Question 1 Why are we talking about companywide strategic planning in a marketing text?

What does strategic planning have to do with marketing? Companywide strategic planning guides marketing strategy and planning. Like marketing strategy, the companys broad strategy must also be customer focused. Strategic planning is the process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities. Each company must find the game plan for long-run survival and growth that makes the most sense given its specific situation, opportunities, objectives, and resources. This is the focus of strategic planning the process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities. Strategic planning sets the stage for the rest of the planning in the firm. Companies usually prepare annual plans, long-range plans, and strategic plans. The annual and long-range plans deal with the companys current businesses and how to keep them going. In contrast, the strategic plan involves adapting the firm to take advantage of opportunities in its constantly changing environment. At the corporate level, the company starts the strategic planning process by defining its overall purpose and mission. This mission is then turned into detailed supporting objectives that guide the whole company. Next, headquarters decides what portfolio of businesses and products is best for the company and how much support to give each one. In turn, each business and product develops detailed marketing and other departmental plans that support the companywide plan. Thus, marketing planning occurs at the business-unit, product, and market levels. It supports company strategic planning with more detailed plans for specific marketing opportunities.

Defining a Market-Oriented Mission An organization exists to accomplish something, and this purpose should be clearly stated. Forging a sound mission begins with the following questions: what is our business? Who is the customer? What do consumers value? What should our business be? These simple-sounding questions are among the most difficult the company will ever have to answer them carefully and completely. Many organizations develop formal mission statements that answer these questions. A mission statement is a statement of the organizations purpose what it wants to accomplish in the larger environtment. A clear mission statement acts as an invisible hand that guides people in the organization. Some companies define their missions myopically in product or technology terms (we make and sell furniture or We are a chemical-processing firm). But mission statements should be market oriented and defined in termsof satisfying basic customer needs. Products and technologies eventually become outdated, but basic market needs may last forever. Mission statements should be meaningful and specific yet motivating. They should emphasize the companys strengths in the marketplace. Too often, mission statements are written for public relations purpose and lack specific, workable guidelines. Setting Company Objectives and Goals The company needs to turn its mission into detailed supporting objectives for each level of management. Each manager should have objectives and be responsible for reaching them. For example, Kohler makes and markets familiar kitchen and bathroom fixtures everything from bathtubs and toilets to kitchen sinks. But Kohler also offers a breadth of other products and services, including furniture, tile and stone, and even small engines and backup power systems. It also owns resorts and spas in the United States and Scotland. Kohler ties this diverse product portfolio together under the mission of contributing to a higher level of gracious living for those who are touched by our products and services. This broad mission leads to a hierarchy of objectives, including business objectives and marketing objectives. Kohlers overall objectives is to build profitable customer relationships by

developing efficient yet beautiful products that embrace the essence of graciousliving. It does thus by investing heavily in research and design (R&D). Research and design is expensive and requires improved profits to plow back into research programs. So improving profits become another major objective for Kohler. Profits can be improved by increasing sales or reducing costs. Sales can be increasing by improving the companys share or domestic and international markets. These goals then become the companys current marketing objectives. Marketing strategies and programs must be developed to support these marketing objectives. To increase its market share, Kohler might increase its products availability and promotion in existing markets and expand business via acquisitions. For example, Kohler intends to boost its production capacity in Thailand to better serve the Asian market. It is also setting up new facilities in India and China. In addition, Kohlers Hospitality Group opened a Kohler Waters Spa in the Chicago area and the Interiors Group acquired furniture manufacturer Mark David. These are Kohlers broad marketing strategies. Each broad marketing strategy must then be defined in greater detail. For example, increasing the products promotion may require more salespeople, advertising, and public relations efforts; if so, both requirements will need to be spelled out. In this way, the firms mission is translated into a set of objectives for the current period. The importance of planning Planning, as a human activity, has always been in existence. From early days, hunters planned how to catch food for their families and so on. We all try to plan out our personal lives according to what we want, or need, to do. This personal planning can be at quite a simple level and, on occasions, can be quite complex think of the planning for a family wedding. However, we are now going to concentrate on the planning which is done in organizations. In the same way as personal planning, organizational plans can be either complex or simple it really depends on what is being aimed for and how much of the overall organization is affected by the plan. What we do know is that organizational planning in today s fast moving business world is very sophisticated even if it is very logical.

Consider the changes which have taken place in the business world which have brought us to this situation : Easier and faster communications Mobility of customers The increased knowledge , and awareness, of customers. The proliferation of products, increasing choice. The rate of changes in technology. Protectionist actions on the part of governments. The grouping together of partners into trading environments. The mergers and acquisitions of companies. World recessions

Arguably the most significant of all changes is : Increased competition

in the cold, real world of business, marketers would have to admit that it is the competition which keeps them on their toes. Everyone knows that marketing is about finding out what the customer wants and then providing it, but it is the competition that stops a company from being complacent. It would be wonderful if we could just take our time to supply what the customer wanted without any interference or hindrance from any other party, but it just doesnt happen that way. There will always be someone who gets in the way. It is because of this that planning has become so sophisticated and is seen as the life-blood or the organization. No planning no future.

