The Founder | McDonald’s Story
This is the movie I chose for my Marketing Management End Term Examination while I am pursuing my MBA at IIMK. It’s the story of Ray Kroc, a salesman. He used a combination of ambition, determination, and ruthlessness to turn two brothers’ pioneering fast-food café, McDonald’s, into the world’s most significant restaurant business. After the idea was tried in San Bernardino, the story illustrates the best of an entrepreneur by developing the client and the industry.
For this expansion, Kroc adopted a franchise model.
Overall, I was able to relate to the majority of the issues covered in class, such as branding, segmentation, franchises, advertisements, value creation, pricing, targeting, positioning, global expansion, and so on. I watched the video and began to time stamp the scenes and tie them to the ideas we learned in class. As per our class ppts, I attempted to connect to a set and then study the marketing principles associated with it in depth.
Introduction to Marketing
It is necessary because there is no other way to make people aware that you are selling a product or service without it. Marketing raises product recognition, establishes brand legitimacy, fosters buyer trust, and delivers information, entertainment, and inspiration to your target audience. Marketing strategy is very important for developing any of the business. The focus of our strategy must make sure that our product should fulfill the demands of the customers and as well to maintain long term relationship with customers.
Product Overview
The film ‘The Founder’ tells the story of Ray Kroc, a struggling salesman who went on to found McDonald’s. Ray Kroc met Mac and Dick McDonald, who ran a burger joint in Southern California, in the 1950s. Ray was pleased by the brothers’ quick food preparation technology and recognized possibilities for a franchise. Ray grows McDonald’s stores through franchisees, wresting control of the company from the brothers and establishing a multibillion-dollar empire.
· McDonald is headquartered in Oak Brook, Illinois.
· World’s largest food service retailing chain.
· Famous for Burgers, fries & cold drinks
· Majority of the restaurants are operated by franchisees
· McDonald’s own the land used for each of the franchises, then builds & secure a long-term lease for the restaurant site.
Products
Promotion of Prince Castle 5-spindle Multimixer
Dollars to Donuts : Ray’s description of the product could be related to market offerings. Using a real-life chicken and egg example to promote the product. He demonstrates the product’s market appeal, as well as an increase in supply, which would result in an increase in demand.
Kept quoting “Increase your supply demand will follow”
Save time and money by reducing wait times from 30 minutes to 30 seconds.
The production is swift and efficient. The ice cream milkshake will be delivered quickly, ensuring client delight. The movie describes the product’s features as well as the produced milkshake’s quality.
MCDONALD KITCHEN LAYOUT
· The strategy refers to the McDonald’s comprises the degree of service and product layout, as well as the interior and outside design.
· McDonald’s has a policy of serving fresh food to its customers in the shortest amount of time feasible while also attempting to attract as many customers as possible to increase revenue. The customer’s pleasure is the most crucial factor to the McDonald’s operations department. Customers’ happiness can only be attained if it provides them with high-quality food in a timely manner at a low cost.
· McDonald’s has a highly specialized layout to carry out this entire operation. The personnel will have simple access to serve the consumers in a timely manner because of the layout. When a staff member serves a customer at the till, the service member has everything the customer requires within reach.
· McDonald’s keeps the greatest number of cash registers available to serve clients, and each employee takes an average of one minute to serve each customer. The chairs are situated in such a way that the persons waiting in line experience the least amount of disruption.
· McDonald’s has chosen high-efficiency fryers in the kitchen to fry the chips in the shortest amount of time. The assignment was delegated to several staff members based on their abilities by the operations manager.
· McDonald’s obtains most of its ingredients in ready-to-serve form from its corporate headquarters, lowering food production costs and allowing the company to maintain consistent quality throughout all its locations.
· McDonald’s employees just must fry the dish in oil before it is ready to serve. It also saves McDonald’s a lot of money on storage.
· McDonald’s maintains solid relationships with its suppliers to keep the system running properly. Their supplier ensures that the supplies arrive at McDonald’s in the shortest period feasible.
· Usage of Paper wrap instead of plates & cups
It’s Revolutionary. Design Thinking in 1950
PORTER’S FIVE FORCES ANALYSIS OF VALUE CHAIN
The major goals of these activities are to provide a degree of value to the consumer that exceeds the cost of the activities. McDonald’s has been able to increase its profits because of this.
Inbound Logistics
Inbound logistics refers to the raw materials that McDonald’s receives at its warehouse and subsequently distributes to other branches based on their needs. McDonald’s has a well-organized warehouse and distribution system. All the products are created in the warehouse, and commodities are dispersed according to each branch’s needs.
