Marketing: The problem McDonald’s faces while expanding in the U.S.
McDonald’s currently holds the title for the biggest fast-food company in the world. The company began its business in the mid 1950’s in the heart of Illinois. And thanks to a good recipe for success and a powerful team, McDonald’s currently operates in 117 countries. The family oriented restaurant operates as a chain which gives the opportunity for it to deliver a Big Mac (signature burger) that tastes the same in both Texas and Beijing. This is a powerful strategy for McDonald’s because it has created a solid foundation of trust for customers of all ages and in all areas of life. The fact that the franchise is family oriented is an asset considering the fact that parents will also cave to the desires of their children. Happy Meals have been proven to be successful with children who frequent the restaurant. The slogan “I’m loving it” and “Forever young” attract a wave of young adults to the restaurant as well. McDonald’s also has devoted itself to the use of social media. Social media has played a prominent role in the outreach for new teenagers and young adult demographics. Engaging content in the right context has proven successful in the attempt to capture the attention of a generation focused on being more “social”. The company is well rounded and has a strategy to successfully reach and serve consumers of all ages. This result in more frequent visits from all kinds of demographics from young families to young adults.
The Problem McDonald’s Faces While Being the Leader
McDonald’s has shown an innovative way to create business over the years. Some of these efforts include setting different features on the restaurants such as televisions, couches, and lounge chairs. The recent introduction to the now popular McCafe threatens the giant coffee chain Starbucks. Brizek (2013) found in a study done by Reiley (2009) that many coffee consumers are more satisfied with the taste and affordability of the McCafe cold coffee drinks over the ones from Starbucks. McDonald’s has stayed at the top of the food-chain pyramid by innovating and reaching out to new consumers. The fast-food market is projected to continue its growth and with that growth comes a new wave of competition for McDonald’s. The management-decision problem McDonald’s is facing right now is: How can McDonald’s maintain and fortify its leadership position in the competitive fast-food chain industry?
To help answer the management-decision problem question, McDonald’s recently conducted a survey. The survey will help marketers move forward in order to expand and assist the company in its efforts to stay crowned as king of all fast-food chains. Marketers need to know more details about the McDonald’s customer demographics, their awareness of other fast-food chains, the satisfaction responses of consumers in terms of family orientation, comfort, price, and so on. Another factor marketers need to consider is the consumer’s preference to eat-in or drive-through. This last piece of data might be extremely important considering the fact that McDonald’s has already expanded beyond traditional restaurants. The company also has several quick service kiosk units located at airports and retail sites already open. This research survey was merely conducted with U.S. consumers in mind. McDonald’s looks to continue to expand its franchise in the United States before applying some of those strategies oversees, especially while considering the fact that the number of restaurants in the United States has slowly begun to shrink for the first time in over 40 years.
How will the decision problem differ while expanding overseas? The management-decision problem will not be much different when attempting to expand overseas. McDonald’s has already successfully expanded into many international markets. The company has become a symbol of globalization and the American way of life. McDonald’s is managed as segments: United States, Europe, Asia/Pacific, Middle East, Africa, Latin America and Canada. U.S. and Europe segments account to over 35 percent of the company’s revenue alone. A small number of U.S. McDonald’s restaurants closed down due to the change in the consumer’s attitude in certain parts of the country. Consumers want more choices and sometimes McDonald’s falls short to deliver everything they want. Fast-food consumers in the U.S. want more choices in what they order, the way they order and the way they are served. One of the company’s most successful adopting countries is France. The company has 1,200 locations there and is investing 200 million Euros in further expansion. Most of the consumer demographics overseas to some degree still holds the mentality and attitude of the United States consumer a few years back.
The company has had to innovate to some degree with its menus and serving methods in order to fit into a certain country and culture. Some of the McDonald’s innovations overseas include France’s touch screens for customers to order faster, the special care and separation of vegetables in India or McDonald’s team members preparing fresh food in front of the customers in Australia (Nandini, 2014). None of these attempts to innovate have changed the taste or quality of the company’s menu. The taste of McDonald’s food has remained a global taste for all countries to recognize.
The company has also been enjoying a low level of competition overseas. Nandini (2014) found chain restaurants like Panda or Chipotle are not prevalent in other countries, and this means that McDonald’s still has a few years to continue expanding overseas the same way it has been working in the United States. As the company continues to struggle with its expansion in the United States and eventually succeeds, it is very likely that the company will only need to apply most of the same strategies while attempting to eventually change its strategy overseas if needed. This is mainly due to the global influence the U.S. market has on other countries through Glocalization (Globalization + Localization) (Nandini, 2014).
McDonald’s has closed its doors in small pockets where customer attitudes are changing and the market has become saturated with fast-food chains, but there is still a lot of room to grow in the United States. Some of the key factors in the survey that will help McDonald’s in its decision to expand in the U.S. might be the following:
- Quality of service: The survey asks about the quality of service in a restaurant or multiple restaurants a person has visited. Then the person is asked to rate the quality of service. This will be important for McDonald’s to evaluate where it is in comparison to competitors in regard to the quality of its service. McDonald’s goal should always be to produce products that are better than the competition and this is an all inclusive task which is not limited to just a good recipe of food (Rad, Akbari, Ghorabi, & Motevaselian, 2014).
- Level of education and income: This factor is important because the information can be valuable to McDonald’s when beginning its expansion process. New ways of executing marketing campaigns allow marketers to target consumers based on specific demographics such as level of education and household income. Social media is just one example of a company that has adopted highly targeted ways for marketers to reach consumers and clients.
- Level of a healthy lifestyle: This information might be one of the most important while trying to expand in the U.S. because there has been a recent growth of awareness about nutritional facts by the consumers. The recent awareness is due to the heavy increase of obesity in the United States. McDonald’s has recently become a target while attempting to lower the percentage of the obesity population which is why the company continues to evolve in its menu with more healthier choices.
The marketing-decision problem has been clearly defined which is why McDonald’s might not need to conduct any exploratory research just yet. The information gathered from fast-food consumers should provide enough information for McDonald’s to make a decision moving forward. If needed, then the company should look into conducting surveys that provide exploratory information such as menu choices, preference of service, brand engagement as well as new technology.
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