Table of Content

1.0 Introduction.. Pg. 2

2.0 Overview of McDonalds Corporation Pg. 3

3.0 Marketing Strategy.. Pg. 3

3.1 Marketing Mix Pg. 4 6

3.2 Michael Porters Five Forces Theory .... Pg. 7 10

4.0 Conclusion.. Pg. 10

1.0 Introduction It is important to implement marketing strategies in businesses for the organisation to get recognition or to enter a new market. Marketing strategies play important roles in business growth to create more awareness to the publics and to gain customers from competitors too.

2.0 Overview of McDonalds Corporation McDonalds Corporation is so far the largest hamburger fast food restaurant in the world. The business began as a barbecue restaurant in year 1940 by Richard and Maurice McDonald. Further in year 1948, the business has changed to a hamburger stand. McDonalds was founded by Ray Kroc, who actually founded the business and opened the 1 st McDonalds Corporation as a franchise agent in year 1955. Ray Kroc foresees the large potential business worldwide growth so he had subsequently purchased the chain restaurant from McDonald brothers. McDonalds Corporation focuses on hamburger as their main product, they sell fast food and provided other beverages and it can be found in 118 countries. They have over 33,000 restaurants worldwide and employing more than 1.5million people to work in their corporation. (McDonalds Corporation, 2011)

3.0 Marketing Strategy Marketing strategy is the strategies that implemented in a venture to observe the companys mission and overall operations. Through marketing strategy, there will be clear goals for the company to achieve. By understanding marketing mix strategy, the marketers can create demands and influence the customers with their own products by studying through 4P (Price, Product, Promotion, and Place) (NetMBA, 2010) McDonalds Corporation is a multinational company. Every multinational company will have issues when they enter a new market. Michael Porters 5 forces theories help a business to identify their potential threats and how to gain the market and maintain customers from switching to competitor brands. (QuickMBA, 2010)

3.1 Marketing Mix Marketing mix is where vary factors were mix together to achieve a perfect marketing plan. In a business, marketing mix plays an important role for the business to identify their potential market and to increase their profit levels. There are four elements in marketing mix, which are place, product, promotion and price. Each element has to appear at the right time to make the perfect match. (NetMBA, 2010)

3.1.1 Place In marketing, place is a very important factor for a company to set up their business. It is where the businesses deliver their services or products to their customers. They need to identify the potential market so that they can operate their businesses at the right place. McDonalds must see their targeted location and review the peoples lifestyle or culture. McDonalds restaurants are available in almost all of the countries, either dine in or drive through. (NetMBA, 2010) Both indoor seats and outdoor seats are available in their restaurants. It makes their products convenient and easy to find for the customers. Cluster Analysis is where those individuals groups that is similar to each other but yet different. It can be identify by customers buying behaviour or demographic. We can find a lot of restaurants are located at the same area or some are just next to each other. Whenever there are fast food restaurants, there are McDonalds restaurants located within the same area. McDonalds can get information from the competitors easily when their competitors have better promotions than McDonalds, or when their competitors have come out with new products. Distribution channels is the ways of the company delivers their products or services to their customers from the beginning until the end. McDonalds deliver both products and services to their customers through direct distribution channel, theres no wholesaler that distribute McDonalds products. (Rohini Upadhyay, 2011) McDonalds sells their product through franchisees, affiliates, or the corporation itself. McDonalds sells their franchises to the publics; McDonalds did so to enables the entrepreneurs to join them. McDonalds can obtain ideas from the entrepreneurs to improve their corporation while they can earn from their sales. By selling their franchises, McDonalds grows rapidly and McDonalds have become globalized. The more McDonalds outlets in the world, the faster McDonalds Corporation can achieve the economies of scale.

