FAQ’s WHY DID McDonald's CLOSED ITS OPERATION AT DO TALWAR & NAZIMABAD? REVENUE ? Strategic Marketing
Introduction History > 1954 – 1955 > 1965 – 1973 > 1974 – 1993 Business Model > 15% restaurants company owned > Rent charged along with franchising fees > Supply of raw materials via approved suppliers Types of restaurant > Drive through service > Counter service (with/without) play area Strategic Marketing
Competition > Burger King (global) > KFC (global/local) > Others (global/local) Global Sales Improvement > Over all – 4.8% > U.S – 0.6% > Europe – 5.4% > Asia/Pacific, Middle East & Africa – 10.4% Global Sales Revenue 2009 - $22744 mn Strategic Marketing
McDonald’s Pakistan Opened in 1993 (Lahore) under Lakson Group of Companies Presently operating 23 branches Over 1200 employees Over PKR 30bn has been invested in the country. Over PKR 10bn is being paid as taxes and duties in comparison to 4bn paid by KFC Pakistan Revenue Strategic Marketing
Industry Life Cycle Market growth rate 13% - 14% per annum. Core competencies > Delivery speed > Customer care > Cleanliness Strategic Marketing
Vision, Mission and Objectives McDonald’s Vision
"McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile."
“McDonald's mission is to be our customers' favorite place and way to eat with inspired people who delight each customer with unmatched quality, service, cleanliness and value every time ... we invite you to be the part of this winning team and give yourself an opportunity to grow with the family of people striving to create smiles on the faces of millions of people everyday”. Strategic Marketing
Vision, Mission and Objectives The Planning and Implementation Matrix Strategic Marketing
Strategies Differentiation By pursuing a strategy of differentiation, the organization gives an emphasis to a particular element of the marketing mix that is seen by the customers to be important and as a result provides a meaningful basis for competitive advantage. This de-massification of markets has led McDonald's towards strategies of product variety marketing and ultimately target marketing. As a result, the company’s marketing effort today reflects buyers’ needs for a far wider variety of tastes and demand which are packaged in a number of different sizes and shapes. Benefits achieved by McDonald’s following a differentiated Strategy: Creation of strong brand identities (association of “Mc”) Distancing from others in the market (KFC for chicken, McDonald's for variety and fun seeking lovers) Flexibility.
Competitor Analysis McDonald's doesn’t believe that it has a direct competition because the market is segmented on a much diversified basis. They are of the point that food industry is the only industry where it is very difficult to alter the taste buds of a customer. Strategic Marketing
Environmental Scanning McDonald‘s thinks customer feedback is vital and they try to make it as easy as possible for their customers to let them know what they were thinking and deciding upon. Their target audience is very fickle. They enjoy trying new restaurants, and are constantly adapting to new developments and fads. Strategic Marketing
Porter’s Five Forces Threat of New Entrants > High and unfavorable > A lot of new Dine In restaurants are already in operation. > Also the demand pattern is changing people are moving towards more expensive restaurants as they find more value for their money there. Strategic Marketing
Contd….. Political => Political factor can have the major impact on threat of entry. In a region like 3rd world there is hardly any certainty and this has lead to negative impact on the potential big investors. Economic => Due to the rising income disparity and the adverse economic conditions, unemployment is on the rise due to which the labor cost is decreasing, increasing the wealth of already well off people which is big factor helping the Dine In restaurants to grow. Social => People are now more status conscious in our society and want more varieties to choose from. Technological => With the rise in the technology data can be easily processed and analyzed. With the innovation in technology the overall labor cost is reduced together with the fact that self service is promoted. Strategic Marketing
Contd….. Bargaining Power of Buyers > High in the industry as the cost of switching is very low. > As a food loving nation which makes the industry more attractive and profitable and volumes are easy to generate. > PEST forces such as increasing population is an appealing opportunity, however, the economic situation of the region brings along adverse effects on the industry. Strategic Marketing
Contd….. Political => This political factor has no direct affect on the bargaining power of buyers. Economic => The increasing population reduces the power of buyers.
