I bet, even if blurred, you cannot mistake the golden arches of McDonald’s. I asked my cousin what her childhood memory of McDonald’s is? It is getting pictured beside the clown, she said. For me, it was getting both toys and food at one place.
As an adult, I remember going to McDonald’s and sitting for hours with friends or savouring the McCafé and Jane Austen, with no interruption. But do you know if I had lived back in 1952, the brothers – Richard and Maurice McDonald would have done everything to shoo me in minutes from the arena?
The revolutionary idea of a fast-food chain was first introduced and implemented at McDonald’s. The founding brothers knew that they had to do something different and productive, so they did – a burger in 30 seconds from 20 minutes!
Now, all this was thought and done back in the 1950s. But how come you, I, our previous and next-generation, are still so familiar with the magic of McDonald’s?
How, after 70 years and running, McDonald’s remains our happy meal choice? The answer is in the magical marketing strategy and marketing mix (4Ps) of McDonald’s.
Fun Fact 1 – The golden arches of McDonald’s are said to be the most recognizable symbol in the world and have played a crucial role in its marketing strategy.
Marketing Mix & Strategy of McDonald’s
1st P: Product – Continuous Innovation
“Change is the only constant” could not be used more aptly than in McDonald’s product and brand innovation over the years. Product innovation is important in McDonald’s marketing strategy as it has helped the brand remain competitive by swearing to QSCV – quality, service, cleanliness, and value. The fastest-growing food chain has something for all. It has remained consistent with positioning itself as a happy place to be with friends and family.
Adapting to customer demands – so that they keep saying I am Lovin It!
- It introduced happy meals with a much-beloved icon Ronald McDonald.
- In 1993 it started McCafé to give a throat competition to Starbucks and other premium coffee brands.
- In the early 2000s, McDonald’s realized that people are getting more health cautious. So, it started adding more salads and chicken items to its menu. Even now, you can check the calorie count for each item in its mobile app.
- In 2006, McDonald’s experienced a huge success for its Snack Wraps, which was brought in to cater for its calorie counting and fast-paced drive-thru customers.
- It started to add more seasoned and limited items, such as Christmas-themed McFlurry, Shamrock, etc.
- McDonald’s started its all-day breakfast to capture more morning business.
- Cage-free egg goal – McDonald’s has committed to using 100% cage-free eggs by the end of 2025
- Partnering with third-party suppliers to have a greater reach. You can order McDonald’s from its mobile app; Uber Eats, Zomato, Swiggy, you name it, McDonald’s has it.
You will find more infographics at Statista
Fun Fact 2 – McDonald’s has a full-fledged training program at Hamburger University, Illinois, with majors in Hamburgerology and a minor in French fries.
2nd P: Place
McDonald’s operates in more than 100 countries with 38,000 (and counting) outlets. If I search McDonald’s near me, I will find at least 5 outlets within 3 km. Its uniqueness is – It is the same and different at the same time.
You will find a few similar items across the globe on the menu and a few locally adapted in any part of the world. So, even if you are craving for a portion of familiar home-like tasting food, you have McDonald’s for it, or if you want to taste something exotic, you have McDonald’s for it.
Not just that, do you know that if you go to Canada, you will find lobster sandwiches on the menu, and if you have cravings for Mc Aloo Tikki, India is the only place in the world to grab a bite of it! Similarly, in Germany, you can have a beer with your food, and in Japan, you can have Green Tea ice cream (now how cool is that!)
Understanding the cultural diversity, limitations, and adaptiveness has helped McDonald’s operate these many outlets globally.
You will find a McDonald’s in the hotspot of your city as well as in the quiet, peaceful arena.
Also, McDonald’s hires local employees. That’s the reason you and I feel at ease in a nearby McDonald’s.
Fun Fact 3- Roswell in New Mexico is believed to be a crash site of a UFO. To pay homage to the parable, the McDonald’s outlet built in the area is sort of a UFO. It is the only location where Ronald McDonald wears a spacesuit.
You will find more infographics at Statista
3rd P: McDonald’s Promotion Strategy
McDonald’s has stayed in the market for more than 70 years now; it has used different tactics and promotion strategies throughout the years to make a lasting impact on its customers.
Catchy slogans and messages: It’s the present slogan – “I’m loving it” is so influential that it is a part of the vocabulary of North Americans. Its earlier slogans were – “Look for the Golden Arches,” “Do you believe in Magic,” and “Did somebody say McDonald’s?” are among its 23 other famous slogans used in the US from 1960 to till now.
Creating memorable icons: Its Golden Arches and the iconic clown of Ronald McDonald, sitting on the bench outside McDonald’s, are a few icons that we remember vividly.
Fun Fact 4 – After Santa Claus, the most recognizable fictional character is Ronald McDonald among U.S. School Children.
Branding and Co-Branding: To boost its brand position in the market, McDonald’s has partnered with several leading brands such as Coca-Cola, TY Barnie Babies, Barbie, Cadbury. Hot Wheels and many more.
