Global Marketing Strategy of McDONALD’s according to Pakistan

Global Marketing Strategy of McDONALD’s according to Pakistan


INTRODUCTION:

      McDonalds was started by Richard and Maurice McDonald as a restaurant concept in San Bernardino, California on 15^th May, 1940.

      Currently McDonald's serves around 53 million people worldwide everyday.

      McDonald’s currently operates 31000 stores worldwide in 120 countries.

      It currently employs around 4,00,000 employees worldwide.

MARKET ANALYSIS OF PAKISTAN:

When McDonald’s comes to Pakistan on 1993 at first opening their branch in Lahore so at that time the market growth rate was 13 to 14% per anum.

COMPETITOR ANALYSIS:

McDonald’s does’nt believe that it has a direct competition  because the market is segmented on a much diversified basis. Food industry is the only industry where it is very difficult to alter the taste buds of customers.

MICRO AND MACRO ENVIRONMENT ANALYSIS:

Porter Five Forces:

Rivalry among the firms:

As a Pakistani nation so we are food loving nation investors are taking interest in investing fast food industry.

McDonald’s faces tough competition because the fast food restaurant market is already saturated. This element of the Five Forces analysis tackles the effect of competing firms in the industry environment. In McDonald’s case, the strong force of competitive rivalry is based on the following external factors:

·         High number of firms

·         High aggressiveness of firms

·         Low switching costs

The fast food restaurant industry has many firms of various sizes, such as global chains like McDonald’s and local mom-and-pop fast food restaurants. Also, most medium and large firms aggressively market their products. In addition, McDonald’s customers experience low switching costs, which means that they can easily transfer to other restaurants, such as KFC. Thus, this element of the Five Forces analysis of McDonald’s shows that competition is among the most significant external forces on the business.

Bargaining Power of McDonald’s Customers:

McDonald’s must address the significant power of customers. This element of the Five Forces analysis deals with the influence and demands of consumers. In McDonald’s case, the following are the external factors that contribute to the strong bargaining power of buyers:

·         Low switching costs (strong force)

·         Large number of providers (strong force)

·         High availability of substitutes (strong force)

Because of the ease of changing from one restaurant to another (low switching costs), customers can easily impose their demands on McDonald’s. In relation, because of market saturation, consumers can choose from many fast food restaurants other than McDonald’s. Also, there are many substitutes to firms like McDonald’s. These substitutes include food outlets, artisanal bakeries, as well as foods that one could cook at home. Based on this element of the Five Forces analysis, McDonald’s must develop strategies to increase customer loyalty.

Bargaining Power of McDonald’s Suppliers (Weak Force):

Suppliers also influence McDonald’s. This element of the Five Forces analysis shows the impact of suppliers on firms. In McDonald’s case, the weak bargaining power of suppliers is based on the following external factors:

·         Large number of suppliers (weak force)

·         Low forward vertical integration (weak force)

·         High overall supply (weak force)

The large population of suppliers weakens the effect of individual suppliers on McDonald’s. This is especially so because of the lack of regional or global alliances among suppliers. In relation, most of McDonald’s suppliers are not vertically integrated. This means that they do not control the distribution network linked to McDonald’s facilities. Also, the relative abundance of materials like flour and meat reduces suppliers’ influence on McDonald’s. Thus, this element of the Five Forces analysis shows that supplier power is a minimal issue for McDonald’s.

The major suppliers of McDonald’s in Pakistan are as follows:

·         Dawn Breads for Buns

·         Choudhry Dairy Limited for dairy products

·         Walls Ice Cream

·         Coca-Cola Ltd. for drinks

·         Packages for packing

Threat of Substitutes or Substitution (Strong Force):

Substitutes are a significant concern for McDonald’s. This element of the Five Forces analysis deals with the potential effects of substitutes on firm growth. In McDonald’s case, the following external factors make the threat of substitution a strong force:

·         High substitute availability (strong force)

·         Low switching costs (strong force)

·         High performance-to-cost ratio (strong force)

There are many substitutes to McDonald’s products, such as products from artisanal food producers and local bakeries. Consumers can also cook their food at home. It is also easy to shift from McDonald’s to these substitutes (low switching costs). In addition, these substitutes are competitive in terms of quality and consumer satisfaction. In this element of the Five Forces analysis of McDonald’s, substitutes are a major issue that the company must address through approaches like product quality improvement.

Threat of New Entrants or New Entry:

New entrants can impact McDonald’s market share. This element of the Five Forces analysis refers to the effects of new players on existing firms. In McDonald’s case, the moderate threat of new entry is based on the following external factors:

·         Low switching costs (strong force)

·         Moderate capital cost (moderate force)

·         High cost of brand development (weak force)

Because of the low switching costs, consumers can easily move from McDonald’s toward new fast food restaurant companies. Also, the moderate capital costs of establishing a new restaurant makes it moderately easy for small or medium-sized firms to affect McDonald’s. However, it is expensive to build a strong brand that could match the McDonald’s brand. Thus, this element of the Five Forces analysis shows that the threat of new entrants is a considerable issue for McDonald’s.

PEST Analysis:

Political:

In general term government policies do not affect the company. Mostly what company what company obligation to the government is the paying of different taxes which include payroll tax and income taxes. McDonald’s enjoys the advantage in countries where consumer protection law is not very strong. In countries like US, where the consumer protection laws are very strong, there are great costs associated with the breach in quality or service in the form of lawsuits.

Economic:

Due to the rising income disparity and the adverse economic condition, unemployment is on the rise due to which the labor cost reduce. More investors are encourage to invest in fast food industry.

