By Daniela Schmirler – Marketing Strategy for Managers – Dr. Kohler

“I’m lovin’ it!” – Critical evaluation of McDonald’s marketing strategy

Executive Summary

McDonald‘s as one of the largest fast food chains in the world, additionally is a strong brand. Nowadays, almost everyone worldwide knows about McDonald’s or has at least heard about it. So why is McDonald’s that successful? One factor is its overall marketing strategy. The company raised strong brand awareness and always seems to be one step ahead in comparison to its competitors. Furthermore, McDonald’s was able to create a strong brand by using franchising as a business model and creating a marketing strategy that is superior to its competitors.

This presentation should give an overview of McDonald’s, its marketing strategy, and the seven years running campaign “I’m loving it”. This successful campaign runs since 2003 and always orientates on new trends. McDonald’s tries to combine community issues (Corporate Social Responsibility) with its overall communication. By providing different topics, and being modern, funny, and innovative, McDonald’s is able to create high brand awareness.

Furthermore, there will be a short overlook of its two main competitors Burger King and Pizza Hut (which is part of the umbrella brand Yum!). In comparison to McDonald’s these two companies lack in their overall marketing strategy. By contrary, McDonald’s always seems to be one step ahead, and also having always the right topics included. But, what has to be mentioned is that there are also differences concerning the companies’ target groups and overall appearance (e.g. Burger Kind tries to attract men, Pizza Hut is for all, and McDonald’s attracts families, children, young urban, and recently also older people).

Lastly, there will be an evaluation of McDonald’s marketing strategy and measurements of success, which will lead to an overall conclusion by developing principles for marketing. The company is successful in comparison to its competition, which is shown in fitting brand associations, numbers, and its competitive advantage, but McDonald’s has to react in order to stay competitive. Finally, all this leads to several principles for successful marketing. But although these principles are success factors for McDonald’s it will never be sure that they will also work for other countries. They more are some kind of framework.

Agenda

1. Facts about McDonald’s2. Marketing strategy McDonald‘s

2.1 Vision and goals2.2 Segmentation and positioning2.3 Marketing mix2.4 Strategic Plan: “Plan to win”2.5 Current campaign: I‘m loving it2.6 Competitor Analysis

3. Measures of success and recommendation3.1 Competitive Advantage3.2 Positive Image3.3 Numbers3.4 Downside: Current decline3.5 Recommendations

4. Principles for marketing analysis

1. FACTS ABOUT MCDONALD‘S

Business modelNumbers

1. Presenting the company

Fast food chain, known by almost every citizen of the world Founded in 1948 by Dick and Mac McDonald in San Bernadino Today, more than 31,000 restaurants worldwide Business model

– Franchise system (15% of restaurants owned by company)– Product consistency (products are similar all over the world)– “Act like a retailer - think like a brand” (long term brand

reputation is important for the company

2. MARKETING STRATEGY OF MCDONALD‘S

Vision and goalsSegmentation and positioning

Marketing mixStrategic Plan: “Plan to win”

Current campaign: I‘m loving itCompetitor Analysis

2.1 Vision and goals of McDonald’s

Vision and goals

Place the customer

experience at the core of

organization

Commitment to people and

customers

Operate the business ethically

Giving back to

communities

Strive continually to

improve

2.2 Segmentation and positioning

Main target segment: young urban family, youth, and children– Concentrates on environment for children (playing grounds)– But also tries to be modern and cool (for youth)– Keeps in mind price sensitivity of targets (low price)

New ways to address urban and young people– McCafé– Wi-Fi access– Modern marketing campaigns

Demographic segmentation: according to age

2.3 Marketing-mix: Think global, act local

Product:– Little product depth and width– Standardized products worldwide, but there are national

different products to apply to the different customer wishes– Continuous innovation to adapt to changing preferences– Quality Assurance teams (monitoring restaurants, products,

and suppliers) Place: at the right place, at right time, in the right quantity

– Especially in the USA: you need almost less than 3 Minutes to get to an McDonald’s restaurant

– In almost all big cities, and important places (airports, shopping malls, etc.)

