1. McDONALDS
The story of McDonald’s started in 1954, when its founder Raymond Kroc saw a
hamburger stand in San Bernardino, California and envisioned a nationwide fast food
chain. Kroc proved himself as a pioneer who revolutionized the American restaurant
industry.
McDonald's, the world's largest chain of fast-food restaurants, has been treating the
Ukrainians with its famous burgers and sandwiches since 1997. The first McDonald's
restaurants were a real sensation, customers traveled kilometers to visit them. Nowadays
there are about 50 McDonald's restaurants in 16 Ukrainian towns, and more than a dozen
of McDonald's restaurants are in Kiev.
As well as in countries of all around the world, the fast-food giant McDonald's in
Kiev offers food of a high standard, quick service and value for money. To treat the
customers with tasty food they expect from McDonald's, it purchases supplies from local
producers wherever possible and carefully monitors every detail of production, transport,
delivery, preparation and service.
Offering choice and variety to its customers, McDonald's restaurants provide an
extensive menu that includes salads, grilled or crispy chicken, hamburgers and
cheeseburgers, sandwiches, fries, ice-cream, delicious desserts, soft drinks and coffee. To
cater for the most different tastes the flexible menu regularly rotates and is often enriched
with new dishes. Come and taste - McDonald's have always something new to offer.
At the entrance to the restaurants the life-size statues of the smiling, friendly clown
Ronald McDonald, children like to shake hands with, greet customers. By the way,
children are especially welcome at all McDonald's restaurant. Bright interiors, modern
playground and tasty dishes attract kids of different ages. Happy Meal, that contains food
and a free toy, both of which are usually contained in a small takeaway box with the
McDonald's logo, is a good small present that will gladden any child.
And the last, McDonald's can be recommended as an effective remedy for nostalgia -
no matter how far from America or Europe you get, it is a McDonald's with its casual
environment and familiar and deer cuisine that makes you feel a little closer to home.
Today McDonald’s is the world’s largest fast food chain serving 47 million customers
daily. McDonald’s is now one of the most valuable brands globally, worth more than $25
billion.
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2. Year Events
1955 Ray Kroc opens his first restaurant. McDonald’s Corporation is created
1957 Quality, Service, Cleanliness and Value (QSC & V) becomes company
motto
1963 Ronald McDonald makes debut
1965 The company goes public
1968 Big Mac is introduced`
1974 Happy Meal is launched
1996 McDonald’s opens in India, the 95th country
Business Model
 Franchise Model – Only 15% of the total number of restaurants are owned by the
Company. The remaining 85% is operated by franchises. The company follows a
comprehensive framework of training and monitoring of its franchises to ensure that
they adhere to the Quality, Service, Cleanliness and Value propositions offered by
the company to its customers.
McDonald’s in India
McDonald’s entered India in 1996. McDonald’s India has a joint venture with Connaught
Plaza Restaurants and Hard Castle Restaurants. Connaught Plaza Restaurants manages
operations in North India whereas Hard Castle Restaurants operates restaurants in
Western India.
Challenges in Entering Indian Markets
 Re-engineering the menu - McDonald’s has continually adapted to the
customer’s tastes, value systems, lifestyle, language and perception. Globally
McDonald’s was known for its hamburgers, beef and pork burgers. Most Indians
are barred by religion not to consume beef or pork. To survive, the company had
to be responsive to the Indian sensitivities. So McDonald’s came up with chicken,
lamb and fish burgers to suite the Indian palate.
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3.  The vegetarian customer – India has a huge population of vegetarians. To cater
to this customer segment, the company came up with a completely new line of
vegetarian items like McVeggie burger, veg surprise and McAlooTikki. The
separation of vegetarian and non-vegetarian sections is maintained throughout the
various stages.

