McDonalds started with one restaurant in the US in 1955. Today McDonalds is the largest and best-known global foodservice retailer. With more than 32,000 restaurants in over 120 countries, their global market potential is enormous. I am going to investigate how McDonalds attracts its customers by marketing. I will research into the products McDonalds sells at what prices and where and how it promotes theses products.
The main group McDonalds target are about 10-25 years old. Market segmented
Like all firms, McDonalds uses the 4Ps of marketing to attract its customers. The 4Ps are:
1. Product. The firm must come up with a product that people will want to buy. It must fulfil some of the customer’s needs and wants.
2. Price. The price of the product must be one that the firms target customers agree with and afford – without being too cheap.
3. Promotion. The product must be promoted so that potential customers are aware that it exists.
4. Place. The product must be available for sale in a place that the customer will find convenient.
1. Product. Variety, brands, own brands, type of product & product range
McDonalds has a large variety of products to suit many people’s tastes, for example children’s meals and the new salads meals. The children’s meals attract the children because there is a free toy with the meals and the meals are quite cheap – ï¿½1.99 for a drink, chips and a burger or chicken nuggets. Also it is possible to have fruit instead of chips and a vegetarian option. This attracts the parents as well because it is healthy for their children and it saves them cooking and washing up!
The new salads on the menu show that McDonalds have changed with the change in society. A few months ago McDonalds introduced the salads and they were a success because the new health conscious teenagers who increasingly want to look thin like models, actresses and singers do not want to eat junk food, like chips.
Some places do not sell a physical product, they sell a lifestyle or atmosphere or an image. For example in perfume adverts you see young glamorous models and people buy the product because they think if they have it they will be like the people on the adverts.
2. Price. McDonalds competes on price not quality so its customers do not have to be really rich to be a McDonalds customer. McDonalds prices usually stay around about the same as time goes on. But with the happy meals McDonalds charged a low price when it was new to get people interested in it and once it was established McDonalds increased the price but this did not work as the price was lowered to the original price. Maybe McDonalds should have used skimming- started off with a high price which helps make the happy meal desirable to people with large incomes and when it has become established McDonalds could have lowered the price to get more people interested but people with a larger income wouldn’t buy it in the first place and a couple of pence isn’t going to make much difference so maybe what they done was right.
Skimming is more known with electrical goods, like DVD players- a few people bought them when they were first introduced at a high price, now a lot of people have it at a cheaper price. This is good for the company as it gets them more money. This pricing is better than just starting off at a price and it staying the same, as more people will buy it at different time.
However, price is not that important for some really expensive, good quality products. For example if a car costing ï¿½50,000 was reduced in price by ï¿½5,000 it wouldn’t make more people buy it because if someone is willing to pay ï¿½45,000 for a car they would probably be willing to pay ï¿½50,000.
Petrol is quite similar to this because people will keep buying the same amount of it no matter what the price is, to a certain extent. Here is the demand curve for petrol:
Other firms like KFC and Burger King have to charge similar prices to McDonalds this is because if they charged noticeably higher prices people will go to McDonalds and if they were noticeably lower they will lose profit.
Some restaurants, like Subway charge different prices to students for the same product, this is good for students and will get them to eat there but its not good for people like OAPs because they might want a discount as well.
3. Promotion. There are many different ways to promote or advertise a product. Firms advertise for four main reasons:
* To make consumers aware of new products (like the new salads at McDonalds)
* To remind consumers about existing products (like the happy meals)
* To persuade consumers to persuade consumers to switch from rival products
* To improve the image of the business
The ultimate aim of advertising, of course, is to sell more products.
McDonalds advertise on TV, bus stops, newspapers, magazines, radio and billboards. But where they advertise depends on their target audience. For example they are not going to advertise the quarter pounder meal in an eating healthy magazine. Also the size of McDonalds means that its not going to advertise only in the Bognor Regis local paper. McDonalds budget is much larger than that of a smaller private company.
McDonalds uses both informative and persuasive adverts, the informative ones are about eating healthy and the persuasive ones persuade people to buy the food sometimes, with TV adverts they show people eating the food and really enjoying it. There is a theme tune for McDonalds, which is Justin Timberlake’s song “I’m lovin’ it.” This will attract a lot of customers as Justin is a very famous star and a teenage heartthrob and the song is very famous.
