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Fast food businesses managed to survive the global financial crisis that the entire world faced since 2007. However, the fast food businesses too began to suffer the consequences of the crisis. In 2009, some fast food chains closed some of their branches as they posted low sales levels. McDonald’s, Yum Brands, KFC and Pizza Hut all posted decline in sales in 2009. The crisis intensified competition in the fast food industry.
Participants in the industry tried to beat competitors through the introduction of new products and prices. McDonald’s is one of the companies that participate in the fast food industry. It faced stiff competition from numerous competitors worldwide. Some of the key competitors include Kentucky Fried Chicken (KFC), Pizza Hut and Yum Brands.
McDonald’s can use product positioning to ensure that it leads in the fast food industry. It can use this strategy to enhance its brand and lead other companies in the industry. This strategy requires that it pays close attention to the needs of the customers (The Times 100 1).
This is essential because there is international promotion and export, psychological and sociological issues that can affect the position of a product in a market. This paper examines product-positioning strategies that McDonald’s can use to promote itself and stay ahead of its competitors in the international market.
It mainly focuses on India and Africa as segments of the international markets. Additionally, it considers the international markets as areas outside the United States.
Background of McDonald’s
McDonald’s is a well-known brand internationally. It is a company that has international operations. Two brothers, Dick and Mac, established the company in 1937. In 1948, the company began to sell fries, hamburgers, soft drinks and shakes. In 1953, the company began to franchise the business.
The first franchises were in California and Arizona. The brothers adopted a system of operations that was efficient and ensured fast movement of customers. Currently, the company operates approximately 31000 restaurants internationally. Moreover, the company has employed about 1.5 million individuals in its restaurants. The company has operations in more than 120 countries.
The advantage that the company has had is that it uses a system that ensures efficiency in operations. The company uses intense media hype to support the efficient process that it adopted. The media hype has been a campaign strategy that the company adopted.
Product positioning involves stimulation of a company’s brand and its services. The brand image of a company shows how clients perceive an organization. Companies promote their brands to develop personalities of their organizations.
Product positioning and branding are effective only if a company maintains consistency (The Times 100 1). Consistency is important in promotion strategies that a company adopts. Images and colours that a company uses in promotions like adverts provide a brand with distinguishable features. McDonald’s uses the Golden Arches logo to position its products in the fast food industry.
McDonald’s faces stiff competition in all the markets in which it has operations. In addition, it faces other challenges in its international operations. Economic statuses of some of the countries in which it operates pose promotion challenges. Technological and legal challenges also affect the operations and competitiveness of McDonald’s. Success of McDonald’s in some countries is also affected by social factors.
These challenges necessitate the need for identification of market needs. McDonald’s must identify the needs of customers to develop effective promotion strategies. After identification of the needs of customers is when it can position its products appropriately within each market (Mueller 29).
Through identification of the needs of the customers, McDonald’s has a better chance to satisfy the market compared to its competitors. The company has to identify its customers before it positions its products in the market. It must identify possible clients in all the markets in which it has business operations. To achieve this, McDonald’s must perform market research.
After McDonald’s has identified its target population, it has to develop a promotion mix that appeals to the recognized group. It has to develop a promotion strategy that incorporates price, product and place characteristics. The company has to ensure that its products are well received in the market, and the clients are able to afford the set prices (The Times 100 1).
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Additionally, the company has to identify the television programmes that the targeted population like to watch. Identification of these programmes also assists the company to position its products appropriately. The identification of a promotion strategy and mix helps McDonald’s to improve sales and increase consumer loyalty.
Market research also assists McDonald’s to identify factors that influence the behaviours of its customers. There exist factors that influence the purchase decisions that people make. Thus, McDonald’s has to know that these factors complement the features of the products that it offers to the customers. These factors can be psychological, sociological or economical.
