Getting to know the sources of competitive advantage. Consideration of the characteristics of the implementation of the marketing strategy. Characteristics of branding forms: corporate, emotional, digital. Analysis of the online advertising functions.
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The topic of product's competitiveness is greatly debated today among managers, politicians as well as academics. Globalization and changes in the world economy over the last years have raised new challenges for firms, industries and countries. The popularity of the concept of competitiveness is clearly demonstrated by the fact that there is an increasing interest around the issue of competitiveness benchmarking at the country level as well as the policies through which governments can enhance national industrial competitiveness.
A competitive advantage refers to the position of superiority within an industry that a firm has developed in comparison to its competitors. Firm level competitiveness indicated a firm's ability to design, produce and market products superior to those offered by competitors, where superiority can be evaluated from several factors, like price, quality, technological advancement, etc. Competitiveness can be considered at different levels of aggregation: firm, industry, and country.
In very simple terms, success can be intended as achievement of company objectives. Hence, performance should be measured in terms of how an organization manages its critical success factors. Today, beyond financial or market-based indicators, measures of competitiveness increasingly include other variables such as innovativeness, quality, and social ones like ethical standing, social responsibility, working conditions of employees, etc. Given the aim of our study, the first question we should address is why and to which extent it makes sense to analyze competitiveness at the firm level.
From an empirical point of view, research on the influence of firm and industry effects on performance shows that a relevant percentage of the variance in profitability is attributed to firm-level variables. The analysis of the sources of variance in firm performance is a key issue in both industrial organization and strategic management studies. Fundamentally there are least two main views of the origin of a firm's competitive advantage.
On one side, industrial organization scholars focus on the influence of industry-related determinants of firm performance and particularly emphasize the importance of factors like concentration, entry and exit barriers and economies of scale. Classical industrial organization scholars claim that a firm can neither influence industry conditions nor its own performance. Therefore, the competitive advantage originates from external sources rather than internal (firm-specific) sources. A modified framework has been advanced by the new industrial organization scholars which recognizes that firms have a certain influence on the relationship between industry structure and a firm's performance . According to Porter, competition within an industry is defined by five structural parameters: current competition within the industry, bargaining power of suppliers, bargaining power of buyers, threat of new entrants, threat of substitute products or services. In Porter's view, the paths of industry evolution depend (among other things) on firms' strategic choices. On the other hand, strategic management
1. Components of competitiveness of the product
1.1 Types of Competitive Advantages
Sources of competitive advantage
Technology and innovation for competitive advantage
The term innovation has a commercial aspect different from scientific research. Innovation has a very important role in economic development of countries, because innovative companies, through commercializing their research and development results, are creating new and nonexistent value. Furthermore these same companies are getting an important share of the newly created value. By this way, they are mainly creating wealth for themselves, for their country and for the world. Innovation includes both product and service and process innovations. Product innovations are products that are perceived to be new by either the producer or the customer; the latter includes both end- users and distributors. Process of innovation refers to new processes which either reduce the cost of production or enable the production of new products . In spite of the increasing importance of innovation and the role played by technological capabilities in a firm's growth trajectory, little is known how technological innovation in different organizations is driven by their technology strategy, the plan that guides the accumulation and deployment of technological resources and capabilities. That is, the most innovative firms engage in a continual search for better products, services, and ways of doing things. They try to continuously upgrade their internal capabilities and other resources. Aggregate innovative capacity of a nation is derived from the collective innovative capacity of its firms. The more innovative firms a nation has, the stronger that nation's competitive advantage. Innovation also promotes productivity, the value of the output produced by a unit of labor or capital. The more productive a company is, the more efficiently it uses its resources. The more productive the firms in a nation are, the more efficiently the nation uses its resources . Innovation and entrepreneurial activity are the engines of long-run economic growth. Often, entrepreneurs first commercialize innovative new products and processes, and entrepreneurial activity provides much of dynamism in an economy. For example, the economy of the United States has benefited greatly from a high level of entrepreneurial activity, which has resulted in rapid innovation in products and processes.
Human resources for competitive advantage
Human resources are a term used to describe the individuals who comprise the workforce of an organization, although it is also applied in labor economics to, for example, business sectors or even whole nations. Firms can develop this competitive advantage only by creating value in a way that is difficult for competitors to imitate. Traditional sources of competitive advantage such as financial and natural resources, technology and economies of scale can be used to create value. However, the resource-based argument is that these sources are increasingly accessible and easy to imitate. Thus they are less significant for competitive advantage especially in comparison to a complex social structure such as an employment system. If that is so, human resource policies and practices may be an especially important source of sustained competitive advantage.
