The Global Fast Food Industry Marketing Essay

The Global Fast Food Industry Marketing Essay McDonalds Incorporated recognized as a premier franchising business around the world, leading global food service retailer having over estimately about 32,000 local restaurants which serve its favourite foods The World Famous -: Fries, Big Mac, Quarter Pounder, Chicken McNuggets and Egg McMuffin to more than Sixty four (64) million people in 117 countries each day. Primarily , McDonalds , french fries, breakfast items, sells hamburgers, nuggets cheeseburgers, chicken ,ice -cream soft drinks, milkshakes and desserts. In response to changing consumer tastes, the company has expanded its menu to include salads, sundae , fish, wraps, and smoothies . McDonalds has made convenience a key factor in its success as below :- Convenience Restaurant locations are so prevalent in suburban towns and cities that you are never more then a few minutes away by car or by foot. McDonalds restaurants located inside for customer availability Shopping centers and strip malls generally have a McDonalds included or within walking distance ,willingness to innovate, even while striving to achieve consistency in the operation of its many outlets and also McDonalds to operate 24-hour drive-thru https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcSaDWH9X4IAsCkYCWZgWNc_q4LxAEkVxQlEBJMHhRmORRuzjvBRZA https://encrypted-tbn1.gstatic.com/images?q=tbn:ANd9GcScMysGdHJbfJD_0k8b95FTtL_PYzGxvfNnh950cxLGQc4xZwby7g Affordability McDonalds considered as Fast food, fast-moving life Fast food has its own place in todays fast-paced life as time is limited. A recent report reveals that up to 70% of the respondents surveyed eat out every day, and among them, 77% head for fast food restaurants between one and three times a week mostly for lunch. The worlds largest restaurant chain posted 10 percent growth in its third-quarter profit that topped market estimates, McDonalds has economic downturns because of the affordability of its menu give customers the option to eat a full meal at a small cost Because of the fast-food restaurants ability to appeal to low-income and middle class families, the company continues to see profit gain. https://encrypted-tbn3.gstatic.com/images?q=tbn:ANd9GcSq5soyD0JnZJWlswY1-RPEVWxZlIsip8aezyhd-2JoriH0oX7hhttps://encrypted-tbn1.gstatic.com/images?q=tbn:ANd9GcT6x5kVSJXctzLYo3ymxeo2hTCGcKkhkbsbst3J2PLvV86C2_HgeA https://encrypted-tbn3.gstatic.com/images?q=tbn:ANd9GcSU9kbCjmlumQPiVI7YFqaps5W-Stg9zsLGJVyo17tcZOK1dAFetA Nutrition McDonalds also pledged to provide customer-friendly nutrition information on menu items. Customers have access to the caloric and fat content to make better choices. This acknowledgement of customer health has helped keep McDonalds successful. On the organizations website, McDonalds states that part of its success is due to its commitment to the well-being of customers. McDonalds established a global advisory council to provide expert guidance on nutrition and well-being. To satisfy health-conscious customers, the fast-food company began to include high-quality choices on the menu. Customers are able to choose from hamburgers or salads as their main entrà ©e. Apples may also take the place of French fries in childrens Happy Meals. French fries are considered to be one of the most sellable items. The very main reason for this is that no matter what other product the consumer is still willing to buy, but in every set French fries are included automatically https://encrypted-tbn3.gstatic.com/images?q=tbn:ANd9GcREJNJ9dZIHZuem2xdZmHZnlEy28McSgaiYZROEwfXui7YunpWUjwhttps://encrypted-tbn3.gstatic.com/images?q=tbn:ANd9GcQmfq5H6VzUZLw9DPxQ_StveJlWCVxU1QprfH_5zfIp77uFNmBk The global fast-food industry is dynamic with variety of competitors. This report identify the current factors influencing the industry specifically focusing on McDonalds Corporation, which considered as the current global leader. Based on the analysis, the report identify several areas for improvement and makes strategic recommendations for McDonalds to enhance its position. . McDonald s corporations revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants Proactive strategies, interesting promotions and a constant update of menus while retaining the best-selling signature items will boost the frequency of customers visits. McDonalds, for example, has chalked up impressive sales by offering seasonally-based toys with its Happy Meals. It also scored points as a frontrunner in offering free internet connectivity at its outlets when WiFi was not freely available at many public places. A McDonalds restaurant is operated by either a franchisee, an affiliate, or the corporation itself As a result, taglines such as Subways Eat fresh, McDonalds Im lOving it! and the oft-repeated story of Colonel Sanders secret recipe in Kentucky Fried Chicken can influence dining decisions https://encrypted-tbn0.gstatic.com/images?q=tbn:ANd9GcSxCB6gIIu_lggbJZTL9_HKwadqOb6DzIEmi0uw8pjdus9Q3tLUqA The earlier stages of McDonalds attracted more families