McDonald’s Corporation or rather the CEO, Mr. Greenberg realized there was a major problem arising within their corporation when their earnings declined in the late 1990s till the early 2000s. Their net income not only shrunk to 17%, but also suffered from slow sales growth below the industry average during that period of time. Although their market share was well above their competitors such as Burger King and Wendy’s nevertheless there was a slow share growth.

Therefore the question of what caused the Big Mac Attack is raised. It is observed that there was a growing trend of customers moving to non hamburger meals which is being offered by indirect competitors such as KFC, Subway (dominating the market with more than 13,200 US outlets) and Pizza Hut as an alternative choice. Sandwiches and a variety of microwaveable meals are being offered at supermarkets, convenience stores and even at petrol stations. This convenience has caused many patrons to switch away from the fast food outlet.

Besides that, there seems to be an increasing trend in fast casual dining which has affected sales for McDonald’s. Patrons are now more willing to spend extra for the traditional fast serving but with a better and classy ambience. Due to this ‘phenomenon’, the growth for fast casual segments grew from 15 to 20% compared to only 2% growth from fast food chains. Taco Bell for instance had an outstanding 19% increases in their profit which proves that higher priced outlets are still in demand.

McDonald’s is also facing a stiff competition among the hamburger eateries such as Wendy’s and Burger King.… Read the rest

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McDonald’s is the worlds leading fast food restaurant and is globally recognized. With over tens of thousands of stores spread across 119 countries, McDonald’s serves an astounding 50 million customers daily. McDonald’s has been viewed as the pinnacle and one of the defining features of the American lifestyle.  Burger, fries, and a Coke were the traditional meal.  Once it spread globally, it boomed into popularity because other countries wanted to be associated with the successful image of the “American dream”.

McDonald’s provides a positive and caring attitude towards the community of which it serves. McDonalds’ vision states that “We are not a hamburger company serving people; we are a people company serving hamburgers”. With a vision so clearly committed to people, customers have responded by continuing to keep McDonald’s number one.

Other aspects of the McDonald’s dining experience show why their customers continue to hold their reputation high.  They use things like the dollar menu, playgrounds, endorsements, and charities all add to create the overall satisfying experience.  These things overshadow the health risks that are a large issue in today’s American society.  Through the information we have found, McDonald’s is still popular because it is about convenience and fast food.  Until people are willing to wait longer to eat and pay more for healthier food, it will still be one of the leading chains.

Target Market

Traditionally, and still today, McDonalds’ focus in advertising, marketing, and design has been children.  This is obvious with their PlayPlace, Happy Meals, and character Ronald McDonald.  … Read the rest

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Besides being one of the NASDAQ’s fastest-growing stocks during the late 1990s, Cisco was also the world’s leading producer of switches and routers that directed traffic across the Internet. In 1998 Cisco released advertising that encouraged Internet usage, which in turn increased the demand for Cisco’s hardware. Two years later Cisco’s ad agency, Hill, Holliday, Connors, Cosmopulos, Inc., introduced a $43.8 million campaign with the tagline ‘‘Empowering the Internet generation.’’ The campaign’s television spots, including one titled ‘‘Factory,’’ featured Cisco’s hardware increasing businesses internet usage, which indirectly boosted the businesses profits. After the technology sector plummeted in late 2000, Cisco did not release a campaign for almost three years. In June 2002 Cisco awarded its advertising account to DarkGrey, the technology unit of Grey Global Group. For its first few months doing business with Cisco, DarkGrey developed a campaign with the tagline ‘‘Advancing the human network.’’ None of the DarkGrey advertisements were actually released, however. When Marilyn Mersereau became Cisco’s new vice president for corporate marketing in late 2002, she turned Cisco’s advertising account over to Ogilvy & Mather, an agency she had worked with as vice president of global advertising at International Business Machines Corporation (IBM).

