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Mc Donalds Pakistan (Presence & Competition)

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  • 1. STRATEGIC MARKETING MANAGEMENT AND THE CASE OF McDONALD’S IN PAKISTAN
    Presentation
    Strategic Marketing
  • 2. Mr. Jamshed AhmedSTRATEGIC MARKETING MANAGEMENT Spring 2010Szabist
    Strategic Marketing
  • 3. Group Members
    Muffadal Ali (0935109)
    Hussain Khairi (0935105)
    Muhammad Jaber Haqqani (0935111)
    Shaikh Faizan Ahmed (0935117)
    Syed Anser Ahmed (0935121)
    Rizwan Saleh (0935124)
    Strategic Marketing
  • 4. Contents
    Competitor/Environment Analysis
    Introduction
    1
    5
    McDonald’s Pakistan
    Key Driving Forces
    2
    6
    Vision, Mission & Objectives
    Customer Analysis
    3
    7
    Market Audit & SWOT Analysis
    Market Segmentation, Target & Positioning
    4
    8
    Strategic Marketing
  • 5. Contents
    Product Portfolio
    Pricing
    10
    9
    Distribution & Promotion
    McDonald's Financials
    11
    12
    Management Control & Corrective Actions
    Conclusion
    13
    14
    References
    15
    Strategic Marketing
  • 6. FAQ’s
    WHY DID McDonald's CLOSED ITS OPERATION AT DO TALWAR & NAZIMABAD?
    REVENUE ?
    Strategic Marketing
  • 7. 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
  • 8. 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
  • 9. 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
  • 10. Industry Life Cycle
    Market growth rate 13% - 14% per annum.
    Core competencies
    > Delivery speed
    > Customer care
    > Cleanliness
    Strategic Marketing
  • 11. 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
     
    “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
  • 12. Vision, Mission and Objectives
    The Planning and Implementation Matrix
    Strategic Marketing
  • 13. Objectives
    • Long term Growth
    • 14. Competitive position
    • 15. Market Development effort
    Strategic Marketing
  • 16. 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.
     
     
    Strategic Marketing
  • 17. Strategic Marketing
  • 18. Market Auditing & SWOT
    Strategic Marketing
  • 19. Contd…
    Strategic Marketing
  • 20. Strategic Marketing
    The Opportunity Matrix
    The Threat Matrix
    Contd…
  • 21. Segment Analysis
    Strategic Marketing
  • 22. 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
  • 23. Contd…..
    Strategic Groups
    Strategic Marketing
  • 24. Contd…..
    Strategic Marketing
  • 25. 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
  • 26. 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
  • 27. 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
  • 28. 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
  • 29. 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
  • 30. 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
  • 31. 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
  • 32. 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
  • 33. 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
  • 34. 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
  • 35. 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
  • 36. 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
  • 37. The Comparative Assessment of Competitors (Numerical Presentation)
    Strategic Marketing
  • 38. Strategic Markting
    The Comparative Assessment of Competitors (Numerical Presentation)
  • 39. Key Driving Forces Affecting the Industry
    Key Driving Forces Affecting the Industry
    • The Internet and new E-Commerce opportunities
    • 40. Increasing globalization of the industry
    • 41. Product Innovation
    • 42. Technological Change
    • 43. Entry or Exit of major firms
    • 44. Changes in cost and efficiency
    • 45. Regulatory influences and government policy changes
    • 46. Changing societal concerns, attitudes and lifestyles
    Strategic Marketing
  • 47. 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
  • 48. Strategic Marketing
  • 49. Customer Analysis 
     
    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
  • 50. Buying Behavior
    Strategic Marketing
  • 51. 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:
    • Geographic Segmentation-
    • 52. Demographic segmentation-
    • 53. Behavioral/Psychographic Segmentation
    Strategic Marketing
  • 54. 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
  • 55. Product Portfolio
    Strategic Marketing
    Star: Fries.
    Cash Cow: Spicy McCrispy Chicken Deluxe
    Question Mark: Happy Meal.
    Dog: Quarter Pounder – Beef
  • 56. Product Line
    Strategic Marketing
  • 57. 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
  • 58. Launching A Product
    McDonald’s usually relies on the below characteristics while launching its campaigns or products in the market.
    Strategic Marketing
  • 59. 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.
    Strategic Marketing
  • 60. New Product Strategies
    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
  • 63. 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.
     
    Strategic Marketing
  • 64. Approaches to Brand Development
    Brand Mapping
    Strategic Marketing
  • 65. Value Proposition
    Strategic Marketing
  • 66. Value Proposition
    Strategic Marketing
  • 67. PRICING
    McDonald's Cost Determination
    C3 Model of Pricing
    Strategic Marketing
  • 70. Factors that Influence the Pricing Strategy
    • The firms corporate and marketing objectives
    • 71. The firms product range
    • 72. The existence or scope of unique selling propositions
    • 73. The nature of market
    • 74. Previous Strategies
    • 75. Currency fluctuations
    • 76. Opportunities of market growth
    Strategic Marketing
  • 77. Price Quality Relationship
    Strategic Marketing
  • 78. 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
  • 79. DETAILED SYNOPSIS OF EACH ELEMENT
    Advertising
    Sales Promotion
    Public Relations (PR)
    Customer Relationship Management (CRM):
    Event Marketing and BTL Activities
    Strategic Marketing
  • 80. Distribution Management & Retailing 
    Strategic Marketing
  • 81. 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
  • 82. Monitoring Service Quality
    Internal
    External - Feedback
    Strategic Marketing
  • 83. Management Control and Corrective Actions
    Allowing for Uncertainty 
    Closed-Loop Control
    Feed Back Control
    Approach to Control
    Strategic Marketing
  • 84. 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
  • 85. References
    http://www.McDonald’s.com.pk/
    http://McDonald’s.com/
    Strategic Marketing Management, Second Edition, Wilson Giligan
    Strategic Marketing
  • 86. Thank You !
    Strategic Marketing

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