A report on “McDonald’s Company”

Subject name: Principles of Marketing

Subject code: INS2003
Lecturer: Do Ngoc Bich

Prepared by: Đàm Thị Thu Uyên

Đinh Lê Hoài Thu
Đỗ Thị Mơ
Phí Kim Ngân
Trần Thị Thu Kim

December 12, 2018

 I. Company review
1. Mission, vision, core values
a. Mission
McDonald’s corporate mission is “to be our customers’ favorite place and way to eat
and drink.” This mission statement highlights the significance of customers as the
business focus, while maintaining the company as a major influence on their food and
beverage purchase decisions. McDonald’s corporate mission statement has the following
main components:

- Customers’ favorite place to eat and drink

- Customers’ favorite way to eat and drink
b. Vision
McDonald’s corporate vision is “to move with velocity to drive profitable growth and
become an even better McDonald’s serving more customers delicious food each day
around the world.” This statement is included in the growth plan that the company
introduced in 2017. The company’s previous vision statement was “Our overall vision is
for McDonald’s to become a modern, progressive burger company delivering a
contemporary customer experience.” The following are the main components of the
company’s new corporate vision statement:

- Move with velocity to drive profitable growth

- Become an even better McDonald’s
- Serve more customers delicious food each day around the world
c. Core values
- We give back to our communities: We look after the locals.
We take seriously the responsibilities that come with being a leader. We help our
customers build better communities, support RMHC, and leverage our size, scope
and resources to help make the world a better place. We are committed to
sustainable business practices and are determined to conduct our operations in a
manner that does not compromise the ability of future generations to meet their
needs.

- We grow our business profitably: Sure we're here to make dollars, but that's
what keeps 85,000 of us in a job. Our stakeholders support our ability to serve our
customers. In return, we work to provide sustained, profitable growth for all
members of our system and our investors.
- We believe in the McDonald's System: You, the person that runs your restaurant,
and the guy that delivers the buns are all equally important McDonald’s business
model, depicted by the “three-legged stool” of owner/operators, suppliers, and
 company employees, is our foundation, and the balance of interests among the
three groups is key.
- We strive continually to improve: We want to take pole position in every race.
We consider ourselves a learning organization that is green and growing which
anticipates and responds to changing customer, employee, system and community
needs through constant evolution and innovation.
- We operate our business ethically: We give everyone a fair go, and tell it like it
is. Sound ethics is good business. At McDonald’s, we hold ourselves and conduct
our business to the highest possible standards of fairness, honesty, and integrity.
We are individually accountable and collectively responsible.
- We place the customer experience at the core of all we do: We treat every
customer like a celebrity. Our customers are the reason for our existence. We
demonstrate our appreciation by providing them with high quality food and superior
service, in a clean, welcoming environment, at great value. Our goal is outstanding
QSC&V for each customer every time.
- We are committed to our people: Macca's cares about you.
We provide opportunity, recognize talent, and develop leaders. We believe that a
diverse team of well-trained individuals working together in an environment that
fosters respect and drives high levels of engagement is essential to our continued
success.
-
2. Company scope
a. Slogan
- McDonald’s mein hai kuch baat (Oct. 13. 1996- 1999)
- Toh ajj. Mmmmmmmmmm! McDonald’s hojaye. ( 1999- 2003)
- I’m lovin’ it (2003- present)
b. Company scope
- An American fast food company, founded in 1940 as a restaurant operated
by Richard and Maurice McDonald, in San Bernardino, California, United States
- 17 restaurants in Vietnam
- McDonald's restaurants are found in 120 countries and territories around the world
McDonald's operates 36,899 restaurants worldwide, employing more than 375,000
people as of the end of 2016. There are currently a total of 5,669 company-owned
locations and 31,230 franchised locations, which includes 21,559 locations
franchised to conventional franchisees, 6,300 locations licensed to developmental
licensees, and 3,371 locations licensed to foreign affiliates, primarily Japan.
 3. STP analysis

Type of Segmentation
segmentation criteria McDonald’s target segment

Region Domestic/international
Geographic
Density Urban/rural

Age 8 – 45

Gender Males & Females

Bachelor Stage: young, single people not living at home

Newly Married Couples: young, no children
Full Nest II: youngest child six or over
Life-cycle stage

Income Low and middle

Demographic
Occupation Students, employees, professionals

Degree of
loyalty ‘Hard core loyals’ and ‘Switchers’

