Marketing Environment (4Cs)
Company (Value, Tactic, Strengths and Weaknesses)
Customers (Segmentation, Customer Profile & Target Market)
Competitors (Competitive Analysis and its Positioning)
Change (Environmental Factors - Opportunities and Threats)
Recap: TOWS Analysis and STV Model
Marketing Opportunities
Marketing Mix – 4Ps
Financial Statements
Overview: Impact and Implications
2

3

COMPANY
Value & Tactic
CHANGE Marketing Mix (4Ps)
Strengths & Weaknesses
CUSTOMERS COMPETITORS
4

The McDonald's System leverages the unique talents, strengths
and assets of our diversity around the globe in order to be our
customers' favourite place and way to eat.
Promote Diversity and Inclusion among our Employees,
Owner/Operator's and Suppliers who represent the diverse
populations McDonald's serves around the globe.
5

Global Outlook of McDonalds
US$23 billion in total revenues in 2007 (record high)
1.6 million restaurant employees worldwide
24,500 restaurants around the world offering extended or
24-hour service
1 billion more customers were served in 2007 than in 2006
6

McDonald’s in Singapore
First opened in October 1979 at Liat Towers
To date, more than 100 McDonald’s restaurant across the island
Serving 1.2 million customers every week
6,000 employees to keep McDonald’s running in Singapore
Source: McDonald’s Singapore
7

Analyzing the STV Triangle:
2 Components (‘Tactic’ and ‘Value’)
‘Strategy’ to be covered under Customers and Competitors
8

9

Value (Heart Share):
Process
Cost-Efficient,
Transparent
(nutritional info), Service
Product Quality
(freshness) Quality Customer
Service, Brand
24-hour outlets,
Online/Phone Orders,
Prompt Delivery Service
10

Tactic (Market Share):
Selling
Transactional,
Phone Orders,
Internet Orders,
Marketing Mix
Drive-Thru
Product Differentiation
Price
Promotion
Place
Kids’ Favorite Place
Shared Lifestyle
11

Tactic (Marketing Mix):
Product: Wide Range of Food Products
Wide Breadth and low depth
Drinks soft drinks, non-carbonated drinks, fruit juices,
milk, coffees (Mccafe)
Food McChicken burger, Big Mac, Filet-O’Fish, McWings,
McNuggets, French Fries
Dessert Ice Cream Cone, Sundae, McFlurry, Cakes
Sides Apple Dippers, Corn Cup, Apple Pie
12

McDonalds’ Product Line
Breakfast Main Sides Dessert Drinks Others
13

Tactic (Marketing Mix):
Price: Competitive and Affordable Pricing
Also practice International Pricing and Price Discrimination
(Student Meal - $4.50)
Drinks soft drinks and non-carbonated drinks ($1.65 - $2.05),
fruit juices ($2.50), milk ($1.75)
Mccafe above $3.50 for a drink or cake
Food burgers ($2 - $4.35), Meals ($5.95 onwards)
Dessert $0.60 - $2.50
Sides $1.00 - $2.55
14

15

Tactic (Marketing Mix):
Promotion: TV Advertisement, Endorsement, Coupons,
Exclusive distribution of movie premiums
(Happy Meal), Loss Leader ($2 McChicken), “I’m Lovin’ It”
16

Tactic (Marketing Mix):
Product: Wide Range of Food Products (breadth vs. depth)
Price: Competitive and Affordable Pricing, Price Discrimination
Promotion: TV Advertisement, Endorsement, Coupons,
Exclusive distribution of movie premiums, Loss Leader….
Place: Direct Marketing Channel, Intensive Distribution,
Physical Outlets (opened by McDonalds or Franchisees)
17

Tactic (Market Share):
Selling
Transactional,
Phone Orders,
Internet Orders,
Marketing Mix
Drive-Thru
Product: Wide Range
Price: Competitive, Affordable, Differentiation
Price Discrimination
Promotion: Coupons, TV ads
Place: Intensive Distribution Kids’ Favorite Place
Shared Lifestyle
18

