McDONALDS FOOD

REPORT
On

Marketing Analysis of Mcdonalds

Submitted To:
Sir Umer Chaudhary

Submitted By:
Shabana Ali
Waqas Ali
Muhammad Ali
Jahangir Khan

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DEDICATION

This report is dedicated to our parents, teachers and our sincere friends who are always with us in every

hardships of life.

May! Allah Give them Long Life (AMEEN)

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Acknowledgement

Most grateful to Almighty Allah who enabled us to utilized our knowledge and skills for the preparation

and completion of this report. We want to express our most humble gratitude to our respected teacher Sir

Umer Chaudhry who furnished us with the opportunity to complete report.

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Table of Contents
Chapter #1: Introduction .……………………………..………………………….……… 06

1.1.Company overview …………………………………………………………... 06

1.2.Distinctive capabilities ……………………...…………………………….…. 06
Chapter #2: Strategic Segmentation, Targeting and Positioning of McDonalds……… 08
2.1.Strategic Segmentation of Mcdonalds ……………………………………… 08
2.1.1. Geographic Segmentation ……………………………………………... 08
2.1.2. Demographic Segmentation ……………….………………………...… 08
2.1.3. Psycho-graphic Segmentation …………………...……...…………...… 08
2.1.4. Behavioral Segmentation ……………………..…………………………09
2.1.5. Occasional Segmentation ………………………………………………..09
2.1.6. Segmentation by benefits ………………………………………………..09
2.1.7. Cultural segmentation …………………………………………………..09
2.1.8. Multi-variable account Segmentation ………………………………….09
2.1.9. Recommendations for improvement………………………………...….09
2.2.McDonald’s Strategic Targeting ……………………………………………. 10
2.2.1. Recommendations for improvement ………………………………….. 10
2.3.McDonald's Strategic Positioning …………………………………………… 10
2.3.1. Recommendations for improvement ………………………………….. 11
Chapter #3: McDonald's Competitors …………………………………………………... 13

3.1. Competitors of McDonald's……………………………….…….…........…. 13

3.1.1. Burger King …………………………………..………………............….. 13

3.1.2. Starbucks ………………………….…………..………………...........….. 13
3.1.3. Yum Brands, Inc. ……………………………..………………...........….. 13
3.1.4. Subway. ……………….………………………..…...…………...........….. 14

3.1.5. Panera …………..……………………………..………….……...........….. 14

3.1.6. Wendy’s ………………………………………..………………...........….. 14

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Chapter #4: McDonalds brand loyalty ……………………………...……………..……. 15

4.1. Recommendations for improvement ….……………………………...……….. 16

Chapter #5: McDonalds innovation ……………………………………………….…..…. 17

5.1. McDonald's Innovation Center goal ……….…..……...…………………....… 17

5.2. McDonald's Sets Up Shop in Silicon Valley ……….…………………..…..…. 17

5.3. Recommendations for improvement ……………………..…………………… 19

References ……………………………..……………………………………………..…….. 20

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CHAPTER #1
INTRODUCTION

1.1. Company Overview:

McDonald's, or simply McD, is an American hamburger and fast food restaurant chain. It was founded in
1940 as a barbecue restaurant operated by Richard and Maurice McDonald. Its marketing slogan is “I’m
lovin it”. Its customers worldwide is 69 million (daily), operating in 119 countries with 420,000
employees. At McDonald’s, we’re proud of the way we’re creating an experience to remember: reaching
customers wherever they are and innovating new tastes and choices, while staying true to customer
favorites. Modern service. Personal engagement. Great-tasting burgers and fries. Building on our
commitments to our people, our communities and our world.