Benefits sought Cost benefits, time efficiency

Personality Easygoing & careless

Behavioral User status Potential and regular fast food eaters

Social class Lower, working and middle classes

McDonald’s targets Resigned, Struggler and Mainstreamer individuals

according to Cross Cultural Consumer Characterization developed by
Psychographic Lifestyle Young & Rubican
Marketing mix
1, Product
 The food is highly standardized and consistent. The goal is to create dishes that
taste the same everywhere in the world.
=> Save money, make a difference and impress with customers.
 The quality of products is gruaranted. Recipes must be thoroughly tested,
McDonald’s has its own quality assurance team, which ensures that all franchised
or joint ventures sell the same products with the similar quality.
 Adaptability and innovation (McDonald’s recognizes that when the tastes of
customers change and when they enter the new markets with different identities
and customs, innovation for adaptation is important)
 Care about the health of the consumer (always try to meet this requirement and
invest in a laboratory in Chicago to specialize in quality inspection and food
hygiene)
2, Place
 Build a chain of restaurants around the world (focus on cost management, tightly
control business development with prudent and strategic expansion plans like
franchise)
 Choosing a convenient business location (actively looking for nice places, then the
franchisers can rent those places). Build drive-thru shops
 Establish a convenient warehouse network for your business (selecting the best
quality suppliers and commit to long-term business partnerships, warehouses at a
convenient distance from the store).
3, Price
 With the goal of increasing market share and sales in different markets,
McDonald’s offers different prices based on competitors' prices for lower prices.
4, Promotion
 Attractive ads ((advertising on many mass media, broadcasting on TV to emphasis
on the quality of product components, online advertising, the blog to exchange
information with customers)
 Enhance PR activities (sponsorship of major sporting events such as the Olympic
Games and the World Cup)
 II. Situation analysis
1. Review the marketing campaign and activities
Before 2017:
• In the early days of penetrating the fast food Vietnamese, McDonald’s focused on
advertising to resonate with customers. However, due to lack of maintenance and
development plans, it caused boring for customers. In addition, website was also
sketchy, not attract customers.
After 2017:
McDonald’s has adopted the AIDA communication formula for its strategy in a very
original and attractive way.

 Awareness
McDonald’s media strategy is aimed at promoting, attracting new brands and
products with objective: Everyone knows and talks about McDonald’s.
 Interest
 McDonald’s use KOL to communicate the next strategy, stimulating customer’s
interest in the product.
 Desire
McDonald’s spread the message "I’m lovin’ it" synchronized on social networks to
stimulate consumers desire to own this product. It also use a variety of PR articles
for demand stimulation strategies, the desire to use the product of the customer.
 Action
McDonald also has many promotions to attract customers, such as offering coupons,
vouchers for a certain product.