Examples of the benefits to be gained from planning include : Risk reduction. The better the plan is, the more secure the future will be. A good plan takes into account a wide variety of factors which could influence the future for the organizations, example, possible new regulations introduced by a government.

Reduction of uncertainty. Personnel need to be aware of what is expected of them and when they have to do it.

Setting targets and standards. If a plan is well thought out, the targets and objectives agreed will be realistic and achievable. Unrealistic targets act as demotivators and are likely to lead to the failure of a plan.

Guidance. Having a plan to follow gives clear instructions to the personnel involved.

Gains commitment. People who accept a plan as being valid will work better towards its success. Very often a good plan will help to overcome resistance to change providing the benefits of the plan can be demonstrated to those who have to implement it.

Improved decision making. If a plan is laid down, managers can check progress and make reasoned decisions on activities and so on that need to be carried out. The security of working to a plan helps decision-makers be more confident and assertive.

Question 2 What are McDonalds mission and strategy? What role does marketing play in helping McDonalds accomplish its mission and strategy? Company introduction McDonalds is a food retail company which was established in 1954. It has around 30, 000 outlets in more than 120 countries and thus it have been considered among worlds largest food chains. Their affluent time began with their founder Ray Krocs vision and his dedication, changed in their brilliant managers, and this will maintain the polish on McDonalds name for years to come.

Mission McDonald's brand mission is to "be our customers' favorite place and way to eat." Our worldwide operations have been aligned around a global strategy called the Plan to Win centering on the five basics of an exceptional customer experience People, Products, Place, Price and Promotion. We are committed to improving our operations and enhancing our customers' experience.

Vision To be Estonias "best" quick service restaurant, experience supported by a set of core values and guiding principles. Statement of the Marketing Goal McDonald believes that customer perception is one thing which always guarantees the products success. So itsmarketing strategies are also designed while keeping in view the customer perspective. It relies on the fact that many innovative products may fail simply because of their incapability to make a strong perception about itself in the customers mind. McDonalds being a globally famous brand brings with it definite hopes for the clients.

Main strategies

1. Market Penetration McDonalds has planned to enhance market penetration strategies by inculcating few interior market promotions so to increase the market share by attracting competitors clients. Secondly MacDonalds has also launched few advertisement campaigns for domestic market clients in each country.

2. Market Development McDonalds has been the best example of market development from last many years in food retail industry. Market development strategy which Macdonalds follow is through company expansion plans in new markets and new outlet events through which large number of clients are attracted. MacDonalds managers take actions like targeting promotions, opening sales offices and creating alliances with other companies.

3. Service/Program Development McDonalds has been giving intense importance to service development programs as its main focus is over providing best services to its clients. They have analyzed the on hand markets and they have developed thecustomer care strategies by taking their feedbacks so to increase the number of satisfied customers. 4. Budget Marketing budgets are designed to support the marketing strategies as they need huge expenses. In Macdonalds marketing budgets are designed and allocated after analysing the given strategies on hand which marketing executives present in front of the finance team. I n this way marketing budgets are allocated. The percentage of budget which usually has been allocated to marketing department every year is almost 50 percent of the total budget of the company. But this ratio may vary depending on the seasonal changes in marketing strategies or launch of new products.

Strategic direction and financial performance The strength of the alignment among the Company, its franchisees and suppliers (collectively referred to as the System) has been key to McDonalds success. This business model enables McDonalds to deliver consistent, locally-relevant restaurant experiences to customers and be an integral part of the communities we serve. In addition, it facilitates our ability to identify, implement and scale innovative ideas that meet customers changing needs and preferences. McDonalds customer-focused Plan to Winwhich concentrates on being better, not just biggerprovides a common framework for our global business yet allows for local adaptation. Through the execution of initiatives surrounding the five elements of our Plan to WinPeople, Products, Place, Price and Promotionwe have enhanced the restaurant experience for customers worldwide and grown comparable sales and customer visits in each of the last seven years. This Plan, combined with financial discipline, has delivered strong results for our shareholders. We have exceeded our long-term, constant currency financial targets of average annual Systemwide sales growth of 3% to 5%; average annual operating income growth of 6% to 7%; and annual returns on incremental invested capital in the high teens every year since the Plans implementation in 2003, after adjusting for the loss in 2007 from the Latin America developmental license transaction. Given the size and scope of our global business, we believe these financial targets are realistic and sustainable over time, keeping us focused on making the best decisions for the long-term benefit of our System. In 2010, we continued to enhance the customer experience by remaining focused on the Companys key global success factors of branded affordability, menu variety and beverage choice, convenience including daypart expansion, ongoing restaurant reinvestment and operations excellence. Initiatives around thesefactors successfully resonated with consumers driving increases in sales and customer visits despite challenging economies and a contracting Informal Eating Out (IEO) market in many countries. As a result, every area of the world contributed to 2010 global comparable sales and guest counts, which increased 5.0% and 4.9%, respectively. Growth in comparable sales is driven by the Systems ability to optimize guest count growth, product mix shifts and menu price changes. Pricing actions reflect local market conditions, with a view to preserving and improving margins, while continuing to drive guest counts and market share gains. In general, the goal is to achieve a balanced contribution of price and guest counts to comparable sales growth. In the