TOWS: Strengths and Weaknesses
Market Leader with a Market Share of 27%
19

TOWS: Strengths and Weaknesses
Market Leader with a Market Share of 27%
1.50% McDonalds
2.10%
2.00% 1.50% KFC
4.70% Burger King
5.00% 27% 7-Eleven
8.40% Subway
20.60% Long John Silver
9.40% Delifrance
MOS Burger
Haagen Dazs
Fast Food in Singapore (dated 15-Oct-2007)
Source: Euromonitor International Yoshinoya
20

BCG Model
20%
MARKET GROWTH
(Cash Utilization)
10%
0%
10x 5x x 0.5x 0.1x
RELATIVE COMPETITIVE POSITION
Market Share (Cash Generation)

TOWS: Strengths and Weaknesses
STRENGTHS
Market Leader with 27% of the market share
Global brand power, Global Presence
Economies of scale (transfer cost savings to customers)
Convenient Locations and Payment Methods (Ezlink)
Appeals to the mass market (especially the kids)
24/7 Operations, Drive Thru, Delivery (extensive coverage of the market)
Halal certification
Ronald McDonald Children’s Charity
WEAKNESSES
Franchising fragility – control over franchises
McDonalds is often perceived as junk food
22

Societal Marketing Concept
Ronald McDonald Children’s Charity (RMCC)
donates its partial earnings to the foundation
World Children’s Day
23

24

COMPANY
Value & Tactic
CHANGE Marketing Mix (4Ps)
Strengths & Weaknesses
CUSTOMERS COMPETITORS
Customer Profile
Segmentation (Geographic,
Demographic, Psychographic…)
Target Market
25

McDonald’s Restaurants in Singapore
Woodlands Toa Payoh
Bishan Sembawang Ang Mo Kio
Yishun Hougang
Boon Keng
Bukit Timah Serangoon
Clementi
Choa Chu Kang
Jurong Bedok
Commonwealth Changi
Dover Pasir Ris
NUS Tampines
NTU Aljunied
West Coast Eunos
Potong Pasir
Bugis Tiong Bahru
Orchard Raffles Place HarbourFront
Chinatown City Hall
Marina Square 26

Market Segmentation
Geographically-segmented Islandwide
Tampines, Woodlands, Clementi, Orchard, NTU…
McCafes – 22 outlets islandwide
Demographic Segmentation
Kids, Family, Students
Psychographic Segmentation
Convenience and Lifestyle
Behavioral Segmentation
Occasions, e.g. birthday parties

Target Market (and Customer Profile)
Kids - 3 to 7 years
Happy Meal (healthier choice) with free toys
Families - Weekend outings or meals
Drive-Thru, Takeaways, McDelivery, Happy Meal
Students - Primary, Secondary, JC, Poly, Uni (a place to
hang out or study)
Student Meals, outlets at SP, NYP, NUS and NTU, 24-Hour
Café goers - for quieter ambience, a place to relax or
read or even business entertainments
McCafe
Working Adults - seek convenience meals; “grab and go”
Drive-Thru, Takeaways, McDelivery, 24-Hour

29

COMPANY
Value & Tactic
CHANGE Marketing Mix (4Ps)
Strengths & Weaknesses
CUSTOMERS COMPETITORS
Customer Profile KFC
Segmentation (Geographic, Burger King
Demographic, Psychographic…) Subway
Target Market Starbucks
Coffee Shops & Food Courts
30

Fast Food Industry - Market Share
2.10% 1.50% McDonalds
2.00% 1.50% KFC
4.70% Burger King
5.00% 27% 7-Eleven
8.40% Subway
20.60% Long John Silver
9.40% Delifrance
MOS Burger
Haagen Dazs Oligopoly
Fast Food in Singapore (dated 15-Oct-2007)
Source: Euromonitor International Yoshinoya Market?
31

Types of Competitions
Brand (direct competition)
McDonalds, Burger King, KFC, KFC’s Chicky Club, Subway, Carl’s Jr
Form (similar in form but not direct)
Long John Silver, Pizza Hut, Yoshinoya
Generic (satisfy the same need of hunger)
Chinese Restaurants, Food Courts, Coffee Shops, etc
Desire
Ice-cream treat, movies, shopping, etc

Competitors
Starbucks
Coffee Bean
Coffee Club
Spinelli Coffee
TCC
Pacific Coffee Club
33

