Marketing management - Part 9
McDonalds Australia is a subsidiary branch of the McDonald in the United States - Marketing management introduction. 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.
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In order to effectively reposition McDonalds into the Australian market a formula to develop, coordinate or control all the marketing activities is going to be needed. Thus, a marketing plan should be developed. A marketing plan is a systematic process of keeping track of customer needs, changing trends new opportunities as well as threats in the forget market so as to have an effective blue print to work around the dynamics of the market (Kotler, Adam, Brown & Armstrong, 2001, De Burca, Brown, & Fletcher, 2004).
The Australian market is full of competition from direct and indirect competitors who compete for space in the customers’ palate, for instance, Hungry jacks, Burger edge, Nandos, Pizza hut and red rooster. The factors in the social cultural, political legal, technological factors and economic environment affect McDonald. The social cultural factors rife in the Australian market are diverse cultures and varied lifestyles. The Australian government is particular on the environmental issues and strict laws and regulations on trade and business practices are enforced. Additionally, the technological advancement in the Australian market is of state of the art and High IT usage in virtually all aspects of trade pose both challenge and opportunity to the McDonald firm. Since, McDonald is a business entity with motives to grow in profit and territory, economic forces such as inflation and standards of living economic growth. As it stands, the economic status of Australia is quite good meaning the peoples disposable incomes are responding positively to trickle down effects of the economic growth. Inflation is low and hence the ideal environment to reposition the McDonalds into Australia.
The process of repositioning McDonald will not exist in a vacuum. Other forces will have a hand in determining its success. These forces include presence of substitutes, the intensity of marketing efforts used by competitors, buyers’ tastes, costs of entering new markets, availability and costs of raw materials among others.
McDonald Australia has not given much attention to any substantive goal of attain profits or greater market share in the Australia market. It has been guided by the objectives of being a good corporate citizen by adding value to the communities in which it operates. Currently the firm is undergoing some changes and has proposed that McDonald set two key corporate goals for the coming 12 months i.e. grow its customer base by 20% and grow revenue by 25%. Notably, these objectives are short-term and will form the basis of the marketing program
Keys to Success
Location: Providing an easily accessible location for customers say, in a busy shopping center surrounded by complimentary businesses, near offices and plenty of parking available.
Environment: Providing a relaxing environment conducive for quick lunch or casual dates.
Convenience: offering clients a wide range of products in one setting and extended business hours.
SWOT analysis: strength
McDonald enjoys global brand recognition and the name itself sells the company’s products. This is strength for McDonalds
In addition, the level of knowledge and experience that the company has is an added advantage over other companies in the Australian market. The people in the marketing team have knowledge on the tricks of the trade as well as confidence to try out new strategies and approaches to marketing efforts, thus a strength.
Marketing activities require money to outsource advertising agencies or experiment on new menus, promotional campaigns among others. (Paulson & Alpha Books, 2003). McDonald Company operates on a larger budget as compared to other fast food restaurants, thus it can employ variety of promotional strategies to create awareness and attract new customers in the new repositioned market. This is another strength owed to McDonald.
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.
McDonalds has weak products, which have reached their maturity stage hence no longer attractive. McDonald is facing this weakness currently.
McDonald’s products are not parallel with the changing customer trends. People need to feel that they are getting value for their money. However, McDonalds products are deep fried and heavily fatty. This has cost its loyal customers’ health. Numerous cases of obesity have been cited because of munching McDonalds calorie packed meals (http://www.healthfinder.gov/) Owing to such damaging press, McDonald Company stands threatened in the restaurant industry.
Now days, people are becoming more health conscious and thus demanding balanced diet foods that are low fat. McDonald’s customer base can grow significantly by tapping to this market.
Additionally, the lifestyle nowadays is fast as well as dynamic. McDonald can offer variety of convenient fast food to professionals who have little or no time to prepare a meal (Stapleton & Thomas, 1998, The Times, 2005)
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.
Market segments will be appropriate in enabling McDonalds to design products to suit customers with homogenous characteristics. In order to effectively group this customers McDonald will need to survey potential customers trait in terms of psychographics and demographics. (Weinstein, 2004). The demographic segment will be based on gender, parents, children, teenagers working citizens and the health conscious. This segmentation strategy will broaden the market for McDonald’s products and allow for differentiation of products thus give McDonalds a competitive edge (Hiebing & Cooper, 2004, McDonald, 2004).
Health Conscious: The health conscious segment is growing at a high rate and this trend will continue in years to come. McDonalds needs to tilt its products to cater for this market segment in order to enjoy high sales. The restaurants may offer more vegetables and fruit meals.
Working citizens: The busy working class citizens make majority of McDonald’s customers. This is because these people are money rich and time poor individuals. McDonalds should give variety of quality and healthy foods at a higher price in order to reap profits.