– Restaurants: hygienic environment, good ambience, great services, and areas for children

2.3 Marketing-mix

Price: Low price and value pricing– Attracts middle and lower class

(also seen in consumer base)– Sort of “value pricing” (Happy meal)– Different prices in different countries

(see table of Big Mac) Promotion: Use of “Marketing Communication Mix”

– Advertising: wide range in different countries (localization)– Personal selling: Employees at counter serve customers best– Public relations: tries to interact with customers, stays in

media, community relations (addresses community problems: like “Ronald McDonald Houses”)

– Direct Marketing: Person– Sales promotion: sport sponsoring (to get healthy image)

2.3 Marketing-mix

People: Value of employees and customer– If employees are motivated and work well, customers will be

satisfied– Internal Marketing: hiring, training, motivation– External Marketing: current campaign (I’m loving it)– Adaption to different laws, conditions in different countries to

serve its employees best Process:

– Identical processes for food worldwide (even size of meat balls, or French fries)

– Suppliers have to meet specifications to meet standards– Also point of purchase is standardized

Physicals:– Message worldwide: Family environment, cleanliness, and

service

2.4 Strategic Plan: “Plan to win”

Service Marketing

Brand Transparency

Ethnic Insights

Social Media Strategy

Customer and supplier integration

Different products for different life cycles

McDonaldizing of suppliers

“Moments of Truth”: each process of interaction between McDonald’s and customers

Be transparent to get trust and influence marketing efforts

Also concentration on minorities and differences. Can become trendsetters for white America

Presence in social media to raise awareness

Integrating in product development to create relationship, satisfaction, and loyalty

To increase profits (e.g. French Fries at decline stage – Shake Fries (spicy) at maturity stage)

To get a huge AND controlled network for guaranteeing McDonald’s standards

2.5 Current campaign: I‘m loving it

Press releases: Many press releases about different topics (new campaigns, events, economical performance, job offers, awards, product information, health, engagement (environment, Ronald McDonald Houses, special offers). McDonald’s tries to be strongly present in the media to keep brand awareness

Annual report: About corporate strategy, business facts, jobs, franchise system, product origin, health, children’s donation, sports, employees. Seems to be very professional and transparent

Internet presence: about food, health, promotions, company, and links to different websites (e.g. CRM, children’s donation). Concentrates on McDonald’s engagement an health issues

Public Relations:

2.5 Current campaign: I‘m loving it

Image campaigns Several image campaigns Main: I’m loving it (started in 2003) Additional campaign: “corporate responsibility” (company’s

engagement in community and other critical issues like environmental protection , which shows new trend of customer demands for responsible companies)

Seasonal campaigns: relate to special seasonal conditions (e.g. “Hüttngaudi” in Germany with skiing environment in winter)

2.5 Current campaign: I‘m loving it

Classical Advertising: Banners, clips, etc. Different issues from campaigns New: Animated spots, attracts gay men, “There is a McDonald’s

for everyone” Combines:

(1) Responsible Citizen; (2) Health consciousness, (3) “We buy local”, (4) Families, (5) Be modern (Wi-Fi), (6) Be humorous, (7) Testimonials (e.g. Heidi Klum), (8) Promotion of products, (9) Including minorities (e.g. offers low prices for African-Americans & Hispanics)

„We buy local“ banner

Spot: Animated

Spot: For everyone

Spot: Gay customers

2.5 Current campaign: I‘m loving it

Product Placement

To raise brand awareness 1988 restaurant as setting for scene in “Mac and Me” Movies like “Spider Man”, “Bridget Jones”, “The day the earth

stood still”, “Spy Kids”, “The fifth element” Other formats like “American Idol”, late night shows, reality

shows, and even news formats (serious coffee cubs)“Mac and me”

News format

“The fifth element”

Videogame

2.5 Current campaign: I‘m loving it

Sales Promotion Games: additionally to campaigns, well-known “Monopoly” Coupons: in newspapers, backside of cinema tickets

Sponsoring Many sports: Olympic games, German Football Association Other events like Fashion Week New York Local franchise companies: local clubs and events

CONCLUSION

Much information about community issues – McDonald‘s as a responsible citizen pared with funny and lovable company

Continuously tries to raise brand awareness

Positioning of the three main companies

2.6 Competitor analysis

Main rivals: Burger King, Pizza Hut (and many others like KFC, Denny, Wendy’s, etc.) – but also restaurants, supermarkets, etc.

High value

Low value

High price Low price

2.6 Competitor analysis

Target group: family, youth, urban peopleMain topic: productsCharacteristic: fun . Media activity: little in comparison, reserved Corporate Responsibility: Umbrella brand Yum! but little activity and little information

Target group: men Main topic: productsCharacteristics: Macho, playful Media activity: aggressive, more on mass channelsCorporate Responsibility: Tries to follow McDonald‘s but is in its beginnings

Target group: family, youth, children, urban, health conscious womenMain topic: storiesCharacteristics: Mix of humor, responsibility, and childrenMedia activity: strong, but not disturbing Corporate Responsibility: McDonald‘s as good citizen

3. MEASUREMENTS OF SUCCESS AND RECOMMENDATION

Competitive AdvantageImage

NumbersCurrent decline

Recommendations

3.1 Competitive Advantage

Measurement of Competitive Advantage: Strength of McDonald’s For people with little time to (fast, quality, clean, service for

satisfied customers) Strong in its structure, technology , marketing, and finance No overexposure: Advertising stays fresh, modern, etc.

