March 16th, 2010 / No Comments » / by nido
Are you one of the 400 million users that have a facebook account? What about twitter? Google Buzz? Well, being a self-proclaimed technology geek and my love for Social Networking Sites (SNS) has gotten me far in the online world.
Now I know what you’re thinking, is this going to be another one of the millions of compare and contrast articles you have already read online of the three social networking giants? Of course not!
Posted in: Essays and Reports
September 18th, 2009 / No Comments » / by nastyrunner
Introduction
McDonald’s is the most famous and well-known fast-food company in the world. It was started by Dick and Mac McDonald’s in 1940. Their concept of the restaurant was based on speed and therefore called ‘Speedee Service System’ in 1948, which in today’s times is known as the fast food concept (Wikipedia, 2009). McDonald’s serves fast food to approximately 47 million people in more than 30,000 restaurants located in 121 countries (Bized, 2009). The product offering has chicken, beef, bread, milk, vegetables as the main ingredients which are composed into burgers (chicken, ham, beef, and vegetable), French fries, milk shakes, soft drinks, breakfast items, juices, and desserts. The major marketing moment for McDonald’s was provided by Ray Kroc, and the brand continues to be a major success by the hard work of its family of employees, suppliers, and franchisees. McDonald’s for years have continued with an extensive advertising campaign targeting children, healthy food, and convenience. The advertising is done through television, radio, newspaper, billboards & signage, sponsoring sport and charity events, many local events throughout the world.
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Question 1 – Summarize the strategic situation confronting McDonald’s
In 1973 Richard Steinig (27 years) became a junior partner in McDonald’s Corp. Franchisee in his 2 stores that generates 80,000 in annual sale and earns 15% from the profit. But since 1999, sales haven’t budged, but instead costs kept rising. (McDonald’s began advertising the Big N’ Tasty burger). Instead of living the American Dream, Steinig says: ‘The business just isn’t nearly as profitable, I don’t think that McDonald’s has the waiting list it used to, and part of that reason is that the return on investment just isn’t what it used to be’.
Prospective franchisee were once eager to get into the 2 year training program by waiting in line for hours, but no line exists today, and the current franchisee start to feels alienated. The problem of McDonald’s is beyond cleaning up restaurant, but by facing rapidly fragmented market, and by fast growing restaurant called “Fast Casual” segment like Cosi & Quinzo.
Immigrant made exotic food like sushi, barrios. Some quick meals of all sort can be found in supermarket, convenience store, vending machine.
The Mickey D’s heyday didn’t help, 194 franchisees left the system, with 69 restaurants forced out for poor performance, the other 25 left seeking greener territory. McDonald’s buys back franchises if they cannot be sold. Opening a McDonald’s franchise costs $500,000 to $800,000. McDonald’s would rent them the location and demand high corporate standards and in return, franchisees could become very rich. But many franchisees says that ownership of a McDonald’s restaurant is no longer the reliable cash cow it once was. In the past, franchisees who beat McDonald’s national sales average were typically rewarded with the chance to open or buy more stores.
McDonald’s gave millions of Americans their first jobs, and has long symbolized to some people the American way of eating, it is now struggling with an identity crisis. Even though it is still the nation’s most visited fast-food (more than 20 million people eat at McDonald), the company is facing a decline in its portion of the fast-food market and in the estimation of many of its customers,
Jack M. Greenberg (60 years) introduce 40 menu items that creates no differences, instead he let the burger business deteriorate. Surveys shows delay in service & quality compare of those of rivals. Back in the 90’s McDonald’s had done so well in capturing market share through their growth and perception of cleanliness and service
The solution was to bring back James R. Cantalupo (59 years) who saw in the 80’s & 90’s the international success. But unfortunately McDonald’s recorded its first quarterly loss in the company 47 years history as a publicly traded business. Cantalupo & his team which included Charles Bell (42 years) and Mats Lederhausen (39 years), had plan to concentrate on getting service & quality right, by introducing “Up or Out” grading system. Cantalupo is enforcing a “tough love” program, where McDonald’s is getting rid of the weakest franchises. And the owners that flunk the rating and inspection system will get a chance to clean up their act, but if they don’t improve themselves they’ll be fired.
Since McDonald’s is living through the death of the mass market, Cantalupo had cut sales growth from 15% to 2 % annually, and added only 250 outlet in U.S., and 30 % less new opening in Europe, including closing 176 stores from 2800 in Japan. Some McDonald’s outlets are trying to draw more customers with improved services and products (some greets customers and opens the door for them, others built a resemblance to a French cafe, with a chef who makes custom panini sandwiches).
