Customer Value Proposition of McDonalds

Discuss about the case study Consumer Behaviour for Opting Fast Food Restaurant- McDonalds.

The industry & service chosen to complete this report on consumer behaviour is Fast Food Restaurants and the Brand opted is McDonalds.

The fast-food restaurant is categorized both by food that is supplied by minimal services & swiftly after ordering. This food is often referred as fast food. In reaction to the increasing criticism contrary to “fast food”, the industry since last seven years, is continuously trying to move the population away from the term “fast food” to “Quick Service Restaurant”.  Despite the industry efforts to change this term, consumers still refer to these restaurants as fast food restaurants.

The food served in these restaurants is often pre-cooked in advance in large quantity and is kept in cold storage, or re-heated to order. Most of these fast-food restaurants are the part of franchise operations or restaurant chains, these restaurants or food chains ship standardised food stuffs to each restaurant from central locations. There are also simple fast-food outlets, like kiosks or stands, which may or may not provide chairs or shelters to the customers.

McDonalds is listed as the 7^th highest ranking global in 2102 according to Interbrand, it has a global brand value of $50 billion. The first restaurant of McDonald’s was opened in 1955 in Des Plains, IL & now it has grown into the world’s largest restaurants chains having over 40,000 restaurants serving more than 80 million people.

The products served at McDonalds represent excellent value for money, fast service & consistent quality. McDonalds experience is always reliable, no matter where a customer visits in the world. 

McDonalds creates value for customers in only 2 ways: by decreasing the customer’s cost in relation to the customer’s benefits & by increasing benefits to the customer’s in relation to the customer’s cost (Narver & Sltaer, 1990). For McDonalds, that means presenting products that are value for money like cheese chicken burger without costing the buyer a premium in terms of time.

McDonalds, as a brand has vast brad awareness through its distinctive and long standing logo “Golden Arches”. The brand image of McDonalds also supports a good quality perception, value for money & positive associations are also abundant. All the above listed are the brand equity dimensions that support the measurement of this $50 billion global megabrand.  It is these dimensions which facilitates a steady benchmarking & measurement of brands irrespective of services or products (Aaker, 1996). McDonald’s core value is to focus on the needs & wants of their customers. McDonalds provide “superior services & high quality food in an environment that is welcoming & clean, at a great value”. The brand value account distils the core of their promise. By this statement of McDonalds they are informing their customers that they can get great value high quality burger and eat in a welcoming & a clean place. The placement of the food standards, product pricing & operational process of restaurant ensures that this brand promise is maintained at all the 40,000 restaurants worldwide. It is the consistent power of their brand & globalisation of their standards that set them apart from their competitors. Consider the food chain “burger king”, the brand image of this food change is somewhat confused of late, for many years, the cartoon-like “king” character was used by them & recently they have started focusing on the food. Whereas burger king has strong brand recognition with the logo, though the brand equity does not compare with McDonalds. Burger King is not listed as a brand at all by Interbrand. The customer experience is not the same at Burger King when compared to McDonalds. My personal experience is that the products offered at Burger King are of comparable costs, lower quality but the services offered are usually terrible. The cost of my time is much higher in comparison of McDonalds. Considering the views of Slater & Narver, Burger King might offer a benefit with their flame grilled taste; however it is certainly not worth the wait. Moreover, they rebranded their image recently in 2012; they saw the death of the “King” character in support of celebrity advertisements from the likes of various sports stars & sports persons like Jay Leno. At the same time, Burger King spent their time completely on spending millions of dollars in upgrading their restaurants, as well as redesigning a large majority of their menu. According to my view point, rebranding exercise only succeeded in increasing year on year revenues, addressing the decline, however it failed to offer a real challenge to its competitors & rivals like McDonalds & Wendy’s. McDonalds yet remains to rule highest with their number 1 position & revenue of Burger King declined considerably to 1.1 billion in 2013 from 2.33 billion in 2011. It is only through a decrease in cost has the company improved net incomes.

