MARKETING PLAN FOR MCDONALD’S

A MARKETING PROPOSAL
Presented to
the Faculty of the College of Business Administration
ADAMSON UNIVERSITY
Manila

In Partial Fulfillment of the Requirements

for the Course
INTERNATIONAL MARKETING MANAGEMENT

ANNIE KAYE GONAYON

MHARAYNEL C. AFABLE
M.B.A. 1ST YEAR

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Chapter 1: Introduction

1.1 Company Overview

McDonald’s is one of the most well-known fast-foodservice chains

worldwide. Company started in year 1940 by Dick and Mac McDonald as a

barbeque restaurant in San Bernardino, California, USA. From extremely modest

beginning, they could able to scale their business by selling a high-quality

product, cheaply price and quickly. Companies expansion in terms of business

happened after Ray Kroc from Chicago joined two brothers in their business. He

quickly realized and had a vision to expand the business throughout USA and

beyond1. They spread across 120 countries and operate around 37, 241

restaurants worldwide employing 1.9 million people. They serve around 68

million customers per day. In 2018, McDonald’s generated revenues of more than

21 billion U.S. dollars and the largest proportion of which came from the USA 2.

The key to such a rapid and successful international expansion is the business

model pioneered by McDonald’s. McDonald’s has a unique franchise model that

empowers local entrepreneurs. Steve Easterbrook, McDonald’s President and

Chief Executive Officer set a long-term plan to increase the percent of

restaurants that are franchised. The company can achieve rapid expansion by

franchise model. Today over 90% of McDonald’s restaurants are running based

on franchise model.3
1 https://corporate.mcdonalds.com/corpmcd/about-us/history.html

2 https://www.statista.com/statistics/273057/value-of-the-most-valuable-fast-food-brands-
worldwide/

3 https://corporate.mcdonalds.com/corpmcd/about-us/our-business-model.html

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 Figure 1 1st First McDonald’s Restaurant4

1.2 McDonald’s Mission

McDonald's brand mission is to be our customers' favorite place and way

to eat and drink. Our worldwide operations are aligned around a global strategy

called the Plan to Win, which center on an exceptional customer experience –

People, Products, Place, Price and Promotion. We are committed to continuously

improving our operations and enhancing our customers' experience.

1.3 McDonald’s Values

McDonald’s place the customer experience at the core of all they do. The

customers are the reason for their existence. The company demonstrates its

4 https://corporate.mcdonalds.com/corpmcd/about-us/history.html

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appreciation by providing them with high quality food and superior service in a

clean, welcoming environment, at a great value. The goals of the company are

quality service, cleanliness and value (QSC&V) for every customer, each time.

McDonald’s are committed to their people. They provide opportunity,

nurture talent, develop leaders and reward achievement. We believe that a team

of well-trained individuals with diverse backgrounds and experiences, working

together in an environment that fosters respect and drives high levels of

engagement, is essential to our continued success.

McDonald’s believe in the Company’s System. McDonald’s business

model, depicted by our “three-legged stool” of owner or operators, suppliers, and

company employees, is our foundation, and balancing the interests of all three

groups is key.

McDonald’s operate their business ethically. Sound ethics is good

business. At McDonald’s, they hold themselves and conduct the business to high

standards of fairness, honesty, and integrity. They are individually accountable

and collectively responsible.5

McDonald’s give back to the communities. The company takes seriously

the responsibilities that come with being a leader. They help their customers build

better communities, support Ronald McDonald House Charities, and leverage

our size, scope and resources to help make the world a better place.

5 https://corporate.mcdonalds.com/corpmcd/about-us/history.html

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 McDonald’s grow their business profitably. McDonald’s is a publicly traded

company. As such, they work to provide sustained profitable growth for our

shareholders. This requires a continuous focus on our customers and the health

of our system.

McDonald’s strive continually to improve. They are a learning organization

that aims to anticipate and respond to changing customer, employee and system

needs through constant evolution and innovation. 6

1.4 Time Line

Dick and Mac McDonald open McDonald's Bar-B-Q

1940 restaurant on Fourteenth and E streets in San

Bernardino, California. It is a typical drive-in featuring

a large menu and car hop service.

The McDonald brothers shut down their restaurant

1948 for three months for alterations. In December it

reopens as a self-service drive-in restaurant. The

menu is reduced to nine items: hamburger,

cheeseburger, soft drinks, milk, coffee, potato chips

and a slice of pie. The staple of the menu is the 15-

cent hamburger.
1949 French Fries replace potato chips and debut Triple

Thick Milkshakes on the McDonald's menu.

Multimixers salesman Ray Kroc visits McDonald's in

San Bernardino intending to sell the brothers more

6 https://corporate.mcdonalds.com/corpmcd/about-us/history.html

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1954 Multimixers. The 52-year-old Kroc is fascinated by

the operation. He learns from the brothers that they

are looking for a nationwide franchising agent. He

has an epiphany and is determined that his future

would be in hamburgers.
1955 Kroc opens his first McDonald's in Des Plaines,

Illinois on April 15. The attention getting red and

white tiled building with the Golden Arches was

designed by architect Stanley Meston in 1953. First

day sales are $366.12.

1956 Fred Turner, future McDonald's Chairman is hired to

work as a counter man for the Des Plaines

McDonald's. He would soon become the head of

McDonald's Operations defining the quality, service

and cleanliness that continue to this day.

1961 Hamburger University opens in the basement of the

Elk Grove Village, Illinois McDonald’s restaurant.

Graduates receive Bachelor of Hamburger logy

degrees. McDonald’s System, Inc. purchases the

rights from the McDonald brothers for $2.7 million.

The Filet-O-Fish sandwich was the first item added to

1965 the national menu. Created by Lou Groen,

McDonald's Cincinnati franchisee to help build

volume in the predominately Roman Catholic

community in which his store was located.

1968 The Big Mac, developed by Owner/Operator Jim

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 Delligatti of Pittsburgh, is added to the national menu.

1973 The Quarter Pounder and the Quarter Pounder with

Cheese are added to the menu.

1974 The first Ronald McDonald House opens in

Philadelphia, Pennsylvania. In 1973, Fred Hill, a

football player with the Philadelphia Eagles, had the

need for such a facility at Children's Hospital in

Philadelphia, where his child was being treated for

leukemia. Hill’s dilemma led to the first Ronald

McDonald House.
1975 The Egg McMuffin, created by Owner/Operator Herb

Peterson of Santa Barbara, California is added to the

national menu.
1983 Chicken McNuggets are introduced into all domestic

U.S. restaurants.

1984 Ray Kroc, Founder and Senior Chairman of the Board

of McDonald's Corporation, dies on January 14.

1990 On January 31, the first McDonald’s restaurant in

Moscow opens. Located in Pushkin Square, more

than 30,000 customers were served on opening day.

1993 The world’s first McCafe´ opens in Melbourne, Victoria

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 Australia.
1995 McFlurry Desserts, invented by Ron McLellan, O/O

Canada are added to McDonald’s Canada menu.

2002 McDonald’s published its first ever Social

Responsibility Report on April 15, 2002.

2003 McDonald’s first global ad campaign, “I’m lovin’ it” is

launched in Munich, Germany on September 2.

