Mc Donald’s Ansoff Matrix

AIN ATIYA AZMIIISM A LEVELS 2017

Established by brothers Richard and Maurice McDonald in 1940 in California. In 1948, the brothers pioneered the “Speedie Service System” which is now widely used as the principle of modern fast-food restaurants. the Speedie Service System uses lots of

unskilled workers, each of whom did one small, specific step

in the food-preparation process.

HISTORY

THEN VS NOW

McDonald’s menu in the 1940s

McDonald’s menu in 2015

McDonald’s outlet, then

McDonald’s outlet, now

Ronald McDonald’s, then

NOW

Selling existing products into existing markets to: -increase market share -ensure dominance in growing markets -drive out competitors in mature markets

McDonald’s strategies: -Happy Meal -Drive Through -Delivery Services -Deals/ Clever Pricing

MARKET PENETRATION

Was founded back in 1977 in St.Louis,Missouri by advertising manager Dick Brams This meal chain is mainly targeted

towards children who undeniably love toys According to the Civil Eats blog ,McDonald’s targeting kids is a deliberate strategy to revive its flagging sales. The culinary options have basically remained the same (Chicken McNuggets were added in 1983) but the toys have changed nearly every week In 1987,the first Disney Happy Meal debuted which 80% of Disney characters have made their appearances and it became a total game changer for McDonalds in piling up their profitability

Happy Meal

Until these days, a great number of other toys and characters also found their way into the Happy Meal box e.g Transformers(highly prized among collectors), Hello Kitty , Legos and etc.

According to the data research firm Sense360, there are 22 million visits per day at McDonalds in the US and 3.2 million of them will order a ‘Happy Meal’.

In other words 14.6% of customers ordered Happy Meals and according to Culver City, McDonalds generates about $10 million dollar from ‘Happy Meal’ sales alone.

This proof that ‘Happy Meal’ have become a huge success for the company in increasing the total company’s revenue each year

Drive Thru In 1975,McDonalds opened its first drive-thru window in

Sierra Vista, Arizona, following Wendy’s lead.

This service gave people a fast, convenient way to procure a quick meal. The company’s goal was to provide service in 50 seconds or less.

This Drive-thru sales eventually accounted for more than half of McDonalds system wide profits

The Drive-thru portion of a fast food restaurants business model contributes greatly to revenue stream.

An article on Smallbusiness.chron.com quotes The NPD Group’s(an independent research firm)claims that customers pulled up to drive-thru windows 12.4 billion times in 2011 and 2012

A report from an investment website claims that about 50 to 60 percent of a fast food restaurant’s sales come through the drive-thru windows

To amp up their sales, recently McDonald’s had launched its “one minute guarantee” for lunchtime orders for people who order their food through the drive-thru windows

This strongly proof that McDonald’s drive-thru strategy will not fade as it contributes about a half of total profits that the company made each single year.

McDelivery McDelivery is a McDonald’s service that

delivers food straight to the customer’s door. It was introduce back in United States

beginning in 1993 and is available in many Asian, Middle Eastern and Latin American countries using motorcycle couriers.

In some countries, delivery is available 24 hours a day, and in at least one location, the service is free with minimum order

Although revenue collected from this service is not quite huge like profits gain from “Happy Meal” and “Drive-thru” services, it still plays a big role in the company in making profits each single year.

Selling current products in new, unexplored markets by:

-identifying markets in new geographical locations

-utilizing new distribution and retail channels -reducing product pricing to cater new

market segments. It is risky as it introduces the product(s) into

previously non-existing markets and segments

Market Development

Total worldwide outlets in 2015

Firstly, McDonald’s opens up its franchise opportunities for more outlets across the world. This business model allows its franchisee-members, management and shareholders to share the risks and rewards from the discovery and exploitation of new business opportunities.

Second, it also adapts and innovates, coming up with fresh products and services to address the needs of a diverse consumer market—as shaped by demographic, economic and local factors around the world.

