Report-2

Expansion of McDonalds to regional markets

Carbon copy: Management committee Date: 15 march 2009

Attention to: Panier salvam(co-director)

No of Reports: 1

No of pages:10

2.0 Expansion to regional markets in India

McDonald's India is a joint-venture company managed by Indians. There are a limited number of
customers in the Indian market. To build long-term business in India McDonalds are learning the nature
of the people and the market, it is essential to retain people once they have become customers.
Customers are not all the same. Around the world, McDonald's traditionally operates with local partners
or local management. In India too, McDonald's purchases form local suppliers. McDonald's constructs its
restaurants using local architects, contractors, labour and - where possible local materials. McDonald's
hires local personnel for all positions within the restaurants and contributes a portion of its success to
communities in the form of municipal taxes and reinvestment. Market research of McDonalds has
identified different types of customers. McDonald's advert, 1996. For example :

A parent with two children Visits McDonalds to give the children a treat.

Children Want to visit McDonalds as it is a fun place to eat.

A business customer Visits McDonalds during the day as service is

quick, the food tastes great and can be eaten in the
car without affecting a busy work schedule.

Teenagers Are attracted by the Saver Menu which is

affordable, and the internet access available in
restaurants.

These examples represent just a few of the benefits of McDonalds possible marketing option and the
customer satisfaction. Each has different reasons for coming to McDonalds 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.

2.1 Range of marketing strategy options

(4*4 Ps)

(Positioning/Branding)

Product
Price
Promotion
Place

2.1.1 The four Ps

The marketing mix is the combination of price, product, promotion and place that successfully markets a
product to focus of McDonalds.

I. Product

The product must be what the customer wants and has to be changed as tastes change. Most products
go through a life cycle which sees them eventually decline. Price must match the customers' idea of what
the product is worth. 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. 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.

Product life cycle

Sales

Maturity

Decline

Growth

Development

Introduction

Time

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.

ii. 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.

iii. 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.

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.

iv. 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.

2.1.2 Marketing objectives

The marketing strategy will be planned to meet clear objectives, with intermediate targets showing
progress along the way. The marketing strategy is the tool that lays out how marketing objectives will be
achieved. Objectives communicate what marketers want to achieve, guide marketing actions and are
used to measure how well a plan is working. They can be related to market share, sales, reaching the
target audience and creating awareness in the marketplace. Long-term objectives are broken down into
shorter-term measurable targets, which McDonalds uses as milestones along the way. Results can be
analysed regularly to see whether objectives are being met. This type of feedback allows the company to
change plans and allows flexibility. Once marketing objectives have been established, the next stage is to
define how they will be achieved. The marketing strategy is the statement of how objectives will be
delivered. It explains what marketing actions and resources will be used and how they will work
together. The company has developed a learning culture geared towards service excellence through its
comprehensive, structured series of classroom and on-the-job training programmes, culminating with a
diploma in "Hamburgerology" from McDonald's Hamburger University.

