CASE STUDIES IN MARKETING

McDonald’s
1. McDonald’s is the world’s leading hamburger fast-food chain, with over 32,000
restaurants in 118 countries. More than 75 percent of McDonald’s restaurants are
owned and operated by franchisees, which decreases the risk associated with
expansion and ensures long-term tenants for the company. McDonald’s serves 58
million people each day and promises a simple, easy, and enjoyable food experience
for its customers.
The history of the McDonald’s Corporation dates back to 1955 when Ray Kroc,
a multimixer salesman, franchised a hamburger restaurant from the McDonald
brothers, named it McDonald’s, and offered simple foods such as the famous 15-cent
hamburger. Kroc helped design the building, which featured red and white sides and
a single golden arch to attract local attention. Ten years later, 700 McDonald’s
restaurants existed around the country, and the brand was on its way to becoming a
household name.
During the 1960s and 1970s, Kroc led McDonald’s growth domestically and
internationally while pushing the importance of quality, service, cleanliness, and
value (QSCV). The menu expanded to include the Big Mac, Quarter Pounder, Happy
Meal, Filet-O-Fish, and breakfast items like the Egg McMuffin. Kroc also understood
early on that his core audience consisted of children and families. Therefore, he
focused McDonald’s advertising efforts at these groups and introduced Ronald
McDonald in 1965 during a 60-second commercial.
It was also during this time that McDonald’s created the Ronald McDonald
House, which opened in 1974 to help children with leukemia. Since then, it has
expanded into a global charity effort called Ronald McDonald House Charities that
strives to improve children’s lives, health, and well-being through three major
programs: Ronald McDonald House, Ronald McDonald Family Room, and Ronald
McDonald Care Mobile.
McDonald’s aggressively expanded overseas throughout the 1980s by adding
locations throughout Europe, Asia, the Philippines, and Malaysia. This rapid
expansion, however, led to many struggles during the 1990s and early 2000s. The
company lost focus and direction, expanding by as many as 2,000 new restaurants a
year. New employees were not trained fast or well enough, all of which led to poor
customer service and dirtier restaurants. New competitors popped up. Consumer
tastes changed, and new products like pizza, the Arch Deluxe, and deli sandwiches
failed to connect with consumers. Jim Skinner, McDonald’s chief executive explained,
“We got distracted from the most important thing: hot, high-quality food at a great
value at the speed and convenience of McDonald’s.”
In 2003, McDonald’s implemented a strategic effort called the “Plan to Win.”
The framework, which still exists today, helped McDonald’s restaurants refocus on
offering a better, higher-quality consumer experience rather than a quick and cheap
fast-food option. The Plan to Win “playbook” provided strategic insight on how to
improve on the company’s 5 Ps – people, products, promotions, price, and place – yet
allowed local restaurants to adapt to different environments and cultures. For
example, McDonald’s introduced an egg, tomato, and pepper McPuff in China; an ebi
Filet-O (shrimp burger), korokke burger (mashed potato and cabbage), and green-tea
flavored milkshake in Japan; McAloo Tikki, a vegetarian burger, in India; McSpaghetti
in the Philippines; bulgogi burger (pork in an onion sake marinade) in Korea; bubor
ayam (chicken congee) in Malaysia; and kao fan (fried rice patties) in Taiwan.
Some food changes that helped turn the company around included offering
more chicken options as beef consumption started to decline. It responded to health
trends and began offering premium salads as well as all-white-meat McNuggets.
While many of the healthier options targeted moms and held a premium price,
McDonald’s introduced the $1 menu at the same time, which targeted the lower-
income bracket and teenagers.
McDonald’s also launched a worldwide repackaging effort as a result of intense
consumer research. The new packaging aimed to accomplish several tasks, including
teaching consumers about McDonald’s health consciousness and building awareness
of its use of locally grown produce. It included bold text and full-colour photographs
of real ingredients like potatoes on French fry packaging and vegetables, cheese, and
cooking utensils on hamburger packaging.
With competition intense in the mature markets, McDonald’s is looking at the
emerging Asia region for its next phase of growth. Trailing behind KFC in China,
where Chinese prefer chicken to beef, McDonald’s is adapting to consumer tastes by
enhancing its chicken menu items. It also revamped its existing yellow-and-red décor
stores into a more relaxed and stylish bistro design to target at the younger
customers. Its focus on the youths is not lost in its communications. A recent
campaign addressed Chinese’ concerns about food safety with a parody on WikiLeaks.
Its communications emphasized its ethical and healthy treatment of chickens.
The campaign, which plays on the Chinese term for WikiLeaks to create “Chickileaks,”
is rolled out on television, a microsite, and online videos in partnership with popular
video-sharing site Tudou.
McDonald’s also launched a 150 million-yuan Hamburger University in China,
its first in the country, to educate local employees not only on QSCV but also on
developing better tasting and locally inspired menu items.
In India, McDonald’s has even gone beyond adapting its menu to the largely
vegetarian-based market. Its managing director has even gone undercover to assess
the performance of its stores. Vikram Bakshi visits each store incognito and observes
the crowd and the service. He also checks the toilets for cleanliness, one of McDonald’s
core values.

