How McDonald's Became The Leader In The Fast Food Industry

McDonald's became the leader in the fast food industry with their strong focus on customer service, response to competition, and use of marketing techniques early on in their development. Please note that we are not proposing that the tactics used by McDonald's are the right or wrong way to strategically or ethically achieve growth. This article simply outlines the tactics and history of a company that has grown significantly since its inception. We see McDonald's as an interesting case study to examine their strategies, tactics, and failures.

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McDonald's

What will be covered in the article:

1. McDonald's Strategy - Listen To This Podcast Episode On How To Apply McDonald's Strategy To Your Business

McDonald's Main Business Strategy Was And Still Is Investing in Advertising & The Franchising Model
McDonald's Advertises towards Children & Families and Produces Recognizable Icons

2. The Keys To McDonald's Success, Rapid Growth & Market Dominance

McDonald's Keys to Success is their Focus on Customer Satisfaction
McDonald's Finds Ways to Make Customers More Satisfied with Fast Service
McDonald's Finds Ways to Make Customers More Satisfied by Creating a Clean Environment
McDonald's Finds Ways to Make Customers More Satisfied with Higher Quality Products
McDonald's Finds Ways to Make Customers More Satisfied with Affordable Prices
Ray Kroc Envisioned, Developed and Implemented A Successful Franchise Model
An Additional Item That Has Driven McDonald's Success is their Relationship with Suppliers – McDonald's Promises Loyalty in Business in Exchange for Innovation

3. How McDonald's Sustains Their Competitive Advantage

McDonald's Sustains Their Competitive Advantage By Providing More Value To The Customer
McDonald's Sustains Their Competitive Advantage with Superior Convenience
McDonald's Sustains Their Competitive Advantage with Optimal Efficiency Business Operations
McDonald's Sustains Their Competitive Advantage with Expansion to Dominate the Market By Being Bigger
McDonald's Sustains Their Competitive Advantage with their Brand

4. How does McDonald's Position their Brand?

McDonald's Utilizes Branding and Co-Branding with Major Well Known Companies for Marketing Purposes
McDonald's Uses Catchy Phrases and Messages in their Advertisements

5. How does McDonald's Maintain their Leadership

McDonald's Changes with the Market Demands of Customers
McDonald's Focuses on Improving the Restaurant's Image by Showing Transparency

6. Statistics on McDonald's Leadership

McDonald's Has The Largest Market Share in The Fast Food Industry (10% Global Share and 43% of the U.S. Fast Serve Market)

7. How McDonald's Recovers from Major Set-Backs or Losses

Investing in Real Estate - Harry Sonneborn's Solution to McDonald's Risk of Bankruptcy
McDonald's Responds to Decline in Sales with Innovation (ie. The creation of Filet-o-Fish)
McDonald's Responds to Lost Customers by Returning Back to their Roots (ie. Superior Food Quality & Cleaner Nicer Restaurant Facilities)

8. Statistics on McDonald's Marketing

McDonald's Focuses on Marketing Towards Children

9. Examples of McDonald's Marketing Material

McDonald's Utilizes the Four Ps of Marketing – Price – Low Enough To Be Very Attractive But Not Too Low That Consumers Think Quality Is Impacted
McDonald's Utilizes the Four Ps of Marketing – Product – What the Consumer Prefers
McDonald's Utilizes the Four Ps of Marketing – Promotion – Contests, Coupons, and Public Relations
McDonald's Utilizes the Four Ps of Marketing – Place – Creating the Atmosphere Customers Desire

10. Examples of McDonald's Advertisements

11. What are McDonald's Values and How Does that Impact their Leadership

McDonald's focuses on Employee Recognition and Creating a Good Place to Work

12. Historic Timeline of McDonald's Major Events

13. Who Were the Main Contributors to McDonald's Development?

14. Other Interesting Information and Statistics about McDonald's

15. References

McDonald's Strategy

McDonald's Main Business Strategy Was And Still Is Investing in Advertising & The Franchise Model

