McDonald’s Marketing Plan and Strategy Report

Executive Summary of McDonald’s Marketing Strategy

McDonald’s Corporation is the world’s largest fast food company by sales volume and retail outlets. McDonald’s operates in over 116 countries with its outlets and franchises. The company is successful and still growing fast. The company uses its marketing plan carefully when implementing its marketing strategies across its global outlets and franchises.

McDonald’s uses the strategy of Plan to Win to drive its worldwide expansion. This strategy has 5Ps that consist of price, promotion, product, place, and people. The company relies on strong strategic thrust and competitive advantage that mainly focus on its resources for implementing its marketing objectives.

McDonald’s is also one of the largest spenders on advertising. Industry analysts estimated that McDonald’s spends over $ 1.2 billion in advertising beating all other fast food companies. The kids’ advertisement and promotional strategies take the largest portion of this budget.

Despite this success, McDonald’s faces a number of challenges from unlikely sources like its customers, who complain that the company uses its advertisement messages to target kids.

Still, McDonald’s has to contend with expensive lawsuits related to obesity claims as a result of consuming its unhealthy food. In addition, there are also challenges of staff turnover, risks of food infection, and threats from competition. The company now strives to focus on provisions of healthy organic food as a response to its customers’ demands for future growth.

Business Mission

McDonald’s Mission Statement

“McDonald’s vision is to be the world’s best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile”.

In McDonald’s annual report of the year 2010, the Vice Chairman and CEO, Jim Skinner, states that the company started to create its brand and strength throughout the globe. The CEO also accepts that the business situation during the year 2010 was tough.

The company managed to deliver its business through consumer-oriented management in order to focus its strategies and enhance its main business concentration, specifically the menu, restaurants, core values, and convenience to the customers. At the same time, McDonald’s management continued to focus on the quality of human resources and restaurants in order to enhance customer satisfaction (McDonald’s Corporation, 2010).

External Situational Analysis

McDonald’s has survived all the external global conditions that may affect its operation. Consequently, the company continuously monitors the external environment, such as political risks. In over 100 countries, political situations have not stopped McDonald’s from operating its outlets or franchises.

McDonald’s is also a stable company economically for the past decades. The company has survived the global recession of 2007 and continues to make profits and introduce new ranges of products. McDonald’s also provides services and uses technology that appeals to its consumers and always strives to create positive consumer experiences in its outlets and franchises.

Thus, observing ethics with regard to claims that McDonald’s advertisement target kids and sell unhealthy foods and junk have been a source of concern for the company. McDonald’s is an industry leader; thus, competitors mainly borrow or watch McDonald’s strategies in terms of new products, technology, promotion, and investments, among others.

Internal Marketing Audit

Marketing Mix Effectiveness

McDonald’s marketing mix is effective and strategic due to its approach. Studies have shown that McDonald’s concentrates carefully on the implementation processes of the 4Ps of the marketing mix. At the same time, the company focuses on fulfilling consumers’ needs through its innovative products and services in different outlets and franchises and enhances the relationship with stakeholders such as consumers, investors, franchisees, employees, suppliers, and the community in which it operates.

McDonald’s also strives to provide healthy food among its products, especially to children, due to claims of obesity. In this regard, the company provides the nutritional contents of its food to consumers on the packages. These concerns have enhanced the company’s competitive strategy and advantages in terms of serving low costs healthy foods (Koshuta, 2007).

However, lately, McDonald’s has suffered several lawsuits related to what consumers call unhealthy food it serves children. The claims relate to an increase in obesity among such consumers. This means that McDonald’s must improve its nutrient contents in such foods and reduce the level of calories. This is where the marketing mix of products should focus in order to create competitive advantages.

McDonald’s can use modern technology to reduce the fat contents and reduce risks of contamination by removing E. coli and salmonella. This way, McDonald’s food will result in a strong brand for the company. McDonald’s can promote reduced fat contents, risk and contamination free, and work with food safety authorities to promote its healthy food.

McDonald’s should capitalize on the strengths of products using the marketing mix strategies in order to promote healthy foods and healthy eating habits among kids.

Promotions and advertisement activities of healthy diets must reflect the above objectives of promoting a healthy diet and helping in the fight against obesity among its customers. These promotions are ethical and legal since they promote and advertise healthy diets. The company’s strategy to focus on healthy products will determine its future growth, marketing strategy, and target market, and in turn, provide the needs and wants of its customers (Story and French, 2004).

