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The aim of this dissertation is to investigate the factors that are influencing consumer decision-making process in relation to fast food restaurant industry in the UK. It further aims to examine how McDonalds is responding to changing environment and consumer behaviour.
This is important and at the same time interesting to observe such topic, because of the high-profile political and public debate on obesity and other health issues that is UK currently facing.
A better understanding of the background and problems related to the fast food issue and context of decision-making process is first obtained via literature review, where various academic journals were examined. Afterwards the qualitative focus group was conducted with an aim to explore and gauge consumer attitudes towards fast food and McDonalds. Key themes from focus group formed questions for the questionnaire. This quantitative survey was then used to gauge whether the views of the respondents from focus group were representative of a larger group.
In order to examine the context in which McDonalds is evolving, with addition to identify the key drivers of change that might influence fast food industry in the future, PEST framework was applied. Changing consumer lifestyle and Government interference were highlighted as two potential drivers of change.
Key themes from focus group were quality of fast food, ethical aspects (animal welfare), trust towards McDonalds and impact of media and Government on consumer behaviour. These themes were then tested to a larger group using questionnaires. Respondents associated McDonalds and its products with adjectives such as unhealthy, cheap, tasty and fatty. They 'ranked' their food (with exception of salads and fruit) as of the worst quality. 25% of respondents claimed that ethical issue regarding chicken bothers them and that is the reason they don't eat chicken in McDonalds. Moreover 28% of those who were familiar with current high public obesity debates in the UK issue it affected them in such way that they now eat less fast food as they used to. 35% of respondents claimed that ever since they saw the documentary "Super Size Me" they don't eat in McDonalds anymore.
Most purchases of fast food occurred as a result of impulse decision-making.
Since consumer's knowledge/information acquired regarding fast food is mostly negative, as a result their attitudes are also negative. There are also external influences that have negative impact on consumer decision-making process i.e. current high public obesity debates in the UK. McDonalds is responding on changes in environment and consumer behaviour by introducing healthier menus. Consumers do not trust McDonalds, which also negatively impact on their decision-making process. All factors above contribute towards risk perception that consumers have with McDonald's food. Marketers at McDonalds try to reduce perceived risk by providing consumers with information regarding their food. That is also author's proposed recommendation- to increase awareness of the quality of McDonalds' products and hence reduce consumer's perceived risk and increase their trust with McDonald's brand.
Referring to Solomon (2009, p.27) consumer behaviour is the study of the processes involved when individuals or groups select, purchase, use or dispose of products, services, idea or experiences. Consumer behaviour focuses on how individuals make decisions to spend their available resources on consumption related items. That includes what they buy, why they buy, when they buy, where they buy it, how often they buy it how often they use it, how they evaluate it after they purchase and the impact of such evaluations on future purchases, and how they dispose it. Schiffman and Kanuk (2008, p.8)
1.1.2 Consumer attitudes
According to Ajzen (1998) the attitudes are the first determinant of behaviour intention. In consumer behaviour context attitude is a learned predisposition to behave in a consistently favourable or unfavourable way with respect of a given object. There is a general agreement that attitudes are learned. This means that attitudes relevant to purchase behaviour are formed as a result of direct experience with the product, word-of-mouth information acquired from others, or exposure to mass media advertising. Internet etc. (Schiffman and Kanuk, 2008, p.253) As learned predispositions, attitudes may propel consumer towards particular behaviour or repel the consumer away from particular behaviour. . (Schiffman and Kanuk, 2008, p.253)
1.2. Fast food VS Junk Food
Fast food is regarded as "food, as hamburgers, pizza, or fried chicken that is prepared in quantity by a standardized method and can be dispensed quickly at inexpensive restaurants for eating there or elsewhere". (dictionary.com, 2009)
Junk food is regarded as "food such as potato chips, sweets and doughnuts, which is mass-produced and is of low nutritional value". (dictionary.com, 2009)
Often the term junk food is used to describe fast food. Just recently, the debate has been going on whether the term junk food (to describe fast food) is in fact justified. Author of article argues that the "junk food" tag seem to be applied selectively, and often to food outlets in urban and suburban areas but not to those in leafier parts. Hence, he points out that the term "junk" has become a way of disapproving of certain foods. (O'Neill, 2009)
Obesity in the UK
The most recent research has shown that being overweight or obese is now the norm in the UK, with figures released by the government showing that two- thirds of men and almost 60% of women are unhealthily heavy. (Boseley, 2009) Furthermore UK has the highest level of obesity in Europe. (Datamonitor, 2009) According to a report issued by the Department of Health, the findings for 'Forecasting obesity in 2010' were grotesque. Within four years, it predicts, a third of all adults in UK (13 million people) will be obese. So will 1million children. (Marrin, 2009)
Fast food industry in the UK
Definition of the fast food industry:
The fast food industry is defined as the sale of food and drinks for immediate consumption either on the premises or in designated eating areas shared with other foodservice operators, or for consumption elsewhere.
