CUSTOMER ACQUISITION & RETENTION

CHAPTER- 1

INTRODUCTION
y MEANING y OBJECTIVE OF THE STUDY y RESEARCH METHODOLOGY y RESEARCH DESIGN

MEANING
Research is a common language refers to a search for knowledge. Research is a scientific and systematic search for pertinent information on a specific topic. Infact, reseaech is an act of scientific investigation

OBJECTIVE OF THE STUDY

Primary objective

To understsnd the strategies of MCDonald behind the their customer acquisition and retention in order to strengthen the organizations existing retention policy

Secondary objective

To construct a basic framework towards improvement of customer satisfaction factors so as to drive product and brand improvement.

RESEARCH METHODOLOGY
Research methodology is a systematic way to solve research problems. It may be understood as a science of studying how research is done scientifically. On it we study the various step that are generally adopted by researcher in studying research problem. There are several ways of

collecting the appropriate data., which differ considerably in context of money, cost, time and other resources. They can be broadly divided in to two categories:-

1. PRIMARY SOURCES. 2. SECONDARY SOURCES.

PRIMARY SOURCES OF DATA COLLECTION Primary data collection in form of questionnaire (VCS)

QUESTIONNAIRE METHOD This method of collecting the data personally giving the questionnaire to respondent is most extensively employed in various economic survey, this method of collecting the data is much popular, particular in case of big enquiries. A questionnaire consist of a number of questions printed or typed in definite order on a form. The questionnaire is given to the reply in thje space meant for the purpose in the questionnaire itself. The merits of questionnaire are as follows:-

1. Respondents have adequate time to give well thought out answer. 2. It is free from the bias because answers are in the respondents own words. 3. It is a low cost method. 4. Large sample can be made use of and thus the results can be made more dependable and reliable.

The main demerits of this system are as follows:-

1. It is difficult to know whether willing respondents are truly representative. 2. This method is likely to be the slowest of all. 3. It can be used only when respondents are educated and co- operative.

SECONDARY RESEARCH DATA

y y Primary & Secondary data analysis of the separations of the AMMD was done. The data made available was necessary to find the areas which have shown high rate of attrition. Such areas were consequently focus group for the project. y Attrition data was made available for the period from April 1, 2009 to March 31, 2010.

2. PROJECT EXECUTION:The execution of the project is a very important step in the research process. If the execution of the project proceeds on correct lines, the data to be collected would be adequate and dependable. This step should be taken to ensure that the survey is under statistical information.

CHAPTER 2

REVIEW OF LITERATURE

 EXIT INTERVIEWS

y PROCEDURE OR PROCESS OF ANALYSIS OR INTERVIEWS

y EXIT INTERVIEW FORM & FORMALITIES

y REASONS FOR EXIT THE COMPANY

y EXIT INTERVIEW ANALYSIS (VOICE CAPTURING SURVEY)

y OPPORTUNITY & THREATS

Two mechanisms drive the financial correlation. Retention of old customers costs much less than acquisition of new ones. The profit generated from the retained customer must therefore handsomely exceed the harvest reaped from the new clientele. The retained customer base is thus a huge intangible asset. If you want to make it look tangible, use averages like the cost per transaction and the profit margin to work out the net present value of the retained customer base. That value demonstrates the return that's won by successful efforts to satisfy the customers so greatly that their custom stays with you. The other way round, look no further than McDonald's to see what happens when unhappy customers start passing a business by. OBJECTIVES

1. To find out the number of the departuring employees and also departued employees and reasons behind their departure. 2. To find out grade, location, functions, designations of the departured employees. 3. To find out the lackings and demeits about the company which is the basic reason for employees departure.

