The Marketing of McDonald’s

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Executive Summary

One of the main questions asked during the recession in any country is whether the country has been affected by the recession and if affected its extent or severity. This question is relevant in China, even though the consumption rate in China is less when compared to the US and other economies. It is very interesting to analyze any industry during a time of recession. Every industry cuts costs and changes its marketing strategies to cope with the recession.

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The study is concentrated in the restaurant industry, especially in China, which has shown a sharper decline due to the cut down in the spending habits of people. In the restaurant industry in China, McDonald’s is the second player in the market. We can see a cut down in their prices and the introduction of several strategic tactics to overcome the recession. The aim of this study is to analyze the marketing of McDonald’s in China during the downturn or recession and to provide recommendations to the company during these difficult times.

Acknowledgment

Many people helped me to complete this dissertation, and their valuable cooperation helped me to carry out this project in a good manner. I am so grateful to the lecturers who guided me in the timely completion of the project. I thank the customers of McDonald’s who answered the questionnaire honestly without showing any hesitation. Next, I would like to thank the employees and management of McDonald’s who participated in the interview and responded to the interview questions. I would also like to thank all others, including my family, friends, and associates, who gave me full cooperation for the timely completion of the project. Then I would like to thank the concerned authorities, and copyright holders for the information gleaned from the internet.

Introduction

Food is essential for maintaining the life of any living creature.

Without food, the survival of a living being is difficult. The spending habits of people chiefly depend upon their income level. People spend more when they have a high income and spend less when their income is low. Thus, if people have good income levels, they will go to have pizzas or burgers.

As a general rule, humans are interested in eating delicious foods, but if their budget does not allow them to do so, they may not go for it.

Food habits of people

The food habits of people in different countries vary. The food habits of the people of Asia are different from that of, say, the people in Europe or the United States of America. For example, in most European countries, during weekends, people make frequent visits to restaurants or pubs and consume pizzas or burgers. However, in Asian countries, such habits are found only among fewer people. The food companies design their strategies according to the food habits of people. Basic foods are consumed to satisfy the hunger of people, whereas food items like pizza and burgers are consumed by people to satisfy the desire to eat delicious foods.

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It is a commonly known fact that the demand for basic food will not have much influence on the income levels of people. That is, they cannot lay restrictions on basic foods which they consume even if their income level comes down.

The Industry Background in Asia

The food industry in Asia was on a growth path. It was growing fast, but the recent financial crisis has affected the growth of the industry in one way or other. Asia is one of the continents in the world where the food industry is in a good position. The food and allied industry in China is growing at high speed. “It is impossible to remove Asia and China from the global food chain.”(Secure food chain strategies for food processors, suppliers, and retailers n.d.).

The Asian food industry is filled with cut-throat competition, with major food companies like Domino’s and McDonald’s holding top positions in the food chain industry. In most Asian countries, there exists a restaurant of McDonald’s and Domino’s. The main characteristics of the Asian food industry are that the food companies make menu changes according to the taste and preferences of customers. Further, globalization has lent the adoption of some Western food items on the menus of Asian restaurants. The prices of food items in Asia are comparatively low. Among the different countries in Asia, the food industry in India is a more challenging one.

The reason is that most people in India prefer non-meat items. Changing such habits is quite difficult, and the companies keep this in mind while they perform their marketing activities. The vegetable industry in India is flourishing, as most people prefer vegetables. This is the general picture of the Indian food industry. “Fenton points out that India’s eat-out market is about $128 billion a year compared with $132 billion in China.” (McDonald’s growth path leads East 2007).

The food habits in China

Food habits in China are different from other parts of Asia. Generally, the people in China follow a vegetable-oriented food system. Earlier, people in China followed a diet system of eating food that involved less use of meat or non-vegetable items. Thus, occurrences of diseases during those periods were lesser. But now, some changes have taken place in the food habits of the people of China. The non-vegetable items have come to gain a significant place on the menu of restaurants in China. This caused an increase in the diseases like cancer. But the traditional food system in China was a pure diet-oriented one.

Vegetable food can protect you from major diseases like cancer. In China, there are different ethnic groups and food systems. The traditional food system was one in which there were flavors like sweet, salty…etc., grains like wheat, rice…etc., fruits like plums, dates…etc., vegetables like greens, onions…etc., domestic animals like sheep, pig…etc. Among these, domestic animals were less important and formed a minor part of the food table of traditional China.

This was the food culture of traditional or old China. Today the situation has changed, non-vegetable food items got a significant role in the menu of the restaurants in China, but a majority of Chinese people prefer vegetable foods to non-vegetable foods. Even then, the restaurants that offer non-vegetable food and western food items run their business successfully. The foreign visitors who are traveling to China are more interested in western food than the food special food items of China.

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Different parts of China have their own food system. For instance, in some locations, rice forms a major part of the total food eaten in a day. At the same time, the consumption of rice is very low or nil in some other parts. Some people in China cannot imagine food without rice during the course of their meals. In the northern part of China, people consume more meat, and they consume eggs for their breakfast as they think that eggs are very good for improving brain function. Some people prefer a combination of egg and rice. (Fallon & Enig 1999).

The food habits and recession

The recession affected different people in a different ways. According to the view of some people, the recession did affect the food customs. However, according to the opinion of a majority of people, the recession did not cause their spending habits and food patterns. It is a commonly known fact that eating food is a basic requirement of any individual. Anyway, it can be said that generally, the recession affected the food practice of the people at different strata of the society. Those who used to consume costly food items might have changed to less costly food items. The people who say the recession did not affect their food customs have their own arguments.

Take, for example, the case of a multinational Company whose business campus is spread across thousands of acres of land. Here they are forced to buy food items that are available in cafeterias inside the campus. They cannot go outside for food as it is impractical. The company may not allow permission for the local foods inside the campus, and the employees are forced to buy costly or branded food items inside the campus. Therefore it can be said that the company in this example was not affected by the recession. In this case, the company is not affected by the recession.

Studies show that ordinary restaurants are affected by the present recession in some way or another. The main reason is that most of the customers of these restaurants belong to lower-income groups, and these lower-income groups have cut down their budget on food due to the recession. But contrary to this, some people have a view that the recession caused to increase in the business of restaurants. They support their view with the fact that the recession caused to increase in the price of the goods that are used for cooking foods which resulted in forcing the lower-income and middle-income groups to buy ready-made fast foods in order to cut down their expenses.

McDonald’s in China

McDonald’s started its operation in China in the year 1990 in the city of Shenzhen. It was a challenge for the company to enter Chinese market as the Chinese food culture was entirely different from the western food culture. The company needed to make some changes or adjustments in its operation. The company deeply identified, assessed and analyzed cultural aspects of the country and made changes accordingly, which was the key reason for the success of McDonald’s in China.