“In 1967, McDonald's spent $2.3 million, or about 1 percent of its sales, on its first national advertising campaign, which was an unheard amount for a fast-food chain.” ⁽²²⁾
Ray Kroc joined McDonald's in 1955, eventually taking it over and is the one attributed for its rapid growth and success. He started to franchise and eventually bought McDonald's from the McDonald's brothers in 1961. Ray valued advertising and marketing. “Kroc believed that advertising was an investment that would, in the end, come back many times over, and advertising has always played a key role in the development of the McDonald's Corporation.” ⁽¹⁴⁾
McDonald's spends approximately 2 billion dollars in advertising – targeting different groups including children. ⁽²⁶⁾
There are three objectives McDonald's has for advertising: make people aware of the item, feel positive about the item, and remember the item. ⁽²⁷⁾
McDonald's invested in advertising earlier in their establishment.
McDonald's Happy Meals included toys like popular Teenie Beanie Baby Promotion in 1996 and 1997 and established a Global Marketing Alliance with Disney/Pixar in 1998 (Promoted their movies). They advertised towards children targeting popular toys that children would be drawn towards. ⁽²⁵⁾

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Listen To This Podcast Episode On How To Apply McDonald's Strategy To Your Business

Click Above to Watch McDonald's Commercial from 1967 Marketing to Children

McDonald's Advertises Towards Children & Families Producing Recognizable Icons

McDonald's Advertised Towards Children & The Family

McDonald's marketed towards families and children it's presented as a fun place to go with your family.

McDonald's Created The Recognizable Icon Of The Golden Arches

In 1952, the McDonald brothers decided they needed a new building, so they closed down their store to create a more eye-catching appearance that included the two yellow golden arches we know today. ⁽²⁴⁾

McDonald's Created The Recognizable Icon Of Ronald McDonald

In 1967, Ronald McDonald was introduced by a franchise owner. Franchise owners realized the importance of advertising and utilizing the icon as a clown to appeal to children.
It is noted that by 1973, Ronald McDonald was more familiar to 96% of American children than the name of their president. ⁽¹⁵⁾
Ronald McDonald ranks second in terms of the most recognizable fictional character after Santa Claus among U.S. School Children. ⁽²¹⁾

Ronald McDonald

image8 150x150

Original Ronald McDonald (Willard Scott) ⁽⁵⁾

The Keys To McDonald's Success, Rapid Growth & Market Dominance

McDonald's Keys to Success is their Focus on Customer Satisfaction

Staff are encouraged to be friendly and provide “service with a smile”. They focus on customer satisfaction (short wait-times, hot food, etc). Ray Kroc was known to offer refunds to customers waiting longer than 5 minutes and say comments to workers like “if you've got time to lean, you've got time to clean” ⁽¹⁵⁾
McDonald's Operations Competitive Strategy focuses on cost, speed, and nutrition. They prioritize making the customer “happy.” ⁽⁴⁰⁾

McDonald's Finds Ways to Make Customer More Satisfied with Fast Service

Historian Love writes that the McDonald's brothers "defined a totally new food service concept...(Their hamburger stand was) the birthplace of a new generation of restaurants" ⁽¹³⁾
The McDonald brothers applied a Factory-line assembly design to a commercial kitchen, to make a faster and precise product. They cut the serving time down from 20 minutes to 30 seconds. ^{(38) (39)}
Ray Kroc who later took over McDonald's implemented having two separate windows for drive-thru (one to pay, one to get food). This created a faster flow through drive-thru which decreased wait times. ⁽⁴⁶⁾

McDonald's Finds Ways to Make Customer More Satisfied by Creating a Clean Environment