TOP TEN TECHNIQUES:. Strategic planning (2) 2. Mission statements (1) 3. Benchmarking (4) 4. Customer satisfaction measurement (3) 5. Core competencies (6) 6. Total Quality Management (5) 7. Reengineering (9) 8. Pay for performance (8) 9. Strategic alliances (10) 10. Growth strategies (-)

This technique is a somewhat long-winded expression of the principle that you start analysing the business system at the customers' end, and work back from their satisfaction. As you move back along the value chain, you reform or eliminate processes, until you gain competitive advantage: you cost the key activities, find out what drives the costs, and strengthen the links with the customer to differentiate your offering and increase satisfaction.

Business Strategy and CRM

We now consider the Business Strategy Perspective on CRM. Here, we propose a model, which is a hybrid, and typical of many of the models and diagrams of CRM that you will find on The Internet and in popular books on the topic of marketing/ecommerce. The model has three key phases and three contextual factors:

Three key phases:

y y y

1. Customer Acquisition. 2. Customer Retention. 3. Customer Extension.

Three contextual factors:

y y y

4. Marketing Orientation. 5. Value Creation. 6. Innovative IT.

1. Customer Acquisition - This is the process of attracting our customer for the first their first purchase. We have acquired our customer. Growth - Through market orientation, innovative IT and value creation we aim to increase the number of customers that purchase from us for the first time. 2. Customer Retention - Our customer returns to us and buys for a second time. We keep them as a customer. This is most likely to be the purchase of a similar product or service, or the next level of product or service.

Growth - Through market orientation, innovative IT and value creation we aim to increase the number of customers that purchase from us regularly. 3. Customer Extension - Our customers are regularly returning to purchase from us. We introduce products and services to our loyal customers that may not wholly relate to their original purchase. These are additional, supplementary purchases. Of course once our loyal customers have purchased them, our goal is to retain them as customers for the extended products or services. Growth - Through market orientation, innovative IT and value creation we aim to increase the number of customers that purchase additional or supplementary products and services. 4. Marketing Orientation - means that the wholes organization is focused upon the needs of customers. Customer needs are addressed by the Three Levels of a Product whereby the organisations not only supplies the actual, tangible product, but also the core product and its benefit, and also the augmented product such as a warranty and customer service. Marketing orientation will focus upon the needs of consumers for all three levels of a product. (N.B. 'market' orientation and 'marketing' orientation are not the same). 5. Value Creation - centers on the generation of shareholder value based upon the satisfaction of customer needs (as with marketing orientation) and the delivery of a sustainable competitive advantage. 6. Innovative IT - is exactly that - Information Technology must be up-to-date. It should be efficient, speedy and focus upon the needs of customers. Whilst IT and/or software are not the entire story for CRM, it is vital to its success. CRM software collects data on consumers and their transactions. Huge databases store data on individuals and groups of individuals. In some ways, CRM means that an organization is dealing with a segment of one person, since every consumer displays different purchasing habits and preferences. Organizations will track individuals, and try to market products and services to them based upon similar buyer behavior seen in other individuals (e.g. When Amazon tells you those customers that viewed/bought the same product as you, also bought another product).

OPPORTUNITIES AND THREATS:Opportunities

y y y

There are opportunities for new restaurants outside the United States, and McDonald's has been taking advantage of them. China is a great opportunity for the company, as is much of Asia. Menu innovations are limited only by imagination. Low interest rates provide cheap capital for growth. In addition to dollar-denominated debt, McDonald's recently became the first foreign company to issue Yuan-denominated bonds in Hong Kong

Threats Changes in commodity prices McDonalds, because of its nature of business may get affected by price fluctuations in beef, chicken and cheese, which are critical ingredients of the company's menu. The company remains susceptible to increases in food costs as a result of factors beyond its control, such as general economic conditions, seasonal fl
y y

Governments are considering regulations targeting fast food. McDonald's faces competition from strong peers such as recent 11 Oclock Stock pick Yum! Brands (NYSE: YUM ) and Burger King (NYSE: BKC ) . New product rollouts often have to go head-to-head with established players like Starbucks (Nasdaq: SBUX ) coffee or Jamba (Nasdaq: JMBA ) smoothies. Commodity price increases could increase costs while a weak economy limits the ability to pass the price hikes through to consumers.

