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McDonald’s McFries Marketing Plan || Page 1

DE LA SALLE UNIVERSITY-DASMARINAS

Research Paper in

Entrepreneurial Marketing

In partial fulfillment of the requirements

For the degree Bachelor of Science

In Entrepreneurship

Submitted to

MR. MICHAEL DEL ROSARIO

Submitted by

ALMALVEZ, AILEEN

NADUA, ALYSSA JOY

REGINO, JANINE DAPHNEE

VOLANTE, MIZPAH MAE

Table of Contents
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I. EXECUTIVE SUMMARY………………………………………………..pages 3-

II. SITUATION ANALYSIS

A. VISION & MISSION STATEMENT…………………………………………...page

B. COMPANY BACKGROUND………………………………………….…..pages 5-7

C. COMPETITIVE ANALYSIS

c.1) Industry Overview……………………………………………….…....pages 8-

c.2) Primary Competitors……………………………………………….....…page

10

c.3) SWOT Analysis……………………………………………………pages 11-

15

c.4) Marketing Objectives…………..………………………………………page

15

D. MARKET ANALYSIS

d.1) Market Strategy………………………………..…………………....page 15-

16

d.2) Target Market…………………………..………………………….pages 17-

18 d.3) Market Positioning…………………..………………………………..

…page 16

III. MARKETING MIX

A. PRODUCT……………………………………………………………….pages 19-
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22

B. PLACE…………………………………………………...……………….pages 22-

23

C. PRICE…………………………………………………………….…………...page

23

D. PROMOTION…………………………………………………………....pages 24-

25

IV. BUDGET……………………………………………………………………..………...page

26

I. Executive Summary

Today, McDonald’s has grown to have more than 36,000 restaurants all over the world,

serving nearly 50 million people in over 119 countries everyday, making it the number one

quick-service restaurant in the world. McDonald’s is a customer-oriented company that strives to

offer Filipinos a combination of great tasting, quality food products at value prices with excellent

service. Clearly McDonald’s food give happiness and satisfaction to its customers. So, the

company came up with a plan to bring home the happiness that it gives the customers when

eating McDonald’s world famous French fries. The company's target market are the teens who is

obsessed with McDonald’s French fries.

Mcdonald creates brand recognition through promotion and advertisement and also

through its impactful logo design which is golden arch. McDonald identifies the economic, legal

and social factors, the retail environment and many other elements which affect the willingness

of the people to buy mcdonald’s product. It also identifies the important psychological factors
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important to customers which form the part of brand recognition.

Mcdonald set up the marketing objective in accordance with the swot analysis and how to

achieve them. Develops the right product according to its customers want and need.

Price is set according to the awareness among people for the brand and also it’s integrity. The

competitive price is set as low price may lead to misconception of low quality.

It focuses on promotion including the types of marketing communication. Each

promotional device is such that it supports each other to bring awareness and not confuse the

consumer and also move target audience to some type of action.

Thus by proper combination of marketing mix, setting targets, and delegating the

responsibilities, Mcdonald is able to achieve long-term objective.

II. SITUATION ANALYSIS

Company Profile

Mission

To serve the Filipino community by providing great-tasting food and the most relevant

customer delight experience!

Vision

Una sa Pamilyang Pinoy!


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First to respond to the fast changing needs of the Filipino family.

First choice when it comes to food and dining experience.

First mention as the ideal employer and socially responsible company.

First to respond to the changing lifestyle of the Filipino family.

Company Background

Ray Kroc started it all when he bought the franchise of a small burger joint owned by

Dick and Mac McDonald, and opened his first restaurant in Des Plaines, Illinois in 1955. Now,

McDonald’s has more than 30,000 restaurants, serving nearly 50 million people in over 119

countries everyday, making it the number one quick-service restaurant in the world.

George T. Yang built the first Golden Arches in the Philippines in 1981. As of 2005,

McDonald’s Philippines is a 100% Filipino-owned company. From its first restaurant along

Morayta, Manila in 1981, McDonald’s has grown to become one of the leading fast food chains

with close to 300 restaurants nationwide! With Kenneth S. Yang at the helm, McDonald’s is now

a multi-billion peso company that continues to expand and serve Filipinos all over the country.