It is indicated that Ray Kroc when opening his first McDonald's insisted on a high standard of cleanliness which included (crisp white button shirts, black slacks, and a paper hat). Ray came up with the phrase that is still used in McDonald's today QSCV – Quality, Service, Cleanliness, and Value. ⁽⁵⁾
McDonald's has a focus on cleanliness – specifically a focus on clean bathrooms. McDonald's acknowledges that people will want to dine in clean and orderly environments and they recognize the negative impacts of having an unclean restaurant and/or bathroom ⁽⁴⁴⁾
Historian Love states, “Kroc was intense about quality of food, fast service, good operations, and most intense about cleanliness.” ⁽¹⁶⁾

McDonald's Finds Ways to Make Customer More Satisfied with Higher Quality Products

McDonald's has a strict regiment for safety and food quality standards. ⁽⁴⁵⁾ There have been questions about chicken McNuggets, which McDonald's debunks through their video.

Click Above to watch video on Chicken McNuggets

McDonald's Finds Ways to Make Customer More Satisfied with Affordable Prices

McDonald's found new ways to streamline the foodservice workplace and employ cheap labour. For example, McDonald's utilizes self-service kiosks. ⁽⁴³⁾
Schlosser reports that McDonald's is the biggest purchaser of beef, pork, and potatoes in the United States. They are second for the largest purchaser of chicken. Since McDonald's is purchasing high levels of potatoes, beef, and chicken their higher buying power also reduces the price they charge customers. ⁽²¹⁾
McDonald's found different ways of cutting back costs with encouraging more independence from the consumer such as people serving themselves pop and throwing out their own trash.

An Additional Item That Has Driven McDonald's Success is their Relationship with Suppliers

McDonald's Promises Loyalty in Business in Exchange for Innovation

They encourage their suppliers to develop and create new and innovative products and processes
They encourage the development of technology from their suppliers in exchange for loyalty in business. This was a way of how McDonald's reduced their costs. ⁽²³⁾

Ray Kroc Envisioned and Implemented A Successful Franchise Model for McDonald's

This franchise model was first to develop a franchise at a large scale with consistent experiences whatever location they attended. ⁽²²⁾
Attention to detail – Same set-up, process, and taste. It is said that “attention to detail was one reason for the company's extraordinary success.” ⁽¹⁴⁾
McDonald's is the largest Worldwide Franchised Food Service Organization. ⁽⁴¹⁾
There was training at "Hamburger University" in Illinois. The franchise owners earned certificates in "Hamburgerology with a minor in french fries". This helped with creating consistent experiences at each McDonald's. ⁽¹⁵⁾
McDonald's model had a different approach - A very supportive process to ensure the franchisees excelled. It was noted that they only collected a fraction of its sales as a service fee. This contrasted with the territorial model (which the parent company would sell supplies to the franchise and a large franchise fee) that many other fast foods were utilizing. ⁽²³⁾
Schlosser notes how most experts would note that key to success with franchises is summed up in one word “uniformity.” ⁽²¹⁾

McDonalds Des Plaines Ill

Ray Kroc

Ray Kroc was the one who streamlined operation and franchise to make it successful
John F. Love writes, "The essence of Kroc’s unique but amazingly simple franchising philosophy was that a franchising company should not live off the sweat of its franchisees, but should succeed by helping its franchisees succeed.” ⁽¹³⁾
Kroc was very engaged and involved with his franchisees, encouraging them to call him directly about any issues. He stressed the importance of each McDonald's being consistent so it'll reflect well on every other McDonald's that was visited by customers. ⁽¹³⁾
Ray Kroc believed, “In business for yourself, but not by yourself.” He focused on getting other people to help him achieve his dream of expanding McDonald's by approaching franchisees. Through this expansion, Canada's first McDonald's was established in Richmond, British Columbia in 1967. ⁽¹⁸⁾

McDonald's Expansion

McDonald’s Expansion ⁽⁵⁸⁾

How McDonald's Sustains Their Competitive Advantage

McDonald's Sustains Their Competitive Advantage By Providing More Value To The Customer

