mc donalds slides draft 5
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TRANSCRIPT
Marketing Environment (4Cs)Company (Value, Tactic, Strengths and Weaknesses)Customers (Segmentation, Customer Profile & Target Market)Competitors (Competitive Analysis and its Positioning)Change (Environmental Factors - Opportunities and Threats)
Recap: TOWS Analysis and STV ModelMarketing OpportunitiesMarketing Mix – 4PsFinancial StatementsOverview: Impact and Implications
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COMPETITORS
COMPANYValue & TacticMarketing Mix (4Ps)Strengths & Weaknesses
CUSTOMERS
CHANGE
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The McDonald's System leverages the unique talents, strengthsand assets of our diversity around the globe in order to be ourcustomers' favourite place and way to eat.
Promote Diversity and Inclusion among our Employees,Owner/Operator's and Suppliers who represent the diversepopulations McDonald's serves around the globe.
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Global Outlook of McDonaldsUS$23 billion in total revenues in 2007 (record high)
1.6 million restaurant employees worldwide
24,500 restaurants around the world offering extended or24-hour service
1 billion more customers were served in 2007 than in 2006
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McDonald’s in SingaporeFirst opened in October 1979 at Liat Towers
To date, more than 100 McDonald’s restaurant across the island
Serving 1.2 million customers every week
6,000 employees to keep McDonald’s running in SingaporeSource: McDonald’s Singapore
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Analyzing the STV Triangle:2 Components (‘Tactic’ and ‘Value’)‘Strategy’ to be covered under Customers and Competitors
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Value (Heart Share):
Brand
Service
Quality Customer Service,
24-hour outlets, Online/Phone Orders,
Prompt Delivery Service
Process
Cost-Efficient, Transparent
(nutritional info),
Product Quality (freshness)
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Tactic (Market Share):
Differentiation
Marketing Mix
ProductPrice
PromotionPlace
Selling
Transactional,Phone Orders,
Internet Orders,Drive-Thru
Kids’ Favorite PlaceShared Lifestyle
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Tactic (Marketing Mix):Product: Wide Range of Food Products
Wide Breadth and low depth
Drinks soft drinks, non-carbonated drinks, fruit juices,milk, coffees (Mccafe)
Food McChicken burger, Big Mac, Filet-O’Fish, McWings,McNuggets, French Fries
Dessert Ice Cream Cone, Sundae, McFlurry, CakesSides Apple Dippers, Corn Cup, Apple Pie
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McDonalds’ Product LineBreakfast Main Sides Dessert Drinks Others
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Tactic (Marketing Mix):Price: Competitive and Affordable PricingAlso practice International Pricing and Price Discrimination
(Student Meal - $4.50)
Drinks soft drinks and non-carbonated drinks ($1.65 - $2.05),fruit juices ($2.50), milk ($1.75)
Mccafe above $3.50 for a drink or cakeFood burgers ($2 - $4.35), Meals ($5.95 onwards)Dessert $0.60 - $2.50Sides $1.00 - $2.55
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Tactic (Marketing Mix):Promotion: TV Advertisement, Endorsement, Coupons,
Exclusive distribution of movie premiums(Happy Meal), Loss Leader ($2 McChicken), “I’m Lovin’ It”
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Tactic (Marketing Mix):Product: Wide Range of Food Products (breadth vs. depth)
Price: Competitive and Affordable Pricing, Price DiscriminationPromotion: TV Advertisement, Endorsement, Coupons,Exclusive distribution of movie premiums, Loss Leader….
