McDonald’s target market Essay

In 1948 Dick and Mac McDonald opened the first McDonald’s restaurant in California. Today, McDonald’s is the world’s leading food service retailer with more than 30,000 restaurants in 118 countries, serving a total of 46 million customers each day. McDonald’s vision is to be the best restaurant experience …by far! To be people focussed and customer driven …passionately! And to inspire people with our can do attitude…always! (McDonald’s Fact File, 2004). This essay aims to identify McDonald’s target market and desired position, to identify McDonald’s ‘Marketing Mix/tactics’ with reference to their effectiveness and make recommendations for improving elements of the mix.

A target market can be defined as a chosen segment of a market that a company has decided to serve (Jobber, 2004). For McDonald’s age has been a big factor in choosing how to segment their market. McDonald’s biggest target market is children. This can be highlighted by the associations with Ronald McDonald, with birthday parties and happy meals among others. McDonald’s argues that ‘children are very finicky and anything that is of the moment will interest them…this means you will have to be on top of the trends’ (Kotler,2001).

McDonald’s partnership with Disney, providing toys from the latest movies in their happy meals ensures that McDonald’s keeps on top of their largest market base. Their Internet site is also heavily targeted towards children, with games, children’s clubs and competitions. McDonald’s however realises that if children want to come to McDonald’s parents will be coming too, therefore they promote McDonald’s as a family experience offering a variety of meals to suit all. Currently they are advertising the McDonald’s Family Meal Deal which includes two Big Mac Meal’s and two Happy Meals for just �9.99.

McDonald’s in recent years has aimed to attract additional market segments and increase their market share. This has been a result of changing demographics, including a decrease in birth rates and an aging population. In Northern Ireland, for example, around 25% of the population is between 16-24 years old. McDonald’s extension into this market included Justin Timberlake and the very catchy “I’m lovin it” theme tune in 2003. In store they offered Extra Value Meals including the Pound Saver Menu. Presently McDonald’s have formed an alliance with Blockbuster which gives free dvd tokens to those who purchase two or more of their Value Meals.

Another major social change that had serious implications for McDonald’s was the changing attitude towards health. McDonald’s in particular received much criticism about causing obesity and after the release of the film Supersize Me in 2002 other harmful effects that McDonald’s products can have on the body were made public. McDonald’s has taken steps to introduce healthier food options and increase its association with sports. In March 2004 McDonald’s launched the Salads Plus range- representing the biggest change to the UK menu for 30 years (McDonald’s Fact file 2004). McDonald’s new healthier range again targets 16-24 year olds, however also gives parents more choice.

In terms of positioning, successful positioning is often associated with products and services possessing favourable connotations in the minds of customers (Jobber, 2004). McDonald’s is related to cleanliness, consistency of product, fast service and value for money. As it reaches into new markets McDonald’s desired position is to establish itself with these qualities in the minds of its new customers, at the moment 16-24 year olds.

The Marketing Mix consists of four elements: Product, Price, Promotion and Place (The 4 P’s). In recent years an argument has been put forward by Booms and Bitner that the service industry requires a 7 P’s approach the additional criteria being Process, Physical and People (Jobber, 2004). Although it has also been argued that the extra criteria can be incorporated into the 4 P’s in order to make sure nothing is left out the 7 P’s approach will be used for McDonald’s.

Product

One major strength of McDonald’s has been its ability to establish itself as a brand name. It is a brand well known and trusted by the general public. For the McDonald’s menu they have aimed to create a standardised set of items that taste the same throughout the world. Slight changes have been made in some countries because of consumer preferences and customs such as in India, where cows are considered sacred; McDonald’s serves chicken, fish, vegetable burgers and the Maharaja Mac (Kotler ; Armstrong, 2004). Regardless of these changes the menu is structured to give customers a main item, fries and a drink. The company strives to ensure quality from field to counter. McDonald’s requires the highest standards and specifications for product ingredients, production, delivery, preparation and service (McDonald’s Fact file 2004). McDonald’s have a very effective New Product Development Team, which are constantly looking at ways of improving the menu through customer monitoring and suggestion boxes.

Place

McDonald’s has a total of 31,561 restaurants in the world. In the UK alone it amounts to 1,248. McDonald’s has always been a franchising company and has relied on its franchisees to play a major role in its success. Approximately 70% of McDonald’s worldwide restaurant businesses are owned by independent investors. This allows the McDonalds Corporation to take advantage of increased revenues, without taking the risks associated with investing in the restaurants. There is often more than one restaurant in every major city; these restaurants are often located in prominent locations such as town centres and retail parks.

Price

McDonald’s is aware of the cost savings by having a standardisation menu. They have to set prices locally rather than on a global scale. McDonald’s looks at demand for their product as a means for setting the price. Generally they use a value-based approach to pricing, this highlighted by their Extra Value Meals ands Pound Saver Menu.

