McDonalds – Dissertationt Essay

CHAPTER 1: INTRODUCTION

This chapter will give the reader a clear statement of the research question and the problem statement that will be addressed in this research. Moreover, the background information on definitions of key terms and the chosen organisation will be presented. Finally, the ‘route map’ will be illustrated in order to guide the reader to the rest of the report.

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1.1 Consumer behaviour

Referring to Solomon (2006, p.27) consumer behaviour is the study of the processes involved when individuals or groups select, purchase, use or dispose of products, services, idea or experiences. Consumer behaviour focuses on how individuals make decisions to spend their available resources on consumption related items. That includes what they buy, why they buy, when they buy, where they buy it, how often they buy it how often they use it, how they evaluate it after they purchase and the impact of such evaluations on future purchases, and how they dispose it. Schiffman and Kanuk (2004, p.8)

1.1.2 Consumer attitudes

According to Ajzen (1998) the attitudes are the first determinant of behaviour intention. In consumer behaviour context attitude is a learned predisposition to behave in a consistently favourable or unfavourable way with respect of a given object. There is a general agreement that attitudes are learned. This means that attitudes relevant to purchase behaviour are formed as a result of direct experience with the product, word-of-mouth information acquired from others, or exposure to mass media advertising. Internet etc. (Schiffman and Kanuk, 2004, p.253) As learned predispositions, attitudes may propel consumer towards particular behaviour or repel the consumer away from particular behaviour. . (Schiffman and Kanuk, 2004, p.253)

1.2. Fast food VS Junk Food

Fast food is regarded as “food, as hamburgers, pizza, or fried chicken, that is prepared in quantity by a standardized method and can be dispensed quickly at inexpensive restaurants for eating there or elsewhere”. (dictionary.com, 2006)

Junk food is regarded as “food such as potato chips, sweets and doughnuts, which is mass-produced and is of low nutritional value”. (dictionary.com, 2006)

Often the term junk food is used to describe fast food. Just recently, the debate has been going on whether the term junk food (to describe fast food) is in fact justified. Author of article argues that the “junk food” tag seem to be applied selectively, and often to food outlets in urban and suburban areas but not to those in leafier parts. Hence, he points out that the term “junk” has become a way of disapproving of certain foods. (O’Neill, 2006)

1.3 Obesity in the UK

The most recent research has shown that being overweight or obese is now the norm in the UK, with figures released by the government showing that two- thirds of men and almost 60% of women are unhealthily heavy. (Boseley, 2006) Furthermore UK has the highest level of obesity in Europe. (Datamonitor, 2006) According to a report issued by the Department of Health, the findings for ‘Forecasting obesity in 2010’ were grotesque. Within four years, it predicts, a third of all adults in UK (13 million people) will be obese. So will 1million children. (Marrin, 2006)

1.4 Fast food industry in the UK

Definition of the fast food industry:

The fast food industry is defined as the sale of food and drinks for immediate consumption either on the premises or in designated eating areas shared with other foodservice operators, or for consumption elsewhere.

Fast food outlets are specialised in burgers, bakery products, chicken, ice cream, fish and pizza. (Datamonitor, 2006)

In spite of consumer concerns of fast food being linked with problems such as obesity, diabetes, heart conditions, food poisoning and scares and unethical advertising, the UK fast food industry has enjoyed remarkable growth in recent years.

