McDonald case study
McDonald case study
McDonald’s uses a combination of marketing strategies to build loyalty and promote their products. They offer coffee loyalty cards and student discounts. The student offers are divided into two; those that use NUS Extra Card and those that present valid student ID. Many companies also use the NUS Extra card to offer discounts to fulltime, part-time and distance learning students. Coffee Loyalty Card & Student discounts Coffee Loyalty Card: This scheme is simple and straightforward. Customers only have to buy six cups of McDonald’s coffee to get the seventh cup free.
The offer applies to any regular size coffee and is redeemed by collecting transparent stickers which are found on scheme-cups and sticking them on the loyalty cards. Scheme-cups are the coffee cups that have the loyalty stickers attached to them. After purchase the customer peels off the stickers and pastes then on the loyalty card. This is unlike other loyalty schemes where a stamp is used to indicate a purchase. With student offer 1 free Hamburgers, Cheeseburgers or McFlurry Original are given with the purchase of an Extra Value Meal while free medium fries are given when purchased with Big Mac or McChicken Sandwich in student offer 2.
Registration & membership Coffee Loyalty Card: No formal registration or online activation is required. Customers are not required to register online or fill applications forms for membership and participation. They simply have to buy six cups of coffee to participate. Both student offers require no form of registration. However students must present either a valid student ID or NUS Extra card for redemption. Students are current members of universities. Redemption Customers qualify for a free cup of coffee when they collect six stickers.
This offer cannot be redeemed with other offers. Upon redemption the restaurant will collect and retain the loyalty card with stickers and present the customer with a free regular cup of coffee. Redemption can only be done once. If the customer wants another free cup of coffee they must get a new loyalty card and collect new stickers. Both student offers require the presentation of either a valid student ID card or a NUS Extra card before ordering to redeem the offer. Valid date Like most loyalty cards it also has a valid date.
The valid date is the duration in which redemptions can be made. McDonald’s loyalty cards last for one and the scheme does not allow redemption from the previous year. Therefore, customer must redeem their loyalty offers within a year. Both student offers are valid for one academic year. The dates are printed on both the student ID and NUS Extra card. Terms and conditions Terms and conditions inform the participants of the legal conditions by which they can participate and redeem offers or invalid offers and redemptions. It also sets out the valid date for redemption.
Both student offers stipulate conditions like: served after 10:30am at participating restaurants, products on sale may be restricted at different times, cannot be used in conjunction with any other offer and one offer per person, per card and per visit. Summary In this case study, we will look into the consumer behavior based on their loyalty in buying McDonald’s food product. McDonald’s has done a strategy whereby it targets the students so that their customer especially for the students will be loyal to their food product.
What McDonald has done is that, they have offer coffee loyalty cards and student discounts. Students offers are divided into two which who uses NUS Extra Card and for those who present valid student ID. For the coffee loyalty cards, it offers simple scheme whereby customers only have to buy six cups of McDonald’s coffee to get the seventh cup free. This is done by the customer buying any regular size coffee and is redeemed by collecting transparent stickers which are found on scheme-cups and sticking them on the loyalty cards.
For student discount, student are offered with ‘offer 1’ that gives free Hamburgers, Cheeseburgers or McFlurry Original with the purchase of an Extra Value Meal and ‘offer 2’ gives free medium fries when purchasing Big Mac or McChicken Sandwich. The registration for the coffee loyalty cards is very simple whereby the customer only has to buy six cups of coffee to participate. For the student offer, the only thing that they must do is flash a card of their valid student ID or NUS Extra card for redemption of either ‘offer 1’ or ‘offer 2’.
The coffee loyalty cards does has its valid date which is the duration where redemption can be made within that time period, and usually last only within the a year and cannot be redeem for next year and so. The student card is valid for only one academic year, which the dates that are printed on the student ID and the NUS Extra card. The terms and condition usually is to inform participants of legal conditions of what they can participate and redeem offers or even invalid offers and redemptions.
The terms and conditions also set out the valid date for redemption. Students offer in terms and conditions are for example served only after 10. 30 am, products sale limited at different time, cannot be used with any other offer and offer only per person, per card or per visit. Important points Loyalty cards and discount as a marketing strategy to increase customer loyalty- It is said that the success of a firm depends largely on its capability to attract consumers towards its brands.
The definition of customer loyalty is ‘the biased, behavioral response, expressed over time, by some decision making unit with respect to one or more alternative brands out of a set of such brands, and is a function of psychological processes’ (M. Mellens et. Al, 1996). There are many approaches in making customer loyal to some product or services, in the behaviorally loyal customer we can categorize them as 3 types which are forced to be loyal, loyal due to inertia and lastly is how in this case study McDonald uses is functionally loyal.
Forced to be loyal is for example when a company act as a monopoly, whereby poor financial customer has limited choice in selecting his goods. The second point is loyal due to inertia, this is due to customer have previously experience the product and therefore consider it to be the best option in terms of brand. The last part is where McDonald uses its style of gaining loyalty is by using the functionally loyal technique, this is whereby customer will be loyal to a brand due to a reason for them to be.
Let’s take example on the McDonald’s loyalty case study, the coffee loyalty card requires student to buy 6 cup of coffee to get the seventh free cup of coffee. Student will be ‘loyal’ by coming again and again until they get the redemption for the free coffee, targeting students with coffee is a good idea since most student need to reduce physical fatigue and to restore alertness when drowsiness occur. The coffee loyalty card whereby adding stickers is also a fun new way to give promotion as well as a reminder of the students to get the redemption when seeing the coffee loyalty card.
The discounts for students also triggers their loyalty towards the McDonald’s food product, by buying of either ‘offer 1’ or ‘offer 2’ they can get free food based on the discount promotion for students that is offered. Giving valid date and also terms and conditions to increase customer loyalty- Other than that, giving valid time for the promotion is also a good plan, this is something like a trigger for the customer to be more loyal since they have limited time to gain the advantage in buying McDonald’s food product.
The student will be coming again and again to the restaurant to get the redemption before the date of promotion or coffee loyalty card expires. Even after the promotion or loyalty card expires, there is a high chance for the students to be coming back again since they have tested the food product which can make the customer to fall into the ‘loyal due to inertia’ category of loyalty, usually McDonald food product is considered to be very delicious thus can attract more customer to be loyal to them.
The term and condition is something can help in making the promotion a little bit ‘hard to get’ so that student have limited access to promotion so that they can have a little bit of excitement in getting the redemption and so on. Conclusion As for the conclusion, based on this case study we can see how customer can be loyal towards certain product, services or company. McDonald itself has done a lot of promotion not only regarding the coffee loyalty card and students promotion. Other promotion that can be seen such as the lunch and dinner promotion, this is a cheaper price compare to the normal hour price.
Having other promotion such as the happy meal that gives toys to children, this can also attract children and at the same time tagging along their parents to eat as well at the McDonalds. Not to forget that McDonald has also one of the best delicious food in terms of fast food restaurant, with its reasonable price, having also drive thru for its busy customer and on. Each company, product or service itself must be able to capture value to its customer and strengthen their customer loyalty towards them, so they must develop good strategy plan to do so.
Subject: Loyalty program,
University/College: University of California
Type of paper: Thesis/Dissertation Chapter
Date: 27 September 2016
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