The document proposes a new marketing strategy for McDonald's in the Czech Republic. It begins with an analysis of McDonald's business model, products, market position, competition, and customer segments. Key findings are that McDonald's is losing market share in the quick service restaurant sector. The proposed strategy is to take a "retail" approach focused on increasing value for money. Specific initiatives are tailored for different customer segments and aim to build the brand while offering deals. Initiatives include strengthening value menus, loyalty programs, healthy options, and expanding the McCafe brand.

1. NEW
McDonalds
Marketing
Menu
Miroslav Jiřík, Sept 2011

2. General notes
Presentation is prepared:
• for specific purpose – to demonstrate my marketing
approach to given task
• based on limited data provided by McDonald’s and own
analysis based on own research from public sources

3. Summary and my task
2006
2009
• introduction of the new platform
“Faajnovky za pár kaček” (EDAP)
• 50% LFL increase
• 350k transactions (in 2005) up to
530k transaction (in 2009)
• 20 % revenue share / stable
• introduction of new platforms:
McWrap, Salats, McCafé
• strengthening communication -
breakfast, “fajnovky”
• couponing for major products
• despite these innovations and
initiatives decrease number of
transactions and revenue
• hypothesis: global recession, customer
focus more on value for money
TASK:
Come up with new mktg strategy and restart and ensure increase
number of transaction and revenue.

4. My approach to the task
1. analysis 2. proposal 3. clarification
Due to limited availability of
internal data all proposals
have to be clarified by:
• Analysis of McD sales
data and all available
surveys
• Prepare business case for
each initiative
• Research & verification
• Communication roadmap
McD data:
• FastTrack Survey
Own analysis:
• McD vision, values
• Business model
• Products & services
• Market, competition
• Segments & positioning
and targeting
• SWOT
• General mktg tactics
• Marketing strategy for
McD
• Segmentation and
marketing goals
• Key marketing
initiatives
Covered in this
presentation

5. analysis
Step 1
McD data:
• FastTrack Survey
Own analysis:
• McD vision, values
• Business model
• Products & services
• Market, competition
• Segments & positioning and targeting
• SWOT

6. Business model supports vision
Everyday affordable place
to eat without compromising
on quality of food and service
Quality, Service, Cleanliness, Value Propositions
Franchise model
and sophisticated
framework ensuring
delivering values
worldwide
Product
consistency through
sophisticated supplier
networked operation
and distribution system.
Strong service
brand.
VISION
VALUES
BUSINESS
DRIVERS
STEP 1

7. McD is clearly positioned as “sharing” brand
Požitek
Sdílení
Vitalita
Moc Přináležen í
Kontrola
Bezpečí
Odlišení
Source: Censydian brand model, Synovate
STEP 1

8. Competition is broad…
Informal eating out (IEO)
Quick service
restaurants (QSR)
MARKET VALUE =
XXX BL CZK
Direct brand
competitors
KFC, BurgerKing, Subway
Similar in form but not
direct
Sbarro, Nord Sea,
Bageterie Boulevard
Generic - satisfying the
same need of hungry
chinese restaurants/
stands, pizza street
windows, canteens, food
corners in retail chains…
STEP 1

9. …and very competitive
STEP 1

10. There is no value gap on IEO market
LOW PRICE
(competitive)
HIGH PRICE
HIGH VALUE PROPOSITION
(services, hygiene, design,…)
McDonalds
KFC
LOW VALUE
Canteens
Chnineese stands,
pizza windows
Local
restaurants
BurgerKing
High
Cuisine
Rest
Subway
STEP 1

