Company Background

Discuss About The Handbook Of Product Placement In Mass Media?

McDonalds is, globally, the largest fast food chain based out of the United States of America (Forbes, 2017). The company is headquartered in California and has company owned outlets as well as franchise in over 120 countries (The Guardian, 2013). As on 2016, McDonalds was a proud owner of approximately 36900 outlets. The purpose of this report is to understanding the marketing intricacies of McDonalds on a micro and macro level with the help of marketing tools like PESTLE, SWOT and Marketing mix (4 Ps of marketing).

McDonald was founded back in 1940 by brothers Richard and Maurice McDonald. The firm was later purchased by their sole franchise distributer Ray Kroc. It is the world’s fourth largest private employer with over 1.9 million employees across the globe (BBC, 2012). McDonalds is currently conducting its business under the leadership of Andrew McKenna as Chairman and Steve Easterbrook as president and CEO.

Micro analysis of any organization predominantly talks about analyzing elements inside the organization (Forbes, 2017).

Customers of McDonalds primarily include families and children who appeal to the happy meal, workers who wish to consumer burger on the go and students who are looking for inexpensive fast food joints (McDonalds UK, 2017).

Fast food market held a value of over USD 539 billion in 2016 (Global News Wire, 2016). Hence the industry is filled with eminent players and who are consistently competing for management share. Competitors of McDonalds are global fast food chains with a remarkable international presence. Major competitors include KFC, Burger King, Subway, Pizza Hut, Domino’s Pizza, and Taco Bell etc. The following figure elaborates on world’s top 10 global fast food chains and their brand value (Statista 2017).

Figure 1: Brand value of fast food brands in 2017

The company McDonalds is a well-established name in the world. Being a part of the food industry, it consistently aims to improve its quality and follows stringent procedures to maintain the value of their brand. The key strengths of McDonalds includes its wide reach and high brand awareness. McDonalds has outlets in over 120 countries and the brand has brilliantly managed to maintain consistency throughout the globe along with customizing the product according to different countries using the strategy of ‘Think Global, Act Local’ (Forbes, 2014).  Due to its high reach, the brand’s TOMA (Top of mind awareness score) is very high and leads to repeated buying (CNBC, 2015).

Micro Analysis

Like every coin has two sides, McDonalds’ weaknesses lie with the extreme rigidity of its process. McDonalds’ procedures are similar in every country where the brand operates. This may lead to frustration among employees and the company therefore takes time to respond to market variations. Another weakness that McDonalds is faced with is lack of customization. Products of the brand are highly standardized in every country, this leaves less room for customers to modify their products according to their taste buds.

Macro Analysis of the firm throws light on various factors affecting the companies’ productivity outside the company.

Fast food industry faces issues from the government whose aim is to reduce the fast food culture and reduce obesity especially in Singapore (Pacific Health Summit, 2008). The health promotion board of the country often indulges in promotion of a healthy lifestyle and organizes various events to discourage junk food eating (Health promotion board, 2014). By doing this they indirectly end up De-Marketing fast food chains like McDonalds. Company must secure its profit margins in every country after detailed study of the political scenario in that country as it tends to affect the company’s bottom line.

Signs of a weak economy have been present in Singapore in the recent years and this is evidenced by empty malls and low sales. According to government data, Singapore showed the worst slowdown in the last four years (South China morning post, 2016). Singapore’s gdp might be growing slowly but that growth is not sustainable. In the future, the forecasted growth rate is close to 1% which is really low (Channel News Asia, 2017). This slowing of economy leads to lesser demand of products which is expected to hurt businesses like McDonalds as they are not necessary goods.

The socio-cultural environment is best suited for McDonalds as the consumption of fast food is growing. People have longer working hours and both the partners have jobs. This makes them increasingly dependent on the fast and handy availability of McDonalds. However, a lot of people are also now shifting to a healthier lifestyle so in order to secure its position in the future, McDonalds should come up with healthier operations. It gives positive impact on the operations of the business and also helps to maximize the sales (Sachdeva, 2015).

In the current scenario most people are well versed with technology in fact most people prefer ordering their food online or via mobile apps. Any restaurant which is not available on these platforms automatically has a competitive disadvantage. McDonalds has tied up with delivery apps including Zomato, Uber Eats, Deliveroo, Food Panda and Gourmet to go etc. Competitors of McDonalds like KFC and Burger king are also technologically averse hence to gain an advantage, McDonalds can work on increasing the speed of delivery and quality of servicemen. The company should also use the updated technology, so that the customer can feel comfortable to purchase the product (Galician, 2013). 

Macro Analysis

McDonalds must operate all its functions under the health and safety legal framework of Singapore. Recently, Indian government closed down over 160 outlets of McDonalds due to failure to meet food quality standards (CNBC, 2017). In order to avoid such law suits, company should also take into consideration all the controls that are essential by the health agency (Percy, 2014). 

The fast food market is very competitive in Singapore especially with the rise of so many players in the industry. Fast foods are made available at a low price and a high reach. All the brands are currently competing to gain market share. In order to survive the competition, it is imperative that McDonalds comes up with plans of product differentiation (Mukhopadhyay, 2017).