2015 McDonald’s USA launched All Day Breakfast.
2017 Global McDelivery Day is celebrated on July 26 to

support the global launch of McDelivery with

UberEATS.7

7 https://corporate.mcdonalds.com/corpmcd/about-us/history.html

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1.5 Management

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 Steve Easterbrook
President and Chief
Executive Officer

Corporate Regional

Lucy Brady Silvia Lagnado

Senior Vice President, Executive Vice Chris Kempczinski
Corporate Strategy and President and President, McDonal
Business Development Global Chief d’s USA
Marketing Officer

Kevin Ozan
Francesca DeBiase Executive Vice
Chief Supply Chain and President and Chief
Sustainability Officer Financial Officer Joe Erlinger
President, Internation
al Operated Markets
Mason Smoot
Senior Vice
David Fairhurst President, Strategic
Executive Vice Alignment and Chief Ian Borden
President and Chief of Staff, Office of the President,
People Officer CEO International
Developmental
Licensed Markets
Daniel Henry
Robert Gibbs Executive Vice President,
Executive Vice Global CIO
President and Global
Chief Communications
Officer
Piotr Jucha
Senior Vice President,
Jerry Krulewitch Global Restaurant
Executive Vice President Development &
and General Counsel Restaurant Solutions
and Secretary Group

1.6 McDonald’s Organizational Structure Type and Features

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 McDonald’s Corporation has a divisional organizational structure. The

business organization is divided into components that are given responsibilities

based on operational requirements. Each division handles a specific operational

area or set of strategic objectives. One of the aims of this corporate structure is

to support autonomy and organizational flexibility in satisfying business needs in

different organizational aspects and markets. McDonald’s organizational

structure has the following characteristics, arranged according to significance in

affecting food service business operations.

Global hierarchy. McDonald’s Corporation has a global hierarchy to

cover all its operations worldwide. This feature of the organizational structure

emphasizes corporate control in the context of managerial control and direction.

McDonald’s CEO directs the activities of all business areas through this structural

characteristic. Mandates and directives are passed from the CEO down to middle

managers, and to the restaurant managers and personnel in company-owned

operations and among franchisees. This feature of McDonald’s corporate

structure is typical of most global business organizations. 8

Performance-based divisions. Performance-based divisions are the

most distinct feature of McDonald’s corporate structure. Prior to its reorganization

on July 1, 2015, McDonald’s had the following geographic divisions in its

organizational structure: (a) U.S., (b) Europe, (c) Asia/Pacific, (d) Middle East

and Africa, and (e) Other Countries & Corporate (OCC) including Canada, Latin

8 http://panmore.com/mcdonalds-organizational-structure-analysis (andrew thompson- update

feb. 2019)

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America and Corporate. After the reorganization, the company used performance

as basis for the new divisions in its organizational structure: (a) U.S., (b)

International Lead Markets, (c) High Growth Markets, and (d) Foundational

Markets and Corporate. The United States division provides the biggest regional

sales revenues to McDonald’s. The combinations of international lead markets

also represent a major chunk of the company’s revenues. The high-growth

markets account for a small minority of McDonald’s revenues, even though these

markets present considerable potential for business growth based on rapid

economic development.

Function-based groups. McDonald’s maintains function-based groups in

its corporate structure. Like in corporate operations, the company has a People

group for human resource management, and a Supply Chain and Sustainability

group for supply chain management and sustainability endeavors. Each group is

under the leadership of a corporate executive or senior manager. This

organizational structure characteristic enables McDonald’s Corporation to

address the basic functions in its business.9

Groups may be added or changed as the company grows and its target

markets change.

1.7 International Operations Significance

9 http://panmore.com/mcdonalds-organizational-structure-analysis (andrew thompson- update

feb. 2019)

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 McDonald’s international expansion started in 1967 when the company

opened in Canada and Puerto Rico. 10 The company has grown into a global giant

with increasing numbers of stores year-on-year over the years. The international

section of the McDonald’s Corporation has become increasingly more important

to the company’s overall success. As of 2018 McDonald’s generated revenue of

more than 21 billion U.S. dollars, where the largest proportion of this came from

the U.S. Even more critical than the amount of sales to the company is the

amount of profits of the overseas operations.

There are a few major reasons why McDonald’s not only chose to invest

overseas originally, but also continuously since, in the last ten years, almost 90%

of McDonalds’ expansion occurred in countries other than the United States.

During that time, the 1990’s saw an increase in international units from 3,600 in

1991 to more than 11,000 by 1998, largely in Japan, Canada, Germany, Great

Britain, Australia, and France. Additionally, the number of international countries

nearly doubled from 59 in 1991 to 114 in 1998 11.

1.8 McDonald’s Franchise Model

McDonald’s recognized as a premier franchising company. Number 1 on

the entrepreneur ranked, and has entrepreneur franchised of 500 for 2018.

The company has a unique franchise model that empowers local

entrepreneurs. Steve Easterbrook, McDonald’s President and Chief Executive Officer

set a long-term plan to increase the percent of restaurants that are franchised. He

describes the benefits of franchising as “By identifying strategic partners who share our

10 https://corporate.mcdonalds.com/corpmcd/about-us/history.html

11 www.global linksconsulting.com/Global%20Inc/pgs/recorp/mcd/mcds.html

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values and vision to accelerate our growth and scale across diverse markets, we will

drive innovation, becoming more relevant to our customers and the communities we

serve.”

McDonald’s restaurants can be found in 120 countries around the globe.

More than 90% of our restaurants worldwide are owned and operated by

independent Franchisees.12

1.9 McDonald’s and Strategy

 Pricing Strategy

McDonald’s has different pricing for different countries.13 Each country

undergoes a strict process to determine the price for a market. McDonald’s

Pricing Process: Selecting the price objective, determining demand, estimating

costs, analyzing competitors costs, prices and offers, selecting pricing method

and selecting the final price. These processes are the basic framework that

McDonald’s uses to set up localized pricing.

The price points and price ranges of the company’s food and beverage

products. The aim is to use prices to maximize profit margins and sales volume.

McDonald’s uses a combination of the following pricing strategies: Bundle pricing

strategy and Psychological pricing strategy.

In the bundle pricing strategy, McDonald’s offers meals and other product

bundles for prices that are discounted, compared to purchasing each item

12 https://corporate.mcdonalds.com/corpmcd/franchising/global-franchising.html
13 http://burnsetal.com/2015/06/pricing-strategies-macdonalds/

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separately. For example, customers can purchase a Happy Meal or an Extra

Value Meal to optimize cost and product value.

In psychological pricing, the company uses prices that appear significantly

more affordable, such as $__.99 instead of rounding it off to the nearest dollar.

This pricing strategy helps encourage consumers to purchase the company’s

products based on perceived affordability. Therefore, this element of McDonald’s

marketing mix highlights the importance of bundle pricing and psychological

pricing to encourage customers to buy more products. 14

Figure 2 McDonald’s Bundle

 Growth Strategy

In March of 2017, McDonald’s introduced the Velocity Growth Plan,

named as such because the company is moving fast and in a clearly defined

direction. The most meaningful way to grow the business and create value for all

our stakeholders is by serving more customers more often. That’s why

McDonald’s focused on giving customers what they really want, hot, delicious
14 http://panmore.com/mcdonalds-marketing-mix-4ps-analysis

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food served quickly – with an overall experience and value for their money that

meets their rising expectations.

Velocity makes the most of the company’s competitive advantages, from

unmatched global scale to iconic brand to the tremendous presence in local

markets around the world.15

McDonald’s have three key Pillars of growth Strategy:

- Retaining the customers, we have, fortifying and extending our areas

of strength with focuses on breakfast and family occasions.

- Regaining the customers, we had lost by improving the taste and

quality of our food, enhancing convenience and offering strong value.

- Converting casual customers to more committed customers with coffee

and snacks.

The Company has three accelerators intended to drive growth on top:

- Digital: Re-shaping our interactions with the customer – whether they

eat in, take out, drive thru or order delivery.

- Delivery: Bringing the McDonald’s experience to more customers – in

their homes, their dorm rooms, their workplaces and beyond.

