McDonald’s McCafé is a chain of coffee houses which also provides various tasty and crafted food items along with eye catchy beverages. The company McCafé is a subsidiary of McDonald’s operating in the city of Melbourne Australia since 1993 (Mcdonalds.com.au 2017). The founder of this organization is Dick and Mac McDonald and the headquarters are in the Oak Brook of United States. The company has spread their business all over the world with their unique food items and tasty beverages. According to a report, the McCafé outlets generates 15% more revenue than the regular McDonald’s. The main product line of McCafé is the coffee (Mcdonalds.com.au, 2017).
The first task discusses about the firm McDonald’s McCafé, their methods of using product leadership, the operational excellence achieved by the company and how they handle their customers with their service supports. The Australian coffee and beverages market is competitive places where many other big organizations are operating their coffee shops with various creative marketing strategies. Thus, to penetrate in the market a company needs to apply some unique competitive marketing strategies. The report discusses various competitive marketing strategies of McDonald’s McCafé in Australia. The second task is about the Porter’s five force analysis of the beverage industry of Australia in the context of the McDonald’s McCafé. The report also discusses the potentiality of the market and strategies for the new companies to enter in the market with the outcomes of the Porter’s five force analysis.
The report goes though majorly two tasks and various subtasks. The first part consists of the first task along with four subtasks. The second task consists of six subtasks. The report focuses on detailed analysis of the beverage market of Australia.
A company’s performance can be analyzed by their product portfolio, their market position and customer relationship management (Treacy and Wiersema 1997). The analysis can be performed with the theoretical concepts of competitive marketing management by Treacy and Wiersema.
(Source: Treacy and Wiersema 1997)
The theory discusses about the Product Leadership, the Operational Excellence and the Customer Intimacy.
The report discusses about the theory by analyzing the profile of McDonald’s McCafé.
The theory of product leadership says that, a product itself is a marketing tool and it can be strategically used as for the marketing strategy of the company (Treacy and Wiersema 1997). McDonald’s McCafé has always used their coffee as the main marketing object in every campaigns. They assures and believes that the coffee they provide in their McCafé is best in class. The McCafé offers an award winning blend of coffee along with cool refreshments and sweet snacks.
Their products ranges from Cappuccino, Latté, Flat white, Long Black, Espresso, Piccolo Latté, Macchiato, Babyccino, Mocha, Hot Chocolate, Chai Latté, English Breakfast Tea, Earl Grey Tea, Jasmine Green Tea, Peppermint Tea, Iced Latté, Iced Mocha, Iced Chocolate, Coffee Frappe, Mocha Frappe, Chocolate Frappe, Banana Berry Smoothie, Mango Pineapple Smoothie to Banana Bread with butter, Raisin Toast with butter, Pineapple and Coconut Loaf with butter, Choc Fudge Macadamia Slice, Caramel Kiss, Carrot cake, Double chocolate cake, raspberry cheesecake, cookies and cream cheesecake, apple and oat muffin and other various more products (Mcdonalds.com.au 2017).
The McCafé always focuses on the creativity in the presentation of the product. The coffee and other beverages are creatively made and always be presented with the dusty coffee touch on the surface of the coffee items. However sometimes various textures are created on the surface of the beverage (Mcdonalds.com.au 2017).
Though they have various snacks and desserts in their menu, they have put the focus on the coffee items more in the marketing campaigns. They have made their coffee items as the best product in the market of Australia along with all over the world (Mcdonalds.com.au 2017).
The products of McCafé are considered as the crafted food and beverages. The company has put all its effort to innovate new range of products under this product line. The innovations are basing on the creativity in presentation, mouthwatering taste and a creative new concept in each product recipe (Mcdonalds.com.au 2017).
The operational excellence of a firm lies in their product pricing strategy, reliability of the product, convenience and the logistics management for the product. According to an article by Elizabeth published in Euromonitor.com, McDonald has introduced new pricing strategies to engage more customers in their coffee shop chains, McCafé (Mcdonalds.com.au 2017). Along with that, the company has applied few more strategic steps to compete the premium coffee shops playing major roles in the countries like UK and Australia (Friend 2017). The bases of these strategies was the price positioning and the convenience of buying. For this campaign the company has more focused on the shops of Australia. The goals of these campaigns were to penetrate in the market with highest rate along with better customer response to their products (Friend 2017).
