McDonald's Marketing Strategy

McDonald's: An Analytical Report

Zhanhao Li

Siyuan Cheng

Sheng Hong

Songwen Hu

Moonhyun Hwang

Hongye Wang

Helen Khau

GMGT 2010

Section A01

Dr. Rakesh Mittoo

May 27, 2015

Executive Summary

McDonald’s was founded in 1940 and has been around for longer than anyone can remember. As one of the oldest burger chains, they are internationally recognized. Anyone growing up in the world inherits this knowledge as it has become a part of human history. McDonald’s uses franchises as its main business model and operates in over 100 countries with the objective of offering food of high and stable quality. They have a variety of products and are always adapting with consumer requests, hence they have different menus in every country to cater to the tastes of different people, as well as offer more health conscious options to cater to the diet craze of the twenty-first century. They also offer a variety of services including free Wi-Fi, discounts, services for children and elderly people, as well as making charitable donations. The general population, particularly children, teenagers, seniors, students, and urban families are targeted as a whole with regards to product and price that is deemed suitable to meet the market’s needs. Many advertising outlets are used and vast amounts of money are put into marketing such as Super-Bowl ads for example. They are very proactive in world events as they sponsor many different organizations such as the World Cup and Nascar. McDonald’s has reached a very mature stage of their business cycle and grow on a smaller scale through consistent monitoring. Key ideologies they maintain are the fast rate of production and low cost to consumer, though they would benefit as a whole by making efforts to remove the misconception and attached negative connotations of fast food in relations to the public’s health that the general population has of them.

Date:         May 27, 2015

To:                Dr. Rakesh Mittoo

From:         Zhanhao Li, Siyuan Cheng, Sheng Hong, Songwen Hu,    ffffffffffffffffffMoonhyun Hwang, Hongye Wang, Helen Khau

Subject:         A Research Report on McDonald’s Marketing Strategies

Introduction

Background

McDonald’s had become one of the largest fast food chain restaurants in the world. According to McDonald’s Corporation, their restaurants primarily offer quick and easy to serve food, such as hamburgers, fillets, french fries, and pop drinks in over 36,000 restaurants in 121 countries. Statistically, around 69 million people are served every day worldwide. In 1954, Ray Kroc, one of the founders of McDonald’s, popularized the franchising business strategy. Up to the end of 2014, “approximately 80% of McDonald’s restaurants were franchised, of which around 57% are conventional franchisees, 24% are licensed to foreign affiliates or developmental licensees, and over 18% are company operated.” The main goals of McDonald’s is to provide high and stable quality food while, “modernizing the customer experience” worldwide.

Market Share and Competitors

According to market share statistics, McDonald’s is the current market leader of the fast food industry; becoming the most valuable fast food brand in the world. According to The Statistic Portal, in 2013, McDonald’s shared almost 21.7% of the United States fast food market. Major four competitors include Yum! Brands Inc., Doctor’s Associates Inc., Wendy’s International Inc., and Burger King Corporation which share around 24% of the U.S. market.

Purpose of Research

As the flagship of the industry, marketing is the most valued part of the business. This research focuses on the marketing aspect of McDonald’s and investigates the company’s products and services, market segmentation, marketing communication programs, international branding, operational strategies, and recommendations.

Methodology

Secondary Sources

The secondary resources used in order to investigate the marketing aspects and successes of McDonald’s consist largely of a variety of websites that were gathered together. Rather than focusing on one source, we found that analyzing an abundance of sources that specialized on each topic chosen to be discussed, would prove much more efficient.

Primary Sources

We decided to conduct a survey that consisted of 11 questions that would pique the general public on what their fast food consumption habits were, preferences when selecting a restaurant, and their opinions on brand loyalty and other competitors. The survey results, in conjunction with our secondary resources, were used to provide more insight towards the effectiveness of McDonald’s marketing strategies on the consumers and how they can be improved upon. Questionnaires were handed out at the University of Manitoba and was also conducted online through social media websites such as Facebook. The turnout was 108 participants with an even female to male ratio. One of the most interesting findings derived from the surveys included how many times consumers ate fast food per week. We found that more than 90% ate fast food at least once a week. From this result, it is clear that there is a demand and market for fast food and McDonald’s will need to find ways to continue differentiating themselves from other chain restaurants in order to remain competitive.

Findings

Product

In the original McDonald’s restaurant in California, only the simplest fast food staples such as hot dogs, burgers, and milkshakes were served. Currently, as McDonald's has become a global brand and must cater to tastes around the world, it offers over a hundred menu items. In recent years, due to the public awareness with regards to health and safety, Mcdonald's has also begun to introduce a wider selection of healthier food choices such as a grilled chicken instead of the traditional greasy patty, as well as a variety of salads.

Services and Promotions

Services offered by McDonalds are generally the same in all cities around the world. McDonald's emphasizes having a good time, so needs of the general public are attempted to be met. First and foremost are the play centers offered for children that include slides and ball pools that are often in a separated area of the restaurant. In this way, other families bringing kids to the store will not be disturbed. McDonald’s has a birthday party arrangement that a consumer can utilize, where parties can also be hosted in these play centers. Other services include free and fast WiFi for everyone, which is oftentimes most commonly used by students who would like to do homework while grabbing a quick meal in the process. The gift card offered by McDonald's is called the “Arch Card.” Similar to that of a Tim Hortons card, this card can be loaded up and used towards future McDonald’s purchases.