Marketing Principles and McDonald's Target Market Analysis Report

This report examines the marketing principles and organizational structure of McDonald's, a leading fast-food chain. It begins with a historical overview, detailing the company's evolution from its inception to its global presence, including its organizational structure, which is characterized by a divisional structure based on geographical zones. The report then focuses on the process McDonald's uses to identify its target market for new products, such as garlic-cheese flavored French fries and nuggets. This involves in-depth market research, competitor analysis, and an evaluation of customer preferences and psychographics. The synthesis of information involves combining data from existing markets, competitor analysis, product attributes, and customer discussions to determine the best fit for the new product. The report concludes that McDonald's success stems from its effective organizational structure, clear division of responsibilities, and the rigorous market research it conducts to understand and target its customers effectively.

Running head: PRINCIPLES OF MARKETING
Principles of marketing
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PRINCIPLES OF MARKETING
Contents
Introduction.................................................................................................................................................2
Specification of key assumptions.................................................................................................................2
Synthesis of information..............................................................................................................................6
Conclusion...................................................................................................................................................8
References...................................................................................................................................................9
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PRINCIPLES OF MARKETING
Introduction
In this report two different sections have been discussed. At first history of McDonald’s, their
organisational structure, features of organisational structure and culture have been identified as
four kind of key assumption followed by a synthesis on the manner the information for deciding
their potential target market for new product was combined for decision has been elaborated.
Specification of key assumptions
a. History of McDonald
According to Business Premium Collection (2016) McDonald’s is a US fast food chain that was
established in the year 1940 as restaurant that was being managed by Richard and Maurice
McDonald. Initially the fast food company started operations in California, USA. Earlier the
business owners rechristened McDonald’s as Hamburger stand and later it was transformed into
a franchise operating business with Golden Arches logo that was launched in year 1953 at
Arizona. McDonald’s has their original head office at Illinois and later the fast food chain moved
their global head quarter to Chicago during 2018. McDonald’s is the biggest operating fast food
chain restaurant across the world in terms of revenue and as of year 2016 McDonald’s served
around 69 million customers every day across more than 100 locations in the world with over
36,900 fast food outlets. Though they are popular for their hamburgers but McDonald’s also
offer cheeseburgers, chicken menu, French fries, breakfast menu, soft beverage drinks,
milkshakes, wraps and deserts. McDonald’s after being heavily criticised across the world by
media and nutritionist groups for offering fast food items to customers which are unhealthy due
to health concerns related to obesity had responded to new customer preferences for health
conscious food products and tastes with food menus that were healthy to deal with negative
criticism. They launched several range of healthy menus like salads, fish, smoothies, fruits
items etc in response of being serving unhealthy food with fast food items.
McDonald’s revenues stream are mostly made from rent, loyalties and fee paid by franchisors
along with sales that are made in their company run restaurants. As of 2012, McDonald’s had
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PRINCIPLES OF MARKETING
been reported as the 2nd biggest private employer in the world after Wal-Mart with around 1.9
million staffs, of whom around 1.5 million worked for franchises.
According to Hoovers Company Record (2018) McDonald’s revenues as of year 2017 was
around 22.82 bn USD, with operating income of nearly 9.553 bn USD and net incomes as of
2017 that was reported was 5.192 bn USD. Total assets that was reported in year 2017 was
33.804 bn USD with total number of employees across the different locations worldwide being
235,000 as in year 2017.
b. Organisation structure of McDonald’s
Fig: McDonald’s Organisational structure
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PRINCIPLES OF MARKETING
Source: Research methodology (2016)
The above figure represents McDonald’s organisational structure and hierarchy of senior
leadership roles in the firm, which is headed by President and Chief Executive Officer. The
leadership team has around 7 Executive VP’s and 1 Senior VP each of whom leads a particular
business domain within the McDonald’s.
c. Features of McDonald’s organisational structure
McDonald’s have divisional organisational structure each of which governs separate operational
domains and this kind of organisational structure helps to reinforce autonomy and flexibility
within the company operations. According to Garg (2017) organisational structure of
McDonald’s has different aspects i.e. global hierarchy, performance base divisions and function
base teams.
Global hierarchy: they have a global hierarchy system of operations across all their locations in
the world and this kind of system characterizes better corporate governance across its
organisational structure. Like for instance the CEO of McDonald’s governs activities of all
business areas and these directives flow down to middle level managers, restaurant managers and
front line staffs. This attribute is generally practiced at McDonald’s organisational structure in all
their international business operations.
Performance base divisions: these are distinctive aspects of organisational structure of
McDonald’s which bases new divisions of operations across the world in their organisational
structure depending on performance such as US, International Lead market, High growth market
and foundational market.
Function base team: McDonald’s controls function base team in their organisational structure
such as under corporate operations, McDonald’s have HR, Supply chain and Procurement, Legal
teams etc and this aspect of their structure capacitates them to meet foundational elements of
their different business areas and needs.
d. Organisational culture
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PRINCIPLES OF MARKETING
At McDonald’s divisional organisational culture is being practised where their business
operations and functions are categorised into four different areas or divisions based on
geographical zones such as US, Europe, Asia Pacific, Middle east and Africa (APMEA) and
other nations. As stated by Crawford (2015) each of the geographical divisions have their
separate departments ranging from marketing, sales, finance and accounting, HR, IT and others
and this kind of organisational culture had been introduced at McDonald’s in the year 2015
which has helped the company improve their operational efficaciousness within various
international markets all over the world with clarified roles of Executives and employees who
had been responsible for the development of different global markets.