3.1.2 Product In product, it can be services or things that the company sells to their customers. The company need to see the opportunity of the market and come out with suitable products to fulfil the market needs. (NetMBA, 2010) Hamburger is the main product in McDonalds Corporation, they focuses on producing vary types of burgers and also side dishes to attract customers. McDonalds practices continuous innovation, they keep coming out with new products and new burgers, the recent product that introduced to Malaysia market is Chicken McBites McDonalds in Malaysia labelled their product Halal so that it underwent Muslim religions respect. McDonalds restaurants sell their hamburgers either in a set or ala carte and their products do not have pork at all. They also have family dinner box in Malaysia outlets which included their burgers, nuggets, drinks and also the French fries and desserts. Fast food is usually targeting youngsters, but offering family dinner box indirectly broadens their target market. McDonalds have this McValue Meal and Happy Meal to make their customers feel that the product is worth to purchase. Everyone meal purchased comes with a softdrinks and French fries. The population of Muslim in Malaysia is 60.4%. (The Office of Electronic Information, Bureau of Public Affairs, 2011) Therefore, obtaining a halal certificate is important for McDonalds. McDonalds are well known globally. In year 1967, which is a clown with red haired and clown face paint called Ronald McDonald have brought to the public by McDonalds, it has been appeared in many of their commercials to attract children and to bring the info that McDonalds is a friendly and happy place for everyone. In year 1968, McDonalds developed their double arch logo. The logo consists of a yellow M alphabet with red background. Every McDonalds outlets have to set up their logo; it enables people to easily recognize their restaurants with the simple logo. In some McDonalds restaurants, we can see PlayPlace, which is a playground for the children. The parents can enjoy their meals while their kids playing at the playground. (Brand Symphony, 2011) Certain McDonalds outlets operating their business 24hours a day, the restaurants offer wireless internet for their customers, it actually attracts more youngsters to dine in McDonalds or socializing in their outlets. McDonalds should offer some sofa seats for the customers and McDonalds can gain even more customers from Starbucks and other competitors in Malaysia

3.1.3 Promotion Promotion is usually used in marketing to attract potential or current customers. It tries to generate positive customer responses. It is the tool for the marketers to generate marketing communication and to create awareness to the publics too. The customers can be persuaded by the marketers to meet their needs by the marketers offering. Corporation advertises through TV commercials, newspapers and also radio stations to promote their products. (NetMBA, 2010) In TV commercials, McDonalds commercials will play for the whole day according to time. In the morning, there will be commercials about McDonalds breakfast set, which talk about their breakfast set promotions. While in the afternoon and night time, there will be commercials about McValue Lunch and Family Set. Advertising during the right time can attract customers with their promotions. McValue meals were launched in year 1985 globally. A McValue meal comes with a burger, softdrink, and also fries. In Malaysia, the price of McValue meals was further discounted during lunch time to target those working individuals. This makes their restaurants attract more crowds during the lunch time. During Ramadan period, McValue meals were discounted at dinner time. This is actually to attract the Muslims in Malaysia and gain more customers from their competitors. The commercials can be seen all over the TV, heard from the radio broadcast, or banners along the highways. There was a branding campaign carried out by McDonalds Corporation to support their slogan Im Lovin It for most of their franchisee. While the other outlets, they have different slogans. McDonalds created the awareness to the public and indirectly. The commercials repeat over and over again for certain period of time to makes people remember about it. Most of the people recognize McDonalds when someone start singing the song. McDonalds developed this to target the youngsters and the commercials shows that there were people having fun while enjoying their meals at McDonalds.

3.1.4 Price The marketers need to target their market and to set their price according to their targeted customers. It may be based on the potential customers income level, or how much are they willing to pay for the products. Customers want their product to worth the price they
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pay. Products that are low pricing may lead the customers to think that it is a low quality product, and pricing too high may lose customers, profit gets lower and decreasing in sales. (NetMBA, 2010) McDonalds pricing strategy brings value to their customers. McDonalds sells a full set of meal including the burger, drinks and fries and the price is cheaper compared to its main competitors such as Burger King, Wendys and Carls Jr. Asians appetite is smaller compared to US or UK country, this enables McDonalds to price their products lower by cutting the portion of their products smaller to fulfil the Asians. McDonalds uses price bundling strategy. Where selling their products in a set at cheaper price. (McDonalds Corporation, 2011) If the customers were to buy softdrinks, fries and burgers separately, the cost will be more expensive compared to just paying for a set of McValue meal or Happy meal which included everything and cost cheaper. Promotional pricing is also one of the strategies from McDonalds. McDonalds in Malaysia sells their McValue lunch beginning from RM5.95 during 12pm to 3pm daily, as during Ramadan period, McDonalds further extended the discounts from 6pm to 9pm as well. (McDonalds Corporation, 2011) McDonalds also uses competition-based pricing strategy, where they will set the price of their products by comparing to their competitors similar products. McDonalds in Malaysia have this Weekdays Breakfast Special (McDonalds Corporation 2011) where their breakfast set at pricing from as low as RM4, while KFC is competing with McDonalds and came out with variety sets but pricing higher than McDonalds. (KFC Holdings, 2011) McDonalds also have Family Dinner Box which included 3 burgers, nuggets, French fries, beverages and also dessert, only selling at RM29.90, where Burger King sells their Chicken Fiesta Meal with only 3 burgers, nuggets, French fries and a bottled drinks at RM33.00. (Burger King Corporation, 2011) We can see that McDonalds earned the advantages in pricing strategy compared to their competitors; McDonalds can come out with better deals and attract the market.