“Mc Donald’s mein hai kuch baat” projects McDonald’s as a place for the whole
family to enjoy. When McDonald’s entered in India it was mainly perceived as targeting
the urban upper class people. Today it positions itself as an affordable place to eat
without compromising on the quality of food, service and hygiene. This commitment of
quality of food and service in a clean, hygienic and relaxing atmosphere has ensured that
McDonald’s maintains a positive relationship with the customers.
Customer Perception and Customer Expectation
Customer perception is a key factor affecting a product’s success. Many potentially
revolutionary products have failed simply because of their inability to build a healthy
perception about themselves in the customers’ minds. McDonalds being an
internationally renowned brand brings with it certain expectations for the customers.
Target Segment What is McDonald’s for me?
A Family with children A treat to children, a fun place to be for the children.
Urban customer on the Great taste, quick service without affecting the work
move schedule
Teenager Hangout with friends, but keep it affordable.
McDonalds Marketing Mix (5 P’s)
After segmenting the market, finding the target segment and positioning itself, each
company needs to come up with an offer. The 5 P’s used by McDonalds are:
1. Product
2. Place
3. Price
4. Promotion
5. People
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4. Product: How should the company design, manufacture the product so that it
enhances the customer experience?
Product is the physical product or service offered to the consumer. Product includes
certain aspects such as packaging, guarantee, looks etc. This includes both the tangible
and the non-tangible aspects of the product and service.
McDonalds has intentionally kept its product depth and product width limited.
McDonalds studied the behaviour of the Indian customer and provided a totally different
menu as compared to its International offering. It dropped ham, beef and mutton burgers
from the menu. India is the only country where McDonalds serve vegetarian menu. Even
the sauces and cheese used in India are 100% vegetarian. McDonalds continuously
innovates its products according to the changing preferences and tastes of its customers.
The recent example is the introduction of the Chicken Maharaja Mac.
McDonalds bring with it a globally reputed brand, world class food quality and
excellent customer specific product features.
Place: Where should be the product be available and the role of distribution
channels?
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. Nearly 50% of U.S.A is within a 3 minute drive from a McDonald’s outlet.
There is a certain degree of fun and happiness that a customer feels each time he dines at
McDonalds. There are certain value propositions that McDonalds offer to its customers
based on their needs. McDonalds offers hygienic environment, good ambience and
great service. Now McDonalds have also started giving internet facility at their centres
and they have been playing music through radio instead of the normal music. There are
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5. certain dedicated areas for children where they can play while their parents can have
some quality time together.
Price: What should be the pricing strategy?
Pricing includes the list price, the discount functions available, the financing options
available etc. It should also take into the consideration the probable reaction from the
competitor to the pricing strategy. This is the most important part of the marketing mix as
this is the only part which generates revenue. All the other three are expenses incurred.
The price must take into consideration the appropriate demand-supply equation.
McDonald’s came up with a very catchy punch line “Aap ke zamane mein ,Baap ke
zamane ke daam”. It also came with the advertisement of coming up with items at a
price of only Rs 20 which is very economical for a customer. Thus this lead to repeated
purchase as with price one also get the quality and service.This was to attract the middle
and lower class consumers and the effect can clearly be seen in the consumer base
McDonalds has now.
McDonalds has certain value pricing and bundling strategies such as happy meal,
combo meal, family meal etc to increase overall sales volumes.
Mcdonald has gone for penetration pricing with introductory new meal at lower price.
Promotion: What is the suitable strategy and channels for promotion of the
product?
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6. The various promotion channels being used by McDonald’s to effectively communicate
the product information are given above. A clear understanding of the customer value
helps decide whether the cost of promotion is worth spending.
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 does its
promotion through television, hoardings and bus shelters. They use print ads and the
television programmes are also an important marketing medium for promotion.
Some of the most famous marketing campaigns of McDonald’s are:
• “Aap ke zamane mein ,baap ke zamane ke daam”.”
• “I’m loving it”.
It has done promotion in many other ways like toys with meals for kids and also
promoting through banners and leaflet etc.
People: How to converge the benefits of internal and external marketing?