than it did other categories, nowadays, McDonalds has made it clear that it positions itself to target and cater people of all backgrounds. Suitable for people of various needs and wants; from families to young children, to people who love to enjoy life to people who are on the go, and meat lovers to vegetarians, virtually anybody and everybody can find something on the menu for themselves. https://encrypted-tbn2.gstatic.com/images?q=tbn:ANd9GcQRZib45RcWFIr_BAO1s3J7mkUlJLfDrpYyCokKM_9BfT14jNJQNg https://encrypted-tbn1.gstatic.com/images?q=tbn:ANd9GcQD0Du3jvRQNteJNUTBOXDufWNtPkgI10_GndFYvVPqgtXgtEkYlQ . Other products such as salads are relatively new in this restaurant. The first salads were added to its menu in 1985. Nowadays more and more people are concerned about their health so, McDonalds puts its all efforts to achieve more and not lose any of the potential customers. The biggest soft drink supplier is the Coca-Cola Company. Hot and iced tea is delivered by SD Coffee in the US), hot chocolate, various juice and other regional beverages such as milkshakes are available in various markets all around the globe. Desserts are considered to be the last big group of products in McDonalds restaurants. It includes such items as ice-cream (McFlurry), McDonaldland cookies, Freshly Baked cookies, Pies, Cinnamon melts, the fruit and yougurt parfait, smoothies and other items which depending on the region and country. McDonalds Business Strategy McDonalds has pursued 2 strategies since 2003. To be in the run with the fast changing customer preferences, demographics and spending patterns, McDonalds has introduced novel items in their menu including angus beef burger and premium chicken sandwiches and does campaigns to create more healthy foods including salads on the side. This strategy basically reflects the beliefs that innovation as opposed to reliability to traditional products is the key determinant towards success in the fast food industry. They have also focused more on increasing their sales at their current restaurants instead of opening new ones. To do so, McDonalds has redesigned many of their restaurants, kept their stores open till late and increased menu options. Nonetheless, new restaurants are still getting opened around the world at a rapid pace the company plans to open nearly 1,000 units in 2010, and continues to produce its new restaurants at a 1%-2% rate each year. Size Matters Size of McDonalds has three main advantages: * McDonalds has a strategy of uniform menu offerings that can be accumulation produced, lowering production costs. * Bargaining power with their suppliers reduces input costs with improved margins. * Large advertising costs mean lots of exposure towards domestic and international market. Mission. Vision. Values McDonalds brand mission statement is to Be our customers favorite place and way to eat .McDonalds are committed to improving operations and enhancing customers experience. .. world-wide operations have been aligned around a global strategy called the Plan to win cantering on the five basics of an exceptional customer experience such as :- Place, Promotion, People Products and Price Providing the excellent service to all customers and achieve the growth with a profit through strengths as McDonalds system innovation and technology This mission includes becoming of the best employer for people in each local community independently in location. The Mission: Be the best employer for our people in each community around the world Deliver operational excellence to our customers in each of our restaurants; Achieve enduring profitable growth by expanding the brand and also leveraging The vision of McDonalds is to be the best quick service restaurant in the whole world . McDonalds company states that their values in practice are the corporate responsibility of the company. . It refers to outstanding Quality, Cleanliness, High Quality Service and High Value Food in order to make every customer satisfied and made sure customer smile. McDonalds values is customer satisfaction which is very important . McDonalds show the appreciation by serving a high quality food and superior service. It is said. Their strong values helped them to become who they are and that the reason for McDonalds existence are customers. The work together with suppliers and independent franchisees to achieve a sustainable future not only for the company but for the communities in which they operate as well . They also strive to achieve a welcoming environment by greeting all customers nicely and perfectly . They are individually accountable and collectively responsible. They are achieving some goals and most importantly open lines of communication is the main value between customer and also to the other stakeholders. Another value is to be committed to people who are working to them. They do believe that working in a well-trained team with intercultural experiences and backgrounds are the core of success. The other value is that they believe in the McDonalds System. . McDonalds obliged