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. McDonalds 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. Wendys ............... 14
Chapter #4: McDonalds brand loyalty ...... 15

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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

CHAPTER #1

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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
Im lovin it. Its customers worldwide is 69 million (daily), operating in 119 countries with 420,000
employees. At McDonalds, were proud of the way were 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:

McDonalds 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 McDonalds
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 McDonalds 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 McDonalds 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, McDonalds competitive advantages are what makes it stand
out when compared to other companies. These aspects of McDonalds 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.

McDonalds provide an exciting environment in terms of amusement for kids and free Wi-Fi
facility.

2.1.3. Psycho-graphic segmentation

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The success of McDonalds is the understanding of customers perception, lifestyle, values, and tastes.
McDonalds is famous for its Hamburgers but in countries like. India, where people dont eat beef, so
considering their preference, they provide Fish burger, Veggie Burger & Aloo Tikki to suit Indian diet.
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 Fathers day or mothers 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.

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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 MacDonalds is offering. This will help to McDonalds create a
brand 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 MacDonalds 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.

McDonalds strategic targeting:

McDonalds 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 MacDonalds 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 MacDonalds brand.

McDonalds has positioned its brand as family friendly and low cost food company in fast food
business. It uses positioning strategies like:

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Ronald Mcdonald character representing kids and using Happy Meal strategy.
Im Lovin it strategy.
Introduced McCafe for teenagers.
Nutritional facts provided and giving healthy food.
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

segmentati
on

Geographic

Segmentat
ion criteria

McDonalds target segment

Region

Domestic/international

Density

Urban/rural

Age

8 45

Gender

Males & Females

Bachelor Stage: young, single people not living at home

Life-cycle
Demographi

stage

Newly Married Couples: young, no children

Full Nest II: youngest child six or over

Income

Low and middle

Occupation

Students, employees, professionals

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Degree

of

loyalty
Benefits
Behavioral

sought

Cost benefits, time efficiency

Personality

Easygoing & careless

User status

Potential and regular fast food eaters

Social class

Lower, working and middle classes

Psychographi
c

Hard core loyals and Switchers

McDonalds
Lifestyle

targets

Resigned,

Struggler

and

Mainstreamer

individuals according to Cross Cultural Consumer Characterization

developed by Young & Rubican

McDonalds STP. will help you in understanding as what makes McDonalds stand out from the
crowd through their segmentation, targeting & positioning strategies. McDonalds Evolution since 1960:
Take a look back through history to see how McDonalds 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. McDonalds also
competes with a fragmented market of takeout and casual dining restaurants. Internationally,
McDonalds 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 companys 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 worlds largest coffee house chain. The company operates 22,500 stores in 65 different
countries, including 12,800 in the United States. None of the companys 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 McDonalds.
As of September 2015, Starbucks market cap was $80.6 billion.

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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
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 companys 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 McDonalds. Panera offers more nutritious, higherquality options at higher price points than McDonalds. 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
companys market cap was $4.6 billion.
3.1.6. Wendys
Wendys is a fast-food restaurant chain with almost 6,500 locations worldwide, 85% of which are
franchised. Wendys 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.
Todays 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
companys 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 McDonalds food, such as, What is in a Chicken McNugget? and, Why cant I get
a McRib year-round? McDonalds 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 companys 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 McDonalds 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.

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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.
The office currently has only a couple employees, though there is room for 15 or 20 people in the nearterm, 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:

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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

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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