MKW 1120 Assignment 3Dulanga Tharusha Fernando

ID: 25768654

INTRODUCTION TO COMPANY
McDonald's, founded in the United States in 1940, is the world's largest chain of hamburger
fast food restaurants, with more than 36,000 outlets in 119 countries worldwide. McDonalds
serves around 68 million customers daily. McDonald's primarily sells different types of
burgers, chicken, french fries, breakfast items, soft drinks, milkshakes, and desserts. In
response to changing consumer tastes, the company has expanded its menu to include salads,
fish, wraps, smoothies, fruit, and seasoned fries. (Wikipedia. 2016)
In 1980 the McDonalds Corporation awarded Golden Arches Restaurants Sdn Bhd, a license
to operate McDonald's restaurant chains in Malaysia and Jalan Bukit Bintang, Kuala Lumpur
was chosen as the strategic locations, to open its first restaurant. Since April 1982 they have
opened more than 200 restaurants nationwide. (Ahmad, E., Ahmad, E., & profile, V. 2015)
TARGET MARKET
Segmentation:
Variable
Sub-Category
Behavioural
Benefits Sought

Age

Description
Quality product
Brand Image
Taste
Regulars
Special Occasion to increase sales1
Kids, Teens and working adults

Income

Average to high income

Religion

Halal seeking customers

Values, lifestyle and

attitudes

Brand conscious
Fairer deal

Purchase Occasion
Demographic

Psychographic

International:
Since McDonalds operates at a global level it seems to be using intermarket segmentation to
target the same segments of consumers across countries using an international advertisement.
However it does take into account the geographical segmentation too, in order to cater for
people of various regions. For instance people living in India will have new addition in the
menu to cater to their tastes as compared to Malaysia2.
Target Market Segment
The working community is regarded as the largest percentage of consumer as opposed to
children and youth mainly because they have their own income and thus are able to make
their own choices. Further McDonald provides fast and efficient service which are suitable
for working adults who are also always on the go. Furthermore, McDonald's 24 hour
operation targets on working adults who work late in to the night 3. Kids are mainly attracted
because of McDonalds happy meals which are catered for kids and the companys mascot.
1 Appendix 1
2 Appendix 2
3 Appendix 8
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MKW 1120 Assignment 3Dulanga Tharusha Fernando

ID: 25768654

(Appendix 7 & 9). McDonalds are normally consumed by middle or higher class incomes
consumers. (Melnick, M. 2016)
Significance:
Segment Size and Growth
Due to the increase in life expectancy (Naik, 2015) and population (Keim, 2015), it can fairly
be assumed that amount of people buying from McDonalds will encounter growth. The
income groups as well as social classes can also be expected to grow due to the increase in
education around the world (NY Times, 2014).
Segment Structural Attractiveness
These segments have many direct competitors which means that McDonalds will obtain a
small market share unless it markets its product on a grand scale. The attractiveness of this
segment is reduced by the fact that several substitutes do exist, although being remote.
Regardless of the number of competitors and substitutes, it is important to note that there is
no close substitute to McDonalds.
VALUE DEMANDED BY TARGET MARKET
Quality of food
Taste
Cleanliness
High quality ingredients
Number of menu offerings
Nutritional value
Service
Price
Comfortable environment
POSITIONING
Perceptual Map
High quality

Affordable

Expensive

Low quality
It is essential for McDonalds to make perceptual map which will help to identify the factors
that differentiate consumers' perceptions of product and the products position.
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MKW 1120 Assignment 3Dulanga Tharusha Fernando

ID: 25768654

In order to position itself successfully, McDonalds needs to figure out what will allow it to
differentiate itself from other competitors in the fast food industry,
McDonalds has positioned itself as the market leader in terms of pricing and its supreme
quality.
McDonalds major contenders are KFC and Subway and as shown it has positioned itself
such that they sell products at an affordable price without compromising quality.
DIFFERENTIATION
Product
McDonald's takes into account cultural factors in serving Malaysian consumers. The food
served is halal and to cater to the specific seasons they serve the prosperity burger 4 for
Chinese New Year.
The main thing to note is that when offering menu items to potential customers there lies a
vast array of choices with regard to how and where they spend their money. Therefore
McDonalds places emphasis on constructing a menu which satisfies customers wants and
needs However, customers requirements may change over time and McDonalds need to
adapt to this change.
Image
The brand image is easily recognizable and portrayed as a copyrighted logo through the
various banners, poster and in their advertisements. Its image conveys a sense of quality and
customer service which differentiates itself from other competitors especially from the
cheaper companies.
MARKETING MIX
Product
The core product are the McDonalds burgers and its world class fries plus other menu
offerings5. The actual product is made from made from superior quality ingredients and high
grade meat patties and packaged in a uniquely designed trademark box 6. Moreover, the brand
image, quality and taste help in satisfying the customers requirements.
McDonalds packaging7 makes it easily recognizable amongst other fast-food companies.
This distinct and eye catching appearance makes it stand out of the rest. Additionally, the
packing is eco-friendly and child friendly showing that its intended for its target market. An
augmented product is the 24 hour customer call centres which are dedicated to answering
queries and problems regarding the products.
Price (Refer to Appendix 12)
4 Appendix 10
5 Appendix 13 & 14
6 Appendix 11
7 Appendix 15
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MKW 1120 Assignment 3Dulanga Tharusha Fernando

