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Research paper in Mcdonald’s Philippines Essay

I. Executive Summary


McDonald’s Philippines is a subsidiary of the Filipino-owned Golden Arches Development Corporation. The first Filipino McDonald’s to open for business was in the Morayta university districts in Manila during 1981. These days McDonald’s is operating over 150 restaurants throughout the islands of the Philippines. Being a 100% Filipino-owned franchise allows McDonald’s Philippines to be more agile and take quicker actions, making them an even more competitive force in the Filipino fast-food market. McDonald’s in the Philippines is owned by Filipino entrepreneur George Yang brought the brand to the country in 1981 after several attempts. In the first few attempts, Yang was turned down by the heads of McDonald’s in the US saying that the Philippines was in the radar (for expansion) but was not yet a priority.


Accurate and timely demographic data is difficult to obtain in western economies; the ability to collect this precise data is even further strained when the survey is of a developing country. With a land area of 300,000 km2 spread over 7000 islands and a domestic population of nearly 100 million people, timely and accurate demographic data requires in-depth, thorough, but quick market surveying. McDonald’s Philippines has been operating in an incredibly competitive market for over 25 years. Domestic competition from the leading local fast-food provider Jollibee and common international rival KFC have created an environment in which McDonald’s must move swiftly and efficiently in order to gain market share and increase profitability. In order to expand effectively, McDonald’s needs to better understand where there are market gaps that can be filled. Additionally, McDonald’s needs to have the most up to date data to determine if current stores are cannibalizing each other’s trade area. To achieve this McDonald’s management will need detailed, segmented demographic data of the Philippines overlaid with both theirs and competitors’ restaurant locations.

II. Situation Analysis

1. Product Offering
They serve the typical consumer wants like burgers, spaghetti, fries, floats, ice cream, rice and chicken meals.

2. Market Analysis
a. Vision, Mission, and Values.
Vision: “Una sa Pamilyang Pinoy”.
First to respond to the fast changing needs of the Filipino family. First choice when it comes to food and dining experience.
First mention as the ideal employer and socially responsible company. First to respond to the changing lifestyle of the Filipino family.

To serve the Filipino community by providing great-tasting food and the most relevant customer delight experience.

Customer-Driven: Conscious and deliberate action to exceed the needs and requirements both internal and external customers; Malasakit: Concern for the customer, employees, co-workers, business partners, community and company. Integrity: Being upright in character and action, upholding the standards of one’s profession and position through honesty, responsibility, and trust Teamwork: Working as ONE towards achieving a common goal

Excellence: Day to day drive to deliver THE BEST results

b. Target Market

1. School-Age Children
• From toddler to early grade school.
2. Tweens (8-12)
• Biggest influencer over family purchases.
3. Generation Y or Millenials (13-19)
• Commonly referred to as teens or young adult.
3. Generation X
• Born between 1966 and 1981.
• Family-oriented, well educated, and optimistic.
Has a stable career, ready to settle down
4. Baby Boomers
• Born between 1946 and 1965.
• Lucrative segment.
Diverse segment that generally tends to value health and quality of life.
5. Seniors
• Also called the gray or silver market.
Elder people, retirees, etc.

c. Market Trends
Green Dining is a trend that we would like to encourage, the mechanics are the customers get the option on bringing their own container for drinks, utensils, and bags for take out, this will deduct a corresponding amount to their bill. With this trend we hope to reduce the waste produced by the food chains and as well as the expenses. The uniqueness of our happy meal box to attract many kids to buy collectible toys.

d. Market Growth Rate
McDonald’s Philippines has a current market share of 14% but with some aggressive marketing scheme and a little bit of adjustments we estimate that the market shares of McDonald’s Philippines will boost from 14% to 25% within the following years.

SWOT Analysis
Affordable products
Good location
Excellent customer service
Service crew punctuality
Quality of food
Customer assessment

Unique product offerings
Media exposure
Effective promotion schemes
Customer Safety
Health conscious consumers

h. PEST Analysis
Political Factors
Economic Factors
The change of tax rates in the country
The raise of minimum wage rates
Improper allocation of tax funds
Inflation rate
Unemployment rate
Employment rate
Socio-cultural Factors
Technological Factors
Consumer behavior

Social Media

i. Market Profitability
There are certain factors that affect market profitability, first are Buyer Power. We can safely say that the products of McDonald’s are normal goods, so when the buyer’s income increases, their purchases of McDonald’s food products will also increase. Next we have the Supplier Power if we were to purchase raw materials in bulk then we could obtain a trade discount, helping us decrease our expenses and lower the prices of our products, making it more affordable to the consumers. Third we have Barriers to Entry; we can decrease the number of competitors by being more efficient in our production, like what I have stated earlier regarding the trade discount. This is one way to be efficient and if the company were to develop innovative products or improve the quality of their product and services, then it would be hard for another firm to enter the market.