In the year 1992 some more stores were opened in China which now reached more than eight hundred stores. The company focused on developing the local employees by providing good leadership training which, they thought, is essential for the success of the McDonald’s in China. (Jenkins 2008). This year, McDonald’s made a big reduction in the prices of its meals in order to gain advantage over competitors, like other American based restaurants. Offering quality food items for a lower price can attract many customers. (Bachmann 2009)

Research Methods

Research Objectives

Research objective refers to the purpose of conducting research and needs to be clearly stated. Marketing is essential to any organisation irrespective of the nature of its products. It covers a wide range of aspects including design, promotion, sales, etc. Tailor has given a definition to marketing as follows: “’Marketing is not about providing products or services it is essentially about providing changing benefits to the changing needs and demands of the customer.” (What is marketing n.d.).

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Companies need to be capable of identifying the customers’ needs under all situations. The present financial crisis had a crucial impact all over the world and few sectors have remained unaffected by its effects. It has affected the spending habits of consumers. In this situation, present marketing tactics have to be changed.

According to Dirk Bongers, PWC, “Fast food has emerged as a solid option for an increasingly wealthy nation in a hurry. Even better, these consumers can afford to be choosier. Incomes are rising. All the demographics are right for the growth of the fast food industry.” (Taylor, Collier & Ryu n.d., p.3).

In the current difficult economic stage, restaurant industry is in a crucial state with empty stalls. Some were forced to be closed down due to the cut down in the time spending by the customers. It is seen that restaurant marketing is unknown to many of the restaurant and food chain players. It can be referred as having dynamics like other management concepts.

We can say that, in today’s challenging economy, the aim of any restaurant marketer may be to add to a customer’s life experience which can increase the wealth and image of the restaurant players, while at the same time offer quality and wholesome food at reasonable prices.

Aim of the study

The main aim of this study is to analyze the present situation of McDonald’s in China and to suggest measures for improving its marketing against the backdrop of current recession.

Research questions

The following research questions need to be formed in order to attain the above aim:

  1. How has the financial crisis affected China’s restaurant industry?
  2. What is the present situation of McDonald’s in China?
  3. Who are its competitors and what are their marketing strategies in order to overcome the current crisis?
  4. How can McDonald’s deal with the present recession?

Personal Interest

The research is designed to study marketing tactics used by McDonald’s in the crisis to withstand in the market. The study also focuses on consumer buying behaviour against the crisis stage and what are the marketing strategies adopted by the major players in the Chinese economy.

According to Kristin Graham, “Restaurant chains themselves caught up in frenzied spending, but the trend was unsustainable. Like the housing market, the restaurant industry has overbuilt. Without credit cards, consumers can’t afford to eat out as often. And recessionary times have required corporations to slash extraneous expenses — particularly food — from their budgets.” (Graham 2009).

Food is essential and can be referred as the last thing that people stop buying during any crisis. So research in the restaurant and food industry about the marketing strategies which make consumers keep buying has relevance.

During crisis we can see organisations changing their marketing strategy according to the changing consumer buying behaviour, thus meeting the after-effects of crisis. Four Ps in marketing are modified. We can see identifiable change among the food habits of Chinese over the past decades and now they prefer more of western style. As in China, McDonald’s is one of the successful branded Western fast food chains and it is very popular among the all age groups in China, especially among youths. We can see consumers spending hours in the McDonald’s stores rather than domestic stores. So the study is concentrated on McDonald’s Marketing during crisis stage in China.

Research Method

As the study is aimed to identify the marketing of McDonald’s in China, survey as well as interview method are used for the research. For the study, China is divided into three regions like Western, Central and Eastern to cover the entire country. Most popular restaurant in each region is randomly chosen for the study. A restaurant from Chengdu in Western Region, Beijing in Eastern region and Henan from Central China are selected for the study. From each restaurant, opinions from the customers are obtained through a set of questionnaires which were distributed among respondents. More so, personal interview of employees and management staff of each store of McDonald’s is done.

Assumptions

The research study marketing of McDonald in China in the backdrop of recession is carried out on the following assumptions:

  1. The study is based on random sampling and data collection is done through the selected samples of McDonald restaurants in China.
  2. All the respondents are the customers of McDonald’s in China i.e. they use any one item of McDonald’s and are aware of the McDonald’s products.
  3. The respondents are randomly selected without any age discrimination.
  4. Study is in the context of financial crisis and other political instability in China.

Dissertation Structure

During the course of this dissertation, the research questions have been answered through a series of steps. Different sources are used for the reliability of the research and dissertation structure has an important role in the success of a project. The research has the following structure: table of contents followed by acknowledgements, executive summary, chapters 1 to 5, conclusion and recommendation, references and appendices.

  • Chapter 1 is the introductory section which helps to identify the food habits of people. An overview of the Asian restaurant industry and that of China’s restaurant industry is included in the introduction section.
  • Chapter 2 describes the research objective, research questions and personal interest related with the project. The assumption of the study is also included in this chapter.
  • Chapter 3 is the literature review which describes the previous researches and works on the topic. In addition, the chapter gives an overview of the restaurant marketing, SWOT analysis, Effects of recession in China. Consumer buying behaviour in the context of recession and the marketing strategies adopted by major players in the market is discussed. Different reliable sources are used for the construction of this chapter.
  • Chapter 4 is the research methodology which describes different methods used for the development of the research i.e. the type of research, design, different sources of data, structure of questionnaire etc. Different primary as well as secondary sources used are explained in this chapter.
  • Chapter 5 is the main body of the project explaining the tactics used in the study. SWOT analysis, PESTLE analysis and questionnaire analysis are done in this section to get an idea of the external and internal environment in addition to the customer perception. Each question in the questionnaire is critically analyzed based on the response obtained. This section also includes the key findings of the research.
  • Chapter 6 encloses conclusions which are based on the findings and recommendations for the further improvement. This chapter summarizes the outcomes and recommendations made from the discussion and analysis. This chapter is followed by references and appendix.

Literature Review

Marketing of Restaurants

Restaurants are places where food is prepared and served to customers. Restaurants have to use various marketing methods to withstand competition.

Guerilla Marketing

Guerilla Marketing is the method of resorting to strategies like national TV ads. Some of the guerrilla tactics are

  1. Signage: This technique is to confirm that the restaurant has the clearest and biggest symbol that is approved by home rules.
  2. Flyers: This method is to ensure that people are been provided clear idea about the restaurant that is proposed to be opened in a particular locality. This method involves giving 15% off in entry fee during the first week of opening of restaurant.
  3. Sampling: This method involves offering customers main delicious items which enables in creating rapport with new customers.. Encourage the customers to return back.
  4. Loyalty Programs: This method involves providing customers something without any payment in case they have bought sufficient items from the restaurant. Provide customers a motive which will make them a regular visitor to the restaurant
  5. Public Relations Stunts: This method involves catching attention of sources like TV. It involves doing methods to get noticed and handing out menu and cards.
  6. Great customer service and warmth: Customers should be treated in a very warm manner and should be made to feel special. People will inform their friends about their remarkable experience they were been thrown into when they were a visitor to that restaurant.
  7. Promotions: This method involves using various promotion methods to attract the customers.
  8. Contests: This method involves collecting business cards which allows collecting valuable information about customers and building an email and or mail campaign.
  9. Customer comment cards: This method involves gathering customers’ addresses and their email to know more about them.
  10. The Web: This method involves creating a website which portrays the menu, mode of payment, operating hours which all can serve as a marketing tool. (Mealey 2009).

