A Vital Role of Customers Feedback's in the Repositioning Strategy - Research Paper Example

Executive Summary The companies and the various brands across the globe are continuously reinvigorating their businesses and positioning them to achieve growth and profitability. There is a need to innovate, reinvigorate and update in order to defeat competitors and stay ahead of the competition. The repositioning strategy that has been adopted in this report is of the McDonald’s UK. The product that has been selected for the study is Chicken McNuggets. Therefore, the main objectives of the study lie at the repositioning of the product that is currently being sold at UK restaurant. The report progresses with situational analysis. It comprises the company analysis which has detail analysis of the goals, focus, strengths and weaknesses of the company. Customer analysis has been conducted in order to understand the number of customers that McDonald’s serves per year and to throw light upon the taste and preferences of the customers of the UK. Competitor’s analysis is also important which forms part of this report. PESTEL and SWOT analysis have been conducted in order to understand the external and internal environmental factors affecting the operation of McDonald’s UK. It is important to understand the market segmentation of the company with the aim that customer segment can be aptly targeted by the company keeping in view their product and also according to the customer preferences. Marketing mix (4Ps) is also discussed along with the implementation of the repositioning strategies of the product. Table of Contents Executive Summary 1 1.0Introduction 3 2.0 Situational Analysis 4 2.1 Company Analysis 4 2.2 Customer Analysis 5 2.3 Competitors Analysis 6 2.4 PESTEL Analysis 8 2.5 SWOT Analysis 10 3.0 Market Segmentation 13 4.0 Marketing Strategy 15 4.1 Four Ps of Marketing 16 5.0 Implementation of the Repositioning Strategy for Chicken McNuggets 18 6.0 Conclusion 21 References 22 1.0 Introduction In recent times it has been seen that due to incessant competition on a global basis, organisations worldwide are striving to renovate and at times re-launch their products with the aim of providing consumers a product that is different and qualitatively superior to their competitors’. In this research paper McDonald’s has been considered and their product Chicken McNuggets has been taken for re-launch. McDonald’s has its headquarters in Oak Brook, Illinois. The company has been selling fast food and has brought about a wave of change in the eating habits of the customers on a global basis. With the emergence of the fast food chains, the hot beefs and the chickens were available at reasonable price. By the year 1970s and 1980s, the company’s global arches logo and the company itself had become an acknowledged global brand. The company has packaged itself as a multi-local company embracing high level of local ownership with a network of franchise outlets. The products are tailored according to the needs and demands of the local market. Even though the company had global dominance, sales were declining at a certain point of time in the 1990s. In response to the declining sales, the company took constructive steps in the form of marketing campaigns and promotional strategies aiming to boost the sales and magnetize the lost customers. Company has witnessed a change in the fortunes and it has noted an increase in sales and profit in the UK. It further announced that it will open 1000 new stores across the UK in order to meet the needs and demands of the customers (Pirzada, n.d.). The marketing plan will deal with McDonald’s Chicken McNuggets. The product is basically made up of tender chicken breast that is cooked in a seasoned batter. The plan will deal with the strategies and tactics for the repositioning and re-launching of the product. In order to reposition a product it is important to understand the brand. 2.0 Situational Analysis 2.1 Company Analysis The key strengths of the company have been the brand awareness among the consumers and the widespread geographic presence. The major weakness of the company has been the seasonal demand for the product. The company has also been facing quality issues all across its franchise network. The objectives tend to communicate what the marketers want to accomplish. Therefore, the long term objectives are generally broken down into shorter term measurable targets that the company has been using as milestones along the way. McDonald’s Restaurant UK Limited is a wholly owned subsidiary of the US parent company. The first restaurant in the UK was opened in the year 1974 (McDonald’s, 2008). The major focus of the company has been towards the healthier lifestyle for the adult and the kids serving hot foods and burgers. The real goal of the organisation is to make money for its stockholders. However, their stated goal is long term sustainable growth for its stakeholders (Slideshare, 2010). The corporate goal in the UK is to amplify the market share and the profitability in order to contribute economically and socially to the UK with the aim to achieve 100% customer satisfaction. 