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04/18/2012

Marketing Customer Value & Management


MCDONALD’S: MARKETING MANAGEMENT

Introduction

            Since, attaining recognition as a separate field of study during early of the 20th century, marketing has developed an impressive body of literature, become a discipline and undergone substantial shifts on its knowledge acquisition (Hill & McGinnis 2007). As a result, marketing has been applied by many organizations and businesses in order to improve their performance and maintain their competitive advantage.

            However, today, the world of business is being affected by different changes in both macro- and micro-environment. This includes the changes in the political, social, economic and technological aspects such as changes in the financial status of the world or individual country, changing lifestyles of the people and the ongoing globalization. In line with this, it is important to consider the statement of Piercy (2009) that marketing is a set of management activities that define value, create value and deliver value for customers. As a result, many companies are becoming aware that application of effective marketing management can be helpful in order to maintain good relationship with the customers, which will reflect the sales and revenue of the company, together with the popularity of the brand and image.

            This paper will focus on the different aspects of marketing management process of McDonald’s.

Background of the Company

            McDonald’s is the leading food service organization in the world. The company produces more than $40 billion of Systemwide sales by operating in 31,000 restaurants in 120 countries in six continents. According to the company, they are taking advantage of their scale and strong financial position; the most famous and popular brand; unparalleled global infrastructure, competencies in restaurant operations including real state, retailing, marketing and franchising; leadership in social responsibility, knowledge and expertise in food safety and the initiative to protect the environment (Funding Universe 2003).

            The history of McDonald’s can be rooted in San Bernardino, California as renovated car-shop restaurant by the McDonald brothers Richard and Maurice (Briggs n.d.). The said business was expanded and developed by Ray Albert Kroc by opening more restaurants under his management including Des Plaines, Illinois, the museum of McDonald’s (Parris Kraus 2006).

            The said success of the company is because of its extensive and intensive marketing efforts including advertisement, research and development or innovation as well as human resource management. As a result, the study of BrandZ and Newsweek, positioned McDonalds as the 8th most powerful brands in the globe (BrandZ 2008) (see Appendix A).

Marketing Management in McDonald’s

            Marketing management is a decision-making or problem-solving process (Kotler 1991). It takes place when at least one party to an exchange gives thought to objectives and the means of achieving desired response from other parties. This involve the process of decision making whereby actions are all planned and then implemented in a way that leads to satisfactory exchange in the marketplace. Generally, managerial planning and more specifically marketing management decision, involves a series of steps (Walsh 2004). These steps are sequential which include the process of problem identification, information collection, development and evaluation of the alternative choice of most appropriate option (Gilmore 1998). Marketing management is being implemented in McDonald’s, the company is focusing on the different strategies and activities that will help in order to cope with the different challenges in the environment, at the same time, focuses on how they will maintain the interest and loyalty of the customers. The next part of the paper will tackle the different marketing management strategies and activities of McDonald’s.

Advertisement and Media

            McDonald’s is one of the companies of the world that are taking the fullest advantage of media in order to introduce their products and brands towards the customers. One of the great example is the I’m Lovin’ it campaign of McDonald’s which was considered as one of the successful campaign to target the changing perception of the customers (Thompson & Strickland 2005). In connection, the company is also among of the first companies in the world that took advantage of the Internet in order to market their products and services. The website of the company serves a communicating means towards the stakeholders of the company which include information about the history, future plans etc. As the technology evolved, the website of the company becomes e-commerce website. Above all, McDonald’s also shows strong message continuity by the development of the advertising slogans from one campaign project to another which focuses on a single core message that did not change from year to year (Aaker & Biel 1993). In connection, advertisement can help to create brand-popularity, thus brand popularity can help to improve sales and revenue, which will help to maintain and improve position in the market (Trehan & Trehan 2009).

            Therefore, advertisement campaigns help McDonald’s to focus on one of the objectives of marketing management which is to increase the market share. It is important to consider that by increasing market share, increase in sales will follow (Singla 2009).

