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How McDonald's Markets its Products in England
Term Paper ID:27274
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Essay Subject:
Original research project in which raw data is collected about McDonald's in England off of the internet. Secondary phase of research consisted of telephone interviews with various respondents.... More...
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13 Pages / 2925 Words
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Paper Abstract:
Original research project in which raw data is collected about McDonald's in England off of the internet. Secondary phase of research consisted of telephone interviews with various respondents.
Paper Introduction:
How McDonald's Markets Its Products in England
Summary
McDonald's is an international restaurant business, with franchises and owner-operated stores throughout the world. There are over 15,000 locations in 79 countries and a new McDonald's restaurant opens every 13 hours. 85% of the restaurants are independently owned and operated, with company-run stores making up the other 15%. Stock increased by 16% in 1994, and 25% of all McDonald's stock is owned by employees, licensees, and suppliers (McDonald's, 1997).
Determining relative data on the marketing of McDonald's products throughout England became a somewhat challenging and daunting task, inasmuch as there is a large amount of material available both in printed form and on the Worldwide Web. Not
Text of the Paper:
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Restaurant Business, 94:16. Major British investors in the U.S. (1996, May 17). Stock increased by 16% in1994, and 25% of all McDonald's stock is owned by employees, licensees, andsuppliers (McDonald's, 1997). Though fast food companies have paved the way into the British market,family-type restaurant chains such as Denny's, Big Boy, and InternationalHouse of Pancakes are following. 29:3 42. Los Angeles Times, A1. Available: http://www.McSpotlight.org Montalbano, W.D. Historically in England, the word franchise meant the granting of a rightor privilege to an individual or group. Approximately 6 Pizza Hut chains are located in England.Domino's Pizza, the second-largest pizza restaurant chain in the UnitedStates, operates 84 franchised units in 37 countries, with sales of $415million. Reuters Business News. Henry Regnery Co, Chicago. But we are not aware of any action that can be taken sincematters of Internet content are still part of a wider public debate." Visitors to the site can also link to the People for the EthicalTreatment of Animals, which regularly pickets McDonalds franchises aroundthe world. Gardner Merchant Services Group of London, England, has been operatingin the United States for 15 years, and in 1994 bought the business andeducation accounts of Morrison Restaurant, Inc.'s, Hospitality Group forabout $1 million. Price, C.C. Sales outside the United States accounted for only16 percent of that total. McSpolight. Although there are some breakfast itemsavailable (sausage and eggs on biscuits), the breakfast menu has not beenas profitable in the UK as it has in America and Japan (McDonald's, 1997). foodservice industry looksabroad. As has been reported in numerous publications, the taste of allMcDonald's' products is negligible, and hardly worth discussing. foodservice industry are GrandMetropolitan, PLC; and Allied-Domecq, PLC, London. A large phone survey to determine general consumer knowledge of McDonald's products. Provided by McDonald's EducationService, McDonald's Restaurants Ltd., 11-59 High Road, East FinchleyLondon, N28AW. Mail survey asking specific market information similar to the survey made by the Pubs group and quoted above. At least that's what prompts some 2million Brits a day to visit one of the McDonald's and have a go at theirfood. 85% of the restaurants are independently owned and operated, withcompany-run stores making up the other 15%. Not only is the amount of data enormous,much of it is split into several camps: pronouncements from McDonald'scorporate headquarters in London; pronouncements from the press (bothtabloid and legitimate); broadleafs and pamphlets from anti-McDonald'sconsumer groups (like Greenpeace) and anti-anti-McDonald's consumer groups. These findings were corroborated, essentially, by executives atMcDonald's who also pressed upon a massive press kit that details thehistory of McDonald's and England. (The average amount oftime allowed for lunch on a weekday was found to be 36 minutes!) Almost aspopular among seven-out-of-ten Brits is going to the pub for a full mealinstead of cooking at home. The most popular type of food to consume in a pub is a bar snack,eaten by three-quarters (75%) of British pub-goers. In 1996, they consumed BP 321 million worth offood and drink of which BP 186 million went for beef products. In more recent times it includesbusiness arrangements known as franchises, licenses, dealerships, anddistributorships, to name a few. Forexample, there are "downtown" and "suburb" price menus in London. Determining relative data on the marketing of McDonald's productsthroughout England became a somewhat challenging and daunting task,inasmuch as there is a large amount