Marketing Structures and Systems

A company’s marketing structures and systems come after marketing strategies for implementation of the strategies (Gilligan and Wilson, 2007). In addition, marketing structures and systems provide the needed support during the implementation of organizational marketing activities.

Still, managers must use such systems in the processes of decision-making. These include application tools, data collection, and interpretation of data for providing factual information for both internal and external situations of the business so as to support marketing activities (Gilligan and Wilson, 2007).

McDonald’s global marketing structures and systems have enabled it to thrive and drive its global business agenda. McDonald’s calls it franchises as systems. Franchises are responsible for the international presence of McDonald’s in over 100 countries. The company is successful because of its marketing structures and systems that offer what consumers want.

SWOT Analysis

McDonald’s SWOT analysis shows that the company has a higher ranking in the global fast food industry. It gets its competitive advantage from locations such as airports, theme parks, busy roads, and in Wal-Mart stores. McDonald’s also has quality food products, such as quality chicken products, beef, and pork for its products.

McDonald’s only uses brand names and supplies nutritional information on the food packages (Adcock and Halborg 2004). McDonald’s also offers its products at low cost in order to appeal to a wide target market. The company has relied on its strategy of Plan to Win and franchise systems in order to maintain its first position and global presence in the fast food industry.

McDonald’s weaknesses include high staff turnover. This has increased its staff acquisition and training costs. McDonald’s also did not pass the pizza test. This failure resulted in limited competition among pizza providers. The issue of obesity is fast affecting the fast food industry, and McDonald is the first casualty.

However, McDonald’s does not focus much on organic food. Occasionally, customers have expressed their concerns regarding the quality of food in McDonald’s outlets and franchises around the globe. In addition, McDonald’s only provides certain fast foods and soft drinks. This act of specialization means that the company cannot serve outside its menu; thus, it cannot offer other varieties of foods.

McDonald’s has many opportunities for provisions of fast food. McDonald’s can still franchise with several retailers. It also has opportunities of providing healthy and organic food as consumers demand in fights against obesity concerns among its customers so as to reduce possible lawsuits.

McDonald’s can also support social responsibilities through support for its farmers and encourage the conservation of the environment. The company can enhance its use of promotional channels in its restaurants, provide playgrounds for kids, increase partnerships with beverage companies, and create locations with Wi-Fi for customers.

McDonald’s encounters many threats. The advertisement experts criticize the company for targeting small children and adults alike with its multi-billion advertisement campaigns. Likewise, the company is also under constant threats of lawsuits because of serving addictive and unhealthy foods, mainly to children. It is impossible for McDonald’s to serve healthy foods to fit various customers’ nutritional needs. In a number of cases, there are risks and issues of food contamination, specifically with e-coli.

This has ruined the company’s reputation in some franchises and outlets. McDonald’s also faces competition from other fast food restaurants, and consumption also depends on economic stability. The main competitors of McDonald’s include Burger King, Wendy’s/Arby’s, Subway, Pizza Hut, and Yum! Brands (Gupta, 2010).

Marketing Objectives

Strategic Thrust

The main strategies are also a company’s strategic thrusts. Strategic thrust offers organizations basic steps in order to undertake strategic actions and functional strategies. Strategic thrusts may work independently or may work together so as to reinforce others (Ferrel and Hartline, 2005).

McDonald’s applies a strategic thrust of concentrated growth. Concentrated growth focuses on enhancing sales of the existing products and services of McDonald’s using its outlets and franchises. At the same time, the strategy addresses issues of price, value, and quality as consumers express their concerns.

This strategy reduces risks and costs to McDonald’s and creates stable business operations. However, this strategic thrust of concentrated growth may not serve the company in unstable business conditions and where there are rapid changes (Baker, 2008).

McDonald’s also focuses on market development. The approach emphasizes the growth of the company through using its existing fast foods and soft drinks and marketing them in related areas, opening new outlets, franchises, and increasing advertisement and promotional strategies.

The company also focuses on product development for both existing and target markets. For instance, McDonald’s has been able to introduce a range of products and services so as to serve its wide target markets. In addition, the company relies on innovation and technology in order to reduce fat content and calories in some of its menus as customers demand.

Strategic Objectives

Andy McKenna, the company Chairman, puts it that McDonald’s has a Plan to Win strategy. The company has used this strategy to carry out its strategic objectives for the past eight years. McDonald’s strategically implements its marketing plan using the Plan to Win strategy, which has the core objectives and strategies of its marketing agenda.

