McDonalds’ Marketing Strategies in the UAE

Executive Summary

In a marketing environment, product manufacturers have to translate the unique selling propositions into tangible product benefits in order to retain the loyal customer base while strategizing on how to acquire new customers. A marketing strategy that complements McDonald’s in the US might not necessarily elicit a similar effect on people in the UAE. As such, market research plays an integral role in McDonald’s in the UAE. The report analyzes the marketing strategies of McDonald’s, its strengths, weaknesses, and opportunities, the micro-environmental and macro-environmental factors that have the biggest impacts on the company, as well as market descriptions and segments of the company in the UAE.

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Introduction

When two brothers decided to form a food joint that would serve youths after WWII in the 1940s, it became obvious that McDonald’s would enjoy massive consumer attention even outside California. About the same period, people paid little attention to unhealthy diets, but today, McDonald’s has to change its strategy in order to fit in the competitive fast-food market. In the UAE, McDonald’s serves about thirty thousand people, including tourists who frequent Dubai and Kuwait. In 2012, the chain of fast-food restaurants had to introduce healthy food options for the people of the UAE who frequently complained of poor foods. The world is fast changing. For this reason, it no longer concerns the needs of the manufacturer, but the requests made by the consumer. In the 1940s, McDonald’s produced the best hamburgers even before Kentucky Fried Chicken, Subway, and Starbucks began doing business in the US. In response to the competition, all fast food joints in the US and around the world that enjoy multinational status had to deliver fresh, healthy, and affordable meals to consumers in a timely manner.

McDonald's
McDonald’s. (Robison, 1996)

Current Market Situation

The brand

The Emirates Fast Food Company is the marketer for McDonald’s in the UAE. Ever since McDonald’s ventured into the UAE’s market in 1994, the company still strives to identify the healthy but tasty food options requested by consumers. Today, the multinational fast food outlet provides Halal dishes to the UAE residents in order to capture the attention of consumers. By 2012, the chain had over 680 branches across the Middle East, serving about 52 million people across the world. The Emirates Fast Food Company operates and owns the chain of fast food joints in the UAE that seeks to have 22 branches by the end of 2015 (Brady, 2011). By 2012, the brand already rolled out a plan for 117 branches within the UAE, which was a very expansive project for the company that sought to cause a complete overhaul in the type of meals offered to consumers. Rafic Fakih, the managing director of McDonalds UAE, is optimistic that the healthy diet strategy will take Mcdonald’s UAE to the next level. For 17 years, the company spent most of the time establishing the 680 outlets within the United Arab Emirates and the larger Middle East. Commonly known branches are in Al Ain and Sharjah, which are barely a year old. Today, McDonald’s plan for the Emirates is to create a unique menu that identifies with the Arab community while ensuring that immigrants, expatriates, and tourists get a feel of what McDonald’s provides in other parts of the world, especially the US (Reilly & Williams, 2012). In 2012, the managing director mentioned that McDonald’s has a very simple strategy of understanding consumers’ demands, and following consumers to their countries. Marketers mention that a customer-oriented approach to business focuses on the value of the customer instead of the customer following the brand.

Even though McDonalds UAE uses the company logo and identifies with the McDonalds, US, the Emirates brand completely focuses on its target market. Most menus are in Arabic, and the chefs, caterers, cashiers, and waiters, among other workers, come from the Emirates. The company invests in the local UAE revenue, especially the Saudi Dirham. As the number of restaurants continues to increase, McDonald’s keeps extending its expansion prospects beyond the 121 countries it currently invests in across the world. In the UAE market, McDonald’s has a huge growth potential in a fast food industry estimated at the value of over Dh 8.1 billion. In the UAE, McDonald’s holds about 14% of the fast-food industry share, and it means that expansion through mergers and acquisitions provide the best avenue for development in the UAE (Berry & Parasuraman, 1991). A major weakness presented by the independence of the McDonalds UAE from other chains across the world could interfere with brand placement in the future. However, the same level of independence and innovativeness create an environment in which McDonalds UAE can make rational choices within the environment of investment because the company understands its customers perfectly. Consequently, the leadership structure enables two-way communication, which provides an excellent environment for popular decision-making procedures within the organization.

The micro-environmental and macro-environmental factors

The market environment both at the micro-level and at the macro-level present competitiveness since the UAE has different countries with different cities that equally rival each other for socio-economic and political development. For instance, Dubai has the world’s largest skyscraper; Burj Khalifa and Saudi Arabia have a megaproject the King Abdulla Economic City. Al-Ain also considers creating seaport that would link to the KAEC in order to increase access to Saudi (Sandikci & Rice, 2011). It means that McDonald’s has the role of providing emerging cities with the best and healthy products. In Dubai, the increased number of tourists means that McDonald’s has to invest in gourmet meals even though it has to maintain its originality as stipulated by the company’s headquarters. Other notable weaknesses likely to interfere with the company’s expansion plans include association with unhealthy food options, high turnover of employees, and legal suits in other countries.

