Introduction

The McDonalds Story- Genesis

sS Formed in 1954, McDonald's brand is the leading global foodservice retailer with more than
30,000 local restaurants serving nearly 50 million people in more than 120 countries each day. Our rich history began with the founder Ray Kroc's vision and his commitment, transformed in our talented executives, and will keep the shine on McDonald's arches for years to come. McDonald's Mission

McDonald's mission is to be our customers' favorite place and way to eat with inspired people who delight each customer with unmatched quality, service, cleanliness and value every time ... we invite you to be the part of this winning team and give yourself an opportunity to grow with the family of people striving to create smiles on the faces of millions of people everyday. McDonald's Vision McDonalds vision is to be Estonia's "best" quick service restaurant, experience supported by a set of core values and guiding principles. The birth of McDonald's began with Raymond Albert Kroc. Ray Kroc was the exclusive distributor of a milk shake maker called the Multimixer. Meanwhile, two brothers, Richard and Maurice McDonald owned and ran a hamburger restaurant in San

Bernadino, California, in the 1950s. Ray Kroc heard how well the McDonald brothers were doing using his Multimixers to serve their customers. He met up with them and acquired the franchising right from them to run McDonald's restaurants. A great success story was in the making. In 1955, Ray Kroc founded the McDonald's Corporation and opened the first restaurant in Des Plaines, Illinois. In 1961, he bought out the McDonald brothers And the rest, as they say, is history. McDonald's grew into the largest restaurant organisation in the world. Today, there are more than 30,000 McDonald's restaurants serving 47 million customers each day in over 121 countries. Ray Kroc died in 1984 but his legacy is very much alive. His success story continues with McDonald's families of employees, franchisees and suppliers. His commitment, dedication and achievements continue to live on at McDonald's restaurants across the world

McDonald's in Pakistan Aiming to be the world's best quick service restaurant, McDonald's Pakistan opened its doors in September 1998 at Lahore and presently operating in six major cities with a network of 20 restaurants. With a strong belief in the Ray Krock phrase when you are green you are growing, McDonald's Pakistan has an aggressive plan to expand in all other cities of Pakistan and is rapidly growing with the focus to provide friendly and quick service restaurant experience to our customers.

The Team To realize the McDonald's service vision, we believe in strengthening our team and ensure to deliver the right skills and knowledge to the right person for getting the right job done. Our strength for making our strong team players to shine under the Golden Arches lies in the People Practice and Development Program, we focus to deliver. Business Defintion Performance overwiew

Marketing in a services industry is becoming an increasingly complex challenge. The paradigms of service marketing demand a passionate understanding of customer expectations and perceptions, and linking them to product design & delivery as well as operational planning. This is where McDonalds has excelled due to its ability to successfully integrate the customers perspective in its products and operations in a comprehensive manner. The revamped menu in Pakistan is an example of McDonalds strategy of integrating the customers perspective in its products. And, the operational integration is evident from McDonalds emphasis on its suppliers as its customers as well as its treatment of its consumers as co-producers of services. The ultimate aim of Service Marketing is not just to become a Service Leader but to create a Service Brand. The Service Delivery Process is the key to achieving this aim of Service Marketing.

Service Delivery Process

Core Product

Supplementary Process

During the Service Delivery Process, each moment of interaction between the firm and the customer, called Moments of Truth, helps understand the opportunities that a firm has to win or lose the customer. For example, these moments of truth are created for McDonalds every time the guard at the McDonalds outlet meets the customer, every time an attendant takes down the order from the customer waiting in the queue, every time the cashier interacts with the customer, every time the attendant helps the customer guided the customer towards the table,

every time the attendant cleans Thetable, etc.Encounter Moments Of Truth the Service
Customer

