MARKETING OF SERVICES

CASE STUDY ANALYSIS ON McDONALD'S ADVENTURE IN THE HOTEL INDUSTRY

INTRODUCTION
McDonald's Corporation is an American fast food company, founded in 1940 as a restaurant
operated by Richard and Maurice McDonald, in San Bernardino, California, United States. They
rechristened their business as a hamburger stand, and later turned the company into a franchise,
with the Golden Arches logo being introduced in 1953 at a location in Phoenix, Arizona. In 1955,
Ray Kroc, a businessman, joined the company as a franchise agent and proceeded to purchase the
chain from the McDonald brothers. McDonald's had its original headquarters in Oak Brook, Illinois,
but moved its global headquarters to Chicago in June 2018.
McDonald's is the world's largest restaurant chain by revenue, serving over 69 million customers
daily in over 100 countries across 37,855 outlets as of 2018. Although McDonald's is best known
for its hamburgers, cheeseburgers and French fries, they feature chicken products, breakfast items,
soft drinks, milkshakes, wraps, and desserts. In response to changing consumer tastes and a negative
backlash because of the unhealthiest of their food, the company has added to its menu salads, fish,
smoothies, and fruit. The McDonald's Corporation revenues come from the rent, royalties, and fees
paid by the franchisees, as well as sales in company-operated restaurants. According to two reports
published in 2018, McDonald's is the world's second-largest private employer with 1.7 million
employees (behind Walmart with 2.3 million employees).

UNIQUENESS OF THE GOLDEN ARCH

McDonald’s had their uniqueness with features. To name a few, luggage handling being provided
by a custom-made trolley, every operation being handled automatically by credits cards reducing
the human interface eventally reducing the time, and patented curved walls in the hotel rooms and a
damn new futuristic shower in the bathroom. These all features made the customers feel delighted.

POINT OF PARTY (POP) AND POINT OF DIFFERENCE (POD)

 Using the brand resonance pyramid, it can be said that in order to create brand resonance with
customers.
 Brands need to deliver both functional performance and meaning and imagery that customers
need.
 The functional performance and imagery is related to the point of parity and point of difference
established by the brand.

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REVIEW
McDonald's, one of the most powerful corporations in the world today, opened its first hotel in
2001 in the Swiss town of Rumlang, right in front of the airport. One of the reasons for opening the
hotel was to continue McDonald's successful hospitality philosophy. The corporation is also known
worldwide for its prompt service restaurant business, which offers low-cost fast food, a friendly
atmosphere, a clean environment, and a great location, especially for children.
The corporation also has a history with the stock market. The stock exchange is like their restaurant
all over the world. The corporation is part of the Dow Jones index, which is exchanged in Paris,
Tokyo, Toronto, Frankfurt and London. As soon as the success of the exchange began to see
success, misfortune came. "Within a few months - between November 1999 and February 2000 -
the stock fell from 48% to 32% per share (Michelle 2005)." The reason was that McDonald's had
just been completed in the United States. The general management came up with a perfect idea: to
help countries develop their core competencies. The idea was to "create the most profitable and
profitable restaurants in the corporation to develop their core competencies for use as a whole
model, and 2) (Michelle 2005)." The entire Golden Arch Hotel project began when CEO Urs
Hammers was given the green light in 1999 by the Chicago Executive Board. His idea was backed
up because his background was in a hotel. McDonald's entered the Swiss market with two middle
class hotels. Selected locations were in Zurich and Lolita for a variety of reasons. Zurich was close
to the airport, young and old for different reasons, and there was a high occupancy rate. Lilly was
selected as a high-traffic area near A-1 Interstate. Rumlang was chosen because it was a small town
on the shores of Zurich that attracted many young and old. "A major expansion of the airport will
increase its capacity by 50,000 in the first decade of the new millennium (Michael 2005)." The
hotel market in Zurich was booming under several building projects. Growth was so rapid that
analysts predicted even greater exposure in the near future. In a highly competitive hotel market,
Golden Arch hotels later faced challenges that are lucrative to target key customer segments: travel
groups, business travellers and regular travellers.
After some successful times, McDonald's met a lot of road blocks in the Swiss market. Despite
doing well in the hotel business, the professional analyst began to question whether the hotel
business was in line with McDonald's overall strategy. As the industry was performing well, hotel
operators built more hotels inside Zurich and occupied hotel beds. Third, there was the lack of a
labour market for the growing hotel industry. Hammer faced the following questions in the Swiss
market.

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 MARKETING OF SERVICES
Neither customer service experience nor ratings were in favour of the Golden Arch Hotel. Many
consumers complained that they did not receive the same reception from McDonald's restaurants.
Most of the time the front desk staff was not present or friendly with them. The beds in the rooms
were electronically operated and looked like hospital beds, and it was difficult to walk on hard
floors. There were also a lot of complaints about this bar because consumers feel like they are in an
airport lounge in a small town. The rooms also had wireless keyboards for computers for users to
access the Internet, which most users were taught was very advanced for 2001. Overall, the hotel's
four-star image was highly rated because it did not match its image. The hotel was located in an
isolated area, forcing customers to keep Macs. Donald's food during his stay which sometimes made
him sick.