Market segmentation refers to dividing the market into various segments as per the needs of the consumers. This makes it easier for companies to target. This segmentation can be done on several factors, McDonalds in Singapore should segment the market into three different bases (Paul & Roy, 2014).

Demographic Segmentation: Considering demographics, McDonalds should segment the market into various age groups, working and non-working professionals, income groups and gender.

Psychographic Segmentation: Psychographic segmentation is done on the basis of consumer lifestyle, eating habits, religious beliefs and spending patterns.

Geographical segmentation: Geographically segmentation is done on the basis of livelihood in the area, genre of people, income class inhabiting the area and distance from competitors.

Demographic targeting: McDonalds specifically targets students during the day as they are often on the lookout for low price food eating joint. Office goers who need a quick and convenient breakfast option on the go are targeted during the wee hours of morning. And families with children have been targeted specially after the introduction of happy meals which comes with a toy.

Psychographic targeting: People who are not very health conscious and believe in a very convenient lifestyle are targeted by McDonalds. People whose eating habits involve eating out often find McDonalds as one of the most convenient options due to its high reach and comfortable culture. Basing on the income group, low income group people are also efficiently targeted by the brand due to availability of low price food items.

Geographic targeting: McDonalds often launches its stores close to schools and colleges in order to target students. Many Malls like Tampines, Hougang, Pioneer, Riverval and Bedok have a McDonald outlet because of the high footfall there. Various office quarters also have McDonalds facility specifically targeted to serve office goers who require a quick snack between breaks.

Market Strategy

Product or service differentiation refers to the art of distinguishing the brand from its customers. This is essential in the competitive scenario that exists today. McDonalds’ biggest differentiation strategies are as below:

Fast service: Today in the world of business and extremely tight schedules, McDonalds takes immense pride in the speed of its service. This high speed is achieved with the help of high standardization and hiring efficient staff.

Low Price products: In the slowing economy and decreasing buying power of consumers, McDonalds offers quick snack options at a low price. This helps in increased market share by targeting more consumers.

High reach: McDonalds, today, holds the highest market share in in the fast food industry owing to its high number of outlets across the globe. Its international reach makes it a market leader and increases its visibility to its customers.

Positioning refers to the image that consumers have in their minds about the brand. This includes what customers feel about the brand, how they perceive it and eventually will they buy its products or not. McDonalds has positioned itself as a low price fast food joint that has a very high reach in the country as well as internationally. McDonalds boasts of high quality products and is most suited for people who are not very health conscious and believe in a convenient lifestyle.

The logo and mascot of McDonalds have helped the brand gain high awareness and ability to recognize. The arch shaped logo and bright yellow and red colors make the logo visible from a distance. The mascot, Ronald McDonald is a clown seated outside every McDonald outlet and highly appeals to children.

Product is defined by the primary offering of a company. Product offered by McDonalds are low cost, appealing to taste buds burgers, fries and wraps. Their menu is changed as per the needs of the local market. Certain outlets are kept entirely vegetarian keeping in mind the local preferences of the consumers. The product is standardized and is prepared in the same manner all over the globe, this gives McDonald’s food a consistent taste irrespective of where it is eaten. 

The price at which the company sells its product plays an important role in defining its target market, sales and company profits. McDonald’s products are priced less as compared to its competitors, which gives the brand a price advantage. For Example, its Barbeque beef burger with egg costs $4.5, Grilled chicken McWrap is priced at $6.20 and a simple cheeseburger starts from a meagre $2.80 (McDonalds Singapore Menu, 2017). This makes McDonald a hot destination for youngsters.

McDonalds has over 36900 stores in over 120 countries. The company outlet is spread throughout the cities which make them very accessible and easy to reach to the consumers (De Mooij, 2013). Place plays a very important role in ensuring a high reach and increased visibility of the brand. One of the smartest decision involved placing McDonalds’ outlets at the entry of highways and close to schools and colleges.

Promotion is one of the most important factor involved in increasing visibility of a brand. McDonalds’ logo and mascot are used at every advertisement, billboard, signage and outlet. This increases the ability of a consumer to recognize brands. Besides this, McDonalds has done various television advertisements, newspaper ads and has worked on its social media visibility. McDonald actively responds to its tweets and Facebook messages and creates a two way platform for customer. Attractive tagline ‘I am loving it’ is used by the company and has gained a lot of traction.

McDonalds is a leading fast food store with a high market share and immense brand value. A Few recommendation to McDonalds brand would be to firstly ensure a very high quality of food. The industry of food and beverage survives solely on the basis of quality, if that is gone, nothing remains. Secondly the brand should work on customization of products and increase its menu options. Specifically introducing healthier snack options is extremely imperative in order to survive the competition in the market and target the changing lifestyles of its consumers. Lastly, efforts should be put in to increase the attractiveness of McDonald stores. At present, they are very basic with no frills. This reduces the number of consumers who would otherwise be interested in a dining out experience.

