With over 35,000 outlets
worldwide, McDonald’s has conquered the fast food industry- and continues to at
an ever-increasing rate. (Nudelman and Lutz, 2015). Since its establishment in
1940, its earnings have escalated to 5.75 billion dollars annually (McDonald’s
Annual Report,2016). They are known to serve more than 70 million customers
daily, which equals feeding 1% of the world’s population every day (Nudelman
and Lutz, 2015). Even though it is one of the largest food chains in the world
and the largest private sector employer in Great Britain, McDonald’s doesn’t
only operate in the food sector but also in the real estate industry (Nudelman
and Lutz, 2015). In fact, most of its income is franchise-generated revenue, which adds up to 82% of the
total annual revenue. Harry J.
Sonneborn, McDonald’s former CFO, once said, “We are not technically in the
food business. We are in the real estate business. The only reason we sell
fifteen-cent hamburgers is because they are the greatest producer of revenue,
from which our tenants can pay us our rent.” (Jargon, 2015)

 This brings us to the question: How did a
single restaurant grow into an expansive corporation? This essay will focus on
examining this question by exploring a few of the marketing techniques used by
McDonald’s; which has led to its global domination of the fast industry and the
massive revenue numbers.  

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The main strategy followed by
McDonald’s has been investing in the franchise
model. In 1955, Raymond Kroc joined McDonald’s, which was at that time, a
single restaurant owned by brothers Richard and Maurice McDonald, obtaining
national franchising rights. By 1960 he had successfully opened 200 restaurants
in the USA. Following its success and immense popularity, in the year 1961 he
bought McDonald’s from the McDonald brothers for 3 million dollars. (McDonald’s
History) Although it was not the first to follow this model, it has become one
of the most shining examples of success through franchising. As the company
began to expand internationally, franchising it to local people was a boon, as
it appealed to the people as pure product and service, rather than propagation
of the US brand culture. This strategy grew to such an extent that now every
eight hours a new McDonald’s opens somewhere in the world. (Gross) McDonald’s
is now the largest Worldwide Franchised Food Service Organization. However,
franchising alone did not give this food giant its brand name and popularity.
This brings us to the next marketing strategy: Innovative and appealing
advertising.

Investments in marketing
communication methods, like advertising, has played a vital in its success from
the very start. In 1967, McDonald’s launched its first ever national
advertising campaign, spending 1% of its sales, a whopping amount of 2.3
million dollars, which was a huge amount for a fast-food joint to be spending
at that time (Gross,1996). The main purpose of advertising was to promote its
products by making people aware of it, attracting them towards it and making
sure they remember it (Business case studies). McDonald’s, even in the present
day, spends approximately 2 billion dollars in advertising- with different
adverts made to cater to different target audiences (Silvestri, 2016). The
company broadcasts the advertisements on television, cinema, radio, online media
and in the press like newspapers and magazines. These adverts are however different
in various countries. Their promotional strategy is ‘brand globally, advertise
locally’. For example, to promote their hamburger in the UK, they used Alan
Shearer, who is an English footballer to appeal to the consumers here, while in
France, their promotional figure was the French goalkeeper Fabien Barthez.
Another example of this are their adverts in Hong Kong which portray them as
environment friendly and being sensitive towards society. What’s common in all
three ideas is the use of different personalities and different cultural traits
to promote its products in a more localised manner (Vignali, 2001).

 McDonald’s also uses sale promotion tactics
like discount coupons and free gifts to attract the public into their
restaurants. In addition to this, McDonald’s public relations makes efforts to
attract positive spotlights by adopting varied spin techniques. For example, in
Beijing, there are more human workers, in contrast to its operations in the
United States, where technology has taken over. Public relations staff are
present to help children, answer questions etc. keeping in mind the importance
of human interaction in the far east (Vignali, 2001).