U.S., we grew sales, guest counts, market share and restaurant cash flow, with comparable sales increasing for the 8th consecutive year, rising 3.8% in 2010. These positive results were achieved despite a declining IEO market. This performance was attributed to several factors including core menu items like Chicken McNuggets and burgers, everyday affordability and value options, such as the Breakfast Dollar Menu, additions to the McCaf beverage line, new snack offerings and limited time offerings such as the McRib sandwich. The national launch of McCaf frapps and real-fruit smoothies provided a meaningful extension to the McCaf line that was well-received by customers. Extending the snack wrap line with the Angus Snack Wraps allowed customers to enjoy popular McDonalds burgers in a smaller, more portable fashion. Complementing these menu offerings were our convenient locations, efficient drive-thru service and value-oriented local beverage promotions. We broadened our accessibility through greater 24 hour operations and offered customers free Wi-Fi in over 12,000 restaurants. Modernizing the customer experience remained a focus with the extension of our interior and exterior reimaging program to enhance the appearance and functionality of our restaurants. In Europe, comparable sales rose 4.4%, marking the 7th consecutive year of comparable sales increases. Major contributors were France, the U.K., Russia and Germany. This performance reflected Europes strategic priorities of upgrading the customer and employee experience, increasing local relevance, and building brand transparency. Initiatives surrounding these platforms included leveraging our tiered menu featuring everyday affordable prices, menu variety including limited-time offerings, new dessert options, and reimaging almost 1,000 restaurants. We expanded our coffee business and have nearly 1,300 McCaf locations, which in Europe generally represent a separate area inside the restaurant that serves specialty coffees, indulgent desserts and light snacks. The expansion of self-order kiosks in France, Germany and Spain and the roll out of the new drive-thru customer order display system in over 3,000 restaurants enhanced service. In addition, we increased our accessibility and convenience with extended hours. We built upon the momentum of portable menu offerings with the introduction of McWrapslarger sized beef and chicken wraps in Germany, and Ptit Plaisir offerings in France. Finally, we continued building customer trust in our brand through communications that emphasized the quality and origin of McDonalds food and our sustainable business initiatives. In APMEA, our momentum continued with nearly every country delivering positive comparable sales, led by Japan, Australia and China. Comparable sales rose 6.0% through strategies

emphasizing value, core menu extensions, breakfast and convenience. Australia launched Family Dinner Boxes featuring popular menu items bundled together at a discounted price while China and Japan concentrated on affordability with Value Lunch platforms. New menu items such as a third Angus burger option in Australia and the extension of the Spicy Wings line in China were popular with consumers. Japan executed a successful U.S.-themed burger promotion and a Chicken Festival promotion featuring several products. Our dessert strategy is introducing consumers to the McDonalds brand with products such as McFlurries and dessert kiosks in China, where we have become one of the largest retailers of ice cream. Our breakfast business continues to develop and is now offered in approximately 75% of APMEA restaurants. In Japan, value breakfast items, including the Sausage McMuffin and McGriddle, were rotated across several months, while Australia launched new breakfast menu items. Nearly two-thirds of APMEA restaurants are now offering some form of extended hours and over 4,800 restaurants are open 24 hours. Delivery is offered in many APMEA markets and is now in approximately 1,600 restaurants, including nearly 400 in China. We continue to offer value to our customers by utilizing a strategic menu pricing tool that optimizes price, product mix, and promotions. This approach is complemented by a focus on driving operating efficiencies and effectively managing restaurant-level food and paper costs by leveraging our scale, supply chain infrastructure and risk management practices. Our ability to execute our strategies successfully in every area of the world, grow comparable sales, leverage a low commodity cost environment and control selling, general & administrative expenses resulted inconsolidated combined operating margin (operating income as a percent of total revenues) of 31.0% in 2010, an improvement of 0.9 percentage points over 2009. In 2010, strong global sales and margin performance grew cash from operations, which rose $591 million to $6.3 billion. Oursubstantial cash flow, strong credit rating and continued access to credit provide us significant flexibility to fund capital expenditures and debt repayments as well as return cash to shareholders. Capital expenditures of approximately $2.1 billion were invested in our business primarily to open and reimage restaurants. Across the System, nearly 1,000 restaurants wereopened and nearly 1,800 existing locations were reimaged. We returned $5.1 billion to shareholders consisting of $2.4 billion in dividends and nearly $2.7 billion in share repurchases. Cash from operations continues to benefit from our heavily franchised business model as the rent