- Experience of the Future in the U.S.: Elevating the customer

experience in the restaurants through technology and the restaurant

teams who bring it to life.16

15 https://corporate.mcdonalds.com/corpmcd/about-us/our-growth-strategy.html
16 https://corporate.mcdonalds.com/corpmcd/about-us/our-growth-strategy.html

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Chapter 2: The Product

2.1 The reason behind the Product

 Relationship of Obesity and Fast Food Industry

Obesity is one the major public health concern in this modern-day society

and in recent years, they are focusing on the environmental factors that are

potentially contributing to the higher rate of obesity.

According to World Health Organization (WHO), the fundamental cause of

obesity and overweight is an imbalance between calories consumed and

calories expended and globally there has been : 1) Increased in intake of energy-

dense foods that are high in fat, and ; 2) An increased in physical inactivity, for

works are now becoming sedentary in nature and even the changes in

transportation and increasing urbanization is also a contributory factor 17. Below

are the 2016 data from WHO, that shows the statics of obesity globally 18:

 More than 1.9 Billion adults ages 18 years old and above were

overweight, and 650 Million of these were obese.

 39% of adults aged 18 years and over (39% of men and 40% of

women) were overweight.

 13% of the world’s adult population (11% male and 15% women)

were obese.
 The worldwide prevalence of obesity nearly tripled between 1975

and 2016.

17 https://www.who.int/news-room/fact-sheets/detail/obesity-and-overweight
18 https://www.who.int/news-room/fact-sheets/detail/obesity-and-overweight

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 The presence of fast food restaurant has been associated with poorer diet

quality and higher energy intake for individual, which are the reasons why fast

food industry is being criticized for their contribution on the increasing rate of

obesity.

Figure 3 Fast Food Consumption per Sex and Age19

Figure 4 Obesity and Fast Food Relationship in USA per State 20

19 https://mchb.hrsa.gov/whusa13/health-status/health-behaviors/img/nVas.gif
20 https://infograph.venngage.com/p/8840/how-does-the-rise-of-fast-food-factor-into-the-growing-
obesity-rate

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 The figure above shows the relationship of Fast food restaurant in USA.

As per the data in the above figure the obesity rate is affected by the number of

fast food restaurant in that state, and the research also proves that if a person is

living within 10 miles of the fast food restaurant they are twice as likely to be

obese.21

Figure 5 Relationship of Fast Food Restaurant and Obesity in America 22

21 https://infograph.venngage.com/p/8840/how-does-the-rise-of-fast-food-factor-into-the-growing-
obesity-rate
22 http://kidskunst.info/59/07777-fast-food-obesity-statistics.htm

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  Increasing Health consciousness

Due to high obesity rate in the large part of the world more and more

individuals are turning their back in the fast food industries and this trend is

forcing the well-known brands to change their menus.

Below is a statistic that shows people are now shifting their lifestyle into a

healthier one, because of the continuous growth in the revenue of the health and

wellness food market.

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 Chart 1 Revenue of Health and wellness food market23

 McDonald’s going for a Healthier Menu

According to an article from New York Times, McDonald’s due to the

pressure it receives to provide a healthier menu, it plans to make changes in its

menu in the 20 largest market of McDonalds (U.S., Canada, Brazil, Argentina,

U.K., France, Germany, Austria, Spain, Netherlands, Italy, Poland, Sweden,

Switzerland, Russia, Hong Kong, China, Japan, Taiwan and Australia), where

85% of their overall sales is accounted for. 24 They will have an increase access

on fruit vegetables, low-fat dairy and water.

23 https://www.statista.com/statistics/502267/global-health-and-wellness-food-market-value/
24 https://www.nytimes.com/2013/09/27/business/mcdonalds-moves-toward-a-healthier-menu.html

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 In June of 2018, 100 percent of the meal combinations offered on Happy

Meal menu boards in the US is 600 calories or under, and together with this is

the offering of bottled water instead of Soda. 25

2.2 The Conclusion and the Product

 Conclusion

With all the reasons stated, from the relationship of Obesity with fast food

restaurants, to the changing of lifestyle, and with the planned movement of

McDonald’s to a healthier menu, the new product to be launched should be

aligned with all the trends and plans of the Company. The researchers have

concluded that the product must not only be healthy but also enough to still

provide the needed daily intake of calories especially for the working individual,

who are the niche market of the product.

Figure 6 will show the average dietary energy requirement per day, and

the range is from 1700 to as high as 2500 kcal per day 26.

 The Product

The chosen product of the researchers will be called “Super McCombo

Meal” with a tagline “The Meal that will get you through out the day, and a

Combination that will lead you to a healthy lifestyle”

The product name was come up, because the researchers do want to

convey the message that the new product will give them the energy like a Super

25 https://www.healthiergeneration.org/articles/mcdonalds-announces-global-commitment-to-support-
families-with-increased-focus-on-happy
26 https://ourworldindata.org/food-per-person

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Human, while having a healthy lifestyle in their hectic and busy schedules.

The product will include the Garden McSalad Shaker (contains a green

salad mix, a cheddar and jack cheese blend, chopped eggs, chopped tomatoes

and green onions), Steamed Chicken Breast (in apple cider sauce), a fruit bag

of apple and will be accompanied by a drink.

Figure 6 Ave. Dietary Energy Consumption per day on each country

 Reasons for choosing each product in the Super

McCombo Meal:

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 The Niche Market of this proposal are the working individuals, that is why

the product should contribute on the achievement of their daily Average Dietary

Energy Requirement in a healthy way and at the same time can be a grab and go

meal to match their busy and hectic lifestyle. Below are the products included in

the Super McCombo Meal to be introduce:

 Garden McSalad Shaker

This has been eliminated for a while in the menu of McDonald’s since

2008 due to low sales27. This item is only a victim of wrong timing of entry, but

now is the time to re-introduce the product, since the trend is already into a

healthy lifestyle and at the same time McDonald’s is into healthier Menu.

This product is perfect for working individuals since you can just grab and

go, but still be filled up in a healthy way.

Nutritional Information Per Portion

Energy (kJ) 77
Energy (kcal) 18
Fat (g) 0.5
Carbohydrate (g) 2.1
Of which sugars 1.9
Fiber (g) 1.1
Protein (g) 0.9
Salt (g) 0.05
Table 1 Nutritional Facts for Garden McSalad Shaker

27 https://mashable.com/2013/11/14/forgotten-mcdonalds-menu-items/

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 Figure 7 McSalad Shaker Packaging

 Steamed Breast Chicken in Apple Cider Sauce

The researchers choose the steamed way of cooking the chicken rather

than grilling, because the latter way leads to more carcinogens which causes

higher risk to cancer, steaming allows the chicken to be cook without using oil

and eliminates the need to add excess calories and fat.

The Breast part of the chicken will be use because it is very low in fat and

has more protein, it is a leaner food too, meaning the consumer won’t feel heavy

on the stomach upon consumption of the food. This part can provide more

energy that a productive person needs.

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 Figure 8 Image of Steamed
Chicken Breast

The apple cider is chosen to be sauce of the steamed chicken for its taste

gives also a flavor to salads, which is the partner of the chicken. Other reasons

are its health benefits, such as it aids in weight loss, can reduce blood pressure

and cholesterol.28

Nutritional Facts Per Portion

Energy (kcal) 110
Sodium (g) 65
Cholesterol (g) 58
Protein (g) 23
Potassium (mg) 255
Table 2 Nutritional Facts for Steamed Chicken Breast29

 Fruit bag of Apple

This is a good companion of the Steamed Chicken Breast in apple Cider

Sauce, which can be served mix together with the chicken or as a separate item.

