McDonalds Price Diffrentiation Strategy

McDonalds Price Diffrentiation Strategy Ray Kroc became the first franchisee appointed by Mac and Dick McDonald in San Bernardino, California. Ray Kroc opened his first restaurant in Des Plaines, Illinois (near Chicago), and the McDonalds Corporation was created. Quality, Service, Cleanliness and Value (Q.S.C. V.) became the company motto. 1959 The 100th McDonalds opened in Chicago. 1961 Ray Kroc bought all rights to the McDonalds concept from the McDonalds brothers for $2.7 million. Hamburger University opened in Elk Grove, near Chicago. 1963 One billion hamburgers sold. The 500th restaurant opened. The 500th student graduates from Hamburger University. Ronald McDonald made his debut. McDonalds net income exceeded $1 million. 1964 Filet-o-Fish sandwich introduced. 1965 McDonalds Corporation went public. Per earning ratio varies from 10 to 22 during year; stock price range, 15 33.5. 1966 McDonalds listed on the New York stock exchange on the 7th May. 1967 The first restaurants outside of the USA opened in Canada and Puerto Rico. 1968 The Big Mac was introduced. The 1,000th restaurant opened in Des Plaines, Illinois. 1970 McDonalds restaurant in every US state. Ray Cesca (Director of Global Purchasing of the McDonalds Corporation) has admitted that when McDonalds opened stores in Costa Rica in 1970, they were using beef from cattle raised on ex-rainforest land, deforested in the 1950s and 1960s. New countries Virgin Islands, Costa Rica. 1971 The Egg McMuffin sandwich was test marketed in the US as McDonalds first breakfast menu item. McDonalds Japanese President, Den Fujita, stated the reason Japanese people are so short and have yellow skins is because they have eaten nothing but fish and rice for two thousand years; if we eat McDonalds hamburgers and potatoes for a thousand years we will become taller, our skin become white and our hair blonde. New countries Japan, Holland, Australia, Germany, Panama, Guam. 1972 Assets exceeded $500 million and sales surpassed $1 billion. A new McDonalds restaurant opening every day. New countries France, El Salvador. The 2,000th restaurant opened in Des Plaines, Illinois. The Quarter Pounder was introduced. Ray Kroc made a $250,000 donation to the controversial 1972 presidential campaign of Richard Nixon. 1973 McDonalds Golden Arches Restaurants Limited founded in UK as a joint venture partnership between the McDonalds Corporation and two businessmen; one British, one American. New country Sweden. Egg Mc Muffin introduced. 1974 The 3,000th McDonalds restaurant was opened in Woolwich (south east London) in October, the first in the UK. The UK Head Office was sited in Hampstead, North London. Up to 1974, McDonalds employees in Puerto Rico were unionized, but the company was sold to a new franchisee. A dispute followed, closing all the stores and McDonalds pulled out of Puerto Rico. They reopened in 1980 with non-union labor. New countries England, Netherlands, Antilles, Guatemala. The first Ronald McDonald House opened in Philadelphia. At a San Francisco Labor Board hearing, McDonalds workers testified that lie-detectors had been used to ask about union sympathies, following which the company was threatened with legal action. 1975 The Companys first Drive-Thru opened in Sierra Vista, Arizona. New countries Hong Kong, Bahamas, Nicaragua. Fred Turner becomes Chairman, Ray Kroc Senior Chairman, and Ed Schmitt becomes President. Broadcast advertising appeared in UK cinemas. 1976 McDonalds first UK TV advertisement was broadcast. 4,000th store opened in Canada. New countries Switzerland, New Zealand. Largest restaurant opens with 334 seats. 1977 New countries Ireland, Austria. Breakfast menu introduced, nationally in America. 1978 The 5,000th restaurant opened in Kanagawa, Japan and it made US $1 million in its first year. Sundaes introduced in USA. In one store in Chicago (USA), a majority of McDonalds workers joined a union. The company then took legal action to stop recognition for the union unless they could get a majority in the 8 stores run by the franchisee. New country Belgium. 1979 A 7 month strike in Dublin (Ireland) lead to recognition of the ITGWU union. In 1985, two union activists won a victory at a labor court after claiming victimization and unfair dismissal. New countries Brazil and Singapore. 1980 The 6,000th restaurant opened in Munich. After workers in a store in Detroit (USA) joined a union, the company organized a visit by a top baseball star, staff disco, and McBingo prior to elections for union representation. First floating restaurant on a steamer in Missouri. 1,000th international restaurant opened. 1981 New countries Spain, Denmark and Malaysia. 1982 Geoffrey Guiliano, a main Ronald McDonald actor, quit and publicly apologized, stating I brainwashed youngsters into doing wrong. I want to say sorry to children everywhere for selling out to concerns that make millions by murdering animals. 