McDonalds Australia is a subsidiary branch of the McDonald in the United States. This subsidiary was first opened in 1971, in western Sydney. Since its inception, the company has grown in both size and profits. For instance, McDonalds employs more than 56000 people in its 730 restaurants in Australia. Profits forecast for the year 2007 is estimated to be reach $2.65AUD billion by December. Not surprisingly, the restaurants can accommodate over 100-seated customers and 40 drive thru customers at a go. To facilitate the activities approximately 100 staff members are employed to keep the drive thru and seated customers served 24-7.
SWOT analysis
A SWOT analysis is used to measure the strengths and weaknesses of a company as well as its potential threats and opportunities. As it stands, McDonalds Australia commands presence in the restaurant industry. This is because its strong brand name speaks volumes, ‘a world class company.’ McDonald companies are found in over 100 companies serving millions of customers each day. This strong company profile is in itself a marketing tool and thus strength. McDonald uses franchising approach to spread its name and products to areas around the country. As such, many business opportunities exist for the McDonalds to gain prominence in the Australian market. Additionally, franchising has enabled McDonalds to grow in territory without compromising the quality of products. This is because McDonald offers training to franchisees so that quality products are assured to customers. Approximately 2/3 of restaurants in Australia are run as franchises. Since McDonalds uses franchises to expand its operations, it has been able to attain consistency in its product supply. This means that taste of a burger at one chain is similar to that offered in another chain. As such, customer confidence in McDonald products is enhanced. The franchise model ensures that revenues collected are consistent i.e. from the rent, fees deduction from percentage sale and supplies that it collects from its franchises. This has put McDonald ahead of its competitors. In addition, McDonalds makes use of iconic products such as big Mac, egg mcmuffins, happy meal, and dell choice, which uniquely stand out and identify to target markets. These iconic products are strengths to McDonalds.
However, McDonalds Australia also faces weaknesses. The restaurants industry is flooded with equally strong companies such as grilled, burger edge, burger king and hungry jacks. (Websites cited). Moreover, other restaurants offering different products yet serve the same industry also pose challenge to McDonald’s market share. McDonald is facing this weakness currently. Although McDonalds has tried to develop its products and diversify from French fries and burgers, its products are still weak. Apparently, their products are not synchronized with the changing customer trends. This is a weakness. The quality of a product is crucial to determining how well it captures the market. People need to feel that they are getting vale for their money and perhaps, McDonalds has failed in this are, not because its products are substandard, no, but in the sense that their products are deep fried and heavily fatty. This has cost its loyal customers health ad wellbeing with numerous cases of obesity cited because of munching the calorie packed meals offered at McDonalds. (http://www.healthfinder.gov/) For instance, its iconic product, super size me, elicited negative publicity from customers as it was associated with obesity. Owing to such damaging press, McDonald company stands threatened in the restaurant industry.
McDonald Australia seems to be an innovative company as demonstrated in its innovative idea to open the McCafé in Melbourne back in 1993. This chain performed exceptionally well that the idea was replicated in several markets around the world.
The potential opportunity available for McDonalds’ is the growing market for healthy foods and drinks. Now days, people are becoming more health conscious and thus demanding balanced diet foods that are low fat. McDonalds has already identified this trend and made headway to catering for this market. However, it needs to capitalize on this opportunity. Additionally, the lifestyle nowadays is fast as well as dynamic. While this might means trouble to other industries, McDonald sees potential opportunity. How so? Well, the restaurant offers fast convenient fast food to professionals who have little or no time to prepare a meal or sit away from the workstation to enjoy a lunch. Its drive two outlet ensures that these people get their snack as fast as possible and conveniently packed. (Stapleton & Thomas, 1998)
Potential threats include lawsuits filed by consumers complaining about obesity or sexual dysfunction accrued from binge eating. McDonalds French fries and burgers. On top of that, threats from environmental activist, animals’ rights activists and vegetarian groups have added to the list of problems that threaten McDonalds.
McDonald’s segmentation
Market segmentation is the technique of dividing markets into smaller proportions made up of people with homogenous characteristics, in terms of demographic, psychographic, behavioral, geographic location and so on. McDonald’s segmentation structure is based on age group. The main segments are parents, teenagers, children, health conscious people and the working class citizens. The reason behind McDonald’s segmentation is to assist it to market the products in age appropriate manner and position its restaurants strategically to target those customers.
