THE FACTOR MAKE MCDONALDS POPULAR AMONG COLLEGE STUDENT IN

MALAYSIA

CHAPTER ONE

INTRODUCTION

Globalization has brought a stream of changes to the pattern of human life from various aspects
including their usage, nutrition and lifestyle. In Malaysia, the growth of franchise restaurant
networks such as Kentucky Fried Chicken (KFC), McDonalds, Pizza Hut, Domino Pizza and
many more are clearly visible in areas of urban and capital city development. The existence of
this fast food restaurant offers an alternative to the crowds, especially in urban areas that are
always busy with day-to-day routines and also face the stress of the city, hence they will prefer
to get instant food without the hassle of cooking and waiting longer. Nowadays almost every
fast food restaurant mentioned above provides the last drive counter (drive thru) to make it
easier for their customers to enjoy fast and flexible service and dishes.

One of the fast food restaurants that received a warm welcome among Malaysians was
McDonalds franchise chain. The restaurant has a broad franchise network focusing on urban
areas as well as shopping malls in Malaysia. McDonald's Corporation is the world's largest fast
food operator since its inception in 1955 after Ray Kroc chose the idea of opening several
restaurants previously owned by Dick and McDonald. McDonald's has been the first to
introduce the leading products to date, the Big Mac burger in 1968. To date, McDonald's has
been operating and now has more than 30,000 restaurants involving more than 100 countries
and is commonly known as its brand. Main customers McDonald's includes families with
children, children, business customers, and teens. In addition to children, the main business
part is the customer who works during the working day who can get instant service and of
course the food provided is delicious and good quality.

The variety of dishes offered to customers has led the restaurant to the customer's attention to
enjoy instant food served such as burgers, fries, fried chicken, ice cream and more. If reviewed
every single day the McDonalds restaurant business premises are always packed by customers
of various societies such as adults, adolescents and children. Therefore, a survey has been
conducted on adolescent groups comprising students who like to visit the McDonald's
restaurant to find out the factors that make this fast food restaurant their choice.

1.1 Research question

1. What is the McDonalds restaurant factor being popular among Penang Central College
students?
2. What marketing strategies are used by the McDonalds restaurant to attract their
customers?
3. What are the features of satisfaction value offered by the McDonalds restaurant?

1.2 Research objective

Here is the objective of this study.

1. To find out the factors that interest college students to McDonalds restaurants
2. To know the marketing strategies used by the Restaurant McDonalds to attract
customers
3. To know the level of customer satisfaction towards the services offered by the
McDonalds.

1.3 Research Aim

The study targeted students from Penang Central College located in Penang. This study
involved 30 randomly selected students and distributed questionnaires via email.

1.4 Research Limitation

Limitation of this study is limited to 30 respondents comprising college students and it also
involves the McDonalds fast food restaurant outlet in Penang state. Hence the findings from
this study do not represent the entire McDonalds customer group in the country.

1.5 Outline Project Report

Chapter 1 of this study report describes the topic of discussion and background of fast food
restaurants McDonalds in Malaysia. In addition, this chapter also explains the research
questions, research objectives, research targets and limitations of this study. For chapter 2 it
will be explained about the survey of previous research sources related to the topic of this study.
Next in chapter 3 this study will show about the methodology of the study used in data
collection and analysis methods used on the data and information obtained for this study. In
chapter 4 will be explained about the findings of this study and chapter 5 will give a summary
of the findings of this study as a whole.
 CHAPTER TWO

LITERATURE REVIEW

Fast food restaurant is now one of the popular consumer food choices in Malaysia. The
lifestyles of today's society that are always busy with everyday tasks are among the causes of
fast food concept restaurants being the user's primary choice. The wisdom of entrepreneurs
promoting through an advertising strategy that attracts consumers is encouraging demand for
this industry. In addition to convenient locations, comfortable surroundings, service speeds,
varied menu and food products that fit the taste of all ages cause customers like to visit fast
food restaurants.