of material available both in printedform and on the Worldwide Web. H. Theyalready have about 19 stores in the United Kingdom and expect to add more(Franchising the top..., 1995). Kroc, R. The U.S. Erlichman, J. The franchisee must maintain qualitystandards and pay a royalty or fee for the franchise. Grand Metropolitan, PLC, acquired Burger King in 1988 withthe purchase of Pillsbury (Henderson, Handy, Neff, 1996). However,one doesn't go to a McDonald's for an upscale meal. Department ofAgriculture, Economic Research Service. McDonalds 'deceived customers' TheGuardian, 4. Japan, England, Canada,Australia, and Mexico are already popular locations for many U.S.restaurant chains, and more are scheduled to open around the world in thenext several years. [On-line]. A taxonomic analysis of the impact that McDonald's has on the employment in England, based on a curiosity of the possibility of the "McEnglandism" of the industry. Casual dinner house restaurants such asTGI Friday's and grill buffets like Sizzler, Golden Corral, and Ponderosaare also expanding into Britain.The Price The price of a Big Mac (the benchmark price structure) will vary fromarea to area to a minor degree due to local prices for land, taxes,ownership, promotion expenses, franchise agreements and so on. F. One goes forsustenance, and sustenance in a hurry. (1997). 7) Nation's Restaurant News. Who are these McDonald's patrons? Aseries of informal interviews were to be held with customers coming out ofand going into McDonald's locations at the first location in Woolich(opened in 1974) and the latest one at Woodall Motorway service area(McDonald's, 1997). Last year McDonald's opened 9 newrestaurants in Britain, creating some 4,5 new jobs." It is safe to interpolate that if McDonald's is planning such anexpansion that they know something about the tastes of the British fast-food consumer that suggests a continuing love affair. Pubs bestplaces for eating out survey shows. BLRA Dispatch. Among the extensive materialoffered on the site are full transcripts of the libel proceedings broughtagainst Steel and Morris including the text of the original brochure thatstarted the problem. Its promotiontechniques include a sophisticated mix of television commercials (generic,special product, and age, gender and ethnic focused); POP merchandising;promotional tie-ins with Disney and other companies; and institutional (TheRonald McDonald houses and so on). sales for Canteen totaled $1.1billion in 1994. Grand Metropolitan,PLC, owner of the Burger King chain, is the largest British investor infood service. Dunkin Donuts was acquired in 199 by London-based Allied-Domecq, PLC,the third-largest foreign investor in U.S. (Perhaps the assumption was that the interview teamwas actually Greenpeace in disguise.) At that point, it was decided toconcentrate on ringing companies up and asking them sets of questions.The Product: McDonald's Fast Foods McDonald's UK specializes in preparing and selling several fast fooditems in the form of sandwiches made from beef, chicken, fish, eggs andsausage; chips; salads; soft drinks and shakes; and desserts. The beef sandwiches, which are all typically marked up 35 percentare: basic hamburger (1/8 lb beef, catsup, pickle); cheeseburger (same asbasic but with cheese added); Quarter Pounder (basic but with 1/4 pound ofbeef); Big Mac (2 beef patties, two buns, cheese, lettuce, tomato, pickle,and sauce. A quick refresher on thebasics of a franchise is helpful here. What do they eat? Among the top 5 franchise chains operating in the United States,Burger King was ranked second in 1994, with total worldwide sales of $8.7billion (Price, 1996). How McDonald's Markets Its Products in EnglandSummary McDonald's is an international restaurant business, with franchisesand owner-operated stores throughout the world. In 1984, for instance, McDonald's promoted heavily in England the factthat it was the first UK restaurant group to introduce nutritionalinformation throughout England for the benefit of British consumers. (1997,January 2). This waspart of the now fabled McLibel trial in which two environmentalists, HelenSteel and David Morris, dubbed the "McLibel 2" were sued for "libel byMcDonald's over a crudely printed leaflet they are alleged to have handedout in London called 'What's Wrong with McDonald's.' Its core allegationwas that diets heavy in so -called junk foods like McDonald's had beenscientifically linked with breast cancer and bowel and heart disease." Attrial, one of the key witnesses was asked whether McDonald's deserved anypraise for being first to put ingredient and nutrition brochures in itsshoppes. (1994, October 17). Some of the information in that reportis supplied throughout this analysis. (1994, September 16). The Market Size and Segmentation The McDonald's executives in London are quite specific about who theirmarket is: "Anyone who likes good food value from a reputable company," isthe answer (McDonald's, 1997). There are over 15, locations in 79 countries and a new McDonald's restaurant opens every 13hours. (1994, June 29). The national averageis that the British take 36 minutes for lunch on a weekday and althoughfairly consistent across the country, the shortest lunch breaks (31minutes) are likely