7,000th restaurant opened in Washington DC. McDonalds were responsible for food poisoning outbreak caused by E. Coli bacteria, which affected 47 people in Oregon and Michigan, USA. Egon Ronay calls McDonalds burgers uninspiring. Breakfast was introduced to the British menu. 1983 The McDonalds Corporation became sole owners of McDonalds in the UK. The Company is named McDonalds Hamburgers Limited. Five consignments of Brazilian beef are secretly imported for McDonalds UK stores. The 100th UK restaurant opened in Market Street, Manchester. New country Norway. Introduction of Chicken Mc Nuggets in USA. New Hamburger University campus opens in Oak Brook, Illinois. Set in 80 wooded acres. Training is provided for every level of McDonalds management worldwide. A lodge with 154 rooms in also on the same site. In Arkansas (USA), the UFCW union, which was interested in recruiting McDonalds workers, was involved in a union dispute at a chicken processing plant supplying McDonalds. 1984 Founder Ray Kroc dies. 50 billionth hamburgers sold. Ronald McDonald Childrens Charities is founded in his memory to raise funds in support of child welfare. A McDonalds pamphlet which is distributed to health professionals in the UK states: There is a considerable amount of evidence to suggest that many of the diseases which are more common in the western, affluent world diseases such as obesity, diabetes, high blood pressure, heart disease, stroke, and some forms of cancer are related to diet. The typical western diet is relatively low in dietary fiber (roughage) and high in fat, salt and sugar. McDonalds now serves 17 million customers a day. 1985 London Greenpeace (a radical group of civil rights and environmental campaigners, independent of Greenpeace International) launches a campaign intended to expose the reality behind the advertising mask of the fast food chains, including McDonalds. Sergio Quintana, the sales director of Coop Monticello (the sole supplier of beef to McDonalds stores in Costa Rica since 1970), stated on camera that his companys beef was being supplied to McDonalds in the USA. 1986 Drive-Thru restaurants opened in UK at Fallow field, Dudley, Neasden and Coventry. Four workers in Madrid who had called for union elections were sacked by McDonalds. The company was forced to reinstate the workers after the labor court ruled that the dismissals were illegal. The 200th UK restaurant opened in Ipswich. McDonalds became the first UK restaurant group to introduce nutritional information, throughout the country, for the benefit of customers. London Greenpeace published a 6-sided factsheet entitled Whats Wrong with McDonalds? Everything They Dont Want You To Know. The first UK franchisee-operated restaurant opened in Hayes, Middlesex. The first World Day of Action against McDonalds was held on 16th October (UN World Food Day). 1987 The Attorneys General of Texas, California and New York threatened to sue McDonalds under the consumer protection laws over an advertising campaign claiming that McDonalds food is nutritious. The Attorneys General concluded that the campaign was deceptive because McDonalds food is, as a whole, not nutritious. McDonalds is serving 20 million people a day in nearly 10,000 restaurants in 47 countries. The UK Midlands regional training centre opened in Sutton Cold field. McDonalds started legal proceedings against the Transnationals Information Centre (an independent research and action group based in London) over a booklet they produced called Working for Big Mac which was highly critical of the companys employment practices. The TIC backed down lacking resources to fight the case to trial, discontinued publication and distribution of the booklet (which was pulped), and the organization itself went bust. 1988 McDonalds sponsored the Child of Achievement Awards. CFCs ceased to be used for most of McDonalds Styrofoam packaging. 300th UK restaurant opened in Dagenham, Essex. 1989 Italian designer Valentino attempts in a Rome court to stop McDonalds opening near the Piazza di Spagna, complaining of noise and disgusting odours. McDonalds is listed on the Frankfurt, Munich, Paris and Tokyo stock exchanges. The Bournemouth Advertiser (UK) is threatened with a libel action by McDonalds over an article which discussed the captive-bolt method of slaughter for cattle. The newspaper backed down and published an apology. Michael Quinlan is appointed Chairman and Chief Executive Officer. The UK Companys name was changed to McDonalds Restaurants Limited. McDonalds send undercover private investigators to infiltrate London Greenpeace over a period of 20 months. McDonalds charity for child welfare fundraising, Ronald McDonald Childrens Charities, was registered. McDonalds Child of Achievement Awards was presented by UK Prime Minister Mrs. Margaret Thatcher. The UK Manchester regional training centre was opened. McDonalds stores in Philadelphia (USA) were independently surveyed and accused of having racist differential wage rates between the inner-city stores (mostly black workers) and the suburbs (mostly white workers). 