International Marketing: McDonald’s

Introduction

McDonald’s is one of the largest and most profitable companies in the global restaurants industry with over 36,000 locations spread out across the world (Bomkamp, S. 2016). The company started out in 1940 in California and has grown in the past 76 years to become a household name in the fast-food industry with numerous signature products that make the company unique in each one of its markets (Bomkamp, S. 2016). McDonald’s success is attributed to the company’s ability to venture successfully into new markets. For example, its entry to China was unexpectedly successful considering how unique the Chinese people are in terms of their culture and how successful they have been at resisting Western influence to retain their authenticity. The fast-food culture represented and propagated by McDonald’s is highly American, and yet the company manages to attract a sustainable customer base for their operations in China. Even though McDonald is facing challenges in some of its up markets such as the US, generally, the company has succeeded in internationalizing its operations.

Part 1

Marketing Mix

As a company in the restaurants industry, McDonald’s represents not only the quality of their products. McDonald relies heavily on both the products and services in their marketing strategy. The customers not only look forward to good quality food but also impeccable service in all the locations that they visit. The applied marketing mix in this organization can thus be broken down using the 4Ps of marketing to include product, price, place, and promotion (Moore and Pareek, 2010). The product at McDonald’s is based on intensive market research aimed to understand what the customers want to see on the menu. However, in the food industry, the needs and expectations of the customers are rather dynamic. The foods that the customers want on the McDonald’s menu tend to change with time thus the company continues to change their menu in order to keep up with the customers. The company, however, does not focus only on the menu or on the products that they are able to avail for their customers. They have to pay attention to the quality of service that the customers expect as well. In their market researches, the company has established that customers relate well to fast and friendly service with some room for customized orders rather than having to eat exactly what is on the menu. The competent customer service team that fits into the company’s goal keeps the majority of McDonald’s customers returning to the establishments. They are not only well treated but allowed to choose what will be put on their plates despite there being a set menu to guide their choices.

The price, on the other hand, is a monetary value placed on the cost of a given product preferably from the customer’s perspective. McDonald’s has persistently been able to determine their prices based on the targeted consumers with some of their establishments having both low end and high end products on the menu. For the McDonald’s India, for example, there are some items on the menu that cost between Rs 50 and R 60 while others cost less than Rs 30 (Bomkamp, S. 2016). The objective, in this case, is to ensure that the restaurants cater to both high end and middle range markets with their menu. The high end meals are mainly signature recipes, like McVeggie and McChicken burgers, while the lower pricing is attached to products such as the Chicken McGrill and the McAloo tikki burgers. The McDonald’s products are relatively more expensive than most fast-food brands in all their markets as a way of standing out from competition, but the company is able to differentiate their prices to cater to a wider market base.

In terms of promotion, McDonald’s has been known for holding many in-store promotions targeting various market segments. A recent promotion labeled happy meals entailed giving toys to children customers as a way of promoting the restaurants as child-friendly places where parents can bring their children for good and healthy meals meant for a child. Promotion entails not only advertising the brand on various media but also interacting well with the customers to engage them and win their loyalty to the brand in question (Pearson, D. 2014). For the most part, companies strive to create a bond with the customers based on their experience in the location. From the way a customer is received at a McDonald’s restaurant to the kind of food they are served and the price that they will pay, it can be appreciated that the company has focused on promoting the brand using all possible market communication strategies that are both direct and indirect. McDonald’s has a website with various offers and discounts as well as giveaways. In addition, they are known for tasty meals with healthy additions to suit the needs of an increasingly health-conscious clientele. Everything mentioned above is part of the company’s promotional strategy.

Initially, McDonald’s was mainly an American brand with foods that were considerably American in taste. However, with time the company was able to grow beyond national borders into other parts of the world where, despite being originally American, they had to fit in to the cultural contexts of their new clientele. The latter implies that while McDonald’s in any part of the world is likely to have a McChicken burger, they also try to incorporate local delicacies that would appeal to their local clientele despite the allure of American menu. To perform well, the company has been able to secure impressive locations for all their restaurants across the globe. With close to 40,000 McDonald’s locations, the company has been able to pay an incredible attention to the locations to ensure convenience, security, and space that would suit their targeted market (Bomkamp, S. 2016). The selection of a location for a McDonald’s is thus hinged upon multiple factors as determined by the company’s numerous market researches. Usually, McDonald’s restaurants are located in busy and convenient locations that are ideally spacious and not out of the way.  

