GROUP ASSIGNMENT

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STUDENT DETAILS

Student name: Ngô Quỳnh Trang Student ID number: 22003557

Student name: Nguyễn Khánh Trang Student ID number: 22002829

Student name: Hồ Minh Khôi Student ID number: 22003282

Student name: Lê Song Nguyệt Nhi Student ID number: 22003192

Student name: Student ID number:

UNIT AND TUTORIAL DETAILS

Unit name: Principles of Marketing – 3 Unit number:

Tutorial/Lecture: Tutorial Class day and time: Wednesday - 15:30
Lecturer or Tutor name: Ngô Viết Liêm
ASSIGNMENT DETAILS

Title: Final Report

Length: Due date: Dec. 10 at 23:59 Date submitted: Dec. 10

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Group Report Assignment

Nguyễn Khánh Trang

Principles of Marketing

December 09, 2022

Assoc. Prof. Ngo Viet Liem

 Group Report

McDonald’s Marketing Strategy in Vietnamese market

Market Overview

Company Profile

Founded in the United States by Ray Kroc in 1940,

McDonald's is one of the largest fast-food restaurant

chain in the world, has more than 35,000 locations and

provides food to 70 million customers per day

throughout 118 nations (McDonald’s, 2017). Over

93% of McDonald's locations across the world are

owned and run by independent local entrepreneurs

(McDonald's, 2022b). It is also the second-largest private employer with 1.9 million employees, 1.5

million of whom work for franchises (IPL, 2022b).

Company Strategic Intent

Mission statement

McDonald’s duty is to "Make delicious feel-good moments easy for everyone.". Their mission is

summed up in four words, which are also their four policies to satisfy customers: Quality- Service-

Cleanliness- Value (McDonald's, 2022c). Specifically, they aim to serve food with high-quality,

along with “superior service, clean and welcoming environment, and great value for money”

(Introduction - McDonald’sTM Vietnam, 2017). These four principles serve as both the foundation for

McDonald's strategy and the guideline for the company's operations.

Vision statement

McDonald’s corporate vision is “to move with velocity to drive profitable growth and become an

even better McDonald’s serving more customers delicious food each day around the world” (Meyer,

2022).
Core value

McDonald’s operates by following their five core values: Serve- “ We put our customers and people

first”, Inclusion- “ We open doors to everyone”, Integrity- “ We do the right thing”, Community- “

We are good neighbors”, and Family- “ We get better together”(McDonald's, 2022).

Business Portfolio

Product Portfolio

McDonald's menu includes burger products, such as Big Mac or McMuffin, McFries, McNuggets,

desserts, pie, soft drinks, McCafé beverages, and other types of beverages (McDonald's, 2019). Their

restaurants also provide a range of additional goods for different short-term promotions, limited

breakfast menus, and special international menu items for each nation they serve. For instance, to

honor Vietnam National Day, McDonald's Vietnam introduced the Phở Burger, which comes with

two beef patties, one egg patty, cilantro, and pho-centric herbs (McDonald's, 2020). And also in

2021, McDonald's collaborated with BTS, and their partnership strategy of "The Famous Meal" set

off a fever not just in the US but also around the world (Hiền Phương, 2021).In order to satisfy the

needs of customers, it can be noticed that McDonald's products and items are becoming more diverse

and changing daily.

Business Performance / Company highlight achievements

With more than 35,000 stores across more than 118 countries and an estimated 1,8 million

employees, McDonald's is the largest worldwide food service retailer. McDonald's delivers a variety

of menu items prepared using high-quality ingredients to almost 25 million consumers each day in

the US. McDonald's promotes a culture of flexibility, opportunity, equality, and diversity (World

Branding Awards, 2022). McDonald's Vietnam received recognition in the Sustainable Development

Category of the most recent Golden Dragon Awards and Vietnamese Excellent Brand Awards 2019

for its future-proof implementation of advanced technologies in operating restaurants and enhancing

service quality (Viet Nam News, 2019). Since 2014, McDonald's has started serving Vietnamese
users, and as of now, there are 18 locations in both Hanoi and Ho Chi Minh City. By operating in

these two essential cities, their customers may get access to innovative technologies and services in

their stores.