This segmentation structure is appropriate for McDonalds especially for the parents and the working class segment. I believe that the busy working class citizens could make majority of McDonald’s customers. This is because these people are money rich and time poor individuals. If McDonalds can give variety of quality and healthy foods, this segment has great potential. What’s more, the parents with fun loving children give great potential for McDonalds, especially these who travel with kids to shopping malls, parks, animals and recreation areas. If McDonald can polish or modify its menus to be more health focused the Health conscious people segment has great potential. McDonalds would be wise to acknowledge the power of the media. All the advertising and negative images associated with consumption of deed fried, calorie-laden foods, which McDonalds specialize in, have changed food choices among customers. The health conscious segment is growing at an unpredicted rate and this trend will continue in years to come. By tilting its products to cater for this market segment, McDonalds should enjoy high rates. Other market segmentations structure that I would recommend to McDonalds is on basis of psychographic characteristics say attitudes, lifestyles values. Customers who value quality will often not have any qualms in high pricing. This is because price is an indicator of quality. The attitudes of people strongly influence spending habits and loyalty to a brand. McDonald can choose to segment market according to how his customers lifestyles are for instance, people with busy lifestyles need fast service and convenient packs. They also require easy eating snacks that boast energy fast. As such, McDonald could position its chains and menu to suit this market. An affordable price that indicates quality and pocket friendly is the way to go for this psychographic segment.
In order to position McDonalds effectively into the psychographic segment would be to locate McDonald chains in a central place whereby working class people with busy lifestyles can easily access. For the young fun loving people, the chains would be located near enemas, Discotheques and shopping malls where by these people can get fast foods as they enjoy their fun activities. For the family oriented lifestyles mostly the parents, McDonald could cater for this segment by targeting family environments such as cinemas convenient stores, as stations and such like. Additionally McDonalds can also target this group by offering family size packaged lunch box or family size pizza. This is because families would often be big and buying many small package lunches is cumbersome. One big pack for the whole family suffices in targeting this market.
Demographic segment will differ in variables such as age, income, behavior, gender and so forth. McDonald can position its product to fit the low-income earners by providing smaller packs of food at cheaper prices.
Based on gender, McDonald has various choices in its hand to target this group. In most cases, women eat lighter foods with more salad and cheese. Men on the other hand, are less conscious of their physique and consume larger portions of foods. Perhaps, McDonalds can have a pack for the female customer and the male customer varying in size portions. Women are very particular about image and places they frequent for lunch. McDonalds can target this market by building restaurants that have appeal to the feminine eye. For instance, by providing tasteful décor, attractive serving plates, mellow music and such like.
Behaviors vary across individuals, for the consumers these behaviors rang from price sensitive, kind, and misers, the crucial component is to create an irresistible offer to them so that the strength of resistance is weakened.
For instance, positioning a McDonald restaurant where these people frequent and having a steady price in place. These people need to be conditioned to change their spending habits and McDonalds can achieve this by giving occasional offers of say ‘Buy one Burger or Chicken and get the other one free’ approach. This approach will encourage them to spend. For the spendthrifts, this should be an easy task for McDonalds. By putting up a restaurant adjacent to ATMS or at the supermarket, the company is likely to capture many buyers.
Marketing Objectives
The marketing objective employed at McDonalds Australia is aimed at making the company a good corporate citizen by adding value to the communities in which they operate. The marketing objective employed at McDonalds Australia is aimed at making the company a good corporate citizenship. As provided in the moving forward report (2006) McDonalds is ‘absolutely committed from the top of our organization to being responsible to addressing the environment, social and economic challenges? (Report by moving forward 2006). The pursuit of this objective is visible in the many foundations that McDonald Australia supports. For example The National heart foundation, Auskick, Ronald McDonald’s products, that directly boosts goodwill among customers’ hence higher sales. (Websites cited) Other marketing objectives that I would recommend to McDonalds include, becoming a market leader in the restaurants industry, to be an equal opportunities employer, to be a trend gather in the restaurant industry and to increase profits per year.
The objectives act as a guiding line to direction of marketing efforts and marketing. For instance, if McDonalds adopts a marketing objective that says the goal or the company is to be a trendsetter in the industry, the implication will be that all products and advertising methods used will be unique and innovative such that other companies learn from McDonalds and not the other way around. If the objective is to be the market leader, then McDonald will ensure that it franchise as many chains as possible so that it saturates the restaurant market.
Marketing strategies.
