Im lovin it!

Critical evaluation of McDonalds marketing strategy

By Daniela Schmirler Marketing Strategy for Managers Dr. Kohler

Executive Summary
McDonalds as one of the largest fast food chains in the world, additionally is a strong brand. Nowadays, almost everyone worldwide knows about McDonalds or has at least heard about it. So why is McDonalds that successful? One factor is its overall marketing strategy. The company raised strong brand awareness and always seems to be one step ahead in comparison to its competitors. Furthermore, McDonalds was able to create a strong brand by using franchising as a business model and creating a marketing strategy that is superior to its competitors. This presentation should give an overview of McDonalds, its marketing strategy, and the seven years running campaign Im loving it. This successful campaign runs since 2003 and always orientates on new trends. McDonalds tries to combine community issues (Corporate Social Responsibility) with its overall communication. By providing different topics, and being modern, funny, and innovative, McDonalds is able to create high brand awareness. Furthermore, there will be a short overlook of its two main competitors Burger King and Pizza Hut (which is part of the umbrella brand Yum!). In comparison to McDonalds these two companies lack in their overall marketing strategy. By contrary, McDonalds always seems to be one step ahead, and also having always the right topics included. But, what has to be mentioned is that there are also differences concerning the companies target groups and overall appearance (e.g. Burger Kind tries to attract men, Pizza Hut is for all, and McDonalds attracts families, children, young urban, and recently also older people). Lastly, there will be an evaluation of McDonalds marketing strategy and measurements of success, which will lead to an overall conclusion by developing principles for marketing. The company is successful in comparison to its competition, which is shown in fitting brand associations, numbers, and its competitive advantage, but McDonalds has to react in order to stay competitive. Finally, all this leads to several principles for successful marketing. But although these principles are success factors for McDonalds it will never be sure that they will also work for other countries. They more are some kind of framework.

Agenda
1. Facts about McDonalds 2. Marketing strategy McDonalds 2.1 Vision and goals 2.2 Segmentation and positioning 2.3 Marketing mix 2.4 Strategic Plan: Plan to win 2.5 Current campaign: Im loving it 2.6 Competitor Analysis 3. Measures of success and recommendation 3.1 Competitive Advantage 3.2 Positive Image 3.3 Numbers 3.4 Downside: Current decline 3.5 Recommendations 4. Principles for marketing analysis

1. FACTS ABOUT MCDONALDS

Business model Numbers

1. Presenting the company

Fast food chain, known by almost every citizen of the world Founded in 1948 by Dick and Mac McDonald in San Bernadino Today, more than 31,000 restaurants worldwide Business model Franchise system (15% of restaurants owned by company) Product consistency (products are similar all over the world) Act like a retailer - think like a brand (long term brand reputation is important for the company

2. MARKETING STRATEGY OF MCDONALDS

Vision and goals Segmentation and positioning Marketing mix Strategic Plan: Plan to win Current campaign: Im loving it Competitor Analysis

2.1 Vision and goals of McDonalds

Vision and goals

Place the Commitment customer experience at to people and the core of customers organization

Operate the business ethically

Giving back Strive to continually to communities improve

2.2 Segmentation and positioning

Demographic segmentation: according to age

Main target segment: young urban family, youth, and children Concentrates on environment for children (playing grounds) But also tries to be modern and cool (for youth) Keeps in mind price sensitivity of targets (low price) New ways to address urban and young people McCaf Wi-Fi access Modern marketing campaigns

2.3 Marketing-mix: Think global, act local

Product: Little product depth and width Standardized products worldwide, but there are national different products to apply to the different customer wishes Continuous innovation to adapt to changing preferences Quality Assurance teams (monitoring restaurants, products, and suppliers) Place: at the right place, at right time, in the right quantity Especially in the USA: you need almost less than 3 Minutes to get to an McDonalds restaurant In almost all big cities, and important places (airports, shopping malls, etc.) Restaurants: hygienic environment, good ambience, great services, and areas for children

