International Sales and Marketing Project
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McDonald’s, a global retailer of fast food services, may enter Kazakhstan market and establish a chain of franchise brand restaurants to sell high-quality snacks and drinks. The company will also position itself as an advocate of the global values, such as healthy diet, sustainable environment, and community commitment. Kazakhstan is a transitional economy with a big population mainly represented by Muslims and Christians. McDonald’s has an experience of operating in post-Soviet countries and other countries with various religions and cultures. Marketing research will help to determine the number of potential customers, their values and desires, and recommend the most efficient services provision practices. Customers’ segmentation will allow concentrating on the typical features of each group to develop an individual marketing approach. Global matrix mix will determine the most relevant combination of products in Kazakhstan market, price policy, as well as the most efficient placement and promotion techniques. The suggested strategy may be implemented through an appropriate organizational structure, accurate budgeting, and strong corporate culture.
McDonald’s is a global fast-food restaurant chain that makes big efforts to be the best place for eating and leisure time. Commitment to continuous expansion and improvement makes McDonald’s an outstanding global company that enters markets with its own production and service standards without violating local customs and traditions. Thus, McDonald’s provides its customers with high quality, hygienic, healthy, and tasty food served in a trendy, clean and welcoming environment. In particular, all food ingredients are certified, and suppliers guarantee that the agricultural raw materials come from legal and sustainable land resources , and animals and fish are properly treated. The menu includes fruit and vegetables to reduce the amount of consumed calories. All employees learn the Code of Conduct and sustainability polices at special trainings. In addition, McDonald’s observes ethical rules of fairness and honesty and acts under the principles of individual accountability and collective responsibility. Finally, the company applies the energy saving practices and runs its business on ecologically healthy premises. Charity, sponsorship, and collaboration with NGOs are just a few of McDonald’s activities. (“Mission and Values”, 2013).
The Republic of Kazakhstan is a post-Soviet country in Central Asia with a population of 16’004’800 people, who are mainly Muslims (70.2%) and Christians (26.6%) (“The results of the national population census in 2009,” 2010). Consequently, McDonalds will have to consider different religious and cultural features as well as eating habits. For example, Islamic religion forbids pork and requires to fast without any food and drink during Ramadan. It focuses on kosher food, brotherhood, equality of people and divine origin of water, land, and air. Islamic culture emphasizes respect to parents, principle of separating male and female audiences, requirement to females to wear modest dress in public, and obligation to demonstrate hospitality. Thus, the company will have to obtain the requited certificates for kosher food to be allowed to the market and consider the above listed values and beliefs while designing advertisements and holding promo events. (Gillespie & Hennessey, 2008). Christians have no strict limitations on food and drink excluding the periods of Christmas and Easter Fasts when they are not permitted to eat meat, eggs, milk, and animal.
Kazakhstan occupies 2’727’300 square kilometers of steppe, desert, and mountainous arrears. Density of the population is not high, thus the best locations for McDonald’s restaurants are the biggest cities Astana and Almaty. Since 1991, Kazakhstan has been a transitional economy; however, it demonstrates a stable economic growth thanks to the development of oil and gas industries, as well as grain and livestock businesses. Consequently, McDonalds’s will have to expect that the national economy guarantee stable incomes to its citizens who have money for eating out. Agricultural raw materials could be bought from local suppliers and cooked at the place to cut the delivery and production costs. Moreover, McDonald’s can use its operation experiences in such post-Soviet countries as Russia, Ukraine, and Belarus, which have many similar tendencies. For example, franchise is the most suitable business model since it helps to avoid financial risks from currency instability, high taxes, and bureaucracy. At the same time, it guarantees a possibility to control standards. Moreover, the business will get a sufficient financial support from local investors.
McDonalds’ restaurants in Kazakhstan will offer a big variety of fast food items serviced in trendy premises with a possibility for a take-away service. The premises will be divided into Muslim and Orthodox halls that will have slightly different designs. Menus will also differ depending on a type of a hall and religion seasons, but the prices will be affordable in both cases. From early morning till late evening customers will be able to eat fries, burgers, sandwiches, and wraps, salads with such ingredients as chicken, beef, fish, cheese, vegetables, greenery, and spices. Desserts and drinks will include ice creams, shakes, pies and cookies, juices, cokes, water and milk, chocolate, tea, and coffee. Children will have a possibility to enjoy Happy Meals with a toy inside and have birthday parties inside the restaurant.