Place: Direct Marketing Channel, Intensive Distribution,Physical Outlets (opened by McDonalds or Franchisees)
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Tactic (Market Share):
Differentiation
Marketing Mix
Product: Wide RangePrice: Competitive, Affordable,
Price DiscriminationPromotion: Coupons, TV adsPlace: Intensive Distribution
Selling
Transactional,Phone Orders,
Internet Orders,Drive-Thru
Kids’ Favorite PlaceShared Lifestyle
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TOWS: Strengths and WeaknessesMarket Leader with a Market Share of 27%
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TOWS: Strengths and WeaknessesMarket Leader with a Market Share of 27%
27%
20.60%9.40%
8.40%
5.00%4.70%
2.10% 2.00%1.50%1.50%
McDonalds
KFC
Burger King
7-Eleven
Subway
Long John Silver
Delifrance
MOS Burger
Haagen Dazs
YoshinoyaFast Food in Singapore (dated 15-Oct-2007)Source: Euromonitor International
RELATIVE COMPETITIVE POSITIONMarket Share (Cash Generation)
MA
RKET
GRO
WTH
(Cas
h U
tiliz
atio
n)
20%
10%
0%10x 5x x 0.5x 0.1x
BCG Model
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TOWS: Strengths and WeaknessesSTRENGTHS
Market Leader with 27% of the market shareGlobal brand power, Global PresenceEconomies of scale (transfer cost savings to customers)Convenient Locations and Payment Methods (Ezlink)Appeals to the mass market (especially the kids)24/7 Operations, Drive Thru, Delivery (extensive coverage of the market)Halal certificationRonald McDonald Children’s Charity
WEAKNESSESFranchising fragility – control over franchisesMcDonalds is often perceived as junk food
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Societal Marketing ConceptRonald McDonald Children’s Charity (RMCC)
donates its partial earnings to the foundation
World Children’s Day
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COMPETITORS
COMPANYValue & TacticMarketing Mix (4Ps)Strengths & Weaknesses
CUSTOMERSCustomer ProfileSegmentation (Geographic, Demographic, Psychographic…)
Target Market
CHANGE
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McDonald’s Restaurants in Singapore
Bukit TimahClementi
Choa Chu KangJurong
CommonwealthDover
NUSNTU
West Coast
BugisOrchardChinatownMarina Square
Tiong BahruRaffles PlaceCity Hall
HarbourFront
WoodlandsBishanYishun
Toa PayohSembawang
BedokChangiPasir RisTampinesAljuniedEunosPotong Pasir
Ang Mo KioHougangBoon KengSerangoon
Market SegmentationGeographically-segmented Islandwide
Tampines, Woodlands, Clementi, Orchard, NTU…McCafes – 22 outlets islandwide
Demographic SegmentationKids, Family, Students
Psychographic SegmentationConvenience and Lifestyle
Behavioral SegmentationOccasions, e.g. birthday parties
Target Market (and Customer Profile)Kids - 3 to 7 years
Happy Meal (healthier choice) with free toys
Families - Weekend outings or mealsDrive-Thru, Takeaways, McDelivery, Happy Meal
Students - Primary, Secondary, JC, Poly, Uni (a place tohang out or study)
Student Meals, outlets at SP, NYP, NUS and NTU, 24-Hour
Café goers - for quieter ambience, a place to relax or read or even business entertainments
McCafe
Working Adults - seek convenience meals; “grab and go”Drive-Thru, Takeaways, McDelivery, 24-Hour
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COMPETITORSKFCBurger KingSubwayStarbucksCoffee Shops & Food Courts
COMPANYValue & TacticMarketing Mix (4Ps)Strengths & Weaknesses
CUSTOMERSCustomer ProfileSegmentation (Geographic, Demographic, Psychographic…)
Target Market
CHANGE
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27%
20.60%9.40%
8.40%
5.00%4.70%
2.10% 2.00%1.50%1.50%
McDonalds
KFC
Burger King
7-Eleven
Subway
Long John Silver
Delifrance
MOS Burger
Haagen Dazs
YoshinoyaFast Food in Singapore (dated 15-Oct-2007)Source: Euromonitor International
Fast Food Industry - Market Share
Oligopoly Market?