Though, it is written by the journalists that, the McCafé was getting experimented with this strategies to penetrate in the market only. However, the customers of the UK and Australia were looking for a premium quality coffee shops from McCafé. That is, the target customers were looking for more product development and McCafé should concentrate on the product development strategies more (Friend 2017).
In Australian market, most of the companies deals with the traditional beverages rather introducing optimum coffee and other beverages. However, presently McCafé is dealing with wide range of products and day by day making new innovations in the field of product development. The products of McCafé are now considered as the premium quality coffee and beverages set among the Australian consumers (Mcdonalds.com.au 2017).
The McDonald’s mymacca’s has revealed their next generation concept in logistics management. They said, the supply chain for McDonald’s mymacca’s is unique and it is based on a culture of partnership among all the suppliers and distributors. The collaboration among the suppliers and the distributors are notable and it is making possible for the company to deliver the best quality, safe and consistently reliable food to their consumers (Mcdonalds.com.au 2017).
The company considers their suppliers as their main business strength to operate sustainable growth management in their business over Australia. The company says the profitability of their business and other beneficial supports are also generated by their partnerships with McDonald’s Australia (Mcdonalds.com.au 2017). The company claims that, they source their product in ethical and responsible manner and in this way they are contributing sustainable development in the field of agriculture and food manufacturing processes. They main three things they consider in their logistics and supply chain management are – Economic, Ethical and Environmental (Mcdonalds.com.au 2017).
The customer relationship management of McDonald’s McCafé is a notable business practices in Australia. According to a new article published by News.com, the company always value their loyal customers and this strategy has given them a notable success opportunity in Australia (NewsComAu 2017).
The McDonald’s always use to reward their loyal customers with a free coffee treat after a certain number of buying products from McDonald’s. In McDonald’s McCafé, the number is 4, after which a customer will save the price of the fifth coffee. This strategy has pulled around $5 billion in sales generation and 955 Australian stores got profited with loyal customers for their future business (NewsComAu 2017).
The franchisee restaurants of McDonald’s has also achieved around 80 % more sales with this strategy. The total sales of the products in McDonald’s McCafé has a share of around 10% for the single product line coffee (NewsComAu 2017). Though the company is giving the toughest competition in the market of Australia, still it is facing many challenges from other competitors like 7-Eleven and Coles Express which are threating their customers with few more good deals and loyalty promotions (NewsComAu 2017).
According to a survey report published by BeanScene.com, by time the company McDonald’s has achieved a strong improvement in the customer satisfaction level for all the stores along with the McCafé. The Canstar Blue Survey reported that McCafé get the bench of most satisfied customers of all the major coffee chains of Australia (BeanScene Magazine 2017).
The customers are satisfied with the price ranges of the quality products along with the creative recipes and the convenience provided by the company to their customers. This report reveals that, the creative marketing strategies are equipped with all sorts of positivity and pushing the company to achieve their benchmark in the field of chains of coffee businesses (BeanScene Magazine 2017).
From the above three discussion it is seen that the company McCafé is using the theory of competitive marketing management by Treacy and Wiersema in their practical businesses and achieving a remarkable success in the Australian market.
For the research purpose, the coffee and beverages industry is taken in this task. The industry structure can be analyzed by the Porter’s Five Force Model (Dälken 2014).
The Porter’s five force model is a framework of analysis of the level of competition in a country within a particular Industry (E. Dobbs 2014). This model is required to develop such sustainability strategy for a particular industry in the present situation. This model is very useful for all the business industries whether it is goods or services. Michael E. Porter has developed this theory to enlarge the hidden facts of macro environment and macro environment of a particular market (Rothaermel 2015). The theory consists of 5 forces which influences the behaviour of a market in various ways. Out of which 3 forces are horizontal and 2 forces are vertical. The horizontal forces are ‘Threat of Substitutes’, ‘Threat of New Entrants’ and the ‘Threat of Industrial Rivalry’. The vertical forces are ‘Bargaining power of the suppliers’ and the ‘Bargaining power of the customers’. The frame can be better explained by the pictorial representation below (Rothaermel 2015).