A marketing research needs to be done in a form of a process of collecting, processing, and analyzing data, and elaborating recommendations that will be relied upon while setting goals. Firstly, it is necessary to determine the number of potential customers and their purchase frequency based on demographic statistics, including population density, ethnicity, religious affiliation, and family incomes. It can be done by means of studying statistics provided by reliable sources or conducting a survey for a big number of people in Astana and Almaty to extrapolate the findings and present them in the form of diagrams. Secondly, insights on behavior and/or motivation factors will make it possible to determine what exactly makes people eat out and what they think about fast food services. Focus group is the most efficient way of discussing the customers’ desires, preferences, values and needs. The findings and recommendations will help to adapt the product and services to the local environment. The more accurate information can be obtained through observations in public catering places and interviews with their visitors (Kolb, 2008). Taking into account the fact that Pizza Hut, the main McDonald’s competitive, has already operated in Astana and Almaty for several years, it is recommended to study its experience in printed and/or online mass media.
Customers of Kazakhstan market could be segmented into ten main categories that have similar features in such categories as religion, age, and social role. Firstly, Muslim and Orthodox customers are two main categories, and each of them should be subdivided into four smaller segments: children (up to 12), teenagers and students (13-23 year), women with children (25-45), and office workers (23-35). (“Customer Segmentation”, 2010).
Children are the most valuable segment, since they love McDonald’s for its philosophy of everyday joy and happiness. This insight iscreated by slimes, bright colors, stylish furniture and decorations, nice music, and tasty food. Parents usually allocate budget for their children’s entertainment and food, thus, visits are supposed to be regular. Consequently, the marketing approach should focus on building and keeping good customer relations to maintain and enhance children’s loyalty to McDonald’s.
Teenagers and students prefer a public place to eat out with friends, have a date with a girlfriend /boyfriend, and stay on their own with the laptop. They like to have a feeling of being a part of the world community since they share its values. Food must be nutritious, tasty, and at affordable prices. Expenditures must not exceed the pocket money given by parents or earned at a part-time job. Thus, a combination of societal marketing and branding will be efficient for this customer segment.
Women with children prefer to spend time with some other women and children to establish friendly relations, communicate, and exchange experiences. Women are pleased to see that their children eat food with big pleasure and have fun with other children in the playing areas under the supervision of a specially trained adult. Healthy diet and good fitness are of big importance for women who gave a birth to a child and have to make big efforts to be in good form. Thus, they prefer to eat vegetables, drink mineral water and calculate calories to control the weight. Thus, a woman will be ready to pay for her meal approximately 1/3 of the sum paid for the child’s food and entertainment. Consequently, the focus should be maintained on high quality and healthy diet.
Office workers usually have a break at lunchtime, and they go out to have a snack and communicate with colleagues. A public catering place must be not far from the office and visited by other office workers. Time and money are limited, thus, high quality but non-expensive coffee or tea with pies, muffins or sandwich would be the best option. Office workers are usually people with the average income; however they prefer not to spend big money on lunch. If married, a person is responsible for the family budget and has to keep to the plan of monthly expenditures. If single, a person saves money for big purchases, like a flat, car, and holiday trip. Consequently, visits of the office workers will be regular but not very profitable. Thus, focus on selling methods would be very helpful, since visits of office workers might be stimulated by discounts and special offers (Senise, 2007).
Global marketing is based on the understanding of exporting and importing tendencies and logistics, finances and investments, human capital management and risks assessment. McDonald’s is an experienced global player and knows how to deal with the product, price, placement and promotion issues. McDonald’s should consider some specific features of Kazakhstan market to compose an appropriate global market mix. In particular, burgers and wraps for Muslims must not comprise bacon and the focus should be made on chicken and vegetables, since these ingredients are very popular in Kazakhstan public catering. During Ramadan some food has to be stored for a longer period, thus, a special vacuum package would be a solution. During Christmas and Easter fasts, McDonald’s should offer a special menu with no meat, eggs, cheese and milk. It should comprise some bread, fish and salads, and special sweets allowed for Christians. All packages and bottles must include Kazakh language. Prices will depend on the product cost, in particular, whether ingredients are produced in Kazakhstan or imported, local transport, communal tariffs, and labor force rates. In addition, an average market price should be compared with the competitors’ prices. McDonald’s will presumably be selling its products and services through a chain of brand fast food restaurants, located closely to the most crowded places, such as train/bus stations, airports, business centers, shopping and leisure amenities, and squares for public events.
Concerning the promotion, McDonalds should launch a massive big-board and TV advertising campaigns to draw the potential customers’ attention to the fact that the company has entered the market. The advertising should be a clear message delivered to their target audiences in a special “heart-and-mind touching” way. The main idea is to position the product as hygienic, economical, and tasty (“The Relationship between Product and Promotion”, 2013).
