The International Marketing Strategy Of McDonald's

INTRODUCTION:.....................................................................................................................................4 [Link] of standardization.............................................................................................................................5 Definition and Concept.......................................................................................................................................5 Standardized elements.........................................................................................................................................5 1. The advertisements 2. The employees 3. The products 4. The franchises 5 5 5 6

[Link] Concept..........................................................................................................................................6 To adapt to each Country....................................................................................................................................7 1. The target 2. The products 3. The distribution 4. The price 5. The promotion 6. Focus on children in France 7 7 8 8 8 9

2. The speech of the Company.............................................................................................................................9 7. The family's restaurant 8. A Communication directed at children 9. A magic world 9 9 9

.................................................................................................................................10 I. II) MCDONALDS CRISES AND ANSWERS.......................................................11

McDonalds in a hostile environment..............................................................................................................11 The Crises..........................................................................................................................................................11 1. The BSE 2. Obesity 11 11

3. The uncommercial opponents 4. Jose Bove 5. Dave Stelle and Hellen Morris 6. Lawsuits for obesity

12 12 12 12

2. The Answers..................................................................................................................................................13 ..........................................................................................................................................................................13 7. Products, services and quality 8. New promotion 9. McDonalds and the Olympic Games 13 14 15

Conclusion:...............................................................................................................................................16

INTRODUCTION:
McDonald's company is a multinational which owns more than 30,000 franchises of fast food restaurants under McDonald's brand, in 121 countries. The company also heads other brands of restaurants, as Aroma Caf, Boston Market, Chipotle Mexican Grill, Donatos Pizza and Prt Manger. In 2001, incomes reached 14.87 billion dollars, with a 1.64 billion dollar net income. France is one of the most dynamic markets: in 2003, the figures of McDonalds France business progressed by 10 %, to reach 2.2 billion Euros. At the beginning of 2004, France had more than 1000 restaurants. In France, McDonalds welcomes more than 1.2 millions customers a day. McDonald's is the leading global foodservice retailer serving nearly 47 million people in more than 100 countries each day. Approximately 70% of McDonald's restaurants worldwide are owned and operated by independent local businessmen and women. The international marketing of McDonalds is very interesting to study because it represents a very important model that consists in providing the same offer through the world with an adaptation per country. Even if this model is sometimes questioned, it appears efficient considering the brand image of McDonalds. However, we are going to study the international marketing strategy of McDonalds emphasizing the concept of McDonalds, mainly with its strategy that evolves from standardization to adaptation. Then, we will focus on the different problems the company encountered and the actions it took. Concept of McDonalds At its creation, McDonalds developed a new market: fast food. Since 1997, the strategy of the firm in France has evolved. At the beginning, the objective was to build a lot of restaurants to slow down the growth of its competitors. Then, there were so many McDonalds that it was impossible not to eat in this restaurant. Nowadays, there are enough restaurants but their offers are not really developed. McDonalds thinks its strategy in the long-term. Due to its size, the firm can make huge investments to develop its strategy. The aim of the firm is to build new restaurants before its competitors even if it includes the cannibalization of the other fast food products. Nowadays, the new challenge is located in Asia and in Eastern Europe. In order to dominate the market more easily, McDonalds does not hesitate to sell its hamburgers at a lower price than the production cost. That means the company uses a dumping strategy to attract new customers.

A. Concept of standardization Definition and Concept

The standardization means that a company wants to use the same marketing mix all over the world. So, the company will launch the same products in the world, helped by the same communication campaign. The massive presence of McDonalds is undeniable: it makes 57% of its income abroad and the percentage of its assets reaches 55% abroad. The globalization strategy of Mc Donalds consists in reproducing the factors that have been successful in the US. This strategy is called: Think global, act local.

1.

Standardized elements
The advertisements

The annual advertisement budget reaches 2 billion Euros. McDonalds needs efficient communications to make people overlook their culture which is a barrier to homogenization. McDonalds targets mainly children because they are becoming more powerful in the decision making process of their parents regarding their food choices. From this point of view, the clown Ronald was created in 1963. This character is used to identify the restaurant more easily as well as to have a brand image. The golden arches have become the most famous logo of the world. Moreover, McDonalds is the second most famous brand in the world after Coca-Cola. 2. The employees

Each day, the employees carry out the same actions in the same order. This standardization is considered a very important characteristic of the McDonalds company. The employee has to be as much homogeneous as the product he sells. 3. The products

The products in the restaurant seem to be different but they are made with the same ingredients. McDonalds is used to launch new products with different names but there are only 6 sorts of hamburgers. McDonalds has only 300 suppliers in the world.

