mc donalda case analysis, Essays (university) of Finance

Download mc donalda case analysis and more Essays (university) Finance in PDF only on Docsity! lOMoAR cPSD|3470863 lOMoAR cPSD|3470863 MARKETING MANAGEMENT II { CASE STUDY } SUMBISSION DATE: 27/05/19 SUBMITTED TO: SUBMITTED BY: Dr. Dhanya J.S. Assistant Professor HARISHKUMAR G SRUTHY S CETSOM BATCH : A T3 MBA CETSOM lOMoAR cPSD|3470863 McDonald’s Case Study lOMoAR cPSD|3470863 announced that it was to start printing nutritional information on its packaging, including fat, salt, calorie and carbohydrate content, thus putting the information directly in the consumer’s hands and allowing them to make an informed decision about their meal choices7 McDonald’s has been forced to contend with a number of potential obstacles to growth in recent years, most notably stark criticism and a less-than-favorable global economic climate that has seen consumers reduce their discretionary spending. McDonald’s has, however, employed strategies to counter these problems, and the decisions the company has taken have allowed it to maintain a strong level of growth. The move towards a healthier menu, achieved by making changes to existing items and introducing new offerings, has helped satisfy some of its critics and attract those who are perhaps more health-conscious than the ‘traditional’ McDonald’s customer, while new items such as the McCafe range are helping the company attract new customers. The message has been reinforced by a relentless and innovative marketing campaign, which has helped make the McDonald’s brand one of the most recognized and valuable in the world. SWOT ANALYSIS Strengths: McDonalds has worked very hard to build a huge brand with 31,000 restaurants in 120 countries. There golden arches and Ronald McDonald are one of the most recognized symbols. McDonald’s market share is still increasing while most are losing market shares. Training managers is a serious business. They even have their own program to train managers to be the most professionally. They have global operations all over the world. A big part of the restaurants are franchised out. They have established excellent locations in places like theme parts, airports, Wal-Mart’s, and along well traveled roads. McDonalds is efficient in operating guidelines in the lOMoAR cPSD|3470863 assembly line fashion. Our McDonalds in Ruidoso has a very good drive through line. They keep the line moving. Weaknesses: McDonald’s food provides large amount of calories, but not so much nutrition. They have some very strict competition with Burger King and Wendy’s. McDonalds loses customers everyday favor of different brands. They lose money to training costs due to high turnover. There is not much of a variation in seasonal products that are offered. Some franchisees are becoming dissatisfied with fees that McDonald’s is forcing them to pay. As McDonalds keeps expanding, the amount of fees franchisees has to pay also goes up. It is causing some franchisees to sale their businesses. Opportunities: McDonalds should research on green energies and green packaging and find a way to make it part of their advertisements and marketing strategies. They can also advertise the capabilities of Wi-Fi services in McDonalds. They are more about favors and cultures in each county they enter, which gives them a chance to favors and culture of their country. Keep a low cost menu, because it attracts low income customers. McDonalds also can create more play places for the children in more restaurants. They can also do an upscale appearance to attract a more upscale clientele. Threats: Other fast food restaurants are being more of a threat to McDonalds every day. McDonalds is still no 1, but brands like Burger King and Wendy’s are becoming more of a threat every day. Consumers are starting to focus on healthier dieting plans. They are going to have to make a more balanced meal with fruits and vegetables in the servings. McDonalds will keep being a lOMoAR cPSD|3470863 target for Americans being obese because of things like Supersized Meals, no fruit or yogurt, very slim salad selection. Their marketing strategies have to reach a wide variety of people. Like small children all the way to adults. Criticism comes with how they try to market. Promotion and Communication Analysis McDonalds uses several outlets to promote their company. One of the most successful methods of promotion by McDonalds was by coming up with their latest jingle, “I’m loving it”. McDonalds, fortunately, is not one of those companies who have a hard time with brand recognition. The familiarity of using the same color pallet, the same sounding names for their products such as “McCafe” or “McDouble” are just a few examples of ways that McDonalds has succeeded in the Fast Food industry by mastering brand recognition. Recently, McDonalds has tried to attract a different type of consumer by offering healthier menu options. Many of McDonalds recent advertising campaigns has been centralized around tasty and nutritious food options, hoping to change their image from “greasy” to “fresh” by offering grilled chicken options and more salad choices. Giving back to the local community through charity organizations like the Charity Christmas Parade in Chicago and the Ronald McDonald house of charity is a few ways the company tries to promote a positive corporate image. This type of community outreach allows the public to view the company as more than just a fast food restaurant. Overall, McDonalds does a lot of publicity to strengthen their company name, give back to communities, and provide their customers with their everyday demands. lOMoAR cPSD|3470863 traditional fast-food items, such as hamburgers and fries. A burger for a burger substitute is the direct nature of this competition as each competitor’s main product is the hamburger. Unlike McDonald’s which only relies on its dollar menu value meal, Wendy’s has no such restrictions and is free to exploit the continued growth of the fast casual niche the remains the driving force behind restaurant expansion. Also, Wendy’s other advantage is the menu innovation, restaurant restorations and mobile marketing all figure into the Wendy’s recipe in winning more cliental. Non-Burger Segment Competition Let’s not forget also that non-burger competition has also increased. Actually, in this category we can count Pizza Hut, KFC, Subway and other vendors. Further we believe that Chipotle’s success is selling burritos may have reinvigorated the broader market for Mexican food. On the higher-end, McDonald’s has to compete with customers who are looking to healthier options like Subway. Therefore, the brand fights back by offering more healthy menus and underline the quality of their ingredients through advertising campaigns. Pizza Hut has the first mover advantage in the pizza chains, the delivery service of Pizza Hut is clearly a competitive advantage that it enjoys. Its delivery service is one of the quickest and who doesn’t want to have fast service. Pizza Hut is also known for its innovation of