2. Micro environment
a. Competitors: the two biggest component of McDonald’s are Lotteria
and KFC.
 Lotteria
 Strength:
- Lotteria’ menu contain similar flavor to the taste of Vietnamese customers, which
cause the easy adaptability of customers to the food.
- Stores are available in almost every center of urban areas across the country,
which helps Lotteria maintains the top position in market share.
- Reasonable cost, cheaper than other competitors, Lotteria attracts the variety of
target segments and owns high market share
- Lotteria keep its high food hygiene and safety, which create a good image in
customer’s mind as an environment-friendly service and product.
- Lotteria offers home delivery service, thatoffer more convenient service for
customers.
 Weakness:
- Although Lotteria is fast-food restaurant but sometime, the customers have to wait
a long-time for their orders. Therefore, Lotteria should improve its service more
fast and convenient.
- Although hamburgers are main menu which make Lotteria stand-out; there is few
promotion for this products. Hence, Lotteria should develop continual long-term
promotion for burger product category.
 KFC
 Strength:
- A key strength for KFC is the very fact that customers are loyal to the brand. This
is evident as KFC held a worldwide market share of over 70 percent in both sales
and restaurant. This naturally leads to KFC having gained strong customer
awareness and to be the market share leader. Also apart from having been in the
fast food industry since 154, has enable them to have proprietary recipes and
technology. KFC also has strong marketing expertise foundation within the U.S,
fast food industry which foreign fast food companies will face difficulty in
developing.
- Variety in menu: KFC’s menu has grown increasingly diverse over the past few
years. Apart from the non-veg items it has also included vegetarian items in its
menu to lure more customers. Its lunch box and meal items have also acquired
great popularity.
- Second best global brand in fast food industry in terms of value ($ 6 billion). KFC
is known by many and is a trustworthy brand in many countries mainly due to its
early franchising and international expansion.
- Original 11 herbs and spices recipe. KFC original chicken recipe is a trade secret
and a source of comparative advantage against firm’s competitors.
- Combination of KFC – Pizza Hut and KFC – Taco Bell. KFC partnership with
other Yum! Brands yields some advantage as the restaurant can offer items from
its partners it doesn’t have itself and satisfy more customers’ needs.
- KFC is the market leader in the world among companies featuring chicken as their
primary product offering. KFC has positioned itself clearly among other fast food
chains bearing its famous slogan and trademark chicken products.
 Weakness:
- Food quality related issues: Food quality has always been a major issue for the fast
food brands whether it is KFC or McDonalds. In past KFC has faced significant
criticism over its use of trans fats in the cooking of non-veg items. For the modern
customers health is a priority. They are looking for products cooked in safe and
hygienic oils without any trans-fats. The fats in its fast food items, still continues
to trouble KFC. Since it meals in chicken items mainly, its menu is bond to remain
calorie heavy.
- Untrustworthy suppliers. Over the years, KFC has been contracting suppliers,
which supplied contaminated poultry to KFC or were mistreating chicken, thus
resulting in falling sales and damaged reputation.
- Negative publicity. KFC receives much criticism from PETA over the conditions
chickens have been raised. Furthermore, it received bad publicity for selling
 chicken wing with kidney. There are many more or less bad news from KFC,
which damage firm’s reputation significantly.
- Unhealthy food menu. KFC menu is largely formed of high calorie, salt and fat
meals and drinks. Such menu offering prompts protests by organizations that fight
obesity and hence, decreases KFC popularity. Consumers also often opt out for
healthier choices.
- High employee turnover. Employment in KFC is a low paid and low skilled job. It
results in low performance and high employee turnover, which increases training
costs and add to overall costs of KFC
 Opportunities: McDonald’s also responds to social changes – by innovation within
healthier lifestyle foods for example it moves into hot baguettes and healthier
snacks (fruits) have supported its new positioning.
 Challenges: Pressure of environmental and health issues regarding the fast food
chain, McDonald’s was sued various times for unhealthy food, usually addictive.
Consumers now focus on nutrition and healthier lifestyles.
b. Suppliers
McDonald’s works with a number of large suppliers such as Coca-Cola Company,
Clorox Company, Dr. Pepper Snapple Group Inc. McCormick & Company Inc.,
International Paper Company, Sealed Air Corporation and others. McDonald’s
Corporation and its affiliates and subsidiaries generally do not supply food, paper or
related items to any McDonald’s restaurants. The Company relies upon numerous
independent suppliers, including service providers for the supply of food and other
related items. A set of important factors such as an abundance of potential suppliers, low
level of uniqueness of products provided by suppliers and the importance of volume of
order for each supplier reduce the bargaining power of McDonald’s suppliers.
c. Buyer:
In the 21st century, the bargaining power of the customers has grown very high.
McDonalds focuses on every aspect from marketing and product quality to customer
service and customer convenience to manage its reputation. Overall, the bargaining
power of customers is high. However, there are also factors that moderate this bargaining
power of the customers. McDonalds is present globally and also has a great reputation
among its customers. Its brand image is an important factor that moderates the bargaining
power of its customers.
 Opportunities: Use of database marketing should be used to more accurately
market to its consumer target groups. It could identify likely customers (based on
modeling and profiles of shoppers) and prevent brand switching. Strengthen its
 value proposition and offering to encourage customers who visit coffee shops into
McDonald’s
 Challenges: Some parents criticize the firm for maintaining marketing strategy that
focuses on kids, who later on take it as a trend to their adulthood.
d. New entrants:
The threat of new entrants is moderate. It is because the barriers to entry are not too high.
However, in case of McDonalds the threat gets moderated by the fact that it is a well-
known brand and to erect such a big brand is not easy. There is a large investment in
supply chain, operations and marketing as well as human resources. This limits the threat
from the entrants. However, a brand can still make an entry at a smaller level locally. So,
the threat remains but gets moderated by the brand’s size and image.
e. Substitutions:
There are many substitutes to McDonald’s products, such as products from artisanal food
producers and local bakeries. Also, consumers can cook their food at home. In the Five
Forces analysis model, this external factor contributes to the strength of the threat of
substitution in the fast food service industry. In addition, it is easy to shift from
McDonald’s to substitutes because of the low switching costs. For example, shifting from
the company to substitutes typically involves insignificant or minimal disadvantages,
such as slightly higher costs per meal in some cases, or additional time consumption for
food preparation. Moreover, substitutes are competitive in terms of quality and customer
satisfaction (high performance-to-cost ratio). In this element of the Five Forces analysis
of McDonald’s Corporation, external factors make substitutes a major strategic issue that
requires approaches like product quality improvement. In relation, the company’s efforts
include encouraging people to eat in fast food restaurants instead of resorting to
substitutes. Such efforts are evident in McDonald’s corporate mission and vision
statements.
 SWOT analysis:
Strength Weakness
- Ads targeting children
- Strong global presence, market leader
- High employee turnover
- One of the first recognized logos - Core product line is out of
- 34,000 restaurants in 119 countries healthy trend food
with 2.5 million employees, serving 68 - Lack of rational innovative
million ppl/day product
- Few seasonal products
- Economies of sales - Quality issues in franchise
- Owned branded items and activities network
- Socially responsible& community
oriented
-
Efficient systematic process, strong
management, variety of product
choices
Opportunity Threat
- Offer innovative product lines - Economy recession negatively
- Luxurious- place located store upgrade impacts the business
- Slow down expansion -> increase - Encouragement in balanced
profitability meals with fruits
- Accelerate -> avoid brand switching - Emergence on fast food
- Deeper international expansion into competitors
Asian market - Environmental& health issues
pressure-> nutrition and healthy
lifestyles focus
- Heavy investments on promotion
decrease market share
- Kid- focus marketing strategy
- Vulnerable to slow economies
due to broad expansion

