Marketing Management - Use of 3 -- Circle Model Marketing Management Using 3-Circle Method

The benefits of using the 3-Circle Model for evaluating a company, brand, or product are readily evident since the approach considers customer, company, and competitive aspects of the environment. While not customer-centric -- a view that would limit assessment -- the model does fold the consumer perspective into the evaluation. This is a different perspective than many strategic planning models which tend to focus primarily on the competitive environment. In this day and age, a considerable amount of power has shifted from companies to customers, enabling consumers to define the nature of the transaction in which they are willing to engage. For this reason, the customer circle is crucial to an assessment. The company circle is invaluable for determining how and where to locate assets to maintain and develop core competencies. Finally, the competitive circle utilizes a traditional environmental scan approach, but with a more interpretable process and display of outcomes.

Context Definition

The focus of the 3-Circle Model is growth. In this assessment, the objective is to determine how McDonalds can increase revenue from a.m. sales by creating and delivering more value to breakfast customers than Starbucks.

FIRST CIRCLE

Value Offered -- Customer View

In order to understand the customer view represented in outline form in the value matrix, it was necessary to communicate with customers directly. Several methods for collecting customer satisfaction information were available to the market researcher.

Value Offered -- Our View BEFORE

Factors

Importance

Who is better?

Deficiency

Consequences / Values

Quality of food

2 -- McD

3 - SBUX

Them

X

Time pressure keeps these customers from eating at home or in a restaurant, but they still want to eat well, & are willing to pay for it.

Speed of service

3 -- McD

2 - SBUX

US

Selection variety

1 -- McD

2 - SBUX

Them

Healthful menu

1 -- McD

3 - SBUX

Them

X

Customers are informed about the importance of healthful foods & they invest time & money to keep fit. They don't want breakfast to undo effort they put in later on in day.

Good coffee

1 -- McD

3 - SBUX

Them

X

Many customers seek coffee first in the morning and the food is a secondary pre-occupation.

Traditional foods

3 -- McD

1 - SBUX

Us

Interviews. Some customers agreed to be interviewed about the product or service, in which case the focus is on determining what attribute the customer considers important and the rank of importance for each relevant attribute. During the interview, a process called deeper values laddering took place. Customers responded to questions about what they personally value, the experiential benefits, the functional benefits. Finally, customers were asked why they gave certain customer satisfaction ratings.

10-minute meeting. A randomly selected group of the customers who agreed to be interviewed also participated in a 10-minute meeting with the market researchers. In this meeting, the discussion focused on choices that the customers made in our restaurants and in our competitors' stores. The purpose of the 10-minute meetings was to determine why customers made the choices they made regarding the venue and the choices they made once they had entered a venue. As in the laddering exercise, the emphasis was on the choice that the consumer made and reasons the customer made those choices.

Diagnosing satisfaction. In the dialogue with a customer, it was important to identify the main positive and the main negative reasons for giving attribute ratings. This satisfaction diagnosis serves to triangulate the data, identifying overlap with the deeper values laddering.

Value Offered -- Customer View AFTER

Factors

Importance

Who is better?

Deficiency

Consequences / Values

Quality of food

3 -- McD

3 - SBUX

Them

X

Main pos. = Freshness Main neg. = Not tasty

Speed of service

3 -- McD

3 - SBUX

US

Main pos. = Few errors Main neg. = Long lines

Selection variety

2 -- McD

3 - SBUX

Them

X

Main pos. = Hot foods Main neg. = Few fruits

Healthful menu

2 -- McD

3 - SBUX

Them

X

Main pos.= Organic items Main neg. = Not tasty

Good coffee

2 -- McD

3 - SBUX

Them

Main pos. = Best brew

Main neg. = Cost

Traditional foods

3 -- McD

1 - SBUX

Us

Main pos. = Comfort food Main neg. = Too fatty

SECOND CIRCLE

Importance vs. Brand Differences

Top 10 Factors

Importance

McDonalds

Starbucks

Hot food options

2

Good

Okay

Organic food options

3

Okay

Good

Homemade taste

2

Good

Okay

Short wait times

3

Excellent

Excellent

Quality of food

3

Good

Good

Courteous service

3

Okay

Excellent

Nutrition info posted

2

Okay

Okay

Healthful menu

3

Poor

Good

Nice ambiance

2

Okay

Excellent

Clean restrooms

2

Good

Good

Need vs. offering. On the 10 most important factors as identified through the market research with customers, Starbucks has 3 "Excellent" ratings, 4 "Good" ratings, and 3 "Okay" ratings. McDonalds has 1 "Excellent" rating, 4 "Good" ratings, 4 "Okay" ratings, and 1 "Poor" ratings. Overall, McDonalds brand offering does not overlap the customers' needs as completely as the Starbucks' brand does.

Parity/common value. Three of the top 10 factors show both McDonalds and Starbucks meeting customer needs and adding value to their experience with the brands. Customers appreciate the speed of service, are satisfied with food quality, and find the restrooms clean.

Top 10 Factors

Importance

McDonalds

Starbucks

Hot food options

2

Good

Okay

Organic food options

3

Okay

Good

Homemade taste

2

Good

Okay

Short wait times

3

Excellent

Excellent

Quality of food

3

Good

Good

Courteous service

3

Okay

Excellent

Nutrition info posted

2

Okay

Okay

Healthful menu

3

Poor

Good

Nice ambiance

2

Okay

Excellent

Clean restrooms

2

Good

Good

Areas of deficiency. McDonald's is not providing sufficient value for customers where the factors are one to two ratings below those of Starbucks, and where the rating is a "3" or very important to the customer. The two areas with the strongest deficiency and difference from the competition are courteous service and nice ambiance....