1.2. Distinctive capabilities:

McDonald’s core competency is providing convenience when people need and want to eat fast food at
prices that are competitive and provide best value for the customer's money. One of McDonald’s
competitive advantages is its focus on consistency of quality, production of food and use of raw materials
all around the world. The world recognition associated with the brand McDonald’s itself is also one of
McDonald's competitive advantages. We strive to be cost leaders and offer our food at prices that
cannot be matched by our competitors. In order to do this, your store must be efficient and keep everyday
operations costs as low as possible. Doing so, will allow for our stores to be superior to other fast food
restaurants because we can serve our food at lower prices than any other fast food company. Another
important competitive advantage we have here at McDonald’s is the speedy delivery of our food. In order
to maintain this advantage over other fast food chains, you must make the processes of cooking food
simple for all your employees. It must be easy to learn and easy to execute with a low failure rate to ensure
the quick production and delivery of your food. These two competitive advantages comply directly with
the vision of the company which is as follows: “

McDonald's vision is to be the world's best quick service restaurant experience. Being the best means
providing outstanding quality, service, cleanliness, and value, so that we make every customer in every
restaurant smile.” Just like any other firm, McDonald’s competitive advantages are what makes it stand
out when compared to other companies. These aspects of McDonald’s are what helped it become

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the number one fast food distributor in the world. McDonald's competitive advantage is based on brand
recognition. McDonald's brand is well known in all markets, nationally and internationally. A new report
by business intelligence firm show top corporations such as McDonalds's, Coca-cola use their.

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CHAPTER # 2
STRATEGIC SEGMENTATION, TARGETING AND POSITIONING OF
MCDONALDS

2.1. Strategic segmentation of Mcdonalds:

McDonalds segmentation, targeting and positioning is one of the integral components of its marketing
strategy. McDonalds are doing segmentation on three different bases:
• Geographic Segmentation
• Demographic Segmentation
• Behavioral Segmentation
• Psychographic segmentation
• Occasional segmentation
• Segmentation by benefits
• Cultural segmentation
• Multi-variable account segmentation
2.1.1. Geographic Segmentation:
Geographically Mcdonalds does segmentation domestic, International, urban and rural.
2.1.2. Demographic Segmentation:
McDonalds provides food to people of different ages, & with different price ranges which can be
affordable for high and low income people.
 Happy Meal for Kids.
 Business customers can visit at any time with quick service and can be eaten in a car, without hurting
the work schedule.
 Saver Menu for teenagers which is affordable and also provide free internet facility.
 McDonald’s provide an exciting environment in terms of amusement for kids and free Wi-Fi facility.
2.1.3. Psycho-graphic segmentation
The success of McDonald’s is the understanding of customer’s perception, lifestyle, values, and tastes.
McDonald’s is famous for its Hamburgers but in countries like. India, where people don’t eat beef, so
considering their preference, they provide Fish burger, Veggie Burger & Aloo Tikki to suit Indian diet.

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2.1.4. Behavioral Segmentation:

Occasions, for e.g. Birthday Parties of kids

2.1.5. Occasional segmentation:

On regular personal occasions Mcdonald focuses on Father’s day or mother’s day
and on rare personal occasions Birthday celebrations
2.1.6. Segmentation by benefits:
Benefits sought by customers as great, e.g in MacDonald's case it is cheap price ,memorable taste, healthy
drinks, fat free burgers, fast customer service etc
2.1.7. Cultural segmentation:
On cultural basis mcdonald segments differently. Like,
• Vegetarian in India

• Pork free in Muslim countries

2.1.8. Multi-variable account segmentation:

In Multi-variable account segmentation Mcdonald offers burgers, fish, beverages, fries, desserts, chicken
etc.

2.1.9. Recommendations for improvement:

We recommend that they should consider old people in segmentation as they are the one who can afford
and enjoy the good variations which MacDonald’s is offering. This will help to McDonalds create a brand

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image and let them recognized for a place which belongs to everyone. Whereas they can use
undifferentiated marketing strategy and offer same marketing mix on mass level.
Choosing this strategy will allow MacDonald’s to positioning themselves according to this approach,
hence. If they adopt this approach and try to positioning according to this approach. The benefits and sales
and revenue will certainly increase.
2.2. McDonald’s strategic targeting:
McDonald’s target kids, families, students, cafe goers, business customers. For sustainable profits in a
competitive McDonalds should introduce new products and changed also it contains low levels of
cholesterol in it. McDonalds has so many up and coming competition in the Indian market, focus on
diversification of its elements for building. The size of the business sector by performing the evaluation
of input methods must ensure that the benefits of lower costs even lower than in the business sector
mention the cost. As a result, they can bring their marketing purposes and can expand their revenues and
total portfolio, even in the future.
McDonald started to use new strategy and try to present themselves as place where healthy variations are
available. After changing the strategy they stated to change their advertising too and started to promote
healthy messages. They started to hire a creative group people and start promoting the creative healthy
commercials.
2.2.1. Recommendations for improvement:

As We recommended that Mcdonald should Include old people in segmentation so they should target this
target market as well as they are the one who can enjoy the good variations which MacDonald’s is
offering.
2.3. McDonald's Strategic Positioning
Positioning is a process of creating a picture in a potential buyers brains and telling them about the qualities
and uniqueness about the product and MacDonald’s brand.
 McDonalds has positioned its brand as family friendly and low cost food company in fast food
business. It uses positioning strategies like:
 Ronald Mcdonald character representing kids and using “Happy Meal” strategy.
 “I’m Lovin it” strategy.
 Introduced McCafe for teenagers.
 Nutritional facts provided and giving healthy food.

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 Sponsoring international sports events like Olympic, World cup, etc.

 Providing dual drive- through to decrease waiting time and increase the volume of serving.

2.3.1. Recommendations for improvement:

Apart from french fries and burgers focus more on fun part and family values

The mentioned table illustrates McDonalds segmentation, targeting and positioning:

Type of Segmentation
McDonald’s target segment
segmentation criteria

Region Domestic/international

Geographic
Density Urban/rural

Age 8 – 45

Gender Males & Females

Bachelor Stage: young, single people not living at home

Life-cycle stage Newly Married Couples: young, no children

Demographic
Full Nest II: youngest child six or over

Income Low and middle

Occupation Students, employees, professionals

Behavioral Degree of loyalty ‘Hard core loyals’ and ‘Switchers’

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Benefits sought Cost benefits, time efficiency

Personality Easygoing & careless

User status Potential and regular fast food eaters

Social class Lower, working and middle classes

Psychographic
McDonald’s targets Resigned, Struggler and Mainstreamer individuals according to
Lifestyle
Cross Cultural Consumer Characterization developed by Young & Rubican

”McDonald’s STP.” will help you in understanding as what makes McDonalds stand out from the crowd
through their segmentation, targeting & positioning strategies. McDonald’s Evolution since 1960: Take a
look back through history to see how McDonald’s has evolved since it was founded in 1940 with one
location in California.
McDonalds has segmented its goods as the premise of demographic, psycho graphic and behavioral. They
segment their product and positioning of their goods as per kids, students and families. They have not
begun a segment related with breakfast at every store.

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CHAPTER # 3
MCDONALD'S COMPETITORS

3.1. Competitors of McDonald's:

McDonald's compete directly and indirectly with numbers of fast food restuarants. McDonald’s also
competes with a fragmented market of takeout and casual dining restaurants. Internationally, McDonald’s
faces competition from some of the largest fast food chains in addition to regional competitors and smaller
local restaurants.

3.1.1. Burger King

Burger King started in 1954 and is headquartered in Miami, Florida. As of November 2014, Burger King
had over 14,000 locations in over 100 countries, with roughly 11 million daily visitors worldwide. Nearly
all of those locations are owned by independent franchisees. The company’s menu includes breakfast,
lunch and dinner items available a la carte. Hamburgers, chicken sandwiches, chicken tenders, French
fries and beverages are categories featured on the menu. Burger King recorded over $1 billion in revenue
during 2014.

3.1.2. Starbucks

Starbucks is the world’s largest coffee house chain. The company operates 22,500 stores in 65 different
countries, including 12,800 in the United States. None of the company’s U.S. locations are franchises.
Starbucks serves coffee, espresso, cappuccino, tea, pastries, sandwiches and other foods. Starbucks
markets itself as a high-quality option at a high price point. The company reported fiscal 2014 revenue of
$16.4 billion, making Starbucks the second highest-selling U.S. chain restaurant behind McDonald’s. As
of September 2015, Starbucks’ market cap was $80.6 billion.