y y

CHAPTER 3

THE COMPANY

y COMPANY PROFILE y MILESTONES y BOARD OF DIRECTORS y DIVERSIFIED AREAS y INTERNATIONAL SUBSIDIARIES y STRENGTH AND WEAKNESSES

Company profile McDonald's Corporation franchises and operates McDonald's restaurants in the global restaurant industry. These restaurants serve a varied, limited, value-priced menu in more than 100 countries around the world. All restaurants are operated either by the Company or by franchisees, including conventional franchisees under franchise arrangements, and foreign affiliated markets and developmental licensees under license agreements. The Company and its franchisees purchase food, packaging, equipment and other goods from various independent suppliers. It offers a range of products. Independently owned and operated distribution centers, approved by the Company, distribute products and supplies to McDonald's restaurants. s menu includes hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, Chicken Selects, Snack Wraps, french fries, salads, shakes, McFlurry desserts, sundaes, soft serve cones, pies and cookies.

McDonald's Corporation (NYSE: MCD) is the world's largest chain of hamburger fast food restaurants, serving more than 58 million customers daily.[3] In addition to its signature restaurant chain, McDonalds Corporation held a minority interest in Pret A Manger until 2008, was a major investor in the Chipotle Mexican Grill until 2006,[4] and owned the restaurant chain Boston Market until 2007.[5] A McDonald's restaurant is operated by either a franchisee, an affiliate, or the corporation itself. The corporation's revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants. McDonald's revenues grew 27% over the three years ending in 2007 to $22.8 billion, and 9% growth in operating income to $3.9 billion.[6] McDonald's primarily sells hamburgers, cheeseburgers, chicken products, french fries, breakfast items, soft drinks, shakes, and desserts. In response to obesity trends in Western nations and in the face of criticism over the healthiness of its products, the company has modified its menu to include alternatives considered healthier such as salads, wraps and fruit. History of McDonald's

The business began in 1940, with a restaurant opened by brothers Richard and Maurice McDonald in San Bernardino, California. Their introduction of the "Speedee Service System" in 1948 established the principles of the modern fast-food restaurant. The original mascot of McDonald's was a man with a chef's hat on top of a hamburger shaped head whose name was "Speedee." Speedee was eventually replaced with Ronald McDonald by 1967 when the company first filed a U.S. trademark on a clown shaped man having puffed out costume legs. McDonald's first filed for a U.S. trademark on the name McDonald's on May 4, 1961, with the description "Drive-In Restaurant Services," which continues to be renewed through the end of December 2009. In the same year, on September 13, 1961, the company filed a logo trademark on an overlapping, double arched "M" symbol. The overlapping double arched "M" symbol logo

was temporarily disfavored by September 6, 1962, when a trademark was filed for a single arch, shaped over many of the early McDonald's restaurants in the early years. The famous double arched "M" symbol in use today did not appear until November 18, 1968, when the company filed a U.S. trademark. The first McDonald's restaurants opened in the United States, Canada, Costa Rica, Panama, Japan, the Netherlands, Germany, Australia, France, El Salvador and Sweden, in order of openings. The present corporation dates its founding to the opening of a franchised restaurant by Ray Kroc, in Des Plaines, Illinois, on April 15, 1955,[7] the ninth McDonald's restaurant overall. Kroc later purchased the McDonald brothers' equity in the company and led its worldwide expansion, and the company became listed on the public stock markets in 1965.[8] Kroc was also noted for aggressive business practices, compelling the McDonald brothers to leave the fast food industry. The McDonald brothers and Kroc feuded over control of the business, as documented in both Kroc's autobiography and in the McDonald brothers' autobiography. The site of the McDonald brothers' original restaurant is now a monument.[9] With the expansion of McDonald's into many international markets, the company has become a symbol of globalization and the spread of the American way of life. Its prominence has also made it a frequent topic of public debates about obesity, corporate ethics and consumer responsibility

