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Marketing Environment (4Cs)

Company (Value, Tactic, Strengths and Weaknesses)


Customers (Segmentation, Customer Profile & Target Market)
Competitors (Competitive Analysis and its Positioning)
Change (Environmental Factors - Opportunities and Threats)

Recap: TOWS Analysis and STV Model


Marketing Opportunities
Marketing Mix 4Ps
Financial Statements
Overview: Impact and Implications
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CHANGE

COMPANY
Value & Tactic
Marketing Mix (4Ps)
Strengths & Weaknesses

CUSTOMERS

COMPETITORS

The McDonald's System leverages the unique talents, strengths


and assets of our diversity around the globe in order to be our
customers' favourite place and way to eat.

Promote Diversity and Inclusion among our Employees,


Owner/Operator's and Suppliers who represent the diverse
populations McDonald's serves around the globe.

Global Outlook of McDonalds


US$23 billion in total revenues in 2007 (record high)
1.6 million restaurant employees worldwide
24,500 restaurants around the world offering extended or
24-hour service
1 billion more customers were served in 2007 than in 2006

McDonalds in Singapore
First opened in October 1979 at Liat Towers
To date, more than 100 McDonalds restaurant across the island
Serving 1.2 million customers every week
6,000 employees to keep McDonalds running in Singapore
Source: McDonalds Singapore

Analyzing the STV Triangle:


2 Components (Tactic and Value)
Strategy to be covered under Customers and Competitors

Value (Heart Share):


Process
Cost-Efficient,
Transparent
(nutritional info),

Product Quality
(freshness)

Service
Quality Customer
Service,
24-hour outlets,
Online/Phone Orders,
Prompt Delivery Service

Brand

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Tactic (Market Share):


Selling
Transactional,
Phone Orders,
Internet Orders,
Drive-Thru

Marketing Mix
Product
Price
Promotion
Place

Differentiation
Kids Favorite Place
Shared Lifestyle

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Tactic (Marketing Mix):


Product: Wide Range of Food Products
Wide Breadth and low depth
Drinks

soft drinks, non-carbonated drinks, fruit juices,


milk, coffees (Mccafe)
Food
McChicken burger, Big Mac, Filet-OFish, McWings,
McNuggets, French Fries
Dessert Ice Cream Cone, Sundae, McFlurry, Cakes
Sides
Apple Dippers, Corn Cup, Apple Pie

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McDonalds Product Line


Breakfast

Main

Sides

Dessert

Drinks

Others

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Tactic (Marketing Mix):


Price: Competitive and Affordable Pricing
Also practice International Pricing and Price Discrimination
(Student Meal - $4.50)
Drinks

soft drinks and non-carbonated drinks ($1.65 - $2.05),


fruit juices ($2.50), milk ($1.75)
Mccafe above $3.50 for a drink or cake
Food
burgers ($2 - $4.35), Meals ($5.95 onwards)
Dessert $0.60 - $2.50
Sides
$1.00 - $2.55

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15

Tactic (Marketing Mix):


Promotion: TV Advertisement, Endorsement, Coupons,
Exclusive distribution of movie premiums
(Happy Meal), Loss Leader ($2 McChicken), Im Lovin It

16

Tactic (Marketing Mix):


Product: Wide Range of Food Products (breadth vs. depth)
Price: Competitive and Affordable Pricing, Price Discrimination
Promotion: TV Advertisement, Endorsement, Coupons,
Exclusive distribution of movie premiums, Loss Leader.
Place: Direct Marketing Channel, Intensive Distribution,
Physical Outlets (opened by McDonalds or Franchisees)

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Tactic (Market Share):


Selling
Transactional,
Phone Orders,
Internet Orders,
Drive-Thru

Marketing Mix
Product: Wide Range
Price: Competitive, Affordable,
Price Discrimination
Promotion: Coupons, TV ads
Place: Intensive Distribution

Differentiation
Kids Favorite Place
Shared Lifestyle

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TOWS: Strengths and Weaknesses


Market Leader with a Market Share of 27%

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TOWS: Strengths and Weaknesses