McDonald’s receives funds from its franchises in two ways. There is monthly service fee that varies but most recently in 2002 was 4 percent of total monthly sales. Another manner in which McDonald’s receives funds from its franchises is in rent money. McDonald’s owns all property in which a McDonald’s outlet was built regardless if the location is a franchise or company owned. It is estimated that McDonald’s generates more money from its rent than from its franchise fees. Investors have accepted that the growth day are over, they remain happily settled for a steady dividends.
Many of McDonald’s franchisees have voiced disappointment with lower profits, expensive new cooking systems, and stressed relations with management. Now franchisees are jumping to rivals, like Paul Saber who was a franchisee of McDonald’s for 17 years, then has sold back his 14 restaurant when he realized that the eating habits is shifting and open Panera Brad Co. (in 2008, a Health Magazine study, judged Panera Bread the America’s most healthy fast food restaurant).
Now franchisees are jumping to rivals, like Paul Saber who was a franchisee of McDonald’s for 17 years, then has sold back his 14 restaurant when he realized that the eating habits is shifting and open Panera Brad Co. (in 2008, a Health Magazine study, judged Panera Bread the America’s most healthy fast food restaurant). Made For You was developed with computer software that gives operators the ability to anticipate orders based on sales volumes during peak periods, according to McDonald’s Corp. spokeswoman Anna Rozenich.
So along with the entire hamburger category, the company has been losing market share to what the food industry calls the fast-casual restaurants like Panera Bread, Baja Fresh, Pret A Manger and Chipotle Grill (McDonald’s has an ownership stake in the last two) that have successfully domesticated exotic tastes for the mass audience.
“We have a new growth strategy,” said Charlie Bell, McDonald’s president and chief operating officer. “We will grow by adding more customers to our existing restaurants … not restaurants to customers. So that means our two top priorities are operational excellence and leadership marketing.” 2003 could be more challenging for McDonald’s once it gets past the initial sales boost it has experienced recently from its two major production launches — the salads and the McGriddle sandwich.
After months of sales declines, McDonald’s has begun to bounce back, recently reporting a 1.3-percent increase in U.S. same-store sales in April followed by a 63-percent jump in May, which reflects the domestic market’s best performance in four years. Wall Street applauded McDonald’s for its US. resurgence, but some restaurant analysts noted that the company faces an uphill climb as the chain’s overseas markets continue to post negative comparable-restaurant sales.
Uncomfortable points for franchisees is the top-down manner
1. fix pricing & menu problems
2. “made for you” kitchen upgrades in each restaurant
3. supposed to speed up orders & contain menu items
Irwin Kruger, a veteran McDonald’s franchisee with six stores in Manhattan, has customized the hamburger chain’s Made For You cooking system for his high-volume urban restaurants that operate without drive-thrus.
2003 could be more challenging for McDonald’s once it gets past the initial sales boost it has experienced recently from its two major production launches — the salads and the McGriddle sandwich.”I have got to make sure that I’m not turning off a customer because I can’t deliver the service he or she wants,” said Kruger, who was involved in the development of Made For You. “I don’t see anything wrong with a small buffer at peak lunch hours.”
Greenberg insisted, however, that the majority of front-counter slowdowns are unrelated to Made For You, but instead are caused by inadequate staffing levels, which can lead to such problems as fry stations not being properly manned
Kruger said one benefit of Made For You is that it has reduced food waste by 0.25 percent to 0.5 percent in his stores. He also emphasized that McDonald’s food quality has improved through such enhancements as toasted sandwich buns and the universal holding cabinets that keep all meat products hot until the sandwich is assembled.
Other service improvements Kruger has implemented in his restaurants include a designated traffic director, or “outside order taker,” who stands on the customer side of the counter and facilitates the ordering process.
McDonald’s has promised an expanded menu before, but it has not had a blockbuster new product since the Chicken McNugget, which was introduced in 1983. Other attempts to diversify their hamburger offerings, like the McLean sandwich and the Arch Deluxe, have all gone to their respective McGraves.
