New Product Introduction Of Mcdonalds

McDonalds is among the leading brands operating in the whole is the UK & Irish market when it comes to fast food and quick service restaurants. This gives the company a wide market area to cover and cater. McDonald’s is counted among the huge chains all around the world with thousands of restaurants.

In this report the plan is to introduce a new product from McDonald with the brand name Mc Tea and as we all know that McDonald is perusing a value strategy offering its products at relatively low prices and they differentiate their products through successful branding campaigns, this thing would be continued with the launch of the new product.

The report is divided in many key parts such as introduction, mission statement, company outlook, market status, objectives and strategies, segmentation, target product, promotional program, sales plan, organization, financial. In all these key areas it is defined that through this new product a handsome chunk of revenue can be gained also keeping affects on the overall market share of the company.

The company plans to introduce Mc Tea as a flavor tea. The aim is to get market share as much as possible covering the spent money on the overall product its advertising and launch. This new opportunity can help company further penetrate by this new product line extension.

As McDonald is entering in an existing market with a new product so there is a handsome requirement for the publicity of the product and the company would be using conventional tools of promotion with sampling as an extra. For advertising the company plans to use both below the line and above line advertising and the company targets the giant media to capture the a good chunk of the market.

INTRODUCTION

McDonald’s is probably the best-known franchised fast food restaurant chain in the world. When the first outlet was opened in the US in 1955 and even when the first UK restaurant appeared in 1974, it would have been hard to imagine a worldwide network of 30,000 outlets by 2002 and 1,200 outlets in the UK. McDonald’s is easily the largest fast-food brand in the world and instantly recognizable in many countries. Across the global network, the majority of outlets are operated by franchisees but, in the UK, only a third are franchised although this percentage is increasing.’ McDonald’s has been growing organically, with new sites located in smaller towns, roadside developments and food court concepts in leisure parks and shopping centers. [1] 

SITUATIONAL ANALYSIS

STRENGTHS:

Promotional strength: is what Mc Donald has in its main and something in which it has been good over the period of time.

Market share: is the second strengthen factor where Mc Donald is preferred by people of all ages and they love the food taste and variety offer.

Image of the company affects its sales and this plays a positive for McDonalds and the efforts towards green world and reduction of waste has given them a good public image.

The company is rated among the top delivery business operators beating even Pizza Hut at many times.

New product special promotional strategies have made McDonald’s corporation leader of fast food industry. Home delivery has gained wide spread acceptance and has become competitive advantage for them.

WEAKNESSES:

McDonald’s has been frustrated by rising wholesale food prices and labor force.

Fast food outlets have to pay higher wages.

Despite of providing a branded quality of flavored tea it is likely that the people might not be attracted towards the product because McDonald’s does not have any past experience in this product.

The company has not been very successful in the past to keep a strict check on the quality of food provided by its franchises.

Not all new product launches have been a success.

OPPORTUNITY:

The company has the opportunity to still expand in many locations in which the company still has not looked towards development or keeping its food hold.

The conventional competitors have not thought about a similar product so this would be an early mover advantage.

Consumption ratios or hot drinks are increasing and specially a launch in the approaching winter and Christmas season can prove to be a treat.

Moving in an alliance with new film releases and media has been an old tactic which has proved worthwhile 90 out of 100 times. A recent alliance during the release of the movie avatar is another proof of opportunity. [2] 

Promotion of the product towards young coffee drinkers through university, colleges and schools can be an added advantage for the company to score big time and earn.

THREAT:

Rejection of the product is one major threat the company faces and is afraid of to happen.

The economy coming out of recession the expected revenues can be lower then what the company expects.

Consumer perception might be difficult to change in terms of product selection as already there is an existing competition with Coffee Cafes.

Taste preference figures show a lead towards coffee drinkers as compared with tea.

Increasing tea leaf prices can affect the overall revenue and costing.

MARKET STATUS

INDUSTRY

UK is the among the leading hot drinks consumer in the world. In fact, the consumption of tea is so widespread in UK that it possesses 2nd position in the tea importing countries of the world, and is only behind the Russian Federation. The already high tea consumption level may further increase in future due to urbanization and increase in per capita income.

MARKET SHARE

THE MARKET

For Mc Tea the target market is entire UK and Irish market with franchises located all over the area giving a huge reach towards the market.

KEY FACTORS:

LEGAL FACTORS

Recent disputes over the prices of tea leaves and prices of payments of farmers have been critical. For the development of the new product the company would require to find out sound suppliers that can be good for the business and can be permanent. Fair trading laws affect the business. Finally the remunerations paid are strictly under review by the EU and specially the UK legal authorities.

