbrand, a branding consultancy. It valued McDonald’s brand at
$31,049 million in 2008 (Datamonitor, 2009).
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: Macro Environment and Marketing Mix
McDonalds: Marketing Management
4. B. McDonalds: Weaknesses
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: Macro Environment and Marketing Mix
McDonalds: Marketing Management
4. C. McDonalds: Opportunities
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: Macro Environment and Marketing Mix
McDonalds: Marketing Management
4. D. McDonalds: Threats
4. D. I. Intense competition
McDonald's restaurants face intense competition from international, national,
regional and local retailers of food products (Scribd, 2009). The company's
competition includes restaurants, quick service eating establishments, pizza
parlors, coffee shops, street vendors, convenience food stores, delicatessens
and supermarkets, Burger King, KFC, PFC etc. (Abdullah, 2009).
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: Macro Environment and Marketing Mix
McDonalds: Marketing Management
5. CONCLUSION
McDonalds could improve their marketing by trying to aim more towards teen, as
most of their advertising is aimed at little children, students or adult. The sale of
McDonalds product could be increasing by introducing types of pricing that they have
not yet used to attract their customers. Apart from that, McDonalds should also
consider axing their least popular products such as ‘Filet-o-Fish’ or some of the
breakfast items. So far, McDonalds are fairly successful in the placement, price and
promotion of their restaurants.
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: Macro Environment and Marketing Mix
McDonalds: Marketing Management
6. BIBLIOGRAPHY
Business Teacher. 2009. McDonald’s Case Study. [Online] UK: Business Teacher.
Available at: http://www.businessteacher.org.uk/business-resources/case-study-
database/mcdonalds-case-study/ [Accessed on 01 September 2009]
Abdullah, F.S.M., 2009. McDonald's Case Study. [Online] Scribd. Available at:
http://www.scribd.com/doc/16050821/McDonalds-Case-Study [Accessed on 04
September 2009]
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: Macro Environment and Marketing Mix
McDonalds: Marketing Management
The Times 100. 2009. McDonald: Marketing Mix. [Online] the Times 100. 2009.
Available at: http://www.thetimes100.co.uk/case-study--the-marketing-process--28-
240-1.php [Accessed on 10 September 2009]
Julie, J. & Stephanie, S. 2009. PETA Ads to Target McDonald's. [Online] Wall Street
Journal - Eastern Edition; 5/1/2009, Vol. 253 Issue 101, pB7. Available at:
http://search.ebscohost.com/login.aspx?
direct=true&db=buh&AN=40512465&site=bsi-live [Accessed 30 August 2009]
York,E., 2008.Credit crunch takes bite out of McDonald's. [Online] Advertising Age;
9/29/2008, Vol. 79 Issue 36. Available at: http://search.ebscohost.com/login.aspx?
direct=true&db=buh&AN=34542924&site=bsi-live [Accessed 06 September 2009]
Amy, G., 2009.McDonald's Is For Real. [Online] Dollars & Sense; Jan/Feb2009,
Issue 280, p4-4. Available at: http://search.ebscohost.com/login.aspx?
direct=true&db=buh&AN=36323414&site=bsi-live [Accessed 09 September 2009]
S., 2007. Global Marketing. 4th ed. England: Pearson Education Limited.
Kotler, P., Armstrong, G., Saunders, J. & Wong, V., 1996. Principles of Marketing.
1996. Europe: Prentice Hall.
Blythe, J., 1998. Essentials of Marketing. 1st ed. London: Financial Times
Professional Limited.
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