McDonald’s Marketing
Q1. Segmentation and Targeting of McDonald’s
Understanding of target customers is an important knowledge when developing a marketing strategy. Having this information will help company offer a better product or a service. Better you know about your consumers, more effectively you could communicate and market them.
McDonalds has segmented their products according to bases of Demographic, Psychographic and Behavioural. Three main segments that McDonalds came up with are kids, students and family.
Segmentation
Market segmentation is a division of a market in small segments. It is crucial for any international company, as needs of people from different segments are vary. Particularly it is done according to the people who have similar characteristics. It can be done on the basis of age, gender, lifestyle, region, etc.
McDonald’s segmentation includes three different bases:
Demographic Segmentation: Kids, Family and Students
Kids are being offered special menu “Happy Meal” which includes a free toy inside the box. Families can find special menus for takeaways and drive-thru, as well as family packs. Students can buy special lunches that were designed particularly to meet their needs.
2) Psychographic segmentation: Convenience and lifestyle
McDonalds as an international brand with 35,000 outlets operating in 119 countries designed its menu according to peoples’ lifestyle that is different in every country. In every country you can find special menu that offers food that people are more or less used to in their home country. For example, India has a huge vegetarian population so McDonalds came up with a different and new product line, which includes items like Mc. Veggie burger and Mc. Aloo tikki Burger.
3) Behavioural segmentation: Income, Occasions, for e.g. Birthday Parties of kids
McDonalds started offering special packages for Birthday Parties. Good animation team with various games, specially designed room and special birthday menu was made in order to attract more customers.
Special Income segmentation that McDonalds came up with attracted a lot of people from lower-middle class. McDonald offered “Dollar menu” and “Extra Value deal” where you can eat for only one dollar or use buy one get one free offer.
In order to appeal more to customers McDonalds should emphasis on their Targeting technique. Today, we live in a time when people are trying to live healthy hence eat good food. Good investment in R&D that will be aimed on modification of new products and introduction of new will improve McDonald’s position and appeal more customers. Introduction of low cholesterol meals that will be deigned to attract healthy eaters can be McDonald’s next strategy.
Overall, McDonalds has improved a lot. Their new menus and good prices made them second best fast food in the world.
Q2.
McDonald’s digital marketing has played a big role in their success. With its help brand attracted more customers and increased customer loyalty an engagement.
First successful digital marketing campaign was promotion of new late night opening hours of McDonalds. When 30 % of restaurant’s outlets extended their hours, aiming to attract particular sector of customers like shift workers and travellers, McDonalds targeted them with advertisements in petrol stations and cash points offering them to download a new Restaurant Finder app. Furthermore, restaurant also bought mobile banner ads to promote the app on websites. This campaign resulted in a 100% return on investment figure and approximately 500,000 visits.
Another successful campaign called “The Ask McDonalds YouTube Campaign”, aimed on informing their costumers about what they eat in the restaurant. Over 20,000 questions from customers were answered by McDonalds and shown on YouTube. With help of this campaign fast-food restaurant increased brand awareness and customer loyalty.
McDonald’s monopoly is one of the most interesting interactions that restaurant made with customers. To catch up with the digital age, customer was able to add a code from a special sticker that McDonalds was providing with to a virtual game on any of electronic devices. After doing this customer has a chance to win prizes, ranging from big cash prizes and cars, through to free food.
Digital Happy Meals Play Zone campaign was aimed on persuading children to be more active with McDonalds. Images and different games were projected onto the floor interacting children and making them move more. This not only attracted kids, but also their parents, since they wanted to see their children active and engaged in something interesting.
McDonald’s Iced Fruit Smoothie App was designed to attract customers to buy a product sales of which are highly dependent on a weather. By playing a “smoothie game” customers had a chance to win a free ice cream or a drink.
Every company is aiming on improving its corporate social responsibility in different ways. McDonalds in Germany came up with a digital marketing campaign called “Kick the Trash” that was encouraging children and adults to dispose of litter.
Last but not the least, Coinoffers App designed by McDonald itself in order to stand out from the rest of the restaurants. Game was created to engage people to buy more of their products in order to receive QR code that they can scan lately and collect a virtual currency that could be spent on real world food at McDonald's. Campaign was so successful that only in the first day over 30,000 coins were collected (Warren-Payne, 2013).
Q3. How as a brand do we need to change to appeal to our current audience and/or future audience(s)?
Recently it has become harder for McDonalds to keep up with the fast growth of other fast food restaurants. People started criticizing McDonalds because of the detrimental health effects of its food and how much it pays employees. Despite recent events McDonalds is still a powerful competitor, however, few changes should be adopted to ensure that relationship with current and potential customers will be improved.
As a potential CMO of McDonalds I would advise them to start a healthy campaign to attract more people, especially those who prefer a healthy lifestyle. This campaign should aim on changing the image of McDonalds from the junk food restaurant to a healthy food restaurant. With help of this new image wider spectre of audience will be targeted, hence McDonalds will have more customers. Another objective of this change will be to persuade existing McDonald’s customers, who are used to eat junk food, to change their lifestyle and become healthier together.
The new potential healthy image should be promoted correctly, so that existing and new customers will understand it. For the positive change, nutrition message should be designed to attract attention and encourage people to change their lifestyle with McDonalds (Warren-Payne, 2013).
Below are a few examples of how a healthy lifestyle message can be sent to the customers. The strategies described have been adapted from Deng, T. (2009).
1. Healthy Meal plan
We can include a new product line to the existing ones, e.g., a healthy meal package, a package that includes salad with a cheaper price. This can attract existing customers to choose healthier option with lower price tag.
