Marketing †Brand Essay

1. Executive drumhead This describe provides an analysis of the inter con tennert marketing environment of fast- aliment exertion in US and evaluates the international marketing activities of McDonalds, which is considered a line player. Firstly, the pesterer framework is used to analyse external environmental factors influencing the persistence. The Porters Five Forces framework is utilised to analyse the competitory rivalry inside the industry, and its attractiveness for potential new entrants. appoint fruit players and their positioning was identified development a strategic-groups model, mapping brand nurse against global presence.establish on the industry analysis, McDonalds was identified as the market leader and an enquiry of their market entry modes was carried out. Their international marketing mix was evaluated to identify succeeder factors, drawing focus upon international branding, international distri onlyion, international communications and standardizatio n vs. adaptation of the service offering. An internal analysis identified the firms strengths and weaknesses whilst an external analysis considered the opportunities and threats posed to McDonalds as market leader.Finally, unretentive and long term strategic and tactical recommendations were outlined in say to enhance McDonalds competitive position within the global fast-food industry. These recommendations argon twain realistic and well supported, based upon the evaluation of their current dodging and activities. 3 2. Introduction The global fast-food industry is dynamic with a physique of competitors. This report identifies the current factors influencing the industry before specifically focusing on McDonalds Corporation, who is considered as the current global leader.Based on this analysis, the report identifies several atomic number 18as for improvement and makes strategic recommendations for McDonalds to enhance its position. 4 3. global Marketing Analysis? 3. 1. PEST A nalysis and environmental Impact hyaloplasm (Macro Environment) The pursuit framework provides an analysis of the external international marketing environment, relating to the fast-food industry *These ratings are based on the authors subjective judgement 5 governmental Global fast-food firms must(prenominal) comply with country-specific political requirements, such as national minimum wage regulations, affecting costs.Hygiene and quality regulations vary importantly between nations and may influence the quality of products provided by fast-food outlets (FDA, 2012). Different countries restrict varying regulations regarding labelling and packaging. For instance the UK government pressured firms to promote healthy eating, and several fast-food companies seduce voluntarily included calorie information on their products (BBC, 2011). Economic disdain the 2008 recession and the resulting decrease in consumer confidence across the globe, average consumer fast-food spending has ch ange magnitude (The Economist, 2010) referable to whatsis and low-cost.Consumers are still looking for the convenience of eating out, but are drawn to the low termss of fast-food over table-service restaurants (Financial Times, 2009). many a(prenominal) fast-food chains progress to capitalised upon the recession by introducing new deals in summing up to their already low-priced menus. Between 2005 and 2010, Latin America, Asia Pacific, Eastern Europe and Russia accounted for 89% of global growth in the fast-food industry (Passport, 2012). Social Increasing consumer sense about healthy lifestyles has pressured many fast-food players to offer healthier selections within their menus (BBC, 2011).This includes offering low- calorie options and salads alongside burgers, and prominently displaying nutritional content. The fast-food industry has also been to a great extent criticised for targeting young children by including toys within childrens meals (New York Times, 2003). Recent ly in the UK, the publicize of junk food adverts during commercial breaks in childrens programmes has been banned (BBC, 2007), following increasing childhood obesity. 6 Technological As consumer familiarity with new engine room increases, fast-food firms are using channels such as social media websites to let with their customers.For example, McDonalds is the 9th most liked brand on Facebook (CNBC, 2012) (Appendix 1). Additionally, digital displays earmark outlets to change their menus efficiently, to suit the time of day (NRA, 2012) and self-service ordering points consider increased service speed and reduced labour costs. Environmental Environmental lobbyists and governments are pressuring the fast-food firms to become more green (Greenpeace, 2012). Rainforests are being washed-up to increase the area of land for beef production to resonate the strike for beef-burgers (Kline, 2007).Recycling is a prominent global issue and in response, McDonalds adopted recyclable packagin g. Increased environmental awareness among consumers provides firms with a prodigious opportunity to position themselves as green to garner customer committal ( topic Pollution Prevention Centre for spicyer Education, 1995). Legal Global operators must comply with country-specific regulations and legislation. This includes opening hours, taxation and employment regulations such as the National Minimum Wage Regulations (1999) in the UK.Firms are often required to meet national food standards such as the requirements set out by the US Food and Drug Administration (FDA). Furthermore, authorities are sightly increasingly worried about childhood obesity associated with the industry (WHO, 2012) and have tightened regulations regarding targeting children. 7 3. 