SOCIO-CULTURAL FACTORS

In UK the concept of flavored branded tea is not yet common among the quick service restaurants, tea is normally taken with milk but this will serve them at time of leisure. On the other hand the product that is being introduced is totally on the contrary. The product is a fruit flavored tea served in tea bags that can be taken anytime anywhere. Aside from this it also has a lot of nutritional values as compared to the conventional tea. However launching “flavored tea” is quite a challenge as people in UK are not only resistant to change but also have rigid views about the concept of tea itself.

ECONOMIC FACTORS

Keeping in mind the per capita income of the people of UK, which is good after the recovery from the recession, the company intends to launch Mc Tea, aiming at the lower and middle income groups who are willing to pay normal and medium price for such an innovative and distinct product. Mc Tea is considered to be a superior product as it is distinct from the conventional tea available by the competitors, in the sense of its form, taste and nutritional attributes people consuming Mc Tea should be well educated as to its usage in the form of tea bags since; there is a general misconception that they produce superior quality tea, which is not true.

PURCHASE CRITERIA

BRAND:

The brand name of McDonald is the very important thing in grabbing customers because they have a trust on the products.

STANDARD:

The brand name of McDonald is itself a standard measure so it is for sure that no one can raise question on meeting the standards. Mc Donald carries a regular check on all franchises on the quality of food provided to the consumers.

INGREDIENTS:

The ingredients which we are using in Mc Tea are Plum, Strawberry, Double Apple, Grape, and Peach and these ingredients would be of high quality from the company’s existing suppliers.

PRESENTATION:

McDonald’s presentation is very unique for this tea as we plan to present all different flavors in their respective flavor colored glasses.

PRICE ANALYSIS

Name

Price

Mc Tea (Flavored)

1 Pound

Pret a Manger (Plain)

1.5 Pounds

Costa Coffee (Plain)

1.8 Pounds

Nero Café (Plain)

1.8 Pounds

Starbucks (Plain)

2.25 Pounds

Others (indirect) (Plain)

50 p

COMPETITOR ANALYSIS

DIRECT COMPETITOR:

COSTA COFFEE/ NERO CAFÉ/ STARBUCKS/ PRET A MANGER

Already competition for the products we sell and have started giving the service of tea in collaboration with their suppliers therefore for Mc tea would face direct competition.

INDIRECT COMPETITORS:

Brands by Unilever, P&G have captured a fair amount of local market share hence it can be said to be an indirect competitor. They being among the favorite brands for local people hence competition can be really tough.

THE MARKETING STRATEGY

OBJECTIVES & MARKET DESCRIPTION:

Total population is in millions, 30 to 35 percent youth of which 65 to 70 percent are elders. The target of Mc Tea is the 20 to 25 percent of the total population of UK and Ireland. QSR industry is the one of the sources of handsome revenue for UK & Irish economies in term of tariff and taxes. The objective is to increase the market share cover the cost and make a profit of million pounds in the first year.

ACCORDING TO BCG MATRIX:

The Product at the moment is in the question mark stage in BCG Matrix. Ultimately the plan is to make it a star product focusing on investment and market share. Upon maturity and growth Mc Tea will later become a cash cow.

HIGH LOW

Market Growth Rate

HIGH

STAR

FUTURE OF Mc Tea

QUESTION MARK

?

CURRENT POSITION OF

Mc Tea

LOW

CASH COW

DOG

Source [3] 

ACCORDING TO GRID EXPANSION

Mc Tea is currently at product development stage. The company is launching new product in existing market.

MARKETING MIX:

PRODUCT

Mc Tea “the flavored tea” is an instant flavored tea drink that can be taken in hot form, consisting of various nutrients and fresh flavored extracts. The way in which we aim to work this marketing variable is by providing enhanced features that include: a variety of flavors such as plum, strawberry, double apple, grape, and peach, which has been derived from natural fruit, including compositions. These distinct flavors satisfy different taste for different people in the target market. Apart from this, one of the distinct features is the enhanced nutritional value that caters to the health conscious people. The ingredients integrated in our tea include liquorices root, passion fruit pieces, hibiscus, rose hips apple pieces, calcium and proteins. As Mc Tea “the flavored tea” is made in such a way that allows it to be taken in hot form, this provides the benefit of convenience for many occasions in the cold weather of Ireland and UK. It can be taken as the substitute of local tea brands and in the same way it can replace the flavored drinks that are available in the market. The company also aim to achieve high quality with a perfect cup of tea with out artificial flavors found in competition.

A crucial part of the product is the packaging, which contains the product itself. The packaging of the Mc Tea “the flavored tea” is in the form of colored cups of the selected fruit flavors that are made using the environment friendly technology. Mc Tea’s packaging is enhanced appealing and attractive which will encourage impulse buying, and hence provide stimulation to our market share growth. Mc Tea’s flavored tea is blended and packaged in hygienic conditions untouched by human hands.

