earch in the four Ps of the marketing mix: Price, Promotion, Place, Product.
According to the spokesman, the company sees the 4 Ps in this fashion. "Competitive Pricing [keeps us] in touch with the pricing of our competitors and allows us to price our products correctly, balancing quality with value.... Competitive Promotion [is vital because] before we communicate with our customers we must be aware of what our competitors are communicating so that we can create a beneficial difference between us and them" (Biz Ed Online, 1999..
McDonald's prepares and sells several fast food items in the form of sandwiches made from beef, chicken, fish, eggs and sausage; French fries; salads; soft drinks and shakes; and desserts.
The beef sandwiches, which are all typically marked up 350 percent are: basic hamburger (1/8 lb. beef, catsup, pickle); cheeseburger (same as basic but with cheese added); Quarter Pounder (basic but with 1/4 pound of beef); Big Mac (2 beef patties, two buns, cheese, lettuce, tomato, pickle and sauce.
In America, McDonald's has approximately 42 percent of the fast food market. Its' major competitors are shown in Table 1 below.
Table 1: McDonald's and its Competition
Company Market Share (1998) Market Share (1997) # Stores # Countries
* TRICON Global Restaurants is KFC, Pizza Hut, and Taco Bell and is a former PepsiCo subsidiary.
The company's American stores sell a concentrated line of foodstuffs, each of which operates with a different cost ratio.
The table below shows the percentage of gross revenues each product adds to the bottom line, and the typical markup and margin.(NB: This is based on one chain of 65 McDonald's and should not be considered typical for the entire chain.)
Happy Meals (for children) 19 130 30
Soft drinks and other beverages 18 500 235
(NB: Percentage of gross exceeds 100 percent because some items are part of combo packages, Source: 1998 Annual Report)
...