1.3.1 Mission Statement 1.3.2 Vision 1.3.3 Values: MKW 3440 Case Study of Mcdonalds Malaysia

MKW 3440 Case Study of McDonalds Malaysia
Contents
Executive Summary.......................................................................................................... 3
1.0 Company vervie!..................................................................................................... 4
1.1 pportunity............................................................................................................ 4
1." #$reat................................................................................................................... 5
1.3 Mission and %ision................................................................................................... 5
1.3.1 Mission Statement............................................................................................... 5
1.3.2 Vision.............................................................................................................. 5
1.3.3 Values.............................................................................................................. 5
".0 External Environmental &nalysis..................................................................................... 6
".1 Economic Environment............................................................................................. 6
"." 'atural Environment................................................................................................. 7
".3 (e)al and *olitical Environment.................................................................................. 8
".4 #ec$nolo)ical Environment........................................................................................ 8
3.0 +ndustry &nalysis...................................................................................................... 10
3.1 ,ivalry amon) existin) industry firms......................................................................... 11
3." #$reats from su-stitute products................................................................................. 11
3.3 #$e t$reat of ne! entrants........................................................................................ 11
3.4 .ar)ainin) po!er of suppliers................................................................................... 11
3./ .ar)ainin) po!er of -uyers...................................................................................... 12
4.0 Competitor &nalysis.................................................................................................. 13
/.0 Mar0et &nalysis........................................................................................................ 14
/.1 Mar0et #rends....................................................................................................... 14
/." Mar0et Si1e and 2ro!t$.......................................................................................... 15
3.0 .uyer analysis.......................................................................................................... 19
3.1 *syc$olo)ical factors.............................................................................................. 19
3." *ersonal factors..................................................................................................... 19
6.2.1 Age............................................................................................................... 19
6.2.2 Income, Education and Occupation.......................................................................20
3.3 Social 4actors....................................................................................................... 20
6.3.1 Family Lie !ycle............................................................................................. 20
1

6.3.2 Social !lass.................................................................................................... 20
6.3.3 Liestyle......................................................................................................... 20
5.0 +nternal analysis and core competencies..........................................................................22
5.1 Stren)t$............................................................................................................... 22
5." Wea0ness............................................................................................................. 22
6.0 Se)mentation7 #ar)etin)7 *ositionin)..............................................................................23
6.1 Mar0et Se)mentation.............................................................................................. 23
6." #ar)etin)............................................................................................................. 24
6.3 *ositionin)........................................................................................................... 24
8.0 Mar0etin) pro)ram of McDonald9s................................................................................ 26
10.0 4inancial *erformance Evaluation................................................................................ 28
11.0 &rticulation of alternatives pro-lems and issues...............................................................31
11.1 'eed of 4amily %alue Meal..................................................................................... 31
11." (imited ,eac$..................................................................................................... 31
11.3 :n$ealt$y *erception............................................................................................ 31
&ppendix..................................................................................................................... 32
,eferences................................................................................................................... 34
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Executive Summary
#$e first section of t$is case study !ill introduce t$e -ac0)round of McDonalds in Malaysia7 t$e
mission and vision of McDonalds and also t$e opportunity and t$reats of McDonalds. &fter t$e
-rief introduction is t$e external environmental analysis of McDonalds.
#$e next section analyses t$e fast food industry t$rou)$ *orter9s five forces model as !ell as t$e
competitor analysis t$at consist of .ur)er Kin) and K4C. Su-se;uently7 mar0et analysis is
conducted to indentify t$e mar0et trend and also t$e mar0et si1e and )ro!t$.
'ext is t$e analysis of t$e -uyer analysis. #$e analysis is -ein) analy1ed -ase on t$e
psyc$olo)ical factors7 personal and social factors. #$en follo!ed on are t$e internal analysis and
core competencies. #$is analysis is to analy1ed McDonald9s stren)t$s and also its !ea0nesses
#$e next se)ment !ill discuss t$e mar0et se)mentation7 tar)etin) and positionin) of McDonalds
in Malaysia mar0et. #$e mar0etin) pro)ram of McDonalds !ill t$en -e evaluated as !ell as its
financial performance.
(astly7 t$e issues and pro-lems are -rou)$t up and recommendations are )iven to improve t$e
situation.
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1.0 Company Overview
McDonalds !as founded -y t!o -rot$ers7 ,ic$ard and Maurice McDonald in 1835 in California.
#$is lar)est )lo-al fast food c$ained arrived in Malaysia 43 years later in Decem-er 1860.
McDonald Corp. )ave t$eir license to 2olden &rc$es Sdn .$d to open McDonald9s ,estaurant in
Malaysia. &fter t!enty six years t$ey no! $ave 16/ franc$ise outlets nation!ide. McDonalds
$ave created over 5000 <o- opportunity ever since t$ey arrive in Malaysia over t$e years. #$eir
vision is =to -e our customers> favorite place and !ay to eat?.
1.1 Opportunity
#$e fast food trend in Malaysia $as -enefited McDonalds as t$ey are a-le to capture more
mar0et s$are and customers. Malaysian !ould li0e to eat outside !it$ t$e increasin) of num-er
of !omen !or0ers. #$ey !ould li0e to loo0 at convenience place to eat as McDonalds provide it
for t$em. #$e tec$nolo)y advance $as improved McDonald9s services efficiency as t$eir
customer a-le to order t$rou)$ p$one and online. #$e )ro!in) internet users in Malaysia
supported for t$is 0ind of service. "4 $ours service !ill open a revenue !indo! for McDonalds
as customers loo0 for ;uic0 meal at late ni)$t.
+nternet World Statistics. @"006A. Malaysia +nternet :sa)e Stats and Mar0etin) ,eport. ,etrieved &pril 37 "0087 from
$ttpBCC!!!.internet!orldstats.comCasiaCmy.$tm
4