Fast food outlets are specialised in burgers, bakery products, chicken, ice cream, fish and pizza. (Datamonitor, 2009)
In spite of consumer concerns of fast food being linked with problems such as obesity, diabetes, heart conditions, food poisoning and scares and unethical advertising, the UK fast food industry has enjoyed remarkable growth in recent years.
In terms of per capita expenditure, between 2000 and 2005, the fast food outlets have been growing at the fastest pace within the consumer food service sector. (Euromonitor, 2009b)
McDonald's Corporation background
McDonald's Corporation was the leading fast food outlet in the UK in 2008, with an 18.3% value share and a clear lead over its nearest rivals KFC (owned by Yum Brands) and Burger King. (Euromonitor, 2009b)
McDonald's is a pioneer in the fast food industry and today world leader in the sector. The company has over 31,000 fast food restaurants in over 120 countries. (MarketLine, 2009)
The company operates primarily in the US and the UK. It is headquartered in Oak Brook, Illinois and employs 447,000 people all over the world. (Datamonitor, 2009)
McDonalds currently operates in more than 1,316 restaurants throughout the UK. Its profits grew by 55% in 2008. (Euromonitor , 2009b)
In 2003 the company was losing money for the first time in its five-decade history, as it was serving mainly greasy food and therefore fuelling obesity epidemic. Moreover the company was losing important consumers trust due to release of the documentary 'Super size me' and critical book 'Fast food nation'. However, McDonalds introduced healthier menus and just recently (October 13th 2009) it has announced that its sales had rocketed, sending its shares soaring to a six year high. British restaurants were singled out among the biggest improvers in performance. (Clark, 2009)
What factors are currently influencing the consumer decision-making process in the fast food restaurant industry in the UK, and how is McDonalds responding to changing environment and consumer behaviour?
The research question can be further divided into three sub sections in order to clarify the objectives of the research.
In order to present the context in which McDonalds is evolving
The PEST Framework will be applied to identify the key drivers of change that may have an impact on the industry in the future.
With the aim of identifying the factors that are influencing consumer purchasing decisions in relation to fast food products:
The Consumer Decision-Making Process will be examined, in particular the psychological field- focusing specifically on consumers' attitudes towards fast food and McDonalds. In addition the socio-cultural environment, as external factors that have impact on consumers' decisions will be investigated.
C. Corporate responses on above changes:
How is McDonalds responding on the changes with respect to its marketing mix and communication strategy? The dissertation also seeks to propose a set of recommendations for future actions by the company.
1.7. Plan of the dissertation
This chapter will give the reader a clear statement of the research question and the problem statement that will be addressed in this research. Moreover, the background information on definitions of key terms and the chosen organisation will be presented. Finally, the 'route map' will be illustrated in order to guide the reader to the rest of the report.
This chapter sets the study within its wider context and show the reader how this study supplements the work that has already been done on chosen topic. Therefore it identifies, analyses, compares and contrasts views and theories of other writers in relation to the research topic. It also provides the stepping-stone towards the methodology chapter of the dissertation.
In this chapter the research design and the research methodology employed to answer the research question will be explained and justified. In addition, it provides the reader with a clear description of models and concept used for the analysis.
This chapter will provide a reader with detailed presentation of facts and data obtained using tools described in research methodology, leaving out discussion for the final chapter. In order to communicate findings clearly, author decided to brake down this chapter into to parts. Firstly, the external analysis will be applied, in order to provide a reader with the context in which McDonalds is evolving. And secondly, the key factors influencing the consumer decision-making process will be analysed/explored.
In this chapter a set of proposed recommendations as well as supporting analysis of the options for McDonalds will be depicted. In addition the implementation plan to support the key recommendation, including description of resources required will be illustrated.
In this chapter author will conclude his research with how the research question has been solved. In addition a brief re-cap of the whole dissertation will be provided.
3.1 Research philosophy
Referring to Saunders et al., (2007, p.106) in order to underpin the research strategy and the methods as part of that chosen strategy, it is important to understand the research philosophy one adopts. Within research philosophy author chose interpretive, as it advocates that is necessary for the researcher to understand the differences between humans in our roles as social actors. This emphasizes the difference between conducting the research among people rather than objects. The role 'social actors' plays significant role here. Saunders et al., (2007, p.106) Author believes that interpretive is more appropriate that positivism philosophy as consumer behaviour differs from country to country. Furthermore it interpretive seeks to explain why human beings react and behave in the way they do.
