Publisher: Asian Economic and Social Society ISSN: 2225-4226 Volume 2 Number 7, July (2012) Impact of Constructive Marketing Strategies on Return (Revenue & Profitability): A Case Study of Mcdonald’s Parvez Azim (Foreign Faculty Professor of Economics, Government College University Faisalabad, Pakistan ) Samreen Azim (Liverpool University, U.K) Citation: Parvez Azim and Samreen Azim (2012). Impact of Constructive Marketing Strategies on Return (Revenue & Profitability): A Case Study of Mcdonald’s. Journal of Asian Business Strategy, Vol. 2, No. 7, pp.153-169. Journal of Asian Business Strategy, 2(7): 153-169 Impact of Constructive Marketing Strategies on Return (Revenue & Profitability): A Case Study of Mcdonald’s Abstract This paper contains the analytical view of the marketing strategic shift of McDonald’s and its effectiveness with respect to the growth of the company. Marketing strategies of the company are Author(s) discussed in the three dimensions, which are marketing philosophy, company’s status with respect to the time Parvez Azim of entrance in the market, and nature of the market Foreign Faculty Professor served. Company continued to retain the strategies of of Economics, Government market pull and national high share in t he first and College University third dimensions respectively since its origination. But Faisalabad, Pakistan company shifts its marketing strategy from frontal Samreen Azim attack to leap frog in the second dimension of Liverpool University, marketing strategy analysis. In the year 2004, U.K McDonald’s aligned its marketing strategi es keeping in view the changing trends towards healthy and diet food from rich (fatty food) and nutritious food.Due to this strategic shift, the company not only protected the growth of its market share but also achieved record increase in revenue of 10%. A record increase of 55% in the net income along with the record increase of 19% in cash from operations which proved not only the efficiency but also the effectiveness of changed marketing strategies of McDonald’s. This pace of the growth of the company continued in later years also with a little fluctuation due to international economic crisis. The ill effects of the fast food have also been mentioned in this paper. Introduction largest fast food restaurants. It is serving 58 million customers daily and McDonald’s corporation came into doing business in 120 countries of the being in 1954 as a follower of world (www.mcdonalds.com). Kentucky Fried Chicken (KFC) in the industry of fast food. McDonald’s McDonald’s is serving only one turned into public limited company in strategic business unit of fast food 1965. After attaining prominent chain in its portfolio and has got position in the USA, McDonald’s distinguished because of its high entered into the international market quality and hygienic products and through franchising and joint ventures. services. Only 15% of the total restaurants are owned by the company. Remaining 85 McDonald’s is one of those % are operated by the franchises and organizations that undertook the right joint ventures (www.scribd.com). Now strategic turn at the right time and kept McDonald’s enjoys the status of the the company growing in spite of 153 Impact of Constructive Marketing….. serious worldwide economic recession . Identifying the pros of the during last five years. McDonald’s marketing strategies employed most prominent strategic turn was by McDonald’s implemented in 2004, when . Determining the need to be McDonald’s turned its marketing adaptive to the environment strategy from frontal attack to leap and to the customer changing frog. As we know that McDonald’s is needs and requirements doing business in the international market, so in this paper international Hypothesis to be tested marketing mix of the company will be H 0: There is no correlation between the considered. Marketing strategy of marketing strategies of an organization McDonald’s can’t be analyzed in and its prospective return (both isolation. It requires having a bird eye revenue and the ultimate profit). view of the whole strategic management process of the company in H 1: There does exist a strong order to check the suitability of its correlation between the marketing marketing strategy as the whole. A strategies of an organization and its brief outlook of the strategic prospective return (both revenue and management process of the company is the ultimate profit). given in the following page. H 0: There are no ill effects of fast food on health. Aims and Objectives H 1: There are ill effects of fast food on The main objective of this paper is to health. analyze various strategies followed by multinational corporations – in my Reasons for selection of this topic case McDonald’s Restaurants- in order Strategic Management Process is a to survive in dynamic business hallmark of the age which is not only environment, to have an edge on its desired for management of competitors, and to retain its administrative affairs but also for all profitability position. Ill effects of fast others