ISLAMIA UNIVERSITY BAHAWALPUR SUB CAMPUS RAHIM YAR KHAN

McDonalds : Behind The Golden Arches

Presented By Slinky City

McDonald: Behind The Golden Arches

The McDonalds Story- Genesis sS

Formed

in 1954, McDonald's brand is the leading global foodservice retailer with more than 30,000 local restaurants serving nearly 50 million people in more than 120 countries each day. Our rich history began with the founder Ray Kroc's vision and his commitment, transformed in our talented executives, and will keep the shine on McDonald's arches for years to come.

McDonald's Mission
McDonald's mission is to be our customers' favorite place and way to eat with inspired people who delight each customer with unmatched quality, service, cleanliness and value every time ... we invite you to be the part of this winning team and give yourself an opportunity to grow with the family of people striving to create smiles on the faces of millions of people everyday.

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McDonald: Behind The Golden Arches

McDonald's Vision
McDonalds vision is to be Estonia's "best" quick service restaurant, experience supported by a set of core values and guiding principles.

McDonald's in Pakistan
Aiming to be the world's best quick service restaurant, McDonald's Pakistan opened its doors in September 1998 at Lahore and presently operating in six major cities with a network of 20 restaurants. With a strong belief in the Ray Krock phrase when you are green you are growing, McDonald's Pakistan has an aggressive plan to expand in all other cities of Pakistan and is rapidly growing with the focus to provide friendly and quick service restaurant experience to our customers.

Lakson Group of Companies

McDonald's Pakistan is a part of the Lakson Group of Companies, with a Head Office in Karachi and a regional office at Lahore. Lakson Group also owned, Lakson Tobacco Co. Colgate Pakistan Ltd, Century Insurance Ltd. Express Newspaper, Cyber Net and various others businesses.

The Team
To realize the McDonald's service vision, we believe in strengthening our team and ensure to deliver the right skills and knowledge to the right person for getting the right job done. Our strength for making our strong team players to shine under the Golden Arches lies in the People Practice and Development Program, we focus to deliver.

Business Model
Franchise Model Only 15% of the total number of restaurants are owned by the

Company. The remaining 85% is operated by franchises. The company follows a comprehensive framework of training and monitoring of its franchises to ensure that they adhere to the Quality, Service, Cleanliness and Value propositions offered by the company to its customers.

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McDonald: Behind The Golden Arches

Product Consistency By developing a sophisticated supplier networked operation

and distribution system, the company has been able to achieve consistent product taste and quality across geographies.

Act like a retailer and think like a brand McDonalds focuses not only on

delivering sales for the immediate present, but also protecting its long term brand reputation.

FIRM CUSTOMERS
All Population of Pakistan are our customers

Customer Perception and Customer Expectation

Customer perception is a key factor affecting a products success. Many potentially revolutionary products have failed simply because of their inability to build a healthy perception about themselves in the customers minds. McDonalds being an internationally renowned brand brings with it certain expectations for the customers.

Target Segment A Family with children

What is McDonalds for me? A treat to children, a fun place to be for the children.

Urban customer on the move Great taste, quick service without affecting the work schedule Teenager Hangout with friends, but keep it affordable.

Customers expect it to be an ambient, hygienic and a little sophisticated brand that respects their values. The customers expect the brand to enhance their self-image. Customer responses obtained at the Vile Parle, Mumbai outlet confirmed the fact that they connect strongly with the brand. However, fulfilling some of the customer expectations like a broader product variety provide McDonalds a great scope for improvement.

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McDonald: Behind The Golden Arches

Segmentation, Targeting and Positioning

McDonalds uses demographic segmentation strategy with age as the parameter. The main target segments are children, youth and the young urban family.
% of kids who influence what FMCG brand their family buys