Operations
It refers to the operations that are carried out to convert inputs into completed goods and services. McDonald’s has a very good operation system since each task in the kitchen is assigned to a skilled employee. Most of its products are already ready to eat. All they must do is place them in the ovens or in the oil, and the product will be ready to serve in the shortest time possible, which is usually 30 second -1 minutes.
Outbound Logistics
Outbound logistics include storing finished items in warehouses before distributing them to various locations. McDonald’s has a well-developed transportation system. Because all of its items are produced at the warehouse, in order to optimize the distribution process, it has implemented IT technology that alerts the warehouse body when a branch is running out of products, allowing it to make the product available to the branch before it runs out. Because branches do not need a stock area for the items, this procedure is incredibly cost effective.
Marketing & Sale
McDonald’s uses a scientific approach to marketing their products to increase sales.
Service
All the extra services that are supplied to clients after they have purchased items.
McDonald’s competes with internal forces, according to Porter’s five forces analysis, to maximize profitability. As a result, it demonstrates that corporate profitability occurred in the Porter’s five forces manner.
4P’s | Marketing Mix & Strategy of McDonald’s
Product
· The phrase “change is the only constant” has never been more apt than in McDonald’s product and brand development over the years.
· McDonald’s marketing strategy emphasizes product innovation since it has helped the company stay competitive by emphasizing quality, service, cleanliness, and value. There’s something for everyone in the world’s fastest-growing food chain.
· It has stayed true to its branding as a fun place to spend time with friends and family.
· Marketing Strategy of McDonald’s that makes you “loving it”.
· Launched Alternate vanilla milkshake powered hence no refrigerator cost required
- Selling toffee suckers along with MCDONALD’S
The scene where the franchise owner lady sells toffee at the front of MCDONALD’S along with the routine selling is a way of Cross Branding. We go on marketing one product and the other product enhances the value to the current one. Sometimes cross branding is called cobranding. In cross-branding, brands have agreed to work together. As u can see in the movie plot, the sticker says MCDONALD’S toffee where she sells in normal toffees using the MCDONALD’S brand
Place
· McDonald’s operates in more than 100 countries with 38,000 outlets. If I search McDonald’s near me, I will find at least 5 outlets within 3 km. Its uniqueness is — It is the same and different at the same time.
· You will find a few similar items across the globe on the menu and a few locally adapted in any part of the world. So, even if you are craving for a portion of familiar home-like tasting food, you have McDonald’s for it, or if you want to taste something exotic, you have McDonald’s for it.
· To improve the brand value, create kiosk models and use them consistently across locations. The Arch shape with two arches represents the closed M in McDonald, and the kiosk McDonald utilizes reflects this brand image.
Promotion
· 30 years of McDonald: To market, a grand reopening is planned. McDonald’s can be linked to the marketing channels utilized. They use numerous ways to capture people’s attention and target audiences of various age groups, as described in the narrative.
· Spotlights to appeal to specific age groups of youngsters — sparklers, jugglers, etc.
· Hoardings were used to promote their product at the event. Mouth-to-mouth marketing: one customer spreading the word about McDonald’s to others, and so on, to reach a large audience.
· Internet Marketing Communication such as Franchising : The situation where McDonald’s future is discussed is upon franchising. McDonald’s brand is being promoted through a franchise concept, which is broadening the horizons beyond the first location. Ray comes up with the idea for the Franchise while daydreaming.
The advantages of franchising can be linked to what is learned in class. A franchisee purchases the right to use the franchisor’s business proprietary knowledge, processes, and trademarks, as well as the right to sell items and offer services under the franchisor’s name. The cost of the license is known as the license fee (franchise fee). Ray can reach an agreement with everyone in this situation.
· Promotion using geographical marketing for own country, US
· Pay franchise fee and start new McDonald’s: The situation where McDonald’s future is discussed is upon franchising. McDonald’s brand is being promoted through a franchise concept, which is broadening the horizons beyond the first location. Ray comes up with the idea for the Franchise while daydreaming. The advantages of franchising can be linked to what is learned in class. A franchisee purchases the right to use the franchisor’s business proprietary knowledge, processes, and trademarks, as well as the right to sell items and offer services under the franchisor’s name. The licensing fee is a payment associated with the license (franchise fee). Ray is able to reach an agreement with everyone in this situation.
· Golden Arch/Phoenix: The golden glow reflects the brand’s magnificence. Ray decides to advertise the McDonald’s, but no one is willing to invest in him due to his previous human contacts. In this scenario, Ray changed the business model and designed a new marketing approach. He used his geographical advantage to market his goods and expand the franchise, persuading the investor to do so for the sake of the country and incorporating patriotic ideas. This relates to the concept of emotional branding.
· Marketing agreement : Dropping a contract
In this scene, Dick and Mac decide to extend their relationship with Ray. This must deal with the marketing strategy. Marketing firms and a person or business that wanted to advertise goods or services signed a contract. It now includes payment terms, billable tasks, and clauses. This is necessary for both parties to reach an agreement on terms that will result in future profits.