This situation is a result of several aspects that include an increase in competition, poor management, bad marketing and lack of response to the changes in the needs of franchises and customers. One reason for this is a high employee turnover rate. McDonald’s has the highest employee turnover rate among its competitors. Another contributing aspect to the poor customer service is slow service at the drive-through window
McDonald’s is struggling to overcome the longtime image problems stemming from its food and customer service, and wants to cultivate a cool reputation so it launched its first worldwide campaign “I’m lovin’ it.”, which was a key component of its massive revitalization program, and that replaced the “We love to see you smile”.
Posted in: Essays and Reports
August 17th, 2009 / 2 Comments » / by nastyrunner
Introduction and Background Analysis
Posted in: Essays and Reports
August 17th, 2009 / Comments Off / by nastyrunner
Introduction
According to the American Marketing Association, brand is a form of representation of the consumer experience with a certain product or service and often refers to logo, name, and slogan. The factors influencing branding are the expectations of the consumer, design and product packaging, advertising, public relation, etc. (AMA, 1995). Traditionally, people considered marketing and salesmanship as the most important criteria for a successful business, but in today’s world, it is very important to develop and enhance the brand or else the product will be considered as a commodity. Branding is an integral part of Marketing Strategy as it creates an image in the minds of the people who are in direct and indirect contact with the product, for example, clients, employees, vendors, shareholders, etc. Successful branding can help in delivering the message of the company clearly, enhances credibility, motivates the buyer, builds brand loyalty of the user, and creates an attachment with the target audience. Organizations perform market research to measure the various aspects of their current products and new upcoming products. Similarly, they should perform brand research to understand how their customers perceive the brand, the reasons for differentiation from its competitors, and various other factors related to a brand. It helps in identifying the reasons the consumers prefer the brand over its competitors and the level of brand loyalty present in the mind of the consumers. So if market research helps in determining the price elasticity of a product, brand research helps in judging if a premium price can be charged for the product (Benson, 2009). Brand Research can be done in situations when a new company and a new brand is launched, existing company and to check brand elasticity, when two companies are merging then the two merging brands are measured, and when the company is revitalizing the brand needs to be rejuvenated.
About the Brand
Coca Cola as a brand is one of the most recognized brands in the world. Before organizing any advertisement, promotional strategy, public relation event, or any other form of media event, Coca Cola undergoes various processes of understanding their consumers and tailor their event accordingly. An extensive market research is conducted which includes surveys, focus groups, in-depth interviews, online forums and blogs, and any other form of obtaining information which helps in knowing the consumer. Creating marketing campaigns tailored to the life of its consumers has made Coca Cola a successful brand and increased brand loyalty. But in 1985, Coca Cola was responsible for one of the most disastrous blunders in marketing, also known as the ‘Coke Fiasco’, by introducing a new product called New Coke.
The rivalry between Coca Cola and Pepsi has been going on even before the introduction of New Coke. Since 1960’s Coca Cola’s market share has been same, whereas the market share of Pepsi was increasing steadily. It later on repositioned itself as the brand of youth which turned out to be really successful. In places where consumers were free to choose their type of cola drink to purchase like supermarkets, convenience stores, etc, Pepsi won the battle, whereas in places with restriction of choice like restaurants, clubs, etc, Coke was winning the battle as it already existed in those markets. This declined the market share of Coke from 60% after World War 2 to 24% in 1983 (Mikkelson, 2007). Moreover, in 1982 Diet Coke was launched without considering segmentation, and it was liked by everyone. By 1984, it reached rank 3 after Coca Cola and Pepsi in terms of liking. Pepsi introduced the Pepsi Challenge where the consumers were blind tasted between Coca Cola and Pepsi and everyone preferred the taste of Pepsi. Since, the market share of Pepsi was constantly increasing, it was important for Coca Cola to react (Cashberry, 2006). Considering all the factors, it was concluded that the taste was the major factor behind the success of Pepsi, and also Diet Coke as it tasted similar to its rival and not to its parent drink. Therefore, in 1985 Coca Cola introduced a new product called New Coke retiring the old one as they did not want the effect of cannibalization. Immediately after the launch, people revolted against the New Coke. Coca Cola was considered as an integral part of the Americans life and it was considered as a part of their identity. The company had under estimated the number of consumers shifting from the old Coke to the new one. According to Michael Ross, majority compared the change of Coke to stomping the American flag (Ross, 2005). Coca Cola received more than 40,000 letters of complaint and more than 6,000 calls daily on its toll free number. Consumers started buying the old Coca Cola on the shelf in bulk, and even started selling it for hiked up prices (Building Brands, 2009). After 87 days, the company reintroduced the old formula by calling it the Classic Coke. People forgave the mistake of the company and in the end of 1985; surveys showed that Pepsi was the leader in the competition. But due to this fiasco, Classic Coke gained a lot of popularity and out sold New Coke and even Pepsi and helped in regaining the number one rank. People who liked the New Coke bought the Diet Coke as it was similar and New Coke was abandoned. The market share of New Coke reduced from 3% to 0.1%.