80% 70% 60% 50% 40% 30% 20% 10% 0%

71% 59% 52%

Biscuits

Burgers & Pizzas

Fruit Juices

As shown above, kids reign supreme in FMCG purchase related to food products. So to attract children McDonalds has Happy Meal with which toys ranging from hot wheels to various Walt Disney characters are given (the latest in this range is the toys of the movie Madagascar). For this, they have a tie-up with Walt Disney. At several outlets, it also provides special facilities like Play Place where children can play arcade games, air hockey, etc. This strategy is aimed at making McDonalds a fun place to eat. This also helps McDonalds to attract the young urban families wanting to spend some quality time while their children have fun at the outlet. To target the teenagers, McDonalds has priced several products aggressively, keeping in mind the price sensitivity of this target customer. Mc Donalds mein hai kuch baat projects McDonalds as a place for the whole family to enjoy. When McDonalds entered in Pakistan it was mainly perceived as targeting the urban upper class people. Today it positions itself as an affordable place to eat without compromising on the quality of food, service and hygiene. The outlet ambience and mild background music highlight the comfort that McDonalds promises in slogans like You deserve a Break Today & Feed your inner child. This commitment of quality of food and service in a clean, hygienic and relaxing atmosphere has ensured that McDonalds maintains a positive relationship with the customers.

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McDonald: Behind The Golden Arches

McDonalds Marketing Mix (7 Ps)

After segmenting the market, finding the target segment and positioning itself, each company needs to come up with an offer. The 5 Ps used by McDonalds are:

((puuiuiuiyuiyuipPPs)sS

1. Product 2. Place 3. Price 4. Promotion 5. People 6. Process 7. Physical Evidence

Product: How should the company design, manufacture the product so that it
enhances the customer experience?

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McDonald: Behind The Golden Arches

Product is the physical product or service offered to the consumer. Product includes certain aspects such as packaging, guarantee, looks etc. This includes both the tangible and the nontangible aspects of the product and service.

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McDonald: Behind The Golden Arches Our clear strategy is to bring the customers in initially and provide a range of entry-level products so that they can try new items and graduate to the higher rungs. --Vikram Bakshi, Managing Director, Northern Region, India McDonalds product includes vegetarian and non-vegetarian items. Also involves combo. Cares for customers sentiments towards religion and Separate cooking area and equipments. Takes dietary concern-Burger King healthier Kids' Club. Culture.

Co- Branding:
McDonalds has major tie-ups with various companies as their cobranding Statergy. Few of Them are listed Below:

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McDonald: Behind The Golden Arches

What are the strengths and weaknesses of the PTCL?

McDonalds Swot Analysis sS

Strengths

MacDonalds has a strong global presence with its nearest domestic competitor being only half its size, McDonalds is the market leader in both the domestic and international markets. MacDonalds benefit from cost reduction through economies of scale because of its enormous size and its huge global presence allows it to diversify risk involved with the economic performance of specific countries.

In international markets, MacDonalds is well placed to expand and take advantage of long-term economic growth. MacDonalds also has a strong real estate portfolio. The companys outlets are located in areas that are highly known for visibility, traffic volume and ease of access. MacDonalds also has exceptional brand recognition. This strong brand recognition creates significant opportunities for the company.

MacDonalds is able to generate more sales because of its brand recognition. Through
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McDonald: Behind The Golden Arches aggressive market planning, MacDonalds has been able to recapture its youth market once again.

Weaknesses
The food industry is really saturated. As a result of this, MacDonalds has to deal with the prospect of looming market saturation, which could make it difficult to add new outlets. The market is forecast to grow by around 2% per year. There is also an increasing price competition driven by too many competitors, which reduces the companys ability to increase revenue. Nevertheless, the swift of the companys focus from a value menu to a more diverse one has recently limited the negative effect of the intense price competition that was traditionally taking place among the industry leaders. Lack of product innovation is another weakness of McDonalds. The last break-through for McDonalds was the Chicken McNugget in 1983, but again the companys new strategy seems to have successfully dealt with the problem through the popularity of its new salads and other new products.

Opportunities
MacDonalds sold its Donatos Pizzeria back to its founder in 2003 and discontinued Boston market operations outside of the US. The company will instead focus on Chipotle Grill which is the companys most successful non MacDonalds branded chain of restaurants. Also to increase profitability the company has slowed its expansion of McDonalds restaurants so as to refurbish and change the image of current restaurants and adding new features such as Internet access. McDonalds still has plans for more international expansion. McDonalds still needs to penetrate in many countries especially in Europe, Asia and Latin America. Changing trends in eating habits toward more health eating, seen as a threat to McDonalds can also be seen as an opportunity.

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McDonald: Behind The Golden Arches

McDonalds introduced new premium salads and Fruit n Yogurt Parfaits in the US which lead to growth in 2004 and the same products will probably bring some more growth in foreign markets.