to grow business profitably as long as it is publicly traded company. This requires not only focus on gaining more money but also on customers and the health of the whole system. Ethic in business is also one of the important values . The changing environment, customer, employee and systems need lead to the McDonalds evolution and innovation as well. PESTLE Analysis is an analytical tool for strategic business planning. PESTLE is a strategic framework for understanding external influences on a business. There are many macro-environment factors that effect strategic planning such as: New laws, tax changes, trade barriers, demographic change. Macro-environment factors includes all the factors that influence an organization, but are out of its direct control. Macro-environment factors tend to have a very long term impact. By understanding these external environments, organizations can maximize the opportunities and minimize the threats to the organization PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental and is used for business and strategic planning, marketing planning, organizational change, business and product development and research reports. . PESTLE analysis answers 6 key questions: Political What are the political factors that are likely to affect the business? Economic What are the economic factors that will affect the business? Sociological What cultural aspects likely to affect the business? Technological What technological changes that may affect the business? Legal What current and impending legislation that will affect the business? Environmental- What are the environmental considerations that may affect the business? Political Factors Political factors relates to the pressures and opportunities brought by political institutions and to what degree the government policies impact the business. Government policies Government term and change Trading policies Funding, grants and initiatives Lobbying and pressure groups Wars, terrorism and conflicts Elections and political trends Internal political issues Inter-country relationships Local commissioning processes Corruption Bureaucracy Political Global fast-food firms must comply with country-specific political requirements, such as national minimum wage regulations, affecting costs. Hygiene and quality regulations vary significantly between nations and may influence the quality of products provided by fast-food outlets . Different countries set varying regulations regarding labelling and packaging. Economic Factors Economic factors relates to economic policies, economic structures and to what degree the economy impacts the business. Local economy Taxation Inflation Interest Economy trends Seasonality issues Industry growth Import/export ratios International trade International exchange rates Economic Despite the 2008 recession and the resulting decrease in consumer confidence across the globe, average consumer fast-food spending has increased its due to convenience and low-cost. Consumers are still looking for the convenience of eating out, but are drawn to the low prices of fast-food over table-service restaurants (Financial Times, 2009). Many fast-food chains have capitalised upon the recession by introducing new deals in addition to their already low-priced menus. Social Factors Social factors relates to the cultural aspects, attitudes, beliefs, that will affect the demand for a companys products and how the business operates. Demographics Media views of the industry Work ethic Brand, company, technology image Lifestyle trends Cultural Taboos Consumer attitudes and opinions Consumer buying patterns Ethical issues Consumer role models Major events and influences Buying access and trends Advertising and publicity Increasing consumer awareness about healthy lifestyles has pressured many fast-food players to offer healthier selections within their menus (BBC, 2011). This includes offering low-calorie options and salads alongside burgers, and prominently displaying nutritional content. The fast-food industry has also been heavily criticised for targeting young children by including toys within childrens meals Technological Factors Technological factors relates to the technological aspects, innovations, barriers and incentives, and to what degree these impact the business. Emerging technologies Maturity of technology Technology legislation Research and Innovation Information and communications Competitor technology development Intellectual property issues As consumer familiarity with new technology increases, fast-food firms are using channels such as social media websites to engage with their customers. For example, McDonalds is the 9th most liked brand on Facebook . Additionally, digital displays allow outlets to change their menus efficiently, to suit the time of day and self-service ordering points have increased service speed and reduced labour costs. Legal Factors Legal factors relates to the laws, regulation and legislation that will affect the way the business operates. Current legislation Future legislation