Task 1

Introduction:

McDonald’s is one of the leading global fast food service retailers, with about
more than 32,000 restaurants serving more than 60 million people in more than
117 countries each day. McDonald’s is well known for some of its much-desired
food like; Chicken McNuggets, Big Mac and Egg McMuffins all around the
globe. McDonald’s 75% of its chains are owned and operated by the franchisees
all over the world and only 25% of its chains are owned by the company. In
1967 McDonald opened its first international outlet in Canada. Most of the
McDonald’s outlets are free standing units, other than that it also has many units
located at airports and in other retail areas. Since the opening of McDonald’s
first international outlet in Canada it is known for providing the outstanding
quality, quick service, cleanliness and value to its customers.

Current Strategic Aims and Objectives of McDonald’s:

McDonald’s has clearly defined its strategic aims and objectives; the vision of
McDonald’s is to be the leading, quick and the best fast food service provider all
over the world. Other objectives of McDonald’s are; to maintain and develop the
best quality food products in the quick service restaurant market, McDonald’s
also wants to lead the quick service restaurant market by attracting new
customers, opening more profitable restaurants, increasing its sales through
promotion that enable them to continue their program of expansion. The
McDonald’s goal is to maximize its profits, maintain its competitive advantage
by constantly creating new products to add onto its menu, which will help to
attract new customers and satisfy their existing customers that gives customers a
reason to visit McDonald’s often.

McDonald’s main objective is to be the world’s best quick service restaurant

ever experience and for this McDonald’s provide outstanding service, quality,
cleanliness and value to its customers all around the globe. McDonald’s also aim
to grasp every opportunity to innovate and lead the industry on behalf of the
customers, they also have a passion and feel committed to go beyond their
customers’ expectations every time in every restaurant in order to enhance and
protect the McDonald’s brand all over the world.

2- A diagram of the marketing planning process McDonalds:

McDonald (1995) suggests that several stages have to be completed in

order to arrive at a strategic marketing plan. These are summarized in the
diagram below:

The extent to which each part of the above process needs to be carried out
depends on the size and complexity of the business. In a small or undiversified
business, where senior management have a strong knowledge and detailed
understanding of the overall business, it may not be necessary to formalize the
marketing planning process. By contrast, in a highly diversified business, top
level management will not have knowledge and expertise that matches
subordinate management. In this situation, it makes sense to put formal
marketing planning procedures in place throughout the organization.

3- A critical review of at least three marketing concepts/models/theories and

how they relate to Each marketing sub-concept describes one aspect of the
product manufacturing, sales and distribution cycle.

Each marketing sub-concept describes one aspect of the product manufacturing,

sales and distribution cycle. Each marketing concept operates independently of
the other four entities, as Marketing-Insider explains.

Product Orientation: The product orientation focuses entirely on bringing the

best possible product, such as a wireless widget, to the marketplace. To
accomplish that goal, the manufacturer’s product designers give the high-tech
widget a striking appearance and several desirable features.

Next, the firm’s manufacturing plant retools its equipment and processes to
bring the designers’ vision to life. The company also spends advertising and
promotional dollars to convince consumers that they should purchase the
wireless widgets.

Production Concept: The simplistic production concept has several similarities

to the product orientation. Again, there is very little focus on the consumer’s
wants and needs. Instead, the production concept-oriented manufacturer turns all
its attention to production and distribution networks.

Let’s say the company manufactures lots of affordable wireless widgets. The
firm believes that if it places the widgets in convenient retail outlets, consumers
will choose its products over competitors’ offerings.

Selling Approach: The selling approach maintains a sales orientation to the

exclusion of every other objective. The company doesn’t emphasize product
development, but instead concentrates on pushing existing products on current
and potential customers. In the company’s view, aggressive sales and
promotional efforts are necessary to ensure that consumers buy sufficient
numbers of the company’s products.

This approach may help the company to generate many one-time sales.
However, its complete lack of interest in learning about consumers’ needs, and
developing products to meet them, sets the stage for short-term customer
relationships that don’t encourage brand loyalty.

MARKETING THEORIES

Market Penetration

This strategy focuses on increasing the volume of sales of existing products to

the organization’s existing market.

Questions asked:

o How can we defend our market share?

o How can we grow our market?

