McDonald's Case Study
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A case study of McDonald's market strategies and strengthening of brand equity over the years.
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McDonald's Case Study
- 2. Inception of mcdonald’s Richard and Maurice McDonald started McDonald’s as a barbeque restaurant in 1940 Ray Kroc, a multi mix salesman franchised a restaurant in 1955 and later bought the whole chain Ronald McDonald, the world famous mascot - introduced in 1960 Expanded to over 700 restaurants in USA by 1965 - Aggressively expanded overseas in the 80s Added almost 2000 new restaurants every year
- 3. Mantra for mcdonald’s initial success – ray kroc •Domestic and international expansion reinforced with quality, service, cleanliness and values. •Iconic golden arch and red and white stripe restaurants •Menu expanded – iconic items – Big Mac, Fillet-O-Fish, Egg McMuffin •Ramped up advertising – targeted children and families
- 4. the magnitude of mcdonald’s McDonald’s serves 70 million people every day. That’s 5 million more than the population of UK World’s largest chain of restaurants. 118 countries – 34000 locations – 1.9 million employees Generated revenues of $27 billion in 2012
- 5. Brand promise Hot, high quality food at a great value at the speed and convenience of McDonald’s High Quality Great Value Speed and convenience
- 6. Science behind mcdonald’s success Customer service has always been top priority FOCUS: •Consistency of quality •Creating strong brand equity through holistic marketing activities •Emphasis on cleanliness and service •Affordability of products •Localized offerings satisfying regional taste
- 7. Science behind mcdonald’s success Quick Service Affordability
- 8. Science behind mcdonald’s success Localized Offerings Quality Control
- 9. Creating Brand equity Wide Array of Marketing Campaigns
- 10. Creating Brand equity Adding more products to the product line. Expanding beyond hamburgers. Brand extension.
- 11. Brand power Regular food items tastes better when wrapped in McDonald’s familiar packaging 4th most valuable brand in the world, valued at $85.7 billion
- 12. Marketing strategies Marketing Segmentation Psychographic segmentation Demographic segmentation based on income
- 13. Marketing strategies Marketing Segmentation India China Japan Geographic segmentation catering to needs of local market
- 14. Brand positioning Family restaurant – Ronald McDonald Targets kids – Happy Meals Attracts teenagers and young adults - $1 menu Attracts health conscious consumers – Premium low calorie salads McCafe – targets consumers in booming coffee industry
- 15. What are McDonald’s core brand values? Have these changed over the years? Core values – quality, cleanliness, service and value Products, product pricing, restaurants and employees showcase these values Lost their way in the 80s and 90s due to aggressive expansion Devised a strategy to restore broken brand promise Strategy of 5P’s – people, product, promotion, pricing and place.
- 16. How has McDonald’s grown it’s brand equity over the years? Brand equity has been created over the years by: • Holistic marketing activities • Smart brand elements – Ronald McDonald • Campaigns – I’m loving it, Closest thing to home • Overhauling restaurants and improving services
- 17. Has McDonald’s changed in different economic times or in different parts of the world? o One of only two companies to register increase in share prices during worldwide recession o Changes product line from country to country based on local taste preferences
- 18. Risks McDonald’s may face in future Rising competition in the market Association with obesity Rapid expansion -> deteriorating quality and service
- 19. How to overcome those risks Introducing healthier items Study market risks and avoid them by research Innovate their product line and marketing strategy
- 20. SUMMARY Richard and Maurice McDonald started the company, Ray Kroc expanded it to several countries. Now it has grown to be the world’s largest restaurant chain with 1.9 million employees Managed to create an international presence Reputed for service and quality Strengthened brand equity by product line extension and various marketing campaigns Adopted clever marketing strategies – market segmentation – demographic, geographic, psychographic Faces risk from competition Needs to continuously innovate and update to stay relevant
- 21. Disclaimer Created by Aniketo Ghosh, Heritage Institute of Technology, Kolkata during a marketing internship under Prof. Sameer Mathur, IIM – Lucknow.