FINAL Marketing Analysis of McDonalds Thivesh Final

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Assignment 1, Module 1- Marketing 9/20/2011

Thivesh Veerasamy 24095

Marketing Analysis of McDonald’s Restaurants (New Zealand) Ltd

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Marketing Analysis of McDonald’s Restaurants (New Zealand) Ltd Table of Contents S Task 1....... ............... ................ ................ ............... ............... ................ ............... ............... ................ ................ ............... ............... ............... ........... ........ ........ ...... .. 5 e 2 . p 0 Marketing Marketi ng Characteristics Characteristi cs of McDonalds ....... ............... ................ ............... ............... ................ ............... ............... ............. ..... 7 Strengths Streng ths....... ............... ................ ............... ............... ................ ................ ............... ............... ................ ............... ............... ................ .............. ........ .. 11 Weaknesses.................................................... .......................................................................................... .................................................. ..............12 Opportunities..................................... ................................................................ ........................................ ......................... ........................ ............ 12 Threats Threat s....... ............... ................ ............... ............... ................ ................ ............... ............... ................ ............... ............... ............. ......... ........ ........ ...... .. 13 Task 2....... ............... ................ ................ ............... ............... ................ ............... ............... ................ ................ ............... ............... .............. .......... ........ ........ ......15 PESTLE is an analysis of Macro-Environment factors which consist of Political, Economic, Socio-Cultural, Technological and environmental factors. Below I have gone in-depth to show what factors affect McDonalds.......................................... McDonalds.......................................... 15 Political......................... Political .................................................... ...................................................... ........................................................... ................................ 15 Economic Economi c........ ............... ............... ................ ............... ............... ................ ................ ............... ............... ................ ............... ............... ............ ........ .... 16 Socio-Cultural......................... Socio-Cultural .................................................... ...................................................... ........................................... ...................... ...... 20 Technological....................... Technological .................................................. ........................................................................ ............................................. ...... 22 Environmental......................... Environmental .................................................... ...................................................... .......................................... ..................... ...... 22 Buyer Behavior ....... ............... ................ ............... ............... ................ ............... ............... ................ ................ ............... ............. .......... ........ ........ .... 31 TASK 3........................... ...................................................... ...................................................... ........................................................... ..................................... ..... 33 a) 7P’s of the extended marketing mix in relation to McDonalds: ...... .......... ........ ........ ........ ...... ..33 c) Organisations vs. Consumers....................... .................................................. ....................................... ........................ .............. ..37 d) International Internatio nal Marketing Marketin g vs. Domestic Marketing ........ ................ ............... ............... ............. ......... ........ ....... ... 37 Bibliography....................................... .................................................................. ................................................. .................................. ..................... ......... 38


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McDonalds History It all began in the USA in 1954 with a milkshake machine salesman named Ray Kroc. Ray received an order from the McDonald brothers’ hamburger outlet in California. He was fascinated by their operation – the menu was simple and inexpensive but the hamburgers were good; the fries were made in-store; and the shakes were thicker than usual. So Ray put a proposition to the McDonald’s Brothers. “Let me open new McDonald’s stores and I’ll give you half of one per cent of the gross sales for the use of the name and the idea.” The McDonald’s brothers accepted and Ray opened his first store in Des Plaines, Illinois. He began to build the business by granting franchises to local entrepreneurs who were committed to the McDonald’s principles. By 1960 Ray had opened 200 restaurants throughout the USA. In 1961 he bought the McDonald brothers’ share of the business for $3 million and in 1965 the company went public and became the McDonald’s Corporation. Today, McDonald’s has more than 30,000 restaurants in more than 120 countries on six continents. Every day, meals are served to more than 50 million people worldwide (Our Story)


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Task 1 a)

Comparisons of Definitions Chartered Institute of Marketing: “the management process responsible for identifying, anticipating and satisfying customer requirements profitably.” (The Chartered Institute of Marketing)

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The company is based in the UK and is one of the leading international body for marketing accreditation, professional development and training infrastructure. (The Chartered Institute of Marketing)

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From the definition the marketers use the management process, which is exactly what they do as they work closely with other professionals to achieve the final result. As stated in the definition “Satisfying customer requirements “ this shows us that the companies marketing is focused on their customers and what they do is for the customers benefit. The last part of the definition talks about “Profitably”, there are many

Marketing Analysis of McDonald’s Restaurants (New Zealand) Ltd positives and negative with regards to this as if a customer had to see this, the customer would think of the company as being greedy whereas for a company profit is the number one goal and the aim of a marketer is to attract consumers so that the company can make a profit.

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American Marketing Association Definition: “Marketing is the activity, set of institutions and processes for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large.” (About AMA) -

“The American Marketing Association (AMA) is the professional association for individuals and organizations who are leading the practice, teaching, and development of marketing worldwide.” (About AMA) The company is based in Chicago, USA.

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From the definition the marketers use the management process, which is exactly what they do as they work closely with other professionals to achieve the final result. From the statement above “Marketing is the activity, set of institutions and processes” which simply means that marketing can be an activity as well and a process that is ongoing and never stops. It doesn’t mention anything about marketing but it does state what marketers do and it says that marketers also follow certain principles in order to achieve success. The last part “creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners and society at large” speaks for itself, it simply says that its focused on customers wellbeing and not making money and profits. They believe in being able to solve customers problems and let customers walk of with a smile on their face. By them talking about exchanging offerings this shows that its not only about business as the saying goes if I scratch your back you got to scratch mine, that exactly how it works when it comes to marketing and satisfying customers.