Nutritional Facts Per Portion

Energy (kcal) 34
Energy (kJ) 145
Fat (g) 0.1

28 https://edition.cnn.com/2017/04/18/health/apple-cider-vinegar-uses/index.html
29 https://www.myfitnesspal.com/food/calories/178621882

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 Carbohydrates (g) 7.6
Of which sugar (g) 6.4
Fiber (g) 1.1
Protein (g) 0.1
Table 3 Nutritional Facts of Apple Fruit Bag

Figure 9 Bag of Fruit Apple

 The Drinks

There will be only three choices for the drinks of Super McCombo meal to

ensure that the healthy meal combination will be partnered by a healthy drink too.

The choices will be Bottled Water, Tea, or Organic Milk. These are chosen

because of they can help to promote a healthy life style.

Chapter 3 The Potential Global Markets and The Chosen Market

3.1 Introduction

Whenever a business will start to enter a market the primary question is

“What segment should be the target?”, this includes the types of customers and

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the product that will be introducing to satisfy and create value on the consumers.

This has been already addressed by McDonald’s, being 2 nd in the rank for the

Most Valuable Restaurant Brands in world 30 and operating in 120 countries with

37, 241 restaurants (34,108 were franchised and 3,133 were operated by the

company) as of the end of 2017 31, the company has already segmented their

market. As discussed in Chapter 1, the business is structured that markets with

similar characteristics and opportunities for growth will be combined, and this

segmentation also reflects how their management reviews and evaluate the

operating performance. The table below shows how McDonald’s segmented their

market.

MARKET SEGMENT DESCRIPTION

United States of America The largest segment of the company
International Lead Markets Established markets including

Australia, Canada, France, Germany,

the U.K. and the related markets

High Growth Markets Markets that the company believes to

have a relatively higher restaurant

expansion and franchising potential

including China, Italy, Korea, the

Netherlands, Poland, Russia, Spain,

Switzerland, and the related markets.

30https://www.qsrmagazine.com/content/10-most-valuable-restaurant-brands-world
31https://corporate.mcdonalds.com/content/dam/gwscorp/investor-relations-content/annual-
reports/McDonald%27s%202017%20Annual%20Report.pdf

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Foundational Markets & Corporate The remaining markets in the

McDonald’s system, most of which

operate under a largely franchised

model. Corporate Activities are also

reported within this segment.

Table 4 McDonald's Market Segmentation32

Revenues
9.00%

35.00%
24.00%

32.00%

Uni ted States of Ameri ca Internationa l Lea d Markets

Hi gh Growth Ma rkets Foundationa l Ma rkets and Corporate

Chart 2 2017 Revenue Contribution of each Segment33

3.2 The Three Potential Markets

With all the facts presented, the researchers choose the International

Lead Markets to be the potential target markets, in which a new product will be

launched. The reason behind is that this market segmentation contributes largely
32 https://corporate.mcdonalds.com/content/dam/gwscorp/investor-relations-content/annual-
reports/McDonald%27s%202017%20Annual%20Report.pdf
33 https://corporate.mcdonalds.com/content/dam/gwscorp/investor-relations-content/annual-
reports/McDonald%27s%202017%20Annual%20Report.pdf

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to the income of the company, and this segment is in the 2020 plan of

McDonald’s where the healthier menu will be launch, where in our proposed

product is very timely. The conductors of the study will focus on Germany,

France, and United Kingdom, because these three places are among the highest

income contributor on their market segment, and the bracket that they belong

with have maintained an increasing Guest Counts in the past years. Also, as

shown in figure 11, the three chosen countries are included in the places that

holds the most numbers of McDonald’s around the world, that contributes to the

high income that they produce.

Figure 10 Guest Counts FY 201734

34 https://corporate.mcdonalds.com/content/dam/gwscorp/investor-relations-content/annual-
reports/McDonald%27s%202017%20Annual%20Report.pdf

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 Figure 11 List of
Countries with Most
McDonald's35

3.2.1 McDonald’ France

 History

In 1972, McDonald’s opened its first restaurant in France (Audi). The

restaurant, which was in Creteil, a suburb of Paris did not experience success, as

the French fought the Americanization of their country, and thus the franchise

closed quickly. Therefore, McDonald’s recognizes its official entrance into France

as 1979, with a restaurant in Strasbourg (McDonald’s History). In 2009,

McDonald’s received a great deal of media attention when it announced plans to

open a restaurant in the food court at the Louvre to celebrate its 30 th anniversary

35 https://www.worldatlas.com/articles/countries-with-the-most-mcdonald-s-restaurant.html

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in France (Samuel). Employees at the world’s most visited fine arts museum are

outraged at this announcement, citing their disappointment because McDonald’s

is “hardly the height of gastronomy” (Samuel). Employees also fear that

McDonald’s will take attention away from the artwork that the Louvre is known

for, stating that “the first thing visitors will likely see when they arrive are big

golden arches.” (Samuel). In order to combat this opposition, museum officials

have stated that this McDonald’s is in line with the image and aesthetic of the

Louvre, and it also represents the American portion of the food court (Samuel).

Although the French have continually fought the Americanization of their

culture, they cannot deny the success of American business models, especially

in the case of fast food. When examining the battle of globalization that exists

between the United States and France, it becomes clear that the French are

unable to stop the American cultural invasion. Despite opposition to American

fast food, McDonald’s has seen great success in France. Today there are more

than 980 McDonald’s restaurants in France (McDonald’s History). Also, along

with Canada, Japan, Germany, Australia, and England, France helps to make up

McDonald’s “Big Six”, generating 80% of the company’s international sales

(McDonald’s History). In particular, 2008 was a year of rapid growth in France, as

the company opened 30 new franchises in order to serve 450 million new

customers, effectively creating the largest market for McDonald’s outside the

United States (McDonald’s History). It is unlikely that French citizens will ever be

truly satisfied with McDonald’s and the Americanization that it represents, yet

32 | P a g e
French customers continue to be frequent patrons, meaning that the company

will continue to have success.36

Figure 12 McDonald's France Location

 McDonald’s France Logo

In the continues effort of the company to have a better conservation

efforts, one of the step that they had take is changing their logo. The green logo

of McDonald’s is marketed to promote a more eco-friendly image in Europe. They

had change the traditional red background for a deep green. The company will

also make this change to other branches in Germany and in Great Britain.

36 https://uramericansinparis.wordpress.com/2010/12/14/mcdonalds-in-france/

33 | P a g e
 Figure 13 McDonald's
France Logo

 McDonald’s in French Market

Different articles in France will support the strong hold of McDonald’s in

France.

First Article – “According to an annual survey of consumer spending, traffic

and other restaurant data conducted by Gira Conseil, a food consultancy firm.

The latest survey, to be released in May, found that fast food chains now account

for 54 percent of all restaurant sales in France. While McDonald's has been in

France since the 1970s, many industry observers say it wasn't until the turn of

this century that outlets for both American and European fast food chains really

began proliferating. The fast food market is now so ripe that Subway says it has

opened some 400 stores in the past decade, and Burger King, which shut its 39

French restaurants 16 years ago, recently re-entered the market with great

success. And as we've previously reported, McDonald's has risen to the top of

the fast food pack in France, with more than 1,200 outlets, precisely by fine-

tuning its menu to fit the local culture (think grass-fed beef burgers). In 2011, the

34 | P a g e
company even opened a salad-only cafe, called McSalad, which managed to win

a begrudging bit of praise from food writer Labro.” 37

Second Article – “While France has the second-highest number of

McDonald’s restaurants in Europe (Germany is still No. 1), it’s seen a 4 percent

growth just since 2016. And its way out ahead of any other fast-food chain: The

Bertrand Group, which owns Burger King, Au Bureau, Quick and Hippopotamus,

earned less than $2 billion in 2017. McDonald’s is also a titan of job production in

an otherwise sluggish French economy. With a growth rate that is 5 to 10 percent

greater than the French economy, McDo is one of the largest sources of private-

sector jobs in the country.”38

Through the articles that have been stated above, McDonald’s was able to

show that for a long time, they are number one in the fast food industry of

France. This also shows how the McDonald’s had change the game, from the

classic French Dining to the American Fast Food Culture.