McDonald’s is a customer-oriented company that strives to offer Filipinos a combination

of great tasting, quality food products at value prices with excellent service.

Well loved McDonald’s products like the Big Mac, Cheeseburger, World Famous French

Fries, Egg Muffin, Apple Pie, Sundae and the Happy Meal, plus local favorites like Chicken

McDo, Burger McDo and McSpaghetti are products of our passion to always give what our
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customers want. McDonald’s ensures high standards in all aspects of operations, promising our

customers only the best meals in every restaurant at any time. Recently, McDonald’s pioneered

24/7 restaurants and 24/7 delivery service to cater to our customers’ changing lifestyles.

Apart from our products and services, McDonald’s gives back to the community through

the Ronald McDonald House Charities (RMHC). RMHC supports children’s development and

well-being through Bahay Bulilit and Bright Minds Read (BMR). Every Happy Meal purchase

gives 50 centavos to RMHC. Bahay Bulilit, a partnership between RMHC and the Department of

Social Welfare and Development (DSWD), builds day-care centers and provides primary

education to children below 6 years old. Bright Minds Read (BMR), on the other hand, is a

partnership program with the Department of Education that teaches beginning reading to Grade 1

public school students.

Ray Kroc started it all when he bought the franchise of a small burger joint owned by

brothers Dick and Mac McDonald. He opened his first restaurant in Des Plaines, Illinois and five

years later, he bought the exclusive rights of the name, McDonald’s.

McDonald’s continues to serve close to 68 million in over 119 countries every day, making it the

number one quick-service restaurant in the world.

Today, McDonald’s has grown to have more than 36,000 restaurants all over the

world. It was in 1981 when George T. Yang opened the first-ever McDonald’s restaurant in the

Philippines. The historic restaurant still stands on its original location in Morayta, Manila. 1992:

McDonald’s goes nationwide McDonald’s brings its food and convenience closer to every

Filipino as it opens its first stores in Visayas and Mindanao. It was in 1992 when McDonald’s
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restaurants were put-up in the cities of Cebu and Cagayan De Oro. 2005: McDonald’s becomes

100% Filipino-owned In order to achieve its vision of Una Sa Pamilyang Pinoy, McDonald’s

Philippines knew it had to become a 100% Filipino-owned company. McDonald’s Philippines

remains all-Filipino to this day. Today, McDonald’s has grown to become one of the country’s

leading fast food chains with more than 500 restaurants nationwide. With President and Chief

Executive Officer Kenneth S. Yang at the helm, McDonald’s is now a multibillion-Peso company

that continues to serve Filipinos all over the country.


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Industry Analysis

McDonald’s is the leading global quick service restaurant retailer as well as one of the

world’s well-known and valuable brands. It has over 31,377 restaurants in 118 countries and its

franchisees operate 20, 505 restaurants. McDonald’s is the industry leader and has been known

as the industry trend setter, yet it has not always been at the forefront on capitalizing new niche

markets. They were the first to create and master the “speedee service system “ also known as

the assembly line. They were also made the first strategic move of purchasing their own land to

rent to franchisees. They were also the first to advertise with an character , which strengthened

their brand equity.

Fast food restaurants represent one of the largest segments of the food industry. In the

United States alone, over 200.000 fast food restaurants are operated bringing in $120 Billion a

year. Food industry is and will always remain in high demand because of its genre. The company

is extremely vital to the industry as well as the economy as a whole because its presence impacts

jobs and the success of other industries. This also reinforces the company’s and the industry’s

market strength and attractiveness. As stated by Eurometer International, Outlet opening have

been supported by the increasing number of shopping centres and small community

supermarkets in Metro Manila and key cities nationwide (“Fast Food…,” 2013)

With this, McDonald’s is going to enter the frozen fries industry. Driven largely by the

rising popularity of Western style cuisine particularly the offerings of quick service restaurants

(QSRs), frozen french fries and other frozen potato products have become global commodities
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generating billions of dollars in revenue worldwide each year. Although exact worldwide

production and sales figures for frozen potato products are not available, it has been estimated

that total world frozen potato production capacity is about 11 million metric tons a year