Types of CompetitionsBrand (direct competition)
McDonalds, Burger King, KFC, KFC’s Chicky Club, Subway, Carl’s Jr
Form (similar in form but not direct)Long John Silver, Pizza Hut, Yoshinoya
Generic (satisfy the same need of hunger)Chinese Restaurants, Food Courts, Coffee Shops, etc
DesireIce-cream treat, movies, shopping, etc
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CompetitorsStarbucksCoffee BeanCoffee ClubSpinelli CoffeeTCCPacific Coffee Club
CHARACTERISTICS
Market Share 27% 20.6% 9.4%
Products Burgers, McCafe Chicken, Burgers Burgers
Kids Meal Happy Meal Chicky Meal BK Kid’s Meal
Average Value Meal $5.95 $6.40 $5.90
Promotions TV ads, Coupons TV ads, Coupons TV ads, Coupons
Distribution (Outlets) 115 77 42
Delivery Service 6777-3777 6222-6111 None
Charity/Sponsorship RMCC, Olympics KFC Colonel's Kids Make-A-Wish Foundation
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Competitors’ Analysis
Sources: McDonalds, KFC and Burger King Webpages (Singapore)
RONALD MCDONALD
Every child's best friend. He is funny, generous, warm, smart,friendly and caring. He is always surrounded by his McDonaldlandfriends - Hamburglar, Grimace, Birdie and Fry Gals and and Guys.
Today, Ronald McDonald speaks more than 24 languages.He remains the same friendly, fun-loving person. His favourite foodis still hamburgers - and his favourite people are still children!
Source: http://www.mcdonalds.com.sg/brand_slogan.htm
DON’T JUST LIVE LIFE, LOVE IT
"i'm lovin' it" focuses on the optimism and enthusiasm that mark great times and enriching discoveries.
Whatever you pursue - be it sports, education, creative endeavours, career advancement, boisterous companionship or intimate moments - there is every reason to like what you do and love who you are. Don't just live life. Love it - at McDonald's, we're certain it'll love you back!
Source: http://www.mcdonalds.com.sg/brand_slogan.htm
“i’m lovin’ it”
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Positioning“Ronald McDonald” branding
“I’m Lovin’ It”, creates the shared lifestyle and new branding
Sponsorship – Olympics (since 1976), World Cup (since 1994)
Ronald McDonalds Children’s Charity
Delivering Quality Service to its customersService Quality Class Recognition (1998)Excellent Service Award (1996, 2003 – 2006)
Equal employment opportunities Employs the elderlyBest Employers in Singapore 2007, SHRI HR Awards 2007
Only 24-hour fast-food restaurant in SingaporeSources: http://www.mcdonalds.ca/en/aboutus/sport.aspx, http://www.mcdonalds.com.sg/awards.htm
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COMPETITORSKFCBurger KingSubwayStarbucksCoffee Shops & Food Courts
COMPANYValue & TacticMarketing Mix (4Ps)Strengths & Weaknesses
CUSTOMERSCustomer ProfileSegmentation (Geographic, Demographic, Psychographic…)
Target Market
CHANGEHealth and WellnessAgeing PopulationInflation rateBirth Rates
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1. Health and WellnessMore Singaporeans are becoming health consciousGeneral perception has been formed that fast foods areconsidered as unhealthy, junk food.
In general, the Singapore Government has been active in encouraginghealthy living and lifestyles from diet regimes for national servicemen andstudents to posters in hawker centres encouraging the consumption ofmore vegetables and less meat. Correspondingly Singaporeans, too, areincreasingly becoming more health-conscious.
Levy taxes on unhealthy foods to tackle obesity Source: The Straits Times, Oct 26, 2007
Good or bad for health?28 August 2008The Straits Times
1. Health and Wellness
Is a light carbonated soft drink = plain water?4 May 2008The Straits Times, Singapore Press Holdings Limited
Organic fare makes its way to fine dining3 March 2008The Business Times, Singapore Healthy in the heartlands
7 June 2008TODAY, MediaCorp Press Ltd
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1. Health and WellnessMcDonalds provide the nutritional facts of its products and
introduced more healthy food in its menu such as the chickenwrap, salad, corn and apple dippers.
The move by the fast-food giant in Singapore is part of a healthy-imagemakeover the Golden Arches is undergoing globally. The burger chainwould label the fat, salt, calorie and carbohydrate content of its food.
The Health Promotion Board is working with the fast-food chain onproviding nutritional education... help consumers make sense of it.
McDonald's takes healthy bite with nutrition labels Source: The Straits Times, 29 December 2005
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1. Health and WellnessYou can "veg out" every first day of the month at any McDonald'srestaurant. Purchase Fresh Sidekicks such as Corn Cup, Apple Dippers orFresh Salad for $1 only, with no additional purchase necessary.