Stages of Consumer Buying Process

Consumer buying decision process has 6 stages. Though all the six stages are basically for a complex decision, this may not be in the case of choosing a fast food restaurant such as McDonalds. The actual purchasing is only 1 stage of the process, because not all the decision results in purchase.

Problem recognition

This stage can also be referred as awareness of needs; this is the difference between the desired state & the actual state, deficit in assortment of products. In case of fast food restaurant (Hunger-Food), hunger stimulates a consumer that they need to eat. In this stage the need is recognized, i.e. the consumer is hungry and he/she needs to eat in order to survive.

Information search.

This could be completed in the 2 ways i.e. internal search (memory) or eternal search (in case more information is required, relatives & friends are referred).  In our scenario, when a person feels hungry he does an information search which leaves him with possible alternatives like Chinese food, Indian food, McDonalds, Burger King.

At this stage criteria for evaluations are established, what features a customer wants or does not wants, consumer weights/ranks the alternatives or resume the search. In our case, the consumer may decide to each something spicy and should be nonveg, the list of alternatives (such as Burger King, Pizza Hut, McDonalds, etc) is ranked according to the need (i.e. spicy & nonveg). If the consumer is not satisfied with the choice, they return to the search phase an think of another restaurant.

Purchase Decision:

At this stage, consumer from the list of alternatives opts for the best option and purchases the product. In our scenario, after searching for various options, McDonalds was chosen finally to eat food from the vast list of fast food restaurants, McDonalds was chosen because it was fulfilling all the needs of the consumer, i.e. under their menu they were offering spicy chicken burger at pocket friendly prices.

At this stage the consumer evaluates weather he/she is satisfied or dissatisfied or weather the decision taken by him was right. After eating a fast food meal i.e. chicken burger, buyer might think he would have opted for a Chinese meal instead. However, in our case, eating a meal at McDonalds completely satisfies and the buyer decides to visit again because of the quality of the meal at reasonable prices and also the ambiance provided by the restaurant was clean and welcoming.

Conclusion

In order to summarise the consumer buying behaviour in the above scenario, first of all the consumer identified a need i.e. he feels hungry and wanted to have food. At the next stage he searches for the alternatives according to his need (i.e. wants to have nonveg & spicy food) and shortlists the some of the best alternatives (such as McDonalds, Burger King, Pizza hut).  After that he opts for the best alternatives i.e. McDonalds which was fulfilling all his needs i.e. he got spicy chicken burger. After eating at McDonalds, he comes to a conclusion that he was happy with the quality of food provided at great prices at a welcoming environment and he decides to visit the restaurant again.

The level of involvement while opting for a fast food restaurant is not too high, and the risk involved is minimal. As visiting McDonalds is a programed behaviour/routine response, also visiting a fast food restaurant is a low involvement, frequent visited, minimal cost place, so these sought of purchases require little search and decision efforts.

References

Aaker, D. A., (1996) ‘Measuring Brand Equity Across Products and Markets’, California Management Review, 38 (3) pp.102-120

Burger King. (2014). Burger King Financial Results 2013. Available: https://investor.bk.com/download_arquivos.asp?id_arquivo=C0B7F543-DEA6-4852-ACB8-F589DFD66CC7. Last accessed 8th Dec 2014.

Interbrand, (2013) Best Global Brands 2012: The Top 100 Brands, Available: https://www.interbrand.com/en/best-global-brands/2012/Best-Global-Brands-2012-Brand-View.aspx. Last accessed 8th Dec 2014.

McDonalds. (2014). About McDonalds. Available: https://www.aboutmcdonalds.com/mcd/our_company.html. Last accessed 8th Dec 2014.

McDonalds. (2014). McDonalds Financial Highlights. Available: https://www.aboutmcdonalds.com/mcd/investors/financial_highlights.html. Last accessed 8th Dec 2014.

Narver, J. C. & S. F. Slater, (1990) ‘The Effect of a Market Orientation on Business Profitability’, Journal of Marketing, 54 (4) pp.20-35