pizza coming up with new flavors and new types of pizza hut. The people want to try new things and Pizza Hut isn’t afraid to experiment. KFC its primary source of income is selling chicken. Its competitive advantage is a very strong financial background. KFC has been functioning as a multinational corporation for several decades. As a result, the company is familiar with the logistical and quality problems which accompany operating an international food operation, and has demonstrated that it can work with host countries and businesses. Within the food chain KFC also developed a new lOMoAR cPSD|3470863 advantage which is eco-friendly green KFC. The restaurant is design in cutting energy and water consumption by 30 percent and reducing CO2. Other operations of KFC help it reduce waste and recycle. Subway is a sandwich and salad restaurant that tries to target people that are trying to be much healthier. We can also say that one of the most competitive advantage of Subway is its healthy menu. The salads and sandwiches appeal much more to the people as compared to fried chicken, burgers, fries, and pizzas. With its advertising and promotion, Subway has long been highlighting its healthy food and has established itself as a healthy brand. Another advantage for subway that its location can be found in food courts, health clubs, hospitals, universities, amusements parks and just about anywhere. Location is a very big factor when trying to sell it products depending on what the market is doing. Also Subway unlike McDonald’s allows its franchisees to choose its own food suppliers, to ensure they can access the freshest ingredients. Completion Summary While other competitors come nowhere near McDonald in growth, sales or profit, many new entrants and established restaurants are growing in a rapid pace. It won’t be too long when we start seeing a bigger corporation then McDonalds. McDonald’s competition comes not only from fast food restaurants, but also from healthier restaurant like subway which is growing at a rapid pace and marketing its product to people that want to become healthier. In a world were change is good McDonald’s is going to have to learn how to innovate once again and come up with new products to offer customer in order to stick to being the biggest competitor in the fast food industry. lOMoAR cPSD|3470863 Also, because McDonald’s is so big it is catching many eyes, and is becoming a target for unwanted publicity and legal challenges. In order for the company to keep its position it has it will have to create healthier options like reducing the trans-fats in their food, but should be placing marketing value on their greatest strengths of value for the money, ease of accessibility, and well-trained, efficient staff. Discussion Questions 1. How are customer’s tastes changing in the fast-food industry? What impact do these changes have on McDonald’s? 2. How well are these changes in customer tastes and preferences being reflected in competitive strategies in the industry? 3. What are Mcdonald strenghts and weaknesses and what conclusions do you draw about its future? 4. Should McDonalds develop a separate strategy for the heavy user segment of the fast food industry? 5. What should Jack Greenberg do to grow sales, profits, and market share at McDonalds? lOMoAR cPSD|3470863 DISCUSSION QUESTIONS 1. How are customer’s tastes changing in the fast-food industry? What impact do these changes have on McDonald’s? In the background of the company, the health movement has certainly forced the company to offer more items such as apples in their happy meals, and salads on the menus, also low calorie items have been added. A new marketing strategy was implemented that focused on tasty and nutritious food. 2. How well are these changes in customer tastes and preferences being reflected in competitive strategies in the industry? Almost every fast-food chain now offers a “healthy option” menu with a list of items that are below 600 calories, and all of the nutritional facts regarding these products are placed on wrappers and containers. The health movement and certainly the First Lady’s campaign on healthy eating and exercise have caused a great deal of awareness for fast-food dining, and this has caused companies to change their menus and mottos. 3. What are Mc Donald strength and weaknesses and what conclusions do you draw about its future? Their strengths are that they are a national and international brand and they are a household name known by almost every living creature. The company is in 119 countries and 33,000 restaurants worldwide, they adapt very well to the culture which the restaurant is placed, and thrive in any environment. Their lOMoAR cPSD|3470863 weaknesses are that they are a high caloric intake provider and almost everything on their menu is above 700 calories and packed full of GMO’s and other unrecognizable products that probably don’t nourish our bodies the way they should and thus linking obesity to these kinds of foods. It is imperative that McDonald’s generate new products that are healthy and organic. McDonald’s future is fine. It strengths outweigh its weaknesses. The company is still one of the most well-known companies. The only challenge it faces is also associated with “cheap and greasy.” In the future they will have to come up with a way to eliminate its grease, innovate the menu, and market more healthy products. Strengths ➢ Intangible assets – Positive company social-image (Ronald McDonald House), Name recognition, and brand-loyalty ➢ Market leader in mature market: possesses three times thee sales volume of nearest competitor and 7% of market sales. ➢ Increases in assets, shareholder equity and numbers of restaurants with decrease in number of shares outstanding ➢ Accessible locations ➢ Strategic marketing alliances – movie tie-ins, McDonald’s brand toys ➢ Scalable product marketing and pricing – Uses Company owned locations to test market product and price lOMoAR cPSD|3470863 ➢ Weaknesses ➢ Market share grew more slowly than that of competitors ➢ Debt increases in 2000 & 2001 not producing asset gains shown in previous three-years ➢ Operating income, EBT, free cash flow declines ➢ Dissatisfaction with food quality ➢ Susceptible to negative publicity 4. Should McDonalds develop a separate strategy for the heavy user segment of the fast food industry? Yes. McDonalds needs to come up with a strategy to keep the heavy users, or in McDonald’s case, single males over the age of 30, interested in continuing to eat at McDonalds Food chains. Targeting the demographic that is considered “heavy users” is the first step in figuring out a strategy that keeps the customer happy and choosing to come back to McDonalds. Targeting demographics by advertising directly to the heavy user consumer or by analyzing which food product seems to be the returning customer’s favorite is a few ways to ensure to continue to attract the heavy user. Discounting meals and keeping the same great quality or familiar products is the best strategy a company can have for heavy users.