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Report-1 Investigation of Main Marketing Metrics Carbon copy: Head officeDate: 15 March 2009 Attention to: Marketing director No of reports: 1 No of pages: 11 1. 0 Marketing Strategy of McDonald’s A marketing strategy can be defined as the art and science of formulating, implementing and evaluating cross functional decisions that enable an organization to achieve its objective. A marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage.
This is where McDonald’s has excelled due to its ability to successfully integrate the customer’s perspective in its products and operations in a comprehensive manner. The revamped menu in India is an example of McDonald’s strategy of integrating the customer’s perspective in its products. ??? Viz Top Tip, published May 1989. Example1: Use a low cost product to attract consumers. Once the organization uses low cost products, and it has established a relationship with consumers, then the organization will sell additional higher-margin products and services that enhance the consumer’s interaction with the low-cost product or service. 1. Development of marketing strategy(Executive summary) The techniques that can significantly improve the marketing management in the part of development the following methods are followed. ???A proper philosophy of marketing. ???A systematic approach of solving marketing problems. ???An awareness and ability to use very latest concepts as per the trend. 1. 2 Tools and Techniques involved in developing Marketing strategy SWOT Analysis of McDonald’s 1. 2. 1 Strengths MacDonald’s has a strong global presence with its nearest domestic competitor being only half its size, McDonald’s is the market leader in both the domestic and international markets.
In international markets, MacDonald’s is well placed to expand and take advantage of long-term economic growth. MacDonald’s also has a strong real estate portfolio. The company’s outlets are located in areas that are highly known for visibility, traffic volume and ease of access. MacDonald’s also has exceptional brand recognition. (Brennan, lines 15-16). 1. 2. 2 Weaknesses The food industry is really saturated. As a result of this, MacDonald’s has to deal with the prospect of looming market saturation, which could make it difficult to add new outlets.
The market is forecast to grow by around 2% per year. Lack of product innovation is another weakness of McDonalds. The last break-through for McDonald’s was the Chicken McNugget in 1983, but again the company’s new strategy seems to have successfully deal with the problem through the popularity of its new salads and other new products. 1. 2. 3 Opportunities MacDonald’s sold its Donatos Pizzeria back to its founder in 2003 and discontinued Boston market operations outside of the US.
The company will instead focus on Chipotle Grill which is the company’s most successful non MacDonald’s branded chain of restaurants. 1. 2. 4 Threats McDonald’s is exposed to changes in the global economy. The company’s aggressive international expansion has left it extremely vulnerable to other countries economic slowdown. Foreign currency fluctuation is also another problem global companies like McDonalds. Top Competitors for MacDonald’s include: Yum! Brands, Inc, Wendy’s International, Inc. Jack in the Box Inc, and Burger King Corporation. (Kevinen McDonalds-Ross, 1969,) Strength |Weakness | |Strong brand |Low depth and width of products | |Customer intimacy | | |Product innovation | | |Supplier integration | | |Opportunity |Threat | |Expand into tier2 and tier3 cities |Changing customer lifestyle and taste | |Entry into breakfast category |Increased competition from local fast food outlets like burger king | 1. 2. 5 Entry to Tier 2 and Tier 3 cities ??? The main target customer for McDonald’s is the new urban Indian family.
With the customer demographics constantly changing and tectonic social and cultural shifts being observed in Tier 2 and Tier 3 cities due to globalization, the company is now expanding to Tier 2 cities like Pune and Jaipur. 1. 2. 6 Rolling out McBreakfast across all outlets ??? In India, the company has recently launched its entry into the breakfast food category. This is now launched on a pilot basis on select stores. 1. 3 PESTEL Analysis of McDonald’s PESTEL analysis is concerning the Macro-environment surrounding a Company, usually in Strategic Analysis Report (SAR). 1. 3. 1 Political – – Trading policies – Employment Law – Taxation (Corporate; Consumer) 1. 3. 2 Economic – – Interest Rates – Inflation – Economic growth – Exchange rates – stage of business cycle 1. 3. 3 Socio-Cultural – – Branding – Demographics – Lifestyle changes – Health and welfare 1. 3. Technological – – Stock Control – Government spending on research – Energy use and costs 1. 3. 5 Legal – – Competition Commision – Employment Law – Trade Regulations. 1. 3. 6 Environmental – – Packaging – Recycling 1. 3. 7 Table |PESTLE ANALYSIS OF McDonald’s | |P |Global market | | |Different Political infrastructures | | Consumer taxation | |E |Market leader | | |Very high target market | | |Low cost and more incomes | |S |Fragmented supplier/workforce | | |Working within many social groups | | |Increase employments | |T |Advanced technology development | | |Quality standards | |L |Legislation for product | | |Sustained logo | |E |Quality packing | | |Local manufacture using foreign supplies | 1. 4 Porter Value Chain Analysis of McDonald’s [pic] The goal of these activities is to offer the customer a level of value that exceeds the cost of the activities, thereby resulting in a profit margin for McDonalds. The primary value chain activities are: ??? Inbound Logistics: the receiving and warehousing of raw materials and their distribution to manufacturing as they are required. ??? Operations: the processes of transforming inputs into finished products and services. Outbound Logistics: the warehousing and distribution of finished goods. ??? Marketing & Sales: the identification of customer needs and the generation of sales. ??? Service: the support of customers after the products and services are sold to them. These primary activities are supported by: ??? Technology development: technologies to support value-creating activities. The value chain model is a useful analysis tool for defining a firm’s core competencies and the activities in which it can pursue a competitive advantage as follows: Cost advantage: by better understanding costs and squeezing them out of the value-adding activities. 1. 5 Porter’s five forces analysis of McDonald’s
As Per the Porter’s 5 Forces analysis McDonalds deals with factors outside an industry that influence the nature of competition within it, the forces inside the McDonalds influences the way in which the firms compete, and so the industry’s likely profitability is conducted in Porter’s five forces model. A business has to understand the dynamics of its industries and markets in order to compete effectively in the marketplace. So McDonald’s rivalry in this competitive market is blooming. 1. 6 BCG matrix of McDonald’s The need for strategy in order to expand its existing product in very promising markets for McDonald’s is very essential. McDonald’s along with KFC and other major fast food chains have dominated the American continent as well as elsewhere. BCG Matrix: The market growth rate measures industry attractiveness. The underlying theory for examining market growth rate is the industry life cycle.