Corporate overview McDonald's restaurants are found in 119 countries[10] and territories around the world and serve 58 million customers each day.[3] McDonald's operates over 31,000 restaurants worldwide, employing more than 1.5 million people.[10] The company also operates other restaurant brands, such as Piles Caf. Focusing on its core brand, McDonald's began divesting itself of other chains it had acquired during the 1990s. The company owned a majority stake in Chipotle Mexican Grill until October 2006, when McDonald's fully divested from Chipotle through a stock exchange.[11][12] Until December 2003, it also owned Donatos Pizza. On August 27, 2007, McDonald's sold Boston Market to Sun Capital Partners.[13]

Types of restaurants
Most standalone McDonald's restaurants offer both counter service and drive-through service, with indoor and sometimes outdoor seating. Drive-Thru, Auto-Mac, Pay and Drive, or "McDrive" as it is known in many countries, often has separate stations for placing, paying for, and picking up orders, though the latter two steps are frequently combined; it was first introduced in Arizona in 1975, following the lead of other fast-food chains. The first such restaurant in Britain opened at Fallowfield, Greater Manchester in 1986.[14]

In some countries, "McDrive" locations near highways offer no counter service or seating. In contrast, locations in high-density city neighborhoods often omit drive-through service. There are also a few locations, located mostly in downtown districts, that offer Walk-Thru service in place of Drive-Thru. Specially themed restaurants also exist, such as the "Solid Gold McDonald's," a 1950s rock-androllthemed restaurant.[15] In Victoria, British Columbia, there is also a McDonald's with a 24carat (100%) gold chandelier and similar light fixtures. To accommodate the current trend for high quality coffee and the popularity of coffee shops in general, McDonald's introduced McCaf, a caf-style accompaniment to McDonald's restaurants in the style of Starbucks. McCaf is a concept created by McDonald's Australia, starting with Melbourne in 1993. Today, most McDonald's in Australia have McCafs located within the existing McDonald's restaurant. In Tasmania, there are McCafs in every store, with the rest of the states quickly following suit. After upgrading to the new McCaf look and feel, some Australian stores have noticed up to a 60% increase in sales. As of the end of 2003 there were over 600 McCafs worldwide. Some locations are connected to gas stations/convenience stores,[16] while others called McExpress have limited seating and/or menu or may be located in a shopping mall. Other McDonald's are located in Wal-Mart stores. McStop is a location targeted at truckers and travelers which may have services found at truck stops.[17]

Playgrounds

McDonald's in Panorama City, California designed for family-friendly image Some McDonald's in suburban areas and certain cities feature large indoor or outdoor playgrounds. The first PlayPlace with the familiar crawl-tube design with ball pits and slides was introduced in 1987 in the USA, with many more being constructed soon after. Some PlayPlace playgrounds have been renovated into "R Gym" areas.

Redesign

The Mc Donalds restaurant in Dudley Town, near Birmingham, during 2002. It is in the old red, gold and grey livery.

McDonald's in Darlington, UK. This is an example of the new look of McDonald's in Europe. In 2006, McDonald's introduced its "Forever Young" brand by redesigning all of their restaurants, the first major redesign since the 1970s.[18][19] The design includes the traditional McDonald's yellow and red colors, but the red is muted to terra cotta, the yellow was turned golden for a more "sunny" look, and olive and sage green were also added. To warm up their look, the restaurants have less plastic and more brick and wood, with modern hanging lights to produce a softer glow. Contemporary art or framed photographs hang on the walls.