The chart below will support the articles that have been stated earlier

regarding on the standing of McDonald’s in the French Market.

37 https://www.npr.org/sections/thesalt/2013/04/29/179879664/mon-dieu-fast-food-now-rules-in-
france?sc=tw&cc=share
38 https://www.ozy.com/acumen/in-france-mcdonalds-not-the-bistro-is-king/89709

35 | P a g e
 Chart 3 McDonald's Standing in French Market

 Porter’s Five Forces Analysis

INDUSTRY ANALYSIS
Force Influence Factors
Threats of New Moderate - Due to the amount of capitalization need

Entrants to enter the industry, is a barrier for new

player to enter the market.

Bargaining Weak - There are a lot of suppliers that can

36 | P a g e
Power of provide the needs of the players, thus this

Supplier limit their influences.

Bargaining Strong - Because of the easy substitution among

Power of competitors, the players continue to

Buyers develop quality products with competitive

prices.
Threats of Strong - Since France is also known for its fine

Substitute dining restaurants, and this food service is

Products being patronized by the locals for a long

period of time, there is a high threat for

substitution
Intensity of Strong - Fast food industry in France is growing

Rivalry nowadays, thus the competition among

the industry player is tough, and this may

result to a slow growth in income

Table 5 Porter's Analysis - France Fast Food Industry

 Consumer Analysis – Population

Age Male Female Total

Bracket
0 - 14 6,360,218 6,076,598 12,436,816
15 - 24 4,045,901 3,864,395 7,910,296
25 - 54 12,773,900 12,578,256 25,352,156
55 - 64 4,020,507 4,315,407 8,335,914
65 – Above 5,648,888 7,422,091 13,070,979

37 | P a g e
 The total population of France as of July 2017 is 67,106,161 39, and the

below table shows the complete Population for the country.

Table 6 Demographics of France

Populati on

19.48% 18.53%

12.42% 11.79%

37.78%

0 -14 15 - 24 25 - 54 55 - 64 65 - Above

39 https://www.indexmundi.com/france/demographics_profile.html

38 | P a g e
 Chart 4 Percentage of Population in France

Male and Female Population

14,000,000

12,000,000

10,000,000

8,000,000

6,000,000

4,000,000

2,000,000 Fema l e
Mal e
0
0 - 14 15 - 24 25 - 54 55 -64 65 - Above
Mal e Femal e

Chart 5 Male and Female Percentage Distribution

 Consumer Analysis – Standards of Living

The researchers consider different aspects, such as Income and Wealth,

Housing, Health status, Civic Engagement, Work Life Balance and Personal

Security, that will help to have a better understanding of the target market.

 Income

In France, the average household net-adjusted disposable income per

capita is USD 31,137 per year. This is higher than the average in OECD

39 | P a g e
countries, which means that the people in this country has a higher standard of

living, and a large part of their income can be allocated for eating at fast foods,
40
and even fine dining restaurants.

 Jobs

About 65% of France population ageing from 15 to 60 years old has a paid

job. This might be lower than the average rate in the OECD Countries, but those

that have been identified as unemployed are actively looking for work.

The wages and monetary benefits averages for USD 42, 992 per year, but
41
there is an average of 0.1% increase per year since 2005.

 Education

Education level in one country can help their citizens to land on a job with

income that will suffice for their needs. France has 16.5 years of education that

ranges from 5 to 39 years old, which is less than the average education year in

OECD countries. Also, 78% of the adults ageing from 25 to 64 have completed

secondary education which is higher than the average of OECD countries,

comes along with this, is their high literacy.42

 Health

40 http://www.oecdbetterlifeindex.org/countries/france/
41 http://www.oecdbetterlifeindex.org/countries/france/
42 http://www.oecdbetterlifeindex.org/countries/france/

40 | P a g e
 Because of the living conditions, public health interventions, and progress

in medical care, French enjoys 82 years life expectancy and it is higher than the

other OECD countries. 43

 Obesity

The rate of obesity among adults in France is 21.6% as of 2016. 44

 Life Satisfaction

This is measured on how the people evaluated their life, and French

people rate it 6.4 which is close to the average life satisfaction rating in OECD

countries.45

 Work Life Balance

This aspect is about the amount of time a person spends at work. In

France, almost 8% of the employees work for very long hours, but they are

devoting 16.4 hours to their personal care and leisure which is more than the

average hours spent by other Nationals in the OECD countries. 46

 Eating Habits of French

French people eat three times a day with no snacks in between. Breakfast

is the lightest meal, which consist of bread and coffee, followed by a large leisure
43 http://www.oecdbetterlifeindex.org/countries/france/
44 https://www.indexmundi.com/france/demographics_profile.html
45 http://www.oecdbetterlifeindex.org/countries/france/
46 http://www.oecdbetterlifeindex.org/countries/france/

41 | P a g e
lunch and four-course dinner. They are taught at the very young age to

appreciate fine foods, that is why they have less of fast food culture. 47

 Target Market Strategy

The researchers opted to use the Focus or Concentrated Targeting Market

Strategy to introduce the new product. This strategy will cover the age bracket

which have their own source of income.

o Phase I – Introduce the product on social media, since the

age bracket is dominated by the Millennials, who heavily use

the said flatform.

o Phase II – Use the bob tube method, for reaching more of

the target market.

o Phase III – Sponsor activities for the target market, on which

we can introduce the product, such as fun runs or

conferences.

3.2.2 McDonald’s United Kingdom

 Timeline of McDonald’s United Kingdom

47 https://traveltips.usatoday.com/food-eating-habits-france-12279.html

42 | P a g e
 In Great Britain McDonald’s is the largest fast food restaurant in

terms of the sales generated, and this all started way back in 1974, when

the first outlet was established in Woolwich, a suburb of London.

Time in Line Event

1974 - First Restaurant opened in

Woolwich
- Head Office was sited in

Hampstead, North London

1975 - First Advertisement was

launched in U.K. Cinema

1976 - First T.V. advertisement was

broadcast
1978 - Head Office was relocated to

Edgware Road, London

1984 - McDonald’s become the first

QSR restaurant in UK to

introduce nutritional information

for the benefits of its

consumers
- Chicken McNuggets was first

43 | P a g e
 introduced in the menu
1986 - First franchisee-operated

restaurant opened in Hayes,

Middlesex
- Happy Meals were introduced

to UK.
1989 - Manchester regional training

center opened.
- McChicken sandwich was

introduced in Menu
1994 - McDonald’s celebrated 20

years of serving in the U.K.

1995 - McDonald’s became the official

restaurant of the FA Premier

League
1996 - Vegetable Deluxe was

introduced nationwide
1998 - McDonald’s was recognized as

an Investor in People
1999 - McDonald’s celebrated its silver

year in UK
2000 - McDonald’s UK launched their

website:

www.mcdonalds.uk.com
- McFlurry ice cream dessert

was launched
2003 - Fruit Bag was Introduced in the

44 | P a g e
 menu
2004 - Additional menu on breakfast

was launched: Oatso Simple

Porridge and bagels

- Launched of wi-fi access in

around 500 restaurants all over

UK
2007 - McDonald’s started to use

organic skimmed milk.