2.3 Marketing-mix
Price: Low price and value pricing Attracts middle and lower class (also seen in consumer base) Sort of value pricing (Happy meal) Different prices in different countries (see table of Big Mac) Promotion: Use of Marketing Communication Mix Advertising: wide range in different countries (localization) Personal selling: Employees at counter serve customers best Public relations: tries to interact with customers, stays in media, community relations (addresses community problems: like Ronald McDonald Houses) Direct Marketing: Person Sales promotion: sport sponsoring (to get healthy image)

2.3 Marketing-mix
People: Value of employees and customer If employees are motivated and work well, customers will be satisfied Internal Marketing: hiring, training, motivation External Marketing: current campaign (Im loving it) Adaption to different laws, conditions in different countries to serve its employees best Process: Identical processes for food worldwide (even size of meat balls, or French fries) Suppliers have to meet specifications to meet standards Also point of purchase is standardized Physicals: Message worldwide: Family environment, cleanliness, and service

2.4 Strategic Plan: Plan to win

Service Marketing Brand Transparency Ethnic Insights Moments of Truth: each process of interaction between McDonalds and customers Be transparent to get trust and influence marketing efforts Also concentration on minorities and differences. Can become trendsetters for white America

Social Media Strategy

Customer and supplier integration

Presence in social media to raise awareness

Integrating in product development to create relationship, satisfaction, and loyalty

Different products for To increase profits (e.g. French Fries at decline different life cycles stage Shake Fries (spicy) at maturity stage) McDonaldizing of suppliers To get a huge AND controlled network for guaranteeing McDonalds standards

2.5 Current campaign: Im loving it

Public Relations: Press releases: Many press releases about different topics (new campaigns, events, economical performance, job offers, awards, product information, health, engagement (environment, Ronald McDonald Houses, special offers). McDonalds tries to be strongly present in the media to keep brand awareness Annual report: About corporate strategy, business facts, jobs, franchise system, product origin, health, childrens donation, sports, employees. Seems to be very professional and transparent Internet presence: about food, health, promotions, company, and links to different websites (e.g. CRM, childrens donation). Concentrates on McDonalds engagement an health issues

2.5 Current campaign: Im loving it

Image campaigns Several image campaigns Main: Im loving it (started in 2003) Additional campaign: corporate responsibility (companys engagement in community and other critical issues like environmental protection , which shows new trend of customer demands for responsible companies) Seasonal campaigns: relate to special seasonal conditions (e.g. Httngaudi in Germany with skiing environment in winter)

2.5 Current campaign: Im loving it

Classical Advertising: Banners, clips, etc.
Different issues from campaigns New: Animated spots, attracts gay men, There is a McDonalds for everyone Combines:
(1) Responsible Citizen; (2) Health consciousness, (3) We buy local, (4) Families, (5) Be modern (Wi-Fi), (6) Be humorous, (7) Testimonials (e.g. Heidi Klum), (8) Promotion of products, (9) Including minorities (e.g. offers low prices for African-Americans & Hispanics) Spot: For everyone
We buy local banner

Spot: Animated

Spot: Gay customers

2.5 Current campaign: Im loving it

Product Placement
To raise brand awareness 1988 restaurant as setting for scene in Mac and Me Movies like Spider Man, Bridget Jones, The day the earth stood still, Spy Kids, The fifth element Other formats like American Idol, late night shows, reality shows, and even news formats (serious coffee cubs) Videogame
Mac and me

News format
The fifth element

2.5 Current campaign: Im loving it

Sales Promotion Games: additionally to campaigns, well-known Monopoly Coupons: in newspapers, backside of cinema tickets Sponsoring Many sports: Olympic games, German Football Association Other events like Fashion Week New York Local franchise companies: local clubs and events

CONCLUSION
Much information about community issues McDonalds as a responsible citizen pared with funny and lovable company Continuously tries to raise brand awareness