1.2 Threat
#$e increase of competitions from K4C7 Su-!ay7 .ur)er Kin)7 and ot$ers $as made t$e
competition for mar0et s$are in Malaysia ti)$ter. Customers $ave more ran)e of fast food -ein)
offered and t$ey !ould $ave no -rand loyalty !it$ one -rand. McDonalds need to fi)$t -ac0
!it$ t$eir promotion and advertisement to )ain t$e customers feelin). #$ey need to spend a lar)e
amount of money on it. #$e $ealt$ concern $as -ecome a main treat for McDonalds as most
customers concern on $ealt$y foods. 4ast food is considered un$ealt$y -ecause of too oily. #$is
!ill reduce t$e num-er of customers to purc$ase McDonalds foods.
1.3 Mission and Vision
1.3.1 Mission Statement
We aim to -e t$e leader in t$e Duic0 Service ,estaurant @DS,A industry -y maximi1in) *rofits
and t$rou)$ our *rinciples of DSC E % @Duality7 Service7 Cleanliness E %alueA consistent !it$
t$e needs of our Customer7 Employees and Community.
1.3.2 Vision
#o -e out customers9 favourite place and !ay to eat.
1.3.3 Values
McDonald9s mission is to -e our customers9 favourite place and !ay to eat F !it$ inspired
people !$o deli)$t eac$ customer !it$ unmatc$ed ;uality7 service7 cleanliness and value every
time.
/

2.0 Externa Environmenta !naysis.
2.1 Economic Environment.
#$e economic condition in Malaysia currently slo!in) as $ouse$old incomes and -usiness
activity decelerates due to t$e effects of current !orld economic do!nGturn. Ho!ever7 Malaysia
is still not in a recession period as compared to Sin)apore or :nited States. Even !it$ t$e
depreciation of ,in))it7 real 2D* )ro!t$ is forecast an increase from /.0I "006 to /."I "008.
3

Sou"ce# Eu"o#monito" Inte"national 2$$% &ased on t'e (o"ld )an*.
Even !it$ current economic condition7 McDonalds remain optimistic. &ccordin) to .usiness
#imes @"008A =McDonalds Malaysia expects its delivery service -usiness to <ump 40 per cent
t$is year as its ne! call centre can $andle more orders?. #$ey invested over t!o million rin))it
for settin) up t$e ne! call center. +n addition7 t$e Mana)in) Director &1mir Jafaar7 said t$e
company =plans to invest 60 million rin))it t$is year to open -et!een 1/ and "0 ne!
restaurants? @"008A.
2.2 "atura Environment.
Malaysia natural environment is considered )ood. .ased on t$e report -y Department of
'ational Environment Ener)y and ,esources7 t$e &ir *ollution +ndex is in t$e status of )ood in
many areas in t$e country.
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+n relation to t$is7 McDonalds around t$e !orld $as al!ays -een a company !$ic$ practice to
protect t$e natural and community resources t$at support and are affected -y t$eir activities.
McDonalds promotes recyclin) and ener)y conservation. =Since 18807 t$ey $ad recycled "
-illion corru)ated card-oard7 purc$ased more t$an K3 -illion in products made from recycled
materials and eliminated several million pounds of pac0a)in)?@McDonaldsA.
2.3 Legal and +olitical En,i"onment.
Malaysia is officially an +slamic nation !$ic$ ma<ority of its population is Muslim. +n
order to capture t$e mar0et7 McDonalds -elieve t$at -elieves in !or0in) !it$ local -usinesses7
)overnment7 aut$orities and suppliers t$rou)$out t$eir !orld!ide operations.
+n Malaysia7 t$ey are -ound !it$ t$e Syariat la! !$ic$ states all food served must -e
Halal. McDonald9s is one of t$e many fast food c$ain restaurant in Malaysia )ained Muslim
consumers confident. =McDonald9s in Malaysia under!ent ri)orous inspections -y Muslim
clerics to ensure ritual cleanlinessL t$e c$ain !as re!arded !it$ a $alal @=clean and accepta-le?A
certificate7 indicatin) t$e total a-sence of por0 products? @JournalA.
2.# Technoo$ica Environment
McDonalds $as -een adaptin) to t$e use of tec$nolo)y in deliverin) its fast food to t$eir
consumers. #$e use of telecommunication tec$nolo)y is a )ood strate)y to -e)in an online
service diverse from its -ric0 and mortar concept. &s explained a-ove7 McDonalds $ad expanded
6

t$eir call centre capa-ility !$ic$ =no! can $andle up to 507000 calls compared to "07000
previously? @McDonaldsA. +n addition7 McDonald>s Malaysia is also =!or0in) on allo!in)
customers to order and pay online?.
.ased on t$e c$art a-ove7 it s$o!s t$at t$ere is -een a constant )ro!t$ in t$e usa)e of
mo-ile users in Malaysia from "001 to "003. #$us7 t$e investment made -y McDonald9s
Malaysia is <ustifia-le and relevant in terms of current trend.
8

10

3.0 %ndustry !naysis
#o analy1e t$e industry for McDonald9s7 t$e Mic$ael *orter9s five forces are used. #$e *orter /
forces analysis is a frame!or0 for industry analysis and -usiness strate)y development
developed -y Mic$ael E. *orter in 1858. +t uses concepts developed in +ndustrial r)ani1ation
@+A economics to derive / forces t$at determine t$e competitive intensity and t$erefore
attractiveness of a mar0et. *orter referred to t$ese forces as t$e microenvironment7 to contrast it
!it$ t$e more )eneral term macro environment. #$ey consist of t$ose forces close to a company
t$at affect its a-ility to serve its customers and ma0e a profit. & c$an)e in any of t$e forces
normally re;uires a company to reGassess t$e mar0et place.
*orter / 4orces Hi)$ Moderate (o!
#$reat of 'e! Entrant

