McDonald’s and the McCafe Coffee Initiative Essay

Looking at McDonalds Canada from a mental imagery-based view (please refer to the appendix), I study that McCaf go away succeed in Canada. McDonalds has a embarrassment of valuable resources in its disposal. Among them, arguably the most important is crisscross equity. The Golden Arches are instantly recognizable to just about everyone in the planet, and that level of shit awareness will play a big part in McCafs entry to Canada. Furthermore, McDonalds, existence a major player in the fast-food manufacture in Canada, has a considerable amount of cash and infrastructure.This ensures that McDonalds will have the means to food market and distribute McCafs products respectively. Another valuable resource that McDonalds has access to is its large network of competent franchisees. A large percentage of the McCafs in Canada will be add-ons to currently existing McDonalds restaurants. Therefore, McDonalds mess be assured that the management of the McCaf initiative in the individual restaurants will meet the high standards that the corporation already imposes on their franchisees.Finally, McDonalds already has a solid paper in Canada for their fast-food service. A sound marketing strategy can help transfer this positive record to the McCaf brand. McDonalds faces stiff competition from several firms in the Canadian retail chocolate industry. However, the McCaf concept will carve out a unique competitive advantage for McDonalds, setting it apart from its competitors. McCaf combines the speedy service of Tim Hortons with the comfortable atmosphere and sophisticated image of Starbucks. McDonalds blends the best of both worlds and has the potential to take market share from both types of competitors. It will be in a contrasting league all by itself.The major factor detracting from McCafs success is McDonalds poor reputation for coffee in Canada, as seen in the SWOT analysis (please refer to theappendix). It is important to note that despite McDonalds poor repu tation for coffee, the coffee itself is made from premium ingredients (100% pure Arabica beans). For McDonalds to succeed with the McCaf initiative, reversing this negative image is absolutely crucial. Furthermore, coffee is a staple in modern Canadian breakfasts, so having a strong brand of coffee on the menu can help revitalize McDonalds breakfast sales.McDonalds poor reputation for coffee can very well be the reason for its recent loss of market share in the breakfast industry. Thankfully, the market for retail coffee in Canada is experiencing significant growth, so if McCaf becomes popular, it can make a sizeable contribution to the companys profits. McDonalds must find a focus to change the negative image of its coffee by using the resources available to the firm. In order to change the negative perception of its coffee in Canada, I recommend that McDonalds give away free samples of the coffee for a limited time. Although McDonalds will initially make no revenue from the coffe e, it will give Canadian coffee consumers a convincing incentive to try it out and potentially switch sides.With the large number of store locations that McDonalds has in Canada already, the free coffee will see wide-scale distribution, meaning that a large percentage of the nations population will be able to orientation the coffee and judge it accordingly. Marketing this run is absolutely essential to its success. McDonalds has used television advertisements to great effect in the past, and it should be no different for this campaign. Word-of-mouth communication will inevitably take place and more people will get a chance to taste the coffee. With all that being said, McDonalds must down measures to prevent customers from taking advantage of the free coffee.For example, it can limit the free coffee to the small cup size and implement a one-cup-per-customer rule. Furthermore, McDonalds must set a precise time period for the campaign. Customers shouldnt come into McDonalds expecti ng free coffee after the campaign is over. Proper use of McDonalds brand equity, cash and infrastructure is the key to the success of McCaf in Canada. Although the McDonalds brand is well known, it is important to note that the McCaf brand is just beginning to grow in Canada. For this reason, I recommend that all McCaf locations start off as extensions of existing McDonalds restaurants rather than stand-alone restaurants.in one case the McCaf brand becomes popular enough in its own right(likely after the free coffee campaign mentioned in the paragraph above), stand-alone McCafs can be established. As of right now, taking the stand-alone route is much too risky. Finally, I recommend that all McDonalds locations which will take on the McCaf extension receive an upgrade to its interior design. Since McCaf will be acting as a pseudo-competitor to sophisticated coffee retailers like Starbucks, design changes must be made to reflect the transformation.For example, bright colours like red and yellow must be replaced with warm, inviting colours like cream and mocha. Moreover, some of the standard four-seat tables should be replaced with sofas and loveseats. The addition of soft, contemporary music in the restaurant would also help in conveying the image of an upper-class coffeehouse. With my given recommendations, I strongly believe that McCaf will be successful in Canada. If you have any questions regarding my report, please feel free to contact me.Regards,Sanger (Sung-Young) YooAppendicesResource Based View of McDonalds CanadaResourceValuable? disused?Inimitable?Substitutable?Tangible AssetsCashXXNumber of store locationsXXStrong managementXStrong franchiseesXXExisting product lineXXGlobal presence (121 countries)XXIntangible AssetsGood reputation in fast-foodXXDepth of supply chainXXBrand equityXXCustomer loyaltyXXOrganizational CapacityFast customer serviceXProduct developmentXXConsistency of qualityXAppeal to all agesXSWOT Analysis of McDonalds Canada(Regarding M cCaf)StrengthsWeaknesses-Powerful supplier partners including Coca-Cola, Disney and Nestl -Good quality coffee (100% Arabica-brewed coffee)-Combines affordable coffee with sophisticated environment-Bad reputation for coffee -Declining market share in breakfast salesOpportunitiesThreats-Potential merger with some other company (similar to Starbucks and Chapters) -Explosive growth in retail coffee consumption in Canada (Growing market for McCaf)-High levels of competition