Service Provider

Service Delivery Points

Managing these moments of truth is a great challenge in Service Marketing especially due to customers involvement as a co-producer of services (e.g. McDonalds self-service concept wherein the customer not only collects the order but also cleans the table after consuming the food). However, McDonald's has been able to create a great experience for its customers by understanding the nature of the entire Service Delivery Process and the various stages in the process that are exposed to the customers. Transparency in the processes at its outlet has helped McDonalds bring the back office in its outlet at the front so that the customer is able to know the operations and provide feedback on service design improvements. Internal Customer Focus is equally important as External Customer Orientation in order to win these moments of truth. McDonalds focus on its People and their service delivery methods therefore plays a very important role in creating a successful Service Brand. The quality and the consistency of the service delivered by McDonalds have been greatly enhanced by the combination of the factors mentioned above. This has helped McDonalds become Service Leader and a successful Service Brand. This is evident from the fact that very few of its customers opt for take-home parcels or home deliveries while most of them prefer to eat at the outlet and enjoy the McDonalds experience.

Key products & Services

Situation Analysis
SWOT Analysis Strengths

MacDonalds has a strong global presence with its nearest domestic competitor being only half its size, McDonalds is the market leader in both the domestic and international markets. MacDonalds benefit from cost reduction through economies of scale because of its enormous size and its huge global presence allows it to diversify risk involved with the economic performance of specific countries.

In international markets, MacDonalds is well placed to expand and take advantage of long-term economic growth. MacDonalds also has a strong real estate portfolio. The companys outlets are located in areas that are highly known for visibility, traffic volume and ease of access. MacDonalds also has exceptional brand recognition. This strong brand recognition creates significant opportunities for the company.

MacDonalds is able to generate more sales because of its brand recognition. Through

aggressive market planning, MacDonalds has been able to recapture its youth market once again.

Weaknesses The food industry is really saturated. As a result of this, MacDonalds has to deal with the prospect of looming market saturation, which could make it difficult to add new outlets. The market is forecast to grow by around 2% per year. There is also an increasing price competition driven by too many competitors, which reduces the companys ability to increase revenue.

Nevertheless, the swift of the companys focus from a value menu to a more diverse one has recently limited the negative effect of the intense price competition that was traditionally taking place among the industry leaders.

Lack of product innovation is another weakness of McDonalds. The last break-through for McDonalds was the Chicken McNugget in 1983, but again the companys new strategy seems to have successfully dealt with the problem through the popularity of its new salads and other new products.

Opportunities MacDonalds sold its Donatos Pizzeria back to its founder in 2003 and discontinued Boston market operations outside of the US. The company will instead focus on Chipotle Grill which is the companys most successful non MacDonalds branded chain of restaurants. Also to increase profitability the company has slowed its expansion of McDonalds

restaurants so as to refurbish and change the image of current restaurants and adding new features such as Internet access. McDonalds still has plans for more international expansion. McDonalds still needs to penetrate in many countries especially in Europe, Asia and Latin America. Changing trends in eating habits toward more health eating, seen as a threat to McDonalds can also be seen as an opportunity. McDonalds introduced new premium salads and Fruit n Yogurt Parfaits in the US

which lead to growth in 2004 and the same products will probably bring some more growth in foreign markets.

Threats McDonalds is exposed to changes in the global economy. The companys aggressive international expansion has left it extremely vulnerable to other countries economic slowdown.

Foreign currency fluctuation is McDonalds. The Fast food

also another problem global

companies

like

industry is becoming

an

increasingly

competitive

sector.

MacDonalds keeps up with competitors through expensive promotional campaigns which leads to limited margins to gain market share. McDonalds is attempting to differentiate itself, with new formats and new menu items, but other fast food industry are doing the same too. McDonalds, just like other fast food industry, often receives bad press because of its link obesity. Increased concern such as this has led the Food Standards Agency and the Department of Health in the UK to review the advertising of junk foods such as McDonalds to children. Top Competitors for MacDonalds include: Yum! Brands, Inc, Wendys International, Inc. Jack in the Box Inc, and Burger King Corporation.