- McDonald’s UK started serving

Rainforest Alliance Coffee and

Tea
2011 - McDonald’s became more

open and transparent on the

nutritional information of their

product, they even print it on

packaging and menu boards

2014 - McDonald’s celebrated their

40th year in UK
- They launched free fruit

Fridays, to encourage millions

of children to eat and enjoy

2015 - McDonald’s introduced the

New Signature Collection, a

gourmet burger range

- Invited Youtubers for the

45 | P a g e
 behind the scenes of supply

chain to show the quality of

their products
2017 - McDonald’s celebrated 11

consecutive years of growth in

UK
Table 7 Timeline of McDonald's UK48

Figure 14 Kitchen in Woolwich branch, 1974

 McDonald’s in UK Market

According to an article, McDonald’s UK have a growth of 5.7%, that

contributed to its great success49, and this can be attributed to the result of a

survey conducted in the year 2015, in which the objective was to know the
48 https://www.mcdonalds.com/gb/en-gb/newsroom/history.html
49 https://realmoney.thestreet.com/articles/10/25/2017/mcdonalds-uses-u.k.-market-springboard-
international-sales-growth

46 | P a g e
leading fast food restaurant in UK and turns out that 57% of the respondent said,

McDonald’s was their go to fast food restaurant.

Chart 6 McDonald's Market Share in UK by 201550

 Porter’s Five Forces Analysis

INDUSTRY ANALYSIS
Force Influenc Factors

50 https://www.statista.com/statistics/527217/leading-fast-food-restaurants-in-the-united-kingdom-uk/

47 | P a g e
Threats of New Entrants Strong - The cost of setting up is a new chain

is relatively low and this provides an

ease in entering and even expanding

the market

Bargaining Power of Strong - In UK there is a concentrated food

Supplier supplier had decreased their

dependence on fast food companies,

and due to this event, the need of low-

cost high-quality food supply has

increased, thus the influence of

supplier power has increased

Bargaining Power of Buyers Moderate - Since not everyone is enjoying fast

food restaurant which results to

weakening of buyer power. Due to

brand building major companies had

already built consumer loyalty and

weakened the buyer power.

Threats of Substitute Moderate - Fast food offers cheaper prices than

Products the other form of food service such as

ready-to-eat meals.
Intensity of Rivalry Strong - The dominant firms control a larger

share and they hold this share due to

high marketing efforts.

Table 8 Porter's Five Forces Analysis for UK

 Consumer’s Analysis – Population

48 | P a g e
 As of July 2017, United Kingdom has a total population of 64,769,452 51,

and the table below shows the complete data on the demographics of the said

country.

Age Bracket Male Female Total

0 - 14 5,819,363 5,532,123 11,351,486
15 - 24 3,938,643 3,770,511 7,709,154
25 - 54 13,387,903 12,873,090 26,260,993
55 - 64 3,843,268 3,918,244 7,761,512

65 – Above 5,246,475 6,439,832 11,686,307

Table 9 Tabular data of UK's Population

51 https://www.indexmundi.com/united_kingdom/demographics_profile.html

49 | P a g e
 Populati on

18.04% 17.53%

11.98% 11.90%

40.55%

0 - 14 15 - 24 25 - 54 55 - 64 65 - Above

Chart 7 Percentage of Population in UK

Male and Female Population

14,000,000

12,000,000

10,000,000

8,000,000

6,000,000

4,000,000

2,000,000 Fema l e
Mal e
0
0 - 14 15 - 24 25 - 54 55 - 64 65 - Above
Mal e Femal e

Chart 8 Male and Female Population Distribution

 Consumer Analysis – Standards of Living

50 | P a g e
 According to the Better life index, United Kingdom is performing well as

per the measurement of well-being in comparison to other countries. Below are

the different criteria that the researchers have taken into consideration.

 Income

UK’s household net adjusted disposable income is the total earnings of a

household after taxes and transfer, which simply means, it is the amount of

money that is available for a household spending on goods and services. The

average household net adjusted disposable income per capita is USD 208,408

per year. 52

Meanwhile, Household financial wealth is the total value of a household’s

financial worth (e.g. money held in bank accounts). The average amount of

Household net financial wealth per capita is USD 83,405, which is lower than the

average for OECD Countries. 53

 Jobs

In United Kingdom, 74% of the working age population has a paid job. The

wages and other monetary benefits that come with the employment, average in

the United Kingdom at USD 42,835 per year and per person. The amount stated

is lower than the average in OECD countries which is USD 44,290. 54

 Education

52 http://www.oecdbetterlifeindex.org/countries/united-kingdom/
53 http://www.oecdbetterlifeindex.org/countries/united-kingdom/
54 http://www.oecdbetterlifeindex.org/countries/united-kingdom/

51 | P a g e
 A person who have a good education increase the likelihood of finding a

job and earning enough money. In United Kingdom, ages 5 to 39 years old has
55
an average of 16.8 years of education.

The rate of high school graduate is increasingly becoming important,

because it can indicate if the country is preparing its students to meet the

minimum requirements in the job market. United Kingdom has an average of

81% of its population from 25 to 64 years old who had completed their Upper

Secondary Education, which is higher than the average for OECD Countries.

 Health

The United Kingdom has a Life Expectancy of 81 years, which is one year

higher than the average in OECD Countries. This higher life expectancy can be

attributed to the higher health care spending per person, living standards,

lifestyles education and environmental factors. 56

 Obesity

The obesity rate of Adults in United Kingdom is 27.8% as of 2016. 57

 Life Satisfaction

55 http://www.oecdbetterlifeindex.org/countries/united-kingdom/
56 http://www.oecdbetterlifeindex.org/countries/united-kingdom/
57 https://www.indexmundi.com/united_kingdom/demographics_profile.html

52 | P a g e
 This life satisfaction or the presence of positive experiences and feelings

and even the absences of negative experiences and feelings, is also necessary

to know, in order to have a better understanding of quality of life across the

country. British has an average of 6.7 life satisfaction that is higher than the

average for OECD Countries.58

 Work-Life Balance

The ability to balance work, family commitments and personal life is

important for the well being of every individual. Almost 13% of the employees in

United Kingdom work for very long hours, which means they are spending 50

hours or more a week in their work place.59

Despite of the long hours British is spending on their work, they still

manage to have 14.9 hours for personal care and leisure, and this is close to the

average of 15 hours for the OECD Countries. 60

 Eating Habits of English People

Unlike French people, British eat six meals a day which are Breakfast,

Eleven, Lunch, Tea, Dinner, and Supper. The Breakfast is usually heavy and with

a lot of variety. Eleven, refers to the time of the day, where morning snack is

consumed, and it is of a piece of cake or biscuit partnered with a cup of Tea.

Lunch is usually a take away food. Dinner is the main meal of the day, which
61
consist of a meat and any two vegetable.

58 http://www.oecdbetterlifeindex.org/countries/united-kingdom/
59 http://www.oecdbetterlifeindex.org/countries/united-kingdom/
60 http://www.oecdbetterlifeindex.org/countries/united-kingdom/
61 https://www.scribd.com/document/83327061/Eating-Habits-in-Great-Britain

53 | P a g e
  Target Market Strategy

Like in France, the researchers opted to use the Focus or Concentrated

Targeting Market Strategy to introduce the new product. This strategy will cover

the age bracket which have their own source of income or

o Phase I – Introduce the product on social media, since the

age bracket is dominated by the Millennials, who heavily use

the said flatform.

o Phase II – Use the bob tube method, for reaching more of

the target market.

o Phase III – Sponsor activities for the target market, on which

we can introduce the product, such as fun runs or

conferences.