Tools important for the success of a restaurant

  • Quality and Consistency: Restaurants need to stress more on quality of products which is a vital source for their success. Product should be tastier, appearance should sound superior to customers and the product should be excellent without any deviation. There should not be any deviation in taste or shape. Customers expect that product quality should be constant.
  • Delivery: Delivery plays a dominant role in case of restaurants. Delivery needs to be consistently on time and responsive to chef and restaurant needs. Deliver on the appropriate date. Cooks expect that whatever they command in producing food should be made available to them at the right time.
  • Packaging: Packaging should prove to be effective over a longer period of time and should prove to be friendly to the customer. Cooks expect that whatever they obtain should not turn out to be scrap. It will not store well and it is too heavy to deal with.
  • Product: The distributed product should sound superior, different and stunning than their other suppliers’ products. Restaurants will be paying more for local made products only if it is superior in quality of products offered by other merchants. They would like to purchase their entire food items from a single supplier. They do not want more suppliers for food items. (Frain n.d.).

Restaurant Promotions

Restaurant Promotions – weekly, monthly, or daily – are some of the tools that can bring more business for the restaurants. Some of the promotional tools are:

  • Happy Hour: Restaurants offering bar service provide the provision of happy hour specials for the week. The target customers of happy hours are working people and they are been wooed for a drink after a hectic day at work. In conjunction with reduced drink specials, several restaurants provide items at economical prices or sometimes without any pay
  • Live Music: Offering live music on a certain night of the week can boost the business. Music ranges from local bands to a live ballet. The music should sound appealing to the customers
  • Open Mike Night: Open Mike Night is a payless entertainment system to boost the business. Locals are been provided an opportunity for playing music and cracking jokes. Along with these people, the presence of their family and friends will boost the business
  • Two- For- One Special: This method involves providing customers two menus for the price of one. Another method is to rotate the menu offering different dishes every week.
  • Contests: Organising contests and providing free gifts can bring in more business for the restaurant. Contests will prove to be fruitful for restaurants with bar or pub. Prizes can be simple and not expensive, such as a gift certificate, a free meal etc. Free T shirts, mugs or other restaurant related items can also be given as gifts.
  • Sport Night Specials: Organising special promotions during various sporting seasons can prove to boost the business. Organising special events such as Monday night football, a super bowl party are all business enhancing measures. Provide discounts for dinner during the course of such events. (Mealey 2009).

Restaurant Marketing Strategies

There are various mechanisms for successful restaurant marketing. Some of them are as follows:

Restaurant Marketing: Branding

A brand is a promise that is expected by customers, employees, and merchants who are trading with restaurants. Brand-building is bridging the gap between what is been promised and what is been delivered. A brand that has arrangement between promise and execution is a powerful brand. Branding is not something that occurs during the course of advertisement. Branding is also not the customer’s recollection of advertisement.

Restaurant Marketing: Positioning

Positioning is a place that held in the consumers mind in relation to competition like superior quality choice and cheaper price etc. For positioning to prove effective it should involves the inclusion of Unique Selling Proposition (U.S.P). U.S.P is the one thing that cannot be claimed by all and can be claimed by a particular restaurant..

Restaurant Marketing: Due Diligence

Effective restaurant marketing is created on the basis of understanding about the market, consumers, competition, internal customers, financial history, marketing history and the external forces that impacts trading. Effective research on marketing activities and due attentiveness can be more effective in restaurant marketing

Restaurant Marketing: Menu Mix

This process involves conducting frequent analysis of the items which are served in the restaurant. This will include analysis of factors that are responsible for reaping profits and the analysis of items served by competitors. It is necessary to find out the profit making item and to know the performance of each item

Restaurant Marketing: Training

Training plays a crucial role in restaurant marketing. Employees should be trained on how to handle customers properly. Customers expect them to be treated warmly.

Tailor a training programme that is necessary in developing and improving the competencies of their staff

Sales Building Measures for Restaurants

Next we will concentrate on steps which will enhance sales.

Restaurant Marketing: New Trail

These are the new customers buying from the restaurant for the first time. These customers will have their own opinion when they are first time purchasers of the product. Following are the steps which help in creating more sales for the restaurant

Restaurant Marketing: Frequency

Frequency is how often existing customers return to you for future purchases. Frequency is created by building up long tem relationships with customers and also to build up customer loyalty.

Restaurant Marketing: Check Average

Check average refers to the total amount of purchase made by a customer. It refers to the quantity of money a customer will spend on each purchase. Check averages can be built through hike in prices, programs focussing on sales, successful merchandizing etc. It is necessary to take care that the check average increases do not change with the positioning strategy adopted by restaurants

Restaurant Marketing: Party Size

Party Size refers to the quantity of people in each and every party. Tailor programs that will persuade customers to bring with them their friends whenever they visit the restaurant. Party Size will make customers loyal to that particular product. (Restaurant marketing tactics 2009).

Marketing Strategies of Competitors

Digital Marketing Strategies

With the arrival of internet, mobile communications, and digital interactive Television (ITV), consumers have ensured that at every moment they have the opportunity to interact, participate, decide and provide feedback. Still the marketing companies follow the hazy soft function. They make it and will come with the attitude of multi million pound marketing campaigns appears to succeed in too many organisations.

The companies which are used internet and mobile advertising claim are dissatisfied with their result. Executives with in the usual media paradigm are unable to understand the importance of interactive advertising and customer response. So the

Marketers failed to get the benefit and compensation of internet or mobile phone offers. Large number of companies that is promising as genuine maestros of interactive marketing. These companies observe only the opportunity and accept the benefit of the potential of each media to raise the value. They consider only the digital customer and clarify the roles of internet and digital TV acts in the customer’s life. These companies recognize that conventional media, internet, mobile telephony, and ITV provide corresponding marketing channel that can be used to influence consumer behaviour at the various phases of the purchasing cycle.

The self-motivated customer by being regularly connected, consumers are allowing marketers’ contact to be part of their lives. Digital technologies and the delivered contents have added dynamic segmentation and targeting potential to more conventional methods. Costumer’s needs, character and tendency to purchase progress and change by the minute, as the pressure that surrounds them change their requirements, viewpoint and physical state. Marketers are learning to use this information to grind their customer segmentation and targeting strategies considering which stands to use in order to confine the customer at the best time.