kinds of fields as well including food consumption on health have also marketing at apex. Gone are the days been mentioned. when the fields of accountancy, marketing, finance, management were This task has been accomplished by: considered to be separate and separate handling and function were undertaken . Understanding the need to for these purposes. Now-a-days formulate stringent marketing diversification is considered to be the strategies best strategy to keep any thing going . Identifying the modes of on, and to avoid fiasco. Keeping in implementing the marketing view the above considerations, an strategies efficiently appropriate amalgam is also needed . Assessing the impact of the between marketing and strategic marketing strategies on the management. Through strategic return both revenue and the management process tools, a firm ultimate profitability enables itself to formulate and . Understanding the various implement state-of-the-art logical factors that influence the course of actions (strategies) in order decision regarding selection of to be a vibrant in all form of desirable marketing strategies circumstances. So, We selected this topic keeping in view the rationale for triumphant success of a multinational 154 Journal of Asian Business Strategy, 2(7): 153-169 corporation in consequence of apt In addition to above statements, it is marketing strategies. hereby mentioned with full confidence that wording of this paper is of my Sources of data and other own except wherever sheer words of information (research) text books or of internet sources would To write this paper, various textbooks have been used. of prime significance were used as enlisted in the references. Strategic management process of However, for some up to date and Mcdonald’s concrete information about Strategic management process for all McDonald’s, the main source was the kinds of activities, in general, consists internet as it enabled me to access and of the following logical steps based seek the research paper written by upon the available material in various various authors as well. text books. Forming a Strategic Vision Forming a Mission Setting Goals and Objectives Crafting Strategies Evaluating Strategy Alternatives Implementing Strategies Post-implementation Review Process Iteration 155 Impact of Constructive Marketing….. A brief description of the various steps Goals and objectives in the above logic flow diagram is as Goals and objectives are used follows: interchangeably despite of marginal difference between them. Goals are Strategic vision some what broader than objectives. Company vision specifies the future Any how, objectives are the desired out look and make up of the company. accomplishments or outcomes of the Also, it indicates management company towards which strategies are aspirations for the organization, aimed. (Etzel et al., 2000) providing a landscape view of “What business an organization wants to be, Strategy (crafting) where it is headed, and the kind of In simple words, a strategy is shape it wants to create”. described as a logical course of action to accomplish certain goals or to get Mission the required job done. (Etzel et al., Mission is synonymous with Purpose, 2000) and this is considered to be the purpose of existence of an Third step in the above flow chart is organization, and it can be describes as divided into further three levels of the basic or fundamental function (s) strategy formulation. According to or task (s) for which an organization Walker et al. (2005), different levels has come into being. of strategy formulation are as follows: Corporate Level Strategies Business Level Strategies Functional Level Strategies Corporate Level Strategies are competitive advantage over its rivals. formulated at overall company level Also, corporate strategy is concerned irrespective of number of Strategic with the overall use of resources by the Business Units (SBUs) in the organization as a whole. company’s portfolio. Business level strategy involves crafting a strategy Business Level Strategies are and positioning the firm in each of its formulated at SBU level in order to businesses to allow it to obtain achieve the business level objectives. 156 Journal of Asian Business Strategy, 2(7): 153-169 Further one SBU has many functions business level as opposed to cost like purchase procurement, human leadership strategy (Ooppapers.com). resource management, production, financing, marketing etc. And business In simple words, a strategy is level strategy is concerned with how to described as a logical course of action compete within a particular market. to accomplish certain goals or to get the required job done. Separate sets of strategies are required to materialize above-stated functions. The key questions that serve as guides These strategies are called Functional for establishing a marketing strategy Level Strategies and marketing are as follows; strategy is the most important functional level strategy. It can’t be . Where are our customers, and drawn and implemented in isolation.