Inside includes marketing mix of mc donalds, SWOT analysis and business model

1. 1
1. Introduction
McDonald is a famous fast food restaurant in the world. The name of McDonald was introduced by
two brothers in California. Their father Patrick McDonald in 1937 was having a hot dog cottage it was
called as Airdrome restaurant which is near to the airport. The restaurant was changed the names as
McDonald’s Famous Barbeque in 1940. During that time both brothers were realized that their profit
comes from selling Hamburger therefore they decided to make their menu is very simple and they sell
only hamburger, cheeseburger, soft drinks, apple pie and French fries. In 1954 McDonald’s brothers
were considered as a turning point for them. Ray Kroc is one of a customer that sells Multimixer
milkshake visited McDonald and he liked the idea of McDonalds. McDonald’s corporation was started at
those times and as a result Kroc started expanding their businesses by opening franchises for the
McDonald. As today is known as the Company of Mcdonalds that Head quartered in Oak Brook, Illinois,
USA, McDonald’s is considered the world’s leading global food service retailer, with more than 34,000
locations,servingmore than69 million customersin118 countrieseachday (Napoli,2016).

2. 2
2. McDonald’s Business Model
Marketing strategies of McDonalds is a franchise model. As per franchise model of
MacDonald only 15% of the total number of restaurants are owned by the company. The
remaining 85 % is operated by franchises. What is Franchising?
Imagine that you are opening your own McDonald's. To do this, you have to buy a McDonald's
franchise. To qualify for a conventional franchise, you have to have $250,000 (not borrowed).
Your total costs to open the restaurant, however, will be anywhere from $685,750 to $1,504,000,
which goes to paying for the building, equipment, etc. Forty percent of this cost has to be from
your own (non-borrowed) funds.
You will pay an initial franchise fee of $45,000 directly to McDonald's. The other costs
go to suppliers, so this is the only upfront fee you pay to McDonald's. Then, you'll go through a
rigorous nine-month training period where you'll learn about the McDonald's way of doing
things -- things like their standards for quality, service, value, formulas and specifications for
menu items, their method of operation, and inventory control techniques. You'll have to agree to
operate the restaurant from a single location, usually for 20 years, following their guidelines for
decor, signage, layout and everything else that makes McDonald's (Obringer, n.d).

3. 3
Once you've completed training and are ready to go, McDonalds will offer you a location
they've already developed. The exterior of the building will be complete, but you will have to
take care of interior additions such as kitchen equipment, seating and landscaping. You'll get
constant support from a McDonald's Field Consultant, who can advise you on details and will
visit regularly. You'll pay McDonald's a monthly fee of 4 percent of your sales, and either a flat
base rent or a percentage rent of at least 8.5 percent of your sales. How much money you make
depends on many things, including the location and its popularity, the efficiency of your
operating costs, and your ability to manage and control the business.
Think of franchising as paying someone for his or her business strategy, marketing
strategy, operations strategy, and the use of his or her name. That's pretty much what franchising
is -- you are establishing a relationship with a successful business, so you can use its systems and
capitalize on its existing brand awareness in order to get a quicker return on your own investment.
You are using its proven system and name and running it by its rules. Are you still your own
boss? In some respects, no. You still have to answer to someone else and follow his or her
direction. You don't really own the business; you own the assets you've purchased in order to
establish the business.

4. 4
3. SWOT analysis for Mcdonalds
3.1. Strength
McDonald’s is a market leader in the fast food industry. McDonald’s has a very strong
brand image. McDonald has expanded its business to more than 125 countries with more than
33000 outlets throughout the world. McDonalds has one competitive advantage and that is
Strategic location. For example In India they are located in busy shopping malls, Airports and
busy drive through. Therefore, the company’s strengths include the brand value and brand
recognitionthatithas builtoverthe years.
3.2. Weaknesses
3.2.1. Social problem –healthy issue
MacDonald’s loaded with fat, carbs, salt, and sugar. Well, these perceptions are generally on
point, as most items on its standard menu are relatively unhealthy. These all are weaknesses of
McDonalds’ in the world. With the economic development, people’s living standards have increased
dramatically these years. People are becoming more concerned about their health issues. It cannot be
denied that McDonald’s has attempted to make itself more convenience for the people. However, people
also believe that such kinds of fast food are not good for their health. The world health organization report
presented that those food not only can cause the obesity of children, but also is part of the reason of
causing cancer. Healthy issues became the biggest stumbling block to the development of McDonald’s.
Customers were switching to healthier offering, such as Subway’s sandwiches, or KFC’s mashed potato
instead of fried potato. McDonald’s has responded to this healthy trend. In order to compete, McDonald’s
has added salads and other lighter options into their menu. If a mother comes in, she is not only buying