Part 2

Internationalisation Process Theories

Internationalisation is considered to be a process that could take one of several approaches. Certain companies prefer the internationalisation to escaping competition and create a geographical niche while others use it to fight the competition. Either way, the choice of which internationalisation process theory to apply is dependent upon a company and an industry conditions that the specific organisation is operating within. According to Welch and Paavilainen-Mantymaki (2014), the internationalisation process happens in 9 facets. Whether a firm or an industry is global, regional, or national, there are advantages and disadvantages that determine what the company would do in their new venture. If the company is national and it is operating within a national industry, they have several advantages compared to any foreign-based competitors. The latter means that the company is prospective to use their own local suppliers, distributors, and the existing relationship with the local buyers. If the company is a regional entity that is trying to do business in a nationally structured industry, they would be expected to use their firm specific advantages to enter the new national industry while considering the psychic distance that needs to be bridged. A regional company venturing into a new market is similar to a local company that is venturing out into the international market except that the regional company has more experience and more resources to their advantage.

A global company seeking to venture into a nationally structured industry will have the same challenges as the regional company but with a higher psychic distance, more experience and even more resources. For a nationally structured industry, the company in question needs a local network to support the business (Welch and Paavilainen-Mantymaki, 2014). Therefore, while a national company may be able to create its supply chain system with ease, the regional and global companies may consider importing, acquiring, or partnering with the locals. Among other aspects, the main considerations for a nationally structured industry include access to its capital, management, relationships, resources, and market experience. The internationalisation process is mainly random, where the company chooses whether to go in alone or to acquire partners; whether to build the business or to buy an existing one.

On the other hand, in a regionally structured industry, a national firm would follow the sequential internationalisation process where they start small and grow gradually in the market as they gain experience, capital, management, and relations that enable them to compete with the established regional organisations. The same applies in a globally structured industry where a number of established competitors is a considerable threat to the new entrant. The need for a sequential approach is understandable, based on the fact that the company has to learn various aspects and develop before they can compete effectively within their respective industry. Generally, if a small company is venturing into a large market, they would have to apply a sequential internationalisation process. If the company is larger and it ventures into a smaller industry, random internationalisation is a better option although a sequential approach may work as well, depending on the limitations of the firm in question. Sequential internationalisation is mainly for companies that are looking to build themselves in the new market before they can take on competition.

McDonald’s Internationalisation Process Theories

McDonald’s was a global company venturing into a national market. Henceforward, the company had the resources, the experience, and the capital for a random internationalisation approach. However, McDonald lacked the relations and the management for venturing into a small national industry within the Indian society. To ensure success, the company had to engage the local population not only in terms of labour but with respect to the management and the relations. Consequently, McDonald’s in India is largely identified as an American fast-food joint, but it has borrowed significantly from Indian cuisine in an attempt to create relations with the Indian society as part of the company’s business strategy (Bomkamp, S. 2016). The random IPT, in this case, involved mostly partnerships with local establishments and entrepreneurs to create a chain of fast-food restaurants that are both foreign and local in equal measure. The competitive advantages remain in the fact that it is a local brand, but they also capitalise on the acquired understanding of the Indian culture to attract and retain even more customers.

Conclusion

Internationalisation is not always a straightforward process, especially when the firm has to consider both an industry condition and how it will influence a company’s success in a new market. Rather than just considering the mode of entry, companies have to consider how they will establish the business successfully after the introduction phase. A global or regional company often has an easier path to internationalisation compared to a national company considering that the main factors determining success are accessibility to experience, resources, capital, relations, and management. Regional and global companies have more experience, resources, capital, relations, and management compared to national companies that only have local connections within local industries and are, otherwise, lost within a foreign market.

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