For Catherine Owens
R unning H ead: M C D O N ALD ’S SITU ATIO N AL AN ALYSIS 1 M cD onald’s Situational A nalysis Sam uel A . Sam ple BU S 330 Principles of M arketing Professor Sadeghinejad February 16, 2016 M CD O N A LD ’S SITU A TIO N A L A N A LY SIS 2 M cD onald’s M arketing Plan: Frieday w ith RedBox Brand or C om pany D escription (m inim um 25 words) M cD onald’s is the w orld’s largest fast food chain w ith over $25B in annual sales and m ore than 35,000 retail locations in m ore than 100 countries (M cD onald’s Corporation, 2015). C ore Products or Services (m inim um 25 words) Beyond the burgers, french fries and m ilkshakes that they’ve been selling since its founding, M cD onald’s sells a variety of w raps, salads, sandw iches and beverages – m ore than 200 item s in all (The Econom ist, 2015). M cD onald’s locations are typically open for breakfast, lunch, dinner and late night dining and m any feature drivethru service. A Brief H istory (m inim um 50 words) The first M cD onald’s restaurant w as opened in 1948 by Richard and M aurice M cD onald. It brought production line techniques to the burger business and challenged the dom inant carhop drivein business m odel. Ray K roc w as one of the earliest franchisees and the key figure in the rapid expansion of the business after he bought out the M cD onald brothers 1961. M cD onald’s becam e a public com pany in 1965 and opened its first international location in 1967. Sales and locations have continued to grow every year since. K ey current com petitors (m inim um 50 words) H istorically, M cD onald’s prim ary com petitors w ere identified to be the large fast food burger chains like Burger K ing and W endy’s. But given M cD onald’s size and the expansion of their m enu, the com petitive set m ust be view ed m ore broadly to include sandw ich shops like Subw ay, other fast food concepts like ChikfilA , m ore upscale fast casual restaurants like Panera and Chipotle, as w ell as coffee shop chains like Starbucks and D unkin’ D onuts. M CD O N A LD ’S SITU A TIO N A L A N A LY SIS 3 SW O T A nalysis (m inim um 500 words) SW O T A nalysis: Strengths (D escribe a m inim um of 3 positive controllable factors) 1. A nytim e, anyw here convenience W ith over 14,000 locations in the U .S. alone, there’s a M cD onald’s w ithin a short drive of alm ost everyone and m ost are open from 6am to 11pm . The num ber of locations also m eans that M cD onald’s can purchase m edia nationally w hich is m ore cost efficient than buying locally. 2. Brand equity A s a results of its m any locations, consistent brand experiences and hundreds of m illions of dollars spent on m arketing each year M cD onald’s has developed a very strong brand. For exam ple, they ranked 5th on BrandZ’s 2014 m ost valuable global brand list (Rooney, 2014). 3. The Best French Fries M cD onald’s french fries are universally loved even by people w ho don’t otherw ise like M cD onald’s food. M cD onald’s fries w ere voted #1 in a 2015 Y ouG ov study (Peterson, 2015). 4. K id appeal M cD onald’s is a popular destination am ongst younger kids. M any locations have indoor playgrounds and there are m enu item s such as H appy M eals w hich com bine several kid friendly food offerings in a fun box that includes a toy. The brand does a lot of advertising on kid targeted program s and Ronald M cD onald is a highly recognizable spokesperson. 5. Inexpensive W ith it’s w ell know n dollar m enu, M cD onald’s is perceived by m ost consum ers as an inexpensive place to go for breakfast, lunch or dinner or a betw een m eal snack. SW O T A nalysis: W eaknesses (D escribe a m inim um of 3 negative controllable factors) 1. M enu bloat M CD O N A LD ’S SITU A TIO N A L A N A LY SIS 4 In their attem pt to com pete w ith a w ide range of com petitors, M cD onald’s m enu has sw ollen to m ore than 200 item s. This is driving dow n operational efficiency as it takes longer for consum ers to order and longer for the food to be prepared (W alton, 2015). Franchisees also have to invest in additional kitchen equipm ent and training. 2. D ining environm ent appeal M any M cD onald’s locations are outdated relative to chains like Starbucks or Panera w hich offer com fortable seating, am enities like fireplaces and greater cleanliness (W alton, 2015). 3. Low custom er satisfaction In a 2014 A CSI survey, M cD onald’s ranked last w ith a rating of 71% , som e 7 points below com petitors like W endy’s and Subw ay (Com oletti, 2014). The rating reflects factors such as order accuracy, food quality, staff courtesy and m enu variety. 