Questions:

(i). What are McDonald’s core brand values? Have these changed over the years?
(ii). McDonald’s did very well during the recession in the late 2000s. With the
world economy turning around for the better and then tottering, should
McDonald’s change its strategy? Why or why not?
(iii). What risks do you feel McDonald’s will face going forward?

Sintex Industries

2. Sintex Industries is an Indian-based holding company engaged in the manufacture of

plastic products and textile manufacturing. The early growth of the company was
marked by a series of product failures based around a plastic moulding unit designed
to manufacture plastic cans to carry cotton slivers in the textile industry. These were
not marketed and further experiments also ended in failure. This forced the owners
to consider other possible end uses that might have substantial market potential. This
led to the development of black plastic water tanks in the late 1970s.
At the time, there were other very small and geographically fragmented
manufacturers of water containers, but it was a commodity market. The owners
decided to name their water tanks Sintex, using sin from the plastic sintering process
and tex from the word ‘textiles’. Most water tanks sit on residential and commercial
property roofs in India, and the visual prominence of the word Sintex provides a
constant free brand reminder to the community. In addition, Sintex spends 70 per
cent of its communication budget on mass media – mainly press and popular
magazines. Its involvement in trade fairs and exhibitions accounts for 7 per cent,
outdoor only 3 per cent, and dealers’ meetings and other promotional activities
account for the remaining 20 per cent. The Sintex website provides company details
and information about its various products. The website is perceived to be a strong
brand-building tool. Overall, Sintex spends less than 1.5 per cent of sales on
communications.
Part of the brand’s success has been attributed to the emphasis placed on
innovation. Sintex has developed solutions for the housing sanitation, power, and
education sectors, and wishes to be known as a ‘thinking company’ – that is, one that
produces innovative products designed to save the environment, rather than one that
merely produces plastic products.
From a simple beginning, Sintex has become the surrogate brand for all plastic
water tanks in India, has seized approximately 45 per cent of the market, and now
operates in nine other countries across four continents.
Sintex capitalized on a market opportunity within a commodity market. Its
subsequent growth and success can be explained in terms of the added value that its
simple branding activities brought to the different B2B markets in which it chose to
operate. However, simply developing a brand does not bring long-term success, and
it was its development of brand values through innovation that drove both consumer
and dealer demand for Sintex.
Although the market insight does not tell us, it is highly probable that Sintex
was able to charge a premium price and hence derive a better margin than its
competitors. This resource was invested in innovation of new products and continued
the growth of the company.

Questions:

(i). To what extent should Sintex’s success be attributed to its being the first to
brand in a commodity market?
(ii). How vulnerable might Sintex be to a global water container brand entering the
Indian market?
(iii). How might Sintex’s communications evolve as it becomes increasingly
regarded as a ‘thinking company’?

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