Market Leader with a Market Share of 27%
2.10%
4.70%
5.00%

1.50%
2.00% 1.50%

McDonalds
KFC
Burger King

27%

8.40%

7-Eleven
Subway

20.60%
9.40%

Long John Silver


Delifrance
MOS Burger

Fast Food in Singapore (dated 15-Oct-2007)


Source: Euromonitor International

Haagen Dazs
Yoshinoya

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(Cash Utilization)

MARKET GROWTH

20%

BCG Model

10%

0%

10x
5x
x
0.5x 0.1x
RELATIVE COMPETITIVE POSITION
Market Share (Cash Generation)

TOWS: Strengths and Weaknesses


STRENGTHS
Market Leader with 27% of the market share
Global brand power, Global Presence
Economies of scale (transfer cost savings to customers)
Convenient Locations and Payment Methods (Ezlink)
Appeals to the mass market (especially the kids)
24/7 Operations, Drive Thru, Delivery (extensive coverage of the market)
Halal certification
Ronald McDonald Childrens Charity

WEAKNESSES
Franchising fragility control over franchises
McDonalds is often perceived as junk food
22

Societal Marketing Concept


Ronald McDonald Childrens Charity (RMCC)
donates its partial earnings to the foundation

World Childrens Day

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CHANGE

CUSTOMERS
Customer Profile
Segmentation (Geographic,

COMPANY
Value & Tactic
Marketing Mix (4Ps)
Strengths & Weaknesses
COMPETITORS

Demographic, Psychographic)

Target Market

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McDonalds Restaurants in Singapore


Woodlands Toa Payoh
Bishan
Sembawang
Yishun
Bukit Timah
Clementi
Choa Chu Kang
Jurong
Commonwealth
Dover
NUS
NTU
West Coast

Bugis
Tiong Bahru
Orchard
Raffles Place
Chinatown
City Hall
Marina Square

Ang Mo Kio
Hougang
Boon Keng
Serangoon

Bedok
Changi
Pasir Ris
Tampines
Aljunied
Eunos
Potong Pasir

HarbourFront
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Market Segmentation
Geographically-segmented Islandwide
Tampines, Woodlands, Clementi, Orchard, NTU
McCafes 22 outlets islandwide

Demographic Segmentation
Kids, Family, Students

Psychographic Segmentation
Convenience and Lifestyle

Behavioral Segmentation
Occasions, e.g. birthday parties

Target Market (and Customer Profile)


Kids - 3 to 7 years
Happy Meal (healthier choice) with free toys

Families - Weekend outings or meals


Drive-Thru, Takeaways, McDelivery, Happy Meal

Students - Primary, Secondary, JC, Poly, Uni (a place to


hang out or study)
Student Meals, outlets at SP, NYP, NUS and NTU, 24-Hour

Caf goers - for quieter ambience, a place to relax or


read or even business entertainments
McCafe

Working Adults - seek convenience meals; grab and go


Drive-Thru, Takeaways, McDelivery, 24-Hour

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CHANGE

CUSTOMERS
Customer Profile
Segmentation (Geographic,
Demographic, Psychographic)

Target Market

COMPANY
Value & Tactic
Marketing Mix (4Ps)
Strengths & Weaknesses
COMPETITORS
KFC
Burger King
Subway
Starbucks
Coffee Shops & Food Courts
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Fast Food Industry - Market Share


2.10%
4.70%
5.00%

1.50%
2.00% 1.50%

McDonalds
KFC
Burger King

27%

8.40%

7-Eleven
Subway

20.60%
9.40%

Long John Silver


Delifrance
MOS Burger

Fast Food in Singapore (dated 15-Oct-2007)


Source: Euromonitor International

Haagen Dazs
Yoshinoya

Oligopoly
Market?
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Types of Competitions
Brand (direct competition)
McDonalds, Burger King, KFC, KFCs Chicky Club, Subway, Carls Jr

Form (similar in form but not direct)


Long John Silver, Pizza Hut, Yoshinoya

Generic (satisfy the same need of hunger)


Chinese Restaurants, Food Courts, Coffee Shops, etc

Desire
Ice-cream treat, movies, shopping, etc

Competitors
Starbucks
Coffee Bean
Coffee Club
Spinelli Coffee
TCC
Pacific Coffee Club

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Competitors Analysis
CHARACTERISTICS
Market Share

