European Business School London BABM DISSERTATION CONSUMER BEHAVIOUR What factors are currently influencing the consumer decision- making process in the fast food restaurant industry in the UK, and how is McDonalds responding to changing environment and consumer behaviour? 1
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European Business School London
BABM DISSERTATION
CONSUMER BEHAVIOUR
What factors are currently influencing the consumer decision-
making process in the fast food restaurant industry in the UK, and
how is McDonalds responding to changing environment and
consumer behaviour?
Rok Zerjal
Tutor: Richard Mannix
1
ACKNOWLEDGEMENTS
Writing and putting together this dissertation has been both exiting and challenging. Indeed, I
have been able to work on really interesting topic- consumer behaviour.
In twelve weeks time that we have been given to write this dissertation have been very
intensive, to some extend exhaustive as well, and have taught me how to deal with a great
amount of information and work within limited period of time.
I have now completed my dissertation of Business and Management degree program at the
European Business School London, and I would like to take this opportunity to thank a few
persons in for their direct or indirect contribution to my work.
Firstly, I would like to thank my tutor Mr. Richard Mannix, Subject Leader Marketing EBSL,
who has been indeed extremely supportive and understanding whilst I was progressing
through my work. Without him I believe that I would not be able to write my dissertation in
the way it has been written.
Finally, I would like to thank my family, my dad who has provided me with some ideas, and
my mom, who has contributed with her thoughts while deciding upon my dissertation topic,
as well as I am thankful for her support and patience during the past weeks.
Rok Zerjal
London 4th of December 2006
2
TABLE OF CONTENTS
CHAPTER 1: INTRODUCTION 1
1.1 Consumer behaviour 1
1.2. Fast food VS Junk Food 1
1.3 Obesity in the UK 2
1.4 Fast food industry in the UK 2
1.5 McDonald's Corporation background 3
1.6 Research question 4
1.7. Plan of the dissertation 5
CHAPTER 2: LITERATURE REVIEW 6
2.1 Consumer decision-making process 6
2.2 Consumer attitude formation and change 8
2.3 The marketing mix 9
CHAPTER 3: RESEARCH METHODOLOGY 12
3.1 Research philosophy 12
3.2 Research approach 12
3.3 The purpose of the research 12
3.4 The research strategy 13
3.5 Data collection techniques and analysis procedures 13
3.6 Sample selection 14
3.7 Data collection 15
3.7.1 Group interviews- focus groups 15
3.7.2 Questionnaire 16
3.8 Models employed in dissertation 17
3.8.1 Consumer decision-making process 17
3.8.2 Tri-component Attitude Model 18
3.8.3 Hierarchy of Effects Concept 19
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3.8.4 PEST Framework 20
3.8.5 Ansoff’s product/market matrix 21
CHAPTER 5: FINDINGS
5.1 External analysis 22
5.1.1 Fast food industry in the UK- overview 22
5.1.2 PEST Framework 24
5.1.2.1 Political / Legal conditions 24
5.1.2.2 Socio-cultural conditions 26
5.1.2.3 Key drivers of change: 27
5.2 Key factors influencing the consumer 29
decision-making process
5.2.1 Focus group (analysis of key points) 29
5.2.2 Questionnaire (analysis of findings) 29
CHAPTER 5: RECOMMENDATIONS 44
5.1 Option description and evaluation 45
5.1.1 Option 1: Increase awareness of the 45
quality of McDonalds’ products
5.1.2 Option 2: Introduction of new healthier 47
menus along with refurbishment of restaurants
5.2 Implementation plan 48
CHAPTER 6: CONCLUSION 50
BIBLIOGRAPHY 52
APPENDIX A 56
APPENDIX B 57
APPENDIX C 62
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LIST OF FIGURES
Figure 1.1: Market share in UK (2004) 3
Figure 3.1: Consumer-decision making process 17
Figure 3.2: Tricomponent Attitude model 18
Figure 3.3: The low-involvement hierarchy 19
Figure 3.4: PEST Framework 21
Figure 3.5: Ansoff’s product/market matrix 21
Figure 5.1: United Kingdom Fast Food Market Value 22
Figure 5.2: United Kingdom Fast Food Market Value 23
Figure 5.3: Expenditure on eating out by sector 23
Figure 5.4: Market share in UK (2004) 24
Figure 5.5: question 3 36
Figure 5.6: question 7 37
Figure 5.7: question 8 37
Figure 5.8 question 11 38
Figure 5.9: question 12 39
Figure 5.10 question 14 40
Figure 5.11 question 18 41
Figure 5.12 question 20 42
Figure 5.13: question 22 43
Figure 5.1 Options for McDonalds illustrated 44
in Ansoff’s matrix
Table 5.2: Gantt chart for 2007 49
5
FORWARD
Having studied in United States (San Francisco) gave me the opportunity to experience the
eating habits of the “fast food nation” and the passion of the fast food myself. In those four
months of studying in San Francisco, I have gained 7 kilograms. At that point I began
questioning my self the importance of healthy diet and how nutritious in fact fast food is?
In the UK today, there is virtually no week that passes by without hearing any news regarding
obesity, health concerns and dietary issues, be it in newspapers or on TV news. That was my
primary motivation, along with studying in the US, that pushed me towards understanding the
process which impacts on us consumers, whether we will go and eat burgers or not.
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EXECUTIVE SUMMARY
The aim of this dissertation is to investigate the factors that are influencing consumer
decision-making process in relation to fast food restaurant industry in the UK. It further aims
to examine how is McDonalds responding to changing environment and consumer behaviour.