This was McDonald’s promotional
strategy in general, but its special focus towards advertising to children,
making them their major target audience, cannot be left undiscussed. McDonald’s
has adopted a uniform strategy which transcends all barriers of race,
nationality, religion and region to advertise to children. In 1967, one of the
franchise owners, recognising a mascot’s importance in advertising and a
clown’s appeal to children, introduced Ronald McDonald. Soon it became more
familiar to 96% of American children than the name of their president (Lee,
2015). Ronald McDonald is also the second most recognisable fictional character
after Santa Claus (Schlosser). When it comes to creating recognizable icons,
McDonald’s not only has Ronald McDonald but also the Golden Arches, which display a sense of grandeur to Americans.
Created in 1952 by the founding brothers to make the restaurant more
eye-catching, it is now recognized by more people than the cross (Harlene L.).
In 1979, the ‘happy meal’ was invented to market the brand to children (2014). In
1997, McDonald’s announced a global alliance for 10 years with Walt Disney,
sharing complete exclusive marketing rights- from food to films. Following this,
the company began to produce toys, bundling them in their ‘happy meal’ for film
promotions. With Walt Disney’s pre-existing world-wide appeal there was no need
to act locally and alter the happy meal for different communities (Abramowitz,
2006). Through these ‘happy meals’, McDonald’s became the largest distributor
of toys in the world, distributing 1.5 billion toys worldwide (2015). These
toys also contributed to 20% of their sales. In a report done in 2009, 37% of
children said their first choice of restaurant was McDonald’s because they-
‘enjoyed getting a toy with their meal’.

McDonald’s co-branding with
well-known companies has been of immense use in their marketing, from Coca-Cola
as their drink supplier to having Michael Jordan and NBA themed cups. Apart
from Disney toys, there were other brands which soon came into the ‘happy meal’
bundles- Barbie, Hot Wheels, Nickelodeon, Transformers, TY Beanie Babies, NFL,
NASCAR and NHL. In Canada, 314 Walmart stores have McDonald’s outlets and in
India, oil companies like Bharat Petroleum have McDonald’s available at their
gas stations (Kulkarni, 2013).

With this outstanding success
in marketing, McDonald’s has become the leading fast-food chain in the world,
along with being the largest distributor of toys, the largest employer in Great
Britain and one of the most recognized brands in the world. However, one thing
that not everybody knows is that even after so much success in the food
industry, most of its income comes from investing in real estate. Schlosser
discussed how McDonald’s Corporation is the largest owner of retail property in
the world. In 1956, at the risk of bankruptcy due to low profitability, Harry
Sonneborn suggested purchasing real estate as a mean of income (Love). They
bought land and leased it to the franchise owners (Tran, 2010). This resulted
in remarkable profit providing enough resources for expansion and security for
future depreciations. At present, the McDonald’s Corporation makes a profit of
almost 40 million dollars through real estate alone (Wall Street Survivor, 2015).

Throughout its journey to this
pinnacle of success, the company has had to face its share of controversies and
challenges multiple times. Health concerns, mostly related to children, and not
following sustainable environmental practices are a few of them. McDonald’s has
always dealt with these tribulations effectively instead of allowing them to
have a devastating impact on their business.

The key to McDonald’s success
is its focus on customer satisfaction. McDonald’s emphasizes in making the
customer ‘happy’- an idea constantly reinforced in their marketing schemes (Kumar,
2004). They work towards this in several ways- first and foremost being, as
historian Love wrote “the brothers defined a totally new food service concept”
by applying a factory- line assembly concept to a commercial kitchen, thereby
cutting short the serving time from 30 minutes to 30 seconds (Frost, 2005)
(Feder, 1997) (King, 2010). Ray Kroc always insisted on high standards of
cleanliness which till date is the hallmark of the restaurant chain (Lister). McDonald’s
has always had a strict policy towards safety and food quality standards. The
company also strives towards making the prices more and more affordable by
cutting unnecessary costs and finding new ways to have an efficient workplace
and reducing costs on labour (Schlosser). A fast, clean, nutritious and cheap
food service will always be an ideal place for any customer. Following this
level of customer satisfaction comes an even higher level of customer loyalty
towards the brand.

Globalisation and the fast-growing
food economy has created competition for McDonald’s, but it has still managed
to stay at the top of its game, whether it is by providing the customer with
more value and faster service or simply perfect deliverance. Raymond Kroc,
founder of McDonald’s, was quoted saying “Perfection is very difficult to
achieve, and perfection was what I wanted in McDonald’s. Everything else was
secondary for me.” (Kroc, 2016). By responding to ideas from franchises and
customers’ demands, it has been constantly innovative, which has helped
McDonald’s in fending off stagnation and satisfying its customers. One example
of this from the early years of the company is from 1975, when in a certain
area, soldiers were not allowed to get out of their vehicles in their fatigues,
and McDonald’s came up with the idea of a drive-thru.
The first McDonald’s drive-thru was located near a military base in Sierra
Vista, Arizona (Bailey, 2017). Another example would be the acceptance of
regional differences in culture and food preferences. In Canada they have
lobster sandwiches on the menu and in India they have more vegetarian and
chicken options (Lamb/ Hair/ McDaniel, 2013). Although they are constantly
coming up with new ideas and innovations, the signature McDonald’s experience
is not affected by them. McDonald’s has been unaffected by competition and
continues to be the leader in its field also because of its constant growth and
expansion and the brand name that it has created and nurtured over the years.

