McDonald’s Marketing Strategy – a Case Study

Executive summary

McDonald’s is one of the largest companies that specialize in fast food in the whole world. The company has experienced expansion businesswise to feature a global scale. However, McDonald’s faces a number of challenges in its operations. One of the main challenges is the stiff competition from fast food joints such as the KFC. In addition, McDonald’s suffers from the problem of cultural diversity in the areas where it operates which makes it hard for it to implement its marketing strategies.

This report therefore, presents an analysis of the internal and external environments of the company, reviews its marketing mix. The report finds out that the implementation of the company’s marketing strategy in international markets is influenced by cultural differences including language, value and customer behaviors.

Introduction

The implementation of a marketing strategy in most of the international markets is affected by major factors such as value, language and the way customers behave when looking at the national aspect (Barnes 2008).

For this reason, it becomes important to analyze the cultural background and differences of any company in order to determine whether the company’s culture has any influence on the marketing strategies in terms of place, promotion, price and product. This report aims at analyzing the marketing strategies of McDonald’s company. As such, the report will cover the background of the company, its environmental analysis, SWOT analysis, and the general marketing mix of the McDonald.

McDonald’s Background

McDonald’s Corporation is one of the largest multinational enterprises dealing with fast foods such as breakfasts, salads, milkshakes, coffee, soft drinks, French fries, chicken and hamburgers (Deng 2009). It operates within the fast food industry serving more than 120 countries and owns more than 290000 restaurants located in major parts of the world. In addition to the above products, the company stills deals with other consumable products by the use of set standards within the fast food industry.

Such a scale of operation explains why McDonald is one of the largest suppliers of fast foods in the whole world. McDonald’s employs over one million people and such a large number of employees make it possible for the corporation to offer quality services to all its customers, as well as offer a demonstration of the outrageous size of MacDonald’s. For any given year, McDonald’s has the potential of serving over 96% of the global population.

McDonald’s first restaurant was started in the fifties, and since then, the company had been working towards broadening its operations through the company’s mission of expanding all costs (Deng 2009). This implies that the company should establish very numerous outlets within the company’s resources.

According to Vrontis and Pavlou (2008), McDonald’s prides itself in the use of several strategies that have been successful in ensuring that the company remains at the fore front of the fast foods industry. The company thus changed the world’s eating habits through the strategy of leveraging on the spending habits of the customers, real estate, brand power, as well as on the company’s cash flow.

McDonald’s Environmental Analysis

In carrying out the environmental analysis of any company, it is important to consider both the internal and external analysis of the given company.

The external environment

The external analysis in this context will involve the competition, political, legal, economic, social and technological factors.

Competition

Barnes (2008) points out that there is a lot of competition within the fast food industry. It is anticipated that the competition will become intense with time with the main focus being on pricing strategy. This can be attributed to the fact that there are so many restaurants being started every day. In addition, some of the competitors of McDonald’s, such as KFC, have invested a lot of capital thus threatening the existence of McDonald’s company in the market.

Economic growth and stability

There is a lot of pressure on McDonald’s as far as the economic factors are concerned. This can be attributed to the fact that economic factors affect organizational performance. Deng (2009) points out that some of the economic factors affecting the organizational performance of McDonald’s include the rate of unemployment, exchange rate, and tax rate. When operating from the local market setting, a company faces governmental regulation especially on profit and tax.

Considering that McDonald’s operates in many parts of the world, the company has established itself with the government of the countries where it operates. However, different countries have different regulations based on their tax index. As such, the exchange rates, as well as the people’s living standard tend to influence the productivity and cost of operations.

Political trends

Different policies especially, from the governments of different countries negatively affect the operations of McDonald’s as far as fast food regulations are concerned. Some of the regulations are based on hygiene and health policies. Research has showed that many people are concerned with their eating habits. This follows high cases of cardiovascular diseases and effects of cholesterol. For this reason, there is a need for the company to maintain a cordial relationship with different countries’ governments in order to remain in the fast food market.

Legal and regulatory issues

Considering that McDonald’s is in the fast food industry, the company has to meet a number of legal requirements in order to continue its operations is given areas. Some of these legal and regulatory issues include tax, company law, labour and employment law requirement. In a region whereby the legal issues are not favorable, the productivity of McDonald’s is adversely affected.

Technological advancements

The advancement of technology has played a great role in developing the fast food industry. This is evident in the way companies are operating and their service delivery to customers. Research has showed that there are not many effects on the fast food industry as a result of technological advancement.