Competitive Environment

In Vietnamese, there are two competitors that McDonald’s faces, which are direct and indirect

competitors. In terms of direct competitors, it includes Lotteria, KFC or Jollibee with speedy and

delicious meals. For indirect competition, which is healthier options (e.g local hip salad bars, poke

bars). By offering the aforementioned features and introducing more nutritional meals and wraps for

the health-conscious public, McDonald's has kept the interests of its customers.

SWOT Analysis

1. Strengths

Highly valuable & recognized brand

McDonald's strongest suit lies predominantly in its high brand value and recognition. As a case in

point, Statista Research Department (2022) reported that McDonald's placed sixth in terms of brand

value, at nearly 197 billion U.S. dollars. Furthermore, its global presence is an essential factor

supporting its widespread success. Its brand and logo are easily identifiable in all marketplaces. In

order to raise brand awareness and draw in new customers, the company has produced numerous

successful campaigns and commercials.

Strong international network

There are more than 38,000 fastfood restaurants spread over more than 100 nations, primarily

through franchising (McDonald's, n.d.-a), Mcdonald's is one that possesses widespread coverage

globally and a strong international network. Its leading market is the US, along with numerous

European and Western markets (e.g. the UK, Canada, Australia, France, and Germany).

Innovation and technology acquisition

To improve the customer experience, McD's is continually innovating and incorporating new

technologies (such as kiosks and mobile ordering apps). For instance, McDonald's is reported to be
testing a new restaurant design that implements contactless technology to optimize order speed and

accuracy for customers (Meisenzahl, 2022).

Positive environmental impact

As a leading fast-food organization, McDonald's profoundly influences the environmental situation.

“By the end of 2021, McDonald's was approximately 82.7% of the way toward its goal to source

primary guest packaging from renewable, recycled, or certified sources by the end of 2025”

(McDonald's, 2022d). Additionally, by the end of 2030, McDonald's aims to reduce greenhouse gas

emissions from its restaurants and offices by 36% from 2015. (McDonald's, 2022e).

Strong supply chain management

Mcdonald's supply chain is mainly responsible for the critical success of the fast-food giant. The key

to its supply chain management lies in the organization's effort to build trust and maintain strong

interpersonal relationships among suppliers. Moreover, the company has adopted excellent quality

standards and strict food safety measures (McDonald's Good Agricultural Practices, Supplier Quality

Management System, etc.) to maintain the smooth running of the integrated supply chain

(McDonald's, 2022a).

2. Weaknesses

Heavy reliance on franchising

More than 93% of McDonald's franchises throughout the world are owned and operated by

independent local business owners (McDonald's, 2022b). Henceforth, the system's biggest drawback

is its heavy reliance on each franchisor. McDonald's is under constant pressure to maintain a good

relationship with and effectively manage its franchisees lest they refuse to cooperate and their

financial performance is incompetent. For instance, Haddon (2022) reported that several owners

were caught off guard by and upset with the changes in the ownership rules proposed by CEO Chris

Kempczinski in an attempt to reinvigorate the business after the pandemic. It is vital that top

management at Mcdonald's are cognisant of and handle such occurrences well to ensure the success

and smooth sailing of the global fast-food corporation.

High dependence on the Western market

McDonald's is primarily reliant on markets in the West (UK, US, France, and Canada). On the

contrary, McDonald’s experienced low market share in nations like Malaysia, China, Singapore, and

India, indicating poor market penetration in Asian markets.