.ar)ainin) po!er of Suppliers

.ar)ainin) po!er of .uyers

#$reat of Su-stitute products

,ivalry amon) existin) industry firms

11

3.1 &ivary amon$ existin$ industry 'irms
#$e fast food industry is facin) $i)$ intense of competition. ,ivalry is stron) -ecause
competition is focusin) on providin) t$e -est service and product variety. t$er competitors suc$
as K4C and &EW create an intense rivalry amon) t$e fast food providers. ,ivalry suc$ as K4C
is constantly providin) more c$oices ran)in) from fried c$ic0ens to -ur)ers and to side snac0
suc$ as potato !ed)es and salad. Moreover7 competitors e;ual in si1e and po!er and )ro!t$ in
t$e industry.
3.2 Threats 'rom su(stitute products
4actors t$at caused t$e firm to lose its sales profit is t$e limited c$oice of product t$ey offer.
#$erefore7 many people !ill )o to su-stitute products. #$e su-stitute products for McDonald9s
!ill -e t$e ot$er fast food c$ain7 for exampleB .ur)er Kin) and road side -ur)er stalls. &lt$ou)$
McDonald9s $as applied "4 $ours all around7 $o!ever7 road side -ur)er stall t$at operates until
late at ni)$t and ot$er fast food restaurant is also operatin) "4 $ours service.
3.3 The threat o' new entrants
'e! entrants pose t$reats and increase competition in t$e industry. #$e lesser t$e t$reat of ne!
entrants7 t$e )reater !ill -e an industry9s attractiveness as it is in t$e retailin) industries. Due to
lo! s!itc$in) cost and lac0 of product differentiation7 ne! competitors can easily enter t$e
mar0et. 4or example7 McDonald9s face competition from Carl9s Junior and Wendy9s !$ic$ are
;uite ne! in t$e Malaysian mar0et still.
3.# )ar$ainin$ power o' suppiers
#$e -ar)ainin) po!er of suppliers is vie!ed as a t$reat -ecause t$e ;uality of t$e supplied
products is $i)$ly dependent on t$em. #$ey can eit$er raise t$e prices or lo!ered t$e ;uality if
t$e suppliers are po!erful. +n t$e fast food industry case7 t$e po!er of suppliers is relatively lo!
1"

-ecause t$e inputs are standardi1ed7 lo! s!itc$in) costs and t$ere are a lot of su-stitutions of
supplier.
3.* )ar$ainin$ power o' (uyers
&s t$e competition amon) rival -ecome intense in attractin) potential customer and maintainin)
loyal customer. &ccordin) to %il<oen E Dann @"000A7 -uyers play an important role in decidin)
t$e s$ape of t$e mar0et as t$ey can drive prices do!n and ma0e unreasona-le demands re)ardin)
;uality7 delivery and terms of payment. +n McDonald9s case7 -uyers assert $i)$er -ar)ainin)
po!er -ecause of lo! s!itc$in) cost to ot$er -rand @.ur)er Kin)A. 4or instances7 McDonald9s
cannot set $i)$ prices on t$eir products as consumer can easily opt for ot$er -ur)er.
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#.0 Competitor !naysis
#$is part evaluates a-out t$e strate)y t$at McDonald used compared !it$ its main competitor of
t$e similar product. +t identifies !$et$er McDonald is a mar0et leaders7 follo!ers7 nic$ers
mar0et c$allen)ers in its o!n type of products and t$e !$ole mar0et9s position.
%ssues Mc+onad,s )ur$er -in$ -.C
Main *roducts .ur)er .ur)er 4ried C$ic0en7 .ur)er
&dditional *roducts 4ried C$ic0en7
*orrid)e
Curly 4ries Wed)es7 Mas$ *otato
Mar0et S$ares
@&mon) all fast food
-randsA
18.3I ".1I /".5I
ri)in :nited States :nited States :nited States
utlets in t$e mar0et
@End of year "005A
153 "0 40"
,an0 in Malaysia " 3 1
,an0 in World 1 3 "
14

*.0 Mar/et !naysis
*.1 Mar/et Trends
4ast food culture $as -ecome a !ay of life or trend in t$e !orld. Malaysian adults eat at
ta0eGa!ay restaurants around 86 percent. *$ilippine7 #ai!an and Malaysia $ave t$e $i)$est
percenta)e of fast food restaurant consumers in t$e !orld compare to &merica !$ic$ count 85
percent @&C'ielsen7 "00/A. #$is is due to t$e -usy life
styles and ease of access of variety of fast food
restaurant. Consumers $ave -een spendin) less of
t$eir -ud)ets on t$e )rocery store !$ile more and
more of t$eir food money is endin) up in cas$
re)isters at t$e restaurants and fast food outlets
@Kara7 et. &l.7 1888A. &round /8I of Malaysian
eatin) ta0es a!ay every !ee0. Even t$e state of
one9s $ealt$ $as -ecome primary concerns for
consumers7 -ut it does not affect t$e !ay consumers c$oose to eat. +t $as -ecome a part of t$eir
life to eat fast food7 particularly in Hon) Kon)7 Malaysia7 and :nited State.
McDonalds !ill -e a-le to increase t$eir tar)et mar0ets in Malaysia as t$is trend $as
-ecome part of t$eir consumers9 life. #$is is also inducin) t$e competition of fast food industry
as Malaysia is a prospect mar0et for fast food industry. McDonalds can perform -etter t$an its
competitors if t$ey can fulfill Malaysian customers !$o prefer convenience location as it
account for /4 percent of Malaysian prefer convenience location to eat @&C'ielsen7 "00/A.
1/

