1. STRATEGIC MARKETINGMANAGEMENT AND THE CASE OFMCDONALDS IN PAKISTANPresentationStrategic Marketing

2. MR. JAMSHED AHMEDSTRATEGIC MARKETINGMANAGEMENTSPRING 2010SZABISTStrategic Marketing 3. Group Members Muffadal Ali (0935109) Hussain Khairi (0935105) Muhammad Jaber Haqqani (0935111) Shaikh Faizan Ahmed (0935117) Syed Anser Ahmed (0935121) Rizwan Saleh (0935124)Strategic Marketing 4. Strategic MarketingContentsIntroduction1McDonalds Pakistan2Vision, Mission &Objectives3Market Audit & SWOTAnalysis4Competitor/EnvironmentAnalysis5Key Driving Forces6Customer Analysis7Market Segmentation,Target & Positioning8 5. Strategic Marketing9Distribution & Promotion11Management Control &Corrective Actions13References15Pricing10McDonalds Financials12Conclusion14Product PortfolioContents 6. FAQs WHY DID McDonalds CLOSE ITSOPERATION AT TEEN TALWAR &NAZIMABAD? REVENUE ?Strategic Marketing 7. Introduction History> 1954 1955> 1965 1973> 1974 1993 Business Model> 15% restaurants company owned> Rent charged along with franchising fees> Supply of raw materials via approved suppliers Types of restaurant> Drive through service> Counter service (with/without) play areaStrategic Marketing 8. Competition> Burger King (global)> KFC (global/local)> Others (global/local) Global Sales Improvement> Over all 4.8%> U.S 0.6%> Europe 5.4%> Asia/Pacific, Middle East & Africa 10.4%Global Sales Revenue 2009 - $22744 mnStrategic Marketing 9. McDonalds Pakistan Opened in 1993 (Lahore) under Lakson Groupof Companies Presently operating 23 branches Over 1200 employees Over PKR 3 bn has been invested in thecountry. Over PKR 1 bn is being paid as taxes andduties in comparison to 400 m paid by KFCPakistan RevenueStrategic Marketing 10. Industry Life Cycle Market growth rate 13% - 14% per annum. Core competencies> Delivery speed> Customer care> CleanlinessStrategic Marketing 11. Vision, Mission and Objectives McDonalds Vision"McDonalds vision is to be the worlds best quick service restaurantexperience. Being the best means providing outstanding quality,service, cleanliness, and value, so that we make every customer inevery restaurant smile." McDonalds MissionMcDonalds mission is to be our customers favorite place and wayto eat with inspired people who delight each customer withunmatched quality, service, cleanliness and value every time ... weinvite you to be the part of this winning team and give yourself anopportunity to grow with the family of people striving to createsmiles on the faces of millions of people everyday.Strategic Marketing 12. Vision, Mission and Objectives The Planning and Implementation MatrixStrategic Marketing 13. Objectives Long term Growth Competitive position Market Development effortStrategic Marketing 14. Strategies DifferentiationBy pursuing a strategy of differentiation, the organization gives anemphasis to a particular element of the marketing mix that is seen by thecustomers to be important and as a result provides a meaningful basis forcompetitive advantage. This de-massification of markets has ledMcDonalds towards strategies of product variety marketing and ultimatelytarget marketing. As a result, the companys marketing effort today reflectsbuyers needs for a far wider variety of tastes and demand which arepackaged in a number of different sizes and shapes.Benefits achieved by McDonalds following adifferentiated Strategy: Creation of strong brand identities (association of Mc) Distancing from others in the market (KFC for chicken, McDonalds forvariety and fun seeking lovers) Flexibility.Strategic Marketing 15. Strategic Marketing 16. Opportunities (O) Threats (T)1. Market Potential Growing market for fast food2. Peoples need for variety in the food andentertainment sector3. E-commerce and Technology4. Peoples attraction towards promotional offers1. Economic problems in the countries2. Bird flu and Mad cow threat3. Political problems in the countries4. Poor performance in one out-let effects others5. Relation between dealer and franchiser6. Rising health issues7. Negative advertising by competitors8. Changing tastes of people9. Rising raw material pricesMarket Auditing & SWOTStrategic MarketingStrengths (S) Weaknesses (W)1. Pioneer in fast food industry2. Strong brand image3. Customer Loyalty4. Successful marketing and advertising5. Market-leading position6. Brand Quality7. Product Value8. Strong brand equity9. Delivery10.Strong global strategy11.Cleanliness12.Quality13.Flexibility1. Frequent Run-ins with NGOs and ConsumerWatchdogs2. Kids based marketing strategy3. Increasing Selling, General & Administrative4. Margins5. Coverage 17. ContdStrategic MarketingSO Strategies ST StrategiesMcDonalds can further tap into othermarkets by using their brand equity,brand image and the diversified menuwhich allows them to reach differentaudiences.(S2, S4, S9, S11, S12, O1, O3, O4)McDonalds can overcome their healthrelated and changing tastes issues byusing their successful advertising andmarketing tools along with newproduct innovations.It can also increase it customer baseto reduce the effects of rising rawmaterial prices.