McDonald’s Case Essay Sample
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McDonald’s Case Essay Sample
A fast food restaurant, also known as a quick service restaurant (QSR) within the industry itself, is a specific type of restaurant characterized both by its fast food cuisine and by minimal table service. Food served in fast food restaurants typically caters to a “meat-sweet diet” and is offered from a limited menu; is cooked in bulk in advance and kept hot; is finished and packaged to order; and is usually available ready to take away, though seating may be provided. Fast food restaurants are usually part of a restaurant chain or franchise operation, which provisions standardized ingredients and/or partially prepared foods and supplies to each restaurant through controlled supply channels. Arguably the first fast food restaurants originated in the United States with A&W in 1916 and White Castle in 1921. Today, American-founded fast food chains such as McDonald’s and KFC are multinational corporations with outlets across the globe. Variations on the fast food restaurant concept include fast casual restaurants and catering trucks. Fast casual restaurants have higher sit-in ratios, and customers can sit and have their orders brought to them.
Catering trucks often park just outside worksites and are popular with factory workers. Some trace the modern history of fast food in America to July 7, 1912, with the opening of a fast food restaurant called the Automat in New York. The Automat was a cafeteria with its prepared foods behind small glass windows and coin-operated slots. Joseph Horn and Frank Hardart had already opened the first Horn & Hardart Automat in Philadelphia in 1902, but their “Automat” at Broadway and 13th Street, in New York City, created a sensation. Numerous Automat restaurants were built around the country to deal with the demand. Automats remained extremely popular throughout the 1920s and 1930s. The company also popularized the notion of “take-out” food, with their slogan “Less work for Mother”. Modern commercial fast food is highly processed and prepared on a large scale from bulk ingredients using standardized cooking and production methods and equipment.
It is usually rapidly served in cartons or bags or in a plastic wrapping, in a fashion which reduces operating costs by allowing rapid product identification and counting, promoting longer holding time, avoiding transfer of bacteria, and facilitating order fulfilment. In most fast food operations, menu items are generally made from processed ingredients prepared at a central supply facilities and then shipped to individual outlets where they are cooked (usually by grill, microwave, or deep-frying) or assembled in a short amount of time either in anticipation of upcoming orders (i.e., “to stock”) or in response to actual orders (i.e., “to order”). Following standard operating procedures, pre-cooked products are monitored for freshness and disposed of if holding times become excessive.
This process ensures a consistent level of product quality, and is key to delivering the order quickly to the customer and avoiding labour and equipment costs in the individual stores. To make quick service possible and to ensure accuracy and security, many fast food restaurants have incorporated hospitality point of sale systems. This makes it possible for kitchen crew people to view orders placed at the front counter or drive through in real time. Wireless systems allow orders placed at drive through speakers to be taken by cashiers and cooks. Drive through and walk through configurations will allow orders to be taken at one register and paid at another. Modern point of sale systems can operate on computer networks using a variety of software programs. Sales records can be generated and remote access to computer reports can be given to corporate offices, managers, trouble-shooters, and other authorized personnel.
The aim of this project is to conduct a market study on a thriving fast food restaurant, going deep into its formation, history and growth; then to analyse the reason that make it so popular.
In this project we will be conducting a market study on the global fast food giant McDonald’s.
MCDONALD’S AN INTRODUCTION McDonald’s Corporation (NYSE: MCD) is the world’s largest chain of hamburger fast food restaurants, serving around 68 million customers daily in 119 countries. Headquartered in the United States, the company began in 1940 as a barbecue restaurant operated by Richard and Maurice McDonald; in 1948 they reorganized their business as a hamburger stand using production line principles. Businessman Ray Kroc joined the company as a franchise agent in 1955. Ray Kroc subsequently purchased the chain from the McDonald brothers and oversaw its worldwide growth. A McDonald’s restaurant is operated either by a franchisee, or an affiliate, or the corporation itself.