11. CONVENIENCE
All needs are being serviced
STEP 1
NICHE PRICE
MARKET
EVERYDAY
SHOPPING
TRIP
LUXURY

12. Fast food market stable, but only slowly growing
Source: euromonitor.com / Fast Food in the Czech Republic report, Sep 2010
TRENDS
Fast food restaurants were successful in showing sales growth under the unstable economic situation
and weaker purchasing power of Czech consumers. With their quick meal items and wider choices of
healthy meals for good prices, they enticed away some consumers from full-service restaurants. Chains started to
introduce snack-size menu items to meet the demands of consumers being forced to save. For example, Subway CR
introduced Baby Sub sandwiches (10 cm long) for CZK25 in August 2009. McDonald’s CR enlarged its offerings of
small snack items for CZK20 and CZK30.
COMPETITIVE LANDSCAPE
McDonald’s and KFC remained the leading fast food brands in the Czech Republic. In 2009, both of these brands
expanded in number of outlets and were successful in increasing their transactions and sales. The brand operators
performed well under the negative effects of the recession on foodservice spending of consumers, though they faced
lower increases in sales than in 2008. Both operators were active in permanent menu innovations, including aspects
pertinent to the health and wellness trend. They also introduced advantageous menus and boosted
sales by clever advertising campaigns.
STEP 1
PROSPECTS
Fast food in the Czech Republic will develop at a constant value CAGR of 4% during the forecast period. Chained
operators will continue their good financial results, whereas independent operators will suffer from lack of
investment. Compared to the review period, value growth will be slower because fast foods will become
more saturated and will be facing stronger competition from casual dining full-service
restaurants.

13. Confirmed by FastTrack survay
Economics predictions are positive, but not for QSR
ECONOMICS
Positive shift in expected expenditures (incl eating out, holidays, new
gadgets,..), people plan to spend their money for quality fine dining (+14)
rather than in QSR (+9).
They do not plan visit QSR (very likely, 20 vs 10), except McD current
customer (certainly visit, 69 vs 82).
Source: FastTrack
STEP 1
Casual dining restaurants can gain more of
the “new” money on the market.

14. There might be value potential on coffee rest market
LOW PRICE
(competitive)
HIGH PRICE
HIGH VALUE PROPOSITION
(services, hygiene, design,…)
LOW VALUE
McCafé
Starbucks
Coffee to go stands
Costa Café
STEP 1

15. Serving basic needs, but small in scale
CONVENIENCE
HIGH VALUE
STATUS/
BRAND

16. Product lines attract different target groups
STEP 1

17. Loosing customer count and share
PENETRATION
Number of those eating outside (IEO) is stable (96 % in 2010 an 2011) while number of
those eating in quick service restaurants (QSR) is slightly decreasing (all -8, McD -6,
KFC -6, Subway -2).
On smaller QSR market…
NUMBER OF VISITS AND FREQUENCY OF VISITS
McD is clearly leader in number of visits, and thus McD’s decrease (107 vs 79, KFC
….) is driving total QSR market decrease (164 vs 127). At the same time the
frequency of visits of IEO is stable (17,43 vs 17,09), McD slightly decrease (2,57 vs 2,24),
KFC slightly increase (1,92 vs 2,24). McD is probably loosing occasional
customers.
…McD is loosing its QSR market share.
Source: FastTrack
STEP 1

18. Image is still good, satisfaction same in KFC
IMAGE
McD is strong in awareness purchase of eurosaver menu and still better than KFC in all
image attributes. But there has been no improvement and even decline in these particular
image attributes: affordable prices, value for money, involved in my community, environmentaly
friendly company, company I can trust, concern about safety of food, has choices I can eat
regularly, top quality beef, has food I feel good about children eating.
McD stays number 1 favorite IEO place, but classical local restaurants are becoming
more popular (17 vs 23). McD increased popularity in QSR (67 vs 78) while KFC has dropped
(30 vs 20).
SATISFACTION
Image is the driver to visit McD, but
weaker than ever before.
Overall satisfaction of McD customers remain unchanged (93 vs 94), but the gap on KFC is
dismissed (8 vs 1). Improvement in some attributes e.g. fast/efficient service, but KFC was
able to improve all satisfaction attributes and the gap is closed.
McD and KFC customers are equally
satisfied with provided value.
Source: FastTrack
STEP 1