3.1.3. Yum Brands, Inc.

Yum! Brands, Inc. (NYSE: YUM) operates several large quick-service restaurant chains including Taco
Bell, KFC and Pizza Hut. The company has over 41,000 locations in 125 countries, 30,000 of which are

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franchised. YUM was ranked 216th on the 2014 Fortune 500 list. Revenue exceeded $13 billion for the
full year ending January 2015. Taco Bell serves fast food breakfast and lunch dishes inspired by Mexican
cuisine, including tacos, burritos, nachos and related specialty items. KFC serves various chicken dishes
and sandwiches along with sides and beverages. Pizza Hut is a quick-service pizza restaurant chain. As of
September 2015, Yum! Brands’ market cap was $34 billion.

3.1.4. Subway

Subway is the largest restaurant chain in the world, with 44,200 locations in 110 countries. All Subway
locations are owned by franchisees, of which there are more than 21,000. The company’s menu consists
primarily of submarine sandwiches and salads. Subway reported 2014 sales of $11.9 billion in the U.S.
alone. The company was founded in 1965 and is headquartered in Milford, Connecticut.

3.1.5. Panera

Panera Bread Company is a fast-casual restaurant chain specializing in soup, salad, sandwiches and bakery
products. It was founded in 1981 under the name Au Bon Pain. Panera offers more nutritious, higher-
quality options at a higher price point than McDonald’s. Panera offers more nutritious, higher-quality
options at higher price points than McDonald’s. There are 1,900 Panera locations, roughly half of which
are franchised. Panera reported revenue of $2.5 billion in 2014. As of September 2015, the company’s
market cap was $4.6 billion.

3.1.6. Wendy’s

Wendy’s is a fast-food restaurant chain with almost 6,500 locations worldwide, 85% of which are
franchised. Wendy’s menus include hamburgers, sandwiches, chicken products and side dishes. The
company reported 2014 revenue of $2.06 billion, though total system sales were higher because sales at
franchised locations are not included in consolidated revenues.

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CHAPTER # 4
MCDONALDS BRAND LOYALTY

One marketing firm found that, in a survey of about 7,000 people in U.K., Germany, Australia, India,
and Japan, more people could identify the golden arches of the McDonald's logo than could identify the
Christian cross.

McDonald's is building a loyalty program into its smartphone app. The program is still in its early stages,
but it will likely reward customers with deals based on the number of visits they make to McDonald's
every month, Nation's Restaurant News reports.

The program will also track customer purchases and learn their menu preferences, McDonald's USA
President Mike Andres said at a conference Wednesday, according to NRN.

So if customers haven't visited McDonald's in a while, the app may prompt them to return with promotions
on their favorite items.

Lately, McDonald's has earned respect for its improved animal welfare and environmental policies. The
company enforces standards on its meat suppliers, ensuring humane methods for handling livestock --
such as phasing out the debeaking of chickens. It also forbids suppliers from using growth hormones on
livestoc. On top of that, some people argue that fast food is inherently greener than other options due to
its efficiency.

Today’s consumers are more mindful than ever about where their food comes from, so McDonald's social
media campaign, “Our Food. Your Questions” is aiming to appeal to those interests and turn the
company’s fortunes around.

The campaign, which has been running in Canada since May 2012 and in Australia since November 2013,
launched in the United States on Oct. 13. Consumers are asked to submit questions via Facebook and
Twitter about McDonald’s food, such as, “What is in a Chicken McNugget?” and, “Why can’t I get a
McRib year-round?” McDonald’s posts answers to the questions on its website and in YouTube videos,
featuring footage of Grant Imahara, former host of the Discovery channel show MythBusters, relaying the
company’s responses.

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In response to a question about whether the fast-food chain uses real beef in its burgers, the company
createda video of Imahara touring a Cargill meat processing plant where McDonald’s sources its beef.
One thousand questions have been submitted to the U.S. version of “Our Food. Your Questions” since its
launch, according to the company.