1990 September libel writs were served on five supporters of London Greenpeace, three of whom feel unable to fight the case. The McLibel Support Campaign is set up to generate solidarity and financial backing for the McLibel Defendants. McDonalds opened in Pushkin Square and Gorky Street, Moscow. McDonalds opened at a UK airport at North Terminal, Gatwick. The first Ronald McDonald House opened at Guys Hospital, London. McDonalds Child of Achievement Awards attended by HRH The Princess of Wales. 1991 McDonalds were responsible for a serious food poisoning outbreak in Preston (UK), when several customers were hospitalized as a result of eating undercooked burgers contaminated by potentially deadly E.Coli 0157H bacteria. The 150th Ronald McDonald House opened in Paris. McDonalds opened in Beijing, China. The 400th UK restaurant (and first in Northern Ireland) is opened in Belfast. McDonalds opens in Hampstead (North London) despite strong opposition from local residents. 1992 Mark Hopkins, a McDonalds worker in Manchester (UK), was fatally electrocuted on touching a fat filtering unit in the wash-up area of the store. The manager of a Newcastle store (UK) was jailed for 6 months for inducing a crew member to phone through a hoax bomb threat to nearby Burger King in order to boost sales at McDonalds. McDonalds Child of Achievement Awards attended by UK Prime Minister John Major. McDonalds opened in a railway station at Liverpool Street, London. A UK Health Safety Executive report made 23 recommendations for improvements in the safety of employees. One of its conclusions was The application of McDonalds hustle policy [ie. getting staff to work at speed] in many restaurants was, in effect, putting the service of the customer before the safety of employees. Visitors to Salisbury Cathedral (UK) are offered two burgers for the price of one if they buy a commemorative parchment scroll. The idea is dropped when the bishop gets back from holiday. First restaurant in a European hospital opened at Guys Hospital, London. 1993 The first McDonalds at sea opened aboard the Silja Europa, the worlds largest ferry sailing between Stockholm and Helsinki. The Paris planning authorities refuse permission for a McDonalds under the Eiffel Tower. The second Ronald McDonald House opened at Alder Hey Childrens Hospital, Liverpool. 500th UK restaurant opened in Notting Hill Gate, London. First UK operated restaurant on a ship opened on the Stena Sealink ferry Fantasia sailing between Dover and Calais. McDonalds sponsored athletics in the UK through the McDonalds Young Athletes League and the International invitational meeting the McDonalds Games. 1994 Mc Libel Trial starts on 28th June. Restaurants opened in Bahrain, Bulgaria, Egypt, Kuwait, Latvia, Oman, New Caledonia, Trinidad and United Arab Emirates, bringing the total to over 15,000 in 79 countries on 6 continents. McDonalds celebrated twenty years of operating in the UK. McDonalds environmental image was revealed to be a sham, and customers being conned when it was discovered that rubbish which customers were asked to put into separated recycling bins throughout New Zealand stores was sent to the tip. McDonalds achieved the highest ever grade under the Royal Society for the Prevention of Accidents (RoSPA) Quality Safety Audit scheme. McDonalds was voted the Most Parent Friendly restaurant in the UK for the second successive year by the Tommys Parent Friendly Campaign, supported by the Daily Telegraph. Workers in an Ontario store (Canada) joined a union, but the company managed to avoid recognition by ensuring victory in Labor Board sponsored elections. The McLibel Defendants issue a countersuit for libel against McDonalds over the companys accusation in a leaflet that they are telling lies. Five McDonalds managers are arrested in Lyon, France for trying to rig union elections. On 1st October, McDonalds UK executives held a celebration along with a jazz band and clown at their Woolwich store to mark 20 years since this first store opened in the UK. In October, there is a demonstration at McDonalds European headquarters in London where sackbuts of the companys litter picked up off the streets are returned. The Company threatens legal action against a topless restaurant in Australia called Mc Tits. 1995 Mc Libel Trial becomes the longest libel trial in British history on Day 102 in March. On 15th April, there were international protests to mark the 40th anniversary of the opening of the worlds first store of the McDonalds Corporation, and to celebrate 10 years of co-ordinate international resistance to McDonalds. On the first anniversary of the McLibel Trial (28th June), it becomes known that