McRib, the Boneless Pig Salvation
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Executive Summary
The goal of this marketing audit is to outline the advertising and marketing strategies that McDonalds Corporation has employed in recent years for the McRib sandwich and to make recommendations about future marketing and promotional plans for the promotional sandwich.
The McRib was introduced in 1981 as an alternative to the common hamburgers and fries on the McDonalds menu in an effort to maintain the interest of those customers who were becoming bored with the basic offerings of the McDonalds chain. The sandwich began to lose popularity and was removed from the core menu several years later. Subsequently, the McRib has been offered as a promotional sandwich in select markets in the United States but has remained a core offering in some European countries. (McDonalds, 2006)
The limited offering has resulted in a cult-like following that is very loyal to the sandwich which makes the McRib the most profitable limited-time-offer sandwich for McDonalds.
McDonalds must make a decision about the future of the McRib. The current method of sporadic offerings is beginning to create some disenchantment in the market. The sandwich should be offered on a regular, dependable limited time schedule, or discontinued and replaced with another, more successful item.
Based on the information obtained through the research results that follow in this marketing audit, the recommendations for McDonalds are:
Determine cost-effectiveness of offering the McRib annually for a designated period customers can anticipate. Analyze the cost fluctuations of pork products to determine the most cost-effective promotional period.
If cost analysis is favorable, perform focus groups to enhance the products attractiveness to the consumer. Research methods for enhancing the flavor of the pork patty and crate a variety of barbeque sauces. Focus groups must include participants from regions that do not currently offer the McRib as well as ones that do.
Formalize the grassroots promotional campaigns. Enlist two to three youthful celebrities to promote the McRib, searching for ones that have a similar cult-like following (such as the skateboard celebrity, Tony Hawk.) Incorporate related promotional items such as T-Shirts, buttons, the “boneless pig” characters, etc.
Offer the sandwich annually for an 8-week period promoted through grass roots channels and echoing company-wide theme. Tie period to an event, or a season, like summer with family picnics and barbeques. Create value price and value meal offering for the menu. Engage the current loyal following and attract new customer-based on focus group feedback results.
Expand the market region to include the entire United States in the promotional period.
Target Markets
McDonalds is the worlds largest foodservice retailing chain. The companys specialty is burgers and fries. These items sell through 31,000 flagship fast-food restaurants in 119 countries. In addition to the burger and fries chain, McDonalds owns the brand names “The Boston Market” and “Chipotle Mexican Grill”. McDonalds headquarters are in Oak Brook Illinois and employs about 438,000 people.
Overall company revenues and market share continue to experience growth, an increase of 11.2% from 2003 to 2004 in revenues, and a 54.9% increase in net profit from 2003 to 2004.
The company and its licensed franchises operate all McDonalds stores in order to maintain continuity of services and standards. Menus are standard across all five international regions/subsidiary: McDonalds USA; McDonalds Europe; McDonalds AMEA (Asia, Middle East and Africa), McDonalds Latin America, and McDonalds International. Now a sixth subsidiary exists that covers the companys non-McDonalds brands such as Chipotle Mexican Grill. (Data Monitor 2, 2005)
McDonalds strongest region or segment is the United States. The greatest potential currently is not in further expansion of restaurants, but rather the strengthening of the brand, improvement of the food quality, improvement of impression of cleanliness of stores, and increased impression of service quality. This would apply to McDonalds other markets as well.
McDonalds weakest overall market is the Latin American and non-McDonalds brand businesses. Strengthening of brand image in these areas would be an important component in reversing losses, especially since the Latin American market is one of the strongest growing targeted market segment targets in the United States region. (Data Monitor 1, 2005)
McDonalds is by far the largest company in the fast food retail business. Its annual revenue is more than double its highest-earning competitor, Yum! Brands (Taco Bell, KFC, Pizza Hut, A&W, and Long John Silvers.) In the competition right behind Yum! Brands is Jack in the Box and Wendys International. (Data Monitor 2, 2005)
McDonalds recorded revenues of $19.1 billion in fiscal year 2004, an 11.2% increase over fiscal year 2003. This was mostly attributed to increased customer traffic in the United States region.
Jack in the Box Inc. reported revenues of $2.3 billion in 2004; a 13% increase on the previous fiscal year.
Wendys International, Inc. reported revenues of $3.6 Billion, up from $3.1 billion in 2003.
Yum! Brand, Inc. (Taco Bell, KFC, Pizza hut, Long John Silvers, A&W) recorded revenues of $9 billion during the fiscal year ended December 2004, an increase of 7.5% over 2003. Their growth was primarily related to new unit development.
Other McDonalds competitors include Dairy Queen, Hardees, Arbys, Subway, White Castle, Carls Jr., and Burger King. The complete list of competitors is much longer, including casual dining facilities, but these comprise the strongest competitors in the fast food industry. The diversity of competitors product offerings present a significant challenge to number one.
McDonalds competitors focus marketing strategies on comparative health value of their food versus McDonalds, or other comparatives, such as higher quality, or a different type of food other than the normal hamburger for a change. Most competitors have set McDonalds as the bar–the one to beat. Advertising is reflective of that goal–to be better than McDonalds. Each competitor uses a unique blend of advertising, such as Taco Bells focus on moving away