The corporation’s revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants. McDonald’s revenues grew 27 percent over the three years ending in 2007 to $22.8 billion, and 9 percent growth in operating income to $3.9 billion. McDonald’s primarily sells hamburgers, cheese burgers, chicken, French fries, breakfast items, soft drinks, milkshakes and desserts. In response to changing consumer tastes, the company has expanded its menu to include salads, wraps, smoothies and fruits. In July 2011, McDonald’s announced that their largest restaurant in the world will be built on the 2012 London Olympics site. The restaurant will contain over 1,500 seats and is half the length of an American Football field. Over 470 staff will be employed serving on average (during the 2012 Olympics) 100,000 portions of fries, 50,000 Big Macs and 30,000 Milkshakes. This restaurant will overshadow the current largest McDonald’s in the world in Moscow, Russia. In January 2012, the company announced revenue for 2011 reached an all-time high of $27 billion, and that 2400 restaurants would be updated and 1300 new ones opened worldwide.
HISTORY OF MCDONALD’S
The McDonald’s restaurant concept was introduced in San Bernardino, California by Dick and Mac McDonald of Manchester, New Hampshire. It was modified and expanded by their business partner, Ray Kroc, of Oak Park, Illinois, who later bought out the business interests of the McDonald brothers in the concept and went on to found McDonald’s Corporation. Early history
In 1937, Patrick McDonald opened “The Airdrome”, an octagonal food stand, on Huntington Drive in Monrovia, California. In 1940, his two sons, Maurice and Richard (“Mac” and ” Dick”), moved the entire building to 1398 North E Streets in San Bernardino, California. The restaurant was renamed “McDonald’s Famous Barbeque” and served over forty barbequed items. In 1953, the McDonald brothers began to franchise their successful restaurant, starting in Phoenix, Arizona and Downey and California. The McDonald brothers created Speedee to symbolize the quick and efficient service system that they had devised.
Downey’s Speedee is one of only a few remaining and Downey’s restaurant is the oldest operating McDonald’s in the world. Recognizing the historic and nostalgic value of the intact 1953 structure, the McDonald’s Corporation acquired the store in 1990 and rehabilitated it to a modern but nearly original condition. In 1954, Ray Kroc, suggested that they franchise their restaurants throughout the country. He got the rights to set up McDonald’s restaurants throughout the country, except in a handful of territories in California and Arizona already licensed by the McDonald brothers. Kroc’s first McDonald’s restaurant opened in Des Plaines, Illinois, near Chicago, on April 15, 1955, the same day that Kroc incorporated his company as McDonald’s Systems, Inc. (which he would later rename McDonald’s Corporation). By 1958, there were 34 restaurants. In 1959, however, Kroc opened 68 new restaurants, bringing the total to 102 locations.
Phenomenal growth in the 1960s and 1970s
In 1960, the McDonald’s advertising campaign “Look for the Golden Arches” gave sales a big boost In 1962, McDonald’s introduced its now world-famous Golden Arches logo. A year later, the company sold its billionth hamburger and introduced Ronald McDonald, a red-haired clown with particular appeal to children. In the early 1960s, McDonald’s really began to take off. In 1961 Kroc bought out the McDonald brothers for $2.7 million, aiming at making McDonald’s the number one fast-food chain in the country. In 1965, McDonald’s Corporation went public. In 1985, McDonald’s Corporation became one of the 30 companies that make up the Dow Jones Industrial Average. McDonald’s success in the 1960s was in large part due to the company’s skilful marketing and flexible response to customer demand. In 1968 the now legendary Big Mac made its debut, and in 1969 McDonald’s sold its five billionth hamburger.