Business Directory Marketing definition: “The management process through which goods and services move from concept to the customer.” (Marketing Definition) -

Just like the others they talk about the “management process”. This definition is simply down to the point as it says it’s a process which goods and services move from concept to customer which means that marketers are there to convey goods/ services to customers through advertising etc. “Marketing is based on thinking about the business in terms of its customer’s needs and their satisfaction. (Marketing Definition)

I have prepared a small table just to show you a few differences between the three different definitions:

Marketing Analysis of McDonald’s Restaurants (New Zealand) Ltd CIM

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AMA

Business Directory

What do marketers do?

“The management process”

“Marketing is the activity, set of institutions and processes”

“The management process”

Who is it aimed at/ about?

“Customer requirements”

“Customers, clients, partners and society at large”

“to the customer”

Why do they do it?

“Profitably”

“Creating, communicating, delivering and exchanging offerings that have value for customers”

“through which goods and services move from concept”

Marketing Characteristics of McDonalds -

Closeness to the customer: Through a profound understanding of exactly what the customer needs (Marketing Oriented Business: How to develop marketing oriented business?)

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Productivity through people: Realising that the employees of the business are regarded as an n asset as they are the most important as they can either make the business work or cause it to decrease in value. (Marketing Oriented Business: How to develop marketing oriented business?)

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A bias for action: Providing for customers exactly what was advertised or intended, therefore there is no false advertising, therefore in simple word what ever is told to the customer need to actually materialise. (Marketing Oriented Business: How to develop marketing oriented business?)

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Value driven: Ensuring that whatever is sold is of a good quality or a good value for money for the customers. (Marketing Oriented Business: How to develop marketing oriented business?)

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Simple form lean staff: Ensuring that it is easy for the customer to interact with the staff or the company by either means of feedback forms or contact details of the managers etc. (Marketing Oriented Business: How to develop marketing oriented business?)


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b) Marketing Concepts

In the evolution of marketing these are following four concepts of marketing.

1. Production Concept: Is when there’s a limited number of products available for purchase and monopolies were common. The belief of this concept that was held by business was that if the demand existed for something, customers would buy it as long as it was available and at a price they could afford. Also the manufactures did not need to put things on the products in order for theirs to be distinguished from others because generally there was no competition. New Zealand followed this production concept in the early 50’s and 60’s. (NZMA, 2011)

2. Product Concept: The focus of this concept is on engineering and technical excellence because the belief of customers will be for the product offering instead of against the highest level of quality, the best performance and the most features. The advantage of this concept is when there are a lot of similar products in the market and the organization puts a lot of energy and resources into the excellence of the product. The customer is not the main focus under this concept. (NZMA, 2011)

3. Selling Concept: This concept has a big emphasis because of the growing competition and customer choice. However the promotion department still receives the highest allocation of resources but now the promotion and the selling departments are considered to necessary and vital. Persuasive selling and disrespect for what the customer really or does not need are typical of this orientation. (NZMA, 2011)


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4. Marketing Concept: Competition has grown a great deal over the years but however there has been a decline in natural and other resources. The consumers in today’s world are more informed of what products are available in the market place and of the different rights they have for example the customer guarantee act. All the business has felt the impact of these rights and changes to this concept. Therefore the essential part of planning is the efficient use of resources and workers in McDonalds. The companies such as McDonalds are able to stay more competitive and may even prosper and grow if they have an emphasis on customer satisfaction. Also products and services are now being able to be made to fit specific groups of customers each with identified needs and therefore innovation becomes the main element in this approach. The changes in society also have a big impact on further development of this concept. (NZMA, 2011) McDonalds have many different marketing ideas one of the main ones are the happy meal deals where children get a choice of many different options and they get a free toy with the meal. This will attract many children as well as their families as there is a fun environment in many of the McDonalds stores as there are play areas where children can go on the jungle gym set up as well as participate in coloring competitions etc.

c) Three benefits of McDonalds marketing approach

There are many benefits that McDonalds in New Zealand have; I will be discussing three of them in the following three points: -

McDonalds in NZ have used many ‘Made in NZ’ products for example like the new Angus beef burgers, these are supplied by the New Zealand cattle farmers and McDonalds have been supporting them for over 30 years. By them doing this it will attract more ‘New Zealanders’ as the locals like to support their fellow business owners. On the menu there are 2 options of Angus beef, there’s the “grand angus and mighty angus beef” (Angus Beef Story) They also use specials during peak times like the value lunch deal where you can choose from a variety of different meals for only $5. By doing this you will attract the lunch time rush of people which should increase the sales.

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McDonald’s focuses on attracting children at a young age as by doing this the children will continue to buy from them in the years to come. They do this by introducing the happy meal which includes a toy which is what attracts the children to buying it. There are many choices available for kids like a choice between burgers, nuggets and wraps, all these options are accompanied by a side and drink.

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McDonalds provides an option for people that are into there health options. They provide a weight watchers menu which consist of a range of salads and seared chicken. This will attract all the women n men that either gym or watch there diet.

All these different options provide for the entire family from the kids to the mums that like to watch there weight.