However, trends how that McDonald’s is likely to advance in its operations, as well as productivity if it makes use of technology in its operations. There are several ways in which the company can make use of technology including sales service, internet advertising, as well as Wi-Fi and internet devices provision. Such advancement is aimed at enhancing customer satisfaction.

Socio-cultural trends

Nowadays, trends show that the lifestyle of many people all over the world is changing. As such, the performance of McDonald’s will be affected adversely. For example, many people in the recent days are changing their eating habits to adopt high expensive styles. As such, fast food is being competed out by high quality and expensive food.

In addition, research has showed that different people have diverse eating behavior. For example, people in western countries are fond of hamburger and potato while Chinese have a liking for hamburger and rice. For this reason, McDonald’s has changed its advertising strategy to promote rice for dinner as opposed to rice burgers as they used to do few years ago.

The internal environment

Review of marketing goals and objective

The marketing goals and objectives of McDonald’s are to ensure that it reaches many customers all over the world. According to research, the promotion and marketing campaign of any company determines the sales volume. As such, McDonald’s is investing in numerous promotional materials as a way to increase its sales.

Review of current marketing strategy and performance

Currently, McDonald’s makes use of an effective and strong marketing strategy as a way to boost the volume of the company’s sales. A review of the company’s internal environment over the last three to four years shows that McDonald’s uses localized marketing strategy in order to remain competitive within the fast food industry (Vrontis & Pavlou 2008).

In the application of such a strategy, the company focuses on customer-centric approach. This can be attributed to the fact that customer satisfaction is very significant in any business or company (Deng 2009). For this reason, McDonalds ensures that its marketing strategy is aligned with consumer behavior while putting into consideration that such behaviour change over time.

Review of current and anticipated organizational resources

Currently, McDonald’s is experiencing crisis as far as its capital base is concerned since its profit margins have gone down following stiff competition from other players such as KFC. As for the customers, there is a strained relationship due to the company’s provision of unhealthy food and drinks. However, the company can improve the current as well as the anticipated organizational setting by making use of the available resources while keeping the interest of the customers at heart.

Review of current and anticipated cultural and structural issues

Research has showed that the internal culture of any company plays a significant role in the achievement of the company’s goals. Therefore, McDonald’s should thus consider structural issues such as customer orientation, commitment of employees and their job satisfaction.

McDonald’s SWOT Analysis

Strengths

The company has a number of strong points that makes it possible for it to remaining business and as a world-leader in the fast food industry (Vrontis & Pavlou 2008). Outlined below are some of the strengths of McDonald’s.

Brand recognition

McDonald’s is one of the companies in the fast food industry whose brand is highly recognized. This is an advantage to the company in that it serves as a selling point for its products. McDonald’s brand recognition can be estimated to a tune of $40 million. Such a situation makes it possible for the corporation to attract a lot of attention from customers all over the globe. This has an effect of increasing the client conversion rate of the company and consequent profits.

McDonald’s owns a big share in the global fast food market

The market for fast foods has become saturated over time. Such saturation can be attributed by the entrance of new players. It has numerous restaurants all over the world making it possible for McDonald’s to dominate the fast food market globally.

The global sales of the company stand at 8%. In addition, the company is the second largest with operations in more than 30,000 regions whereby it covers an estimated number of about 70 million customers on a daily basis in over 120 countries worldwide. This gives McDonald’s a competition advantage over other suppliers of fast food in the world.

High capital for advertising

McDonald’s has an advertising budget of $2 million. Compared to other fast food suppliers, such a budget is very high and enables the company to reach most of its existing customers while still attracting new ones. As such, McDonald’s is able to remain at the helm of the fast food market.

Partnership opportunities with other strong brands

Partnerships are important in helping any given organization, company or business to increase its market recognition. For this reason, the company has adopted the partnership strategy. The choice of the partnerships is important for the company since it has to ensure the partnership it has entered into is enhancing its growth within the industry. As such brands like the Coca Cola help in increasing brand recognition and McDonald’s popularity.

Adapts local food menus in most of its outlets

Most of the areas where McDonald’s outlets are situated have different tastes and preferences when it comes to the type of food. This difference can be attributed to cultural diversity that is not similar to the cultures of most European countries and that of the United States of America.

In order to ensure that the company is relevant in all areas, it ensures that it adopts local food menus. Such strategy is a strength in that the company can provide for customers according to their cultures, tastes and preference regardless of the region the restaurants are situated.

Presence of independent franchisees in the company’s ownership

A great percentage of the restaurants are owned, managed and run by independent franchisees. For this reason, the company can direct much of its resources in ensuring that it perfects the company’s marketing strategies, as well as its serving system.

