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Contents

1. Introduction

2. Mission Statement

3. Marketing Audit

1. Macroenvironment

1. Politics

2. Economic

3. Ecological

4. Social

5. Technological

2. Microenvironment

1. Competition

2. Suppliers

3. Customers

4. SWOT Analysis

1. Strengths

2. Weaknesses

3. Opportunities

4. Threats

5. Marketing Objectives

1. Strategic Thrusts

2. Strategic Objectives

6. Core Strategy

1. Target Marketing

1. Segmentation

2. Targeting

3. Positioning

2. Competitor Targets

3. Competitive Advantage

7. Marketing Mix Decisions

8. Organisation and Implementation

9. Control

10. References

11. Bibliography

12. Appendices

1. Introduction

This report will provide you, as McDonalds, with a full marketing plan identifying the key issues. In this plan we will critically analyse each stage of the marketing planning process, and suggest possible strategy changes which you may wish to consider. We will set examples with theories throughout the plan and compare existing marketing decisions with our recommendations and the importance in building and maintaining your competitive advantage.

2. Mission Statement

“McDonald's brand mission is to be our customers' favourite place and way to eat. Our worldwide operations are aligned around a global strategy called the Plan to Win, which centre on an exceptional customer experience – People, Products, Place, Price and Promotion. We are committed to continuously improving our operations and enhancing our customers' experience.” (McDonalds 2012)

3. Marketing Audit

1. Macroenvironment

1. Politics

Generally McDonalds do not make political contributions but in some cases it may be clear that whatever political views they have are their own and not that of the company's, they must not use their position to coerce other employees. Any political contribution must be approved by the head of the government relations department of McDonalds. (McDonalds 2012)

2. Economic

In 2011 sales increased by 5.1% in developing regions and sales in Asia-Pacific, the Middle East and Africa grew 4%. McDonalds saw a decrease in sales in June 2012. Consolidated operating income of $2.3 billion decreased 4%, Operating income for the quarter declined 1% and their growth was down due to a rough economy which started in southern Europe but concerns were worldwide therefore sales in all stores decreased by 3.2% in July. McDonalds sales figure have not decreased since April 2003 between this date and June 2012 sales have increased month on month. ”McDonald’s same-stores sales dropped 0.1 % in the U.S., 0.6 % in Europe and 1.5 %in Asia/Pacific, Middle East and Africa, U.S sales dropped 0.1% compared to a 4.4% growth last year. In addition, European sales edged down 0.6 percent after a 5.3% growth in 2011. (Economic times: 2012).

As a consequence of the decrease in sales there has been a decrease in earnings per share to $1.43, down 1% including $0.08 per share of negative currency impact. This could impact on the company as people may not be as willing to buy shares if the dividends continue to decrease. The board of directors made a decision to increase the quarterly cash dividend by 10% to $0.77 per share - the equivalent of $3.08 per share annually - effective for the fourth quarter 2012. This is to motivate people into buying shares. (Economic times: 2012).

McDonalds has increased its spending on promotion recently but this has not helped with the decline in the companies’ growth. They have also said that they are going to deal with the decline by remodelling locations and freshening up the menu (McDonalds: 2012).

3. Ecological

McDonalds is one of many companies that have had to change the way it does things to keep up with the ecological demand its customers now want. McDonalds has tried to satisfy its customers’ needs by; recycling the vegetable oil used to cook some of its food, this is recycled into bio-diesel and used to power logistics fleet and also to fuel its vans. (Go green 2012)

In 2012 McDonalds opened its largest restaurant in the world within the Olympic park. To keep with the eco friendly way they have started to do things they made sure that the uniform the employees were wearing were 100% recycled, they also made sure there was zero-waste. McDonalds (2012)

In August 2008 McDonalds opened the first corporate owned pilot green restaurant in the USA and received leadership in energy and environment design gold certification in April 2009. Since then green restaurants have opened in America, France, Germany, Brazil and Canada. McDonalds (2012)

The Ecologist (2012) States that although all these changed have been put into place McDonalds still use two suppliers for chicken that have been accused of intensive chicken farming methods to produce their meat.

