McDonald’s Company: New Product-Menu Development Case Study

Abstract

McDonald’s Corporation is one of the largest fast food retailers in the world. The publicly traded company was founded on 15^th May 1940 in San Bernardino, California. Over the years, the company has managed to achieve consistency with regard to meeting various customer needs, maintaining high quality products, and adapting well to the dynamic nature of the international market. The company mainly sells fast foods such as hamburgers, chicken, French fries, soft drinks, coffee, milkshakes, salads, and desserts.

With more than 35,000 chains in 119 countries, McDonald’s is definitely one of the world’s best known brands. One of the main factors that have contributed to the strong brand is the ability of the company to understand the changing lifestyle choices of their customers by providing menus that meet their dietary needs. McDonald’s often conducts market analysis to understand various factors that influence the dietary choices of its customers in order to develop new products that match their changing needs.

Drivers for new product-menu development at McDonald’s

New product development refers to the complete process of introducing a new product to a market. The process at McDonald’s involved increasing the product range and variety by introducing new items (Barnes, 2007). In addition, the company developed new product lines and renovated the existing ones to include healthier options.

The new developments made at McDonald’s were customized to reflect the tastes and customs of the local market. One of the main factors that contributed to McDonald’s introducing the balanced lifestyle menus was the changing needs of the customers (Barnes, 2007). People in the contemporary world have become overly conscious about their health and the need to life a healthy lifestyle. Meeting the dynamic customer needs is a complex process that required McDonald’s to make numerous considerations with regard to the interplay of factors that influenced various food choices.

Healthy living entails eating low fat foods and daily exercise (Williams & Carter, 2011). McDonald’s considered these factors because they have a huge effect on food decisions made by their clients. Customers responded very well following the introduction of the balanced lifestyle menus, thus boosting the company’s revenue across various outlets.

Another driving force for new product development at McDonald’s was the need to retain their customers and continue their dominance in the global market (Barnes, 2007). With the customer needs and preferences rapidly changing, the company could not afford giving their competitors a chance to take away their customers. Thus, they needed to act swiftly by introducing the balanced lifestyle menus across it numerous outlets.

Reflection of new product development in McDonald’s menu lines

The concept of new product development reflects on McDonald’s menu lines in various ways. It is important to note that the company sourced the ideas for its new menu across various functional international teams comprising of its employees and experts. The balanced lifestyle menus were supported by three pillars namely, menu choice, need for physical activity, and information (Barnes, 2007).

Under menu choices, McDonald’s focused on adding new products that would help its customers to adapt healthy living. In addition, it introduced new menu lines that introduced new products such as salads, fruits, and vegetables (Williams & Carter, 2011). For example, McDonald’s units in Europe, Canada, and Hong Kong were among the first to introduce fruit salads, fruit yoghurt, and other new products created by the company (Hawkes & Henson, 2009).

In other menu lines such as Taiwan, Australia, and Sweden, McDonald’s introduced new products such as toasted rice burger, carrot slices, cereals, juices, as well as low-fat milk and yogurt. The introduction of balanced lifestyle menus also focused on promoting the concept of physical activity (Williams & Carter, 2011). The initiative was highly localized as the company wanted to create a positive appeal to its customers across the world. McDonald’s used a number of strategies in its efforts to internalize its business.

The first strategy was developing a work partnership with the international Olympic committee during the launch of its “Go Active” program (Barnes, 2007). This help the company to create a global appeal to its customers across the world, a step that helped to boost its performance in the international market. For example, the sponsorship deal with Stepometers in order to promote their happy meals, also help McDonald’s to have an easier time creating an international appeal (Williams & Carter, 2011). The main aim of the program was to provide McDonald’s customers with various online physical resources and personal fitness assessment tools.

Designing of new products and innovation teams at McDonald’s

Over the years, McDonald’s has been very consistent and effective with regard to designing new products. This has been necessitated by it ability to bring together a highly creative innovation team that identifies opportunities as soon as they sprout (Barnes, 2007). The balanced lifestyle menus represent one of McDonald’s latest products to be introduced into the market.

This new product was designed and developed with an orientation towards fulfilling the increasing demands for healthy foods by the customers (Bratskier, 2015). The innovation team that came up with the new menus comprised of nutritionists, as well as experts in the fields of wellness and physical activity. One of the corporate objectives of McDonald’s is increased promotion of innovation and development of new products that meet the dynamic needs of various customers (Associated Press, 2004).

The customer is always the top priority, a phenomenon that influenced the kind of new products developed by McDonald’s. In addition, the food retailer also developed and promoted new and healthier menus that considered the tastes and customs of local in its various outlets. The innovation teams generate and source ideas for new products by conducting a thorough market analysis (Hawkes & Henson, 2009).

