Strategic Management of McDonald's Company - Research Paper Example

Executive Summary Background McDonalds aims to counter the threat posed by full service competitors such as KFC and Burger King. It seeks an integrated marketing communications campaign to reposition itself in the market. It is aimed at determining the target populations attitudes and perceptions towards full service restaurants. The research design was done through an exploratory research that did a pilot survey among adults aged 18 and 49 through convenience sampling. Results A majority of the respondents eat at McDonalds at least once a month and in which more than 50 % were women. 43% also said they eat at a full service restaurant at least once a week. Food quality, cleanliness, employee friendliness and price were deemed very important of restaurant attributes. Majority of the audience listened to radio and TV especially during Prime time. They also made use of the internet and magazines which offer a good avenue for advertising. Conclusions and Recommendations Most people prefer to have takeouts rather than full service restaurants. Most of the respondents asserted that they eat takeout once or twice a week as compared to once a month for full service restaurant. Persons with incomes higher than $45000 went to full service restaurant more than three times a week and took lesser takeouts. Restaurant qualities of food quality, price, employee friendliness and cleanliness were deemed fairly important. Media habits showed that Prime Time were the best times for advertising as most people listened or watched TV at those times. It was recommended that a clear definition of objectives would lead to better research outcomes. The survey would also look at determining customer attitudes in relation to the competition. Marketing ought to take advantage of the internet, TV and radio in the different formats and also target magazines with wide coverage and large audiences. Introduction and Problem Definition McDonalds is the leading fast food outlet in the US and is dominant in both the delivery and dining business in most states. The company had annual turnover of $ 6 billion annually which is a big chunk of the fast food segment which had a turnover of $5 billion of which a quarter is controlled by the chain (Baker & Mouncey, 2013 p. 415-433). This is more than double the market share of KFC and Burger King. The rest of the market share is held by local and other smaller chains such as Jollibee. In recent times the chain has faced increasing competition from other chains such as KFC, Burger King and Jollibee. These are full service restaurant as opposed to the McDonald model which emphasizes quick service with minimal contact. In order to keep up with the competition there is a need for McDonald’s to change its policies or modify them (Yin, 2002). There is a need to change the design and décor of McDonald’s outlets in order to be more appealing to a wider range of consumers. These changes will offer new ways of offering the services and products to the consumer through full services. An important aspect to be taken into consideration is the need for conducting an advertising campaign and pilot survey (Sharke, 2004 46-59). The pilot survey is aimed at a determination of the target market towards full service restaurants as opposed to the McDonalds bare bones model. The results of this study will be used in the making of a national survey and will also be useful in enabling management make strategic decisions for McDonalds’s operations. Objectives Several aspects of the business operating environment were taken into consideration in determining the limits of the study. The following research objectives were determined to be critical in this research. Determine how frequently the target audience eats takeout as opposed to eating in a full service restaurant. Determination of the aspects of service such as selection or other variables determines choice of restaurant by target audience. Determine how frequently the audience targeted eats at McDonalds. Determination of the media habits of the target audience Methodology An exploratory research which made use of a pilot survey was the means which was opted for as research design. We opted to make use of a structured questionnaire survey since it offered cheaper costs, convenience, and efficiency in the collection of varied and huge amounts of information across the targeted audience base (Demirdjian, 2013 218-223). This information was varied in terms of consumers’ media preferences, interests and restaurant dining behavior. However we felt it was necessary to include different close ended questions which some of the research objectives called for. The design sample was appropriate for the clientele targeted by McDonalds. Targeted respondents were grownups aged between 16 and 55. Persons from the large metropolises of New York and Los Angeles provided a database of potential clients for the study. Respondents were selected according to the measures of convenience sampling (Kim, 2013). The questionnaires were given out at Malls in these large cities while in the rural and smaller towns they were distributed at popular local hangout joints. An advertising and marketing company will also be contracted to distribute the questionnaires to persons that fit the profile. Distributors of the questionnaire were for the most part the advertising company. Questionnaires were filled out at the respondents’ desire. 