and royalty income received from owner/operators provides a very stable revenue stream that has relatively low costs. In addition, the franchise business model is less capital intensive than the Companyowned model. We believe locally-owned and operated restaurants maximize brand performance and are at the core of our competitive advantage, making McDonalds not just a global brand, but also a locally relevant one. Segmentation, targeting and positioning. McDonalds uses demographic segmentation strategy with age as the parameter. The main target segments are children, youth and the young urban family. Kids reign supreme in FMCG purchase related to food products. So to attract children McDonalds has Happy Meal with which toys ranging from hot wheels to various Walt Disney characters are given ( the latest in this range is the toys of the movie ). For this, they have a tieup with Walt Disney. At several outlets, it also provides special facilities like Play Place where children can play arcade games, air hockey and etc. This strategy is aimed at making McDonalds a fun place to eat. This also helps McDonalds to attract the young urban families wanting to spend some quality time while their children have fun at the outlet. To target the teenagers, McDonalds has priced several product aggressively, keeping in mind the price sensitivity of this target customer. In addition, facilities like Wi-Fi are also provided to attract students to the outlets.

Customer perception and customer expectation Customer perception is a key factor affecting a products success. Many potentially revolutionary products have failed simply because of their inability to bulid a healthy perception about themselves in the customers minds. McDonalds being an internationally renowned brand brings with it certain expectations for the customers. Target segment A family with children Urban customer on the move teenager What is McDonalds for me? A treat to children, a fun place to be for the children. Great taste, quick service without affecting the work schedule Hangout with friends, but keep it affordable.

Customers expect it to be an ambient, hygienic and a little sophisticated brand that respects their values. The customers expect the brand to enhance their self-image. McDonalds Marketing Mix (5 Ps) After segmenting the market, finding the target segment and positioning itself, each company needs to come up with an offer. The 5 Ps used by McDonalds are : 1) Product 2) Place 3) Price 4) Promotion 5) People Product : Product is the physical product or service offered to the consumer. Product includes certain aspects such as packaging, guarantee, looks etc. This includes both the tangible and the nontangible aspects of the product and service. McDonalds has intentionally kept its product depth and product width limited. McDonalds studied the behaviour of the Indian customer and provided a totally different menu as compared to its International offering. It dropped ham, beef and mutton burgers from the menu. India is the only country where McDonalds serve vegetarian

menu. Even the sauces and cheese used in India are 100% vegetarian. McDonalds continuously innovates its products according to the changing preferences and tastes of its customers. The recent example is the introduction of the Chicken Maharaja Mac. McDonalds bring with it a globally reputed brand, world class food quality and excellent customer specific product features. Place : The place mainly consists of the distribution channels. It is important so that the product is available to the customer at the right place, at the right time and in the right quantity. Nearly 50% of U.S.A is within a 3 minute drive from a McDonalds outlet. There is a certain degree of fun and happiness that a customer feels each time he dines at McDonalds. There are certain value propositions that McDonalds offer to its customers based on their needs. McDonalds offers hygienic environment, good ambience and great service. Now McDonalds have also started giving internet facility at their centres and they have been playing music through radio instead of the normal music. There are certain dedicated areas for children where they can play while their parents can have some quality time together. Price : Pricing includes the list price, the discount functions available, the financing options available etc. It should also take into the consideration the probable reaction from the competitor to the pricing strategy. This is the most important part of the marketing mix as this is the only part which generates revenue. All the other three are expenses incurred. The price must take into consideration the appropriate demand-supply equation. In India, McDonalds came up with a very catchy punch line Aap ke zamane mein ,baap kezamane ke daam. This was to attract the middle and lower class consumers and the effect can clearly be seen in the consumer base McDonalds has now. McDonalds has certain value pricing and bundling strategies such as happy meal, combo meal, family meal etc to increase overall sales volumes.

Promotion : The various promotion channels being used by McDonalds to effectively communicate the product information are given above. A clear understanding of the customer value helps decide whether the cost of promotion is worth spending. There are three main objectives of advertising for McDonalds are to make people aware of an item, feel positive about it and remember it. The right message has to be communicated to the right audience through the right media. McDonalds does its promotion through television, hoardings and bus shelters. They use print ads and the television programmes are also an important marketing medium for promotion. Some of the most famous marketing campaigns of McDonalds are: You Deserve a break today, so get up and get away- To McDonalds Aap ke zamane mein ,baap ke zamane ke daam. Food, Folks, and Fun Im loving it. people : McDonalds understands the value of both its employees and its customers. It understands the fact that a happy employee can serve well and result in a happy customer. McDonald continuously does Internal Marketing. This is important as it must precede external marketing. This includes hiring, training and motivating able employees. This way they serve customers well and the final result is a happy customer. The level of importance has changed to be in the following order (the more important people are at the top): 1.Customers 2.Front line employees 3.Middle level managers4.Front line managers The punch line Im loving it is an attempt to show that the employees are loving their work at McDonalds and will love to serve the customers.