In terms of per capita expenditure, between 2000 and 2005, the fast food outlets have been growing at the fastest pace within the consumer food service sector. (Euromonitor, 2006b)

1.5 McDonald’s Corporation background

McDonald’s Corporation was the leading fast food outlet in the UK in 2004, with an 18.3% value share and a clear lead over its nearest rivals KFC (owned by Yum Brands) and Burger King. (Euromonitor, 2006b)

Figure 1.1: Market share in UK (2004)

Name of the company

Market share (%)

McDonald’s Corp

18.3

Yum! Brands Inc

8.4

Burger King Corp

8.3

Pret a Manger Europe Ltd

1.4

Compass Group Plc

1.2

Nando’s Group Holdings Ltd

0.8

Source: Euromonitor, 2006b

McDonald’s is a pioneer in the fast food industry and today world leader in the sector. The company has over 31,000 fast food restaurants in over 120 countries. (MarketLine, 2006)

The company operates primarily in the US and the UK. It is headquartered in Oak Brook, Illinois and employs 447,000 people all over the world. (Datamonitor, 2006)

McDonalds currently operates in more than 1,316 restaurants throughout the UK. Its profits grew by 55% in 2004. (Euromonitor , 2006b)

In 2003 the company was loosing money for the fist time in its five-decade history, as it was serving mainly greasy food and therefore fuelling obesity epidemic. Moreover the company was loosing important consumers trust due to release of the documentary ‘Super size me’ and critical book ‘Fast food nation’. However, McDonalds introduced healthier menus and just recently (October 13th 2006) it has announced that its sales had rocketed, sending its shares soaring to a six year high. British restaurants were singled out among the biggest improvers in performance. (Clark, 2006)

1.6 Research question

What factors are currently influencing the consumer decision-making process in the fast food restaurant industry in the UK, and how is McDonalds responding to changing environment and consumer behaviour?

The research question can be further divided into three sub sections in order to clarify the objectives of the research.

A. In order to present the context in which McDonalds is evolving

o The PEST Framework will be applied to identify the key drivers of change that may have an impact on the industry in the future.

B. With the aim of identifying the factors that are influencing consumer purchasing decisions in relation to fast food products:

o The Consumer Decision-Making Process will be examined, in particular the psychological field- focusing specifically on consumers’ attitudes towards fast food and McDonalds. In addition the socio-cultural environment, as external factors that have impact on consumers’ decisions will be investigated.

C. Corporate responses on above changes:

o How is McDonalds responding on the changes with respect to its marketing mix and communication strategy? The dissertation also seeks to propose a set of recommendations for future actions by the company.

1.7. Plan of the dissertation

INTRODUCTION

This chapter will give the reader a clear statement of the research question and the problem statement that will be addressed in this research. Moreover, the background information on definitions of key terms and the chosen organisation will be presented. Finally, the ‘route map’ will be illustrated in order to guide the reader to the rest of the report.

LITERATURE REVIEW

This chapter sets the study within its wider context and show the reader how this study supplements the work that has already been done on chosen topic. Therefore it identifies, analyses, compares and contrasts views and theories of other writers in relation to the research topic. It also provides the stepping-stone towards the methodology chapter of the dissertation.

METHODOLOGY

In this chapter the research design and the research methodology employed to answer the research question will be explained and justified. In addition, it provides the reader with a clear description of models and concept used for the analysis.

FINDINGS

This chapter will provide a reader with detailed presentation of facts and data obtained using tools described in research methodology, leaving out discussion for the final chapter. In order to communicate findings clearly, author decided to brake down this chapter into to parts. Firstly, the external analysis will be applied, in order to provide a reader with the context in which McDonalds is evolving. And secondly, the key factors influencing the consumer decision-making process will be analysed/explored.

RECOMMENDATIONS

In this chapter a set of proposed recommendations as well as supporting analysis of the options for McDonalds will be depicted. In addition the implementation plan to support the key recommendation, including description of resources required will be illustrated.

CONCLUSION

In this chapter author will conclude his research with how the research question has been solved. In addition a brief re-cap of the whole dissertation will be provided.

CHAPTER 2: LITERATURE REVIEW

This chapter sets the study within its wider context and show the reader how this study supplements the work that has already been done on chosen topic. Therefore it identifies, analyses, compares and contrasts views and theories of other writers in relation to the research topic. It also provides the stepping-stone towards the methodology chapter of the dissertation.