Two years later, McDonald’s restaurants had reached all 50 states. In 1968, McDonald’s opened its 1,000th restaurant; Kroc became chairman and remained CEO until 1973. By the late 1960s, many of the candy-striped Golden Arches stores had been modified with enclosed walk-up order areas and limited indoor seating. By June 1969, “mansard roof” building design featuring indoor seating became the standard for McDonald’s restaurants. The company pioneered breakfast fast food with the introduction of the Egg McMuffin in 1972 and five years later McDonald’s added a full breakfast line to the menu. In 1975, McDonald’s opened its first drive-thru window in Sierra Vista, Arizona. This service gave Americans a fast, convenient way to procure a quick meal. Drive-thru sales eventually accounted for more than half of McDonald’s systemwide sales. Surviving the 1980s “Burger Wars”
In the late 1970s, competition from other hamburger chains such as Burger King and Wendy’s began to intensify. A period of aggressive advertising campaigns and price slashing in the early 1980s became known as the “burger wars.” Burger King suggested to customers: “have it your way”; Wendy’s offered itself as the “fresh alternative”. But McDonald’s sales and market share continued to grow. During the 1980s, McDonald’s further diversified its menu to suit changing consumer tastes. The company introduced the McChicken in 1980. It proved to be a sales disappointment and was replaced with series of different chicken sandwiches a year later. Chicken McNuggets were invented in 1979. By the end of 1983, McDonald’s was the second largest retailer of chicken in the world. In 1985, ready-to-eat salads were introduced to lure more health-conscious consumers. The 1980s were the fastest-paced decade yet. Efficiency, combined with an expanded menu, continued to draw customers. McDonald’s, already entrenched in the suburbs, began to focus on urban centres and introduced new architectural styles. Despite experts’ claims that the fast-food industry was saturated, McDonald’s continued to expand.
The first generation raised on restaurant food had grown up. Eating out had become a habit rather than a break in the routine, and McDonald’s relentless marketing continued to improve sales. McDonald’s growth in the United States was mirrored by its stunning growth abroad. By 1991, 37 percent of system wide sales came from restaurants outside the United States. McDonald’s opened its first foreign restaurant in British Columbia, Canada, in 1967. By the early 1990s the company had established itself in 58 foreign countries and operated more than 3,600 restaurants outside the United States, through wholly owned subsidiaries, joint ventures, and franchise agreements. Its strongest foreign markets were Japan, Canada, Germany, Great Britain, Australia, and France. Braille menus were introduced in 1979, and picture menus in 1988. Experiments were conducted to find new technology and to research new markets to keep McDonald’s in front of its competition. New locations such as hospitals and military bases were tapped as sites for new restaurants. 1990s: Growing pains
The 10,000th unit was opened in April 1988.It took McDonald’s 33 years to open its first 10,000 restaurants. Incredibly, the company reached the 20,000-restaurant mark in only eight more years, in mid-1996. By the end of 1997 the total had surpassed 23,000, and by that time McDonald’s was opening 2,000 new restaurants each year, an average of one every five hours. In 1993, a new region was added to the empire when the first McDonald’s in the Middle opened in Tel Aviv, Israel. As the company entered new markets, it showed increasing flexibility with respect to local food preferences and customs. In Israel, for example, the first kosher McDonald’s opened in a Jerusalem suburb in 1995. In Arab countries, the restaurant chain used “Halal” menus. McDonald’s entered India for the first time in 1996, where it offered a Big Mac made with lamb called the Maharaja Mac.
Overall, the company derived increasing percentages of its revenue and income from outside the United States. In 1992 about two-thirds of systemwide sales came from U.S. McDonald’s, but by 1997 that figure was down to about 51 percent. Similarly, the operating income numbers showed a reduction from about 60 percent derived from the United States in 1992 to 42.5 percent in 1997. The company made several notable blunders in the United States in the 1990s. A seemingly weakened McDonald’s was the object of a Burger King offensive when the rival fast-food maker launched the Big King sandwich, a Big Mac clone. Meanwhile, internal taste tests revealed that customers preferred the fare at Wendy’s and Burger King. In response to these difficulties, McDonald’s drastically cut back on its U.S. expansion. Plans to open hundreds of smaller restaurants in Wal-Mart and gasoline stations were abandoned because test sites did not meet targeted goals.
Failed turnaround: late 1990s
Following the difficulties of the early and mid-1990s, several moves in 1998 seemed to indicate a reinvigorated McDonald’s. Announcements were made that McDonald’s would improve the taste of several sandwiches and introduce several new menu items. McDonald’s also said that it would overhaul its food preparation system in every U.S. restaurant. The new just-in-time system, dubbed “Made for You,” was in development for a number of years and aimed to deliver to customers “fresher, hotter food”; enable patrons to receive special-order sandwiches (a perk long offered by rivals Burger King and Wendy’s); and allow new menu items to be more easily introduced thanks to the system’s enhanced flexibility.