Product Development

This strategy focuses on reaching the existing market with new products.
Questions asked:

o How can we expand our product portfolio by modifying or creating

products?

Market Development

This strategy focuses on reaching new markets with existing products in the
portfolio.

Questions asked:

o How can we extend our market?

o Through new market sectors?
o Through new geographical areas?

Diversification

This strategy focuses on reaching new markets with new products.

Diversification can be either related or unrelated.

o Related Diversification: The organisation stays within a market they have

familiarity with.
o Unrelated Diversification: The organisations moves into a market or
industry they have no experience with. This is considered a high-risk
strategy.

BALANCED SCORECARD

In order for a business to succeed it must set objectives in line with the overall
mission and vision of the organisation. The balanced scorecard suggests that it is
not only financial performance that equates to a successful business. Therefore,
it takes the perspectives of four different areas of the organisation and monitors
their performance based on their individual objectives.

To do this certain condition must be in place:

 o Objectives must be set
o Data must be collected
o A value must be set to measure the data against
o Corrective action must be readily available

The Four Perspectives:

Learning and Growth

This perspective involves staff learning and training in order to improve the
knowledge resource. Managers should be able to identify where they should be
investing their funds for personnel development, not just through training but
through mentor schemes and improving communication amongst staff.

Considerations for measurement include:

o Job satisfaction
o Employee turnover
o Levels of specialist knowledge and skills
 o Training opportunities

Internal Business Processes

This perspective allows managers to see how well their business is performing
based on whether their products and services are meeting the needs of their
customers. Carefully designed metrics will be needed to monitor this area.

Considerations for measurement include:

o Activities per function

o Process alignment
o Process automation

Customers:

For those of you aware of the marketing orientated business, opposed to the
sales orientated businesses of the past, will know that customer satisfaction is
now more and more at the forefront of every marketers, and therefore every
business's mind. Marketers know that poor performance in this area leads to
customers switching to alterative suppliers and if this is not addressed a future
decline could continue.

Considerations for measurement include:

o Customer satisfaction rate

o Customer retention
o Delivery performance
o Quality performance

Financial:

At the start we said that the balanced scorecard was a useful tool as it looks at
areas other than finance to judge the performance of a business. This does not
mean however that traditional financial metrics should be ignored and that is
why they make up the fourth perspective. Financial metrics are still important to
see exactly how profitable the business is. Considerations for this perspective
include:

o ROI
o Cash flow
o Financial results

By implementing a balanced scorecard in your business, you can hope to

achieve improved processes and customer satisfaction, more motivated staff and
clear positive financial results.

4- A critical discussion of the significance of branding using McDonalds as

an example.
McDonald is one of the most popular fast food brands in the world. It started
business in fifties and now it is serving worldwide chain of 30,000 restaurants.
McDonald restaurants undoubtedly present a very useful example of
sociological artifact. Several artifacts of modern world have been very well
organized as Macdonald’s popular brands, promotional strategies with the
famous toys and films, its involvement in the charities and its saturation
advertisement.

More than 75% of McDonald is owned and operated by local men and women.
Its serves more than 40million people per day. It drives 80% of its revenue from
8 countries like Canada, Brazil, Germany, France, Japan, UK, Australia and
USA. The greatest achievement it got was creating a image in the minds of
people and introducing them to the fast food culture. Delivery speed, customer
care and hygiene cautions are the main driving advantage it has which helps the
Macdonald to attract many customers. They have created a corporate symbol
and saturated advertisement has helped the Macdonald to make a brand image
and logo in the minds of millions of people.
5- Illustrate the concepts of ‘brand pyramid’, ‘brand positioning’ and
‘brand management’, and how and why these concepts should be integrated
into marketing planning.

Brand Pyramid: The Brand Pyramid can be defined as a framework or the tool
that answers the fundamental questions related to the brand and its operations in
the market. It is one of the most crucial and integral aspects when the brand is
on the verge to embark on the journey in the market.

Brand management: Brand management must be careful when setting brands

in different countries, because, brands maybe viewed differently by people
according to their cultures, beliefs, values, and traditions. All of these points
should be taken into consideration carefully because they can lead to failure or
success of the band. Brand managers should study carefully where they are
trying to position their brand, and who are the consumers that are going to be
targeted, so that any misunderstanding of the brand could be avoided. He is
example of how brand names are perceived differently from country to another:

McDonalds all around the world is in a red color, but there is a state in USA
where they perceive the red color as violence, so in order to solve this problem,
McDonalds changed their color in this state into blue.