The following literature review will critically analyse the theories associated with the research topic. Firstly, it looks at the issues of consumer behaviour; hence it highlights the factors, which influence the consumer decision-making process, predominantly the consumer attitudes. The author has found a variety of academic articles, some of which focus on food industry and public trust in food safety. Other articles examine more generally models of consumer attitude formation, which might be useful applied to the research question in this dissertation.

While the first section focuses on the aspects of consumer behaviour, the second part of the review, as already outlined in the introduction section of dissertation, observes the marketing issues, particularly the marketing communication strategy within the marketing mix. Furthermore this review will contribute towards creation of possible marketing strategies as well as recommendations that McDonalds might pursue in order to respond on changing environment and consumer behaviour.

Therefore the following theories from consumer behaviour and marketing have been outlined:

* Consumer decision-making process

* Consumer attitude formation and change

* The marketing mix

2.1 Consumer decision-making process

The consumer decision to purchase or not to purchase the product is crucial for marketers. It can signify whether the marketing strategy has been wise, insightful, and effective, or whether was poorly planned and missed the mark. Hence marketers are particularly interested in such process. (Schiffman and Kanuk, 2004, p.581)

Verbeke (2005) recognizes that at any point in time throughout the decision-making process, judgements and choices are affected by a variety of stimuli from environment as well as by internal process and characteristics form the consumers themselves. Based on earliest presented models of consumer behaviour towards food (Pilgrim, 1957, cited by Verbeke, 2005) and on a review of factors affecting food acceptance and behaviour (Shepherd, 1990, Steenkamp, 1997, cited by Verbeke, 2005) proposed a classification with three types of influencing factors: environmental factors, person-related factors and properties of the food.

Jobbers (1995) identifies the concept of influences on consumer purchasing behaviour among which he points out the level of purchase involvement as one of the factors that influences the consumer decision-making process. Referring to Kim (2005) who was investigating how product involvement and values interact with consumers, more current research examines consumer involvement under working assumptions that different types of product involvement trigger different behaviour. In the research conducted by Schroeder and McEachern (2005), who were analysing the impact of McDonald’s and KFC’s corporate social responsibility (CSR) on consumers purchasing behaviour, authors propose that purchases of fast food are mostly impulsive, hence suggesting relatively low-involvement in each case.

Brown, McIlveen and Struggnel (2000) examined the nutritional awareness and food preferences among young consumers. They suggest that young consumer decisions regarding food preferences are influenced by nutritional awareness knowledge. This knowledge is acquired within the home, school and social environments. They also put forward that education plays important role regarding healthy eating.

Lye et al. (2005), in their study of consumer decision models, advocate that the complexity of consumer decisions is increasing. “We have limited understanding of the decision process and the models are inadequate at predicting decision outcomes”. Hence the current models, they argue, are out of date and insufficient in providing the desired outcome.

Nevertheless, the decision-making process model will provide the author and the reader with general overview and understanding of factors influencing on consumers purchasing behaviour.

Author will attempt to identify and focus, along with the attitudes, on the socio-cultural part of the consumer decision-making process, i.e. impact of communication and information from mass media (bad publicity of fast food), as it appears that this is the most recent issue due to health concerns in the UK.

2.2 Consumer attitude formation and change

For Nielsen, Jongen and Meulenberg (1998, cited by Verbeke 2005) understanding of the factors that determine consumer perception/attitudes of a product’s value or cost is of crucial importance to an industry’s product innovation, choice of marketing and communication strategy and maintenance of competitive advantage.

According to Ajzen (1998) the attitudes are the first determinant of behaviour intention. In consumer behaviour context attitude is a learned predisposition to behave in a consistently favourable or unfavourable way with respect of a given object. Most researchers agree that attitudes consist of three components: Affect (consumers’ emotions and feelings about the attitude object), Behaviour (intention to do something with regard to an attitude object) and Cognition (believes a consumer has with an attitude object). (Solomon et al., 2006, p.140)

For Verbeke (2005), who examined the influences on consumer decision-making process towards fresh meat, the hierarchy of effects indicates the different mental stages that consumer must go through when making buying decision and responding to marketing or non-commercial messages. In our instance, where the attitude object is fast food, plus taking into account that fast food is considered to be low involvement product, the low involvement hierarchy of effects would occur. This will be explained in more details in the next chapter- methodology.