McDonald's works to provide the best value to their customers of anyone in their market, a great example of this is their value menu
McDonald's tries to always be the leader with dominance when it comes to value ⁽⁶⁵⁾

McDonald's Sustains Their Competitive Advantage with Superior Convenience

They continue to focus on developing and selling products that can be served quickly

McDonald's Sustains Their Competitive Advantage with Innovation

They utilize Culinary Head Chefs that innovate and create new menu items to be relevant and provide high-quality taste. ⁽⁵⁶⁾
As per their recent menu changes, this is just one example of how they are continually innovating and adding new products ⁽⁶⁴⁾

McDonald's Sustains Their Competitive Advantage with Optimal Business Operations

Ray Kroc described that he strived for absolute perfection for McDonald's. This would be true in how many described how he operated and the strict regiment he expected his employees to perform by. He was quoted as saying "Perfection is very difficult to achieve, and perfection was what I wanted in McDonald's. Everything else was secondary for me.” ⁽¹⁷⁾
McDonald's has a strict focus on operating efficiently at all levels of their company to keep costs competitive

McDonald's Sustains Their Competitive Advantage with Expansion to Dominate the Market

McDonald's continued expansion tactics to dominate the field and focus on generating more traffic in existing restaurants. ^{(52) (54)}
McDonald's has a substantial advantage over its competition due to its size in terms of purchasing power, optimal physical locations, more resources available for marketing and brand recognition
International expansion – McDonald's continues to grow outside of North America. One-third of their new restaurants are built outside of the U.S. to gain a greater scale advantage ⁽²²⁾

McDonald's Sustains Their Competitive Advantage with their Brand

McDonald's has an amazing job at creating recognizable images. “The golden arches of McDonald's are said to be the most recognizable symbol in the world”. ⁽⁵⁵⁾

How does McDonald's Position their Brand?

McDonald's Utilizes Branding & Co-Branding With Major Companies To Maximize Impact And Reach

McDonald's Invests in Marketing

Teenie Beanie Babies ⁽⁶⁾

McDonald's utilizes Branding and Co-Branding (when two companies work together to market their good/service) ⁽³⁶⁾with major well-known companies in their marketing
McDonald's has found strategic ways to co-brand with major companies and used this to their benefit for marketing their restaurant:
- Coca Cola is their drink supplier who they do co-branding with(which is widely known throughout the world)
- Walmart (McDonald's can be found in 314 Walmart stores in Canada) ⁽¹⁸⁾
- Walt Disney (Happy Meal toys) – It should be noted that they are no longer working with McDonald's as they have concerns about childhood obesity and do not want to be linked to fast-food ⁽³⁴⁾
- Hasbro Monopoly Game
- TY Beanie Babies – Miniature beanie babies in Happy Meals
- Transformers Toys in Happy Meals
- NBA themed cups, toys, collecting cards, and even a burger named after Michael Jordan called McJordan (Michael Jordan cups, Dennis Rodman cups where his hair would change depending on the temperature) ⁽⁵⁾
- NHL – Collectable Hockey Cards and various hockey memorabilia
- NFL – McDonald's signed to be the official restaurant sponsor, and created contests like “tailgate photo sweepstakes”, happy meal toys, sweepstake contests that a customer could win tickets to the SuperBowl ^{(31) (32)}
- NASCAR – McDonald's has sponsored various NASCAR cars ⁽³³⁾
- Olympics – Official Sponsor and themed cups, Olympic collectible cards
- Nickelodeon toys in Happy Meals
- Barbie figurines in Happy Meals
- Cadbury - this is found it items like McFlurrys and Milkshakes
- Hot Wheels toys in Happy Meals
- Oil Companies (Such as Bharat Petroleum In India) – To have McDonald's available at gas stations ⁽³⁵⁾