Social:

People in our society are more conscious about status and want more varieties to choose from. Also there has an allot of controversies with McDonald’s abroad for the suppliers, so this is the threat for McDonald’s in Pakistan to select the best suppliers in Pakistan.

Technology:

Technology has made it possible for competitors to affectively reduce cost, therefore enabling them to match each other and imitate other competitive advantage. Technology has made it possible to manage and control poultry industry more efficiently, thus enabling more suppliers to come in. The advancement in technology makes it possible for the customer to gather information quickly and take quick decisions.

MARKET SEGMENTATION:

McDonald’s limit itself to chicken and beef offering and has also started catering to sea related food. This enables McDonald’s Pakistan to divide its segment on certain principles. Mcdonald’s makes combination of demographics, geographic, behavioral, and psychographic segmentation to identify various segments. In Pakistan McDoanld’s primary focus is for families with kids as a play place where they can have a fun and fund together. Interesting key finding was that McDonalds was more popular in females than in males. Reportedly, 42 percent females consume McDonalds as compare to only 33 percent of males. 

MARKETING MIX:

Products:

The major and most important thing while offering a menu to the customer is that you should provide them a choice. The reason for this is that customer has number of ways to spend their money on various places according to their need. So by providing them a choice you are actually catering their need. McDonalds always try to create a menu, which is actually customers want or need. However due to rapid changes in technology and others factors customers are changing over time. May be what is fashionable today may not look attractive tomorrow. So here the Research and Development of McDonalds monitors consumer’s preferences closely. They do cater these changes through introducing new products and also by elimination old ones or those, which are not actually working for them. McDonald’s mainly deals with the food and beverages products in a wide range. They use to offer various types of gifts with their products to attract kids. This may not be counted in their products list but can be mentioned as the innovative way of offering the products.

The following main unique product line as follows.

Price:

McDonald’s has been best in creating the value in the minds of customers due to which they are successful in satisfying customers on what they are charging. In Pakistan they are using two types of pricing strategies Price bundling along with psychological pricing. McDonalds is basically offering various deals and discounts in price bundling and are using psychological pricing strategy in a way that it looks much easier to be affordable, For example Rs.99 or Rs.299 instead of rounding it off to the nearest rupee.

Place:

There are total 24 fast food outlets of McDonald’s in Pakistan, and they all are located in famous areas. So far McDonald’s is only in Karachi, Hyderabad, Lahore, Faisalabad, Rawalpindi and Islamabad In future, very soon planning to expand in many cities in Pakistan.

Physical presence or distribution points for any products are not known as place in the marketing mix but it is consist of management range of process. These processes are engaging to provide products to the end customers. Here McDonalds Pakistan has adopted this strategy and is providing their customers with the prominent places where they are going to distribute their products. So the element indicated that there should be location where firm product can be offered. So McDonald Pakistan has virtual and non-virtual locations for selling their products like following

·         Restaurants

·         Kiosks

·         Websites and app

Promotion:

In Pakistan McDonald’s on national channels is less founded or hardly founded because of the fact the use social media to promote their advertisements. They do promote their videos on Facebook and YouTube in Pakistan. For example when MacDonald’s was in rumors for the obesity issues than they used social sites and various others to defend their selfs. In that advertisement they have shown the process that how from an ordinary potato it turns into the Mac-Fries with in hygiene environment. This again shows that how the MacDonald is trying promote their services along with their products. McDonald’s also use co-branding technique as given below.

INTER MARKET SEGMENTATION:

In local market McDonalds is operating in these cities:

·         Karachi

·         Hyderabad

·         Faisalabad

·         Lahore

·         Rawalpindi

·         Islamabad

McDonald’s not trying to further segment their market in Pakistan they offer same product, price throughout the Pakistan.

GLOBAL STRATEGY OF McDONALD’s:

In India:

When McDonald's set up shop in India in 1996, it ditched beef and introduced the Maharaja Mac, originally made with lamb. Chicken patties are used on the sandwich now, but even more popular is the vegetarian McAloo Tikki, a burger made from potatoes and peas. To allay strict dietary concerns, the carnivorous and vegetarian cooking is done separately, by different sets of workers: Those cooking the veggie meals wear green aprons; people handling meat wear red.

In China:

McDonald's, on the other hand, sticks mostly with classic sandwiches. After introducing regionally specific items, such as the rice burgers it serves in other Asian countries, and trying to compete with KFC on the chicken front, it found that its Chinese customers preferred to order Western foods. So it played up the burgers, rolling out a suggestive ad campaign with the slogan "Feel the beef."

In Japan:

For its Japanese stores, McDonald's has found that novelty is the way to go, and the company has introduced lots of special menu items. You can pair your Teriyaki McBurger, made from pork, with a bag of Seaweed Shaker fries (add the seaweed powder yourself). You can get a Croquette Burger or a Bacon Potato Pie. Probably the most distinctively Japanese dish is the Ebi Filet-O, a fried shrimp patty on a bun ("ebi" means shrimp in Japanese). McDonald's helped popularize the dish by signing up model Yuri Ebihara -- nicknamed "Ebi-chan" -- to do a series of print ads and commercials.

REFERENCES:

https://www.slideshare.net/faizan1us/mc-donalds-pakistan-presence-competition

http://www.brandsynario.com/fast-food-consumption-in-pakistan/

http://www.academia.edu/24640163/Strategic_Marketing_Plan_for_McDonald_s_2016

https://www.scribd.com/doc/34273434/Report-on-McDonald-s-Pakistan

http://edition.cnn.com/2010/LIVING/homestyle/04/08/fast.food/index.html