Business model
McDonald's Corporation earns revenue as an investor in properties, a franchiser of restaurants, and an operator of restaurants. Approximately 15% of McDonald's restaurants are owned and operated by McDonald's Corporation directly. The remainder are operated by others through a variety of franchise agreements and joint ventures. The McDonald's Corporation's business model is slightly different from that of most other fast-food chains. In addition to ordinary franchise fees and marketing fees, which are calculated as a percentage of sales, McDonald's may also collect rent, which may also be calculated on the basis of sales. As a condition of many franchise agreements, which vary by contract, age, country, and location, the Corporation may own or lease the properties on which McDonald's franchises are located. In most, if not all cases, the franchisee does not own the location of its restaurants.

The UK business model is different, in that fewer than 30% of restaurants are franchised, with the majority under the ownership of the company. McDonald's trains its franchisees and others at Hamburger University in Oak Brook, Illinois. In other countries, McDonald's restaurants are operated by joint ventures of McDonald's Corporation and other, local entities or governments. As a matter of policy, McDonald's does not make direct sales of food or materials to franchisees, instead organizing the supply of food and materials to restaurants through approved third party logistics operators. According to Fast Food Nation by Eric Schlosser (2001), nearly one in eight workers in the U.S. have at some time been employed by McDonald's. (According to a news piece on Fox News this figure is one in ten.) The book also states that McDonald's is the largest private operator of playgrounds in the U.S., as well as the single largest purchaser of beef, pork, potatoes, and apples. The selection of meats McDonald's uses varies with the culture of the host country.

Products
Main article: McDonald's products See also: McDonald's products (international) Main article: McDonald's products See also: McDonald's products (international)

McDonald's predominantly sells hamburgers, various types of chicken sandwiches and products, French fries, soft drinks, breakfast items, and desserts. In most markets, McDonald's offers salads and vegetarian items, wraps and other localized fare. Portugal is the only country with McDonald's restaurants serving soup. This local deviation from the standard menu is a characteristic for which the chain is particularly known, and one which is employed either to abide by regional food taboos (such as the religious prohibition of beef consumption in India) or to make available foods with which the regional market is more familiar (such as the sale of McRice in Indonesia).

McDonald's predominantly sells hamburgers, various types of chicken sandwiches and products, French fries, soft drinks, breakfast items, and desserts. In most markets, McDonald's offers salads and vegetarian items, wraps and other localized fare. Portugal is the only country with McDonald's restaurants serving soup. This local deviation from the standard menu is a characteristic for which the chain is particularly known, and one which is employed either to abide by regional food taboos (such as the religious prohibition of beef consumption in India) or to make available foods with which the regional market is more familiar (such as the sale of McRice in Indonesia).

Headquarters

McDonald's Plaza, the headquarters of McDonald's The McDonald's headquarters complex, McDonald's Plaza, is located in Oak Brook, Illinois. It sits on the site of the former headquarters and stabling area of Paul Butler, the founder of Oak Brook.[55] McDonald's moved into the Oak Brook facility from an office within the Chicago Loop in 1971.[56]

visison visisonMcDonald's Vision Statement "McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile."

McDonalds Mission Statemen

Board of Directors Biographical Information

as of January 27, 2011

Andrew J. McKenna
Non-Executive Chairman of McDonalds Corporation since April 2004 and also Chairman of Schwarz Supply Source, a printer, converter, producer and distributor of packaging and promotional materials. Mr. McKenna serves as a director of Aon Corporation and Skyline Corporation. He has served over the years on many civic, community and philanthropic boards and currently serves as a trustee of the Museum of Science and Industry and the University of Notre Dame and as a director of the Big Shoulders Fund of the Archdiocese of Chicago, Childrens Memorial Hospital of Chicago, The Ireland Economic Advisory Board, the Lyric Opera of Chicago and the United Way of Metropolitan Chicago among others. Mr. McKenna is also the Founding Chairman of Chicago Metropolis 2020. Director since 1991. Class of 2012.