Question 3 What roles do other McDonalds departments play, and how can the companys marketers partner with these departments to maximize overall customer value? Marketing, alone, cant create superior customer value. Under the companywide strategic plan, marketers must work closely with other departments to form an effective internal company value chain and then must work with other companies in the marketing system to create an overall external value delivering network that jointly serves customers. Finance at McDonalds Introduction Although the realm of accounting and finance has often been viewed as dull bean counting, in todays modern and competitive business environment, the finance department should be at the heart of any company, encompassing a variety of functions that go beyond its traditional financial reporting role. While it is still a priority for accountants to ensure a companys financial statutory accounts meet legal requirements, dynamic companies such as McDonalds have shifted the focus of their accounting and finance function to additionally include the evaluation of past performance and appraisal of future opportunities, helping to ensure the company maximizes its strategic capabilities. McDonalds Restaurants UK Limited, a wholly owned subsidiary of the U.S. parent company, opened its first UK restaurant in Woolwich in 1974. There are now 1,200 restaurants operating in the UK which, despite representing only 4% of the total number of McDonalds restaurants worldwide, contribute 7% of global profits, making the UK a very important financial market for McDonalds shareholders.

McDonalds understands the value of an integrated accounting and finance function, extending from the restaurant floor up to the board of directors. Each individual McDonalds restaurant is structured as an independent business, with restaurant management responsible for its financial performance, supported by the centralised Accounting & Finance department. Department structure and function McDonalds Finance Department has two key areas of responsibility: financial reporting and management accounting. Although each of these functions has different priorities, working together ensures the best financial position for the company now and for the future. Financial reporting Financial reporting looks at historical performance with the primary responsibility of the Corporate Accounts department being the preparation of annual financial statements and reporting McDonalds monthly results to their parent company in the U.S. Several specific functions are in place in order to achieve these requirements: A centralised accounting centre is responsible for processing all accounts receivable and payable transactions, banking income, managing working capital and also for the maintenance of the fixed asset registers. The accounting centre provides day-to-day support to every McDonalds restaurant. Treasury and tax experts ensure compliance with tax laws and make sure the company has sufficient cash flow and appropriate finance in place in order to meet business needs. Payroll staff are responsible for the accounting and payment of wages to all 68,000 staff. Management accounting The Commercial Finance department has a predominantly forward-looking focus, using management accounting to analyse past financial performance in order to project and improve future results and aid commercial decision-making. Key to the decision making process is information about our competitors and the market environment. This is provided by the

McDonalds Business Strategy & Intelligence department which specialises in internal and external data collection, for example consumer research. The Commercial Finance team helps define and measure several key targets known as Key Performance Indicators (KPIs) which McDonalds must achieve in order to succeed in its business strategy. Although these indicators are both financial and non-financial to ensure a balanced scorecard approach, the Commercial Finance team concentrates on the results of the financial KPIs. How does McDonalds make a profit? McDonalds has two sources of profit: Sales made by company-owned restaurants Rental and royalty income from franchised restaurants. Restaurant sales McDonalds retains all of the profit earned by company-owned restaurants. An example Profit & Loss Statement for a restaurant is shown left and highlights how food and labour constitute a restaurants largest costs. In addition to variable costs, which increase or decrease depending on the level of sales, McDonalds also incurs costs that are largely fixed, for example utilities and advertising, which need to be paid for even before the restaurant makes any sales.Increasing sales and controlling costs are fundamental to ensuring the profit of each restaurant is either maintained or increased. Franchise rental and royalty income The owner of each franchised restaurant, known as the franchisee, keeps all of the profit they make through sales after paying McDonalds a royalty for trading under the brand name and rent for operating in a McDonalds owned property. The benefit to McDonalds of operating franchised restaurants is that these restaurants guarantee a stream of income for McDonalds at a reduced level of risk while enabling the company to maintain a single brand presence. The risk to McDonalds is reduced because much of it is borne by the Franchisee. The Franchising Accounts team works closely with franchisees to provide the support they require to grow their profitability.