j. Industry Cost Structure
Firm Infrastructure: Market Strategy, Business Strategy
Human Resource Management: Product Development, Staff recruitment and training Procurement: Equipment, Raw materials
Inbound Logistics:
-Storage maintenance
-Production of food and beverages
-Sanitation of facilities
Outbound Logistics:
-Drive through
Sales and Marketing:
-Online delivery
-Feedbacks form consumers through social media

k. Distribution Channels
Our other means of selling the product is through direct selling in events like concerts, carnivals, festivals, etc. Exclusive Distribution and we also see the possibility of putting up McDonald’s food trucks at areas where McDonald’s is unavailable to see the possibility of putting up a restaurant
in those areas depending on the sales and revenues generated.

l. Key Success Factors
Our other means of selling the product is through direct selling in events like concerts, carnivals, festivals, etc. We also see the possibility of putting up McDonald’s food trucks at areas where McDonald’s is unavailable to see the possibility of putting up a restaurant in those areas depending on the sales and revenues generated.

m. Marketing Mix Strategy (4p’s)
After analyzing the market, finding the key factor, target segment and understanding the market demand, every company needs to come up with an offers or such type of plan, that speed up the growth of the company. For which McDonalds uses 5p’s of marketing mix which are as follows:

1. Product
2. Place
3. Price
4. Promotion

1. Product:
Products include that, how the company should design, manufacture the product so that it enhance the customer experience?

Product is the physical product or services offered by the company to its customers. McDonalds includes certain aspects of its product such as packaging, desirability, looks, etc. This consists of both tangible and non-tangible aspects of the product and services. And it has purposely kept its product depth and product width limited. McDonalds continuously innovates its products according to the changing preferences and tastes of its customers. The recent example is the introduction of the Mc Spicy Chicken burger and latest introduction of chicken style burger. McDonald’s serves the world some of its favorite food like the Big Mac, Big n’ Tasty, Quarter Pounder with Cheese, Cheeseburger, French Fries, Egg McMuffin, Apple Pie and Sundae. This is what we are famous for, globally and locally. In the Philippines, we are also happy to serve local favorites like Chicken McDo, Burger McDo and McSpaghetti. These favorites were specially made to cater to the unique Filipino palate.

2. Place:
The place consists of distribution channels and outlets of the company. They used to franchise McDonalds near Jollibee food chain so that there is a competition between two food chains. Usually they put it up near universities and inside the mal and near vacation hotspots. Now McDonalds have also started offering internet facilities at their outlets, along with music system through computers, not the music but the music which preferred by young generation in order to attract them.

3. Price:

They released new strategy of buying products for the consumers. They called it the “BFF BURGER BUNDLES” and “BFFCHICKENBUNDLES” .

4. Promotion:

Setting The Promotion Mix
An advertisement is targeted to attract the masses it reaches to large number of people at a time. Advertising is one of the most important tools for promotion which had various ways of advertisement in that advertisement through billboards and media are often used by any of the business enterprise. Consumers mostly perceive goods which are advertised goods, as they assume it is more rightful. Due to distinct features of advertisement McDonalds also hold the hand of advertising. There are three main objectives of advertising for McDonalds are to make people aware of an item, feel positive about it and remember it. The right message has to be communicated to the right people through the right media. McDonalds does its promotion through television commercials, billboards and now they used online advertisement. They use print ads and the television programmes are also an important marketing medium for promotion.

III. Marketing Strategies
1. Business Strategy
a. Franchise Module
As per franchise model of McDonalds Only 15% of the total number of restaurants are owned by the company. The remaining 85% is operated by franchisees. The company follows all the framework of training and monitoring of its franchises to ensure that they achieve good QUALITY SERVICE, CLEANLINESS AND VALUE FOR THE MONEY offered by the company to its customers.

b. Product Consistency
By developing a sophisticated supplier networked operation and distribution system, the company has been able to achieve consistent product taste and quality across the nations of the world.

c. Act like a retailer think like a brand
McDonald’s focuses not only on a delivering sales for the immediate present, but also protecting its long term brand reputation.

2. Segmentation, targeting and Positioning
McDonald’s uses demographic segmentation strategy with age as the parameter. The main target segments are children into consideration, children are more attracted towards toys and delicious meals including teenagers such their place foe their entertainment and the urban families select McDonald’s on various occasion like birthday party, to treat children. To also for the seniors to enjoy their delicious and yummy burgers.

