McDonalds Australia Holdings - Case Study Example

Marketing Report: McDonald’s Australia Holdings Student’s Name Institutional Affiliation Course Name Date of Submission Executive Summary Fast food has become part of Australian food culture. Today, the majority of the Aussies eat fast foods in restaurants. McDonald’s Australia Holdings is one of the fast food restaurants that have experienced tremendous growth since it opened its first door in 1971. The subsidiary of the American McDonalds Corporation currently has about 2,647 branches in Australia. The company has maintained a competitive strength by exploiting its strengths to take advantage of the opportunities available in the market. However, McDonald’s Australia Holdings also has a number of weaknesses and threats that it must address to remain successful. Among the weaknesses is the fact that its products have poor health image, which makes consumers avoid them. Therefore, to enhance its competitiveness, McDonald’s Australia Holdings has to introduce healthier products, such as fruit juices to attract the growing health conscious consumers in Australia. Company Background Fast food industry has experienced rapid growth in Australia. Today, a large percentage of Australians consume fast foods, such as French fries, chicken and burger among others. The increase in the consumption of fast foods has resulted in the growth in the fast food businesses in the country. McDonald’s Australia Holdings is one of the most famous fast food restaurants in Australia. McDonald’s Australia Holdings is a subsidiary McDonalds. The restaurant opened its doors in Australia in 1971 and has since open many other franchises in major cities throughout Australia. McDonald’s Australia Holdings currently has about 2,647 branches in Australia and continues to open more brunches in major towns and cities (IBIS World 2014). McDonald’s Australia Holdings offers a variety of products, including breakfast, dinner, desserts, salads, smoothies, sides, value picks, drinks and favorites. Additionally, the restaurant also offers coffee, sweet snack, baked pastries and snacks. McDonald’s Australia Holdings has about 8,000 employees, making the company rank among the largest employers in Australia (IBIS World 2014). Because of the high demand for fast foods in Australia, McDonald’s Australia Holdings generates huge revenues and profits. According to the Sydney Morning Gerald (2015) report, the restaurant generated about $4 billion in sales revenue. This translated to about $1 billion in profit despite the strong competition that the firm faces from rivals in the fast-food market. SWOT Analysis SWOT Analysis is a useful management tool used to analyze the internal and external environment forces that might impact a company in an industry. SWOT denotes strengths, weakness and opportunities and threats facing a company in an industry. Strengths Strong brand name and reputation Commands large market share Highly innovative Effective marketing strategies Government support First to introduce the concept of fast food Highly trained staff that results in excellent customer service Weaknesses Unhealthy product image Health issues Unbalanced meals Many litigations High rate of employee turnover Environmental issues associated with its production processes Opportunities Faster growth of fast food industry Expansion into more cities and towns Adoption of sustainable production processes and packaging Growth of demand for low cost meals Diverse preferences and taste of customers Customers becoming more health conscious Growth in demands for discounts Threats High competition Health problems associated with junk foods Growing environmental concerns Economic recession Findings According to the SWOT analysis above, it becomes apparent that McDonald’s Australia Holdings has a number of strengths that it can utilize to take advantage of the opportunities it has in the Australian fast food market. Firstly, McDonald’s Australia Holdings has a strong brand name and reputation as its major strength. Throughout Australia, whenever fast food is mentioned, the first restaurant that comes into mind it McDonald’s Australia Holdings because of its parent company McDonald Corporation (Bloomberg Business 2015). As such, McDonald’s Australia Holdings should take advantage of this strength to gain more customers in Australia. Using its brand reputation to gain more customers does not imply that the company should consider introducing more product lines. Instead, the McDonald’s Australia Holdings should consider exploiting its brand name and reputation to market its existing products, such as soft drinks and fast foods. Although McDonald’s Australia Holdings is a strong brand in Australia, the restaurant has not reached all parts of Australia. Therefore, the company should consider taking advantage of its strong brand name and reputation to expand to as many places as possible. Despite the stiff competition that McDonald’s Australia Holdings might face from rival firms, the company stands a huge chance to outcompete its rivals in the new markets because of its strong brand name and reputation (Bloomberg Business 2015). The second most important strength of McDonald’s Australia Holdings is introduction of production (The Sydney Morning Gerald, 2015). Therefore, the restaurant should take advantage of this strength to grow stronger in the industry. In particular, the company should take advantage of this strength to ensure that it diversifies its product portfolio as regular as possible. This implies investing heavily in R&D to develop new products and services and to enhance the operation efficiency. For instance, McDonalds should consider introducing a play place for kids in all its restaurant branches throughout Australia, something that is lacking and giving its rivals a competitive edge over the company ((IBIS World 2014). This will give McDonald’s Australia Holdings customers time to party while leaving their children to play freely in a safe place. Because most customers love this service, its popularization in all the restaurants of McDonald’s Australia Holdings will be more satisfying to customers thereby helping build loyalty, which is critical for business success and competitiveness. The third most important strength of McDonald’s Australia Holdings is customer service. McDonald’s Australia Holdings has highly trained personnel and staff that have always ensured high level