Recently, in this crowded market place, McDonald's competitive lead came under pressure largely because many fast food outlets have either:
* copied the trail-blazing ideas that previously set McDonald's apart and put it ahead of the field
* promoted new ideas of their own e.g. urban supermarkets and petrol stations that sell convenient, portable mealtime replacements.
McDonald's recognises the need to respond. It is looking to increase the competitive gap by:
* adding greater value through innovation
* making the process of visiting a McDonald's less routine and controlled
* enhancing the overall in-house experience.
McDonalds has defined its marketing approach: Price, Promotion, Place, and Product.
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Competitive Pricing: Being in touch with the pricing of their competitors allows McDonalds to price their products correctly, balancing quality with value.
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Competitive Promotion: Before McDonalds communicate with their customers they must be aware of what their competitors are communicating so that they can create a beneficial difference between them and their competitors.
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Competitive Place: Distribution is key to any retailer or brand.
Competitive Product: Quick Service Restaurants are constantly expanding their menus. This can be done on a short-term promotional basis or as a long-term expansion strategy.
In terms of the marketing concepts, what issues are of most concern to McDonalds?
McDonald's is looking to provide appropriate solutions to these changing trends, in it’s marketing concepts. In particular what concerns McDonalds the most is:
* consumers are seeking more food variety and healthier eating - McDonald's is providing a more balanced offering that includes fruit, sugar-free fruit drinks for children and more chicken products
* price is becoming more critical to decision-making - McDonald's has created an Extra Value Meal and a McChoice menu offering a flexible combination of drinks, sandwiches etc in addition to the meal, thereby providing excellent value for money.
McDonalds has responded to the data they have gathered through market research by providing the best possible marketing mix (the four P's) for their customers. This involves providing:
* appropriate products e.g. chicken as well as beef, salad items, and healthy drinks for children
* the right price: in this case providing food and drinks in a value for money way
* in the right place (at convenient locations) e.g. in shopping areas/malls
* through the right form of promotions. McDonald's spends more on advertising its promotional offers than all of its competitors combined.
Even mature markets can have gaps in provision that leave some potential customers unsatisfied. The McCafé development is the result of intensive market research that has identified a group of potential customers that had remained largely untapped.
McDonald's recognises the importance of listening to the needs and requirements of this substantial group of users. McCafé provides an avenue for McDonald's to target these consumers by offering high quality coffee served by specially trained café staff in a café style environment.
McDonald's has defined its target market clearly. TheMcCafé target market is customers who appreciate quality coffee and who want an excellent product in an attractive, undaunting environment.
This concept has already worked well in Australia and New Zealand where the café concept is less developed than in Europe and America. These examples suggest that while McCafé works well and is profitable in both city and suburban locations as city locations in the UK become increasingly flooded with new entrants to the café market, competition for 'the coffee £' will continue to increase as will the need to continue to look for new ways to compete within cities.
Suburban and regional McCafés offer a new group of customers a way of taking 'time out' with a good cup of coffee. Demographically this group is primarily female, aged 25-39. Many within this group have young families. McCafé are designed to offer them a place to meet friends and enjoy a quality coffee experience as well as keep the children fed and entertained.
The emphasis is on a casual coffee experience in a comfortable place where people can relax and feel welcome. At the same time, McCafé's association with McDonald's brings with it a 'Family Friendly' environment and, unlike some of the more pretentious cafés, a place where children are welcome and specifically provided for. The convenience of car parking and playgrounds also makes McCafé a highly attractive destination for these people.
McCafé customers are busy people. Whether they are 'Mums with Kids' in search of a little 'time out' to themselves, or white-collar city workers in search of a quick break from the office, they all have one thing in common -the need for a promptly-served high quality drink.
McCafé offers a haven in which they can spend whatever time they have available with a good quality coffee at a value for money price.
What are the benefits to McDonalds of their marketing campaign, e.g “I’m loving it”, and the limitations?
“ I love what McDonalds is doing with this new campaign and it’s cool to be a part of it” said Justin Timberlake. “ We share the same crowd – people who like to have fun – and that’s what this new partnership is all about”.
McDonalds will work with Justin Timberlake to develop new and innovative ways to reach and connect with today’s young customers and today’s pop culture. In addition, he was involved in activities to support Ronald McDonald House Charities, World Children’s Day at McDonalds worldwide fundraiser on November 20th, and McDonalds global sports sponsorships including FIFA World Cup and the Olympic Games.
McDonalds “I’m lovin it” campaign marks a key milestone in McDonalds marketing revitalisation process. McDonalds countries will incorporate the “I’m lovin it” theme into advertising, promotions, public relations, restaurant merchandising and overall brand communications initiatives.
The benefits of the campaign is the attraction to the youthful communities around the world, as each aspect of the “I’m lovin it” campaign shows off the way the youth culture of today in each country actually is.
The limitations of the “I’m lovin it” campaign is that they could alienate their existing established customers who are currently outside of the ‘youth’ market as the campaign is entirely advertised for the youth market.
The likes of Burger King, Wimpy and Wendy’s as well as independent burger bars are not running such intense campaigns like the “I’m lovin it” campaign, which is advertised solely for youths. Established customers may treat this campaign as a threat because of their age, and decide to change which burger outlet they may eat at.
As the market leader and as a pioneer of the Quick Service Restaurant concept, McDonald's has to respond to a changing business environment. It is well placed to do so. It has listened to its customers, and also observed them. Based on its research, it has launched McCafé and McChoice - new products conceived and designed to complement and extend what it already offers and to keep the company 'ahead of the game' in an increasingly competitive market place.