Social => The trend is towards dining out, which is increasing the total consumers, thus, reducing their bargaining power. Technological => The advancement in technology makes it possible for the buyer to gather all the information quickly and make informed decisions. Strategic Marketing
Contd….. Threat of Substitutes > High as there are plenty of other options available already in the market. > People generally like going to specific restaurants and cafés because of their splendid experience in the past including ambience and food. Strategic Marketing
Contd….. PEST forces > There are many substitutes of the fast food industry. > Decrease in the purchasing power of the people could lessen their visits to the restaurants thereby increasing the threat of substitutes of lower quality than ones of fast food industry. > With the increase in the health awareness, people are substituting from the junk food to a more healthy food. Strategic Marketing
Contd….. Bargaining Power of Suppliers > High because the inputs are not easily substituted. > The inputs are usually of a perishable nature, thus, stock-ups are not possible. > McDonald's in Pakistan has to follow a strict quality procedure that is defined by the mother company. > McDonald's has to import the food related raw materials as no Pakistani company can match their standards. Strategic Marketing
Contd….. Political => There is a need for political will from the government side which can help grow dairy farming sector in Pakistan and bring it onto international standards. Economic => Current economic conditions are not good around the world a lot of food related industries have shut their operations which have limited the number of suppliers in the market hence increasing the bargaining power for them.
Social => There has been a lot of controversies with McDonald's abroad related to its suppliers. Technological => Technology has made it possible to manage and control the poultry industry more efficiently, thus enabling more suppliers to come in. Strategic Marketing
Contd….. Rivalry among existing competition > The rivalry amongst the existing firms is moderate to high. > The market share for each of them is deteriorating. Strategic Marketing
Contd….. Political => The government could play a very important role. If taxes are reduced, then the chances of rivalry will increase further. Economic => As a food loving nation more and more investors are showing interest in investing in this business. Social => Controversies such as “All the earning from McDonald's go into Israel’s pocket” is a common rivalry tactics that is being used against them. Technological => Technology has made it possible for competitors to affectively reduce cost, therefore enabling them to match each other and imitate others competitive advantage. This increases the rivalry between competitors. Strategic Marketing
Market Research and Analysis Market research and analysis is conducted in-house and is also being outsourced to companies such as AC Nielson etc depending on their creditability in the market. The outsourced research firm is given the job of finding out the brand value, quality, hygiene, perceived value etc. The research need also arises at opening of new outlets or launch of new products (Meals) or new campaigns. Strategic Marketing
The Comparative Assessment of Competitors (Numerical Presentation) Strategic Marketing
Strategic Markting The Comparative Assessment of Competitors (Numerical Presentation)
Key Driving Forces Affecting the Industry Key Driving Forces Affecting the Industry
Regulatory influences and government policy changes
Changing societal concerns, attitudes and lifestyles
McDonald’s SUSTAINABLE COMPETITIVE ADVANTAGE What makes it still strong and ranked among the top business concerns is its core competences both internally and externally and its sustainable competitive advantages. SCA is the advantage a company has which is difficult or impossible for other companies to possess or break through. McDonald's SCA are: Strong Brand Image Flexibility Strategic Marketing
McDonald's emphasizes a lot of focus on buyer behavior. It usually asks the following questions in order to understand the market better.