Threats
McDonalds is exposed to changes in the global economy. The companys aggressive international expansion has left it extremely vulnerable to other countries economic slowdown. Foreign currency fluctuation is also another problem global companies like McDonalds. The Fast food industry is becoming an increasingly competitive sector. MacDonalds keeps up with competitors through expensive promotional campaigns which leads to limited margins to gain market share. McDonalds is attempting to differentiate itself, with new formats and new menu items, but other fast food industry are doing the same too. McDonalds, just like other fast food industry, often receives bad press because of its link obesity. Increased concern such as this has led the Food Standards Agency and the Department of Health in the UK to review the advertising of junk foods such as McDonalds to children. Top Competitors for MacDonalds include: Yum! Brands, Inc, Wendys International, Inc. Jack in the Box Inc, and Burger King Corporation.

Promotion: What is the suitable strategy and channels for promotion of the
product?

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McDonald: Behind The Golden Arches

The various promotion channels being used by McDonalds to effectively communicate the product information are given above. A clear understanding of the customer value helps decide whether the cost of promotion is worth spending. There are three main objectives of advertising for McDonalds are to make people aware of an item, feel positive about it and remember it. The right message has to be communicated to the right audience through the right media. McDonalds does its promotion through television, hoardings and bus shelters. They use print ads and the television programmes are also an important marketing medium for promotion. Some of the most famous marketing campaigns of McDonalds are: You Deserve a break today, so get up and get away- To McDonalds

Aap ke zamane mein ,baap ke zamane ke daam.

Food, Folks, and Fun Im loving it. Target customer Childrens Awareness about products among People Use of Different Media like Television, hoardings and bus shelters DDB Needham and Leo Burnett agencies appointed for the advertisement Description of Products on Paper Mats placed in the trays. The placing of the pamphlets and banners in and around the outlets 80-20 Menu Board Lucky Promotion strategies

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McDonald: Behind The Golden Arches

An activity, such as a sale or advertising campaign, designed to increase visibility or sales of a product. McDonalds, for years has maintained an extensive promotion strategy with highest spending on marketing amongst all its competitors. Advertising: Focus on overall experience. Brand globally and act locally. Overall it is doing what it does the best marketing. Intensive advertising aimed at children. Paper mats on trays ensure that no new scheme goes unnoticed. 80-20 menu boards marketing tool. Sponsors sport events with their logos advertised in these events. Significant use of billboards and signage. Image of portraying warmth and a real slice of everyday life has become a trademark and has created many memorable commercials. Campaigns Im lovin it is an international branding campaign which was launched in 2003 and has proved to be its biggest success. aap ke zamaane mein baap ke zamaane ke daam is a highly localized campaign which aimed at attracting the masses through its happy price menu.

HOW DO THE CUSTOMERS LEARN ABOUT THE FIRMS PRODUCT AND SERVICES?

Majority of the customers learn about the firms product and services from the newspapers ads, franchises and TV commercials.
WHO ARE COMPETITORS?

Only KFC and Pizza Hut is our major competitor in Pakistan.

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McDonald: Behind The Golden Arches

HOW WOULD YOU IMPROVE THE FIRMS COMMUNICATIONS ACTIVITIES?

More focus on service delivery time because of customer dont have much time today. Use electronic media for promotion.

Placement:
Located at prime locations Evenly spread in NCR Almost in all big cities At residential areas, malls, Multiplexes
WHAT IS THE NEED OF CHANNELS FOR THE PRODUCT AND SERVICES OF THE McDonalds? Firm point of view

Easy availability of product and services to the customers Easy availability for providing basic services and value added services Easy complaint handling To cover target market

Customers Point of view

Easy availability of Product and Services Time and Money saving Fast Service System and Resolve Conflict
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HOW WOULD YOU IMPROVE THE CHANNEL ACTIVITIES?

Try to convert your traditional channel into remote channel.

Price: What should be the pricing strategy?