As mentioned on previous page, knowledge and perceptions (cognitive component) of an attitude that consumer has with an attitude object plays important/initial role by the attitude itself. Baltas (2001, cited by Schroeder and McEachern 2005) acknowledge that the nature of fast food production and processing is becoming more important to consumer. Furthermore Harper and Makatouni (2002, cited by Schroeder and McEachern 2005) note that ethical production in terms of animal and human welfare and environmental protection are of greatest importance. Similarly Mohr et al. (2001, cited by cited by Schroeder and McEachern 2005) recognize that information regarding firm’s ethical behaviour is thought to influence product sales and consumers’ overall image of a company. Additionally Verbeke (2005) recognizes that along with increasing importance of quality, organoleptic and sensory properties of the food, issues relating to food safety and human health have gained considerable attention and importance. All above links well to attitudes that consumers will have with fast food products and companies.

Attitude can form in several different ways, depending on particular hierarchy of effects in operation. (Solomon et al., 2006 p.145) Referring to Schiffman and Kanuk (2004 p.256), the formation of consumer attitudes is strongly influenced by personal experience, the influence of family and friends, direct marketing and mass media. Yet again author will attempt to link the current health concerns/obesity issues to above factors that have direct impact on attitudes formation. Goldsmith, Freiden and Henderson (1997) who investigated the impact of social values on food related attitudes, recognize that marketers, consumer psychologists and public policy makers have an interest in the personal and social values of consumers as these deeply held feelings of what is important in life influence both consumer attitudes and behaviour. Reflecting desired end states or ways of living, values might in part represent some of the fundamental motives that drive and direct the consumer behaviour. Furthermore Homer and Kahle 1988, cited by Goldsmith, Freiden and Henderson (1997) suggest that the influence of values may not be limited just to high- involvement areas, but may also be relevant to less involving product fields such as food.

Besides the values, which influence both consumer attitudes and behaviour, Schiffman and Kanuk (2004 p.256) acknowledge that formation of consumer attitudes is strongly influenced by personal experience, the influence of family and friends, direct marketing and mass media. Author will try to connect the current health concerns/obesity issues to above factors that have direct impact on attitudes formation.

Finally, the importance of risk perception needs to be explained. Verdume and Viaene (2003) investigated consumers’ beliefs, attitudes and purchase intentions with regards to genetically modified food. Attitudes towards GM food are determined by perception of risk and benefits. (Grunet, 2001, cited by Verdume and Viaene, 2003). When perceived risk is high, that influence negatively on consumer’s purchase intention. That might be linked to fast food as well, as eating fatty food may be risky of suffering obese related diseases.

2.3 The marketing mix

The concept of the marketing mix as the combination of the major tools of marketing was first developed by Borden in the 1950s. The idea of 4Ps (Product, Place, Price and Promotion) was later formulated by McCarthy in 1975. The marketing mix creates an offering for the customer. Marketers need to ensure that the marketing mix meets their customers’ needs and wants in addition to that all of its components need to be consistent with each other. If not costumers will turn away to its competitors. (Brassington, 2006 p.30)

Vignali (2001) acknowledges that for many years 4Ps have been used as the principal foundation on which a marketing plan is based. However, with particular attention being paid to services marketing in recent years, theorists have identified additional variables, which could be added to the 4Ps. Fifield and Gilligan (1996, cited by Vignali 2001) recognized the following variables as an integral part of the marketing mix- process, physical and people. Vignali (2001) applied 7Ps analysing the marketing mix of McDonald’s in the following way:

1. Product – features, quality, quantity.

2. Place – location, number of outlets.

3. Price – strategy, determinants, levels.

4. Promotion – advertising, sales promotion, public relations.

5. People – quantity, quality, training, promotion.

6. Process – blueprinting, automation, control procedures.

7. Physical – cleanliness, decor, ambience of the service.

In this dissertation, however, the author will not focus on all 7Ps; the emphasis will be on product, promotion and physical as this links logically with the research question/objectives.