3. Macro environment
a. Political
- First, MC Donald’s brought a rather huge capital to Vietnamese fast food industry,
following the encouragement of Vietnamese government to FDI enterprises in
Decree No.103/NQ-CP.
 - Second, Vietnam is a country with a stable political institution that facilitate
doing business in Vietnam, a peaceful country without war and terrorism

 Opportunities: increasing FDI; stable market; create international

relations…
 Challenges: the number of complicate procedures and documents, unfair
competition (because Vietnamese administrative controlling system are
not explicit, the corruption still exists in a variety levels of authority…)
b. Economic
- In 2006, Vietnam joined The World Trade Organization (WTO)
- In 2007, Government promote and support the business activities of
Vietnamese enterprises
- 3 growth motivations: increased FDI inflows, consumption growth and GDP
 Opportunities: expand market (with 90 million people), increase
consumptions …
 Challenges: the increase of competition and WTO regulations; tax rate
with import product …
c. Social- cultural
- Population and age: people in working age (15-64) account for nearly 70% of
population. Vietnam’s population is quite young, almost citizens were born
after the war.
- Population: growth rapid

- Culture: traditional food, healthy food and affordable price

 Opportunities: abundant labor force, young and dynamic people easily

accept and adapt new trends from western countries…
 Challengers: high price, fast food not good for the health some people, it
would not be easy to change eating habits of Vietnamese because of
different tastes between western and eastern cuisines…
d. Technological
- Internet system is large, McDonald’s provides free wireless internet access
inside
of their outlet
- The most outstanding innovation of McDonald’s came from their drive-thru
section with a touch-activated screen
- McDonald’s has not had an official online website in Vietnam
  Opportunities: the customers can easily browse internet while eating, it
easier for customers to order, they only need to punch in their orders
without queuing
 Challengers: it more difficult for customers who want delivery service
to order while other rivals have online selling systems; difficult in small
city….

Review challenge
Except for the achievements that McDonald's has achieved so far, it also faces
some challenges:

Firstly, McDonald's has to compete with many competitors in the market (such
as KFC, Lotteries, Jollibee .... - the famous fast food brands)

Secondly, McDonald's has not met the needs of customers in terms of the
quantity and quality of product in the market.

Thirdly, McDonald's does not have a steady stream of customers because

McDonald's is hot for a short time thanks to vouchers and discounts.

