Growing the McDonald’s Brand

Mansi SanghaniPGP31230Section B

About McDonald’s

Mc Donald's is operated either as a franchisee, an affiliate or the

corporation itself

It has 761,000 employees worldwide, more than the population of Luxemburg

It’s $27 billion revenue makes it the 90th largest economy in the world

McDonald’s sells 75 hamburgers every second

Largest Chain of hamburger fast food restaurant founded in 1940

McDonald’s daily customer traffic of 62 million is more than the population of Great Britain

One in every eight American worker is employed by McDonald’s

Challenges Faced

Market Saturation

Global Health Concerns

Slumping Economy

What did McDonald’s do???

The strategies employed by Mc Donald’s can be classified using the Ansoff Growth Share matrix

Market Penetration

• Used to follow the strategy of introducing hundreds of new outlets every year

• New corporate motto of “Better not Bigger” was adopted in response to the challenges

• Investments now were made in upgrading the existing facilities• 24 hour service introduced at many stores• To accommodate this extension, their menu has been constantly

modified• Breakfast became an essential part, contributing a quarter of

McDonald’s revenue• Snacks and smoothies were also introduced as between meals crowd

pullers• “I’m Lovin’ it” provided a perfect platform for new product launches

McDonald’s Breakfast Ad-“What makes you smile”

The ad emphasis on the different offerings along with coffee as an integral part

Market Development

• McDonald has made concerted efforts to expand globally• It operates 36,525 restaurants in 118 countries and serves

around 68 million customers a day• It has actively adopted it’s menu to different cultural and

regional preferences• It has also introduced Salads and other lighter menu options

to appeal to the health conscious consumer base particularly women

Japan

Japan

Different regional Offerings

India

China

Thailand

The following ad of McSpicy Paneer in India shows how it customizes its offerings and advertising campaign to appeal to its

target consumer base

Product Development

• McDonald’s faced severe criticism for its super size options and unhealthy offerings as concern over obesity and fast food contributing to poor health grew

• It revamped it’s menu by removing super size meals and by adding healthier options like salads, bottled water, healthier happy meals etc.

• It also promoted healthy lifestyles via it’s “Go Active” campaign• Ronald McDonald was recast as chief happiness officer with as a more

athletic version• It also tapped into the premium market trend by introducing roast

coffee, and premium hamburgers• Introduction of a 20 piece Chicken McNugget helped it enter the

shared meal segment endorsed by KFC

Exercising Ronal McDonald

Diversification

• Opened its first gourmet coffee shop “McCafe” in 2001

• It also has its ice-cream and dessert shop “McTreat”

• In Hong Kong, 3 McDonald’s offer wedding packages

• It is trying to foray into new territories though not with success always

Reason for Success of McDonald’s as a Brand

Strong Connections that cut across a variety of consumer segments

Consumer to brand connection hierarchy

An example of McDonald's effort to gain more trust of consumers is the Transparency Program launched by it called “Our food. Your Questions.” This was in response to increasing doubts about the quality of food especially chicken McNugget. McDonalds has hence always tried to show its trustworthy and retain if not gain further loyalty of its consumers.

Reasons for Success of McDonald’s Extensions

• Reduced Risk perceived by consumers due to strong positive brand connection

• The extensions were perceived as relevant and consistent by the consumers

• The advertising of the extensions focused on them rather than the parent brand.

• McCafe has outlets that are more sophisticated and have a different feel to the parent brand. The advertisement shown on the next slide emphasises this fact.

None of the ads have Ronald McDonald or focus on the parent brand overtly.

McCafe Advertisement

Summary

A little about McDonald’s

Challenges

Ansoff Matrix

Market Penetration

DiversificationProduct Development

Market Development

Disclaimer

Created by Mansi Sanghani, PGP2 Student at IIM Lucknow during Brand Management Course taught by Prof. Sameer Mathur.