to be found in the North East and the longest ones(43.7 minutes) in East Anglia (McDonald's, 1997). Competition is expected to grow throughout the next century accordingto an analysis in Food Review (Price, 1996, 15). The franchisor and the franchisee, in which the franchisor grantsthe franchisee the right to market a product or service, including the useif the trade mark and provides a tested format or system for which thefranchisee is required to conform. Franchising: The top 5 chains. Canteen operates 1,6 accounts in the United States(Henderson, Handy, Neff, 1996). Figuratively speaking they had to bedragged kicking and screaming into the fold." Silenced by the libel suit the group turned up the heat by setting upthe McSpotlight web site (http://www.McSpotlight.org) which offers morethan 16 documents damning McDonald's. Leaflet a threat to McDonald's. Allied-Domecq also owns Baskin-Robbins ice cream stores. Burger King operated over 7,5 units worldwide,with over 6, units in the United States in 1994 (The top 1 ..., 1997). Thevalue-for-money offered by pubs is a key factor in their appeal to peopleeating out, but it is not actually the prime reason consumers choose pubs.Almost four-out-of-five adults (78%) put speed and convenience as the mainconsiderations when choosing pubs for a meal and two other factors - thatpubs are handy if not everyone in a group wants to eat and that pub food isimportant for families on holiday away from home - come before the value-for-money aspect (Ripley, Hampson, Finnerty, 1997). That analysis shows thatU.S. & Anderson, R. The Top 1 Chain Rankings & Company Rankings: Annual Comparisons(1995, Aug. Thiswas accomplished by the distribution of millions of folders in allrestaurants and heavily marketed place mats with the values listed. TheGuardian. References Erlichman, J. The expansion by McDonald's Restaurants Ltd. It is, in fact, very hard to escape aMcDonald's message of some sort on any given day. A Reuters Business News Report dated Jan 2, 1997,points out that McDonald's plans 1 new restaurants in Britain this year. There are two mainadvantages to being a franchisee: collective buying power (which helpsreduce costs of doing business), and marketing. Food Review, 18 13(5). E. This plan fell apart when the neighborhood of thefirst was investigated and the second proved impossible to generateinterview interest. Grinding it out: The making ofMcDonalds. Franchises are generally known tothe public under a well promoted name like "McDonald's" not the names ofthe individual franchise owners (Serwer, 1994, 1 3). Finding more specifics is a bit moredifficult. McDonald's Fact File (1997, May). Its growth will depend more on international expansion. (1996, September).Globalization of the processed foods market, AER-742eds. Pricing philosophy within the McDonald's operation isextremely market-driven and usually is tied in to one or another of dozensof simultaneous promotions and bundling programmes (McDonald's, 1997).Placement: How is the Product Sold McDonald's products are sold in the UK through a combination of 731franchised outlets and company-owned stores and the corporation itself hasa total investment in property of GB 1 billion. C. A chain of operating unitscan afford to generate far more exposure and advertising than can anindependent, resulting in higher sales volume.Promotion McDonald's is the second-most recognized brand in the world - onlyCoke (which McDonald's serves) is more recognized. U.S. McDonald's conquers the world.Fortune, 1 3 (13). Arecent survey conducted as part of National Pub Week found the followingdata, released in June 1997. Henderson, D.R., Handy, C.R. Field interviews with McDonald's employees. According to several managers and workers interviewed casually,the main portion of business comes from families, typically young, with thesecond segment coming from young single males, 18-24. And pubs are more popular than Chinese,Indian, and Italian restaurants, fast burger outlets, wine bars, and steakhouses (Ripley, Hampson, Finnerty, 1997). In thecity it ranges from BP 1.79 to BP 1.94 while in Manchester it ranges fromBP 1.24 to BP 2.14. Mr. Gardner, who was in charge of consumer protection for Texas,said: "McDonald's deserved nothing. The announcement was made by The British subsidiary of McDonald's Corp.who also said the openings would create at least 5, new full- or part-time jobs. A comparison of ads (concepts, creations, media buys) between England and America. In 1996,British consumers also devoured BP 39.5 million worth of chicken and downed52, tonnes of chips, 453 million buns, and 7 million gallons of milk(McDonald's, 1997). Field interviews with McDonald's customers. Ed Oakley, McDonald's headof purchasing in Europe, is quoted as testifying that "if McDonald's didn'tuse throw-away packaging what would people use to fill up all those emptygravel pits around the country." McSpotlight has carefully located itself-- not on British soil Bbut in the Netherlands to avoid lawsuits.McDonald's denies all allegations made by McSpotlight: "Our position isthat the allegations that are made are untrue, regardless of what theformat is. (1977). A media representative at one ofLondon's premier ad agencies that handles some of the TV ads