Three costs of marketing for McDonalds

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McDonalds spends most of its money on advertising. From the annual report for 2010 I found a few facts that will assist my argument about how much they spend on advertising: “Advertising costs included in operating expenses of Company operated Restaurants primarily consist of contributions to Advertising cooperatives and were (in millions): 2010–$687.0; 2009–$650.8; 2008–$703.4. Production costs for radio and Television advertising are expensed when the commercials are initially aired. These production costs, primarily in the U.S., as well as other marketing-related expenses included in selling, general & administrative expenses were (in millions): 2010–$94.5; 2009–$94.7; 2008–$79.2. In addition, significant advertising costs are incurred by franchisees through contributions to advertising cooperatives in individual markets.” (Corporation, 2010) There are many different ways in which McDonalds do this like television, magazines, billboards etc. All these ways of advertising cost McDonalds a lot cause in Auckland everywhere you look you see the ‘Golden Arches’ (what the McDonalds ‘M’ is known as). There is also word of mouth which is also a big advertisement for them.

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McDonalds in New Zealand has a menu that has a big variety of choice, personally from my experiences worldwide I think that it’s a high expense as when I was in India there wasn’t such a big variety. I think it’s a waste for NZ as the population isn’t as big as India’s population. New Zealand has the ‘M’ Range which is focused on a more luxury range which has a different bun and extras like onion etc. This large product range is costly for New Zealand to keep up and things such as wastages etc. come into play.


There are many pressures from society that play a big part. No matter how much advertising McDonalds use if a parent doesn’t allow a child to come due to the publicity of children becoming obese. (McDonalds, healthy eating, and the Happy Meal of the future, 2006) Therefore if parents are not open minded then no matter what McDonald’s do they still wouldn’t bring there families to the fast food restaurant. Below are just a few articles that I attached with regards to McDonalds negative publication due t wrong advertising.

“The McDonald’s “French fry” lawsuit has become one of the biggest stories in the vegetarian movement, yet very little about it has appeared in vegetarian publications. The class action suit originated after it was discovered that the fast-food chain had not told vegetarians that its french fries and hash browns had beef in them, contrary to the impression some had after a company press release of July 23, 1990, which stated that McDonald’s fries were cooked in 100 percent vegetable oil. But alas, many unfortunate vegetarians did consume McDonald’s french fries or hash browns after July 23, 1990, and in doing so unwittingly consumed minuscule amounts of beef. A lawsuit was filed against the company and a $10 million settlement was agreed upon, with $6 million going to vegetarian groups. But then disputes erupted, not only with McDonald’s, but within the vegetarian community as well, over which groups should get the money—probably the most serious and most public division in the history of the modern vegetarian movement.” (McDonald’s Lawsuit - Whats the story?)

d)

SWOT Analysis of McDonalds

Strengths McDonald's has been a thriving business since 1955 and 20 of the top 50 corporate staff employees started as a restaurant level employee. In addition, 67,000 McDonald’s restaurant managers and assistant managers were promoted from restaurant staff. Fortune Magazine 2005 listed McDonald's as the "Best Place to Work for Minorities." McDonalds invests more than $1 billion annually in training its staff, and every year more than 250,000 employees graduate from McDonald's training facility, Hamburger University. (SWOT analysis of McDonals, 2009) 

The business is ranked number one in Fortune Magazine's 2008 list of most admired food service companies. (SWOT analysis of McDonals, 2009) 

Marketing Analysis of McDonald’s Restaurants (New Zealand) Ltd One of the world's most recognizable logos (the Golden Arches) and spokes character (Ronald McDonald the clown). According to the Packard Children's Hospital's Center for Healthy Weight children age 3 to 5 were given food in the McDonalds packaging and then given the same food without the packaging, and they preferred the food in the McDonald's packaging every single time. (SWOT analysis of McDonals, 2009) 

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They are a global company operating more than 23,500 restaurants in 109 countries. By being spread out in different regions, this gives them the ability to weather economic fluctuations which are localized by country. They can also operate effectively in an economic downturn due to the social need to seek out comfort foods. (SWOT analysis of McDonals, 2009) 

McDonald's takes food safety very seriously. More than 2000 inspections checks are performed at every stage of the food process. McDonalds are required to run through 72 safety protocols every day to ensure the food is maintained in a clean contaminate free environment. (SWOT analysis of McDonals, 2009) 

Weaknesses 

High employee turnover in their restaurants leads to more money being spent on training (SWOT analysis of McDonals, 2009)

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McDonald's have problems with fluctuations in operating and net profits which ultimately impact investor relations. Operating profit was $3,984 million (2005) $4,433 million (2006) and $3,879 million (2007). Net profits were $2,602 million (2005), $3,544 million (2006) and $2,395 million (2007). (SWOT analysis of McDonals, 2009)

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They have yet to capitalize on the trend towards organic foods. (SWOT analysis of McDonals, 2009)

Opportunities 

In today's health conscious societies the introduction of a healthy hamburger is a great opportunity. They would be the first QSR (Quick Service Restaurant) to have FDA approval on marketing a low fat low calorie hamburger with low calorie combo alternatives. Currently McDonald's and its competition health choice items do not include hamburgers. (SWOT analysis of McDonals, 2009)

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They have industrial, Formica restaurant settings; they could provide more upscale restaurant settings, like the one they have in New York City on Broadway, to appeal to a more upscale target market. (SWOT analysis of McDonals, 2009)

Marketing Analysis of McDonald’s Restaurants (New Zealand) Ltd 

In 2008 the business directed efforts at the breakfast, chicken, beverage and convenience categories. For example, hot specialist coffees not only secure sales, but also mean that restaurants get increasing numbers of customer visits. In 2009 McDonald's saw the full benefits of a venture into beverages. (SWOT analysis of McDonals, 2009)