This is important and at the same time interesting to observe such topic, because of the high-
profile political and public debate on obesity and other health issues that is UK currently
facing.
A better understanding of the background and problems related to the fast food issue and
context of decision-making process is first obtained via literature review, where various
academic journals were examined. Afterwards the qualitative focus group was conducted with
an aim to explore and gauge consumer attitudes towards fast food and McDonalds. Key
themes from focus group formed questions for the questionnaire. This quantitative survey was
then used to gauge whether the views of the respondents from focus group were
representative of a larger group.
In order to examine the context in which McDonalds is evolving, with addition to identify the
key drivers of change that might influence fast food industry in the future, PEST framework
was applied. Changing consumer lifestyle and Government interference were highlighted as
two potential drivers of change.
Key themes from focus group were quality of fast food, ethical aspects (animal welfare), trust
towards McDonalds and impact of media and Government on consumer behaviour. These
themes were then tested to a larger group using questionnaires. Respondents associated
McDonalds and its products with adjectives such as unhealthy, cheap, tasty and fatty. They
‘ranked’ their food (with exception of salads and fruit) as of the worst quality. 25% of
respondents claimed that ethical issue regarding chicken bothers them and that is the reason
they don’t eat chicken in McDonalds. Moreover 28% of those who were familiar with current
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high public obesity debates in the UK issue it affected them in such way that they now eat less
fast food as they used to. 35% of respondents claimed that ever since they saw the
documentary “Super Size Me” they don’t eat in McDonalds anymore.
Most purchases of fast food occurred as a result of impulse decision-making.
Since consumer’s knowledge/information acquired regarding fast food are mostly negative, as
a result their attitudes are also negative. There are also external influences that have negative
impact on consumer decision-making process i.e. current high public obesity debates in the
UK. McDonalds is responding on changes in environment and consumer behaviour by
introducing healthier menus. Consumers do not trust McDonalds, which also negatively
impact on their decision-making process. All factors above contribute towards risk perception
that consumers have with McDonalds food. Marketers at McDonalds try to reduce perceived
risk by providing consumers with information regarding their food. That is also author’s
proposed recommendation- to increase awareness of the quality of McDonalds’ products and
hence reduce consumers perceived risk and increase their trust with McDonalds brand.
8
CHAPTER 1: INTRODUCTION
This chapter will give the reader a clear statement of the research question and the problem
statement that will be addressed in this research. Moreover, the background information on
definitions of key terms and the chosen organisation will be presented. Finally, the ‘route
map’ will be illustrated in order to guide the reader to the rest of the report.
1.1 Consumer behaviour
Referring to Solomon (2006, p.27) consumer behaviour is the study of the processes involved
when individuals or groups select, purchase, use or dispose of products, services, idea or
experiences. Consumer behaviour focuses on how individuals make decisions to spend their
available resources on consumption related items. That includes what they buy, why they buy,
when they buy, where they buy it, how often they buy it how often they use it, how they
evaluate it after they purchase and the impact of such evaluations on future purchases, and
how they dispose it. Schiffman and Kanuk (2004, p.8)
1.1.2 Consumer attitudes
According to Ajzen (1998) the attitudes are the first determinant of behaviour intention. In
consumer behaviour context attitude is a learned predisposition to behave in a consistently
favourable or unfavourable way with respect of a given object. There is a general agreement
that attitudes are learned. This means that attitudes relevant to purchase behaviour are formed
as a result of direct experience with the product, word-of-mouth information acquired from
others, or exposure to mass media advertising. Internet etc. (Schiffman and Kanuk, 2004,
p.253) As learned predispositions, attitudes may propel consumer towards particular
behaviour or repel the consumer away from particular behaviour. . (Schiffman and Kanuk,
2004, p.253)
1.2. Fast food VS Junk Food
Fast food is regarded as “food, as hamburgers, pizza, or fried chicken, that is prepared in
quantity by a standardized method and can be dispensed quickly at inexpensive restaurants for
eating there or elsewhere”. (dictionary.com, 2006)
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Junk food is regarded as “food such as potato chips, sweets and doughnuts, which is mass-
produced and is of low nutritional value”. (dictionary.com, 2006)
Often the term junk food is used to describe fast food. Just recently, the debate has been going
on whether the term junk food (to describe fast food) is in fact justified. Author of article
argues that the "junk food" tag seem to be applied selectively, and often to food outlets in
urban and suburban areas but not to those in leafier parts. Hence, he points out that the term
"junk" has become a way of disapproving of certain foods. (O’Neill, 2006)
1.3 Obesity in the UK
The most recent research has shown that being overweight or obese is now the norm in the
UK, with figures released by the government showing that two- thirds of men and almost 60%
of women are unhealthily heavy. (Boseley, 2006) Furthermore UK has the highest level of
obesity in Europe. (Datamonitor, 2006) According to a report issued by the Department of
Health, the findings for ‘Forecasting obesity in 2010’ were grotesque. Within four years, it
predicts, a third of all adults in UK (13 million people) will be obese. So will 1million
children. (Marrin, 2006)
1.4 Fast food industry in the UK
Definition of the fast food industry:
The fast food industry is defined as the sale of food and drinks for immediate consumption
either on the premises or in designated eating areas shared with other foodservice operators,
or for consumption elsewhere.