"McDonald's 'Veg-out Day' initiative highlights the availability of fruit andveggies at its outlets, in line with our support for the Health PromotionBoard's 'eat 2 servings of fruit + 2 servings of veggies' public educationaloutreach programmes
McDONALD'S DECLARES FIRST DAY OF THE MONTH A "VEG OUT" DAY! Source: TODAY, 4 August 2006
Census Year
Median Age
1921 28
1931 26
1947 23
1957 19
1970 20
1980 24
1990 29
2000 34
2010 37
2020 39
2030 41Report on the Ageing Population (1999)Source: Singapore Census of Population 2000
Incr
easi
ng m
edia
n ag
e
2. Ageing PopulationSingapore Dependency Ratios
Year Total Child Old-age1960 83 79 41965 86 81 51970 73 67 61975 59 52 71980 47 40 71985 42 34 71990 37 29 81995 40 31 92000 41 31 102005 39 27 122010 35 21 142015 36 17 182020 42 17 252025 54 19 352030 68 22 46
Source: Singapore Dependency RatiosUnited Nations: World Population Prospects: Revision 2006
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Due to improving living standards and medical technologies, there has been a rising trend of ageing population
Population pyramid: lopsided in 2030?
Increasing trend in the dependency ratio Source: Demographic Indicators, Singapore Department of Statistics, 2007
2. Ageing Population
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Singapore is faced with a rising inflation
Singapore’s annual inflation rate was 6.5% in JulySource: Channel NewsAsia - Singapore's July inflation up 6.5% on-year
Source : Singapore Statistics Department, 2007
3. Inflation Rate
Consumer Price IndexSource : Singapore Statistics Department, August 2008
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4. Birth RatesDeclining Trend (6.4 vs 1.29)
Although Singapore is experiencingdeclining birth rates, the governmentis trying hard to promote birth.
Source: Singapore Total fertility (children per woman)United Nations: World Population Prospects: Revision 2006
Period Total fertility1950-1955 6.40
1955-1960 5.99
1960-1965 4.93
1965-1970 3.46
1970-1975 2.62
1975-1980 1.87
1980-1985 1.69
1985-1990 1.71
1990-1995 1.76
1995-2000 1.57
2000-2005 1.35
2005-2010 1.29
2010-2015 1.29
4. Birth RatesIn the recent National’s Day Rally 2008, PM Lee announced the
increase in benefits for mothers as a move to encourage morewomen to give birth.
These included longer paid maternity leave (extended to fourmonths), childcare subsidies, tax credits, subsidies for in-vitrofertilisation and more child allowances for mothers.
Will Birth Rate Increase?
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IN SUMMARY:TOWS Analysis & STV Model
STRENGTHSMarket Leader with 27% of the market shareGlobal brand power, Global PresenceEconomies of scale Convenient Locations and Payment Methods (Ezlink)Appeals to the mass market (especially the kids)24/7 Operations, Drive Thru, Delivery (extensive coverage of the market)Halal certificationRonald McDonald Children’s Society
WEAKNESSESFranchising fragility – control over franchisesPerceived as junk food
OPPORTUNITIESExpansion of other cashless payment systemsWellbeing and ethical image improvementExpansion of the children market (other business – market penetration)Setting up vegetarian menus or outlets to expand the market
THREATSIntense CompetitionsGrowth of health conscious eatersOutbreak of diseases (madcow, H5N1, bird flu, SARS)Recent hygiene complaints affect sales
SELLINGTransactional Selling,
Phone/Internet Orders,Drive-Thru
MARKETING MIXProduct: Wide RangePrice: Competitive, Affordable,
Int’l Pricing, Price DiscriminationPromotion: Coupons, TV adsPlace: Intensive Distribution
SEGMENTATIONSegment Marketing
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Brand Integrity
Bran
d Im
ageBrand Identity
TARGETINGKids, Families, Student,
Café-goers, Working Adults POSITIONING
i’m lovin’ itRonald McDonald
DIFFERENTIATIONKid’s Favorite Place
Shared Lifestyle
PROCESSCost efficient, transparent,
Quality products
SERVICEGood Customer Service, 24-
Hour outlets, Delivery Service
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Marketing OpportunitiesVenturing into the Vegetarian outletRevamping existing outletsIntroducing healthier menusExpanding the Kids’ marketVenturing into new business - clothings
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Why the Kids Market?Children remains as one of the main target market forMcDonalds, why not expand the market?“Every parent loves their kid(s)”CROSS-SELLING opportunitiesDespite the declining birth rate, we will expected a fall inpopulation for that target market.However, we can BOOST demand through…..