What does McDonalds do with its profits? It is the responsibility of the senior management at McDonalds to reinvest the profits made by the company in order to generate future cash flows and returns for the shareholders. Whether this is done by building new restaurants, reinvesting in existing restaurants, paying off debt to reduce financing costs or paying a dividend to shareholders, their decisions will be based on financial appraisals carried out by the McDonalds Finance team. The investment strategy of McDonalds UK has changed notably over the last decade. During the 1990s, McDonalds actively opened a large number of restaurants in order to grow market presence and increase market share. In recent years, however, McDonalds has taken a much more consolidated approach by focusing on fewer restaurant openings and instead investing in the re-imaging of its current estate. This investment strategy is intended to maintain the perception of McDonalds as a modern, progressive company and enable us to upgrade the customer experience and maintain market share in an ever-increasing competitive environment. Financial targets and measures A key role of the McDonalds finance team is to help formulate relevant targets for the business and report actual performance against these targets. Analysing this data allows us to highlight areas where improvements might be made within the business. As with all McDonalds performance analysis, financial measures are considered alongside non-financial measures, and in consideration of longterm effects, so as to evaluate the activity from a balanced position. Key Performance Indicators include: Comparable Sales Growth Measuring increased demand and market expansion is done by comparing like-for-like sales, year-to-year, day-to-day. McDonalds breaks this down further into the comparable sales for different areas of the business so as to identify areas of sales growth opportunity and enable it to adapt quickly to changes in the market.

For example, comparing: Sales at different times of the day Sales at restaurants located near each other Sales of specific products over time Profit Growth Increasing the bottom line profit in the long-term through sales growth and improved efficiency in cost management. Return on Investment McDonalds is evaluated by its shareholders on how well it invests its money. Shareholders require a certain level of return which means it is important for McDonalds to focus on making decisions that satisfy and maximise this return. For each project undertaken, the potential return on investment (the estimated profit return as a percentage of the initial capital investment) is an important measure used by management in considering the viability of the project.There are specific targets for McDonalds larger capital investments, such as new restaurant openings which must achieve a 20% return over a 10 year period and re-imaging investments, which must achieve a 20% return over a 5 year period. Marketing at McDonalds Introduction McDonalds is one of the best known brands worldwide. This case study shows how McDonalds aims to continually build its brand by listening to its customers. It also identifies the various stages in the marketing process. Branding develops a personality for an organisation, product or service. The brand image represents how consumers view the organisation. Branding only works when an organisation behaves and presents itself in a consistent way. Marketing communication methods, such as advertising and promotions, are used to create the colours, designs and images which give the brand its recognisable face. At McDonalds this is represented by its familiar logo the Golden Arches. In all its markets, McDonalds faces

competition from other businesses. Additionally, economic, legal and technological changes, social factors, the retail environment and many other elements affect McDonalds success in the market. Marketing involves identifying customer needs and requirements and meeting these needs in a better way than competitors. In this way a company creates loyal customers. The starting point is to find out who potential customers are not everyone will want what McDonalds has to offer. The people McDonalds identifies as likely customers are known as key audiences. The marketing mix and market research Having identified its key audiences, a company has to ensure a marketing mix is created that appeals specifically to those people. The marketing mix is a term used to describe the four main marketing tools the 4Ps. By analysing detailed information about their customers, as derived from ongoing market research, the McDonalds Marketing department can ascertain information key to determining the correct marketing mix. 1) Which products are well received 2) What prices consumers are willing to pay 3) What TV programmes, newspapers and advertising consumers read and view 4) Which restaurants are visited Accurate research is essential in creating the right marketing mix which will help to win customer loyalty and increase sales. As the economy and social attitudes change, so do buying patterns. McDonalds needs to identify whether the number of target customers is growing or shrinking and whether their buying habits will change in the future.

Market research considers everything that affects buying decisions. These buying decisions can often be affected by factors wider than just the product itself. Psychological factors are important, e.g. the image a particular product conveys or how the consumer feels when purchasing it. These psychological factors are of significant importance to the customer. They can be even more important than the products physical benefits. Through marketing, McDonalds establishes a prominent position in the minds of customers. This is known as branding. Meeting the needs of key audiences There are a limited number of customers in the market. To build long-term business, it is essential to retain people once they have become customers. Customers are not all the same. Market research identifies different types of customers. Using this type of information McDonalds can tailor communication to the needs of specific groups. It is their needs that determine the type of products and services offered, prices charged, promotions created and where restaurants are located. In order to create a marketing strategy that will enable the needs of the key market to be met, the strengths and weaknesses of the organisation must first be identified and analysed. The analysis will examine the following parts of the companys business: The companys products and how appropriate they are for the future The quality of employees and how well trained they are to offer the best service to customers The systems and how well they function in providing customer satisfaction e.g. marketing databases and restaurant systems The financial resources available for marketing. Once the strengths and weaknesses are determined, they are combined with the opportunities and threats in the market place. This is known as SWOT analysis - strengths, weaknesses, opportunities, threats. The business can then determine what it needs to do in order to increase its chances of marketing successfully.