Refurbishing and creating a healthier image: Early 2000s
McDonald’s was sued in 2001 after it was revealed that for flavoring purposes a small amount of beef extract was being added to the vegetable oil used to cook the french fries. McDonald’s soon apologized for any “confusion” that had been caused by its use of the beef flavouring, and in mid-2002 it reached a settlement in the litigation, agreeing to donate $10 million to Hindus, vegetarians, and other affected groups. McDonald’s also had to increasingly battle its public image as a purveyor of fatty, unhealthy food. McDonald’s responded by introducing low-calorie menu items and switching to a more healthful cooking oil for its French fries.
McDonald’s continued to curtail store openings in 2004 and to concentrate on building business at existing restaurants. McDonald’s also aimed to pay down debt by $400 million to $700 million and to return approximately $1 billion to shareholders through dividends and share repurchases With the new “Forever Young” design (adopted in 2006), the first major redesign since 1969, McDonald’s turned a new page for itself. Most of new and remodelled restaurants feature dining zones with three sections or zones. Free wifi access points were also granted. Also, harsh colours and hard plastics have been replaced with custom earth tones and flexible padded fabric. The McDonald’s menu has been tweaked to offer a larger variety of what the corporation refers to as more healthy food.
In July 2011, McDonald’s announced that their largest restaurant in the world will be built on the 2012 London Olympics site. The restaurant will contain over 1,500 seats and is half the length of an American Football field. Over 470 staff will be employed serving on average (during the 2012 Olympics) 100,000 portions of fries, 50,000 Big Macs and 30,000 Milkshakes. This restaurant will overshadow the current largest McDonald’s in the world in Moscow, Russia. In January 2012, the company announced revenue for 2011 reached an all-time high of $27 billion, and that 2400 restaurants would be updated and 1300 new ones opened worldwide. LIST OF PRODUCTS
All beef patties are seasoned, consisting primarily of salt and black pepper. Big Mac: Along with the Quarter Pounder with cheese, this is one of the two McDonald’s signature menu items, introduced in 1967 as a response to the flagship burger at Big Boy restaurants. Two 1.6-ounce ground beef patties, special Big Mac sauce, shredded iceberg lettuce, cheese, two gherkin slices, and re-hydrated onions on a toasted sesame seed bun, with an additional middle bun separating both beef patties. Big N’ Tasty: The Big N’ Tasty consists of a seasoned quarter-pound beef patty with ketchup, mayonnaise, slivered onions, two dill pickle slices, leaf lettuce, and one tomato slice on a sesame seed bun. Quarter Pounder: Along with the Big Mac, this is one of the two McDonald’s signature menu items. 4-ounce of ground beef patty with ketchup, mustard, slivered onions, two gherkin slices, and two slices of cheese. Hamburger and cheeseburger: A 45 g ground beef patty, with ketchup, mustard, a single dill pickle, re-hydrated onions, on a toasted bun. Also sold as a double or triple, adding an extra pickle slice for each beef patty added Double Cheeseburger: It has two 45 g ground beef patties, with ketchup, mustard, two slices of dill pickle, re-hydrated onions, and two pieces of cheese on a toasted bun.
McDouble: It similar to a Double Cheeseburger, but with just one slice of cheese. It was reintroduced as a permanent dollar-menu item in December 2008. Daily Double: Similar to the double cheeseburger, however the toppings are different. The Daily Double is made with lettuce, tomato, slivered onions, and mayonnaise. It also has only one slice of cheese, rather than the two slices that are on the double cheeseburger. The Big N’ Tasty: It was introduced in 1997 and has beef patty with ketchup, cheese, mayonnaise with a grill flavouring, diced onions, two pickles, leaf lettuce, kebab meat and a tomato slice, on a toasted bun. It was devised to resemble Burger King’s Whopper sandwich. McFeast: A hamburger with lettuce, tomato, and mayonnaise, the McFeast contains a quarter pounder patty, lettuce, and modified mayonnaise with lemon juice, ketchup, onion and tomato.
