Understanding Consumer Behavior

Introduction

This report outlines about the various contexts of consumer behaviour towards McDonald and its products in consideration with various theories and models such as cultural web, AIDA, consumer decision making process and so forth. According to Jisana (2014), consumer behaviour is the study of individuals, groups and management decisions in relation to the selection, buying, use and disposals of product and services to fulfil their wishes and desires. In simple words, it assesses how consumer make decisions about their various wants, needs and desire and the way they shop, use and dispose of the goods or services.

It is a multifaceted and multi-disciplinary field that scrutinises an array of aspects from economic to social and the psychological and emotive wants and desires near purchase and post-purchase responses.

Understanding consumer behaviour and its related factors help the organisation as well as marketers to develop marketing campaigns that connect effectively with the customers resulting in consumption and repeat purchase. Considering an example, understanding consumer behaviours factors of different generation can help markets to decide where to place advertising like baby boomers still like to give time in reading a printed publication whereas millennials expendnearly 14 hours a week on social media.

Marketers can make all types of strategic references, however, it is the consumer behaviour and response that represents a clear evaluation of their achievement(Twenge, Martin and Spitzberg, 2019). Hence, this report also outlines the way McDonald is undertaking consumer behaviour in a positive way so as to strengthen its marketing and promotional practices in increasing competitive market.

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Overview and Background of McDonald

McDonald is one of the international fast food chains started its journey in 1954 through a contract based agreement. Soon with time and leadership of different people, the company had varying success with further efforts to adapt its menu domestically and internationally.One of the success factors of the brand is their employees as due to its organisation culture, McDonald promotes global youth employment tended towards delivering great value. Some of the key products in their portfolio includes hamburgers, chicken, French fries, happy meal, McMuffins and cheeseburgers. The United States is one of the biggest markets for McDonald from a long period of time and in 2019, over half of its revenue (i.e. 11.66 billion U.S. dollars) was generated through its franchised restaurants (Lock, 2020).

Some of the major competitors of McDonald includes the Burger King, Subway, Wendy’s and Taco Bell, each outperforming McDonald signifying a worrying trend for the future. For instance, Subway leads to be a major challenge on the health front and it has also surpassed McDonald in the number of total restaurants with 40,000 Subway shops in comparison with McDonald as 34,000 stores(Wattles, 2017). To improve its growth strategy, McDonald also introduced its velocity growth plan in 2017 that helped the company to make the most of their competitive advantage and meet the rising expectations of the market(corporate.mcdonalds.com, 2020). Some of the key pillars of their growth strategy include retain, regain, convert, digital and distribution. McDonald is continuing its legacy with offering customer a great tasting, affordable food and highest quality ingredients and products.

McDonald Customer Segmentation

Today, consumers are increasingly demanding, skeptical and expect personalisation as a standard of service. This makes requires a brand to decide what groups of people they want to target and attract based on their business models, product portfolios and corporate values. To unpack such target audience in the market, customer segmentation is the process where brands and marketers can group their customers in relation to the common characteristics and attributes such as demographics, behavioural and psychographic variable(Aguirre et al 2015). The key purpose of customer segmentation is to gain a deeper understanding of each and every segment so that marketing can be done effectively and efficiently.

In relation with McDonald segmentation, it has been evolved over the time in an effort to compete with other fast food chains and therefore, the company practice adaptive type of product positioning while from time to time re-positioning of goods and services to changes in the segment.

In relation with geographic segmentation, McDonald has grown to be the top fast food chain internationally and presently have nearly 34,000 stores in 118 countries and territories. The company also serves approximately 69 million customers per day in all these markets(Rossenberg, 2020). Considering demographic segmentation, McDonald usually targets children’s starting from age group 7 through their Happy Meal product where they offer toys as added part of the food package. The company also targets men and women with different marital status, studying or working situated in cities with low or middle income level range.

In behavioural segmentation, McDonald segment the customer base on the bases of degree of loyalty where the company bring more offers for the switcher category and retain loyal customers with different programs and reward systems. Behavioural segmentation is also been done mostly for different occasions such as kids birthday parties. The last is psychographic segmentation where McDonald has adopted itself as per the accessibility and lifestyle of their customers. Furthermore, for the nations, where there is a huge vegetarian population, McDonald also introduced a new product line like Mc Veggie burger.

