McDonalds, a long-time leader in the fast-food industry, put some emphasis on the

marketing strategy of the company, with the marketing expenses of only the company-owned
storefronts included1.
Observed from the marketing strategy of McDonalds throughout these years, one or two
major campaigns are held in new product launching or other development. It also focuses on
building the image of being green and having corporate responsibility. Together with the new
products introduced in the original product line, or launching a new series (like Mac Snack
Wrap) or whole product line (like McCafe), McDonalds expense these marketing costs in the
selling, general & administrative expenses2 item. The marketing strategy of McDonalds
also addresses the challenges faced in these recent years concerning the intensive pressure
from external competitors, the rising concern over health from parents as well as the
environmental-friendly issue.
This is expected that McDonalds will continue to promote itself as the fast-food provider
with a qualitative services and food. It will continue its involvement in the environmental
actions to address the concern, as well as in the corporate responsibility using green as the
concept. No great changes are foreseen in the overall marketing strategies of McDonalds.
Concerning the pricing strategies of McDonalds, flexible strategies are used in accordance
with different product promotion as well as the economic situation. Product line and bundling
are introduced in McDonalds worldwide, providing limited choices of ValueMeal with few
interchangeable options. Promotional pricing is often used, especially in Hong Kong,
introducing weekly promotion products or meals in a lower price to trigger sales. Penetration
pricing is for new product launching like the coffee of McCafe. Value pricing is special as it
appears in times of economic downturn, offering DollarMeal to meet the demand of cheaper
meals. As there are competitors offering more upscale dining experience charging a higher
price, and some traditional rivals competing in the market giving lower price meals on an
eroded margin. Therefore it is less likely for McDonalds to have a huge change in the pricing
strategy for either increasing the price which shifts customers to competitors, or lower the
price which may further reduce the profit margin that is impossible to support the quality of
goods and services delivered.
For the advertising costs, McDonalds allocates its budget for its advertisements worldwide
on TV, billboards, newspaper etc. Despite the traditional displays, McDonalds also exposes
itself in the digital world by focusing on the online advertising targeting at the younger
generation. From the $611.5 million advertising cost in 2005, $699.8 million in 2006
increased by 14.4%, with a smaller percentage increase of 2.64% for the advertising cost
$718.3 million in 2007, $703.4 million in 2008 with 2.07% decrease to the further decrease
of 7.48% to $650.8 million in 2009, it is observed that the advertising cost is decreasing from
2005 to 2009. It seems that it is reasonable for the advertising cost to keep on falling in 2010
or even 2011. However, when comparing the figure to the selling, general & administrative
expense every year3, an increase of 4% in this expense item to $2333.3 million can be seen in
1 The number of company owned stores in 2009: 6262 out of 32478.
2 For the selling, general & administrative expense account, it only reflects the spending of
McDonalds marketing and related costs on the company owned stores. All comparison and
prediction are thus made based on the expenses for its stores owned.
3 For the selling, general & administrative expense from 2005 2009: 2005 - $2118 million;
2006 - $2296 (+8%); 2007 2367 (+3%); 2008 2335 (-0.5%); 2009 2234.2 (-5%), where
a similar trend of decrease to the advertising cost can be observed.

the 2010 highlight.

It is likely for the advertising cost to increase on a steady rate to a similar level of 2007,
before the major sports events held, which were expected to bring certain fluctuation to the
currency and thus the expenses allocate (McDonalds, 2007, 2008, 2009). Therefore, the
advertising expense is expected to have a 3% growth in 2010 to $670 million4; while that in
2011 may have a further increase of 8% to 723.9 million in the expense because of the
economic recovery in the primary stage, with quite an uncertain prospect for all industries.
McDonalds is expected to have a positive change in the advertising cost addressing the
online marketing and the consolidation of brand image in face of competitors, but not as
much as the increase in 2006.
Similarly, it is expected that an increase in the overall marketing expense can be observed in
the year 2011, with the level of 5% increase to $2500 million, in the situation better off than
2007, but the progress is not as obvious as that in 2006.
Reference:
McDonalds Corporation. (2006). 2006 Annual Report. Retrieved April 4, 2011 from McDonalds Web Site:
http://www.aboutmcdonalds.com/mcd/investors.html.
McDonalds Corporation. (2007). 2007 Annual Report. Retrieved April 4, 2011 from McDonalds Web Site:
http://www.aboutmcdonalds.com/mcd/investors.html.
McDonalds Corporation. (2008). 2008 Annual Report. Retrieved April 4, 2011 from McDonalds Web Site:
http://www.aboutmcdonalds.com/mcd/investors.html.
McDonalds Corporation. (2009). 2009 Annual Report. Retrieved March 7, 2011 from McDonalds Web Site:
http://www.aboutmcdonalds.com/mcd/investors.html.

4 The estimated number is only based on the assumption of the trend of increasing expenses
in relevant account. Though the figure of selling, general & administrative expense is shown
in the 2010 Highlight, detailed items like advertising cost is excluded, therefore the figure of
2010 can only be projected.