120 person in total were surveyed of which all persons returned the questionnaire/Verification of the questions in the questionnaire was done to ensure that the correct question was given the appropriate answer. The survey did not perform a follow up to confirm that the respondents had completed the questionnaire. Analysis of the data was conducted through statistical methods of SPSS. Through SPSS the results were analyzed tabulated then verified to reflect the attitudes of the different respondents (McCullough, 2008 p.29). Limitations of the Study Due to conditions in the market and the need to make fast strategic management decisions, the survey was curtailed by several limitations. Budget and time constraints were among one of the most pertinent of issues that the survey had to contend with. Respondents in the survey were selected on the basis of convenience sampling through being conducted on mall goers (Kotler, 2011). Projecting the results of the survey to larger population of the target profile is therefore not an accurate representation. Information on some variables such as media habits and income may be inaccurate given the criteria of respondent selection and the sample size. The survey would have been more accurate had it been conducted across the country and on a wider range of persons that frequent restaurants (Lee, 2011). Even as the survey verified and ensured each question was accurately and completely answered lack of contact to confirm whether the respondents filled out the survey questionnaire is bad practice. This makes it plausible that some information could be falsified by the respondents or the distributors which would skew the results (Van Hamersveld, 2007). Initial evaluation of the data showed that there needed to be comprehensive analysis of the whole data in order to come to conclusions. Some statistics needed to be compiled and compared with other responses in order to come up with appropriate conclusions (John, 2009). Since some categories were not compiled in the appropriate manner and the great differences and variation in the questions, it was felt that the data may not be accurate. Analysis of the survey established that the statistical relevance or significance was not of much use. The research problem was found to be too broad in its statement (Jenster &Soilen, 2007). A more clear definition of the problem statement would have resulted in the design of questions that were more specific which would have resulted in results that were more meaningful (McDonalds 2007). Poor statement of the research problem also did result in objectives that were too broad resulting in some proposals of the study not being achieved. The questions in the survey were so varied that significant evaluations of the issues was not possible (Malhotra, 2002). There was a need to structure questions on how the target audience perceived McDonalds and their competition. It was critical to determine the relative position of McDonald with regard to the competition in the minds of consumers (Armstrong et al, 2003). There ought to have been questions regarding why consumers decide to not go or go to McDonalds. A critical aspect that was overlooked was the definition of why persons opt to eat out (John, 2009). The time of day which was preferred for eating out was a question which needed to be asked. The menu items and what consumers would like to be dropped or added to a menu were critical questions which were not asked. Questions of media habit seemed superfluous since survey results are not as accurate as the secondary data collected (Bealle, 2010). Lastly the incorporation of more interval, ordinal and ratio scaled data in the research design would have enhanced the data analysis process. Research Findings Consumer Behavior Carry Out Two thirds of the respondents asserted that they take carryout once every week while a third at least once every month. Men carried out more food as compared to women with those taking 3 carry outs per week being 60% male. 31% of people taking carry out earned less than $ 15000 which is would make it unrealistic to eat out so often. Eating Out at a Full Service Restaurant 42% of respondents eat at a full service restaurant once week and 58% at least once a month. 62% of males compared with 38% of females asserted that they eat in a full service restaurant at least once in a month. The data showed that people that earned more than $50,000 annually were 62% more likely to eat at full service restaurants. Eating Fast Food 69% of the respondents asserted that they eat fast food at least once a month as compared to 31% for once a week. Males ate more fast food at 17% once a week to females at 14% once a week. 50% of Persons eating fast food earned $45000 or more as oppose to those that earned less than $25000 at 23%. Eating at McDonalds 80% of respondents asserted that they eat at McDonalds at least once a month compared with 20% that never eat at the chain. A greater majority of persons eating at McDonalds at 56% were women as compared 84% of men that had never eaten at McDonalds. Restaurant Attributes Food Quality and Employee Friendliness 83% of respondents asserted that food quality was an important variable in opting for a restaurant. 70% of respondents found cleanliness to be very important while 51% said employee friendliness was very important as compared to 32% that deemed it fairly important. Males at 55% deemed employee friendliness as very important. Price and Speed of Service 47% of respondents asserted that price is very important with 34% asserting it was fairly important. Persons that made less than $50000 a year deemed price to be an important determinant of restaurant attributes. 58% of persons asserted that the speed of service was fairly important as compared to 24% that deemed it very important. Atmosphere and Menu 42% of the respondents asserted that the atmosphere was fairly important as compared to 30 % who deemed it very important. 29% of Persons that deemed the atmosphere to be very important made $15000 or less as compared to 37% who made more than $50,000 that deemed atmosphere fairly important. 