QUESTION 1: McDonald’s Marketing Strategy and Tactics Analysis
The COVID-19 pandemic brought about havoc to the business industry, where all companies were affected in one way or another, with most of them being affected negatively. McDonald’s was no exception, and despite the company’s sophisticated marketing strategies and tactics, the effects have been dire. Here is a detailed analysis of the company’s strategies and how the pandemic has impacted them;
McDonald’s targets everyone because the company deals in a basic commodity that people are interested in. however, different strategies are in place considering the various segments the brand serves. According to Pafitis (2020), the brand targets various groups, including families, workers, and people of different ages, which justifies that Mcdonald’s is using a differentiated target marketing strategy considering the many market segments it serves. Research by An (2020) indicates that McDonald’s segmentation approach considers people’s age, gender, life-cycle stage occupation, religious belief, and other differential factors that call for product and service differentiation. This target market has not changed despite the pandemic’s impacts on the market. The only difference has been that consumer purchase behaviours have changed because of the economic times, which is slowly falling back.
As the company tries to remain competitive in the market and attract more customers during the post-pandemic times, its positioning strategy is still the same. According to Boerop and Moynihan (2021), it is to provide what the customers need very fast, without wasting time, and then sell it to them at a low price. Therefore, affordability and fastness are what customers perceive McDonald’s as a brand to be, and it does this without compromising the quality of the product or services offered. This positioning strategy conforms to what Karadeniz (2009) refers to and recommends for brands to achieve a competitive advantage: to be different and creative. The marketing team continues to guarantee customers that their value for money has not changed and delivery is still with speed even after the pandemic, which keeps the customers coming back. According to BBC News (2021), in addition to being different and trying to win back customers during the post-pandemic period, the brand has updated its menu to accommodate the new needs of the customers.
The definition of the value proposition by Hassan (2012) is that it “is an explicit promise made by a company to its customers that it will deliver a particular bundle of value creating benefits.” And McDonald’s is no exception as it tries to offer value to its customers. During the pandemic, many countries issued restrictions, some of which forced McDonald’s and its competitors to only allow drive-through and not dine in services in the stores; however, according to BBC News (2021), the dine-in services are back because of the high demands from customers and the reduction in restrictions relating to the health institutions. Unfortunately, despite its digitization process being beneficial, its recent investment in Dynamix Yield did not bear any fruits. Especially with the coronavirus pandemic, which has forced the company to withdraw from using the technology whose focus was to use predictive analytics to deliver personalized customer experiences. According to Mixson (2021), this has not been the case. There is an urgent need to counter the effects and have a more positive outcome in finding a way to deliver personalized experiences to the company’s customers. However, the company’s delivery option for customers has created more value. According to reports by Quilliam (2021), this has significantly contributed to the company’s success, especially during and now after the pandemic.
Marketing Mix Strategies
Product and Service Mix
McDonald’s does not only offer products anymore, but also it has also ventured into service delivery as well, and this has been received well by its loyal customers. According to Walsh’s (2020) post on The Times, McDonald’s got into a deal with Just Eat, a company that offers delivery of fast foods. The deal includes delivery of the brand’s products, especially burgers, in the UK. The delivery platform is now the other McDonald’s official delivery partner after Uber Eats that had come on board relatively earlier, according to Saker-Clark (2020). Through this, the company now has two delivery platforms that offer the delivery services to customers and the products that customers order for consumption. The product and services mix has placed the company on customers’ good side as most of their most dire needs have been catered for, and they do not have to move around to get their food even with the fast looming post-pandemic period.