2.2 Customer Analysis Customers are the backbone of any organisation. The central motto of any organisation is to create and retain the customers before positioning the product. It is essential for the company to identify who the target customers would be for the product. The people of the UK are more concerned about the food that is consumed by them and their children. There has been a trend of eating out frequently not just on special occasions but also whenever they feel like. Wide ranges of food are available in the restaurants of the UK. People prefer to eat different kinds of food. However, they are suspicious and are cautious about the quality of the meat being sold in the market. Therefore, they are switching to the vegetarian foods. The people following different religions have different eating habits. Fish and chips have been a traditional meal in the UK. However, in the recent days, it has been seen that curry has replaced fish and chips as the most preferred British meal. People are unsure about the genetically modified food and hence they are opting for organic food production (Ship for World Youth Alumni Association, 2007). The company has been focusing upon the kids and the adults in order to sale its products. The UK McDonald’s has been delivering strong sales growth at its first quarter of 2009 as the company experienced large number of customers at its restaurants. This proves that the company possess strong brand awareness among its customers (Thompson, 2009). The company serves more than 47 million customers around the world every day (McDonald’s, 2010). 2.3 Competitors Analysis The major competitor for McDonald’ UK is Burger King. The company offers almost similar kinds of products and provides its customers with similar range of product offerings like McDonald’s. The prices of the product that Burger King offers are relatively cheaper in comparison to McDonald’s. It has also been emphasizing on the promotional activities (Burger King, 2010). It is important to know about the competitors in order to reposition the products. The companies need to consider the quality of its products, and try to innovate new ideas, which they can implement in the products and services, customer responsiveness that will help the organisation to establish the needs and wants of the customers and to develop the products that will help to satisfy the needs of the customers. McDonald’s has also been able to improve its efficiency by catering choices to its customers in order to meet the specialist dietary and the balance needs of the customers. For instance, the company provides salads, juices and fruits in its healthy options range with the aim to meet the needs of the customers. This is how the company has struggled endlessly in order to beat the competition and generate the competitive advantages. 2.4 PESTEL Analysis Political Environment The British political system is headed by the monarchy. However, the power of the monarch as the head of the state is ceremonial. There are three arms of the state namely the executive, the legislature and the judiciary. Department of Health in the UK monitors the activities of McDonald’s. The government of UK in order to improve the public health in recent times has taken measures to ensure that companies like McDonald’s are made part of writing UK health policy (Lawrence, 2010). Economic Environment After emerging from the recession there has been a shift of people towards the sustainable life style. The increase in population along with demands for more and larger homes, is threatening the UK security of the water supplies and wildlife. Moreover, the public concern about the green issue may decline as more people live in towns. Therefore, they won’t be able to experience the natural beauty of the world (Meikle, 2010). The rise in GDP in third quarter of 2010 has been by 0.7%. There has been growth in the productivity in third quarter of 2010. The consumer spending has also increased by 0.3%. This will have a positive impact upon the products of McDonald’s (Office for National Statistics, 2010). Social Environment The country has around 58 billion inhabitants or 246 inhabitants per square kilometre. There is high level of urbanisation which is 89, 5%. The wealth of the elderly persons is quite high in comparison to the younger people. Social relation is important for the health and well being and may help to protect against the decline in the health and ageing. Adult children play a vital role in the social network of population. There has been change in the attitude of the people towards diet and health. The people are joining the fitness clubs and are focusing upon the demand of organic food. The change in population also has a direct impact upon the organisation. This will affect the demand as well as supply of the goods and services within the economy (Seniorwatch, n.d.). Technological Environment With the change in the technology, business operations have also undergone remarkable change. Consumers can shop 24x7 from their home itself. Internet has changed the way companies operate their business. Even the government is showing interest to encourage the investment in research and technology. Environmental Factors There has been a change in the climate which is an increasing concern among the people of the globe. With the seriousness in this issue everyone has a role to play in reducing the impact of the changes which also includes companies like McDonalds. Therefore, the company has developed a multi-faceted effort that focuses on the energy efficiency and the sustainability stretching from their stores to the supply chain (McDonald’s, 2009). Legal Environment Even though the company has the world’s largest chain of fast food restaurant, it has been surrounded by controversies and legal proceedings. It has been accused of several legal cases and lawsuits (Admin, 2010). In one such case, it has been claimed by Pelman, a plaintiff that McDonald’s has been indulged in certain kinds of misleading sales, advertising as well as promotion. Moreover, it has been claimed that the food is unsafe and it has failed to warn the consumers regarding the danger of the product (Project Hope, 2003). 