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Case Study: McDonald’s
Sept. 15, 2013
The function of this discussion is to identify the product, price, place, and promotion strategies of the McDonald’s Corporation. As a business owner with 20 years of experience, I offer these findings: the corporate strategy for McDonald’s product is a threefold approach using strategic flexibility, the pricing strategy is based on low price/high volume, the corporate strategy concerning place is push/pull, and the strategy for promotion focuses on saturation. The prognosis for the future is that McDonald’s will continue to increase its annual revenue and stock prices over the next five years. The purpose of this report is to show my working knowledge of the 4 P’s of marketing. Please evaluate this report and prepare for discussion on Wednesday. Product
The corporate strategy for McDonald’s product is a threefold approach using strategic flexibility. The three components are permanent, temporary, and local product. Each “layer” of the product strategy fulfills a distinct purpose. The main purpose of the permanent items is to ensure that there is always something familiar for consumers on the menu (1). The temporary products function as a development strategy to give customers a new experience and to experiment with products that may become permanent (1). As McDonald’s expands internationally, the local products have been created to meet consumer demands in particular markets (1). The way that McDonalds’ implements its business level strategy is through product differentiation, such as the company’s response to criticism and the public’s increasing desire for healthier items. They are continuing to develop healthy versions of popular menu items, such as the Egg White Delight McMuffin, which succeeds in cutting fat and calorie count (2). On a functional level, products such as the McArabia Tagine, available across Morocco, serve to support the strategic flexibility of McDonald’s corporate strategy. "When you walk into a McDonald's -- no matter where you are in the world -- the restaurant should connect to the local culture," said company representative Lizzie Roscoe. "So when you look at our menus... you'll find food that reflects local taste preferences” (3). Price
The corporate pricing strategy for McDonald’s is based on low price/high volume. Effective pricing is a main component but the company also realizes the importance of value- people enjoy McDonald's food which is a big part of repeat business. The best pricing in the world will not sell a product if the consumer does not perceive value in what they are purchasing (4). This strategy is implemented on the business level by the McDonald’s Value Menu. The items on the Value Menu often serve as "loss leaders" in order to sell other products which are profitable (4). On a functional level, prices are contingent on competitors, such as Wendy’s. Wendy's has started advertising its lower-priced items more aggressively this year and came out with a new value menu (5). This has resulted in expansion of the popular dollar menu and continued efforts to compete with the offerings from other chains, such as the creation of the McDonald’s dollar breakfast menu (6). A McDonald's spokesman, Bill Whitman, said the menu isn't aimed at repelling rivals, but several of McDonald's test sites are the same markets where Wendy's is entering into the breakfast business (6). Place
The corporate strategy for McDonald’s concerning place is a push and pull strategy. The major focus is on push- that is, opening restaurants all over the U.S., both in cities and on highways as well as expanding internationally. This strategy has been so successful at discovery and exploitation of new business opportunities that the McDonald’s business model has become the norm for other franchise organizations (7). The business level strategy can be seen in the expansion of McDonald’s...
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