Organisations look interactive channels to build strong associations in the product and service features of customer’s life. An example “Domino’s Pizza” is intentionally associating its brand with exact content. (The Simpson’s, family shows at a meticulous time of day (dinner time) with a highly characteristic signature (jarring, loud sounding siren to denote heat).More over, Domino’s administers the marketing overthrow the refinement by making it easier over time to use the service. Cookies keep track of earlier orders and options and allow customers to have dinner distributed to their door at the touch of a switch.

Domino’s, the interactive remote control has confirmed to be a magic stick. It has helped to increase their sales. By increasing the presence of additional platform, the pizza service could operate further. SMS service offers electronic coupons to increase the devotion of its customer’s lives.

Exploiting platform synergies

The digital channels used by the organisations will effectively realize the worth of digital marketing. Now let us see the power of these digital channels.

Digital Interactive Television

Traditional TV has become a consciousness formation tool for customers. So it has evolved as a tool that can provide knowledge to customers about the product and will in turn influence customers to buy the product

Internet on the PC

The PC is the information vehicle of choice. The more the cost of a product, the more will be the importance of internet during purchase

Mobile Telephony

Cell phones and other mobility devices are very useful tools to provide knowledge of products to customers. The frequency of these devices is an important tool for marketers to improve loyalty of customers. SMS based marketing has proven to be very effective for motivating purchase of low cost location – based offerings. Electronic coupons generate more presence for products.

An organisation can implement sophisticated internet marketing programme. Through its tactics, the company was able to achieve superior brand visibility.

If so, the organisation can target the appropriate customers at the appropriate time and there by able to achieve confidence of customers and improved level of service. (Digital marketing strategies 2009).

SWOT analysis

The main function of strategic planning process is the examination of internal and external environment of an enterprise. The internal factors which are influencing the firm’s surroundings can be divided as strength or weakness, and the external factors which are affecting the firm’s surroundings can be divided as opportunities or threats.

The study of tactical surroundings of an organization is known as SWOT analysis.

It is helpful for delivering information regarding the resources potential of a firm’s environment in which it performs

Strength

The strength of a firm determines its resources and the capabilities used as a basis for developing competitive advantage. The following are some examples of such strengths.

  • Good brand names.
  • Reputation of the firm
  • Advantages of cost.
  • Availability of natural resources.
  • Proper channels of distribution.

Weakness

Due to the lack of certain strengths, the firm cannot work well. So the absence of such strengths may be treated as the weakness of a firm. The following are some examples of weakness of an organization.

  • Absence of patent protection
  • Weak reputation among its customers.
  • Highest cost volume
  • Lack of natural resources
  • Absence of proper distribution channels

Opportunities

The external environment may conceal some opportunities of the profit and growth of an organization. The following are some examples regarding the opportunities of an organization.

  • Unfulfilled needs of customers
  • Arrival of advanced technologies
  • Avoidance of international trade barriers

Threats

Changes in the external environment bring out threat to the organization. The following are some examples of threats.

  • Gap between consumer tastes and firm’s product.
  • Urgency of substitute products
  • Changes in regulation
  • Trade barriers

The SWOT matrix

“A firm should not necessarily pursue the more lucrative opportunities. Rather, it may have a better chance at developing a competitive advantage by identifying a fit between the firm’s strengths and upcoming opportunities. In some cases, the firm can overcome a weakness in order to prepare itself to pursue a compelling opportunity.” (Swot analysis 2007). SWOT analysis is a tool for understanding and decision making for all kinds of situations in a business organization.

It is applicable either at corporate level or a single business unit level. The framework of SWOT was described in the late 1960’s. Both external and internal analysis can produce a lot of information, which may be highly relevant. The SWOT analysis can serve as a filter to reduce information to an acceptable quantity of key issues. It classifies the internal aspects of the firm as strengths or weakness and the external factors as opportunities and threats. Strength can build the foundation of the competitive advantages of a firm and weakness may hinder it. By understanding all those aspects an organization can better increase its strengths, avoid its weakness, capture golden opportunities and overcome its threats for achieving the competitive advantage.

Impact of Recession on food chain in China (MC Donald’s

Generally, most of the companies all over the world face recession in its functional areas of an undertaking. Many companies became bankrupt and thousands of employees lost their jobs during the recession period. The recession impact over global economy is not the first phenomena. It has a major influence on the world market.

Recession created a prominent impact on the over all production and distribution systems of food chain process in China. Various studies have been conducted to analyze the effect of recession over Chinese food production. The following points will give a clear cut idea regarding the overall impact of recession over the McDonald’s food chain in China.

The analysts in China believe that China’s GDP growth rate is not just slowing. They are concerned that the economy could really constrict. This is a fair assumption about it. The exporting rate is very low compared to other years. Chinese middle class families are the major consumers of the food products in China. “McDonald’s (NYSE: MCD) is prepared to ignore all of that. According to Reuters, “McDonald’s Corp, the world’s largest fast-food chain, is optimistic about business prospects in China and plans to open about 500 stores in the country in three years.” (McIntyre 2009).

Why China has taken this risk? The answer is very simple. McDonald’s product could create a major impact on the few US Companies and survive from the economic crisis. As a result, the world’s largest fast food production could push into the new market. McDonald’s has taken a major part of market share in the nation on the recovery of economic crisis.

One of the important things that differentiate McDonald’s from other companies is the rapid growth and expansion of business and money in the global market, while the other companies are hesitating to expand their business.

McDonald’s plays a major role as the good economic indicator in China. It cultivates a large amount of investment with several creative ideas to face recession and to ensure its survival in the global market. In tough times it develops a positive idea to mobilize their savings and to avoid the economic imbalances in the overall operational aspect of a business.

McDonald’s cuts prices in China

McDonald’s corp. is the world’s largest fast food chain. It cut prices of consumer related goods in China, to overcome the financial crisis in the global economy. It provides price cut of 40 percentage of total cost. A large number of Chinese restaurants are cutting their prices to make the availability of products at cheapest cost.

“Chief Executive Jim Skinner said late last year that the company was well positioned in the face of recession, because people would think twice about where to spend money when going out for food.” (McDonald’s slashes China prices by up to 33 percent 2009). The company framed its plans to establish 175 restaurants and hire 10,000 staff in China in this year. At present, it runs 1050 restaurants and hires around 60,000 staff in China.

Recession- causes and effect

Nowadays every one is talking about recession in the global economy. Technically, recession refers to declining of GDP or gross domestic product of a particular country for two consecutive quarters. Before studying recession deeply, we have to understand the meaning of GDP. Gross Domestic Product means the money value of all final goods and services produced in an economy during a particular year. Final goods are those goods, which are not transformed into other goods. The final goods are calculated on the basis of the present market value of goods and services. So recession means the declining rate of all the final goods and services produced in an economy for two quarters.

“As per NBER (National Bureau of Economic Research), there have been ten recessions since 1945. From mid 1940s till 2007, the average recession lasted 10 months, while the average expansion lasted 57 months, giving us an average business cycle of 67 months or about 5 years and seven months.” (Bijlani 2009).

