Sunteți pe pagina 1din 25


The competition among the fast food restaurants has intensified over the last
decade and with them fighting for bigger market share. In lieu with the said
event, the world's biggest hamburger chain, McDonalds, is facing an
onslaught of competition from better-burger chains. On January 29, 2015,
McDonalds Corp. said that it was replacing CEO Don Thompson with its chief
brand officer, Steve Easterbrook after seeing their own customer visits
decline at established U.S. locations for two straight years. It was the latest
in a string of changes the company has announced in hopes of appeasing
investors and winning back customers.

McDonalds has built a global empire based on the consistency of its

products, down to the thickness of fries and the number of pickles on a
sandwich. However, the upstart rivals have been able to capitalize on
consumer demand for food that is perceived as healthier and made with
fresher, natural ingredients.
To this end, McDonald's is simplifying menus, tailoring food to local tastes,
offering custom burger and sandwich options, rolling out mobile services
such as payments and ordering, and opening a social media "dialogue" with
customers to cater their growing concern of decreasing sales due to the
tough competition in the industry.

One of marketing problems affecting restaurant businesses is the tough
competition in the industry. Trying to get a business stand out in a crowded
marketplace is tough. Even large chain restaurants are facing tough
competition from their rivals. The answer to this problem doesnt start with
expensive advertising and more exposure but meeting the customer
demands and discovering its edge in making it different and more appealing
than its competitors.

The restaurant business is tough. Everyone in it knows it. Therefore, top

officers should create stringent measures to make it float in the industry and
to prevent it from flunking in the long run. In view of this, customers need a
reason to come in their business instead of their competitors. While it is
good to think that the food is so good that people will line up out the door to
eat it, millions of mistaken restaurant owners are now out of business.
In this marketing plan, the most famous known fast-food chain, McDonalds,
was being chosen to be given analysis since recent news about its
decreasing sales triggered a drastic response from their top executives.
Refreshing its image in the market and adapting to the wants of todays
generation and trend were seen to be their response in the very tough
competition that they are facing against their competitors. Indeed, it is not
easy to maintain the top position in the industry but knowing what satisfies
the customers and allowing the company to always provide with fresh
presentation of their products may give them a competitive edge over their


The fast food industry, also known as Quick Service Restaurants (QSR), has
been serving up tasty food for as long as people have lived in cities. The
modern system of fast food franchising is believed to have started in the mid
1930s when Howard Johnson franchised his second location to a friend as a
means to expand operations during the Great Depression.
Fast food franchises focus on high volume, low cost and high speed product.
Frequently food is preheated or precooked and served to-go. Consumers
enjoy being able to get a familiar meal in each location, and menus and
marketing are the same in every location.
There have been challenges for the fast food industry in recent years that
have been pressuring profit margins. The industry as a whole has proven
robust enough to withstand these challenges, though some players have
done better than others.
Market saturation is also a relevant issue in the fast food industry today, at
least in the U.S. There is a McDonald franchise is in almost every town, and
it usually sits in a row with several competitors. With so many competitors
which offer similar products there are fewer customers per location.
The major players in the fast-food market, which generates around $120B in
annual revenues, are: Domino's, Inc., Burger King Corporation, Wendy's
International, Inc., Jack in the Box, Inc., Yum! Brands, Inc., Doctor's
Associates, Inc., and McDonald's Corporation. As can be seen, the fast food
industry is somewhat fragmented. The seven major competitors only
account for 45% of total revenues.

McDonalds sales from the company-owned restaurants were $18,169 billion

or 66.21% of the total revenues and the revenues from the franchisees were
$9.272 billion or 33.79% of the total revenues in 2014. Few other rivals
receive as much revenue from its franchisees as does McDonalds.
Figure 1. Percentage of income from the franchisees

Percentage of income from











the franchisees
Source: Companies Financial Reports
The numbers indicate that Yum! Brands and Wendys has to rely on their
directly owned restaurants to generate most of the income, while Burger
King (and Subway) has to rely on the franchisees for its income. Both

situations, when a company has to rely on one source of income, arent

favorable to McDonalds competitors.
McDonalds income is also much more geographically diversified than its
Figure 2. Income from different regions



