Social Responsibility

            According to the World Business Council for Sustainable Development, social responsibility is the continuing commitment to behave in ethical manner, at the same time, contribute to the economic development while improving the quality of life of its workforce, their families and the local community at large. On the other hand, the Corporate Responsibility Index stated that social responsibility can be achieved when a company has effectively and sustainably built a lasting, meaningful relationship within its sector where it belonged and its immediate community (Scott 2007).

            Social responsibility is also used in marketing. As a matter of fact, if a company is socially responsible, it will create a good image perception of the customers.

            First, McDonald’s focuses on the improvement and the development of its employees. This pertains on the effort of the company to focus on the Hamburger University, which help employees to gain higher position in the company, at the same time help the employees with their education. For the community, McDonald’s focuses on the beautification projects around the globe, at the same time continue programs that will help children like Ronald McDonald House. This includes taking care of sick children.

            McDonald’s also focuses on responsible purchasing. With this, the standard about animal welfare and safety is established in the entire supply chain of the company. This includes checking animal treatment and the proper handling of raw materials.

            The most important aspect is the process of protecting the environment. This is because the world had becoming more and more aware of the global warming, which pushed them to focus on practices and strategies that will help to help prevent or lessen the impact of climate change.

Attract Quality Employees

            Internal customers or the employees are always the important factor in the overall marketing activities. This is because they are the one who perform in order to transform raw materials into products or services. This is particularly applicable in the service industry, where in the behavior and performance of the employees directly impact the perceptions of the customers towards the brand or the company.

            McDonald’s believe that the quality of its employees is one of the primary factors which influence the success of the brand and the company. This is the reason why, the company is working hard in order to come up with the different policies and procedures that will help in order to improve the working environment of the employees, at the same time focuses on the different actions and strategies to be done to attract more reliable and skilled workers. According to Elliot & Percy (2007) organizations that have a strong brand can use its popularity and brand to attract and retain their employees. With this, different companies in the world, together with McDonald’s are focusing on allocation of money on the employee and employer brand due to the fact that strong employer brand can help in order to attract better applicants (Slaughter & Zickar 2004). Furthermore, Ritson (2002) stated that strong employer brand image can result to reduction of the employee acquisition, improve the relationship between the employees and employer, thus, extend the average length of retention of employees and enable to attract skilled staff at lower salaries that those competitors with weaker employer brands (cited in Elliot & Percy 2007).

            The study of Kozak & Rimmington (1998) showed that owners of food establishments believe that the key areas center around the quality and presentation food and drink, hygiene, staff attitudes and appearance, fast and efficient service, attention to customer needs and the quality of the physical environment (Kozak & Rimmington 1998). However, the study of Bitner & Booms (1990) showed that staff is a major variable because perfectly cooked food could be badly received because it was badly served. Conversely, even when there has been a failure in the delivery of the service, an able employee can ensure customer satisfaction with an appropriate response (cited in Pratten 2003).

            With this, it focuses on the objectives of marketing management which is to perform the marketing function in efficient manner. This include the process of marketing research, product planning, purchase, sale, branding, packing, pricing advertising etc., which are all done by the human resource or the employees (Trehan & Trehan 2009).

Differentiation and Innovation

            Customer perception and satisfaction is being affected by different factors in both micro- and macro-environmental setting. As a result, many changes in social and economic aspect affect their buying behavior and their perception about the service and product offering of a company. This is important in the case of McDonald’s because the restaurant industry is being affected by many social forces including the changing lifestyle of the people, demographics as well as the health issues related.