27%

20.6%

9.4%

Products

Burgers, McCafe

Chicken, Burgers

Burgers

Kids Meal

Happy Meal

Chicky Meal

BK Kids Meal

$5.95

$6.40

$5.90

TV ads, Coupons

TV ads, Coupons

TV ads, Coupons

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6777-3777

6222-6111

None

Average Value Meal


Promotions
Distribution (Outlets)
Delivery Service
Charity/Sponsorship

RMCC, Olympics KFC Colonel's Kids

Make-A-Wish
Foundation

Sources: McDonalds, KFC and Burger King Webpages (Singapore)


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RONALD MCDONALD
Every child's best friend. He is funny, generous, warm, smart,
friendly and caring. He is always surrounded by his McDonaldland
friends - Hamburglar, Grimace, Birdie and Fry Gals and and Guys.
Today, Ronald McDonald speaks more than 24 languages.
He remains the same friendly, fun-loving person. His favourite food
is still hamburgers - and his favourite people are still children!
Source: http://www.mcdonalds.com.sg/brand_slogan.htm

im lovin it
DONT JUST LIVE LIFE, LOVE IT
"i'm lovin' it" focuses on the optimism and enthusiasm that mark
great times and enriching discoveries.
Whatever you pursue - be it sports, education, creative endeavours,
career advancement, boisterous companionship or intimate
moments - there is every reason to like what you do and love who
you are. Don't just live life. Love it - at McDonald's, we're certain it'll
love you back!
Source: http://www.mcdonalds.com.sg/brand_slogan.htm

Positioning
Ronald McDonald branding
Im Lovin It, creates the shared lifestyle and new branding
Sponsorship Olympics (since 1976), World Cup (since 1994)
Ronald McDonalds Childrens Charity
Delivering Quality Service to its customers
Service Quality Class Recognition (1998)
Excellent Service Award (1996, 2003 2006)

Equal employment opportunities


Employs the elderly
Best Employers in Singapore 2007, SHRI HR Awards 2007

Only 24-hour fast-food restaurant in Singapore


Sources: http://www.mcdonalds.ca/en/aboutus/sport.aspx, http://www.mcdonalds.com.sg/awards.htm

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CHANGE
Health and Wellness
Ageing Population
Inflation rate
Birth Rates
CUSTOMERS
Customer Profile
Segmentation (Geographic,
Demographic, Psychographic)

Target Market

COMPANY
Value & Tactic
Marketing Mix (4Ps)
Strengths & Weaknesses
COMPETITORS
KFC
Burger King
Subway
Starbucks
Coffee Shops & Food Courts
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1. Health and Wellness


More Singaporeans are becoming health conscious
General perception has been formed that fast foods are
considered as unhealthy, junk food.
In general, the Singapore Government has been active in encouraging
healthy living and lifestyles from diet regimes for national servicemen and
students to posters in hawker centres encouraging the consumption of
more vegetables and less meat. Correspondingly Singaporeans, too, are
increasingly becoming more health-conscious.
Levy taxes on unhealthy foods to tackle obesity
Source: The Straits Times, Oct 26, 2007
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1. Health and Wellness


Organic fare makes its way to fine dining
3 March 2008
The Business Times, Singapore

Healthy in the heartlands


7 June 2008
TODAY, MediaCorp Press Ltd

Is a light carbonated soft drink = plain water?


4 May 2008
The Straits Times, Singapore Press Holdings Limited

Good or bad for health?


28 August 2008
The Straits Times

1. Health and Wellness


McDonalds provide the nutritional facts of its products and
introduced more healthy food in its menu such as the chicken
wrap, salad, corn and apple dippers.
The move by the fast-food giant in Singapore is part of a healthy-image
makeover the Golden Arches is undergoing globally. The burger chain
would label the fat, salt, calorie and carbohydrate content of its food.
The Health Promotion Board is working with the fast-food chain on
providing nutritional education... help consumers make sense of it.
McDonald's takes healthy bite with nutrition labels
Source: The Straits Times, 29 December 2005
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1. Health and Wellness