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Provide optional allergen free food items, such as gluten free and peanut free (SWOT analysis of McDonals, 2009)

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Threats •

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They have been sued multiple times for having "unhealthy" food, allegedly with addictive additives, contributing to the obesity epidemic in America. In 2004, Michael Spulock filmed the documentary Super Size Me, where he went on an all McDonalds’ diet for 30 days and wound up getting cirrhosis of the liver. This documentary was a direct attack on the QSR industry as a whole and blamed them for America's obesity epidemic. Due in part to the documentary, McDonalds no longer pushes the super size option at the dive thru window. (SWOT analysis of McDonals, 2009) They are a benchmark for creating "cradle to grave" marketing. They entice children as young as one year old into their restaurants with special meals, toys, playgrounds and popular movie character tie-ins. Children grow up eating and enjoying McDonalds and then continue into adulthood. They have been criticized by many parent advocate groups for their marketing practices towards children which are seen as marginally ethical. (SWOT analysis of McDonals, 2009) Any contamination of the food supply, especially e-coli. (SWOT analysis of McDonals, 2009) Major competitors, like Burger King, Starbucks, Taco Bell, Wendy's, KFC and any midrange sit-down restaurants. (SWOT analysis of McDonals, 2009)


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(McDonalds SWOT)


Task 2

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PESTLE is an analysis of Macro-Environment factors which consist of Political, Economic, Socio-Cultural, Technological and environmental factors. Below I have gone in-depth to show what factors affect McDonalds.

Political •

McDonalds worldwide is influenced by many political factors, each state has its own policies which is decided by the government of that state. For example there’s certain parts in United States that have laws for pertaining to the health implications of eating fast foods. It has been said that harmful elements like cholesterol and effects of obesity are caused from eating fast foods like McDonalds. For example “there is an impending legal dispute in the McDonald’s franchise in India where certain infringement of rights and violation of religious laws pertaining to the contents of the food.” (PESTLE analysis, 2009)

Marketing Analysis of McDonald’s Restaurants (New Zealand) Ltd These are the important legislations when a business like McDonalds comes to New Zealand. The Commerce Commission Act 1986 is an Independent Crown entity that enforces 2 principal legislations: e S 2 . p 0 - Commerce Act 1986: Promotes competition in markets within NZ - Fair Trading Act 1986: Protects consumers from misleading and unfair trading practices. These legislations are important to McDonalds as they employ local people from New Zealand to work for them. These legislations are: - Human Right ACT 1993 - Health & Safety in Employment Act 1992 - The Equal Act 1972 - Employment Relations Act 2000 Taxation Policy These will affect McDonalds a lot because they need to know how much tax they must charge on their products and also the correct tax for their employees. These legislations are: - Income Tax Act 2004 - Goods & Services Tax Act 1985

Economic Companies in the fast food industry have their individual concerns involving economic factors. Due to the changing inflation and the changing exchange rate, McDonald’s has the tendency to experience hardship. These fluctuation affect every country in the world there it would also affect McDonalds as they have many chain stores worldwide. Customers are also faced with a problem of going over their individual budgets on whether or not they should spend more on fast food chains. Therefore, the chains have to put up with many issues of the effects of the economic environment. “In regarding the operations of the company, food chains like McDonald’s tend to import much of their raw materials into a specific territory if there is a dearth of supply.” (PESTLE analysis, 2009) Business Cycle: It’s the predictable long-term pattern of alternating periods of economic

growth which is recovery and decline which is recession is characterized by changing employment, industrial productivity, and interest rates. In NZ the economy runs approximately in 7 year cycles and the stages are: - Recession - Trough - Expansion - Peak - Contraction


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(Definition of Business Cycle)

Marketing Analysis of McDonald’s Restaurants (New Zealand) Ltd “McDonald’s is not supported by an improving economic outlook. Given the fact that our economic projections and simulation are correct, MCD is expected to remain at current price e S levels until the end of this year. The best outcome implies only modest positive return, while 2 . p 0 the worst-case scenario holds a risk of significant loss. Such a poor return profile does not seem very attractive, particularly in the presence of better investment options.” (Mcdonald's: Left Behind The business Cycle, 2011)

From the above graph we find that McDonald's was an exceptional investment prior to and during the great recession of 2008. (Carnevale, 2011) We can see that the dividend increased from $.55 per share to an estimated $2.49 per share for calendar year 2011.


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Income is very significant to McDonalds because they must know what the market related salary is for their employees in order for them to pay them the correct amount. The stats from New Zealand are as follows: - The average annual salary in New Zealand is $45000 - If you have a university qualification you are likely to earn 30% more than those who are nor qualified - If you also have a bachelors degree or higher you are likely to at least double the amount than a person who left school and has no qualifications.