Fast food outlets are specialised in burgers, bakery products, chicken, ice cream, fish and
pizza. (Datamonitor, 2006)
In spite of consumer concerns of fast food being linked with problems such as obesity,
diabetes, heart conditions, food poisoning and scares and unethical advertising, the UK fast
food industry has enjoyed remarkable growth in recent years.
In terms of per capita expenditure, between 2000 and 2005, the fast food outlets have been
growing at the fastest pace within the consumer food service sector. (Euromonitor, 2006b)
1.5 McDonald's Corporation background
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McDonald's Corporation was the leading fast food outlet in the UK in 2004, with an 18.3%
value share and a clear lead over its nearest rivals KFC (owned by Yum Brands) and Burger
King. (Euromonitor, 2006b)
Figure 1.1: Market share in UK (2004)
Name of the company Market share (%)
McDonald's Corp 18.3
Yum! Brands Inc 8.4
Burger King Corp 8.3
Pret a Manger Europe Ltd 1.4
Compass Group Plc 1.2
Nando's Group Holdings Ltd 0.8
Source: Euromonitor, 2006b
McDonald's is a pioneer in the fast food industry and today world leader in the sector. The
company has over 31,000 fast food restaurants in over 120 countries. (MarketLine, 2006)
The company operates primarily in the US and the UK. It is headquartered in Oak Brook,
Illinois and employs 447,000 people all over the world. (Datamonitor, 2006)
McDonalds currently operates in more than 1,316 restaurants throughout the UK. Its profits
grew by 55% in 2004. (Euromonitor , 2006b)
In 2003 the company was loosing money for the fist time in its five-decade history, as it was
serving mainly greasy food and therefore fuelling obesity epidemic. Moreover the company
was loosing important consumers trust due to release of the documentary ‘Super size me’ and
critical book ‘Fast food nation’. However, McDonalds introduced healthier menus and just
recently (October 13th 2006) it has announced that its sales had rocketed, sending its shares
soaring to a six year high. British restaurants were singled out among the biggest improvers in
performance. (Clark, 2006)
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1.6 Research question
What factors are currently influencing the consumer decision-making process in the fast
food restaurant industry in the UK, and how is McDonalds responding to changing
environment and consumer behaviour?
The research question can be further divided into three sub sections in order to clarify the
objectives of the research.
A. In order to present the context in which McDonalds is evolving
o The PEST Framework will be applied to identify the key drivers of change that
may have an impact on the industry in the future.
B. With the aim of identifying the factors that are influencing consumer purchasing
decisions in relation to fast food products:
o The Consumer Decision-Making Process will be examined, in particular the
psychological field- focusing specifically on consumers’ attitudes towards fast
food and McDonalds. In addition the socio-cultural environment, as external
factors that have impact on consumers’ decisions will be investigated.
C. Corporate responses on above changes:
o How is McDonalds responding on the changes with respect to its marketing
mix and communication strategy? The dissertation also seeks to propose a set
of recommendations for future actions by the company.
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1.7. Plan of the dissertation
INTRODUCTION
This chapter will give the reader a clear statement of the research question and the problem statement that will be addressed
in this research. Moreover, the background information on definitions of key terms and the chosen organisation will be
presented. Finally, the ‘route map’ will be illustrated in order to guide the reader to the rest of the report.
LITERATURE REVIEW
This chapter sets the study within its wider context and show the reader how this study supplements the work that has already
been done on chosen topic. Therefore it identifies, analyses, compares and contrasts views and theories of other writers in
relation to the research topic. It also provides the stepping-stone towards the methodology chapter of the dissertation.
METHODOLOGY
In this chapter the research design and the research methodology employed to answer the research question will be
explained and justified. In addition, it provides the reader with a clear description of models and concept used for the
analysis.
FINDINGS
This chapter will provide a reader with detailed presentation of facts and data obtained using tools described in research
methodology, leaving out discussion for the final chapter. In order to communicate findings clearly, author decided to brake
down this chapter into to parts. Firstly, the external analysis will be applied, in order to provide a reader with the context in
which McDonalds is evolving. And secondly, the key factors influencing the consumer decision-making process will be
analysed/explored.
RECOMMENDATIONS
In this chapter a set of proposed recommendations as well as supporting analysis of the options for McDonalds will be
depicted. In addition the implementation plan to support the key recommendation, including description of resources
required will be illustrated.
CONCLUSION
In this chapter author will conclude his research with how the research question has been solved. In addition a brief re-cap
of the whole dissertation will be provided.
CHAPTER 2: LITERATURE REVIEW
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This chapter sets the study within its wider context and show the reader how this study
supplements the work that has already been done on chosen topic. Therefore it identifies,
analyses, compares and contrasts views and theories of other writers in relation to the
research topic. It also provides the stepping-stone towards the methodology chapter of the
dissertation.
The following literature review will critically analyse the theories associated with the research
topic. Firstly, it looks at the issues of consumer behaviour; hence it highlights the factors,
which influence the consumer decision-making process, predominantly the consumer
attitudes. The author has found a variety of academic articles, some of which focus on food
industry and public trust in food safety. Other articles examine more generally models of
consumer attitude formation, which might be useful applied to the research question in this
dissertation.
While the first section focuses on the aspects of consumer behaviour, the second part of the
review, as already outlined in the introduction section of dissertation, observes the marketing
issues, particularly the marketing communication strategy within the marketing mix.
Furthermore this review will contribute towards creation of possible marketing strategies as
well as recommendations that McDonalds might pursue in order to respond on changing
environment and consumer behaviour.