In 2003 Ogilvy & Mather released the largest campaign in Cisco’s history, the $10–$150 million ‘‘This is the power of the Network. Now’’ campaign. With the goal of positioning Cisco as a leader in networking technologies for businesses and individual consumers, the campaign focused on associating Cisco’s brand with ingenuity. In a television spot titled ‘‘Olive,’’ the CEO of an olive distributor was humorously shown reducing his company’s costs by optioning for an Internet-based phone system.… Read the rest

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International Business Machines Corporation, better known as IBM, is a multinational IT company involved in the manufacture and retail of computer hardware and software applications, and IT consulting services. The company has established itself as one of the selected information technology companies since 19th century. Adoption of marketing strategies for IBM has been a planned structure since 19th century and by means of these strategies it has earned enough success all over the world. With its growth in the manufacturing as well as marketing domains of computer hardware and software, it has gained the nickname of “Big Blue”. On marketing grounds, IBM follows strict infrastructural services, added by hosting provisions and consulting services in various areas from mainframe computers to the persuasion of nanotechnology.

Well – devised and efficient marketing strategies have been the key to IBM’ global success. The company strongly believes that devising effective marketing strategies requires making appropriate decisions that can well enhance all kinds of competitive advantages and can create all kinds of new sources of value for the purpose of improving the organisational revenue growth. According to Luq Niazi, Leader of Strategy and Change at IBM, “when the leaders of an organisation think about their business as components, it becomes clear which ones they need to own – and which they do not”. This clearly indicates the great emphasis that IBM places on the performance and decision making capabilities of leaders in devising effective marketing strategies. In addition, the firm also considers understanding the requirements and needs of customers as crucial for developing effective marketing strategies.… Read the rest

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With more than 17000 Starbucks stores in the world, spanning throughout 49 countries , and with significantly higher prices than the market average, the Starbucks enterprise is a tale of success, and a direct result of a genius social marketing and branding strategy. At the core of the business their signature fresh, dark-roasted, full-flavored coffee brews and beans consorting with specialty teas and blended beverages, the special ambiance, its principles and its sense of connection and community; it’s all about creating the ‘Starbucks Experience’, which is the soul of the business, a place to gather, talk and enjoy the allures of their savory brews, a ‘Third Place’ in people’s lives between home and work, for customers to feel perfectly comfortable and imbued with familiarity. Connecting and engaging with the customers is a very important aspect of Starbucks philosophy and one of the reasons why they have been so successful in their social media strategy.

It has been established the company’s conscious efforts towards building a relationship and creating interaction with its customers, but it took the company a few years of trial an error to finally get the formula right and assimilate the prowess of social media. It wasn’t until 2008 that Starbucks finally started to get things right and to follow the path that will endow them with the very impressive feat of becoming the number one brand on Facebook. In 2008 Howard Schultz made a comeback as CEO, refocusing the brand efforts into reigniting the emotional attachment of its customers.… Read the rest

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In 1976, when the cosmetics industry was making exaggerated claims about scientific advancements in skin care, Anita Roddick opened a store, The Body Shop, in a seaside town on the southern coast of England. Her product line, based on natural ingredients and age-old beauty secrets from Polynesia and the Amazon rain-forest, was a vast departure from the patented laboratory-created, animal-tested products that promised to stop the aging process, eradicate dark circles under the eyes, and otherwise correct a woman’s flaws. The products were plainly packaged, and they were not tested on animals and not promoted through extravagant advertising campaigns. Her company’s refusal to test products on animals, along with an insistence on non-exploitative labor practices among suppliers around the world, appealed especially to upscale, mainly middle-class women, who were and have continued to be the company’s primary market.

Part of the secret of The Body Shop’s early success was that it had created a market niche for itself. The company was not directly competing against the traditional cosmetics companies, which marketed their products as fashion accessories designed to cover up flaws and make women look more like the fashion models who appeared in their lavish ads. Instead, The Body Shop offered a line of products that promised benefits other than appearance—healthier skin, for instance—rather than simply a better-looking complexion. During the 1980s, when The Body Shop dominated the niche it had created, it avoided the kinds of traditional marketing used by the more fashion-driven cosmetics companies. This ‘‘antimarketing’’ strategy defied conventional wisdom in several important ways: the company had no advertising agency, it did not hire fashion photographers to photograph beautiful women wearing its products, and it did not advertise in the usual women’s magazines.… Read the rest

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The Body Shop (TBS) has developed 2500 stores in 60 countries with a range of over 1,200 products in approximately 30 years, and is the second largest cosmetic franchise in the world. After the first TBS’s outlet founded in 1976, the company has experienced rapid growth and with expanding rate of 50% annually. When its stock first obtained a full listing on the London Stock Exchange, its price increased by more than 500%. In 1999, TBS was even voted as the second most trusted brand in UK by the Consumers Association. The founder, Anita Roddick had received numerous awards including Dame Commander of the British Empire for her contributions. TBS’s success is hard to observe from the extrinsic value but the ethical value which make the success of TBS so legendary and inspiring.