(S4,S8,S13, T6, T8, T9) 18. Strategic Marketing The Opportunity Matrix The Threat MatrixContd 19. Segment AnalysisStrategic Marketing 20. Competitor Analysis McDonalds doesnt believe that it has a directcompetition because the market is segmentedon a much diversified basis. They are of the point that food industry is theonly industry where it is very difficult to alter thetaste buds of a customer.Strategic Marketing 21. Contd.. Strategic GroupsStrategic Marketing 22. Contd..A B C D E FKings &QueenChatkharay The Deli Roasters McDonalds NawabZeenan Gazebo Ole Copper Kettle KFCWimpysThe ElbowRoomGuns nSmokeNANDOSKaybees Sawasdee Caf Zouk PizzaHutKundunBroastAqua Lounge Caf Aylanto DominosHot n Spicy Caf Flo BBQ Tonite SubwayEaton Pompei Salt n Papa JohnsStudentBiryaniGrillSakuraStrategic Marketing 23. Environmental Scanning McDonalds thinks customer feedback is vitaland they try to make it as easy as possible fortheir customers to let them know what they werethinking and deciding upon. Their target audience is very fickle. They enjoy trying new restaurants, and areconstantly adapting to new developments andfads.Strategic Marketing 24. Porters Five Forces Threat of New Entrants> High and unfavorable> A lot of new Dine In restaurants are already inoperation.> Also the demand pattern is changing people aremoving towards more expensive restaurants as theyfind more value for their money there.Strategic Marketing 25. Contd.. Political => Political factor can have the major impact on threat ofentry. In a region like 3rd world there is hardly any certainty and thishas lead to negative impact on the potential big investors. Economic => Due to the rising income disparity and the adverseeconomic conditions, unemployment is on the rise due to which thelabor cost is decreasing, increasing the wealth of already well offpeople which is big factor helping the Dine In restaurants to grow. Social => People are now more status conscious in our society andwant more varieties to choose from. Technological => With the rise in the technology data can beeasily processed and analyzed. With the innovation in technologythe overall labor cost is reduced together with the fact that selfservice is promoted.Strategic Marketing 26. Contd.. Bargaining Power of Buyers> High in the industry as the cost of switching is very low.> As a food loving nation which makes the industry moreattractive and profitable and volumes are easy togenerate.> PEST forces such as increasing population is anappealing opportunity, however, the economic situationof the region brings along adverse effects on theindustry.Strategic Marketing 27. Contd.. Political => This political factor has no direct affect on thebargaining power of buyers. Economic => The increasing population reduces the power ofbuyers. Social => The trend is towards dining out, which is increasing thetotal consumers, thus, reducing their bargaining power. Technological => The advancement in technology makes itpossible for the buyer to gather all the information quickly and makeinformed decisions.Strategic Marketing 28. Contd.. Threat of Substitutes> High as there are plenty of other options availablealready in the market.> People generally like going to specific restaurants andcafs because of their splendid experience in the pastincluding ambience and food.Strategic Marketing 29. Contd.. PEST forces> There are many substitutes of the fast food industry.> Decrease in the purchasing power of the people couldlessen their visits to the restaurants thereby increasingthe threat of substitutes of lower quality than ones offast food industry.> With the increase in the health awareness, people aresubstituting from the junk food to a more healthy food.Strategic Marketing 30. Contd.. Bargaining Power of Suppliers> High because the inputs are not easily substituted.> The inputs are usually of a perishable nature,thus, stock-ups are not possible.> McDonalds in Pakistan has to follow a strictquality procedure that is defined by the mothercompany.> McDonalds has to import the food related rawmaterials as no Pakistani company can matchtheir standards.Strategic Marketing 31. Contd.. Political => There is a need for political will from the governmentside which can help grow dairy farming sector in Pakistan and bringit onto international standards. Economic => Current economic conditions are not good aroundthe world a lot of food related industries have shut their operationswhich have limited the number of suppliers in the market henceincreasing the bargaining power for them. Social => There has been a lot of controversies with McDonaldsabroad related to its suppliers. Technological => Technology has made it possible to manage andcontrol the poultry industry more efficiently, thus enabling moresuppliers to come in.Strategic Marketing 32. Contd.. Rivalry among existing competition> The rivalry amongst the existing firms is moderateto high.