3.2 Research approach
In this dissertation author will start with collecting the data first and then the theory will be developed, based on results of the data analysis. Moreover the research will be particularly concerned with the context in which such events were taking place. Author is predominantly interesting in understanding why something is happening, rather than being able to explain what is happening. (Saunders et al., 2007, p.118) These are the reasons why this research will be undertaken inductively and not deductively. Deductive approach is used for scientific researches and it involves the development of a theory that is subject to a rigorous test. (Saunders et al., 2007, p.118)
3.3 The purpose of the research
According to Saunders et al., (2007, p.133) exploratory study is a valuable means of finding out what is happening, to seek new insights, to ask questions and to assess phenomena in new light.
The emphasis by explanatory study is on studying a situation or a problem in order to explain the relationships between variables.
In the first part of this dissertation, the research purpose will be exploratory and explanatory because the aim of the research is to explore consumer attitudes and factors that influence the consumer decision-making process in the fast food industry. The purpose of the second part of dissertation, however, is to elucidate McDonalds potential responses on changing environment and consumer behaviour. From the analysis of the market and consumer behaviour author will seek to apply established business models such as marketing mix in order to generate a set of practical recommendations for McDonalds business.
3.4 The research strategy
Strategy used in this dissertation involves the empirical investigation of a particular contemporary phenomenon within its real life context using multiple sources of evidence. Moreover it is of author interest to gain a rich understanding of the context of the research and the process being enacted. On account of these factors the chosen strategy will be the case study. The case study has also considerable ability to generate answer to question "why", which appears to be appropriate for the research question (Saunders et al., 2007, p.139)
3.5 Data collection techniques and analysis procedures
To achieve the research aims, a mixed-methods data collection technique was adopted where both qualitative and quantitative data collection techniques and analysis procedures are used. (Saunders 2007, p.147)
Saunders (2007 p.147) justifies the adoption of a mixed-method to achieve an in-depth insight in consumer behaviour. Another advantage of using such approach is that it enables triangulation to take place. For instance focus groups may be a valuable way of triangulating data collected by other means such as questioners. Baker and Goodyear (1998, cited by Verdurme and Viaene 2003) recognise that interactive qualitative approach enables us to explore and to see particular issues (in our instance fast food) through consumers' eyes and to understand the basis for their attitudes and behaviour. Qualitative results are sometimes speculative and usually not general sable to the larger population. Nancarrow et al., 2000, cited by Verdurme and Viaene 2003) Author therefore intends to conduct a qualitative survey to attempt to gauge whether the views of the respondents in the focus group were representative of a larger population.
Taking above facts into consideration author decided, firstly, to carry out the qualitative focus group, and secondly use its outcome to formulate questions for the questionnaire.
3.6 Sample selection
In this research the probability of each case being selected form the population is not known and it is impossible to answer research question or to address objectives require author to make statistical inferences about the characteristics of population. For that reason, Saunders (2007 p.207) suggests applying non-probability or judgemental sampling technique. Nevertheless, author will still be able to generalize from such technique, though, not on statistical grounds. For this reason non-probability sampling technique is more frequently used when adopting the case study strategy. Moreover such technique provide author with opportunity to select sample purposively. (Saunders, 2007 p.235)
The chosen sample for the focus group were undergraduate students from European Business School London in the UK. Three out of seven participants were British citizens, remaining four were international students; however, they have been living in the UK for 3-4 years. Kraus (1995, cited by Schroeder and McEachern, 2005) support the use of students since they are more homogeneous as a group than non-students, thus resulting in less "extraneous variation". As a key target market of the UK fast food sector is between 17-25 years, a convenience sample of students is justified for this exploratory study. Author realizes that socio-economic status of some EBS students for the focus group might not be the same as one of typical fast food consumer. However, participants eat in such restaurants and are therefore appropriate for this study.
Since there is nearly impossible to distribute questionnaires physically in such a short time, author decided to distribute questionnaires to students via email. Author acquired approximately 140 British email addresses that he got from a person who lives in London. The questionnaires were sent then to people around the UK.
3.7 Data collection
In this study, both primary and secondary data sources were used. Firstly, for a better understanding of the background and problems related to the context of the consumer decision-making, the literature review was written based on secondary data collection. Then the primary data was gathered using qualitative focus group, which were then quantitatively validated through questionnaires.
Secondary data sources used in this dissertation include books, library databases, periodicals, McDonalds web site and other Internet sources. For collecting primary data sources, author used firstly focus group and secondly questionnaire.