Rest of the world






Source: Companies Financial Reports
We can see that Burger King and Wendys heavily rely on sales from U.S.,
while more than 52% of Yum! Brands revenue comes from China.
McDonalds diversified income is a strength that allows the company to grow
more steadily. The company isnt affected by major demand changes in one
or another region as much as the other fast food companies.
In relation to McDonalds, it faces competition from other fast-food chains
such as Burger King, which has been gaining market share with a simpler
and cheaper version of the McDonalds menu. And it is being squeezed by
more upmarket "fast-casual" restaurants such as Shake Shack and Chipotle

Mexican Grill, which are rapidly growing. They have been luring customers
particularly younger onesaway from McDonalds chicken nuggets and chips
by offering slightly better quality food, a high level of customization (such as
the option to choose the ingredients in a burrito or burger) and some table
Some of McDonalds problems stem from operational mishaps across the
world. In particular, its business in Asiawhere it makes nearly a quarter of
its global revenueshas been hit by several health scares. Sales in China fell
sharply after one of its suppliers was discovered last July to be using expired
and contaminated chicken and beef. More recently, several Japanese
customers have reported finding bits of plastic and even a tooth in their
food. Geopolitics has not helped. Last year some Russian outlets were
temporarily closed by food inspectors, seemingly in retaliation for American
and European sanctions against Russia over its military intervention in
Ukraine. Some politicians in Russia have even called for the chain to be
thrown out the country completely.
The world's biggest hamburger chain, McDonalds, is facing an onslaught of
competition from better-burger chains. tough competition in the industry.

1. Diversified income. The fast food chains revenues come from various
countries, regions and products. It doesnt rely on one key source of income,
unlike some of its rivals.
Strong brand name, image and reputation
McDonalds has built up huge brand equity. It is the no 1 fast food company
by sales, with more than 31,000 restaurants serving burgers and fries in
almost 120 countries. The image of McDonalds is recognized everywhere.
This brand is in top ten of the most powerful brand names in the world with
Coca-Cola, Nokia or GM.
- Large market share

McDonalds is considered as the largest player in size and global reach. When
Wendys or Burgers King are losing market share in 2006, McDonalds still
increases its market share. Market share of McDonalds in the recent time is
about 19% while Yum!Brands is 9% and both Wendys and Burger King is

-Another strength they have is that they are able to us the idea of
economies of scale. This means the more they make of something, the less
it costs for each one. McDonalds mass produces French fries and burgers at
one time in batches so they always have products ready for the customer.
- Another strength they have is that their name is well- known throughout
the world. This comforts people because they know they can trust that the
food that McDonalds makes is safe, cheap, and good.
High employee turnover in their restaurants leads to more money

being spent on training.

They have yet to capitalize on the trend towards organic foods.

- Customer looses due to fierce competition

McDonalds has to compete with many strong brand name in fast food
industry such as Wendys, Burger King or Yum!Brands. This fierce
competition makes McDonalds loose a large number of customers who
prefer favor of other brands.

- Problem related to health issue

McDonalds use Trans - fat and beef oil in their food. Although it is not
illegal, it affects badly on customers health because Trans fat is
causes of some kind of cancer. Consequently, a number of customers
who care about their health stop eating at McDonalds restaurants. It
makes revenue of company decrease.

In todays health conscious societies the introduction of a healthy

hamburger is a great opportunity. They would be the first QSR (Quick

Service Restaurant) to have FDA approval on marketing a low fat low
calorie hamburger with low calorie combo alternatives. Currently
McDonalds and its competition health choice items do not include
They have industrial, Formica restaurant settings; they could provide

more upscale restaurant settings, like the one they have in New York
City on Broadway, to appeal to a more upscale target market.
Provide optional allergen free food items, such as gluten free and

peanut free.
In 2008 the business directed efforts at the breakfast, chicken,

beverage and convenience categories. For example, hot specialist

coffees not only secure sales, but also mean that restaurants get
increasing numbers of customer visits. In 2009 McDonalds saw the full
benefits of a venture into beverages.

- Globalization, expansion in other countries

McDonalds has more than 31,000 restaurants serving in almost 120

countries. Of the 31,000 restaurants, at least 14,000 are in US.