Promotion

McDonald’s use a number of different methods to promote the company. They are by far the largest advertiser in the industry spending more than $660 million a year on advertising (Kotler & Armstrong, 2004). Sponsorship is another method of promotion; one key figure that McDonald’s in the UK is associated with is Alan Shearer. Ronald McDonald houses, Ronald McDonald Children’s Charities and McDonald’s Education Service are among others that promote the company. In store sales promotions, such as buy one get one free are successful means of promotion also direct marketing such as birthday parties and publicity such as Mchappy day are important.

Process

McDonald’s operates on an assembly line process taken from the idea of Henry Ford. The speed of production is a key factor in the success of McDonald’s. The process for making food and buying food is identical everywhere. McDonald’s overcame language barriers for customers by using pictographs. Drive thru is seen as a convenience for customers.

Physical

Kroc’s marketing philosophy is captured in McDonald’s motto of ‘QSC ; V’, which stands for Quality, Service, Cleanliness and Value (Kotler et al, 2001). This is exactly what you receive when you enter any McDonald’s. McDonald’s emphasises a family environment with no cigarette machines and no jukeboxes which would encourage teenage hangouts. All McDonald’s have a similar layout, lighting and furnishings.

People

McDonald’s aims to recruit people who have a positive attitude towards customers and other employees and who are capable of delivering the highest standards of quality, service and cleanliness to their customers (McDonald’s Fact file 2004). In 1994 when McDonald’s advertised “There’s nothing quite like a McDonald’s” they began to take a more personnel approach to their customers to add to the McDonald’s experience (Claudio Vignali, 2001).

There are four characteristics that an effective marketing mix needs in order to achieve marketing and organisational objectives. In order to be effective a marketing mix must match customer needs, create a competitive advantage, be well blended and match corporate resources (Jobber, 2004). McDonald’s effectiveness will be assessed using these criteria.

Match Customer Needs

In order to assess if the product or service is matching customer needs the management team need to look at the product through the customer’s eyes. They need to realise that customers evaluate products on economic and psychological criteria (Jobber, 2004). In terms of economic criteria McDonald’s products are widely available, reliable in that they are always of the same standard and reasonably priced. They meet psychological criteria in that they are pleasurable because they taste good and are convenient however the image associated with McDonald’s and the risk taking due to obesity and harmful health claims has left some people with a negative image of McDonald’s.

Competitive Advantage

In order to gain a competitive advantage it is important to know what customers value and how to satisfy them. McDonald’s is the leading competitor in the food industry. This is because it realises customer’s value quality, service, cleanliness and value for money. The demands of customers in the food industry however are changing to focus more on the product; this is highlighted by the fact that there are now more subway restaurants in America than McDonald’s. McDonald’s may find it difficult in the future to keep hold of this competitive advantage.

Well Blended

In order to be effective a consistent theme needs to be developed throughout the 7 P’s. McDonald’s products are standardised and this is indeed reflected in the value based pricing. The promotional mix all highlight a consistent theme with good choice, good quality and good pricing. Regardless of where the place is the process and physicals are all going to be the same. The people emphasis the same virtues of quality, service and cleanliness that are emphasised throughout all the stores.

Corporate Resources

McDonald’s is in a secure financial position. Total sales in McDonald’s UK restaurants in 2004 were in excess of �1.6 billion (McDonald’s Fact file 2004). It is interesting to note however that profit has fallen since 2001 and in 2003 they faced 29 closures. McDonald’s are losing out to the likes of Subway that are selling fresh healthy products and although they have their salad range it is not having a major impact. McDonald’s need to look at the human resources they have to get their healthy range to the top of the market.

If we look at the areas in which McDonald’s lacked effectiveness we can see that some people are associating McDonald’s with a negative image due to obesity and harmful health claims and as a result their salad’s are not having as big an impact as they had hoped. A further result of this was that we seen Subway are taking over the market in the USA. McDonald’s is simply not seen as the place to go to get healthy food. A recommendation for McDonald’s is that they increase their advertising campaign and don’t stop until they convince people that they are all about fresh products and not processed food.

McDonald’s also needs to use the fact that its meals are available at any time throughout the day to its advantage. For young professionals eating on the move has become a necessity and the traditional one hour lunch break is not as stead fast as it used to be. Again through extensive promotion they could increase brand awareness and make the McDonald’s name the first thing on the minds of young professionals when they are thinking I need to go somewhere and eat quickly.

In terms of place, McDonald’s with regards to the continuing growth of the economy needs to be very strategically aware of all new shopping centres or complexes opening so that it can view sites first and stay pro active when considering new locations for its outlets so that it does not lose any market share to competitors. Another area with possibilities for McDonald’s is the website. McDonald’s website does not allow the consumer to place an order and have it delivered; this is offered by some competitors namely Pizza Hut and Papa John’s. This could be something the company could develop in the near future.

Kotler et al (2001) recognise that credit for McDonald’s success belongs to a strong marketing orientation. McDonald’s know how to serve people and adapt to changing consumer needs. In this essay we have identified McDonald’s target market, marketing mix, the effectiveness of the mix and made recommendations. To conclude on a light note it is true to say that ‘not everyone is a McDonald’s fan, but millions daily are happy to return to the trusted golden arches’ (Dibb et al, 2001).