Within the best practices approach to strategic HRM, the first practice, internal career opportunities, refers to the organizational preference for hiring primarily from within. Second, training systems refers to whether organizations provide extensive training opportunities for their employees or whether they depend on selection and socialization processes to obtain required skills. Third, appraisals are conceptualized in terms of outcome-based performance ratings and the extent to which subordinate views are taken into account in these ratings. Fourth, employment security reflects the degree to which employees feel secure about continued employment in their jobs. Although formalized employment security is generally on the decline, organizations may have either an implicit or an explicit policy. Fifth, employee participation, both in terms of taking part in decision making and having opportunities to communicate suggestions for improvement, has emerged as a strategic HRM practice. Sixth, job description refers to the extent jobs are tightly and clearly defined so that employees know what is expected of them. Finally, profit sharing reflects the concern for overall organizational performance on a sustainable basis argue that the future HR professional will need four basic competencies to become partners in the strategic management process. These include business competence, professional and technical knowledge, integration competence and ability to manage change. Human Resources seeks to achieve this by aligning the supply of skilled and qualified individuals and the capabilities of the current workforce, with the organization's ongoing and future business plans and requirements to maximize return on investment and secure future survival and success. In ensuring such objectives are achieved, the human resource function purpose in this context is to implement the organization's human resource requirements effectively but also pragmatically, taking account of legal, ethical and as far as is practical in a manner that retains the support and respect of the workforce.
Organizational structure for competitive advantage
Organizations are a variant of clustered entities. An organization can be structured in many different ways, depending on their objectives. The structure of an organization will determine the modes in which it operates and performs. Organizational structure allows the expressed allocation of responsibilities for different functions and processes to different entities such as the branch, department, workgroup and individual. Individuals in an organizational structure are normally hired under time-limited work contracts or work orders, or under permanent employment contracts or program orders. Also, this correlate of changing structures and processes is reinforced by increased competitive pressure forcing companies to focus on their core competencies, redrawing their boundaries around what constitute and support their competitive advantage. This pressure is reflected in the changing organizational structures from a functional to a multi-divisional one, through the shifting of business towards smaller, decentralized units. When superior skills or resources exist outside the company, firms are making increased use of strategic alliances to supplement and sometimes enhance their own competencies. Whenever by alliances, outsourcing or downscoping, firms appear to be drawing in their boundaries around narrower spheres of activities. An effective organizational structure shall facilitate working relationships between various entities in the organization and may improve the working efficiency within the organizational units. Organization shall retain a set order and control to enable monitoring the processes. Organization shall support command for coping with a mix of orders and a change of conditions while performing work. Organization shall allow for application of individual skills to enable high flexibility and apply creativity. When a business expands, the chain of command will lengthen and the spans of control will widen. When an organization comes to age, the flexibility will decrease and the creativity will fatigue. Therefore organizational structures shall be altered from time to time to enable recovery. If such alteration is prevented internally, the final escape is to turn down the organization to prepare for a re-launch in an entirely new set up.
Strategies for Competitive Advantage
The differentiation and cost leadership strategies seek competitive advantage in a broad range of market or industry segments. By contrast, the differentiation focus and cost focus strategies are adopted in a narrow market or industry. A firm positions itself by leveraging its strengths. Porter has argued that a firm's strengths ultimately fall into one of two headings: cost advantage and differentiation. By applying these strengths in either a broad or narrow scope, three generic strategies result: cost leadership, differentiation, and focus. These strategies are applied at the business unit level. They are called generic strategies because they are not firm or industry dependent. The following Porter's generic strategies:
Strategy - Differentiation
This strategy involves selecting one or more criteria used by buyers in a market - and then positioning the business uniquely to meet those criteria. This strategy is usually associated with charging a premium price for the product - often to reflect the higher production costs and extra value- added features provided for the consumer. Differentiation is about charging a premium price that more than covers the additional production costs, and about giving customers clear reasons to prefer the product over other, less differentiated products. Firms that succeed in a differentiation strategy often have the following internal strengths:
1) Access to leading scientific research.
2) Highly skilled and creative product development team.