The BCG assumes that growth rates, life cycle stages affect a firm’s finances. |[pic] McDonald’s USA |? McDonalds Europe | |McDonald’s Asia |[pic]Americas McDonald’s | |[pic] | | Placing products in the BCG matrix results in 4 categories in a portfolio of a McDonalds: 1. Stars (=high growth, high market share) ??? Frequently roughly in balance on net cash flow. However if needed any attempt should be made to hold share, because the rewards will be a cash cow if market share is kept. So, McDonald’s USA is under Star position. 2. Cash Cows (=low growth, high market share) Profits and cash generation should be high, and because of the low growth, investments needed should be low. Keep profits high. 3. Dogs (=low growth, low market share) ??? Avoid and minimize the number of dogs in a company. ??? Beware of expensive ‘turn around plans’. 4. Question Marks (= high growth, low market share) ??? Have the worst cash characteristics of all, because high demands and low returns due to low market share 1. 7 McDonald’s Competitive analysis matrix The Competitive profile matrix identifies the firms major competitors and their particular strength and weakness. Using this CPM matrix the position of McDonalds’ is assessed. 1. 7. 1 Key factors Analysis Key factors |McDonald’s |KFC |Burger king | |Critical success factors|Weight |Rating |Score |Rating |Score |Rating |Score | |Advertising |20 |1 |20 |4 |80 |3 |60 | |Product Quality |10 |4 |40 |4 |40 |3 |30 | |Price competitiveness |10 |3 |30 |3 |30 |4 |40 | |Management |10 |4 |40 |3 |30 |3 |30 | |Financial Position |15 |4 |60 |3 |45 |3 |45 | |Customer Loyalty |10 |4 |40 |4 |40 |2 |20 | |Global Expansion |20 |4 |60 |2 |40 |2 |40 | |Market share |05 |1 |05 |4 |20 |3 |15 | |Total |100 | |315 | |325 | |280 | |NOTE: Rating value are as follows; 1= major weakness, 2= minor weakness, 3= minor strength, 4= major strength, As listed above McDonalds’ | |deals the second position in critical factors. | 1. 7. 2 External factor Analysis |The External factor evolution matrix for McDonalds’ | |Key xternal factors |Weight |Rating |Weighted score | |opportunities | |Global markets are practically |15 |1 |15 | |tapped with fast food industry | | | | |Increased sales caused by public’s |10 |3 |30 | |interest to McDonalds | | | | |Astronomical Internet advertising |10 |1 |10 | |growth | | | | |McDonald is leader in the |15 |4 |60 | |competitive market | | | | |Threats | |Increase in competition with the |20 |2 |40 | |decrease in price | | | | |Decrease in sales as the per the |10 |3 |30 | |economy | | | | |The cost of media exposure in the |20 |2 |20 | |future | | | | |Total |100 | |205 | NOTE: Rating value are as follows; 1= major weakness, 2= minor weakness, 3= minor strength, 4= major strength, As listed above McDonalds’ deals the second position in critical factors. 1. 7. 3 Internal factor evaluation matrix for McDonald’s Key internal factors |Weight |Rating |Weighted score | |Internal strengths | |Increasing free cash flow |10 |4 |40 | |Strong management team |10 |4 |40 | |Long range planning |10 |3 |30 | |Reputation as family-friendly |15 |4 |60 | |Financial ratios |20 |3 |60 | |Internal weakness | |Little diversification |10 |1 |10 | |Family reputation, not high rollers|15 |2 |30 | |The salary for employees increase |10 |2 |20 | |in future | | | | |Total |100 | |290 | |NOTE: Rating value are as follows; 1= major weakness, 2= minor weakness, 3= minor strength, 4= major strength, As listed above McDonalds’ | |deals the second position in critical factors. | ———————– Threat of new entrants ??? The ease of new competitors enters the market make the price lower than normal and threat the company. Competitive rivalry ??? The strength of competition in this industry is very high Bargaining power of suppliers ??? Low bargaining power Bargaining power of buyers ??? Low bargaining power will take cheapest as the best option Threat of substitute products ??? Perceived level of product for substitute has undergone.