4. Social

McDonalds Seek to make progress in 5 focus areas these are; Nutrition and well being, sustainable supply chain, environmental responsibility, employee experience and community.

McDonalds state that “with guidance from our global advisory council , we continue to evolve our overall approach, while supporting our individual markets in meeting the specific needs and requirements of their local cultures and governments” McDonalds (2012). Since 2004 the GAC has provided McDonalds guidance on areas such as; Global nutrition labeling, McDonalds “ what I eat, what I do” children’s well-being platform, potential risks and issues in the marketplace, developing internal metrics to gauge their progress and understanding how McDonalds can promote the consumption of more fruit and vegetables McDonalds (2012).

McDonalds have a supply chain that profitably yields high quality, safe products without supply interruption to create a net benefit by improving ethical, environmental and economic outcomes. McDonalds (2012)

5. Technological

McDonalds have continuously kept up with technology and will continuously change the way things are done to improve their restaurants and the customer services. An example of the way they have done this are; McDonalds has plans to phase out cash, they are going to do this by changing cashiers and replacing them with touch screen computers, by doing this customer can only pay with card, it also means customer can put their order through manually on their own. McDonalds (2012) state that they use technology innovation to market themselves.

2. Micro-environment

1. Competition

Whilst McDonalds growth is decreasing some of their competition such as KFC and Taco Bell obtain majority if its growth from Asia. “Taco Bell is successful these days because of new hit, Doritos-flavored tacos. In addition, Wendy’s Co. and Burger King Worldwide Inc. have been updating their menus and starting to invest more in the marketing campaigns. . (Economic times: 2012).

2. Suppliers

Within the food, McDonalds changed the way suppliers made the meat. This meant that the burgers were changed to 100% beef and contained no preservatives or added flavors. Also none of the meat were fed genetically modified grain, this happened in the early 2000’s. In 2007 they changed their coffees so that no McDonalds restaurant sells coffee that is not rainforest alliance certificated (The Ecologist 2012). They now use unbleached paper napkins made from recycled paper.

McDonalds (2012) say “We’re committed to working with suppliers and outside experts to continuously improve our standards and practices both within McDonalds and across the industry”.

McDonalds also work with the Greenpeace organization to make sure that the soya suppliers make in Brazil does not destroy the rainforests through making the soya Guardian (2012)

3. Customers

McDonalds’ customers range in age, income and culture. McDonalds have placed intercoms within their drive thru’s to make the process of ordering the food, then food being received quicker for customers.

4. SWOT Analysis

1. Strengths:

McDonalds is well known and has a strong presence around the global market (see appendix 1). “The largest fast food corporation in the world now has over 30,000 franchise outlets in 121 countries, and serves about 46 million people a day.” (BBC: 2012) The major competitors include Burger King which has “more than 11,500 restaurants in 72 countries worldwide” (Burger King: 2012) and KFC which has “over 15,000 KFC outlets in 105 countries” (KFC: 2011). These figures show how vast the company is by having almost more than double of outlets in comparison to its competitors and its success, placing the company high above in the fast food market.

The brand is so well-known that it is recognised by almost everybody in the world. This will give great opportunities for the company to get involved with which will result in more customers and more sales. Having your own charity “Ronald McDonald House Charities” (RMHC) is another advantage. “RMHC is all about helping less fortunate children. We help by raising money to give scholarships, medicine, food and books to these children to improve their lives” (McDonalds 2011). As fast food is often portrayed as being unhealthy, McDonalds also launched a healthy eating campaign by promoting healthy eating on advertisements and by also helping “customers to balance their diet by providing detailed nutrition information on all its products.” (McSpotlight)

International outlets of McDonalds give the company an advantage of long term economic growth. The Travel Almanac (2012) suggests that many items on the menu relate to the foods that are popular amongst the different countries, for example in Turkey, McDonalds serves the traditional drink ‘Ayran’ and in the Middle East McDonalds offer the ‘McArabia’ to gain customers recognition and loyalty.
The locations of the outlets are vastly spread out throughout the world and also in popular places where there will always be people around. As your company does not directly own every single one of these outlets; this is also another way to earn revenue, franchises for McDonalds help to expand the company geographically.

