Marketing Concept of McCafe and its Product Line

This report provides an overview of the marketing concept of McCafe and its product line that targets young customers. It discusses the core marketing concepts, marketing mix, and target market segments of McCafe.

Running Head: McCafe
McCafe
Report
System04104
4/12/2019

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1. Introduction
McCafe is known for its quality beverage products, which is controlled and owned by
McDonald. McCafe uses the network of McDonald and establishes itself in the market as a
giant coffee house after Starbucks (McCafe, 2019). This report will provide the marketing
concept of McCafe and about its product line that targets a specific customer group. The
present work helps to understand how the company targets young customers having a high
level of disposable income as its primary customers for the hot beverages product line. The
second part of this report will provide a short overview of the company. The third part of the
report will explain the core marketing concepts of McCafe and its strategies to target the
youngsters for its product and services. The fourth part of this report will include the
marketing mix of the McCafe for its hot beverage products such as Cappuccino, hot
chocolates, Latte, and Mocha etc. In the end of this report, a conclusion will summarise the
whole report as a short summary.
(Source: McCafe, 2019)
2. Overview of the Company
McCafe is a subsidiary company of McDonald, which is also owned by McDonald. McCafe
is a Coffeehouse style beverage chain based on the concept of Starbucks. It was founded in
1993 in Melbourne (Australia) by Dick and MacDonald. McCafe is the largest coffee brand
in Australia and New Zealand in 2003. The concept of McCafe was designed to help the
people who were gathered at the entrance point of the McDonald's. It was also designed to
create an atmosphere and clear the foot-traffic. McCafe operates its business almost all over
the world with 1500 café that sells the McCafe products in almost every country of this world
(Adams, Gans, Hayes, & Lampe, 2018). The McCafe has three product categories such as

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Cold Beverages, Hot Beverages, and Desserts. The product line consists of Cappuccino,
mocha, latte, hot and iced teas, iced latte, and a wide range of pastries and muffins. This
report is based on the hot beverages of the company such as Cappuccino, Latte, Mocha, Hot
chocolate etc.
3. The core marketing concept
McCafe is a chain of restaurants that is owned by its parent company McDonald and it is
associated with the food and beverage industry. The core-marketing concept of McCafe can
be explained under these following points:
3.1 Markets and Target market segments
McCafe opens its outlets in urban areas and metropolitan cities where it can target the
high-income group of youngsters and professional youths. It considers young adults having a
high level of disposable income. It also targets those young people who are working and want
to enjoy their leisure time with their young friends in a café with some hot beverages. It has
been seen that young people, especially, working young professionals are more addicted to
hot beverages like tea, coffee, cappuccino, etc. The McCafe target these young people and
promote its products among them (Coleman, Gao, & Kim, 2016).
3.1.1 Customer profile
The McCafe targets the group of young people or young professional who always
look for a laid-back environment with comfortable surroundings. These customers have more
disposable income and they are ready to pay for their choice and quality services provided by
McCafe. This young generation is always looking for artistic ambience in a coffee house and
McCafe provide them all the facilities they need during the coffee time. It has been seen that
many of the customers included an approximate 40% female (Aged 16-39) enjoy a quality
coffee experience with their love partners or with their boyfriends (Horn, 2011). It is also
considerable that many of these females have their own family and they enjoy their time with
their kids and family members.
3.2 Need, wants and Demand
The young generation is so addicted to coffee and other hot beverages such as tea and
cappuccino. They want a quality ship of their hot beverages with their friends. The
professional youths also need to spend some time from their busy schedules with their friends
and enjoy the moment. These young people have more time to spend with friends and more
disposable income to spend. Hence, they are the primary consumers of McCafe (Mujtaba &
Patel, 2011).
3.3 Marketing offerings
McCafe attracts its customers with various types of offerings such as point of sale
offerings, combo offers, and heavy discounts on family packs. However, to attract the
customers it provides them with various offers. The key strategy of McCafe is to attract
young customers and for this purpose, they plan all their offerings in such a way that attract
youths having high disposable income (Weaven, Grace, & Jones, 2012). McCafe also provide

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buy one get one free offer; provide heavy discounts on combo offers. This not only keeps the
customers they already have but also attract new young people to visit in the McCafe and
enjoy the ship of hot beverages. McCafe continuously includes young people and young
professionals in the advertisements who advertise the product offerings of McCafe and its
world-class taste (Ramadhan, Sumarjaya, Asih, & Kencana, 2018).
3.4 Value and Satisfaction
The major focus of McCafe about providing the exact value of its customers in return
to what they paid for the products and services. McCafe provides quality services with tasty
and awesome beverage products. The hot coffee, hot chocolate, chai latte, Espresso
macchiato, and Cappuccino are some popular hot beverage products of McCafe that provide
full value and satisfaction to the customers of McCafe (Schmid & Gombert, 2018). The hot
beverages are so famous in young people, especially in young professionals. Apart from this,
McCafe introduces new products in the hot beverages category that provide a variety of
choices for customers and meet their expectations. Customer satisfaction requires constant
attention and change in the product line. However, McCafe is known for its new product
development and innovation that attracts new young customers in the market (Abarbanel-
Uemura, 2014).
3.5 Exchange, Transaction, and Relationships
McCafe believes in a life-long relationship with its customers. McCafe exchange
information related to its new products with their customer on social media and on their
personal email ids. McCafe provides membership cards to its customer for establishing a long
relationship with customers. It also accepts the opinion of its customers and their
recommendation about the service they get in McCafe (Kolm, 2018). On the basis of
customer feedback and their recommendations, McCafe applies the necessary changes in
their services. McCafe is also connected with its customers and exchanging the information
with them about the new products and new offers on the existing products. It helps the
company to connect with its young customers for a long time in the future.
4. Marketing Mix
The marketing mix of a service provider company or of a restaurant can be defined under the
7Ps. This 7Ps are Product, Price, Place, Promotion, People, Process, and physical Evidence.
4.1 Product
McCafe is a retail chain of coffee house that provides its products in three categories;
Hot beverages, cold beverages, and Dessert. The product of the McCafe generally targets
three categories of people such as who likes cold beverages, people who like hot beverages
and dessert for those people who like sweet cakes. The Product categories of the McCafe can
be explained in the below table:

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McCafe Products
Hot Beverages Cold Beverages Desserts
Cappuccino
Latte
Mocha
Hot Chocolate
Chai Latte
Espresso Macchiato
Espresso
Flat White Coffee
Premium Double Dark Hot Chocolate
Strawberry Green Tea
Ice Coffee
Ice Tea
Mango Smoothie
Mocha Frappe
Mixed Berries Smoothie
Chocolate Frappe
Caramel Frappe
Cold Coffee Frappe
Cold Coffee
Green Apple Ice Tea
Lemon Ice Tea
Chocolate Muffin (Eggless)
Blueberry Cheese Cake
Marble Slice Cake
Oats Raisin Cookie
Choco Chip Cookie
Vanilla Chocolate chip Muffin
Chocolate Express Cake
The products of McCafe target all group of people, but the hot beverages mainly targets the
youth. Youths are the target market of McCafe for their beverage products. It has been seen
that most of the youth people between 16-30 years old people are spending their days with
their friends in a coffee café (McCafe, 2019).
(Source: McCafe, 2019)
4.2 Price
McCafe is known for its low prices products in comparison to its other competitors
like Starbucks, Costa coffee, and Dunkin Donuts. McCafe is reputed to earn 15% more than
revenues than regular McDonald outlets (Gross & Mein, 2019). Its product's prices set in
such a way that is affordable to any income group of people. Although its outlet for everyone
for all age groups including men, women, kids, youngsters, middle-aged, and aged people.

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However, it has been seen that the youngsters are especially attracted to the hot beverages of
the McCafe. The prices of its hot beverages adopt the pricing strategy of McDonald that
focuses on high-quality products on reasonable rates.
4.3 Place
McCafe one of the largest brands in all over the world and it is known for its quality
beverages. McCafe operates its business through 1500 outlets in all over the world. McCafe
normally opened near the McDonald outlets to attract those customers who are gathering near
the entrance of McDonald. However, the youngsters enjoy the beverages of the company in
McCafe with their friends. McCafe also targets those areas where it can attract the youth
people such as its outlets are located near the schools and colleges, sports ground, near
shopping malls, many residential areas, and right near the highways. Although, the company
opens its outlets every day in each country and targeting the youth people towards its hot and
cold beverages. It has been seen that Youngsters generally like cappuccino and latte in the
café. Hence, McCafe generally opens its store near the McDonald outlets or located in those
are where it can easily target the youth consumers (Gordon & Froend, 2015).
4.4 Promotion
The youngsters are the main target customers of McCafe. Therefore, McCafe has
launched a series of advertisements in which the young professionals publicising about the
taste of McCafe products. It has been seen that in almost every advertisement it includes
young generation people and young professionals who like tea and coffee during working
hours. The parent company of McCafe promotes the products of McCafe in all over the
world, especially in young people and professionals. Because it is the modern trend that
people are looking for a café to spend their leisure time with friends and partners. However,
McCafe also promotes its product in newspaper advertising, Cinema, online, magazines etc.
and urges young people to try the taste of McCafe (Huang, Chang, Yeh, & Liao, 2014).
4.5 People
McCafe follows the philosophies of quality services, quick services, cleanliness, and
giving value to the people and guiding force behind its service. Just like McDonald's it also
focuses on fast friendly services and equality services treatment with its all customer. The
young people and Young professionals are the major segments, which are targeted by
McCafe.
4.6 Process
Process is generally associated with those activities, which are performed to deliver
the service to the customer. McCafe adopts a uniform approach and process just like its
parent company McDonald to serve its customer and maintain homogeneity in the process of
serving its customers. It also uses the most efficient cooking equipment to prepare the
hot/cold beverages and company also invited people to enter those areas where beverages are
being prepared by the chef (Singh, 2015).

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4.7 Physical Evidence
The physical appearance helps the company to make its impression to the outsiders as
well as insiders of the business. The staff member shows real professionalism during serving
the beverage to the customers. The locations of the McCafe also attract people because it is
generally attached to a mall or shopping centre where normally youth people enjoy their
times. The interior design of McCafe designed in such a way that people can comfortable
enjoys their beverages. McCafe also provides a comfortable sitting arrangement within the
café for youngsters where they can enjoy the hot beverages with their group of friends
(Sathyanarayana, Gargesa, & Lekha, 2018).
5. Conclusion
In conclusion, McCafe is one of the leading brand coffee houses in the world after
Starbucks and Dunkin Donuts. McCafe have a different product line in the beverage and
dessert products, but its hot beverage attracts the youth customers. McCafe is known for its
youth promotion activities and it also uses the customer network of McDonald. However,
McCafe needs to expand its business in the rural and low-income areas, because as per the
study, it has been observed that the company is generally targeting the upper-income class
youths having high disposable income. The prices of its products are still low in comparison
to other competitors but it cannot be affordable for a low-income group of youngsters.

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