You can "veg out" every first day of the month at any McDonald's
restaurant. Purchase Fresh Sidekicks such as Corn Cup, Apple Dippers or
Fresh Salad for $1 only, with no additional purchase necessary.
"McDonald's 'Veg-out Day' initiative highlights the availability of fruit and
veggies at its outlets, in line with our support for the Health Promotion
Board's 'eat 2 servings of fruit + 2 servings of veggies' public educational
outreach programmes
McDONALD'S DECLARES FIRST DAY OF THE MONTH A "VEG OUT" DAY!
Source: TODAY, 4 August 2006

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2. Ageing Population
Median
Age

1921

28

1931

26

1947

23

1957

19

1970

20

1980

24

1990

29

2000

34

2010

37

2020

39

2030

41

Singapore Dependency Ratios


Year
Total
Child Old-age

Increasing median age

Census
Year

Report on the Ageing Population (1999)


Source: Singapore Census of Population 2000

1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030

83
86
73
59
47
42
37
40
41
39
35
36
42
54
68

79
81
67
52
40
34
29
31
31
27
21
17
17
19
22

4
5
6
7
7
7
8
9
10
12
14
18
25
35
46

Source: Singapore Dependency Ratios


United Nations: World Population Prospects: Revision 2006

2. Ageing Population
Due to improving living
standards and medical
technologies, there has
been a rising trend of
ageing population
Population pyramid:
lopsided in 2030?
Increasing trend in the
dependency ratio

Source: Demographic Indicators, Singapore Department of Statistics, 2007

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3. Inflation Rate

Consumer Price Index


Source : Singapore Statistics Department, August 2008

Source : Singapore Statistics Department, 2007

Singapore is faced with a rising inflation


Singapores annual inflation rate was 6.5% in July
Source: Channel NewsAsia - Singapore's July inflation up 6.5% on-year
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Period
1950-1955

Total fertility
6.40

1955-1960

5.99

1960-1965

4.93

1965-1970

3.46

1970-1975

2.62

1975-1980

1.87

1980-1985

1.69

1985-1990

1.71

1990-1995

1.76

1995-2000

1.57

2000-2005

1.35

2005-2010

1.29

2010-2015

1.29

4. Birth Rates
Declining Trend (6.4 vs 1.29)
Although Singapore is experiencing
declining birth rates, the government
is trying hard to promote birth.

Source: Singapore Total fertility (children per woman)


United Nations: World Population Prospects: Revision 2006
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4. Birth Rates
In the recent Nationals Day Rally 2008, PM Lee announced the
increase in benefits for mothers as a move to encourage more
women to give birth.
These included longer paid maternity leave (extended to four
months), childcare subsidies, tax credits, subsidies for in-vitro
fertilisation and more child allowances for mothers.

Will Birth Rate


Increase?

IN SUMMARY:
TOWS Analysis & STV Model

49

THREATS
Intense Competitions
Growth of health conscious eaters
Outbreak of diseases (madcow, H5N1, bird flu, SARS)
Recent hygiene complaints affect sales

OPPORTUNITIES
Expansion of other cashless payment systems
Wellbeing and ethical image improvement
Expansion of the children market (other business market penetration)
Setting up vegetarian menus or outlets to expand the market

WEAKNESSES
Franchising fragility control over franchises
Perceived as junk food

STRENGTHS
Market Leader with 27% of the market share
Global brand power, Global Presence
Economies of scale
Convenient Locations and Payment Methods (Ezlink)
Appeals to the mass market (especially the kids)
24/7 Operations, Drive Thru, Delivery (extensive coverage of the market)
Halal certification
Ronald McDonald Childrens Society

SELLING
Transactional Selling,
Phone/Internet Orders,
Drive-Thru

SEGMENTATION
Segment Marketing

DIFFERENTIATION
Kids Favorite Place
Shared Lifestyle

Intl Pricing, Price Discrimination

Promotion: Coupons, TV ads


Place: Intensive Distribution

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Br

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POSITIONING
im lovin it
Ronald McDonald

Brand
Integrity

MARKETING MIX
Product: Wide Range
Price: Competitive, Affordable,

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Id

Br

TARGETING
Kids, Families, Student,
Caf-goers, Working
Adults

SERVICE
Good Customer Service, 24Hour outlets, Delivery
Service
PROCESS
Cost efficient, transparent,
Quality products

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Marketing Opportunities
Venturing into the Vegetarian outlet
Revamping existing outlets
Introducing healthier menus
Expanding the Kids market
Venturing into new business - clothings

53

Why the Kids Market?