3.2.3 McDonald’s Germany

 Timeline of McDonald’s Germany

Time in Line Event

1971 McDonald’s opened it first store in

Munich, Germany

54 | P a g e
 1989 Sales reached 1 billion for the first

time
1999 1000th restaurant was opened
2003 Introduction of new marketing era with

“Ich liebe es” or “I’m lovin’ it” in

English as their tag line

2004 New product line was introduced with

high quality, fresh products such as

salads, and fruit bags.

2008 500 McCafé was launched due to the

trend in the market.

 McDonald’s in Germany Market

A study was conducted in Germany from year 2014 to 2018 to show who

are the most popular fast food restaurant in the country. The graph shows that

McDonald’s is the lead player in the German fast food market and has a large

gap between its competitors. Also, according to the study, the population ages

from 14 years old and above is visiting the place at least once a month. Through

this we can conclude that McDonald’s have a strong hold to the German Market.

Chart 9 Most Popular Fast Food Restaurant in Germany 2014 - 201862

62 https://www.statista.com/statistics/560813/most-popular-fast-food-restaurants-germany/

55 | P a g e
  Porter’s Five Forces Analysis

INDUSTRY ANALYSIS
Force Influence Factors
Threats of New Moderate - Entering the market in Germany is

Entrants not requiring a large amount of

capital but consumers already

established their loyalty, which can

result to a waste of effort for the new

entrants.
- The legal requirements for a new

56 | P a g e
 restaurant are also threated as a

barrier for it is a lengthy process.

Bargaining Power Moderate - In Germany, suppliers are less

of Supplier dependent for they are dealing with

different customers.
Bargaining Power Strong - There is a trend in Germany now,

of Buyers where the consumers are having an

increased awareness on their

health, with this event players are

taking steps to meet the consumers

demand.
Threats of Moderate - Fast food offers cheaper prices than

Substitute Products the other form of food service such

as ready-to-eat meals. Also, they

offer convenience.
Intensity of Rivalry Strong - The players are more of

differentiation through brand

awareness, value pricing and food

quality.

57 | P a g e
 Table 10 Porter's Five Forces – Germany

 Consumer Analysis – Population

As of July 2017, Germany has a total population of 80, 549,017 63, and the

below table will give the detailed composition of the said number.

Age Bracket Male Female Total

0 - 14 5,304,341 5,028,776 10,333,117
15 - 24 4,145,486 3,986,302 8,131,788
25 - 54 16,467,975 16,133,964 32,601,939
55 - 64 5,834,179 5,913,322 11,747,501
65 – Above 7,822,221 9,957,451 17,779,672

Table 11 Population of Germany

63 https://www.indexmundi.com/germany/demographics_profile.html

58 | P a g e
 Populati on

12.82%
22.06%
10.09%

14.58%

40.45%

0 - 14 15 - 24 25 - 54 55 - 64 65 - Above

Chart 10 Population Percentage of Germany

Chart 11 Male and Female Population

Chart Title

18,000,000
16,000,000
14,000,000
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
Fema l e
2,000,000
Mal e
0
0 - 14 15 - 24 25 - 54 55 - 64 65 - Above
Mal e Femal e

59 | P a g e
  Consumer Analysis – Standards of Living

As per the result of Better Life Index, Germans are more satisfied in their

lives than the average of OECD countries. This is supported by the below

criterion.

 Income

Household net adjusted disposable income per capita of Germans is USD

33,652 a year. This is higher than the average of OECD countries.

The total financial wealth of a household in Germany is USD 57,358,

which lower than the average of OECD Countries.64

 Jobs

About 75% of the working age in Germany which is 15 to 64 years old has

a paid job. This percentage is higher compared to the other OECD countries.

The population with paid job is enjoying wages and other monetary benefits on

the average of USD 46, 389 per year and this is more than the average on what

other countries in OECD is receiving.65

 Education

In Germany, their population from 5 to 39 years old will be expected to go

through 18.3 years of education, which is more than average of 17 years in the

OECD countries. Also, the age group of 25 to 64 years old is comprise of 86%
66
who have completed their secondary education.
64 http://www.oecdbetterlifeindex.org/countries/germany/
65 http://www.oecdbetterlifeindex.org/countries/germany/
66 http://www.oecdbetterlifeindex.org/countries/germany/

60 | P a g e
  Health

The life expectancy of Germans at birth is 81 years old, which is a year

higher on the average of other OECD Countries, and 65% of their population is

reported to be in good health.67

 Obesity

The obesity rate of German adult as of 2016 is 22.3%.

 Life Satisfaction

This a measure of how people evaluate their life, and Germans, do have a

grade of 7 which is higher than the average of OECD countries. 68

 Work-Life Balance

Five (5) percent of the German work force population is working for more

than 50 hours per week, and they are also enjoying 15.6 hours for personal care

and leisure, which is higher than the average of OECD countries. 69

 Eating Habits of German

Like the French people, German do have 3 main meals per day, which are

the Breakfast, Lunch and Dinner. The breakfast generally bread, cold cuts,

cheese, eggs, honey, coffee or tea. Their main meal is the Lunch which

comprises a meat and vegetables. Dinner is the smallest meal of the day, but

67 http://www.oecdbetterlifeindex.org/countries/germany/
68 http://www.oecdbetterlifeindex.org/countries/germany/
69 http://www.oecdbetterlifeindex.org/countries/germany/

61 | P a g e
due to change in eating habits, it is also becoming an important meal, this consist

of meat, sausage, cheese, and vegetable.

 Target Market Strategy

Like in first two countries, the researchers opted to use the Focus or

Concentrated Targeting Market Strategy to introduce the new product. This

strategy will cover the age bracket which have their own source of income.

o Phase I – Introduce the product on social media, since the

age bracket is dominated by the Millennials, who heavily use

the said flatform.

o Phase II – Use the bob tube method, for reaching more of

the target market.

o Phase III – Sponsor activities for the target market, on which

we can introduce the product, such as fun runs or

conferences.

3.3. The Chosen Market

After gathering all the necessary data, a comparison had been done, for

the researcher to know the best market to introduce the product.

 Bargaining Power of Buyers

France UK Germany
Bargaining Strong Moderate Strong

Power of Buyer
Through this we can see that the France and German consumers greatly

affect the movement of the company. Both countries are now having a shift in

62 | P a g e
their lifestyle, the French are going back to fine dining, while Germans are having

healthier eating habits.

 McDonald’s Market Standing in the Country

France UK Germany
st st st
Market Standing 1 1 1

This criterion does not give much insight on as to what country is to be

chosen, since in the three countries McDonald’s is the top market player.

 Population percentage of the Niche Market

France UK Germany
Population 62% 64% 65%

percentage

Among the three markets Germany has the largest percentage if the

chosen Niche market of the researchers. The niche market is consisted by the

working age group, which is according to the study of Better Life Index, it is from

15 – 60 years old.

 The employment rate of the working age group

France UK Germany
Employment 65% 74% 75%

Rate

63 | P a g e
 The country with highest employment rate among its working age group is

the Germany, which will give a higher number of customers in that country.

 Wages and other Monetary Benefits per year

France UK Germany
Wages and other USD 42, 992 per USD 42,835 per USD 46, 389 per

monetary year year year

benefits

This shows that among the three countries Germany has the highest

income given to its work force, which gives them the ability to avail meals in fast

food restaurants.

 Obesity Rate

France UK Germany
Obesity Rate 21.6% 27.8% 22.3%

United Kingdom is the country with highest obesity rate among the three

global markets. This states impliedly that they have the highest consumption of

Fast Food, because obesity is in relationship with fast food intake.