3) Strong sales team with the ability to successfully communicate the perceived strengths of the product.
Strategy - Cost Leadership
With this strategy, the objective is to become the lowest-cost producer in the industry. Many (perhaps all) market segments in the industry are supplied with the emphasis placed minimising costs. If the achieved selling price can at least equal (or near) the average for the market, then the lowest-cost producer will (in theory) enjoy the best profits. This strategy is usually associated with large-scale businesses offering standard products with relatively little differentiation that are perfectly acceptable to the majority of customers. Occasionally, a low-cost leader will also discount its product to maximise sales, particularly if it has a significant cost advantage over the competition and, in doing so, it can further increase its market share. Firms that succeed in cost leadership often have the following internal strengths:
· Access to the capital required making a significant investment in production assets; this investment represents a barrier to entry that many firms may not overcome.
· Skill in designing products for efficient manufacturing, for example, having a small component count to shorten the assembly process.
· High level of expertise in manufacturing process engineering.
· Efficient distribution channels.
Strategy - Differentiation Focus
In the differentiation focus strategy, a business aims to differentiate within just one or a small number of target market segments. The special customer needs of the segment mean that there are opportunities to provide products that are clearly different from competitors who may be targeting a broader group of customers. Companies following focused differentiation strategies produce customised products for small market segments.
They can be successful when either the quantities involved are too small for industry-wide competitors to handle economically, or when the extent of customisation (or differentiation) requested is beyond the capabilities of the industry-wide differentiator. The important issue for any business adopting this strategy is to ensure that customers really do have different needs and wants - in other words that there is a valid basis for differentiation - and that existing competitor products are not meeting those needs and wants.
Strategy - Cost Focus
Companies that compete by following cost leadership strategies to serve narrow market niches generally target the smallest buyers in an industry (those who purchase in such small quantities those industry-wide competitors cannot serve them at the same low cost). Here a business seeks a lower-cost advantage in just on or a small number of market segments. The product will be basic - perhaps a similar product to the higher-priced and featured market leader, but acceptable to sufficient consumers.
1.2 Introduction of marketing strategy
Marketing strategy is very much important for developing any of the business. Without it, the effort of the business to attract customer is random and very inefficient. The main focus of efficient strategy must make sure that the product should fulfill the demands of the consumers and as well as it maintains the long-term relationship with those consumers.
To achieve this, it is necessary to initiate flexible strategy that responds to change in customer demand and perception. It may also give brand name to the product which will help you to run your business in new markets smooth and efficient manner. First of all the main purpose of marketing strategy should be to identify the weather the target customers are satisfied with your product and services of your business. Once you have created and implemented your strategy, try to identify the feed from you customer and if any changes or improvement is required apply it for the maximum satisfaction of customers. This helps you to identify that, where your strategy needs to be improved and how it can be developed, so that it can be implemented for effective action. Before applying any strategy in the business proper planning programs must be organized within the members of the organization.
MEANING OF MARKETING STRATEGY
A Marketing strategy defines and describes the objectives or planning through which you are going to satisfy your consumer needs in the selected target market. It does not involve written work but, it includes communication between different departments of the business enterprise for example: sales department, managers, executives etc.
In fact it is a set of strategies that implied by the organization in order to increase the growth and development of the business.
Normally strategy deals with the manner in which your organization plan to achieve the consumer satisfaction and maximize the profit.
DEFINITION OF MARKETING STRATEGY
Marketing Strategy is a set of specific ideas and actions that outline and guide decisions on the best or chosen way to create, distribute, promote, and price a product or service (manage the marketing mix variables). м
A marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage. A marketing strategy should be centered on the key concept that customer satisfaction is the main goal.
1. identifies needs and wants of consumers
2. determines demand for product
3. aids in design of products that fulfill consumer s needs
4. outlines measures for generating the cash for daily operation, to repay
5. debts and to turn a profit
6. identifies competitors and analyzes your product's or firm's competitive advantage
7. identifies new product areas
8. identifies new and/or potential customers
9. allows for test to see if strategies are giving the desired results
1. identifies weaknesses in your business skills
2. leads to faulty marketing decisions based on improperly analyzed data
3. identifies weaknesses in your overall business plan
1.3 Branding as a way to increase competitiveness
To create a brand is not limited in any particular kind of product or service, but it is necessary for organization too; no matter public organization, private organization, political party and even through education institute. Obviously, having a unique and strong brand will bring the notable, reputation and good image to its organization.