2. Porters Five Forces Fast-food Industry This framework identifies the competitive forces affecting the fast-food industry THREAT OF NEW ENTRANTS Industry rule by global chains with very steep brand appraises senior high sc hool brand awareness and loyalty.Retaliation from strong incumbent players Low sign capital outlay Low fixed costs Economies of scale bureau OF SUPPLIERS Many undifferentiated suppliers Fast-food chains have high purchasing actor collectable to high volume COMPETITIVE RIVALRY IN THE FAST-FOOD diligence Fragmented market Low exit costs Low margin, high turnover drives competition High brand causality POWER OF BUYERS High product differentiation Target many segments High price predisposition THREAT OF SUBSTITUTIONS Alternative foodservice options Ready meals and home cooking ingredients Main players sort of differentiated No switching costs.Convenience is the value adding portion which is uncontrollable to substitute 8 Threat of New Entrants Moderate The industry is dominated by a number of international Quick Service restaurant (QSR) chains, including McDonalds, Burger King, Pizza Hut, KFC and dominos (Datamonitor, 2010). These global brands are extremely valuable, blu ster strong customer loyalty and recognition indicating consistent quality and service. fall upon players including McDonalds, adapt their marketing orientation to suit local cultures and social norms (Datamonitor 2010), beef up the brand and avoiding consumer alienation.New players struggle to compete with incumbent firms, as their brands are unknown and advertising campaigns are expensive. Established chains have the resources to strike back aggressively through pricing promotions, deterring new players from entering the marketplace. New entrants inadequacy economies of scale, which existing chains have developed over time, and utilise to run competitive in this low-margin, high-turnover industry. However, social media websites have evened the playing field in terms of marketing communications they allow firms to efficiently communicate their kernel inexpensively.Initial capital outlay and fixed costs are low, supporting(a) new entrants (Datamonitor, 2012). Threat of Substit utions Moderate Substitutes are readily available food can be purchased some anywhere, through foodservice or retail. However, convenience is the value-adding component of the service which reduces the threat of substitutes. Consumers can cook at home cheaply, but this lacks the convenience element which people require nowadays. Ready-meals are therefore a more substantial threat, competing with fast-food on price as well as convenience.(Datamonitor, 2012). If you are on-the-go however, without access to a microwave, QSRs are almost uncontested if you insufficiency a hot meal in a short timeframe. With many differentiated players (Datamonitor, 2012) and varying service offerings, customers can select the best value option. 9 Competitive Rivalry Strong Although McDonalds and Burger King almost hold a duopoly in the burger segment, the market as a whole is fragmented with many global chains and independent operators (Datamonitor, 2012). argument is primarily cost-based with firms continuously investing in their production and service processes to deletion competitors. Exit costs are low and capacity is easily increased through franchising. Branding is the most prevalent weapon for competing McDonalds washed-out over $650 million on global advertising in 2009 (Datamonitor, 2012). situation of Buyers Moderate Figure 1 shows sales and growth of the top ten fast-food companies (Euromonitor International, 2012).The markets competitiveness increases buyer power and customers are price sensitive (Muhlbacker et al., 1999) with no switching cost between providers. However, key players crusade to reduce buyer power, offering a product range which caters for the full demographic, rather than one specific segment. For example, McDonalds target children with Happy Meals and professionals with breakfast options and take-away coffee (McDonalds, 2012).Firms are increasingly promoting differentiated products McDonalds openhanded Mac, Burger Kings Whopper and offers su ch as Dominos Two for Tuesday campaign. High brand value and customer loyalty has reduced buyers bargaining power.The 2011 ranking of the top 100 brands indicates McDonalds victory (Interbrand, 2011). 10 Power of Suppliers Moderate Figure 1 Top decade Fast-food Companies by Growth. With a competitive global give chain, supplier power is limited. 17,500 British and Irish farms that provide us with top-quality ingredients. (McDonalds UK, 2012) These farms supply Tier 1 suppliers who transform raw materials into food items, ready for McDonalds to cook and serve.Due to the number of suppliers in the industry, it is difficult for them to leverage earthshaking power over fast-food firms. The supply of soft- tipsiness is dominated by Coca-Cola (McDonalds and Burger King) and Pepsi (KFC) due to their global distribution channels. Additionally, Coca-Cola and Pepsi provide fast-food chains with equipment such as refrigerators and drink dispensers. This markets their brand and aligns it with fast-food brands, reducing costs for customers, which would otherwise be passed onto them (SMO, 2011). 11 3. 3. acknowledgment of Key Players and their Competitive Position 3. 3. 1.Strategic Groups The following framework identifies the key players in the international fast-food industry and identifies which firms are in the most select competition with each other Brand value and the chains global presence (Appendix 2) are meaningful indicators of overall performance. The above strategy-group graph maps the firms performance. Brand value (US$) is plotted against the chains global presence, in terms of the number of outlets worldwide. The strategy-grouping shows that McDonalds has the 12 highest global market value and revenue in the industry, despite Subway having more international outlets.4. Key Player Evaluation of International Activities 4. 1. Identification of Key Player Based upon their global presence, market value and revenue, McDonalds is identified as the key pla yer in the industry. 4. 2. McDonalds International Market Entry Modes In 1940, McDonalds operated only one QSR but today has restaurants at 33,000 locations in 119 countries. McDonalds utilises a variety of international market entry modes for rapid expanding upon sole ventures, franchising, master franchising and joint ventures. 15% of McDonalds mark restaurants are operated as sole ventures.This involves a significant capital allegiance but allows the highest degree of control.? Most restaurants are operated as franchises, allowing rapid expansion without high capital requirements. Franchising has also allowed McDonalds to benefit from local acquaintance, present by the menu differences by country. However, McDonalds maintains control over of import aspects such as the supply chain, marketing mix and staff training. conquer Franchising introduces a third party as a go-between to vote down geographical and cultural barriers.The combination of the master franchisees local knowledge and McDonalds brand and model has been a successful formula, allowing expansion whilst maintaining significant control. McDonalds has also expanded internationally through joint ventures. Again, this allows for rapid expansion and utilises the knowledge of firms in closely-linked markets. Since 13 Both firms invest uprightness in the project, there is a lower financial risk for both parties however, many joint ventures end in hostility and conflict due to firms taking advantage of one another (Brown and Harwood, 2010).