Marketing †Brand Essay

1. Executive Summary This oerlay provides an compendium of the foreignistic grocery storeing environment of fast- victuals patience in US and evaluates the inter discipline merchandising activities of McDonalds, which is considered a key player. Firstly, the pestis modeling is used to analyse outer environmental factors influencing the patience. The ostiariuss volt Forces mannikin is lend virtuososelfd to analyse the private-enterprise(a) rivalry in spite of appearance the industry, and its attractiveness for potence red-hot entrants. mainstay players and their positioning was identify using a strategic-groups model, mapping crack economic repute against spheric presence.Based on the industry analysis, McDonalds was identified as the food mart leader and an examination of their market entry modes was carried out. Their international marketing scuffle was evaluated to identify success factors, drawing revolve about upon international tick offing, internationa l distri hardlyion, international communications and standardisation vs. adaptation of the emolument offering. An infixed analysis identified the firms strengths and weaknesses whilst an external analysis considered the opportunities and threats posed to McDonalds as market leader.Finally, short and ample term strategic and tactical recommendations were adumbrate in order to enhance McDonalds agonistic position within the globular fast- aliment industry. These recommendations atomic number 18 both realistic and wholesome supported, establish upon the evaluation of their current outline and activities. 3 2. Introduction The orbiculate fast-food industry is dynamic with a variety of competitors. This report identifies the current factors influencing the industry before specifically focusing on McDonalds Corporation, who is considered as the current world(prenominal) leader.Based on this analysis, the report identifies several(prenominal) argonas for improvement and makes s trategic recommendations for McDonalds to enhance its position. 4 3. multinational Marketing abstract? 3. 1. PEST Analysis and environmental Impact Matrix (Macro Environment) The by-line framework provides an analysis of the external international marketing environment, relating to the fast-food industry *These ratings atomic number 18 based on the authors subjective judgement 5 Political Global fast-food firms must honour with country-specific political requirements, such as national minimum wage regulations, affecting cost.hygienics and quality regulations vary significantly in the midst of nations and may influence the quality of products provided by fast-food outlets (FDA, 2012). Different countries set varying regulations regarding labelling and packaging. For sheath the UK goernment pressured firms to promote wholesome eating, and several fast-food companies have voluntarily included kilogram calorie information on their products (BBC, 2011). Economic patronage the 2008 deferral and the resulting decrease in consumer assurance across the globe, average consumer fast-food spending has increase (The Economist, 2010) payable to dodge and low-cost.Consumers are unchanging looking for the convenience of eating out, merely are drawn to the low prices of fast-food over table-service restaurants (Financial Times, 2009). Many fast-food irons have capitalised upon the recession by introducing new deals in appendage to their already low-priced wags. Between 2005 and 2010, Latin America, Asia Pacific, Eastern Europe and Russia accounted for 89% of orbicular increase in the fast-food industry (Passport, 2012). cordial Increasing consumer awareness about healthy lifestyles has pressured many fast-food players to offer healthier pick outions within their menus (BBC, 2011).This includes offering low- calorie options and salads alongside burgers, and prominently displaying nutritional content. The fast-food industry has also been heavily critici sed for pointing young children by including toys within childrens meals (New York Times, 2003). Recently in the UK, the broadcasting of cast away food adverts during commercial breaks in childrens programmes has been banned (BBC, 2007), following increasing childhood obesity. 6 Technological As consumer familiarity with new technology increases, fast-food firms are using carry such as genial media websites to lock with their customers.For example, McDonalds is the 9th close to liked stake on Facebook (CNBC, 2012) (Appendix 1). Additionally, digital displays dispense with outlets to channelise their menus efficiently, to suit the time of day (NRA, 2012) and self-service ordering points have increased service speed and trim back labour cost. Environmental Environmental lobbyists and governments are pressuring the fast-food firms to become much green (Greenpeace, 2012). Rainforests are being ruined to increase the area of land for plain take to meet the demand for beef-b urgers (Kline, 2007). cycle is a prominent worldwide riposte and in response, McDonalds adopted utile packaging. Increased environmental awareness among consumers provides firms with a significant opportunity to position themselves as green to garner customer trueness (National Pollution Prevention Centre for in advanced spiritser(prenominal) Education, 1995). Legal Global operators must keep up with country-specific regulations and legislation. This includes opening hours, taxation and employment regulations such as the National Minimum rent Regulations (1999) in the UK.Firms are often call for to meet national food standards such as the requirements set out by the US Food and Drug cheek (FDA). Furthermore, authorities are becoming more and more worried about childhood obesity associated with the industry (WHO, 2012) and have tightened regulations regarding targeting children. 7 3. 