COMPETITOR’S ANALYSIS
Product Form\Brands Competitors
Product Substitute\Product Competitors
Coffee chains: Barista, Star bucks, Costa coffee, Café Coffee Day, Peets coffee.
- Food Courts in Malls and organized food counters
- Dhabas, Mithai Shops and hotel restaurants
- Other family restaurants.
Generic food counters
- Precooked meals sold in supermarkets
- Packed food
- Road side hawkers
Advantages of McDonalds in comparison to others:
Retail Mix
Today’s retail sector has grown rapidly, thus intensifying the competition. If a company in the present scenario wants to compete in the retail food sector, it requires a strong marketing mix. The marketing mix comprises of 8 Ps. A company needs to have a right balance of all the factors based on its core competency.
- Placement Strategy
Also known as placement strategy this primarily refers to making the product available to the end consumer. McDonalds currently has over 100 outlets in India. Mc Donald’s placement strategy has always been to focus on the best locations, creating convenience for its consumers thus giving them an edge over its competitors worldwide. It uses a franchising strategy to minimize cost and expand its customer base rapidly. However this strategy has resulted in cannibalizing sales due to more than one store in the same location.
Future Plans:
- India has been the first ever country, wherein McDonalds has started its delivery operations. It has been very successful and thus it now plans to invest Rs.3 million over a span of 3 years.
- In the next three years, it plans to invest Rs. 3billion in expansion in India, tripling there present number of outlets.
- It also plans to open up outlets at various petrol station across India, for which they have tied up with many petroleum companies.
Recommendations:
- It can have a joint venture with various multiplexes(like PVR) cropping up in metros and tier-2 cities, to get instant access to a new array of customers.
- They should focus on improving there delivery operations by diverging funds that they already plan to invest.
- They can also enter into new market which they haven’t explored yet. Eg: eastern India.
- Since they are targeting mostly middle-class, they should open more outlets in tier-2 and tier-3 cities, wherein the major population is there target customers.
Presence
This map clearly shows that mc Donald’s is present in the all the main cities occupying all the prime locations.
- Pricing Strategy:
It refers to a setting a price base similar to the competitor’s product price gain a competitive advantage in the market place.
Worldwide, McDonalds follows a Value Pricing Model, wherein it maintains quality standards at bare minimum prices, giving it competitive advantage due economies of scale, thus creating an entry barrier. In India, people spend more than 50% of their disposable income on food and beverages, which makes pricing of food product a very sensitive issue. The value pricing model of Mcdonalds ensures affordability and thus,
attracts the widest section of customers.
ECONOMY VALUE PRICING
SKIMMING PREMIUM
Future Plans:
- Demand based pricing strategy will be initiated in the McDonalds express outlets which will first be introduced in airports across the country. 10%-15% increase in pricing on limited products which will be made available on these outlets.
- The intention of the company will be to drive volumes, creating greater economies of scale, thus making pricing easier for the company.
Recommendation:
- The profitability of the company can be increased by catering to premium segment of customers, or using premium pricing strategy.
- Further steps should be taken to reduce the cost factor, and increase value for the firm and its stakeholder.
- Promotion Strategy:
Promotion strategy relates to communicating clearly to the target market about the products or services of the company.
Due to the highly competitive nature of the fast food industry, the firm needs to constantly invest in promotional activities to attract and retain customers. Promotional schemes used by McDonalds to target children and middle-class families are sales promotions and advertising through print as well as audio/visual media to boost sales to the desired levels.
McDonalds uses pull strategy to attract its customer base, wherein the promotion is directed towards the target customer to create demand. Consumers then pull the product through the distribution channels forcing the wholesale and retailer to stock it, and in McDonald’s case, franchisee.
Recommendation;
- Sponsoring events for kids and school going children should be taken up to create multifaceted brand, which will also help in covering social responsibility of the company in concern.
- The company at present is in growth stage of the PLC, it should thus try to increase its customer loyalty. McDonalds can use persuasive advertisement as well as loyalty and discounting programs to achieve these results.
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Product Strategy:
It is the most important factor in the marketing mix, taking into account the capabilities, in terms of engineering/design of product and sales distributions, existing in the company. It must evaluate the customer expectations and deliver accordingly with profit objective. However, product is a much larger term than simply a burger, i.e. the physical unit, it also includes the packaging, warranties, service, brand image and logos.