> The market share for each of them is deteriorating.Strategic Marketing 33. Contd.. Political => The government could play a very important role. Iftaxes are reduced, then the chances of rivalry will increase further. Economic => As a food loving nation more and more investors areshowing interest in investing in this business. Social => Controversies such as All the earning from McDonaldsgo into Israels pocket is a common rivalry tactics that is beingused against them. Technological => Technology has made it possible for competitorsto affectively reduce cost, therefore enabling them to match eachother and imitate others competitive advantage. This increases therivalry between competitors.Strategic Marketing 34. Market Research and Analysis Market research and analysis is conducted in-house and is also being outsourced tocompanies such as AC Nielson etc dependingon their creditability in the market. Theoutsourced research firm is given the job offinding out the brand value, quality, hygiene,perceived value etc. The research need alsoarises at opening of new outlets or launch ofnew products (Meals) or new campaigns.Strategic Marketing 35. www.themegallRating Scale 1 = very weak;10 = Very StrongSignificant Buying Factors McDonalds KFC Nandos SubwayProductsProduct Design 8 8 9 6Product Quality 8 9 9 8Product Performance 9 8 9 5Breath of Product Line 8 7 7 7Depth of Product Line 8 7 7 7The Comparative Assessment of Competitors (Numerical Presentation) 36. Strategic MarktingThe Comparative Assessment of Competitors (Numerical Presentation)McDonalds KFC Nandos SubwayPromotion and PricingAdvertising 8 8 8 4Image and Reputation 9 9 8 8Product Literature 5 8 6 4Price 7 7 9 8Selling and DistributionSales Force Calibre 8 8 9 8Sales Force Experience/Knowledge 7 7 9 8Geographical Coverage 8 9 8 7Sales Force/Customer Relations 8 8 9 8Delivery 9 8 10 7ServiceCustomer Service Levels 7 8 8 7Performance Against Promise 8 8 9 8 37. Key Driving Forces Affecting the IndustryKey Driving Forces Affecting the Industry The Internet and new E-Commerce opportunities Increasing globalization of the industry Product Innovation Technological Change Entry or Exit of major firms Changes in cost and efficiency Regulatory influences and government policy changes Changing societal concerns, attitudes and lifestylesStrategic Marketing 38. McDonalds SUSTAINABLE COMPETITIVEADVANTAGE What makes it still strong and ranked among the topbusiness concerns is its core competences bothinternally and externally and its sustainable competitiveadvantages. SCA is the advantage a company haswhich is difficult or impossible for other companies topossess or break through.McDonalds SCA are: Strong Brand Image FlexibilityStrategic Marketing 39. Key Success factorsMarket Share: 43% share in fast food chain market (limited to thenumber of cities it is operating)Financial Position: Has a very strong mother company to back it up.Advertising: No compromises are being made on this. Even a carefulstandard has to be followed while printing panaflex for billboards.Technology: New food processing machines have been installed in 2branches in and will follow in the rest accordingly. Previous machinescooked a Pattie in 4 min now it will only take 1 min to cook.Product Quality & Hygiene: Won three international Awards in 2009 forFood Quality & Safety, Peoples Commitment, Restaurant Cleanliness &HygieneEmployee Productivity: Regular Training programs before every newlaunch with incentivesStrategic Marketing 40. Customer Analysis McDonalds emphasizes a lot of focus on buyerbehavior. It usually asks the following questions in orderto understand the market better. Who is in the market and what is in extent of their power withregard to the organization? What do they buy? Why do they buy? Who is involved in buying? How do they buy? When do they buy? Where do they buy?Strategic Marketing 41. Buying BehaviorStrategic Marketing 42. Market Segmentation, Targeting and Positioning McDonalds limits itself to chicken and beef offeringsand has also started catering to sea related food. Thisenables McDonalds Pakistan to divide its segments oncertain principles. As far as segmentation is concerned,McDonalds makes combination of demographics,geographic, behavioral and psychographicssegmentation to identify various segments: Geographic Segmentation- Demographic segmentation- Behavioral/Psychographic SegmentationStrategic Marketing 43. Market Positioning In Pakistan and also all over the world, McDonaldsprimary focus is for families with kids and has positioneditself in the minds of kids as a play place, where theycan have fun and food together. In the mind of adults and teenagers it has positioneditself as the best fast food restaurant.Strategic Marketing 44. Product PortfolioStrategic MarketingStar: Fries.Cash Cow: Spicy McCrispy Chicken DeluxeQuestion