2. Porters Five Forces Fast-food Industry This framework identifies the competitive forc es affecting the fast-food industry scourge OF NEW ENTRANTS Industry dominated by global shackles with very high cross off treasures High grade awareness and loyalty.Retaliation from upstanding incumbent players Low initial capital disbursal Low fixed cost Economies of outperform berth OF SUPPLIERS Many un secern suppliers Fast-food duress have high purchasing agent due to high volume militant RIVALRY IN THE FAST-FOOD INDUSTRY disunited market Low exit costs Low margin, high turnover drives argument High pock place POWER OF BUYERS High product differentiation prat many segments High price esthesia THREAT OF SUBSTITUTIONS Alternative foodservice options Ready meals and photographic plate training ingredients Main players quite distinguish No chemise costs.Convenience is the value adding component which is difficult to substitute 8 affright of New Entrants curtail The industry is dominated by a human body of international Quick Service eating place (QSR) cha ins, including McDonalds, Burger magnate, Pizza Hut, KFC and eye masks (Datamonitor, 2010). These global brands are extremely valuable, boasting strong customer loyalty and recognition indicating arranged quality and service. Key players including McDonalds, adapt their marketing orientation to suit local cultures and social norms (Datamonitor 2010), strengthening the brand and avoiding consumer alienation.New players fight down to compete with incumbent firms, as their brands are unknown and advertising campaigns are expensive. launch chains have the resources to retaliate acutely through pricing promotions, deterring new players from get in the marketplace. New entrants lack economies of scale, which existing chains have developed over time, and utilise to remain competitive in this low-margin, high-turnover industry. However, social media websites have evened the playing field in terms of marketing communications they allow firms to efficiently communicate their message i nexpensively.initial capital outlay and fixed costs are low, encouraging new entrants (Datamonitor, 2012). Threat of Substitutions Moderate Substitutes are readily on hand(predicate) food can be purchased close to anywhere, through foodservice or retail. However, convenience is the value-adding component of the service which reduces the threat of substitutes. Consumers can cook at home cheaply, but this lacks the convenience element which people require nowadays. Ready-meals are therefore a more meaning(a) threat, competing with fast-food on price as tumesce as convenience.(Datamonitor, 2012). If you are on-the-go however, without access to a microwave, QSRs are almost uncontested if you motivation a hot meal in a short timeframe. With many differentiated players (Datamonitor, 2012) and varying service offerings, customers can select the best value option. 9 free-enterprise(a) Rivalry Strong Although McDonalds and Burger King almost hold a duopoly in the burger segment, the market as a whole is fragmented with many global chains and independent operators (Datamonitor, 2012).Competition is mainly cost-based with firms continuously investing in their production and service processes to undercut competitors. Exit costs are low and capacity is well increased through franchising. blemishing is the most prevalent weapon for competing McDonalds worn-out(a) over $650 million on global advertising in 2009 (Datamonitor, 2012). antecedent of Buyers Moderate Figure 1 shows sales and growth of the top ten fast-food companies (Euromonitor International, 2012).The markets competitiveness increases buyer power and customers are price sensitive (Muhlbacker et al., 1999) with no switching cost between providers. However, key players move to reduce buyer power, offering a product range which caters for the entire demographic, or else than one specific segment. For example, McDonalds target children with Happy Meals and professionals with breakfast options and tak e-away drinking chocolate (McDonalds, 2012).Firms are increasingly promoting differentiated products McDonalds Big Mac, Burger Kings Whopper and offers such as Dominos Two for Tuesday campaign. High brand value and customer loyalty has reduced buyers bargaining power.The 2011 ranking of the top nose candy brands indicates McDonalds success (Interbrand, 2011). 10 Power of Suppliers Moderate Figure 1 outgo Ten Fast-food Companies by Growth. With a competitive global rendering chain, supplier power is limited. 17,500 British and Irish farms that provide us with top-quality ingredients. (McDonalds UK, 2012) These farms supply class 1 suppliers who transform raw materials into food items, ready for McDonalds to cook and serve. out-of-pocket to the number of suppliers in the industry, it is difficult for them to supplement significant power over fast-food firms. The supply of soft-drink is dominated by Coca-Cola (McDonalds and Burger King) and Pepsi (KFC) due to their global dis tribution channels. Additionally, Coca-Cola and Pepsi provide fast-food chains with equipment such as refrigerators and drink dispensers. This markets their brand and aligns it with fast-food brands, reducing costs for customers, which would otherwise be passed onto them (SMO, 2011). 11 3. 3. Identification of Key instrumentalists and their emulous Position 3. 3. 1.Strategic Groups The following framework identifies the key players in the international fast-food industry and identifies which firms are in the most admit competition with each other Brand value and the chains global presence (Appendix 2) are significant indicators of general performance. The above strategy-group chart maps the firms performance. Brand value (US$) is plotted against the chains global presence, in terms of the number of outlets worldwide. The strategy-grouping shows that McDonalds has the 12 highest global market value and revenue in the industry, despite resistance having more international outlets. 4. Key Player Evaluation of International Activities 4. 1. Identification of Key Player Based upon their global presence, market value and revenue, McDonalds is identified as the key player in the industry. 4. 2. McDonalds International Market Entry Modes In 1940, McDonalds operated only one QSR but today has restaurants at 33,000 locations in 119 countries. McDonalds utilises a variety of international market entry modes for fast refinement re fix ventures, franchising, master franchising and junction ventures. 15% of McDonalds branded restaurants are operated as sole ventures.This involves a significant capital shipment but allows the highest degree of control.? Most restaurants are operated as franchises, allowing rapid expansion without high capital requirements. Franchising has also allowed McDonalds to realize from local knowledge, demonstrated by the menu differences by country. However, McDonalds maintains control over crucial aspects such as the supply chain, marketi ng mix and staff training. superscript Franchising introduces a third party as a go-between to overcome geographical and cultural barriers.The combination of the master franchisees local knowledge and McDonalds brand and model has been a successful formula, allowing expansion whilst maintaining significant control. McDonalds has also grow internationally through joint ventures. Again, this allows for rapid expansion and utilises the knowledge of firms in closely-linked markets. Since 13 Both firms invest equity in the project, there is a lower monetary risk for both parties however, many joint ventures end in hostility and action due to firms taking advantage of one another (Brown and Harwood, 2010).