McDonald's Uses Catchy Phrases and Messages in their Advertisements

McDonald's has had 23 different slogans in the US from 1960 to now. ⁽³⁷⁾
McDonald's current slogan is “I'm lovin' it”. Other slogans that could be remembered are “Look for the Golden Arches!” (1965-1967), “Do you believe in magic?” (1993-1997), “Did somebody say McDonald's?” ⁽³⁷⁾
Their brand at this time would be “I'm lovin it” and weaving that through their advertising. A key thing to McDonald's is that they focus on creating memories for the customers. The phrase “I'm lovin' it” has been so influential, it is a part of the vocabulary of North Americans. ⁽⁵⁾
An example of how McDonald's uses their tag lines in their marketing is how they play on the “I'm lovin' it” theme and showed how their food can conquer hate, replacing hate with love in the recent Big Mac commercial “conquering hate” - It is a commercial where Montreal Canadiens fans hug the last person they would want – Zdeno Charra from Boston Bruins
Having a slogan is a simple way of getting people to remember your logo or brand and have a positive image with your company and McDonald's executes this flawlessly.

Click Above to Watch Video of Fans Hugging Charra

Click Above to Watch an Example of how McDonald's Uses Catchy Phrases

How does McDonald's Maintain their Leadership?

McDonald's Changes with the Market Demands of Customers

McDonald brothers realized after the war there was a new mentality of wanting things instant and thus focused on faster service. This approach is still engrained in McDonalds' culture today. ⁽³⁹⁾
In 1993 they started McCafe – to compete with Starbucks, Tim Hortons, and other coffee shops. Offering premium coffees. ⁽⁴⁸⁾
There was a shift in society in the 2000's where people wanted fresh and healthy food, which continues today. There were concerns about obesity and heart disease. As a result, McDonald's started creating healthier menu options (added more chicken and salads).
In 2006 McDonald's chefs noticed a trend of people grazing and eating 5 small meals, so they created “snack wraps.” ⁽¹⁶⁾
In 2014 McDonald's spent approximately $3 Billion on restaurant renovations. A major shift and renovation of the restaurant's set-up which created a more family-friendly environment and comfortable spots for people to stay longer and socialize. Ways they did this was introducing free wifi, comfortable seating, and focusing on children play areas.

Snack Wraps

Every item goes through intense scrutiny and development process to find relevant products for their customers.
Each year on average 1800 new menu items get tested and evaluated and only 3 or 4 make it to the stores. ⁽¹⁶⁾
Mike Bullington a historian that specializes in McDonald's describes the “staple menu items have originated from franchisee ideas”. The examples he uses are Big Mac, Egg McMuffin, Hot Apple Pie, and Shamrock Shake. ⁽⁴²⁾
McDonald's franchisee Lou Groen responded to a decline in sales on Fridays by creating the filet-o-fish. This was in response to a Roman Catholic neighbourhood that practices abstaining from red meat on Fridays and during Lent. It is noted that in 2016, 25% of annual sales of the sandwich occurs during that time. The filet-o-fish is a permanent menu item that beat out Ray Kroc's own idea of a “Hula Burger” in a contest between the two individuals. ⁽⁴²⁾

McDonalds Filet O Fish Sandwich

McDonald's also recognized that there were regional differences in what would be relevant to the culture and food preferences. For example, we see this in Canada where out east they have lobster sandwiches on their menu.

McLobster Advertisement ⁽⁶²⁾

McDonald's in other countries offers different types of foods depending on culture. For example in India, they have more vegetarian and chicken options. ⁽⁴⁹⁾
Below you can see different menu items offered in India. ⁽⁶³⁾

McDonald's India

In 2016 McDonalds' launched making custom burgers at the kiosk - “Create Your Taste” - customized food and freshly made to appeal to the customer. This allows customers to cater to what they like at McDonald's and create a fresh burger. ⁽⁴³⁾
Recently (2017), McDonald's started offering all day breakfast in Canada (followed after the U.S.). As it was noted this was a demand for consumers due to their lifestyles.