However, now, because the care of McDonalds about favors and

cultures in each countries it enters, McDonalds can open more
restaurant in new areas such as China or India the countries which
culture influences on people lifestyle deeply. They are very potential
markets. The expansion of these areas is big opportunities For

- Low cost menu is preferred by large number of customers

With low cost menu, McDonalds can attract customers who just have
low income. This segment makes up a fairly remarkable part,
especially in the recent time, when global economic is struggling. It is
not difficult for McDonalds to apply low cost menu on all restaurants.

- Appearance of freebies and discounts

Discounts given on every food item may help them gain more
customers. Moreover, a new trend is rising among customers that they
like freebies and discounts, even when they dont need it or dont use
these freebies after.

- Diverse tastes and needs of customers

Customers tastes now become more diverse. As a result, they require

new format of service in order to satisfy them. McDonalds, with new
format of business such as McCafe, it can attract new segment of
customer; for instance civil service, who prefer coffee as well as want
to use Wi-Fi to work when drink coffee.

-Economically speaking, McDonalds would be considered an inferior

good due to the fact that they are a lot less expensive and have lower
quality products compared to a normal good such as a restaurant.

This means as consumers incomes decrease, the demand for an


good such as

McDonalds would increase.




opportunity for McDonalds because the country is going through tough

economic times now and people are either getting laid off or not able
to find a job so when a family makes a decision about a meal, they

would pick the cheaper one over the more expensive one.
-McDonalds have an opportunity to expand its business internationally

to increase its revenue.

- They have the opportunity to create new products that satisfy the
changing culture such as making healthier foods for the health
conscience people.


They have been sued multiple times for having "unhealthy" food,
allegedly with addictive additives, contributing to the obesity epidemic
in America. In 2004, Michael Spulock filmed the documentary Super
Size Me, where he went on an all McDonalds diet for 30 days and
wound up getting cirrhosis of the liver. This documentary was a direct
attack on the QSR industry as a whole and blamed them for Americas
obesity epidemic. Due in part to the documentary, McDonalds no longer
pushes the super size option at the dive thru window.

- Intensity competitors
Along with the development of fast food industry, there are many new fast
food brand enter to the market. It is nothing to say if there is no strong
brand which can compete with McDonalds. However, in fact, there are some
and they are stronger gradually, for example Yum!Brands, Wendys or Burger
King. Although market share of these brand are lower than McDonalds, they

try to gain more customers from McDonalds. Moreover, more casual dining
restaurants increase their burger offering and decrease the price. If we are
not really hurry, we may choose this kind of restaurant instead of fast food
restaurants. They also become the competitors of McDonalds.
- Economic recession
The company's revenue streams are diversified, but depending on the length
of this "recession", they will inevitably be negatively impacted by the
trickledown effect. Recession or down turn in economy may affect the
retailer sales, as household budgets tighten reducing spend and number of
-The largest threat for McDonalds would be the presence of competition.
They face many competitors in their same industry such as Burger King,
Wendys, KFC, Taco Bell, and many others. Out of all of them Burger King
would be their biggest competitor because Burger Kings real estate strategy
is to find where McDonalds opens a store and open one a block over.
-Being a food based business; they have a constant potential threat of the
FDA. McDonalds have to worry about the FDA establishing new federal
regulations on the food and it could affect the way McDonalds makes its
- Another threat is the changing society and the different eating patterns
consumers have. As time goes on people are starting to eat healthier and
this is a threat to McDonalds because most wouldnt consider their food to
be the healthiest.


First, change the company name. But that would certainly

have its costs, as the company derives many benefits from
a well-recognized global brand.