IV. Industrial Analysis
a. Threats Of New Entrants
Possible competing firms are likely to increase because society nowadays is searching for affordable food. Most of the people today refer to affordable but tasty that can deal with their customer satisfaction, so the rate of new entrants is expected to increase.

b. Bargaining Power Of Buyers
There is a low bargaining power for the buyers because the company will imply fix but reasonable pricing. The buyers’ curiosity is surely a great factor in buying rate of the products but, it won’t be a reason for the decreasing chances of the products’ price. The increasing price of the product will vary upon the market demand and as well as the supplies.

c. Bargaining Power Of Suppliers
Suppliers tend to bargain on the price of the resources needed like, chicken, beef, potatoes, rice etc. This happens when the prices of the commodities goes up, the company tends to increase their products and services, as a result the company’s which they usually supply might switch to a different supplier who offers the product and their services at a lower price. There is a low bargaining power for the suppliers because the resources needed for production are abundantly available in the market.

d. Rivalry
McDonald’s is one of the most famous fast food chains in the world compared to its local competitors. They are also one of the leading fast food chains that donate a portion of their sales to charity and create creative TVC’s that are family and friend oriented.

e. Substitutes
There are a lot of substitutes for McDonald’s like Jollibee, Burger king, KFC, and Wendy’s to name a few, but despite the variety of substitutes this is no sign of weakness but a sign of strength. McDonald’s is also adapting to the fast advancement of technology like adapting an online delivery portal and social experiments which most people are fond of.

V. Customer Analysis
a. Survey

b. Profile
a. Age: all ages
b. Class: A, B and C
c. Sex: Both Males and Females
d. Education: All levels of education including those who didn’t have an
education e. Income: Those with minimum wages and above
f. Places: Cities and Provinces

VI. Competitor Analysis
a. Competitor Profile
Tony Tan and his family founded Jollibee with its humble beginnings as an Ice Cream Parlor, which later grew into an emerging global brand. At the heart of its success is a family-oriented approach to personnel management, making Jollibee one of the most admired employers in the region with an Employer of the Year Award from the Personnel Management Association of the Philippines, Best Employer in the Philippines Award from Hewitt Associated and a Top 20 Employer in Asia citation from the Asian Wall Street Journal. Values

Customer Focus
Respect for the Individual
Spirit of Family and Fun
Humility to Listen and Learn
Honesty and Integrity

“To serve great tasting food, bringing the joy of eating to everyone”. Source: http://www.jollibee.com.ph/about-us/
b. Competing Product Features
Product Feature
Value Meals
Available Everyday
Available Monday-Friday
Delivery Time
Depends on the order
Guaranteed 30 minutes
Optional Double Patties
Single Patty

c. Target Market Section

Age: all ages
Class: A, B and C
Sex: Both Males and Females
Education: All levels of education including those who didn’t have an education Income: Those with minimum wages and above
Places: Cities and Provinces
Filipino Kids ages 3-10 years old; Teens ages 11-21 years old. Can be male/female. Filipino Families – even the senior citizen. Social Classes C, D, and E Looking for budget-friendly or quick meals.

Target Audience: The Traditional Family and all communication materials focus on the importance of family values, making Jollibee the number one family fast food chain in the Philippines.

d. Positioning strategy
Ensuring high traffic needs an emphasis on store location and positioning Jollibee in the minds of the consumer as a place that they would enjoy eating fast food. This entails proper branding and positioning of the service offered. Jollibee also projected itself as world class and not a local brand. The service that is offered should be consistent over all Jollibee stores, however this might be a problem as the division has been slimmed recently and resources might be stretched too far.

e. Marketing Mix Strategy

Product- they continue to innovate their products which are the rice meals and strengthen its weaknesses to ensure that their clients will be satisfied with their products and continue buying it. They try to make price bundling.

Place- they locate their stores near places where it tends to be crowded with people, granting them accessibility to their food chains, they also put up restaurants near public areas like churches, bus stations, hospitals, parks, etc. Just like in SM-Dasmarinas they have 3 branches of Jollibee’s, every mall has Jollibee like hypermarkets, supermarkets and near plaza’s.

Price- they try to price their products as low as possible, they also provided a value meal that can go head to head with the value meal offered by McDonald’s. They also started selling their products in ala Carte just like McDonald’s

Promotions- Jollibee does its best to hire artists that are currently in demand like Julia baretto, Sarah Geronimo, Carmina Villaruel, etc. They also mix it up with some real life stories to give inspiration to their viewers casting regular people to make it look more legitimate. Consumer Promotion pull promotional activities designated to encourage demand by end like Banded/bundled packs, Continuity Program, introductory Discount Coupons, Internet Advertising like sky scrapers, sponsorship ads.

f. Differential Advantage Analysis

The advantage of Jollibee over McDonald’s is first; it’s a Filipino Brand. Which means the very core values of Jollibee is whatever the core values of a regular Filipino, like Family. Another would be taste, since it is a local brand; there is no need to localize it, making their products stays as it is. Whatever they are doing, they are doing it right.

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