McDonald's All Day Breakfast

McDonald's Focuses on Improving the Restaurant's Image by Showing Transparency

Recognizing the importance of the restaurant's image was learned early in the development of McDonald's. In 1952, McDonald brothers created a new building (shut down their restaurant and re-opened). Their main goals were to improve the appearance of the restaurant and efficiency of the operations. ⁽⁵⁰⁾
McDonald's are trying to be transparent with their customers. They have a website where you can ask questions and they will respond. It's called, Our Food, Your Questions. ⁽⁵¹⁾
A perfect example is that McDonald's shows a basic recipe for their Big Mac Sauce through a video, in the restaurants, and on the website – trying to show that they are not hiding any secrets. This strategy appears to be working as over 5.5 Million people have watched the video

Click Above to Watch Big Mac Recipe Video

McDonald's has done a shift to focus the importance of Canadian farmers. They are trying to change the image of it being highly processed with fillers. In the Not Without Canadian Farmers advertisements, McDonald's indicates that more than 80% of their ingredients are sourced from Canadian farmers.
They have a commercial where kids are able to ask farmers questions about their work and food. The focus is “Canadian beef”

McDonaldès also did an Old McDonald twist for International Women's Day. McDonald's aired a commercial that advertises Canadian women farmers and when shared they will donate money towards helping young Canadian farmers.

Click Above to Watch McDonald's International Women's Day Video

Statistics on McDonald's Leadership

McDonald's Has The Largest Market Share in The Fast Food Industry (10% Global Share and 43% of the U.S. Fast Serve Market)

Below is a chart of the revenue of McDonald's Corporation worldwide from 2013 to 2016, by region (in billion U.S. dollars). ⁽⁵⁷⁾

Revenue of McDonald's Corporation Worldwide

The Fast Food Market Size is $245 billion worldwide (this includes not only burger restaurants but all fast food restaurants including Asian, Italian, pizza, etc). ⁽⁸⁾
McDonald's is has a market share of 10% of the world wide fast food market
McDonald's in the United States has $8.253 billion of the Fast Food Market. ⁽⁹⁾
McDonald's main competitor in the United States is Subway. It is noted that they have approximately $1.110 billion of the market. ⁽¹⁰⁾
In 2015, a study was done for the quick service restaurant chains by revenue worldwide. It is noted that McDonald's is at the top with $25.41 billion US dollars, followed by Subway at $19.2 billion US dollars. ⁽¹¹⁾
In 2015 a study was also done on all restaurant chains in the US. It indicated that McDonald's had $35.8 Billion in sales in the US in 2014, compared to $12.7 Billion by Starbucks, $11.9 Billion by Subway, $8.6 Billion by Burger King and $8.5 Billion by Wendy's ⁽⁶⁶⁾
Of the Quick Service Food Industry in the United States, it is noted that McDonald's represents 43%. ⁽⁴⁾
In 2016, McDonald's was the highest ranked restaurant brand with the value of $42.937 billion US dollars. ⁽¹²⁾
Below you can see in the chart of the revenue of McDonald's Corporation worldwide and how it has ranged between 2005-2016 (This graph does not break it down like the earlier graph by region). ⁽¹¹⁾

McDonald's Revnue

How McDonald's Recovers from Major Set-Backs or Losses

Investing in Real Estate - Harry Sonneborn's Solution to McDonald's Risk of Bankruptcy

Schlosser details how McDonald's Corporation is the largest owner of retail property in the world. ⁽²¹⁾
Historian John Love notes that McDonald's was at risk of bankruptcy after Ray Kroc bought out the McDonald brothers. Profitability was low at this time. ⁽²²⁾
Harry suggested that McDonald's purchase real estate as a way to create income. This helped create some stability in the earlier stages. Initially they had long leases with landowners to sublet. Later, they purchased land and leased it. This was a predictable profit (with land appreciation) and provided money for expansion. ⁽²³⁾
The rate at what the markup was for subleasing started at 20% and then gradually they reached 40%. ⁽²²⁾
They charged rent based on how much the franchisee sold. Franchisees who were subleasing would either pay McDonald's a minimum rate or a percentage of sales (whatever one was more profitable). ⁽²²⁾