Fig: Responsibility distribution at McDonald’s for international operations
Source: Source: Research methodology (2016)
As can be observed from the above figure the role of international operations of McDonald’s is
being divided amongst 4 Senior Executive as role of President who oversees different global
functions at various levels. As stared by Garg (2013) the US market is the biggest business
market of McDonald’s and is responsible for over 40% of operating outcome of the group. The
high growth market segments are those markets that have huge prospect in context of extension
of restaurant and franchise chains. These high growth market holds for around 10% of
McDonald’s operating outcome and consists of merging markets of China, Italy, South Korea,
Poland, Russia, Spain, Switzerland and Netherlands. International lead markets are those
markets that have already been established markets of McDonald’s like Australia,
Canada, France, Germany and the United Kingdom. This segment accounts for around 40% of
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McDonald’s overall income and Foundational markets are all those remaining markets of the
company that has the possibility to operate under a large base franchise model like India.
Synthesis of information
a. The information to find the potential target market for new garlic cheese flavoured
French fries and nuggets was combined from different forms of sources to get more
relevant and significant information’s and outcomes. These included as follows:
 A Research was carried out in different existing market for nugget and French fries to
find information about the current customer base such as who were the customers and
what were the purchase intentions. According to Osswald, Brecht, Gentner and Mahnke
(2016) research was conducted to gather information on customer characteristics and
preferences, business markets which sold most of French Fries and nuggets etc to collect
information on customers.
 Research was conducted on competitors to collect information like who were the
competitors target audiences, what were their market etc
 Analysis of own product where a detailed information was documented on attributes of
current French Fries and Nugget product of McDonald’s, brief of product benefits etc.
 Research was made through discussion with current target audiences to determine their
psychographics based on their personal characteristics that consisted of personality,
behaviour, values, interests, lifestyle and frame of mind (Osswald, Brecht, Gentner and
Mahnke 2016). Also information was collected to find the way the new flavoured garlic-
cheese French Fries and nuggets would fit into the target customer lifestyle as well as
inputs were gathered to find how and when the product will be introduced for aright
markets, what features were most tempting for the target customers, what media like
print, TV ads, internet ads, social media etc was mostly preferred to find information.
 To determine the potential target market for new flavoured French Fries and Nuggets the
final event that was made was evaluating the decisions about target market by
consideration of fit of customers with product, actual benefit that target customer would
receive from new product, would it meet needs, drive the target market and their
affordability etc. Also evaluation was made to decide on type of media, content and ease
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of access for each channel for customers to make final decision on potential target
market.
b. Gantt chart
Activities conducted Department Duration
Carrying out research in
different existing market to
reveal information about the
current customer base
Marketing and Sales 2 months
Research on competitors Marketing, Distribution and
Supplies
3 months
Analysis of own product R& D department 2 months
Determination of
psychographics target market
Marketing, Customer Support 1 month
Evaluation of the decisions on
potential target market for new
flavoured French fries and
Nuggets
All departments heads,
managers and employee
groups
2 months
Activities
Duration
1 month 2 month 3 month
Research in different
existing market
Research on
competitors
Analysis of own
product
Determination of
psychographics
Evaluation of the
decisions
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PRINCIPLES OF MARKETING
Conclusion
Thus from the above discussion it can be concluded that McDonald’s has been a successful fast
food company that has extended their business all over the world and has been practising
divisional organisational structure for better clarity of roles, responsibilities across different
operational area of business which helps them deliver better performance across different
geographic markets as these are based on functions of performances. This kind of division helps
to facilitate better opportunities across different markets of McDonald’s. Also it can be inferred
that for identifying prospective target market for their new product they need to find information
through conducting research to identify existing preferences of customer in different market,
along with competitor analysis to decide on target markets.
References
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Business Premium Collection. (2016). McDonald's corporation : Leisure and arts - company
profile, SWOT & financial analysis. London: Progressive Digital Media. Business Premium
Collection. [Online] Available: https://search.proquest.com/docview/1813468059?
accountid=30552 [Accessed on 6 Nov. 2018]
Crawford, R. (2015). McDonald's restaurants put motivation and reward at heart of business
strategy. Employee Benefits, [Online] Available:
https://search.proquest.com/docview/1747605599?accountid= [Accessed on 6 Nov. 2018]
Garg, V. (2017). Executive team consensus-based perspective of organization
evolution. Management Research Review, [Online] 40(9), 954-970. Available:
https://search.proquest.com/docview/1938839684?accountid=30552 [Accessed on 6 Nov. 2018]
Garg, V. K. (2013). Does multi-unit franchising aid differentiation? An exposition. Journal of
Applied Management and Entrepreneurship, [Online] 18(1), 3-26. Available:
https://search.proquest.com/docview/1282103213?accountid=30552 [Accessed on 6 Nov. 2018]
Hoovers Company Record, (2018). McDonald's corporation. Business Premium Collection
[Online] Fort Mill: Mergent Available: https://search.proquest.com/docview/1860751909?
accountid=30552 [Accessed on 6 Nov. 2018]
Osswald, M., Brecht, L., Gentner, D., and Mahnke, T. (2016). How successful are your product
launches? ISPIM Conference Proceedings, Manchester: USA [Online] 1-25. Available:
https://search.proquest.com/docview/1860981994?accountid=30552 [Accessed on 6 Nov. 2018]
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