· Branding : Along with McDonald’s, they’re selling toffee suckers — Cross Branding is demonstrated in the scenario where the franchise owner lady sells toffee in front of McDonald’s in addition to her regular sales. We continue to promote one product while simultaneously promoting another that adds value to the existing one. Cross branding is also known as co-branding. Brands have agreed to collaborate in cross-branding. The sticker states McDonald’s toffee, which she sells in conventional toffees utilizing the McDonald’s trademark, as seen in the movie narrative.
Price
McDonald’s pricing approach has always been to provide food at a reasonable cost. This is why the restaurant has been so successful for so long. This has significantly aided McDonald’s in establishing itself as one of the world’s leading fast-food companies. With the cost of living continuing to rise, McDonald’s has started offering combinations and specials to draw customers and generate profits through economies of scale.
1) Customer sensitivity to price (price elasticity).
2) To identify the right option, you need the elasticity values. This can be achieved through past data, surveys, evaluating the availability of substitutes in market
3) Economies of scale (and scope)
4) Adequate production capacity
5) Threat of competition (availability of substitutes)
· McDonald’s is aware of this pricing strategy and has maintained prices low to sell in quantity. McDonald’s enjoys cheaper purchase costs because of economies of scale, and bulk purchasing results in significant savings from suppliers. McDonald’s is the largest buyer of beef, pork, potatoes, lettuce, and tomatoes in the world, as well as the second-largest buyer of chicken.
· McDonald’s follows a mix of a couple of pricing strategies: low-cost pricing strategy and bunding pricing strategy.
· Lost Cost Pricing Strategy: A corporation uses this pricing strategy to generate demand and gain market share by offering a cheap price. When the product does not have a competitive advantage and economies of scale might help the company in terms of greater profitability, this method is particularly useful.
· Scene where ray gets letter saying not to deal with coco cola: This is connected to the sponsorship marketing strategy. This would be a reliable source of revenue with no additional labor requirements. A sponsorship is when your company funds an event or group for the mutual benefit of both parties. Sponsorship marketing is when you use your sponsorship to promote your company, particularly in your local area. Sponsorship is defined as cash or in-kind support for a company. Despite Mac and Dick’s rejection of the plan, this is the best strategy to promote their goods and gain mutual advantage. It’s free, rapid money you get in exchange for a favor you do and the space we supply.
STP — Segmenting, Targeting, Positioning
Segmentation is the process of clustering customers. Segments are made in such a way that the segments differ from each other, but each segment consists of homogeneous people.
· Acquisition can be linked to the scene where Ray gives Dick and Mac a sum of money and completely takes over their business and name. Implementing tactics to advertise your products and services to new clients is known as acquisition marketing. Acquisition marketing differs from other types of marketing in that it focuses on customers who have heard about your company and are considering making a purchase. He enters a contract and acquires all the Brand name’s rights.
Segmentation can be done based on various parameters:
· Demographic (age, gender, life stage, income, generation, race and culture)
· Geographic (location- geo clustering, density, and mapping)
· Psychographic- science of psychology and demography. Three motivations- ideals, achievement and self-expression.
· Lifestyle (culture, choices, belief system)
· Behavior/relationship to product (new user, regular user, loyal, satisfaction level)
· Need/benefit sought (performance, quality, price)
The way Mac and Dick outlined how they concluded just having three things on the menu is like the positioning class we took. Segmentation, targeting, differentiation, and positioning are all connected in this matrix. McDonald’s has only three product options, price, and segmentation on its menu (Burgers, fries & cold drinks).This is a method of providing value to customers. It could be in the form of a slide show, as shown below.
Sustaining value — CSR, CRM, Customer Perceive value
Advertising to be fastest delivery service — Delivering and sustaining value
· For two minutes, the entire scene serves as a terrific commercial, promising customer the fastest delivery in the state and the perfect response to any parties. They position themselves as an alternative to a long day of cooking, as well as a one-stop shop for superb meals in the shortest amount of time. They also sell it as the closest thing to home. Increasing the value of the goods to customers.
· Hurry on over to McDonald’s, now serving family communities from coast to coast. You’re probably only minutes from America’s favorite restaurant.
Make things Happen. Persistence is the key !
I attempted to incorporate my observations into it. This was our Marketing End of Term exam, and I based my comments and strategies on seeing the movie assigned during the exam. Appreciate and dedicate various films that have offered entertainment to the Professor and Crew.
Course: Marketing Management
College : IIM Kozhikode
OTT Platform: Netflix
Let me know your feedback/suggestions on this if I can improvise this any better.
Hit a clap to let me know :)