ID: 25768654

A basic meal at McDonalds will cost around 11 to 20 Rm which includes a burger of the
customers choice a packet of prices and a drink. McDonalds has specific times where they
drop down the price for selected items to make it cheaper for customers.
The customers perception of value is key when deciding the price charged. A product is
more than a physical item; it also has psychological impact on the customer.
The danger of using a lower price as a marketing tool is that the customer may feel that a low
price indicates lower quality and so it important to note the brand and its integrity. A further
potentially adverse consequence of price reduction is that competitors will easily match the
lower prices resulting in no extra demand. This means the profit margin will be reduced
without any increase in the sales volume.

Place (Refer to Appendix 6)

In terms of distribution, McDonalds have more than 200 restaurants nationwide. Since the
trend of all Malaysian to shop in malls most McDonalds restaurants are built in shopping
malls. McDonalds is also open in several local gas station such as PETRONAS Mesra. They
have separate express cafs & drive through that serve some of their popular products. This is
meant for people in a rush to work. McDonalds is mostly exclusive meaning that they sell
their products themselves.
Promotion
High customer satisfaction and promotion are main factors to achieve good profit. Fast food
buyers seek good price deals and promotions before visiting a fast food restaurant. Generally
McDonald's use promotion methods such as Television Advertisement, Media TextNewspaper and Magazine, Events & Sponsorships, Billboards, Games and Contest, Price
Reduction, Coupons, Loyalty Card etc. Normally, their ads attract children rather than adult
consumers. McDonalds spends a lot for promotions especially their advertisement to gain a
higher market position.
In addition to the above mentioned they also utilize the social media listed below:
Facebook
(https://www.facebook.com/McDonalds)
Google +
(https://www.google.com/+McDonalds)
Instagram
(https://www.instagram.com/mcdonalds/?hl=en)
Tumblr
(mcdonalds.tumblr.com)
Twitter
(https://twitter.com/McDonalds/)
Website
(www.mcdonalds.com/)
YouTube
(https://www.youtube.com/user/mcdonaldscorp)
Process
All McDonald's products, from the selection of ingredients through preparation and cooking,
comply with the most strict quality standards and food safety. Every procedure is monitored
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MKW 1120 Assignment 3Dulanga Tharusha Fernando

ID: 25768654

thoroughly to ensure that they serve tasty, top quality food. All McDonald's Restaurants
follow (HACCP) Hazard Analysis and Critical Control Point and (GMP) Good
Manufacturing Practice, monitors food preparation locations, processes, environments and
hygiene. These stringent manufacturing processes ensure that all food prepared is high quality
hygienic and safe. McDonalds service staff are well groomed and trained to take care on
customer needs, the speed and excellent service with high hygiene standards.
(Mcdonalds.com.hk, 2016)
Since Malaysia is a Muslim country special consideration should be given to make the
products under halal standards. (Roslani, A. 2013)
People
People are a key ingredient in customer service; training and recruiting the right staff is
required to create a competitive advantage. Customers make decisions and judgments based
on the people representing McDonalds. This is because people are the mostly the only part of
the service that customers can see and interact with.
Staff require appropriate interpersonal relationship skills and service knowledge in order to
deliver an efficient and quality service. Further accreditation that McDonalds trains their
staff to adhere to prescribed standards practices can be shown.
Psychical Evidence (refer appendix 3 & 5)
Physical evidence is about where the service is being delivered from. This element
distinguishes McDonalds from its competitors and can be used to charge a premium price for
a service and establish a positive experience.
Some aspects are the ambience, the layout and branding. For instance a McDonalds outlet
will usually have a huge signage at the entrance to the outlet8.
Word Count: 1504

8 Appendix 8
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MKW 1120 Assignment 3Dulanga Tharusha Fernando

ID: 25768654

Appendices
Appendix 1

Retrieved from:
http://springsbargains.com/2012/05/mcdonalds-free-breakfast-for-mom-on-mothers-day/
Appendix 2

Retrieved from:
http://www.mcdonaldsindia.net/home.aspx
Appendix 3

Retrieved from:
http://www.isaactan.net/2012/07/mccafe-kota-damansara-mcdonalds-1st-in.html