*.2 Mar/et Si0e and 1rowth
13

&s fast food -ecomes a trend in Malaysia7 t$e num-er of expenditure used -y t$e
consumers $as increased -y nine percent and ran0ed t$ird in terms of expenditure. #$e fast food
mar0et si1e is increasin) from year to year and it reac$es "70/6.6 in "005. McDonalds Malaysia
company s$are also increase in t$e year "005 -y 400 plus. #$e num-er of $ouse$olds purc$ase
on fast food reac$ 3/3746"7100 -y year "005. #$e fast food sector is expected to experience t$e
fastest )ro!t$ -et!een "0 to 30 percent per annum @Malaysia Mar0et pportunities ,eport7
"000A. McDonalds already $as 164 stores in Malaysia7 and McDonalds plan to open ten to fifteen
ne! outlets eac$ year @.usiness #imes7 "008A. Even t$ou)$ it is still far a!ay compare to K4C
outlets in Malaysia !$ic$ count for more t$an 380 outlets7 t$is trends and )ro!t$ is )ood
indicators for McDonalds to increase t$eir mar0et s$are in Malaysia.
&s fast food -ecomes a trend in Malaysia7 t$e num-er of expenditure used -y t$e
consumers $as increased -y nine percent and ran0ed t$ird in terms of expenditure. #$e fast food
mar0et si1e is increasin) from year to year and it reac$es "70/6.6 in "005. McDonalds Malaysia
company s$are also increase in t$e year "005 -y 400 plus. #$e num-er of $ouse$olds purc$ase
on fast food reac$ 3/3746"7100 -y year "005. #$e fast food sector is expected to experience t$e
fastest )ro!t$ -et!een "0 to 30 percent per annum @Malaysia Mar0et pportunities ,eport7
"000A. McDonalds already $as 164 stores in Malaysia7 and McDonalds plan to open ten to fifteen
ne! outlets eac$ year @.usiness #imes7 "008A. Even t$ou)$ it is still far a!ay compare to K4C
outlets in Malaysia !$ic$ count for more t$an 380 outlets7 t$is trends and )ro!t$ is )ood
indicators for McDonalds to increase t$eir mar0et s$are in Malaysia. @refer to appendix "A
15

2.0 )uyer anaysis
2.1 3sychoo$ica 'actors
#$e demand for fast food industry $as increased over t$e past t!enty years. Consumers
try to purc$ase )oods or services to fulfill t$eir o!n needs and !ants. #$is is t$e same in t$e fast
food industry. House$old !it$ dual income family are t$e social norm in Malaysia. McDonalds
provide fast food to -e served for t$e family !$et$er t$ey are dual income or ot$er types of
family. McDonalds provide foods t$at are fast and easily o-tain -y t$e consumers !$o are
una-le to coo0 for t$emselves. #$is is more comforta-le and easier since t$ey do not !aste t$eir
time and can focus on t$eir <o-s.
&ttitudes also can drive t$e consumer consumption of fast food as attitudes are a learned
predisposition and occur !it$in a situation @Sc$iffman et. al.7 "006A. McDonalds offer "4 $ours
service !$ere some consumers !ill feel $un)ry durin) midni)$t after doin) !or0s or study. #$is
!ill induce t$e customers to dial McDonald9s call center and order foods. #$e !ord of mout$
!ill spread !$en t$e customers feel satisfied !it$ McDonalds9s fast foods. t$ey !ill spread t$e
!ord of mout$ to t$eir relative and friends.
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2.2 3ersona 'actors
6.2.1 Age
McDonalds tar)et mar0et is t$e dual income families !$o $ave no time to prepare for t$eir foods
for t$eir c$ildren7 t$e !or0ers !$o are $avin) t$eir lunc$7 and teena)ers. #$e )lo-al tar)et
mar0et fastGfood industry account for 58 percent is at a)e 15G"/ @Sc$roder E McEac$ern7 "00/A.
6.2.2 Income, Education and Occupation
#$ese criteria used -y mar0eters to measure a-ility of consumers9 spendin). #$e salary earnin)7
is related to !$at <o- t$e consumer $olds7 !$ic$ is in turn rated -y t$e level and ;uality of $is or
$er received education. McDonald tar)et consumers are upperGmiddle and lo!er income
consumers. #$e Mac value offered -y McDonalds !ill attract lo!er class consumer as lon) as
upperGmiddle class consumers. McDonald ,M/.8/ lunc$ meal $as -oosted t$e products as it is
attractive to upperGmiddle and even lo!er class customers @.usiness #imes7 "008A.
2.3 Socia .actors
6.3.1 Family Lie !ycle
Most families pass t$rou)$ t$e pro)ression of family life cycle !$ic$ is )enerally start from
youn) sin)les7 youn) married7 parent$ood7 postGparent$ood7 and dissolution @Sc$iffman et. al.7
"006A. Different family unit see0 different types of food. McDonald offer different set of foods
!$ere eac$ family unit can c$oose accordin) to t$eir needs. #$e value meals are offered in
18

different portion of foods. 4or t$e dual income families !$o do not $ave enou)$ time to prepare
-rea0fast for t$eir family mem-ers7 t$ey can order -rea0fast meal in McDonald9s menu.
6.3.2 Social !lass
McDonalds tar)eted to various social class !$ic$ are lo!erGmiddle and upperGmiddle. #$e menu
of Mac value )ives more convenience for t$e lo!er middle class to en<oy McDonald9s fast food.
#$e .i) %alue meal !$ic$ is ;uite expensive can -e purc$ased -y upperGmiddle class family.
6.3.3 Liestyle
Malaysia fast food mar0et is )ro!in) !$ic$ is attri-uted !it$ t$e c$an)in) in life style suc$ as
leisure7 eatin) out and convenience. &round 86 percent Malaysian are fast food patron @Euro
Monitor7 "008A. #$e c$an)in) role and independence of !omen as more of t$em enter t$e la-or
mar0et and ur-ani1ation7 as ur-an families can afford and more !illin) to incur $i)$er
expenditures on food suc$ as fast food. McDonalds try to provide promotion for t$e value meal
to personali1e to t$eir lifestyle.
"0

