Marketing plan final anyone?

Running head: MCDONALD’S MARKETING PLAN

McDonald’s Marketing Plan

Samuel A. Sample

BUS 330: Principles of Marketing

Avisha Sadeghinejad

February 16, 2016

MCDONALD’S MARKETING PLAN 2

McDonald’s Marketing Plan: Frie-day with Redbox

McDonald’s is the world’s largest fast-food chain with over $25 billion in annual sales and

more than 35,000 retail locations in more than 100 countries (McDonald’s Corporation, 2015).

Core Products or Services

Beyond the burgers, French fries and milkshakes that they have been selling since its

founding, McDonald’s sells a variety of wraps, salads, sandwiches and beverages - more than

200 items in all (The Economist, 2015). McDonald’s locations are typically open for breakfast,

lunch, dinner, and late night dining, and many feature drive thru service.

A Brief History

The first McDonald’s restaurant was opened in 1948 by Richard and Maurice McDonald.

It brought production-line techniques to the burger business and challenged the dominant carhop

drive-in business model. Ray Kroc was one of the earliest franchisees and the key figure in the

rapid expansion of the business after he bought out the McDonald brothers 1961. McDonald’s

became a public company in 1965 and opened its first international location in 1967. Sales and

locations have continued to grow every year since.

Key Current Competitors

Historically, McDonald’s primary competitors were identified to be the large fast food

burger chains like Burger King and Wendy’s. But given McDonald’s size and the expansion of

their menu, the competitive set must be viewed more broadly to include sandwich shops like

Subway, other fast food concepts like Chick-fil-A, more upscale fast casual restaurants like

Panera and Chipotle, as well as coffee shop chains like Starbucks and Dunkin’ Donuts.

SWOT Analysis

A SWOT analysis is a strategic planning tool used to assess the strengths, weaknesses,

opportunities, threats, and trend of an organization, company, project, plan, or venture.

MCDONALD’S MARKETING PLAN 3

Strengths

Anytime, anywhere convenience. With over 14,000 locations in the U.S. alone, there’s a

McDonald’s within a short drive of almost everyone and most are open from 6am to 11pm. The

number of locations also means that McDonald’s can purchase media nationally which is more

cost efficient than buying locally.

Brand equity. As a result of its many locations, consistent brand experiences and

hundreds of millions of dollars spent on marketing each year, McDonald’s has developed a very

strong brand. For example, they ranked 5th on BrandZ’s 2014 most valuable global brand list

(Rooney, 2014).

The best French fries. McDonald’s French fries are universally loved-even by

people who do not otherwise like McDonald’s food. McDonald’s fries were voted number

one in a 2015 YouGov study (Peterson, 2015).

Kid appeal. McDonald’s is a popular destination among younger kids. Many locations

have indoor playgrounds and there are menu items such as Happy Meals which combine

several kid-friendly food offerings in a fun box that includes a toy. The brand does a lot of

advertising on kid-targeted programs and Ronald McDonald is a highly recognizable

spokesperson.

Inexpensive. With its well-known dollar menu, McDonald’s is perceived by most

consumers as an inexpensive place to go for breakfast, lunch, dinner, or a between-meal

snack.

Weaknesses

Menu bloat. In their attempt to compete with a wide range of competitors, McDonald’s

menu has swollen to more than 200 items. This is driving down operational efficiency as it

takes longer for consumers to order and longer for the food to be prepared. Franchisees also

have to invest in additional kitchen equipment and training.

Dining environment appeal. Many McDonald’s locations are outdated relative to chains

MCDONALD’S MARKETING PLAN 4

like Starbucks or Panera, which offer comfortable seating, amenities like fireplaces, and greater

cleanliness. (Walton, 2015).

Low customer satisfaction. In a 2014 ACSI survey, McDonald’s ranked last with a rating

of 71%, some 7 points below competitors like Wendy’s and Subway (Comoletti, 2014). The rating

reflects factors such as order accuracy, food quality, staff courtesy and menu variety.

Low employee wages. McDonald’s does not pay its restaurant workers what most would

consider to be a “living wage” As a result, McDonald’s does not always attract the highest

quality employees and turnover can be high, resulting in a constant need for re-hiring and re-

training.

Threats

Healthier eating trends. While McDonald’s menu does feature some healthier items like

salads and wraps, they are still primarily associated with burgers, French fries, mass production,

and processed food. As such, healthier eating trends represent a threat to McDonald’s business.

Aging of the population. The percent of population in the United States over the age

of 65 is growing from 10% in 1970 to a projected 20% by 2030 (Ortman, Velkoff, & Hogan,

2014). The aging of the population is a threat for a business whose core consumer franchise has

historically been families with younger children.

Rising social consciousness. While McDonald’s business or environmental practices

have likely improved over time, the level of scrutiny surrounding the triple-bottom line and

associated negative publicity has increased in recent years. Popular documentaries like Super

Size Me and Fast Food Nation have not portrayed McDonald’s food or its business practices in a

positive light.

