Marketing Plan

EXECUTIVE SUMMARY

The competition among the fast food restaurants has intensified over the last decade and with them fighting for bigger market share. In lieu with the said event, the world's biggest hamburger chain, McDonalds, is facing an onslaught of competition from better-burger chains. On January 29, 2015, McDonalds Corp. said that it was replacing CEO Don Thompson with its chief brand officer, Steve Easterbrook after seeing their own customer visits decline at established U.S. locations for two straight years. It was the latest in a string of changes the company has announced in hopes of appeasing investors and winning back customers.

McDonalds has built a global empire based on the consistency of its products, down to the thickness of fries and the number of pickles on a sandwich. However, the upstart rivals have been able to capitalize on consumer demand for food that is perceived as healthier and made with fresher, natural ingredients.

To this end, McDonald's is simplifying menus, tailoring food to local tastes, offering custom burger and sandwich options, rolling out mobile services such as payments and ordering, and opening a social media "dialogue" with customers to cater their growing concern of decreasing sales due to the tough competition in the industry.

INTRODUCTION

One of marketing problems affecting restaurant businesses is the tough competition in the industry. Trying to get a business stand out in a crowded marketplace is tough. Even large chain restaurants are facing tough competition from their rivals. The answer to this problem doesnt start with expensive advertising and more exposure but meeting the customer demands and discovering its edge in making it different and more appealing than its competitors.

The restaurant business is tough. Everyone in it knows it. Therefore, top officers should create stringent measures to make it float in the industry and to prevent it from flunking in the long run. In view of this, customers need a reason to come in their business instead of their competitors. While it is good to think that the food is so good that people will line up out the door to eat it, millions of mistaken restaurant owners are now out of business.

In this marketing plan, the most famous known fast-food chain, McDonalds, was being chosen to be given analysis since recent news about its decreasing sales triggered a drastic response from their top executives. Refreshing its image in the market and adapting to the wants of todays generation and trend were seen to be their response in the very tough competition that they are facing against their competitors. Indeed, it is not easy to maintain the top position in the industry but knowing what satisfies the customers and allowing the company to always provide with fresh presentation of their products may give them a competitive edge over their competitors.

Marketing Description and AnalysisThe fast food industry, also known as Quick Service Restaurants (QSR), has been serving up tasty food for as long as people have lived in cities. The modern system of fast food franchising is believed to have started in the mid 1930s when Howard Johnson franchised his second location to a friend as a means to expand operations during the Great Depression. Fast food franchises focus on high volume, low cost and high speed product. Frequently food is preheated or precooked and served to-go. Consumers enjoy being able to get a familiar meal in each location, and menus and marketing are the same in every location.There have been challenges for the fast food industry in recent years that have been pressuring profit margins. The industry as a whole has proven robust enough to withstand these challenges, though some players have done better than others.Market saturation is also a relevant issue in the fast food industry today, at least in the U.S. There is a McDonald franchise is in almost every town, and it usually sits in a row with several competitors. With so many competitors which offer similar products there are fewer customers per location. The major players in the fast-food market, which generates around $120Bin annual revenues, are: Domino's, Inc., Burger King Corporation, Wendy's International, Inc., Jack in the Box, Inc., Yum! Brands, Inc., Doctor's Associates, Inc., and McDonald's Corporation. As can be seen, the fast food industry is somewhat fragmented. The seven major competitors only account for 45% of total revenues.

McDonalds sales from the company-owned restaurants were $18,169 billion or 66.21% of the total revenues and the revenues from the franchisees were $9.272 billion or 33.79% of the total revenues in 2014. Few other rivals receive as much revenue from its franchisees as does McDonalds.Figure 1. Percentage of income from the franchisees2014McDonaldsYum! BrandsBurger KingWendys

Percentage of income from the franchisees33.79%14.7%86%19%

Source: Companies Financial ReportsThe numbers indicate that Yum! Brands and Wendys has to rely on their directly owned restaurants to generate most of the income, while Burger King (and Subway) has to rely on the franchisees for its income. Both situations, when a company has to rely on one source of income, arent favorable to McDonalds competitors.McDonalds income is also much more geographically diversified than its rivals.Figure 2. Income from different regions2014McDonaldsYum! BrandsBurger KingWendys

Income from U.S.31.5%22.3%58%>98%

Income from Europe40.4%~20%29.3%0%

Rest of the world28.1%57.7%12.7%