4.0 %nterna anaysis and core competencies
4.1 Stren$th
#$e stron) )lo-al present -ecomes one of t$e -i))est stren)t$ McDonald9s $as. +t ma0es
McDonald9s a-le to capture lar)e mar0et in ot$er countries suc$ as Malaysia. McDonald9s
expand t$eir mar0et $as proven successful !$ic$ is supported -y t$e -rand reco)nition. +t
)enerated more sales and )ain mar0et s$are. McDonald9s product innovation is t$e ot$er stren)t$
it $as. #$e innovation of fast food !$ic$ is different in every country it enters is a )ood strate)y
for locali1in) t$e taste and preference of customers. McDonald9s offers &yam 2oren) !$ic$ is
only availa-le in Malaysia and McCurry *an in +ndia. McDonalds also offered "4 $ours delivery
services !$ic$ ena-le consumers to en<oy foods durin) midni)$t if t$ey feel $un)ry. #$is is t$e
core competencies for McDonalds over its competitors !$ere K4C7 Su-!ay7 .ur)er Kin) and
ot$ers do not $ave "4 $ours delivery service.
4.2 5ea/ness
McDonald9s $as lo! !idt$ of product caused -y t$e saturated mar0et in food industry $as ma0e
McDonald9s difficult to add ne! outlets in t$eir menu lists. #$e last -rea0t$rou)$ for
McDonald9s is t$eir c$ic0en nu))et in 1863. t$e increase of competition suc$ as K4C7 &EW7
.ur)er Kin)7 and Su-!ay7 $as created a ti)$t price competition. McDonald9s una-le to earn
muc$ revenue from t$is price competition. Healt$ concern -ecomes one of t$e ma<or !ea0nesses
of McDonalds !$ere many people complaint !it$ t$e oily foods t$at are offered.
"1

6.0 Se$mentation7 Tar$etin$7 3ositionin$
6.1 Mar/et Se$mentation
Se)ment -ase C$ildren Mout$ Wor0in) &dults
Demo)rap$ic
&)e
+ncome
ccupation
.elo! 13
*arent9s allo!ance
Students
13G"4
.elo! "000
Students7 *artGtimers
&-ove "4
&-ove "000
SelfGemployed7 4ullG
timers7 *rofessional
2eo)rap$ic
,e)ion
(ocation
Capital and ,e)ional Cities
+nner City
Social Cultural
Social class
4amily life cycle
Middle7 Hi)$
Kids
Middle7 Hi)$
Sin)les7 Couples
Middle7 Hi)$
Sin)le7 Couples7 Married
*syc$o)rap$ic
(ifestyle (eisure (eisure7 4astGmovin) 4astGmovin)7 convenient
McDonald uses $y-rid se)mentation approac$ to se)ment its mar0et and t$e )eodemo)rap$ic is
used. 4e! se)mentation -ases are used to divide t$e mar0et se)ments. 4rom t$e ta-le7 fe!
se)ments are discovered to -e McDonald9s main se)ments. #$ey are c$ildren7 yout$ and !or0in)
adults.
""

6.2 Tar$etin$
4rom t$e mar0et se)ments discovered7 t$e most profita-le tar)et mar0et se)ment seems to -e t$e
!or0in) adults mar0et. #$e !or0in) community se)ment is considered t$e lar)est )roup of
consumer of McDonald compared to c$ildren and yout$. #$ere are more sensitive to trends and
lifestyles in today9s culture and in almost every!$ere. +n addition7 !or0in) adults $as t$eir o!n
income t$us a-le to ma0e t$eir o!n c$oice !it$out too muc$ constrain. Hence t$ey $ave t$e
tendency to determine t$eir eatin) $a-its. &lso7 t$e McDonald provides fast services t$us suit
t$ose !or0in) adults !$o are also al!ays on a )o and fast movin) especially t$ose in t$e capital
cities. &lso7 t$ose !$o consume McDonald are normally from t$e middle or $i)$er class ran)e.
4urt$ermore7 McDonald9s "4 $our operation is also tar)etin) on !or0in) adults !$o !or0 till
late at ni)$t or t$ose !$o are al!ays re;uired to -e early settin) off to t$eir !or0 place.
6.3 3ositionin$
+t is essential for McDonalds to ma0e perceptual map to $elp identifies t$e underlyin)
dimensions t$at differentiate consumers9 perceptions of product and t$e position product on t$e
dimensions @*an)upta7 "00/A.
+n order to position itself successfully7 McDonalds need to esta-lis$ criteria t$at may allo! it to
differentiate itself from ot$er competitors @Sc$iffman7 et.al7 "006A. +n t$e fast food industry7
McDonalds $as positioned itself as t$e mar0et leader in t$e sense of pricin) and services. +ts "4
$our services in almost all of t$e outlet nation!ide ma0es t$em a place to loo0 for food even it is
in t$e middle of a ni)$t. Ho!ever7 it is $ard for McDonalds to position itself far a!ay from t$e
competitors as ot$ers are also follo!in) t$e trend. Ho!ever7 it9s not up to many competitors9
outlet to -e runnin) on "4 $ours to -e competin) !it$ McDonald.
+ositioning +e"ception Map
"3