4. Low em ployee w ages M cD onald’s does not pay its restaurant w orkers w hat m ost w ould consider to be a “living w age”. A s a result, M cD onald’s does not alw ays attract the highest quality em ployees and turnover can be high, resulting in a constant need for rehiring and retraining. SW O T A nalysis: Threats (D escribe a m inim um of 3 negative uncontrollable factors) 1. H ealthier eating trends W hile M cD onald’s m enu does feature som e healthier item s like salads and w raps, they are still prim arily associated w ith burgers, french fries, m ass production and processed food. A s such, healthier eating trends represent a threat to M cD onald’s business. 2. A ging of the population The percent of population in the U nited States over the age of 65 is grow ing. From 10% in 1970 to a projected 20% by 2030 (O rtm an, V elkoff, & H ogan, 2014). The aging of the population is a threat for a business w hose core consum er franchise has historically been fam ilies w ith younger children. M CD O N A LD ’S SITU A TIO N A L A N A LY SIS 5 3. R ising social consciousness W hile M cD onald’s business or environm ental practices have likely im proved over tim e, the level of scrutiny surrounding the triplebottom line and associated negative publicity has increased in recent years. Popular docum entaries like Super Size M e and Fast Food Nation have not portrayed M cD onald’s food or its business practices in a positive light. SW O T A nalysis: O pportunities (D escribe a m in. of 3 positive uncontrollable factors) 1. Positive childhood associations Regardless of people’s current perceptions or level of satisfaction, m ost M cD onald’s consum ers have fond childhood m em ories associated w ith the brand that can be potentially activated w ith the right m essaging or product offerings. This creates an opportunity w ith the next generation of parents. 2. The prolonged U .S. econom ic recession The m ore people’s budgets are pinched, the m ore they are apt to “trade dow n” to less expensive options like fast food. W ith its w ellknow n dollar m enu, M cD onald’s has the opportunity to benefit from a prolonged econom ic dow nturn. 3. G row th in speciality coffee The percentage of A m ericans drinking speciality coffee in the U S has m ore than doubled since 2009 (W ard, 2004) and teenagers are a particularly high grow th segm ent. M cD onald’s M cCafe specialty coffee product line should continue to benefit from this trend. M arketing Plan Focus (W hat you’re m arketing and why, m inim um 100 words) Based on m y SW O T analysis, I believe there is an opportunity to significantly grow the afterdinner snacking business (i.e., french fries and M cCafe beverages) am ongst teenagers and young adults. This is also a w ay to show case updated facilities and am enities like W ifi to custom ers w ho m ay not have visited M cD onald’s recently. I think it’s im portant to reestablish brand liking w ith this age group prior to them having kids of their ow n. This w ill be the focus of m y m arketing plan. M CD O N A LD ’S SITU A TIO N A L A N A LY SIS 6 R eferences Bacic M edia G roup, LLC. (n.d.). M cD onald's prices fast food m enu prices. Retrieved February 1, 2016, from http://w w w .fastfoodm enuprices.com /m cdonaldsprices/ Com oletti, J. (2014, June 19). A m erica's favorite fast food chains. Retrieved from http://w w w .businessinsider.com /m cdonaldslastincustom ersatisfaction20146 The Econom ist. (2015, January 10). W hen the chips are dow n. Retrieved from http://tinyurl.com /m g8nm qh M cD onald's Corporation. (2015). 2014 Annual Report (Rep.). Retrieved from http://tinyurl.com /haq4fkp O rtm an, J. M ., V elkoff, V . A ., & H ogan, H . (2014). A n aging nation: the older population in the U nited States. W ashington, D C: U S Census Bureau, 251140. Peterson, H . (2015, July 13). The best fast food french fries in A m erica. Retrieved from http://w w w .businessinsider.com /thebestfrenchfriesinam erica20157 Redbox A utom ated Retail, LLC. (n.d.). Redbox corporate inform ation. Retrieved February 7, 2016, from http://w w w .redbox.com /facts Rooney, J. (2014, M ay 20). G oogle beats A pple A s BrandZ m ost valuable global brand. Retrieved from http://tinyurl.com /hsg5zu3 W ard, H . (2014, D ecem ber 10). Specialty coffee consum ption: A look at the num bers. Retrieved from http://tinyurl.com /jm k5ok7