Economy:
When the economy is strong this means that there is more money and this means more customers to buy products therefore more cash flow.
When the economy is weak this means that there is less money and this means less customers to buy products therefore less cash flow.
Inflation:
Inflation is the cost of living and when there is high inflation customers have to spend more leaving them with less money to spend therefore not high sales.
When there is low inflation can be an advantage and disadvantage so if inflation is too low the demand is low and companies cannot put the prices up so less profit is made but when it is low to an extent this means that there is more money in the economy therefore more money to be spent.
Competition:
A company like McDonald's has to develop competitive strategies that differentiate it from its rivals therefore out compete them. Rising incomes mean that the economy is richer as a result it means more people are able to eat at a fast-food service and this pushes the promotion of new products to keep the large franchise into the competition.
There are a number of competitors but the main competitors are:
- Burger King
- Pizza Hut
- KFC
Interest Rates
The higher the interest rates are the more interest the public will have to pay so this means the customers have less money to spend and this is the same principal as with the state of economy.
Key Objectives
McDonalds is looking to expand their business by selling their franchise to other people in other companies, the more they expand the more money they make.
- Promote new products to kids
Kids are McDonalds selling point, the best way for them to promote this is with the ‘Happy Meal’ and this is also kept the same but the toys are updated according to latest hits for the kids.
This is the most common objective of any sort of business but there are also other reasons for this objective, one of them is if there is more money they can expand therefore even more money is made.
- To train employee’s to satisfy customers
The reason McDonalds is as successful as it is, its because they are willing to sacrifice money on employee training so they can satisfy the customer and if the customer is satisfied this will result into them coming back more than once.
Price is becoming a more critical decision for McDonalds, as there is more competition, McDonalds is giving new products for a great value price because there is more competition out there.
The Marketing Strategy McDonalds Uses
The 4 'P' s
Marketing is all about the four 'P's - product, promotion, pricing, place and this will ensure that McDonalds will stay ahead in the competitive market.
Product
The product is the item that the company is selling to the public. In McDonald's case, it is the burgers, chips and drinks that are the products. A business often sells many different products in order to generate more sales and also to reduce its risk should one product fail. Different products may cater for different markets too. For example, the Big Mac is made for those who like to eat beef burgers, and the Chicken McSandwich is made for customers who prefer chicken. In this way McDonald's is satisfying two markets and therefore increasing sales. This is known as product differentiation and is a very successful method.
Promotion
Businesses need marketing to communicate with their customers. Without it customers would not know about the company's products or even about the company itself. It is thus vital that advertising is done through as many channels as possible so the maximum numbers of customers are reached. McDonald's has done this by advertising on television, radio, newspapers, magazines, posters, sponsorship of well-known events such as the World Cup and even on the Internet.
Place
The place that a product is sold is important. A product will not sell well in areas where demand for it is low and it must therefore be situated well to attract the right consumers.
Price
A business needs to think very carefully about its pricing in order for it to maximise its revenue. Setting the right price for a product is crucial for the business. A price that is too high may lose sales as consumers switch to cheaper alternatives, but a price that is too low may also lose revenue as consumers may think that a lower price means lower quality. In order to attract customers a business may use a variety of different pricing strategies such as discounts and sales. A company may run special offers in order to attract new customers, in which prices are temporarily lowered or some incentive is offered to buy.
How McDonalds is a Franchise
McDonalds is a franchise and McDonalds; the franchiser grants the franchisee the right to sell McDonalds branded goods to someone who wishes to set up their own business. The licence agreement allows McDonalds to insist on manufacturing or operating methods and the quality of the product.
McDonalds will own or lease the site that the new franchisee has set up the business.
Advantages of being a franchiser
- Sells the business to the franchisee
- Provides expansion capital
Advantages of being a franchiser
- Reduction of risk for the investment
- Systems/Policies/Procedures Already Tested And Established
- Quicker Startup/Higher Sales/Higher Profit/Increased Equity
To Consumers
Franchising is booming because consumers like to purchase goods and services from familiar names with reliable standards of service and quality. They like to deal with businesses where the owner is on-premise and has been established with a successful brand name.