McDonald’s understands the value of both its employees and its customers. It
understands the fact that a happy employee can serve well and result in a happy customer.
McDonald continuously does Internal Marketing. This is important as it must precede
external marketing. This includes hiring, training and motivating able employees. This
way they serve customers well and the final result is a happy customer.
The level of importance has changed to be in the following order (the more important
people are at the top):
1. Customers
2. Front line employees
3. Middle level managers
4. Front line managers
The punch line “I’m loving it” is an attempt to show that the employees are loving their
work at McDonalds and will love to serve the customers.
Relationship with the Suppliers
McDonald’s has changed the nature of not only the food service industry but also the
food processing industry as well. McDonald’s realized that the battle between fast food
chains would increasingly be one of efficiency of supply, lower cost production and
greater desire to innovate. It pioneered with innovative and sophisticated food
distribution and packaging systems when the traditional food processors were unwilling
or unable to supply food items that McDonald’s demanded. They achieved amazing
consistency by devoting more attention than anyone else to field service and training at
store level. Production was concentrated in huge plants devoted exclusively to
McDonald’s. McDonald’s also started with tiny suppliers and grew with them displaying
great loyalty.
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7. Nowhere is the supplier loyalty more evident than in development of new, improved
products. Some of McDonald’s classic food items like Filet-o-Fish, French Fries,
Chicken Nuggets etc. are results of supplier innovation. Interestingly, it took KFC more
than three years before in finally introduced its own version of chicken nuggets. Thus
supplier technological expertise had given McDonald’s a product which was not a mere
marketing innovation but a technical one. McDonald’s attempted to squeeze labour out of
the stores by moving more preparation back into the processing plant, creating the
opportunity to develop unique products based on suppliers’ processing skills. For the
first time, McDonald’s suppliers became the focal point of new product
development. This converted the fast-food industry’s most fragmented distributed
system into more efficient one which helped McDonald’s reduce its inventory and
manage costs effectively.
Importance of PLC in McDonalds
The requirements of customers change over time and thus the product offering has to be
changed accordingly. What is the fashion today may be out of market within few weeks.
Thus continuous innovation is required.
To counter these changes McDonalds has continuously introduced new products and has
phased out the old ones which were at the decline stage of their PLC. The introduction is
timed such that the new product does not cannibalize the product already in the maturity
or growth stage. Thus the secret lies in getting profits with different products in the
different stages of the PLC.
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8. A perfect example of revitalising a product in decline phase
The French Fries have been an important part of the McDonalds menu worldwide. But
now it was in the stage of decline and was actually not generating proper return. In an
attempt to revitalize it, a new variant was introduced namely SHAKE SHAKE FRIES.
This is being served with chatpata spice mix which has resulted in increase in the sales of
French Fries and has elevated it from to the decline stage. This is used to delay the
decline of a well established product which has the potential of generating further
revenue.
Competitors Analysis
McDonald’s has been a leading fast-foods outlet. But the outlet understudy has other
competitors eating away into its market share. In addition to its traditional rivals—KFC,
Dominos, Pizza Hut—the firm encounters new challenges. Jumbo 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 McDonald’s. Perhaps in the new environment, fast, convenient
service is no longer enough to distinguish the firm. At this time, a new critical success
factor may be emerging: the need to create a rich, satisfying experience for consumers.
This brings us to service and experience based competition which McDonald’s can use
for competitive advantage against Jumbo King. Keeping in mind the demographics of the
area, McDonald’s has Wi-Fi enabled the outlet to cater to the student community. It is for
this overall “Food, Fun & Folks” experience that customers pay a premium over the other
competitors.
Competition also reduces product lifecycle; inducing firms to revise their products
portfolios and to revisit their product market to understand changing needs, expectations
and perception of different market segments. The new McBreakfast would be introduced
between 6 to 11 am as a pilot project. This would open up a whole new revenue stream
for McDonald’s by tapping into the student and working population by providing a
healthy and wholesome breakfast. This shows how demographic shift can affect the
demand for products and services. McDonald’s has anticipated these changes to maintain
its competitive edge.
