Background

From 2016 to 2020, with the development and innovation of science and technology, the
era of big data is coming in China, and more and more industries choose to combine
development with network big data. Among them, McDonald's, one of the representatives
of the fried chicken hamburger category head, also took the lead in choosing digital
transformation. McDonald's successfully completed the digital transformation in 5 years,
continuing to maintain the strong competitiveness of the fried chicken hamburger fast-
food industry head enterprise, and attracting more consumers to consume. This paper
will deeply explore the marketing strategy adopted by McDonald's after the digital
transformation, and make a comparative analysis of the competitive advantages of digital
marketing strategy compared with traditional marketing strategy, and then show how
McDonald's after the digital transformation solves the pain points in the customer journey.
The conclusion of the study is that McDonald's uses big data, network social media and
other ways to provide more personalized products and services, increase consumers'
engagement and sense of empowerment and thus gain a huge competitive advantage.
The close connection between digital processes, personalized products and consumers'
mutual benefit is the reason for McDonald's strategy and competitive advantage. In
addition, this paper believes that digital transformation is urgent and necessary for China's
fried chicken and hamburger fast food industry, only in this way can it occupy a larger
market share and gain more competitive advantages in the era of big data.
Profile
McDonald's is a global large multinational chain restaurant, founded in 1955 in Chicago,
the United States, in the world has about 30,000 branches. It mainly sells hamburgers,
as well as fast food such as French fries, fried chicken, soda and ice cream. With some
32,000 restaurants in 119 countries on six continents, McDonald's represents an
American way of life in many countries. In 1992, McDonald's opened its first restaurant in
Beijing, China. According to the 2016 BrandZ Top 100 Most Valuable Brands list,
McDonald's ranked 9th with a brand value of $88.654 billion. In the same year,
McDonald's officially began digital transformation and further developed its network
platform, mobile app and other functions to further strengthen its relationship with
customers. In April 2020, Baidu's AI digital personage "Xijiajia" became the first virtual
recommendation officer of McDonald's products, which was launched on the naked eye
3D large screen in Chengdu and Dalian, symbolizing the further deepening of McDonald's
digital transformation. As of April 2020, McDonald's annual revenue reached $21.077
billion, with nearly 450,000 employees and one of the world's top 500 companies

MCDONALD'S APPROACH TO PAIN POINTS AFTER TRANSFORMATION

First, McDonald's launched the McCafé app to address the pain point of long queues
during peak hours. The establishment of the self-service ordering digital platform allows
customers to avoid the queue at peak hours and place orders quickly on the network.
Customers can order their food online before departure and pick it up when they arrive at
McDonald's, which will greatly reduce waiting time for customers. Then, in view of the
pain point that customers could not timely know the information of McDonald's limitedtime
discount, McDonald's opened the all-channel website and application McCafé push
function. Whenever McDonald launched a discount activity, it would timely push the
discount information to every consumer through these channels. In addition, McDonald's
also offers the McCafé app, which allows customers to redeem coupons at any time they
want as long as they have enough points. In order to recommend dishes, McDonald's
proposed the artificial intelligence + personalized menu scheme. McDonald's collects
huge amounts of customer data and recommends personalized menus to customers
through smart systems that track production and inventory data in real time. This means
that the dishes recommended by different customers are different, and each customer
will be recommended to their favorite dishes. Through digital transformation, McDonald's
can provide every consumer with their own consumption experience. These consumers
can not only order their OWN DIY products online to avoid long queues, but also can use
coupons at any time of consumption and be pushed their favorite dishes and packages.
This strengthens customer engagement, satisfies customer consumption experience and
keeps in touch with customers, thus achieving the marketing purpose of enhancing
customer loyalty and stickiness. When customers receive more and more positive
feedback, they will spontaneously promote McDonald's, attract more consumers to join
the digital system of McDonald's, and maintain its competitive advantage and sales
volume.
INDUSTRY ANALYSIS
Porter’s 5 competitive forces
The fast food restaurant business became very competitive as many multinational and
local restaurants that sells almost the same food are being opened every day.
Competition is very intense because every company is striving to have a market share
and there is a new saturation level that has developed. Each company is spending more
on innovation, advertising and opening new franchises to increase the access to reaching
new customers. The high number of competitors made competitive rivalry a strong force
in McDonalds.

Bargaining power of the supplies is a weak force in McDonald because the company uses
raw materials that can be bought from a large variety of suppliers. There are many
suppliers that are willing to supply the needed raw materials to McDonald. McDonalds
can switch suppliers easily and with low costs. Therefore, the existing suppliers cannot
attempt to bargain with McDonalds or even try to force them to increase their prices.

Bargaining power of the buyers is a strong force in McDonalds. There are a lot of fast
food restaurants that buyers can switch to without any switching costs if they are not
satisfied with McDonalds food or prices. The buyers can complain about any McDonald’s
meal price and change to buy from other restaurants. Buyers are in a position of great
influence on bargaining McDonalds to cut their food prices for them to come back and
buy from McDonalds.

Threat of substitute products is a strong force in McDonalds. The substitutes of

There are many entry barriers on the international level such as high investments on
advertising therefore the threat of new entry on the international level is a weak force for
McDonalds. However locally there are very few entry barriers thus the threat of new entry
is a strong force, one billboard of a competitor can cause a lot of problems for McDonalds.
The overall threat of new entry is moderate for McDonalds.
Information System Strategies for 5 Porter’s forces
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