Alternatively, re-arrange

the value proposition to change the image consumers have

about McDonalds place salads and other healthy items,
rather than hamburgers and sodas, in advertisements.
Second, acquire a restaurant chain that is already riding the







Corporation, or The Noodle & Company provided that

one of these companies is up for sale and that McDonalds is
willing to pay a hefty premium over current market







franchising and logistics, to create two separate units one

that caters to the low-calorie-low cholesterol consumers,
and another that caters to the local and semiglobal
segments of the world economy.
The first, although saturated in the United States, McDonalds has great
expansion capabilities abroad. According to the grand matrix, market
development is one strategy that McDonalds should implement. Company
should prepare an international strategy which focus on big cities along with
high populated areas, especially in Asia. There are not many McDonald
restaurants in this potential market. Japan is the only Asian country which
has a lot of McDonalds fast food restaurants. In contrast, China is
considered as one of the biggest market in the world because of this
countrys population. Nevertheless, according to the recent figures, China is










restaurants with about 1000 restaurant while this number in US is about

14000. If McDonalds can develop more and more in Asia, it is a huge
advantage for company to gain market share.
The second is about the name recognition. Everywhere, millions of people
are familiar with the Golden Arches that are on top of every McDonalds
restaurants. McDonalds should use this advantage to gain more attraction
from customers. It does not mean that this company should become
involved into many areas of the food industry. In fact, soft drink and fast
food bring large profit for McDonalds. However, if keep involving in other
areas, it would increase the potential for liability to the company because of
many intensity competitors. McDonalds has built the McDonald Hotel in
Zurich, Switzerland. Needless to say it is a very unique hotel. A lot of
customers in other countries want McDonald open the same hotel in their
countries. As a result, McDonalds should care about this chance more than
developing new kind of food business which the company is not sure about
this success. In addition, aside from exploiting brand name, company can
exploit its sources of food and drink in McDonalds fast-food restaurants for
the hotel, as well as service skills of employees.
In addition, McDonalds strength as I told above is that introduction to new
production. Company should focus on this strength to develop stronger.
However, the company seems not diversify its products regularly while
competitors are stronger and have new products gradually. Because of this
reason, McDonalds should spend more money on Research and Development
to create new products and services as well as increase the efficiency of
operations. First, one thing McDonald should focus on is that the play place
for kids. McDonalds has play place but not in every restaurants. If you eat in
McDonalds restaurant, you can be free to party while your children play at
the place for kids. Customers love this service. Thus, if it is popularized in all

restaurant of company, customers will be more satisfy and of course they

want to comeback regularly. Moreover, toys have to be cared much more
with many new interesting toys as well as safety. Jolly Bee is one brand
which applies this strategy very successful. McDonalds can learn from Jolly
Bee developing this service to improve its market position. Next, even if the
companys menu is still relatively inexpensive compare to that of its
competitors, it is not totally enough. Because apart from price, customers
also make decision rely on menu. After bring a fresh menu with tuna
sandwich and salad in some restaurants, especially in Britain and get
support from a lot of customers, there is no new one like that. McDonalds
focus too much on cheese,beef or chicken menu, more than vegetable. For
instance, McDonalds has fruit slice in menu. However, it is served once a
week. In the recent time, with the change in eating habit of a large part of
customers, McDonalds also should change. Company should bring new
vegetarian products to restaurants menu. An organic menu is very
necessary. This








McDonalds to maintain its market share globally.

The last one is also about customer service. Managers of McDonalds are
trained professionally. As a result, they can train employees well. McDonalds
employees are evaluated high by customers because of their behaviors as
well as attitude. However, customers are not pleased at the idea of waiting in
long lines and insufficient employees to handle the volume of customers.
Just the minority, but sometimes the employees are rude forcing the
customers to go to a competitors restaurant next time. At the market which
has high market share and very huge number of customers such as USA,
Canada or United Kingdom, this issue occurs more frequently. McDonalds
should find a way to solve it. For example, the company has to rent more
employees and increase their salary in order to keep them working for a long
time. This time is just enough for them to get skills to service customers

well. Besides, it is necessary to increase the number of employees at the

weekend or in the lunch time. More employees means that pressures are
shared and avoid the bad attitudes.

Intergrated Marketing Communications Program

McDonalds should put about six million dollars in advertisments using ads
during tv commercials. The commercial should air between the times of 6
am to 10 am on weekends because this is the time range where young
children get up and watch tv while their parents are still sleeping.


allows time for the advertisements to sink into the childrens minds and
convince them that they want a happy meal from McDonalds.

