Recently, McDonald’s the number one fast food company in the world started selling the McCafe at grocery stores, as shown in the article. MacDonald , johnny bets the sales manager said ” After tripling our coffee sales over the last five years and doubling our share we had been getting requests from our guests for several years [for coffee in grocery stores]“.
From my analysis i believe that MacDonald is moving towards a market penetration strategy, where they are targeting existing customers but in new markets, which are retail stores, the strong brand name of MacDonald will allow the McCafe to penetrate the market easily. MacDonald have conducted a market research by conducting both primary and secondary research, before launching their coffee in grocery stores, the research shows that coffee is an inelastic product, which mean the the demand on it will change a lot with a price increase, because Coffee is the most-ordered item outside the home after water.
Despite the high competition in the Coffee market , MacDonald has managed to be the fastest growing coffee brand, this was due to the increasing demand on their coffee between 2008-2013 in Canada. one of the most important factors which made them successful in this market is their strong relationship between them and their suppliers which made them offer their products at cheaper prices, where they benefit from economies of scales, which make their product competitive in relation to competitors such as Starbucks. nevertheless the brand name allows MacDonald to penetrate any market easily.