Assignment

Services Marketing And Service Design And Relationship

Date of Submission : 20 .04.2022

MFM BATCH (2021-2023)

NIFT KANGRA
 McDonald's

McDonald’s, the world’s largest chain for hamburger fast food restaurants. McDonald's serves
nearly 68 million happy customers daily in 119 countries over 35,000 outlets. The initial restaurant
with arches opened in Phoenix in March 1953. The McDonald’s, the world’s largest chain for
hamburger fast food restaurants. McDonald's serves nearly 68 million happy customers daily in 119
countries over 35,000 outlets. The initial restaurant with arches opened in Phoenix in March 1953.
The primary mascot of McDonald’s was a man with a chef ’s hat on top of a hamburger shaped
head whose name was “Speedee”. In 1967 Speedee was being replaced by Ronald McDonald
when the company primarily filed a U.S. trademark on a clown-shaped man having puffed-out
costume legs. McDonald’s first filed for a U.S. Trademark on the name “McDonald’s” with the
description “Drive-In Restaurant Services”. The company filed a logo trademark on an overlapping,
double-arched “M” symbol. The present version as a letter “M” did not appear until 1968 when the
company applied for U.S. Trademark.
McDonald’s predominantly sells hamburgers, chicken sandwiches,
chicken, French Fries, Soft drinks, breakfast items and Desserts. It also offers salads, vegetarian
items, and wraps. It offers McRib on a seasonal basis. McDonald focuses more over its strategy of
local responsiveness. It offers soups in Asia, McRice in Indonesia, Ebi (Prawn) Burger in
Singapore, In Germany and western European countries it sells beer. McDonald’s restaurants are
found in 118 countries and territories around the world and it serves nearly 68 million customers
each day.
McDonald’s Corporation earns its revenue being an investor in properties,
a franchiser of restaurants, and a restaurant operator. Approximately 15% of McDonald’s
restaurants are owned and operated by McDonald’s Corporation directly. The remainder of the total
is operated by others through a variety of franchise agreements and joint ventures. 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. As a matter of policy,
McDonald’s does not make direct sales of food or materials to its franchisees, instead it organises
the supply of food and materials to restaurants through approved third party logistics operators.
McDonald’s has maintained a huge advertising campaign for decades. In addition to the common
media (television, radio, and newspaper), the company significantly used billboards and signage,
sponsors sporting events.

Servqual

Earlier Servqual was known as Rater, a quality management framework. Servqual was discovered
by Valarie Zeithaml, A. Parasuraman & Leonard Berry in the mid-1980s, to measure quality in the
service sector. The Servqual originally consisted of ten elements of service quality, but later, these
were collapsed into five factors - Reliability, Assurance, Tangibles, Empathy and Responsiveness
(RATER).

● Reliability : the ability to perform the promised service dependably and accurately.

● Assurance : the knowledge and courtesy of employees and their ability to convey trust and
confidence

● Tangibles : the appearance of physical facilities, equipment, personnel and communication

materials.

● Empathy: the provision of caring, individualised attention to customers. ●

Responsiveness: the willingness to help customers and to provide prompt service

Different service sectors use Servqual to measure and manage service quality by analysing
questionnaires that measure both the customer expectations regarding service quality in terms of
five dimensions (RATER), and their perceptions about service they receive. When customer’s
expectations are more than their perceptions, service quality is deemed to be low. The Servqual
identified four Gaps that may cause customers to experience poor service quality.
Gap 1:Listening Gap(Consumer Expectation and Management Perception)
Here management does not know what the customer actually wants. Factors leading to this gap
can be:

● Poorly interpreted information about the customer’s expectations

● Inadequate market research
● Research not focused on demand quality

Customers expect to get a healthy food

● Concern about health

● Management just think on providing tasty and high calories
● The law forces McDonald’s to post warning sign which is chemical known to cause cancer
may be present in our food
● This could lead to obesity and even risk getting cancer

Solution

● Proper market research

● Collecting samples, customer survey and so on to find the expectation of customers
● McDonald’s should offer healthy foods
Gap 2: The Service Design & Standard Gap
This gap may occur when Management knows what their customers actually want but not able to
set an appropriate performance standard for their employees. This Gap can be occurring because
of following reasons:

● Cryptic service design

● Deficient planning procedures
● Chaotic new service development process

Lack of management commitment and unclear service design

● Management thinks of quick order delivery

● Standard of having multiple counters
● Multiple counters which are not effective and they still ended up having long queue during
peak hours and messy ordering system
● Customers are complaining their service during peak hours
● Staffs are doing multitasking and get high work pressure

