McDonald’s is one of the first companies to become truly global. While it has branches all over the world, the fast food behemoth has retained its identity. The McDonald’s marketing strategy has stayed true to its brand. US companies and US businesses that wish to venture outside of the country and even the state or the city can learn lot of things from McDonald’s marketing strategy and the company’s way of doing things, especially when it comes expansion of business in other countries and geographies. In this post you’ll learn everything about McDonald’s business Strategy and how they expanded into various countries across the world.
A Brief History of McDonald’s
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Like other iconic companies, McDonald’s also started out small. The first McDonald’s restaurant was a tiny affair and had nothing to distinguish itself from the other drive-in restaurants popping up in California in the 1940s. In 1948, eight years after they started their business, the McDonald brothers decided to make changes. They came up with a new McDonald’s marketing strategy.
Under their first business model, the restaurant offered a wide selection of items. While that was something that the customers loved, it also meant keeping a lot of inventory and stocks. It also took time to prepare some of the entries on their menu.
The brothers knew that the best way to increase the number of customers is to bring down the prices of their food. They decided to limit the types of food that they are serving to hamburgers, potato chips, and later fries, pies, and drinks.
Aside from limiting the menu, they also developed a system as part of the McDonald’s business strategy for food preparation and service which they called the Speedee Service System. The biggest development brought by the new system is the use and introduction of self-service counters, which meant that there was no need for waiters. They also promoted those changes as part of the McDonald’s marketing strategy.
The system also ensured that the customers got their food hot as the hamburgers and the other items on the menu were prepared or cooked ahead of time. The system allowed McDonald’s to bring down their prices considerably. They were able to charge 15 cents for their hamburgers while their competitors charged double that.
The salesman who sold the appliances needed by McDonald’s was so impressed by what the brothers had developed that he became a franchise agent for McDonald’s business strategy. That salesman was Ray Kroc, who would introduce even more innovations in the process and would eventually buy the McDonald brothers out of the business they founded. He was the genius behind the McDonald’s marketing strategy.
From there, McDonald’s grew to become the global juggernaut and American icon that it is today. In less than a decade after he became the sole owner of McDonald’s, the number of outlets went over 1,000. That was how effective McDonald’s business strategy was.
The McDonald’s Strategy for Expansion
In 2020, McDonald’s operated and franchised or operated more than 39,000 stores globally and has a presence in over a hundred countries of the world. What has made its expansion such a huge success? Can it be adopted by other companies?
McDonald’s business strategy is mainly focused on three things; investing heavily in advertising, building a strong brand, and emphasis on franchising.
- Focus on Advertising
Even during its early years, part of McDonald’s business strategy was to invest heavily in ads. Way back in 1967, when national ad campaigns for fast food chains were not a thing yet, the company spent over $2 million on a national ad campaign. The McDonald’s marketing strategy was really ahead of its time.
The company continues with that tradition. It spent over $600 million in 2020 just for advertising and the McDonald’s marketing strategy calls for the same kind of spending in the future.
- Focus on Branding
Another major reason the McDonald’s business strategy is such a huge success is because of its branding. The company has managed to create a distinctive brand that has become easily recognizable all over the world.
- Creating an Icon
Another aspect of the McDonald’s business strategy that was used quite successfully is coming up with recognizable figures that can represent the company. The best example of this is Ronald McDonald, arguably the most successful commercial mascot of all time.
The Ronald McDonald character was first used by an individual franchise owner in 1967, but other franchise owners and eventually, the corporate headquarters saw the potential of the character as an ambassador of the brand.
The McDonald’s marketing strategy was so successful at building up the Ronald McDonald character that it has become an American icon. In 1973, just a few years after the character was introduced, it was more familiar to 96% of schoolchildren at the time than the American President.
At one time, the character also ranked second to Santa Claus as the most recognizable fictional character. Achieving that level of recognizability can translate to a lot of money. It’s unclear just how much money Ronald McDonald helped to bring into the company but the mascot definitely played a part in popularizing the brand. Though the character has been phased out largely by now and is no longer part of the McDonald’s marketing strategy, it has set the benchmark of success for branded characters.
- The Big “M”
Another stroke of branding genius that was part of the McDonald’s business strategy is the introduction of the Big Mac. Introduced to its menu nationally back in 1968, the hamburger went on to become one of the biggest sellers for McDonald’s. It also went on to become one of the most easily recognizable fast food choices in the world. US businesses seeking to grow should focus on developing a great logo.