The unemployment stats will affect McDonalds the most in the economic section of the environment. Below are the figures from the department of labour and Statistics of NZ: - Unemployment Rate is 7.3% which is the highest in the last 10 years - 168000 are unemployed in New Zealand - The most affected sectors of the retailers are the retail, manufacturing ,construction and the car industry - However the health and education sectors is where the employment has risen


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Also the unemployment rate is the one of the lowest in the world. They are rated 61 in the world. (Unemployment Rate) In the youth the unemployment rate has reached 18.4% and in the ethnic group the following Pakeha (White people of NZ) 4,6% Maori 15,4% Pacific Islanders 14%

Socio-Cultural McDonald’s has a vast variety of consumers worldwide that they aim to attract, they focus on attracting children, families, students as well as business people. In each country, McDonald’s uses local favourites to draw in there customers like at the moment in Auckland we get frozen L&P and Pavlov as well as Angus beef patties. In order to attract students during the lunch time they give away free Wi-Fi with any meal purchased. In the Uk McDonalds have given them options for dining. (PESTLE analysis, 2009)


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These are important facts that McDonald’s needs to know in order for them to be profitable. Demographics of NZ This information is based on the census taken in 2006 Age Structure - 0-14 Years 20.7% - 15-64 Years 66.5% - 65 Years and over 12.8% Life Expectancy - Total Population is 80.36 years - Males are 78.43 years - Females are 82.39 years

(Age Structure In NZ)

Marketing Analysis of McDonald’s Restaurants (New Zealand) Ltd New Zealand consists of the following ethnic groups: - NZ Pakeha 72% e S - Maori 13% 2 . p 0 - Asians 8.1% - Pacific Islanders 6% - Other 0.9%

Technological Technology is something that changes everyday with regard to McDonald’s there are many new technologies such as “the inventory system and the management of the value chain of the company allows for easy payments for their suppliers and other vendors which the individual stores in respective markets deal with.” (PESTLE analysis, 2009) Mcdonalds have also got a new ordering system which has a specific ordering time and if the meal isnt done within the times its given free, for example if the food is prepared already its 35 sec and if the meal is unprepared its 4 min.

Environmental McDonald’s have had a lot of environmental issues regarding there packaging of burgers and styrofoam cups for the drinks as there were harmful to the environment. From articles, McDonalds have decided “to turn its spent cooking oil into biodiesel fuel to power its vans in the UK.” (Barriaux, 2007) They also decided to use non-hydrogenated cooking oil in there stores. “The menus have changed to varying degrees over the past few years, with the introduction of sustainably grown coffee, organic milk and toasted deli sandwiches.” (Barriaux, 2007) They no longer uses polystyrene packaging, except for drinks such as milkshakes and coffees, and now uses only cardboard which is made from 70% recycled cardboard and brown paper bags.


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As you can see from the above picture McDonalds is on a mission to prove that they are eco -friendly. They now offer healthier options like salads and other low calorie foods. “In the German Newspaper “Die Welt”, I even read about the first McDonald’s branch that offers no burgers. It makes use of the concept of a salad bar and is located in the business quarter of Paris, La Défense. Customers can order salads that cost about 7 Euro. They can choose between five classic recipes or combine their own mixture.” (NerdyLaura, 2011) McDonalds also focuses on it Drinks, as they now offer sustainably grown coffee and organic milk which now puts a pressure on other companies like Starbucks.


a) e S The micro environment is the internal part of the business. Its also the factors or elements in 2 . p 0

an organization's immediate area of operations that affect its performance and decision making freedom. (Micro Enviroment Definition) These factors include the following: -

Stakeholders

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Competitors

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Customers

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General public

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Banks/financial institutions

Shareholders McDonalds has 1,348,000 shareholders of record and beneficial owners of the Company’s common stock as of January 31, 2011. All shareowners are also entitled to attend the Annual General Meeting (AGM), at which they have the opportunity to ask questions, discuss the company's performance and vote on certain issues. (2010 Annual Report- McDonalds, 2010)

Marketing Analysis of McDonald’s Restaurants (New Zealand) Ltd Consumers McDonald’s consumers can contact the company by various means and also deals with e S 2 . p 0

consumer enquiries on a daily basis via in store feedback forms to website and phone calls. It performs market research to track the changing consumer trends. Many parts of the business also use surveys and market research panels to find out what consumers think of their products. Customers McDonalds has ongoing discussions with its customers. Wholesalers and retailers provide the vital link to consumers and it is they who make the McDonalds brand widely available. Employees McDonalds has a tradition of encouraging direct, two-way involvement and communication with employees. Managers hold regular individual and team meetings to inform colleagues about the business and hear their views. The company also does surveys to check how its employees feel about working at McDonalds. Internal newsletters, a group website and many local websites help employees keep up to date with what is going on and allows to see what events are taking place in McDonalds. General Public The company regards itself as a citizen in the countries in which it operates and enters into regular dialogue with organisations such as national governments and international bodies. For example, the World Health Organisation (WHO) to discuss issues that effect the company. These issues can be anything from agricultural policy to education and skills. Competitors McDonalds has many different competitors such as Burger King, Wendy’s, Oporto’s, etc. McDonalds at the moment is currently running a few special like the McValue meals which run at $5 for the meal whereas Wendy’s has a similar meal but give an extra ice-cream sundae with the meal. There are many other specials that other fast foods are running that will affect the customers of McDonald’s choices

Marketing Analysis of McDonald’s Restaurants (New Zealand) Ltd b)

Segmentation

1. Geographic factors: e S 2 . p 0

“Geographical segmentation divides markets into different geographical areas” (Market segmentation) McDonalds is eaten all over the world and in every continent you will surely find a McDonalds outlet. When it comes to the city or metro size it varied from under 5000, 2000050000, 50000 +. When it’s come to climate it’s in the Northern and Southern. You mainly find it in city centres but to my surprise I have even seen it in rural areas as well. 2. Demographic factors: “Demographics originate from the word ‘demography’ which means a ‘study of population’. The population can be divided into age, gender, income, and family lifecycle amongst other variables.” (Market segmentation) McDonalds caters for all ages, genders and family sizes. People of all income can purchase it from kids at school to Ceo of companies that earn in the millions it provides for all its customers. When it comes to religion it varies from country to country like for example in india they dont serve beef as its part of their relgion not to eat beef and in mexio they add extra chilli sauce to the burgers therfore as every country has different setups of McDonalds. It caters for all races and every nationality. 3. Psychographic factors: “In psychographic segmentation, buyers are grouped according to variables such as Social Class, Lifestyle, or Personality.” (Psychographic Segmentation) For McDonalds it caters for all types of classes, they do this by having different meal option ones for the people on a tight budget and the more expensive meals for people who like to purchase expensive meals like the ‘M’ range.