Pricing includes the list price, the discount functions available, the financing options available etc. It should also take into the consideration the probable reaction from the competitor to the pricing strategy. This is the most important part of the marketing mix as this is the only part which generates revenue. All the other three are expenses incurred. The price must take into consideration the appropriate demand-supply equation. McDonalds came up with a very catchy punch line Aap ke zamane mein ,baap ke zamane ke daam. This was to attract the middle and lower class consumers and the effect can clearly be seen in the consumer base McDonalds has now. McDonalds has certain value pricing and bundling strategies such as happy meal, combo meal, family meal etc to increase overall sales volumes.
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McDonald: Behind The Golden Arches Policy which caters to Indian customers Quite affordable products Heavily marketed Happy Price Menu Importance to brand and its integrity Household Expenditures

Pricing Strategy: Purchasing power pricing:In 1997 slashed prices for vegetable nuggets and soft serve cone. In September 2001, they offered Veg surprise burgers for Rs 17. March 2004 Aap ke zamane mein, baap ke zamane ka daam. Value Ladder strategy :a) Started offering value meals in a range of prices. b) Ensure affordability and attract widest section of customers. c) Brought the customer and provided a range of entry- level products. d) Try those new items and graduate to higher-rungs. e) E.g- if a customer starts with McAloo Tikki, he will finally graduate to McVeggie and so in Non veg. f) Helped its Volume business. Value Pricing. a) Happy price menu Rs 20. b) Economeal Rs 49(save Rs 11). c) McChicken & McVeggie Meal Rs 75,Rs 65 (Save Rs 15).
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McDonald: Behind The Golden Arches d) Happy Meal for Kids Rs 69,99,109 (toy free). e) Big saving Meals Combos Rs 109 Rs 119(Save Rs 36). f) A-la carte menu Rs 45- Rs 65 (Veg) a) Desserts Rs 12 Rs 25. b) Beverages Rs 25- 50 ( a little costly)
HOW DO THE CUSTOMERS CHANNEL REACT TO THE FIRMS PRICES?

Rs 55- Rs 65 (Non Veg)

Customers react positively due to Good quality of our product and services.
ARE THERE ANY ACTIONS THE FIRM TO SET ITS PRICES CONSISTENTLY WITH ITS STRATEGY?

McDonalds rationalizes its tariff with the passage of time in order to beat the competitors.

Physical evidence:

Mc Donalds focuses on clean and hygienic interiors of is outlets and at the same time the interiors are attractive and the fast food joint maintains a proper decorum at its joints. Cleanliness, speed, quality and transparency of process is the biggest physical evidence. The interiors are attractive and more or less consistent throughout the world. A proper decorum and strict standards of cleanliness are maintained at all the joints. Extra care is given

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McDonald: Behind The Golden Arches to make the joints children Friendly Family environment message throughout the world, just the way of communication is adjusted to different countries. Play areas are provided so that kids dont Play areas are provided so that kids dont Become panicky. Counters are kept low and menus pictorially displayed so that children can order for themselves. The physical appearance affects not only the impression outsiders have of a business but also the way that business functions. Staff members Location & appearance Building maintenance Visible cues

Mcdonalds Tariq Road

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McDonald: Behind The Golden Arches

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McDonald: Behind The Golden Arches

Process:
The food manufacturing process at Mc Donalds is completely transparent i.e. the whole process is visible to the customers. In fact, the fast food joint allows its customers to view and judge the hygienic standards at Mc Donalds by allowing them to enter the area where the process takes place. The customers are invited to check the ingredients used in food.

Food manufacturing Transparent Training to the licensees

to customers

Invented the most efficient cooking equipment New methods of food packaging and distribution McDonalds In Pakistan followed the same tradition Spent Rs.50 Crore - even before

People: How to converge the benefits of internal and external marketing?

McDonalds understands the value of both its employees and its customers. It understands the fact that a happy employee can serve well and result in a happy customer. McDonald continuously does Internal Marketing. This is important as it must precede external marketing. This includes hiring, training and motivating able employees. This way they serve customers well and the final result is a happy customer.

