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Mc Donalds Slides Draft 5

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Page 2: Mc Donalds Slides   Draft 5

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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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

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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

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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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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

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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)

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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

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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

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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

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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

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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

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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

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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

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PRODUCT

McDonaldland Concept:McDonaldland-themed PlaygroundMcDonaldland Membership CardMcDonaldland Exclusive Line of Kids Wear

Product

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Floor Plan for McDonaldland

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Product

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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

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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

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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

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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

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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

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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

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McDonaldland Kids WearTargeted at kids7 colours per design;Red, Pink, Blue, White, Black, Greenand YellowSizes; XS, S, M, L, XL

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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

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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

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Bundled Offer1 Happy Meal of your choice

A top from McDonaldland Kids Wear

1 Mystery gift

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Price

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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

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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

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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

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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

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

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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

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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

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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?

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QUESTIONS & ANSWERS


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