Company and Product Background McDonald’s is one of the best known brands worldwide. McDonald’s first made its way to Malaysia in December 1980 when McDonald’s Corporation of USA issued the exclusive license to GOLDEN ARCHES RESTAURANTS SDN BHD or commonly known as McDonald’s Malaysia to operate McDonald’s restaurants in Malaysia. The entry of McDonald’s into Malaysia is through a Joint Venture agreement with Golden Arches Restaurants Sdn Bhd.
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McDonald’s Corporation of USA holds 49% equity. The remaining equity is held by local partners: 26% is held by Tan Sri Vincent Tan and 25% by Mohamed Shah Bin Tan Sri Abdul Kadir.
At the helm of Golden Arches Restaurants Sdn Bhd is Mohamed Shah Bin Tan Sri Abdul Kadir, the Managing Director / Joint Venture Partner. He took over the reins from Tan Sri Vincent Tan in 1987. Malaysian got their first taste of McDonald’s when McDonald’s Malaysia opened its first restaurant at Jalan Bukit Bintang, Kuala Lumpur on 29 April 1982. This restaurant is still in operation today and has undergone four renovations to maintain and keep with the changing trends. To date, Golden Arches Restaurants Sdn Bhd operates 194 restaurants located nationwide including Sabah, Sarawak, and Brunei.
McDonald’s Malaysia is currently expanding at an annual rate of approximately 10 to 20 restaurants. McDonald’s has created many job opportunities in Malaysia. McDonald’s Malaysia employs more than 8,000 local people with 120 support staff at its headquarters managing the day-to-day operations of the McDonald’s business. There is also a regional office in Penang and Johor Bahru. McDonald’s business actually began in 1940, with a restaurant opened by siblings Dick and Mac McDonald in San Bernardino, California.
Their introduction of the “Speedee Service System” in 1948 established the principles of the modern fast-food restaurant. The present corporation dates its founding to the opening of a franchised restaurant by Ray Kroc, in Des Plaines, Illinois on April 15, 1955, the ninth McDonald’s restaurant overall. Kroc later purchased the McDonald brothers’ equity in the company and led its worldwide expansion. McDonald’s grew into the largest restaurant organisation in the world. Today, there are more than 30,000 McDonald’s restaurants serving 47 million customers each day in over 100 countries.
Ray Kroc died in 1984 but his legacy is very much alive. With the successful expansion of McDonald’s into many international markets, the company has become a symbol of globalization and the spread of the American way of life. Product Product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need. Product includes certain aspects such as variety, quality, design, features, brand name, packaging and services. These product attributes can be manipulated depending on what the target market wants.
McDonald’s predominantly sells hamburgers, various types of chicken sandwiches and products: French fries, soft drinks, breakfast items, and desserts. Each country implements the core McDonald’s menu: hamburger, cheeseburger, chicken nuggets, and french fries. McDonald’s has intentionally kept its product depth and product width limited. McDonald’s studied the behaviour of the Malaysian customer and provided a totally different menu as compared to its International offering. Being a Muslim-majority country, all McDonald’s in Malaysia are certified Halal.
Thus, pork products are not offered in McDonald’s Malaysia to satisfy Halal certification requirements. McDonalds continuously innovates its products according to the changing preferences and tastes of its customers. The recent example is the introduction of the Grilled Chicken Burger (GCB) and Prosperity Burger. Food quality is the key at McDonald’s. This means that McDonald’s take pride in the foods to serve for customers. McDonald’s seeks out fresh lettuce and tomatoes, quality buns and potatoes, pure ground beef, select poultry, fish and wholesome dairy product.
The potatoes are specially blanched and processed so that maximum nutrients are retained. Besides, upon arrival at the plant in Malaysia, the fish blocks are stored in a temperature-controlled environment to maintain their freshness. Freshly shredded lettuce, slivered onions and pickles are used in all burgers. Thus, McDonald’s has implemented rigorous food safety standards and established high food safety standards. So, there is nutrition information provided on web site for consumers and the aims of this information as regards quality product and menu selection.
