Technological: This means the impact technology on the operations that are carried out and what you do, technology is evolving at a very fast pace and the same needs to be assessed about how it impacts the organisations products and / or services, things that were not possible five years ago are now mainstream, for example mobile phone technology, web 2.0, blogs, social networking websites. New technologies are continually being developed and the rate of change itself is increasing. There are also changes to barriers to entry in given markets, and changes to financial decisions like outsourcing and in-sourcing.
On a technological front there were not many inventions or impacts which would have considerably affected the food industry in general and McDonalds in particular. However, there have been some minor improvements that the company would have achieved by the way of improving the quality of offerings and bringing down the time of service by pruning on the technology and also McDonalds has brought in a technological service offering to their stores by offering Wi-Fi in their stores for customers as a value added service.
Environmental: This relates to the study of what is happening with respect to ecological and environmental aspects. Many of these factors will be economic or social in nature.
The environmental issues that happened during the previous year were the adverse climatic conditions that were experienced in winter which had put the life out of gear in United Kingdom due to which transport was adversely affected. The other serious factor was the global warming which was in the spotlight recently and is being discussed in various forums and at an international level. McDonald’s on its part has taken the cue and had been consistently working towards achieving a better and greener planet by bringing in different policies around this. The initiative was called as the ‘Working towards a greener future’ as part of this initiative the company has launched various measures to bring in effective control by way of following methods namely ‘Litter’ through which they provide bins outside their restaurants and are one of the biggest sponsors of council provided litter bins in the United Kingdom. ‘Waste’ they effectively manage their oil waste i.e., the used cooking oil which represents 10% of a restaurant’s total waste, the same is recycled into biodiesel, with which they run their delivery fleet. ‘Packaging’ as part of this process they have replaced their salad containers with a paper card base thereby reducing the amount of plastic purchased by sixty nine tonnes as a company. ‘Energy’ all the McDonald restaurants use low energy lamps and have light level sensors installed in them to control external lighting. All new lighting systems also have high frequency fittings.
Legal: The changes that are happening to legislation. This may impact employment, access to materials, quotas, resources, imports/ exports, taxation etc.
The legal issues are concerned with employability factors, restrictions if any imposed in the local markets like quotas or restrictions on availability of materials etc., In the previous twelve months there have been no changes as per available information. However, there were some minor skirmishes on the legal front like the pull out of Iceland as it is too expensive for the franchisee due the financial crisis affecting the country ().
Future Strategies of McDonald’s
Based on the above factors it can be assessed that the company has undergone lots of pulls during the last twelve month period and has learnt a lot and can plan their strategies keeping a tab on the below issues:
- On the political front the cost of petrol has increased and the same is expected to continue the organisation would require to consider the factor of adding up more drive-in stores as more and more customers may opt for walk-ins rather than a drive-in and may move the drive-in restaurants to sub-urban locations to achieve efficiency.
- On the economical front there seems to some good news as the economy is recovering from the recession and the company can leverage from this by aggressively targeting their customers who have moved in to opt their services during the recession as part of curtailing their budgets. The same can be retained by offering more quality products or restaurants to target the niche market through differential marketing techniques or targeted marketing.
- The sociological factors like health epidemics forced the company to readjust its strategies and hence a customised build up of business continuity plan on these scenarios would ensure that the organisation can reach out its customers with an effective plan to counter these kinds of threats.
- On a technological front the provision of Wi-Fi can be extended to include tie-ups with online community networks by providing gaming stations and large screen televisions to attract and retain new customers and old customers respectively.
- From an environmental perspective the implementation of LEED (Leadership in Energy and Environmental Design) designs across all the stores which would enable McDonalds to achieve goodwill marketing through green marketing.
- The legal aspects and the impact of the McLibel case (Haig, 2003) explain the implications of legal issues on brand value. Hence, a coordinated and concerted effort would be required on this front to avoid such pitfalls in future.
McDonald’s Marketing Mix
McDonald’s has been at the forefront in relation to marketing globally and that has been one of the key advantages for it to capture the world markets and it had an impact on globalisation wherein at times globalisation is also referred to as McDonalisation (Ritzer, 2004).
With such an efficient process of operations the next big target for the organisation is to market their products. The same is carried out by them through the effective utilisation of the 4P’s model (). The same would be evaluated to get an understanding how this model was implemented by McDonald’s in their organisation.
The 4Ps model has evolved over period and this one of the marketing mix strategies adopted by different organisations has been proposed by (McCarthy. J.E, 1960, as cited by Mercer, 1996)
The marketing mix consists of the Product, Price, Place, and Promotion. Let us have a look at how this were analysed and utilised for the growth of McDonalds in their marketing mix strategy.