of customer satisfaction all the time. McDonald’s Australia Holdings staff is rated highly by customers because of the good behavior and attitude they portray when dealing with customers (The Sydney Morning Gerald, 2015). The restaurant can take advantage of this strength to attract new customers to the business. Nevertheless, customers sometimes complain of waiting for too long in lines to be served because of lack of enough service staff in the restaurants to handle the huge volume of customers that visit the restaurant. Additionally, some employees sometimes prove rude a behavior that sometimes forces some customers to go to rival restaurants. Therefore, to solve the problem and maximize the opportunities, the company should consider exploring its strong financial muscle to hire more employees and increase their salaries to keep them highly motivated to work for long. Recommendations Target Market Market segmentation is a critical activity that companies engage in to ensure that they direct their marketing strategies to the fulfillment of the needs of that particular market segment (Wenderoth M 2009, p. 12). McDonald’s Australia Holdings, however, has different target markets for its products and services. These include kids, adults and people on a hurry for breakfast in the morning. Although all these market segments contribute significantly to the company’s growth, kids have become a huge target for McDonald’s Australia Holdings in the recent past. The company executive reveals that the majority of Australian children love eating fast foods (IBIS World 2014). As such, the company has focused much of its marketing efforts in serving this important market segment that has largely been ignored by its competitors in the industry. Proposed New Product for Kids For many years now, McDonald’s Australia Holdings has been serving kids only with junk foods and soft drinks. However, the junk foods that McDonald’s Australia Holdings has been serving Australian kids have always come under sharp criticism in the recent past. Currently, about 20% of Australian kids are either overweight or obese (NHMRC 2014). Unfortunately, the increase in obesity and related health conditions, such as diabetes, hypertension and heart problems are largely linked to high consumption of fast foods served by McDonald’s Australia Holdings and other restaurants. This implies that, for McDonald’s Australia Holdings to remain relevant in the coming years, it must change its strategies and introduce healthier products for the kids. Therefore, for McDonald’s Australia Holdings to remain competitive, it is highly necessary for the company to introduce the natural fruits as part of its product offerings for the kids. Currently, the Australian government and health professionals are encouraging people to feed their children high quantities of fruits to enable them live a healthy life (NHMRC 2014). In fact, most Australian households are currently spending a significant portion of their budget on buying fruits for their kids to enable them live a healthy life. As such, McDonald’s Australia Holdings should take advantage of this market trend by introducing natural fresh fruit juice as part of its product offerings for the kids. Doing so will see the restaurant experience a rise in the number of customers visiting the restaurant, as well as give it a competitive edge over rivals in the industry. Because price is a critical element of the marketing mix that customers consider when making purchasing decision, the restaurant must ensure that the prices charged for fruit juices is affordable. Charging affordable prices will give McDonald’s Australia Holdings a competitive edge as it will draw many kids and their parents to the restaurant instead of the competitors (Wenderoth M 2009, p. 19). Place is another critical marketing mix that McDonald’s Australia Holdings must incorporate when developing its marketing decisions for the new products for kids (Lamb, Hair and McDaniel 2011, p. 44). In this respect, it will be highly appropriate for McDonald’s Australia Holdings to ensure that kids do not have to travel long distances to get the fruit juices. Accordingly, the restaurant will have to open more brunches in major towns and cities throughout the country to enable customers to get the products easily. Additionally, the restaurant should introduce a concept where customers who make their orders can get the fruit juice distributed to their doorsteps as this will enhance customer service. Promotion is another important element of the marketing mix that McDonald’s Australia Holdings must engage in when introducing the fruit juices to the market. For this reason, the company will have to engage in aggressive promotional campaigns, including advertising the products using various communication tools, such TV, newspapers, billboards, social media, direct sales and road shows to create awareness of the new product (Wenderoth M 2009, p. 21). The new product suits the SWOT analysis in the sense that McDonald’s Australia Holdings major weakness is the fact that its product food products are associated with poor health while most Australian consumers are increasingly becoming health conscious. Therefore, introducing fresh fruits juice as part of its product offering will help minimize the weaknesses associated with its junk foods that are associated with poor health, such as rising cases of obesity. Additionally, introducing fresh fruit juices will help McDonald’s Australia Holdings explore the growing untapped market of health conscious consumers. References Bloomberg Business 2015, Company overview of McDonald's Australia Limited, viewed 5 August 2015 http://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapid=11312749 IBIS World 2014, McDonald's Australia Holdings Limited - Profile company report Australia, viewed 5 August 2015 http://www.ibisworld.com.au/enterprisefull/default.aspx?entid=202 Lamb, C., Hair, J., & McDaniel, C 2011, Essentials of marketing. Cengage Learning, London. NHMRC 2014, Obesity and overweight, viewed 5 August 2015 https://www.nhmrc.gov.au/health-topics/obesity-and-overweight The Sydney Morning Gerald 2015, McDonald's sales reach $4b in Australia, 18 March, viewed 5 August 2015 http://www.smh.com.au/business/retail/mcdonalds-sales-reach-4b-in-australia-20150313-143gru.html Wenderoth, M 2009, Particularities in the marketing mix for service operations. GRIN Verlag, Berlin, Germany. Read More