Targets children

A business can only succeed if it lays out strategies that are aimed at a given target group within the purchasing population, and one that can earn the business the projected profit margin (Barnes 2008). For this reason, McDonald’s has set up strategies that aim at the young children. Such a strategy serves as strong points for the company within the fast food industry.

Weaknesses

McDonald’s has several weak points which if not addressed can make the company fail to achieve its objectives (Vrontis & Pavlou 2008). The following are some of the weakness of McDonald’s.

Unhealthy food menu

In spite of the fact that McDonald’s has laid strategies to establish different health choices in its outlets, the menu has been criticized extremely since it comprises of drinks and meals that are not as healthy as required. For this reason, the company is suffering from constant protests from organizations, as well as people who are against unhealthy eating habits. As a result, the popularity of McDonald’s has been decreasing considerably following such protests.

Negative publicity

The company has had a lot of pressure from different organizations and people following its unhealthy food menus, obesity stimulation, as well as the company’s robust focus on children who are very young. For this reason, the fame that existed many years ago is no more, and thus the company is at risk of being competed out of the market by other providers offering healthy meals and drinks.

Low differentiation

Nowadays, the company is no longer in a position to distinguish itself from other suppliers of fast food. For this reason, the company is experiencing threat of being competed out in terms of its market share. Following such a threat the company has opted to maintain its market share through price competition whereby it reduces its prices as opposed to the use of additional features on the products that it supplies.

Mac job

Mac job refers to a job that is low skilled and thus attracts low payments. Employees in this organization have negative attitude towards the Mac job. As such, the performance of the employees is reduced with a subsequent increase in employee turnover. High employee turnover, low employee productivity results in increased costs of training, which leads to high overall costs incurred by the company while trying to maintain its position in the market.

Opportunities

In spite of the above weaknesses, McDonald’s still has a potential to remain in business through the following opportunities.

Adoption of new strategies such as home delivery of meals

Nowadays, only a few companies in the fast food industry are offering home delivery of meals. As such, McDonald’s can exploit this opportunity as a way of boosting its profit margins while enhancing the company’s market position all over the world. Such a strategy will not only increase McDonald’s profits but also broaden its customer base.

Ensure that the company provides healthier food

Many people are now concerned with their eating habits considering that there are many diseases that have come up as a result of unhealthy meals and drinks. As such, the company can work towards provision of healthy food. Such an opportunity is possible since there is an increased demand for food that is healthy. Following such an opportunity, McDonald’s has plans of starting a restaurant in India that will focus on the provision of vegetarian means only.

Adopt new customer group while changing their habits

The types of habits that customers have play a great role in determining whether a business can achieve its organizational goals. The change of customer habits presents McDonald’s with the opportunity to establish new needs for the business to meet.

Stick to its new strategies

Recently, the company changed its existing restaurant design as well as the company logo. Moreover, the company has established a number of practices as a way to help in maintaining its market share in the fast food industry.

Threats

Saturation of the fast food market

In the developed countries, the market for fast food has been saturated by numerous chains of restaurants. In addition, some of these chains are powerful min terms of capital endowment and popularity. For this reason, McDonald’s is threatened to be competed out of the fast food market.

Changing trends that are aimed at healthy eating habits

Many organizations, people and the government are advocating the adoption of healthy meal and drinks in the fast food menus of all fast food suppliers. Such advocacy is aimed at the fight against obesity among adults and young children. As a result, McDonald’s is forced to change its menu to incorporate healthy food as opposed to what the company has been offering for a long time.

Establishment of fast foods outlets locally

Many people especially the locals, are turning to local types of foods. This turn of events can be attributed to the fact that many local fast food restaurants are in the business of changing the approach of providing as well as serving food. One of the changes adopted is the inclusion of local tastes in the restaurants’ menu. Such changes including the increase in the number of local fast food outlets, as well as the low prices they offer is a big threat to the market position of McDonald’s within the fast food industry.

Fluctuations of currency

Foreign exchanges play a significant role in increasing the income of the business. For example, when sending profits to the United States of America, it has to be send in terms of dollars. As a result, the amount can be influenced by the prevailing exchange rates, particularly for a case where there is an appreciation of the dollar in comparison to other currencies.

Constant lawsuits

The company has been involved in a number of conflicts, which have ended into lawsuits most of which the company has lost. The company has incurred a lot of expenses, as well as time in these lawsuits. However, as it stands McDonald’s is likely to be involved min other lawsuits that are even more expensive.