Therefore the following theories from consumer behaviour and marketing have been outlined:
Consumer decision-making process
Consumer attitude formation and change
The marketing mix
2.1 Consumer decision-making process
The consumer decision to purchase or not to purchase the product is crucial for marketers. It
can signify whether the marketing strategy has been wise, insightful, and effective, or whether
was poorly planned and missed the mark. Hence marketers are particularly interested in such
process. (Schiffman and Kanuk, 2004, p.581)
Verbeke (2005) recognizes that at any point in time throughout the decision-making process,
judgements and choices are affected by a variety of stimuli from environment as well as by
internal process and characteristics form the consumers themselves. Based on earliest
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presented models of consumer behaviour towards food (Pilgrim, 1957, cited by Verbeke,
2005) and on a review of factors affecting food acceptance and behaviour (Shepherd, 1990,
Steenkamp, 1997, cited by Verbeke, 2005) proposed a classification with three types of
influencing factors: environmental factors, person-related factors and properties of the food.
Jobbers (1995) identifies the concept of influences on consumer purchasing behaviour among
which he points out the level of purchase involvement as one of the factors that influences the
consumer decision-making process. Referring to Kim (2005) who was investigating how
product involvement and values interact with consumers, more current research examines
consumer involvement under working assumptions that different types of product
involvement trigger different behaviour. In the research conducted by Schroeder and
McEachern (2005), who were analysing the impact of McDonald’s and KFC’s corporate
social responsibility (CSR) on consumers purchasing behaviour, authors propose that
purchases of fast food are mostly impulsive, hence suggesting relatively low-involvement in
each case.
Brown, McIlveen and Struggnel (2000) examined the nutritional awareness and food
preferences among young consumers. They suggest that young consumer decisions regarding
food preferences are influenced by nutritional awareness knowledge. This knowledge is
acquired within the home, school and social environments. They also put forward that
education plays important role regarding healthy eating.
Lye et al. (2005), in their study of consumer decision models, advocate that the complexity of
consumer decisions is increasing. “We have limited understanding of the decision process and
the models are inadequate at predicting decision outcomes”. Hence the current models, they
argue, are out of date and insufficient in providing the desired outcome.
Nevertheless, the decision-making process model will provide the author and the reader with
general overview and understanding of factors influencing on consumers purchasing
behaviour.
Author will attempt to identify and focus, along with the attitudes, on the socio-cultural part
of the consumer decision-making process, i.e. impact of communication and information from
mass media (bad publicity of fast food), as it appears that this is the most recent issue due to
health concerns in the UK.
2.2 Consumer attitude formation and change
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For Nielsen, Jongen and Meulenberg (1998, cited by Verbeke 2005) understanding of the
factors that determine consumer perception/attitudes of a product’s value or cost is of crucial
importance to an industry’s product innovation, choice of marketing and communication
strategy and maintenance of competitive advantage.
According to Ajzen (1998) the attitudes are the first determinant of behaviour intention. In
consumer behaviour context attitude is a learned predisposition to behave in a consistently
favourable or unfavourable way with respect of a given object. Most researchers agree that
attitudes consist of three components: Affect (consumers’ emotions and feelings about the
attitude object), Behaviour (intention to do something with regard to an attitude object) and
Cognition (believes a consumer has with an attitude object). (Solomon et al., 2006, p.140)
For Verbeke (2005), who examined the influences on consumer decision-making process
towards fresh meat, the hierarchy of effects indicates the different mental stages that
consumer must go through when making buying decision and responding to marketing or
non-commercial messages. In our instance, where the attitude object is fast food, plus taking
into account that fast food is considered to be low involvement product, the low involvement
hierarchy of effects would occur. This will be explained in more details in the next chapter-
methodology.
As mentioned on previous page, knowledge and perceptions (cognitive component) of an
attitude that consumer has with an attitude object plays important/initial role by the attitude
itself. Baltas (2001, cited by Schroeder and McEachern 2005) acknowledge that the nature of
fast food production and processing is becoming more important to consumer. Furthermore
Harper and Makatouni (2002, cited by Schroeder and McEachern 2005) note that ethical
production in terms of animal and human welfare and environmental protection are of greatest
importance. Similarly Mohr et al. (2001, cited by cited by Schroeder and McEachern 2005)
recognize that information regarding firm’s ethical behaviour is thought to influence product
sales and consumers’ overall image of a company. Additionally Verbeke (2005) recognizes
that along with increasing importance of quality, organoleptic and sensory properties of the
food, issues relating to food safety and human health have gained considerable attention and
importance. All above links well to attitudes that consumers will have with fast food products
and companies.
Attitude can form in several different ways, depending on particular hierarchy of effects in
operation. (Solomon et al., 2006 p.145) Referring to Schiffman and Kanuk (2004 p.256), the
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formation of consumer attitudes is strongly influenced by personal experience, the influence
of family and friends, direct marketing and mass media. Yet again author will attempt to link
the current health concerns/obesity issues to above factors that have direct impact on attitudes
formation. Goldsmith, Freiden and Henderson (1997) who investigated the impact of social
values on food related attitudes, recognize that marketers, consumer psychologists and public
policy makers have an interest in the personal and social values of consumers as these deeply
held feelings of what is important in life influence both consumer attitudes and behaviour.