Product
A product can be defined as a tangible or intangible product or service that is mass produced on a large scale in batch lots or individually. A base product will involve product variation, product differentiation, product innovation, product elimination.
Taking the above into consideration McDonalds puts lots of efforts in the design of its menu (product) to suit the requirements of the customers. Simultaneously, they understand that customer taste’s changes over time and considering the same they reinvent their products depending upon the product life cycle which is also monitored on regular basis. A typical product life cycle illustration is given below (www.mcdonalds.co.uk).
McDonalds has to ensure that it does not introduce a new product before the maturity phase of a similar product to avoid cannibalisation in sales. As the new product may affect the sales of a similar product which is reaching its maturity level this is to be monitored on a continuous basis by the strategist to plan the new product launches in sync with the maturity levels of older similar products.
Due to this continuous cycle of phasing out and introduction of new products the products availability are suited to meet the requirements of the customers and the range of products on offer ensures that they have different products at different stages of their product life cycle which will enable continuous rollover of products.
Price
The price of the product is another factor that has considerable impact on the marketing mix adopted by the organisation. This can defined as the amount a customer pays for the product. This is determined using different factors including market share, competitor’s price, and cost of production. The other aspect that needs consideration during pricing is the skimming strategy that can be utilised for taking leverage of new product development.
The above picture is an adaptation of the BCG matrix related to pricing and how it affects the market share relatively. In this picture Brand D can be related to McDonalds as they maintain their prices on the lower end of the spectrum and using this strategy have gained a considerable amount of market share. At the same time McDonalds consistently differentiates its products to maintain prices to avoid negative connotations due to the pricing factor. As low prices are related to inferior quality of products on a psychological level by the customers, hence McDonalds maintains a relative pricing strategy to have consistency and does involve in price reduction strategies as it would be counter-productive for the organisation as the competitor would also reduce the price and thereby the competitive advantage derived from the cost reduction strategy would be lost. Hence from a strategic point of view it would be wise to retain the price band and position newer products in the same band to ensure that the market position and pricing is maintained ().
Place
This can be defined as the physical location where the goods or services are offered to the end customer or the medium through which it is channelled to the customer, this would include the distribution channels, direct sales, indirect sales, web based sales etc,.
From McDonald’s point of view it needs to be understood that place has an important relation as their customers are spread across different geographical locations and hence the location of stores which is the direct way of marketing needs to be undertaken and that would provide a strategic advantage if the location of the store is in the right location. Keeping this in view McDonald’s has gone with the franchising model of utilising the channel of distributions which is has proven to be quite successful of capturing different markets at a faster pace in comparison to other modes of distribution as the investment required in this channel is comparatively less and McDonalds has stretched this concept to its extremes by mixing different variants in the franchising channel.
McDonalds have an efficient way of identifying their channel partners who are put through rigorous interviews and they are given extensive training before they are offered the franchisee license. This ensures that the right quality of people run the channel which is essentially the ‘place’ from a 4Ps perspective. The importance of this factor can be understood by the amount of resources deployed by McDonalds to groom their channel partners; they are given training for a period of nine months before being given the franchising task.
Through the utilisation of this medium of distribution channel McDonalds gained a competitive advantage vis-a-vis it has ensured that marketing team is separated from the daily running of the business and ensured that the marketing can work on the location and other details of the channel. Thereby effectively reducing the risk in entering new locations to the organisation which otherwise would have to be borne by the organisation itself if it opens up new stores in different locations where considerable market intelligence or information is not available ().
Promotion
Promotion can be defined as the types of communications that are used by the marketing strategist to convey the message about a product to a target audience. There are different ways of communication namely advertising, public relations, word of mouth, and point of sale.
McDonalds works on different campaigns to gain advantage through various modes of communication currently McDonalds are running one of the biggest monopoly campaigns () wherein they have partnered with multiple modes of communication like the TV adverts, Press publication and online activities. From time to time McDonalds runs different campaigns to correspond with the launch of new products. The other campaign that is running include is the concept ‘There’s a McDonalds for everyone’ in the United Kingdom which is targeted to wider spectrum of the population. The marketing strategist develops a plan to target a segment or at times the whole population and accordingly the campaigns are designed and deployed in the market place.
Conclusion
Based on the above it can reasonably concluded that McDonalds has imbibed the concepts of PESTLE and Marketing mix in their strategies and have carried on their activities by focussing on this concepts to achieve success in the industry. They are deriving competitive advantages by evaluating the markets inline with the 4Ps strategy and constantly scanning the local environment by using PESTLE and also utilising the latest additions in PESTEL which is being coined recently as PESTELED the last two being the Ethical and Demographic parts which are also undertaken by McDonalds in a different format.
The above are the factors through which McDonalds has achieved this growth and its rapid expansion has ensured that the company would sustain the growth on a long term basis through its franchising mode of positioning strategy.
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