Brand positioning: Brand managers their mission is to try positioning their

brand in the consumers mind. The positioning of the brand comes at three levels
which are attributes, benefits, beliefs and values. Attributes are the weakest level
to position a brand. These days most of the competitors are copying each other
attributes, but the thing they are missing here is that consumers no longer
interested in the attributes itself but they are interested in what will the attributes
help them to acheive. Benefits are the outcomes that the consumer will get when
using a certain brand. Beliefs and values are related to emotions, it’s about how
purchasing these products empowers its socially conscious customer.
Marketing expenses must be included in the financial forecast. The expertise of
an accountant makes it possible to correctly budget this investment, which is
essential for business development, and to have sound management of the
company's finances over the long term.

After targeting the brand's identity, the expert defines the visual identity that
corresponds to it by calling on a graphic designer. This visual identity (logo,
slogan, typography, colors, etc.) is available on all communication media. A
semantic identity is also chosen. She is the one who will drive the brand's SEO
strategy. Marketing studies have shown that SEO performs better than an
advertising campaign or paid search pages. SEO strategy is therefore determined
in close correlation with branding strategy.

The consistency of logo, style, tone makes it easy to identify and make a lasting
impression on the brand of business partners and consumers.

The positioning of the brand must be based on the quality of the products and
services offered. Do not hesitate to highlight the specificities of production,
original know-how, original techniques, special skills ... Branding is not about
communication for the sake of communication. It serves to highlight real
strengths that distinguish a company from the mass of competitors! This is why
targeting the strengths specific to the company upstream during an internal
diagnosis is an essential step.

Task 2

1- A section in which you perform a PESTLE analysis and review

Porter’s 5 forces relevant to McDonalds.

McDonald’s Corporation’s strategies address issues in its external environment,

such as the ones identified in this PESTEL/PESTLE analysis of the global fast
food restaurant chain business. The PESTEL/PESTLE analysis model supports
strategic management by identifying the external factors that present
opportunities or threats, based on the remote or macro-environment of the
business, pertaining to the political, economic, sociocultural, technological,
legal, and ecological factors (the PESTLE factors). In the context of this
business analysis, McDonald’s employs a set of strategies for maximizing the
benefits of opportunities in its industry environment. These strategies are
intended to address the external factors in the organization’s environment, along
with competitive rivalry involving firms like Wendy’s, Subway, Burger King,
and Dunkin’ Donuts, as well as Starbucks Coffee Company. As the biggest fast
food restaurant chain in the world, McDonald’s uses its strengths to adapt to
changes in its business environment, such as the trends shown in this
PESTEL/PESTLE analysis. Such adaptation is essential to the long-term
survival and growth of the business, especially amid aggressive competition.

Through a PESTEL/PESTLE analysis of McDonald’s Corporation, management

decisions can focus on the most significant trends that influence the food service
business and its industry. These trends are among the defining factors of
developments in the global food and beverage market, which is also under the
influence of the strong force of competition shown in the Porter’s Five Forces
analysis of McDonald’s Corporation. In this regard, in understanding the
competitive landscape and the external factors and trends identified in this
PESTEL/PESTLE analysis, the company’s management can develop strategies
appropriate to the conditions of the business environment.

Porter’s Five Forces analytical framework developed by Michael Porter (1979)

[1] represents five individual forces that shape the overall extent of competition
in the industry. These forces are represented in Figure 1 below. You can read
about the theory of Porter’s Five Forces here.
Bargaining power of McDonald’s suppliers is low. McDonald’s works with a
number of large suppliers such as Coca-Cola Company, Clorox Company, Dr.
Pepper Snapple Group Inc. McCormick & Company Inc., International Paper
Company, Sealed Air Corporation and others. McDonald’s Corporation and its
affiliates and subsidiaries generally do not supply food, paper or related items to
any McDonald’s restaurants. The Company relies upon numerous independent
suppliers, including service providers for the supply of food and other related
items. A set of important factors such as an abundance of potential suppliers,
low level of uniqueness of products provided by suppliers and the importance of
volume of order for each supplier reduce the bargaining power of McDonald’s
suppliers.