(Huffaker, 2003). The Philippines with a population of 98 million on 300,000 km2 of which 19%

(57,000 km2 = 5.7 million ha) arable land grow potato on 7,000 ha with and estimated

production of about 120,000 t per annum. This means that on average a person eats about 1.2 kg

potatoes produced in the country. The national production is all sold on the fresh market and no

potatoes produced in the country are currently processed into chips (crisps), extruded products or

into French fries. French fries are imported frozen at a quantity of 32,000 t/year. Assuming that 2

tons of potatoes are needed to produce 1t of French fries this represents a quantity of raw

material equivalent to 64,000 t per annum. (Wageningen, DLO Foundation..,2010)


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Competitor Analysis

The competitors in the frozen food industry are Frenchies French Fries and Sm Bonus Fries. The

direct competitor is the SM Bonus fries and Frenchies French fries. The indirect competitor are

the other frozen food made by Frenchies and SM bonus.

Table 1

The competitors and its competitive strategies are shown in the table below:

Competitors Competitive Strategies

1. Producing product line by adding more

Consolidated Dairy and Frozen Food products.


2. Offers varieties of fries or potatoes
Corporation: Frenchies 3. Expanding its target market specifically to

the younger generation or the Generation Y

1. Cheaper pricing of merchandise


2. Using advertisements
SM Supermalls: SM Bonus 3. Offers varieties of products

SWOT Analysis

● Strengths
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1. Strong brand name, image and reputation

McDonald's has built up huge brand equity. It is the no 1 fast food company by

sales, with more than 31,000 restaurants serving burgers and fries in almost 120

countries. The image of McDonald's is recognized everywhere. This brand is in top ten of

the most powerful brand names in the world with Coca-Cola, Nokia or GM.

2. Large market share

McDonald's is considered as the largest player in size and global reach. When

Wendy’s or Burger King are losing market share in 2006, McDonald's still increases its

market share. Market share of McDonald's in the recent time is about 19% while Yum!

Brands is 9% and both Wendy’s and Burger King is 2%.

3. Specialized training for managers

McDonald's is very serious on training managers. This company has its own

program to train managers the most professionally, which is called Hamburger

University. As a result, McDonald's has many good managers who can help company

development well.

4. McDonald's Plan to Win

McDonald's customer – focused Plan to Win provide a common framework for its

global business yet allows for local adaptation. Through the execution of initiatives

surrounding the five elements of its Plan to Win – People, Products, Place, Price and

Promotion – McDonald's has enhanced the restaurant experience for customers

worldwide and grown comparable sales and customer visits in each of the last eight

years. This Plan, combined with financial discipline, has delivered strong results for

company’s shareholders.
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5. Introduction of new production

McDonald's is considered the first one enter to fast food industry. It initiates to

other brand to enter this industry. As a result, when think about fast food, customers

always remember McDonalds first. In fact, in some big countries, especially in US,

McDonald's is the first choice of a large number of customers.

6. Technology Innovative

McDonald’s is keeping at the forefront of technology around the globe. For

example, In Brazil McDonald’s is currently studying the installation of Internet access

terminals in some outlets as well as enabling customers to order online. This will create a

more efficient process that will reduce the amount of lag time between a customer’s

orders and pick up of the order.

7. Good marketing strategies

No matter the continent, children and adults know the face of Ronald McDonald

is synonymous with the colossus restaurant chain. This results in wonderful marketing

strategies among management which conducts a very thorough market analysis, resulting

in much success around the globe.

● Weaknesses

1. Unhealthy food image

McDonald's has been impacted by negative press like the documentary "Supersize

Me" by Morgan Spurlock in which he contributed our society’s obesity to McDonald's

and other fast food chains. In fact, each McDonald's dishes provides large amount of

calories but not too much nutrition.


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2. Unbalance meals

Although McDonald's tries to update its menu by healthy criteria, McDonald’s

meals are still unbalance. For example, there are many dishes with chicken (both grilled

and fried), bacon, beef, rib or egg. Besides, just several dishes are salad with vegetable

and fruit. Moreover, amount of fruit or vegetable is not much.

3. Legal action

McDonald’s has been involved in a number of lawsuits and other legal cases in

the course. For example, there are many case which involved with trademark issue.

