Business Marketing Management McDonalds Case Studies TEST QUESTIONS FULLY SOLVED 2024

the strategic role of marketing goods and services At McDonald's, marketing plays a vital role in sustained sales growth. The company does this by developing a range of strategies in regard to product design, pricing and promotional campaigns. Marketing plans are then used to employ strategies that aim to achieve the overall business objectives. For example, one of the strategic goals identified by McDonald's Corporation in the 2019 Annual Report was to have systemwide sales growth of 3% to 5% per annum. Management has since withdrawn this (and many other) objectives as a direct result of the uncertainty surrounding the COVID-19 pandemic. Role: marketing approaches McDonald's has shifted from a sales approach where the focus of marketing was to simply advertise products as a way of maximising sales. This approach to marketing did not take into consideration the needs of the consumer and applied a blanket approach to selling. As consumerism evolved, McDonald's adopted a marketing approach that puts greater emphasis on meeting the needs of its customers. The 2019 Annual Report stated: "Taste, quality, choice and nutrition are important to our customers, and we are continuously evolving our menu to meet our customers' needs, including testing new products on an ongoing basis." Brainpower Read More Previous Play Next Rewind 10 seconds Move forward 10 seconds Unmute 0:00 / 0:00 Full screen Role: types of markets (resource, industrial, intermediate, consumer, mass, niche) Mass Market - the market where the products and services are aimed at all consumers. E.g. McDonalds Influences: factors influencing customer choice (psychological) Mc Donald's "Hungry? Let's fix that" tagline appeals to an individual's need to satisfy their hunger - the marketing aims to motivate them to satisfy their hunger with Mcdonalds. Influences: factors influencing customer choice (sociocultural) "Coffee Fit for an Aussie" campaign here highlights an Australian lifestyle choice about coffee. The advertisement also portrays coffee drinking to be associated with sport which is very central to Australian culture. Influences: factors influencing customer choice (economic) The result of a worldwide economic decline caused by Covid, coupled with forced store closures, dramatically reduced McDonald's sales. Influences: factors influencing customer choice (government) Government regulations around COVID changed the operations process at Mc Donald's and they communicated this through their marketing. The contactless drive through influence consumers decisions Influences: consumer laws (deceptive and misleading advertising) (not McDonald's): In early 2016 the ACCC won its case against pharmaceutical giant Reckitt Benckiser (manufacturers of Nurofen) over the company's "specific pain" range. The Federal Court found the products were misleading because they all contained the same active ingredient and did the same thing. It handed the company a $1.7 million fine, but on 16/12/16 it was increased to a $6 million after the consumer watchdog appealed. The ACCC had originally asked the Federal Court to impose a fine of $6 million. Influences: consumer laws (price discrimination) no case study Influences: consumer laws (implied conditions) (not McDonald's): Takata airbags have been recalled in vehicles across Australia due to extreme safety risks. In a crash, the airbag can go off causing sharp metal fragments to kill or injure people in the vehicle. More than three million vehicles are affected. One in four Australian vehicles are fitted with faulty Takata airbags. Influences: consumer laws (warranties) (not McDonald's): In 2017, the ACCC initiated proceedings against Apple over allegations they misled consumers about their warranty rights under the ACL. The ACCC alleges that Apple represented to consumers with faulty products that were not entitled to a free remedy if their device had previously been repaired by a third party (e.g. for a cracked screen), even if the repair was unrelated to the fault. Consumer guarantee rights should not be extinguished simply because a consumer had their goods repaired by a third party. Influences: ethical (truth, accuracy and good taste in advertising) In 1997, the judgement from the landmark "McLibel" case found that McDonald's UK was guilty of exploiting children with its advertising. Since then, McDonald's advertising has been under the spotlight. In order to highlight its commitment to going further than the law requires and being ethically responsible, in 2009, McDonald's Australia and other fast-food restaurants agreed to abide by the "Quick Service Restaurant Initiative for Responsible Advertising and Marketing Communications to Children." This is a self-regulatory initiative that aims to reduce the amount of advertising featuring unhealthy products to children and to promote a