Susan E. Arnold
Former President - Global Business Units of The Procter & Gamble Company from 2007 until March 2009 when she retired from that post. Prior to that time, Vice Chair of P&G Beauty and Health since 2006; and Vice Chair of P&G Beauty since 2004. Director of The Walt Disney Company. Director since 2008. Class of 2011.

Robert A. Eckert
Chairman and Chief Executive Officer of Mattel, Inc., a designer, manufacturer and marketer of family products, since May 2000. Director of Levi Strauss & Co. Director since 2003. Class of 2012.

Enrique Hernandez, Jr.

President and Chief Executive Officer of Inter-Con Security Systems, Inc., a provider of high-end security and facility support services to government, utilities and industrial customers. Non-executive Chairman of Nordstrom, Inc., and Director of Chevron Corporation and Wells Fargo & Company. Director since 1996. Class of 2012.

Jeanne P. Jackson
President of Direct to Consumer for NIKE, Inc., a designer, marketer and distributor of athletic footwear, equipment and accessories, since March 2009. Between 2002 and 2009, Chief Executive Officer of MSP Capital, a private investment company. Director of Motorola Mobility Holdings, Inc. Director since 1999. Class of 2012.

Richard H. Lenny

Operating Partner of Friedman, Fleischer & Lowe, LLC, a private equity firm, since January 2011. Former Chairman, President and Chief Executive Officer of The Hershey Company, a manufacturer, distributor and marketer of candy, snacks and candy-related grocery products, from January 2002 until his retirement in December 2007. Director of ConAgra Foods, Inc. and Discover Financial Services. Director since 2005. Class of 2011.

Walter E. Massey
President of the School of the Art Institute of Chicago, since September 2010. Also, President Emeritus of Morehouse College having served as its President from 1995 to June 2007. Director since 1998. Class of 2013.

Cary D. McMillan
Chief Executive Officer of True Partners Consulting LLC, a professional services firm providing tax and other financial services, since December 2005. From October 2001 to May 2004, he was the Chief Executive Officer of Sara Lee Branded Apparel and from January 2000 to May 2004, Executive Vice President of Sara Lee Corporation, a branded consumer packaged goods company. Director of American Eagle Outfitters, Inc. Director since 2003. Class of 2011.

Sheila A. Penrose
Non-executive Chairman of Jones Lang LaSalle Incorporated, a global real estate services and money management firm, since January 2005. From October 2000 to December 2007, she was President of the Penrose Group, a provider of strategic advisory services on financial and organization strategies. Director since 2006. Class of 2011.

John W. Rogers, Jr.

Chairman and Chief Executive Officer of Ariel Investments, LLC, an institutional money management firm, which he founded in 1983. Director of Aon Corporation and Exelon Corporation, and a trustee of Ariel Investment Trust. Director since 2003. Class of 2013.

James A. Skinner
Vice Chairman and Chief Executive Officer, a post to which he was elected in November 2004 and he has also served as a Director since that time. Vice Chairman from January 2003 to November 2004. Mr. Skinner has been with the Company for 38 years and has held various management positions during that time. Director of Illinois Tool Works Inc. and Walgreen Co. Class of 2011.

Roger W. Stone
Chairman and Chief Executive Officer of Kap Stone Paper and Packaging Corporation, formerly Stone Arcade Acquisition Corporation, since April 2005. Mr. Stone was Manager of Stone-Kaplan Investments, LLC from July 2004 to January 2007 and Chairman and Chief Executive Officer of Box USA Group, Inc., corrugated box manufacturer, from 2000 to 2004.

Non-executive Chairman of Stone Tan China Acquisition Corp. and Stone Tan China Acquisition (Hong Kong) Co. Ltd. Director since 1989. Class of 2013.

Donald Thompson
President and Chief Operating Officer, a post to which he was elected in January 2010 and has also served as a Director since January 2011. President, McDonald's USA from August 2006 to January 2010, Executive Vice President and Chief Operations Officer, McDonald's USA from January 2005 to August 2006. Mr. Thompson has been with the Company for 20 years and has held various management positions during that time. Director of Exelon Corporation. Class of 2012.