Anita Roddick, founder of TBS first entered the industry by using £4,000 to open a small stand-alone shop of natural ingredient cosmetics and skincare products. Through her early travel experience, she had seen the potential of those natural ingredients being produced as cosmetic and skincare products commercially. Due to the budget constraint, Roddick used the urine sample containers purchased from local hospital as the containers of her products. The shop’s walls are painted with dark green to cover the damp. To save cost on advertisement, Roddick spread aroma in front of her shop to gain attention of the patrons. The strategy pursued was a huge success and another shop was able to be opened before the first year ended.… Read the rest

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For years, Avon lady was a fixture in American neighborhoods. Selling door-to-door built Avon into the world’s largest manufacturer of beauty products. Avon operates in 135 countries and besides the cosmetics it also sells jewelry, home furnishings, and babycare products. Avon pioneered the idea of hiring housewives for direct selling cosmetics in the neighbourhood. But in 1980s, as millions of women began to work outside the home, the cosmetics maker’s pool of customers and sales representatives dwindled, and its sales faltered. By 1985, its profits were half what they had been in 1979.

Consumer research showed that many women thought Avon’s make-up was “stodgy,” its gifts products overpriced, and its jewelry old-fashioned. So the company created a more contemporary line of jewelry, lowered the prices of its giftware to offer more items under $15, and expanded its lipstick and nail polish colours.

On the selling side, recruiting sales people had become problematic, much as it had for other direct sellers like Mary Kay Cosmetics and Premark International’s Tupperware division. To attract sales representatives and boost productivity, Avon improved incentive-compensation plans and offered free training programmes for recruits. As a result, Avon’s direct-sales business – which accounts for 70 per cent of sales and 85 per cent of operating profits – experienced a dramatic turnaround. Within a year sales rose 17 per cent, to $2.9 billion, and profits jumped as much as 25 per cent.

Today more than 450,000 sales representatives work for Avon and fill out some 50,000 orders daily. Sales exceed $3.5 billion a year.… Read the rest

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When some starry-eyed startup or a small company takes on the big budget corporate in the marketing domain with an underground marketing campaign that costs nothing but causes shock-waves for months, its called guerrilla marketing. Guerrilla marketing is a different kind of marketing which does not involve big budget but it is about out of the box thinking; it is about using anything around to market a product, an idea or a social message virtually anything under the sun. It believes in entertaining and engaging the target customer. It does not involve preaching or educating but it is about exciting the viewer to find out a secret or solve a puzzle. Guerrilla campaigns purely depend on creativity, intensive word of mouth campaigns and its oddness like using unconventional locations. Some guerrilla campaigns are so brilliant that it has made bystanders feel lucky to be there to witness them.

AMA defines Guerrilla Marketing as “Unconventional marketing intended to get maximum results from minimal resources”.

The goals of guerrilla marketing are relatively simple: use unconventional tactics to advertise on a very small budget. It is based on the idea that one does not need radio or TV ads to market something. Make a campaign so shocking, funny, unique, outrageous, clever, or creative (even controversial) that people cant stop talking about it thus create intense word of mouth publicity. Guerilla marketing involves approaches like interception in public, giving free products, PR stunts basically any unconventional marketing approach intended to give maximum result from minimum investment. … Read the rest

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McDonald’s is the worlds leading fast food restaurant and is globally recognized. With over tens of thousands of stores spread across 119 countries, McDonald’s serves an astounding 50 million customers daily. McDonald’s has been viewed as the pinnacle and one of the defining features of the American lifestyle.  Burger, fries, and a Coke were the traditional meal.  Once it spread globally, it boomed into popularity because other countries wanted to be associated with the successful image of the “American dream”.