All these factors are vital in product positioning. Moreover, these factors can be crucial to the customers than the products sold. Through identification of these factors, McDonald’s can shape the minds of the customers. Hence, it can determine how to position its products appropriately within a market.
McDonald’s faces a number of challenges in its attempts to position its products within the international markets. The challenges can be in terms of prices, perception and competition among others. The issues can be classified into three broad categories. These categories are international promotion and export management, psychological and sociological.
International promotion and export management relate to price strategy and methods of operations that a company uses in its overseas operations. McDonald’s faces challenge in the establishment of the appropriate price for its products in some of the markets in which it has operations. Poverty and low amount of disposable income are key issues that the organization has to tackle.
The products that the company offers are perceived as expensive in some countries. In Africa and India, for example, many people cannot afford the prices. Additionally, the company has to target cities only with the products that it offers. People in semi urban regions are unable to afford the products sold by the company. They have low levels of disposable incomes and most of them practice agriculture.
The layout of McDonald’s is also a source of challenge in some of the international markets. Some societies are used to the hotel environment and not the fast process system associated with McDonald’s operations. This challenge emanates from the consumption patterns of such societies. They are used to consumption of breakfast, lunch and supper. Normally, lunch and supper involves consumption of a balanced diet meal.
The composition of breakfast depends on the culture of a household. However, the layout of McDonald’s restaurants promotes the consumption of burgers and other fast foods. However, Burgers are not considered as healthy foods for consumption, especially at lunchtime in these societies (Misra and Yadav 27).
Psychological challenges faced by the company in international markets relate mainly to religion, personality and lifestyle. McDonald’s sells hamburgers that contain beef or pork. However, extremely few people in some countries in which it operates consume beef and pork. In India and some Arab countries, cows are considered sacred (Tiffany 1).
Hence, it is a challenge for the company to enter these markets and increase overall sales revenues. Many people in such countries are vegetarians. They cannot consume the burgers that the company sells.
The company has to find ways through which it can capture these markets. These markets have high populations and can assist the company to increase revenues. India, for example, has a population of over one billion people (Misra and Yadav 28).
The perception and lifestyles of many people in international markets is also an issue that brings challenges to McDonald’s promotion strategies. Perception and lifestyle patterns are sociological issues. However, they affect the strategies that the company can use to position its products within some of the international markets.
Consumption patterns, for example, affect the strategies that the company can use to promote its products. People in some societies prefer to eat together at lunchtime. However, the pattern that McDonald’s has adopted encourages people to eat away from home. This is not common in some societies especially in Africa and India.
Analysis of the Issues
Based on the challenges described above, McDonald’s must identify suitable solutions. It must identify the challenge that it faces in each market and formulate a strategy that will position its products appropriately. One psychological factor that McDonald’s can identify is vegetarianism. Vegetarianism is widespread in some of the countries in which it has operations.
Some of these countries have high populations and promise high sales returns. The company must identify a strategy through which it can position its products in these markets and increase its sales revenues. This can assist it to stay ahead of its competitors like KFC and Pizza Hut. For example, in India, consumption of beef is prohibited. However, India has a large population and can assist McDonald’s to increase its sales revenues.
Muslims and Indians do not consume beef or pork. Furthermore, they consider cows sacred. However, McDonald’s was interested in the high population of the country. Hence, it developed a product that was able to position itself appropriately within the Indian market. KFC and Pizza Hut do not have a product that can position itself in the Indian market like the Aloo-Tikki burger developed by McDonald’s (Amoako-Agyei 1).
The Hamburgers that McDonald’s normally produce are made of beef. However, since many people in India are vegetarians, the company developed Aloo-Tikki. It is made of potatoes and spices and with no beef. The company also made hamburgers made of chicken and fish fillets. Moreover, the company separated the preparation processes of the hamburgers.
This was done to promote the “vegetarian experience” idea that the company developed for the market. Thus, the company managed to position its products after it identified the needs of the market. It understood the psychological factors associated with beef consumption in the Indian market (Tiffany 1).