4.

The franchises

According to Ray Kroc, franchises were the only means to a quick expansion of its model. Nowadays, 80% of the McDonalds restaurants are franchises. In order to assure the standardization of McDonalds in the world, every franchise must use the brand, the menus, the organization as well as the administrative system of the firm. This system of franchise has enabled the company to reach its current position: a strong brand image and a global presence. McDonalds has developed its concept of fast food by trusting real managers inserted into the local economic and social network. The distribution of the roles between the brand and the franchisees offers to the latter a real autonomy. The sign keeps the rights on the brand, the control of the real state and the construction, as well as the conception of the products. From its part, the franchisee invests in the equipment (kitchen and furniture) and maintains the restaurant: recruitment and mobilization of the teams, the operational and financial management of the restaurant. The McDonalds franchisees represent the meeting between professionals of different domains (large-scale distribution, farm-produced industry etc) and a rapidly expanding company: a turnover worth 2.1 billion Euros in 2002, with an increase of 10 % compared to 2001. So, McDonalds is on a growing market because of new ways of life, desire of variety in food consumption, so many elements which provide McDonalds real potential of evolution. To become a franchise, the managers have to undergo training for a year, combining theory and practice and a close association with the regional councillors of McDonalds France in every stage of development: opening of the restaurant, operational management, mobilization of the teams, expansion etc. In 2003, McDonalds registered a turnover worth 2.2 billion Euros in 2003 in France. It is present in more than 750 cities and accounts for over 1010 restaurants today. Its leading position on a constantly expanding market allowed it to envisage the opening of 40 new restaurants in 2004. Henceforth, its expansion aims at the towns of 10,000 to 20,000 inhabitants. The development of the franchise constitutes one of the priorities of the brand for the next years and stays unmistakably one of the foundations of its success in France. McDonalds wishes to recruit 10 franchise a year over the next 5 years. Nevertheless, standardization is limited because it doesnt take the differences of cultures or needs of the consumers into account. Concerning McDonalds, tastes vary from one country to the other. That is why McDonalds has had to adapt its offers for each country because its image, its turnover as well as its competitiveness were at stake.

B. Marketing Concept

To adapt to each Country

To adapt a product is a strategy which consists in changing one or several marketing mix elements in order to fit with the local culture. Even if some companies prefer having a global marketing strategy, many international firms have to adapt the variables of their mix marketing to the different cultures. Then, it is important to know different economic or cultural elements as: Consumption habits Preferences and tastes Standards of living Educational level Cultural preferences are a major reason to adapt the outputs because they have an impact on the purchase behaviors and the consumption of the products. But, there is not only the culture or the purchase behavior, there is also the place which can incite Mac Donalds to adapt. For example, when Mac Donalds wanted to set up one restaurant in Moscow, it realized there were neither suppliers nor correct logistic networks there. As a consequence, the company had to create a new process over there, from production to distribution. McDonalds is known as the fast food chain adapting the most to local tastes. Indeed, the firm has adapted several elements of its strategy.

1.

The target

In developed countries, McDonalds targets children, this is the reason why it has developed some links with Disney. In 1963, the company created Ronald who is the brands mascot for children. On the contrary, in developing countries, it is more often youngsters who prefer to meet up with friends at a McDonalds outlet. In fact, each country has its habits. For example, in Bangkok, teenagers wear McDonalds T-shirts because it is considered cool, whereas in the US, wearing McDonalds T-shirts gives the impression that youre an employee of the brand. So, McDonalds has a different brand image in each country. 2. The products

Although McDonalds adopts a global approach, its restaurants provide different food items that match with the local tastes. In Israel, there are kosher and non-kosher restaurants, but the meat served in McDonalds restaurants is 100% kosher beef. Vegetarians can opt for, say, the McVeggie, which comprises of peas, carrots, green beans, red capsicum, potatoes, onions, rice and seasoning. The burger also contains lettuce, egg and mayonnaise in a toasted sesame seed bun.