3.2 Michael Porters 5 Forces Theory Professor Michael Porters five forces theory helps the multinational company to identify their threats and risks that may occur when the business is entering a competitive market. It helps the business to determine the weaknesses and strengths in their own company as well. The five variables in this theory are rivalry, threats of new entrants, supplier power, buyer power and threats of substitutes. (QuickMBA, 2010)
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3.2.1 Threats of New Entrants When a company profits and market share is increasing, there will be other new firms trying to enter to compete in the high profits market. There are barriers of entry when a business is entering a new market as the existing competitors are trying to protect the market from their new competitors. (Kashan Pirzada, 2011) McDonalds is already a well-known brand around the world, so it already has a very strong influence power in Malaysia market. McDonalds created strong barriers of entry to the competitors as McDonalds has the competitive advantage in pricing and promotional strategy. McDonalds have already achieved their economies of scales. (Demetris Vrontis and Pavlos Pavlou, 2008) The reputation of McDonalds makes other competitors difficult to enter their market and gain their customers with their affordable prices and credit crunch. The new comers need a very high investment cost to enter McDonalds market and the risk is high as McDonalds is a mass producer around the world where new comers will have problems of high production cost and they cannot lower down their selling price or else they are not making any profit. 3.2.2 Threats of Substitutes McDonalds Corporations substitutes can be very common in Malaysia, even Mamak food stalls or any food stalls in Malaysia can be McDonalds substitutes. Some of their customers may even choose to eat at home rather than going to spend extra on their meals. This is depends how customers judge on McDonalds, whether they want to go for other substitutes rather than choosing McDonalds. McDonalds is not the only fast-food outlets that offering best deals and services, and as when credit crunch happens, it makes McDonalds customers to change their mind and rather eat at home and not going to pay extra for their meals. (Kashan Pirzada, 2011) McDonalds pricing strategy has been trying to maintain their market again. Coming out with affordable prices on their meals attracts most of the working individuals or students to select their restaurants rather than going for other substitutes. McValue Lunch Set which lower down the price of the meals helps McDonalds to stay strong at the credit crunch. McDonalds market is strong as their burgers have created customer loyalty and makes some of their customers cannot decide whether to choose substitutes products and with the pricing and promotional strategy, the customers decision becomes clear. With the comfortable environment they have and refillable drinks, it makes their customers even harder when they want to go for other substitutes.
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3.2.3 Supplier Power A company that sells products need vendors to supply raw materials, machineries, and other stuffs. Supplier plays an important role in a venture. A company need to build good relationship with the suppliers so that they can get reasonable price for their raw materials. McDonalds practices value chain supply concept, they are not only doing restaurant businesses but also produces their own supplies such as potatoes and also might producing other raw material for themselves too as the market price for certain products are increasing rapidly. (Kashan Pirzada, 2011) McDonalds produces most of their products, whereas the beverages were supplied by their major supplier, Coca-Cola Company and F&N Sdn. Bhd. Coca-Cola have been McDonalds main beverages supplier since the beginning until now, and also because of the long-term relationship between Coca-Cola and McDonalds, it enables McDonalds to sell their drinks bottomless, it means McDonalds customers can refill their beverages for unlimited times in Malaysia. It is actually a strategy to make their customers stay longer at their restaurants and also gain customers from their competitors which doesnt offer such services. Recently, McDonalds dropped Sparboe Farms from one of their supplier for eggs when it found that the company is involved in animal rights and cruelty charges and in the meantime, McDonalds are now using their own McDonalds eggs.