Bargaining power of the suppliers
There a many suppliers in Australia who supplies the materials like milk, sugar, coffee beans, machinery equipment, store furnishing and various other products to the coffee shops. The market is well organized and there are enormous companies working as suppliers to the Coffee shops (Bailey et al. 2015). Thus, one supplier can easily be replaced by other. The coffee-beans and other raw materials for food items’ market is cut-throat in nature and allowing the coffee shops to choose their suppliers according to their norms (Heimeshoff and Klein 2014).
Thus the bargaining power of the suppliers in this market is quite low. Henceforth, the operational performances of a company in this industry can be easily controlled under the production budget of the company (Wilson and Wilson 2014). Along with that, there is various opportunities to earn more revenue since the production cost can be minimized by choosing a supplier accordingly. However, the suppliers of quality raw materials can charge a little more from a company like McCafé.
Bargaining power of the customers
The coffee and beverages industry of Australia observes single type of buyers that is individuals. In this industry, the products has lack of differentiation on the bases of different companies. Although few companies experiments to innovate some creative skills in the recipe or the presentation of the product (Wilson and Wilson 2014). The bargaining power of the buyers is always high and due to extensive competition in the market, the buyers can choose a coffee shop who will give the tastier product in reasonably low price.
In Australia there are more than 6000 coffee shops along with various coffee brands both domestic and international (Www2.warwick.ac.uk 2017). According to a research, it is found that, the consumer buying behavior in Australian Coffee shops market get influenced by three parameters such as their previous experience in that coffee shop, the distance of the coffee shop, that is the convenience of the location of the coffee shop and the opinions of their family and friends (Www2.warwick.ac.uk 2017). Apart from that, the quality of food, the outer atmosphere of the coffee shop and the market reputation also matters in this case.
Threat of New entrants
In every industry there is a threat of new entrants as an external issue for the companies. In the Australian Coffee and beverages industry, there are lucrative opportunities for new coming companies. The market has a considerable demand (Wilson and Wilson 2014). The people have lifestyle of hanging out with friends and thus visiting the coffee shops. Apart from that, there is a government support for new entrepreneurs to get into new businesses such as coffee shop or a fast food shop. These things influences the threat of new companies in the Australian market.
However, presently various international companies also taking interest in the coffee and beverages market of Australia to take an entry and grab few customers with their international identity. The business of Coffee shops requires comparatively low investments. Thus anybody can open a business of coffee and beverages in Australia and hence this force can strongly influence the current situation of the coffee and beverages industry of Australia.
Threat of substitutes
The product coffee has few benefits along with various side effects of having coffee in excessive manner (Wilson and Wilson 2014). Now days, various herbal companies are coming up with herbal substitutes of caffeinated drinks. Such beverages are pretty much healthier and tastier too. The Australian people and day by day becoming health conscious and adopting the herbal products.
Even in the coffee industry, there is a new entrant called Green coffee beans, famously grown as the healthy and nutritious beverage for those who are diet and this drink can increase the metabolism rate along with other health benefits. Similar kind of various products are coming day by day in the market (Jeszka-Skowron, Stanisz and De Peña 2016). Henceforth the coffee and beverages industry all over the world is facing a difficult situation to motivate their customers to be regular to their café. Thus, there is a high power threat of substitute products in the market.
Industry Rivalry
In Australia, there is competition in the Coffee and Beverages industry. There are extensive demand in the market since Australian people have habit of visiting coffee shops on regular basis and hence, it is giving all the companies many chances to penetrate their product successfully. Along with that, few big international coffee shop chains are taking part in the race of coffee industry (Dundon and Wilkinson 2014). Hence, the industry is facing various challenges for the small and medium scale companies. However, there are always treat of new entrants in the market. These reasons are increasing the rivalry in the industry. Along with that, all the coffee shop chains now days implementing various creative marketing and promotional strategies like free coffee after frequent buy. These strategies are also increasing the competition level in the market.
Use of Porter’s five force model for new companies
There are various relevant use of this analysis in the context of Porter’s five force model (Mathooko and Ogutu 2015). A new company whether it is small or big can get a clear view of the coffee and beverages industry of Australia and it can measure the necessary investment of strategic campaigns along with marketing approaches according to the industry rivalry, the bargaining power of the supplier and the customers and the companies providing the substitute product. The porter’s five forces analysis will help a new company to take the right step to overcome challenges in the industry.
Conclusion
The report concluded that, McCafé is operating a lucrative business in Australia with various creative marketing strategies and wide ranges of products related to coffee, tea and sweet snacks. The company has achieved a very good reputation in the Australian market with the quality services and tastier products.