The non-kosher restaurants serve Israeli customers who are not keep strictly kosher and want to visit McDonalds on Saturdays and religious holidays. In kosher restaurants, the menus dont include any dairy products and all the food is prepared in accordance with kosher law. Also, we can find the Mc Spaghettis in the Philippines, a burger that contains lamb in India and fish and rice in Japan. McDonalds has also worked with its franchises to adapt to cultural specificities. So in Europe, we can find beer in the restaurants, while in the US, people can eat salads or pizzas. In Jakarta, customers can eat rice, while in Seoul, the restaurants provide sandwiches that contain pork. 3. The distribution

The size of the restaurants depends on its location, thats the reason why it is possible to find small outlets in Japan, because land is very expensive in Japan. On the contrary, it is possible to find big restaurants with more than 700 seats in Russia and China. Furthermore, the uniform colors are adapted to the religious beliefs of the countries. 4. The price

McDonalds sells its burgers at different prices according to whether it is a developed or a developing country. It also considers the competitors prices. 5. The promotion

McDonalds adapts its communication strategy according to each country. For example, in China, TV ads are a waste of money and the firm uses newspapers and magazines for its communication. But, even if the mode of communication changes from one country to another, the message has been the same for a long time: Theres nothing quite like McDonalds. Nowadays, it has changed to: Im lovinit. For many years, McDonalds competitors have developed creativity and customer relationship management that have endangered McDonalds. As a consequence, more than thousand restaurants of McDonalds have been closed. In 2002, McDonalds developed new strategies with one objective: to re-connect the brand to the customers.

6.

Focus on children in France

Everywhere in the world, McDonald's symbolizes a restaurant dedicated to the family. McDonald's wants to be the privileged place to foster the relationship between parents and children. A strategy largely exploited by the American multinational is the promotions targeting children: the clown Ronald, the toys, spaces for play, the Happy Meal menu as well as birthday parties are made in order to satisfy children.

2. The speech of the Company

7. The family's restaurant McDonald's proposes to its young customers a menu adapted to their age and their needs: it is composed of a hot sandwich, chips, a drink, cookies and a different gift every week. Today, the families account for 49% of the customers of the restaurant. 8. A Communication directed at children Nowadays, children are the main target of McDonalds, because they can create pressures on their parents as well as in the purchasing decision or in the choice of the menu. This concept does not escape the McDonald's marketing strategy, especially because young people are considered as an easily influenced target. The external communication of McDonald's is mainly directed towards the children even if, for a few years, the brand has tried to diversify and to reach other targets (young people, working population with breakfast etc). The advertisements targeting children take advantage of their emotional and sensitive feelings, for example, the family and happiness or a magic universe. 9. A magic world

In all its restaurants, McDonald's tries to transform the meal into a game for children. Everything is organized to make them think they are in a magic world: food, packing, games areas, advertisements and the decoration. It is important not to forget the birthday, considered as a magical and unforgettable day. The most important element in the happy meal is the gift which changes every week and not the food. Children are very attracted by the colorful packaging, and the gift which supports the play aspect of the meal. Thanks to the contract the firm signed with Disney, children can find toys representing the heroes they have seen in movies. One of the main marketing strategies targeting children is the birthday party. This one is especially adapted to young consumers as well as their parents. Indeed, the birthday is the only moment when the presence of the parents is not necessary, because McDonalds totally takes care of their children.

I. II) McDonalds crises and answers

McDonalds in a hostile environment The Crises
1. The BSE

With the BSE (Bovine Spongiform Encephalopathy; more commonly known as Mad Cow Disease) crisis, the consumption of beef had decreased by 45%, the frequentation of McDonalds had thus decreased to the same percentage. So, McDonalds had to communicate enormously on the control of the origin of its meat in order to reassure its consumers. Indeed, some sick cows were detected in the farms of their suppliers in various countries. The same problem can be seen with the case of contagious flu of the chicken. 2. Obesity

Obesity is becoming a serious problem in the US and also in France. McDonalds is often accused for this health issue. Obesity is a real epidemic; in the US, around 65% people suffer from obesity. Consequently, the US President decided to fight against obesity giving a priority to public health.

Even a film was made on this subject, super size me, in which Morgan Spurlock follows MacDonalds feeding for one month and films the side effects of fast food. As soon as the Super Size Menu was offered to him (in which the portions of chips and drink are huge and cheaper), he obliged himself to accept every time and does not walk more than the average American (that is to say 5000 steps a day). The results were catastrophic: Morgan gets fat and weakens, physically, mentally, and even sexually.