These are the 5Ps of price, promotion, product, place, and people. McDonald’s executives have noticed the potential and importance of every P, and the company plans to apply all the Ps in its marketing plan. McDonald’s is using this strategy in order to focus on its right priorities, such as keeping its brand relevant and meeting the needs of ever-changing customers, more so with regard to healthy food.

The Plan to Win strategy enables McDonald’s to be decisive, flexible, and show strong business orientation so as to meet the needs of its customers, especially with regard to obesity and health issues. McDonald’s believes that the strategic objective of the Plan to Win strategy has worked well and will continue to do both in the domestic and global markets in the coming years (McDonald’s Corporation, 2010).

Core Strategy

Target Market(s)

McDonald’s target market is wide and broad, covering every segment of the consumer demography. Thus, McDonald’s target consumers of all ages, generations, nationalities, income, race, gender, and family with its global presence and franchises approach. The company offers low-cost and high-cost products that meet its wide markets.

Competitor Targets

McDonald’s competitors include Wendy’s/Arby’s, Burger King, Subway, and Yum! Brands, among others. Some of these competitors do not focus on the entire market segment as McDonald’s does. For instance, Burger King has been targeting adults of 18 years to 35 years old, as Wendy’s/Arby’s target consumers of 24 to 49 years, instead of its previous strategy of targeting 18 to 24 years consumers (WSJ, 2008). In addition, most of these competitors’ target markets have limits in terms of geographical coverage.

Wendy’s/Arby’s is in 33 countries. The company focuses on providing varieties of fast-food products and services. McDonald’s focuses on all segments of the market. Consequently, it has reduced its prices to cater to such consumers and gain a competitive advantage. However, Wendy’s/Arby’s focuses on the quality of its products instead of prices. The company has products like Garden Sensation that appeal to diet-conscious consumers (Gupta, 2010).

McDonald’s has been able to challenge its competitors using expansion strategies across the globe through franchises. However, a competitor like Wendy’s/Arby’s focuses its expansion strategy in Latin American countries. The company also seeks joint ventures and uses acquisition strategies.

KFC focuses on profits and sales growth. In addition, just like McDonald’s, the company also focuses on customer service. KFC also tries to change its menus to match those of the countries it serves and caters to different ethnic communities. This is to enhance its market share. KFC targets emerging markets and highly populated areas like shopping malls.

Subway also has a strategy of targeting international markets. Subway also focuses on healthy food in reaction to customers’ demands. The company has established healthy brands of sandwiches as a form of fight against obesity among children. The company believes that health-conscious consumers are here to stay (Gupta, 2010).

Competitive Advantage

Like any other company, McDonald’s also seeks competitive advantage. Competitive advantage has enabled McDonald’s to hold the leading position in the fast food industry since its inception. The focus of the company has been brand recognition and a global presence through franchises and outlets. The company is consistent with its advertisement and has an innovative capacity to create a low-cost menu of $ 1.

It is also focusing on introducing healthy options consisting of salads in its menus so as to reflect the changing taste of consumers. Recently, the company introduced a low-cost coffee product that aims at competing with Starbucks in the coffee market. These approaches keep McDonald’s competitive advantage stronger than competitors (Ferrel and Hartline, 2005).

McDonald’s attention is on managerial and organizational activities that aim at creating an integration of the company. The team focuses on a common goal that aims at creating value for the organization. Therefore, change and learning are necessary in order to cater to customers’ trends, developments in technology, and innovation in the company (Hooley et al, 2007). McDonald’s concentrates on hiring and creating management experts and enhances organizational behavior.

The company also looks into areas of technology, structure, and assets that enhance competitive advantage. McDonald’s uses its resources, technology, and financial resources to create a competitive advantage in the fast food industry.

McDonald’s focuses on a wide target market with global outreach and creates low-cost products, which has improved its competitive advantage in the market. The company’s vision of serving fast food to busy consumers has seen it spread throughout the world. The provision of quality products and services has remained defining factor in McDonald’s competitive advantage. These are advantages that are unique to McDonald’s only; thus, it is difficult for competitors to imitate them (Bateman and Snell, 2004).

McDonald’s Marketing Plan

Product

McDonald’s deals in fast food that consists of hamburgers, chicken, French fries, soft drinks, coffee, milkshakes, salads, desserts, and breakfast. These products provide varieties for McDonald’s wide target consumers. McDonald’s serves these products in various quantities and quality, and prices.