Factors Influencing Consumer Behaviour in McDonald

Consumer behaviour of McDonald is influenced by many factors and it is essential for marketers to recognise the factors so as to reach them in a most effective way. The four factors that influencing McDonald consumer behaviour are outlined below –

• Cultural Factors – It represents one of the main source of buyerneeds and behaviour and McDonald as a global fast food chain leader standardized food items as per the local culture and tradition. In addition, each culture has subcultures comprising nationalities, racial group, religion and so forth. The company put great efforts in localizing their food menu as per the different culture and assessing the buying pattern of the consumer. Taking an example of Middle East Arab countries, the company offers grilled halal chicken with Arabic bread and spices, modified vegetarian list of options in India as their individuals do not consume meat as cow is sacred in Hinduism (major religion in the country) and so on.

• Social Factors – Social factors also influence on consumer buying behaviour and it comprises of factors including family, friends, reference group and status. Cohen, Prayag and Moital (2014)also stated that consumers are highly influenced by family members and in case of McDonald, the company will target children’s in their advertisement if the purchasing decision of some products is influenced by children. For example, the toy given with the happy meal product often tied with TV and movies shows, therefore, acting as a transition for children with the idea that eating should be fun influences them in relation to their food choices. The reference group (co-workers, close friends, relatives, rock stars)also have the great potential to influence consumer behaviour of McDonald, however, it varies across product to product like for the products such as burger, cold drinks, and fries, the influence by reference group will be high.

• Personal Factors – Some of the important personal factors that influences buying behaviour of McDonald customers includes economic position, lifestyle, age and self-realization. Customers having different age groups showcase different buying behaviour, however, McDonald targets and cater the needs of every age group like for Children, the company offers Disney and other movie toys with the happy meal products, for students and teenagers, McDonald offers the different and affordable product range combos together with free Wi-Fi service. Similarly, for business peoples and self-employed individuals, the company offer fast services through its drive through platform on the go.

• Psychological Factors – Human psychology is one of the major determinants of consumer behaviour and they are powerful enough to influence a buying decision (Ramya and Ali, 2016). Some of the major psychological factors are perception, learning, motivation, beliefs and attitudes. It is also true that if the promotional advertisement clicks with consumer emotion, there are more chances of a positive result. For example, McDonald with a nostalgic campaign in New Zealand taps into the insight that families seek to spend more quality time together to develop an intergenerational story. McDonald director stated that this campaign aimed to develop on previous brand work to reinforce the emotional connection it has with New Zealanders.

Perception is also a way through McDonald use various marketing strategies to make change the mind and draw their interest. For instance, the company draw attention of customer by promoting their new menu relying upon festive season and stating spend the joyous occasion with your loved ones, and make your celebration ‘sedap’ with our new Twist & Shake fries! atHari Raya Celebration.

The Process of Consumer Decision Making

Consumer decision making procedure is one of the effective ways to strengthen the company sales function while refining the customer journey through driving evidenced based strategies as well as making data driven choices. There are five phases in consumer decision making process and understanding these stages in the business will help McDonald to identify internal stimuli or external stimuli so as to create the product or service more enticing to their consumers. Rani (2014)also stated that the knowledge of consumer decision making process will help in effective targeting the customer, improving products and services and understand consumer perception of the product versus competitors’ products. In relation with McDonald, the consumer decision making process if being outlined below –

• Need Recognition – This stage is also stated to as awareness of needs that creates a locus between the actual and desired state of a consumer in relation with extensive brand portfolio. In case of McDonald, hunger stimulates a consumer that they need to eat enforced by either internal stimuli or external drivers such as promotion or word of mouth. Internal stimuli can be associated to fulfilling of functional need such as seeking to purchase McDonald burger for instant hunger. In addition, there can also be a need for change where a consumer wishes to buy a new burger variant of McDonald that has justintroduced in the market.

• Information Search – This phase of consumer decision making procedure enables buyer to make a purchasing decision after recognising a need. It can be accomplished in two ways, either by internal search (memory about previous experiences) or external search (wherein case more information is needed from family, friends, social media and reference groups)(Wolny and Charoensuksai, 2014). In context of McDonald, when a person feels hungry, he does an information search from these internal and external areas and accordingly leaves necessarily alternatives such as McDonald, Burger King or Dominos.