McDonald's Responds to Decline in Sales on Fridays by Creating Filet-o-Fish

McDonald's franchisee Lou Groen responded to a decline in sales on Fridays by creating the Filet-o-Fish. This was in response to a Roman Catholic neighbourhood that practices abstaining from meat on Fridays and during Lent. It is noted that in 2016, 25% of annual sales of the sandwich occurs during that time. The filet-o-fish is a permanent menu item that beat out Ray Kroc's “Hula Burger” in a contest between the two. ⁽⁴²⁾

McDonald's Responds to Lost Customers by Returning Back to their Roots

As of 2016, McDonald's has lost many customers and are currently trying to recover approximately 500 million orders that were made in the United States. McDonald's report that they are going to return to their roots. It is noted that they are responding to the decline by incorporating home deliveries, reviewing the quality of food and renovating restaurants. ⁽⁶⁰⁾

Statistics on McDonald's Marketing

McDonald's Corporation spends 1.43 billion dollars US in advertising. ⁽¹⁾

McDonald's Focuses on Marketing Towards Children

The chart below you can see how much McDonald's focuses on advertising towards children between the ages of 2-5, and 6-11 years old. McDonald's is more than three times than their competitors. ⁽²⁾

Through McDonald's Happy Meal Toys, it is noted that they are the “largest distributor of toys in the world”. From focusing on advertising towards children – including their toys, it results in 20% of their sales. It is noted that McDonald's distributes 1.5 billion toys worldwide (which is higher than Hasbro and Mattel). There was a report done in 2009 to explore their favourite fast-foods and the reasons why they like that restaurant. 37% of children said McDonald's was their first choice – 87% of 6-7 year olds and 80% of 8-9 year olds talked about how they “enjoy getting a toy with their meals.” ⁽³⁾
There have been concerns that this tactic has caused childhood obesity among children ⁽⁴⁾

Click Above to Watch an Example of McDonald's Kids Advertising

Examples of McDonald's Marketing Material

McDonald's Utilizes the Four Ps of Marketing – Price – Finding the Right Price

McDonald's focuses on the right price (not too low as some consumers will think quality has been impacted). North Americans are known to respond well to “value items”.
It is noted that 40% Americans will choose quick service food industry after work due to the food being cheaper. ⁽⁴⁾

McDonald's Utilizes the Four Ps of Marketing – Product – What the Consumer Prefers

Focusing on their product and demands of the consumer (what is relevant, assessing if the item is in decline in the product life cycle) – Offering certain items around a specific time (Christmas themed McFlurry, Shamrock McFlurry, McRibs, etc). ⁽²⁸⁾
They focus on familiarizing themselves with customer preferences and how to upsell to them.

Click Above to Watch a Video on McDonald's Global Strategy

McDonald's Utilizes the Four Ps of Marketing – Promotion – Contests, Coupons, and Public Relations

Sales promotion – using contests (McDonald's Hasbro Monopoly sweepstakes game), and coupons (free coffee week). It is noted that in Canada, McDonald's has given away over 113 million cups of coffee for free since 2009. ⁽⁶¹⁾

McDonald's Monopoly Game ⁽⁷⁾

They utilize public relations – having news stories (Ronald McDonald House), events, sponsorships, scholarships for post-secondary for employees
In 1976, McDonald's became an official sponsor for the Olympics and they have committed to supporting the Olympics since. ⁽²⁹⁾

McDonald's Utilizes the Four Ps of Marketing – Place – Creating the Atmosphere Customers Desire

Targeting their types of customers. For example, children want to visit McDonald's because it is a fun place to go (playground, happy meal toy). A business person eats at McDonald's because it is quick and can be eaten on the go. Teenagers are drawn to the value menu items as it is more affordable and that free wifi is available. ⁽³⁰⁾

Examples of McDonald's Advertisements

McDonald's Advertises towards Children & Families

As stated earlier, McDonald's markets towards families and children and presenting the restaurant as a fun place to go with your family. Some advertisements talk about how children "always have a friend with big red shoes".