4. Behavioral factors: “Is based on variables such as usage rate and patterns, price sensitivity, brand loyalty, and benefits sought.” (Market Segmentation) McDonalds is available for all types of occasions but I would say it’s more for on the go or kids birthday parties. It has many customers that are very loyal to the company and only purchase meals from them. With regards to peoples attitude towards the product it turns out to be very positive and customers seem to be very positive about the products they receive.

Geographic

Happy Meals

Kiwi Pavlova

World Region Or Country , Happy meals are a Pavlova is only significant Country Regions , worldwide that is toRestaurants New Zealand McDonalds Marketing Analysis ofthing McDonald’s (New found inZealand) every country. Ltd The it cost $3.90 and is only only difference would be sold during the spring and the choice of the food summer months. included in the happy meal and the toys that are included with the meal. e S 2 . p 0 These factors are not so relevant to McDonalds

These factors are not so relevant to McDonalds

Age, Gender, Family Size, Family Life Cycle, Occupation, Education, Religion, Race, Generation, Nationality



Income

This factor is relevant to McDonalds in order for them to be a successful company. A person who earns less money will find it hard to spend money on a happy meal for their child as they have to pay for other expenses.

This factor is relevant to McDonalds in order for them to be a successful company. A person who earns less money will find it hard to spend money on a Pavlova as they have to pay for other expenses.



Occasions



Benefits, User Status, User Rates, Loyalty Status, Readiness Stage, Attitude toward product

This factor is relevant to McDonald’s products in order for them to be successful. McDonalds needs to be of high quality therefore this aspect is very important, if the quality of there products is of high quality then the customers would be satisfied wand keep coming back. Attitude is very important as if a

This factor is relevant to McDonald’s products in order for them to be successful. McDonalds needs to be of high quality therefore this aspect is very important, if the quality of there products is of high quality then the customers would be satisfied wand keep coming back. Attitude is very important as if a

Density & Climate, City or Metro Size Demographic

Psychographic

Social class, Lifestyle, Personality Behavioral


e S 2 . p 0

c)

• • •

3 Marketing Strategies that influence McDonalds

Marketing Mix Target Market Health

Marketing Mix: This consists of the product, price, place and promotion. With regards to McDonalds the menu that they introduce has to be a appealing to the customers as they want to attract the customers into supporting them. The price of a good is always important as it determines whose going to buy it and how often. At McDonalds in New Zealand they cater for both the wealthier as well as the poorer communities. For the wealthier people they have a special range of burgers which is classified as the ‘M’ Range which is a different more expensive bun and extra add ons whereas they offer the cheaper burger for those that are less fortunate. When it comes to the promotional aspect McDonalds uses many different forms of advertising such as TV ads, bus decals, billboards, and sponsorships. By doing this they are getting there brand across so that they can attract more consumers. Place is another factor of the marketing mix as McDonalds have many stores worldwide, in this case they are evenly spread out so that one store doesn’t clash with another. (Bhasin, 2010) Target Market: The target market of a company is the market or customers that the company wishes to attract or focus on. With regards to McDonalds there are many for example they focus on student, families, children, and on-the-go business people. I have contrasted a small table outlying some of the above groupings of their target market.

Parent with children

Visits to give their child a treat


Student

Cheap for students as they get many discounts as well as the option to use WIFI internet

Children

Fun place for children to eat therefore the child loves to go there

Business person

Prefers going there as they receive fast service as well and the food being great and convenient to take anywhere with there busy work schedule as well as the use of WIFI internet

e S 2 . p 0

Health: There are many positive and negative factors with regards to the health factor: Positive: •

•

•

•

There are healthier options like the choice of different burgers, wraps and salads. Some of the meals are weight watchers approved which is recommended for the people looking for healthier options. With the burgers they come in chicken or fish and the chicken is seared chicken which is the healthier option. They also offer a garden salad with the chicken as well which I think is a positive aspect with regards to health. (Weight Watchers) “The campaign, called McDonald's Real Life Choices, shows consumers how to order their McDonald's menu items and stay on track, whether they're watching calories, fat or carbohydrates. McDonald's restaurants will showcase posters and brochures featuring information on McDonald's Real Life Choices.” (Is McDonald's Actually Getting Healthy?, 2004)

Negative: •

•

McDonalds has had many negative articles against them that say that there food is bad for one’s health. “Fast food is usually fried or contains a part that is. Or the food is cooked in oil or grease or some other way that adds so much of the bad fats that are out there to it.” (Health Risks Of McDonald’s Food) What they saying is that there are so many fats etc in the fries and patties that it might be a risk to ones health. The fat

Marketing Analysis of McDonald’s Restaurants (New Zealand) Ltd that we intake goes into our bodies and doesnt digest very well, so we pretty much just storing the fats all over especially in our arteries. e S 2 . p 0