Rivalry among existing firms is fierce. McDonald’s faces competition from

quick-service eating establishments, casual dining full-service restaurants, street
stalls or kiosks, cafés,100% home delivery/takeaway providers, specialist coffee
shops, self-service cafeterias and juice/smoothie bars According to Euromonitor
International, the global informal eating out segment comprised about 8 million
outlets and generated USD 1.2 trillion revenues in 2013. McDonald’s outlets
accounted for0.4% of those outlets and 7.5% of the sales. As it is illustrated in
figure below, McDonald’s also maintains a leadership position in terms of the
brand value among its major competitors.

Threat of new entrants is moderate. On one hand, fast-food market is near the
point of saturation in many locations and the economies of scale derived by
major market players such as McDonald’s, Starbucks Coffee, Burger King, KFC
and Subway can be a significant barrier for new entrants. On the other hand,
opening a fast-food restaurant does not involve huge capital requirements
compared to many other types of businesses and there are no legal or regulatory
barriers to start a business in this industry. Moreover, a new fast-food restaurant
may have a decent chance of becoming successful if it adopts product
differentiation as its competitive advantage in an efficient manner…

McDonald’s Corporation Report contains a detailed discussion of McDonalds

Porter’s Five Forces Analysis. The report also illustrates the application of the
major analytical strategic frameworks in business studies such as SWOT,
PESTEL, Value Chain Analysis and McKinsey 7S Model on McDonald’s
Corporation. Moreover, the report contains analysis of McDonald’s marketing
strategy, its financial performance, leadership and organizational structure and
discusses the issues of corporate social responsibility.

2- A section with a SWOT analysis and a stakeholder analysis of

McDonalds

SWOT is an acronym for strengths, weaknesses, opportunities and threats

related to organizations. The following table illustrates McDonalds SWOT
analysis:

Strengths Weaknesses

1. Market leadership in the US 1. Unhealthy food on the menu

2. Brand value and brand 2. Declining brand image

awareness
3. High employee turnover
3. Sustainable business model
4. Negative publicity
4. High level of profitability
5. Low differentiation
5. Global presence
Opportunities Threats

1. Enhancing focus on nutritional 1. Food safety concerns

menu
2. Fast food market saturation in
2. Home delivery of meals developed countries

3. Product differentiation 3. Lawsuits against the company

4. Improving CSR aspect of the 4. Currency fluctuations

business
5. Competition from quality burger
chains
5. Increasing the extent of
localization in international markets

McDonald’s top stakeholders are its employees and customers. However, the
firm’s corporate social responsibility status is also subject to the influence of
other stakeholders. The following are McDonald’s main stakeholder groups,
arranged according to significance:

 Employees
 Customers
 Investors
 Communities

Employees: McDonald’s prioritizes employees as its top stakeholder group. The

interests of these stakeholders include career development and fair
compensation. McDonald’s addresses these interests through a number of
training and development programs. For example, the company maintains
Hamburger University, which is a training facility for its personnel. McDonald’s
also has a global mobility policy that supports leadership development.
However, the company pays low wages that are almost down to the level of the
legal minimum wage, even when employees keep demanding for higher wages.
Thus, McDonald’s corporate social responsibility efforts only partially satisfy
the interests of employees as a stakeholder group.

Customers: McDonald’s Corporation views its customers as its second-priority

stakeholder group. The interests of these stakeholders include affordable and
healthful food choices. McDonald’s corporate social responsibility initiatives
ensure affordability of products through standardization and supply chain
streamlining. However, the company is widely criticized for the health effects of
its foods. In this regard, McDonald’s corporate social responsibility efforts only
partially satisfy the interests of customers as a major stakeholder group.
Investors. McDonald’s strives to fulfill the demands of investors as a major
stakeholder group in the business. The interests of these stakeholders include
profitability and growing revenues. McDonald’s addresses these concerns
through stable business operations. The company currently has a low but stable
growth rate. The introduction of new products, such as through McCafé, also
helps address such interests. Thus, McDonald’s corporate social responsibility
efforts effectively satisfy the interests of investors as a major stakeholder group.

