Thursday, July 18, 2019
McDonaldââ¬â¢s Current Market Strategies Essay
McDonaldââ¬â¢s stands as the worldââ¬â¢s largest hamburger chain with over 30,000 stores in 120 countries. Yet as strong as it stands in the hamburger industry, it is still vulnerable to price competition and the current federal unemployment rate. In order to try to overcome a low profit margin, McDonaldââ¬â¢s is presently pursuing new strategies to help increase its market share in other industries. The primary objectives being targeted includes, growth in sales, increase in profitability and market share. Current Strategies Being Pursued According to CEO, Jim Skinner, McDonaldââ¬â¢s ââ¬Å"Plan to Winâ⬠strategy includes, ââ¬Å"Giving our customers a unique balance of food and beverage choices is driving performance in every area of the world.â⬠Skinner also stated, ââ¬Å"Weââ¬â¢re offering new menu items and classic favorites, including premium and value selections, all for our customers to enjoy in our convenient, contemporary restaurants. We intend to continue our momentum by further enhancing the McDonaldââ¬â¢s experience and giving customers even more reasons to visitâ⬠(McDonaldââ¬â¢ Corp, 2010). They are executing product development strategies by expanding the famous Dollar Menu. Due to constant price competition McDonaldââ¬â¢s is trying to increase sales by attracting more customers into their stores by promoting products in the economical Dollar Menu. After evaluating McDonaldââ¬â¢s current strategies, one of the leading strategies McDonaldââ¬â¢s is trying to achieve is market penetration by focusing efforts on increasing their presence in the coffee industry. Due to recent closures of Starbuck stores and the current high unemployment level, fewer consumers are able to pay a high price for a cup of coffee. This has given McDonaldââ¬â¢s an opportunity to enter the coffee industry, and positioning themselves as the low price option by offering free McCafà ¨ mochas every Monday from 7 am to 7 pm to every customer. In addition, by offering an assortment of lower priced coffee drinks McDonaldââ¬â¢s is beginning to attract new customers. According to Michael Bauer from SFGate, ââ¬Å"about 48% of Starbucks customers visit McDonaldââ¬â¢s at least once a week.â⬠In response to a decline in demand for Starbucks products, they lowered their prices, yet McDonaldââ¬â¢s coffee drinks remain 25%-40% cheaper. Coupled with low prices, increasing marketing efforts within the coffee industry has allowed McDonaldââ¬â¢s market share to increase by 5.4%. The use of franchising has always been a central strategy to McDonaldââ¬â¢s ability for rapid expansion. McDonaldââ¬â¢s involvement in forward integration through the use of proceeds from the sale of company owned stores helping finance franchisees and buy back company stock, while paying higher dividends and creating other investments for benefit shareholders (David, 2011, 2009, 2007) clearly implies McDonaldââ¬â¢s intention to focus on franchising and not company owned stores. Through strategies such as ââ¬Å"Plan to Winâ⬠, McDonaldââ¬â¢s has established themselves as a very effective franchise option. Due to the majority of their stores being franchised, McDonaldââ¬â¢s Corporation can continue to rely on constant production from franchisees. Conclusion As previously discussed, the strategies McDonaldââ¬â¢s is currently pursuing include, but not limited to, market penetration, forward integration, and product development. Each of these strategies are cruicial to McDonaldââ¬â¢s success. ââ¬Å"McDonaldââ¬â¢s customer focus, menu innovation and the ongoing modernization of our restaurants continue to drive our business momentum,â⬠said Chief Executive Officer Jim Skinner. ââ¬Å"However, there are additional strategies McDonaldââ¬â¢s will consider pursuing to ensure economical market advantage and customer satisfaction . References Baertlin L., Wohl, J. McDonaldââ¬â¢s October same-store sales up, U.S. slips. (2009, November 09). Reuters. Retrieved November 8, 2010 from http://www.reuters.com/article/idUSTRE5A822F20091109 David, F. R. (2011). Strategic Management: Concepts and Cases. Upper Saddle River: Pearson Education. McDonaldââ¬â¢s Corp. (2010, September 09). Clear Station. Retrieved November 8, 2010, from http://clearstation.etrade.com/cgibin/bbs?post_id=9490105&Refer=http://clearstation.etrade.com/doc/newcoming.html McDonaldââ¬â¢s Corp. (2010, October 10). Clear Station. Retrieved November 8, 2010, from http://clearstation.etrade.com/cgi-bin/bbs?post_id=9530212&Refer=http://clearstation.etrade.com/doc/newcoming.html Shepherd, L. Starbucksââ¬â¢ rivals brew up a coffee war. (2007, March 26). MSN Money. Retrieved November 8, 2010 from http://articles.moneycentral.msn.com/Investing/Extra/DunkinAndMcDonaldsTakeOnStarbucks.aspx
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