The advance of technology, new inventions, innovation has been developed rapidly and continuously. The main purpose is to response the customers' uncertain favor and needs caused by the aging of the population, income ratio, tastes and values that have been imitated; People pay much attention to health and beauty as well as rules that became something that many countries will need to take action in order to be part of a global economic, social and politic.
These factors result in increasing of competition of goods production and services more seriously. With the competitive advantage through the use of limited productive resources, many countries have turned to setting up strategies and seeking new approaches to create advantages beyond their competitors. There is one strategy that many countries might not deny and it's gaining popularity as a business strategy to success which is branding. As mentioned above, any business with a reputable brand, loyal consumers, the greater chance to be succeeded.
In short, the main purpose of branding is to get more people to buy more stuff for more years at a higher price.
Since each company has its own characteristic and there are a number of ways how to branding, manager can choose whether which one it is suitable with company's situation. This paper presents the trend of various forms of branding that widely used by successful companies which also describe the pros and cons of each method.
1.4 The various forms of Branding
Corporate Branding was began due to the overpopulated in the market with both large and small companies and overexposed with marketing advertising. It has made the complexities and difficulties for company to be differentiation. Plus, the competition in the global business environment is tough and achieving a unique position and competitive advantage is becoming more and more difficult and expensive. Corporate branding is the practice of using a company's name as a product brand name. It is an attempt to use corporate brand equity to create product brand recognition. It is a type of family branding or umbrella brand. Disney, for example, includes the word "Disney" in the name of many of its products; other examples include IBM and Heinz. This strategy contrasts with individual product branding, where each product has a unique brand name and the corporate name is not promoted to the consumer.
When brand is to present the company's soul to the world, can CEO be a brand then? In today's crisis-prone environment, the CEO and senior executive team are personally responsible for the brand, not just in selecting and managing the people who develop and protect it, but also by their own behavior and personal standards.
In many ways, the CEO, whether past and present, personifies the corporation and presents its values to the world.
The method is to make CEO as the Spokesperson in communication, introduction and delivery the business content to customers, also create a good image to company as well as products. However, the qualification of person who is going to be CEO Branding must be reliable, honest, and talented and have the ability to communicate, influence customers, also know how to solve problem in right way with the right time.
Good CEO Branding must treat consumers feel two things. 1st is the feel that they got the most valuable thing that more than worth enough for what they have paid and 2nd is the feel of sincerity of the executives did not exploit, sell goods just for profit, instead of it is to maximize the benefits to consumers.
The good example of CEO brand can be Steve Jobs the co-founder of Apple Corporation. When people think of Apple, the thing pop up in their mind is Steve Jobs; and he is an American businessman and inventor widely recognized as a charismatic pioneer of the personal computer revolution. He is the CEO Branding by his super genius innovator, his characteristic, his appearance, his speech, his dress and so on, that reflects the brand of his product. People, believes and trust on what he presented. That can add significant impact toward the brand of Apple product too.
Rather than huge advertisements and image or brand awareness, branding boils down to how a product makes a customer feel and that is where emotional branding comes in and that is where the competitive edge also comes in.
It has been widely accepted for years that brands offer psychological and social benefits. These benefits go beyond the features and function of a particular product; they extend to the overall customer experience and the lingering psychological and emotional aspects of the brand. Sometimes, customers' decision to buy product or service does not base on appropriation, but it comes from the order from their right brain which controls feelings and emotions. Many times that customers decide to buy something that they can feel, touch more than strict with the quality, price, or what benefits they can get from that product. Fashion products seem to be good example in this case. If customer is just only interested in convenience and price, luxury brand like louis vuitton, channel etc would not be able to sell. Fortunately, millions of people are happy and proud when they are wearing Armani Shirt, Boss jacket and carrying Fendi bag.
