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Transcript of McDonalds
average production cost: $0.66
McDonald's on the Road to Success,
One Dollar at a Time
Over 32,000 locations in more than 100 countries all around the globe
(Prior to 2013) Target market was low-income singles/families up to lower middle class.
(2013-present) Target market changed to specifically target middle class/ higher educated
Marketing is changed to accommodate local language and culture
Current Marketing Situation
New Marketing Strategy
4 C's Strategy
Marketing Research Strategy
Porter's Five Forces of Competition
Alicia Amaya, Emily Davis, Chris Deleon, Jordan Jacobs, Kassy Patel, Roberto Witrago
The new research strategy that will be produced is to take surveys inside a McDonalds of what they think about the Dollar Menu and if they could create an item to be on the menu what would it be.
The next step could be going to local Wal-Mart locations that have a McDonalds and asking the Fresno citizens that shop there the same question.
Fresno will be used like a test market for the new Dollar Menu in all places that McDondol's is located in the city.
Cause of Declining Success
Food seen as unhealthy
Rumors about pink sludge
Heavy marketing to young children
Cancellation of the Dollar Menu
Implementation of the Dollar and More Menu
Low cost seeking market being taken
Main competitor: Taco Bell
Dollar Cravings Menu
Low Cost Leadership
Dollar Menu and More: $1.31
Dollar Menu: $1.00
Value Meal - $1.31
Right Price, Right Size - $1.47
Jack's Value - $1.90
Dollar Cravings - $1.00
S1 O1: McDonald’s strength of having adequate financial resources and being an acknowledged market leader can be matched with the opportunity of having the ability to grow and expand in markets. McDonald’s has lost its place in the “cheap meal for a buck” category of fast food chains. Once the Dollar Menu is reinstated, we will use our financial resources to invest in marketing and advertising to take back the number one spot as leader in the value menu restaurant chains. We will pour ample amounts of money into advertising prior to releasing the new Dollar Menu to instill excitement in our consumers. Consumers will be well aware that the Dollar Menu is coming back prior to the release date.
W2 O 4: McDonald’s weakness of the Dollar Menu being discontinued can be matched with the opportunity of new innovations to meet the broader needs of the customer. There is a larger market of consumers in the Fresno area that have the needs for a quick and cheap meal. The Dollar Menu will be brought back with the original items as well as with new items to expand the consumer base. The plans are to have a grilled cheese sandwich, a vegetarian-friendly soy burger, a four-piece chicken nuggets, and a new McMuffin breakfast sandwich featuring eggs farmed fresh from local Fresno farmers. All of these items will be priced at just one dollar, will meet the needs of the consumers on a budget, vegetarian consumers, and consumers looking to support local Fresno farmers.
S4 T3: McDonald’s can apply its product innovation skills to meet the new direction in the market that favors healthy living and eating habits. McDonald’s release of new products on the Dollar Menu, such as the soy burger, will bring healthier options. McDonald’s can also expand its salad variety and dressing variety with new items such as a spring salad mix, an Asian chicken salad, and a Waldorf chicken salad. We can also continue to advertise our egg white delight breakfast sandwich, fruit and yogurt parfait, breakfast oatmeal, and grilled chicken sandwiches. With consumers constantly trending more and more to eating healthier and living more of a well-balanced life, these products are sure to meet their needs of a healthy and cheap meal.
W2 T4: McDonald’s can match the weakness of the Dollar Menu having been canceled before with the threat of consumers leaning towards cooking at home to avoid the costly habit of going out to eat. As prices of food continues to rise, and with the cancellation of the Dollar Menu, many consumers choose to not dine out anymore and prepare their meals at home. We want to show the consumer that with our release of the new and improved Dollar Menu, eating out at McDonald’s will save them time and money, and give them a tasty meal. As long as the price is right, the consumer should feel comfortable spending their hard earned money at McDonalds. We will continue to market to these consumers and show them that we understand there is a need for good food at an affordable price.
1. We have adequate financial resources because of our franchise it is the largest franchise in the fast food industry we are an acknowledged market leader in the fast food industry.
2. Access to Economies of scale because the more units McDonalds produces the lower the per-unit fixed cost because this cost is shared over a large number of goods.
3. Cost advantages because our production cost are low and our overall cost our low due to low production cost.
4. Product innovation skills because we have access and room for change and innovation of products and services.
5. Technology is readily available to us this is because we run under an efficiency model were fast production is most important and so technology often is our fastest option in producing goods.