Market Description

Since 2007, McDonald UAE’s managing director realized that consumers increased demand for Halal, lettuce, and beef, but the meals needed to be healthy. The first seven years of operation were very easy because people rarely took an interest in healthy living; French fries from McDonald’s became famous (Robison, 1996). The burgers equally enjoyed massive interest from consumers across the world. In the past seven years, things took a sudden turn as the globe developed overwhelming consciousness about health and the general human lifestyle. With a consumer base of about 30,000 in the UAE, The International Fast food industry estimated that McDonald’s served about 51 million consumers in the UAE in 2012, which was a very good, but busy year characterized by expansion. With about Dh 30 million, the company established a brand that target healthy eaters who will still enjoy fast foods. Healthy eating plans established by McDonald’s include the ability to watch portions while including less processed foods into consumers’ diets. McDonald’s does not fear innovation; its current breakfast menu incorporates a deluxe salad, sandwich, chicken nuggets, and egg muffins among other meals (Hassanien & Dale, 2010). Weight and health conscious customers have a variety of products and services to choose. However, healthy options are slightly costly in comparison to the fast foods normally prepared by the company since its inception.

Market segments in the UAE targeted by McDonald’s incorporate consumer who prefer healthy meals and consumers who seek to relate with McDonald’s original brand. McDonald’s responds to consumers’ demands from the many franchises established in the UAE. Arguably, market segmentation and identification for McDonalds UAE result in the creation of both a limited and non-limited menu. The intention is to serve the target consumers with conflicting demands. In 2012, McDonald’s realized that most customers made demands for meals that had the regional and local Middle Eastern taste. It explains the introduction of the Halal meals with a special offer for the Maharaja McBurger during festive seasons. The company went ahead to introduce Kosher foods for the Jews living in the UAE (Benesh, 2010). The limitless menu recognizes that McDonald’s has the capability to provide meals for the larger UAE, East Asia, the Middle East, and the Persian Gulf. For the limited consumers who cannot take the widely known prosperity burger, McDonald’s has a special menu of the McAloo Tikki, which is purely vegetarian. The good thing is that meals prepared by the chefs in the UAE serve different continents neighboring the Middle East.

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Marketing Opportunities

Besides an assessment of the microenvironment, which makes McDonald’s a strong brand name with a good brand image, and a good reputation, McDonald’s has many opportunities to explore in the UAE. McDonald’s invests in technology for marketing, distribution, and product development. The UAE has a huge potential for technological advancement, meaning that McDonald’s will have an easy time improving its service delivery (Gillespie & Hennessey, 2011). Consumer demands keep changing, and there is always the ardent need to move closer to the market. McDonald’s has many opportunities in the target market considering the fact that the fast food industry is growing very fast. It provides McDonald’s with an opportunity to expand and invest widely within and outside the UAE. In addition, green energy is an area that provides an opportunity for reputation building in the 21st century. In a world dominated by ecofriendly debates, green businesses, and issues of green washing, it is realistic to come up with sustainable organizational programs. As a result, McDonald’s needs to invest in green solutions of packaging and distribution (Sonnenburg & Baker, 2013).

Conclusion

In retrospect, McDonaldization is the mark of globalization because of the expansive chains of the MNC across the world. For instance, McDonald’s has over 31,000 branches in about 125 countries globally. Markedly, the deeply rooted cross-cultural integration into new branches is inevitable for the brand. Further expansion into the UAE is necessary because the 17 branches might not fulfill consumers’ demands as projected by the MNC. Most people enjoy fast foods from McDonalds and KFC, but the cost of eating in the restaurants prevents prospective customers from entering the outlets. If McDonald’s make foods available, then it will be capable of attracting the customers that prefer Subway and Starbucks to it. Consequently, the socio-political environment characterized by a calm political environment, advanced technologies, and cultural diversity is a great expansion opportunity for McDonald’s. Clearly, the foreign direct investment (FDI) it promotes between the UAE and the US will assist the involved countries to share excellent foreign relations.

References

Benesh, G. C. (2010). United Arab Emirates: A survival guide to customs and etiquette. Tarrytown, NY: Marshall Cavendish Editions.

Berry, L., & Parasuraman, A. (1991). Marketing services: Competing through quality. New York: Free Press.

Brady, D. (2011). Essentials of international marketing. Armonk, N.Y.: M.E. Sharpe.

Gillespie, K., & Hennessey, H. D. (2011). Global marketing. Australia: South-Western Cengage Learning.

Hassanien, A., & Dale, C. (2010). Hospitality business development. Amsterdam: Butterworth-Heinemann/Elsevier.

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Reilly, P. A., & Williams, T. (2012). Global HR: Challenges facing the function. Farnham, Surrey, England: Gower.

Robison, R. (1996). The New rich in Asia: Mobile phones, McDonalds and middle-class revolution. London: Routledge.

Sandikci, O., & Rice, G. (2011). Handbook of Islamic marketing. Cheltenham: Edward Elgar.

Sonnenburg, S., & Baker, L. (2013). Branded spaces: Experience enactments and entanglements. Wiesbaden: Springer VS.

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