Mcdonald's Positioning Places

MCD Positioning The product positioning map for McDonalds is as follows. Positioning maps are important to understand how consumers perceive a given product/service offering in terms of two key variables (Riley, 2012). In quick service, the main dynamics are price and quality. By definition, this industry is defined by an element of price competition, but consumers also realize that there are tradeoffs with respect to quality.

McDonalds has a very good reputation for quality, at least among consumers of fast food, but is not seen to occupy the very high end of the business. For example, Starbucks and Five Guys have what is essentially ultra-premium positioning within this market. Those companies therefore enjoy success on the basis of that positioning. In general, however, the firms that occupy the high/high corner of the positioning map are in a good position, because the tradeoff is obvious to consumers.

This is why most of the major brands in the industry fit into this corner, with other brands fitting into the low price/low quality quadrant, where consumers can also find value. Firms struggling badly in this industry will probably fit elsewhere, with price and quality misaligned. The big gap for McDonalds in terms of its product positioning is that it lags two rapidly growing companies that sit at the top of the quadrant in terms of price/quality. Consumers in times of relative prosperity appreciate quality.

While this has helped McDonalds, it has helped companies like McDonalds and Five Guys even more. McDonalds therefore needs to consider if its positioning is effective. When it promotes coffee, it does so on the basis of having a lower cost than Starbucks, so on the price axis the company is properly positioned. However, there is a gap in terms of the quality. What McDonalds ideally wants to do is have the highest quality perception in the industry to go along with lower costs.

The product positioning is a tangential element to McDonalds' strategy. The company actually sees its brand as being far more complex than a two-dimensional model can convey. The brand is seen as multidimensional, so price and quality are only two elements of how McDonalds wants to appeal to consumers (Crain, 2013). Most of its recent promotions have been more about its story, reaching for a more emotional reaction. This could, however, be a response to the gap that it faces with respect to its competitive positioning.

The company seeks premium pricing within the quick service business, so it has low costs, high levels of efficiency, and its prices are at the high end for the industry. Strategy is based on marketing to create strong volume demand and high quality perception, and an emphasis on efficient production and supply chain allows for lower costs. The company's margins are quite healthy, which is evidence that McDonalds has achieved strong pricing power, which means that the marketing side has worked well for the company.

This is why it occupies a very good position within the product positioning map for the industry. EPS and EBIT are both measures of past performance. In a sense, good management does not get too hung up on past results, and should not worry about the results of competitors unless is legitimately affects strategy. Past results are good in terms of control, in that they illustrate whether past strategy has been effective or not. However, basing future strategy on past performance is reactive, so not optimal.

Effective strategy should be proactive, anticipating where the market is going and then leading the company there before.