In the 21st century, McDonald’s have continued to design and introduce new products and indeed new part menus, such as breakfast. The reasons that McDonald’s might have in introducing these products to satisfied their consumer’s needs and company strategies. The design of paper bag used by McDonald’s is made from grease resistant grass paper and pulp paper. The grease paper lines the interior, which allows for a grease less and environmentally friendly breakfast, lunch and dinner of McDonald’s sets. Next, McDonald’s is one of the most popular fast food restaurants whether domestic or abroad.
The feature of McDonald’s is McDonald’s thrives on the term “fast food” and offers a full menu 24 hours a day in some locations. For breakfast, the menu is filled with items like the Egg McMuffin, Sausage McMuffin with Egg, Egg McMuffin, Hotcakes, Hotcakes with Sausage and so on. For lunch, the menu is filled with McValue Lunch which offers from every Monday to Friday from 12 noon to 3 pm. McDonald’s uses packaging to ensure their food is fresh, hot, convenient and safe. The vast majority of McDonald’s is enjoyed without the use of cutlery.
Yet when menu items do require cutlery, McDonald’s will provide plastic cutlery to customers. The cups that are used for McDonald’s beverages are made from paper and have a coating to meet quality and food safety standards. This aim is to make sure that as much of McDonald packaging as possible is made from renewable resources. All McDonald bags, tray liners and cup carriers are made from 100 percent recycled paper. Packaging for hot foods such as Hamburgers, French Fries, Chicken McNuggets and Apple Pies, is made from 72 percent recycled paper.
The delivery packaging used for all buns, muffins, milkshake and sundae mix are returned to suppliers for reuse. This avoids the use of significant amounts of cardboard. All McDonald’s packaging carries an anti-littering symbol to actively encourage their customers to dispose of their litter responsibly. By replacing McDonald’s plastic salad containers with a paper card base they have reduced by nearly 69 tones the amount of plastic. McDonald’s provides service with convenience, cleanliness, delicious food and friendly service to their customers.
With free Wi-Fi, customers can access the Internet at no charge for customers who dine in McDonald’s. Thus, customers may enjoy foods but also searching information on internet. Besides, McDonald’s provides also an indoor and outdoor birthday party for those who wish to have a fun celebration on their birthday. Most of the McDonald’s restaurant provides 24 hours McDelivery service to satisfied customer needs. In addition, when several companies market a similar product, it is important that the brand name to be clearly seen on the packaging and easily recognizable.
McDonald has been put effort into making their brand name, logo, and packaging different style compared to their competitor. Therefore, McDonald menu item are different compared to Burger King’s, because McDonald have their specific Menu which provide McValue Lunch, Happy Meal, breakfast and so on. Such tactics are usually easy to recognize, and even if a customer is fooled once, it isn’t likely to happen a second time. Promotion A promotion mix is any form of communication a business or organization uses to inform, persuade, or remind people about its products.
Promotion mix consists of advertising, direct marketing, sales promotion, personal selling, and public relations. Using these tools, McDonald’s looks to localise its marketing communications strategy as it needs to consider the enormous range of cultural and other differences that it would be faced with in each country. It would be naive to ignore the various local markets and the factors which may affect the performance of its product in them. It also needs to analyse consumers’ attitudes towards its product, usage patterns and ethnic, moral and religious considerations in that environment.
Although the idea is to promote McDonald’s as a global image, McDonald’s focuses on the needs of the communities they are entering. In a communication context, the maxim “brand globally, advertise locally” is the McDonald’s promotional strategy. There are three main objectives of advertising for McDonald’s are to make people aware of an item, feel positive about it and remember it. The right message has to be communicated to the right audience through the right media. McDonald’s advertising is conducted on television, radio, in cinema, online, using poster sites and in press.
Television advertisement for the new Prosperity Burger for example explained the new choices and attempted to generate excitement for the product in conjunction with Chinese New Year. This may be supported by in store promotions to get people to try the product and a collectable promotional device to encourage them to keep buying the item. In press for example business magazines, television news reports, and newspaper articles provided free media coverage of the product launch and it became a significant news story.