Competitors’ Analysis
CHARACTERISTICS
Market Share 27% 20.6% 9.4%
Products Burgers, McCafe Chicken, Burgers Burgers
Kids Meal Happy Meal Chicky Meal BK Kid’s Meal
Average Value Meal $5.95 $6.40 $5.90
Promotions TV ads, Coupons TV ads, Coupons TV ads, Coupons
Distribution (Outlets) 115 77 42
Delivery Service 6777-3777 6222-6111 None
Charity/Sponsorship RMCC, Olympics KFC Colonel's Kids Make-A-Wish
Foundation
Sources: McDonalds, KFC and Burger King Webpages (Singapore)
34

RONALD MCDONALD
Every child's best friend. He is funny, generous, warm, smart,
friendly and caring. He is always surrounded by his McDonaldland
friends - Hamburglar, Grimace, Birdie and Fry Gals and and Guys.
Today, Ronald McDonald speaks more than 24 languages.
He remains the same friendly, fun-loving person. His favourite food
is still hamburgers - and his favourite people are still children!
Source: http://www.mcdonalds.com.sg/brand_slogan.htm

“i’m lovin’ it”
DON’T JUST LIVE LIFE, LOVE IT
\"i'm lovin' it\" focuses on the optimism and enthusiasm that mark
great times and enriching discoveries.
Whatever you pursue - be it sports, education, creative endeavours,
career advancement, boisterous companionship or intimate
moments - there is every reason to like what you do and love who
you are. Don't just live life. Love it - at McDonald's, we're certain it'll
love you back!
Source: http://www.mcdonalds.com.sg/brand_slogan.htm

Positioning
“Ronald McDonald” branding
“I’m Lovin’ It”, creates the shared lifestyle and new branding
Sponsorship – Olympics (since 1976), World Cup (since 1994)
Ronald McDonalds Children’s Charity
Delivering Quality Service to its customers
Service Quality Class Recognition (1998)
Excellent Service Award (1996, 2003 – 2006)
Equal employment opportunities
Employs the elderly
Best Employers in Singapore 2007, SHRI HR Awards 2007
Only 24-hour fast-food restaurant in Singapore
Sources: http://www.mcdonalds.ca/en/aboutus/sport.aspx, http://www.mcdonalds.com.sg/awards.htm 37

38

CHANGE
Health and Wellness COMPANY
Ageing Population Value & Tactic
Inflation rate Marketing Mix (4Ps)
Birth Rates Strengths & Weaknesses
CUSTOMERS COMPETITORS
Customer Profile KFC
Segmentation (Geographic, Burger King
Demographic, Psychographic…) Subway
Target Market Starbucks
Coffee Shops & Food Courts
39

1. Health and Wellness
More Singaporeans are becoming health conscious
General perception has been formed that fast foods are
considered as unhealthy, junk food.
In general, the Singapore Government has been active in encouraging
healthy living and lifestyles from diet regimes for national servicemen and
students to posters in hawker centres encouraging the consumption of
more vegetables and less meat. Correspondingly Singaporeans, too, are
increasingly becoming more health-conscious.
Levy taxes on unhealthy foods to tackle obesity
Source: The Straits Times, Oct 26, 2007
40

1. Health and Wellness
Organic fare makes its way to fine dining
3 March 2008
The Business Times, Singapore Healthy in the heartlands
7 June 2008
TODAY, MediaCorp Press Ltd
Is a light carbonated soft drink = plain water?
4 May 2008
The Straits Times, Singapore Press Holdings Limited Good or bad for health?
28 August 2008
The Straits Times

1. Health and Wellness
McDonalds provide the nutritional facts of its products and
introduced more healthy food in its menu such as the chicken
wrap, salad, corn and apple dippers.
The move by the fast-food giant in Singapore is part of a healthy-image
makeover the Golden Arches is undergoing globally. The burger chain
would label the fat, salt, calorie and carbohydrate content of its food.
The Health Promotion Board is working with the fast-food chain on
providing nutritional education... help consumers make sense of it.
McDonald's takes healthy bite with nutrition labels
Source: The Straits Times, 29 December 2005
42