PRICE

Pricing is the significant factor of the marketing mix, which must be carefully administered in order to give consumers the greatest value for their money. The way Mc Tea “the flavored tea” is intended to price is by using the market survey. As the company is using differentiation as the grand strategy, the charge is low to medium price initially in order to capture uniqueness, innovativeness, high quality and convenience of our product. In this way the maximum sales revenue can be achieved. However the price that we will charge will not be way beyond the competitive prices otherwise we will lose out on sufficient market share. Mc Tea will be launched as a flavored with the market skimming strategy in mind which will attract health conscious people as well as status conscious people.

However, when competition sets in future and more companies start launching flavored tea we can alter our price strategy according to our competitive situation and prevailing market demand and supply equilibrium.

The pricing method for Mc Tea “the flavored tea” will be markup pricing. In this way after determining the costs we will add a relatively high markup in order to gain substantial profits and cover our investment costs. Thus, keeping in mind all these things, we will launch all Mc Tea categories at a price of 1 Pound per cup.

PLACE

Mc Tea aims to be a true company with a huge distribution network, which caters the entire UK and Irish market. The strategy follows to make the product easily available to customers is through huge distribution.

PROMOTION

This refers to the activity of bringing Mc Tea “the flavored tea” to the attention of the target market and persuading them to buy the product. Promotion for the Mc Tea will be done through advertising and sales promotion.

SEGMENTATION

GEOGRAPHIC

UK & Ireland

Density

All cities in the distribution network

DEMOGRAPHIC

Age

General population over 12

Income

15000/- & above per anum

Social class

Lower middle class, Middle class, middle-upper class, upper-upper class

PSYCHOGRAPHICS

Life style

Value oriented, sociable and active, actualizers,

Personality

Sophisticated.

BEHAVIORAL

Occasion

Regular occasion.

Benefits

Quality, economy, nutrition.

User status

Non user, potential user, first time user

Usage rate

Light and medium

Loyalty status

Tea lovers

TARGET PRODUCT

McDonald has very large experience of food industry all around the world. Here, the target product of McDonald is Mc Tea. The product is a combination of many fruit flavors and a simple plain tea. Following are the some feature of the Mc Tea:

FEATURES

FLAVORS: VARIETY OF FLAVORS AVAILABLE:

Plum

Double apple

Grape

Peach

Strawberry

BENEFITS:

It has easy usage as the flavored tea can be taken in either form, it can be taken as a substitute of tea.

The nutritional values our drink provides contents like vitamin A, vitamin C, calcium, iodine and folic acid.

PROMOTIONAL PROGRAM

ADVERTISING

Advertising is a very crucial part of promotion as it is responsible for creating long term loyalty towards brands. As consumer choices increases, it becomes essential to stand out in the crowds of brand ad media clutter by building a good corporate image through advertising.

And in this we have planned to use both below the line and above the line advertising techniques and list of all the elements are below:

ABOVE THE LINE ADVERTISING

Media name

Selection

Television

Sky Network

(Channels of SKY)

RADIO

Local Radio channels in the UK & Ireland

BELOW THE LINE ADVERTISING

MEDIA NAME

NAME

NEWSPAPERS

NATIONAL NEWSPAPERS

MAGAZINES

HERALD

VISAGE

BILLBOARDS

Nowadays bill boards are almost every where we go for example shopping malls, airport, overhead bridges, you name the place and the billboard is there, provided the area being a commercial area.

Billboards attract people of all ages. It has proved to be a very effective way to promote and create awareness of a product, there fore this strategy will be used by Mc Tea “the flavored tea” to promote itself. Mc Tea will occupied all billboards next to or near McDonalds outlets.

SAMPLING

The company has planned to do sampling of Mc tea at universities, colleges and shopping malls.

TRADE SHOWS AND CONCERTS

Trade shows and concerts are also one of the very tools of doing advertising. So the company have planned to hold a trade show in London and concerts in Manchester, London etc.

ACTION PLAN OF PROMOTION

SEPT 1st 2010- Television, newspapers, magazines advertisement.

SEPT 1st 2010 – Launch in all around UK and IRELAND.

SEPT 15th 2010 – Promotional trucks in UK and IRELAND.

SEPT 20th 2010 – free sampling of Mc Tea at all major shopping malls, universities and colleges in UK.

OCT 1st 2010 – discounted rates offer for all major products of McDonalds at major cities of UK & Ireland at buying a minimum of 5 Mc Tea.

OCT 15th 2010 – Free mugs printed with Mc TEA will be distributed at all outlets.