Children remains as one of the main target market for
McDonalds, why not expand the market?
Every parent loves their kid(s)
CROSS-SELLING opportunities
Despite the declining birth rate, we will expected a fall in
population for that target market.
However, we can BOOST demand through..

54

Why the Kids Market?


Demand = Population x Price x Frequency
Population =
Price = Competitive Pricing or Penetration Pricing
Frequency =
Thus, our marketing objective will be to look at ways to
increase frequency, buying behaviours and upselling.

Demand
Function

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Ansoffs Product/ Market Expansion Grid


Existing Product

Existing
Market

New
Market

Market
Penetration

Market
Development

New Product
Product
Development

Diversification

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McDonaldland
MARKETING STRATEGIES
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Product

PRODUCT
McDonaldland Concept:
McDonaldland-themed Playground
McDonaldland Membership Card
McDonaldland Exclusive Line of Kids Wear

Floor Plan for McDonaldland

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Product

Product
Front view

McDonaldland
Membership Card
Targeted at kids below 12 years
Membership Fees
S$10 per year
S$25 for 3years
Register at any McDonalds
outlets in Singapore.
Register online,
www.mcdonaldsland.com.sg/membership.htm
Back view

Product
Register and hop on with Ronald and friends as they
embark on monthly learning journeys to places of
interest, farms. Attend weekly drawing/singing sessions
organized. Make New friends!
Come and join Ronald for go-active fun! Move to the
beat with fun and simple workout learn creative ways
to exercise, keep fit with Ronald!
Enjoy exclusive offers with McDonaldland!
Be rewarded with gifts on your birthdays
McDonald - 10% off birthday party packages
Popular 10% off regular priced items
Yamaha 10% off courses
Swensons 15% off birthday cakes and many more!

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Product

McDonaldland Membership Card


How our Points System Works?
Flash your card and collect points as you dine and retail with us.
Activities

Points

McDonaldland Activities

10 pts

Happy Meal Set

20 pts

McDonaldland Kids Wear

50 pts

Referral of Friends

100 pts

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Product

McDonaldland Membership Card


How to redeem the points?
With your points earned, exchange points to redeem meals, kids
wear and many other attractive items for FREE!
Redemption Options

Points

Mystery Gift

40 pts

Vanilla Ice Cream Cone

60 pts

Regular French Fries

80 pts

Cheeseburger

100 pts

Happy Meal

200 pts

McDonaldland Apparels

300 pts
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Product

McDonaldland Membership Card


Kids Identity We all have it!
Let the kids be McDonaldlands advocates!
With the points system, our little advocates will be
driven to spread by word of mouth and through peer
influence the benefits of McDonaldland Membership Card.
DADDY!!!
They all have it!
I want it too!

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Product

McDonaldland vs Chicky Club


McDonaldland

KFCs Chicky Club

Membership Fees

$10 per year


$25 for 3 years

$10.20 per year

Registration procedure

At any McDonaldland outlets or Only through roadshows


online

Benefits

McDonald - 10% off purchases


& birthday party packages
Popular 10% off regular
priced items
Yamaha 10% off courses
Swenson 15% off birthday
cakes
:

KFC 10% off purchases &


birthday party packages
Pizza Hut 10% off a la carte
purchases
City Chain 10% off nonpromotional house brand
Fox Kids 10% off regular
priced items

Points System

Accumulate points and


redeem freebies

-NA66

McDonaldland Kids Wear


Targeted at kids
7 colours per design;
Red, Pink, Blue, White, Black, Green
and Yellow
Sizes; XS, S, M, L, XL

Product

McDonaldland Kids Wear


Housebrand Designs
- McDonalds own characters
Movie-designed Tees
- Movies: Madagascar 2 (release 13 Nov 2008)
Exclusive Distributorship of Merchandise
Tap on Happy Meal (existing relationship with
Disney, Pixar, Dreamworks, etc) to extend the new
product line of clothings
Price: $8 to $12.50