1. Health and Wellness
You can \"veg out\" every first day of the month at any McDonald's
restaurant. Purchase Fresh Sidekicks such as Corn Cup, Apple Dippers or
Fresh Salad for $1 only, with no additional purchase necessary.
\"McDonald's 'Veg-out Day' initiative highlights the availability of fruit and
veggies at its outlets, in line with our support for the Health Promotion
Board's 'eat 2 servings of fruit + 2 servings of veggies' public educational
outreach programmes
McDONALD'S DECLARES FIRST DAY OF THE MONTH A \"VEG OUT\" DAY!
Source: TODAY, 4 August 2006
43

2. Ageing Population
Census Median Singapore Dependency Ratios
Year Age
Year Total Child Old-age
1921 28 1960 83 79 4
1931 26 1965 86 81 5
1970 73 67 6
1947 23
1975 59 52 7
1957 19 1980 47 40 7
1970 20 1985 42 34 7
Increasing median age
1990 37 29 8
1980 24
1995 40 31 9
1990 29 2000 41 31 10
2000 34 2005 39 27 12
2010 35 21 14
2010 37 2015 36 17 18
2020 39 2020 42 17 25
2030 41 2025 54 19 35
2030 68 22 46
Report on the Ageing Population (1999)
Source: Singapore Census of Population 2000 Source: Singapore Dependency Ratios
United Nations: World Population Prospects: Revision 2006

2. Ageing Population
Due to improving living
standards and medical
technologies, there has
been a rising trend of
ageing population
Population pyramid:
lopsided in 2030?
Increasing trend in the
dependency ratio Source: Demographic Indicators, Singapore Department of Statistics, 2007
45

3. Inflation Rate
Consumer Price Index
Source : Singapore Statistics Department, August 2008 Source : Singapore Statistics Department, 2007
Singapore is faced with a rising inflation
Singapore’s annual inflation rate was 6.5% in July
Source: Channel NewsAsia - Singapore's July inflation up 6.5% on-year
46

Period Total fertility
1950-1955 6.40
1955-1960 5.99
1960-1965 4.93
4. Birth Rates
1965-1970 3.46 Declining Trend (6.4 vs 1.29)
1970-1975 2.62
1975-1980 1.87
Although Singapore is experiencing
1980-1985 1.69 declining birth rates, the government
1985-1990 1.71 is trying hard to promote birth.
1990-1995 1.76
1995-2000 1.57
2000-2005 1.35
2005-2010 1.29
2010-2015 1.29
Source: Singapore Total fertility (children per woman)
United Nations: World Population Prospects: Revision 2006
47

4. Birth Rates
In the recent National’s Day Rally 2008, PM Lee announced the
increase in benefits for mothers as a move to encourage more
women to give birth.
These included longer paid maternity leave (extended to four
months), childcare subsidies, tax credits, subsidies for in-vitro
fertilisation and more child allowances for mothers.
Will Birth Rate
Increase?

IN SUMMARY:
TOWS Analysis & STV Model
49

THREATS
Intense Competitions
Growth of health conscious eaters
Outbreak of diseases (madcow, H5N1, bird flu, SARS)
Recent hygiene complaints affect sales
OPPORTUNITIES
Expansion of other cashless payment systems
Wellbeing and ethical image improvement
Expansion of the children market (other business – market penetration)
Setting up vegetarian menus or outlets to expand the market
WEAKNESSES
Franchising fragility – control over franchises
Perceived as junk food
STRENGTHS
Market Leader with 27% of the market share
Global brand power, Global Presence
Economies of scale
Convenient Locations and Payment Methods (Ezlink)
Appeals to the mass market (especially the kids)
24/7 Operations, Drive Thru, Delivery (extensive coverage of the market)
Halal certification
Ronald McDonald Children’s Society

SELLING
Transactional Selling,
Phone/Internet Orders,
SEGMENTATION
Drive-Thru
Segment Marketing
MARKETING MIX
TARGETING
Product: Wide Range
Kids, Families, Student,
Brand Price: Competitive, Affordable,
Café-goers, Working
Integrity Int’l Pricing, Price Discrimination
Adults POSITIONING DIFFERENTIATION Promotion: Coupons, TV ads
i’m lovin’ it Kid’s Favorite Place Place: Intensive Distribution
Ronald McDonald Shared Lifestyle
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SERVICE
Good Customer Service, 24-
Hour outlets, Delivery
Service
PROCESS
Cost efficient, transparent,
Quality products
51