McDonalds had initiated secret settlement negotiations and had twice flown members of their US Board of Directors to London to meet with the McLibel Defendants in an attempt to bring the case to an end. 12th October, the third anniversary of the death of Mark Hopkins, was a Day of Solidarity with McDonalds Workers in the UK. On 16th October, the 11th annual Worldwide Day of Action against McDonalds, there were protests in at least 20 countries. In the UK, at least 250 of the companys 600 stores were leafleted. On 11th December (Day 199 of the trial), the McLibel Trial becomes the longest civil case in English history. Following widespread opposition by local residents, McDonalds were refused permission to open an outlet at their European headquarters in north London. 1996 February 16th 10am, the McSpotlight website was launched. In March, the publics intense concern over the links between the cattle disease BSE and its human equivalent CJD forced McDonalds UK to ban British beef. The company did not sell any beef products for a week while supposedly waiting for beef supplies to arrive from other EU countries. The Vegetable Deluxe was launched in the UK. McDonalds opened stores in India. McDonalds and Disney announced a deal giving McDonalds exclusive rights to use characters from Disney films in its promotions around the world for 10 years. Commentators called it the biggest global marketing alliance yet devised. McDonalds opened a store in Belarus, its 100th country. The movie star Robin Williams turned down a million-pound offer to advertise McDonalds. McDonalds threatened the owner of a UK sandwich bar called McMunchies with legal action for breach of trademark. A retired Scottish school-teacher called Ronald McDonald, and the chief of the McDonald clan in Scotland were both outraged at this further attempt by McDonalds to claim global dominion over the prefix Mc and the name McDonald which has been an Irish and Scottish family name for centuries. The Supreme Court of Denmark ruled against McDonalds claim that a sausage stand called McAllans was in breach of its trademark. Following widespread opposition by local residents in Winchmore Hill (north London) which put a lot of pressure on the local MP (Michael Portillo, the Defense Secretary), McDonalds were refused permission to convert the local Conservative Association HQ into a Drive-Thru. McDonalds sued for breach of trademark a Jamaican fast-food company (called the McDonalds Corporation Limited) which had been operating in Jamaica since the early 1970s. McDonalds succeeded in its trademark battle in South Africa, when an appeal court prohibited competitors from using its name and the golden arches symbol. McDonalds began spending $200 million on a promotional blitz in the USA Canada to lure adults to visit their outlets. This included the launch of the new adult burger, the Arch Deluxe in May. Despite this blitz, US sales continued to fall. The parents of a child, who died from E.Coli 0157 food poisoning after eating McDonalds burgers in Spain and England, began legal proceedings for compensation in the USA. Meanwhile, three children who suffered E.Coli 0157 food poisoning in England also from McDonalds burgers were granted legal aid to sue McDonalds and their supplier McKeys. McDonalds opened the worlds first fast-food ski-through in the Lindvallen resort (Sweden). The Mc Libel Trial became the longest trial of any kind in English legal history in November. A value meal is a group of menu items offered together at a lower price than they would cost individually. They are common at fast food restaurants. Value meals are a common merchandising tactic to facilitate bundling, up-selling, and price discrimination. Most of the time they can be upgraded to a larger size of fries and drink for a small fee. The perceived creation of a discount on individual menu items in exchange for the purchase of a meal is also consistent with the loyalty marketing school of thought. TECHNOLOGY:- In order to make speedy service possible and to ensure accuracy and security, many fast food restaurants have incorporated hospitality point of sale systems. This makes it possible for kitchen crew people to view orders placed at the front counter or drive through in real time. Wireless systems allow orders placed at drive through speakers to be taken by cashiers and cooks. Drive through and walk through configurations will allow orders to be taken at one register and paid at another. Modern point of sale systems can operate on computer networks using a variety of software programs. Sales records can be generated and remote access to computer reports can be given to corporate offices, managers, troubleshooters, and other authorized personnel. Food service chains partner with food equipment manufacturers to design highly specialized restaurant equipment, often incorporating heat sensors, timers, and other electronic