MARKETING FUNDAMENTALS: McDONALD'S McCAFE
Category : McDonald's
MARKETING FUNDAMENTALS: MCDONALD’S MCCAFE
The contemporary business environment is a turbulent one characterized by rapid technological innovation, global markets, diverse consumer preferences, and cut-throat competition. Consistent strategy formulation and successful adaptation to change are vital to the survival of a business firm. The growing concern in the modern business arena is the ability of every company to provide diversified products or services to the target and potential consumers at the right place and at the time that these products or services are needed or wanted. The failure to fulfill this basic business requirement warrants the slow demise of the business organization.
Today, business organizations, no matter what industry they are operating in, continue to adopt specific marketing strategies that would help them deliver product or service combinations in the best way possible. Every organization’s marketing department and experts exert their time, intellect, and effort to conceptualize the ultimate objectives, implement the strategies and monitor success or failure in the course. Careful scrutiny is rendered on every marketing decision and the business firm is basically opened to periodic assessment relative to risks, needs, strengths and opportunities for growth. Generally, the core of contemporary marketing strategy is the firm’s capacity and willingness to embrace change either to maintain existence or get ahead.
MAKETING MIX AND MCDONALD’S MCCAFE
Marketing is both a formal organizational function and a series of processes that a business organization undergoes in establishing, communicating, and providing value to consumers and managing customer relationships in a manner that ensures advantages to the entire firm and the various stakeholders ( 2004). It entails the study and analysis of what customers want and need so that the business organization can tailor its strategies with these needs and therefore, attain competitive edge. Marketing efforts necessitate that products and services are perceived and seen by customers beyond their physical aspects. The customers must be able to obtain value from products or services that they purchase ( 2000, ). One marketing tool available to business firms is the marketing mix model. (2005) states that business organizations have to formulate marketing strategies that comprise various elements. These elements are interdependent and should always maintain a balance in order to achieve marketing objectives. The elements form the marketing mix – product, price, promotion, and place or distribution. Product in the marketing mix involves both tangible and intangible offerings of the business such as product lines, what the customer can see, feel, taste or smell in a product, product image, and the quality of the product. Next, price consists of all the costs incurred in the production and delivery of the product or service. Then, place or distribution is the channel that connects the products or services to the consumers. Finally, promotion comprises all the types and manner of communication that companies use to make products or services known to the customer. The primary goal is to persuade the consumers that the product or service offered would suffice his needs in a way that a competitor cannot ( 2002).
The major marketing challenge faced by McDonald’s Food Corporation is expansion of its customer base through building brand awareness and offering trials of its product offerings. Hence, McDonald’s long term goal is to facilitate campaigns that would help establish long-term brand equity and value ( 2004, ). As one of the major strategies in the company’s pursuit of more customer loyalty and value, McCafe, McDonald’s own coffeehouse, aims to provide another reason for customers to patronize the company ( 2001). , Director of Marketing, said that McCafe is an organizational innovation in order to make its brand more relevant and contemporary ( 2003). In today’s competitive markets, the focus of product marketing is the creation of goods/services that are functional, appealing and can address a certain need of the customers ( 2002). Thus, McCafe hopes to offer a new dimension of value to leisure needs of new consumers such as mothers, parents and professionals through menu offerings of cappuccino, hot chocolate, fruit smoothies, premium tea, cakes, muffins, scones and sandwiches as well as a relaxing venue of comfortable leather couches, bistro-inspired tables and chairs, French posters, mahogany and granite furniture, soothing music, and wireless Internet connection ( 2003). McCafe operates within McDonald’s restaurants or adjacent to McDonald’s existing facilities in a “store-within-a-store” strategy so that professionals and parents would get McCafe for themselves at the same time that they can avail of McDonald’s for the kids ( 2003). This strategy suffices what (2005) argues that “place” in the marketing mix also requires the company to consider consumer convenience when deciding the place to deliver a product or service. McCafe was first launched in Australia in 1993 and has grown to around 300 franchises in 17 countries ( 2003). Furthermore, (2002) explains that companies must have a promotion plan to convey to the consumers what it wants the consumer to see in the products or services. Many businesses use sales teams, mass media, billboards, products trials, commercials, public relations and other promotional activities that would help form consumer perception. The point is to make the product visible to the consumers. McCafe provides access to mothers and parents about its products through direct mail, free standing inserts to publicize store openings, and distribution of samples and coupons in malls, holiday events and sports venues. Professionals are accessed through sampling ( 2003). According to (2003) pricing decisions take into account existing market situations and competitors’ prevailing prices to better position the product. McCafe’s prices for coffee and desserts are slightly lower than that of Starbucks ( 2006). Cappuccino and muffins sell at $1 each while the Internet access is priced at $2.95 for two hours usage ( 2000). McCafe wants to symbolize anti-snobbery which is the rationale behind its pricing strategy. Its strong competitor Starbucks, promotes hip urban culture and is also trying to incorporate hot breakfast sandwiches in its product offerings. Hence, McCafes still need to be vigilant and alert in formulating strategies to gain edge against its rivals and successfully contribute to McDonald’s history ( 2007).