Mark: Happy Meal.Dog: Quarter Pounder Beef 45. Product LineStrategic Marketing 46. Health Considerations: Considering the healthy eating trends McDonalds hasstarted to publish nutrition figures which helps ineducating its customer about what they eat and whatimpact does that food would have on their health.McDonalds also wants to inform their customer thatthey are really concerned about their customer health.Strategic Marketing 47. Launching A Product McDonalds usually relies on the below characteristicswhile launching its campaigns or products in the market.Strategic Marketing 48. Campaign Based Launches: McDonalds regularly introduces new innovative dealswhich as per McDonalds are their Campaign BasedLaunches which can further be divided into ProductBased Campaigns and Brand Based Campaigns. As thename suggests PBC are introduced on a launch of anew product or deals or on running meals. BBC isusually launched in order to enhance the brand image ofMcDonalds. For better understanding lets review a live example.McDonalds launched its Hit Offer Campaign all overPakistan in which they were offering a spicy chickenburgers + drink for only Rs.95.Strategic Marketing 49. New Product Strategies Segment Trend CompetitionInnovator or Follower?McDonalds takes an innovative approach towards its product developmentand is not scared of experimenting in the market. According to the statisticsgathered they have a success ratio of above 95% considering their productlaunches in Pakistan.It was one of the pioneers who partnered with labels in bringing Englishmovies. Movies such as Shrek, Madagascar 2, Ice Age 3 were formallyintroduced by McDonalds in Pakistan.Co BrandingMcDonalds strongly believes that collaboration and alliances are veryimportant for a brand to move towards success. For this reasonMcDonalds has co branded with Ufone, Titan, PIA, Coke, Nescafe etc.Strategic Marketing 50. ContdLatest Launches (from last year till the date ofpublishing of this report) Product Related: 4 launches which are: Mozzarella cheese sticks,Chocolate Orange pie, Mango Shakes and new flavors forMcFlurry. Campaign Related: McDonalds has launched over 50 brandrelated campaigns in the last year which is a record in itself. It hasworked really hard to capture and settle in the minds of its audienceand has also successfully achieved it. One of the recent campaignsincludes its collaboration with a music band named Call. Themembers of the band are from now on also their brandambassadors for McDonalds.Strategic Marketing 51. Approaches to Brand Development Brand MappingStrategic Marketing 52. Value PropositionStrategic Marketing 53. Value PropositionStrategic Marketing 54. PRICING McDonalds Cost Determination C3 Model of PricingCosts:Competitors:Customers:Strategic Marketing 55. Factors that Influence the Pricing Strategy The firms corporate and marketing objectives The firms product range The existence or scope of unique selling propositions The nature of market Previous Strategies Currency fluctuations Opportunities of market growthStrategic Marketing 56. Price Quality RelationshipStrategic Marketing 57. PROMOTION Elements of the Promotional MixMcDonalds pays special attention to all components ofits communication mix to reach customers with 360degree promotional techniques in cost effectivemanners. Various economic and value meals offergreater value for money for the customer. Theseaspects along with brand image are propagated throughfour main communication vehicles: Advertising, PR,CRM, BTL and Event marketing together these fourelements along with BTL activation form the promotionalmix of the company.Strategic Marketing 58. DETAILED SYNOPSIS OF EACH ELEMENT Advertising Sales Promotion Public Relations (PR) Customer Relationship Management (CRM): Event Marketing and BTL ActivitiesStrategic Marketing 59. Distribution Management & RetailingStrategic Marketing 60. Determining Effectiveness of Marketing Efforts 1. Incremental sales revenue resulting from a particular campaign 2. Ratio of cost to revenue 3. Cost per sale generated by each outlet 4. Changes in value of sales generated 5. Cost of new customer acquisition from marketing efforts 6. Cost of customer retention.Strategic Marketing 61. Monitoring Service Quality Internal External - FeedbackStrategic Marketing 62. Management Control and Corrective Actions Allowing for Uncertainty Closed-Loop Control Feed Back Control Approach to ControlStrategic Marketing 63. Conclusion With this report we hope that we have done acomprehensive job of outlining the status ofMcDonalds. As a brand it is going quite strong inPakistan. As a market leader, with aggressive andprudent marketing savvy and a desire to remaincompetitive and vibrant in a globalized economy,McDonalds is well poised to face the futureStrategic Marketing 64. References http://www.McDonalds.com.pk/ http://McDonalds.com/ Strategic Marketing Management, Second Edition,Wilson GiliganStrategic Marketing