McDonald’s force many others restaurant, company of just a coffee shop to change their

brand name because of keeping “Mc” letters.

● Opportunities

1. Growth of the fast food industry

Fast food industry now is developing significantly. The change of lifestyle leads

to the change in people eating habit. In the past, if just workers, drivers or someone who

had to work busily and didn’t have enough time for a home meal choose fast food;

nowadays, almost people eat fast food and a major of them like fast food very much. It is

a huge chance for fast food brand to increase their revenues, especially McDonald's.

2. Low cost menu is preferred by large number of customers

With low cost menu, McDonald's can attract customers who just have low

income. This segment makes up a fairly remarkable part, especially in the recent time,

when global economy is struggling. It is not difficult for McDonald's to apply low cost

menu on all restaurants.


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3.Conservation

McDonald's should research green energies and green packaging solutions and

incorporate these finding as a part of their marketing strategies and advertisements.

● Threats
1. Economic recession

The company's revenue streams are diversified, but depending on the length of

this "recession", they will inevitably be negatively impacted by the trickledown effect.

Recession or downturn in economy may affect the retailer sales, as household budgets

tighten reducing spend and number of visitors.


2. Serious environmental issue

Environment is one of the hottest topics all over the world. Any action which

influence on the earth and human life is criticized strongly. Consequently, if McDonalds

keep using HCFC -22, it may lose customers, especially who really care about the earth.
3. Intensity competitors

Along with the development of fast food industry, there are many new fast food

brand enter to the market. It is nothing to say if there is no strong brand which can

compete with McDonald's. However, in fact, there are some and they are stronger

gradually, for example, Wendy’s or Burger King. Although market share of these brand

are lower than McDonalds, they try to gain more customers from McDonald's. Moreover,

more casual dining restaurants increase their burger offering and decrease the price. If we

are not really hurry, we may choose this kind of restaurant instead of fast food

restaurants. They also become the competitors of McDonalds.


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Marketing Objectives

1. To establish product awareness in the target market by 80% within one year.

2. To acquire 50% new customers by the end of the year.

3. To become the most preferred brand of frozen french fries within 5 years.

4. To sell 5,000,000 units within the year.

5. To increase product sales by 50% within the year.

6. To achieve a market share of 40% for the product within 3 years.

Marketing Strategy

Table 2

PSYCHOGRAPHIC AND VALUES

Market Lifestyle A These are parents who want to buy French fries for their kids. They

like to store these products as staple which are easy to cook just heat

oil, deep fry then season and it prevent shortage of snacks in their

household.

Market Lifestyle B These are men and women who are busy or always in a hurry which

don't have much time to cook. They are hardworking and punctually

and always busy and living in a workaholic life but when they had a

break they can have this as their comfort food with their love ones.

Market Lifestyle C These Teens and young adults without a source of income and don't

know how to cook meals. They want to prepare in an instant and

don't need too much money.

Positioning
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For Filipino parents who have kids that love French fries like in fast food, it is now made

instant and you can cook it in your own home easily.

For Filipino who are always in a hurry in need of comfort food, the tastiest French fries

now in pack offers the most satisfying answer to your cravings and good comfort food with your

love ones.

For Filipinos who don't know how to cook, French fries is now made instant even if you

can’t cook all you just need is to heat oil then fry it.

Table 3

Profile of Target Markets

DEMOGRAPHIC , SOCIOECONOMIC AND PERSONALITY

Gender Male, Female

Age of Target Primary Market:

Market 18-50

Teens and parents who want to buy instant and easy to cook french fries

for their kids

Secondary Target Market:

Working professionals who do not have the time to cook food and want to

satisfy their craving of comfort food when they are with their love ones
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Tertiary Target:

Trade dealers

1. Supermarket

2. Convenience stores

3. McDonald’s branches

4. Other kiosks or food cart or people who are business minded who want

to sell French fries.