If we look further into the promotion part of the marketing mix, the promotional mix is a direct way in which an organization attempts to communicate with various target audiences. It consists of five main elements:

* Advertising

* Public relations

* Sales promotion

* Direct marketing

* Personal selling

(Brassington, 2006 p.630)

As mentioned earlier fast food products are purchased mainly impulsively, hence they are considered to be low involvement products. Laurent and Kapferer (1985 cited by Kim 2005) recognize that the degree of consumer involvement in a product category has become a major factor relevant to advertising and promoting strategies. Solomon et al. (2006) suggests that this might be involvement paradox; the less important is the product to consumers, the more important are many of the marketing stimuli (e.g. packages, jingles) that must be devised to sell it.

Taking above statements into account, McDonald’s might want to employ advertising and sales promotions, in order to attempt to change consumer attitudes. Having said that author will focus therefore primarily on advertising and promotion of the promotional mix.

CHAPTER 3: RESEARCH METHODOLOGY

In this chapter the research design and the research methodology employed to answer the research question will be explained and justified. In addition, it provides the reader with a clear description of models and concept used for the analysis.

3.1 Research philosophy

Referring to Saunders et al., (2007, p.106) in order to underpin the research strategy and the methods as part of that chosen strategy, it is important to understand the research philosophy one adopts. Within research philosophy author chose interpretivism, as it advocates that is necessary for the researcher to understand the differences between humans in our roles as social actors. This emphasizes the difference between conducting the research among people rather than objects. The role ‘social actors’ plays significant role here. Saunders et al., (2007, p.106) Author believes that interpretivism is more appropriate that positivism philosophy as consumer behaviour differs form country to country. Furthermore it interpretivism seeks to explain why human beings react and behave in the way they do.

3.2 Research approach

In this dissertation author will start with collecting the data first and then the theory will be developed, based on results of the data analysis. Moreover the research will be particularly concerned with the context in which such events were taking place. Author is predominantly interesting in understanding why something is happening, rather than being able to explain what is happening. (Saunders et al., 2007, p.118) These are the reasons why this research will be undertaken inductively and not deductively. Deductive approach is used for scientific researches and it involves the development of a theory that is subject to a rigorous test. (Saunders et al., 2007, p.118)

3.3 The purpose of the research

According to Saunders et al., (2007, p.133) exploratory study is a valuable means of finding out what is happening, to seek new insights, to ask questions and to assess phenomena in new light.

The emphasis by explanatory study is on studying a situation or a problem in order to explain the relationships between variables.

In the first part of this dissertation, the research purpose will be exploratory and explanatory because the aim of the research is to explore consumer attitudes and factors that influence the consumer decision-making process in the fast food industry. The purpose of the second part of dissertation, however, is to elucidate McDonalds potential responses on changing environment and consumer behaviour. From the analysis of the market and consumer behaviour author will seek to apply established business models such as marketing mix in order to generate a set of practical recommendations for McDonalds business.