McDonald’s provides a positive and caring attitude towards the community of which it serves. McDonalds’ vision states that “We are not a hamburger company serving people; we are a people company serving hamburgers”. With a vision so clearly committed to people, customers have responded by continuing to keep McDonald’s number one.

Other aspects of the McDonald’s dining experience show why their customers continue to hold their reputation high.  They use things like the dollar menu, playgrounds, endorsements, and charities all add to create the overall satisfying experience.  These things overshadow the health risks that are a large issue in today’s American society.  Through the information we have found, McDonald’s is still popular because it is about convenience and fast food.  Until people are willing to wait longer to eat and pay more for healthier food, it will still be one of the leading chains.

Target Market

Traditionally, and still today, McDonalds’ focus in advertising, marketing, and design has been children.  This is obvious with their PlayPlace, Happy Meals, and character Ronald McDonald.  … Read the rest

The post Case Study of McDonalds: Advertising and Promotion Strategies appeared first on MBA Knowledge Base.

Definition of Service Quality

There are a number of different “definitions” as to what is meant by services quality. In its simplest form service quality is a product of the effort that every member of the organization invests in satisfying customers. In its broadest sense service quality is defined as superiority or excellence as perceived by the customer.

More especially service quality has been defined as:

• The delivery of excellent or superior service relative to customer expectations.
• Quality is behavior – an attitude – that says you will never settle for anything less community, your stockholders or colleagues with whom you work every day.
• When we want to be effective – delivering good quality to the customer – we must produce services that meet “as much as possible” the needs of the consumer.
• Quality is providing a better service than the customer expects.

One that is commonly us defines services quality as the extent to which a service meets customer’s needs or expectations. Today the most popular model of service quality in use is service quality gap model, perceived service quality as the difference between consumer expectations and their perceptions.

Customer Retention Through Quality Improvement

The focus of the modern marketers has shifted away from a one-time sale to making repeated sales to the same customer. Increasing attention is being paid to medium and long term perspectives, rather than just the short-term perspective. This has been a major revolution in thinking in the field of marketing. Customer retention usually pays dividends by way of:

• Lifetime value of the customer.

… Read the rest

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For years, Avon lady was a fixture in American neighborhoods. Selling door-to-door built Avon into the world’s largest manufacturer of beauty products. Avon operates in 135 countries and besides the cosmetics it also sells jewelry, home furnishings, and babycare products. Avon pioneered the idea of hiring housewives for direct selling cosmetics in the neighbourhood. But in 1980s, as millions of women began to work outside the home, the cosmetics maker’s pool of customers and sales representatives dwindled, and its sales faltered. By 1985, its profits were half what they had been in 1979.

Consumer research showed that many women thought Avon’s make-up was “stodgy,” its gifts products overpriced, and its jewelry old-fashioned. So the company created a more contemporary line of jewelry, lowered the prices of its giftware to offer more items under $15, and expanded its lipstick and nail polish colours.

On the selling side, recruiting sales people had become problematic, much as it had for other direct sellers like Mary Kay Cosmetics and Premark International’s Tupperware division. To attract sales representatives and boost productivity, Avon improved incentive-compensation plans and offered free training programmes for recruits. As a result, Avon’s direct-sales business – which accounts for 70 per cent of sales and 85 per cent of operating profits – experienced a dramatic turnaround. Within a year sales rose 17 per cent, to $2.9 billion, and profits jumped as much as 25 per cent.

Today more than 450,000 sales representatives work for Avon and fill out some 50,000 orders daily. Sales exceed $3.5 billion a year.… Read the rest

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The rise of personal computers in the mid 1980’s spurred interest in computer games. This caused a crash in home Video game market. Interest in Video games was rekindled when a number of different companies developed hardware consoles that provided graphics superior to the capabilities of computer games. By 1990, the Nintendo Entertainment System dominated the product category. Sega surpassed Nintendo when it introduced its Genesis System. By 1993, Sega commanded almost 60 per cent of Video game market and was one of the most recognized brand names among the children.

Sega’s success was short lived. In 1995, Saturn (a division of General Motors) launched a new 32-bit system. The product was a miserable failure for a number of reasons. Sega was the primary software developer for Saturn and it did not support efforts by outside game developers to design compatible games. In addition, Sega’s games were often delivered quite late to retailers. Finally, the price of the Saturn system was greater than other comparable game consoles.