Reasons for Failure
The launch of the New Coke was not a hasty decision. Coca Cola performed market research for a period of two years and spent an enormous amount of $4 million to compare the taste of New Coke versus Pepsi and old Coke. After performing 200,000 blind taste tests, it was concluded that people preferred the taste of New Coke over any other available beverage. Therefore, New Coke was given a new packaging and launched in the market with a bang and they discontinued the old Coke. Even though the introduction was carefully studied and many right steps were taken like reacting at the right time for a market change when the market share was decreasing, best research and development team was chosen to prepare the best flavor and packaging design which is appealing to the masses, no monetary compromises were done in terms of market research and the marketing campaign to launch the new product. But did it fail because of lack of enough research or misinterpreting the research result? During the press conference of the launch, New Coke was introduced but the reason for doing so was not declared. They never mentioned the reasons for change, that is, Pepsi Challenge and the other tests done by their research and development department which proved that the taste of the Coke was the reason it was losing its market share. During the blind taste test, people just take a sip of the cola and prefer a sweeter taste. But in reality they buy a can of 330 ml and they preferred the less sweet taste of old Coke. During the taste test, they did not ask if the New Coke taste would be preferred in a 330 ml can or a whole glass. Also, it was revealed in some tests that it was the taste of new Coca Cola, but no information was provided related to the discontinuation of the old Coke. Since Diet Coke was launched during that time, people considered it to be another variant of the parent beverage. Therefore, due to the wrong framing of questions for market research, they yielded wrong results which proved to be fatal. Moreover, the new packaging isolated itself from its consumers. The association of the word new was related to Pepsi as it was comparatively new into the market and a brand of youth. The old Coke was considered a legacy and an integral part of the American culture. Therefore, the brand loyal consumers of Coke were finding it hard to associate the ‘new’ change with Coca Cola. Also, during focus groups the loyal Coke consumers said that if Coke was changed, they might stop drinking Coke completely, and this influenced the Focus Group in terms of peer pressure, and provided misleading results. Coca Cola had ignored the sentimental value which its loyal American consumers had towards the brand. During the overall launch of the product, Coca Cola had its complete focus on the product and neglected the emphasis on the brand. The promotional campaign was different when compared to its previous campaigns and it is very important to have consistency in terms of advertising and promotion strategy. Therefore, changing the strategy for the launch of New Coke was not accepted by the people. This was one of the only major changes they performed, and after that kept it same for more than a century. To make matters worse, Pepsi launched advertisements in New York Times and other publications stating that Pepsi had won the ‘cola war’ and has taken a lead due to the mistake made by Coca Cola. Coke did not react to this, as they were already pressurized by the consequences of the fiasco. After all the havoc, the old Coke was launched with the name of Classic Coca Cola, and it was widely accepted by the American population.
Lessons for Market Research
There are a lot of major lessons to be learned from the blunder caused by the Coca Cola marketing even though it turned out to be a positive impact on the company. Coca Cola did not perform a complete and thorough SWOT analysis to understand its position in the market. Before any major decision is taken in an organization, it is very important to perform a SWOT analysis as it will help in defining the objectives clearly. Since there was no problem with the brand and even the product, they should have devised their strategies in terms of increasing sales. They could use promotional strategies like bundling offers, special packaging for occasions, coupons, competitions, or free giveaways. Or they could work on the public relation by sponsoring more events, or any other form of publicity. Moreover, they should have worked on their opportunities to their advantage. Since the consumers were emotionally attached to the product, they should have launched marketing campaign reminding their consumers the emotional attachment with the product and recall their memory. Coca Cola did not interpret its customers, their needs, and expectations from the company. It is very important to perform a brand research along with market research as it provides an insight of what people perceive the brand as. It is important to focus on the product as it should be according to the consumers liking, but at the same time, there should be equal focus to brand management. And depending on the information, marketing campaign is launched which will motivate the customers and decide the fate of the product. Moreover, conducting market research includes much more than conducting surveys, in-depth interviews, focus groups, etc. It involves collecting data, analyzing information, inferring result, and finally organizing the result which can provide easy understanding insights of the whole problem. It should be done carefully as minor mistakes like not revealing important information or asking questions in detail can cause misleading results.