Quatemary Target market:

13-21

Students who prefer to buy less expensive and easy to cook food for their

convenience.
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III. Marketing Mix

Product Strategy

Figure 1 Picture of the Product

Figure 1 is "Mcfries" which consist of French fries and seasoning. This is your ordinary comfort

food that is more affordable and accessible and convenient .Starting a new company, we give all
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our effort to produce a product that is beneficial to almost everyone because it will be available

anytime they want. They could buy few of these and stock it so if they want to eat "French fries"

they don't have to go to a store saving them both time and money. This product has less

preservatives than other product thus adding quality to it. It would be healthier and tastier than

sold in the market “Mcfries" is a non-durable goods meaning this has a limited lifetime which

will depreciate and this product would last for a month or two because we use less preservatives.

Moreover, this product is a convenient product and it can be classified as staple or comfort food

depends on the consumer and the time when the customer consume this food.

“McDonalds’s Corporation" will develop its product line by enhancing its position in the market

and continue developing products which will benefit health and use less preservatives and

continue to be honest to the customer by using company's resources. This would improve the

company's reputation which will help us in promoting our product.

Figure 2 Front Packaging of the Product


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Figure 3 Back Packaging of the Product

Figure 2 and 3 shows the packaging of product. The front show the name of the product

which is “McFries" and its tagline " no need to defrost , just fry" and " Less preservative , much

healthier" . In the back packaging or figure 3, the ingredients, nutrition facts, direction, barcode

and expiration date is seen. This provide knowledge and information to customers so that they

know its content and also for them to know if it's safe for their health

Place
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Figure 4 Place where the product will be placed

McDonald’s McFries will be available to all of its branches, for those people who want to

cook and eat McDonald’s fries anywhere. McFries will be *available* to different hypermarkets,

supermarkets, and groceries. It will be place on the fridge or freezers as shown in the slotting to

preserve the product and maintain its freshness. Allowance will be provided here and it will also

be placed to the most visible part of the fridge or freezer. This will help boost product visibility

and this will let people be aware of the new McFries product. More so, This will be placed near

its competitors to increase customer curiosity which could help increase McFries’ sales.

Price

The strategies used for frozen McFries are prestige objective, and profitability objective.

By using prestige objective, frozen McFries aims to set its price to the expectation of a high

quality french fries. Frozen McFries also aims to be a profitable product and earn a profit in
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return. Psychological unit pricing is another pricing strategy used for the product. It states the

prices in terms of some recognized unit of measurement (such as grams, and liters) or a standard

numerical count. The price for the product will be based on the of the unit of measurement per

package and the original price of a regular McDo fries. The estimated price for the product will

be Php 229.41 for 1 kilogram per package.

Promotion
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Figure 5 Sample poster of the product for promotions

Newspaper

These ads can do a lot more than just advertise one item or one sale, each one can work

really hard to bring in customers, and then bring them back again and again. They're a good way

to reach a large number of people, especially those aged 45-plus who tend to read the paper more

frequently than younger demographic groups who tend to get their news from television, radio or

the internet. And we can target our ads to the appropriate markets by requesting that our ads run

in the section(s) that most closely relate to our target audience.

Television Ads

It is the most effective advertising to convince the target audience to buy McDonald’s
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frozen McFries.

Radio Ads

Mcdonald’s McFries will be mentioned by a radio DJ. Through this, people who listen to

these DJs would support the product.

Online Ads ( Facebook , Twitter , Youtube , Instagram, etc…)

“Consumers are spending more time logging in than tuning in, with Google’s digital

audience to soon eclipse TV viewing.” Most people are spending more time surfing the internet.

It is able to reach a larger number of people for costs.

IV. BUDGET AND IMPLEMENTATION SCHEDULE

Estimated budget for distribution, promotion, and product development.


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Activities Budget Time Period Purpose

Television Ads Php. 50,000,000.00 From launch up To be known quickly and to

to 3 months. attract more customers.

Online (Facebook P400,000.00 From launch up To gain awareness and

Ads, Twitter Ads, to 4 months. persuade the consumers to

etc.) buy.

Radio Ads Php. 100,000.00 From launch up To broadcast to the

to 2 months. consumers.

Newspaper/Tabloid Php. 300,000.00 From launch up More information of ads to

to 4 months. the readers.

Total of Php 50,800,000.00 is allocated for McDonald’s McFries for its marketing

activities such as distribution, promotion, and product development.