• Evaluation of Alternatives – At this phase, customer ranks, prioritize and ranks the alternative to continue its search. Such evaluation and prioritizationare being done on various factors such as price, product varieties, service experience, location proximity and ambience(Wolny and Charoensuksai, 2014). For example, if a person has to go with his children’s to any of the fast food chains, he will compare that which of the restaurant offer best child meals and atmosphere considering McDonald as Happy meal or Burger King as cheeseburger kids meal. If the consumer is not satisfied with the selection, they return to the search phase think of another restaurant.

• Purchase decision and store collection – This is one of the significant phase of customer decision making process where customer finally choose best of alternatives and options like McDonald as it offers vast list of menu items including of exclusive child menu at pocket friendly prices. Such purchase decision may be influenced by the competitor’s sales marketing and campaign and therefore, miss the buying decision if not tackle well by McDonald.

• Post-Purchase Behaviour – At this phase of customer decision making process, the McDonald consumer evaluates whether he is happy or dissatisfied with the consumption of product. After eating any of fast food meal whether burger, fries or drinks, the consumer may decide to visit again as of the quality of meal, affordable prices and the internal environment offered by the restaurant in terms of cleanliness and hygiene.

McDonald Cultural Web and its Impact on Consumer Behaviour

The cultural web refers to the assumptions that are core to organisation culture and it is comprised of six elements including symbols, stories, control systems, routines and rituals, organisational structure and power structures (Yeoman and McMahon-Beattie, 2018). In relation with stories, it concerns with past events and things people have talked about both externally and internally. McDonald revitalizes on being better, not just bigger. The company also care about its customers with showing commitment in relation with offering of delicious and organic products.

The company also have shared various stories on its corporate website about their responsible sourcing strategy with using high quality raw materials considering food safety, quality and choice. This impact consumer behaviour as it communicates customer about the brand mission and what they are doing towards customer loyalty as well as society. Considering symbols, it is one of the most influencer element of cultural web that impacts consumer behaviour with the various visual representations of brand such as logo, symbol, store colour and so forth.

In relation with McDonald, its symbols are McThis and McThat, Big Mac, Happy Meal, McDonald Logo and Ronald McDonald. With its symbols, the company creates a huge impact on the consumer behaviour like in context with its logo (yellow and red colour), red prompts stimulation, hunger and attracts attention as of psychology qualities and the yellow triggers the feelings of friendliness and happiness.

The power is next element of the cultural web where it includes company huge investments, great level advertisement and promotion, worldwide recognition and number of stores. McDonald usesa combination of almost all digital and conventional media (such as billboards, social media) including to increase its global recognition and for this, the company in U.S. only invested 1.54 billion dollars for marketing in 2018 since 2014, the company is continuously increasing its spending as they believe, consumer attention can effectively be attained with aggressive promotion and marketing(statista.com, 2019). Furthermore, the company is also increasing the number of stores from last 13 years and presently they have 38, 695(statista.com, 2020).

Increasing number of stores, as well as promotion, is more likely to influence positively and trigger impulse purchase intentions of customers. In relation with organisational, McDonald has a divisional structure and through this structure, the fast food chain rolls out new products to maintain its performance in satisfying consumer’s globally specifically in the existence of other foodservice firms, such as Burger King, Wendy’s and Starbucks. In relation with control system, it is associated with McDonald practices towards quality control, audit control and customer satisfaction control.

For instance, McDonald undertakes survey on timely basis from the customer in to check whether they are satisfied with the products, any update they seek from the brand’s stores, prices affordable and so on?. This survey either taken by the brand through social media, mobile application, SMS or through its online website. This information helps McDonald to target customer segment and behaviour in the most appropriate way.

The last is the routine and rituals through which McDonald connects with the consumer through engaging in CSR activities, celebrating anniversaries, constantly updating advertisements and introducing new product with time. Du, Bhattacharya and Sen (2015) stated that practising CSR can help the brand to leverage consumer engagement in the most effective way and todays, the millennials are more attracted towards the brand that is undertaking some sort of social activities for the community development.