The report analyses the potentiality of the coffee and beverages market of Australia and the outcomes are as, there is huge demand for the premium quality coffee shops in Australia. Along with that, the report analyzes the present situation for the new companies in this industry. The report uses the Porter’s five force model for this analysis and hence concludes that, though there is tough competition in the coffee and beverages industry of Australia but there are sufficient opportunities for the new companies.
References:
Aithal, P.S., 2016. Study on ABCD analysis technique for business models, business strategies, operating concepts & business systems. Browser Download This Paper.
Bailey, J., Price, R., Pyman, A. and Parker, J., 2015. Union power in retail: contrasting cases in Australia and New Zealand. New Zealand Journal of Employment Relations (Online), 40(1), p.1.
BeanScene Magazine. 2017. Survey reports rise in McCafé customer satisfaction levels. [online] Available at:
https://www.beanscenemag.com.au/news/article/survey-reports-rise-in-mccafe-customer-satisfaction-levels
Björk, B.C., 2017. Scholarly journal publishing in transition-from restricted to open access. Electronic Markets, pp.1-9.
Dälken, F., 2014. Are porter’s five competitive forces still applicable? a critical examination concerning the relevance for today’s business (Bachelor’s thesis, University of Twente).
Dundon, T. and Wilkinson, A.J., 2014. Case Studies in Global Management: Strategy, Innovation and People Management. Tilde Publishing and Distribution.
Friend, E. 2017. McDonald’s Experiments With McCafé Strategy in Developed Markets – Euromonitor International Blog. [online] Euromonitor International Blog. Available at: https://blog.euromonitor.com/2015/03/mcdonalds-experiments-with-mccafe-strategy-in-developed-markets.html
Heimeshoff, U. and Klein, G., 2014. Bargaining Power and Local Heroes.
Jarzabkowski, P. and Kaplan, S., 2015. Strategy tools?in?use: A framework for understanding “technologies of rationality” in practice. Strategic Management Journal, 36(4), pp.537-558.
Jeszka-Skowron, M., Stanisz, E. and De Peña, M.P., 2016. Relationship between antioxidant capacity, chlorogenic acids and elemental composition of green coffee. LWT-Food Science and Technology, 73, pp.243-250.
Kharub, M., Kharub, M., Sharma, R. and Sharma, R., 2017. Comparative analyses of competitive advantage using Porter diamond model (the case of MSMEs in Himachal Pradesh). Competitiveness Review: An International Business Journal, 27(2), pp.132-160.
Mathooko, F.M. and Ogutu, M., 2015. Porter’s five competitive forces framework and other factors that influence the choice of response strategies adopted by public universities in Kenya. International Journal of Educational Management, 29(3), pp.334-354.
Mcdonalds.com.au. 2017. McCafe | McDonald’s Australia. [online] Available at: https://mcdonalds.com.au/mccafe
Mcdonalds.com.au. 2017. McCafé | McDonald’s Australia. [online] Available at: https://mcdonalds.com.au/menu/mccafe
Mcdonalds.com.au. 2017. Supply Chain | McDonald’s Australia. [online] Available at: https://mcdonalds.com.au/about-maccas/our-supply-chain
NewsComAu. 2017. Spot the sneaky change to Macca’s loyalty card. [online] Available at:
https://www.news.com.au/finance/business/retail/maccas-stingy-loyalty-card-change/news-story/6a82e76bda7467b462dce9405fdac323
Rothaermel, F.T., 2015. Strategic management. New York, NY: McGraw-Hill.
Sridharan, R. and Simatupang, T.M., 2013. Power and trust in supply chain collaboration. International journal of value chain management, 7(1), pp.76-96.
Treacy, M. and Wiersema, F., 1997. The discipline of market leaders: Choose your customers, narrow your focus, dominate your market. Basic Books.
Wilson, A.P. and Wilson, N.L., 2014. The economics of quality in the specialty coffee industry: insights from the Cup of Excellence auction programs. Agricultural Economics, 45(S1), pp.91-105.
Www2.warwick.ac.uk. 2017. The Motivational Reasons behind Consumer Choice in Branded Coffee Shops. [online] Available at: https://www2.warwick.ac.uk/fac/cross_fac/iatl/reinvention/issues/bcur2013specialissue/burge/
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download