- Golden Arches
It was also in the 1960s that another iconic part of the McDonald’s brand was introduced, the double-arched logo that is known all over the world. It is one of the most popular logos of all time and a major part of the McDonald’s business strategy.
- Focus on Franchising
Another crucial instrument to the success of McDonald’s is its emphasis on franchising. It was Kroc who came up with the winning formula for franchising. He was the one who came up with the strict standards on how each McDonald’s should be run and was largely responsible for the McDonald’s business strategy that gave the company success.
These standard procedures include everything from cleaning the outlets to how the foods are prepared. All franchisees are required to follow the standards and sell only the foods that have been set by the company.
The rules and standards come with a winning formula and a strong brand that is attractive for franchisees because they don’t have to do the hard work of determining what works and what doesn’t. Much of the groundwork for success has already been laid out and all they have to do is follow the formula and the McDonald’s business strategy. US businesses must take this lesson quite seriously.
Lessons from the McDonald’s Business Strategy
McDonald’s is perceived to be one of the most successful and valuable brands in the world. It has a global presence and serves millions of customers each day.
While it may not be the biggest thing in some of the countries where it has a presence, it cannot be denied that McDonald’s is a major success internationally. For US businesses that are eyeing overseas expansion, the strategies used by McDonald’s can provide insights on how to expand in other areas, especially in other countries.
McDonald’s Business Strategy for Adapting to Other Countries
There are several key points on McDonald’s success internationally. Those are innovation, standardization, and adaptability.
While the company has standardized its look and aesthetics, it is also open to changes when it is operating in a different country. While the fast food chain serves mainly hamburgers and fries, countries with different cultures have accepted it. That is just one proof of how adaptable the company is when dealing with foreign markets.
We have already mentioned how McDonald’s has standardized its look. That’s why no matter where an outlet is located, it can be recognized right away.
Aside from the look and appearance of their outlets, the company has also standardized the foods being served. It doesn’t matter what country you are in, when you walk into a McDonald’s, you can order a Big Mac, McNuggets, or a McChicken.
It’s the same with their outlets, wherever you are in the world, you know right away when you see a McDonald’s. That’s how standardized the brand has become and they use translation services and local experts to convey that uniformity.
- Adaptation Is Crucial
While the company has managed to standardize all of its stores, it also has adapted its operations depending on where it is located. This is very similar to localization.
McDonald’s adapts to the tastes and the culture of the country where it is operating. This is why it has some foods in some countries that are only available there. For example, you can get spaghetti in McDonald’s outlets in the Philippines or a shrimp fillet in Japan. The same is true with other countries, they have offers that you cannot get anywhere else.
Innovation has always been at the core of McDonald’s business strategy.
It was the innovation of the founders of the company that made it different from all the other restaurants. It was Ray Koch’s innovations that catapulted McDonald’s to the global giant that it is now today.
In 1961, Kroch established what’s known as Hamburger University, where the company can train franchisees to follow the standards of the company. It was Koch who also introduced the counter staff to take orders from the customers.
McDonald’s found a way to expand within the United States but it wasn’t sure if the same formula would work in other countries. There are so many factors that will have to be considered when entering a foreign market.
Still, McDonald’s was able to win in most of the foreign markets that they entered.
Translation Services and Other Ways of Localizing Marketing
McDonald’s has mastered localization and they use that when entering a foreign market. Localization goes beyond translation, although that is a crucial part of it. Translating and localizing the ads and other communications of the company should be done by service providers like TransPerfect, Tomedes, and RWS. TransPerfect is a trusted name when it comes to business translations. Tomedes has been helping large US businesses especially Businesses in Boston and other small companies across the US to localize their services and ensure the quality of their output through their top-rated Boston translation services. RWS, on the other hand, is another popular choice when it comes to translations.
Here are a few examples of how McDonald’s marketing strategy is changed to adapt to local markets. US businesses can learn from these lessons.
Japanese culture is vastly different from Western and American culture where the concept of fast food is popular. That cultural difference applies to consumer culture as well. When it first entered the Japanese market, McDonald’s tried to retain the same menu it is offering in the United States.
But the Japanese are very proud of their culture and their heritage and they don’t readily embrace anything foreign. What McDonald’s did was introduce some items on the menu that are distinctly Japanese. They offered the Rice Burger and the Teriyaki Burger. The sizing of the food was also localized by making them smaller.