5. 5
the happy meal for her children, she will also be likely to buy herself a meal too. The lighter options also
encourage existing customers to come back more often, because there is a greater variety of choices.
3.3. Opportunity
Opportunities for McDonald’s lie in the form of moderate to low bargaining power of
suppliers and the low bargaining power of buyers. This is a mass market industry that focuses on
price and product turnover than on differentiation in terms of product and service delivery. An
emphasis on operations and supply chain management go well with the brand image and the
product and delivery mechanisms. The key advantage is the franchise model and the extensive
reach that the model has given the brand through global distribution. In addition, Macdonald’s
can introduce healthy food consisting of low calories items. They should put more efforts in
Research and Development. Management should try find ways to reduce food wastage which
leads to cost control. New products with different variety should be introduced to capture the
market.
3.4. Threat
Macdonald’s is facing major competition from its rivals KFC and Burger King all over
the world. For example, In India local curry shops are offering great challenge to McDonalds.
Company rapid growth has made McDonalds very vulnerable to other countries economic
slowdown. Press associating Macdonald’s with obesity destroys Macdonald’s image.
McDonald’s in the past has been sued for its unhealthy products. McDonald’s should try and
solve these problems by investing heavily and effectively in research and development
(Jurevecius, 2018).

6. 6
4. Marketing Mix of Mcdonalds
After analyzing the market, finding the key factor, target segment and understanding the
market demand, every company needs to come up with an offer or such type of plan, that speed
up the growth of the company. For which McDonalds uses 5P’s of marketing mix which are as
follows:
4.1. Product
product is the physical product or service that is offered to a customer.as we know that
Macdonald’s is very customer oriented and all their products are customized according to the
local community.in order to succeed in market research has suggested that customers are always
looking for innovation and new products. McDonald is famous for its product innovation.
McDonald’s has introduced new products, removed old products and always looking for the
better products so that customers are satisfied.
4.2. Price
Price is a very important tools which identifies how reliable and qualitative a product is.
when a customer is buying something He/she first draw in his/her own mind of what the product
is worth of.If the price of a product is very low customer think quality is being promised. Price
should really ‘reflect brand and its integrity. McDonald’s products are classified in two
categories, BA (Branded affordability) and BCV (Branded Core Value products).

7. 7
4.3. Promotion
Promotion is a way by which company tries to communicate with public and make them
aware of what the company is offering. One of the methods is Advertisement. Advertisement is
conducted on TV, Cinemas, Internet, Magazines, Poster site press and radio. Other ways of
promotion includes direct mail, loyalty scheme, door drops and merchandising. McDonald’s is
unique in the way they do promotion. In order to captures the market of McDonalds.
4.4. Place
Place plays very important role in launching a product and making it successful.
McDonald’s has expanded throughout the urban areas. McDonald is currently targeting urban
areas as we know that big part of population is living in urban areas. Place doesn’t only include
physical location but it is includes all the processes that eventually leads to product ending in
customers hand. Place plays very important role in getting priority over the rivals and place
should be selected after research on the local demography, income level and customers
preferences. For instance, McDonalds in India chooses a particular place after long research and
checking local area’s demographic characteristics, income level etc. This is the reason
McDonald’s is very successful.
4.5. People
The final aspect of McDonald’s marketing mix is people. This unlikely most ordinary
marketing mix is. The main objective when talking about the people aspect is to discuss both
customer and employees, because if the employees are not happy, they will be more likely to
take out their anger on the customers. This would result in bad service and publicity.
McDonald’s does a lot of internal as well as external marketing. They have found that it is
extremely important to show the employees the proper respect and courtesy that they deserve and

8. 8
by allowing for them to give input about things they think should be improved or work on is a
great way of keeping everyone happy. If customers did not feel a great sense of appreciation
when they walk into a location, they are much less likely to come back and be repeat customers.
By doing research and taking surveys, McDonald’s executives are finding out what people want
and making sure that customers and employees are completely satisfied (Bhasin, 2018).