The 4Ps product 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 places 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. Marketing continuously monitors customers preferences. In order to meet these changes, McDonalds has introduced new products and phased out old ones over time, and will continue to do so. Care is taken not to adversely affect the sales of an existing option by introducing a new option which will cannibalise its sales (trade off). McDonalds knows that sales of products on its menu will vary at different points in their life cycle as is illustrated on the graph to the right. The type of marketing undertaken and the resources invested will be different depending on the stage a product has reached. For example, the launch of a new product will typically involve television and other advertising support. At any time a company will have a portfolio of products, each in a different stage of its cycle. Some of McDonalds options are growing in popularity while arguably the Big Mac is at the maturity stage. Price 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. It is important when deciding on the price to be fully aware of the brand and its integrity. 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.

Promotions The promotions aspect of the marketing mix covers all types of marketing communications. One of the methods employed is advertising, sometimes known as above the line activity. Advertising is conducted on TV, radio, in cinema, online, using poster sites and in the press for example in newspapers and magazines. What distinguishes advertising from other marketing communications is that media owners are paid before the advertiser can take space in the medium. Other promotional methods include sales promotions, point of sale display, merchandising, direct mail, telemarketing, exhibitions, seminars, loyalty schemes, door drops, demonstrations, etc. The skill in marketing communications is to develop a campaign which uses several of these methods in a way that provides the most effective results. For example, TV advertising makes people aware of a food item and press advertising provides more detail. 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. For example, to reach a single professional woman with income above a certain level, it may be better to take an advertisement in Cosmopolitan than Womans Own. To advertise to mothers with families, it may be more effective to take advertising space in cinemas during Disney films. The right media depends on who the viewers, readers or listeners are and how closely they resemble the target audience.

Place 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. Human resources management at McDonalds The company is the leader in the fastfood industry and it proves that the strategy the company chosen is right and efficient. All the details about employment in McDonalds will be reviewed in this article. McDonald's began in the USA in the USA in 1995 with one restaurant. McDonald's is now the largest and fastest growing Quick Service restaurant in the world. From New York to Newcastle the Golden Arches have become a universal symbol for McDonald's. McDonalds opened its first store in the UK on 1974 in Woolwich, London and by the year 2000, it started to operate over 1000 restaurants. The human resource management of McDonald's covers a variety of activities. The term human resource management? Has largely replaced the old-fashioned word personnel? Which was used in the past. Human resources management withinMcDonald's The key to human resources management is that it is seen as a strategic concern for McDonald's. Rather than being simply a specialised function (as a personnel management used to be), it is a concern for all managers. Managers across McDonald's are being given responsibilities for selecting, motivating, developing and evaluating employees. All managers are therefore taking on human resource responsibilities. Employees are the most important resources in McDonald's, particularly in creating a competitive edge. The types of work covered by human resource management in McDonald's are as follows: A policy-making role ?establishing major policies that cover the place and importance of people in McDonald's. A welfare role, concerned with looking after people at McDonald's and their needs.

A supporting role, concerned with helping other managers to develop their work. A bargaining and negotiating role, concerned with acting as an intermediary between different groups and interests. An administrative role, concerned with the payment of wages the supervision implementation of health and safety laws, etc. Human resources planning Like all businesses, McDonald's require the assistance of staff to carry out the daily activities related to the nature of the organisation. The people are allimportant members of staff to McDonald'sand fulfil a key role in its operation. McDonald's would not be successful without of sophisticated technology, human beings are responsible for setting up correctly, pressing the right buttons and repairing it if it malfunctions. Once inside McDonald's staff performs various duties in connection with their roles and McDonald's expects their work to be of a satisfactory standard, completed within a timescale and to be cost effective. Training is provided to help employees improve their levels of efficiency and this is rewarded with promotion or a bonus in recognition of their efforts. None of this would occur if the managers had not selected potential workers in a careful way. The skills required can be identified and matched against the abilities of people looking for work. If McDonald's takes on staffs who are unsuitable, it can cause a number of problems, e. g. Poor productivity levels Bad feeling among staff Dissatisfaction about the job High level of absenteeism Customer complaints Dismissal or resignation The search for a replacement. Human resources planning are concerned with getting the right people, using them well and developing them in order to meet McDonald's goals. In order meet McDonald's aims successfully, it is necessary to identify the means of using people in the most effective way and to identify any problems that are likely to occur (for example recruiting the best people) and then coming with solutions. Demand for labour McDonald's demand for human resources is estimated by analysing its future plans and by estimating the levels of activity within McDonald's. Methods of forecasting demand