McDonalds faces both direct and indirect competition in the market indirect competitors includes Nandos, Trios, Pizza Hut, and Dominos among others. These chains are indirect competitors they offer food products which although not exactly to that of McDonald, and include Hungry Jack, Burger edge and others. Potential threats also affect McDonalds marketing strategies. So what are the marketing strategies currently employed by McDonalds? One clear strategy is its collaboration with suppliers of farm products and soft drinks, which ensures that the chains are supplied with fresh quality products at reduced cost. (The Times, 2005)
It has also formed alliances with powerful brand names like Coca-Cola, Disney, BP, Cadbury and Kraft. (Coca-Cola, Cadbury, BP, Disney websites) This alliance has accorded benefits such as recognition and strategic location, which is a powerful, marketing mix in its marketing strategies. The strategies I would recommend to McDonald to achieve its objective is development of new products menus that set the trend in the fast food industry. The Burgers are so old school and should be replaced new tasty menus. The customers can help in deciding new menus by offering suggestions. Additionally, McDonalds can toy with the price variable to meet its objective of being a market perception of quality could help to this end. Intensive promotions and advertising is another strategy that McDonalds could use to achieve its objective. This implies using many media as well as developing advertisements that are clear, concise and persuasive promotions should be targeted to the intended customers. This means using the right medium of communication. At present McDonalds uses competitions such as name it burger competition to remind customers of its product existence. The use of parents’ magazine and promotions at Disney land has also worked well in targeting the parent segment. (Richard, 2001). The strategies I would like to see McDonald incorporate is using models that eat the McDonald foods and frequent the fitness center to balance the calories. Perhaps, a reality show on TV would dispel claims of obesity associated with McDonald products hence promote sales. Another strategy I would recommend is increasing collaborations with more outlets and recreational centers so that sales are boosted. Alternatively, popularizing the new varieties offered in the chains say the Deli Choice and Lighter choices, a strategy aimed at the health conscious people. McDonalds has adopted the strategy of indicating in small print the nutritional value of its food. This has helped to encourage positive attitude towards its product. McDonald strategy to cater specifically for the teenage market is a good one. This strategy has taken the form of increasing access to McDonald for teenagers by locating chains near schools and recreation areas, reducing prices so that they are affordable, giving quick service to impatient teenagers and giving sections for teenager in restaurants. (Stone, 2001)
Conclusion
Overall, the McDonald Australia continues to enjoy great sales and it seems that the Australian market is yet to get enough of McDonald’s products. The strategies used are very effective and as long as the company continues it innovative marketing strategies, then the competitors will need to up their strategies in order to be on the league of McDonalds. In a nutshell, it is kudos to McDonald Australia.
Reference
Moving Forward (2005-2006) McDonald’s Australia Corporate Social Responsibility Report
Richard J. V. (2001). Marketing Communication: Principles and Practices. Routledge.
IBIS World G5125.Takeaway Food Retailing in Australia – Industry Report.
McDonald’s Australia website viewed on 21/09/2007 www.mcdonalds.com.au
The Times. (2005)The Marketing Process. Ed 11, pg 101-104
Health people. Obesity. Available at
http://www.healthpeople.gov. Accessed on September 21, 2007.
Stapleton, J. & Thomas M. J. (1998) How to Prepare a Marketing Plan: A Guide to Reaching the Consumer Market. Gower Publishing, Ltd
Stone, P (2001) Make Marketing Work for You: Boost Your Profits with Proven Marketing Techniques. How to Books Ltd
The Heart Foundation, viewed on 22/09/2007 www.heartfoundation.com.au
AusKick Organization viewed on 22/09/2007 www.aflauskick.com.au
Ronald McDonald House Charities viewed on 22/09/2007 www.rmhc.org
Clean Up Australia viewed on 22/09/2007 www.cleanup.org.au
Camp Quality viewed on 22/09/2007 www.campquality.org.au
Kentucky Fried Chicken Restaurants viewed on 22/09/2007 www.kfc.com
Dominos Pizza viewed on 22/09/2007 www.dominos.com
Red Rooster Australia viewed on 22/09/2007 www.redrooster.com.au
Nandos Chicken viewed on 22/09/2007 www.nandos.com
Trios, viewed on 22/09/2007 www.trios.com.au
Pizza Hut viewed on 22/09/2007 www.pizzahut.com
Subway viewed on 22/09/2007 www.subway.com
Quiznos Subs viewed on 22/09/2007 www.quiznos.com
Hungry Jacks Australia, viewed on 22/09/2007 www.hungryjacks.com.au
Grill’d – Grilled Healthy Burgers, viewed on 22/09/2007 www.grilld.com.au
Burger Edge, viewed on 22/09/2007 www.burgeredge.com
Burger King Corporation, viewed on 22/09/2007 www.burgerking.com
Welcome to Disney.com.au, viewed on 22/09/2007 www.disney.com.au
The Coca-Cola Company, viewed on 22/09/2007 www.thecoca-colacompany.com
Inghams Enterprises, viewed on 22/09/2007 www.inghams.com.au
Kraft Foods Inc, viewed on 22/09/2007 www.kraft.com