Price

PRICE
PRODUCT

PRICING

Membership Fees

$10 per year /


$25 for 3 years

Kids Wear
- Housebrand
- Movie Characters

$8.00 per piece


$12.50 per piece

McDonaldLand
Bundled Offer

$11 per set (basic combo)


$15 per set (movie combo)

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Price

Bundled Offer
1 Happy Meal of your choice

A top from McDonaldland Kids Wear

1 Mystery gift
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Place

PLACE
Three existing McDonald outlets will be revamped
Outlets located in areas with the highest concentration of kids
indicators: age of the housing estates, no of primary school

Proposed Areas:
Yishun Central
Tampines Central
West Coast Park

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Promotion

PROMOTION
Banners
Outside McDonaldland outlets to create awareness
Roadshows
a max. of 3 roadshows a month around Singapore (near
shopping malls or MRT stations) to create awareness and
encourage membership sign ups
Public Relation - sponsorship of Kids Central
Membership perks and benefits
Bundling offers to spur buying behaviour
Launch McDonaldland concept on Childrens Day (every
Childrens Day is our birthday)
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Im
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DIFFERENTIATION
Kids Favorite Place
Shared Lifestyle

Br

POSITIONING
im lovin it
Ronald McDonald
McDonaldland

Brand
Integrity

McDonaldland
FINANCIAL STATEMENT
Accounting Period 1 Oct 2008 31 Sept 2009
Accounting Period 1 Oct 2009 31 Sept 2010
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PROJECTED SALES
SALES

Year 1

Membership
Clothes - Housebrand

20,352*$10.00
13,568*$8.00

$203,520
$108,544

Clothes - Movie Character

40,704*$12.50

$508,800
$820,864

Assumption
Population of kids age 14 and below
3% of the kids take up our membership
Cost of membership
2% of the kids purchase 1 of housebrand top
Cost of Housebrand Top
2% of the kids will purchase movie tops
Average 3 kids movie release per year
Cost of Movie Character Top

678,400
20,352
$10
13,568
$8.00
13,568
40,704
$12.50

678.4

Source: http://www.singstat.gov.sg/pubn/popn/respop.pdf

PROJECTED SALES
SALES

Year 1

Membership
Clothes - Housebrand

20,352*$10.00
13,568*$8.00

$203,520
$108,544

Clothes - Movie Character

40,704*$12.50

$508,800
$820,864

LESS COST
Membership Card
Clothes - Housebrand
Clothes - Movie Character
Gross Profit

20,352*$1.00
13,568*$4.00
40,704*$4.00

$20,352
$54,272
$162,816
$237,440
$725,888
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PROJECTED SALES
Gross Profit
Less: Other Operating Cost
Salary
$4.50/hr, 3 outlets
Renovation Costs
$100,000*3 outlets
Promotional Costs
- public relations
Kids Central
- banners
$600*6 banners
- roadshow
$6,000*12 months
Miscellaneous Fee

Net profit/(loss) before tax

$725,888

$73,913
$300,000
$200,000
$3,600
$72,000
$53,048
$702,560
($179,136)
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SALES
Membership
Clothes - Housebrand
Clothes - Movie Character
LESS COST
Membership Card
Clothes - Housebrand
Distributorship cost
Clothes - Movie Character

Gross Profit
Less Other Operating Cost
Salary
Renovation Cost
Promotion
- public relations
- banners
- roadshow
Miscellaneous Fee

Net profit/ (loss) after tax

Year 1
$203,520
$108,544
$508,800
$820,864

Year 2
$142,464
$119,398
$559,680
$821,542

$20,352
$54,272
60000
$162,816
$297,440

$14,246
$59,699
$80,000
$179,098
$333,043

$523,424

$488,499

$73,913
$300,000

$73,913
0

$200,000
$3,600
$72,000
$53,048
$702,560

$200,000
0
$36,000
$53,048
$362,960

-$179,136

$125,539

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Impact and Implications


Introductory stage of the PLC
In the first year of McDonaldland, we incur a net loss $179,136.
This is due to the high initial cost of entry such as renovation
costs and materializing of promotion efforts to increase awareness.
However, when the brand name becomes established, profits
should be experienced (breakeven) as reflected in our financial
statement of a net profit of $125,539 in year 2.

Future
Prospects?
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QUESTIONS &
ANSWERS