2.1.3 Evaluation of Benefits and Limitations

Benefits
McDonalds is relatively inexpensive when
compared to the ratio of cost against the
reach of the other fast foods. It can reach
wide Customers for a small fraction of
traditional advertising budgets. The
Service of the company allows customers
to Choose and purchase Food and services
at their own convenience. Therefore,
McDonalds have the advantage of
appealing to consumers in a medium that
can bring results quickly. The marketing
strategy of McDonalds is not under
recession to be panic and can develop the
strategic options for the company.
McDonalds also have the advantage of
measuring the statistics easily and
inexpensively. Nearly all aspects of its
marketing strategy can be traced,
measured, and tested. It is not under the
position to advertise to build it market it is
under the peoples mind and have a good
priority for McDonalds. Therefore,
customers can determine which service or
offerings are more appealing to the
audience. The results of marketing strategy
can be measured and tracked immediately
because the measurements of the
performance of the employees are tracked
for customer needs. Such measurement
cannot be achieved through any
advertising.
McDonalds marketing strategies directly
impact food purchasing and eating habits.
For example, in the late 1970s scientists
announced a possible link between eating
a high-fiber diet and a reduced risk of
cancer. However, consumers did not
immediately increase their consumption of
high-fiber cereals. But in 1984
advertisements claiming a relationship
Limitations
From the Customers perspective, the
inability of shoppers to touch, smell, taste
or "try on" tangible goods before making a
purchase can be limiting. However, there is
an industry standard for Customers to
reassure by having liberal return policies as
well as providing in-store pick-up services.
Insufficient ability to measure impact, lack
of internal capability, and difficulty
convincing senior management.
In response to public pressure, McDonald's
has sought to include more healthy choices
in its menu and has introduced a new
slogan to its recruitment posters: "Not bad
for a McJob". (The word McJob, first
attested in the mid-1980s and later
popularized by Canadian novelist Douglas
Coupland in his book Generation X, has
become a buzz word for low-paid,
unskilled work with few prospects or
benefits and little security.) McDonald's
disputes the idea that its restaurant jobs
have no prospects, noting that its CEO, Jim
Skinner, started working at the company as
a regular restaurant employee, and that 20
of its top 50 managers began work as
regular crew members. In 2007, the
company launched an advertising
campaign with the slogan "Would you like
a career with that?" on Irish television,
outlining that their jobs have many
prospects.
In a bid to tap into growing consumer
interest in the provenance of food, the
fast-food chain recently switched its
supplier of both coffee beans and milk. UK
chief executive Steve Easterbrook said:
"British consumers are increasingly
interested in the quality, sourcing and
ethics of the food and drink they buy".
 between high-fiber diets and protection
against cancer appeared, and by 1987
approximately 2 million households had
begun eating high-fiber cereal. Since then,
other health claims, supported by scientific
studies, have influenced consumers to
decrease consumption of foods high in
saturated fat and to increase consumption
of fruits, vegetables, skim milk, poultry,
and fish.
McDonald's has dubbed its new marketing
effort "Rolling Energy." The effort was
designed to focus on increasing credibility
with consumers at a time when people are
becoming more interested in taking an
active role in their diets. MacDonalds
benefit from cost reduction through
economies of scale because of its
enormous size and its huge global
presence allows it to diversify risk involved
with the economic performance of specific
countries.
McDonald's coffee is now brewed from
beans taken from stocks that have been
certified by the Rainforest Alliance, a
conservation group. Similarly, milk supplies
used for its hot drinks and milkshakes have
been switched to organic sources which
could account for 5% of the UK's organic
milk output.
McDonald's announced on May 22, 2008
that, in the U.S. and Canada, it will be
introducing cooking oil for its French fries
that contains no trans fats. The company
will use canola-based oil with corn and soy
oils by year's end for its baked items, pies
and cookies.

3.0 Changes in Marketing Environment for McDonalds

In April 2008, McDonald's announced that 11 of its Sheffield restaurants have been using a biomass trial
that had cut its waste and carbon footprint by half in the area. In this trial, waste from the restaurants
were collected by Veolia Environmental Services and used to produce energy at a power plant.
McDonald's plans to expand this project, although the lack of biomass power plants in the U.S. will
prevent this plan from becoming a national standard anytime soon. In addition, in Europe, McDonald's
has been recycling vegetable grease by converting it to fuel for their diesel trucks.

Furthermore, McDonald's has been using a corn-based bioplastic to produce containers for some of their
products. Although industries who use this product claim a carbon savings of 30% to 80%, a Guardian
study shows otherwise. The results show that this type of plastic does not break down in landfills as
efficiently as other conventional plastics. The extra energy it takes to recycle these plastic results in a
higher output of greenhouse gases. Also, the plastics can contaminate waste streams, causing other
recycled plastics to become unsaleable.
The U.S. Environmental Protection Agency has recognized McDonald's continuous effort to reduce solid
waste by designing more efficient packaging and by promoting the use of recycled-content materials.
McDonald's report that they are committed towards environmental leadership by effectively managing
electric energy, by conserving natural resources through recycling and reusing materials, and by
addressing water management issues within the restaurant.

3.2 Analyzing McDonalds in respond to changes

When McDonalds received criticism for its environmental policies in the 1970s, it began to make
substantial progress towards source reductions efforts. For instance, an average meal in the 1970sa
Big Mac, fries, and a drinkrequired 46 grams of packaging; today, it requires only 25 grams, allowing a
46 percent reduction. In addition, McDonalds eliminated the need for intermediate containers for cola
by having a delivery system that pumps syrup directly from the delivery truck into storage containers,
saving two million pounds of packaging annually. Overall, weight reductions in packaging and products,
as well as the increased usage of bulk packaging ultimately decreased packaging by 24 million pounds
annually.