It is notable that several McDonalds restaurants in the chain have not received low ratings for ambiance. These restaurants have served as experimental models in very well-to-do neighborhoods, and are characterized by "lodge-style" interiors and elaborate play structures for children. Breakfast volume at these model McDonalds are higher than for non-model McDonalds restaurants, with more customers eating on the premise and lingering, often with their children.
Top 10 Factors

Importance

McDonalds

Starbucks

Hot food options

2

Good

Okay

Organic food options

3

Okay

Good

Homemade taste

2

Good

Okay

Short wait times

3

Excellent

Excellent

Quality of food

3

Good

Good

Courteous service

3

Okay

Excellent

Nutrition info posted

2

Okay

Okay

Healthful menu

3

Poor

Good

Nice ambiance

2

Okay

Excellent

Clean restrooms

2

Good

Good

McDonald's point of difference. Customers rated hot food options and homemade taste as moderately important to them when choosing where to eat. McDonalds earned higher ratings from customers on both of these points, and the factors align with the key attributes of the foods McDonald's serves.

Top 10 Factors

Importance

McDonalds

Starbucks

Hot food options

2

Good

Okay

Organic food options

3

Okay

Good

Homemade taste

2

Good

Okay

Short wait times

3

Excellent

Excellent

Quality of food

3

Good

Good

Courteous service

3

Okay

Excellent

Nutrition info posted

2

Okay

Okay

Healthful menu

3

Poor

Good

Nice ambiance

2

Okay

Excellent

Clean restrooms

2

Good

Good

Unmet customer needs. The juxtaposition of McDonalds areas of deficiency and points of difference create a mosaic in which unmet needs of McDonalds customers are articulated. McDonalds customers are looking for a quality breakfast experience that allows them to feel good about the food choices they have made and to feel welcome in the restaurant in a "down-home" as opposed to "up-town" way. The unmet needs for McDonalds customers fall into the category of fresh, local and "slow" food -- menu items that are not overly processed -- f or breakfast.

Top 10 Factors

Importance

McDonalds

Starbucks

Hot food options

2

Good

Okay

Organic food options

3

Okay

Good

Homemade taste

2

Good

Okay

Short wait times

3

Excellent

Excellent

Quality of food

3

Good

Good

Courteous service

3

Okay

Excellent

Nutrition info posted

2

Okay

Okay

Healthful menu

3

Poor

Good

Nice ambiance

2

Okay

Excellent

Clean restrooms

2

Good

Good

THIRD CIRCLE

Growth Strategy & Tactics

Build & defend. Improving customer service, staff attitude and behaviors are an area with little up-front cost but long-range impact. Restaurant staff will participate in an extensive training program designed to improve the customer experience in McDonalds restaurants and to enhance on-the-job satisfaction for McDonalds employees.

Explore & innovate. As some McDonalds restaurants are experiencing success with the "lodge-style" model -- a model that captures several of the factors identified by customers as important, one strategy will focus on developing more of this "lodge-style" store in key locations. The stores will be closely monitored for return-on-investment in terms of increased breakfast and a.m. sales volume. Also, a focused customer satisfaction initiative will be conducted in each of these model stores.

Neutralize. The most effective way to neutralize our competitors' points of difference is to match them point-by-point. Plans to create more "lodge-style" models will go a long way toward creating a new identity for McDonalds that is categorically similar to Starbucks.

Correct, reduce, remove, or reveal. Creating healthful menus and ensuring that nutritional information is readily available for consumer review is a straightforward improvement that can be addressed without an extensive commitment of funds or delay.

Growth Strategies

Brainstorming growth strategies. At least one growth idea was generated for each growth strategy area. Customer satisfaction information was rechecked to ensure that data was interpreted accurately.

Growth Strategy Area

Question Summary

Growth Ideas

Fix Deficiencies

E to B

Impacts customer value a lot, but is low cost to fix

Courteous service

Build / Expand A

B to A

Points of parity to build on to enhance A

Quality of food

D to A

Connect attributes to value proposition

More organic

E to A

Improve dis-equities beyond competitors'

Nicer ambiance

F to A

Create short-term differential advantage

Nutrition info

G to A

Unused but real drivers of demand

Use of local food

Neutralize

C to B

Match or exceed competitor value

Quality coffee

C to A

Ignore other competitor values

Universal ambiance

Reduce Costs

E or D

Reduce w/out loss of value= use more local food

Hot food items

Selecting growth strategies.

Growth Strategy Area

Growth Ideas

Resources / Capabilities / Networks

Fix Deficiencies

E to B

Courteous service

Training -- McDonalds' University

Build / Expand A

B to A

Quality of food

Local bakeries and farms

D to A

More organic

Local organic farms

E to A

Nicer ambiance

Design team & regional studies

F to A

Nutrition info

Licensed characters to present information

G to A

Use of local food

Local farms & regional recipes

Neutralize

C to B

Quality coffee

McCafe and K-Cup machines

C to A

Universal ambiance

Design team & regional studies

Reduce Costs

E or D

Hot food items

Local farms and regional recipes

Presenting selected growth strategies with tactical plan.

Growth Strategy Area

Growth Ideas

Tactical Ideas

Fix Deficiencies

E to B

Courteous service

Reward teams with high customer service ratings

Build / Expand A

B to…