global marketing
Weightage 40%
Word Limit Maximum of 2000 words per assignment
Assignment 1: revised version
To be submitted by 24th November 2011
Students are required to refer to Case 1-2 of the reference text: “McDonald’s expands globally while adjusting its local recipe.”
Overview.Today, McDonald?s golden arches are one of the most recognized symbols in the world, just behind the Olympic rings. While growth within the U.S. has slowed, the picture outside the U.S. has appeared brighter, until recently. However, globally, taste profi les and consumer desires are changing. McDonald?s has responded to these changes by altering their basic products (when necessary) to fit the requirements of the local markets. While not always successful, it has proven to be a winning strategy.
Part One - Group inputs:
1. Identify the key elements in McDonald?s global marketing strategy (GMS). In particular,
how does McDonald?s approach the issue of standardization? (10 marks)
Globalization involves developing marketing strategies as though the world is a single entity; marketing standardized products in the same way everywhere. Globalized organizations employ standardized products, promotional campaigns, prices and distribution channels for all markets. Brand name, product characteristics, packaging and labelling are the easiest of the marketing mix variables to standardize.McDonald?s in particular adopt a standardized products and other standardization to expand its business.
McDonald?s global marketing strategy is based on combination of global and local marketing mix elements. It offers an ideal example of global localization (“globalization”), wherein it mixes standardization and customization in a way that minimizes costs while maximizing satisfaction. McDonalds is “thinking globally and acting locally”. The company provides a global framework of common goals, policies, and guidelines rooted in the organization?s core values. Within this framework, individual geographic units are at liberty to design programs and performance measures appropriate to their locale. McDonald?s vision to be the world?s best quick service restaurant experience is supported by the company?s recognition of the importance of adjusting its operational strategies to the meet the specific dynamics and needs of the countries in which it operates.
The first key elements for McDonald?s is a business model of a restaurant system can set up in everywhere in the world.McDonalds promised customers inexpensive foods regardless of location. They continue to expand and built more outlets around the globe promising customers more convenience and availability. Outlets globally increased from 30,766 to
31,377 outlets from 2005 to 2007. The concentration of marketing strategy is globally advertised in different languages using the same arches logo of McDonald?s.
The other element would be the coordination of marketing activities should be reflecting a consistent image of McDonald?s. In Western Europe for example, the golden arches ae a familiar sight in Europe, particularly in England, France and Germany. Overall, Europe contributes 40% of both revenue and operating income for McDonalds. This brand is one of most valuable brands and the golden arches is said to be the 2nd most recognized symbol in the world after the Olympic rings. And in United States alone, McDonalds? typically spend twice as much on advertising compared to Burger King and Wendy?s.The golden arches brand is available in all McDonald?s outlets around the world to standardise the look and feel and familiar environment for their customer.
Next, the other element would be the location service outlet. For restaurants in high traffic public areas, McDonald?s adopt free-standing restaurants. While in places with a public car park, McDonald?s offer drive-through windows for passengers with family and kids in the car and wish to order take-away meals. Larger outlets will have indoor playground for children?s. In product standardization, McDonald?s introduced a breakfast menu in 1976 as a way to attract more customers in the morning hours. In 1980?s, the company rolled out Chicken McNuggets. Today, the breakfast menu is a breakthrough and attracted many family and kids to spend their morning session and time in the outlets. Chicken nuggets are available becomes a standard menu in the restaurant.Their menu have core and available in almost all outlets and becomes the regular menus for people everywhere- Hamburgers, French Fries, and Soft Drinks becomes standard m enu for all McDonald?s outlet around the world. In some countries, they also customized menu to suit with local eating customs.In many countries, McValue meals and Breakfast meals are introduced to promote standardization on menu and food.
In China, which is largest market with 800 restaurants opened, 95% raw materials are locally sourced and purchased including lettuce. This step ensures the taste and recipe and tastes becomes standard and consistent within the country and adaptraw material standardization. While in other countries, McDonalds?protects itself from local currency by purchasing as much as possible from local suppliers. Raw material standardization becomes a key strategy for McDonald?s to continue to deliver consistent states, quality of food, and low cost model to operate its business.
In view of price standardization, for average price of productsis match accordance to country and per capita income level. Example Big Mac in USA is cost $3.54 but with same product in China cost equivalent of $1.83. In absolute terms, Chinese Big Macs are cheaper than Americas Big Mac; hence it becomes affordable in country with lower income per capita. The price of a Big Mac often used by McDonald?s to measure the purchasing power parity power of the consumers in different markets.Hence, price does not becomes an issue, because McDonald?s ensures the prices are afforda ble for every consumer range in different geographical locations.
Based on stores? design and layout, t he last major change at McDonald?s restaurants was the introduction of play places for children in the early 1980s. In order to retain their …forever y oung? brand, they have to adopt a hip look in its stores to keep up with the changing environment. A very significant change that can be found in most of their stores worldwide is the elimination of the …heavy plastic look? that they have been carrying fo r 51 years already. Some of the notable pieces in their stores are comfortable armchairs, cool hanging lights, funky graphics and photos on the walls, Wi-Fi access and even premium coffee, providing the …café environment?.
To make McDonald?s more welcom ing as a place to socialize; hanging lights will suffuse the new restaurants with a warm glow. The booth seats will have fabric cushions with colourful patterns. And the moveable tables and chairs will be more informal and flexible to accommodate large families. The ambiance created is friendly, family orientated with children playground and consistent colours and outlook.
(937 words)
REFERENCES
Vignali, C (2001) …McDonald?s: “Think Global, Act Local “ - the Marketing Mix … British Food Journal, Vol 103, No. 2, pp. 97- 111
Whalen, J (1995) …McDonald?s cooks worldwide growth …Advertising Age International ,
July/Aug, pp. 5
Manrodt, Karl B, (2004) …Global Process Standardization: A Case Study?
https://www.sodocs.net/doc/d714419387.html,/p/articles/mi_qa3705/is_200401/ai_n9395263/
Term paper on McDonald's Corporation
https://www.sodocs.net/doc/d714419387.html,/mc_donald_s%20.html
A PPENDIX A: FA CTS about McDonald’s
?McDonald?s has over 30,000 local restaurants in more than 121 countries ?70 percent of their restaurants worldwide are owned and operated by independent, local businessmen and businesswomen
?McDonald?s serves nearly 50 million customers each day
?McDonald?s has its ownHamburgerUniversityinIllinois, and the first batch graduated in 1961
?In 1963, McDonald?s sold its one billionth hamburger
?McDonald?s is listed on theNew York, Frankfurt,Munich,ParisandTokyostock exchanges
?The clown character seen in all McDonald advertisements, Ronald McDonald, was created in 1963.
?The first McDonald?s drive‐thru opened inSierra Vista,Arizona in 1975
?Happy Meals were added to McDonald?s menu in 1979
?McDonald?s launched McCafe in 1994.
?McDonald?s launched the new worldwide Balanced Active Lifestyles public awareness campaign in 2005
?McDonald?s celebrated its 50th Anniversary on April 15, 2005