Along with the big-board and TV advertising, McDonald’s will communicate with its customers through the local print and online mass media, in-store promotions, public relations and sponsorship activities. In particular, local and national newspapers and magazines will publish interviews with McDonald’s top executives, who will be telling about the company’s mission, goals, strategy products and services. Kazakhstan version of McDonald’s website will be available for the internet users to watch the menu and read the news and announcement. In addition, McDonald may create its blog to provide direct communication with its loyal customers, promoting fair and reliable relations. The blogger will discuss healthy diet, ecology sustainability, and charity to learn about the public opinion and promote McDonalds as a company that cares about health and ethics of Kazakhs and sustainability of Kazakhstan eco-system.
McDonald’s should also carry out some in-store promotions as events for children and their parents. It will be aimed at raising children and parents’ awareness about McDonald’s values, products and services, and establishing their loyalty to the company. The events may be organized as competitions with prizes, food, and drinks, to demonstrate that McDonald’s loves children and enjoys communicating with them. Booklets could be handed out as sources of valuable information to expose the food in pictures, describe services, and provide the contacts for visits and making orders for birthday parties. Finally, McDonalds could be a sponsor or co-sponsor of some events for children, for example, an exhibition of pictures painted by orphans within the framework of the national program aimed at raising finances for reducing the level of orphanage in Kazakhstan.
The strategy will be implemented through an organizational structure, corporate culture, and budgeting. Managers will set tasks, assign roles to employees and develop instructions on the tasks fulfillment in accordance with the strategy goal and objectives. They will make detailed calculations with the aim to compose a budget and allocate resources for all activities. After that, they will develop corporate rules, values, norms, and beliefs to drive the strategy.
Thus, an organizational structure might be associated with the “body” of a company, investments with the “blood”, and a corporate culture with the “soul”. These are three key components for the strategy implementation. Absence or poor state of any of the components will result in failure. On the contrary, their synergy will result in a competitive advantage required for the overall success.
In addition, a strong control system is needed to verify the efficiency of the strategy implementation and signal about the possible risks or problems. McDonald’s will be implementing its strategy by maximizing its organizational efficiency, improving its product and service quality, and increasing the customer’s satisfaction. Furthermore, the strategy must be clearly delivered to all levels within a company in a discarding way, starting from senior executives, moving to junior executives, and finishing by front-line personnel. The understanding must be checked at all levels to guarantee a unified vision. Finally, the strategy must be communicated efficiently in everyday work by delivering the main statement in words, symbols, and colors to become a part of corporate culture. For example, pens, bags, and caps with the corporate symbols might enhance the commitment. All personnel should accept the strategy goals and work as a team to achieve them. If personnel do not believe in the key statements, they will never be able to deliver a sincere and convincing message to their customers (Edinger, 2012).
To sum up, McDonald’s may expand its global operation by entering Kazakhstan’s market, which has a big potential. Despite the fact that Kazakhstan is a country with transitional economy, it has a good geographical location, healthy tendencies in the national economy, developed agricultural sector, and potential local investors. The majority of population are Muslims and Christians, thus McDonald’s will have to consider their religious and cultural features while composing its menu, delivering services, developing designs and advertisements. Thus, for Muslims McDonald’s will have to produce snacks with no bacon and serve special vacuum packs for long storage in Ramadan period. Advertisements should not outline any child as a decision maker, highlight a high social status, and advocate commercial interests. Christians need a special Christmas or Easter fast menu with no animal fat, milk, or eggs.
The market research should be based on descriptive and exploratory methods, comprising quantitative and qualitative analyses, and a study of Pizza Hut’s experience. Potential customers could be segmented into such groups as children, teenagers and students, women with children, and office workers with the definite type of marketing approach for each group. Local business environment and religious requirement will have an impact on the product assortment. Prices will depend on the production and delivery costs, competitors’ prices and the average family incomes. McDonald’s trendy restaurants should be located in crowded places to provide a big customers’ flow. Public relations, including interactive events for children, and sponsorship activities should be carried out to attract new customers and gain a good image. Big-boards, TV, print and on-line media, website, blogs, will be the most efficient and contemporary channels of communication.
The strategy will be implemented through an appropriate organization structure, budgeting, and corporate culture. Careful planning usually results in high sales, a good image and the overall global success. In particular, clear goals and an understanding of methods and techniques for achieving them, awareness of the local market challenges, and risks make up big amount of work, which will be rewarded if everything is done in accordance with the scientific approach and best practices. Global marketing skills and knowledge application (as we have demonstrated with the help of McDonald’s case) are beneficial to all business students who will be operating in the business world after graduating from their educational establishments.
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