3.4 The research strategy

Strategy used in this dissertation involves the empirical investigation of a particular contemporary phenomenon within its real life context using multiple sources of evidence. Moreover it is of author interest to gain a rich understanding of the context of the research and the process being enacted. On account of these factors the chosen strategy will be the case study. The case study has also considerable ability to generate answer to question “why”, which appears to be appropriate for the research question (Saunders et al., 2007, p.139)

3.5 Data collection techniques and analysis procedures

To achieve the research aims, a mixed-methods data collection technique was adopted where both qualitative and quantitative data collection techniques and analysis procedures are used. (Saunders 2007, p.147)

Saunders (2007 p.147) justifies the adoption of a mixed-method to achieve an in-depth insight in consumer behaviour. Another advantage of using such approach is that it enables triangulation to take place. For instance focus groups may be a valuable way of triangulating data collected by other means such as questioners. Baker and Goodyear (1998, cited by Verdurme and Viaene 2003) recognise that interactive qualitative approach enables us to explore and to see particular issues (in our instance fast food) through consumers’ eyes and to understand the basis for their attitudes and behaviour. Qualitative results are sometimes speculative and usually not generalisable to the larger population. Nancarrow et al., 2000, cited by Verdurme and Viaene 2003) Author therefore intends to conduct a qualitative survey to attempt to gauge whether the views of the respondents in the focus group were representative of a larger population.

Taking above facts into consideration author decided, firstly, to carry out the qualitative focus group, and secondly use its outcome to formulate questions for the questionnaire.

3.6 Sample selection

In this research the probability of each case being selected form the population is not known and it is impossible to answer research question or to address objectives require author to make statistical inferences about the characteristics of population. For that reason, Saunders (2007 p.207) suggests applying non-probability or judgemental sampling technique. Nevertheless, author will still be able to generalize from such technique, though, not on statistical grounds. For this reason non-probability sampling technique is more frequently used when adopting the case study strategy. Moreover such technique provide author with opportunity to select sample purposively. (Saunders, 2007 p.235)

The chosen sample for the focus group were undergraduate students form European Business School London in the UK. Three out of seven participants were British citizens, remaining four were international students, however, they have been living in the UK for 3-4 years. Kraus (1995, cited by Schroeder and McEachern, 2005) support the use of students since they are more homogeneous as a group than non-students, thus resulting in less “extraneous variation”. As a key target market of the UK fast food sector is between 17-25 years, a convenience sample of students is justified for this exploratory study. Author realizes that socio-economic status of some EBS students for the focus group might not be the same as one of typical fast food consumer. However, participants eat in such restaurants and are therefore appropriate for this study.

Since there is nearly impossible to distribute over 100 questionnaires physically in such a short time, author decided to distribute questionnaires to students via email. Author acquired approximately 140 British email addresses that he got from a person who lives in London. The questionnaires were sent then to people around the UK.

3.7 Data collection

In this study, both primary and secondary data sources were used. Firstly, for a better understanding of the background and problems related to the context of the consumer decision-making, the literature review was written based on secondary data collection. Then the primary data was gathered using qualitative focus group, which were then quantitatively validated through questionnaires.

Secondary data sources used in this dissertation include books, library databases, periodicals, McDonalds web site and other Internet sources. For collecting primary data sources, author used firstly focus group and secondly questionnaire.

3.7.1 Group interviews- focus groups

This qualitative data collection technique was employed in order to get better understanding in consumer behaviour. Participants in the focus group tend to express views that might not express in other settings, or if interviewed as individuals. (gwbweb.wustl.edu, 2006, unattributed) With focus group individual group members’ interactions and responses are both encouraged and more closely controlled to maintain the focus. (Saunders, 2007, p.339) As explained earlier by the sample selection, participants (students) are selected because they have certain characteristics in common that relate to the topic being discussed and they are encouraged to discuss and share their points of view without any pressure to reach a consensus. (Kruger and Casey, 2000, cited by Saunders, 2007, p.340) Furthermore the aim is to crate conditions that promote both comfort and independence of thought, in order to maximize discussion and self-disclosure. (gwbweb.wustl.edu, 2006, unattributed)

For questions discussed during focus group and other detailed information, please refer to Appendix A.

When designing questions for focus group author focused primarily on two things; firstly on exploring consumers’ attitudes towards fast food, and secondly identifying impacts from external environment which might influence the consumer decision-making process regarding fast food. Having said that knowledge and perception about fast food will be examined, and what kind of experience and beliefs participants have with such restaurants and products. Then their emotions and feelings towards fast food will be explored. Additionally the possible impact of current anti-obesity campaigns and regulations on participant’s decision-making process will be examined.