19. Local trends are similar to global ones
New technology
Rapid growth of new technology,
mobiles and internet shopping,
cashless payment
Children
Baby boom in China
High child focus in many Asian
countries
Heath Well-being
Increasing obesity concerns
worldwide, and continued interest
in health and well-being in many
Asian countries
Home/local focus
Growth of in-home eating
entertaining in Europe and
interest in their local community/
local products
Ageing Society
Key demographic trend in many
European and Asian countries
Savvy consumer
Many consumers remain cautious
– looking for deals, shopping
around and buying online to save
Trading down/up
More polarised shopping with
increasing unemployment as well
as increasing prosperity
Sustainability
Consumer awareness and
concern enviroment and for
climate change
STEP 1

20. Analysis conclusion / SWOT
STEP 1
• strong profiled “service” brand
• consistent user experience and
value propositions worldwide
• focus on customers / moments of
truth
• staff
Strengths
• perceived often as a junk food
• Franchising fragility – control over
franchises
• shift from QSR to casual dining
restaurants
• growth of health conscious eaters
• leveraging trends – wellbeing and
ethical image improvement
• McCafe as new choice to expand
the market
Weaknesses
Opportunities
Treaths

21. proposal
STEP 2
• General mktg tactics
• Marketing strategy for McD
• Segmentation and marketing goals
• Key marketing initiatives

22. Different marketing tactics can be used…
Revenue
Transactions
Visits
Customers
Product
• New products
• Product lifecycle
management
• Up-selling
cross-selling
Place
• New restaurants
• Online sale
• Delivery service
Price
• Promos
• Couponing
• Loyality schemes
Promotion
• Brand and
subbrand
building
…but based on limited data provided and my own study I propose in this
presentation only red tactic. With sufficient data the others can be of course
evaluated as well.
STEP 2
In retail business increasing value for
money results in increasing number of:

23. STEP 2
“Act as a retailer, think like a brand” strategy
Ultimate “retail” strategy and goal
Increase value
for money
perceived benefits (rational + emotional)
price
What for McD?
Act as a retailer,
think like a brand
Value for money =
Brand promise
I'm lovin' it
Value (quality,
cleanness, products…)

24. Retail segmentation is basic cornerstone
Segments based on price sensitivity
Sub-segment based on lifestyle
STEP 2
Price sensitive
• Youth (teens)
Mid market
• A family with children
Up market
• Urban consumer on the
move

25. Precise targeting and brand positioning is essential
Segment
Subsegment
(audience)
Who they
are
Brand
positioning
What is
McD for
me?
Price sensitive
• Youth (teens)
• Teenagers (13-19)
who love fun,
entertainment, their
friends and are hungry
all the day
unfortunately with
low budget.
• Hangout with friends,
but keep it affordable.
Mid market
• A family with children
• Busy parents with kids
(4-12), living in towns
and cities, spending
free time together
with their kids -
travelling, visiting
cinemas, shopping.
• A treat for parents, a
fun place to be for
children.
Up market
• Urban consumer on
the move
• Active urban people
(25-40) enjoying and
investing in
themselves – career,
sport, culture. Aware
of trends. Time
pressured.
• Great taste, quick
service without
affecting the work
schedule.
STEP 2

26. Initiatives are segmented and mktg mix vary
Segment
Marketing
goals
Initiatives
and tactics
increasing
value for
money
Price sensitive
• Keep revenue
1. Strengthening
and utilizing
EDAP
2. Time limited
price offers
3. Events
Mid market
• Build loyalty
• Attract new
customers
1. Building service
brand
2. Refreshing
product lines
3. New ways of
couponing
4. Environmental
focus/good
responsible
citizen
5. Loyalty program
for kids (only)
Up market
• Attract new
customers
STEP 2
1. Building McCafé
brand and
introducing new
“healthy”
platform as part
of it
2. Piloting new
dinner platform
3. My Home Office
Meeting Point