Chicken, Fish, Pork McChicken: It is a mildly spicy chicken sandwich. Made from ground white meat chicken, mayonnaise, and shredded lettuce, on a toasted bun. It still remains one of the biggest sellers, just behind the Big Mac. Premium chicken sandwiches: The Classic is a rebranding of the Crispy Chicken and Chicken McGrill sandwiches, with mayonnaise, leaf lettuce, and a tomato slice. All are served on a whole-grain roll, with either a grilled or crispy chicken breast. Southern Style Chicken Sandwich: A southern-style fried chicken breast filet, on a steamed bun, dressed with butter and two pickles. Snack Wrap: McDonald’s version of a wrap made with white meat chicken breast, lettuce, shredded Cheddar cheese and Monterey Jack cheese, and a sauce, wrapped in a soft flour tortilla. There is also a Mac Snack Wrap which features the fixings of the Big Mac, but without the bun and wrapped in a tortilla shell, and uses one half of a piece of quarter meat. Chicken Fajita: Chicken, cheese, red and green bell peppers, and diced onions in a flour tortilla. Comes with Picante sauce packets on request, which is available in mild and spicy. Chicken McNuggets: Introduced in 1980 as a replacement for the McChicken, these are small chicken chunks served with dipping sauces of Barbecue, Sweet n’ Sour, Honey, and Hot Mustard.
In 2011, 4 new dipping sauces were introduced and added to the lineup: Sweet Chili, Honey Mustard, Spicy Buffalo, and Creamy Ranch. Chicken Selects: McDonald’s version of chicken strips. They include choices of spicy buffalo, creamy ranch, Honey Mustard, and Chipotle barbecue dipping sauces; sauce selections in the UK are Smokey barbecue, sour cream and sweet chilli sauce. Filet-O-Fish: It is a whitefish fillet with tartar sauce and a half slice of cheese, on a steamed bun. McRib: It is a sandwich featuring boneless pork with barbecue sauce, slivered onions, and pickles. McArabia: There are two versions of the McArabia: Grilled chicken and grilled kofta (beef with spices). Both are served with lettuce, tomatoes, onions, and garlic mayonnaise in addition to two small patties of grilled chicken or kofta, all wrapped in an Arabic style pita bread. The McArabia has been very well received throughout the Middle East. Chicken McBites: They are Popcorn chicken breast with “home-style seasoning”. Dipping sauces include ranch, Sweet n’ Sour, Tangy BBQ, Chipotle BBQ, and Honey Mustard. Fish McBites: Similar to the Chicken McBites, these are small pieces of flaky whitefish dipped in batter and fried until golden brown, and served with tartar sauce for dipping. Salads and side orders
McDonald’s first introduced salads to its menu in 1985. The Premium Salads all are a mixture of iceberg lettuce and a special lettuce assortment, with cherry tomatoes and different toppings to differentiate them; additionally all salads can be topped with warm grilled or crispy chicken. All of its salads are part of McDonald’s move towards creating a healthier image. McDonald’s sells French fries as its primary side order. They also sell potato wedges, a type of French fry that is thick cut and wedge shaped, fried onion pieces and onion rings.
Facts and figures
McDonald’s restaurants are found in 119 countries and territories around the world and serve 58 million customers each day. McDonald’s operates over 31,000 restaurants worldwide, employing more than 1.5 million people. The companies also operate other restaurant brands, such as Piles Café. Focusing on its core brand, McDonald’s began divesting itself of other chains it had acquired during the 1990s. The company owned a majority stake in Chipotle Mexican Grill until October 2006, when McDonald’s fully divested from Chipotle through a stock exchange. Until December 2003, it also owned Donatos Pizza. On August 27, 2007, McDonald’s sold Boston Market to Sun Capital Partners. Notably, McDonald’s has increased shareholder dividends for 25 consecutive years, making it one of the S&P 500 Dividend Aristocrats.