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Why the Kids Market?Demand = Population x Price x Frequency
Population = ↓Price = Competitive Pricing or Penetration PricingFrequency = ↑
Thus, our marketing objective will be to look at ways toincrease frequency, buying behaviours and upselling.
Demand Function
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Existing Product New Product
Existing Market
NewMarket
Ansoff’s Product/ Market Expansion Grid
MarketPenetration
Product Development
MarketDevelopment Diversification
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“McDonaldland”MARKETING STRATEGIES
PRODUCT
McDonaldland Concept:McDonaldland-themed PlaygroundMcDonaldland Membership CardMcDonaldland Exclusive Line of Kids Wear
Product
Floor Plan for McDonaldland
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Product
Product
McDonaldlandMembership Card
Targeted at kids below 12 yearsMembership Fees
S$10 per yearS$25 for 3years
Register at any McDonaldsoutlets in Singapore.Register online,
www.mcdonaldsland.com.sg/membership.htmBack view
Front view
Register and hop on with Ronald and friends as theyembark on monthly learning journeys to places ofinterest, farms. Attend weekly drawing/singing sessionsorganized. Make New friends!
Come and join Ronald for go-active fun! Move to thebeat with fun and simple workout – learn creative waysto exercise, keep fit with Ronald!
Enjoy exclusive offers with McDonaldland!Be rewarded with gifts on your birthdaysMcDonald - 10% off birthday party packagesPopular – 10% off regular priced itemsYamaha – 10% off coursesSwensons – 15% off birthday cakes and many more! 62
Product
McDonaldland Membership Card
Activities Points
McDonaldland Activities 10 pts
Happy Meal Set 20 pts
McDonaldland Kids Wear 50 pts
Referral of Friends 100 pts
How our Points System Works?Flash your card and collect points as you dine and retail with us.
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Product
How to redeem the points?With your points earned, exchange points to redeem meals, kids wear and many other attractive items for FREE!
McDonaldland Membership Card
Redemption Options Points
Mystery Gift 40 pts
Vanilla Ice Cream Cone 60 pts
Regular French Fries 80 pts
Cheeseburger 100 pts
Happy Meal 200 pts
McDonaldland Apparels 300 pts64
Product
McDonaldland Membership CardKids Identity – We all have it!Let the kids be McDonaldland’s advocates!With the points system, our little advocates will bedriven to spread by word of mouth and through peerinfluence the benefits of McDonaldland Membership Card.
DADDY!!!They all have it!
I want it too!