3. The uncommercial opponents Several people, like Jose Bove and Dave Stelle and Hellen Morris, have militated against the junk food distributed by fast food restaurants such as McDonalds. According to them, McDonalds proposes in its chain of restaurants, hamburgers, and chips, in which the particular smell of oil is bound to a cooking style with lower temperature, salads, fragments of chicken coated with breadcrumbs, diverse soft drinks (rich in sugars or sweeteners and caffeine). 4. Jose Bove Jose Bove is known as the defender of the poor small farmers oppressed by the US which takes advantage of the globalization to corrupt the French people. During this campaign, he even instigated the dismantling of a McDonalds restaurant under construction in Millau. For this malpractice, he was imprisoned and condemned to 3 months of detention. 5. Dave Stelle and Hellen Morris In 1994, the multinational charged a big lawsuit in England against two environmental activists, Dave Stelle and Hellen Morris, over the distribution of pamphlets compromising McDonalds. The lawsuits required 294 days of hearings and discussions, in which several specialists in nutrition, environment and vet experts intervened, and the verdict came only in 1997. The two activists were condemned to pay a fine of 300,000 francs to the American firm because they were not able to defend two of the accusations levelled against them. But, on the other hand, the other points were made official. That was a victory for the two activists because it had an impact on the McDonalds reputation.

6. Lawsuits for obesity

Many people sued McDonalds alleging its role in increasing obesity. For example, in 2002, a group of New York teenagers sued McDonald's and accused it of making them obese. The judge rejected the charges as he reasoned that the plaintiffs were well aware that consuming a Big Mac and other super portions of chips daily would increase the risk of obesity. Nevertheless, the judge added a paragraph suggesting a new strategy against McDonald: the plaintiffs would have won if they had based their argument not on the misleading advertising, but on the impossibility to exercise their individual responsibility in full knowledge of the facts. Indeed, the hamburger served by McDonald is not a minced beef product. Products sold by McDonald are altered in radical way, that their unhealthy attributes can only be underestimated by the average consumer, says the judge. So, "Chicken Mc Nuggets is not only fried chicken, it is an overall combination of unknown ingredients that cannot be found in homemade food: a chicken Mc Nugget includes not only chicken but also a list of other components such as sodium and phosphates. So, even if McDonalds does not lose its lawsuits, all these charges, demands and revelations soil its reputation and oblige it to become aware that it has to diversify its menus, for example, by proposing salads and fruits. McDonalds had to change its image because it has been proved that the calorie value of the hamburger (fat meat and sweet bread) and eating frequently in its restaurants can favour obesity. In order to reconnect to its customers, McDonalds had to change its image of junk food. As a result, the company decided to develop some new strategies to respond to these attacks.

2. The Answers
7. Products, services and quality

In France, McDonalds is considered as a restaurant for families, mainly the ones who travel or move a lot. The strength of McDonalds is all that is around the meal. It is possible to organize a birthday party for children and people can eat very quickly. In 2000, the strategy of McDonalds was to develop its sales apart from meals. Thats why they proposed the Mac Morning for people who want to have their breakfast outside. Sometimes, some McDonalds stores stay open for 24 hours to serve meals to people working at night. As sparsely decorated restaurants appear too dismal, McDonalds would like to improve the decoration of its restaurants in order to make them more attractive. McDonalds is committed to the superior quality of its chicken and beef meat. To produce 100% minced beef, it selects pieces of meat that are muscles from the topside, from the shoulder or from the collar. The pieces of chicken are fillets or chicken leg. 80% of the suppliers of meat are French; the others are Dutch and Irish. Some others were taken over by the company for better quality. They are selected and controlled in accordance with very strict specifications to assure the food security with rigorous hygiene rules and sanitary behaviors at each step of the production of the food. Moreover, all animals are controlled by the system of traceability, which allows finding exactly the origin and the history of the meat that composes the

products. Furthermore, no antibiotic is used to activate the growth. As McDonalds was criticized a lot regarding its food with high calorie content, it decided to inform its customers about the calories in each product on the sets of trays and on its website. Nowadays, it offers products with low calorie content, like new mixed salads, fruit salads, breaded fish in happy meals, compotes and yoghurts.

Indeed, it was forced to propose these kinds of products due to the lawsuits. Furthermore, in the US, there are many competitors like Burger King. Today, the leading competitor is Subway, whose marketing strategy is principally based on the comparison of calories between Subway sandwiches and McDonalds sandwiches.