Marketing communication is one of the most important yet challenging aspects of the marketing mix. It requires intense research, strategy, and investment in time, finance, and other resources. According to Kotler and Keller (2016), communication strategies can come in two distinct ways, the traditional means and digital means, which is the most current. Considering McDonald’s strategy, the company utilizes traditional mass media to reach a wide population and digital media to reach an even wider market while getting feedback. This justifies the suggestions by Kotler (2000) that communication in marketing is about delivering the information to the buyer and receiving feedback from them. The company uses magazines and newspapers for announcements and issuing other information to customers, which is evident in Kowitt (2020) report on Fortune. Similarly, television advertisements have continued to dominate the company’s advertisement, especially now that countries are adjusting after a long struggle with the pandemic. McDonald’s has been present on social media for a long time. According to Zimmer (2021), it uses these platforms for promotional purposes and to engage with its worldwide customers in the UK, US and further. It is evident in the report that social media marketing is effective, especially now that many people have found their way around the technology and have embraced its use because of the pandemic.
According to Friedman (2016), the food industry, like McDonald’s operates uses a psychological pricing strategy to compel customers to buy the products. Price bundling is one of the pricing strategies the company uses. According to Mac (2016) definition, “it refers to when several products or services are sold together as one single package.” Further, the company also uses a competitive pricing strategy by having low prices for customers who choose McDonald’s instead of other brands. All these pricing strategies have been effective during the pandemic, especially because of the economic times. However, the company needs to make more profits and take advantage of the fast recovering economy, which means competitive pricing is not appropriate for profit maximization. As an already popular and established brand, premium pricing would be appropriate.
Value Delivery Channels
McDonald’s value delivery system comprises two crucial channels; the internet and intermediaries, making this a dual distribution channel approach. According to Preston and Schramm Jr. (1965), direct selling (online or offline) and using third parties. The company has opened many stores around the UK and in the US, and other parts of Asia, according to McDonald’s (2022), and customers can access the products from there. They also have an online platform where customers can place orders and wait for delivery. Distribution platforms like Just Eat and Uber eat have been used during the pandemic and continue to be used in the post-pandemic to deliver the products to the customers.
QUESTION 2: Marketing Strategy Recommendations
The following recommendations have been made concerning the analysis above and for the aim of helping the company to expand its value delivery to its customers globally.
First, the company needs to change its pricing strategy; premium pricing is the most recommended as it will influence the market’s perception of the brand as an already established brand providing nothing less than quality products. According to Anderson and Simester (2008) research findings, premium pricing in most cases will not harm customer perception and eventual purchase decision, especially where the brand is already well known for its benefits and advantageous attributes. Further research by Allsopp (2005) indicates that changing market conditions cause changes in consumer behaviour. This calls for different pricing, which can also be premium pricing, which has tremendous benefits. McDonald’s products are highly ranked by many, and even in the UK, the products are like a luxury, which means they qualify as premium products, which people will be very willing to pay slightly higher for. Introducing premium pricing will increase the company’s sales revenue and change its positioning to be a product that creates value for money for the market it serves.
Secondly, in terms of social media marketing, the company should prioritize its content development and delivery. The economy is rapidly restructuring and readjusting, following various government interventions to mitigate the effects of the pandemic. These strategies have changed the consumption behaviour of consumers because there is significantly more money going into their pockets. Therefore, more social media adverts are highly recommended, and the content should include compelling information like discounts and offers. In addition, the company should use celebrity endorsements for social media advertisements because it has proven to be very effective, according to Foong and Yazdanifard (2014). The main reason for this is that people are more open to social media, and it has become an influential marketing channel; hence having celebrity content there will boost the effectiveness of the adverts.
QUESTION 3: Challenges in Operations Management and Commonality in the Fast-Food Industry
Supply and demand are the major contributors to operations management, and according to Slack and Brandon-Jones (2019), they determine what the delivery process entails. Whether planning or controlling, the demand and supply factors must all be in consideration for the operation to fully take place and to ensure customer satisfaction, being that they are the end target. However, with the COVID-19 pandemic and its unanticipated effects, operations managers worldwide have been facing a tone load of challenges, with many being related to supply chain management and inventory management, as will be shown below. The most affected industry is McDonald’s, and other companies operate in the fast-food industry. The effects caused by the pandemic were similar in a wide range regarding supply chain management and inventory management.