2. Two for one meal offer
Another way to attract future customers is to offer two meals for the price of one at particular times. Since customers can buy two healthy meals, they will search for their pair to eat together in McDonald. Since this would be the only way to get the offer, they are more likely to find a friend or a partner at that time. This will introduce many new customers to the restaurant.
3. Free Coupon for fitness A sport coupon can be distributed to the existing consumers who like to consume less healthy food in Mc. Donald, for example, a swim free coupon can be distributed after they visit Mc. Donald for the fifth time. This will give them a chance to exercise themselves and they are also given a chance to learn that exercise is really good for their life style balance. For this strategy, McDonald can collaborate with a fitness center.
4. New products, credit cards and on line service McDonald has many product lines for the young consumers. If more organic icons are added for the products such as fruits and vegetables, or free salad for consumers who pay with the credit card or on line orders, this will spread message that McDonald is now selling the healthy food.
While many other changes can be made to retain existing customers and attract new customers, this will require amendment to the marketing strategy in order to fulfil the needs of the customers who chose a healthy lifestyle.
Q4. How might we build up more meaningful relationships with our audience(s) in order to protect from new market entrants or threats?
For new competitor entering the market and trying to compete with McDonalds directly usually end up not being successful. The reason behind it is that McDonald has been in the market since 1940 and has made a very strong brand image for it self, there are also other factors which has made McDonalds strong in the market, for example their secret sauce, and serving meals which are similar to the local taste such as the McArabia in the Arab countries. The strategy that other fast food chain and the new entrants have used is that they are competing indirectly by introducing healthy meals. Today in the modern era, people have access to all the information how McDonalds or even other fast food restaurants are making the food and serving it to the clients. Unfortunately McDonalds have failed to prove that there food is healthy and this has caused their sales to reduce by 30%. Today people are moving towards eating healthy and having organic food and that’s because they know what the circumstances of having an unhealthy food. On the other hand McDonald has a very strong brand image world wide, if they start introducing the fact that McDonald is serving healthy food they can make a very strong barrier for entry for the new entrants. McDonald should start serving organic meat and should start advertising this to the customers, by for example publishing videos and proof of how their farms are being organic.
According to Lutz (2014), McDonald’s is utilizing three changes to win the heart of their customers and challenge competitions like Chipotle and Panera Bread,
1. Modifying the menu
McDonald's has been working on customizable burgers that can be topped with guacamole, bacon, or tortilla chips. McDonalds also introduced McWrap, which has between 360 and 600 calories and is stuffed with chicken, veggies, cheese, and sauce.
Bringing healthier options to the menu will attract younger crowd as mentioned earlier. McDonald's CEO Don Thompson mentioned that the company is going to trim down it’s menu items.
2. Customer service improvement
McDonald's is trying to change wait tome for the drive-thru items. Kitchens are being redesigned so that stuffs can work more effectively. They are also working on a mobile ordering app. With this app the customers can place orders and pick up items in restaurants.
3. Healthy food marketing
Since many view McDonald's as junk food, McDonald's is bringing a turnaround strategy in the marketing department. For example, it’s extending its customizable burger menu to thousands of restaurants in the United States. Customers will be able to choose toppings like guacamole, onions, bacon, grilled mushrooms etc. In Canada, Kale is also served as salads at McDonald’s.
Q5. What impact will these recommendations have on our business and/or marketing activity?
The marketing strategy will definitely need to change in order to bring the recommendations to life. There is need for evaluation which can conducted using phone calls, surveys, blogs, interviews or reviews and these can be used to research in depth about McDonald’s performance to make improvements (Deng, 2009).
Marketing activities will depend on certain countries or areas. For example, in India McDonald’s “Happy Meals” comes with Lego toys to attract children. McDonald’s also have many play zones for the children (Kulkarni, 2009). This also applies to other countries in the world.
According to Peterson (2015), it will cost franchisees between $120,000 and $160,000 by the kiosk to implement the new changes that McDonald’s is planning to bring to the US. This means that marketing activity will also have an effect on the cost. Increasing employees wages, adding nutritional items to the menu, retraining staffs for better customer service, and digital marketing to reach out to customers will have added costs for the business.
However, all the new recommendations specified above are important to survive with the competitors. Bringing a healthy change to the menu will also significantly affect it sales and number of consumers, since people are becoming more health conscious everyday.
Please use market references, examples and citations to ratify your recommendations.
References
Deng, T. (2009). McDonald’s New Communication Strategy on Changing Attitudes and Lifestyle. International journal of Marketing studies,1,37-42. Retrieved from http://www.ccsenet.org/journal/index.php/ijms/article/viewFile/1645/1556.
Warren-Payne, A. (2013, July 10), 10 brilliant digital marketing campaigns from McDonald's. [Web log comment]. Retrieved from https://econsultancy.com/blog/63032-10-brilliant-digital-marketing-campaigns-from-mcdonald-s/
Lutz, A. (2014, Sep. 9). McDonald's Is Making 3 Changes To Win Back Americans. Business insider. Retrieved from http://www.businessinsider.com/mcdonalds-changes-to-improve-business-2014-9
Kulkarni,S.; Lassar, W. (2009, Jan 31). McDonald's Ongoing Marketing Challenge: Social Perception in India. Online journal of international case analysis, 1(2).
Peterson,H. (2015, Sep. 19). McDonald's turnaround strategy is in overdrive. Business insider. Retrived from http://www.businessinsider.com/changes-mcdonalds-made-this-year-2015-9