Communities: McDonald’s supports communities as one of its main

stakeholder groups. The interests of these stakeholders include community
development support and environmental programs. McDonald’s has
sustainability and support programs for this stakeholder group. The Ronald
McDonald House Charities provides financial support for families in need. The
firm’s sourcing policy prioritizes sustainable production, such as in farms. Also,
the McDonald’s Global Best of Green recognizes and rewards innovative
environmental ideas and contributions. Thus, the company has a wide variety of
corporate social responsibility programs to support these stakeholders.
McDonald’s effectively satisfies the interests of communities as a stakeholder
group.

3- A section in which you should develop SMART strategic objectives

for McDonalds

McDonalds main aims are to serve good food in a friendly and fun
environment, to be asocially responsible company and provide good returns
to our shareholders. The company aims to provide its customers with food of
a high standard, quick service and value for money. They also wish to be
more eco-friendly and to serve healthier food.
Profit maximization: Maximizing sales revenue or profit is an aim
McDonalds may have been using since the beginning as the success of the
business has grown immensely. This is where the business will seek out to
gain and increase in their income from the customers. For example,
McDonalds have done this by selling two burgers for the price of one or even
one pound per burger. This gains a lot of customers coming in and spending
more as they assume they are getting value for their money plus more and no
doubt that they actually like these offers McDonalds is so generously giving
out. Survival Survival is an aim for many businesses. For McDonalds, as
they started out they would first try aiming to stay in the business by earning
enough money from customers to meet all of the businesses expenses.
McDonalds also has the majority of its businesses as franchise. This means
that the person or manager opening a McDonald’s restaurant up would have
to aim for making enough money to cover its costs during the first year or so.
Market Share McDonalds needs to research other business and find out how
they make customers so they can promote their business and they can make
their business better than their competitors.

4- The market segment:

a. Discuss how market segments could be used for McDonalds

The segmentation of McDonalds is an integral component of its marketing

strategy. Segmentation involves dividing the population into groups based on
certain characteristics, while targeting involves choosing specific groups
identified as a result of segmentation to sell products.

Segmentation is the dividing of a populations into groups according to

certain characteristics. Dudovskiy (2016) claims that McDonalds uses these
segmentations and segmentation criteria: Geographical; region, density.
Demographical; age, gender, life-cycle stage, income, occupation.
 b. Select one or more market segment(s), justifying your decision.

Using different types of market segmentation allows you to target customers

based on unique characteristics, create more effective marketing campaigns, and
find opportunities in your market.

The four bases of market segmentation are:

 Demographic segmentation
 Psychographic segmentation
 Behavioral segmentation
 Geographic segmentation

Demographic Segmentation: Demographic segmentation is one of the most

popular and commonly used types of market segmentation. It refers to statistical
data about a group of people.

 Income level: In a market like India where a significant proportion of

India’s population lies in the lower income bracket, the price of the
products becomes very critical. Now the challenge was to provide quality
products at prices affordable to urban masses.

• For example, the chain has a product called Mc Aloo tikki costing Rs:20/,
which caters mainly to the student community whose pockets are not broad
enough

 Age: The earlier strategy of the McDonald’s was to segment the market
on the basis of the age, by catering mainly to the kids and youth.
However, now they are trying to blur this segmentation and focus on the
all age groups.
 Family: McDonald’s is now targeting the entire family by offering
various incentives packed product schemes like “family meals” at a very
competitive price
Geographic Segmentation: Geographic segmentation is the simplest type of
market segmentation. It categorizes customers based on geographic borders.

Geographically McDonald’s seem to have categorized the entire Indian market

as urban and rural markets. As a strategy for entering the Indian market
McDonald’s appear to have adopted the segmentation at the micro level, by
directing the entire focus towards only urban market. McDonald’s India as of
today caters only to the urban population in India.

Psychographic Segmentation: Psychographic segmentation categorizes

audiences and customers by factors that relate to their personalities and
characteristics. Psychographic segmentation factors are slightly more difficult to
identify than demographics because they are subjective. They are not data-
focused and require research to uncover and understand.