Supply Chain Management
A brief description of what supply chain management is by Mentzer et al. (2011) is the flow of products and services from the suppliers to the company that undertakes the conversion process of the products into usable form then all the way to the end-user. Delivery is key in part of operations management, and it is the definition of the value of a product or service to the customer. Further explanation by Slack and Brandon-Jones (2019) shows that part of the supply chain is the flow of products and services downstream and upstream, which means from suppliers to the customer and vice versa. The flow of products from suppliers is key to operations because without what the suppliers have to offer; there is no product. Subsequently, if the supplies are delayed, operations are also affected. This was one of the challenges that Mcdonald’s faced caused by the pandemic as companies tried to adjust to the changing times. According to a publication on Forbes by Wu (2020), the restrictions affected distribution channels for McDonald’s and other companies in the restaurant industry. Other reports by Nonomiya (2021) show how flooding at the port in Japan and other pandemic-related issues caused disruptions in the company’s supply of a major commodity. Therefore, the transport restrictions are a major contribution to the Supply Chain Management nightmare that many companies in the restaurant industry like McDonald’s are facing to date.
Another important component of operations management is inventory management. Yet, the uncertainties caused by the pandemic, followed by disruption of distributions channels which force delays, has made this a major challenge for many companies in the restaurant industry. According to Goodman and Bradsher (2021), consumers have had to deal with the new reality of ‘no stock available’ and ‘no idea when it will be available. The main reasons are the high costs and delays, which may lead to product perishing. With the high cost of delivery and commodities in general, companies have opted to purchase only what they can, making the capacity of purchase a major concern. When the stock arrives, it is quickly utilized and then sold out, making the businesses run out of stock fast. This is highly common for all restaurants industry companies like McDonald’s because of the supply chain issue caused by the pandemic. Demand for the raw materials for processing is high, and therefore, the costs have become high, and many companies cannot accommodate the expense, forcing them to buy what they can afford for now.
How McDonald’s has handled the Challenges
The supply chain and inventory management issues that had come up during the pandemic saw McDonald’s cut off certain products from its menu because it was not possible to deliver with the lack of raw materials. According to Lucas (2020), the post-pandemic period is seemingly better for the company as it has bounced back from the negative effects and has introduced the old menus and new ones for customers. The menu cutbacks saw various products removed because, according to the case study, the supply of milk and other commodities used for processing was impacted because of the restrictions and high costs. This means that removing some items from the menu was the best move to avoid customers being disappointed when they ask for a certain product. Later on, according to Bogage (2020), the company has announced the coming back of past products into the menu like ice cream and chocolate chips, and consumers have received this news well. Reports by Forbes (2021) and Lucas (2021) show that the company has been performing better and even beating the profit estimated by a significant percentage since the bouncing back, which proves McDonald’s successfully mitigated the challenges it faced from the pandemic.
QUESTION 4 : Recommendations and Suggestions
Innovation is key, especially during uncertain times like the one witnessed during the pandemic. This calls for coming up with new designs and strategies that will not be affected or, rather will be effect proof. Since there are other pressing matters a company can be handling at a given moment, it may have been hard for the company to develop a new product for its customers, yet the many offerings had been removed from the menu, which called for replacement with alternatives. Slack and Brandon-Jones (2019) recommend outsourcing innovation to a third party. This could have helped the company introduce new products that did not rely on imported raw materials, often delayed during the pandemic. Innovation should therefore become the company’s priority. It diversifies its production and does not only depend on specific distribution channels, which if are affected, but there is also a lack of supply. Therefore, the best approach is to outsource this service to a more qualified company to do the necessary research for new product development. Additionally, despite the pandemic slowly fading away and economies recovering, inventory management is still key especially drawing from the lessons learnt during the pandemic. McDonald’s needs to maximize its inventory to avoid shortages that may come as a result of delays and lack of supplies because of major alterations in the global supply chain that the company greatly depends on.
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