• Toucan Insights Staff

Competitor Analysis through the eyes of McDonald’s


Ronald McDonald's drive thru

What is Competitor Analysis?


Competitor analysis is the process that defines who your competition is and what their strengths and weaknesses are.


This includes analyzing other companies who offer similar products or that fulfill the same needs in different ways.


Competitor analysis focuses on gathering relevant information about the product portfolio and marketing strategies, as well as the competitors themselves.


With this information, you will gain insights into the marketing strategies of the most successful brands in your market.


This will allow you to start the process for developing an enhanced product or service and if you are successful you will be able to establish a competitive advantage in your market.


Benchmarking can help you to see the direction in which your industry is going and understand how your competitors are serving their consumers.


What are the main benefits of doing competitive analysis?


When doing marketing research, one of the first things you need to do is analyze your competitive landscape.


This will determine which marketing activities you should prioritize.


A big part of competitor analysis focuses on determining how unique your product is compared to the already existing products in the market.


Knowing your own strengths and weaknesses will make it easier for you to fill in the market gaps.


Your goal should be to establish a unique value proposition in order to differentiate your business from the rest.


Looking at the top performers of your industry will allow you to identify certain practices and strategies that are commonly used to improve their business.


By doing benchmark, you will be able to identify how you can stay relevant and apply the best practices in your industry.


Also, by identifying the shortcomings of your competitor’s offering, you will be able to see how you can add value with your products and satisfy the customers' needs that are not yet covered by anyone else.


Similarly, seek for areas of opportunities in the marketplace and be the first one to try out new strategies or address the spotted need in a better way.


Go Beyond Direct Competition: Coca-Cola vs Pepsi Cola


Conducting competitor analysis is more than just identifying your biggest competitor.

Imagine being a marketer at Coca-Cola and focus all your energy on becoming better than Pepsi.


Even though comparing your business with your biggest rival is a crucial part for analyzing your position in the market, you shouldn’t neglect the rest of the companies.


Competitor analysis is about identifying where your company is positioned in your industry and what needs and customers it serves.


Therefore, the more information you have about all the different businesses that have an overlapping target audience to yours, the better.


Seeing the BIG picture: The McDonald's Case



The following paragraphs analyze the McDonald's case. This brand has disrupted its market by properly identifying and addressing the needs of its target consumers.


McDonald's: Creating a Brand based on CONVENIENCE


With the birth of fast-food chains, people developed the need to obtain their food in a more timely-efficient manner than with traditional restaurants.


More specifically, the booming success of brands like McDonald's can be attributed to the rising desire to have affordable food with fast service at available and multiple locations.


Especially convenience is the reason why McDonald's can serve 6.5 million burgers per day or 75 burgers per second worldwide.


The vision of Ray Kroc, who was the brain behind the development of McDonald's into a nationwide and later worldwide phenomenon, was to have an efficient way to serve tasty food that was available in every McDonald's around the globe.


But how does McDonald's manage to stay so comfortably ahead of its competition for such a long time?


McDonald's has become not only a world-famous fast-food chain but also a massive real estate company.


In 2020, it was reported that McDonald's owns more than 38,600 locations in more than 119 countries.


McDonald’s total real estate values at $30 billion, according to an official statement of the company.


This number is not surprising when knowing that 82% of their restaurant locations belong to McDonald's and can be rented out to franchisees.


In comparison, its biggest competitor KFC counted 24,000 locations worldwide in 2020. Here you can see that there is a clear difference between the 2 fast-food chains.


The goal of McDonald's is to place their branches in as many high-traffic areas as possible aiming to expand their overall market reach capturing the best spots in the cities.


This central aspect of McDonald’s marketing strategy follows the guidelines of the 7p's of marketing.


The company understands that its customers value convenience among other aspects related to their McDonald's experience.


This includes ordering and receiving their order in no time while providing quality standard meals.


Another factor that McDonald's wants to take advantage of is allowing its restaurants to deliver their burgers to people’s doorsteps.


This service plays a huge role when going to the restaurant is not possible (especially with COVID-19).


Cooperating with third-party delivery services like Uber Eats, Just Eat Takeaway, and Deliveroo to name a few, translated into a $4 billion business, lifting the company from its worst quarter ever at the beginning of 2020.