Finally another strength for your company is that McDonalds uses economies of scale for reducing the cost. Plates and cutlery are avoided which saves you from spending unnecessarily on machineries such as a dishwasher etc unlike other restaurants.

2. Weaknesses:

The public perception for McDonalds attracts negative press, portraying that the food that is served is very unhealthy. This can turn a lot of customers away as a balanced diet is taken very seriously.

McDonalds has a high employee turnover. This means more money is being wasted on training. By finding ways to make the employees stay will reduce this factor and help save money in this area.

3. Opportunities:

By way of innovation, McDonald’s occasionally tries out new menu items for limited periods in order to test the market. This was due to the product orientated thoughts of your business. By gaining feedback and opinions of your customers you will be able to produce new items that are wanted instead of wasting the money when it fails to satisfy everyone.

Mcdonalds fulfills its duty towards the environment by promoting energy conservation, less packaging etc. and if they continue to do so it will give them many opportunities as they will be meeting their social responsibilities. McDonalds can look into incorporating this idea into their advertisements and also their marketing strategy.

Another way forward for your company is by getting personal with your customers, having contact with them, receiving feedback and general customer opinion. You should look at using social media, SMS messaging or emails to those customers who wish to participate. This will enable you to receive feedback so you can further improve what needs to be done.

Franchises should be more attainable throughout the world internationally. The more outlets there are, the more customers and the more profitability. However by simply refurbishing old outlets you will also be able to gain more profit this way. More people will want to come to new environments with the new free internet access that your company now has, so to continue providing more service in the current franchises will gain more customers without having to spend so much on a whole new outlet.

4. Threats:

Threats include having lawsuits filed against your company due to various reasons, one of which involves allegedly using addictive additives (Hickman, M: 2008).

During the years overtime, the number of competitors has also increased and will continue to do so. These competitors will sell similar items at lower prices in which your company may not eventually be able to compete with.

Your company also invests heavily on promotional campaigns as to stay on top in regards to its competitors, which in effect decreases the gaining of market share.

5. Marketing Objectives

1. Strategic Thrust

The strategic thrust of business is the set of objectives, set out in terms of which products to sell in which markets. It is the strategy which defines the future of a business (Jobber 2010).

The Ansoff Matrix below displays strategic thrust alternatives and is broken down into four main areas:

[pic]

1. Market Penetration: McDonalds tackles this aspect of its strategy by using a value pricing and bundling strategy for example its happy meal, combo meal, family meal etc in order to increase its sales volumes (McDonalds 2012).

2. Product Development: McDonalds has does this successfully by developing new menus to suit different cultures depending on where a restaurant is based. For example restaurants in Saudi Arabia serve halal meat and do not serve pork (McDonalds 2012).

3. Market Development: One way in which McDonalds has tackled this aspect is the addition of salads, fruit bags, juices and wraps. These products are targeting the more health conscious customer which is a new segment for McDonalds.

4. Diversification: When McDonalds entered India in 1996 due to some religions within the country meaning customers would avoid eating beef and pork the company had to reinvent its menu to satisfy it new customers. In answer to this they launched a new “Mc Veggie burger and McAloo Tikki” amongst others, these products were aimed at targeting the large vegetarian population of this country (Marketing at McDonald's2012).

2. Strategic Objectives

Along with objectives for product and market direction, objectives must be set for each product. The four alternatives of planning at product level:

1. Build, as the word describes this is the stage at which new products will start.

2. Hold, keeping sales at a reasonable level in every business portfolio of products there will be a certain amount of these. They will be left alone until there is any change but are needed to sustain a business.

3. Harvest, these products are allowed to lose sales and market share but require some attention to ensure maximum profit margins. These products are usually known as loss leaders, due to them being produced to fill a gap in the market and fight off competitors.