Reflecting desired end states or ways of living, values might in part represent some of the
fundamental motives that drive and direct the consumer behaviour. Furthermore Homer and
Kahle 1988, cited by Goldsmith, Freiden and Henderson (1997) suggest that the influence of
values may not be limited just to high- involvement areas, but may also be relevant to less
involving product fields such as food.
Besides the values, which influence both consumer attitudes and behaviour, Schiffman and
Kanuk (2004 p.256) acknowledge that formation of consumer attitudes is strongly influenced
by personal experience, the influence of family and friends, direct marketing and mass media.
Author will try to connect the current health concerns/obesity issues to above factors that have
direct impact on attitudes formation.
Finally, the importance of risk perception needs to be explained. Verdume and Viaene (2003)
investigated consumers’ beliefs, attitudes and purchase intentions with regards to genetically
modified food. Attitudes towards GM food are determined by perception of risk and benefits.
(Grunet, 2001, cited by Verdume and Viaene, 2003). When perceived risk is high, that
influence negatively on consumer’s purchase intention. That might be linked to fast food as
well, as eating fatty food may be risky of suffering obese related diseases.
2.3 The marketing mix
The concept of the marketing mix as the combination of the major tools of marketing was first
developed by Borden in the 1950s. The idea of 4Ps (Product, Place, Price and Promotion) was
later formulated by McCarthy in 1975. The marketing mix creates an offering for the
customer. Marketers need to ensure that the marketing mix meets their customers’ needs and
wants in addition to that all of its components need to be consistent with each other. If not
costumers will turn away to its competitors. (Brassington, 2006 p.30)
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Vignali (2001) acknowledges that for many years 4Ps have been used as the principal
foundation on which a marketing plan is based. However, with particular attention being paid
to services marketing in recent years, theorists have identified additional variables, which
could be added to the 4Ps. Fifield and Gilligan (1996, cited by Vignali 2001) recognized the
following variables as an integral part of the marketing mix- process, physical and people.
Vignali (2001) applied 7Ps analysing the marketing mix of McDonald’s in the following way:
1. Product – features, quality, quantity.
2. Place – location, number of outlets.
3. Price – strategy, determinants, levels.
4. Promotion – advertising, sales promotion, public relations.
5. People – quantity, quality, training, promotion.
6. Process – blueprinting, automation, control procedures.
7. Physical – cleanliness, decor, ambience of the service.
In this dissertation, however, the author will not focus on all 7Ps; the emphasis will be on
product, promotion and physical as this links logically with the research question/objectives.
If we look further into the promotion part of the marketing mix, the promotional mix is a
direct way in which an organization attempts to communicate with various target audiences. It
consists of five main elements:
Advertising
Public relations
Sales promotion
Direct marketing
Personal selling
(Brassington, 2006 p.630)
As mentioned earlier fast food products are purchased mainly impulsively, hence they are
considered to be low involvement products. Laurent and Kapferer (1985 cited by Kim 2005)
recognize that the degree of consumer involvement in a product category has become a major
factor relevant to advertising and promoting strategies. Solomon et al. (2006) suggests that
this might be involvement paradox; the less important is the product to consumers, the more
important are many of the marketing stimuli (e.g. packages, jingles) that must be devised to
sell it.
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Taking above statements into account, McDonald’s might want to employ advertising and
sales promotions, in order to attempt to change consumer attitudes. Having said that author
will focus therefore primarily on advertising and promotion of the promotional mix.
19
CHAPTER 3: RESEARCH METHODOLOGY
In this chapter the research design and the research methodology employed to answer the
research question will be explained and justified. In addition, it provides the reader with a
clear description of models and concept used for the analysis.
3.1 Research philosophy
Referring to Saunders et al., (2007, p.106) in order to underpin the research strategy and the
methods as part of that chosen strategy, it is important to understand the research philosophy
one adopts. Within research philosophy author chose interpretivism, as it advocates that is
necessary for the researcher to understand the differences between humans in our roles as
social actors. This emphasizes the difference between conducting the research among people
rather than objects. The role ‘social actors’ plays significant role here. Saunders et al., (2007,
p.106) Author believes that interpretivism is more appropriate that positivism philosophy as
consumer behaviour differs form country to country. Furthermore it interpretivism seeks to
explain why human beings react and behave in the way they do.
3.2 Research approach
In this dissertation author will start with collecting the data first and then the theory will be
developed, based on results of the data analysis. Moreover the research will be particularly
concerned with the context in which such events were taking place. Author is predominantly
interesting in understanding why something is happening, rather than being able to explain
what is happening. (Saunders et al., 2007, p.118) These are the reasons why this research will
be undertaken inductively and not deductively. Deductive approach is used for scientific
researches and it involves the development of a theory that is subject to a rigorous test.
(Saunders et al., 2007, p.118)
3.3 The purpose of the research
According to Saunders et al., (2007, p.133) exploratory study is a valuable means of finding
out what is happening, to seek new insights, to ask questions and to assess phenomena in new
light.
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The emphasis by explanatory study is on studying a situation or a problem in order to explain
the relationships between variables.
In the first part of this dissertation, the research purpose will be exploratory and explanatory
because the aim of the research is to explore consumer attitudes and factors that influence the
consumer decision-making process in the fast food industry. The purpose of the second part
of dissertation, however, is to elucidate McDonalds potential responses on changing
environment and consumer behaviour. From the analysis of the market and consumer
behaviour author will seek to apply established business models such as marketing mix in
order to generate a set of practical recommendations for McDonalds business.
3.4 The research strategy
Strategy used in this dissertation involves the empirical investigation of a particular
contemporary phenomenon within its real life context using multiple sources of evidence.