Mainly there are various factors that turn an economy into recession, among these factors; inflation plays a predominant role to change the economy into recession. In the simple sense, we can say that inflation is the situation occurred due to continuous price rise. It is the condition of an economy when the prices of all the goods and services are increased continuously over a period of time. Inflation occurs in the economy due to the increased rate of production costs, higher energy cost, etc… It can change the overall functional aspects of an economy. When the rate of inflation increases, the people spend low amount of money for purchasing and other basic needs. The people tend to cut the rate of total expenditure of spending. Automatically, it makes the companies to cut their overall production costs and brings unemployment in the particular situation.

Following are the factors, which can turn an economy into recession.

  • Lack of sufficient fund
  • Falling house prices
  • Uncontrollable rate of inflation
  • Reduced disposable income etc….

Recession creates major effect on the economy over a particular period. The following are the causes and effect of recession. It influences the standard of living of people in a particular country, and creates unemployment during the specific financial years.

Consumer behaviour during recession

This is the study which represents the behaviour of consumers during the times of a weak economy or recession period. Here, there is a report which contains the information about the consumer’s shopping or buying behaviour during the weak economic year. The following are the detailed data which gives a clear idea regarding the consumer behaviour.

“The report is also supported with online shopping traffic data sourced from Market Reporter, a statistical database that tracks actual consumer shopping behaviour on PriceGrabber.com. PriceGrabber.com is a major shopping comparison engine, with more than 26 million unique users per month and up-to-date daily pricing of products supplied by more than 12,500 sellers.” (Consumer behaviour Report 2008).

Consumer spending trends in a weak economy

During the year 2008 surveys were conducted to analyse the consumer spending behaviours and the economic downturn. The tax rebate survey contains 1260 respondents of consumers from March 25 to April 19. Consumer spending survey includes 3359 respondent surveyed consumers and the economic stimulus survey contains 2483 respondents’ surveyed consumers in the year.

  • Among the 1260 online shoppers surveyed from March 25 to April19, they planned to use tax refund in the recession period. Among them 65 percentage of consumers are interested to spend their tax refund. 35 percentages of respondent consumers planned to save their money.
  • Among the 3359 respondents surveyed from April 29 to May 23, 2008. The survey revealed that 56 percentages of consumers accepted the cutting back price policy as per the impact of weak economic crisis. A few reasons of the cutting price are; 57 percent increasing inflation and 25 percent causes due to the lack of confidence in the economy.
  • June 13-30, 2008 survey included 2483 respondents; among them 69 percent of consumers decided to spend their stimulus check. 39 percentages indicated that, they will pay the existing debt as economic stimulus check.
  • From the above information we can have an idea regarding the consumers spending behaviour based on the surveys conducted on various individuals, as per the weak economic down turn. (Consumer behaviour Report 2008).

Methodology

Success of the research depends upon the methods used in it. If the research is not properly planned, then the whole research is a failure thus leading to false conclusion. The research methodology gives an understanding of the research, how to conduct it to reach success. Redman and Mory have defined “research as a systematized effort to gain new knowledge.” (Kothari 2005, p.3).

The study is intended to analyze the present situation of McDonald’s in China against the background of recession. This helps the company for reviewing the tactics and change according to the situation. The customers’ perception towards the company and other players in the market can help in reviewing their plans. In addition, the present trends in the market may help in developing groundbreaking products by the company to boost up the sales during the downward trend.

Research design

There are mainly two approaches of research such as qualitative and quantitative research methods. From the term itself we can identify that quantitative research measures the quantity and qualitative research measures the quality.

Qualitative research

“Qualitative Research Techniques involve the identification and exploration of a number of often mutually related variables that give insight in human behaviour (motivations, opinions, attitudes), in the nature and causes of certain problems and in the consequences of the problems for those affected.” (Module 10A: overview of data collection techniques n.d.). It is adopted mainly in the case of social researches where the behaviour analysis is needed as a part of the research. The opinions, experience and feelings of individuals are extracted through qualitative research models such as interviews, focus groups etc.

The data extracted through qualitative methods are subjective in nature. It better describes the social phenomena. Thus manipulation on the data is not functional in this method. It is best suited to identify a situation through a holistic approach. Qualitative is an inductive approach to develop concepts and theories. The data collection in this approach is done directly by interviews, focus groups or observations. The data collection process is time consuming and the research results may be subject to bias. Only limited samples can be used under the qualitative model.

Quantitative research

The gathering and analysis of data that can be expressed in numerical form. Quantitative research involves data that is measurable and can include statistical results, financial data, or demographic data.” (Business definition for: quantitative research 2009). It is used to determine how people experience, think or act in a specific approach. These surveys lead to large samples and are formed through a number of interviews. Interviews are conducted through structured questionnaires.

Sampling

Sampling, which is an important element in research methodology, refers to selection of individual observations from the whole population for collecting the information for the research. If the size of population is less, survey could be conducted with the whole population which is referred as census study. But in case of large population, even though information from the whole population gives 100% accuracy to the research, it is very difficult to obtain the information from the whole population. So proper sampling should be drawn with each element representing the characteristics of the whole population. Probability and non-probability sampling are the two types of sampling in which each and every element in the population has an equal chance of selection in the probability sampling. But in case of non-probability sampling, there is no equal chance of selection. Some of the sampling methods are simple random sampling, systematic sampling, stratified sampling, convenience sampling etc.

For this study the entire China is divided into three parts like Eastern China, Western China and Central China. From these regions one each McDonald’s stores which are popular are selected totalling three stores. The interview of the selected management and staff of the above said three McDonald’s are conducted. Also a questionnaire was prepared and distributed to the selected 100 customers of the above said three stores. The interview questions and questionnaire are given in the appendix.

Sources of data

The topic under discussion in this section is of two distinct heads, firstly, in terms of primary data, and secondly, with reference to secondary data.

Collection of primary data could be done based on first hand knowledge (observations), surveys and field studies, personal interviews with the senior management team at McDonald’s, and discussions with selected respondents and members of the consuming public.

Coming to secondary data, they could be said as data gained through books, journals and internet searches, and published information gained from previous research studies, recordings and archives of earlier surveys and research studies. In addition, the definitions and analysis of marketing strategies of McDonald’s shall also form a part of the secondary research programmes.

Data Collection

Accuracy of data leads to the success of research. Data collection can be referred as the systematic collection of information from the relevant parties for the research. There are mainly four ways to obtain data for the study. They are literature study, observation, questioning method, and check list. For this study, all methods except check list are used for the study. “A literature study makes the researcher aware of what the current train of thought is, as well as the focus of existing and acceptable thought regarding a specific topic. It also helps him demarcate the boundaries of his research theme.” (Data collection n.d.).

Under observation method, the researcher has observed specific situations and conclusions are drawn. Questionnaire to the customers and interview with management personnel and employees of McDonald’s in China were used to obtain the data.

Questionnaire – Structure

The questionnaire included both open-end questions and closed-end questions. Only the last question is an open-end question, which was intended to get the recommendation of the customers.