2.5 SWOT Analysis Strengths The company has been the market leader in both the domestic and international markets. The outlets are located at the areas where it is popular for its visibility, ease of access and traffic volume. It is able to generate sales because of its brand recognition (Docstoc, 2010). It has been offering number of new products in order to attract the customers. It invests in advertisement in order to improve the public image (Scribd, n.d.). Weaknesses There has been shift in the consumers’ preferences towards the hamburger. The search of substitute product of hamburgers has resulted in creation of competitors like KFC, Pizza Hut and Taco Bell. The fast food industry is highly criticized for its unhealthy food containing high calories. Moreover, the company doesn’t have a product line in order to cater to the needs of the health conscious customer segment. Lack of product innovation has been another major weakness of the company (Docstoc, 2010). Opportunities It needs to penetrate in various other sectors of the world. The changing trend in the eating habits to the healthy eating has been seen as a threat. However, it can also be seen as an opportunity as it will help the company to introduce more healthy meals in their menus like salads, fruits and yogurts (Scribd, n.d.). Threats There have been changes in the climatic condition, which is a threat to the company. The fluctuation in the currency rates is another threat for the global companies like McDonalds. Even though the company has tried to differentiate itself by adding new formats and menu items, the other fast food industry players like Burger King and Wendy’s have also been trying to do the same (Docstoc, 2010). 3.0 Market Segmentation Demographic Segmentation The company has been targeting children, youth singles along with the young urban families. It attracts the youth urban families who want to spend quality time while their children and can have some fun at the outlet. Mostly the youngsters as well as the kids are targeted. In order to attract the children, it offers ‘Happy Meal’ with which they provide toys ranging from hot wheels to various Walt Disney’s characters. Psychographic Segmentation The company’s luxury services try to fulfil the needs and wants of the self worth. It segments its market to the extrovert people who usually hang out with their family and friends. Its slogan tries to create a good image in the minds of the customers. Geographic Segmentation The UK market has been selected for the study. However, it has been providing its service all around the world. Use Related Segmentation Most of the people seems to be aware of the brand and are more interested towards the services that are provided by McDonald’s. The company has loyal customers. Considerable number of consumers in the UK is seen to be using products offered by McDonald’s. Benefit Segmentation It has been providing luxury meals that have value for money. Hybrid Segmentation The company uses hybrid segmentation rather than using particular segmentation. Through demographic and psychographic segmentation the company acquires an understanding of the people’s lifestyle and their thinking pattern. This helps them to advertise their campaign according to the lifestyle pattern and reach its customers effectively (Scribd, n.d.). 4.0 Marketing Strategy The strategy that has been chosen for the study is the repositioning of the product of the McDonald’s. The repositioning strategy takes place in order to aid the additional sales. The companies also want to keep track of the changes that occur in the business environment in order to stay ahead of the competition (Anandan, 2010). Old concept gradually becomes obsolete with the change in the taste and preferences of the consumers. Moreover, the entry of the new competitors makes it more important for the companies in order to bring certain changes in its traditional method of working (Doyle, 2008). Even if the companies consider repositioning their brand, they fail to do so because of the increased marketing expenditure. The companies need to focus upon the achievable position rather than the aspirational positioning. While repositioning the brand, it is important for the companies to capture the dynamic situation in which the needs occur rather than focusing just upon the emotional and the physical needs of the customers. After repositioning the brand, it is important to see if the brand performance is able to keep up its new promises (McKinsey & Company, n.d.). The major reason for selecting the strategy has been to improve the sales and to beat the competition. 