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Product
McDonaldland KFC’s Chicky ClubMembership Fees $10 per year
$25 for 3 years$10.20 per year
Registration procedure At any McDonaldland outlets or online
Only through roadshows
Benefits McDonald - 10% off purchases & birthday party packagesPopular – 10% off regular priced itemsYamaha– 10% off coursesSwenson – 15% off birthday cakes:
KFC – 10% off purchases & birthday party packagesPizza Hut – 10% off a la carte purchasesCity Chain – 10% off non-promotional house brandFox Kids – 10% off regular priced items
Points System Accumulate points and redeem freebies
-NA-
McDonaldland vs Chicky Club
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Product
McDonaldland Kids WearTargeted at kids7 colours per design;Red, Pink, Blue, White, Black, Greenand YellowSizes; XS, S, M, L, XL
McDonaldland Kids WearHousebrand Designs- McDonald’s own characters
Movie-designed Tees- Movies: Madagascar 2 (release 13 Nov 2008)
Exclusive Distributorship of Merchandise
Tap on Happy Meal (existing relationship with
Disney, Pixar, Dreamworks, etc) to extend the newproduct line of clothings
Price: $8 to $12.50
Product
PRICEPRODUCT PRICING
Membership Fees $10 per year / $25 for 3 years
Kids Wear- Housebrand- Movie Characters
$8.00 per piece$12.50 per piece
McDonaldLandBundled Offer
$11 per set (basic combo)$15 per set (movie combo)
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Price
Bundled Offer1 Happy Meal of your choice
A top from McDonaldland Kids Wear
1 Mystery gift
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Price
PLACEThree existing McDonald outlets will be revampedOutlets located in areas with the highest concentration of kids
indicators: age of the housing estates, no of primary school
Proposed Areas:Yishun CentralTampines CentralWest Coast Park
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Place
BannersOutside McDonaldland outlets to create awareness
Roadshowsa max. of 3 roadshows a month around Singapore (near
shopping malls or MRT stations) to create awareness andencourage membership sign ups
Public Relation - sponsorship of Kids CentralMembership perks and benefitsBundling offers to spur buying behaviourLaunch McDonaldland concept on Children’s Day (everyChildren’s Day is our birthday)
PROMOTION
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Promotion
Brand Integrity
Bran
d Im
ageBrand Identity
POSITIONINGi’m lovin’ it
Ronald McDonaldMcDonaldland
DIFFERENTIATIONKid’s Favorite Place
Shared Lifestyle
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“McDonaldland”FINANCIAL STATEMENT
Accounting Period – 1 Oct 2008 – 31 Sept 2009Accounting Period – 1 Oct 2009 – 31 Sept 2010
PROJECTED SALES
SALES Year 1
Membership 20,352*$10.00 $203,520
Clothes - Housebrand 13,568*$8.00 $108,544
Clothes - Movie Character 40,704*$12.50 $508,800
$820,864
Population of kids age 14 and below 678,4003% of the kids take up our membership 20,352Cost of membership $10 2% of the kids purchase 1 of housebrand top 13,568Cost of Housebrand Top $8.00 2% of the kids will purchase movie tops 13,568Average 3 kids movie release per year 40,704Cost of Movie Character Top $12.50
Assumption
678.4
Source: http://www.singstat.gov.sg/pubn/popn/respop.pdf
LESS COSTMembership Card 20,352*$1.00 $20,352 Clothes - Housebrand 13,568*$4.00 $54,272 Clothes - Movie Character 40,704*$4.00 $162,816
$237,440
Gross Profit $725,888
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PROJECTED SALES
SALES Year 1
Membership 20,352*$10.00 $203,520
Clothes - Housebrand 13,568*$8.00 $108,544
Clothes - Movie Character 40,704*$12.50 $508,800
$820,864
Gross Profit $725,888
Less: Other Operating CostSalary $4.50/hr, 3 outlets $73,913Renovation Costs $100,000*3 outlets $300,000Promotional Costs- public relations Kids Central $200,000 - banners $600*6 banners $3,600 - roadshow $6,000*12 months $72,000 Miscellaneous Fee $53,048
$702,560
Net profit/(loss) before tax ($179,136)
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PROJECTED SALES
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SALES Year 1 Year 2Membership $203,520 $142,464Clothes - Housebrand $108,544 $119,398Clothes - Movie Character $508,800 $559,680
$820,864 $821,542LESS COSTMembership Card $20,352 $14,246Clothes - Housebrand $54,272 $59,699Distributorship cost 60000 $80,000Clothes - Movie Character $162,816 $179,098
$297,440 $333,043
Gross Profit $523,424 $488,499
Less Other Operating CostSalary $73,913 $73,913Renovation Cost $300,000 0Promotion- public relations $200,000 $200,000 - banners $3,600 0- roadshow $72,000 $36,000 Miscellaneous Fee $53,048 $53,048
$702,560 $362,960
Net profit/ (loss) after tax -$179,136 $125,539
Impact and ImplicationsIntroductory stage of the PLCIn the first year of McDonaldland, we incur a net loss $179,136.This is due to the high initial cost of entry such as renovation
costs and materializing of promotion efforts to increase awareness.However, when the brand name becomes established, profits
should be experienced (breakeven) as reflected in our financialstatement of a net profit of $125,539 in year 2.
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Future Prospects?
QUESTIONS & ANSWERS