III. New campaign

Besides the previous products of McDonald's, in order to overcome the
problems of product quality, meet the tastes of consumers and have a
sustainable position in the Vietnamese fast food market, we design and
produce a new collection called "McBread" with the slogan "American style_
Vietnamese taste".
Products are produced according to the criteria: suitable with the needs of
Vietnamese people: Quality, Service, Cleanliness and Values. McDonald's
continues to advance the advantages of the older generation, adding to the
improvements to improve the defects left over and listen to some of the
customer feedback on the market to launch good products about both quality
and quantity. But besides that the price of products is still affordable,
consistent with the cheap criteria that the quality of the customer. The expected
price of product is from 20.000 VND to 50.000 VND.
 Topic: How to McDonald’s become the first choice fast food in
Vietnam?
Theme: Launch new product and solve some challenge

In Phase 1: Inspiring on week 1 of December.

OBJECTIVE

- There is a truth that, KFC entered the fast food Vietnamese market in 1997, Lotteries
penetrated in 2004 while McDonald's entered too late, until 2015. When McDonald's
went to Vietnam, KFC and Lotteria had a strong position in the fast food market in
Vietnam. Therefore in this phase, we will improving awareness about McDonald’s
brand with Vietnamese customers. After that, we introduce McDonald’s new product
and announce the launch event of this product.
TACTICS:

- Because the target customer focus on 8- 45 years old groups so to support this phase
we will focus on social media such as youtube, TV, Facebook, Instagram…
- Introduce the new product by a short video and post on social media and broadcast
inside supermarket, shopping center or walking street.
- Prepare for Phase 2: Holding an event “ McDonald’s with Vietnamese Bread”
+ Invited guests: brand representation, famous people, reviewers, food bloggers,
expert in the field of nutrition…
+ Send invitations letters to guests.

In Phase 2: Inspiring Week 3 of December

OBJECTIVE:

- Give information about the launching time of the product, demo of new product to
raise attention of the customer of the product and the event’s day.
- Highlight the traditional Vietnamese Bread along with famous flavor of McDonald
chicken and reputation for McDonald’s.
TACTICS:
- Holding event “ McDonald’s with Vietnamese Bread”
- Reviewers and food bloggers share their review to customers
- Interview the expert in field of nutrition
- Slogan of the event” American Style_ Vietnamese Taste”

EVENT TO INTRODUCE MCBREAD

- Pre-event: : announce celebrity guests attending the event on social network with demo
product and time launch the new product. Mini game like and share the livestream in
public with hashtag #McBread and lucky number to get a voucher 500.000 for all
McDonald’s store. There are 5 prize for 5 lucky person
- During event :
With joining Invited guest :
 Food reviewers and Bloggers : Woosi, Khoai Lang Thang, Dinh Quynh….
 Some online news with a huge of followers: Yan Tv, Kenh 14, Foody.vn,
Feedy… to livestream during the event in social network…

*Location : National Convention Center

*Time : 23/12/2018

- After event the invited guest will be received a gift of McDonald’s and then they can
check in or give feedback, reviewer on their Facebook or Instagram.

PHASE 3 : ACTION IN WEEK 4 OF December

OBJECTIVE: Diffuse the new product of McDonald’s and give experience for the
customers

TACTICS:

In this phase, firstly we will run minigame on Facebook and Instagram to pay
attention as much as possible with the customer with new product of McDonald's. In
this activities, some small games will be taken place to get attention and attraction of
customer with this and the customer will get some small gift of McDonald's: the
notebook, McDonald's keychain or some learning supplies like pen , eraser or rural.
During this event the customer also can get experience with new product to raise
attention about this product.
Secondly, about discount and freeship. 100 McBread which is ordered earliest will be
discount 20% and freeship. Besides, we have voucher buy 1 get 1, free drink for 100
earliest orders.
 IV. Conclusion
Goal we can receive:

- Expand market share with a huge followers the event especially McDonald’s
- Higher sales revenue during introduce new product
- Good impression with the customer
- Raise awareness to customers

WHY DO YOU NEED TO INVEST US?

- This campaign we design is good way to raise brand awareness and reputation of
McDonald’s
- Marketing plays an important role in changing to success and become the first choice
of the Vietnamese customer.
- New product suitable with Vietnamese taste
- The price is reasonable

REFERENCE
Our group used some material from the internet to look for information for this
report.
http://www.brandsvietnam.com/congdong/topic/6970-Cac-chuoi-thuc-an-nhanh-nuoc-ngoai-
co-thuc-su-hap-danVietNam
http://www.brandsvietnam.com/3876-4-doi-thu-lon-cua-McDonalds-tai-Viet-Nam
https://www.slideshare.net/pridhavale/mcdonalds-marketing-strategies