8.0 Mar/etin$ pro$ram o' Mc+onad,s
8.1 3roduct
"4

"4 $ours 'on "4
$ours
Hi)$
*rice
(o!
*rice
1
"
3
1. McDonalds
". .ur)er Kin)
3. K4C
1. McDonalds
". .ur)er Kin)
3. K4C
McDonald9s ta0es into account cultural factors in servin) t$e Malaysian consumers. #$e
food serve is $alal and servers local taste as !ell. #$ey $ave !ide ran)e c$oice of menu similar
!it$ -ur)er 0in). Seasonally t$ey serve t$e Nprosperity -ur)er9 for C$inese 'e! Mear.
McDonald9s also serves $ealt$y food -ut t$is !ill effect on t$e taste and consumers eatin)
experience. 4or instance7 saturated oil t$at no! is replaces !it$ #rans fat oils $ave c$an)e t$e
taste of t$e McDonald9s famous fries.
8.23rice
McDonald9s $ave more price reduction compared to K4C and .ur)er Kin). #$ey offer a
very competitive food prices. #$ey $ave t$e =%alue Mc Savers? and t$e =Mc %alue Meal?. K4C
do $ave t$eir value meal called =Jom Jimat Everyday? and .ur)er Kin) -ut in term of t$eir
price7 McDonald offers t$e -est price for fast 4ood. Ho!ever7 McDonalds7 t$ey offered only
durin) certain period of time t$ereGfor rise t$e ;uestion of its availa-ility.
8.3 3ace
+n terms of distri-ution7 McDonalds $ave 16/ restaurants nation!ide. #$ey are -uilt or
open in retail area9s li0e s$oppin) malls due to a trend of all Malaysian !$o loves to s$op in
malls. #$ey also open in some rural area9s $o!ever K4C $as more restaurants in t$e rural area.
+n some strate)ic places7 McDonalds also opens in several local )as station suc$ as *E#,'&S
Mesra. #$ey open an express cafO t$at serve some popular products. #$is can satisfy t$e $un)er
of consumers suc$ as7 !or0in) executives onGt$eG)o and motorist.
8.# 3romotion
"/

+n order to ac$ieve )ood profit and $i)$ customer satisfaction7 promotion is one of t$e
main factors. &ccordin) to Kara7 Kayna0 and Kucu0emiro)lu @1885A fast food -uyers are
see0in) price deal and promotions -efore visitin) a fast food restaurant.
3romotion Methods Mc+onad,s -.C )ur$er -in$
Teevision
!dvertisement
Media Text9
"ewspaper and
Ma$a0ine
Events :
Sponsorships
)i(oards
1ames and Contest
3rice &eduction
Coupons
;oyaty Card
Speciaties
McDonald9s television advertisement is place on a seasonal -asis !$ic$ t$ey only
advertise durin) festive seasons and movie. 'ormally7 t$eir ads attract c$ildren rat$er t$an adult
consumers. K4C also does #% ads similar concept to McDonalds. Ho!ever7 K4C $ave t$eir o!n
#elevision *ro)ram called t$e =C$ic0y Hour? t$at is on air every Saturday.
Events and sponsors$ip -y McDonalds is mainly to coordinate !it$ t$eir social
responsi-ility. #$ey usually or)ani1e events for t$eir ,onald McDonald C$arity House.
Ho!ever7 K4C doesn9t focus on c$arity $o!ever more related to increase t$eir position in t$e
"3

mar0et. ,ecently7 =t$ey or)ani1e campai)n7 entitled N2ood t$in)s come to)et$er !it$ K4C97
aims to differentiate K4C from its rivals and $i)$li)$ts t$e fast food c$ain9s presence and role in
everyday Malaysian life?@.rand ,epu-lica7"008A. .ur)er Kin) $as no 0no!n event in Malaysia.
McDonald9s in Malaysia primarily focus of it mar0etin) campai)n -y sendin) flyers to
$ouses and attac$ coupon in ne!spapers. K4C also )ives discount coupons as !ell as .ur)er
Kin). Ho!ever .ur)er Kin) coupons are purc$ased from t$e store not )iven for free li0e K4C
and McDonald9s.
McDonald9s also advertise t$eir product usin) -ill-oard. #$ey place t$eir latest advertisement on
=McDonald9s Mc %alue Meal? at ma<or roads t$at indeed attract attention. K4C and .ur)er Kin)
do not use t$is advertisement tool to promote t$eir -rand.
McDonald9s $ave more price reduction compared to K4C and .ur)er Kin). #$ey $ave
t$e =%alue Mc Savers? and t$e =Mc %alue Meal?. K4C do $ave t$eir value meal called =Jom
Jimat Everyday? and .ur)er Kin) -ut in term of t$eir price7 McDonald offers t$e -est price for
fast 4ood.
#$erefore !e can conclude t$at McDonalds spends $eavily in promotion especially t$eir
advertisement to )ain t$eir mar0et position. #$is is ali)nin) !it$ t$e )lo-al McDonald
advertisin) strate)y of retainin) customers.
"5

10.0 .inancia 3er'ormance Evauation
#$is case study !ill evaluate a-out t$e financial performance of McDonald9s. McDonalds is not
t$e only fast food c$ain restaurant in Malaysia $o!ever t$ey are competin) !it$ many ot$er
competitors suc$ as K4C7 *i11a Hut7 .ur)er Kin) and ot$ers. #$erefore t$e financial ratios !ill
indicate !$et$er McDonald9s is a mar0et leader or a follo!er in Malaysia -y comparin) !it$
K4C. #$e financial statements are only availa-le for t$e year ended "005.
4) Debt Ratio
Total Liabilities
Total Equity
2006 2007