Types of restaurants
Most standalone McDonald’s restaurants offer both counter service and drive-through service, with indoor and sometimes outdoor seating. Drive-Thru, Auto-Mac, Pay and Drive, or “McDrive” as it is known in many countries, often has separate stations for placing, paying for, and picking up orders, though the latter two steps are frequently combined; it was first introduced in Arizona in 1975, following the lead of other fast-food chains. The first such restaurant in Britain opened at Fallowfield, Manchester in 1986. In some countries, “McDrive” locations near highways offer no counter service or seating. In contrast, locations in high-density city neighbourhoods often omit drive-through service. There are also a few locations, located mostly in downtown districts that offer Walk-Thru service in place of Drive-Thru. To accommodate the current trend for high quality coffee and the popularity of coffee shops in general, McDonald’s introduced McCafé, a café-style accompaniment to McDonald’s restaurants in the style of Starbucks. McCafé is a concept created by McDonald’s Australia, starting with Melbourne in 1993.
Today, most McDonald’s in Australia have McCafés located within the existing McDonald’s restaurant. In Tasmania, there are McCafés in every store, with the rest of the states quickly following suit. After upgrading to the new McCafé look and feel, some Australian stores have noticed up to a 60% increase in sales. As of the end of 2003 there were over 600 McCafés worldwide. Some locations are connected to gas stations/convenience stores, while others called McExpress have limited seating and/or menu or may be located in a shopping mall. Other McDonald’s are located in Wal-Mart stores. McStop is a location targeted at truckers and travellers which may have services found at truck stops. Since 1997, the only Kosher McDonald’s in the world that is not in Israel is located in the “Abasto de Buenos Aires”, Argentina.
McDonald’s has become emblematic of globalization, sometimes referred to as the “McDonaldization” of society. The Economist newspaper uses the “Big Mac Index”: the comparison of a Big Mac’s cost in various world currencies can be used to informally judge these currencies’ purchasing power parity. Norway has the most expensive Big Mac in the world as of July 2011, while the country with the least expensive Big Mac is India . Some observers have suggested that the company should be given credit for increasing the standard of service in markets that it enters. A group of anthropologists in a study entitled Golden Arches East looked at the impact McDonald’s had on East Asia, and Hong Kong in particular. When it opened in Hong Kong in 1975, McDonald’s was the first restaurant to consistently offer clean restrooms, driving customers to demand the same of other restaurants and institutions. McDonald’s has taken to partnering up with Sinopec, the second largest oil company in the People’s Republic of China, as it takes advantage of the country’s growing use of personal vehicles by opening numerous drive-thru restaurants. McDonald’s has opened a McDonald’s restaurant and McCafé on the underground premises of the French fine arts museum, the Louvre. The company stated it will open vegetarian-only restaurants in India by mid-2013. Redesign
In 2006, McDonald’s introduced its “Forever Young” brand by redesigning all of its restaurants, the first major redesign since the 1970s. invested $1 billion to redesign nearly all of the 14,000 restaurants by 2015. The goal of the redesign is to be more like a coffee shop, similar to Starbucks. The design includes wooden tables, faux-leather chairs, and muted colours; the red is muted to terra cotta, the yellow was turned golden for a more “sunny” look, and olive and sage green were also added. To warm up its look, the restaurants have less plastic and more brick and wood, with modern hanging lights to produce a softer glow. Many restaurants now feature free Wi-Fi and flat screen TVs. Other upgrades include double drive-thrus, flat roofs instead of the angled red roofs, and replacing fibre glass with wood. Also, instead of the familiar golden arches, the restaurants now feature “semi-swooshes” (half of a golden arch), similar to the Nike swoosh.
McDonald’s Corporation earns revenue as an investor in properties, a franchiser of restaurants, and an operator of restaurants. Approximately 15% of McDonald’s restaurants are owned and operated by McDonald’s Corporation directly. The remainder are operated by others through a variety of franchise agreements and joint ventures. The McDonald’s Corporation’s business model is slightly different from that of most other fast-food chains. In addition to ordinary franchise fees and marketing fees, which are calculated as a percentage of sales, McDonald’s may also collect rent, which may also be calculated on the basis of sales. As a condition of many franchise agreements, which vary by contract, age, country, and location, the Corporation may own or lease the properties on which McDonald’s franchises are located. In most, if not all cases, the franchisee does not own the location of its restaurants.