Lack of employee satisfaction

In recent times, Mcdonald's has faced dissatisfaction from its employees, which stems from unsafe,

poor working conditions and benefits. For instance, on May 2, 2022, employees at a McDonald's in

Los Angeles went on strike in protest of plumbing problems that had recently gotten worse and were

causing sickening odors (Sainato, 2022). In another case, on November 12, 2019, In the UK,

McDonald's employees struck from their jobs to call for higher pay and improved working

conditions (Kolirin & CNN Business, 2019).

3. Opportunities

Digital Marketing

McDonald's increased market share and revenue by integrating with the digitization process.

McDonald's uses a variety of digital marketing tools, including corporate websites and blogs, in

addition to social media platforms to advertise and interact with customers. For supply chain

management, franchise management, employee engagement, and consumer interaction, McDonald's

uses digital technologies.

Healthy innovations in the food menu

Health consciousness is gradually growing among today's young people. They favor low-calorie

diets and wholesome foods. McDonald's should therefore provide a menu that best suits the present

generation in order to attract more health-conscious and diet-appropriate customers and keep its

current ones.

Development in the Asian market

In recent years, Asia has seen significant growth and a surge in the spending power of middle-class

consumers. McDonald's needs to build market entrance plans for Asia that will serve as a reference.
The consumer base and income of the brand will grow as a result. There is a large need for fast food

among the current generation in nations like China, Singapore, Malaysia, and other Asian nations.

Many people like fast food because of its convenience and speed.

4. Threats

Rise of competitors

Many companies are strong competitors of McDonald's. In a global context, McDonald's faces

intense competition from other corporations, such as Burger King, Wendy's, and Subway. In the

Vietnamese Market, the fast-food giant main competition consists of Jollibee, Lotteria, KFC, and

many others. In order to stand out from the competition and attract and retain customers, the business

should prioritize its customers and invest in product and market research.

Market Segmentation and Targeting

Segmentation

McDonald's divides a larger market into smaller consumer groups using various forms of

segmentation. They are given below

1. Geographic Segmentation

McDonald’s Vietnam breaks its business into 2 different geographical segments:

- The Southern Vietnam: Ho Chi Minh City, and Khanh Hoa Province

- The Northern Vietnam: Hanoi City

These are the big cities in Vietnam, and they are also the places McDonald’s choose to open their

branches in Vietnam

2. Demographic Segmentation

McDonald’s mainly segments the market in below demographics, according to Dudovskiy (2022)

- Age: 8-45

- Life cycle stage: Newly married couples, youngest child six or over, young couples, teenagers,..

- Bachelor Stage: Young, single people not living at home

- Employment: Students, employees, professionals

3. Behavioral Segmentation (Dudovskiy, 2022)

- Degree of loyalty: Hard core loyal and switchers

- Benefits sought: Cost benefits, time efficiency

- Personality: Easy going and careless

- User Status: Potential and regular fast food eaters

4. Psychographic Segmentation

“McDonalds has adopted itself according to the convenience and lifestyle of the consumers”

(Dudovskiy, 2022), McDonald’s developes different and new product line which includes items like

Big Mac, Chicken McNuggets, Egg McMuffin. McDonalds also creates as a place to unwind as well

as entertain.

Market Targeting

Target Audience What they want Product/Service they use

Happy Meal with free toys

Kids (3-7 years) Healthier choice of fast food

Drive-thru, Takeaways,
Families Weekend outings or meals
McDelivery, Happy Meal

Students Meals, Outlets, 24

Students A place to hang out or study
Hrs

For quieter ambience, a place to relax or

Cafe-goers McCafe
read or even business entertainments

Drive-thru, Takeaways,
Working Adults Seek Convenience meals, “Grab & Go”
McDelivery, 24Hrs

Source: Huong (2017)