28.9% 31.8%
2007
0.12
5) Retur o !ales
"ro#it a#ter Ta$
Total Re%eue
0.0098 0.0197 0.42
6) &ross "ro#it 'ar(i
&ross )ro#it
*et sales
26.7% 27.8% 100%
#$e current ratio of McDonald for "003 and "005 is 0."3B1 and 0."6B1 respectively. +t is assumed
t$at t$e $i)$er t$e current ratio7 t$e stron)er t$e -usiness can cover its s$ortGterm lia-ility. +t is a
-asic indicator of s$ortGterm de-t servicin) andCor cas$ flo! capacity. #$e lo! current ratio of
McDonald9s may also impose ot$er pro-lems. +t may su))est t$at McDonalds is not fully
utili1in) t$e availa-le li;uidity assets especially cas$ and not availa-le to pay t$eirs lia-ilities.
Compare to K4C in "0057 its ratio is "6B1. #$is means K4C $as a stron)er s$ort term to cover its
lia-ility.
"6

#$e cas$ flo! ratio of McDonald and K4C for "005 is 0.44/ and 1.331 respectively. #$is s$o!s
t$e a-ility of K4C to solve t$eir s$ort term solvency !$ic$ indicates t$at t$ey $ave a stron)er
and more positive cas$ flo! compare to McDonald9s.
#$e avera)e inventory turnover period for McDonald9s as indicated is 1"./ days. #$is is a )ood
indicator for a fast food restaurant. +t s$o!s t$at McDonald only ta0e on avera)e 1"./ days for
t$eir inventory to -e sold. Ho!ever due to some unavaila-le data7 t$e K4C inventory turnover
period can9t -e calculated.
De-t ratio measures proportion of total assets financed -y de-ts. #$e de-t ratio for McDonald9s
for "003 and "005 is "6.8I and 31.6I respectively. #$is is an increase of de-ts from previous
year t$at $as a considera-ly lo!er de-t ratio. &s compared !it$ K4C7 1"I t$ey $ave a lo!er
de-t ratio7 almost to $alf t$an McDonalds. #$is indicates t$at McDonald9s $as financed "6.8 I
of its assets !it$ de-t. #$e $i)$er t$is ratio7 t$e more financial levera)e McDonald $as.
#$e return on sales measures t$e profit )enerated from eac$ dollar of sales. Hi)$er return on
sales ratio indicates $i)$er profit mar)in and t$e expenses are mana)ed !ell. McDonald9s on
"003 !as 0.0086 and increase in "005 to 0.185. Ho!ever7 if compared to K4C !it$ a ratio of
0.4" almost t!ice t$e profit )enerated from eac$ dollar of sales.
2ross profit mar)in is a one of t$e -est indicator to measure t$e performance of McDonald
operations. +n "005 McDonald $as "5.6I )ross profit mar)in compared to "003 !it$ "3.5 I a
small increase. #$e proportion of revenues t$at is operatin) profit and t$us McDonald9s is
availa-le to compensate de-t7 e;uity capital. +t also reflects McDonald9s a-ility to )enerate
revenues and control costs in suc$ a !ay as to )enerate a profit. K4C $o!ever $ave a 100 I
)ross profit mar)in. +n t$e statement t$ey $ave no cost of )oods sold.
"8

.ased on t$e ratios selected it s$o!s t$at K4C is performin) -etter t$an McDonalds. Ho!ever if
compared t$eir net profit for "005 McDonalds earn ,M1"7 /"4000 and K4C earns ,M
3375507000 t$ree times more t$an McDonalds
#$erefore in Malaysia7 K4C is t$e mar0et leader in t$e fast food c$ain -ased on t$e financial
statements.
P@calculation in appendix 1A
11.0 !rticuation o' aternatives pro(ems and issues
11.1 "eed o' .amiy Vaue Mea
McDonald9s must not lose si)$t of its core consumer )roup or $eavy fast food users. Even
t$ou)$ t$e tar)et mar0et is youn) adult7 !or0in) executives and c$ildren t$e menuC product is
not for !$ole family. McDonald emp$asi1e on individual menu not family menu. 4or instance7
K4C $as t$e Nvariety -uc0et com-o9 E Nmini -uc0et com-o9. McDonald s$ould come out menu
!it$ family meal or pac0a)e for family meals. 4or instance7 NMc4amily %alue Meal9 t$at comes
!it$ four medium drin0s7 t!o lar)e fries7 )arden salads and four -ur)ers !$ic$ suits for a family
30

of four. +n t$is current economic do!nturn7 Mc4amily %alue Meal !ill encoura)e families to eat
out in McDonald9s rat$er t$an eatin) at $ome.
11.2 ;imited &each
#$e allocation of McDonald9s outlets is al!ays in t$e ur-an area suc$ as cities and to!ns. ,ural
areas in t$e country are -ein) left out -y McDonalds to explore more. &s a result of t$at
McDonalds $as a lo!er mar0et s$are. Hence7 venturin) into rural areas mi)$t <us -oast up t$e
mar0et s$are and reac$in) out to ne! tar)ets in t$e rural area can increase t$e a!areness and
sales in t$e rural areas. Ho!ever t$ey plan to improve more in -uildin) and openin) ne!
restaurants t$is year.
11.3 <nheathy 3erception
4ast food $as al!ays -een perceived as an un$ealt$y food no matter !$at t$e company $as done
to improve on t$e $ealt$ issue. Even t$ou)$ McDonalds $as al!ays comin) out !it$ $ealt$y
menu for customers7 t$e fast food provided is still considered not $ealt$y. #$is issue can actually
-e $andled -y introducin) real $ealt$y food suc$ as salads or may-e even ve)etarian -ur)ers.
#$is can eventually put a mindset of $ealt$y food -ein) provided -y McDonalds and t$at
McDonalds is really ta0in) $ealt$ issue seriously.
31

&ppendix
&ppendix 1
3"