1. Typically unhealthy food
2. The dollar menu has been canceled before
3. We have an abundance of old products on our menu that need to be updated for the new growing “healthy” generation.
4. No new products yet developed for the dollar menu
5. Customer relationships tend to be weak because we are such a fast pace, in and out type of model fast food restaurant and therefore it is hard to have faculty and even the facilities connect with the customer.
1. We have the ability to grow and expand in markets because of our leader status in the fast food industry.
2. We have many ways to expand our product lines such as setting up task forces to encourage innovation of new products and to set budgets to create the product.
3. There are plenty emerging new technologies such as new automated order taking machines, and automated fry boilers to help the production process move more smoothly.
4. With new innovations we can meet broader needs of costumer and broader target markets such as inventing the new products to the dollar menu to reach vegetarians and young parents on a budget. (Veggie burger, grilled cheese)
5. The constant changing environment allows room for change in external and inertial environmental structures in the organization (which could help with productivity and reaching new market areas)
1. Costly regulatory requirements
2. New substitutes from competitors such as Taco Bell and their value menu compared to our dollar menu.
3. New direction in the market that favors healthy living and eating habits which means changing tastes and needs to what the new “healthy” generation wants and changing lifestyle choices of consumers.
4. Consumers leaning towards cooking at home to avoid the costly habit of going out to eat.
5. Bad stigma of McDonald’s marketing unhealthy food to children which can be seen as unhealthy.
Founded in 1948, McDonald's grew and excelled to the top of the fast food industry. Until recently, 2013, McDonald's had the competitive edge when it came to the Dollar Menu. They launched the Dollar Menu in 2002 and had great success. No other fast food franchise had a dollar menu. It was epic. Since the launch of the Dollar Menu and More sales have been declining and its hurting McDonald's. The Dollar Menu brings in 13-15% of revenue a year. The new Dollar Menu and More is encountering major setbacks.
Differentiate through the use of the nationally recognized brand, and high quality customer service.
Sustain production of previously built franchises, while expanding new restaurants each year.
Ronald McDonald Charity
Social Media and Public relation spreads to create awareness
Create large profit because off low cost from production
Rejuvenate key items on the menu to fit all members of the family
Promote the product using nostalgia about the old Dollar Menu
Consumer: The typical Mcdonalds consumer is looking for a low priced meal that is healthy and easy on their finances.
Cost: Once we determine what the consumer is looking for, in the new marketing strategy the consumer demands cheaper products.
Communication: What the Mcdonalds customer wants is highly important in our marketing strategy. We want to hear what type of product they would like to see on the dollar menu.
Convenience: Mcdonalds wants the dollar menu to be as convienent for the customer to make the stop worth their time.
4 P's Strategy
Product: Once we determine what the consumer wants we must determine the product which is redeveloping the dollar menu back to its original price with new additions
Price: The Mcdonald's target market is leaning towards a price that is a dollar and is true to the actual menu.
Promotion: Mcdonald's will promote the new menu through commercials, surveys and social media to gain past customers back to their resturant.
Place: Mcdonalds will try the new dollar menu in the Fresno area and in all the the locations in Fresno so it is acessable.
McDonald sustains a high level of competitors based on the amount of fast food franchises imitate the menu format of McDonald.
Competitors are beginning to implement the quick pace and efficient service already presented by McDonald
Suppliers are decreasing in size for large franchises
There is an increase for limits of bargaining for cheaper products and large quantity discounts
McDonald maintains the largest relationships with suppliers and values their service
Decrease the competition through patenting products
Maintain the high volume of products produced in a short period of time
McDonald's use of a high level of technology
Buyers hold the power of purchasing from the large selection of fast food franchises
McDonald continuously changes to meet the demand of the buyers
Substitutions are at a high level for McDonald due to the large range of options for each customer.
Examples of other fast food franchise substitution options are: Wendy's, Taco Bell, and Burger King.
There are 19 McDonald's Restaurants in Fresno.
Unemployment rate in Fresno-15.3%, National Average-8%
New Target Market and Dollar Menu and more does not fit the criteria for being a low-cost leader.
Taco Bell is taking advantage with their own Dollar Menu.
New marketing Strategy will progressively influence the competitive quality of the Dollar Menu.
Effectively raise profits.
McDonalds would rise as the Low-Cost Leader once again.
$1 Healthy Food Choices will be one of a kind to the fast food industry moving past competition.
Reason for change:
Associate pricier items with value items
Adjust to inflation ($1 in 2002 = $1.30 today)
Continue meeting market's demands for cheap food
Tight monitoring of sales, customer service satisfaction, expenses, and competitors
Sale goals will be compared with actual sales
Any customer service problems will be handled with appropriately and acknowledge customer feedback
Spend on profitable advertising only
Keeping an eye on the competition.
Barriers To Entry