Teenagers: Teenagers provide an attractive market especially because of their love or junk foods. This segment requires fast service as well as affordable prices. McDonalds should offer affordable meals for the segment and locate chains in the recreational areas as well as near schools.
Parents: The parents with fun loving children give great potential for McDonalds, especially those who travel with kids. McDonald could cater for this segment by targeting family environments such as cinemas, shopping malls and recreational areas. Additionally, McDonalds should target this group by offering family size packaged lunch box or family size pizza, which are cheaper and less cumbersome. One big pack for the whole family suffices in targeting this market.
Gender: 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.
Lifestyle: The attitudes of people strongly influence spending habits and loyalty to a brand. People with busy lifestyles need fast service, convenient packs, energy packed foods. McDonald needs to locate McDonald chains in a central place whereby working class people with busy lifestyles can easily accessible; set an affordable price that indicates quality. For the young fun loving people, the chains would be located near cinemas, Discotheques and shopping malls so that people can get snack as they enjoy their fun activities.
Buying characteristics of customers: By evaluating customers’ buying habits McDonald will be in a position to improve products to match with the reasons put across, for instance, customers who buy McDonalds because of image; ‘world class brand’. Additionally, the behavior characteristic shows customers consumption patterns. By learning these patterns, McDonalds will be in a position to offer products at the time when needed and in the correct state.
McDonald should position its product to fit the low-income earners, price sensitive and misers by providing smaller packs of food at cheaper prices or locating chains where these people frequent. Alternatively, McDonald can influence their spending habits by giving occasional offers of say ‘Buy one get the other free’ approach, or for spendthrifts, putting up a restaurant adjacent to ATMS or supermarkets. This will encourage them to spend by weakening their resistance.
Marketing Mix strategy
The price variable is the most convenient for McDonald to utilize the marketing strategy, because its products are consumer goods, which enjoy repeat purchase and hence are price sensitive. McDonald may choose cannibalization pricing by offering low prices for quality burgers or large discounts. This strategy will attract a large customer base while also crippling small businesses that pose unnecessary competition. A large customer base will translate to large profit margin although in small bits.
In this category, the area of interest is a quality and quantity. One thing that needs to be changed is the quality of food. McDonald needs to consider revising its menus so that it is more balanced diets. This will draw the health conscious group as well as surplus the expectations of the ordinary customer, which is a plus for McDonald. Quantity variable means that McDonalds should ensure that the chains never run out of customer’s favorite products. The products for every market should be sufficient for current demand and unexpected rise in demand. In order to ensure this McDonald will need to invest in technologies that facilitate fast preparation of foods as the customer waits.
In terms of quality, freshness is key to selling more products especially in the food industry. McDonald may collaborate with suppliers of farm and groceries to supply top quality fresh products to chains at reduce cost and on timely moments. In addition, collaborations with soft drink companies to ensure the chain never runs out of supply at any given time. Essentially, the strategy is to give cater not let the customer try out products from other companies which could mean a lost customer for life
This encompasses the display the ambience location and accessibility of a chain strategically to the target market/customer. (Stone, 2001) McDonald could form alliances with fellow world-renowned brand names such as BP, Disney, Cadbury and the like. The rationale behind this is that the location of their chains is ideal for conducting fast food business. The alliances ensure that both companies mutually benefit. For instance, the children and parents visiting Disney land provide great market for McDonalds French fries and Burgers. Customers fueling cars at BP stations also provide market as they make rush to catch a snack on their way to work or home.
The ambience of restaurant work to attract customers in even before they consider viewing what is in the menu. Due to this fact, McDonald restaurants cold be revamped to provide the ideal setting for the target market. For instance, the teenagers need a free environment to relax and chat preferably near schools or recreational areas. The working class on the other hand, requires places with professional appeal while the parents look for convenient locations and family environment McDonald should ensure that it opens up chains in locations frequented by the different groups and provides the ideal setting to appeal to each.
This section emphasis advertising and personal selling campaigns. Since the Australian market comprises of customers with different characteristics variety of marketing vehicles need to be used. For instance, TV advertising and magazines competitions, promotional offers and such like. These techniques employed are essentially to create awareness of new products in the market and persuade targeted customers to buy more or try out new menus. (Richard, 2001). Some promotion in place are the name it burger competitions and advertisement in Disney movies specially targeted to parents with children. New products for the health conscious people lack recognition and publicity stunts need to be utilized to create awareness. For example happy hour where they offer Deli choices for people to try out, providing nutritional value information will promote sales in the health conscious segment. The children segment on the other hand could do with promotional approaches like toy give away, prize and competition clowns who attract them inside the chain.
What will set McDonalds apart from the competition; it is our commitment to provide variety of tasty and nutritious foods, fast service, and convenient location. Our business atmosphere will be a relaxing one where customers can relax. Soft drinks will be offered to clients as they enter for service.
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