One sociological factor that influences product positioning is consumption habits. In many countries, people like to eat out only on extraordinary circumstances. In Africa, for example, people meet and eat at home to share their experiences during the day. However, due to globalization, growth of cities and increase in full time employment opportunities, the trends have changed.
The growth of cities has promoted the need for fast food restaurants. However, consumption behaviour in Africa is different from that of western societies. Hence, McDonald’s had to develop new products and services for the African market. The strategy positioned its products before those of its competitors. Many African countries are used to the restaurant environment and not the streamlined structure of fast food businesses.
Additionally, consumption pattern in many African countries involve breakfast, lunch and supper. Lunch and supper involve consumption of meals that provide appropriate nutritional balance. Breakfast is normally based on a household’s culture. McDonald’s had to develop a strategy that considered these factors. The strategy has helped the company to position its products appropriately within the African market (Amoako-Agyei 1).
Product positioning is also influenced by international promotion and export management factors. Valuation of food in monetary terms is a sensitive matter in some of the countries in which McDonald’s operates. McDonald’s had to adopt a strategy that focused on the ability of customers to pay. Normally, the strategy of McDonald’s is to enhance sales volume.
It normally provides its products and services at prices that are considered affordable. However, many people perceive the prices that it offers as high. Therefore, it has targeted certain sections of the populations with its products in international markets. For example, in India and Africa, it targets the wealthy and the upper middle class people with its products.
These people have the ability to pay for products offered by the company (Amoako-Agyei 1). Moreover, it targets people who have been exposed to western culture. It also operates in principal cities only in India and Africa. People in semi urban areas are not able to afford the set prices.
This strategy has helped the company to position its products appropriately within international markets. The strategy has ensured that the company operates in urban areas where there is continuous growth in disposable incomes. This has enabled the company to maintain leadership in the fast food industry.
There exist hypothetical strategies that the company can use to tackle the challenges identified. The company can determine an appropriate promotion strategy that can assist it to position its products in the international markets. It must identify the objectives of a promotion strategy that it can use. Objectives express the goals that a company hopes to achieve through a promotion strategy.
Objectives also direct the promotion plans adopted by a company and are vital in the assessment of the strategy used. Objectives can focus on acquisition of market share or improvement of sales volume and so on. The company has to identify its long term and short-term objectives to position its products. Notably, the long-term objectives can be divided into short-term objectives.
Hence, in India, the long-term objective can be to increase sales while the short-term objective can be to introduce the products in the market. On the other hand, the short-term objective in Africa can be to change consumption patterns while the long-term objectives can be to increase sales (Mueller 29).
The second step is to define the methods that can be used to achieve the objectives formulated. In this hypothetical strategy, a promotion mix can be used. McDonald’s has to offer products that clients want. The company has to ensure that there are numerous choices for its potential clients. It must also be ready to change products regularly to ensure that clients are satisfied.
Hence, in a market like India where people do not eat beef, the company can develop numerous alternatives to products that already exist. However, it has to ensure that it does not interfere with the sales growth of a product that customers already know.
Thus, it is essential for the company to monitor the life cycle of a product that it has developed for each market. Additionally, the company has to use adverts to position its new products within the international markets.
The promotion mix that the company can use also has to consider prices of products sold. The company has to consider the psychological aspects associated with prices of products. It must consider the perception of customers about the prices that it charges for products sold in the restaurants.
Hence, the company should charge relatively uniform prices in all markets even though some customers may feel that they are high. Low prices may make certain sections of the markets feel that the quality of the products is low. Thus, the company must protect the image and integrity of McDonald’s brand in its price strategy.
Low prices may also make competitors like KFC match with the costs of McDonald’s. This may not result into an increase in demand for products offered by the company. Hence, price reduction is not an effective strategy that McDonald’s can use to improve the position of its products within different markets.