            McDonald’s focuses on responding towards responding to the changing tastes, demands and preferences of the customers because of the growing preferences of the public towards wholesome food choices and other premium products in different parts of the world (Thompson & Strickland 2005). One of which is the changing eating habit of the world due to the health issues, particularly obesity. Because of the different studies, projects and programs of the government and non-government organizations in the world, the public had become more aware regarding the negative impact of fast food offerings towards their health. In connection, the people also had become more conscious about their weight or size. In the United States, McDonald’s and its competitors faced veto votes from mothers, teens and kids. In order to come up with the solution, which will help in order to maintain the market share of the company, McDonald’s focuses on changing some of the menu of the restaurant by offering healthy food. One of the effort of the company is its offering of Chicken McNugget made from pressed chicken that is equivalent to hamburger and the likes, it is combined and pressed into an easily workable whole. In addition, the company also offered the premium chicken nugget made with breast meat. In order to cater the needs of those vegetarian, the restaurant also offers salad and replace the shaken salad which contains shredded iceberg lettuce with the mixed salad which consists of sixteen different lettuces. For the children, the restaurant also offered fruits, yogurt parfaits, soup selections and McGriddles (Silverstein & Butman 2006).

            This strategy enables the company to ensure the satisfaction of the consumer which is an important objective of marketing management. The management had been able to make some intensive study regarding the changing needs and demands of the customers (Trehan & Trehan 2009).

Conclusion

            All of these strategies enable the company to implement its effective marketing management. As a result, it had helped McDonald’s to sustain the popularity of its brand, at the same time, maintain it market share, because of it continuous effort to improve and satisfy the customers. As a result, McDonald’s enables to create a strong brand image and strong customer loyalty which help to create good market share, high revenue and sales and profit.

            The process of innovation, HRM, advertisement and social responsibility enables the company to focus on how it will meet the objectives of marketing management.

References

Aaker, D & Biel, A 1993, Brand Equity & Advertising: Advertising’s Role in Building Strong Brands, Lawrence Erlbaum Associates.

Elliot, R & Percy, L 2007, Strategic Brand Management, Oxford University Press.

Hill, M, McGinnis, J & Cromartie, J 2007, ‘A Marketing Paradox’, Marketing Intelligence & Planning, vol. 25, no. 7, pp. 652 – 661.

Gilmore, A 1998, ‘Services Marketing Management Competencies: A Ferry Company Example’, International Journal of Service Industry Management, vol. 9, no. 1, pp. 74 – 92.

Kotler, P 1991, Marketing Management: Analysis, Planning, Implementation and Control, 7th ed. Prentice-Hall, Englewood Cliffs, NJ.

Kozak, M & Rimmington, M 1998, ‘Benchmarking Destination Attractiveness and Small Hospitality Business Performance’, International Journal of Contemporary Hospitality Management, vol. 10, no. 5, pp. 184 – 188.

Pratten, J D 2003, ‘The Importance of Waiting Staff in Restaurant Service’, British Food Journal, vol. 105, no. 11, pp. 826 – 834.

Scott, S 2007, ‘Corporate Social Responsibility and the Fetter of Profitability’, Social Responsibility Journal, vol 3 no. 4.

Silverstein, M & Butman, J 2006, Treasure Hunt: Inside the Mind of the New Global Consumer, Portfolio

Singla, R K 2001, Business Management, FK Publication, New Delhi.

Slaughter, J E,  Zickar, M J, Highhouse, S, Mohr, D C 2004, ‘Personality Trait Inferences About Organizations: Development of a Measure and Assessment of Construct Validity’, Journal of Applied Psychology, vol. 89, pp. 85 – 102

Trehan, M & Trehan, R 2009, Advertising and Sales Management (For BBA - 1), FK Publications, New Delhi.

Walsh, S 2004, ‘Managing and Implementing Simultaneous Transaction and Relationship Marketing’, The International Journal of Bank, vol. 22, no. 7, pp. 468 – 483.

Appendices

Appendix A: Top 10 Most Powerful Brands

Position

Brand

Brand Value (US$m)

Brand Value Change

1

Google

86,057

30%

2

GE (General Electric)

71,379

15%

3

Microsoft

70,887

29%

4

Coca-Cola (1)

58,208

17%

5

China Mobile

57,225

39%

6

IBM

55,335

65%

7

Apple

55,206

123%

8

McDonald’s

49,499

49%

9

Nokia

43,975

39%

10

Malboro

37,324

-5%

Source: (BrandZ 2008)

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