Research has established that a market analysis helps in developing new perspectives about consumer choices, a factor that highly influences the development of new ideas. In addition, creating an innovation team with individuals providing expertise in various fields helps to introduce efficiency in the decision making process (Associated Press, 2004).

Activities by McDonald’s geared towards increasing the acceptance of new menus

First, the company focused on developing menus that promoted the habits of the local people and at the same time meeting their dietary needs (Barnes, 2007). Research has established that culture a lot of influence of the choices that people make with regard to food. Therefore, it was important for McDonald’s to ensure that their new menus had a cultural aspect that would draw more customers.

Second, McDonald’s created an active lifestyle team, whose main duty was to provide the management team with strategic directions with regard to achieving efficiency in the introduction of new products (Gilbert, 2008). The cross-functional team was very influential in ensuring that customers understood the health benefits of the new products through well coordinated advertisements (Williams & Carter, 2011). In addition, it ensured that the information available in the company’s website is updated as soon as new products are developed.

Third, McDonald’s also hired a global team of nutrition experts, whose main role was creating contact with the right stakeholders. The reason for creating a nutrition team was to ensure that the culinary culture of various communities was considered when developing new products for respective markets (Barnes, 2007). This played a crucial role in increasing customers’ acceptance of new products because they met all their nutrient and culinary requirements.

Exploiting the power of social media

Social media has changed the way people do things in a lot of ways. Research has established that social media tools such as blogs are very influential in the food industry with regard lifestyle choices and food decisions (Hill & Jones, 2011). There are numerous ways through which McDonald’s can exploit the power of social media to increase the acceptance level of their new menus among their customers.

First, the company can create a nutrition blog that will give their customers a platform to interact with each other and nutrition experts (Hill & Jones, 2011). The blog can also be used to generate posts that educate people about various products contained in the menus and their importance in terms of achieving success in adapting a healthy lifestyle. In addition, the customers can share their different experiences with the new menus on the blog, thus influencing other users who have not tried them to do so (Hill & Jones, 2011).

Second, social networking sites such as Facebook provide a good opportunity for McDonald’s to promote its new recipes among the high number of people using the tool. By hiring a social media manager, McDonald’s can increase the customer adoption of its balanced lifestyle menus through status updates and instant chat messaging service (Hill & Jones, 2011). The number of people that use Facebook keeps increasing every day, thus creating an even bigger opportunity for McDonald’s to dominate the online market.

Another effective way in which McDonald’s can exploit the power of social media is giving free meal vouchers to the people who like their social media pages and profiles (Hill & Jones, 2011). This is a form of advertisement that the company can use to promote their menus because the few followers who will get a chance to sample the menus will definitely influence the others depending on the kind of feedback they give. Social media is a very powerful tool that can propel a business to prolonged success as long as it is used effectively (Hill & Jones, 2011).

Measuring the success of new menu items

There are numerous elements that McDonald’s can use to assess the success rate of its new balanced lifestyle menus. The first element is the number of people that visit their outlets every day (Love, 2008). A sudden increase in the number of customers is a clear indication that the menus are a success, while a reduction in the number of people visiting various outlets can indicate the ineffectiveness of the new products. The second element that can be used to measure the success of new menus is the kind of feedback and comments from customers.

Positive remarks would definitely mean that the customers appreciate the new menus, while negative remarks indicate that there are certain things that should be improved (Love, 2008). Profitability can also be another effective element that McDonald’s can use to assess the effectiveness of their new tools. Increase in revenue is an indication that more people make purchases, while a reduction in profit margins can be an indication that the demand for the new products is very low (Gilbert, 2008).

References

Associated Press. (2004). McDonald’s Phasing out Supersize Fries, Drinks: Efforts to Offer Customers a Balanced Lifestyle. Web.

Barnes, D. (2007). Operations Management: An International Perspective. New York: Cengage Learning.

Bratskier, K. (2015). Want Kids to Eat Healthy? Make their Meals More like McDonald’s. Web.

Gilbert, S. (2008). The Story of McDonald’s. San Francisco: The Creative Company.

Hawkes, C., & Henson, S. (2009). Trade, Food, Diet, and Health: Perspectives and Policy Options. New York: John Wiley & Sons.

Hill, C., & Jones, G. (2011). Essentials of Strategic Management. New York: Cengage Learning.

Love, J.F. (2008). McDonald’s: Behind the Arches. New Jersey: Paw Prints.

Williams, E.M., & Carter, S.J. (2011). The A-Z Encyclopedia of Food Controversies and the Law. California: ABC-CLIO.