1A Current ,atio Q Current &ssets C Current (ia-ilities
McDonald
@"003A Q 4/70037000 C 15374147000 Q 0."3B1
@"005A Q /470567000 C 18"73637000 Q 0."6B1
K4C
@"005A Q 13674367000C /786/7000 Q "6.1/B1
"A Cas$ 4lo! ,atio Cas$ 4lo! from psC &vera)e Current (ia-ility
McDonalds
@"005A Q 6"1447 000C R@18"73637000 S 153414AC"A Q0.44/
K4C
@"005A Q 137//67000C R@/786/7000 S5/533AC"T Q 1.331
3A &vera)e +nventory #urnover Q @&vera)e +nventory CCost of 2ood SoldA x 33/ days
McDonald9s
@"005A Q R@578637000 S 5755"7000AC 4/8746/7000T x 33/ days Q 1"./ days.
K4C
@"005A Q 'ot availa-le
4A De-t ,atio Q #otal (ia-ilities C #otal &ssets
McDonalds
@"003A Q 5173317000C"46705/7000 Q 0."68 Q "6.8II
@"005A Q 80716/7000C"6"76517000Q 0.316 Q31.6I
K4C
@"005A Q 3374"87000C /46765/7000 Q 01" Q 1"I
/A ,eturn on Sales Q*rofit after #ax C #otal ,evenue
McDonalds
33

@"003A Q /73/87000C /4574437000 Q 0.0086
@"005A Q 1"7/"47000C 33373557000 Q 0.0185
K4C
@"005A Q 3375507000C 6670007000 Q 0.4"
3A 2ross *rofit Mar)in Q 2ross *rofit C 'et Sales
McDonalds
@"003A Q 143708/7000C/4574437000 Q 0."35 Q "3.5 I
@"005A Q 153768"7000C 33373557000 Q 0."56Q "5.6I
K4C
@"005A Q 667000C667000Q 1Q 100I
34

+))e,i$ 2
3/

33

+))e,i$ 3
-elo. is t/e #ia0ial state1ets o# '0Doal,s 'alaysia u,er &2LDE* +R34E!
!D* -4D
35

&e'erences
.usiness #imes. @"008A. Mc-onald.s ne/ call cent"e to &oost sales. ,etrieved Marc$ "87 "0087
from $ttpBCC!!!.-times.com.myCCurrentU'e!sC.#+MESCarticlesCmacdo1C&rticleC
.usiness #imes. @"008A. Mc-onald.s to spend 0M3$$m on ne/ outlets. ,etrieved &pril 37 "0087
from $ttpBCC!!!.-times.com.myCCurrentU'e!sC.#+MESCarticlesCmcdC&rticleC
Euro Monitor. @"008A. !onsume" Liestyles # Malaysia. ,etrieved &pril 17 "0087 from
$ttpBCC!!!.portal.euromonitor.com.e1proxy.li-.monas$.edu.auCpassportCDocument%ie!.aspx
Euromonitor. @"008A. Eu"omonito" Inte"national. ,etrieved Marc$ "/7 "0087 from 2lo-al
+nformation Mar0et Data-aseB $ttpBCC!!!.portal.euromonitor.com.e1proxy.li-.monas$.edu.au
CpassportCma)a1ine.aspx
Hamsa!i7 ,. @"0087 Marc$ 15A. )usiness 1imes. ,etrieved Marc$ "47 "0087 from 'e!s Strai)$t
#ime *ressB $ttpBCC!!!.-times.com.myCCurrentU'e!sC.#+MESCarticlesCmacdo1Cmacdo1.pdf
Kara7 &.7 Kayna07 E. E Kucu0emiro)lu7 . @1888A. Ma"*eting St"ategies Fo" Fast#Food
0estau"ants2 A !ustome" Vie/. .ritis$ 4ood Journal 88C8 R1885T 316G3"4.
(im7 K. @"0087 Marc$ 18A. 3F! launc'es t'"oug'#t'e#line d"i,e in Malaysia. ,etrieved Marc$
"67 "0087 from .rand ,epu-licB
$ttpBCC!!!.-randrepu-lic.asiaCMediaCsearc$articleC"008U03CK4CGlaunc$esGt$rou)$Gt$eGlineG
driveGinGMalaysiaC34608
McDonald :S&. @"008A. En,i"onment. ,etrieved Marc$ "47 "0087 from McDonald>s :S&B
$ttpBCC!!!.mcdonalds.comCusaC)oodCenvironment.$tml
'ielsen. @"00/A. &sians t$e World9s 2reatest 4ast 4ood 4ans. ,etrieved &pril 17 "0087 from
$ttpBCCmy.acnielsen.comCne!sC"00/01"3.s$tml
36

'ielsen. @"00/A. & 330V %ie! of 4ast 4ood and +mpulse Ha-its. ,etrieved &pril 17 "0087 from
$ttpBCCasiapacific.acnielsen.comCpu-sC"00/U;"UapUfastfood.s$tml
*eirson7 2. E. @"003A. 4inancial &ccountin)B &n +ntroduction. +n 2. E. *eirson7 +ei"son,
4"a'am 5 0amsay, Alan @pp. 534G610A. 4renc$s 4orest 'SWB *earson Education &ustralia.
Sc$iffman7 (7 .ednall7 D7 9Cass7 &7 *aladino7 &7 Ward7 S E Kanu07 (. @"006A. Consumer
.e$aviour7 4t$ edn7 *earson *rentice Hall7 &ustralia
Sc$roder7 M.J.&.7 E McEac$ern. @"00/A. 4ast foods and et$ical consumer valueB a focus on
McDonald9s and K4C. .ritis$ 4ood Journal %ol. 105 'o. 47 "00/ pp. "1"G""4
%i)nali7 C. @"001A. McDonaldsB #$in0 2lo-al &ct (ocal #$e Mar0etin) Mix. )"itis' Food
6ou"nal 7 85G111.
38

1.3.1 Mission Statement 1.3.2 Vision 1.3.3 Values: MKW 3440 Case Study of Mcdonalds Malaysia

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