Course Marketing Management

Case Study Mcdonald's\

McDonalds is the worlds leading hamburger fast-food chain with more than 34,000 restaurants in 119 countries. McDonalds serves 70 million people each day and promises an easy and enjoyable food experience for its customers. McDonalds Corporation dates back to 1955 when Ray Kroc, a multi-mixer salesman, franchised a hamburger restaurant from the McDonald brothers. Kroc named it McDonalds and offered simple foods such as the famous 15-cent hamburger. During the 1960s and 1970s, Kroc led McDonalds growth domestically and internationally but always reinforced the importance of quality, service, cleanliness, and value. The menu expanded to include iconic items such the Big Mac and the Happy Meal. The company ramped up its advertising as well. To target its core audiencechildren and familiesit introduced Ronald McDonald during a 60-second commercial in 1965. Soon, characters like Grimace, the Hamburgler, and Mayor McCheese made their debut in McDonalds advertising and helped lure children into its restaurants for familiar food and a fun experience. In 1974, McDonalds opened the Ronald McDonald House, a charitable cause to help children with leukemia. Since then, it has expanded into a global effort called Ronald McDonald House Charities that consists of three major programs: Ronald McDonald House, Ronald McDonald Family Room, and Ronald McDonald Care Mobile. McDonalds aggressively expanded overseas during the 1980s by adding locations throughout Europe, Asia, the Philippines, and Malaysia. However, this rapid growth led to many struggles during the 1990s and early 2000s. The company lost focus and direction as it added as many as 2,000 new restaurants a year. New employees werent trained fast enough or well enough, which led to poor customer service and dirtier restaurants. In addition, new healthier-option competitors popped up such as Subway and Panera Bread. Consumers tastes and eating trends also started to change in the early 2000s, and McDonalds new food offerings failed on many fronts. Product launches like pizza, the Arch Deluxe, fajitas, and deli sandwiches did not connect with consumers, nor did tweaks to the current menu like multiple changes to the Big Mac special sauce. Jim Skinner, McDonalds former chief executive, explained, We got distracted from the most important thing: hot, high-quality food at a great value at the speed and convenience of McDonalds. In 2003, McDonalds implemented a strategic effort called the Plan to Win. Still in effect, the plan helped McDonalds restaurants refocus on offering a better, higher-quality consumer experience rather than a quick and cheap fast-food option. Its playbook provided strategic insight on how to improve on the companys 5 Pspeople, products, promotions, price, and placeyet allow local restaurants to adapt to different environments and cultures. For example, McDonalds introduced a Bacon Roll breakfast sandwich in the United Kingdom, a premium M burger in France, and an egg, tomato, and pepper McPuff in China. Prices also varied slightly across the United States to better reflect different regional tastes. Some changes that initially helped turn the company around included offering more chicken options as beef consumption started to decline, selling milk in a bottle instead of a carton, and removing SuperSize options after the documentary Super-Size Me targeted McDonalds and its link to obesity. The company responded to customers desire for healthy foods with premium salads and apple slices instead of French fries in its Happy Meals. It also dismissed claims of mystery meat by introducing all-white-meat McNuggets. Many of these healthier options targeted moms and charged a premium price. Meanwhile, McDonalds targeted teenagers and its lower-income consumers with the introduction of the $1 menu. The company improved its drive-thru service, added more snack options, and refurbished restaurants with leather seats, warm paint colors, Wi-Fi, and flat-screen TVs. In many locations it created three different zones that fit the needs of each target audience. Initial results were staggering; from 2003 to 2006, revenues increased 33 percent and share price soared 170 percent. In 2008, McDonalds was one of only two companies in the Dow Jones industrial average whose share price rose during the worldwide recession. Sales continued to increase, and in 2012, McDonalds experienced record revenues of $27 billion. Today, McDonalds increases its consumer base through global growth and product expansion. For example, the successful introduction of McCaf directly targeted consumers in the booming coffee industry and stole share from companies like Starbucks, Dunkin Donuts, and Caribou Coffee.

QUESTIONS

1. What are McDonalds core brand values? Have these changed over the years?

2. How has McDonalds grown its brand equity over the years? Has McDonalds changed in different economic times or in different parts of the world? Explain the importance of this strategy.