Marketing Analysis For McDonald’s Corporation
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History and Scope of Business
No one will argue that the golden arches is as much of an American icon as apple pie and baseball. The McDonalds sign is one of the most recognized logos in American and now it is quickly becoming one of the most recognized in the world. McDonald’s got its beginning in the late 1940s when Dick and Mac McDonalds were searching for a way to improve their little drive-in restaurant in San Bernardino, California, U.S.A. They invented an entirely new concept based upon speed service, low prices, and big volumes. Its success spread quickly, in 1952 they had more than 300 franchising inquiries a month from all over the country. McDonald’s is now the largest and best-known food service retailer and one of the two best-known and powerful brands in the market. It now operates more than 24,500 restaurants in 115 countries (Love, 1992).
The global market potential is still huge: yet on any day, but McDonald’s still serves less than one percent of the world’s population (Mcdonalds.com). The restaurant chain plans to expand their leadership position through convenience, superior value and excellent operations. There is still a large untapped market and McDonald’s plans to capture it.
The Company operates in the food service industry segment and primarily operates quick-service restaurant businesses under the McDonald’s brand. Approximately 80% of McDonald’s restaurants and more than 80% of the Systemwide sales of McDonald’s restaurants are in eight global markets: Australia, Brazil, Canada, France, Germany, Japan, the United Kingdom and the United States (mcdonalds.com, 2002)..
To capture a larger market share, the Company also operates other restaurant concepts under its Partner Brands: Aroma Cafe, Boston Market, Chipotle and Donatos Pizzeria. In addition, the Company has a minority ownership in Pret A Manger (mcdonalds.com, 2002)..
McDonald’s Market Segment
The first step in developing a marketing strategy is to understand your customers. The key to success is the ability to react to their to their changing needs and the changing conditions in the market. This has been a key to McDonald’s success. Customer research tells marketers how McDonald’s is perceived and about trends that are taking place in the market. Research is conducted in the local area of our restaurants, as well as, into the general market environment, and into specific areas of the business, such as children, seniors and persons on special diets.
Another key to successful marketing is a thorough understanding of major competitors.. The Total Eating Out Market gives the broadest competitive context and includes all restaurants, hotels, pubs, and any other outlet where people eat. The Quick Service Restaurant sector includes all the obvious competition and also fish and chip shops, and sandwich shops, and any other outlet where food is served quickly. The final sector and most closely related sector that we focus on is defined as the Burger House Sector. This looks only at restaurants serving hamburgers including Burger King, Wimpy, Wendy’s and all independent burger bars (mcdonalds.com, 2002). This is their most closely related sector and the one most closely watched. McDonald’s exists in an market sector within a market sector. It is necessary to keep tabs on the close competition as well as the general market.
Competition and Market Share
McDonald’s remains the largest fast-food player with more than 12,000 U.S. restaurants and 21,000 worldwide. McDonald’s is still the biggest player in this industry with a 40 percent market share. By comparison, Burger King, has about a 19 percent market share and Wendy’s International Inc. about 12 percent (Commins, 1997).
Price promotions have been at the center of the strategy for competitor Burger King, which offers its Whopper hamburgers for 99 cents in some markets. Wendy’s has been trying to sell its product on taste, and most recently launched a line of stuffed pita sandwiches. McDonald’s tried to improve up its own menu in 1997 with the Arch Deluxe hamburger that was aimed at adult consumers (Commins, 1997)..
Another major competitor is Chick-fil-A. Chick-fil-A’s attraction is not price or convenience, but the taste of their chicken sandwiches, billed as a “healthier” alternative to ham- burgers. When com- pared to giants such as McDonald’s, Burger King and Wendy’s, Chick-fil- A is outnumbered in store count nearly 4 to 1 and outspent in media tenfold (Commins, 1997).
Each of these chains has already carved distinct images in the minds of consumers. The vast majority of fast food outlets sell hamburgers as their primary food product, and usually resort to price promotions and movie tie-ins to attract customers. This competition has had a profound effect on McDonald’s business (Commins, 1997)..
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