36% deemed fast food an important part of the menu as compared to 39% that were neutral. Favorite Restaurant Attributes Asked different questions regarding their favorite restaurant, the respondents were expected to say what they liked about the restaurant. The aforementioned questions regarding quality of food, price, service, and atmosphere were the most notable items. The frequency of these was similar to the ones found in the aforementioned questions. Media Habits Internet 80% of respondents asserted that they use the internet with 90% of persons between 18 and 49 asserting that they used the internet as a media. The data showed that internet usage dropped as the income rose. This may be attributed to the fact that students have access to free internet as opposed to older working class persons. Radio Two thirds of the respondents asserted that they listen to the radio between 6am and 3pm. 30% of females listened mainly to country music while males generally listened to rock music. While the different age groups did not show differences in listenership during the day, the format of radio was different among the age groups. Incomes for the most part had no relationship to radio listenership. Magazines 34% of the respondents answered that they did not read any particular magazine regularly. Secondary research in this area would offer better information regarding this. Less than 20% read theme related magazines for all age groups. In the making of the decision on the type of media to be employed it would be important to consult these sources. Television 77% of the respondents watched TV during prime time as opposed to 22% who said they did not watch TV during the weekend. Every part of the day tended to have women viewers even though men watched more sports and women situation comedies and dramas. People aged 37 and above watched news more as compared to the younger age groups in which 65% of persons under 30 watched situational comedies. Demographics Age 29% of those surveyed were between the ages of 19-25. A quarter were between 38 and 43, a fifth were between 24 and 29, 15% between 30 and 35, and a tenth between 42 and 48. Occupation A quarter of the respondents said their occupation was professional or managerial, a quarter were students, 15% were semi professional and salaried, a tenth were self employed, 14% skilled workmen, 5% were homemakers and 2% were unskilled laborers. Education 36% of the respondents asserted that they had some college education when asked to state their education status. A fifth of the respondents had graduated from college, 23% were high school graduates, and 2% did not finish high school. Gender The survey offered questionnaires to females 53% and 47% males. Income Questions on annual income established that a quarter of households had incomes of less than $20000. 30% answered that they had incomes between $20000 and $30000, 15% had incomes of, between $30000 and $45000, a tenth between $25000 and $35000, ten percent above $75000, 8% between $56000 and $65000, 5% between $65000 and $75000, 5% between $44000 and $50000, while 3% of respondents refused to answer the question. Conclusions Consumer Behavior It was established that for the most part respondents prefer take out to full service restaurants offered by the competition. A majority of the respondents asserted that they eat take out once or twice a week as opposed to eating out in a full service restaurant once in a month. Most of the respondents eat take out once a week with men being the majority of the persons preferring takeout. Women prefer full restaurant services at least once in week as opposed to men who frequent full service restaurants at least once a month. Persons with incomes over $45000 will be more likely to frequent full service restaurants at least 3 times in a week. A majority of the respondents ate fast food once every month with men eating more and people between the ages of 18 and 25 also frequent consumers of fast food. Persons earning $25000 or more were also likely to consume more fast food. Most of the respondents frequent McDonalds at least once a month with women being more likely to eat at McDonalds. Restaurant Qualities In their response to a choice for a restaurant the respondents asserted that what mattered most were food quality, price, employee friendliness and cleanliness in that order. These were consistent with the answers given with regard to favorite resistant attributes. For the most part the respondents deemed the most important attributes to0 be food quality, service and atmosphere respectively. Of fair importance were speed of service, atmosphere and variety of the menu. Media Habits It has been established that the target population of McDonalds listens to radio between 7am and 4pm. Radio formats with the most appeal are Country, Rock and Golden Oldies. For the most part males will listen to Rock while the females prefer Country music. A majority of the respondents watched TV during Prime time preferring sitcoms and news. Women preferred sitcoms and drama while the men were more interested in sports and news. The target audience read magazines but only a tiny fraction of them, Almost 50% of the audience were regular internet users. Recommendations Creating a National Survey Before the creation of a national survey it would be important to clearly define the research objectives and problems. The survey that will be created will have to omit questions dealing with general restaurant behavior questions. These ought to be replaced with specific questions which are specific to consumer experience at McDonalds and its competitors. The survey ought to be a definition of McDonalds according to the perception of the consumer. Good questions will deal with why consumers opt to eat at McDonalds or why not. It ought to determine questions on why people opt to eat out or take carry outs. There ought to be more specific information on the times when people will prefer eating out. The survey ought to ask questions regarding what the consumer would like modified or added to the menu. Questions on media habit are not critical since secondary research would be more effective in establishing media habits of American audiences. Lastly it would be critical to incorporate interval, ordinal, and ratio scaled data into the design to make data analysis easier. Marketing McDonalds Advertising ought to reference improvements in the atmosphere of McDonalds’ outlets given the importance consumers attach to this. Advertising ought to place emphasis on employee friendliness; price and the quality of food served which are deemed most important by the target population. The target population will be reached through Prime time adverts which will reach the largest number of people. McDonalds will benefit from advertising during drive time in the rock and rock formats. 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