McDonald's drive-thru service is also a big part of making the whole customer experience as convenient as possible.


No wonder in the U.S.A 95% of the McDonald's restaurants offers drive-thru. In the rest of the globe, this percentage equals 65%.


The company's future plans include incorporating the McDonald's app for their drive-thru services to reserve spots in a dedicated lane to make it even more efficient.


The following paragraphs will explain the different competitor types that McDonald's has and how the company competes in each category.

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McDonald's vs Burger King & KFC


Competitors with similar products and target audiences (Burger King & KFC)


After the huge success that Ray Kroc had with McDonald's countless other brands have followed in McDonald's footsteps.


The biggest rivals of McDonald's in this category are KFC and Burger King with annual revenues of $2.49 billion (2019) and $1.78 billion (2019), respectively.


Like McDonald's, they offer food for relatively affordable prices with fast service and a consistent menu anywhere you go.


Therefore, these 3 brands are competing in the same market category.


McDonald's is constantly updating their menu to keep its less-loyal customers coming back to them.


On one side, they haven't remove any popular items from the menu to keep their most loyal customers emotionally connected.


On the other side, McDonald's regularly announces new meals for a limited amount of time to attract new customers and create awareness.


Furthermore, they have tried out new ways to engage with their customers with actions like organizing massive giveaway prizes multiple times a year to attract the type of customers who enjoy playing games.


McDonald's vs Starbucks & Dunkin Donuts


Competitors with different products but similar target audiences


Food and beverage companies that sell a different range of products but fulfill the same needs as McDonald's is the next category to analyze.


Brands like Starbucks and Dunkin Donuts can be considered indirect competitors of McDonald's but direct competitors of Mc Café in the coffeehouses category.


In the case of Starbucks, they cater to an audience characterized for preferring comfort and experience, and that is willing to pay a premium price for it.


Dunkin Donuts is famous for its donuts but targets the consumers that are more interested in obtaining a good product-price relation without the need of paying a premium price for being in a fancy store.


Even though the main business of McDonald's is selling meals at any time of the day, it has also tapped into the market of Starbucks and Dunkin Donuts with a specific chain.


McCafé is part of McDonald's and it is sometimes a standalone business selling mostly hot drinks and sweet snacks.


McCafé caters to the needs of its direct competitors by providing comfortable locations and an affordable menu.


McDonald's vs Local Restaurants


Competitors with different products and target audience


Traditional restaurants cater a different target audience but address the same need as fast-food chains and that is why they are a competitor of McDonald's.


Even though McDonald’s attracts a different audience when compared to your local pizzeria or your fancy local restaurant, they are still competing for a slice of your income.


These restaurants are focused on delivering a personal experience to their customers.

They prepare and serve more elaborated dishes that are based on the chef's expertise and skills.


The aim lies solely on delivering high-quality food and personal service that customers cannot easily substitute.


As such these restaurants are catering towards a specific target customers that value their quality above all.


McDonald's vs Adapting to New Needs and Audiences


Catering towards future needs


One reason why McDonald’s is incredibly successful is that the brand is actively looking for current as well as future needs emerging and impacting their target audience.


The fast-food chain is also functioning as a modern business that is focused on optimizing its marketing strategy.


Classic restaurants unlike fast-food chains rarely change their menu. Brands that are successful want to search constantly for fresh ways to keep their customers interested.


This is what sets them apart. McDonald’s as well as their fast-food competitors are trying to stay one step ahead of each other.


In this case, the company that best caters to the needs of its customers wins the race.


One example of how McDonald’s adapted to future trends was when they introduced the touchscreens to choose the menu from or when they implemented a vegetarian option to attract the vegetarian segment.


Conclusion: McDonald's, the global real estate company


The previous paragraphs show how McDonald’s puts convenience at the center of its strategy, which can be seen in every example mentioned above.


The fast-food chain focuses its offline marketing strategy around opening as many McDonald’s restaurants in relevant locations as possible.


Even though the company's business strategy started focusing on offering standardized meals at a low cost and served in a short period of time it has evolved into a global real estate firm that franchises its brand, operations, suppliers, and know-how to smaller administrators to continue its global expansion.

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