Fast service concept restaurant was introduced in Malaysia in the early 1960s with the opening
of the first A & W restaurant in Kuala Lumpur in 1963. This was followed by KFC (1972),
McDonalds (1982) and several other RSPs. At the beginning of its development, RSP's location
was only concentrated in large cities. Through the franchise system, more RSP outlets are
opened in small towns to meet increasing demand along with changing lifestyle and consumer
tastes. Euromonitor (2014) reports that there are 3,340 fast food restaurants operating
throughout Malaysia in 2012 with a total transaction of 335.2 million. Fast food restaurant
industry is expected to continue to grow and become more competitive following the opening
of more fast food restaurants and also the development of several other food service sub-
sectors.

Among the key factors that can attract customers and attention to a service are satisfaction. The
satisfaction here is subjective in nature which can also be defined as the ability of the company
or the business to meet the demands and demands of the market and the consumer. Fast food
industry is growing so fast and has reached all levels of society. Fast food serving and
customer-oriented cuisine makes the fast food restaurants popular and popular. Among the
biggest groups in the industry are teenagers and children. McDonald is one of the examples of
fast food restaurants that are popular among Malaysians, it is a choice every day customers
want to enjoy hot french fries and a variety of burgers that evoke customer tastes. In accordance
with the title of this study, to find out the factors that make McDonald so popular among college
students, so researchers will put forward the factors that are referred to by referring to the
relevant sources of previous studies
2.1 CUSTOMER SATISFACTION

The customer satisfaction aspect is said to be among the most important factors that lead to
customer loyalty towards a product or service. It can be linked to the conceptual framework
developed by Qin and Prybutok (2009) showing service quality, food quality and value
impression as an antecedent to customer satisfaction, while loyalty is a consequence of
customer satisfaction.

2.1.1 Services Quality

According to Parasuraman, Zeithaml and Berry (1988), service quality refers to "the ability of
an organization to meet or exceed customer expectations where customer expectations are
defined as customer desires and wants". This definition illustrates that service quality is the
difference between the expectation and the customer's response to the services rendered by an
organization. The study by Parasuraman et al. (1988) identify five service quality dimensions
as follows:
1. Reliability: The ability to perform the service correctly and accurately and reliably.
2. Guarantee: Employee's knowledge and decency and the ability to cultivate trust and
confidence on the customer side.
3. Real: Physical facilities, equipment conditions and personnel appearance.
4. Empathy: Concern, individual attention given by service providers to customers.
5. Responsive: Willingness to act to help customers and to serve them promptly.

Many studies have shown that service quality determines customer satisfaction in various
sectors, including banking (Levesque & McDougall, 1996), hospitality (Ladhari, 2009), higher
education (Douglas, McClelland, & Davies, 2008), health care (González-Valentín , Padín-
López, & de Ramón-Garrido, 2005), tourist (Nowacki, 2005), postal service (Águila-Obra,
Padilla- Meléndez, & Al-dweeri, 2011), and transportation (An & Noh, 2009). Previous studies
have shown that the quality of service determines customer satisfaction with RSP (Qin &
Prybutok, 2008, 2009; Qin, Prybutok, & Zhao, 2010; Tat, Sook-Min, Ai-Chin, Rasli, & Abd
Hamid, 2011; , Prybutok, & Blankson, 2012). Therefore, this study proposes that: There is a
significant relationship between service quality and customer satisfaction on fast food
restaurants.
2.1.2 Food Qualities
Food quality is one of the important factors that determine the success of a restaurant (Andaleeb
& Conway, 2006). The quality of food is assessed in objective and subjective form (Grünert,
1995). The objective quality emphasizes the physical characteristics of foods such as fat
content and consistent quality control in food preparation. The subjective quality also
emphasizes consumer assessments on food quality. Study by Qin and Prybutok (2008, 2009)
and Qin et al. (2010) indicates a positive relationship between food quality and customer
satisfaction. Studies by local researchers such as Habib, Abu Dardak and Zakaria (2011) show
that safety, taste and speed of preparation are the major factors affecting fast food purchases.
While Shaharudin, Mansor, and Elias (2011) find that consumers generally place high
importance on freshness, presentation and taste of food. This finding suggests that fast food
restaurant customers are more emphasizing on end products than raw materials used to produce
food. Therefore, this study proposes that: There is a significant relationship between the quality
of food and customer satisfaction on fast food restaurants