SWOT Matrix

Strengths	Weakness
Brand recognition Big share in the global fast food market High capital for advertising Partnership opportunities Local food menus Independent franchisees in the company’s ownership Targets children	Unhealthy food menu Negative publicity Low differentiation Mac job
Opportunities	Threats
Start home delivery of meals Provision of healthier food Establish new customer groups Stick to its new strategies	Market saturation Changing trends Local fast foods outlets Fluctuations of currency Constant lawsuits

Study Objectives

This study was aimed at establishing McDonald’s culture differences and how such differences influence the 4P marketing strategies in different ways.

Marketing Mix Strategy

According to Barnes (2008), the amount of market shares, revenue and profit are defined by a company’s marketing strategies and objectives. Thus, the company should set marketing objectives that are common and specific by ensuring that it defines long-term profitability as well as the strategic aims such as strong communication and offering motivation to the workers in charge of marketing.

The marketing mix strategies of this company comprises of a number of elements that are highly significant in McDonald’s marketing system, and are thus important in achieving the objectives of the company as far as its marketing is concerned.

Products

The products that the company offers to the market are significant in determining the satisfaction of consumers. According to Vrontis and Pavlou (2008), it is evident that the needs of customers change with time. McDonald’s should introduce a few new products that can be used in place of the old ones. However, the company should take care to ensure that the adopted changes do not negatively influence the sales of a number of its choice through the introduction of new choices.

Such a move can if not carefully thought out can cannibalize sales from the company’s trade off. Usually, the items in the menu of the company are likely to draw different attention from the customers. For example, the move to start an only vegetarian restaurant in India can be seen as a successful move considering that most of the people in this country rely on vegetables. The addition of the happy meal with a special focus on children can equally be a great selling point for McDonald’s.

Price

Usually, customers determine the value of any given product by assessing the price tag on it. As such, through an analysis of the price and their perceived value, the customers are in a position to build their mental picture regarding the worth of a given product. Customers do not see a given product as a physical item only, but they are concerned with the psychological connotations that the product can have on the customers.

For this reason, it becomes highly dangerous for the company to use low price for its products and services as a marketing tool. This is because customers are likely to develop a feeling that low quality products attract low prices and vice versa. Thus, the company should carry out a thorough research on the brand, and its integrity before attaching any price to a given product.

Place

Place in this context does not necessarily refer to the physical setting of any given products or their points of distribution. Place thus, comprises of the several processes that are carried out before a given product gets to the final consumer. McDonald’s has a potential of being accessible by many customers all over the world by ensuring that its outlets are spread everywhere. In addition, the adoption of drive in, as well as drive through is a very important strategy.

Promotion

There are numerous methods that the company can adopt to ensure that it reaches millions of people all over the world. One of these methods included the use of advertisements. Advertisement can be done in a number of ways such as through the use of televisions, online platforms, in cinema, radio, print media, as well as by the use of posters. However, apart from advertisement there are other methods of promotions such as door drops, loyalty schemes, direct mail, merchandising, point of sale display and sales promotion.

McDonald’s Marketing Mix Strategy

Proposed strategies

For McDonald’s to achieve its organizational and business goals, it should come up with viable strategies with respect to its 4p’s marketing mix.

First, the company should ensure that it provides differentiated products to its customers all over the world. This strategy can be implemented by carrying out a research on customers’ tastes and preference and comparing customers’ needs with what other restaurants are providing.

Secondly, McDonald’s should decide on a given price range for which it will sell its products. However, the adopted range should not be so high to scare away customers, or so low such that customers might build a negative perception regarding the quality of the products being offered.

Thirdly, fast food customers are everywhere in the whole world. As such, the company should come up with best areas where it can locate more restaurants to ensure that it reaches many customers. In addition, there is a need to strategize on the processes that the company is supposed to cover before availing the finished product to the final consumer. Some of the strategies in this context can include home delivery as a way of increasing sales and widening customer base.

Lastly, McDonald’s should focus on reaching many potential customers. Thus, the company can come up with a campaign that adopts different promotional methods as a way to maintain existing customers and attracting new ones. Some methods such as TV adverts are used to carry out an awareness of a given product while press advertising is suitable for the provision of detailed information about a given product or service. As such, the company can adopt TV and press advertising with a little support from in-store promotions in a bid to woo customers.