4. Divest, these products are at the end of the product life cycle and are usually dropped or sold (Jobber 2010).

McDonald’s recognises that customer’s tastes will change over time causing products to move from one level to another. In order to meet these changes McDonalds will introduce new products and faze old ones out being careful not to affect the position of its other products on its menu (Marketing at McDonald's 2012).

6. Core strategy
As we have established the main objectives for McDonalds as a company, it is essential to discuss the core strategies that your company already have and any other suggestions in order to achieve or maintain these strategies.

1. Target Marketing

“A decision has to be made regarding those groups of customers (segments) that are attractive to the business and match its supply capabilities.” (Jobber, D 2010:51)

1. Segmentation

Geographic segmentation: Mcdonalds franchises have been situated in various different locations. Your company can cater towards the local taste and needs and employ local people. Each restaurant can also be designed and decorated based on the local tradition.

Demographic segmentation: McDonalds can cater to the needs of people in the market with the pricing of their menu. Currently the saver menu is ideal for people in contrast to the rest of the menu. As for age there is the happy meal with the free toys and the different characters of McDonalds for entertainment. Some larger outlets also include the r-gym which includes a miniature gym for children. There are different zones for families with children with large tables attached to smaller tables to aid everybody whilst eating. McDonalds can also look into providing more services to others instead of mainly focusing on children.

Psychographic segmentation: The people that categorise into this segment are those that are heavily influenced by having a healthy lifestyle including a healthy diet. Mcdonalds may be able to take this segment as an opportunity by improving to satisfy their customer’s healthy lifestyle.

Behaviour segmentation: These include the ‘grab and go’ bars that have tall stools for single people in a rush. The drive through also caters for the way in which people prefer to purchase their food.

2. Targeting

Through segmenting the market and to meet the objectives for your company, the target market that best benefits your company as a whole now and in the future, are the customers that categorise as being influenced by a healthy lifestyle. Mcdonalds has already introduced salads and fruits into their menu, dairy products to the children’s happy meal such as milk, reduced sodium and unsaturated fats, include nutritional information and much more.

By targeting this segment, your company will maintain a good perception to its brand and will gain an increase in popularity amongst your customers as your company will be catering on the needs for more people in the market.

Mcdonalds can then follow on to using a differentiated strategy gradually, to cater for each segment of the market as to continue to gain popularity.

3. Positioning

Within this section McDonalds is placed on a perceptual map (see appendix 2) in which customers perceive the company amongst its competitors. “The objective is to create and maintain a distinctive place in the market for a company and/or its products” (Jobber, D 2010:285)

2. Competitor Targets

Competitor Analysis seeks to answer five key questions which will be listed below, with regards to Mcdonalds, in order to identify important information of a business’ competitors.

1. Who are our competitors?

The main competitor of Mcdonalds is KFC. Both companies are almost equally as large as each other in the fast food market in terms of popularity and brand recognition.

2. What are their strengths and weaknesses?

Strengths:

-cater for vegetarians with fish and salad options

-“Our restaurants can be as small as an Express counter and as large as a two storey unit or a drive thru.” (KFC 2012)

-“KFC has joined forces with Barnardo’s: the UK’s largest children’s charity” (KFC 2012)

-“KFC has been named in first place overall in the large organisations category at the Britain’s Top Employer Awards.” (KFC 2012)

Weaknesses:

-lack innovation and limited to mainly chicken

-not enough products on the menu to cater for vegetarians

-Uses genetically modified chicken, which is highly controversial amongst the educated and health conscience.

-The word ‘fried’ attached to the brand name puts KFC at a disadvantage giving people a negative perception to its company

3. What are their strategic objectives and thrust?

-KFC provides halal food to cater for the Muslim segment of their market enabling them to expand their customer base.

-KFC is now providing healthier options such as salads and wraps etc.

4. What are their strategies?

We are committed to customer satisfaction through offering high quality with excellent services and good value.

We take great pride in serving each other, our customer and our communities.

We seek continuous improvement in all that we do.

(KFC 2012)

5. What are their response patterns?

In response to threats, KFC are adding healthier options to their menu due to the threat from companies such as Subway.

KFC are also making their packages smaller and more affordable.