Miles D. White
Chairman and Chief Executive Officer of Abbott Laboratories, a pharmaceuticals and biotechnology company, since 1999. Director of Caterpillar, Inc. Director since 2009. Class of 2013.

Communications with the Board of Directors

Interested persons, wishing to communicate directly with the Board of Directors or the nonmanagement directors, individually or as a group, may do so by sending written communications addressed to them to the following address: McDonald's Corporation

Product diversification
growing sales of a new product in a new market.

Any modification of a current product that serves to expand the potential market implies that the company is following a strategy of product diversification. The product diversification strategy is different from product development in that it involves creating a new customer base, which by definition expands the market potential of the original product. This is almost always done through brand extensions or new brands, but in some cases the product modification may "create" a new market by creating new uses for the product.

Teen People is thus an example of product diversification since it was a new product that expanded the market potential of the original product, People magazine. While some teenagers undoubtedly bought People magazine, they were not People's target market. Courtyard by Marriott and Fairfield Inn are other examples of product diversification since before Marriott offered those new brands they had little potential to expand sales in the business and budget categories. Marriott had business and budget guests, but they were not specifically targeted, so by concentrating on these two markets they were able to add to their market potential. It should be apparent why Marriott could not expand into such different categories with their original brand name. When Heinz realized that children play with food and it would be more fun to play with ketchup if it were green or purple rather than red, they also were following a product diversification strategy since the market potential for ketchup increased from food to food plus play. Notice in this case that the brand name was unchanged. Sometimes product diversification takes the form of a product extension with the same brand name. Reebok, a shoe company, now sells water under the Reebok Fitness Water brand name. Clearly, Reebok's market potential has increased from the previously-defined athletic shoe market to shoes plus water.
The dangers of product diversification

The main dangers facing a company following a product diversification strategy for a brand are that it could fail to adequately understand the new customer base and that any new brand name may result in loss of meaning for the original brand and/or cannibalization of the original brand, particularly if it is a brand extension. The risk of not understanding the new customer base is

present as it is with market development. And the risks of loss of meaning and/or cannibalization are just as significant as with product development. For every successful magazine like Teen People, however, there are many more that are unsuccessful. All of the women's sports magazines failed, for example. The new market (women) was not interested in the new product (new magazines with various titles) sinceunlike menwomen did not want to read a magazine about sports without some link to fitness. And the few who did buy the new magazines simply switched from the men's versions. McDonald's is testing a new hotel concept in Europe: McDonald's hotels for businesspeople. Perhaps that's all that needs to be said!
The special case of retailers

Just as with product development, retailers present a special case. Thus, Subway's conversion from a ordinary sub shop to a healthy food outlet not only changed the brand's positioning substantially but also added new potential customers since, before the change, many of them would have never considered a Subway.

Strengths:
y

McDonald's has successfully rolled out new items like coffees, smoothies, and Angus burgers, expanding the range of menu choices. With a strong product offering, the company has grown income throughout the recession, notching strong increases in same-store sales. Operations are spread around the world, meaning the company is not exposed to just once currency or economy. Even trading near its highs, McDonald's serves up sizzling dividend yields that top the 10-year Treasury. The yield comes with a side order of annual dividend hikes dating back to 1976. The annual dividend payment has gone from 55 cents per share in 2005 to $2.20 this year.

y y y

Weaknesses:
y

It will be harder and harder to find prime locations to build a set of golden arches. The U.S. is saturated with its restaurants, so growth will have to occur internationally, posing potential cultural challenges. While the annual dividend hikes are likely to continue, the dividend growth rate has been slowing and will probably continue to slow or level off.

CHAPTER 4

DATA ANALYSIS AND INTERPRTATION

Is the Product line adequate ?

AVERAGE 30% YES 55%

NO 15%