The United Kingdom and Ireland business model is different than the U.S, in that fewer than 30% of restaurants are franchised, with the majority under the ownership of the company. McDonald’s trains its franchisees and others at Hamburger University in Oak Brook, Illinois. In other countries, McDonald’s restaurants are operated by joint ventures of McDonald’s Corporation and other, local entities or governments. As a matter of policy, McDonald’s does not make direct sales of food or materials to franchisees, instead organizing the supply of food and materials to restaurants through approved third party logistics operators. According to Fast Food Nation by Eric Schlosser, nearly one in eight workers in the U.S. have at some time been employed by McDonald’s. It also states that McDonald’s is the largest private operator of playgrounds in the U.S., as well as the single largest purchaser of beef, pork, potatoes, and apples. The selection of meats McDonald’s uses varies with the culture of the host country.
The marketing mix of a company consists of the various elements as follows which form the core of a company’s marketing system and hence helps to achieve marketing objectives. The marketing mix of McDonald’s is as follows:- Product: – 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. 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 cannibalise 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 cycle. In India McDonalds has a diversified product range focussing more on the vegetarian products as most consumers in India are primarily vegetarian. The happy meal for the children is a great seller among others.
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. In India McDonalds classifies its products into 2 categories namely the branded affordability (BA) and branded core value products (BCV). The BCV products mainly include the McVeggie and McChicken burgers that cost Rs 50-60 and the BA products include McAloo tikki and Chicken McGrill burgers which cost Rs20-30. This has been done to satisfy consumers which different price perceptions.
Promotion :- The promotions aspect of the marketing mix covers all types of marketing communications .One of the methods employed is advertising, Advertising is conducted on TV, radio, in cinema, online, using poster sites and in the press for example in newspapers and magazines. Other promotional methods include sales promotions, point of sale display, merchandising, direct mail, loyalty schemes, door drops, etc. 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 on buying the item. At McDonalds the prime focus is on targeting children. In happy meals too which are targeted at children small toys are given along with the meal. Apart from this, various schemes for winning prices by way of lucky draws and also scratch cards are given when an order is placed on the various mean combos.
Place: – Place, as an element of 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. McDonald’s outlets are very evenly spread throughout the cities making them very accessible. Drive in and drive through options make McDonald’s products further convenient to the consumers.
Other than the main four elements mentioned above there are a few other elements too in the marketing mix, which are as follows:-
People:-The employees in McDonald’s have a standard uniform and McDonald’s specially focuses on friendly and prompt service to its customers from their employees.
Process:-The food manufacturing process at McDonald’s 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 McDonald’s by allowing them to enter the area where the process takes place. The customers are invited to check the ingredients used in food.
Physical evidence: – McDonalds 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.
* McDonald’s holds a very strong brand name worldwide.
* They have large partnerships with other companies that provide them with their desired products; this increases the goodwill of the company. * McDonald’s is one of the most reputed firms who are socially responsible. * Loyal employees & management & customer are their biggest strength. * McDonald’s makes sure that cultural & regional barriers are kept in mind while providing food to different countries. * Clean environment and play areas for children where they can enjoy their time.
* The weakness that hits the list of employee turnover rate. Every year many of their employees are fired out of the restaurant.
* McDonalds mostly advertises products and food items that targets children.
* Health conscious people often complain that they do not provide us with the organic and healthy food. This becomes their weakness when they get in the complaints.
* They also face quality issue at times. This affects the business as they are running the outlet worldwide, if one franchise gets affected others also get a bad name.
* It can open up online services for their customers so that they can easily order their desired meals sitting at home.
* Discounts given on every food item may help them gain more customers.
* They can go for a joint venture with the retailers they work with.
* They can introduce healthy hamburgers and healthy drinks for the people who are health conscious.
* In order to be environment friendly, they can use packing material which can be recycled later or material that does not create pollution.
* Emerging competition of similar outlets is becoming a problem for McDonalds.
* Health issue also becomes a problem when it comes to food.
* As it is a multinational food outlet, fluctuations in the currency of other countries becomes a problem for such companies.
* Recession in any country would definitely affect the whole outlet worldwide.
* People facing heart problems and obesity accuse McDonalds for not providing them with the healthy food.
* They have a threat of local food outlets in different countries.