Environmental Factors Paper: A Study of McDonald's Corporation

Environmental Factors Paper: A Study of McDonald’s Corporation

Environmental factors have wide-reaching effects across a company’s global marketing platform. Many areas, such as economic or social aspects, can be sensitive and must be addressed appropriately for marketing success. McDonald’s Corporation is a global company that faces these challenges and issues, some of which will be addressed in this paper. Additionally, the importance of technology and how it impacts McDonald’s marketing decisions will be explained. Finally, the importance of social responsibility and ethics will be addressed as it pertains to McDonald’s.

Domestic and Global Environmental Factors

Demographic environment

The world’s age is changing. In some areas, mostly in developed countries such as the United States, Japan and many in Western Europe, the median age of the population is growing older, due to slowing birth rates and longer life expectancy. In the newer, emerging countries, such as those in Asia or Africa, the median age is getting younger mostly due to higher birth rates. These different trends require different marketing approaches.

McDonald’s caters to both segments of the population, domestically and globally by targeting each segment individually. It is not unusual to see television commercials showcasing older generations enjoying a McDonald’s meal. A viewer is just as likely to see another commercial aimed at the younger generation, characterized by progressive music or urban attractions. In McDonald’s stores, customers will see “Happy Meals” complete with an advertisement for the latest Hollywood action movie as well as coffee offered to senior citizens for 49 cents.

In September 2006, McDonald’s Japan, faced with operating in a country with the fastest aging population and the highest percentage of senior citizens in the world (Statistical Handbook of Japan, 2005), has abolished its forced retirement policy. While the move follows legislation passed by the Japanese government in April of the same year, McDonald’s Japan states that the action was taken because job opportunities should be available to anyone who has the ability and desire to work, no matter what age (Smerd, 2006).

Cultural environment

The cultural environment changes, sometimes drastically, from city to city, country to country. This is a particularly important area for McDonald’s because food and people’s eating habits are generally a very social and personal act. In order for McDonald’s to be appealing worldwide means that they must make local concessions. For instance, in India, where 20% of the population is vegetarian (Kala, 2005), McDonald’s India offers 100% vegetarian food items, including an egg-free mayonnaise developed specifically for McDonald’s India. They do not offer any kind of beef products due to local religious beliefs, substituting chicken and fish items instead (2006). This kind of cultural sensitivity is paramount to McDonald’s global success.

Domestically, the U.S. is becoming more ethnically diverse. This fact has not escaped McDonald’s. Marketing experts view McDonald's as the most astute in targeting the growing black and Hispanic population. The company has a long history of inclusive advertising, and continues to aim many of its television commercials to those segments, which tend to use more urban language and music (Warner, 2006).

Economic environment

Since the introduction of McDonald’s Dollar Menu in the United States three years ago, the company has seen its revenue increase 33% and its share price boom over 170%. This can only mean one thing: people want (or need) cheap food. McDonald’s says the lower-priced menu attracts the young, lower-income and ethnic bracket of the market. Marketing to this segment has paid off: double cheeseburgers priced at $1 bring in more revenue than any other menu items, such as salads or chicken sandwiches, which cost $3.19 to $4.29 (Warner, 2006). There can be no doubt that those on the lower end of the economic scale gravitate towards fast-food for its price and convenience. McDonald’s has seen this need and given the people what it wants.

Technology and Marketing Decisions

McDonald’s has embraced emerging technologies and put them to use as part of its marketing plan and text messaging is at the forefront. McDonald’s has used text messaging for promotional activities such as games and contests. It has been so successful that the company now views text messaging as a significant part of their U.S. marketing plan. McDonald’s sees customers using texting to order their food before reaching the restaurant and paying the bill through their phone