Moreover it is of author interest to gain a rich understanding of the context of the research and
the process being enacted. On account of these factors the chosen strategy will be the case
study. The case study has also considerable ability to generate answer to question “why”,
which appears to be appropriate for the research question (Saunders et al., 2007, p.139)
3.5 Data collection techniques and analysis procedures
To achieve the research aims, a mixed-methods data collection technique was adopted where
both qualitative and quantitative data collection techniques and analysis procedures are used.
(Saunders 2007, p.147)
Saunders (2007 p.147) justifies the adoption of a mixed-method to achieve an in-depth insight
in consumer behaviour. Another advantage of using such approach is that it enables
triangulation to take place. For instance focus groups may be a valuable way of triangulating
data collected by other means such as questioners. Baker and Goodyear (1998, cited by
Verdurme and Viaene 2003) recognise that interactive qualitative approach enables us to
explore and to see particular issues (in our instance fast food) through consumers’ eyes and to
understand the basis for their attitudes and behaviour. Qualitative results are sometimes
speculative and usually not generalisable to the larger population. Nancarrow et al., 2000,
cited by Verdurme and Viaene 2003) Author therefore intends to conduct a qualitative survey
21
to attempt to gauge whether the views of the respondents in the focus group were
representative of a larger population.
Taking above facts into consideration author decided, firstly, to carry out the qualitative focus
group, and secondly use its outcome to formulate questions for the questionnaire.
3.6 Sample selection
In this research the probability of each case being selected form the population is not known
and it is impossible to answer research question or to address objectives require author to
make statistical inferences about the characteristics of population. For that reason, Saunders
(2007 p.207) suggests applying non-probability or judgemental sampling technique.
Nevertheless, author will still be able to generalize from such technique, though, not on
statistical grounds. For this reason non-probability sampling technique is more frequently
used when adopting the case study strategy. Moreover such technique provide author with
opportunity to select sample purposively. (Saunders, 2007 p.235)
The chosen sample for the focus group were undergraduate students form European Business
School London in the UK. Three out of seven participants were British citizens, remaining
four were international students, however, they have been living in the UK for 3-4 years.
Kraus (1995, cited by Schroeder and McEachern, 2005) support the use of students since they
are more homogeneous as a group than non-students, thus resulting in less “extraneous
variation”. As a key target market of the UK fast food sector is between 17-25 years, a
convenience sample of students is justified for this exploratory study. Author realizes that
socio-economic status of some EBS students for the focus group might not be the same as one
of typical fast food consumer. However, participants eat in such restaurants and are therefore
appropriate for this study.
Since there is nearly impossible to distribute over 100 questionnaires physically in such a
short time, author decided to distribute questionnaires to students via email. Author acquired
approximately 140 British email addresses that he got from a person who lives in London.
The questionnaires were sent then to people around the UK.
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3.7 Data collection
In this study, both primary and secondary data sources were used. Firstly, for a better
understanding of the background and problems related to the context of the consumer
decision-making, the literature review was written based on secondary data collection. Then
the primary data was gathered using qualitative focus group, which were then quantitatively
validated through questionnaires.
Secondary data sources used in this dissertation include books, library databases, periodicals,
McDonalds web site and other Internet sources. For collecting primary data sources, author
used firstly focus group and secondly questionnaire.
3.7.1 Group interviews- focus groups
This qualitative data collection technique was employed in order to get better understanding
in consumer behaviour. Participants in the focus group tend to express views that might not
express in other settings, or if interviewed as individuals. (gwbweb.wustl.edu, 2006,
unattributed) With focus group individual group members’ interactions and responses are
both encouraged and more closely controlled to maintain the focus. (Saunders, 2007, p.339)
As explained earlier by the sample selection, participants (students) are selected because they
have certain characteristics in common that relate to the topic being discussed and they are
encouraged to discuss and share their points of view without any pressure to reach a
consensus. (Kruger and Casey, 2000, cited by Saunders, 2007, p.340) Furthermore the aim is
to crate conditions that promote both comfort and independence of thought, in order to
maximize discussion and self-disclosure. (gwbweb.wustl.edu, 2006, unattributed)
For questions discussed during focus group and other detailed information, please refer to
Appendix A.
When designing questions for focus group author focused primarily on two things; firstly on
exploring consumers’ attitudes towards fast food, and secondly identifying impacts from
external environment which might influence the consumer decision-making process regarding
fast food. Having said that knowledge and perception about fast food will be examined, and
what kind of experience and beliefs participants have with such restaurants and products.
Then their emotions and feelings towards fast food will be explored. Additionally the possible
23
impact of current anti-obesity campaigns and regulations on participant’s decision-making
process will be examined.
3.7.2 Questionnaire
Since the participants in focus group were not randomly selected from the population, the
author cannot freely generalize from the results. Hence qualitative data obtained by focus
group will inform the content of the questionnaire and will be tested to a larger group.
According to Saunders (2007, p.356) a questionnaire to discover consumers’ attitudes can be
complemented by focus groups to explore and understand these attitudes. Author decided to
use questionnaires that are completed by respondents, i.e. self-administrative questionnaires
(internet-mediated questionnaires). More specifically author selected special on-line surveys
(www.freeonlinesurveys.com) due to time restrictions and convenience reasons. In order to
ensure the high response rate, Saunders (2007 p.390) suggests use of covering email, which
explains the purpose of the study. The aim of my study was explained in the introduction part
of questionnaire, attached to actual questions.