Promotion mix that the company can use should include all communication methods. Adverts are the most effective method that the company can use to tackle sociological and psychological issues that affect a product’s position. The company can use radio and television adverts to promote the products that it sells. The company can then use adverts and other promotion methods like displays at the point of trade and fidelity schemes.
McDonald’s can develop a communication strategy that involves different promotion methods. This can assist the company to tackle the challenges posed by sociological and psychological factors associated with different markets. For example, television adverts can inform Indian clients that the hamburgers sold at McDonald’s do not contain beef.
On the other hand, newspaper adverts can provide the same Indian customers with more details about the hamburgers. Additionally, it is essential that the messages provided by the different promotion methods complement each other. Any contradictions may confuse the customer and affect the position of products sold by the company.
The promotions that the company adopts must also catch the attention of the customers. The adverts must ensure that psychological, sociological and other issues are tacked. The adverts must inform potential clients the benefits that the company provides.
For example, it can inform customers that the fast process system saves their time. It saves their time so they can be punctual at their work places. This can make customers who prefer to go home at lunchtimes reconsider their actions.
Finally, the company has to use layouts that are efficient and that make customers comfortable. The place of operation is vital in the promotion of a product. The place of operation has to consider many features other than the layout and points of distribution. McDonald’s must consider social aspects that are essential to some communities. For example, some communities like to eat together.
On the other hand, McDonald’s like a system that is fast and efficient. Hence, in such communities, the company can adopt a layout that considers the sociological needs of clients and at the same time ensures speed and efficiency in service delivery. The area of operation also has to consider the ease in management of all the activities that take place within the restaurants.
The first step is to conduct a market research. This can assist the company to identify the potential customers, their ability to pay and their characteristics. Additionally, the company can determine psychological, economic and sociological aspects of the markets that can affect the position of the products that it offers. Secondly, the company can determine the best market entry method.
The company can identify the best method based on the features and beliefs of the potential customers. It can develop and promote products that meet the needs and features of the customers. The company can then develop promotion methods that explain to the customers why the products suit them (Doole and Lowe 8).
In this way, the company will tackle issues that it identified through market research. The promotion strategies used must also ensure that the international brand of the company is not compromised by the modifications made on the products offered to the customers of a region.
The implementation of the hypothetical strategies described should assist the company increase the volume of sales. The strategies can assist the company to shape the minds of clients and at the same time meet their needs. The strategies can enable the company to maintain international standards in promotion and export and tackle sociological and psychological issues associated with different international markets.
The strategies can also enable the company to develop new versions of products that it normally sells (Doole and Lowe 8). The new versions can suit the needs of different segments of the international markets.
Finally, the strategies can assist the company to maintain leadership in the fast food sector. This can be achieved since the strategies can assist the company position all its products appropriately within the different markets in which it has business operations.
The goal of this paper was to determine ways through which McDonald’s could position its products within international markets. It examined ways through which the company could do so by identification of effective strategies. It considered international promotion and export, psychological and sociological issues that can affect the position of products offered by the company.
It then provided different examples in Africa and India and provided strategies that could be applied to solve the problems posed. Additionally, this paper provided hypothesized strategies that can be used to improve the position of products offered by McDonald’s.
It discussed promotion strategies that the company can employ to tackle the challenges posed by the different markets. It also discussed the advantages that can be realized through implementation of the strategies. Finally, it provided a brief procedure that can be used to implement the hypothesized strategies and the expected outcomes of the plans.
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Misra, Sanjay, and Yadav, P. International Business: Text and Cases, New Delhi: PHI learning, 2009. Print.
Mueller, Barbara. Dynamics of International Advertising: Theoretical and Practical Perspectives, New York: Peter Lang, 2011. Print.
The Times 100, The marketing process: A McDonald’s Restaurants case study. 2012. Web.
Tiffany, Hsu, Vegetarian McDonald’s: Its first non-meat restaurant to open in India. 2012. Web.