3.2.4 Buyer Power Buyer is the one that raise our market shares and pay for our products. Establishing good relation between the buyers and the business may lead to more loyal customers and maintain the profit level of the business. McDonalds keeps their customers satisfied by maintaining the pricing strategy that attracts customers and maintain loyal customers from switching to competitor products. The possibilities of customers switching to other brands are relatively high as the switching cost is low so McDonalds should work hard on achieving customers satisfaction. (Demetris Vrontis and Pavlos Pavlou, 2008) The prices of the products are based on the customers, McDonalds maintain their customers with their quality of products too. They provided nutrition information for each of their product for the public so that people can get knowledge about their products and see how McDonalds maintain their products quality. Their offering on seasonal promotions or limited time promotions
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such as McValue Lunch Set or Prosperity Burger attracts even more customers to come and dine at their restaurants. 3.2.5 Rivalry Rivalry refers to the competitors of the business. Having competitors in a business does not bring disadvantages, and it is actually benefits the business from competitive strategy. McDonalds main competitors are KFC, Burger King, Wendys and Carls Jr. as their brands and products are already well established too. (Kashan Pirzada, 2011) Whenever McDonalds customers face dissatisfaction issues, they will switch to McDonalds competitors instead. McDonalds continuous innovation process is the strategy that keeps their customers satisfied. (Demetris Vrontis and Pavlos Pavlou, 2008) After McDonalds invented on their recipes and studies the publics concern, McDonalds launched their new product, Chicken McBites in Malaysia. That people here are concerning about healthy food product and previously were complaining that McDonalds products are less health concern. The strong competition on the fast-food market makes McDonalds often comes out with their best deals promotions on their products and give their customers more reason to choose their products. If McDonalds dont come out with such new promotional strategy, their customers may easily switch to other brands. 4.0 Conclusion Marketing strategy is important to every organization, the marketers are not only using it to promote the products, and it can be uses to change the attitudes of the customers and indirectly attracts the potential markets too. It helps the marketers to identify the possible market instead of blindly having promotions or advertising. With marketing strategy, our business can achieve the economies of scales and increase our profit level together with the market shares. McDonalds is a very successful fast-food corporation and it is well-known in every country. We can find McDonalds outlets in almost every corner of the world.

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Referencing
McDonalds Corporation, 2011. The McDonalds Story [online] Available at: http://www.mcdonalds.com.my/abtus/corpinfo/history.asp [Accessed 20 November 2011]

Rohini Upadhyay, 2011. Distribution Strategy of McDonald [online] Available at: http://www.managementparadise.com/forums/elements-logistics/217308distribution-strategy-mcdonald.html [Accessed 21 November 2011]

The Office of Electronic Information, Bureau of Public Affairs, 2011. Background Note: Malaysia [online] Available at: http://www.state.gov/r/pa/ei/bgn/2777.htm [Accessed 21 November 2011]

Brand Symphony, 2011. McDonalds Branding and Marketing Strategies. Brand Symphony, [blog] 8 August 2010. Available at: http://brandsymphony.org/branding/mcdonalds-branding-and-marketingstrategies/ [Accessed 21 November 2011]

McDonalds Corporation, 2011. Weekday Breakfast Special [online] Available at: http://www.mcdonalds.com.my/highlights/weekdaysbreakfastspecial.asp [Accessed 22 November 2011]

McDonalds Corporation, 2011. McValue Lunch [online] Available at: http://www.mcdonalds.com.my/highlights/hariraya11_promo.asp [Accessed 22 November 2011]

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KFC Holding, 2011. KFCs Breakfast Menu [online] Available at: http://www.kfc.com.my/breakfast-menu.php [Accessed 22 November 2011]

Burger King Corporation, 2011. Whats Hot Promotions [online] Available at: http://www.burgerking.com.my/whats_hot/promotions/default.php [Accessed 22 November 2011]

NetMBA, 2011. The Marketing Mix [online] Available at: http://www.netmba.com/marketing/mix/ [Accessed 23 November 2011]

QuickMBA, 2010. Porters Five Forces [online] Available at: http://www.quickmba.com/strategy/porter.shtml [Accessed 24 November 2011]

Kashan Pirzada, 2011. McDonalds Mini Report [online] Available at: http://www.scribd.com/doc/28290117/Mcdonalds-Mini-Report [Accessed 24 November 2011]

Demetris Vrontis and Pavlos Pavlou, 2008. The external environment and its effect on strategic marketing planning: a case study for McDonalds [online] Available at: With-Pavlou-P http://www.scribd.com/doc/64156017/McDonalds-08-JIBED-Vol-3-No-4-

[Accessed 30 November 2011]

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