Opportunities

Positive childhood associations. Regardless of people’s current perceptions or level of

satisfaction, most McDonald’s consumers have fond childhood memories associated with the

brand that can be potentially activated with the right messaging or product offerings. This creates

MCDONALD’S MARKETING PLAN 5

an opportunity with the next generation of parents.

The prolonged U.S. economic recession. The more people’s budgets are pinched, the

more they are apt to trade down to less expensive options like fast food. With its well-known

dollar menu, McDonald’s can benefit from a prolonged economic downturn.

Growth in specialty coffee. The percentage of Americans drinking specialty coffee in the

US has more than doubled since 2009 (Ward, 2004) and teenagers are a particularly high growth

segment. McDonald’s McCafé specialty coffee product line should continue to benefit from this

trend.

Marketing Plan Focus

There is an opportunity to significantly grow the after-dinner snacking business

(i.e., French fries and McCabe beverages) amongst teenagers and young adults. This is also

a way to showcase updated facilities and amenities like Wi-Fi to customers who may not

have visited McDonald’s recently. It is important to re-establish brand liking with this age

group prior to them having kids of their own. This will be the focus of the marketing plan.

Segmentation Approach

A straightforward demographic approach to segmenting the market is appropriate for this

marketing plan. A behavioral approach based on past purchase history as captured via use of the

McDonald’s app is also considered. However, the app was only introduced in late 2015 and age is

not captured in the registration process (unless a social media log-in is used). Giving the broad

appeal of the McDonald’s concept and its national footprint, other demographics will be targeted.

Target Definition

The target for the Frie-day Night with Redbox promotion are U.S. teens and young adults

ranging from approximately 15 to 23. To the degree media targeting allows it, an interest in

movies, fast food restaurants and coffeehouses would represent a further level of definition.

Positioning Statement

For teenagers and young adults, Frie-day night with Redbox is a chance to hang with

MCDONALD’S MARKETING PLAN 6

friends and enjoy great fries, cool coffeehouse drinks, and a movie without draining the wallet.

Marketing Mix

Marketing mix is a set of tools that firms utilizes to pursue their goals and objectives in

satisfying the needs of their target audience.

Product

This marketing plan focuses around two McDonald’s product lines, French fries and

McCafé beverages, which include specialty coffee drinks as well as smoothies. The core idea is

to use the hook of America’s favorite French fries (in the red box) to drive trial and awareness

of high margin McCafé beverages (that might otherwise be bought at a Dunkin’ Donuts or

Starbucks) and kick-start an inexpensive, at-home social gathering occasion involving a Redbox

movie (or video game) rental.

Price

McDonald’s everyday pricing strategy for its French fries can be defined as competitive

relative to other fast food chains. In contrast, the pricing strategy for the McCafé line is better

characterized as skimming relative to the specialty coffee houses from where they are trying to

take business. For example, a large McDonald’s Mocha Frappe is $3.80, whereas a comparable

Starbucks Mocha Frappuccino is $5.54 (Bacic Media Group, LLC., n.d.).

As part of this marketing plan, on Friday (henceforth referred to as Frie-day) from 7:00

p.m. to 11:00 p.m. (or closing time, if later), all customers can upgrade from a small to a large

McCafé smoothie, frappe, or espresso drink for free when they purchase a large order of fries.

This represents a $1 savings to the customer. The offer would be limited to Frie-day nights (at

least initially) to create an air of urgency and specialness. The promotional pricing represents a

deepening of the McCafé skimming strategy as well as an example of segmented pricing as well

as peak-load (or in this case, off-peak) pricing, as this discount is only available on Friday

nights after the peak dinner rush hour.

Promotion

MCDONALD’S MARKETING PLAN 7

In addition to the promotional pricing deal discussed above, there would be a scratch-off

game that would also involve the use of a mobile phone (perhaps to look up a code on a Frie-day

night microsite). The mobile component is important as we want to reinforce the fact that

McDonald’s has Wi- Fi. Prizes would be things in red-boxes, namely free large fries, free Redbox

movie rental nights, and a big prize like your own fully stocked Redbox unit or a special Arch

(gift) Card that gets you free McDonald’s French fries for life. Codes that are not instant winners

could be translated into electronic punches via the McDonald’s app and redeemed for free fries

when a certain threshold was reached (e.g. six cards or by spelling the word ‘Redbox’).

Redbox is selected as a promotional partner because of the link to the McDonald’s red

french-fry box, but also because it is a good match with the low-cost image, has widespread

distribution, high use by teens and young adults, and is related to the late night hang-out ritual that

works well with McDonald’s. Redbox would be willing to offer up free night promotional codes

in exchange for the publicity the promotion would bring them.

As for the media, the plan is to leverage to promote Frie-day nights with Redbox and stay

away from traditional mass media channels, despite McDonald’s ability to buy such media

cheaply. For this promotion to work, teenagers and young adults will need to feel it is for them.