2.1.3 Impression of value

In the context of food service, the value obtained can affect customer satisfaction. Researchers
claim that impression is a fundamental element that can predict purchase intention (Eggert, &
Ulaga, 2002). The study by Qin et al. (2010) proves a positive relationship between the value
and satisfaction of RSP customers. Therefore, this study proposes that: There is a significant
relationship between the perceptions of value and customer satisfaction towards fast food
restaurant

2.1.4 Customer satisfaction

The main goal of service marketing is to meet customer needs and wants (Machleit & Mantel,
2001). Empirical studies prove that customer satisfaction plays an important role in generating
long-term benefits in the form of established loyalty and profit (Anderson & Mittal, 2000;
Yeung & Ennew, 2000; Ennew, Banerjee, & Li, 2000). This is because loyal customers will
tend to re-purchase and recommend products and services to others (McIlroy & Barnett, 2000).
The study by Qin and Prybutok (2008) proved a significant relationship between customer
satisfaction and behavioral intentions in the context of RSP. Therefore, this study proposes
that: There is a significant relationship between satisfaction and customer loyalty towards fast
food restaurants.

2.2 MARKETING STRATEGY

McDonald’s fast food chains have spread in more than 100 countries across the world with its
80% of the outlets based on a franchise model. The informal eating out segment (IEO) facing
intense competition & stagnant growth, even in this market McDonald is able to attract
customers to its 36000+ stores.Its success in the segment depends upon its capability to act
quickly on shifting consumer demographics, taste & preferences and trends in innovative
supply chain management. McDonald’s uses a mix of demographic, geographic &
psychographic variables to segment the market, at the same time considering changing taste &
preferences. Due to change in consumption pattern, consumer buying behaviour & rise in
income level, fast food chain McDonald has started using differentiated targeting strategy to
cater to the customer evolving needs. Since its inception, McDonald’s has evolved itself from
using a product-based positioning to using Value-based positioning strategy.

2.2.1 Competitive advantage in the Marketing strategy of McDonald’s

An efficient SIPOC (supplier-Input-Process-Outputs-customer) model integrating the supplier,

Customer & company to improve the service quality level is the strategic advantage that
McDonald’s have over other food chains. Low infrastructure cost due to the majority of
business being franchised based helps the company in its Profitability. Its Glo-cal strategy to
serve the customers in a better way & enriching their experience is the smartest step that proved
critical to McDonald’s success.

2.2.2 Distribution strategy in the Marketing strategy of McDonald’s

McDonald’s have several franchised set up to cater to the growing needs of the different
segments and that’s what helps them to survive in the competitive environment. McDonald’s
takeaways are specifically targeted for the customers offering counter service or drive-thru
service. In some of the countries, it is known as McDrive. Macafee is specifically designed as
in café format targeting the young generation who want to enjoy an outing with their friends.
The company owned quality centres at a strategic location and integrated supply chain with the
help of 3rd party logistics is helping the company in making the products available to the
consumers across the service delivery channel. Also to make this kind of store set-ups works
properly, TAT (Turnaround time) and backend integration are necessary which is practiced by
McDonald’s.

2.2.3 Brand equity in the Marketing strategy of McDonald’s

Extensive branding through tie-up & sponsorships with well-known entities like FIFA,
Olympics has helped the company in increasing its visibility in the International market.
Presence across different channels for advertising has enabled the company in creating top of
mind awareness. It has been listed in Forbes top 500 companies list in the year 2014.