Marketing Opportunities
Venturing into the Vegetarian outlet
Revamping existing outlets
Introducing healthier menus
Expanding the Kids’ market
Venturing into new business - clothings
53

Why the Kids Market?
Children remains as one of the main target market for
McDonalds, why not expand the market?
“Every parent loves their kid(s)”
CROSS-SELLING opportunities
Despite the declining birth rate, we will expected a fall in
population for that target market.
However, we can BOOST demand through…..
54

Why the Kids Market?
Demand = Population x Price x Frequency
Population = ↓
Price = Competitive Pricing or Penetration Pricing
Frequency = ↑
Thus, our marketing objective will be to look at ways to
increase frequency, buying behaviours and upselling.
Demand
Function 55

Ansoff’s Product/ Market Expansion Grid
Existing Product New Product
Market Product
Existing Penetration Development
Market
Market
New Development Diversification
Market
56

“McDonaldland”
MARKETING STRATEGIES
57

Product
PRODUCT
McDonaldland Concept:
McDonaldland-themed Playground
McDonaldland Membership Card
McDonaldland Exclusive Line of Kids Wear

Floor Plan for McDonaldland
59

Product

Product
Front view
McDonaldland
Membership Card
Targeted at kids below 12 years
Membership Fees
S$10 per year
S$25 for 3years
Register at any McDonalds
outlets in Singapore.
Register online,
www.mcdonaldsland.com.sg/membership.htm
Back view

Product
Register and hop on with Ronald and friends as they
embark on monthly learning journeys to places of
interest, farms. Attend weekly drawing/singing sessions
organized. Make New friends!
Come and join Ronald for go-active fun! Move to the
beat with fun and simple workout – learn creative ways
to exercise, keep fit with Ronald!
Enjoy exclusive offers with McDonaldland!
Be rewarded with gifts on your birthdays
McDonald - 10% off birthday party packages
Popular – 10% off regular priced items
Yamaha – 10% off courses
Swensons – 15% off birthday cakes and many more! 62

Product
McDonaldland Membership Card
How our Points System Works?
Flash your card and collect points as you dine and retail with us.
Activities Points
McDonaldland Activities 10 pts
Happy Meal Set 20 pts
McDonaldland Kids Wear 50 pts
Referral of Friends 100 pts
63

Product
McDonaldland Membership Card
How to redeem the points?
With your points earned, exchange points to redeem meals, kids
wear and many other attractive items for FREE!
Redemption Options Points
Mystery Gift 40 pts
Vanilla Ice Cream Cone 60 pts
Regular French Fries 80 pts
Cheeseburger 100 pts
Happy Meal 200 pts
McDonaldland Apparels 300 pts
64

Product
McDonaldland Membership Card
Kids Identity – We all have it!
Let the kids be McDonaldland’s advocates!
With the points system, our little advocates will be
driven to spread by word of mouth and through peer
influence the benefits of McDonaldland Membership Card.
DADDY!!!
They all have it!
I want it too!
65

Product
McDonaldland vs Chicky Club
McDonaldland KFC’s Chicky Club
Membership Fees $10 per year $10.20 per year
$25 for 3 years
Registration procedure At any McDonaldland outlets or Only through roadshows
online
Benefits McDonald - 10% off purchases KFC – 10% off purchases &
& birthday party packages birthday party packages
Popular – 10% off regular Pizza Hut – 10% off a la carte
priced items purchases
Yamaha– 10% off courses City Chain – 10% off non-
Swenson – 15% off birthday promotional house brand
cakes Fox Kids – 10% off regular
: priced items
Points System Accumulate points and -NA-
redeem freebies
66

McDonaldland Kids Wear
Targeted at kids
7 colours per design;
Red, Pink, Blue, White, Black, Green
and Yellow
Sizes; XS, S, M, L, XL

Product
McDonaldland Kids Wear
Housebrand Designs
- McDonald’s own characters
Movie-designed Tees
- Movies: Madagascar 2 (release 13 Nov 2008)
Exclusive Distributorship of Merchandise
Tap on Happy Meal (existing relationship with
Disney, Pixar, Dreamworks, etc) to extend the new
product line of clothings
Price: $8 to $12.50