The media gave McDonald’s franchise owners and corporate executives an opportunity to explain the reasoning behind the menu addition and to reassure their customers that McDonald’s was still in the hamburger business. In September 2003, McDonald’s introduced ” I’m lovin’ it ” as its first global advertising theme. Besides that, the advertisement capture the fun, youthful spirit and high energy that is the essence of the McDonald’s brand as well as the ba-da-ba-ba-ba™ audio trademark that has become recognized around the world. McDonald’s also ties in with sponsors. McDonald’s sponsors a vast array of sports.
Like example, during the summer 2008 Olympic Games in Beijing, McDonald’s was a cooperate sponsors. McDonald’s outlets offer its customers with various forms of incentives to buy its products. Using McDonald’s discount voucher or coupons that one can acquire after spending a particular amount over a period of fixed time, customers can enjoy the benefits of free meals or free add-ons. Additionally, they provide meal vouchers and exciting offers in their print ads, which the customer must cut and bring along when purchase it. Sales promotion efforts in McDonald’s involved free samples, launch parties, and store banners.
Today, McDonald’s patrons can enjoy close to 30% savings for selected products from its McValue Meal line-up between noon and 3pm everyday at almost all McDonald’s restaurants nationwide. In conjunction of the month of Ramadan, McDonald’s extended the time of McValue Lunch, normally is 12p. m-3p. m to 6p. m-9p. m. Extended period is to consider for the Muslims who fast during Ramadan and let them to have their dinner to break the day’s fast. The McDonald name the extend McValue Lunch called McValue Buka Puasa. Public Relations are also an important part of the McDonald’s marketing strategy.
The restaurant employees play a huge role in interacting with the public. On a day-to-day basis the employees commit themselves to customers and the customers’ feelings toward the brand. McDonald’s feels that before they communicate with their customers they need to be aware of what their competitors are communicating, so they can create a beneficial difference between themselves and the competitors. McDonald’s main idea of campaign is to connect with consumer all around the world. Some of the most famous marketing campaigns of McDonald’s are “You deserve a break today’, “Food, Folks and Fun”, “I’m Lovin’ It” and so on.
McDonald’s concentrates to help seek solutions for the problems facing children and families today. In Malaysia, the cornerstone of McDonald’s community relations programme is the Ronald McDonald House Charities Malaysia (RMHC Malaysia). It was established as a non-profit organization with the mission to create, find, and support programs that directly improve the health and well being of Malaysian Children through health, education, and welfare. McDonald’s Malaysia supports all administration and management costs, thus enabling RMHC Malaysia to use 100% of all donations received to assist Malaysian children in need.
RMHC Malaysia Coin Boxes are placed in every McDonald’s Malaysia restaurants to help raise funds for the organization. Every member of McDonald’s Malaysia is also involved in many local events in support of RMHC Malaysia. Price The customer’s perception of value is an important determinant of the price charged. Customers draw their own mental picture of what a product is worth. A product is more than a physical item, it also has psychological connotations for the customer. Price is the only marketing mix variable that can be altered quickly.
Price variables such as dealer price, retail price, discounts, allowances, and credit terms influence the development of marketing strategy, as price is a major factor that influences the assessment of value obtained by customer. McDonald’s strategy is to offer quality food quickly to customers at a good value. The pricing structure for McDonald’s over years has supported this message. The company strives to differentiate itself from other fast food restaurants by offering a variety of menu items that appeal to a variety of people from those who just want great hamburgers, to those who just want a quick healthy meal.
McDonald’s has a unique pricing strategy that falls solely on their many product lines. Their Value Meals fall into the category of Product Line Pricing, where there is a range of product or services the pricing reflect the benefits of parts of the range. For example, you can order a Double Cheeseburger Value meal that comes with a medium drink and fries for around RM9. 50. You can Upsize this meal to get a large drink and large fries for a little more money or you can go with another value meal that might include different items for different price.
The value pricing approach is used where external factors such as recession or increased competition force companies to provide ‘value’ products and services to retain sales. The most notable and recent example of this is McDonald’s McValue Meal. The McValue Meal was created because McDonald’s recognized that the economy was in a decline and that their competition was getting fiercer. The McValue Meal satisfies the current decreasing economy and has increased the pressure towards competitors. The introduction to the McValue Meal is by far the most economical product line that McDonald has ever offered.