Demand and Key Trends Product Lifecycle Competition analysis and basis for competition Critical Success Factors

Marketing Objectives

Marketing Strategies

Product Strategy Product is the physical product or service offered to the consumer. Product includes certain aspects such as packaging, guarantee, looks etc. This includes both the tangible and the nontangible aspects of the product and service. Their clear strategy is to bring the customers in initially and provide a range of entry-level products so that they can try new items and graduate to the higher rungs. McDonalds product includes vegetarian and non-vegetarian items. Also involves combo. Cares for customers sentiments towards religion and Culture. Separate cooking area and equipments. Takes dietary concern-Burger King healthier Kids' Club. Co- Branding: McDonalds has major tie-ups with various companies. Few of them are listed below:

Promotion: What is the suitable strategy and channels for promotion of the product?

The various promotion channels being used by McDonalds to effectively communicate the product information are given above. A clear understanding of the customer value helps decide whether the cost of promotion is worth spending. There are three main objectives of advertising for McDonalds are to make people aware of an item, feel positive about it and remember it. The right message has to be communicated to the right audience through the right media. McDonalds does its promotion through television, hoardings and bus shelters. They use print ads and the television programmes are also an important marketing medium for promotion.

Some of the most famous marketing campaigns of McDonalds are: You Deserve a break today, so get up and get away- To McDonalds Aap ke zamane mein ,baap ke zamane ke daam. Food, Folks, and Fun Im loving it. Target customer Childrens Awareness about products among People Use of Different Media like Television, hoardings and bus shelters DDB Needham and Leo Burnett agencies appointed for the advertisement Description of Products on Paper Mats placed in the trays. The placing of the pamphlets and banners in and around the outlets 80-20 Menu Board

 Lucky Promotion strategies

An activity, such as a sale or advertising campaign, designed to increase visibility or sales of a product. McDonalds, for years has maintained an extensive promotion strategy with highest spending on marketing amongst all its competitors.

Advertising: Focus on overall experience. Brand globally and act locally. Overall it is doing what it does the best marketing. Intensive advertising aimed at children. Paper mats on trays ensure that no new scheme goes unnoticed. 80-20 menu boards marketing tool. Sponsors sport events with their logos advertised in these events. Significant use of billboards and signage. Image of portraying warmth and a real slice of everyday life has become a trademark and has created many memorable commercials. Campaigns Im lovin it is an international branding campaign which was launched in 2003 and has proved to be its biggest success. aap ke zamaane mein baap ke zamaane ke daam is a highly localized campaign which aimed at attracting the masses through its happy price menu.

HOW DO THE CUSTOMERS LEARN ABOUT THE FIRMS PRODUCT AND SERVICES?

Majority of the customers learn about the firms product and services from the newspapers ads, franchises and TV commercials.
WHO ARE COMPETITORS?

Only KFC and Pizza Hut is our major competitor in Pakistan.

HOW WOULD YOU IMPROVE THE FIRMS COMMUNICATIONS ACTIVITIES?

More focus on service delivery time because of customer dont have much time today. Use electronic media for promotion.

Placement:
Located at prime locations Evenly spread in NCR Almost in all big cities At residential areas, malls, Multiplexes
WHAT IS THE NEED OF CHANNELS FOR THE PRODUCT AND SERVICES OF THE McDonalds?

Firm point of view

Easy availability of product and services to the customers Easy availability for providing basic services and value added services Easy complaint handling To cover target market

Customers Point of view

Easy availability of Product and Services

Time and Money saving Fast Service System and Resolve Conflict

HOW WOULD YOU IMPROVE THE CHANNEL ACTIVITIES?

Try to convert your traditional channel into remote channel.

Price: What should be the pricing strategy?

Pricing includes the list price, the discount functions available, the financing options available etc. It should also take into the consideration the probable reaction from the competitor to the pricing strategy. This is the most important part of the marketing mix as this is the only part which generates revenue. All the other three are expenses incurred. The price must take into consideration the appropriate demand-supply equation.