APPLICATION
When entering a variety of businesses, I think McDonald's needs to make sure they have an
integrated marketing strategy that fits well into their overall strategy. "Based on the concept of a
holistic marketing organization, marketing needs to integrate all the processes facing consumers so
that customers see a face and hear a voice when they interact with the firm”.
 I think the corporation should create a new department that looks at the core competencies of all
the countries and makes sure that they are connected to the overall voice, mission and brand of
the company in which they are moving.
 In addition, all basic capabilities will be able to be extended to other countries. While it is
important for McDonald's to develop its strategy and product offerings in different countries, it
must adhere to its core competencies globally.
 "Because Golden Arch caters to a wide variety of clients - frequent individual travellers,
business travellers, group travellers, airline employees and layover travellers, they need to
analyse their market to see if they can What kind of food will you enjoy during the hotel stay.
Nowadays I think most travellers want more than fast food while staying at their hotel.
 McDonald's should have its own luxurious design, comfortable beds, and high-end fast food
offerings that include appetizers, entries, and desserts that help customers feel at home.
 Although customers live for a certain period of time, it can be incorporated into their experience
targeting different customer segments including cleanliness, consistent customer service and
great environment as well as high end fast food.
 Also, as their largest customer segment, they will be able to charge higher prices. If all of this
applies, I'm sure consumers won't complain about pricing.

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RESPONSE
As we all know, McDonald's is a popular collaboration in the world. I think they also recognized
the brand in the fast food restaurant category. They are one of the fast food restaurants that has also
contributed to providing affordable food to consumers globally.
 I think McDonald's has to rely on the strength of its corporate brand for a good common-sense
experience.
 Similarly, the McDonald's tradition offered world-class customer service and an unbeatable
price for the Golden Arch Hotel should have been offered. I'm sure it would have been a great
help for consumers to buy their products.
 I think they should gain the trust of their customers first before they can make a profit.
 Now that we have recognized that the McDonald's brand is not only superior, but also that
consumers trust their brand, their ability to grow in the hotel industry, they need to know the
market. Analyse how their customers really understand what brand they are.
 I also learned that McDonald's ran out of customers and money, when it was decided to go into
the pizza business.
 The reason for his failure was similar to why he failed in the hotel business. They offered
products that did not differ much from the current market price suggestions.
 It is important to make sure that you provide the right product that will be sold in the industry.
 If they want to be as successful as their fast food brand, they are already doing well in the fast
food business.

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CUSTOMER EXPERIENCE
 Customers reactions after visiting and staying in the Golden Arch hotel, was not very pleasant.
Many visitors who came to the McDonald’s restaurant did not notice the signage of the hotel.
 So, not many customers were aware that the hotel was situated in that locality.
 Quite often, there were no front desk employees to receive the customers and they were
unfriendly.
 The beds in the room which were electronically operated looked more like a hospital bed.
 The customers complained about the bar ambience as they felt it was very unwelcoming and
quite similar to a small city airport lounge.
 The rooms had wireless keyboards for the customers to access internet.

Golden Arch tried to differentiate themselves from others in design and use of technology.
DESIGN
 They had a design of curved wall in rooms which they even got patented.
 There were movable beds in the rooms and a futuristic shower.
TECHNOLOGY
 They had a keyboard in each to operate T.V and internet.
 Automation for check in and check out.
 Custom made trolley so that customers could carry their own luggage.

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SERQUAL MODEL
 Tangibility: This dimension deals with modern looking equipments and visual appeals of the
hotel. Tangibility deals with the appearance of physical facilities, equipment and communication
materials. The Golden Arch Hotel has to have a modern looking equipment (Hotel’s physical
appearance, reception desk, pamphlets, paperwork etc).
 Reliability: This dimension has a direct positive effect on perceived service quality and
customer satisfaction. It deals with the ability to perform the promised service dependably and
accurately. The firm has to deliver the promised service to the customers if their customers have
any problems the firm has to take initiative to solve it.
 Responsiveness: It deals with the Willingness to help customers and provide prompt &
accurate service. Employees are liable and should show honesty with their customers.
 Assurance: It deals with the Knowledge and courtesy of employees and ability to inspire trust &
confidence. The employees of the firm have a full information about their work and what
services had to be provided to its customers.
 Empathy: It deals with the Caring and providing individualized attention to its customers. The
employees of the firm should be willing to solve the problems of the customers as it is their
responsibility.

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 MARKETING OF SERVICES

SERVICE RECOVERY
Service recovery is a company's resolution of a problem from a dissatisfied customer, converting
them into a loyal customer. It is the action a service provider takes in response to service failure.

Service Failure of Golden Arch Hotel are

 Slow service
 Wrong Billing
 Conflicts with customers
The customers are dissatisfied with services which is provided by the Golden Arch Hotel as the
employees deliver the service very slowly to them and sometimes there are no employees to receive
or welcome the customers at entrance of the hotel. The bed of the room in the hotel is of no quality.
More over the employees do not provide the solutions to its customers for the problems that they
face in the hotel. The firm has promoted itself among the customers their best.

Service Recovery;
 Quick service
 Discounts in Billing
 Smooth handling
There are also service recovery process which can be used by the firm to recover the service failure
and satisfy the customers. Once the firm know where they are lacking or failed to provide the
service the firm can take the necessary actions to recover the service failure effectively.

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