Co-branding or sometimes known as Brand Partnership, has background from western countries. One of the well known companies who used this strategy is the Tricon, an independent company, which owned and franchised the KFC, Pizza Hut, and Taco Bell brands worldwide. By definition from www.wikipedia.org, “Co-Branding” is an arrangement that associates a single product or service with more than one brand name, or otherwise associates a product with someone other than the principal producer. The typical co-branding agreement involves two or more companies acting in cooperation to associate any of various logos, color schemes, or brand identifiers to a specific product that is contractually designated for this purpose. The main purpose of co-branding is to strengthen the product's reputation or image in order to make it more sellable. Co-branding also increases awareness of the lesser known brands: Having a big brand appear next to theirs on the same product/service is like an approval from the big name. Despite the increasing applications, the potential disadvantages associated with co-branding strategies are the risks and lack of control in consumers' perception towards the "new" co-branded product. Mismatch could occur when combining two brands, thus co-branding may affect partner brands negatively
Due to these days is the era of information technology, the way of communication has been changed; fast internet creates new and fast format of communication especially through the social web and social media. There is now a plethora of digital channels which can be used to hold a dialogue between a Brand and a Consumer, or groups of consumers. Digital Branding creates new opportunities for brand building; changes the way brands behave interact and speak. From animating brands across web and digital platforms to creating websites and social media expressions, designing applications and managing brand assets in real time.
To do the digital branding, you can consider some key issues such social media, Search Engine Optimization, and online advertising.
Social media has a huge impact on brands and how brands are marketed. As we can see that many brand name products or stores become the topic of discussion on Facebook, Twitter, LinkedIn, Google+, or any number of blogs. These brand impacts mark conversations in at least three ways. 1st Social media can help people involve more in Product Ratings and Reviews, for example of social product reviews, when several video began circulating on YouTube showing how to open a Kryptonite bike lock with a Bic pen. The videos caused Kryptonite, who was a leader in bike locks for over three decades, to redesign its product. 2nd social media has the impact to customer behavior which can certainly impact a brand's reputation and last one is social media has effected to the innovation of brand market
Internet advertising is also another way to create digital branding opportunities across web properties your customer might be visiting and helps to increase its online visibility. Even though not all impressions lead to measurable success, they increase the exposure, regardless of what some might say about banner blindness. Marketers budget continue to shift to online advertising, social media and Search Engine Optimization, leaving many traditional publishers to rethink their business model.
competitive marketing branding
In that part we have tried to examine different types of competitiveness and looked through various strategies. I we tried to give clearly definition and meaning of a marketing strategy and name some of its advantages and disadvantages. We have also tried to pinpoint significance of branding in building an efficient marketing strategy and to mention all its types. The most important part of marketing is to build brilliant marketing strategy which consists of various parts and every point should be done in a proper way. I would like mention again about such important components of Sources of competitive advantage as Technology and innovation, Organizational structure, Cost Focus and of course, human resources. So, in increasing competitiveness of a product necessarily implies building a marketing strategy which consists of many points, and each point cannot be missed.
2. Marketing strategy of McDonald's Corporation
2.1 Business strategy
Franchise model - As per franchise model of McDonald s only 15% of the total number of restaurants are owned by the Company. The remaining 85% is operated by franchises. 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.
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.
Act like retailer think like a brand - McDonald s focuses not only on delivering sales for the immediate present, but also protecting its long term brand reputation.
competitive marketing branding
2.2 Mcdonald s marketing mix (5ps) strategy
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:
Product includes 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. McDonalds has purposely kept its product depth and product width limited. McDonalds had first studied the behavior of the Indian customer and provided a totally different menu as compared to its menu offered in International market. It removed pork, beef and mutton burgers from the menu. India is the only country where McDonalds serve vegetarian menu. Even the sauces and cheese used in India are 100% vegetarian. McDonalds continuously innovates its products according to the changing preferences and tastes of its customers. The recent example is the introduction of the Chicken Maharaja Mac and latest introduction of chicken style is Chicken Mcnuggets. McDonalds brings best product of quality and of best features as per the preference and demand of the target market.
The place mainly consists of distribution channels and outlets of the company. It is considered as very important because the product must be available to the customer at the right place, at the right time and in the right quantity. In U.S.A nearly 50% of outlets are situated within the distance of 3 minutes. There are certain degree of fun and happiness that McDonalds provides to its customers. It provides value position based on the needs of the customer. McDonalds offers proper hygienic atmosphere, good abidance and better services. Now McDonalds have also started offering internet facilities at their outlets, along with music system through radio, not the normal music but the music which is preferred by young generation in order to attract them. There are also games for children the one example is air hockey. Children play games till the time there parents spend quality time in McDonalds.