Buyer Behavior Cultural e S 2 . p 0

Culture Is the most basic Personal Factors cause of a person’s wants Age & Life Cycle Stages is and behaviours. Some that people the goods and factors are language, food services they buy over their and etc lifetimes Occupation are peoples occupation affects the goods Subculture contains smaller and services bought subcultures, or groups of people withSituation shared value Economic A systems based on common persons economic situation life experiences and will affect product choice situations for e.g. in NZ Pakeha and Maori Social Class are society’s relatively permanent and Lifestyle is a person’s pattern ordered divisions whose of living as expressed in his members share similar or her activities such as values, interests and work, and hobbies. behaviours. E.g. of some social classes upper-upper Personality & Self-Concept: class, lower-upper class Each person’s distinct Social personality influences his or Reference Groups. A group her buying behaviour. is made up of 2 or more people who interact to Psychological Factor accomplish individual and Motivation: A person has mutual goals.atThe many needs anyreference given groups then act as a point of time reference for us to judge our behaviour based on how we identify with that group. Family it is the most important reference group because we are born in to it therefore we are influenced by our parents, brothers and sisters. Roles & Status: A person can belong to many groups like family, clubs, and organizations. The person’s position in each group can

Emotional Buyer The emotional buyer will buy it because they really want to Doesn’t matter what age you eat McDonalds and they are you can still buy want to satisfy their needs. McDonalds.

Companies For a company they buy shares, franchises etc as an Obviously you would be old investment. enough to make a decision to purchase shares or franchises for the company. Doesn’t matter what age you You would have to be high are you can still buy up on the chain in order to When it comes to race it Doesn’t affect companies. McDonalds. make decisions for the matters as for example company. Muslims only eat halal food This is difference for both However companies can’t only and in India Hindus because with recession just buy shares or franchises don’t eat beef therefore it people don’t want to spend the company has to be can’t be sold there. but however if people are financially stable to purchase felling for McDonalds they such things. Social class will only matter if Companies would have to will still buy it. you going for the more have a lot of money to There is no difference There is no difference expensive choice from the purchase shares as they because I think that lifestyles because I think that lifestyles ‘M’ range but all the other aren’t very cheap especially do not effect if a person is do not effect if a company is meals are affordable for all with regards to McDonalds. buying McDonalds buying McDonalds shares social classes. etc This is different because if you don’t like McDonalds for a particular reason than you These are both the same won’t buy it because you because it doesn’t effect if don’t like it. you buy McDonalds with a group bysame yourself. This isor the because if

It depends on the person making the decision for the company. Two or more people would represent the company so it wouldn’t make such a big difference. It’s got to do with the person

the person wants McDonalds to satisfy their need they will buy it until they are satisfied

that’s buying the shares for the company.

Whether you come in a family or individually you still going to purchase McDonalds therefore it won’t make a difference.

Won’t affect the company.

I think is the same for both because when it comes to buying McDonalds it doesn’t matter what roles and status you have in your home.

I think is the same for both because when it comes to buying McDonalds it doesn’t matter what roles and status you have in your company


e S 2 . p 0


TASK 3

e S 2 . p 0

a) 7P’s of the extended marketing mix in relation to McDonalds: The product marketing mix consists of 4 P’s namely Product, Pricing, Promotions and Placement, but there 3 more extended service marketing’s P’s called People, Process and Physical evidence.

Product:

When McDonalds decided on the products that are going to be on the menu they had to take into consideration what customers would buy for example the McChicken, they had to decide on what chicken to use in the burger whether to have mayonnaise or just tomato sauce and what bun to use, as customer want quality and they not going to pay for an item that doesn’t taste good or look appealing. Therefore when they had to do the menu that had to place considerable emphasis on what customers are going to want. This is where the market research comes into play. However customers requirement do change over time, for example what is fashionable and attractive today may be discarded tomorrow. With regards to all that McDonalds tend to change it menu by either adding on new stuff and getting rid of the items that don’t do so well. You will find that some of the products still remain hits like the Big Mac or Cheeseburger for examples whereas other died down like the deluxe cheeseburger which took of well but died right down. They also provide a more expensive range called the ‘M’ range which consists of the Grand Angus which is “filled with a thick and tender Angus beef patty, red onion rings, cheese, tomato, gourmet salad mix, and served on a soft sourdough bun. It's mouth-wateringly juicy.” (M Selections) Theres also other ones ilke the Mighty Angus, Grand Chicken crispy and there are many more which also include wraps


e S 2 . p 0

Pricing: Pricing is a major factor when it comes to customers as they the ones that pay for the goods, therefore McDonalds has to analyze its customer’s pockets and then decide on what the prices will be for each product. For example at the moment they have the Mc Values meals for $5 and this is only runs in New Zealand. It includes a burger, fries and coke and a bonus ice-cream. There are many problems with using the low price marketing tool as customers will think that due to the low price the quality of the product is poor therefore not purchasing it. Another factor of price reduction is that competitors match the lower prices resulting in no extra demand therefore the profit margin is reduced without the sales increasing. Promotion: As we all know promotions is the biggest aspect of marketing due to the different type and ways of promoting a product. Advertising is the main way of a company promoting its products and they do so by using TV, radio, in cinema, online, using poster sites and in the press for example in newspapers and magazines. The thing that distinguishes advertising from other marketing communications is the media owners are paid before the advertiser can start using the space. The skill in marketing is to develop a campaign that uses several different techniques to provide the most effective results. For example TV advertising makes people much more aware of McDonald’s item whereas press provides more detail. McDonalds uses in-store promotion to get people to try their products and to encourage people to keep coming back for more. The aim of most marketing audiences is assist the customers to take some type of action for example buy the product, visit a restaurant, recommend the choice to a friend or increase purchases of the menu item. The more McDonalds know about the customers the more they are able to provide for what they want. With regard to their advert McDonalds focuses on placing adverts to capture the right target market for example I have done up a table to show where they would put an advert and for what target market they aimed at: Business women Cosmopolitan, or women’s magazines Students Around the universities, teen magazines and defiantly TV adverts Children The best would be Disney Channel, Nickelodeon etc Business men Men’s magazines like GQ etc


e S 2 . p 0

Placement:

This refers to where the stores are located. Place is another factor of the marketing mix as McDonalds have many stores worldwide, in this case they are evenly spread out so that one store doesn’t clash with another. (Bhasin, 2010) In Auckland city alone there are about 3 stores but they dont clas with each other as they are in different parts of the city.

People:

People can either make or break a company in this I’m talking about the staff. Recruiting the right staff and training them appropriately is essential for the company’s success as they are the face of the company. Consumers make their judgement on a company within the first 10 sec of talking to a staff member therefore the staff have to be customer friendly and always smiling an dwell trained.” Staff should have the appropriate interpersonal skills, aptititude, and service knowledge to provide the service that consumers are paying for. Many British organizations aim to apply for the Investors in People accreditation, which tells consumers that staff are taken care off by the company and they are trained to certain standards.” (Service Marketing Mix / Extended Marketing Mix ) From my past experiences at McDonalds there have been some

Marketing Analysis of McDonald’s Restaurants (New Zealand) Ltd positive and negative experiences where staff have been very rude but there’s been experiences where they have been good to me. e S 2 . p 0

Process: “Refers to the systems used to assist the organization in delivering the service.” (Service Marketing Mix / Extended Marketing Mix ) With McDonalds there systems are evry advance they run a special at the moment whereif your meal is prepared and takes longer that 30sec to come to you during drive-thru you are given free vouchers. This is a current promotion in NZ only. There system in the store are very advanced therefore the delivery time can be achieved. Physical Evidence

“Where is the service being delivered? Physical Evidence is the element of the service mix which allows the consumer again to make judgments on the organisation.” (Service Marketing Mix / Extended Marketing Mix ) When a customer walks into a restasurant like McDonalds they expect the restaurant to be a clean and friendly enviroment. If the restaurant isnt clean then consumers will make perceptions based on their sight and then will probly never come back. b) The two products are Happy meals and Pavlova: Product Price Promotion

Placement

Happy Meals Happy meals are focused for kids as they give a toy with the comb as a promotion to attract kids to buy it All McDonalds outlets

Pavlova $3.90 A big advertisement of the product has been put up on TV, adverts and in stores. All McDonalds outlets


e S 2 . p 0

c) Organisations vs. Consumers McDonalds focuses on marketing their products in different ways to different consumers and companies. Consumers can purchase food such as burgers etc and drinks both hot and cold, but as for organisations it’s a another whole ball game altogether as McDonalds would probably sell them share or even a franchise but they do also buy food for catering events etc. McDonalds offer companies more than they would offer consumers for example if Auckland University had to approach them to purchase a mini store at the university McDonalds would sell them one whereas for a consumer McDonalds would only market food items for them. Organisations are also sold shares in McDonalds like State Street Corp in the US.

d) International Marketing vs. Domestic Marketing When it comes to marketing in general both international and domestic are the same. Domestic Marketing

“The marketing strategies that are employed to attract and influence customers within the political boundaries of a country are known as Domestic marketing.” (Difference Between Domestic marketing and International marketing) When a business only caters for local markets, even though it competes against foreign companies functioning within the country, it is known as domestic marketing. The companies focus is only to provide for local markets and not overseas. International Marketing

“When there are no boundaries for a company and it targets customers overseas or in another country, it is said to be engaged in international marketing.” (Difference Between Domestic marketing and International marketing)

Marketing Analysis of McDonald’s Restaurants (New Zealand) Ltd Difference between domestic marketing and international marketing

As explained earlier, both domestic as well as international marketing refer to the same marketing principles. However, there are evident dissimilarities between the two. e S 2 . p 0 “The scope of domestic marketing is limited and will eventually dry up. On the other end, international marketing has endless opportunities and scope. “(Difference Between Domestic marketing and International marketing) “As is obvious, the benefits in domestic marketing are less than in international marketing. Furthermore, there is an added incentive of foreign currency that is important from the point of view of the home country as well.” (Difference Between Domestic marketing and International marketing) “Domestic marketing is limited in the use of technology whereas international marketing allows use and sharing of latest technologies.” (Difference Between Domestic marketing and International marketing) “Domestic marketing has nothing to do with political relations whereas international marketing leads to improvement in political relations between countries and also increased level of cooperation as a result. “(Difference Between Domestic marketing and International marketing) “In domestic marketing there are no barriers but in international marketing there are many barriers such as cross cultural differences, language, currency, traditions and customs.”(Difference Between Domestic marketing and International marketing) •

•

•

•

•

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Marketing Analysis of McDonald’s Restaurants (New Zealand) Ltd M Selections. (n.d.). Retrieved September 15, 2011, from McDonalds: http://mcdonalds.co.nz/our-food/menu/#/m-selections e S 2 . p 0

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FINAL Marketing Analysis of McDonalds Thivesh Final

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