It pursues a glocalisation strategy with localised menu delivered with precision quality at a price that works.

Therefore, it is affordable and suit locals’ tastes while also giving the chance for foreign travellers to experience local cuisine at a fine brand restaurant.

E.g. McAloo Tikki in India and McArabia in Middle East

Involves the process of: identifying changing consumer needs, creation of new products through R&D and launching of new and unique trends.

E.g. -McAloo Tikki -McArabia Chicken -Sundaes -Apple Pie

Product Development

In India, McDonald’s went vegetarian by introducing the McAloo Tikki, which is a potato and peas patty with special Indian spices.

McDonald’s also took off meat and pork off its menu in India.

Due to the localised menu that is delivered with precision quality at a price that works, McDonald’s had secured over 350 outlets in India.

Mc Aloo Tikki (India)

McDonald’s restaurants in the Middle East introduced The McArabia, instead of a using a burger bun,it is made on a flatbread and is seasoned with cumin, rather than the normal seasonings that go into standard McDonald’s fare.

Because of this adaptation, McDonald’s began to see a great boost in sales. The McArabia proved to be a great success and is one of their most popular sandwiches alongside their famous Big Mac.

McArabia (Middle East)

McDonald’s also introduced variety of desserts and sweet treats including donuts, apple pie, milkshakes and the popular range of Sundaes and McFlurries.

Recently in 2017, it launched the new Milo McFlurry which became an instant hit.

DESSERTS & SWEET TREATS

Introducing new products into new markets by:

-expanding the skills and knowledge that the business already has acquired through experience

McDonald’s strategies: -Mc Café -The Golden Arch Hotel in Switzerland

Diversification

Was conceptualized and launched in Melbourne, Australia in 1993 by McDonald’s Licensee Ann Brown. The chain reflects a consumer trend towards espresso coffees. The main purpose of “McCafe” is to compete with other premium

coffee purveyors such as Starbucks and Second Cup but with a significant low prices.

Canada represents the 2nd largest market for the brand with its presence in 910 McDonald’s locations across the country contributing about 85% of the chain’s traditional standalone restaurants

As propose by Douglas Fisher, president of Toronto food service, franchise and hospitality consultancy FHG INTENATIONAL “the concept could draw customers to McDonald’s during highly competitive breakfast sales period. He also added that it can-up sell customers on premium coffee beverages without incurring significant expenses.

Reports from research firm indicated that McCafe outlets generated 15% more revenue than a regular McDonald’s and by 2003, were the largest coffee shop brand in Australia and New Zealand

Mc Cafe

Golden Arch Hotels

Presented and officially opened in November 9, 2000, aiming to offer world class customer service and an unbeatable price-value preposition.

Jack Greenman , chairman and CEO of the McDonald’s Corporation at that time said that this kind of innovation is an integral part of their vision for McDonald’s in the 21st century.

The hotels have 211 rooms respectively and in the range of a four star hotels, targeted at business travelers during the week and at families and young adults on the weekends.

Among various attractions of the hotel is a special 4000 dollar bed that can be turned from a couch into a top of the line comfort bed and also provide high speed internet access, a state of the art online booking system and etc.

In spite of their big dream and hope towards this hotel, it turned out that this idea was a complete failure as the hotel cannot compete with other hotel chain such as Shangri-la and Four Seasons hotel.

By publicizing the venture mainly inside Switzerland and using the name Golden Arch rather than McDonald’s the company avoided the damage to the corporate brand. Moreover, the real estate investment did not result in a significant loss.

The two hotels are now managed by Rezidor SAS Hospitality.While P&L statement was never made public, the estimated operational losses were significant to the McDonald’s portfolio.

The decision to exit the hotel business after less than three years represents a further limitation of the company’s risk

McDonald’s continue to elevate the customer experience by remaining focused on the company’s key global success factors of branded affordability, menu variety and beverage choice, convenient and ongoing restaurant investments which lead to a sustainable business practice

Conclusion