The first two questions are designed to identify the nature of customers like in age group and their occupation. In the first question, customer’s age group is divided into three categories like below 18, between 18 and 25, above 25. Customers below 18 are considered as children who come along with their parents. Customers between 18 and 25 are considered as students or youth and above 25 aged customers as middle aged group. Under Question 2, three categories like employed, unemployed and student are included to know whether the customers are working group or not.

Question 3 is aimed to identify the most moving and customer preferred item of McDonald’s. The products of McDonald’s included are Hamburgers, Fried chicken, chicken sandwich and soft drinks. In the fourth question, customer’s favourite towards the company in certain factors is rated. The company’s quality of food items, affordable price, reputation and quality of service are the included factors.

Questions 5, 6 and 8 are raised to identify the views of the customer’s attitude towards recession and their spending habits. The seventh question is aimed to analyse whether customers prefer other restaurants with respect to McDonald’s.

Question 9 is aimed to retrieve the opinion about the promotional activities of McDonald’s. It is aimed to check whether the current promotional activities help the company to reach the customers or whether any innovations are required.

Questions 10 and 11 are aimed to identify the company’s attitude towards the customers if any difficulties arise to customers and their recommendations towards the company to improve.

Interview structure

The management staff and the employees of McDonald’s in the three regions of China were interviewed to get their views. The interview questions mainly raised the current recession status in China and whether it affected McDonald’s in its marketing efforts. The questions were framed to understand whether any major changes have been made in the marketing mix of the company to meet the recession and competition in market. The customers’ spending nature during the recession was the main topic in the interview section and if the company felt any reduction in the arriving customers.

Analysis & Findings

This section takes in SWOT analysis, PESTLE analysis, a review of competitors and questionnaire analysis to reach conclusion.

SWOT Analysis

It helps to identify the strengths and weakness of McDonald’s in China, which is mainly internal, and its opportunities and threats in the external environment thus leading to competition in the market.

Strengths

  • McDonald’s advertising strategy
  • Strategic alliance between Sinopec and McDonald offers a strong retail network to McDonald
  • “Drive Thru” car restaurant to catch the consumers’ fast changing lifestyles.
  • More than 1000 outlets in China
  • Good relationship with the suppliers helping in reducing buying cost
  • Standardised and uniform services and employees compensation schemes.

Weakness

  • Fading market share due to competition and crisis.
  • Unhappy franchisees may lead to decline in sales.
  • “Economic weakness in China has impacted the sales and margins, especially in southern China where manufacturers have closed.” (McDonalds April Same-Store Sales Up 6.9 Percent2009).

Opportunities

  • Expansion in the Western region of China and rebuild the market share.
  • China’s demographic growth and free market policy can nourish food chains like McDonald’s.

Threats

  • Competition from KFC, Dominoes,Yum Brands Inc and Pizza Hut
  • When consumers become more health conscious, it will affect the sales.
  • Changing demographics and exchange rate may force to increase the price of products.
  • Slow growing economy of China may affect the expansion activities.

PESTLE analysis

It is mainly used to scan the business environment mainly external environment. The opportunities for the company in the market and threats in the external environment like competition etc could be analyzed using the PESTLE tool. PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental factors for assessing the market.

  • Political: Government policies and regulations over fast food industry control in the form of mandatory licensing for opening of new restaurant and laws regarding the health which protects people from obesity and other cardio vascular disease in the country will affect the operations of the company. Expansion of the company over the country will be restricted, if the rules and regulations become stricter. Moreover, the company will be compelled to withdraw certain products in the event of lab tests turning hostile.
  • Economic: Foreign exchange rate during the supply of materials and import of raw materials, slow growth of Chinese economy and people cut down their spending and tightly hold income. Also price reduction in the fast food industry has become crucial since 2009 in China. “McDonald’s, which had dropped the prices for three times in last year, announced the reduction in the sales prices.” (The fast food industry all cut down their prices in droves in china 2009). Strengthening of dollar value will increase the cost of purchasing, thus increasing the cost of production. In this case, demand of the product may decrease.
  • Social: Change in the lifestyle and culture of the people in China, increase in cost of living etc may increase or decrease the demand of certain products. Consumers may withdraw from the fast food system. Contrarily, one could say that western influence can attract customers towards major brands like McDonald’s thus enhancing popularity of the company.
  • Technological: Competitors increasing the technological facilities in the outlet, technological advances in the advertising and sales promotional activities by the market players etc forces the company to introduce technology accordingly, to minimise cost.
  • Legal: Introduction of new laws regarding health of the consumers, welfare of the employees, product quality, environment pollution etc is some of the legal factors. The company has to fulfil all laws regarding this or legal issues may arise.
  • Envirnmental: Concentrating on the welfare of the animals and human beings and pursuing environmental friendly strategies to reduce pollution by focussing on recycling, corporate social responsibility towards the environment are some of the environmental factors. It may make the company to withdraw certain products from the market. Also huge investment will be required for adopting the proposed system.

Competitors of McDonald in China – a comparison of their product, price and promotion etc

Particulars McDonald KFC Pizza hut
Promotional activities Advertisement, Beef education campaign, Olympic Cheering Little Champions, sponsorship of other games, Super value program TV advertisement, main focus on family and friends group Casual dining concepts
Number of stores in China Opened 1000thstore 2000 stores More than 200 stores
Products Meat based items like Quarter Pounder, hamburgers, McCafe etc. Chicken based items like Fried chicken Different styles of Pizza
Key factors of success 24 hour delivery service, well structured supply chain, corporate social responsibility of supplying quality foods, “leadership team on the ground, its business strategy, and the implementation of that strategy touching upon local partnerships, franchise and JV partnerships, government relations, localization, supply-chain.” (Interview with Warren Liu, Author of ‘KFC in China: Recipe for Success’2009). Quality of the pizza, social brand name, ability to make differences, experiments with new products and discontinue less successful products

Questionnaire Analysis

Question 1: age group of the customers

From a sample of 100 questionnaires distributed, it was seen that the main customers in the selected regions were between the age group of 18-25 i.e. about 50%. 45% were between the age group of above 25. Only 5% could be seen below the age of 18. This shows that, youth are the main customers of McDonald’s.

Serial Age group %
1. Between 18-25 years age group 50
2. Above 25 years age group 45
3. Below 18 years 5
100

Question 2: Occupation of the respondents

The three categories under this question were student, employed, and unemployed. Out of these three categories, 70% were of student category and 25% employed category. The unemployed customers of McDonald’s were only about 5%.

Serial Occupation %
1. Student category 70
2. Employed category 25
3. Unemployed category 5
100

Question 3: Products preferred by the customers

4 products like Hamburgers, Fried Chicken, Chicken sandwich and Soft drinks are included for identifying most moving and most preferred item of McDonald’s. It was seen that about 70% preferred Hamburgers. Fried chicken was the next moving item with15% and chicken sandwich by 10%. Soft drinks are the less moving item among the products and it is only 5%.