healthy lifestyle. Influences: ethical (products that may damage health) A 2019 Federal Government report suggested as much as 67% of the Australian population was either overweight or obese - including 1 in 4 who were in the 2-17 age bracket. Clearly, fast food has a role to play in this health issue and McDonald's has an ethical obligation to ensure the problem does not get worse. As a response, McDonald's Australia voluntarily works with accredited dietetics to improve the quality of its food. For example, McDonald's Australia has reduced the sugar content in burger buns to 5%, reduced the sodium content of McDonald's signature cheese by 20% and has introduced healthier options to its menu. The traditional Happy Meal now includes options such as seared chicken wraps, sliced apples, flavoured milk and water. Influences: ethical (engaging in fair competition) McDonalds establishes meal pricing based on consumer research. It would be illegal for McDonalds to agree bundle prices with any competitors (such as Dominos, Subway or KFC). Influences: ethical (sugging) (not McDonald's): Hello Fresh is an example of seeking information to personalise an offer. Revitalife therapeutic sleep systems were sold through sugging and were investigated by the ACCC. Processes: situational analysis (SWOT, product life cycle) Product Life Cycle; Introduction - French fries replaced packets of potato chips at McDonald's in the 1940s. (Growth) From the 1940s to 1990, as McDonald's rapidly expanded across the US, and then internationally, french fries became a menu favourite and grew in popularity. (Maturity) - In 1990, Phil Sokolof campaigned against McDonald's, claiming that the oil used to prepare french fries, which included beef tallow, was high in saturated fat and a danger to health. Under this pressure, McDonald's changed the recipe for cooking the french fries, eliminating beef tallow. This change was met with resistance from customers who favoured the previous taste - and even McDonald's shares fell in price on the New York Stock Exchange. (Post Maturity / Renewal) - McDonald's again made slight changes to the recipe over the years - in a bid to reduce saturated fat content and make the fries healthier. However, to stay relevant and ensure consistent sales, they also adopted a renewal strategy - innovation and extension. To do this, they have "extended" the base product (fries) to create new variations worldwide - including "Loaded fries," "Twisted fries" and "Cheesy fries." Processes: market research The introduction of various apps used by McDonald's has enabled the company to get real-time market information about what items are selling, at what time, where and to whom. This not only helps the company decide on what products are proving the most popular but, more importantly, what can be learned about individual customer preferences that will allow a more targeted and individualised marketing approach. McDonald's makes no secret of this. Processes: establishing market objectives Roy Morgan reports - Old favourite McDonald's is Australia's leading quick-service restaurant with over half of Australians, or 52.7%, eating at or having McDonald's take away in an average of six months, almost 12 percentage points ahead of second-placed KFC on 40.8%. Mcdonald's has the highest market share in fast food in Australia. Their marketing objective is to continue this leadership position. Processes: identifying target markets Although they run campaigns to a broad range, McDonald's still segments current (and potential) customers by using a range of characteristics. The most obvious example is that it offers different products in different countries - and thereby segmenting its 69 million customers using geographic and cultural factors. Processes: developing marketing strategies In March 2017, McDonald's unveiled a new global growth plan. This plan identified three core areas that would underpin marketing initiatives: 1. Enhancing digital capabilities and the use of technology to elevate the customer experience. 2. Redefining customer convenience through delivery. 3. Elevating the customer experience to provide a more convenient, personalised and enjoyable visit. Processes: implementation, monitoring and controlling The constantly evolving menu, along with mobile ordering and payment methods is part of a marketing plan designed to increase sales by appealing to modern customers. It is essential that when a marketing plan is implemented, the company monitors actual progress. McDonald's has such a strong focus on measuring the success of its marketing that it has a "Head of Global Media Accountability". Strategies: market segmentation (demographic - age) Happy Meals contain a toy that appeals to young children, while the expansion of McCafé barista-made coffee, sweets and table service appeal to older customers. Strategies: market segmentation (demographic - race) McDonald's in the US run