 Differentiation Strategy

The model of buying with drive-service makes Vietnamese McDonald’s different from other

competitors such as KFC, Burger Kings, when entering Vietnam. This strategy focuses on busy

people, thanks to drive-through service, customers can order and get their food in two minutes

without parking, which is a big plus for the brand when the Vietnamese economy has long been

considered a "motorcycle" economy. In addition, another service of McDonald’s that distinguishes it

in Vietnam is applying Kiosk technology in ordering products. Before they ever reach the counter,

customers in line are given electronic handheld devices on which to place their order. This approach

saves a lot more time. Generally speaking, it can be seen that the customer services differentiate

McDonald’s from other fast-food branches in Vietnam. (Mai Anh et al., 2014)

Brand positioning

McDonald’s positioned itself on 5 values: Serve, Inclusion, Integrity, Community, and Family.

Positioning Maps (compare competitors’ value proposition)

It can be seen in the map, two criteria chosen are the price and other things (service, location,

variety). As in the map, McDonald’s sells their products with the highest price compared to other

competitors. Moreover, in comparison with KFC, which is also a Western fast-food branch, it is
more successful than McDonald’s in providing a lower price for Vietnamese customers as well as the

better service, location and variety. However, compared to local competitors, McDonald’s is ahead

of them in meeting the need in services, accommodation or variety.

Recommendation: Due to the STDP model we can see that McDonald's has been able to reach each

of its consumers by offering the services they require. Furthermore, McDonald's distinguishes itself

from rivals by using modern technology into their sales process. In addition, the diversification of

dishes in the menu also helps McDonald's attract potential customers. With its campaigns,

McDonald's needs to further promote the above strategies to compete with Vietnamese fast-food

competitors.

McDonald's 4Ps of Marketing

1. Price

McDonald’s main pricing strategy is value-based pricing. Their objectives are to pay attention to

consumer feedback, put a lot of work into products that customers are certain to desire and charge

appropriately, and avoid spending money on less important items that customers might like (Wells,

2019).

For the economy pricing, McDonald's operates on a cost leadership philosophy. And as a result, its

meals and beverages are sold at reasonable costs. Customers of the fast food establishment can enjoy

a meal for a portion of what most other eateries charge (John, 2022).

Psychological pricing strategy is also placed at the core of McDonald's pricing strategy. The fast food

chain specifically employs a Price Point Perspective (PPP) of 99,000 VND rather than

100,000 VND (IPL, 2022a).

Overall, in addition to attracting customers with its pricing promotions, which can be successful in the

short term, McDonald's could face failure in the Vietnam market if it continues to adopt Western

pricing to the country along with the average Vietnamese income level.

2. Place
In each of the nations they serve, McDonald's uses a different distribution strategy. In various nations,

the restaurant offers home delivery in addition to technology driver platforms. This service has given

their customers more options by signing delivery contracts with companies like UberEats, or Baemin,

Grab, Be, and ShopeeFood in Vietnam. Many McDonald's restaurants are open 24/7, which serve as

an illustration of intense distribution, and refer to making things available for purchase through all

available channels. This service also aids the restaurant in boosting earnings and sales.

Other channels of distribution are also used by McDonald's. Their drive-thru service is one of their

most well-known offerings. The McDonald's restaurants are usually located on the busiest streets with

the intention of capturing the volume of customers entering and exiting the building both during

business hours and after hours.

Additionally, McDonald's is accessible online. They appear on Facebook, one of the most popular

social media platforms in Vietnam, which has a big online community and potential audience, many

of whom are young. The target market for the fast food sector is therefore between the ages of 15 and

30, as well as the group of potential customers between the ages of 5 and 14. Advertising over the

Internet thus has a concentrated audience that is suitable for both of these age groups.

The average standard of living is rising. It stands to reason that the two locations in Ho Chi Minh City

and Hanoi, where the GDP per capita is substantially higher than the national average, will be put into

action first. With higher income, customers in these cities may afford to spend between 4 and 6 USD,

which is around VND 96,000 to VND 144,000 on a McDonald's dinner. Furthermore, as a result of

urbanization, Vietnamese people's spending patterns and lifestyles change, especially those of young

people. Their fast eating or fast drinking habits, and industrial life all contribute to the rapid growth of

fast food. If eating fast food in the US is considered to be a common practice, then the concept of "fast

food" in Vietnam has undergone significant changes due to cultural differences.