The company has unique designs for its packaging that reflects its brand and identity. Product packaging is a strategy that McDonald’s uses in its products to implement its marketing mix (Jobber, 2010). The company knows the effect of packaging messages to all its customers.

Consequently, the packaging of fast food products must thrust McDonald’s brand. The fast food industry is competitive; thus, McDonald’s has to convince customers with its products within a short period. Products packaging offers convenience to consumers who buy fast food for home consumption or traveling. Most products experience repeat purchases due to packaging. McDonald’s has strived to enhance its fast food products and coffee for the convenience of its consumers.

Consumers know McDonald’s for its French fries. However, the product had been on the decline stage and was no longer generating significant revenue (Perner, 2008). Consequently, McDonald’s reacted by revitalizing and repositioning it through a new product known as Shake Shake Fries. In addition, the company added new varieties to it, such as spices mix. This approach ensured that French fries remained relevant in its menu for revenue growth.

Although McDonald’s has several outlets and franchises, it strives to maintain the same quality and tastes of its products across the globe. McDonald’s can claim that all its products will be of the same quality and service always across the globe. The leading fast food company has demonstrated this over a number of years.

Consequently, customers can trust McDonald’s brands. This allows consumers to know what to expect from McDonald’s products and services whenever they make purchases. This flexibility allows consumers to trust McDonald’s to provide the same quality fast food in every outlet and franchise.

Price

McDonald’s pricing tends to consider all elements of the marketing mix. The company provides value pricing whereby its offers products as low as $ 1. This combination provides quality products at fair prices to all customers. Therefore, a non-pricing approach is impossible for McDonald’s, even if it is the company leading in the fast food industry (Perner, 2008). Pricing strategy and implementation are necessary due to the competitive nature of the fast food industry.

In addition, McDonald’s must set a pricing strategy to cater to reduced costs that affect the price, promotion, and distribution of its products. These will strongly affect its pricing strategy. In all these marketing mixes oriented toward pricing, McDonald should know that consumers’ decision to buy goes beyond pricing alone as there are other factors that influence consumers’ decisions. Consumers seek the best values and satisfaction from their purchases.

McDonald’s sells to high-end consumers as well as low segments of its target markets. Consequently, McDonald’s pricing mix and implementation are necessary for determining the company’s success. McDonald’s value pricing strategy sends a message to all consumers of different segments and income statuses.

The advantage is that McDonald’s serves all segments of the market. Consumers need value for their spending, and McDonald’s has created this. McDonald’s pricing strategy must also account for competition. McDonald’s also experiences competition from other fast food companies. Therefore, a pricing strategy to outdo the competition and maintain the leading position, as well as market share, is crucial in McDonald’s marketing mix (Adcock and Halborg, 2004).

McDonald’s has noted customers’ sensitivity to prices. Consequently, the company has reacted by introducing low-cost, fast food of a dollar. However, some customers do not have to pay much attention to product pricing if they can get quality products and value. McDonald’s must use its pricing strategy and implementation as a tool for controlling other elements of the marketing mix.

Place

McDonald’s has some of the most strategic places among fast food companies. The company seeks populated areas, places of high-end consumers, and easily accessible such as airports, busy streets, and retail stores. McDonald’s also likes locations near its main competitors, such as Subway and Burger King. This strategy is crucial to ensure that McDonald’s captures and supplies its products to all market segments.

McDonald’s is also available online as clients can place their orders. McDonald’s has a worldwide focus through its new outlets and franchise approach. Availability has enabled McDonald’s to remain competitive and conduct profitable business. Presence in such locations creates demands for such products. Place strategy has worked for McDonald’s as customers can easily access their favorite fast foods.

The choice of place also promotes McDonald’s brand image to its target markets. In addition, the choice of such places also influences the pricing of McDonald’s fast food products and the type of consumers who visit such places. Thus, McDonald’s serves both low-end consumers as well as high-end consumers who may not have time to prepare their meals (Gupta, 2010).

When implementing a place strategy, McDonald’s must consider the price, products, place, and people. McDonald’s must also watch its competitors, such as Subway and Burger King, as they choose their places. McDonald’s has been opening new outlets and franchises. McDonald’s place strategy must appeal to its employees, stakeholders, and customers.