For example, McDonalds use:

o Taste and preferences of people for that particular country.

o Religious beliefs and behaviour of customers.
c. Propose and justify a brand positioning for the targeted market
segment

After analyzing the diversity of needs in the reference market through

segmentation, analyzes of the attractiveness of these segments and of the
company's competitiveness in each of them allow marketing decision-makers to
choose targeting and positioning for their products. The choice of targeting will
depend, among other things, on the ambition of the company, its ability to
develop several products and the degree of heterogeneity of demands in the
markets. Positioning must primarily take into account the attractiveness of each
of the previously identified segments, the current position of competitors, the
intensity of competition as well as the company's simultaneous ability to
compete on each of them. Once the target segment (s) have been chosen, the
company must still decide on the positioning to adopt in each segment. This
decision is important because it will serve as a guideline in establishing the
marketing program. Positioning defines how the brand or company wants to be
perceived by target buyers and how it wants to differentiate itself from
competing brands or companies.

5- A section concerning the marketing mix.

McDonald’s Corporation’s marketing mix (4Ps) involves various approaches

that meet business concerns in different fast food restaurant markets around the
world. The marketing mix defines the strategies and tactics that a company uses
to reach target customers, in terms of products, place, promotion, and price (the
4Ps). In this business analysis case, McDonald’s has corporate standards that its
marketing mix applies globally. For example, the company’s corporate
standards for productivity are implemented in the management of each
company-owned and franchised location. McDonald’s also applies some
variations in its marketing mix to suit the conditions of local or regional
markets. For instance, the company’s promotion strategies and tactics focus on
print media in countries where such media are most popular, and prioritize
television in other markets. The specifics of the 4P variables define the various
strategies and tactics that McDonald’s uses in executing its marketing plan and
achieving related strategic goals to grow the multinational restaurant chain
business.

McDonald’s Products (Product Mix)

As a food service business, McDonald’s has a product mix composed mainly of

food and beverage products. This element of the marketing mix covers the
various organizational outputs (goods and services) that the company provides
to its target markets. McDonald’s product mix has the following main product
lines:
 o Hamburgers and sandwiches
o Chicken and fish
o Salads
o Snacks and sides
o Beverages
o Desserts and shakes
o Breakfast/All-day breakfast
o McCafé

Among the 4Ps, products are a fundamental determinant of McDonald’s brand

and corporate image. The company is primarily known for its burgers. However,
the business gradually expands its product mix. At present, customers can
purchase other products like chicken and fish, desserts, and breakfast meals.
McDonald’s generic strategy and intensive growth strategies influence the
product lines included in this element of the marketing mix. In diversifying its
product lines, the company satisfies market demand, improves its revenues, and
spreads risk in its business. In terms of risk, a more diverse product mix reduces
the company’s dependence on just one or a few market segments. This element
of McDonald’s marketing mix indicates that the firm innovates new products to
attract more customers and improve its business stability.

Place/Distribution in McDonald’s Marketing Mix

This element of the marketing mix enumerates the venues or locations where
products are offered and where customers can access them. Restaurants are the
most prominent places where the company’s products are distributed. However,
the business utilizes various places as part of this 4P variable. The main places
through which McDonald’s distributes its products are as follows:

o Restaurants
o Kiosks
 o McDonald’s mobile apps
o Postmates website and app, and others

McDonald’s restaurants are where the company generates most of its sales
revenues. Some of these restaurants also manage kiosks to sell a limited
selection of products, such as sundae and other desserts. Some kiosks are
temporary, as in the cases of kiosks used in professional sports competitions and
other seasonal events. This element of McDonald’s marketing mix also involves
the company’s mobile apps. These virtual places are where customers can access
information about the company’s products and buy these products.

McDonald’s Promotion (Promotional Mix)

This element of the marketing mix defines the tactics that the business uses to
communicate with customers. Among the 4Ps, this variable focuses on
marketing communications with target customers. For example, the company
provides new information to persuade consumers to purchase new products.

McDonald’s uses the following tactics in its promotional mix, arranged

according to significance in the business:

o Advertising (most significant)

o Sales promotions
o Public relations
o Direct marketing

McDonald’s Prices and Pricing Strategies

This element of the marketing mix specifies the price points and price ranges of
the company’s food and beverage products. The aim is to use prices to maximize
profit margins and sales volume. McDonald’s uses a combination of the
following pricing strategies:

o Bundle pricing strategy

 o Psychological pricing strategy

In the bundle pricing strategy, McDonald’s offers meals and other product
bundles for prices that are discounted, compared to purchasing each item
separately.