3. Product
McDonald's is one of the successful fast food franchises in the world. “Their main products include

breakfast, burgers, fries, chicken, munchies, desserts & shakes, salads, and beverages” (Rahman,

2017). They offer customers a range of choices, which could be analyzed through the product portfolio.

The core customer value is the most fundamental level, which addresses the question: " What is the

buyer really buying?". For McDonald’s, people who buy food or drink are buying much more than.

They are buying convenience, quality of food, and connectivity with friends and family.

At the second level, product planners must turn the core benefit into an actual product. They need to

develop product and service features, a design, a quality level, a brand name, and packaging. In this

case, McDonald’s burger- Big Mac is an actual product. For the quality of food, its ingredients include

the burger buns with 2 layers of beef, cheese, fresh vegetables and Big Mac sauce, creating a big size

burger for one person. The Big Mac is then wrapped with paper and served to the customer.

Finally, by providing extra customer services and benefits, product planners must create an augmented

product around the primary benefit and actual product. Big Mac and other McDonald's items are more

than just meals. They offer nourishment to consumers as well as a means of social interaction. As a

result, customers who eat the Big Mac or any other item from McDonald's will receive a warm

welcome, a welcoming setting in which to communicate, and the assurance that the food is safe each

time it is purchased by customers, should there be any issues with the company's products. They also

connect convenience through their ordering apps, websites, restaurants or drive-thru services as well

as packaging, and eating areas.

4. Promotion

Mission-Communication Objectives: With the mission of “To make delicious feel-good moments

easy for everyone.” McDonald’s Vietnam communication objectives focus mainly on buyers who

are in the “liking-preference-conviction” stages.

Promotion Mix

Advertising

McDonalds is the brand that spends the most amount of money out of all fast food chains on

advertisement. The firm employs a variety of advertising techniques, especially Out of home (OOH)

advertising. McDonald’s displays great creativity in their OOH advertising, through billboards and

other mediums, to make their products and other activities more memorable in the minds of

consumers.

Sales promotion

McDonald's employs techniques for promoting sales such as menu upgrades, gift cards, marketing

campaigns targeted at particular demographics, digital initiatives, and a concentration on breakfast

sales (Reference, 2020). McDonald's is renowned for its toys, scratch cards, and other extras that

come with combo dishes like the Happy Meal. Specifically, scratch cards are another promotional

strategy that is used to advertise combo meals. Additionally, Mc Donald's also offers value meals

and econo-meals.

Organic food and healthy eating are becoming more and more important in today's consumer society.

McDonald's has therefore developed a strategy to keep their current consumers while also attracting

new ones by releasing Meals intended for Healthy Eating. Happy Meals were created by the firm with

the goal of encouraging kids to eat healthily. Additionally, the group has partnered with DreamWorks

Animation to promote a line of toys featuring characters like Shrek, Donkey, and Puss in Boots to

promote fruit, vegetables, low-fat dairy, and fruit juice. They also have meals on the menu for this

campaign that have less than 400 calories (UKEssays, 2018).

McDonald's has attempted to break through the consumer base that purposefully avoids fast food

because they believe it to be unhealthy and fatty by encouraging healthy eating. This is a creative

advertising strategy that will help the business by adding a new consumer base segment to the

company's existing database.

Personal selling

Good customer relationships are built through personal selling. The best illustration of human

engagement in personal selling is provided by McDonald's salespeople who operate in distinctive

outlets. In a straightforward manner, the employees provide client services with face-to-face

interactions, which are more convincing and effective (IPL, 2020). This strategy also helps

McDonald's to keep their consumers going back to dine at their locations. Since a variety of customers

are happy with the service received, it is evident that personal selling is done very effectively overall

at McDonald's.