3.7.2 Questionnaire

Since the participants in focus group were not randomly selected from the population, the author cannot freely generalize from the results. Hence qualitative data obtained by focus group will inform the content of the questionnaire and will be tested to a larger group.

According to Saunders (2007, p.356) a questionnaire to discover consumers’ attitudes can be complemented by focus groups to explore and understand these attitudes. Author decided to use questionnaires that are completed by respondents, i.e. self-administrative questionnaires (internet-mediated questionnaires). More specifically author selected special on-line surveys (www.freeonlinesurveys.com) due to time restrictions and convenience reasons. In order to ensure the high response rate, Saunders (2007 p.390) suggests use of covering email, which explains the purpose of the study. The aim of my study was explained in the introduction part of questionnaire, attached to actual questions.

The key issues/themes identified from focus group were used as a basis to construct closed-end questions or forced-choice questions. These provide a number of alternative answers from which respondent is instructed to choose. More specifically author used mainly category, ranking and list type of closed questions. (Saunders, 2007 p.368) Moreover by designing questions, for instance question number 4, the tricomponent attitude model was incorporated, to gauge consumers’ attitudes toward fast food products. (Shiffman and Kanuk, 2004, p.258) Answering categories given in the questionnaires were also based on the preliminary qualitative research- focus group. Key themes from focus group (quality of fast food, ethical aspects, trust towards McDonalds, impact of media and government on consumer behaviour), formed questions for questionnaire and were further examined and tested to larger group.

Saunders (2007, p.386) encourages pilot test prior using the questionnaire to collect data. Author sent questionnaire to few individuals before sending it to larger population, in order to ensure that all questions are clear. For more information regarding actual questionnaire that was sent to participant, please refer to appendix B.

3.8 Models employed in dissertation

3.8.1 Consumer decision-making process

Many consumer theories regarding the consumer behaviour were based on economic theory on the notion that individuals at rationally to maximize their benefits/satisfaction in the purchase of goods and services. Later research discovered that consumers are just as likely to purchase impulsively and to be influenced not only by family, friends, and advertisers but also by mood, situation and emotion. All of these factors combine to form a comprehensive model of consumer behaviour that reflects both the cognitive and emotional aspects of consumer decision-making. (Schiffman and Kanuk, 2004, p.19)

In this simplified model (Figure 3.1) of consumer decision-making process Schiffman and Kanuk (2004) identified three distinct but linked stages from which the process of consumer decision-making can be viewed. It ties together the psychological, social and cultural concept into easily understood framework.

Figure 3.1: Consumer-decision making process

Source: Schiffman and Kanuk (2004)

This model will provide author and reader with a starting point and general picture of what kind of factors have impact on consumer decision-making process.

Despite some critiques, which imply that these models are out of date and inadequate at predicting decision outcomes, author decided to use it merely to clarify and illustrate rather complex process of the decision-making.

3.8.2 Tri-component Attitude Model

According to tri-component attitude model, attitudes consist of three major components:

* Cognitive component- knowledge, perceptions and beliefs that are acquired by a combination of direct experience with an attitude object and related information from various sources.

* Affective component- emotions and feelings that consumer have towards an attitude object

* Conative component- is concerned with the likehood or tendency that consumer will undertake a specific action or behave in a specific way with regard to the attitude object

Schiffman and Kanuk (2004 p.256)

Figure 3.2: Tricomponent Attitude model

Source: Schiffman and Kanuk (2004)

This model emphasizes the interrelationships between knowing, feeling and doing.

The tri-component attitude model will assist author to structure questions for focus group and questionnaire, as it helps to explore and gauge consumers’ attitudes towards attitude object- fast food. When such model applied to the questions, the outcome might give author greater insight regarding knowledge and perceptions (about the fast food), emotions or feelings (toward the fast food) and finally likelihood or tendency (of certain behaviour).