The key issues/themes identified from focus group were used as a basis to construct closed-
end questions or forced-choice questions. These provide a number of alternative answers from
which respondent is instructed to choose. More specifically author used mainly category,
ranking and list type of closed questions. (Saunders, 2007 p.368) Moreover by designing
questions, for instance question number 4, the tricomponent attitude model was incorporated,
to gauge consumers’ attitudes toward fast food products. (Shiffman and Kanuk, 2004, p.258)
Answering categories given in the questionnaires were also based on the preliminary
qualitative research- focus group. Key themes from focus group (quality of fast food, ethical
aspects, trust towards McDonalds, impact of media and government on consumer behaviour),
formed questions for questionnaire and were further examined and tested to larger group.
Saunders (2007, p.386) encourages pilot test prior using the questionnaire to collect data.
Author sent questionnaire to few individuals before sending it to larger population, in order to
ensure that all questions are clear. For more information regarding actual questionnaire that
was sent to participant, please refer to appendix B.
nutritional content of the food, animal welfare, super size me documentary, etc. From the
analysis 34% (for beef burgers) and 39% (for chicken sandwiches) of respondents claimed
that if they had been given a fact that McDonalds uses 100% beef and chicken, they would eat
there more often. (Appendix C, questions 9 and 15) If McDonalds manages to inform these
people about the leanness of its meat and the truth behind its apple pies and chicken
McNuggets- that might reduce consumers risk perception, since they would feel more
confident of what they are eating, and where did that meat come from.
Besides that they could attract more people to visit their website and spend more time there by
introducing various games and healthy quizzes that could be launched form their website.
They could increase consumer’s knowledge regarding its product by giving away (after the
purchase with a receipt) each customer a special voucher booklet, in which the information of
the ingredients they use how they treat the animals and what parts of animals goes into their
burgers would be described. In addition, this booklet would contain the story of the
McDonalds brand in a ‘warm and engaging way’ and therefore try to create and increase the
consumers’ emotions with McDonalds brand. Such booklets/fliers would also be distributed
in front of each McDonalds restaurants. They would also put their nutritional facts list on
every back of the tray paper, give the chance to their customers to see how much fat, sugar,
proteins, calories etc. their meal consists of. That would be a good start of building trust with
their customers.
This option is suitable since it fits perfectly in the environment. People are concerned with
what goes into their bodies. Referring to findings, people would go more often to McDonalds
if they would be guarantied that what they are eating is 100% good quality food. People want
to know what they are eating. By providing all these information regarding nutrition quality,
McDonalds would increase sales as well as increase and improve their brand value.
What are the risks and returns? That is the question of acceptability. This option is
considered as not particularly risky. In case of failure, this would not be disastrous for
McDonalds (apart from for money invested in that promotional campaign). Regarding
possible returns associated with that option are incomparable with the risk of that option. In
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addition, there is no critical issue attached to that option that would not be accepted or
approved by McDonalds stakeholders.
Is it feasible, will it work in practise? This option should work in practise, since author
presume that McDonalds is capable of such marketing investment. Improving their website,
purchasing of prizes, providing voucher booklets and other point of purchase promotional-
informational material to increase their awareness is relatively inexpensive for a giant like
McDonalds. Moreover author believes that McDonalds possesses all resources and
competences in order to make this option work in practise.
5.1.2 Option 2: Introduction of new healthier menus along with refurbishment of
restaurants
Nowadays customers demand quality and healthy food. Thus, McDonalds should consider
introducing new range of healthier sandwiches, salads, fruit salads and other more nutritious
food. For French fries, apple pies and other fried food, they could, for instance, instead of
frying it, prepare it in oven, which would be a lot healthier and it would eliminate the trans fat
it uses in cooking fried food. Instead of white bread they could use wholemeal bread. They
would start position themselves as healthier food chain. The interior design of their typical
restaurant would change from combination of red-yellow colour, to softer browns-
emphasizing the nature. Moreover they could start introducing computers equipped with
Internet in some of their restaurants as well as newspapers. This could attract new customers
going to their restaurants- they could broaden its customer base. They would be promoting
healthy living by new advertising campaigns in which advertising message would be designed
in such way to show explicitly how more nutritious and healthier their food is.
From suitability perspective, it fits completely with trends in domestic environment and
current health concerns. That option might result in changing peoples’ perception they
presently possesses with McDonalds brand, which is anything else than healthy.
Is it acceptable? From stakeholder’s prospective it is likely to be acceptable, since it is in line
with current healthy trend. However, there is a risk that this option would not work because
people simply would not go there to eat “healthy”, as it was always known as the ‘lower
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quality fast food chain’. Furthermore not all McDonalds shareholders might agree with that
option, since it would require significant investments, which would most probably mean no
dividends for them in the short-medium term. Furthermore there could be a risk of
cannibalisation effect on traditional burgers, which would suffer on expense of new healthier
menus.
Is this feasible? From financial perspective it would be probably one of the most expensive
investments in the history of the company. Money required for financing refurbishment of all
restaurants and offering healthier, better quality products (which are obviously more
expensive than products they offers now), on the top of new advertising campaigns, would
definitely be a difficult task, even for a giant like McDonalds.
Both presented options are attractive for McDonalds and furthermore both fit in the
environment. However, according to authors’ findings, he believes that option 1 is more
appropriate than the second one. Moreover first option meets criteria (suitability,
acceptability, feasibility) better than the second option. It is very straightforward, it can be
employed immediately and it does not require heavy investments. Above all, it does not shy
away from McDonalds core (traditional) business, which is making burgers and French fires.