Public relations (PR)

Within public relations, McDonald's has also taken part in significant occasions that convey a

positive message. “McDonald's has been a long-standing sponsor of the Olympics and the World

Cup, with its exclusive deals ensuring it is the only branded restaurant on site” (Gibson, 2011). For

instance, throughout the Olympic Games Rio 2016, on-site lunches were given by McDonald's for

the players, coaches, and officials in its International Zone Restaurant, alongside a Dessert Kiosk for

spectators in the Olympic Park (International Olympic Committee, 2016). In another story,

“McDonald's has initiated the McDonald's Player escort program, giving more than 1,408 children

from 69 countries a chance to walk hand-in-hand with their football heroes at the 2010 FIFA World

Cup in South Africa” (Shout-Africa News, 2010).

By collaborating with such well-known global events, McDonald's intends to generate buzz to

promote a firm brand image that closely identifies with the youth, attracting new customers from all

over the world to encourage higher sales growth and form meaningful consumer relationships with

them.
Direct and digital marketing

In an era of rapid advancement in digital marketing, McDonald's has used a variety of innovative

approaches, including social media marketing and email marketing.

Social media marketing

McDonald's is a well-known organization with a significant reputation throughout the world, and it is

active on several social media networks. Due to their prominence as a recognized global brand, they

benefit from using social media to concentrate on keeping current followers and brand aficionados.

As of November 2022, McDonald's accumulated 81 million likes on Facebook, 251k followers on

Twitter, and 4.5 million followers on Instagram. On its social media channels, McDonald's portrays a

friendly, humorous persona to facilitate a relatable image with consumers worldwide (Giraffe Social

Media, 2021). Furthermore, McDonald's routinely responds to online complaints and concerns from

disgruntled customers and offers assistance to fix the problem.

Setting Brand Strategies

According to the product Life-Cycle Strategies, McDonald's is demonstrating common

characteristics in the decline stage - low profits and low growth rates - due to high competition from

other fast-food chains locally. For example, a piece of Big Mac in Vietnam currently costs about

69,000 VND (~3 USD). While this price is often considered reasonable and fair for the Western

market, it is quite expensive and unsuitable - often regarded as premium food - for daily purchases

with the current level of income in Vietnam. Meanwhile, KFC and Jollibee's most expensive

hamburgers only cost 50,000 VND. Given these price discrepancies, KFC and Jollibee have a

significant competitive edge over McDonald's in captivating customers to frequent their restaurants

and generating higher profits. To alleviate this problem, McDonald's needs to decide on an

appropriate marketing strategy for its product to convince consumers that the benefits and values

accompanying the products justify its high price.

Market-Target Market and Customer Insight

Customers/Partners Relationship Management

Build engagement and strong relationships with chosen customers: McDonald's always has great

deals for its customers. For new customers, they give them Free bonuses and points for first

purchase. And for loyal customers, redeem points for rewards is bonused.

Build strong relationships with marketing partners: McDonald’s Vietnam partners with timo

delivery apps, such as Grab, Gojek, Shopeefood,.. They build strong relationships with their partners

by promoting their partners and bringing new customers value (increase convenience for customers,

give customers more choices,...)

Conclusion

Overall, McDonald's uses effective marketing strategies to introduce a distinctive fast food brand to

the Vietnamese market. With marketing efforts, McDonald’s has runned their advertising campaigns,

cooperated with brand partnerships, used cutting-edge, specialized equipment, and services in major

Vietnamese cities in order meet the customer’s need, demand, and want. However, the problem of

higher prices is one of the biggest reasons for McDonald's failure in the Vietnamese fast food market

compared to local brands. Therefore, an appropriate price policy should be applied by McDonald’s

as soon as possible.
 References

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