The promotional activities adopted by the McDonald helps to communicate efficiently with the target customers. The diagram gives idea about the promotion strategy of McDonalds. Application of above mentioned Communication Mix describes the cost that is feasible as per the consumers. McDonald's corporate used advertising, personal selling, sales promotion, public relations, and direct marketing and became world s largest leading Burger Empire. These five promotion tools are used by McDonalds to integrate marketing communication program which allows McDonalds to access the communication channels clearly, consistently and easily transfers messages and product to the target audiences.
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 McDonald s 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. McDonald s does its promotion through television, hoardings and bus shelters. They use print ads and the television programmes are also an important marketing medium for promotion. Personal selling is most effective tool for building buyers preference, convenience and actions. Personal interaction allows knowing for feedback and adjustments if required. If the organization had a good Relationship with Buyers they are more attentive towards personal selling. In personal selling McDonalds employees working in different outlets are the best example of personal interaction, the employees are directly serving the customers so, and the face to face communication is easily possible. In the McDonalds outlet there are such staff which are appointed for personal selling they are the one who perform the activities regarding selling up of goods to customers. Sales promotion activity consist of promoting the business unit through organizing various contest, programmes, functions, distribution of free discounts coupons etc that attracts attention of the customers, Also offers strong purchase incentives, dramatizes offers, boosts sagging sales Stimulates quick response; Short-lived; Not effective at building long-term brand preferences.
McDonalds organizes several sales promoting contest and programmes in different retail markets and outlets in which they distributes free discounts coupons. The statue of Mascot McDonalds is always there for any occasions that are also one of the logo of McDonalds.
Public Relations are also an important part of the McDonald's marketing strategy. The restaurant employees play a huge role in interacting with the public. On a day-to-day basis the employees commit themselves to customers and the customers' feelings toward the brand. McDonald's feels that before they communicate with their customers they need to be aware of what their competitors are communicating, so they can create a beneficial difference between themselves and the competitors. Many forms: Telephone marketing, direct mail, online marketing, etc.; Four distinctive characteristics: Nonpublic, Immediate, Customized, Interactive; Well-suited to highly-targeted marketing efforts. Direct marketing is also one of the efficient tools for promotion. The McDonalds uses tool in the home delivery services in which they directly serve the order to their home. Also they have a websites which are more in preference for direct marketing in that they usually mentioned all the new offers along with the contact number of your nearby outlets.
McDonald s understands the importance of both its employees and its customers. It understands the fact that a happy employee can serve well and result in a happy customer. McDonald continuously does Internal Marketing because if the internal marketing is effective it will automatically lead to in the success of external marketing. Internal marketing includes hiring, training and motivating employees. In
this way they can easily serve customers and the result will be the smiling faces of the customers. The level of importance has to be placed in the following order (the more important people are at the top):
2. Front line employees
3. Middle level managers
4. Front line managers
The punch line I m loving it м is an attempt to show that the employees are loving their work at McDonalds and will love to serve the customers.
There have been many McDonald's advertising strategy and slogans over the years. McDonald s is one of the most widespread fast food advertisers. McDonald's Canada's corporate website says that the business campaigns have always focused on the "overall McDonald's experience", rather than just product. The purpose of the image has always been "portraying warmth and a real slice of everyday life." Its TV ads, showing various people engaging in popular activities, usually reflect the season and time period. Finally, they have never in their advertising history used negative or comparison ads pertaining to any of their competitors; the ads have always focused only on McDonalds alone.
McDonalds has for decades maintained an extensive advertising campaign. In addition to the usual media television, radio, and newspaper, the company makes significant use of billboards and signage, sponsors sporting events ranging from Little League to the Olympic Games. Television has always played a central role in the company's advertising strategy.Today, McDonald's has used 23 different slogans in United States advertising, as well as a few other slogans for select countries and regions because slogans is also considered as important factor in advertising strategy.
McDonald s positions itself as the leader in quick service restaurants. In order to maintain their standard, they have started marketing to a younger set of persons, much in the same way that their I m Loving It м campaign does. They have send out FSIs (free standing inserts) as designed at the end of this report to ensure that their loyal customers will be motivated enough to try the new campaign even though they have always loved and used McDonalds. These FSIs will also act as a way to get customers who may have never been to the store. Users and non-users alike will use the Club McDonalds to their advantage. They expect that their younger target will seek out memberships in Club McDonald s. The online points-tracker and profile will add to the innovation factor. No need of paperwork when figuring out your point totals and prize eligibility. This is easy to use aspect of the promotion is appealing to those who were born with computers. Club McDonalds is targeted at younger people who are familiar with credit cards and some of the rewards cards that are part of them.