Click Above to Watch Advertisement "Do You Believe in Magic?"

McDonald's advertises in a way that associates McDonald's with "good times, great taste" and with children singing with the Ronald McDonald characters.

Click Above to watch McDonald's Advertisement

McDonald's Food, Folks, and Fun Ad has children playing with their Happy Meal toys and signing with Ronald McDonald the song "food, folks, and fun"

Click Above to watch advertisement

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What are McDonald's Values and How Does that Impact their Leadership

McDonald's focuses on Employee Recognition and Creating a Good Place to Work

By trying to create a better workplace atmosphere, McDonald's believes it should result in happier employees which should create better customer service.
McDonald's shows appreciation of youth and their important role (to try to eliminate negative association with working at McDonald's and valuing their role at McDonald's).
It is estimated that 1/8 Americans have worked at McDonald's at one point in their life. Famous people noted that have worked in McDonald's: Shania Twain, Rachel McAdams, Jay Leno ⁽²¹⁾

Click Above to Watch We Believe in Canadian Youth Advertisement

Historic Timeline of McDonald's Major Events

McDonald's Timeline In The US ⁽⁵⁹⁾

McDonald's Timeline in the US

For a quick video summary of McDonald's Click Above to Watch McDonald's Marketing History

Who Were the Main Contributors to McDonald's Development?

Fred Turner's Training Program that Ensured Consistency with each Franchise

Fred started a serious management training program – called Hamburger University. ⁽²⁰⁾
The training at the Hamburger University provided consistency, as everyone was being trained the same way, which was what Ray Kroc desired to have each restaurant the same wherever you went.
Fred Turner was known as the son that Ray never had. ⁽¹⁹⁾

Ray Kroc and Fred Turner

Ray Kroc and Fred Turner ⁽⁵⁾

Other Interesting Information and Statistics about McDonald's

The first McDonald's moved from a sit-down to fast food. The early McDonald's tried different marketing tactics such as turning off the heat (to prevent people from staying), the arrangement of seating (having people sit over their foot, which encouraged faster eating), seating location (further apart which made it more difficult to socialize and stay longer), and using cone-shaped cups to encourage people to eat faster (not able to put their drink down). These tactics were all focused on speeding up the eating process and getting more people to flow through the restaurant. ⁽²⁵⁾
Historian Love describes how Ray Kroc sold Multi-mixers for milkshakes and the McDonald brothers had eight of the milk shake machines. Ray went to visit them and then proposed franchises to the brothers. Dick and Mac McDonald made $100,000 a year (50,000 each) when in 1952, the average wage is U.S. was about $3000. ⁽¹³⁾
In 1961, the brothers agreed to sell the business to Kroc for $2.7 million. ⁽¹⁵⁾
There have been significant changes in the amount of money Americans spend on fast food. Schlosser notes that in 1970 they spent approximately $6 billion, while in 2000, it was more than $110 billion. It is suggested that Americans are spending so much on fast food that it is more than they would on academics, technology (computers, computer software), entertainment (books, movies, magazines, newspapers, music) or a new vehicle. ⁽²¹⁾

Click Above to Watch a Video about McDonald's Strategic Analysis

References:

1. https://www.statista.com/topics/1444/mcdonalds/
2. http://www.businessinsider.com/american-children-see-253-mcdonalds-ads-every-year-2013-11
3. http://www.huffingtonpost.com/2014/03/13/mcdonalds-happy-meal-facts_n_4936593.html
4. http://brandongaille.com/29-important-mcdonalds-obesity-statistics/
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