Price
PRICE
PRODUCT PRICING
Membership Fees $10 per year /
$25 for 3 years
Kids Wear
- Housebrand $8.00 per piece
- Movie Characters $12.50 per piece
McDonaldLand $11 per set (basic combo)
Bundled Offer $15 per set (movie combo)
69

Price
Bundled Offer
1 Happy Meal of your choice
A top from McDonaldland Kids Wear
1 Mystery gift
70

Place
PLACE
Three existing McDonald outlets will be revamped
Outlets located in areas with the highest concentration of kids
indicators: age of the housing estates, no of primary school
Proposed Areas:
Yishun Central
Tampines Central
West Coast Park
71

Promotion
PROMOTION
Banners
Outside McDonaldland outlets to create awareness
Roadshows
a max. of 3 roadshows a month around Singapore (near
shopping malls or MRT stations) to create awareness and
encourage membership sign ups
Public Relation - sponsorship of Kids Central
Membership perks and benefits
Bundling offers to spur buying behaviour
Launch McDonaldland concept on Children’s Day (every
Children’s Day is our birthday)
72

Brand
Integrity
POSITIONING DIFFERENTIATION
i’m lovin’ it Kid’s Favorite Place
Ronald McDonald Shared Lifestyle
McDonaldland
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“McDonaldland”
FINANCIAL STATEMENT
Accounting Period – 1 Oct 2008 – 31 Sept 2009
Accounting Period – 1 Oct 2009 – 31 Sept 2010
74

PROJECTED SALES
SALES Year 1
Membership 20,352*$10.00 $203,520
Clothes - Housebrand 13,568*$8.00 $108,544
Clothes - Movie Character 40,704*$12.50 $508,800
$820,864
Assumption
Population of kids age 14 and below 678,400
3% of the kids take up our membership 20,352
Cost of membership $10
2% of the kids purchase 1 of housebrand top 13,568
Cost of Housebrand Top $8.00
2% of the kids will purchase movie tops 13,568 678.4
Average 3 kids movie release per year 40,704
Cost of Movie Character Top $12.50
Source: http://www.singstat.gov.sg/pubn/popn/respop.pdf

PROJECTED SALES
SALES Year 1
Membership 20,352*$10.00 $203,520
Clothes - Housebrand 13,568*$8.00 $108,544
Clothes - Movie Character 40,704*$12.50 $508,800
$820,864
LESS COST
Membership Card 20,352*$1.00 $20,352
Clothes - Housebrand 13,568*$4.00 $54,272
Clothes - Movie Character 40,704*$4.00 $162,816
$237,440
Gross Profit $725,888
76

PROJECTED SALES
Gross Profit $725,888
Less: Other Operating Cost
Salary $4.50/hr, 3 outlets $73,913
Renovation Costs $100,000*3 outlets $300,000
Promotional Costs
- public relations Kids Central $200,000
- banners $600*6 banners $3,600
- roadshow $6,000*12 months $72,000
Miscellaneous Fee $53,048
$702,560
Net profit/(loss) before tax ($179,136)
77

SALES Year 1 Year 2
Membership $203,520 $142,464
Clothes - Housebrand $108,544 $119,398
Clothes - Movie Character $508,800 $559,680
$820,864 $821,542
LESS COST
Membership Card $20,352 $14,246
Clothes - Housebrand $54,272 $59,699
Distributorship cost 60000 $80,000
Clothes - Movie Character $162,816 $179,098
$297,440 $333,043
Gross Profit $523,424 $488,499
Less Other Operating Cost
Salary $73,913 $73,913
Renovation Cost $300,000 0
Promotion
- public relations $200,000 $200,000
- banners $3,600 0
- roadshow $72,000 $36,000
Miscellaneous Fee $53,048 $53,048
$702,560 $362,960
Net profit/ (loss) after tax -$179,136 $125,539 78

Impact and Implications
Introductory stage of the PLC
In the first year of McDonaldland, we incur a net loss $179,136.
This is due to the high initial cost of entry such as renovation
costs and materializing of promotion efforts to increase awareness.
However, when the brand name becomes established, profits
should be experienced (breakeven) as reflected in our financial
statement of a net profit of $125,539 in year 2.
Future
Prospects?
79

QUESTIONS &
ANSWERS