1. Is McDonalds trade-up strategy to the McCafe’ line of premium coffee products a good deal for the franchisees? Why or why not?
- After reading this case I began by reviewing the planned way McDonalds would handle the trade-up approach. If they were to apply this method to the launch of new coffee products, in order to properly address they should keep these strategies in mind, like the products themselves, what the manager is capable of, how much financial support they have, how much power is behind the brand and lastly, the value of the channel members in carrying out the manufactures product strategies.
- Trading up means you are competing with other companies in the same line, but putting a higher price on it, in order to reach the top of the market. I believe this is taking a huge risk, because they are now facing new competitors they didn’t have to deal with before like Starbucks and Dunkin donuts, they might not have the proper knowledge, or the channel management that these other companies may possess. If their products do well then it is worth the risk.
- But, the products are expected to add an average of $125,000 in additional revenue, and if this follows through, then this trade up strategy would be a great success. McDonalds is a company that has been accepted by many and continues to be successful. They believe it will attract more off-peak customers, and although the prices seem high they are still less than Starbucks, and if their products are satisfying customers then will continue to pay less for something just as good as other big name