Strengths

Financial resources

Market leadership

Buyer supplier relation-ships

Strong imageCompany logo and campaigns

Product value

Emphasis on HR to

3.2 Positive Image

Measurement of image: Fits to self-image except “healthy image”

Brand Knowledge

Brand Awareness

Brand Awareness

Easy Brand Recognition

Easy Brand Recall

Types of associations

Favorable, strong, unique

associations

Attributes

Benefits

Evaluation (attitude)

Non-product related (cheap, bags & boxes, families, fast food)Product-related (yellow & red, golden arch, Ronald McDonald)

Functional (eat fast, save time, good food)

Symbolic (smell of burgers and fries, childhood)

Experiential (remember earlier times with families, fun with friends)

(Shimp, 2008, p. 39)

“loving it”, fast food, not that healthy, good, easy,

3.3 Numbers

Own design: http://businessmodelinstitute.com/wp-content/uploads/2010/05/Fast_Food_Industry_Markets.jpg

http://brandautopsy.typepad.com/brandautopsy/images/sbux_adage_chain.jpg

3.3 Numbers

http://retailsails.com/2009/07/

3.4 Downside: current decline

There is current decline in sales and services Customer trends and their decisions change People could get tired of the same brands (people see

McDonalds everywhere If one restaurant lacks in its actions, it effects the whole brand Difficulties in choosing target audience (kids, health conscious

women and senior citizen comprise the major population but kids soon grow out to become adults)

Choice of distributors, wholesalers and jobbers is extremely important (to guarantee time aspect, quality, health standards, etc.)

Discussion about issue of gay men (conservative vs. progressive)

3.5 Recommendations

Should it stay with: I‘m Loving it?“ – yes! People trust brand and know slogan Change is expensive (e.g. for all countries and languages) Only if market research shows new trends and demands of

customers

Adaptation to customer trends as another factor of success Loyalty program Customer integration Social media Direct marketing

4. PRICIPLES FOR MARKETING ANALYSIS

Principles for marketing analysis

This is just a framework!

Ask

Look at the long term

Be open to feedback

Look at competition

Corporate Social Responsibility

Be flexible and adapt to customer trends

Integrate customers

If you should do something new, or how you could improve your appearance

Develop the right strategy for your brand

Listen to complains and feedback – it can improve your brand, products, and performance

Always be one step ahead by creating a USP

Engagement in this field gets more and more important to also win customersAlways watch out for new trends (e.g. use social communities, etc. if appropriateTo create relationship, satisfaction, and loyalty. Even more, to get new insights

Adapt to new customer trends To gain and win customers

Do not overexposure Too much could lead to switch of customers

Use networking Creating networks makes your “life” more easier (e.g. having right suppliers, big customers, etc.)

Bibliography

Burger King Corp (2008): Annual report Burger King corporate Homepage (2010): http://www.bk.com Helm, B. (2010): “Ethnic Marketing: McDonald’s Is Lovin’ it”, Business Week, online available

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Hlavinka, K. (2010): Lovin‘ it, Journal of Marketing, Colloquy, online available at: http://www.cgarena.com/archives/news/mcdonald_campaign.php [accessed 29 October 2010]

http://www.marketingpower.com/ResourceLibrary/Pages/Content%20Partner%20Article%20Pages/COLLOQUY/2010/lovin_it.aspx [accessed 29 October 2010]

McDonald‘s corporate Homepage (2010): http://www.mcdonalds.com McDonald‘s Corpt (2008): Annual report Metekohv, M. (2009): “McDonald’s Social Media Marketing Strategy”, online available at:

http://www.viralblog.com/social-media/mcdonalds-social-media-marketing-strategy/ [accessed 29 October 2010]

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http://www.funnycommercialsworld.com/mcdonalds-campaign-favourites-theres-a-mcdonalds-for-everyone-2367.html [accessed 30 October 2010]

Bibliography

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Peter, J. P., Donnelly, J. H.Jr. (2007): Marketing Management (8th ed.). New York: McGraw-Hill Irwin

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Yum Corp. (2008): Annual report