OCT 30th 2010 – Free sampling of Mc Tea in universities of Ireland.

NOV 15th 2010 – Advertising campaign in all major planned areas.

AUG 2010 – Concert will be held.

SALES PLAN

FORECAST BY MARKET SEGMENT

As a firm develops a target market strategy, it should forecast the short run and long run sales of its offering to that market. Sales forecast outlines expected company sales for a specific good or service to specific consumer group over a specific period of time under a well-defined marketing program. By accurately forecasting sales, Mc Tea will be better able to develop a marketing budget, allocate marketing resources, measure success, analyze sales productivity, monitor the external environment and competition, and modify marketing plans.

Factors

Sales forecast

UK

2 m

Ireland

1.3 m

Total sales

3..3 m

Total Sales 3.3 m

Cost of goods sold 1 m

——-

Gross profit 2.3 m

Marketing expenses 1 m

——-

Profit before tax 1.3 m

Tax (17%) 0.21 m

——-

Net profit 1.09 m

===

TARGET ACCOUNTS

Our target account for the fiscal year is 1.09 m net profit. From these target account we have anticipated that UK people are the tea lover, there we will be able to grab many customers. In Ireland, the winter season is of 4 to 5 months so there we will grab a huge chunk of customers.

DISTRIBUTION

The channel of distribution of the product will be direct through company outlets. Because the network of distribution is through all outlets which cover the entire market throughout.

FINANCIALS

ADVERTISING BUDGET

Mc Tea now needs to establish an advertising budget for allocating the advertising expenses over several media types. The marketing cost that has been estimated for the promotion and awareness of the product is Pounds 1 million. This cost will be efficiently allocated in the various types of promotional activities that will be taking place. The budget is allocated in the following activities.

Electronic media

200,000

Print media

100,000

Billboards

200,000

Promotional trucks

100,000

Free sampling of mugs and tea

200,000

Concert

200,000

TOTAL

1 million

CONCLUSION

The company has planned to integrate the overall approach towards the launch of MC Tea with the current existing product the tea offered in MC Donald. Also the overall launch of this product is planned to be profitable venture and is aimed to increase the target market share and performance of the company.

CRITICAL REFLECTION

Selected Learning outcome:

“Appreciate the importance of the separate marketing functions, the management of

these functions, and how each function affects other functions within and external to

the marketing domain.”

The marketing function became a revolution with the beginning of the 19th century. The initial phase of the century did not realize the potential of marketing and its functions but as time progressed the marketing function became a crucial part of the running businesses. Then whether it maybe Henry ford’s concept of black colors or any other people slowly and gradually started understanding the concept.

In today’s world of the 20th century marketing acts as a center point for any new or existing product. Now whether may it be a pen or a car. It begins with creating awareness, then moving on to teaching the buyer (consumer OR customer) and then later on towards making sales for the company. The new approach is to quantify things that are in current use by companies and things in practice.

Separating the marketing function was like providing a working heart to the company. In the past era there were companies and products about which the customers had to go and extract information out from paid sources themselves. Marketing has revolutionized the entire effort and with it came many other things such as personal selling, sales promotion, advertising, media etc. In today’s world a revolutionized marketing looks something like this:

Marketing

Public Relations

Advertising

Above the line

Sales Promotion

Below the line

Implementation planning

Media Tactics

Sales Effort

Discounts

Teaching Customers

Market Budgeting

Selling efforts

Media

Marketing now has its extension further towards complementing other departments of a company. Finance department particularly seeks advertising expenditure and then return revenues. All budgets allocated to the marketing department are now quantified. Human resource department seeks towards good people and assets addition to a company. People involved in operations look to gain money return on production by good sales and promotion, even if they wish to achieve high operational targets they need to keep the marketing department inline so to achieve things such as economies of scale and economies of scope.

Now writing towards the amount of learning I have had from this module is phenomenal. I haven’t heard of many terms and approaches that were used in this course before. The best part was the experience which I had. The course has transformed the way I look at TV ads, hoardings etc. Now I tend to pickup products in the market and carefully analyze the packaging and the mentioned contents in it to find relevance with the theory I had studied. I did missed out on practical part in the course where I should have made more efforts towards learning how the media planning and budgeting actually is done in an original market plan. This was due to lack of resources that I could make myself available. Yet I have filled my desire to see an actual marketing plan by analyzing the ongoing campaigns quite deeply to look for problems and things where they went wrong. I also came to know of potential problems such as promise and delivery gap. My prior knowledge was way too less as compared to what I learned in this module.

What I further intend to do is to get my theory more strong and approach companies to understand the practical part of a marketing plan. Also try and practically see how a marketing effort can be improved and made better.