This situation of Saturn’s misstep benefited Nintendo and Sony greatly. Sony’s Play Station was unveiled in 1994 and was available in 70 million homes worldwide by the end of 1999. Its “Open design” encouraged the efforts of outside developers, resulting in almost 3,000 different games that were compatible with the PlayStation. It too featured 32-bit graphics that appealed to older audience. As a result, at one time, more than 30 per cent of PlayStation owners were over 30 years old.

Nintendo 64 was introduced in 1996 and had eye-popping 64-bit graphics and entered in more than 28 million homes by 1999.… Read the rest

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Geographical pricing refers to the location at which the price is applicable. Geographical pricing strategy is influenced by a number of factors such as the location of the company’s plant, the location of the competitors’ plants and their pricing strategies, dispersion of customers, extent of transport costs, demand and supply conditions and competitive environment. In geographical pricing, there are generally two methods of price basis which are stated in the offers or quotations submitted by a seller to a buyer. These are:

1. Ex-Factory: “Ex-factory” means the prices prevailing at the factory gate. When a seller quotes to a buyer “ex-factory price’, it means that the freight and transit insurance costs are to the buyer’s account. In other words, the seller will charge the costs of freight and insurance to the buyer. The more distant customers landed costs are higher because of freight cost. 
2. FOR Destination or FOB Destination: When a seller quotes to a buyer “FOR destination or FOB destination” (free on road/free on board destination), it means the freight costs are absorbed by the seller or included in the quoted prices. However, transit insurance costs, which are small amounts, are generally absorbed by the seller, but sometimes the goods are dispatched under the open insurance policy of the buyer. In this method of price basis, all the customers get the product at the same price irrespective of their locations from the seller’s factory premise. If the quotation or the price list is on FOR destination basis, generally the industrial marketer estimates the average freight and insurance costs and adds the same to the basic product prices.

… Read the rest

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Businesses that succeed do so by creating and keeping customers. They do this by providing better value for the customer than the competition. Marketing management constantly have to assess which customers they are trying to reach and how they can design products and services that provide better value (“competitive advantage”). The main problem with this process is that the “environment” in which businesses operate is constantly changing. So a business must adapt to reflect changes in the environment and make decisions about how to change the marketing mix in order to succeed. This process of adapting and decision making is known as marketing planning.

So, marketing planning is a plan involves designing activities relating to marketing objectives and attach with the capability of changing marketing environment. It contains with the issues of product lines, distribution channels, marketing communications and pricing.

Marketing planning process is a fundamental part of Marketing Audit. It is conducted not only at the beginning of the process but also during and after the process completion. Marketing audit not only consider its own plan but also considers internal and external factor that affects marketing planning. Some important tools used by marketing audit are SWOT for internal and external environment where as PEST and Five Forces Analysis which focus only on the external environment.

Where does marketing planning fit in with the overall strategic planning of a business?

Strategic planning which you will cover in your studies of “strategy” is concerned about the overall direction of the business. It is concerned with marketing, of course.… Read the rest

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The advertising medium refers to the means through which the advertiser can convey his message to audience. Proper selection of the media enables the advertiser to achieve the desired results. Hence, advertising media selection is vital for the success of an advertising campaign.

An advertising medium is any object or device that carries the advertising message. It should be capable of accomplishing following three objectives:

1. To reach the largest number of people possible.
2. To gain their attention.
3. To be less expensive.

The character of the medium is largely determined on the objective and factual basis such as whether the coverage of the medium should be national, regional or only local.

Factors Governing of Advertising Media Selection

Selection of a suitable medium for advertising is really a complex problem to the advertiser. There are a number of kinds and classes of media in the modern advertising. Hence, the advertising media selection means not only the choice of the right classes of media out also the individual medium within the class or classes. Besides there is no single medium that is best suited for all advertisers. In reality, a medium which is best suited for one may be almost useless for another. The medium once employed for advertising a particular product itself may be found unsuited subsequently. Therefore, the right choice of a medium calls for a careful analysis. If the medium is unsuited the whole amount of money spent on the advertising campaign shall turn to be a waste.