 Important Meal of the Day

France UK Germany
Meal of the Day Breakfast Diner Lunch

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 France and Germany are the two countries that are product might be

suitable because the proposed meal is intended to get the consumers throughout

the day.

 The Conclusion

With all the facts that have been laid down for the three countries, and

after comparing the chosen global markets, Germany standout among the other

choices. The reason is that, Germany is the most sensitive country in terms of

the demand of its consumers, that is why they belong to the plan of McDonalds

for 2020 Healthier Menu. At the same time, they have the largest percentage of

the Target Market of our product. The working population of Germany has also

the highest amount of paid wage, which allows them to have a higher purchasing

power. Lastly, the “Super McCombo Meal” is really intended to give the

necessary nutrition for the day in a healthy and convenient way, which the

Germans are up to, since they are into healthy living, but their way of life is so

fast-pacing that their meal must compliment their lifestyle.

CHAPTER 4 : MARKETING THE PRODUCT

4.1 Marketing Research

McDonald’s first restaurant in Germany opened on December 4, 1971. It

has been rapid period of growth and success in reaching the one billion sales for

the first time in 1989. The company opened its 1000 branch in 1999 in Germany

and continued with further development: like the induction of new era of

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marketing slogan in 2003 “I’m Lovin’ It” (Ichliebees-in germany) also creates new

line of high quality, fresh products like Salads and fruit bags in 2004. 70 They also

considered the importance of nutritional value foods, since people in Germany is

more on Healthy living. The company further proved its ability in listening to

market trends, that’s why McDonald’s launched almost 500 McCafe across

Germany in 2008. This result of intensive market research which showed

McDonald’s to target specific consumers by offering high quality coffee that is

served by the well-trained café staff in a café style environment.

Figure 15 McDonald’s Customer compared to the Population in Germany, 2018 by age

4.2 Product Differences

70 http://www.foodchainmagazine.com/2015/11/30/mcdonalds-germany/

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 Standard menu items at German McDonald's include the Hamburger

Royal TS, Caesar salads,71 one Veggie burger called Veggie Clubhouse and

Caesar, honey mustard, and Ranch chicken wraps, The McRib sandwich, a

seasonal item in most countries, is a permanent menu item in Germany. 72

The German McDonald's Breakfast does provide Brötchen, a crispy bread

roll; McCroissant, a Croissant stuffed with Ham and Cheese; Scrambled

Eggs with Bacon and "Classic Breakfast", a choice of bread rolls with sweet

spreads resembling a very common German breakfast choice. 73

Since in Germany they value Nutritional foods and Health Concern we will

launch a bundle of food consist of veggie salad, a piece of apple and a steamed

breast chicken.

4.3 Branding Strategy

 Target Market
Mcdonald’s uses a mix of demographic, geographic and psychographic

variables to segment the market, at the same time considering changing taste,

preferences and market trends.74

Our target markets are those people who are ages 25-60 since as the

survey showed that most people who patronize McDonald’s in Germany are the

the working people. They are income generator they afford the product and the

product that would be launch is suited for them.

71 "McDonald's – AlleProdukte" (in German). mcdonalds.de. Retrieved 12 August 2016

72 Feder, Barnaby J. (December 9, 1992). "A McDonald's Burger of the Garden Variety". The New York
Times. Archived from the original on November 16, 2011.
73 "Breakfast product information at mcdonalds.de". Retrieved 17 February 2013.
74 https://www.marketing91.com/marketing-strategy-mcdonalds/

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  Brand Name

The branding of McDonald’s has evolved since the early conception. This

has tried to conform to both popular culture and changing views of healthy living

or eating.

The McDonald’s Brand itself has evolved considerably to cope with the

face of changing society. What was the once seen as a predominantly child

oriented “fun” restaurant has now undergone a shift into a slightly more health

conscious territory. Also, the McDonald’s restaurant as a concept is represented

in a more adult or responsible light.75

 Brand Equity

In terms of trust, 63 % McDonald’s got for quality service cleanliness and

value. More than 48% feel comfortable at McDonald’s. 76 The kids feel excited and

happy when at McDonald’s and the restaurant is considered as a fun place to go

with friends.

Strong focus on building of brand equity through perceived quality, brand

awareness, brand association and brand loyalty.

Creating Brand Equity by adding more products to product line and

expanding beyond or brand extension.

 Positioning

75 https://www.marketing91.com/marketing-strategy-mcdonalds/
76 https://www.marketing91.com/marketing-strategy-mcdonalds/

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 McDonald’s overall positioning can be summarized as: the leading fast

food chain, with lots of convenient locations, well-priced products with a tasty

array of menu items, delivered quickly and efficiently.

McDonald’s company creates positioning for the product. It must be

unique in selling promotion to persuade the customer. McDonald’s has a range of

value propositions that attract and retain customers. Like for example Happy

Meals for young children, Convenient of drive-thru service, Decent quality, and

well-priced food, Wide choice of menu items, Quick service, and Comfortable

surroundings and so on. Happy meal if your targets are the kids, for teenagers

and young adults what attracts them are the menu and price and to attract health

conscious consumers offer premium low-calorie salads.

4.4 Pricing Strategy

McDonald’s has different pricing for different countries. It undergoes a

strict process to determine the price for a market. McDonald’s Pricing Process:

Selecting the price objective, determining demand, Estimating costs, Analyzing

competitors costs, prices and offers, selecting pricing method and selecting the

final price. McDonald’s have two pricing strategy the bundle pricing strategy and

psychological pricing strategy.

We will use both strategies in the product that we will launch. We will offer

a bundle of food and a lesser price or to save amount of money unlike if they buy

the product per piece.

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 4.5 Promotion
 Distribution Strategy
McDonald’s have several franchised set up to cater to the growing needs

of the different segments and that’s what helps them to survive in the competitive

environment. McDonald’s takeaways are the offering counter service or drive-thru

service or in some countries it is known as McDrive.

The company owned quality centres at a strategic location and integrated

supply chain with the help of 3 rd party logistics is helping the company in making

the products available to the consumers across the service delivery channel.

Also, to make this kind of store set-ups work properly, TAT (turnaround-Time) and

backend integration are necessary which is practiced by McDonald’s. 77

 Distribution Channel

The most prominent place McDonald’s products can be found at its

restaurants. Other places where the company uses to sell its products are:

 The McDonald’s restaurant itself

 counter-service

 sit-down

 drive-thru

 Kiosks

 Postmates website and app

77 http://www.foodchainmagazine.com/2015/11/30/mcdonalds-germany/

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  McDonald’s mobile app7879

Hence, the company is using the selective distribution channel maintaining a

push-and-pull marketing communication.

4.6 Ways to promote the product launch

We will promote the product through Social media by posting an

advertisement to different kind of social media. Social media allows businesses

to be in direct contact with target customer. Social media marketing is

inexpensive and gives brands instant reach to billions of active users. For these

reasons, social media has proven to be one of the most effective channels to

promote products online. Air an advertisement through televisions using a well-

known people as endorser. Distribute flyers to the valued customer.

 Waterfall Strategy

The “Super McCombo Meal” will be released first to Germany, as per the

research done by the researchers, and we will duplicate it and launched to other

markets. The next target market will be in France then United Kingdom. Since

they belong to the same Segmentation and they are identified in the top 20
78 https://mpk732t12016clusterb.wordpress.com/2016/05/14/distribution-and-logistics/

79 Meyer 2015).(distribution channel

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Markets that will have healthier menu in 2020. Finally, as we go global, further

research regarding the other target countries will be conducted. Things that will

be in consideration is that their culture, acceptance for the product, positioning of

the product, strategies to use, and localizing the product.

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