controls into the design. Collaborative design techniques, such as rapid visualization and parametric modeling of restaurant kitchens are now being used to establish equipment specifications that are consistent with restaurant operating and merchandising requirements. The United Kingdom In the United Kingdom, many home based fast food operations were closed in the 1970s and 1980s after McDonalds became the number one outlet in the market. However, brands like Wimpy still remain, although the majority of branches became Burger King in 1989. Japan Traditional ramen and sushi restaurants still dominate fast food culture in Japan, although American outlets like Pizza Hut, McDonalds, and KFC are also popular, along with Japanese chains like MOS Burger. Nigeria In Nigeria, Mr. Biggs, Chicken Republic, Tantalizers, and Taste Fried Chicken are the predominant fast food chains. KFC and Pizza Hut have recently entered the country. South Africa KFC is the most popular fast food chain in South Africa according to a 2010 Sunday Times survey. Chicken Licken, Wimpy and Ocean Basket along with Nandos and Steers are examples of homegrown franchises that are highly popular within the country. Mcdonalds, Subway and Pizza Hut have a significant presence within South Africa. China and Hong Kong In Hong Kong, although McDonalds and KFC are quite popular, there are 3 major local fast food chains providing Hong Kong Chinese style fast food. These 3 major chains are Cafà © de Coral, Fairwood Fast Food, and Maxim MX. In recent years, they have also been extending their operations to Mainland China. Israel In Israel, local burger chain Burger Ranch is popular as are McDonalds, Burger King and KFC. Dominos Pizza is also a popular fast food restaurant. Chains like McDonalds offer kosher branches. Non-kosher foods such as cheeseburgers are rare in Israeli fast food chains, even in non-kosher branches. There are many small local fast food chains that serve pizza, burgers and local foods such as falafel. MCDONALDS PRICE DISCRIMINATION:- McDonalds is reported to have decided that it is dropping the idea of one price fits all for its chain of over 1,200 franchise-based stores across the UK and may move towards regionally-based pricing for cheeseburgers and other products. Like many other fast food retailers, McDonalds has come under huge pressure because of rising operating costs. The key issue is how much of the rise in the price of ingredients and wages for staff can be passed onto consumers without it damaging sales volumes. Is the market demand for burgers sensitive to the economic cycle? Is the demand for McDonalds burgers price elastic or inelastic? The Financial Times has reported that Revenue Management Solutions has been commissioned to do some market research to find out how price-sensitive customers are in Britain and recommend where and on what menu items it can raise prices by 10p-20p. This would move McDonalds closer towards Burger King which allows franchises to charge different prices and Sainsbury and Tesco which charge different prices at high street stores. EOs of America Tricon Global Restaurants, the group that owns KFC and Pizza Hut, promotes Traditional Peking Chicken Roll at a KFC restaurant in Shanghai. At present, there are more than 1,000 KFC restaurants in China, and they are increasing at annual rate of 200. A new KFC restaurant opens every other day. Western counterpart McDonalds also continues to expand its premises. Having arrived on the mainland in the early 1990s, McDonalds has more than 600 restaurants in nearly 100 cities. Although there have been fewer golden arches in America, its native country, in the past two years, Chinas McDonalds have grown at a rate of 100 restaurants per year. The total income of fast food restaurants in China now stands at 180 billion yuan RMB, and KFC and McDonalds account for eight percent. What kind of magic has brought them such success in China? How do they sustain growth rates? Their standardized business operation apart, the key is excellent inter-cultural management. Western Fast Food Chinese Style Alluring the captious customers is a hurdle every foreign fast food restaurant must clear. The novelty of these fast food restaurants initially won many customers. Although cheap and commonplace in America, at the time the Chinese governments opening-up policy was newly enacted, fast food was exotically foreign enough to whet Chinese peoples curiosity about the outside world. Managers took advantage of this by charging the relatively high prices of 10 yuan for a hamburger, and 5 yuan for a Coke. By the mid-1990s, there were 100 fast food restaurants around Beijing; the convenience, efficient service, comfortable environment, pleasing music and jovial atmosphere garnered fans. Office workers enjoyed grabbing a quick bite on their way to work, and friends enjoyed relaxing over a Coke. However, certain eagle-eyed