The ad

should show Sponge Bob and Dora the Explorer eating a happy meal
because they are famous characters in the shows that children watch. Those
characters would be like celebrities to children so they would serve as
celebrity testimonials saying to get a happy meal at McDonalds. The ads
should be placed during specific tv shows such as morning cartoons. For
example a good show to run the ad is during Sponge Bob, the Rug Rats, and
Dora the Explorer. Another spot to place an ad is on the bench at bus stops
for the school bus which should cost roughly two million dollars to print the
ad and have them placed on the benches.
McDonalds should also use product placement to promote the happy meal.
They should spend about two million dollars to have sponge bob eating a
happy meal during one of the episodes and have him say that McNuggets
are great.
Another strategy that should be used is sales promotion.

One great

promotional idea McDonalds had in the past was the monopoly game. They
give out properties on their products that you have to purchase and it allows
the consumer a chance to collect enough to make a monopoly and win a
price. McDonalds should advertise this game to children because children
love to play games.

This forces them to demand more meals from

McDonalds inorder to win a price which increases sales and revenue.

Another sales promotional idea is to offer a two month short term promotion
of two toys in one happy meal. The toys are cheap enough that McDonalds

can afford to do it and it would make up for it with the increased purchases
of happy meals within the two months.

McDonalds has undergone several changes since its inception in San
Bernardino, California. The fast food chain has conquered the US and it now
focusing on the rest of the world. McDonalds, along with this trend,
continues to strive toward customer satisfaction while still enhancing its
international market position. The company is doing very well and keeps
trying in Africa, China, and the Middle East, which will be continued source of
revenue for many coming years. If McDonalds can overcome all of its
challenges, makes use of advantages and has right strategies, it will win the
market again and hold fast to first position in fast food industry.

The most emphasis should be placed on advertising because this directly

speaks to the young children who McDonalds wants to buy the happy meal.
The ads should be product specific to the happy meal and should be
nationally run. McDonalds should use the push strategy to entice the young
children to want to buy the happy meal.

Target Market:
There are multiple market segments that McDonalds must market too. They
must market to young children, teenagers, seniors, families, and people who

like to eat healthy food.

The target market that I will address in this

marketing plan will be the market of young children. The demographics of

this target group would be both boys and girls of the ages 3-10.


geographic would be any kids that live in the united states or within a few
miles from a McDonalds.

Psychographically speaking, McDonalds would

market to all different social class structures but focus more on the middle to
lower classes because the upper class would tend not to eat fast food as
often. Another reason they shouldnt focus as much on the upperclass is
because in order for them to be considered upperclass the parents would
have to work more to make more money leaving little time to listen to the
children wine about wanting McDonalds. When it comes down to it, the
reason we market to children is to get them to have their parents buy it for
them but if the parents dont have time to listen to their children then it
could be a waste of money to market to them.
The important thing to remember when offering menu items to potential
customers is that there is a huge amount of choice available to those
potential customers with regard to how and where they spend their money.
Therefore McDonalds should place considerable emphasis on developing a
menu which customers want. Market research establishes exactly what this
is. However, customers requirements change over time. What is fashionable
and attractive today may be discarded tomorrow. Furthermore, since its
competitors are also updating their products, McDonalds should consider the
present trend and the customers wants if they really want to get ahead in
the competition.

The customers perception of value is an important determinant of the price

charged. Customers draw their own mental picture of what a product is
worth. A product is more than a physical item; it also has psychological
connotations for the customer. The danger of using low price as a marketing
tool is that the customer may feel that a low price is indicative of
compromised quality. Therefore, McDonald should be fully aware of the
brand and its integrity in considering its food prices. A further potentially
adverse consequence of price reduction is that competitors match the lower
prices resulting in no extra demand. This means the profit margin has been
reduced without increasing the sales.
McDonalds should continue in developing a campaign that makes people
aware of a food item. This may be supported by in-store promotions to get
people to try the product and a collectable promotional device to encourage
them to keep on buying the item. It is imperative that the messages
communicated support each other and do not confuse customers. A
thorough understanding of what the brand represents is the key to a
consistent message. The purpose of most marketing communications is to
move the target audience to some type of action. This may be to buy the
product, visit a restaurant, recommend the choice to a friend or increase
purchases of the menu item. Key objectives of advertising are to make
people aware of an item, feel positive about it and remember it. The more
McDonalds knows about the people it is serving, the more it is able to
communicate messages which appeal to them. Messages should gain
customers attention and keep their interest. The next stage is to get them
to want what is offered. Showing the benefits which they will obtain by
taking action is usually sufficient. The right messages must be targeted at
the right audience, using the right media.