3.3 Functional area to be developed

McDonalds must develop in the functional areas that is listed below in order to achieve its marketing
objectives, the company must concentrate in all factors listed below.

Provide faster service

Technology functions

Customer perception reading

Customer satisfaction

Research and development activities etc.

3.3.1 Provide faster service

The success of McDonald's is built upon the success of the service provided by the employees. In the
case of service McDonalds must be straight forward and more active to the customers, there must be
simple changes in the service in order to achieve the customers appreciation. This provides the
attraction to the customer for their regular visit. The faster service of the company makes the customer
to retrieve their hunger faster. Restaurant managers also must be given the opportunity to attain a
degree in hospitality through McDonald's University Accredited Programme. This promises customers
hotter and fresher food prepared only upon each order. Customers can also easily customize their menu
order (for example, more vegetables or no sauce in burgers) to meet dietary needs, with no lapse in
service time.

3.3.2 Technology Functions

In this age where technology is a key element in ensuring a company's success, The Company must
provide many automated machines for good and faster service. This makes time saving and less work for
the employees in McDonalds. This is the main functional aspect which the company has to consider for
their good marketing perception and for the customer satisfaction. Since McDonald's is one of the
world's most well-known and valuable brands and worlds leading food service retailer the company must
target on the technology wise like automated machines for service sector and preparing food machines
faster. As a result, managing its day-to-day operations is a major challenge and that the information and
communications technology requirements and infrastructure should be well placed. Moreover, this is
going to be cost-effective for the company.

3.3.3 Customer Perception Reading

The main functional area which the McDonalds had to anticipate a lot is customer perception Analysis. It
must bid to tap in growing consumer interest in the province of food . Employee engagement is critical in
inculcating a strong service culture. McDonald's achieves this by placing major emphasis on aligned and
open internal communications from the boardroom to the crew room. The management team schedules
quarterly sharing sessions with all restaurant managers to create a strong sense of ownership of the
company's quarterly goals. Ultimately, this discipline of aligned communication cascades down to the
counter crew who can then deliver better service in the restaurants.

3.3.4 Customer satisfaction

McDonalds must always listen and understand the customers lifestyle needs. The 24/7 and no
minimum order requirement demonstrate the commitment to always be relevant to our customers
lifestyles. It is all about the customers and how we can offer quality, tasty food at great value and
convenience. Customers craving for a McDonalds meal can easily call anytime without even having to
place a minimum order. A two dollars surcharge should not continue to apply. Be it breakfast in the
comfort of your own home or a meal in the office anytime of the day or night, we will gladly deliver any
of McDonalds menu choices you like. This includes our recently launched Mix N Match Happy Meals
and even our Everyday Value Savers. We are looking forward to our customers loving-captain cook
Forster, 1988.

3.3.5 Research and Development Activities

McDonalds need to examine how their rivals are adapting their prices and products to meet the
consumers needs, how well the rivals are selling and what marketing strategies they are using. Market
research should supply the company with all the information they require about consumers preferences,
whether they buy certain products, what design features are preferable and what kind of retail outfits
are most frequently used for purchasing certain food products. Quantitative data and Qualitative datas
must be developed in the form research activities. All parts of its organisation then have to work
together to ensure that the strategy reaches its objectives. Once the marketing strategy is in place,
various responsibilities are given to different individuals so that the plan can be implemented.

3.3.6 Achievements of marketing objectives at three years period

Activity Time Period Budget($)

Average age of big Mac product 2009-2011 1,000,000.
Promotions of big Mac product Complete year 2009 3,00,000
Mcdelivery service 2009-2011 50,000
Launched N mixed Happy meal 2009-2011 300,000
Reputation in training 2009-2011 25,000
Marketing Advertisements 2009-2011 1,00,000
Adapting automated machines 2009-2011 40,000
Total budget 1,815,000

Conclusion

McDonald's uses market research information to build a marketing strategy. All parts of its organisation
then have to work together to ensure that the strategy reaches its objectives. Once the marketing
strategy is in place, various responsibilities are given to different individuals so that the plan can be
implemented. Systems are put in place to obtain market feedback which measure success against short-
term targets. McDonalds has to ensure that this is done within the confines of a tightly controlled, finite
marketing budget.