Posted in: Essays and Reports
August 13th, 2009 / No Comments » / by nido
So I just signed up for a twitter account because I’m extremely bored and don’t have much to do here in Lebanon. Unfortunately for me, most of my friends are in Dubai and the ones who are here in Lebanon are at the end of the world so I don’t really get to do anything but to either stay at home or go out with my family!
Posted in: Holiday, Rant
May 27th, 2009 / 1 Comment » / by nastyrunner
The movie ‘Knowing’ is pretty decent to be watched in the theatre or on Blu Ray as the visual effects and the sound effects make each penny worth it. The story is about a school which has time capsule dug by children in the past and the capsule is opened in the present times, where Nicholas Cage’s son gets a paper which has the series of events which have already occurred and others that are about to occur. The paper has the dates, the number of people killed and the longitude and latitude of the place where the disaster is going to occur. I would not like to blow off the whole movie experience by narrating the whole story, but it is worth a watch. Only the ending, could have worked on more as it was a little draggy and boring. Moreover, the emotions of Nicholas Cage scared me a bit rather than make me cry! lol! Overall, the movie has amazing visual and sound effects, good story line which could be built up, and is worth a watch.
Posted in: Movie Reviews
May 25th, 2009 / No Comments » / by nastyrunner
Introduction
One of the most active and dominant industry is the Retail Industry. There has been a steady growth in the retail industry throughout the globe. Retailers try to provide convenience and excellent services to consumers in order to pass their expectation levels of retailing. There are many factors which influence the decision of retailers of providing extra services to the consumers. As the number of retailers is increasing, the competition amongst them is getting tougher resulting in cost cuts and increases in customer services. Creating a relationship with the customers is the most profitable way for the retailers. The use of Information Technology and human interaction helps to build the bond between the customer and the retailer and can be used to capture data and analyze consumer behavior (Dawson, 2004). Constant adaptation to the changes in technology and environment by the retailing companies is the key to success.
Posted in: Uncategorized
May 25th, 2009 / 2 Comments » / by nastyrunner
Executive Summary
Steve Jobs established the Apple Company in 1971. Since then it has delivered and produced the best products and have become a brand to reckon with. It is one of the most well-known electronics companies of the world and Apple consumers are brand loyal as well as they tend to associate themselves with the brand. The 1984 advertisement of Apple which was shown only once in the Super Bowl revolutionized the advertising industry and helped Apple in creating a brand image. Soon after the departure of Steve Jobs the company lost it brand image as the advertisements now focused more on the price and features of the product rather than the brand itself. However, Steve Jobs rejoined the company in 1997 and a campaign was launched call “Think Different” which again helped the company restore its brand image in the consumers mind. This paper will talk about the IMC campaign of Apple.
Posted in: Essays and Reports
March 19th, 2009 / 2 Comments » / by nastyrunner
The company 1and1 is filled with thugs, and their terms and conditions will trap you forever. I had two domains registered with them, www.miniturf.com and www.i-reserved.com, and they were about to expire yesterday. Without notifying me, or sending any warnings related to the expiry of my domains, they renewed them, and charged me on my credit card. Moreover, after I mailed them, they had the gutts to tell me that I should remember the expiry dates of my domains. I have over 20 domains, and registered with 4 different registrars, and they expect me to remember all of it. Wow, this is what I call screwed up Customer Service. And they are not ready to return my money, and are blaming me for all the actions. I have immediately removed myself from their service because I cannot take this crap of them treating a customer this way. On the other hand, with a registrar like GoDaddy, they notify me nearly every fortnight that my domains are going to expire and I should either renew them, or take some action related to it. If you want to make a wise decision, it is better to go for GoDaddy, and not the scam of 1and1. I am writing this article to help other people not to tangle in the web of 1and1, and mugged by them.
Posted in: Bummers, review
March 16th, 2009 / No Comments » / by nastyrunner
Introduction
The word “philosophy” is derived from the Greek meaning “love of wisdom”. Professor Walter says, “Though many philosophers would dispute what I say, I will give you one model of philosophy. For me, Philosophy is defined by a goal and a method”. He continues by saying that philosophy’s goal is nothing less than systematic worlds view.
Posted in: Essays and Reports
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