Place, as an element of the marketing mix, is not just about the physical
location or distribution points for products. It encompasses the management
of a range of processes involved in bringing products to the end consumer.
Control and Evaluation:
Inorder to find out how well my marketing plan is doing, I am going to track
my sales through my marketing information system. If sales seem to be up
and increasing, I will continue with the plan and enjoy the increased
revenue. However if the sales seem to be decreasing, I must find out why.
I will research which part of the plan is most effective. First I will send out a
business memo to all the McDonalds stores that tells them that they must
ask every child that walks in the store where they heard about McDonalds
and what is the reason for wanting to buy the happy meal. Each month I
will have the employees send the marketing department the childrens
answers and we will have a better understanding of which ads are most
effective and what promotional ideas led the children to want to buy a happy
meal. I will also create a focus group filled with children who half of them
have eaten at McDonalds and half of them who have never eaten at
McDonalds. The ones who have eaten there before will be asked what made
them want to eat there in the first place. They will also be asked what they
like about the happy meal and what they think needs to be improved in the
happy meal. The answers to these questions will inform us what marketing
strategy was most effective and what changes should be done to the happy

We will ask the children who never ate at McDonalds why they

havent ate there and what could we do differently to make them want to eat
there. As an incentive to join the focus group we will be giving all the
children free happy meals. I will need to form 500 focus groups nation wide
to get a good sense of what the children are thinking and this would cost us

about 500 thousand dollars to cover the happy meals, the salaries of the
people conducting the focus group and the researchers who watch the focus


Conclusion Once the marketing strategy is in place, various responsibilities
are given to different individuals so that the plan can be implemented.
Systems are put in place to obtain market feedback which measure success
against short-term targets. McDonalds has to ensure that this is done within
the confines of a tightly controlled, finite marketing budget.

McDonalds has pursued two strategies since 2003. To keep up with rapidly
changing consumer preferences, demographics, and spending patterns,
McDonald's has introduced new items (Premium Chicken sandwiches and the
Angus Beef Burger) and campaigns to create more healthy foods (Premium
Salads). The strategy reflects the philosophy that novelty, as opposed to
loyalty to traditional products, is the key determinant of sales in the fast
food industry.
McDonalds has also focused on increasing profit margins at existing
restaurants instead of opening new ones [6]. To do so, McDonald's has
remodeled many restaurants, kept stores open longer, and increased menu
options. Nevertheless, new McDonald's restaurants are still opening around
the world at a rapid rate - the company plans to open about 1,000 units in
2008, and continues to grow its restaurant base by 1-2% each year.

That ride wasnt always smooth. In the late 1990s and early
2000s, the company faced all sorts of challenges to its
business model among different consumer groups, and it
took its toll on sales growth and equity performance.
Nonetheless, McDonalds leadership managed to re-ignite
sales growth by launching the Fast and Convenient
campaign, a radical adjustment of the companys product
portfolio to meet emerging food industry trends; and






branded, updated, and more natural dining environment.

The fast and convenient elements of the McDonalds
concept were augmented by healthy and more natural
features, adding salads, fruits, carrot sticks to the menu;
and high quality coffee and healthy drinks (either through
its traditional restaurants or the Cafs) which positioned the
company to compete head to head with Starbucks and local
Now, McDonalds challenge is far more serious, in our
opinion. The two trends that have propelled the companys
growth are turning from tailwinds to headwinds. Babyboomers are no longer the teenagers and the twentysomething













convenience. The same could be said to be true for a large

segment of the younger, millennial generation.
McDonalds is hardly the first place that comes to mind
when thinking of a low-calorie-low-cholesterol menu. The

McDonalds name, which once was an asset for the babyboomer market, turned into a liability.