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

CHANGE CUSTOMERS

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

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.

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

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

Analyzing the STV Triangle:

2 Components (Tactic and Value) Strategy to be covered under Customers and Competitors

Value (Heart Share):

Process
Cost-Efficient, Transparent
(nutritional info),

Service
Quality Customer Service, 24-hour outlets, Online/Phone Orders, Prompt Delivery Service

Product Quality
(freshness)

Brand

10

Tactic (Market Share):

Selling
Transactional, Phone Orders, Internet Orders, Drive-Thru

Marketing Mix
Product Price Promotion Place

Differentiation
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-OFish, 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), Im 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, Drive-Thru

Marketing Mix
Product: Wide Range Price: Competitive, Affordable, Price Discrimination Promotion: Coupons, TV ads Place: Intensive Distribution

Differentiation
Kids Favorite Place Shared Lifestyle

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

Haagen Dazs Yoshinoya

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20% MARKET GROWTH

(Cash Utilization)

BCG Model

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 Childrens Charity

WEAKNESSES
Franchising fragility control over franchises McDonalds is often perceived as junk food
22

Societal Marketing Concept

Ronald McDonald Childrens Charity (RMCC)
donates its partial earnings to the foundation

World Childrens Day

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24

CHANGE

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

CUSTOMERS Customer Profile Segmentation (Geographic,

Demographic, Psychographic)

Target Market

25

McDonalds Restaurants in Singapore

Woodlands Toa Payoh Bishan Sembawang Yishun Bukit Timah Clementi Choa Chu Kang Jurong Commonwealth Dover NUS NTU West Coast Ang Mo Kio Hougang Boon Keng Serangoon

Bedok Changi Pasir Ris Tampines Aljunied Eunos Potong Pasir

Bugis Tiong Bahru Orchard Raffles Place Chinatown City Hall Marina Square

HarbourFront
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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

Caf 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

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CHANGE

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

Demographic, Psychographic)

Target Market

Fast Food Industry - Market Share

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

Haagen Dazs Yoshinoya

Oligopoly Market?
31

Types of Competitions
Brand (direct competition)
McDonalds, Burger King, KFC, KFCs Chicky Club, Subway, Carls 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

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

Sources: McDonalds, KFC and Burger King Webpages (Singapore)

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

im lovin it
DONT 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 Im Lovin It, creates the shared lifestyle and new branding Sponsorship Olympics (since 1976), World Cup (since 1994) Ronald McDonalds Childrens 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 Ageing Population Inflation rate Birth Rates CUSTOMERS Customer Profile Segmentation (Geographic,
Demographic, Psychographic)

COMPANY Value & Tactic Marketing Mix (4Ps) Strengths & Weaknesses COMPETITORS KFC Burger King Subway Starbucks Coffee Shops & Food Courts
39

Target Market

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 Year 1921 1931 1947 1957 1970 1980 1990 2000 2010 2020 2030 Median Age 28 26 23 19 24 29 34 37 39 41 Increasing median age 20 Singapore Dependency Ratios Year Total Child Old-age
1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 83 86 73 59 47 42 37 40 41 39 35 36 42 54 68 79 81 67 52 40 34 29 31 31 27 21 17 17 19 22 4 5 6 7 7 7 8 9 10 12 14 18 25 35 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

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3. Inflation Rate

Consumer Price Index Source : Singapore Statistics Department, August 2008

Source : Singapore Statistics Department, 2007

Singapore is faced with a rising inflation Singapores annual inflation rate was 6.5% in July
Source: Channel NewsAsia - Singapore's July inflation up 6.5% on-year 46

Period 1950-1955 1955-1960 1960-1965 1965-1970 1970-1975 1975-1980 1980-1985 1985-1990 1990-1995 1995-2000 2000-2005 2005-2010 2010-2015

Total fertility 6.40 5.99 4.93 3.46 2.62 1.87 1.69 1.71 1.76 1.57 1.35 1.29 1.29

4. Birth Rates
Declining Trend (6.4 vs 1.29) Although Singapore is experiencing declining birth rates, the government is trying hard to promote birth.