Management estimates Managers are asked to forecast their staff requirements. They will do this on the basis of past, present and likely future requirements. Work study techniques Work-study specialists works out how long various jobs take, using available machinery and equipment. Provided they know what sales are likely to be, they calculate the numbers of employees required and the hours they will need to work. Supply of labour For McDonald's to work out the supply of labour available it examines the numbers of people available to work, how long they can work for, their ability to do the required job, their productivity (output per head) and other factors. The supply of labour is made up of two sources: Internal supply Statistics and information is collected on employees already within McDonald's. This will cover the following main areas: The number of employees in a particular job. This figure will give a broad overview of the number in McDonald's who already possess certain broad categories of skills. The skills available. It may be helpful to identify the current skills held by the labour force and to see how many of these are transferable. Skills analysis. McDonald's needs to be sure that it has the right number of people available at the right time but also with the right skills. McDonald's, therefore, need to assess its present supply of skills across its workforces and to identify the sorts of skills it will require in the future. A skills inventory of current employees will indicate those who have received recent training and those who will require training. It may be possible to meet the human resource requirements of McDonald's by training and developing current staff rather than recruiting externally. Performance results. McDonald's gathers various informations about the level of performance of various categories of current employees. Promotional potential. An internal promotion changes the availability of existing resources. McDonald's finds it useful to know how many employees have the skills and the aptitude for promotion to more demanding roles. In addition,McDonald's finds useful to know how many employees have the potential, with suitable training for promotion.

Customer services at McDonalds Do you know that only 5% of customers with a complaint ever put their complaint to a customer services department? A further 45% of customers with a complaint take time to raise their concerns on the spot and speak with an employee. We need to ensure that for such customers, their complaint is resolved satisfactorily there and then. If this is not achieved, we run the risk that these customers will not voice their concerns in the future, thereby losing for us an opportunity to gather important customer feedback. The remaining 50% of customers who encounter a problem, dont make a complaint. In order to move towards a situation where this 50% are more likely to voice their concerns, we encourage both the Customer Services department and restaurant employees to be accessible to our customers and open to feedback. This is encouraged in several ways in the restaurant. Each restaurant should display a name plaque indicating the Shift Running Managers name. In addition, each manager should wear a name badge displaying their first name. The Customer Care employee should ensure that, as the first point of contact for customers, they are welcoming and accessible at all times. Finally, the restaurants telephone number should be on display. Combined, these initiatives should help to create an inviting and customer-friendly environment. It is imperative that we encourage our customers to voice their concerns within the restaurant itself so our restaurant management have the opportunity to resolve the problem then and there. Employee training A very important part of their departments remit is working with restaurant employees to give them the tools and resources they need to deal with complaints effectively. Training starts as part of their Basic Shift Management course. We teach them the four step method to complaint handling and give them advice on how to deal with all types of customer feedback, for example a basic nutritional enquiry or a service issue. Most importantly, we encourage our employees to recognise a dissatisfied customer and diffuse potential complaints. We also make the session interactive with role-plays and break-out groups. This initial training is followed up throughout the careers of our restaurant employees to ensure they are always aware of the importance of customer care and retention. Along with their managers, they spend time with other Head Office

support departments teaching them how to deliver effective customer service both within the business and to external suppliers. Regional links At McDonalds, individual restaurants fall within geographical regions for management purposes, and we have mirrored this approach in the customers services arena in order to support individual managers in aspects of complaint reduction and customer care. Each restaurant manager is assigned to a particular customer services region and is encouraged to liaise with that region in order to fulfil their particular customer services needs. In turn, our regional teams are heavily focussed on supplying each restaurant with reports and analysis to assist them in identifying key areas of improvement. Techonology Using the technology we have in place, we are able to receive and record customer feedback in a variety of ways. Every customer contact, be it by internet, phone or letter, is captured onto a customer services database which is also used by other major retailers in the customer service industry. By properly using our technology, we are able to ensure that each and every customer receives an accurate, personal and timely response. As evident in the below graph, the largest single feedback channel is the internet. The Contact Us page was introduced onto the McDonalds website in 000 and ever since then it has been the most favoured way for our customers to provide feedback. As the chart above indicates, on average 48% of our customer contacts are received this way. The fact that this percentage is steadily increasing can be attributed to the general increase in internet usage and the ease, speed and simplicity this feedback channel provides. The remainder of contacts are received by letter and telephone. These contacts are then coded to reflect the type of feedback being given, a system that then enables them to analyse and report on this information. Letters are received into the department, manually logged and carefully coded to reflect the main cause of concern or query. The telephone calls we receive are sent through an automatic call divert system to ensure that they are tracked, monitored and timed. Unlike other systems, after the initial welcome message there are no further messages, menus or queues. The customer or restaurant employee is put straight through to a member of the Customer Services team for assistance.

Finally, one of the most important benefits of customer feedback is that it can be used and fed back into the business. The Customer Services department sits on many company crossfunctional projects and promotions, acting as the customers advocate and ensuring that we implement truly customer led initiatives. It is essential that they keep on listening to and valuing the most important part of their business their customers!