Who is in the market and what is in extent of their power with regard to the organization? What do they buy? Why do they buy? Who is involved in buying? How do they buy? When do they buy? Where do they buy? Strategic Marketing
Market Segmentation, Targeting and Positioning McDonald's limits itself to chicken and beef offerings and has also started catering to sea related food. This enables McDonald's Pakistan to divide its segments on certain principles. As far as segmentation is concerned, McDonald's makes combination of demographics, geographic, behavioral and psychographics segmentation to identify various segments:
Market Positioning In Pakistan and also all over the world, McDonald’s primary focus is for families with kids and has positioned itself in the minds of kids as a play place, where they can have fun and food together. In the mind of adults and teenagers it has positioned itself as the best fast food restaurant. Strategic Marketing
Health Considerations: Considering the healthy eating trends McDonald's has started to publish nutrition figures which helps in educating its customer about what they eat and what impact does that food would have on their health. McDonald's also wants to inform their customer that they are really concerned about their customer health. Strategic Marketing
Launching A Product McDonald’s usually relies on the below characteristics while launching its campaigns or products in the market. Strategic Marketing
Campaign Based Launches: McDonald's regularly introduces new innovative deals which as per McDonald's are their “Campaign Based Launches” which can further be divided into Product Based Campaigns and Brand Based Campaigns. As the name suggests PBC are introduced on a launch of a new product or deals or on running meals. BBC is usually launched in order to enhance the brand image of McDonald's.
For better understanding lets review a live example. McDonald's launched its Hit Offer Campaign all over Pakistan in which they were offering a spicy chicken burgers + drink for only Rs.95.
Innovator or Follower? McDonald's takes an innovative approach towards its product development and is not scared of experimenting in the market. According to the statistics gathered they have a success ratio of above 95% considering their product launches in Pakistan. It was one of the pioneers who partnered with labels in bringing English movies. Movies such as Shrek, Madagascar 2, Ice Age 3 were formally introduced by McDonald's in Pakistan. Co Branding McDonald's strongly believes that collaboration and alliances are very important for a brand to move towards success. For this reason McDonald's has co branded with Ufone, Titan, PIA, Coke, Nescafe etc. Strategic Marketing
Contd Latest Launches (from last year till the date of publishing of this report)
Product Related: 4 launches which are: Mozzarella cheese sticks, Chocolate Orange pie, Mango Shakes and new flavors for McFlurry.
Campaign Related: McDonald's has launched over 50 brand related campaigns in the last year which is a record in itself. It has worked really hard to capture and settle in the minds of its audience and has also successfully achieved it. One of the recent campaigns includes its collaboration with a music band named “Call”. The members of the band are from now on also their brand ambassadors for McDonald's.
Approaches to Brand Development Brand Mapping Strategic Marketing
PROMOTION Elements of the Promotional Mix McDonald's pays special attention to all components of its communication mix to reach customers with 360 degree promotional techniques in cost effective manners. Various economic and value meals offer greater value for money for the customer. These aspects along with brand image are propagated through four main communication vehicles: Advertising, PR, CRM, BTL and Event marketing together these four elements along with BTL activation form the promotional mix of the company. Strategic Marketing
DETAILED SYNOPSIS OF EACH ELEMENT Advertising Sales Promotion Public Relations (PR) Customer Relationship Management (CRM): Event Marketing and BTL Activities Strategic Marketing
Distribution Management & Retailing Strategic Marketing
Determining Effectiveness of Marketing Efforts 1. Incremental sales revenue resulting from a particular campaign 2. Ratio of cost to revenue 3. Cost per sale generated by each outlet 4. Changes in value of sales generated 5. Cost of new customer acquisition from marketing efforts 6. Cost of customer retention. Strategic Marketing
Monitoring Service Quality Internal External - Feedback Strategic Marketing
Management Control and Corrective Actions Allowing for Uncertainty Closed-Loop Control Feed Back Control Approach to Control Strategic Marketing
Conclusion With this report we hope that we have done a comprehensive job of outlining the status of McDonald’s. As a brand it is going quite strong in Pakistan. As a market leader, with aggressive and prudent marketing savvy and a desire to remain competitive and vibrant in a globalized economy, McDonald’s is well poised to face the future Strategic Marketing
References http://www.McDonald’s.com.pk/ http://McDonald’s.com/ Strategic Marketing Management, Second Edition, Wilson Giligan Strategic Marketing