for McDonald'salso confirmed that for the most part, McDonald's emphasizes a market focuson young and upwardly mobile families.Market Share and Competition Curiously, the major competition to this granddaddy of the Americanfast food business is one of Britain's oldest traditions -- the pub. B. Some 16 million peoplein England and Wales now eat either a bar snack or a full meal in a pubrestaurant at least once a month. Ten years later, that entire campaign was called into question, when aheadline appeared in the Guardian reading "McDonald's Deceived Customers"followed by a story that claimed McDonald's, was accused of deliberatelylying customers and competitors by pretending it was first to declarevoluntarily the ingredients of its foods (Erlichman, 1996, A1). One protest reported was March 15, 1997, when a person dressedas a cow presented Ronald McDonald with a pie in the face during, what thegroup described as "his recruitment of kids to sing the 'Two All-BeefPatties Jingle.' PETA wants the children to know the truth: "hamburgersdon't really grow in 'hamburger patches' and don't love to be eaten. & Finnerty, B. Internet Threads. G. The chicken dishes are a chicken sandwich, and a bit of processedstuff called Chicken McNuggets. Generally franchising is an ongoing contractual agreement between twoparties. A discussion group would be established on the net to institutionalize and quantify the opinions and data sources. An analysis of the changes in McDonald's advertising over the years. Serwer, A.E. Regionally, pub food seems most popular in the East Midlands,followed by the West Country, the West Midlands and the North East. for $45 million. Eight percent (around 5 stores) of Kentucky Fried Chicken's overseasoutlets are located in England. London-based CompassGroup, PLC, made its initial debut into the United States in April 1994 bybuying the majority of Flagstar Cos., Inc.' s, Canteen Corp. & Neff, S.A. After immersion in MacData and Macfacts, the next step was to hit thestreets in search of the answers from the end-line users and providers. (1997, June 19). Possibly noother food company has prompted so much vigorous discussion and protest. McDonald's plans 1 new restaurants in Britain this year. The strongestdevelopment in the fast food market is based on the fact that Britain isturning the tables and starting to buy up American fast food businesses. markets become saturated. Ripley, P., Hampson, T. (1996, May 4). Theyare really ground-up cows."Future Tends in Consumer Behaviour In spite of protests and great amounts of nutritional information, itis apparent that none of this is really affecting the nation's love forMcDonald's fast foods. As a result, thegeneral public may not realize that many businesses are in fact franchises. U.S. I. represents aninvestment of more than 116 million British pounds ($197 million) in landand buildings: "The company said it would open about 38 more restaurantsin southern England, 27 in the Midlands, 28 in the north, 12 in Scotlandand five in Northern Ireland. This acquisition increased Gardner Merchant's U.S.portfolio to more than 1, accounts and will nearly double its projectedannual revenues in the future (The top 1 ..., 1997).Methods of Improving the Research If more money and time were available, the following improved researchmethods would be utilized: A. Eating in a pub as a family is popular among67% of the population. The pub is still the British public'sfavourite place to eat out at, confirms the data analysis released by theBrewers and Licensed Retailers Association (BLRA). D. An extensive literature review encompassing the pros and cons of McDonald's theories of franchising and operations. Mad cow ban strikes at heart ofBritish identity. A recent promotion emphasizes "Veggie McNuggets," a non-chickenversion of the popular Chicken McNugget product line which is offeredexclusively in Britain, and there are rumours of bringing the Groenteburger(a vegetable burger served exclusively in the Netherlands) to England aswell as the McPizza, a vegetarian dish exclusively in Canada.The External Environment McDonald's has made money in England, but it has not been an easytask, and its corporate identity is accepted yet questionable. Then there are the die-hard British fans who have taken to expressingtheir love of the Big Macs to the Internet who postulate both data andopinion and fact and fancy. More than half the population have eaten Sundaylunch in a pub and many are making it a regular occasion (Ripley, Hampson,Finnerty, 1997). foodservice companies are moving more and more into internationalmarkets as U.S. foodservice operations. According to severalstores contacted in outlying areas, the trend there seems to be toward anolder segment of the population usually coming in for breakfasts. All references cited as "McDonald's, 1997". The firm operates 2,979Dunkin Donuts outlets and 2,355 Baskin-Robbins outlets in the UnitedStates, with combined sales of $1.8 billion in 1994. (1995). Pizza Hut, also a division of PepsiCo,Inc., has 11,546 units operating in 82 countries (Franchising the top...,1995). The site expands the original brochure by usingcarefully selected portions of court testimony.
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