The advertiser, therefore, while selecting the media, should consider the following factors:

1. Class of the audience: Firstly, the advertiser must note the class of the audience to be influenced by the medium.

… Read the rest

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Nicosia Model of Consumer Behavior was developed in 1966, by Professor Francesco M. Nicosia, an expert in consumer motivation and behavior.  This model focuses on the relationship between the firm and its potential consumers. The model suggests that messages from the firm (advertisements) first influences the predisposition of the consumer towards the product or service.  Based on the situation, the consumer will have a certain attitude towards the product.   This may result in a search for the product or an evaluation of the product attributes by the consumer.  If the above step satisfies the consumer, it may result in a positive response, with a decision to buy the product otherwise the reverse may occur. Looking to the model we will find that the firm and the consumer are connected with each other, the firm tries to influence the consumer and the consumer is influencing the firm by his decision.

The Nicosia model of Consumer Behavior is divided into four major fields:

1. Field 1: The firm’s attributes and the consumer’s attributes. The first field is divided into two subfields. The first subfield deals with the firm’s marketing environment and communication efforts that affect consumer attitudes, the competitive environment, and characteristics of target market. Subfield two specifies the consumer characteristics e.g., experience, personality, and how he perceives the promotional idea toward the product in this stage the consumer forms his attitude toward the firm’s product based on his interpretation of the message.
2. Field 2: Search and evaluation. The consumer will start to search for other firm’s brand and evaluate the firm’s brand in comparison with alternate brands.

… Read the rest

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John Howard and Jagadish Sheth put forward the Howard Sheth model of consumer behavior in 1969, in their publication entitled, ‘The Theory of buyer Behaviour’.

The Howard Sheth Model is a sophisticated integration of the various social, psychological and marketing influences on consumer choice into a coherent sequence of information processing. It aims not only to explain consumer behavior in terms of cognitive functioning but to provide an empirically testable depiction of such behavior and its outcomes (Howard 1977).

The logic of the Howard Sheth model of consumer behavior summarize like this. There are inputs in the form of Stimuli. There are outputs beginning with attention to a given stimulus and ending with purchase. In between the inputs and the outputs there are variables affecting perception and learning. These variables are termed ‘hypothetical’ since they cannot be directly measured at the time of occurrence.

The Howard Sheth model of consumer behavior suggests three levels of decision making:

1. The first level describes the extensive problem solving. At this level the consumer does not have any basic information or knowledge about the brand and he does not have any preferences for any product. In this situation, the consumer will seek information about all the different brands in the market before purchasing.
2. The second level is limited problem solving. This situation exists for consumers who have little knowledge about the market, or partial knowledge about what they want to purchase. In order to arrive at a brand preference some comparative brand information is sought.

… Read the rest

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The Engel Kollat Blackwell Model of Consumer Behavior was created to describe the increasing, fast-growing body of knowledge concerning consumer behavior. This model, like in other models, has gone through many revisions to improve its descriptive ability of the basic relationships between components and sub-components.

The Engel Kollat Blackwell Model of Consumer Behavior or consists of four distinct stages;

1. Information Input Stage: At this stage the consumer gets information from marketing and non-marketing sources, which also influence the problem recognition stage of the decision-making process. If the consumer still does not arrive to a specific decision, the search for external information will be activated in order to arrive to a choice or in some cases if the consumer experience dissonance because the selected alternative is less satisfactory than expected.
2. Information Processing Stage: This stage consists of the consumer’s exposure, attention, perception, acceptance, and retention of incoming information. The consumer must first be exposed to the message, allocate space for this information, interpret the stimuli, and retain the message by transferring the input to long-term memory.
3. Decision Process Stage: The central focus of the model is on five basic decision-process stages: Problem recognition, search for alternatives, alternate evaluation (during which beliefs may lead to the formation of attitudes, which in turn may result in a purchase intention) purchase, and outcomes. But it is not necessary for every consumer to go through all these stages; it depends on whether it is an extended or a routine problem-solving behavior.
4. Variables Influencing the Decision Process: This stage consists of individual and environmental influences that affect all five stages of the decision process.

… Read the rest

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