campaigns directed at different groups, including Black, Hispanic and Asian consumers. In fact, not so long ago, there were senior marketing management positions at McDonald's with titles such as "Director of African American," "Director of Hispanics," etc. Strategies: market segmentation (geographic) As the marketing mix varies in different geographic locations, market segmentation by geography allows McDonald's to add or alter menu items to suit local tastes. E.g. In India, it does not sell any beef or pork products due to the prevailing Hindu belief. Strategies: market segmentation (psychographic) Psychographic segmentation involves dividing existing and potential customers via variables such as their interests, attitudes, values and lifestyles. For example, in order to appeal to vegetarians, McDonald's Australia now offers the McVeggie. Additionally, to cater for more "health conscious" consumers, McDonald's have significantly expanded the range and availability of salad items. Strategies: market segmentation (behavioural) Behavioural segmentation, as the name suggests, divides customers on the basis of their behaviour - in particular, their behaviour toward the company. It includes elements such as loyalty, purchase frequency and average transaction value. A simple example of McDonald's segmenting a market. This way is to reward customers with a free coffee after they purchased 5. Although this was done for many years with a paper-based loyalty card, in 2019 this loyalty reward scheme in Australia moved exclusively to the app. Strategies: product/service differentiation Globalisation has increased the quantity and variety of goods and services available to consumers. Consequently, in order to attract sales, businesses have had to make their product or service appear different to those provided by their competitors. The informal eating outlet market contains approximately 9 million restaurants, therefore the process of differentiation has been an important focus for McDonald's. One of the strategies McDonald's has utilised right from its inception to differentiate itself from other food outlets is the speed of service. Strategies: positioning Bad publicity that followed the 2004 documentary Super Size Me and the legal outcome of the "McLibel" trial put McDonald's Corporation in the spotlight. Since the film, McDonald's has phased out the Super-Sized option from its menu and has been responding to calls to provide consumers with healthier food options. Evidence that the company has been trying to reposition the brand can be seen in campaigns such as: "Un-McDonald's" and "Vegan Nuggets". Strategies: products: goods and/or services The core product sold by McDonald's is food. The main benefit of buying food is to satisfy hunger. Globally, there are 9 million informal eating out (IEO) food outlets that can satisfy an appetite. If products and services are not differentiated, customers may make consumer decisions based only on convenience or price. McDonald's has stated that it concentrates on food quality, workers and technology - not just price - to attract and retain customers. It is important therefore that McDonald's designs its products and processes to ensure potential customers buy its products over those offered by other quick-service eating establishments. A key strategy McDonald's aims to exploit in service delivery is speed. Strategies: products: goods and/or services (branding) According to the book Fast-food Nation, more people are able to recognise the "golden arches" than the Christian cross. This shows the effectiveness of global campaigns to build brand awareness. Strategies: products: goods and/or services (packaging) At McDonald's packaging does more than just protect the burgers; the packaging is used to reinforce information that the company wants consumers to know. This promotes consistent brand design. Matt Biespiel, the Senior Director of Global Brand Development at McDonald's said regarding the 2016 packaging change: "The packaging is intended to create noticeable change for our customers and I'm hoping it makes them feel better about their choice of going to McDonald's. ..." Strategies: Pricng methods (cost, market, competition-based) no case study Strategies: Pricing Strategies (skimming) no case study Strategies: Pricing Strategies (penetration) This strategy is where businesses offer a package for a lower price than if the customer purchased each item separately. The McValue Meals and Family Boxes are examples of how McDonald's uses price bundling. For instance, a Big Mac Value Meal typically costs around $11.85.This represents a 20% saving over purchasing each of the component items individually (Big Mac AU$7.35, medium fries AU$3.70, medium drink AU$3.75 - total AU$14.80). McDonald's reported that, during the COVID-19 pandemic as most sales were takeaway, customers were, on average, purchasing larger bundles of food in one order.