This illustrates how the company is willing to alter the McDonald’s marketing strategy to fit their local market.
With the rapid growth of the Chinese economy and the size of its market, it is an ideal place for expansion for a company like McDonald’s. The company had to adjust to the unique issues and problems of a specific market.
For China, the issue was the concern of the people about the sanitation and safety of the food that they are consuming. This is why McDonald’s focused on creating ads that showed clean and fresh foods in China.
US businesses wishing to expand can learn from the McDonald’s marketing strategy of taking the issue that concerns a local market and addressing that.
A vast portion of India’s population are Hindus and to them, they hold the cow sacred. Because of that, McDonald’s took out beef from their menu and introduced some localized selections. A good example is the Maharaja Mac, which is the Indian version of the Big Mac, minus the beef.
Because there are a lot of vegetarians in India, the company also offered vegetarian-friendly options on their menu. The McDonald’s marketing strategy has evolved over the years to be sensitive to be flexible based on local market needs.
Indonesia is a very large country with a large population, making it an ideal target for expansion. With most of the Indonesian population belonging to the Muslim faith, the company has to make certain adjustments to the McDonald’s marketing strategy. They replaced pork with fish on their menu and tried to assure their customers that they are halal.
As in other Asian countries, McDonald’s has also included rice on its Indonesian menu.
Being conscious about the customs and religious practices of a new location is something that expanding US businesses should always consider.
The typical German diet includes generous amounts of meat. This is why McDonald’s has come up with menu options like the Triple Bratwurst Sandwich which combines sausages and beef.
Another innovation that McDonald’s has in Germany is the beer option. It is served there just like soda drinks in other countries.
The French people are proud of their cuisine so it is not easy trying to convince them to eat at an American fast food place. One strategy that McDonald’s used to draw in their French customers is to run an ad campaign that showed support to members of the LGBTQ community.
By doing so, the company was able to humanize its brand, which is a great boost to the McDonald’s marketing strategy.
As with other countries, McDonald’s was able to localize its operations in Switzerland by introducing an entry in its menu which catered to local tastes. The best example is when they started selling the McRaclette burger. The burger was inspired by the favorite dish of the Swiss, which is a large chunk of cheese that has been heated and ready for serving.
These are just some examples of how McDonald’s has been studying the market that it is about to enter and making sure that its services are localized to that particular location. That’s something that US businesses seeking to expand could learn from.
Lessons from McDonald’s
So what are the lessons that US businesses could learn from the McDonald’s marketing strategy when it comes to expansion? What can a company based in Boston that has never ventured outside of the city but is faced with the possibility of expanding copy from the McDonald’s corporate strategy?
Defining the Identity
The first thing to do is to establish the identity of the company. That means building a strong brand for the Businesses based in Boston that are seeking to expand and venture in different locations. The McDonald brothers were not able to do that right away. It took several years for them to come up with a unique process and even then, there was no solid brand behind it.
It was Koch who eventually created a unique identity for the brand.
So, before you start expanding your business, you must make sure that it has a clearly defined identity. In some cases, it is the brand that you are selling.
Standardizing the Process
Before you expand into a new location, be sure that you have all the processes for your business fixed. There should be no uncertainties as to how certain things should be done. Like when taking orders from clients or customers, it should be fixed as to who will perform that task.
McDonald’s was able to standardize its process early on. That has made its franchising model a major success and it was copied by other fast food chains.
Study the Market
What do you know of the market that you are trying to enter? It’s very crucial that you try to do your research first before you move into a new market. Get familiarized with its culture and try to know about the taboos that should not be committed. Boston businesses that do not study new markets can fare pretty badly.
McDonald’s did an excellent job in learning about the Indian market, which is why they avoided selling beef there. They know that selling beef products would have offended a significant portion of the population.
Adapt and Innovate
So, after you study the market, what’s next?
The next thing to do is adapt to the conditions of the market. You can’t force your existing business model on the new market without any adjustments. US businesses moving on to new locations cannot expect to have the same strategy to work in other cities.
If McDonald’s did not change its menu in Japan and introduce localized menu selections, then it probably won’t be that much of a success. You can’t stick to what you’ve been doing when you’re expanding to a new area.
If your US business is doing fine, then you might be afraid to move out of your comfort zone. You’ve been doing business there and you know the ins and outs of the city. But if you want to expand, then you must try to look at excellent examples of how other Boston businesses have grown and McDonald’s business strategy is one of the best examples that you can study.
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