International legislation Regulatory bodies and processes Employment law Consumer protection Health and safety regulations Money laundering regulations Tax regulations Competitive regulations Industry-specific regulations Global operators must comply with country-specific regulations and legislation. This includes opening hours, taxation and employment regulations such as the National Minimum Wage Regulations in year of 1999 in the UK. Firms are often required to meet national food standards such as the requirements set out by the US Food and Drug Administration (as known as FDA). Furthermore, authorities are becoming increasingly worried about childhood obesity associated with the industry and have tightened regulations regarding targeting children Environmental Factors Environmental factors relates to the ecological and environmental aspects that will affect the demand for a companys products and how that business operates. Environmental regulations Ecological regulations Reduction of carbon footprint Sustainability Impact of adverse weather Environmental lobbyists and governments are pressuring the fast-food firms to become more green. Rainforests are being destroyed to increase the area of land for beef production to meet the demand for beef-burgers . Recycling is a prominent global issue and in response, McDonalds adopted recyclable packaging. Increased environmental awareness among consumers provides firms with a significant opportunity to position themselves as green to garner customer loyalty Strengths of McDonalds Identification of strengths weaknesses McDonalds provides the best employees-business relationship such as providing an equal opportunity employer. As an equal opportunity employer McDonalds ensures that employees and job applicants are selected, trained, its promoted without discrimination to race, gender, sexual orientation, age or disability. McDonalds brand strengths keep customer come back again For quick-service restaurant patrons the most important factors that drive loyalty to a brand are good value and convenience, with low prices and quick-service being very important as well McDonalds has a clear image lead on all of these factors, with Subway consistently being the 2nd-best performing brand and Burger King and Wendys also performing well The resource strength, behavior, weakness, synergy and distinctive competences are major components of the internal environment of an organization. . McDonalds high repeat-purchase intention scores despite their lower satisfaction scores illustrates the strength of their brand on the attributes that matter most to quick-service customers. Taking into consideration that McDonalds is a global company, working its capital in many countries worldwide and known for almost all people in the world, we can point out such strengths of this franchise:It is all about how the company manages to use its resources and put into what outcome it brings. McDonalds is the market leader in both the domestic and international markets The size of McDonalds, as it was mentioned before, its enormous and it has an advantage of economies of scale, which is very crucial for every business. McDonalds is a strong competitor for all sit-down restaurants because of its size, worldwide extent and famousness. Smaller brands need to find ways to differentiate among themselves to gain share of wallet in this ultra-competitive segment. Diversifying business worldwide in various countries let to reduce or at least to verify the risk of business and find best advantages of different countries economies. McDonalds also takes an advantage of a long-term economic growth as an international company. It is also known that McDonalds has a strong real estate portfolio, which is also considered as strength of a company. The companys outlets are located in areas that are highly known for visibility, traffic volume and ease of access. It can adapt to the needs of the societies and undergo an innovative product line. McDonalds promotes and sustains a working environment, which is free from unlawful discrimination, harassment and bullying The brand of McDonalds is easy recognised among competitors and is very strong. Through aggressive market planning, MacDonalds has been able to recapture its youth market once again. Viewing the strengths of McDonalds form consumer eyes, the strengths can be more focused on brand, famousness, quick supply of a food, good taste of food, which often lead even to an addiction of McDonalds foods, also mostly well perceived personnel polite and performing their job well. Weaknesses of McDonalds Weaknesses: Saturated Nature of Business: The company has a presence in nearly every nook and cranny the world has to offer, so there is not much more room to run McDonalds has a very huge extent in the world, has a strong strategy, feels comfortable in a market and well known brand , however, as all business it faces some difficulties or some threats and as all business has some internal weaknesses but can be identified only by professional economists, which