Source: Singapore Total fertility (children per woman) United Nations: World Population Prospects: Revision 2006 47

4. Birth Rates
In the recent Nationals 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 Childrens Society

SEGMENTATION Segment Marketing TARGETING Kids, Families, Student, Caf-goers, Working Adults

SELLING Transactional Selling, Phone/Internet Orders, Drive-Thru MARKETING MIX Product: Wide Range Price: Competitive, Affordable,

POSITIONING im lovin it Ronald McDonald

Brand Integrity

DIFFERENTIATION Kids Favorite Place Shared Lifestyle

Intl Pricing, Price Discrimination

Promotion: Coupons, TV ads Place: Intensive Distribution

SERVICE Good Customer Service, 24Hour outlets, Delivery Service PROCESS Cost efficient, transparent, Quality products

Br

an dI ma ge

Br d an y tit en Id

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

Ansoffs Product/ Market Expansion Grid

Existing Product Market Penetration New Product Product Development

Existing Market

New Market

Market Development

Diversification

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!

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Product

McDonaldland Membership Card

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

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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 Mystery Gift Vanilla Ice Cream Cone Regular French Fries Cheeseburger Happy Meal McDonaldland Apparels Points 40 pts 60 pts 80 pts 100 pts 200 pts 300 pts
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Product

McDonaldland Membership Card

Kids Identity We all have it! Let the kids be McDonaldlands 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!

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Product

McDonaldland vs Chicky Club

McDonaldland
Membership Fees Registration procedure Benefits $10 per year $25 for 3 years

KFCs Chicky Club

$10.20 per year

At any McDonaldland outlets or Only through roadshows online McDonald - 10% off purchases & birthday party packages Popular 10% off regular priced items Yamaha 10% off courses Swenson 15% off birthday cakes : Accumulate points and redeem freebies KFC 10% off purchases & birthday party packages Pizza Hut 10% off a la carte purchases City Chain 10% off nonpromotional house brand Fox Kids 10% off regular priced items -NA66

Points System

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 - McDonalds 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
Membership Fees

PRICING
$10 per year / $25 for 3 years

Kids Wear - Housebrand - Movie Characters McDonaldLand Bundled Offer

$8.00 per piece $12.50 per piece $11 per set (basic combo) $15 per set (movie combo)

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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

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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 Childrens Day (every
Childrens Day is our birthday)
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POSITIONING im lovin it Ronald McDonald McDonaldland

Br d an y tit en Id

Brand Integrity

DIFFERENTIATION Kids Favorite Place Shared Lifestyle

Br

an d

Im ag e

McDonaldland
FINANCIAL STATEMENT
Accounting Period 1 Oct 2008 31 Sept 2009 Accounting Period 1 Oct 2009 31 Sept 2010
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PROJECTED SALES
SALES Membership Clothes - Housebrand Clothes - Movie Character
Assumption Population of kids age 14 and below 3% of the kids take up our membership Cost of membership 2% of the kids purchase 1 of housebrand top Cost of Housebrand Top 2% of the kids will purchase movie tops Average 3 kids movie release per year Cost of Movie Character Top 678,400 20,352 $10 13,568 $8.00 13,568 40,704 $12.50

Year 1 20,352*$10.00 13,568*$8.00 40,704*$12.50 $203,520 $108,544 $508,800 $820,864

678.4

Source: http://www.singstat.gov.sg/pubn/popn/respop.pdf

PROJECTED SALES
SALES Membership Clothes - Housebrand Clothes - Movie Character LESS COST Membership Card Clothes - Housebrand Clothes - Movie Character Gross Profit 20,352*$10.00 13,568*$8.00 40,704*$12.50 Year 1 $203,520 $108,544 $508,800 $820,864 20,352*$1.00 13,568*$4.00 40,704*$4.00 $20,352 $54,272 $162,816 $237,440 $725,888
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PROJECTED SALES
Gross Profit Less: Other Operating Cost Salary $4.50/hr, 3 outlets Renovation Costs $100,000*3 outlets Promotional Costs - public relations Kids Central - banners $600*6 banners - roadshow $6,000*12 months Miscellaneous Fee $725,888

$73,913 $300,000 $200,000 $3,600 $72,000 $53,048 $702,560 ($179,136)

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Net profit/(loss) before tax

SALES Membership Clothes - Housebrand Clothes - Movie Character LESS COST Membership Card Clothes - Housebrand Distributorship cost Clothes - Movie Character

Year 1 $203,520 $108,544 $508,800 $820,864 $20,352 $54,272 60000 $162,816 $297,440 $523,424

Year 2 $142,464 $119,398 $559,680 $821,542 $14,246 $59,699 $80,000 $179,098 $333,043 $488,499

Gross Profit Less Other Operating Cost Salary Renovation Cost Promotion - public relations - banners - roadshow Miscellaneous Fee

$73,913 $300,000 $200,000 $3,600 $72,000 $53,048 $702,560 -$179,136

$73,913 0 $200,000 0 $36,000 $53,048 $362,960 $125,539

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Net profit/ (loss) after tax

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