managers noticed that some people never dropped in when they passed by. Some customers complained that fast food was not as good as their Chinese cuisine, and that it lacked variety. McDonalds and KFC restaurants were almost empty during the traditional celebrations of Spring Festival and Mid-autumn Festival while Chinese restaurants were heaved and bustled. The reason? Cultural differences. Fast food restaurants like KFC and McDonalds are distinct American brands. Differences between China and US politics, economics, social development and ideology became obstacles to international enterprises operating in China. Corporate culture could not be understood or accepted here, especially in the restaurant field, where culture plays a crucial role. McDonalds at full sail on the Huangpu River. So the solution was to adapt: when in Rome, do as the Romans. Deep-rooted in the Chinese consciousness is the traditional culture of food and drink that features color, fragrance, flavor and variety. Fast food simply does not compare. Now that curiosity had faded, people returned to their own more extensive cuisine. Under such circumstances, the only way out was to combine the two different cultures. Fast food restaurants have been learning to absorb elements of Chinese culture. Since the summer of 2001, KFC has introduced many Chinese items onto their menus. Preserved Sichuan Pickle and Shredded Pork Soup was one of the first. Consumers felt their traditions were being respected when they could taste Chinese cuisine at a foreign restaurant. The soup proved a success, and Mushroom Rice, Tomato and Egg Soup, and Traditional Peking Chicken Roll were soon added to the menu. Not content to lag behind, McDonalds Vegetable and Seafood Soup and Corn Soup were introduced, and the company worked to modify the restaurants design. During the 2004 Spring Festival, McDonalds on Beijings Wangfujing Street attracted many people with a traditional Chinese look, decorating their interiors with paper-cuts of the Chinese character Fu (Happiness), magpies and twin fishes, all auspicious symbols. Inter-cultural Management Mode McDonalds have absorbed the Chinese cultural elements of showing respect, recognition, understanding, assimilation and amalgamation, while maintaining the substance of the Western culture of efficiency, freedom, democracy, equality and humanity. This inter-cultural management mode, with American business culture at the core, supplemented by Chinese traditional culture, provides reference for international enterprises which need to adjust, enrich and reconstruct their corporate culture to enhance local market flexibility. There are, however, certain conditions essential to inter-cultural management mode. On the objective side, there must be similarities in environment in order for the two cultures to connect and synchronize. McDonalds embody an accommodation of the fast tempo of modern life: a product of development and a market economy. Their resultant speed and efficiency are only meaningful in countries with a market economy. Chinas rapid economic development offered the environmental conditions corresponding to fast food culture. Services offered by fast food chains express their full respect for freedom, an American value, as well as the psychological statement of Chinese open-mindedness that yearns to understand and experience the Western lifestyle. Two cultures proactively crashed, connected, and assimilated. KFC and McDonalds use the localization strategy to re-express American business culture, with profound traditional Chinese cultural emblems, catering to local customs on the basis of stand ardized management. A CASE :- In July 2006, the worlds largest fast food restaurant chain, McDonalds, which claims to be an equal opportunity employer, was at the receiving end of a discrimination lawsuit along with the management company that runs the McDonalds outlet in Dearborn and an unnamed manager. Two Muslim women claimed that they had been denied employment at McDonald Dearborn outlet as they sported a hijab. Introduction On July 24, 2008, two Muslim women filed a lawsuit against the worlds largest fast food restaurant chain, McDonalds, its management company at Dearborn, Michigan, USA, and one of its managers, alleging that they had been discriminated against during their job interviews because they were wearing the hijab. In the lawsuit filed in Wayne County Circuit Court, Michigan, the women claimed that the discrimination had been going on for years and demanded US$10 million as compensation. The two women Toi Whitfield (Whitfield) of Detroit, and Quiana Pugh (Pugh) of Dearborn alleged that the manager had told them that they would not be considered for employment unless they removed their hijab. According to the women, Pugh had approached McDonalds for an interview in July 2008, while Whitfield had her interview in November 2006 SWOT ANALYSIS