McDonald follows a mix of Standardization and Contextualization. Being a global company, to maintain a strong brand the company adheres to standard quality worldwide with catering to local tastes of different countries. The name McDonald creates a specific value addition to everything that is wrapped in their name , thus benchmarking the quality standards.
Future Plans:
- McDonalds product strategy shows, they are interested in becoming a part of the world culture and are also looking for ways to appeal to the market internationally.
- To serve faster, friendly, convenient and better products.
- As they plan to expand in the Indian subcontinent, they plan to invest in product engineering for regional parts, like for South India , they are coming up with ‘dosa wrap’.
Recommendations:
- They should increase their existing product line.
- They can also enter into a new product line to take the advantage of established brand, i.e. McDonalds
- Since 18% of their target customers are kids, they should come up with new and healthier product focusing them.
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People Strategy:
People are the most important asset for a company and require constant investment to give competitive advantage to the company. McDonalds is becoming known for recruiting youngsters, generally with no prior experience. This gives the company a young, energetic and flexible environment.
Recommendations:
- In house training facility leads to reduction in cost efficiency, thus the company can outsource the recruiting and training process.
- They can hire more of skilled personnel, to increase efficiency, thus increasing profitability due to reduction in training and development cost.
- Processes Strategy:
Processes include the method or plan of actions to be taken in the operations from the procurement of raw material, adding value to it for end consumption. McDonalds follows a process which involves 7 steps of value addition. This has helped them to serve an average customer of 2000 per outlet within 50 seconds each.
Recommendations:
- They should have some amount of flexibility in there process for bringing in new and wider range of products.
- Physical Evidence:
Physical Evidence is the material part of service. Since services are intangible, so a consumer tends to rely of material cues such as packaging, uniforms, furnishings etc. McDonald’s physical evidence contributes to its ambience and the culture one experiences in the restaurant. Moreover, the products and people can also be constituted as a physical evidence of the organization/company.
Recommendation:
- Since the company is known as a family restaurant, the outlets can have a seating arrangement of 4 and more.
- To make the ambience better, the company may also use different colors to attract kids which is a major target segment for them.
PORTER’S FIVE FORCE MODEL
Pre- Mc Donald (before 1996)
Post Mc Donald’s (After 1996)
CUSTOMER ANALYSIS
Buyer’s roles:
SWOT ANALYSIS
STRATEGIES
The Retail Life Cycle
McDonald’s lies between the maturity and decline phase in the retail life cycle. It has made its name in the fast food industry in India as well as around the globe but its growth is stagnant as the sales and profits are diminishing. Many new food outlets are now competing making it tougher to survive and sustain market share. Moreover McDonald’s has not introduced any innovative food items, healthy food products etc. and hence is loosing out to its competitors.
Recommendation:
McDonald’s should aim to save its dropping market share by investing on the newly opened dining food outlet. It should also focus on coming up innovative food items which are nutritious and healthy. It should also aim towards further exciting offers apart from the existing ones.
STP Analysis
Segmentation
Targeting
McDonalds follows a market specialization strategy as it concentrates on serving various needs of particular customer groups.
Proposed Targeting
Retail Positioning Matrix
Breadth of Product Line: Range of Products offered
Value Added: Reputation/Prestige of the brand, anything unique in the product
McDonald’s has positioned itself in the minds of the consumers as a retail food outlet offering diversified range of food products with high value added services.
Product Positioning Map
HIGH
PRICE
LOW
LOW HIGH
QUALITY
The food products of McDonalds are of super value because they are low priced along with high quality.
Porter’s 3 Generic Strategies
McDonalds follows the Over All Cost Leadership Strategy as it is a fast food chain which basically targets children, teenagers and families having a competitive advantage over those who are focused on differentiation by giving wide variety but at comparatively higher cost. McDonalds priced their products low and aim at a broader market, so that the sales can cover the costs.
References
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(Generic strategy)
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(retail current format)
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(retail current format)
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(ansoff)
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(map)
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(map2)
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(retail definition)
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(retailing in india)
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(food industry in india)
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retail and service marketing by david lovelock en.wikipedia.org/wiki/Vegetable (photo of vegetables)
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- http://agencyfaqs.com/news/interviews/data/226.html