Internationally KFC are diversifying their menu to suit the local cuisine.

(KFC 2012)

3. Competitive Advantage

[pic]

(Kotler, P and Keller, K 2012)

Cost Leadership: For an international brand name such as Mcdonalds, it has been extremely successful with this strategy by offering hot fast food meals at low prices. This can be difficult to compete with in the restaurant industry but Mcdonalds keep their low prices through a division of labour that allows it to hire and train inexperienced employees with low wages instead of trained chefs and cooks that would expect higher wages.

Differentiation: Mcdonalds provide fast service where the customers wait no longer than a minute in the queue to be served and no longer than thirty seconds at the ordering counter (Mcdonalds 2012).The happy meal also encourages children to persuade their parents to buy them a happy meal due to the toy included with the meal.

Focus with low cost: Mcdonalds has focused itself with mainly children with smaller meals and drinks to cater for the low costs. Salads have also been introduced to the healthy eating customers of Mcdonalds and these options on the menu cost lower than the burger meals etc.

Focus with differentiation: When you came under fire for aiding to the unhealthy eating habits of your customers you responded by adding healthy options to your menu this has contributed to enable Mcdonalds to remain the leading fast food restaurant in the world. This is a claim not many organisations in any business sector can make but due to doing more towards changing customer demands quicker than its competitors. This strategy if maintained will keep Mcdonalds at the forefront of the fast food industry.

7. Marketing Mix Decisions

Once the marketing strategy is in place, explaining which resources and actions are needed they would then put together the marketing mix or the 5P’s as it is known (Jobber 2010).

1. Product: McDonalds has intentionally kept its product depth and product width limited. It studies the behaviour of its customers to aid in the continuous innovation of its products, in order to meet the changing preferences and tastes of its customers. A great example of this is their pound saver menu offering a range of affordable menu options, for the customers who is looking for a quick bite (Marketing at McDonald's 2012).

2. Price: McDonalds pay particular attention not to fall into the trap of pricing their product to low, causing customers to perceive it to be of a lesser quality to that of its competitor’s it may also damage the brand and its integrity. This could also have the knock on effect of its competitors following suit, resulting in a low margin product without any additional sales. McDonalds uses value pricing and bundling strategies such as happy meal, combo meal, family meal etc to increase overall sales volumes without any adverse effect on the brand (Marketing at McDonald's2012).

3. Place: McDonalds look at the whole experience of dining in one of their restaurants based on the needs of its customer. The basic needs of a hygienic environment, good ambience and great service it also includes a degree of fun and happiness that a customer feels each time he dines at McDonalds.

They offer free Wi-Fi access connection in their twelve hundred and fifty restaurants within the U.K. of which thirty seven percent are franchised. This provides a different kind of experience for its customers, allowing for web browsing, e-mails to be checked or even work to be done over a coffee. Changing the dynamics of some customers who used to grab a burger and run, instead they spend more time and often increasing the amount they spend.

With dedicated children areas set aside to enable parents to spend some quality time together with their children without disturbing other customers. Offering additionally, the Party service, where parents only worry about taking their children to the McDonald's restaurant because they do the rest.

McDonalds have even gone so far as to change their music from CDs played over and over again to radio stations that play up to date music to aid in the happiness feeling they are trying to create (McDonalds 2012).

4. Promotion: The key objective for McDonalds is to make people remember and feel positive about an item from its menu. Over the years McDonalds have put a lot of emphasis on getting to know it customers, meaning its communications are directed at the right audience for their product (Marketing at McDonald's2012).

McDonalds target two main segments children and adults, promoting a positive image for itself. Signing up to help sponsor the 2012 London Olympics, promoting its wide range of products from burgers to salads showing they don’t just sell unhealthy food but also low fat meals with their customers welfare in mind.

With a good relationship with Disney they target the children by basing their happy meal theme and toys around the latest film release (Marketing at McDonald's2012).

5. People: McDonalds also have recognised how their employee’s play an important role in their marketing strategy by simplifying its restaurants and making them transparent for both customers and employees. They ensure their customers are focused on by providing cost effective relevant training both in hospitality and role specific.