5.2 Implementation plan
Following implementation plan will set out stages McDonalds will need to go through to turn
proposed option into reality.
In order for McDonalds to successfully implement this new strategy, the author created a
Gantt chart. In the following Gantt chart, the author listed all the different tasks assigned and
the timeframe allocated to achieve each of them.
The timescale to implement proposed tasks can vary, nevertheless, author presume that the
implementation could approximately take 3 months for the design and creation of promotional
material and another 6 months to distribute the material.
The main objectives for increasing awareness of the quality of McDonalds products are:
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Redesigning the website (in order to make people read about the facts of their products
and spend more time in their website)
Promote their website (coupon with a number that has to be entered on their website in
order to win prizes)
Designing special voucher booklet, designing list of nutritional facts (which goes on
the top of the tray), and other point of purchase promotional material
Table 5.2: Gantt chart for 2007
TASKS Jan Feb Mar Apr May Jun Jul Aug Sep Oct RESPONSABILITIESSet promotional campaign objectives MGT/MKTG directorPreliminary budget MGT/MKTG directorRedesigning website MKTG dep.(design team)Contact Apple and Sony dealers for prizes MARKETING departmentDesigning voucher booklet MKTG dep.(design team)Designing other promotional material MKTG dep.(design team)Press release MKTG dep. (PR)Finalize budget MKTG dep/FINANCE dep.Distribution of promotional material MARKETING departmentLaunch of new website* IT departmentEvaluation of the project MGT/MKTG director *Once the new website is launched, it will be available in the future as well and not just in the first 6 monthsas it is illustrated on the chart.
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CHAPTER 6: CONCLUSION
In this chapter author will conclude his research with how the research question has been
solved. In addition a brief re-cap of the whole dissertation will be provided.
My research question:
What factors are currently influencing the consumer decision-making process in the fast
food restaurant industry in the UK, and how is McDonalds responding to changing
environment and consumer behaviour?
The need for fast food comes impulsively. People do not spend significant time thinking on
whether they will go eat in McDonalds or not. Attitudes that consumers have with McDonalds
are predominantly associated with their knowledge regarding fast food. Their
knowledge/information they have acquired regarding fast food is primarily negative. As a
result their attitudes are also negative. Research revealed that majority of people link
McDonalds food with adjectives unhealthy, cheap, tasty and fatty. Furthermore people ranked
McDonalds food as of worst quality. The reason for eating in their restaurants was described
as the ‘last resort’, underpinning the fact that McDonalds is still (traditionally) perceived as
typical junk food restaurant. There are also external influences that have impact on consumer
decision-making process. These have direct impact on consumer’s psychology, resulting in
changing their attitudes and perceptions they currently possess. These external influences are
current high public obesity debates in the UK, which according to research have negative
impact on consumers purchasing behaviour. All factors above contribute towards risk
perception that consumers have with McDonalds food. The research also revealed that
consumers do not trust McDonalds, which negatively impact on their decision-making
process of eating in such restaurants.
How is McDonalds responding on above changes in environment and consumer behaviour?
Marketers at McDonalds try to reduce the perceived risk that consumers have with their
products. They try to reduce the perceived risk by providing consumers with information
regarding their food. They also strive to gain consumers trust, change their attitudes and hence
increase their sales. McDonalds does everything to be as ready as possible for the threats
arising from external environment. As PEST analysis has shown that one of the key drivers of
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change that might have an impact on the industry in the future is high- profile political and
public debate on obesity and other health issues in the UK.
Nonetheless, McDonalds is used to that. Having said that, McDonalds has been battered by
books (Fast Food Nation), thousands of dietary experts stressing dangerous facts about
McDonalds food, criticized by celebrity chefs (Jamie Oliver) and they even made a
documentary (Super size me) to reveal the truth behind the fast food. On top of that it had
gone through several lawsuits (in the US), fortunately (for McDonalds) neither of them
succeeded. Indeed, these had negative impacts on the company as people became aware of the
consequences of fast food. As a response on that McDonalds introduced healthier menus, cut
the amount of trans fat it uses in cooking fried food and introduced the website that offers
their side of the story as a response on the ‘Super size me’ documentary. And it seems like its
effort has paid off. McDonalds sales are now increasing and as a consequence its shares price
ended at highest point in past six years. Perhaps McDonalds became immune on all those who
want to harm its reputation and it even got stronger with all these many years of accusations.
Perhaps in a ten years time they might be famous for their salads and organic food as they are
now for their burgers and fries.
To conclude, author has not found anything particularly new regarding consumer attitudes
towards such food. Consumers still (and probably will) have negative attitudes towards
McDonalds. They will perceive it as something greasy, fatty and bad for their body.
McDonalds cannot change people’s perception over night. What they can do, though, is they
can show people what their food is made of- it is then up to us consumers, whether we will
trust them or not. And that is what will make us go and eat their burgers.
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BIBLIOGRAPHY
WebPages:
BOSELEY, S. (2006) Fears for the future as figures reveal Britons are fattest people
in Europe,
Available URL: http://www.guardian.co.uk/frontpage/story/0,,1892626,00.html
Viewed 15/10/06
CLARK, A, (2006) Customers flock back to Big Mac
Available URL: http://www.guardian.co.uk/food/Story/0,,1921201,00.html