Solutions

● Task standardisation whereby standardise specific rules and task

● Setting a rule that all the counter must be opened during peak hours and more staffs
● McDonald’s must emphasise on delivery good service rather than cost reduction
Gap 3: Service Performance Gap (Service Quality Specification and Service Delivery)

This gap may occur because service personnel are poorly trained, demotivated, incapable or
unwilling to meet the standard set for the service. The major reasons behind this gap can
be:

• Lack of proper customer education and training

• unable to match demand and supply
• Improper internal marketing

Staffs are not helpful

● McDonald’s have standards of having best and helpful staffs

● Staffs tends to get irritated if customers ask a lot of questions
● High pressure working in McDonald’s
● High labor turnover
● Employers have to deal with new staffs
● Job training causes confusion between front staff and kitchen staff
Example ; front staff does not receive the food at precise time from the back staff
in the kitchen

Solutions

● Giving bonus or increase salary or wages

● Increase their operating cost for employee benefit payroll expenses
● Management also must make sure that the employee fit the job
● Management should given flexibility for part time workers

Gap 4: Communication Gap(Service Delivery and External Communication)

This gap occurs when Consumer expectations go high from the influencing statements made by
company representatives and advertisements etc. but are not fulfilled at the time of delivery of the
service. These discrepancies may occur due to the following reasons:

● Over-promises in advertising and other communication campaign

● Failure to perform accordingly
● Failure to manage customer expectations
Customers feel happy meals are expensive and not worth it

● McDonald’s shows as if happy meals are very affordable with fun toys
 ● One customers complaint about the toys in happy meals as the minion toy said to use curse
word
● The customer said,the staffs should have checked the toys before giving it

Solutions

● Continually communicating between sale and operation department

● Keep updating and aware of new trend
● Directly interact with their customers to know whether their new products or services are
accepted
● Separate department such as customer care

Gap 5 : Perception gap ( Expected service and perceived service

● McDonald’s is doing good overall

● Performance is quite good in Asian countries only
● McDonald’s are not doing well in other countries such as U.S,UK
● McDonald’s should focus more to provide good customer service
● Look on all complaints and improve
● If the company keep continue dissatisfying the customers, they will lose
their loyal customers
Although McDonald's tries to maintain an image of high ethical responsibility, major gaps have
been identified. They manage to disguise a considerable part of these gaps through effective
communications. However major gaps remain in terms of working conditions and animal welfare
treatment. Great efforts have been made to create an environmentally friendly image, in the outlets
and on the supplier side. The recent financial performance has been poor and clearly failing their
aim of 'system growth'. Closing this gap will be one of their main priorities.

McDonald’s places heavy focus on customer service. It helps at attracting new as well as retaining
old customers. Apart from courteous staff, the brand also uses a variety of technologies to serve
and engage its customers
Changes are made to the menu to suit the local taste. Apart from that it tests new products
regularly to make its menu exciting. The number of QSR brands in the global fast food industry has
grown high and McDonald’s has continued to compete on the basis of price, quality customer
convenience and flavour. Particularly, it is the international brands that are being most affected by
the increased control. McDonalds is also subject to severe regulations, control and oversight by the
government authorities. The political factors are also exalted to economic factors and an unstable
political environment can cause business and supply chain disruption Another important strength of
McDonald’s is its supply chain management. McDonald’s sources its raw material from suppliers
around the world. However, it does work to manage its quality standards and enforces them with
the help of quality teams.

The 3 Ps: Properly Managing People, Process, AndProduct

People
 The staff who are delivering the service product - can also include

external partners

​ McDonald's staff are trained to adhere to brand values.

​ Uniforms provide physical evidence of the brand.

​ Use of celebrities in promotional campaigns.

Process

The process in which the product reaches the consumer

​ McDonald's is a master of procedure at every stage and extremely efficient with production

in-store. They have recently innovated the way customers purchase in-store. Providing

terminals where customers order and then wait in-line for the product, this drives efficiency -

significantly reducing wait time and the number of staff required to complete orders. Some

stores offer table service, which in turn improves customer experience and mitigate time lost

spent queueing.

Physical evidence

Premises, industry awards, visual identity are all physical signals of the brand
 ​ The McDonald's brand is physical evidence, iconic M that can be recognized around the

world and used to trigger emotional responses to the brand.

​ McDonald's uses awards to reinforce ideas of product quality, for example, "100% British

beef" and food service awards.