You can get a number of products off of their menu for a few ringgits. It is efficient and practical. Geographical pricing is evident where there are variations in price in different parts of the world, country or state. For example rarity value, or where shipping costs increase price. In McDonald’s Malaysia, the price differs in East Malaysia, Langkawi, Genting Highland, KLIA, and LCC Terminal. If a market is close to perfect, in other words there is a lot of competition, this means that the participants are price takers and have no influence over the price.
In the case of McDonalds, if they raise their price above the market price then the consumer will simply take their business elsewhere as they can get the same product cheaper. Therefore McDonalds could concentrate their marketing on distinguishing their product from their competitors to make the consumer think that their competitors’ product is not as good. Alternatively they could reduce their price and compete that way instead. However sometimes price can act as a market indicator, that is if McDonalds burgers are cheaper than other burgers people might think they are poor quality and still buy from the competition. This branding means that the market is not perfect). So McDonalds would still need to aim their marketing at convincing the consumer that their product is good quality. McDonald’s is one of the first and most sort after in the fast food business and millions around the globe, especially the food lovers are passionate about it. McDonald’s offers discounts to its regular shoppers as a promotional strategy and along with that it is more cost-effective than dining at restaurants with waiters. Thus it helps in saving money which many consumers are concerned about when all the want is to fill up their appetite.
People can cut down their expenses because of the discounts offered. This is the reason for its growing popularity. Purchasers prefer burgers, fries and drinks when it comes with a better price discount availed through coupons. Discounts make the demand go higher and in buying more they save even more. McDonald’s coupons are sometimes given completely free. One can get them easily at any McDonald’s eatery without any money. The staff is informed about the discounts and can certainly give all the necessary details. Staffs are deliberately placed at shopping malls to give out these coupons, to areas where most people pass through.
Online websites are launched to provide the McDonald’s chits, letting one print the coupons out. Some use the internet and it is seen that many people are fond of these McDonald coupon websites. Loads of websites post their printable chits offering discount on food products at McDonald’s and also inform about the coupons and lists regularly. The most important reason for McDonald’s pricing flexibility is its well-established supply chain arrangement, which ensures efficiency and speed in distribution. Besides, huge increases in volume sales and food processing technology have been helping the company to offset its cost.
Place In the marketing mix of McDonald’s, the place is not just about the physical location or distribution points for products. It encompasses the management of a range of processes involved in bringing products to the end consumer. Place mix includes physical distribution, storage, inventory management, and channel selection. McDonalds is currently has over 33, 000 restaurant in 123 countries across the world. According to McDonald’s Malaysia website, there are 194 McDonald’s restaurants located nationwide. McDonald’s focuses on store placement and is always looking for the best locations.
This strategy created some weaknesses because it seemed that too many stores were put in some areas, cannibalizing sales from the other McDonald’s. The company has also made convenience a focus, not only through how fast it serves customers, but also in the location of its outlets. Most McDonald’s restaurants are small spaces, especially behind the counter in the food preparation area. These areas are designed for efficiency where the equipment is placed together to cut down on wasted movement and energy. The place mainly consists of the distribution channels.
It is important so that the product is available to the customer at the right place, at the right time and in the right quantity. There is a certain degree of fun and happiness that a customer feels each time he dines in McDonalds. There are certain value propositions that McDonalds offers to its customers based on their needs. McDonalds offers hygienic environment, good ambience and great service. Now McDonalds have also started giving internet facilities at their centre and they have been playing music through radio instead of the normal music.
There are certain dedicated areas for children where they can play while their parents can have some quality time together. In addition to its tradition rivals such as Burger King, KFC and Pizza Hut, the firm encounters new challenges. Burger King competes using a back to basics approach of quickly serving up burgers for time-pressed consumers. On the higher end, the KFC has become potent competitor in the quick service field, taking away customers from McDonalds’s. Perhaps in the new environment, fast, convenient service is no longer enough to distinguish the irm. At this time, a new critical success factor may be emerging: the need to create a rich and satisfying experience for consumers. This brings us to service and experience based competition which McDonald’s can use for competitive advantage against Burger King. Keeping in mind the demographics of the area, with urban professional class getting bigger and bigger, McDonalds also begin to adapt by offering more elegant looks in its layout design, offering special seating and Wi-Fi access to tech-savvy consumers who eat in the outlet.
