Distribution Strategy Essay
The core of this presentation is to discuss the theory of distribution strategy with the underlying real life examples of McDonald’s fast-food restaurants in Australia. In other words, the aim is to discuss McDonald’s distribution channel, the way this fast-food restaurant gets its products to the market. Nonetheless, this presentation will demonstrate that McDonald’s distribution strategy is effective in many cultures. In the theory of marketing mix, place (distribution) determines where the product will be sold and how it will get there. In fact, McDonald’s is the leading global foodservice retailer, with more than 30,000 local restaurants serving nearly 46 million people each day in 121 different countries.
Approximately 80 percent of all McDonald’s restaurants worldwide are owned and operated by independent franchisors. Furthermore, at the essence of place decisions, Kotler (et al., 2001, p. 513) claims that, “retailers, particularly image fast foods chains often state their seven P’s of marketing to be, that is location, location, location, location, location, location and location.” Hence, a retailer’s location is the key to attracting customers. The costs of the building or leasing facilities is a major factor on the retailer’s profits. Thus, site location decisions are among the most important the retailer make (Kotler, et al., 2001, p. 513).
On the other hand, McDonald’s opened its first restaurant in Australia in December 1971. Today there are more than 690 restaurants throughout Australia and serving in excess of one million customers per day and employing over 55,000 staff. Therefore, you can find them everywhere in Australia, where some of the McDonald’s are open 24 hours per day which satisfy people’s needs and wants, especially for exists their hunger. This kind of distribution strategy is called “intensive distribution”, means marking the product available for sale through all possible channels of distribution. As defined by Kotler (et al., 2001, p. 487), “intensive distribution is stocking the product in as many outlets as possible.” In addition, this strategy must be designed to reach the consumer wants at anytime and anywhere.
Vertical marketing network (VMN)
Furthermore, to quote Kotler (et al., 2001, p. 482), a franchise organization is “a contractual vertical marketing network in which a channel member called a franchisor links several stages in production-distribution process”. McDonald’s has adopted the service-firm-sponsored retailer franchise network, in which a service firm licenses a network of retailers to bring its service to consumers (Kotler, et al., 2001, p. 482). Nevertheless, McDonald’s caters to a large consumer market with varying tastes and thus cannot afford to introduce products without familiarizing itself with provincial preferences in food.
For this reason, McDonald’s distributes its products in foreign locations with the help of franchisors who are well aware of what works in their country. Moreover, these franchisors also provide insight to the company on its diverse customers and helps McDonald’s achieve its vision of “being the world’s best quick service restaurant experience.” In brief, this is an extremely intelligent distribution method since it helps in providing people with the kind of products they desire, maintaining the franchise reputation worldwide.
To encourage repeat customer visits, McDonald’s are intensifying the efforts to ensure the restaurant interiors and exteriors are clean and welcoming. Moreover, McDonald’s intends to regain the status as the gold standard for clean restaurants. Furthermore, McDonald’s are giving the business a fresh edge in many places by rebuilding, renovating and re-imaging the restaurants. The experiences in Australia demonstrate that doing such can result in improved sales and profitability.
McDonald’s ensures consistent products by controlling every stage of the distribution. In addition, regional distribution centres purchase products and distribute them to individual restaurants. On the other hand, when designing its channels, a company needs to consider competitors’ channels. Yet, it may want to compete in or close to the same outlets that carry competitors’ products (Kotler, et al., 2001, p. 486). Thus, food companies want their brands to be displayed next to competing brands. Meanwhile, McDonald’s adopted this setting channel objective as a view and therefore wants to locate near KFC. On the other hand, McDonald’s uses essentially the same competitive strategy in every country as be the first in a market and establish the brand as rapidly as possible by advertising very heavily. However, the strategy has helped McDonald’s develop a strong market share in the fast-food market around the world.
Moreover, according to Kotler (et al., 2001, p. 513) store must have a planned atmosphere that suits the target market and moves customers to buy. In addition, McDonald’s determine the locations for reaching a widely spread population. Hence, McDonald’s are turning their stores into theatres that transport customers into unusual, exciting shopping environments that designed to meet the taste of target markets. For instance, McDonald’s Blacktown is one of McDonald’s Australia’s newest restaurants, it has create a locate playgrounds for children to enjoy.
In conclusion, McDonald’s improve the frequency of their deliveries, form relevant partnerships and implement alternate distribution strategies to effectively capture market and build international brand name based on hygienic, healthy, appetizing fast food consistently worldwide. Adopting market study and focusing on location of franchise, MacDonald’s ensures market niche for food product distribution is a definite success story.
▪ Kotler, P., Brown, K., Adam, S., & Armstrong, G., 2001, Marketing, 5th Edition, Pearson Education Australia, Frenchs Forest, NSW