2.6 Competitor analysis

Main rivals: Burger King, Pizza Hut (and many others like KFC, Denny, Wendys, etc.) but also restaurants, supermarkets, etc.
High value

High price

Low price

Low value
Positioning of the three main companies

2.6 Competitor analysis

Target group: family, youth, urban people Main topic: products Characteristic: fun . Media activity: little in comparison, reserved Corporate Responsibility: Umbrella brand Yum! but little activity and little information

Target group: men

Main topic: products

Characteristics: Macho, playful Media activity: aggressive, more on mass channels Corporate Responsibility: Tries to follow McDonalds but is in its beginnings

Target group: family, youth, children, urban, health conscious women Main topic: stories Characteristics: Mix of humor, responsibility, and children Media activity: strong, but not disturbing Corporate Responsibility: McDonalds as good citizen

3. MEASUREMENTS OF SUCCESS AND RECOMMENDATION

Competitive Advantage Image Numbers Current decline Recommendations

3.1 Competitive Advantage

Measurement of Competitive Advantage: Strength of McDonalds For people with little time to (fast, quality, clean, service for satisfied customers) Strong in its structure, technology , marketing, and finance No overexposure: Advertising stays fresh, modern, etc.
Financial resources Emphasis on HR to Market leadership

Strengths Product value Company logo and campaigns

Buyer supplier relationships Strong image

3.2 Positive Image

Measurement of image: Fits to self-image except healthy image
Easy Brand Recognition Attributes Easy Brand Recall Non-product related (cheap, bags & boxes, families, fast food) Product-related (yellow & red, golden arch, Ronald McDonald) Functional (eat fast, save time, good food) Benefits Brand Awareness Types of associations Symbolic (smell of burgers and fries, childhood) Experiential (remember earlier times with families, fun with friends) Evaluation (attitude) loving it, fast food, not that healthy, good, easy,

Brand Awareness

Brand Knowledge

Favorable, strong, unique associations

(Shimp, 2008, p. 39)

3.3 Numbers

Own design: http://businessmodelinstitute.com/wpcontent/uploads/2010/05/Fast_Food_Industry_Market s.jpg

http://brandautopsy.typepad.com/brandautopsy/images/sbux _adage_chain.jpg

3.3 Numbers

http://retailsails.com/2009/07/

3.4 Downside: current decline

There is current decline in sales and services Customer trends and their decisions change People could get tired of the same brands (people see McDonalds everywhere If one restaurant lacks in its actions, it effects the whole brand Difficulties in choosing target audience (kids, health conscious women and senior citizen comprise the major population but kids soon grow out to become adults) Choice of distributors, wholesalers and jobbers is extremely important (to guarantee time aspect, quality, health standards, etc.) Discussion about issue of gay men (conservative vs. progressive)

3.5 Recommendations
Should it stay with: Im Loving it? yes! People trust brand and know slogan Change is expensive (e.g. for all countries and languages) Only if market research shows new trends and demands of customers Adaptation to customer trends as another factor of success Loyalty program Customer integration Social media Direct marketing

4. PRICIPLES FOR MARKETING ANALYSIS

Principles for marketing analysis

Ask Look at the long term Be open to feedback Look at competition Corporate Social Responsibility Be flexible and adapt to customer trends Integrate customers Adapt to new customer trends Do not overexposure Use networking If you should do something new, or how you could improve your appearance Develop the right strategy for your brand Listen to complains and feedback it can improve your brand, products, and performance Always be one step ahead by creating a USP Engagement in this field gets more and more important to also win customers Always watch out for new trends (e.g. use social communities, etc. if appropriate To create relationship, satisfaction, and loyalty. Even more, to get new insights To gain and win customers Too much could lead to switch of customers Creating networks makes your life more easier (e.g. having right suppliers, big customers, etc.)

This is just a framework!

Bibliography
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Bibliography
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