Serial Product line % users
1. Hamburgers 70
2. Fried chickens 15
3. Chicken sandwich 10
4. Soft drinks 5
100

Question 4: Customers outlook towards McDonald

This question was to identify the customer’s attitude towards the company. Factors included under this section are quality of food items, affordable price, reputation of the company and quality of service. When comparing the above mentioned factors majority of the customers preferred McDonald’s due to the quality of food items.

The second factor was quality of service. Less preference was given to price by the customers while choosing McDonald’s. Following bar chart shows the customer rating towards the selected factors with respect to the company.

Customers outlook towards McDonald

Question 5: Has recession affected the spending habits of consumer?

This question was included to identify whether recession has affected the spending habits of customers. About 75% said that, they had changed their buying habits due to the downturn in the economy. They have to cut down their spending as majority of them were unemployed during recession. Only 25% were of the opinion that, the recession has no effect upon their spending.

serial Description %
1. Changed their buying habits due to the downturn in the economy 75
2. Did not Change their buying habits due to the downturn in the economy 25

Question 6: How customers exercise control over the food habits especially in eating pizzas and burgers?

This question got equal response from the customers. 50% were of the opinion that they control their food habits, only if any disorder arises in the health. Other 50% said that, they don’t bother it.

Question 7: When and why do customers preferring other restaurants?

When customers were asked if they go to restaurants other than McDonald’s 98% were against this question. Only 2% were of the opinion that they seldom go to other restaurants.

Question 8: Will these recessionary trends last for a long period?

Majority of the respondents were of the opinion that, recession will soon end and they can continue their spending habits in the previous manner. About 25% were of the opinion that, recession will last for a longer period and they have to still cut their expenditure.

Opinion about promotional activities of McDonald and company give due consideration to their responses

All of the respondents were satisfied with the present promotional activities of McDonald’s. The company give due consideration to the customers’ responses and incorporate the change.

Interview results

Interview of the employees and management of three McDonald’s restaurants in China is conducted. The restaurants selected include one from Northern China, one from Western China and the other from Central China. There were several questions in the interview. Among these questions some questions were asked to the management, some were asked to the employees and some question were asked to both the management and employees. The participants answered the questions sincerely.

What is your general opinion about recession? Do you think that it will last for a long period?

This was the first question and was asked to both the management and employees. The majority of the participants from management opined that recession happened due to the policies of banks and financial institutions and it affected the world economy in one way or the other. Almost all opined that the recession will last for one more year. When the same question was asked to the employees, most of the employees are not much aware of the recession and some who know about the recession opined that fall in the oil price was the reason for the recession. Majority of the employees do not have an idea about when the recession will end.

Is there any reduction in your salary?

This question was asked only to the employees. All the interviewees answered recession did not affect their salary and there is no reduction in their salary. From this it is clear that McDonald’s tried to protect the employees from the effect of recession. This counters the claim that McDonald’s stores in China are paying lesser wages to its part time employees. (Chinese workers for McDonald’s, Kentucky fried chicken and pizza-hut are underpaid 2007).

How long have you stayed in the industry?

This question was asked to the management. Around 95% of the participants opined that the company has a bright future and they think that recession or any other such factors will not result in the closure of McDonald’s stores in China. They were of the opinion that, if the company continues focusing on customer satisfaction and providing better working environment, it is clear that the survival will not be a problem. Moreover, China is slowly turning towards the western eating culture which means that companies like McDonald’s has good future in china

Do you conduct new recruitment in this period of financial crisis?

This question was asked to the management. They answered that at present they are not making any recruitment, but this is not due to the recession. However, the company did not go for the termination of employees unlike other companies did.

What strategy the company implements to deal with the present situation?

This question was asked to the management. The company implemented a strategy of offering food items at reduced price in order deal with the present situation, so that the company can maintain existing customers and add new customers. In recession time most of the people are interested in buying and eating food items from restaurants where the prices are affordable.

How do you reduce the cost in this recession period?

This question was asked to the management. They answered that they are controlling cost by eliminating the wastage of food items. The company follows a kind of Just in Time (JIT) production which means production according to the requirements. This helps the company to control the cost.

Is there any change in the marketing mix?

This question was asked to the management. They answered that there is change in the promotion mix. The company offers reduction in the prices of food. This means that there is a change in the promotion mix of the company. The company is forced to change the marketing mix; otherwise the survival may be difficult.

According to you how fast the industry can recover from this crisis?

This question was asked to the management. The majority opined that the recession has slight impact on the industry and the industry is expected to recover from these minor effects within one and half year.

Did you conduct or do you conduct an analysis of present period with pre-recession period? If yes what was findings?

This question was asked to the management. They answered that they have conducted an analysis of present period with pre-recession. The result of the analysis was that the recession caused a slight decrease in the business of the company. Another thing is that the company reduced its price in this recession period which may cause to reduction in the revenue. However the company maintained its revenue by retaining existing customers and adding new customers.

Do you experience any reduction in the number of customers? If yes, what are the reasons according to you?

This was a question to the management. The answer for this question was ‘no’. The company did not lose any customers. The reason was that sales promotional techniques were more efficient in this recession period. Main among them was reduction in the prices of the food items like meals. This helped the company to prevent the loss in the number of customers and attract new customers.

Do you have any new plan or proposal to implement shortly?

This question was asked to the management. The management explained their new plans of providing feedback opportunity to the customer and giving prizes to those who participate in the feedback programs. The feed backs can be used for improving the quality of the food items and also for improving the quality of the services of the company. The company is also planning to make changes in the marketing mix for adjusting with the cultural differences in the country.

Comparison of the trend in coming customers during the past five years in McDonald

years customers arrived in Mc Donald in million
2004 11
2005 10
2006 14
2007 25
2008 31

Time series analysis using least square method to identify whether recession has caused any reduction in the incoming customers

The calculation is as follows:

y x xy xx yc
years Customers
Arrived in millions
2004 11 -2 -22 4 7.2
2005 10 -1 -10 1 12.7
2006 14 0 0 0 18.2
2007 25 1 25 1 23.7
2008 31 2 62 4 29.2
91 0 55 10

a =Σy/n = 18.2

b= Σxy/x2 = 5.5

Yc = 18.2 + 5.5*x

Also in 2009, the estimated customers is calculated as 34.7 by putting the value of x=3 in the above equation.

Graph showing the trend line and the actual customers arriving at McDonald in China

In the below graph, Series 1 shows the trend line and series 2 shows the actual customers arriving at McDonald. From the figure, it is clear that, the customers are increasing year by year and the recession has not hit the incoming customers.