Conclusions

As is clear by the report, McDonald is huge brand and is doing fairly well for itself. It has a large number of stores and a wide reach in over 120 countries. McDonalds has positioned itself as a low price, high quality fast food brand aimed at serving people who appeal to a convenient lifestyle. Specifically the brand target school and college students, office goers and families with children. The biggest advantage of the brand lies in the consistency of its taste and ability to localize as per every country. Another factor to McDonald’s advantage is that the land and building of every outlet is owned by the company, this reduces costs of rent and secondly helps make more money in franchise models for the company.

McDonalds must ensure that the quality of food served is up to the mark. McDonalds should also work on making its outlets more attractive to appeal dine in customers. It should build more 24 hour open outlets, at least one in every city, as there is almost negligible competition in this segment (overnight open restaurants) and is a great source of income by helping people’s midnight hunger pangs. Lastly, an image reconstruction is called for as the logo, official mascot as well as the ‘I am loving it’ tagline is being used since a long time. A change in brand structuring and image would be refreshing and should help the brand by giving a kick start in to the slowing economy.

References

BBC, 2012, ‘Which is the world’s biggest employer’, https://www.bbc.com/news/magazine-17429786, viewed on 20 September, 2017.

The Guardian, 2013, ‘McDonalds’ restaurants: Where are they’, https://www.theguardian.com/news/datablog/2013/jul/17/mcdonalds-restaurants-where-are-they, viewed on 20 September, 2017.

Forbes, 2017, ‘Top 10 Global fast food brands’, https://www.forbes.com/pictures/feji45hfkh/1-mcdonalds-3/#1373ddd215a7, viewed on 20 September, 2017.

McDonalds UK, 2017, ‘Target Nursing’, https://www.mcdonalds.co.uk/ukhome/whatmakesmcdonalds/questions/running-the-business/business-strategy/who-is-your-target-market-audience.html, viewed on 20 September, 2017.

Forbes, 2017, ‘In marketing both the micro and the macro matter’, https://www.forbes.com/sites/forbescommunicationscouncil/2017/08/09/in-marketing-both-the-micro-and-the-macro-matter/#2ac75ec52dc8, viewed on 20 September, 2017.

Global News Wire, 2017, ’Global fast food market’, https://globenewswire.com/news-release/2017/03/01/929307/0/en/Global-Fast-Food-Market-will-reach-USD-690-80-Billion-in-2022-Zion-Market-Research.html, viewed on 20 September, 2017.

Statista, 2017, ‘Brand value of ten most valuable fast food brands’, https://www.statista.com/statistics/273057/value-of-the-most-valuable-fast-food-brands-worldwide/, viewed on 20 September, 2017.

Forbes, 2014, ‘McDonalds’ winning strategy’, https://www.forbes.com/sites/panosmourdoukoutas/2012/04/20/mcdonalds-winning-strategy-at-home-and-abroad/#15df3dc52a92, viewed on 20 September, 2017.

CNBC, 2015, ‘McDonalds’ brand perception’, https://www.cnbc.com/2015/10/14/mcdonalds-brand-perception-at-a-two-year-high.html, viewed on 20 September, 2017.

Pacific Health Summit, 2017, ‘Obesity prevention and control efforts in Singapore’, https://pacifichealthsummit.org/downloads/Obesity%20Prevention%20and%20Control%20Efforts%20in%20Singapore%20-%202008%20Case%20Study.pdf, viewed on 20 September, 2017.

Health Promotion Board, 2014, ‘Singapore’s obesity issue’, https://www.hpb.gov.sg/article/health-promotion-board-ramps-up-efforts-to-combat-singapore’s-obesity-issue-with-new-season-of-million-kg-challenge, viewed on 20 September, 2017.

South China morning post, 2016, ‘the week in Asia’, https://www.scmp.com/week-asia/business/article/2028084/no-recession-heres-why-singapore-faces-bigger-worries-ahead, viewed on 21 September, 2017.

Channel News Asia, ‘Singapore’s economy is slowing’, https://www.channelnewsasia.com/news/business/singapore-s-economy-is-slowing-what-you-need-to-know-7708744, viewed on 21 September, 2017.

Sachdeva, A. (2015). Evaluation and selection of differentiation as a strategy for McDonald’s.

Galician, M. L. (2013). Handbook of product placement in the mass media: New strategies in marketing theory, practice, trends, and ethics. Routledge.

CNBC, 2017, ‘McDonalds to shut 169 outlets in India’, https://www.cnbc.com/2017/08/21/mcdonalds-to-shut-169-outlets-in-india.html, viewed on 21 September, 2017.

Percy, L. (2014). Strategic integrated marketing communications. Routledge.

Mukhopadhyay, S. K., & Ye, G. (2017). Effect of Csr on Product Differentiation in the Presence of Cost Advantage. Journal of Economic and Social Development, 4(1), 15. paradoxes. Sage Publications.

Galician, M. L. (2013). Handbook of product placement in the mass media: New strategies in marketing theory, practice, trends, and ethics. Routledge.

De Mooij, M. (2013). Global marketing and advertising: Understanding cultural paradoxes. Sage Publications.

McDonald Singapore menu, 2017, ‘Menu’, https://www.mcdelivery.com.sg/sg/browse/menu.html?daypartId=21&catId=30, viewed on 21 September, 2017.