8. Organisation and Implementation

In order for a marketing plan to succeed it must be an integral part of an organisation, it must have the capability and resource to implement the plan. The SWOT analysis may have highlighted particular organisational weakness which restrict may restrict strategic options. The only option for the organisation may be to restructure the business and if not already established the addition of a designated marketing department may be needed. As organisations have grown and the need to attract larger customers with enormous buying powers has evolved, the need for dedicated marketing departments enable them to meet the needs of these customers. Organisations will often have account managers with a sales team dedicated to servicing one particularly large account (Jobber 2010).

9. Control

With every marketing plan there must be some sort of control put into place with the aim of evaluating the marketing plan and so action can be taken quickly if objectives are not being met. If a marketing plan is not successful it can be very costly due to the issues caused by low sales, but also the expense of having to start the process from the beginning (Brassington and Petit 2007).

McDonalds work to very tightly controlled budgets, so in order to ensure these are met they implement short-term targets to all of their objectives. Using systems to obtain market feedback and sales performance in order to monitor success/failure against these targets and adjust the plan if necessary.

10. Conclusion

To conclude this report Mcdonalds has a very strong core business strategy but needs to ensure that it reacts in a timely manner to the changes in customer needs. Over the last few years Mcdonalds has responded slowly to the changes in customers’ diets and to overcome this, we suggest your company to collect data and feedback through social media and/or surveys to build a good customer database. This will enable you to adjust the marketing plan in a more timely fashion to combat the poor growth rate with which you have been suffering in previous years due to customers changing to more healthier eating options.

11. References

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Jobber D. (2010). Principles and Practice of Marketing. Sixth Edition. London. McGraw-Hill Higher Education.

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12. Bibliography

Atlantic Online. (2012). Why Mcdonalds fries taste so good. Available at. http://www.karlloren.com/diet/p94.htm [Accessed 13/11/2012]

BBC. (2012). Fast food factory. Available at http://www.bbc.co.uk/worldservice/specials/1616_fastfood/page2.shtml [Accessed 17/12/2012]

Burger King (2012) Company information. Available at http://www.burgerking.co.uk/company [Accessed 15/11/2012]

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Go Green (2012) McDonalds going eco-friendly. Available at http://www.go-green.ae/greenstory_view.php?storyid=1690.[ Accessed 19/11/12].

Jobber D. (2010). Principles and Practice of Marketing. Sixth Edition. London. McGraw-Hill Higher Education.

KFC (2012) About KFC. Available at http://www.kfc.com/about/ [Accessed 15/11/2012]

Kotler, P. Keller, K.( 2012) Marketing management. 14th edition. Harlow. Person education.

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The Guardian (2012) McDonalds goes green but not all the customers are lovin it. Available at http://www.guardian.co.uk/business/2007/jul/05/lifeandhealth.consumerandethicalliving. [Accessed 19/11/2012]

The independent. (2008). On the menu at Mcdonalds. Available at. http://www.independent.co.uk/life-style/food-and-drink/news/on-the-menu-at-mcdonalds-78-additives-some-may-be-harmful-767533.html [Accessed 13/11/2012)

The Travel Manac. McDonalds in Muslim countries (2012). Available at. http://www.thetravelalmanac.com/food/mcdonalds/muslim.htm [Accessed 16/11/2012]

13. Appendices

Appendix 1: Location of Mcdonalds Franchises.

Appendix 2: Perceptual Map

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Marketing Planning

Assessment 1: Group Report, McDonalds

Module Tutor: Amanda Boyd

|BA (Hons) Business Management | |

Low Price

High Price

Popular Brand Recognition

Unrecognised Brand Recognition

·ð McDonalds

·ð KFC

·ð Burger King

·ð Domino s Pizza

·ð Subway

·ð Wimpy

·ð Dixy Chicken

·ð Chicken Cottage

n

Unrecognised Brand Recognition

• McDonalds

• KFC

• Burger King

• Domino’s Pizza

• Subway

• Wimpy

• Dixy Chicken

• Chicken Cottage