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9. Two Dimensional Perceptual Mapping
BCG matrix of McDonald’s
The need for strategy in order to expand its existing product in very promising markets for
McDonald’s is very essential. McDonald’s along with KFC and other major fast food chains have
dominated the American continent as well as elsewhere. BCG Matrix: The market growth rate
measures industry attractiveness. The underlying theory for examining market growth rate is the
industry life cycle. The BCG assumes that growth rates, life cycle stages affect a firm’s finances.
McDonalds Europe
?
QUESTION MARKS
STAR
McDonald’s USA
McDonald’s Asia(india) DOGs
CASH COWS Mcdonalds America
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10. Placing products in the BCG matrix results in 4 categories in a portfolio of a McDonalds:
1. Stars (=high growth, high market share)
• Frequently roughly in balance on net cash flow. However if needed any attempt should
be made to hold share, because the rewards will be a cash cow if market share is kept.
So, McDonald’s USA is under Star position.
2. Cash Cows (=low growth, high market share)
• Profits and cash generation should be high, and because of the low growth,
investments needed should be low. Keep profits high.
3. Dogs (=low growth, low market share)
• Avoid and minimize the number of dogs in a company.
• Beware of expensive ‘turn around plans’.
4. Question Marks (= high growth, low market share)
• Have the worst cash characteristics of all, because high demands and low returns due to low
market share
Porter 5 forces model
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11. Competition
Restaurant industry is highly competitive industry. There are many small fast food
businesses in the industry who fight with each other to improve their customer base;
McDonalds is not an exception to this. Since its establishment in 1940, MCD has
excelled in the sector. Nevertheless, to stay in the competition, it started with McCafé.
This helped the company to stay in the business as a major fastfood business. Another
major step came out when McDonald started Breakfast to compete with the existing
business serving breakfast. Hence, this industry is extremely competitive and the MDC
should be up to date with customer taste & preferences
The Threat of Entrants
Large established companies with strong brand identities such as burger king, subway,
wendy etc do make it more difficult to enter and succeed within the marketplace; new
entrants find that they are faced with price competition from existing chain restaurants.
Bargaining Power of Buyers
Low bargaining power of buyers.
Bargaining power of suppliers
Bargaining power of suppliers within the fast food industry would be relatively
small, unless the main ingredient of the product is not readily available. Suppliers are
Coca cola, Heinz etc.
Threat of Substitutes
This could range from a competitive fast food restaurant to family restaurant to
a home cooked meal. Some of the restaurants like Ruby Tuesday,Yo china and TGF
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12. Mcdonalds Value chain
PESTEL Framework:
Political:
• The international operations of McDonald’s are highly influenced by the
individual state policies enforced by each government.
Economic:
• McDonald’s has the tendency to experience hardship in instances where the economy
of the respective states is hit by inflation and changes in the exchange rates.
• Market leader.
• Low cost and more incomes.
• The rate at which the economy of that particular state grows determines
the purchasing power of the consumers in that country.
Social:
• Working within many social groups.
• Increase employments.
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13. Technological
• Advanced technology development.
• Quality standards.
Environmental:
• Quality packing.
• Local manufacturer using foreign supplies.
Legal:
• Legislation for product.
• Sustained logo
SWOT Analysis
The Road Ahead
Rolling out McBreakfast across all outlets – In India, the company has recently launched
its entry into the breakfast food category. This is now launched on a pilot basis on select
stores. The company views this category as a key growth driver in future.
Mcdonald should increase its product line. To have more variety to choose from, to
include more deserts and more items like Pizza McPuff. It should continue to provide
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14. better and quick service. By lower the supply chain cost so that it helps in cost reducing.
McDonalds is willing to expand their Happy Meal choices to attract and retain customers.
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