4.1. Recommendations for improvement:

• More use of web 2.0 as a communication media and focus on children and corporate sector

• Advertise real stories of people eating McDonalds for years and are still not obese

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CHAPTER # 5
MCDONALDS INNOVATION

5.1. McDonald's Innovation Center goal: Better service at restaurants

Welcome to the Innovation Center in Romeoville, where the world's largest fast-food operator studies,
dissects and tweaks current routines as well as proposed ideas that could quicken the operations at some
34,000 McDonald's restaurants worldwide.

The center is far enough from McDonald's Oak Brook headquarters that it can run on its own, yet close
enough for interaction when needed, said Laurie Gilbert, a 22-year McDonald's veteran who is vice
president of restaurant innovation.

Opened in 2001, the Innovation Center brings together a variety of players, from engineers, researchers
and designers to visiting vendors and franchisees, as they work to improve the burger giant's service.

The mission is particularly important now because McDonald's is grappling with its longest stretch of
declining sales at long-standing restaurants in more than a decade. Shortening service times, ensuring that
kitchens and crew members are ready to prepare new foods and drinks, and updating the ordering process
are all key to that goal. Tucked away in a warehouse, McDonald's tests and tweaks new technology and
equipment.

Every move the crew takes can be studied, by people watching from inside the kitchen, across the counter,
from an observation deck above, or later, by reviewing video. Those tracking tags worn by workers and
customers log how long it takes an order to make its way through the kitchen, through the mock drive-
thru or across the counter.

5.2. McDonald's Sets Up Shop in Silicon Valley:

McDonald's is setting up shop in the tech community epicenter of Silicon Valley.

The company's new outpost, on San Francisco's Market Street, is the brainchild of business development;
and provide the company "a way for us to be more plugged into the flow of ideas.
"The office is one of several things are doing to grow our focus on digital and be more consumer-centric.

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The office currently has only a couple employees, though there is room for 15 or 20 people in the near-
term, who he termed "the typical suspects in Silicon Valley. People who have joined mainly have come
through my network." Though the company declined to give names of recent hires. McDonald's Chief
Digital Officer Mr. Rafiq said that they have come from PayPal, Facebook, AOL, Yahoo and Microsoft
Xbox, among other internet companies.
The company has been posting job openings in San Francisco, seeking digital marketers, digital media
execs and designers, among other tech-savvy employees.
"McDonald's has bold plans to evolve the customer experience for the digital era, and the Global Digital
team is at the center of this aggressive change," read one recent job listing for a user-experience designer.
"Our team is leading the worldwide effort to develop and orchestrate digital initiatives across every facet
of our interactions with customers. This includes new brand engagement, e-commerce, service delivery,
and digital content capabilities."
McDonald's focus on digital comes as it and its competitors are looking for ways to connect to consumers,
particularly in the mobile space -- a medium the restaurant industry has been slow to embrace here in the
U.S.
The company is currently testing mobile payments in the U.S., including mobile ordering allowing
customers able to pick up food in stores, curbside or at the drive-thru. Mr. Rafiq declined to detail when
a national rollout for the mobile test would occur. The Golden Arches has also been digitizing its menu
boards in recent years. Overseas, McDonald's and other chains have been working with mobile for some
time.
Beside the innovation center and McDonald's Sets Up Shop in Silicon Valley Mcdonald has innovated
many new concepts in its businesss which are as under:
• Drive- Thru concept 1975

• Tik Tok Easy Shop model

• “Come as you are” the outdoor innovation

• Menus designed based on regions

• Table service using Kiosk

• Outsourcing of order taking

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5.3. Recommendations for improvement:

We recommend the following points to Mcdonalds for further improvement in innovation.

• Develop a mobile app to reduce order delivery time in drive thru

• Menu customization

• Focus on launching organic food menu

• Use drone technology for home delivery

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References:

http://research-methodology.net/mcdonalds-segmentation-targeting-and-positioning/

http://www.businessinsider.com/mcdonalds-to-launch-loyalty-program-2016-3

http://corporate.mcdonalds.com/mcd/our_company.html

http://www.chicagotribune.com/bus http://adage.com/article/digital/mcdonald-s-sets-shop-silicon-
valley/293500/iness/ct-mcdonalds-innovation-1019-biz-20141017-story.html

http://money.howstuffworks.com/mcdonalds3.htm

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