Promotion

Implementation of a promotional strategy is crucial for the success of any business venture. Companies rely on communication to promote their brand images and create awareness about their products. The company must consider the message and tools of communication in order to reach its target market.

McDonald’s has used several strategies, such as providing toys for kids, Big Mac Hockey Contest, and card games. Such strategies aim at promoting both its existing and new products. There are also advertisement campaigns that promote McDonald’s experience and active lifestyle.

McDonald’s uses channels such as television, newspapers, and radio. It also uses billboards and signage. The company also sponsors sporting events like Olympic Games and Little League. The company provides its branded drinks at such events. Lately, McDonald’s has used its Web site to promote its products. However, it is the television that has created the most memorable advertisement for the company.

McDonald’s has many slogans for different countries. Some of these slogans and advertisement campaigns have resulted in lawsuits.

McDonald’s also has a fifth element in the marketing mix that focuses on people. This is mainly to enhance customers’ experiences of McDonald’s products and services.

However, some reports indicate that McDonald’s tends to concentrate on children more than any other segment of the target markets in terms of advertisement budget and products alike (Story and French, 2004). According to John Koshuta, “the world’s largest fast food chain uses cartoons, toys, schools, charities, and even parents to reach its youngest customers” (Koshuta, 2007).

Budget

According to Advertising Age, McDonald’s spent $ 1.2 billion in the US alone in the year 2008. It is among the top 30 largest advertisers in the US. In the US, McDonald’s has a national and local advertisement strategy. The company has a national budget for national advertisements, and local co-operatives organize local advertisements. The industry total is $ 5.6 billion. Koshuta notes “about 40% of McDonald’s total advertising budget focuses on children” (Koshuta, 2007).

McDonald’s Action Plan

A marketing plan will provide McDonald’s with the road it requires in order to pursue its marketing objectives. However, a marketing plan is just a plan; thus, it is not a guarantee that the company will achieve such desired goals.

Therefore, turning a marketing plan into a strategy needs practical implementation. This will turn the plan into action and, in turn, helps achieve strategic marketing objectives (McDonald, 2007). Implementing any strategy requires resources. McDonald’s needs a strategy management approach that will ensure that the marketing plan becomes the center of focus (Lehmann, 2007).

The best marketing plan with the best strategic plan will ensure that McDonald’s achieves its business goals and objectives of Plan to Win. Some authors have argued that the implementation of the plan is more crucial than the strategy. However, implementation and strategy depend on each other for success.

Kotler and associates note that implementation results in a competitive advantage for the company (Kotler, Wong, Saunders, and Armstrong, 2005). In this context, scholars have identified three stages that are crucial for the implementation of business strategy. These include owning the plan, supporting the plan, and adapting the plan.

Most business plans fail due to a lack of ownership. McDonald’s management teams must demonstrate a willingness to support the plan. They can claim a stake in it and take responsibility during its formulation. Management must promote ownership of the plan by establishing action points, plan, involvement of senior level management, compensation, champions, and ownership team.

Senior-level management of McDonald’s must also actively participate in the process. They must remain committed and take part in the review of the progress of the plan. Senior-level management that shows less interest in the plan may communicate a lack of interest in the plan. Consequently, champions and ownership groups may feel a lack of interest too. This may result in a complete failure of the plan due to its lack of implementation (Aaker, 2009).

McDonald’s must also support the plan. Supporting the plan depends on five company elements. These include human resources with the necessary competencies and skills and leadership needed to implement the plan successfully. Allocation of resources such as time, personnel, and money will also affect the implementation of the plan. The organization must also provide the required structures in terms of policies and practices that guide a marketing plan.

The support for the plan also requires the organization to provide systems of information flow, operation, communications, rewards, planning, and measurement of outcomes. Lastly, organizational culture also influences the outcome of plan implementation. McDonald’s must have a strong culture that supports marketing initiatives and promote coordination during implementation processes. These five elements must be in line with each other and aligned with the business strategy of the organization (Baker, 2008).

Control

Businesses have control systems that guide their strategic plans in order to adapt to dynamic market situations. A strategic marketing plan sets the direction and offers the company a direction for implementation and continuous improvement as it adapts to the market (Gilligan and Wilson, 2007).

Controls ensure that McDonald’s takes corrective measures after evaluating its marketing plan. This will ensure that the company achieves its strategic plan. McDonald’s must find ways to narrow boundaries due to its international presence by creating a cross-functional management system that communicates organizational plans across various units or countries (Aaker, 2009).

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