Related tactics leading to strategy implementation

In order to implement the proposed strategies, McDonald’s can rely on the following tactics:

1. Develop the company’s workforce with the focus being on the proposed strategies.
2. Disburse enough resources that can help in the implementation process
3. Creation of approaches aimed at the proposed strategies
4. Ensure that realization of results is linked to a compensation structure
5. Adopt strategic leadership in the implementation plan

Proposed time schedule and accountable parties in the firm/ organization

Specific Tactical Activities	Person/Department Responsible	Duration
Product Activities	Management	2 days
Pricing Activities	Marketing	1 day
Distribution activities	Suppliers	1 week
Promotion Activities	Sales	Continuous

Evaluation, review and control

The goals and objectives of a marketing strategy are only achievable if properly implemented. The expectations of any marketing strategy are often different from the actual results from the strategy. If the company experiences such difference there is a possibility that the strategy used or the implementation process was not suitable. In addition, there might have been a change in the company’s environments or the implementation process did not follow the right course.

Formal Marketing Control

Input controls: actions needed before the marketing plan can be executed

The company will have to carry out an a number of activities such as recruiting, selecting and training employees, human resource allocations, outlaying capital and analyzing expenditures for research and development

Process controls: actions needed during the execution of the marketing plan

During the execution of the marketing plan, the following actions are necessary: setting up systems for evaluating and compensating employees, employee empowerment, ensuring that the management is committed.

Output controls: performance standards to be compared to marketing goals and objective during and after the execution of the marketing plan

Product performance standards: In a situation whereby the market is favorable for the product, actions will be set in place to ensure that the product maintains its performance, as well as introduce advanced products with the potential to perform in the current market. For a situation whereby the product does not perform well, or its demand is low, its provision will be stopped.

Price performance standards: the distribution cost and demand will be used to determine the price standard. As such, the price will be directly proportional to the distribution cost and demand.

Marketing Audits

Informal marketing control

Employee self-control: The goals and expectations of the employees will determine the control. The primary focus lies on employee commitment to plan execution, their effort, and job satisfaction.

Social control: the social control in McDonald’s is based on the expectations of the organization, as well as society’s norms with emphasis laid on the shared organizational values.

Cultural control: the expectations and norms of the organization determine the cultural control. However, the main areas of concern include cultural changes and organizational culture.

Implementation schedule and timeline

Month	1				2
Activities Week	1	2	3	4	1	2	3	4
Activities related to product
Activities related to pricing
Activities related to distribution

Methodology of study

The systematic planning of actions that are applied in the collection of information and subsequent analysis of data in a logical manner that help in realization of the purpose of the study is called the study design (Creswell 2009). Research methodology refers to the principles and processes that are applied to collect data that can be utilized in decision making, in business and/or social setting.

The study used sampling technique. The sampling technique applied is the simple random sampling procedure. This method allows the research to be very inclusive, bearing in mind that the study aims at covering a wide geographical area, which has many restaurants. The random sampling will give all the restaurants in the sample frame an equal chance of being represented in the sample.

Data Collection and Analysis

Data was collected by the use of interviews. Interviews are good research instruments that can be applied in the collection of information in order to gain insights into attitudes and perceptions (Creswell 2009). They also serve to explore personal differences, experiences, and outcomes. The study used guided interviews, as they probe to get specific information from the respondents. The guided questionnaire thus have questions that are clear and succinct and in line with the research objectives.

Findings

The analysis revealed that the cultural differences play a great role in the marketing strategies of McDonald’s. This is attributed to the fact that McDonald’s operates in different countries with different languages, value as well as diverse customer behaviors. As such, the implementation of the company’s marketing strategy in such conditions becomes difficulty added to the fact that there are so many new players offering expensive, quality and healthy meals and drinks.

Limitation, bias and constrains in study

The study was limited to marketing strategy and the 4Ps, thus other aspects of the company could not be easily established.

Conclusion & Recommendations

From the foregoing, it is evident that McDonald’s holds a big share in the fast food industry. However, the company has a number of challenges such as threat from powerful competitors such as the KFC, change of customers’ eating habits, as well as legal and regulatory issues from the countries where the company operates. In order to increase the sales volume of the company, the study proposes the following recommendations; establish more outlets, and provide featured services as well as health products.

In addition, the company should set target market alongside a robust customized positioning while maintaining consistency in the products’ quality and taste. Such goals can be achieved if McDonald’s adopts strong advertising and promotional methods in order to reach very many people all over the world.

References

Barnes, D. 2008, Operations Management: An international perspective, Cengage Learning EMEA, UK.

Creswell, J. 2009, Research design: Qualitative, quantitative and Mixed methods approaches, Sage publishers, Thousand Oaks, CA.

Deng, T. 2009, ‘McDonald’s New Communication Strategy on Changing Attitudes and Lifestyle’, IJMS, vol.1, no.1, pp.1-2.

Vrontis, D. & Pavlou, P. 2008, ‘The external environment and its effect on strategic marketing planning: A case study for McDonald’s’, JIBED, vol. 3, no. 3/4, p.289.