CLASS DISCUSSION CASE #4
McDonald’s and the McCafe Coffee Initiative, p529
DUE DATE: 04.10.08
1) -McDonalds’ purpose in pursuing this McCafe strategy was to regain lost market share in the breakfast sector. The idea was first brought up by Sgro. He believed this concept of quick, reliable, inexpensive coffee could address the issue of Tim Hortons’ increasing market share in Canada. McCafe was made to look clean and modern and was designed for working adults who enjoy coffee.
-The strategy is very close to most of McDonalds’ strategies. They focus on low cost, but I would lean toward saying this is a focused low-cost leadership strategy, since it is directed towards working adults. The equipment is inexpensive, easy to use, and doesn’t take much space to operate. Most coffee items are served in 22 seconds. With this fact in mind we have to give the strategy credit for incorporating a differentiation factor. The coffee is marketed as being relatively high value, yet is served in a fraction of the time competitors are able to serve similar drinks.
*McCafe fit seamlessly into McDonalds’ operations. The new equipment did not require extensive training or the expertise of baristas.
*The overall McCafe package was modern and sophisticated. This is a useful appeal to working adults who enjoy coffee, considering Starbucks’ success. The difference with McCafe’s approach is that customers get this experience in a very convenient and quick delivery.
*There is a bit of a conundrum as to how McDonalds will convince consumers the quality of their items are up to coffee shop standards. Customers will not pay premium prices that places like Starbucks charges, but extremely low prices will exert a sense of lower quality. Finding that magic area of price will be a huge determination of success or failure.
3) -McDonalds employees must be professional and...