In the 2000’s, there was an
era of enlightenment in society towards a healthier lifestyle when at this
point, McDonald’s faced challenges concerning health and obesity, particularly
related to children. Addressing this issue, the company in 2004 formed the
Global Advisory Council (GAC), an international team of experts to provide
professional guidance in areas of general well-being and nutrition for
children. Healthier options were added to the menu like salads and low-fat milk
in the drinks (Bailey, 2017). Also, realising the new concept of 5 small meals,
in 2006, McDonald’s chefs created “snack wraps” (Ready BBC, 2014). Furthermore,
to gain the confidence of its customers regarding McDonald’s concern towards
health it has embraced the policy transparency. In this effort they created a
website ‘our food your questions’. A forum where one can see recipes through
videos and ask questions regarding the food. There are also videos online where
children can ask questions to farmers.

In the mid-1980’s, McDonald’s
faced one of the greatest controversies in its existence. London Greenpeace an
environmentalist activist challenged that the production and packaging of their
food causes destruction of rainforests. As expected, McDonald’s addressed the
issue and established a Global Environmental Commitment in 1990. This traced
the several steps taken to reduce solid waste and conserve natural resources.
Following this 80% of McDonald’s packaging is made from recyclable materials
(Bailey, 2017). Even though the accusation was handled, its public image could
not be cleaned up for a long time and the company had to face its consequences.
The goodwill of the consumers built throughout its journey made this easier for
the company.

Keeping in mind the success
and massive turnover of the company from both the restaurants and the real
estate, the company has acknowledged its duty to give back to society.
McDonald’s has created strong community relations and as Ken Barun, the president
and CEO of Ronald McDonald House Charities, said ‘… to seek solutions for the
problems facing children and families today’- One of the charities by
McDonald’s is the Ronald McDonald House Charities and does exactly that. It
provides free ‘homes away from home’ accommodation for families with children
in hospital. There are 160 local RMHCs in 27 countries all aimed at improving
the lifestyle of underprivileged children (Vignali, 2001). McDonald’s also
works with several other charities in different countries.

McDonald’s understood and implemented the 7P’s marketing
mix very precisely. Providing high quality product- at a low and affordable prices-
in prime locations that are easily accessible- effectively promoting the brand name
and its products linking the material value to non-material values such as those
of family- employing the right people and training them to work well imbibing the
company’s beliefs-keeping in mind the importance of physical appearance McDonald’s
is strict when it comes to cleanliness in every sphere-and finally the process is
made transparent with visible kitchen and websites with videos of the various processes
used.

To conclude, McDonald’s has risen from the
bottom, rose to the top and remained at the top since it’s operations began.
Several studies have been conducted to analyse how this giant corporation has
achieved such heights, to which the answer lies in McDonald’s belief: Resilience, Consistency and Innovation.
Through its varied and sophisticated plans, this brand has emerged to become
more than a fast food chain. It has not only managed to represent the American
culture to the outside world, it has also catered to the needs of other
cultures which have helped it grow. It struck a perfect balance between
employing labour and technology, the results of which can be seen today. It has
accommodated traditional values with modern production techniques to create a
brand with unparalleled competence. Whether it’s advertisements, apps, menus or
services, McDonald’s has always allocated its profits into expanding its roots
further into the grounds of multiple industries. The company’s aggressive
expansion of franchises worldwide, has give its brand name a world-wide appeal,
on that cannot be competed with. Every business faces problems and downtimes, but
McDonald’s has dealt with them with so much efficiency and went past them with ease
owing to the rapport it establishes with its customers. The ubiquitous “golden
arches” have become a symbol of not only consistent and uniform product but also
an atmosphere of positive family vibes. When one walks into a McDonald’s
restaurant one is walking into a brand that extends into the community. The
company has hence, always received popular support from the locals owing to the
support the provide to society in the form of charities, scholarships or
employment. This fame is also a result of effective advertisements, mascots and
brand image- all capturing the interests of majority of the customers. By the
means of intense advertising, impeccable public relations and exemplary
business expansion models, McDonald’s has achieved what other brands can only
hope of achieving- Longevity.