McDonald's, as an internationally well-known trademark, it operated tremendous success to shock the world. There are many reasons for its success, such as the management, franchising strategies are familiar and relish and hope to emulate. In fact, there is a McDonald's key factor in its success, it is the early twentieth accurate and reasonable market segments. If we have a little bit deep look of McDonald's history can be found on this point: McDonald's has always been based on the market segments to make decisions. The success can be said came from the market segments and also lose in market segments. From the following analysis, we will be able to see this clear.
2. Market segment
2.1 the position of market segment in history
Its entrepreneurial start strategy is to grab the fifties and sixties when the U.S. economy was in the golden period of development because the working-class’s fast-paced work need very convenient diet. This correct positioning of products targeted market segments won a big success at that time. It is notable that McDonald's early promise is two very important words: fast and health.
However, at this century, McDonald's market segments result in its first failure since it started. In 2002, McDonald's first loss occurred in the fourth quarter, it lost around $ 243 million. Another loss is also intolerable, the stock market fell to 27 cents per share, which is its first painful experience during the thirty seven years. In 2002 financial year, McDonald's operating income was $ 11.5 billion with the net profit of $ 893.5 million which decreased 45.5 percent compared with that in 2001. McDonald's annual report indicated that its last quarter had a loss of 243.8 million in U.S. dollars, while in the same period of 2001, it had a profit of $ 271.9 million.
After the loss occurred, the McDonald's managers gave their explain: poor management. Through analysis, we can see some of the problems lies in its market segment. As a part of the fast food industry, McDonald's did not require special attention to the target market in numbers of market segments, but it was not done well in each segment, resulting in a loss. Here we will look at both success and failure of McDonald's marketing strategy.
2.2 The role of market segmentation
Traditional market segments should be divided into the following steps, market segmentation, target market and market positioning (Ailawadi et. al 2001). Business success lies in its ability to process through market segmentation to capture business opportunities for the production and marketing to play a positive role.
The role of market segment
A help select target markets and develop marketing strategies.
B is conducive to explore market opportunities and develop new markets.
C is conducive to concentrate manpower, material resources into the target market.
D help enterprises to improve economic efficiency.
The role of the above four aspects can enable enterprises to improve economic efficiency, which both meet the market needs and increase their income. On another hand, it will improve product quality and the economic efficiency of enterprises.
2.3 Decisions making based on market segments
From the history, McDonald's began to analyze this information to consider whether the target market selection criteria.
The fundamental of the decision making
A market segment size and growth rate.
B The key attractions in the market segment structure.
C business goals and resources.