MKW 1120 Assignment 3Dulanga Tharusha Fernando

Appendix 4

Retrieved from:
http://www.mcdonaldsindia.net/happy-meal.aspx
Appendix 5

Retrieved from:
http://www.the-mines.com.my/en/tenants/dining/fast-food/mcdonald/
Appendix 6

Retrieved from:
https://www.google.com/maps/d/u/0/viewer?
mid=z3VMhfLSQGjA.kidpW6jjNQFI&hl=en_US

ID: 25768654

MKW 1120 Assignment 3Dulanga Tharusha Fernando

ID: 25768654

Appendix 7

Retrieved from
http://www.marketingmagazine.co.uk/article/1143170/mcdonalds-bring-ronald-back-fore
Appendix 8

Retrieved from:
http://www.alamy.com/stock-photo-malaysia-circa-2010-mcdonalds-american-fastfood-inmalaysia-provide-41285448.html
Appendix 9

Retrieved from:
https://www.youtube.com/watch?v=Axec4MgDUz0

MKW 1120 Assignment 3Dulanga Tharusha Fernando

ID: 25768654

Appendix 10

Retrieved from:
http://www.travellingmcds.com/2012/12/prosperity-burger-and-twister-fries.html
Appendix 11

Retrieved from:
http://www2.dupont.com/Packaging_Resins/en_US/whats_new/article05282009c.html
Appendix 12

Retrieved from:

MKW 1120 Assignment 3Dulanga Tharusha Fernando

ID: 25768654

http://www.malaysiafreebies.com/mcdelivery-free-coca-cola-glass-giveaway-promotion2014/
Appendix 13

Retrieved from:
https://opsmgt.edublogs.org/2013/05/19/mcdonalds-goes-on-a-mcdiet/

Appendix 14

Retrieved from:
https://www.google.com.qa/url?
sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiD1ePD4sf
KAhUJOhoKHaRMCWwQjRwIBw&url=http%3A%2F%2Fwww.mcspotlight.org
%2Fcompany
%2F&psig=AFQjCNFq8_COke0nFmyZlkvtsAgozUHngw&ust=1453907643930329

MKW 1120 Assignment 3Dulanga Tharusha Fernando

ID: 25768654

Appendix 15

Retrieved from
https://www.google.com.qa/url?
sa=i&rct=j&q=&esrc=s&source=images&cd=&cad=rja&uact=8&ved=0ahUKEwiFit7X4Mf
KAhVFChoKHRJBB-AQjRwIBw&url=http%3A%2F%2Fwww.boxerbranddesign.com
%2Fsnapshot-of-our-work
%2F&bvm=bv.112454388,d.d2s&psig=AFQjCNF8oERTJDvarrVP9SQuabiqVe9x0g&ust=1
453907117651819

MKW 1120 Assignment 3Dulanga Tharusha Fernando

ID: 25768654

References
Ahmad, E., Ahmad, E., & profile, V. (2015). Mcdonald in Malaysia: Background McDonalds
in Malaysia. Shakillajb1309bd4725.blogspot.qa. Retrieved 24 January 2016, from
http://shakillajb1309bd4725.blogspot.qa/2015/04/background-mcdonalds-inmalaysia.html
Keim, B. (2015). Boom! Earth's Population Could Hit 12 Billion by 2100 | WIRED. WIRED.
Retrieved 9 May 2015, from http://www.wired.com/2014/09/human-population-2100/
McDonalds. (2016).Retrieved 24 January 2016, from http://www.mcdonalds.co.uk/uk
home/whatmakesmcdonalds/questions/running-the-business/business-strategy/whatare-mcdonalds-short-term-and-long-term-goals-and-objectives.html
Mcdonalds.com.hk. (2016). How Do We Process Our Food? :: McDonald's Hong Kong.
Retrieved 27 January 2016, from http://www.mcdonalds.com.hk/en/food/learn-moreabout-mcdonalds-food/how-much-do-you-know-about-our-food/how-do-we-processour-food.html
Melnick, M. (2016). Fast Foods Biggest Customer: Not the Poor, But the Middle Class |
TIME.com. TIME.com. Retrieved 25 January 2016, from
http://healthland.time.com/2011/11/07/fast-foods-biggest-customers-not-the-poor-butthe-middle-class
NY Times. (2014). A Simple Equation: More Education = More Income. Retrieved 9 May
2015, from http://www.nytimes.com/2014/09/11/business/economy/a-simpleequation-more-education-more-income.html?_r=0
Roslani, A. (2013). McDonalds Malaysia Releases Statement on Pork Fat Found in Sauces.
VenusBuzz. Retrieved 27 January 2016, from
http://www.venusbuzz.com/archives/54255/mcdonalds-malaysia-releases-statementon-lm-10pork-fat-non-halal-ingredient-issue/
Wikipedia. (2016). McDonald's. Retrieved 24 January 2016, from https://en.wikipedia.org
/wiki/McDonald%27s