For example, the last American Subways commercial says that 3 chicken Subways contain fewer calories than a Big Mac. And in France, where taste is very important, the Belgian Quick and the American McDonalds are in confrontation in the market of the fast food. Quick is McDonald's unique challenger with 26.5 % of market shares in France. Quick tries to differ and not to look like McDonalds by keeping the European culture and by building up its own gustative identity. Even if McDonalds makes efforts concerning the calories and the information of its consumers, it also has new competitors with the increase in the consumption of kebabs in Europe. Indeed, young people appreciate Greek food for its cheaper price and its cool image when compared with the family image of McDonalds. 8. New promotion

For nearly one year, a new McDonalds advertisement campaign has been making

the rounds. The topic is it's all that I like. The campaign was developed by the British advertising agency Boxer. The slogan has been translated into all languages. By the end of 2004, the 30,000 McDonalds restaurants across the world are supposed to have adopted this new packing. In France, McDonalds has shown an unusual campaign. The chain gives councils information regarding nutrition to parents in order to protect their children from obesity. It recommends them to bring children to McDonalds only once a week. It is an unusual step for this company for which the advertisements are almost entirely targeted at children. In the same way, some surveys showed that children used to eat too quickly and thus they did not finish their meal (and didnt eat the yogurt). Thus, the chain recommends the mothers to make children eat quietly and slowly. It is still a paradox for the king of the fast food. The last ambiguity of this advertisement campaign is that it is addressed to those who often eat in a McDonalds restaurant and it advises them to come only once a week. Is the company ready to decrease its turnover? How will the company compensate this loss of customers? Maybe it is just a new strategy not to be sued again; the company lets one think that it takes care of its consumers health. The concept of the McDonald's family is not real because the representation of the family changes from one advertisement to another; it is never the same family in the advertisements. It is supposed to represent all communities. It evolves like a family joining together during more or less a long time. McDonald's did not choose the characters of a fixed and representative family (i.e. the same father, the same mother and children which one finds in each spot). It shows possible binomials (father and child if possible). In the new campaign, the mother appears in the advertisements of McDonalds which are addressed directly to her. But for a long time, the mother was not present in the advertisements. The mother was considered to be too much protective and she resisted the invasion of the modern food and defended the family cuisine. 9. McDonalds and the Olympic Games In order to strengthen its promotion about health, McDonalds has decided to be the sponsor of the Olympic Games in Athens. The company has already been the sponsor of the Olympic Games, but it has never used strongly this argument in its advertisements. But, in 2004, McDonalds used several Olympic champions to promote its restaurants. According to an interview (found on the McDonalds website) of Jackie Woodward, Vice President, Global Brand Business: The Olympic Games and the ideals they represent are perfectly aligned with our strong commitment to helping people everywhere to live more balanced and active lives. We are delighted that the Olympic athletes and their supporters in the Olympic Village have been enjoying the full range of our menu with more people coming back each day. We hope that our customers across the world will embrace this message about the importance of leading a balanced, active lifestyle. We can notice that McDonalds tries to change its image to convince people that eating McDonalds food is not so bad if it is not excessive. It is noticed in the TV ads with the French athletics champion who runs in the morning and who takes his lunch at McDonalds. This ad

shows clearly the message of McDonalds: McDonalds does not provide only calorific food, and if you do some sports, McDonalds is not bad for health.

Conclusion:
McDonalds has developed its group by spreading a family concept of American food around its restaurants through its menus and its advertising and marketing. McDonalds offers various menus with beef, chicken, fish and pork and also salads, drinks and desserts such as cakes or ice creams. Moreover, McDonalds has the happy meal for children with gifts, often the figurines of new cartoons. Otherwise in its advertisements, it tries to create a kind of intimate climate. At the beginning, the firm wanted to create a restaurant for everybody (standardization), nowadays, the company is developing more services in order to become a restaurant for each person. This strategy of diversification enables McDonalds to become more popular. In fact, people are more interested in their health and therefore in their food. In France, McDonalds does not have a good reputation and must diversify its offers to match with the concerns of the French people. According to Jim Skinner (McDonalds Chief Executive Officer): ''Marketing innovation at McDonald's has attracted a lot of attention this year, both from the media and customers. In fact, advertising awareness of 'i'm lovin' it' in their top ten countries recently reached 86% -- another sign that the company is connecting with customers. The company has broken into new territory in all aspects of marketing this year, and it's only the beginning. It has changed the voice of its advertising, celebrating what its customers love about life, which is the reason why one can notice a dramatic difference in tone and attitude at the Golden Arches.'' Finally, we can affirm that McDonalds company is very efficient in using different marketing strategies that enable it to evolve in its industry.