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McDonald: Behind The Golden Arches The level of importance has changed to be in the following order (the more important people are at the top): 1. Customers 2. Front line employees 3. Middle level managers 4. Front line managers The punch line Im loving it is an attempt to show that the employees are loving their work at McDonalds and will love to serve the customers. The employees in Mc Donalds have a standard uniform and Mc Donalds specially focuses on friendly and prompt service to its customers from their employees. Each outlet is headed by a Restaurant Manager . He is responsible for the daily operation and customer interaction. Delivery Crew Member carries basic operation of a restaurant. Ensures customer satisfaction at the restaurants.In order to motivate there employees they give them stars as per their performance. Stars as per their performance Gives employees larger role in decisions Philosophy of Quality, Service, Cleanliness and Value (QSC&V) is the guiding force behind its service Customer always comes first Fast friendly service Provides clean, comfortable environment especially suited for families

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McDonald: Behind The Golden Arches

Organizational Chart:

The McDonalds Experience

Marketing in a services industry is becoming an increasingly complex challenge. The paradigms of service marketing demand a passionate understanding of customer expectations and perceptions, and linking them to product design & delivery as well as operational planning. This is where McDonalds has excelled due to its ability to successfully integrate the customers perspective in its products and operations in a comprehensive manner. The revamped menu in Pakistan is an example of McDonalds strategy of integrating the customers perspective in its products. And, the operational integration is evident from

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McDonald: Behind The Golden Arches McDonalds emphasis on its suppliers as its customers as well as its treatment of its consumers as co-producers of services. The ultimate aim of Service Marketing is not just to become a Service Leader but to create a Service Brand. The Service Delivery Process is the key to achieving this aim of Service Marketing.

Service Delivery Process

Core Product

Supplementary Process

During the Service Delivery Process, each moment of interaction between the firm and the customer, called Moments of Truth, helps understand the opportunities that a firm has to win or lose the customer. For example, these moments of truth are created for McDonalds every time the guard at the McDonalds outlet meets the customer, every time an attendant takes down the order from the customer waiting in the queue, every time the cashier interacts with the customer, every time the attendant helps the customer guided the customer towards the table, every time the attendant cleans the table, etc. Moments Of Truth The Service Encounter
Customer

Service Provider www.slinkycity.tk

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McDonald: Behind The Golden Arches

Managing these moments of truth is a great challenge in Service Marketing especially due to customers involvement as a co-producer of services (e.g. McDonalds self-service concept wherein the customer not only collects the order but also cleans the table after consuming the food). However, McDonald's has been able to create a great experience for its customers by understanding the nature of the entire Service Delivery Process and the various stages in the process that are exposed to the customers. Transparency in the processes at its outlet has helped McDonalds bring the back office in its outlet at the front so that the customer is able to know the operations and provide feedback on service design improvements. Internal Customer Focus is equally important as External Customer Orientation in order to win these moments of truth. McDonalds focus on its People and their service delivery methods therefore plays a very important role in creating a successful Service Brand. The quality and the consistency of the service delivered by McDonalds have been greatly enhanced by the combination of the factors mentioned above. This has helped McDonalds become Service Leader and a successful Service Brand. This is evident from the fact that very few of its customers opt for take-home parcels or home deliveries while most of them prefer to eat at the outlet and enjoy the McDonalds experience.

McDonaldizing the Suppliers

McDonalds has changed the nature of not only the food service industry but also the food processing industry as well. McDonalds realized that the battle between fast food chains would increasingly be one of efficiency of supply, lower cost production and greater desire to innovate. It pioneered with innovative and sophisticated food distribution and packaging systems when the traditional food processors were unwilling or unable to supply food items that McDonalds demanded. They achieved amazing consistency by devoting more attention than anyone else to field service and training at store level. Production was concentrated in huge plants devoted exclusively to McDonalds. McDonalds also started with tiny suppliers and grew with them displaying great loyalty. Nowhere is the supplier loyalty more evident than in development of new, improved products. Some of McDonalds classic food items like Filet-o-Fish, French Fries, Chicken Nuggets etc. are results of supplier innovation. Interestingly, it took KFC more than three years before in finally introduced its own version of chicken nuggets. Thus supplier technological expertise had given McDonalds a product which was not a mere marketing innovation but a technical one. McDonalds attempted to squeeze labour out of the stores by
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McDonald: Behind The Golden Arches moving more preparation back into the processing plant, creating the opportunity to develop unique products based on suppliers processing skills. For the first time, McDonalds suppliers became the focal point of new product development. This converted the fastfood industrys most fragmented distributed system into more efficient one which helped McDonalds reduce its inventory and manage costs effectively.

Importance of PLC in McDonalds

The requirements of customers change over time and thus the product offering has to be changed accordingly. What is the fashion today may be out of market within few weeks. Thus continuous innovation is required.