​ The toy in the happy meal, physical evidence th

People

Customer Satisfaction
McDonald’s understands the importance of keeping customers happy and satisfied. The staff is
generally encouraged to be friendly and serve customers with a smile. True to its ‘fast-food’ name,
there are usually short waiting times due to its highly efficient operations. Self-service kiosks and
digital menu boards also make use of technology to provide a more seamless customer experience
while simultaneously reducing manpower costs.

Children & Families

McDonald’s also tends to have marketing campaigns targeting children and families. From Happy
Meal toys to advertisements with smiling children and parents, McDonald’s presents itself as a fun
place where a family can visit together.

Product

Diversification

McDonald’s may be well known for their burgers, but it offers an impressive range of other menu
items as well. From salads for the more health-conscious to ice cream for dessert, McDonald’s
caters to a wide range of tastes and preferences.By diversifying the menu items that it offers, it
meets larger market demand as it attracts more customers. This also decreases the risk of
depending on just one sector of the market.

Localization

One aspect that McDonald's does exceptionally well is localization. With so many outlets all over
the world, they recognize that there are cultural differences in different regions, leading to varying
food preferences.For example, in India, where there is a larger proportion of people who do not eat
beef or meat in general, there are more chicken, fish, and vegetarian options.McDonald’s also
utilizes the ‘Glo-cal’ strategy and offers specials such as the bulgogi burger in Korea, which
integrates local cuisine into fast-food menu items, appealing to local taste buds.
Process

The food manufacturing process at McDonalds 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 McDonalds. The customers are invited to check the ingredients used in food.

Place
Accessibility

McDonald’s is highly accessible, with many outlets located within close proximity to city centres and
shopping malls.While McDonald’s mainly generates revenue through restaurant operations, there
are also other options such as dessert kiosks, McCafe, and even McDelivery in some countries.
Some of McDonald’s outlets are also open 24/7, providing service to customers around the clock.

Facilities

Many of McDonald’s outlets also have free wifi, making it more convenient and attractive for
teenagers, businessmen, and even freelancers looking for a place to do their work.In certain
locations, there may even be a playground located on its premises. This offers a place for children
to play after they have eaten, greatly appealing to children and families

Promotion

Advertising

McDonald’s spends over a billion dollars each year in advertising, and they utilise a variety of
methods to advertise, including newspaper and magazine advertisements, radio and TV
commercials, social media posts, and more.There are a few aspects of advertising that McDonald’s
does exceptionally well, namely:
● Symbols & slogan
● Co-branding
● Corporate social responsibility
Symbols & slogan

The golden arches and Ronald McDonald clown have become synonymous with
McDonald's.McDonald’s also has a short and simple slogan.” This slogan frequently appears in
both digital and print advertisements and is accompanied by a catchy jingle.These eye-catching
symbols, as well as the memorable slogan, make it easy for people to remember the McDonald’s
brand, strongly establishing it across the world

Co-branding
McDonald’s is also known for working together with other companies to market their products
together. One notable example is their collaboration with Hasbro where they created the
McDonald’s Monopoly Game.Seasonally, it also offers collectibles when buying a meal, such as
Transformer figurines, Hot Wheel cars, NBA and Olympic themed merchandise, etc. This
encourages customers to collect the entire set, hence frequenting the restaurant more often.

Corporate social responsibility

Additionally, McDonald’s makes use of corporate social responsibility to create a positive image.
For example, the Ronald McDonald House is a charitable organisation that aims to improve the
health and wellbeing of children.McDonald’s also works toward decreasing its environmental
footprint by reducing plastic waste and purchasing from suppliers who don’t engage in
deforestation. This strengthens its brand value of sustainability and attracts customers looking to
support socially responsible companies.

Price

Bundle pricing

McDonald’s actively uses bundle pricing when offering combo meals that are cheaper than ordering
a burger or drink a la carte. With this discounted price, customers are more likely to purchase more
items in order to maximise value. Other than combo meals, family meals are also another way to
encourage customers to spend more.

Psychological pricing

Many of the menu items are also strategically priced, using prices such as $.95 or $.99 instead of
rounding up to $.00. This makes customers perceive items to be more affordable, encouraging
them to buy more.
References
https://www.mbaknol.com/management-case-studies/case-study-mcdonalds-business-strategies-in-india/

https://www.casestudyinc.com/case-study-mcdonalds-india-business-strategy/

https://www.mcdonalds.com/us/en-us.html

https://graduateway.com/case-study-mcdonalds-india/

https://graduateway.com/case-study-mcdonalds-india/