It is for this overall “Food, Fun ; Folks” experience that customers pay a premium over the other competitors. McDonalds stress importance to meet customer’s expectation especially in term of time of delivery. In order to ensure fast delivery is through “Drive Thru” concept where customers can place order by driving through the counter with their car. This can save time from parking and waiting long queue for those who just want to take away the food. Customer‘s expectation is to able to get what they needs right on time at any place in convenience way and McDonalds is morphing from just a fast food restaurant to value service provider.
It is getting itself closer to the customer’s base so it can serve them better. For example fast ordering system like McDelivery will not only increase McDonald’s business opportunities to those who are reluctant to travel to its physical outlet but also will delight the customers with the fast response. This is the efforts by McDonalds to serve the hunger and needs of consumers anywhere, anytime whether it is rain or shine and day or night. In Malaysia, McDonalds started 24 hours concept in 2006 with 72 selected outlets or drive thru station that operate on 24 hours basis.
Logistics is the integration of the activities that procure materials, transform them into intermediate goods and final products through manufacturing and assembly, and deliver them to customers. For a firm as large as McDonald’s logistics is an area where proper planning results in increased efficiency. Purchasing is the most costly activity in most firms. Purchasing provides a major opportunity for management to reduce costs and increase contribution margins. Because the cost and quality of goods sold is directly related to the cost and quality of goods purchased, McDonald’s must examine a number of strategies for effective purchasing.
Because of the perishable nature of food, a system of just-in-time ordering and delivery is most effective for the company. For such a system to work, solid ties must be forged with a lot of suppliers. Ordering huge quantities of beef, chicken, and vegetables and expecting them to arrive at the shortest possible time requires coordination with capable suppliers. The company stands to gain the most with improvements in production – the actual preparation of food. Raw agricultural materials arriving at its commissary must be turned into buns, hamburger patties, french fries and McNuggets with minimal waste.
It must then carry over this practice of efficiency into its outlets. Conclusion Marketing mix is the combination of four elements, called the four P’s (Product, Price, Promotion, and Place), that every company has the option of adding, subtracting, or modifying in order to create a desired marketing strategy. McDonald’s marketing mix is strategic because of the diverse approaches that are used. First, in identifying the four P’s of marketing, McDonald’s is very careful in making decisions that affect each area or how each area affects the other.
McDonald’s is concerned about how the firm will fulfil the needs and wants of its customers and in the activities associated with maintain the relationships with its stakeholders. McDonald’s stakeholders include customers, franchisees, suppliers, employees, and the local communities surrounding them. McDonald’s has shown care for customers through the decisions to add more healthful foods to the menus, by changing how products are packaged or how foods are prepared, and by philanthropic contributions and sponsorships.
Local adaptation, no doubt, has contributed to McDonald’s business growth in Malaysia. The restaurant has developed competitive advantages in the industry of serving quality fast food as low as cost. In addition to these decisions, the development of the Golden Arches or Ronald McDonald has provided consumers with memorable icons that are associated with quality, service, and value. McDonald’s faces some difficult challenges in moving away from the fast food king to a more conscious provider for customers who care about what they at. The keys to its future success will be maintaining its core strengths, an unwavering focus on quality and consistency while carefully experimenting with new options. The company’s environment efforts, while important, should not overshadow its marketing initiatives. Though there are many opportunities for this fast food giant, McDonald’s must keep the strategic nature of its marketing efforts to stay on top and provide what customers want. McDonald’s uses market research information to build a marketing strategy.
All parts of its organisation then have to work together to ensure that the strategy reaches its objectives. Once the marketing strategy is in place, various responsibilities are given to different individuals so that the plan can be implemented. Systems are put in place to obtain market feedback which measure success against short-term targets. McDonald’s has to ensure that this is done within the confines of a tightly controlled, finite marketing budget. Thus, the four P’s of marketing provide a good starting point for consideration of the requirements of strategy implementation in the marketing function.