As the offer will be available to anyone, the “just for me” nature of the promotion will need to be

achieved through the media channels used and the message execution. Promotional efforts to

focus around targeting advertising on Facebook, YouTube and/or Instagram given its younger

skew and highly visual nature.

Another effort is to explore whether there is possibly a way to license Rebecca Black’s

“Friday Night” song (or Katy Perry’s “Last Friday Night”), as these would be a good

conceptual fit.

In-store signage for a limited time of day and/or week promotion can be difficult to

coordinate, but in this case, the limited presence of such materials (e.g., a counter card or drive-thru

window sticker) would enhance the specialness of the promotion for the target.

MCDONALD’S MARKETING PLAN 8

Place

The Frie-day night with Redbox promotion would occur at all participating

McDonald’s locations and would relate to in-store and drive-thru purchases on Friday nights.

Redbox movie redemptions would happen at any of Redbox’s 35,000+ U.S. locations which

are typically found near grocery and convenience stores (Redbox Automated Retail, LLC,

n.d.).

A dedicated McDonald’s Frie-day night microsite is where customers could be directed to

learn more about the promotion and check their prize codes. Integration with the McDonald’s app

might be a potential means of executing the “collect x codes, get free fries” aspect of this

promotion (and encouraging additional downloads of the relatively new McDonald’s app).

Potential Success Metrics

There are a variety of metrics that could be potentially captured and analyzed to measure

the effectiveness of this marketing plan. The most direct measures would be the growth in

customer counts and dollar sales during the promotional window versus the previous period or

year ago timeframe. As the promotion would only be offered on Frie-day nights, sales growth on

other nights could be used for comparison. One might also monitor increases in social media

followers, app downloads and counts of promotional codes entered (and other promotional

microsite actions). Redbox could monitor rental counts and number of promotional codes

redeemed to evaluate the success of their promotional participation.

International Considerations

If this McDonald’s Frie-day night marketing plan was to be translated for a foreign

market, it would probably be a complete start-from-scratch scenario. First, the promotion would

need a different name as the verbal link between Frie (as in French Fries) and Friday would not

likely exist in most languages. Secondly, a different promotional partner would be needed as

Redbox is strictly an American concept. Finally, the focus on coffee products might need to

change in a country like China and India where coffee consumption versus, for example, tea is

MCDONALD’S MARKETING PLAN 9

much lower than in the U.S.

Conclusion

The Frie-day night with Redbox marketing plan should be approved for funding because it

will succeed in leveraging America’s favorite French fries to drive increased trial of McCafé

beverages by teens and young adults. It will also increase consideration of McDonald’s as an

evening snack destination and help cement the brand’s association with Friday night movie get-

togethers. It will also help build brand affinity amongst this future generation of parents.

MCDONALD’S MARKETING PLAN 10

References

About Redbox. (n.d.). Retrieved February 7, 2016, from http://about.redbox.com/about-redbox/

Comoletti, J. (2014, June 19). America’s favorite fast food chains. Business Insider. Retrieved from

http://www.businessinsider.com/mcdonalds-last-in-customer-satisfaction-2014-6

McDonald’s prices. (n.d.). Retrieved February 1, 2016, from

http://www.fastfoodmenuprices.com/mcdonaldsprices/

McDonald’s Corporation. (2015). 2014 annual report. Retrieved from

http://corporate.mcdonalds.com/content/dam/AboutMcDonalds/Investors/McDonalds2014Annual

Report.PDF

Ortman, J. M., Velkoff, V. A., & Hogan, H. (2014). An aging nation: The older population in the United

States [Report]. Retrieved from https://www.census.gov/prod/2014pubs/p25-1140.pdf

Peterson, H. (2015, July 13). The best fast food french fries in America. Business Insider. Retrieved from

http://www.businessinsider.com/the-best-french-fries-in-america-2015-7

Rooney, J. (2014, May 20). Google beats Apple as BrandZ most valuable global brand. Forbes. Retrieved

from https://www.forbes.com/sites/jenniferrooney/2014/05/20/google-beats-apple-as-brandz- most-

valuable-global-brand/#78acff8b268d

Starbucks prices. (n.d.). Retrieved February 7, 2016, from

http://www.fastfoodmenuprices.com/starbucksprices/

The Economist. (2015, January 8). McDonald’s: When the chips are down. Retrieved from

https://www.economist.com/news/business/21638115-after-long-run-success-worlds-largest-fast-

food-chain-flounderingand-activist

Walton. (2015). McDonald marketing plan 1 [Infogram]. Retrieved from https://infogram.com/marketing-

plan-tutorialoutlet-dot-com-1gqo2qnlo48w278

Ward, H. (2014, December 10). Specialty coffee consumption: A look at the numbers. Retrieved from

http://www.scanews.coffee/2014/12/10/specialty-coffee-consumption-a-look-at-the-numbers/