Although advertising gives people information and makes them aware of the product, subsidises newspapers and magazines so they cost less and makes money for the firm because it will hopefully pull in more customers, it can make a lot of people want things they do not need and costs money so the firms have to charge more for their products and if the adverts do not work then the money is wasted and the opportunity cost of employing people in advertising is they could be spent on making things.
McDonalds is a very famous brand name, and because it is famous more people are attracted to it than a restaurant that is not as well know. I think this is because people trust it and it has got quite a good name for itself.
McDonalds famous logo, the “golden arches” are what most people associate McDonalds with. I think that because of their simple design, the arches are more famous than their main rivals’ logos (BK and KFC) because I don’t even know what they are.
McDonalds has a lot of special offers; for example, earlier this year if you bought a Big Mac on a Saturday between 1 and 3pm you will get one free. Also there was a 99p menu where there were products like large fries, McFlurry or a large drink for 99p. They have given out prices as well, for example in special straws (which you got when you bought a certain meal) there were prices, like money or tokens for McDonalds products. These kind of special offers get a lot of people interested in McDonalds and attract more people.
McDonalds is famous all over the world and advertises all over the country but little fish and chip shop will not advertise on the TV, for example because it is too expensive and a waste of time.
4. Place. Where a firm sells its products is very important because if they sell there product in a place where their target market cannot see then they will not get as many customers as they would if they sold it in a place where their market are going to see.
There are a lot of McDonalds restaurants in convenient places, like in town centres and on motorways so when people have been shopping or driving for a long time and are hungry, McDonalds is the most suitable place to eat. So I think McDonalds has an added bonus that it is convenient and the food is made quickly and there are “drive-thrus” to attract more people.
I think that McDonalds restaurants will always be successful as long as it changes when people’s tastes change so I think the product life cycle goes a bit like this:
1. = Development
2. = Introduction
3. = Growth
4. = Maturity
5. = Decline
But I think that certain products like the McDonalds hotdogs, which they got rid of this, may be because they were not doing that well. Here is the product life cycle for the McDonalds hotdogs:
I am now going to use some primary research to ask people what they think about McDonalds and their rivals. I designed a questionnaire with nine questions and I gave them to 20 people, half men and half women with a variety of ages. Here is one of my questionnaires: The rest are at the back of my project.
From my questionnaire I can conclude:
* Most people eat McDonalds about once a fortnight.
* 13 out of the 20 people I asked ate from the salads menu, which means having healthier options is quite successful.
* The vast majority of people prefer McDonalds to its main rivals, burger king and KFC.
* Out of the 17 people who have seen the adverts, 11 of them are not tempted by them, so the adverts are not very convincing but 13 people knew what the theme tune is.
* Most people live about 3-4 miles from a McDonalds so there are a lot of them and are very common.
* Finally, most people go to McDonalds because it is convenient, cheap, tasty, the food is made quickly and it is healthier than what it used to be.
Here are some graphs to show my results clearly:
After I finished my questionnaire, I wanted to find out more about McDonalds so I wrote to the company, in London and asked for some more information but they did not send anything back so I just visited their website but it was basically just advertising it’s products.
I am now going to evaluate everything that I have found out in this investigation.
McDonalds is attracts millions of customers every day. This is because it is convenient, cheap, quick, easy and healthier than it used to be. It also has the added bonus that it is very famous and McDonalds restaurants are very common. Also it sponsors a lot of things. For example the euro 2004 football, this would have bought a lot of customers in because a lot of people watched it. McDonalds ha special offers a lot like buy one get one free, discounts and competitions which not only keep the customers they already have, but get new customers in.
I think that the advertising attracts new customers but the convenience keeps the customers returning. However, the evidence that I have found out from my questionnaires show that most people have seen adverts, but are not temped by them. This might be because there are so many of them and McDonalds is everywhere, so they might just annoy people.
Also McDonalds has economies of scale, which attracts customers because it’s a large firm so it is able to cut costs and get more profit. This will lead to more customers and make it bigger still.
I think that McDonalds is more successful than burger king and KFC and it attracts more customers because burger king and KFC cannot cut costs as much as McDonalds because they are smaller. But McDonalds has to be careful and make sure they do not have diseconomies o f scale which happens when firms get too big.
Overall, I think McDonalds is doing very well at the moment and will continue doing well if it satisfies its customers wants and needs. I think my investigation has been very successful and worthwhile.