CASE for the BAM 101 mid-term exam February 2016

Competition and the Influencing Environments


McDonald’s Restaurants of Canada Ltd, with a long reputation for consistency and value in supplying hamburgers, made a major departure from its previous product strategy a few years ago.

Shifting consumer attitudes about healthy eating, and a price war being fought by competing burger chains, forced McDonald’s to try a different approach.
It took steps to enter the pizza market and compete with Starbucks and Tim Horton's for better quality coffee. With prices similar to those for Big Mac’s, and the option to include other items such as fries and pop or a “combo”, they could offer the new product within the 2.50 to $4.00 range depending upon the options chosen. Sometimes, to attract customers away from Tim Hortons, McDonald's will offer small coffees for free - (no strings attached) for a 2 or 3 day period to get people to try McDonald's coffee.

With McDonald’s numerous restaurants featuring convenient parking, or drive through windows for those in a hurry, many felt confident that this new product would be successful. These windows are also designed to shelter drivers in Canada who do not like the cold winter weather.

“McDonald’s is simply giving consumers what they want, and what they asked for,” said Peter Beresford, the company’s vice-president and national director of marketing. “We have always been a consumer-driven company.”

Burgers, which had been criticized for their high fat content, began to be downplayed by McDonald’s in favour of pizza, which is seen by nutritionists as a healthier alternative. The change in the demographic make-up of the population in Canada has resulted in different customers liking different types of food.

The fast food industry continues to follow consumer trends. “The burger guys are selling pizza, the pizza guys are selling chicken wings, and the submarine guys are selling pasta dinners. It’s an incredible mix,” said David Menzies, assistant editor of Canadian Hotel and Restaurant magazine, which follows the fast food business. The fast food business is also responding to the growing diversity of Canadian consumers which are increasingly new immigrants which come from countries with a variety of food tastes and flavours - one constant worldwide is the popularity of pizza - which is known in almost every culture by 2014.

Government rules and regulations have also resulted in McDonald’s having to include more information on the calories in their food and provide labels and other information that tell customers the food ingredients. An increased awareness of handicapped access has also meant stores have to make sure their washrooms are wheelchair accessible and that people visually handicapped have access to menu information in Braille.

McDonald's was not successful with the pizza effort, but some say they were successful drawing coffee customers away from Timmies. One example of McDonald's competing against Timmies was in the category of packaging.
Timmies coffee cup lid

Timmies lid was sometimes difficult to open easily and the shape did not allow for a gap on top to accommodate toppings

McD's coffee cup lid

McD's lid was easy to open and allowed for toppings