CUSTOMER PERCEPTION AND CUSTOMER EXPECTATION
Customer perception is a key factor affecting a product s success. Many potentially changed products have failed simply because of their inability to build a healthy perception about themselves in the customer s minds. McDonalds being an internationally famous brand brings with it certain expectations for the customers.
VISITS MCDONALDS TO
A parent with 2 children
Visits McDonald s to give the children a treat.
Want to visit McDonald s as it is a fun place to eat.
A business customer
Visits McDonald s during the day as service is quick; the food tastes great and can be eaten in the car without affecting a busy work schedule.
Hangout with friends, but keep it affordable.
Customers expect it to be an ambient, hygienic and a little sophisticated brand that respects their values. The customer s expect the brand to enhance their self-image. Customer responses obtained at the Vile Parle, Mumbai outlet confirmed the fact that they connect strongly with the brand. However, fulfilling some of the customer expectations like a broader product variety, provide McDonald s a great scope for improvement.
2.3 Competitive Strategy
OPERATIONS COMPETITIVE STRATEGY
McDonald s Corporation competes in a challenging market segment by providing need-satisfying products to customers. In this segment, ineffective competitors often fail without proper strategies. To sustain its viability, the McDonald s corporation employs an effective competitive strategy to make it stand out against competitors such as other fast food restaurants. McDonald s competes on several bases, including:
their strongest priority is 3making customers happy м. The company recently made strong changes to its process by introducing the Made for You м system.
COMPETITOR S ANALYSIS
McDonald s has been a leading fast-foods outlet in Vile Parle. But the outlet understudy has other competitors eating away into its market share. In addition to its traditional rivals- KFC, Dominos, Pizza Hut - the firm encounters new challenges. Jumbo King competes using a back-to- basics approach of quickly serving up burgers for time-pressed consumers.
On the higher end, the KFC has become potent competitor in the quick service field, taking away customers from McDonald s. Perhaps in the new environment, fast, convenient service is no longer enough to distinguish the firm. At this time, a new critical success factor may be emerging: the need to create a rich, satisfying experience for consumers.
This brings us to service and experience based competition which McDonald s can use for competitive advantage against Jumbo King. Keeping in mind the demographics of the area, McDonald s has Wi-Fi enabled the outlet to cater to the student community. It is for this overall Food, Fun & Folks м experience that customers pay a premium over the other competitors.
McDonald s competes on several bases mainly to make their customers happy by providing speedy, affordable, and nutritious foods.Through extensive market research and survey, the organization discovered that its customers desire speed as one of the restaurant s top priorities. Therefore, McDonald s vision aims to provide fast, friendly and accurate service м.
McDonald s realizes that specific targets are necessary to measure the performance of speed, and continuously takes relevant measurements to compare actual performance with desired targets.
To achieve efficient service times, the company utilizes proven, standardized training processes for its employees and new drive-thru layouts to reduce service times. Along with speed, McDonald s also competes by offering prices at a low cost.
To offer high quality products at low cost requires efficient processes throughout the entire McDonald s organization. Once again, this goal is built into their vision statement when they claim that We will be the most efficient provider so that we can be the best value to the most people м. McDonald s incorporates several ways of approaching to provide great value to its customers. One strategy that the company has employed for many years is the value meal.
The value meal allows customers to buy a sandwich, French fries, and beverage at a discount when purchased together. McDonald s restaurants offer from seven to twelve value meals, both for their lunch menu and breakfast menu. More recently, McDonald s began offering a value menu, consisting of many individual items costing only $1.00 each.
First tested in southern California, the value menu has proved to be very successful and has been since incorporated to the individual stores. Some individual franchise owners choose to offer daily specials of special menu items, such as 3$0.39 hamburger Wednesdays, м or other similar specials. Big Mac Mondays are a popular regional promotion.
McDonald s third main competitive base is nutrition. The organization understands that health trend is an increasingly popular trend therefore; the organization has recently focused extraordinary efforts to promote their new nutritious choices. Although not specifically built into the organization s vision, McDonald s has already introduced many options to achieve this goal. In the United States, Go-Active м meals have been offered within the last few years. These meals include a salad, bottled water, and a step-o-meter м to help customers keep track of how many steps they take a day. Other countries have seen similar healthy options.