3.8.3 Hierarchy of Effects Concept

While all three components of an attitude are important, their relative importance will vary depending upon a consumer’s level of motivation with regard to the attitude object. Thus the concept of hierarchy of effects was developed in order to explain the relative impact of the three components. Attitude researchers traditionally assumed that attitudes were predetermined sequence, consisting first of the formation of beliefs (cognitions) regarding an attitude object, followed by an evaluation of that object (affect) and then some action (behaviour). However, depending in the consumer’s level of involvement and the circumstances, attitudes can result from other hierarchies of effects. (Solomon et al., 2006, p.159)

Hence in our instance, where the attitude object is fast food, plus taking into account that fast food is considered to be low involvement product, the low involvement hierarchy of effects can be illustrated. (Figure 3.3)

Figure 3.3: The low-involvement hierarchy

Source: Solomon et al. (2006)

In this sequence, the consumer does not initially have a strong preference for one brand over another, but instead acts on a basis of limited knowledge and then forms an evaluation only after the product has been purchased or used. Under these conditions consumers are influenced by principles of behavioural learning. (Solomon et al., 2006 p.142) Referring to that, author assumes that consumers of fast food products will form attitudes via the concept of low involvement hierarchy of effects. In turn, this concept will be taken into consideration later in the dissertation by the final recommendations, when suggesting McDonald’s communication strategy.

3.8.4 PEST Framework

The external environment will be analysed with the PEST framework, which categorized environmental influences into four main types: political/legal, economic, socio-cultural and technological (Johnson et al, 2005, p.65). This framework will help to analyse the macro environmental influences that might affect the organization. In addition it will provide an overview of the environment in which McDonalds is evolving.

The use of this framework is useful only when you apply the potential impact of factors, now and in future affecting the industry, rather than just a long list of influences itself. Having said that, we mean factors that have potential impact on customers and stakeholders. It is of vital importance that one identifies the key drivers of change, as they will provide a better understanding of the main issues that are currently facing the industry and how these might affect the future of the business within the particular industry. Nevertheless, not all factors will have the potential impact, thus combined effect of some of the factors is likely to be the most important. (Johnson et al, 2005, p.65).

Economic and technological factors appear not to have any significant impact on the fast food industry, and are hence irrelevant for such research. For that reason author decided to exclude them from the PEST Framework. It is important, however, to identify the political and socio-cultural factors, as they appear to be of crucial importance by influencing the fast food industry in the future.

Figure 3.4: PEST Framework

3.8.5 Ansoff’s product/market matrix

In order to generate options for McDonalds, the author will use the Ansoff’s product/market matrix, which is used for identifying directions for strategic development. (Ten Have et al., p. 9)

Figure 3.5: Ansoff’s product/market matrix

Source: Johnson et al, 2005, p.341

Once the options will have been generated the author will be able to evaluate them and choose the one that could be the most beneficial.

CHAPTER 5: FINDINGS

This chapter will provide a reader with detailed presentation of facts and data obtained using tools described in research methodology, leaving out discussion for the final chapter. In order to communicate findings clearly, author decided to brake down this chapter into to parts. Firstly, the external analysis will be applied, in order to provide a reader with the context in which McDonalds is evolving. And secondly, the key factors influencing the consumer decision-making process will be analysed/explored.

5.1 External analysis

In this section no other tools than PEST Framework will be applied, since the outcome of PEST analysis will provide author with sufficient information for further research.

5.1.1 Fast food industry in the UK- overview

The UK fast food market generated total revenues of 2.8 billion in 2005. Comparing to 2004 revenues has increased by 4%. Furthermore sales of fast food to quick service restaurants represented the markets most profitable segment, generating total revenues of 1.6 billion in 2005, equivalent to 59.7% of the market’s overall value.