4.1 Four Ps of Marketing Product The product selected has been McDonald’s Chicken McNuggets. The existing nutritional facts for the product have been demonstrated as follows: It contains 12g of total fats, 2 g of saturated fats. Cholesterol accounts for 30 mg, sodium 400 mg, carbohydrates 11 g. Protein in the product is 10 g with 1mg of vitamin C and 8 m of calcium. The product is made up of chicken, water, salt and sodium phosphates which are breaded and battered with the bleached wheat flour, water, wheat flour, food starch, salt, spices, paprika, dextrose, yeast, partially hydrogenated soya bean oil and other oils. It also contains dimethylpolysiloxane. Price The price of the product has been £5.99 which varies from one restaurant to another. It has been focusing upon the value pricing. Place The product is currently sold in the UK at all the restaurants of McDonald’s. Promotion The company focuses its ad campaign on its overall McDonald’s experience and active life style. The company focuses upon the idea to promote McDonald’s as a global image. ‘Think globally, act locally’ has been the promotional strategy of the company. In the UK, England footballer Alan Shearer is used as a figurehead in order to promote hamburgers. 5.0 Implementation of the Repositioning Strategy for Chicken McNuggets The product will be launched on 1st of July 2011. It has been evident that the current Chicken McNuggets that are sold at the restaurants of McDonald’s tend to be rich in calories and fats. This might not be preferred by the health conscious women. Therefore, slight modification is important in order to improve the product. The Chicken McNuggets will contain fewer calories than before and the amount of fat will be reduced in order to appeal to the large number of health conscious women. The chicken that is pre-packed on the retail sale can be packed in modified atmosphere packaging. It will help to increase the level of oxygen inside the packs in order to decrease the rate at which the bugs can multiply. It was found that people of the UK are more health conscious and are switching their preferences from non-vegetarian food items to the vegetarian food options. Therefore, it is increasingly important for the company to check if the chicken is contaminated with campylobacter. Certain features can be added to the product in order to attract large group of customers. The item can be served with different flavoured dips which will help to enhance the taste of the product. It is proposed that the product should be served with salads, the combination of which will make the product more healthier option for the UK people. Along with the kids and the youngsters, the product can also be targeted towards the old people. Internet can be used to market the product to a wider group of consumers. The price of the product may increase to £7.00 in the UK market and it can also be proposed that the price of the product needs to remain uniform in all the stores of the UK. As the product of the McDonald’s are generally targeted towards the upper middle class people, therefore the slight change in the price of the product won’t seem to affect the demand of the product. Moreover, the product having better taste and quality help to justify the price that the people will pay for the product. It becomes increasingly important for the marketers to communicate about the changes that have been made to the existing product. Therefore, promotion has a crucial role to play in this regard. The new tag line can be used for the product in order to communicate about the changes that have been made to it. The tag line must be short and precise and must be developed in such a way that it states the changes made in the product. Advertisement needs to be made available at the local level via TV, radio, newspapers, hoardings, billboards and also on the company’s website. It can be proposed that the company tries to reduce the amount of dimethylpolysiloxane from the product and use certain other alternatives in this regards. Before the launching of the product it is important that the company takes feedback from the customers in order to understand the likability of the product with improved features. This is the crucial stage of the repositioning strategy as it helps the companies to find the right ways for further improvement in the product. After receiving the feedback of the customers, the company can capitalise upon the feedback received and find certain ways in order to fill the voids. It may be such that during this stage little bit of changes may occur in the product. It is important to match the customer requirement with the current product. After receiving customer’s feedback it would be prudent that the company launches the product. Even if the company has launched the product, it needs to focus more upon the promotional activities and conduct market research in order to gain response from the customers. This needs to be carried out till 1st January 2012. 6.0 Conclusion Repositioning plays a vital role for the companies especially at times when certain brands or product are in the sick category or are performing below the average level. McDonald’s has been the leader in the fast food industry having high brand recognition and awareness. The product Chicken McNuggets was chosen for the repositioning. Several new strategies were adopted in this report in order to appeal to the mass. Weaknesses of the product have been tried to overcome and threats have been taken as a challenge to further improvements. Customers’ feedbacks have played a vital role in the repositioning strategy. References Admin, 2010. Legal Factors Affecting McDonalds Operations. Florida Public Record Search. [Online] Available at: http://floridapublicrecordsearch.org/88/legal-factors-affecting-mcdonalds-operations/ [Accessed December 27, 2010]. Anandan, 2010. Product Management. Tata McGraw-Hill. Burger King, 2010. 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