To counter these changes McDonalds has continuously introduced new products and has phased out the old ones which were at the decline stage of their PLC. The introduction is timed such that the new product does not cannibalize the product already in the maturity or growth stage. Thus the secret lies in getting profits with different products in the different stages of the PLC.

A perfect example of revitalising a product in decline phase

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McDonald: Behind The Golden Arches The French Fries have been an important part of the McDonalds menu worldwide. But now it was in the stage of decline and was actually not generating proper return. In an attempt to revitalize it, a new variant was introduced namely Shake Shake Fries. This is being served with chatpata spice mix which has resulted in increase in the sales of French Fries and has elevated it from to the decline stage. This is used to delay the decline of a well established product which has the potential of generating further revenue.

McDonalds
Name: Age Group: a) Below 18 b)18-28 b) Business Gender: M / F c)28-40 d)Above 40 c) Service d) Housewife e) Any other

Occupation: a) Student

CONFIDENTIAL:
This research questionnaire is only for to conduct the research on particular problem and your given information will be secured. How often do you visit McDonalds? Weekly Monthly Occasionally

Specify your satisfaction with McDonalds according to the following? Parameter Quality Price Outlet Taste Service Excellent Good Average Poor

Through which media you are getting information about McDonalds? TV Newspaper Pamphlets Bill Boards others (specify)..

Are you satisfied from the product and services of the McDonalds? Yes No

What is the first thing that strikes your mind about McDonalds? Burger Service Fun Value for money Congestion

What is the main problem you faced at McDonalds? Long Queues Rude Behavior of Employees No problem Others Do you want McDonalds services in RYK? www.slinkycity.tk

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Yes Does the logo attract you? Yes

No No

Which place you suggest for opening a McDonalds here? _____________________________________

Survey Research Result

sS
Thanks for your cooperation!

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McDonald: Behind The Golden Arches

How often do you visit McDonalds?

Weekly Monthly Occasionally

Specify your satisfaction with McDonalds according to the following? (Quality)

10% 0% Excellent Good 30% 60% Average Poor

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McDonald: Behind The Golden Arches

Specify your satisfaction with McDonalds according to the following? (Price)

15% 0% 30% Excellent Good Average Poor 55%

Specify your satisfaction with McDonalds according to the following? (Outlet)

5% Excellent Good Average 20% 60% Poor

15%

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McDonald: Behind The Golden Arches

Specify your satisfaction with McDonalds according to the following? (Taste)

5% 0% Excellent Good 40% Average 55% Poor

Specify your satisfaction with McDonalds according to the following? (Service)

5% 20% 40% Excellent Good Average Poor 35%

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McDonald: Behind The Golden Arches

Through which media you are getting information about McDonalds?

10% 0% 5% 0% TV Newspaper Pamphlets Bill Boards Others 85%

Are you satisfied from the product and services of the McDonalds?
20%

Yes No

80%

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McDonald: Behind The Golden Arches

What is the first thing that strikes your mind about McDonalds?

35%

30% Burger Fun Service Value for money 15% 20%

What is the main problem you faced at McDonalds?

5% 5% 5% 15% Long Queues Rude Behavior of Employees Congestion No problem 70% Others

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McDonald: Behind The Golden Arches

Do you want McDonalds services in RYK?

0%

Yes No

100%

Does the logo attract you?

5%

Yes No

95%

CONCLUSIONS:
McDonald's views the relationship between franchisor, franchisee and supplier to be of paramount importance to the success of the business. Ray Kroc recognised the need very early on for franchisees that would dedicate themselves to their restaurants. He wanted people who had to give up another job to take on the franchise venture, relying on their
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McDonald: Behind The Golden Arches franchise as their sole source of income and would therefore be highly motivated and dedicated. Consequently, McDonald's will not offer franchises to partnerships, consortia or absentee investors. The initial capital has to come from the franchisee as a guarantee of their commitment. The selection process is rigorous to ensure that McDonald's only recruits the right people.

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McDonald: Behind The Golden Arches

References
1. Marketing Management 2. McDonalds Behind the Arches John S Love 3. www.Mcdonaldsindia.com 4. Outlet Manager McDonalds Vile Parle 5. McDonalds Pakistan 6. Google 7. www.slinkycity.tk

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