McDonalds came up with a very catchy punch line Aap ke zamane mein ,baap ke zamane ke daam. This was to attract the middle and lower class consumers and the effect can clearly be seen in the consumer base McDonalds has now. McDonalds has certain value pricing and bundling strategies such as happy meal, combo meal, family meal etc to increase overall sales volumes. Policy which caters to Indian customers Quite affordable products Heavily marketed Happy Price Menu Importance to brand and its integrity Household Expenditures

Pricing Strategy: Purchasing power pricing:In 1997 slashed prices for vegetable nuggets and soft serve cone. In September 2001, they offered Veg surprise burgers for Rs 17. March 2004 Aap ke zamane mein, baap ke zamane ka daam. Value Ladder strategy :a) Started offering value meals in a range of prices. b) Ensure affordability and attract widest section of customers. c) Brought the customer and provided a range of entry- level products. d) Try those new items and graduate to higher-rungs.

e) E.g- if a customer starts with McAloo Tikki, he will finally graduate to McVeggie and so in Non veg. f) Helped its Volume business. Value Pricing. a) Happy price menu Rs 20. b) Economeal Rs 49(save Rs 11). c) McChicken & McVeggie Meal Rs 75,Rs 65 (Save Rs 15). d) Happy Meal for Kids Rs 69,99,109 (toy free). e) Big saving Meals Combos Rs 109 Rs 119(Save Rs 36). f) A-la carte menu Rs 45- Rs 65 (Veg) a) Desserts Rs 12 Rs 25. b) Beverages Rs 25- 50 ( a little costly)
HOW DO THE CUSTOMERS CHANNEL REACT TO THE FIRMS PRICES?

Rs 55- Rs 65 (Non Veg)

Customers react positively due to Good quality of our product and services.
ARE THERE ANY ACTIONS THE FIRM TO SET ITS PRICES CONSISTENTLY WITH ITS STRATEGY?

McDonalds rationalizes its tariff with the passage of time in order to beat the competitors.

Physical evidence:

Mc Donalds focuses on clean and hygienic interiors of is outlets and at the same time the interiors are attractive and the fast food joint maintains a proper decorum at its joints. Cleanliness, speed, quality and transparency of process is the biggest physical evidence. The interiors are attractive and more or less consistent throughout the world. A proper decorum and strict standards of cleanliness are maintained at all the joints. Extra care is given to make the joints children Friendly Family environment message throughout the world, just the way of communication is adjusted to different countries. Play areas are provided so that kids dont Play areas are provided so that kids dont Become panicky. Counters are kept low and menus pictorially displayed so that children can order for themselves. The physical appearance affects not only the impression outsiders have of a business but also the way that business functions. Staff members Location & appearance Building maintenance Visible cues

Mcdonalds Tariq Road

Process:
The food manufacturing process at Mc Donalds is completely transparent i.e. the whole process is visible to the customers. In fact, the fast food joint allows its customers to view and judge the

hygienic standards at Mc Donalds by allowing them to enter the area where the process takes place. The customers are invited to check the ingredients used in food.

Food manufacturing Transparent Training to the licensees

to customers

Invented the most efficient cooking equipment New methods of food packaging and distribution McDonalds In Pakistan followed the same tradition Spent Rs.50 Crore - even before

People: How to converge the benefits of internal and external marketing?

McDonalds understands the value of both its employees and its customers. It understands the fact that a happy employee can serve well and result in a happy customer. McDonald continuously does Internal Marketing. This is important as it must precede external marketing. This includes hiring, training and motivating able employees. This way they serve customers well and the final result is a happy customer. The level of importance has changed to be in the following order (the more important people are at the top):

1. Customers 2. Front line employees 3. Middle level managers 4. Front line managers The punch line Im loving it is an attempt to show that the employees are loving their work at McDonalds and will love to serve the customers. The employees in Mc Donalds have a standard uniform and Mc Donalds specially focuses on friendly and prompt service to its customers from their employees. Each outlet is headed by a Restaurant Manager . He is responsible for the daily operation and customer interaction. Delivery Crew Member carries basic operation of a restaurant. Ensures customer satisfaction at the restaurants.In order to motivate there employees they give them stars as per their performance. Stars as per their performance Gives employees larger role in decisions Philosophy of Quality, Service, Cleanliness and Value (QSC&V) is the guiding force behind its service Customer always comes first Fast friendly service Provides clean, comfortable environment especially suited for families

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