27. Price
sensitive
segment

28. Initiatives are mainly price oriented
Rational benefits: Strengthening and utilizing EDAP
• new items from standard menu combined with time limited offers (donuts, salats,
sandwiches)
perceived benefits (rational + emotional)
price
Value for money =
Price: Time limited price offers
• Try regular BigMac just for xxx CZK
• Invite your friends - BuyOneGetOneForFree, 2+1
• Come and see if today is LuckyDay. It is not promoted, come and be suprised (1+1 free,
discount for facebook fans/facebook places)
• Real time pricing (number of tweets)
Emotional benefits: Events and cool services
• Come to celebrate Valentines Day. Talk about your holiday experiences (Back To School)
and enjoy our EDAP, and spent your SMS coupon you've got from us
• Do your school homework together in McD. Wifi is free, meal is cool and cheap.
Continual targeted promotion – BTL, digital, POS, viral
STEP 2

29. Mid
market
segment

30. Initiatives are combined brand and price (1/2)
perceived benefits (rational + emotional)
price
Value for money =
Rational benefits:
Refreshing product lines
• You already know that your kids love HappyMeal. You, parents, can try our new menus
STEP 2
(rotating a couple of highly promoted new menu items, no price promo, just more seasonal)
Emotional benefits:
Building best service brand / promoting core McD values
• Family is hungry, kids need pee? Let’s stop in McD because food is fresh and high quality,
service fast, restaurant and toilets clean, kids have fun (targeted communication of core McD
values)
Environmental focus / McD is good responsible citizen
• We care about place where we do our business. Look how we handle with waste, check
our green activities, we care about obesity (McCup, nutrition info, competition for kids,…).
• Visit our new “100% nature friendly” restaurant in Prague! It is made environmentally
friendly. No CO2, no organic waste, energy consumption less 25%.
Campaigns on roadmap – ATL, BTL, POS

31. Initiatives are combined brand and price (2/2)
Price:
New ways of couponing
• I like seasonal, I am with 2 kids, I prefer healthy combos, I come for breakfast, Quick dinner
for 2
Loyalty program for kids (only)
• There is no loyalty program for kids. Only McD rewards you – merchendise (t-shirt),
“coins”,etc.
Campaigns on roadmap - ATL
STEP 2
perceived benefits (rational + emotional)
price
Value for money =

32. Good citizen / environmental focus

33. values

34. Up
market
segment

35. Initiatives are brand oriented
STEP 2
perceived benefits (rational + emotional)
price
Value for money =
Rational benefits:
New healthy platform as part of McCafé
• I am still on the move and I need quick, but healthy, snack.
Dinner platform
• I am always in a hurry. I need fast breakfast, fast lunch and very often fast dinner.
Emotional benefits:
McCafé brand
• Wide range of tasty coffee, slightly more expensive than at McD counter, but much more
delicious. And of course fast service and great quality delivered by McD (which I know
already well).
My Favorite Home Office Meeting Point
• Still on the move? Don’t like your “open-space” cage? Lots of short meetings with external
partners? McCafé offers you great coffee, free wifi, cosy design and healthy snacks.
Campaigns on roadmap – ATL, BTL

38. Conclusion
Act like a retailer, think like a brand strategy = increasing value for
customer via ongoing promotion of brand and core values
combined with time limited “retail like” segmented offers
Continual targeted promotion – BTL, digital, POS, viral
Products and
seasonals
Service
brand
Messages and campaign on comm roadmap – ATL, BTL
PRICE
SENSITIVE
MID
MARKET
UP
MARKET
STEP 2
Messages and campaign on comm roadmap – ATL, BTL, PR
Good
citizen
McCafé
campaign
Dinner
platform
Your
homeoffice
Kids loyality
programme

39. clarification
(not part of this ppt)
Step 3
Due to limited internal data all proposals have to be clarified by:
• Analysis of McD sales data and all available surveys
• Prepare business case for each initiative
• Research verification
• Communication roadmap
Are you interested in finishing this part?
J

40. Thank you for your attention.
marketing
mjirik@gmail.com
M: 725 032 333