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Case 18
McDonald’s
Case Objectives
1) To demonstrate the importance of franchise management as an example of channel
management
Problem Situation
McDonalds initiated a strategic iniative to bring a full range of premium coffee products under
its McCafe’ banner to all of its 14,000 U.S. stores. This was a dramatic event in terms of altering
Teaching Suggestions
Students can relate to “value” meals being that many are on tight budgets already. It would be
informative to ask the class to segment McDonald’s markets by the times of day customers
frequent its McDonald’s franchises. Students can develop their own plan for this or the
following segmentation scheme could be used:
• Breakfast
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Case Discussion
McDonald’s clearly has a number of environmental factors that affect its business model and
resulting sales. A discussion of these environmental factors should reveal a number of
environmental influences outlined in chapter 3. For example:
• Competitive: This chould include a general list of McDonald’s fast food competitors, and
Starbucks and Dunkin’ Donut in the realm of premium coffee providers.
An additional topic raised by this case is the use of promotion by McDonald’s to launch McCafe’
products. In other words, it is an example of how a franchise can use a pull strategy of
promotion to support its franchisees. Both the magnitude of the promotional investment ($100
million spent for national marketing) and the variety of promotional techniques that were
executed are worthy of class discussion. Students should be able to list some of the techniques
from the case and from personal experience. The case lists the following among the methods
used to promote McCafe’:
• Advertising (TV, print, radio, outdoor, etc.)
What methods do students recall? Which did they feel were most likely to affect their
willingness to try McCafe’ coffees?
Finally is the issue of franchise managment. It may be useful to remind students that franchises