actually cannot be always visual by individual eyes, The summary of McDonalds weaknesses might be: Looming market saturation which it can lead to difficulties in advertising new products. Recent Disappointment: Recently the company has reported declining revenues and a great strain on their same-store growth rate; however in the long-term view of things these short- term issues should not prove significant McDonalds also a low innovative company Fast growing and competitive market. That makes company to face income problems Income problems and huge competition do not let the range of production rise into value ones but makes to diversify a range of cheap and quickly made ones. Nevertheless, fast food industry is not a respected industry in most of nowadays point of view because of rising number of various diseases caused by fast, unhealthy food. Moreover, McDonalds food might seem more unhealthy and fatty food, rather then delicious. And there the price seemed as low doesnt help in case of quality of food Low Barrier to Entry: All a person has to possess to compete with McDonalds is food, and it is an under-exaggeration to say that there is fierce completion in the industry McDonalds operates in In more simple view the McDonalds might have weaknesses because of huge competition in fast food industry. Vulnerability to Rising Input Costs: The historic drought this year has already caused food prices to soar, and this will cause McDonalds to face a situation in which they raise prices for their customers or allow their margins to be squeezed, a lose-lose situation Charity McDonald House charity offers thousands of sick children in estimate about 48 countries hope and it inspires courage. They say laughter is the best medicine and nothing makes people smile more than a Happy Meal. world-policy-hero At McDonalds we recognize our responsibilities to protect and preserve the environment for future generations to come Internal and External environment analysis for Mcdonalds This McDonald business is ranked as number 1 in the Fortune Magazines 2008 list of most admired food service companies. McDonalds has been a thriving business since year 1955 and 20 of the top 50 corporate staff employees started as a restaurant level employee. Fortune Magazine 2005 listed McDonalds as the Best Place to Work for Minorities. They have an efficient, assembly line style of food preparation. In addition they have a systemization and duplication of all their food prep processes in every restaurant. McDonalds is a community oriented, socially responsible company. They run McDonald House facilities, which provide room and food ,board and sibling support at a cost of only $10 a day for families with children needing extensive hospital care. McDonald Houses are located in more than 259 local communities worldwide, and McDonald Care Mobile programs offers cost effective medical, dental and education services to children. They also sponsor Olympic athletes. They successfully and easily adapt their global restaurants to appeal to the cultural differences. Example, they serve lamb burgers in India they provide separate entrances for families and single women. McDonalds uses only 100% pure USDA inspected beef, no fillers or additives. Additionally the produce is farm fresh. McDonalds serves 100% farm raised chicken no fillers or additives and only grade-A eggs. McDonalds foods are purchased from only certified and inspected suppliers. McDonalds works closely with ranchers, growers and suppliers to ensure food quality and freshness. McDonalds only serves name brand processed items such as Dannon Yogurt, Kraft Cheese, Nestle Chocolate, Dasani Water, Newmans Own Salad Dressings, Heinz Ketchup, Minute Maid Juice. McDonalds takes food safety very seriously. More than 2000 inspections checks are performed at every stage of the food process. McDonalds are required to run through 72 safety protocols every day to ensure the food is maintained in a clean contaminate free environment. McDonalds was the first restaurant of its type to provide consumers with nutrition information. Nutrition information is printed on all packaging and more recently added to the McDonalds Internet site. McDonalds offers salads, fruit, roasted chicken, bottled water and other low fat and calorie conscious alternatives. It has branded menu items e.g. Big Mac, Chicken McNuggets, which further promote McDonalds. McDonalds Egypt: Has the second largest market share in Egypt with branches exceeding 60. Fastest delivery service provided in Egypt. Nutrition information is printed on all packaging Safety protocols and quality assurance to serve best quality food. More than 92% of suppliers are Egyptian (Halal) Efficient assembly line to serve food as fast as possible with maintaining high quality. McDonalds is the first restaurant in Egypt to provide drive through in 7 branches. Has a joint venture with shell petroleum. Sponsors many events and football teams. Cares about the environment by recycling the oil used in cooking for delivery motorcycles.