The United Kingdom saw fresh fruit bags, containing apples and grapes, as an alternative to French fries. Not only does McDonald s care about its customers, but it is also considerate of its employees health. In Europe, the organization worked with external nutritionists to develop an Employee Guidebook м which contains tips and nutrition information for healthy lifestyles. McDonald s has assembled their Global Advisory Council on Balanced Lifestyles.
This council consists of exercise & obesity specialists, environmentalists, and other professionals to ensure that McDonald s takes appropriate steps in helping its customers achieve optimal health. The company is also utilizing technology to their advantage.
The current McDonald s website lets a user select any combination of menu items, place the items in the online bag, and conduct a nutritional analysis on their selections. The user can break down the analysis even further than a menu item, down individual condiments, including ketchup; pickles etc. Not only has the company introduced many steps to ensure nutrition, but it will strive to continue the trend toward nutrition. McDonald s plans to add additional healthy menu options (fruits and vegetables) increase nutrition awareness among McDonald s employees; conceive new ways to deliver nutrition information to its customers, and other actions.
CHANGE IN STRATEGY
Made for You
McDonald s organization recently underwent drastic strategy changes to serve better to their customers. Under their old system, м the company would make several sandwiches at once, and hold the sandwiches in a warming bin until purchased by a customer. Under this system, management had to accurately predict how much food had to be put on hold. Accurate prediction had to be used because if there were not enough food placed on hold, this would create the problem of increase waiting times for customers, and too much food would cause waste of expired items. McDonald s dramatically changed their strategy in order to stay competitive with other fast food organizations. In 1999, McDonald s spent $181 million to introduce their Made for You м system. Under this new system, standard food items are not held in a bin until they are sold. In the Made for You м system, modern technology greatly assists McDonald s operations. When a customer places an order, the sandwich items are immediately displayed on a computer monitor in the kitchen and a tone sounds to alert the kitchen staff. Upon a new order, an employee in the kitchen will toast the bun, and assemble the sandwich accordingly. Standard items simply list the name of the sandwich, while customized orders list the sandwich name and the desired condiments. Once the sandwich is assembled, it is presented to the food loading area, where a different staff person retrieves the sandwich and completes the order by adding French fries, desserts, etc. The system works the same for front counter orders as well as drive-thru orders. Unfortunately, the introduction of the Made for You м system did not come easily. McDonald s watched its customer satisfaction drop for the three consecutive years beginning in 1999. After further research, they realized that although the new system provided fresher food, it was not as quick as the previous system. Instead of reverting back to the old system, McDonald s continues to fine tune Made for You м and add new options to help the system work faster.
In order to cope with the first ever quarterly loss that resulted from inefficient use of the Made-for-you-system McDonald s has devised a new plan to increase profits. Previously, the corporation emphasized adding more restaurants to increase sales, but the new plan places emphasis on increasing sales at existing restaurants.
The new plan will reduce spending, to enable more cash to shareholders through dividends and share repurchases. Specific goals of the revitalization plan are to:
1) Attract new customers
2) Encourage existing customers to visit more often
3) Build brand loyalty
4) Create enduring profitable growth
The main goal is to increase sales by creating an exceptional customer experience. McDonald s plan is to achieve this goal by focusing on its people, products, places, prices, and promotions.
Table. Swot analysis
1) Strong brand
1) Low depth and width of product
2) Customer intimacy
3) Product innovation
4) Supplier integration
1) Expand into new cities
1) Changing customer lifestyle and taste
2) Entry into breakfast category
2) Increased competition from local fast food outlets.
Marketing Strategies implied by McDonald s clearly gives the entire comprehensive information that is necessary for the growth and development of a business enterprise. Basically, the strategies that are implemented by McDonald s includes many basic essentials features like market research, innovative ideas, customers views, forecasting consumers demand, planning, organizing etc, these are the few basic essentials elements that plays a vital role for the successful business and also in creating the brand name of a product. Today, in this fast moving dynamic world the demand for goods and services are increasing at an alarming rate due to which there is greater competency and competitors ruling in the market. Therefore, most of the companies adopt different types of marketing strategies in order to serve their customers in a more better and efficient manner than their competitors so that, their business can easily survive in the market. Even corporate companies are implementing various strategies from past many years. This shows that marketing strategies provides competitive edge for every business unit.
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