Not just that, it has a strong partnership with sports too; it has NBA-themed cups, toys, and even a burger named after Michael Jordan called McJordan. It has also partnered with Bharat Petroleum in India to have its outlets at gas stations.
Fact 5 – McDonald’s has been involved with the Olympic Movement since 1976, ending its 41 years partnership in 2017. Do you know that once McDonald’s had “airlifted” burgers to US Olympic athletes in French Alpine city as they had become “so homesick for American food”
Celebrity Collaboration: This has been an important aspect of the marketing strategy of McDonald’s. McDonald’s first celebrity collaboration was back in 1992 with Michael Jordan, in which it launched “McJordan,” undoubtedly was a huge success.
In September 2020, the burger chain collaborated with Travis Scott, and McDonald’s launched a limited offer meal and some Cactus Jack merchandise. The food was a hot success and it’s safe to assume that the merchandise was similarly well-received.
It doesn’t end here, recently McDonald’s partnered with the BTS, and the ARMY of this widely famous band went gaga over it. In addition to the food, the themed merchandise included everything from clothes to laptop slips to keychains!
Celebrity collaborations have made a roaring impact in driving restaurant traffic but 2020 had been a challenging year for McDonald’s as well. The company generated revenues of $ 19.2 bn for FY 2020, a decrease of 10.1% YoY.
As per McDonald’s annual report: the Company was well-positioned to effectively navigate such challenging circumstances because of our operating model, our focus on running great restaurants, and our many competitive strengths, including our formidable, Drive-Thru presence. We also were well positioned due to the significant investments we’ve made in recent years to develop our digital and delivery capabilities, which proved to be a boon throughout the pandemic.
And as I write this, McDonald’s has announced its next celebrity collaboration with hip hop artist Saweetie.
Fun Fact 6- The largest distributor of toys globally is not Hasbro and Mattel but McDonald’s. Every year, it distributes 1.5 billion toys worldwide.
4th P: McDonald’s Pricing Strategy
Pricing is an important aspect of McDonald’s marketing strategy & mix. McDonald’s follows a mix of a couple of pricing strategies: low-cost pricing strategy and bunding pricing strategy. The basic idea is to “think globally and act locally”. Let’s understand each pricing strategy concept in detail and how McDonald’s has excelled in those strategies.
Lost Cost pricing strategy: In this pricing strategy, a company offers a low price to stimulate demand and capture additional market share. This strategy is particularly useful when the product does not have a competitive advantage and economies of scale can benefit the organization in terms of increased profitability.
McDonald’s understands this pricing strategy very well and has kept the pricing usually low for it to sell in bulk. Economies of scale also result in a lower cost of purchase for McDonald’s and bulk buying results in steep discounts from the suppliers. McDonald’s is the world’s largest purchaser of beef, pork, potatoes, lettuce, and tomatoes and the second-largest purchaser of chicken.
As a matter of fact, McDonald’s operating margin is ~37% when the average profit margin for a fast food restaurant (QSR) is around 6-9%. In short, a low-cost pricing strategy has worked exceptionally well for McDonald’s.
Another way in which McDonald’s has been able to achieve cost leadership is through its reduced labor cost. McDonald’s chooses workers on low pay who can be trained rather than skilled chefs with higher pays. On top of it, it has started self-serving kiosks that again reduce labor costs.
Bundle pricing strategy: When two or more products are combined and are sold as a single comprehensive package for a reduced price than the individual prices combined then it’s called a bundle pricing strategy. Although items are sold at a discount, as more items are sold and higher profitability is achieved. In this case, communicating the bundle offer is very important.
Product configuration is more science than art. McDonald’s has learned this over time. It makes a bundle of different items on the menu so as to make its consumers buy more. A bundle price is kept much lower than individual prices so that people tend to buy bundles (in this context its meals) instead of just a single item. Since coke is a high-margin item, you will see coke in many meals. As a result of this pricing strategy, McDonald’s achieve higher revenue and higher profitability.
Fun Fact 6 – Do you know that Quanesha Burks, a former part-time employee at McDonald’s, is now an Olympian? Yes, you read it right. McDonald’s has a book named Golden Opportunity, where it documents the remarkable careers of its former employees.
By the way, do you know that McDonald’s is not in the food business but the real estate business? How McDonald’s became a Real Estate Company?
Do you want Tech with that?
It was not late when McDonald’s realized that it could add technology to its marketing strategy and provide a more personalized experience to its customers. McDonald’s acquired Dynamic Yield for $300 million to personalize its drive-thru experience based on climate, current traffic in the restaurant, time of the day, and many other factors. In 2019 alone, McDonald’s spent $6 billion on outdoor digital menu boards, self-service kiosks, and global mobile apps.
According to a recent interview of Chris Kempczinski, CEO of McDonald’s with Mckinsey Digital, their investment in 3Ds -Delivery, Drive-thru, and Digital have paid off well in the Covid-19 era.
Also, in the future, the company is expecting to take all the orders on its My McDonald’s platform, which will assist it in getting insightful data to understand the customers’ preferences and cravings.
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