The trend line and the actual customers arriving at McDonald

Standard deviation of the above data:

Year Incoming customers
(In million)
x
2004 11
2005 10
2006 14
2007 25
2008 31
2009 34.7
n = 6 ∑x = 125.7

X or mean = ∑x / n

= 125.7 / 6 = 20.95

Standard Deviation or SD = √∑dx2 / n-1

dx = x – mean dx2
-9.95 99.0025
-10.95 119.9025
-6.95 48.3025
4.05 16.4025
10.05 101.0025
13.75 189.0625
n = 6 ∑ dx2= 573.675

Therefore SD = √573.675/(6-1)

= √573.675/5

= √114.735

= 10.7144

From the calculations it is clear that there is a high standard deviation.

Key findings of the research

  • The success of McDonald’s is due to its strong brand image among the consumers. All customers are aware about the McDonald’s trademark of Golden Arches. In their opinion, cinema, radio, press and television advertising have helped the company to reach over the customers and convey the quality of the company. The customers are also impressed by the promotional activities within the restaurant. Olympic, world foot ball sponsorship etc has helped a lot in gaining attention from the sports customers.
  • From the recommendation side of customers, many were of the opinion to introduce new products. They say that, McDonald’s has an opportunity to enlarge the market by increasing the product line as McDonald’s has a narrow product line at present.
  • 24 hour delivery service, well structured supply chain, corporate social responsibility of supplying quality foods are considered as the key success factors of McDonald’s in China apart from the competitors.
  • In southern parts of China, McDonald’s stores are facing the problem of decline in business as this part of the country is characterised by poor economic condition.
  • The main competitors are KFC, Yum Brands Inc and Pizza Hut
  • In order to retain the customers, the company follows the strategy of price reduction.
  • The influence of western culture is slowly increasing in the country.
  • The company is concentrated on providing quality in the food items and services.
  • The most moving item of McDonald’s is Hamburger and youth are the core customers of the company.
  • Recession caused change in the spending habits of the people.
  • Most people believe that the recession will end within one and half year.
  • Recession did not affect the salary of the employees.

Recommendations & Conclusions

Recommendations

It is seen that recessionary trends in Chinese food chain market mainly manifest as high employee costs, high staff turnover and material and maintenance costs. However, in a labour intensive unit like fast foods, where quality and quantity needs to be ensured, the choice of China as a major food chain destination is correct. Also it would be a welcome change for Chinese people who have lived on conventional and staid rice products for a long time

Food chain units, like the McDonald’s unit could be attractive business proposition to enhance employability options in a densely populated country like mainland China.

It could be precisely for this reason that having started the first food store way back in 1990, McDonald’s could rightly boast of 960 restaurants in 37 markets. (Jie 2009). According to the CEO, China of McDonald’s, Jeffrey Schwartz, “We have a business model of getting better versus getting bigger. It’s not about you have how many restaurants; it’s about how many restaurants that serve your customers well. It’s not about how big, it’s about how good and how you run your business.” (Jie 2009).

One of the main reasons for success of McDonald’s could be its high quality, excellent delivery systems and total customer commitments.

In order to ensure this in future, it is also necessary that McDonald’s invest in right technology and personnel who could boost revenue generation capacities in the future, especially in the backdrop of worldwide recessionary trends and its impact on food industry.

It is seen that many of McDonald’s competitors and business rivals have slashed the prices of several food products, and it is therefore important that McDonald’s also follows suit to remain strategically well poised in the competitive food industry.

Again ostentatious advertising, sales promotions and superfluous marketing costs need to be reduced if bottom line is to swell in future, since advertisements and publicity tend to increase costs in the long run.

In the food industry, inventory is a major aspect with spoilages, wastages and servicing losses occurring; this needs to be cut down to the minimum, to ensure maximum capacity utilization at optimum costs.

It is necessary that manual labour should be replaced by mechanised means, more investments in mechanised and efficiency intensive heavy duty machines for food products, serving etc,

Conclusions

It is seen that in the Asian context, the benefits derived through use of McDonald’s has far overreached its hazards, in terms of health and obesity risks, etc.

The quality and service effectiveness of this food chain also accounts for its immense popularity and growth over the years. It plans to have around 1000 restaurants in China by the end of this decade.

One of the major threats would be in terms of labour costs, and inventory in a recessionary markets. However, these could be tackled by excellent planning taking the local conditions into consideration. It is necessary that standardised procedures of McDonald’s need to be adjusted to local Chinese conditions for gaining long term sustainability for its food product lines for the future.

The aspect of trade unionism as an aftermath of labour issues needs also to be examined in the case of major food chain employing large full time and part time employees. It is, therefore, necessary to maintain harmonious worker- management relations in the best interests of the organisation and resolve deadlocks through dialogue and peaceful negotiations, thus paving the way for better growth prospects for the employers and the employees in the long run.

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Appendix 1

Questionnaire to the customers

  • Age group:
    • Under 18
    • 18-25
    • above 25
  • Occupation:
    • Student
    • Employed
    • Unemployed
  • Products preferred by you:
    •  Hamburgers
    • Fried chicken
    • Chicken sandwich
    • Soft drinks
  • How you rate McDonald’s on the following factors?
    • Quality of the food items
    • Affordable price
    • Reputation of the company
    • Quality of the service
  • Did recession affect your spending habits?
    • Yes
    • No
  • Do you make any control in your habit of eating pizzas or burgers?
    • Yes
    • No
  • Do you go to any other Restaurants?
    • Yes
    • No
  • Do you feel that the recession will last for a long period?
    • Yes
    • No
  • Your opinion about the promotional activities of McDonald?
    • Good
    • Better
    • Best
  • Does the company actively hear your responses?
    • Yes
    • No
  • Do you have any recommendations?

Interview Questions to management staff of McDonald’s chain stores

  1. What is your general opinion about recession? Do you think that it will last for a long period?
  2. Is there any reduction in your salary?
  3. How long you stay in the industry?
  4. Do you conduct new recruitment in this period of financial crisis?
  5. What strategy the company implements to deal with the present situation?
  6. How do you reduce the cost in this recession period?
  7. Is there any change in the marketing mix?
  8. According to you how fast the industry can recover from this crisis?
  9. Did you conduct or do you conduct an analysis of present period with pre-recession period? If yes what was findings?
  10. Do you experience any reduction in the number of customers? If yes, what are the reasons according to you?
  11. Do you have any new plan or proposal to implement shortly?

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BusinessEssay. (2022, July 9). The Marketing of McDonald’s. https://business-essay.com/the-marketing-of-mcdonalds/

Work Cited

"The Marketing of McDonald’s." BusinessEssay, 9 July 2022, business-essay.com/the-marketing-of-mcdonalds/.

References

BusinessEssay. (2022) 'The Marketing of McDonald’s'. 9 July.

References

BusinessEssay. 2022. "The Marketing of McDonald’s." July 9, 2022. https://business-essay.com/the-marketing-of-mcdonalds/.

1. BusinessEssay. "The Marketing of McDonald’s." July 9, 2022. https://business-essay.com/the-marketing-of-mcdonalds/.


Bibliography


BusinessEssay. "The Marketing of McDonald’s." July 9, 2022. https://business-essay.com/the-marketing-of-mcdonalds/.