According to Lewis and Jelmayer (2015), the American restaurant chains are increasingly taking advantage of the expanding Brazilian market. Players such as Subway, Dunkin’ Donuts, and McDonald’s are among the companies, which have opened new stores in the market. Despite the slowed economic growth, the marketers are taking advantage of more than 100 million Brazilians in the middle class. The acceptance of the American restaurant chains and in particular fast food is witnessed with the doubling of the franchised food chains since 2009 to about 685 stores in 2014.
The primary external factors affecting global marketing include the legal, political, social, technological, and economic aspects (Murray-Webster and Williams 88). When a manager/investor is looking forward to exploiting a foreign market, he/she should consider several factors before committing the required resources. The importance of considering the elements is because the operating environment in other countries would be different from the domestic market. For instance, the legal factors concerning the laws and regulations set out by the government. The issues to do with the protection legislation, environmental legislation, and employment law, among others should be observed to ensure that the business operations are legal. The economic factors, including the income levels, the economic growth, as well as availability of labor influence the performance of the business in terms of revenue collected and income reported. The political factors, particularly the government policy on foreign investors, and the civil stability have a direct implication of the performance and operations. The social factors concern the composition of the society, which the business intends to serve. Features such as age, the population size, lifestyle, and cultural values are important because they influence business management and performance (Lesley and Sinclair-Hunt 77). Lastly, the technological advancement and adoption level in the given market influence the effectiveness and efficiency of the operations.
The social factors, particularly the presence of a large population of younger people are a good indication that US fast food companies can succeed. The young people are largely attracted to fast food because of the convenience and time saving, enabling them to socialize and attend to many activities in their lives. The second factor making the Brazilian market strong for the companies is the economic growth rate. By being a member of the BRIC, the Brazilian economy is growing at a relatively high rate, implying that the revenue and income rates can grow at preferred rates.
The low pricing and high quality, as well as franchising, are the common marketing strategies used by McDonalds. The leading restaurant is known for the high-quality products offered to the consumers at affordable prices. The target generation of the company in both the United States and Brazil comprise of the young people who are more concerned about the quality of foods and the price charged. In addition, since the company may not succeed in establishing and running outlets in its entire target market, it embarks on franchising, a strategy applied in both countries.
The American and Brazilian markets for McDonalds are different and hence, call for different approaches when formulating the marketing strategies. The American market is already mature and saturated. The number of key players in the market is high, leaving the company with little opportunity for expansion. According to Ansoff’s matrix, product development is the best strategy for the company (Donald and Waters 274). The strategy calls for the modification of existing products and introduction of new ones to attract new customers and retain the existing ones. On the other hand, the Brazilian market is new and at the growth phase, which calls for penetration marketing strategy. The marketing approach by McDonalds comprises the massive promotion to assist in the penetration of the market (Donald and Waters 274). The company is likely to be less popular in Brazil as compared to the United States market. The target market may not be aware of its presence and location in the market; hence, the need for a different approach.
As is evident from the above analysis, the Brazilian market is getting more open to restaurant business operations. Therefore, a company operating in the industry should take advantage of the growth in the market to maximize the opportunity for better results. The decision by McDonalds and other American restaurants to enter the foreign market upon the saturation of the U.S market is noble and highly regarded. Nevertheless, it is important for any companies to put in place mechanisms, which will enhance their operations in the market. It is clear that competition in the industry will continue to grow, and the best marketers will have the best share. The first proposed strategy is to incorporate technology in marketing. In this respect, the social media and corporate website, which are rampantly used by the young people, should be used. The second proposal is to locate the outlets in a strategic place. Therefore, the restaurants should be conveniently located in areas that can be accessed by the customers. In essence, McDonalds should look for premises in the main streets of the big cities where more customers are based.