9. 9
5. Competition Between KFC and McDonalds
In general products is the combination of goods and services the company offers to the target
market. McDonald’s and KFC are two of the most prominent fast food chains cherished by numerous
around the globe. In the matter of burgers, McDonald’s is dependably the top choice while in terms of
seared chicken, KFC is dependably the first thing that springs to mind. The most notable difference
between kfc and mcd are that KFC only provide chicken products while Mcd products provide more
kinds of products which mainly comes from meat, fish and chicken. Examples of McDonald products are
Big Mac, Chicken burger, double cheese burger and many others. KFC also have many different
products, but the source of products is mainly from chicken (Reilly, 2011).
Figure 1.1. Above ShowsKFC Chickenand MCD Chicken
Comparing both we notice one difference between KFC and mcd in terms of feedback system .
Kfc is using the 360-degree feedback system in which employees receive confidential anonymous
feedback from people who work around them. This people include the employee’s manager, peers and

10. 10
direct reports. Kfc uses 360-degree feedback system to ensure employees performance keep up. This
feedback system is not practice by mcd company. The example of this feedback system is the employees
need to solve form of question with rating scale as well as question about staff behavior about
employees. Several studies indicate that the use of 360-degree feedback helps to improve
employee performance because it helps the evaluated see different perspectives of their
performance.
In a 5-year study, no improvement in overall rater scores was found between the 1st and
2nd year, but higher scores were noted between 2nd and 3rd and 3rd and 4th years. Found that
performance increased between the 1st and 2nd administrations and sustained this improvement
2 years later. Additional studies show that 360-degree feedback may be predictive of future
performance. This feedback system in the end will benefiting the quality of service of KFC itself
by improvement. Another difference to be observed is Services and prices. As shown below the
price of mc chicken is far cheaper than chicken zinger burger as well of all other listed products
McDonald’s have very fast services and have relatively low prices for their products. KFC have
fast services and relatively higher prices for their products.

11. 11
6. Conclusion
McDonald’s is the King of the fast food. In order to achieve this greatness McDonald’s has tried
hard for many years to prove by its self in the competitive environment of fast food restaurant.
The key is innovation, customization, good management and above all best marketing strategies
adopted by McDonald’s. Therefore, McDonald’s surviving and strong image of the brand until
today.

12. 12
7. References list
Reilly Admin. (2011) Differences Between McDonalds and KFC. [Online] Available from:
https://www.differencebetween.com/difference-between-mcdonalds-and-kfc/d
[Accessed 2 October 2018]
Hitesh Bhasin. (2018) Marketing Mix of McDonalds. [Online] Available from:
https://www.marketing91.com/marketing-mix-mcdonalds/ [ Accessed 27 September 2018].
Lee Ann Obringer. (n.d) How Franchising Works. [Online] Available from:
http://udel.edu/~pollack/Acct351/handouts/Franchise%20costs%20McDonalds%20&%20Dunki
n%20Donuts.pdf [Accessed 7September 2018].
Lisa Napoli.(2016) The Story of How McDonald’s First Got Its Start. [Online] Available from:
https://www.smithsonianmag.com/history/story-how-mcdonalds-first-got-its-start-180960931/
[Accessed 5 September 2018].
Ovidijus Jurevicius. (2018) SWOT analysis of McDonald's. [Online] Available from:
https://www.strategicmanagementinsight.com/swot-analyses/mcdonalds-swot-analysis.html
[Accessed 2 October 2018].