Marketing Principles for MacDonald's: Segmentation, Targeting and Positioning

This report focuses on the marketing principles for MacDonald's, the world's largest chain of hamburger fast food restaurants. It covers the various elements of marketing process, benefits and costs of marketing orientation, micro and macro environmental factors influencing market decisions, proposing segmentation criteria, range of products and services, buying behavior affecting marketing activities, and proposing a new positioning for selected service or product. The report also discusses product development for sustaining competitive advantage, distribution and pricing strategies, promotional activities, and additional elements of marketing mix.

Marketing Principles

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 The various elements of marketing process .........................................................................1
1.2 The benefits and cost of marketing orientation to MacDonald's..........................................2
TASK 2............................................................................................................................................2
2.1 The micro and macro environmental factors influencing the market decisions..................2
2.2 Proposing segmentation criteria for MacDonald's in different markets................................5
2.3 Range of products and services of MacDonald's and targeting strategies for them..............5
2.4 Buying behavior affects marketing activities in different buying situations........................6
2.5 Proposing a new positioning for selected service or product of MacDonald's.....................6
TASK 3............................................................................................................................................7
3.1 Product development for sustaining competitive advantage.................................................7
3.2 Distribution strategies used by MacDonald's for customer's convenience and satisfaction. 7
3.3 Pricing strategies used by MacDonald's as per market conditions.......................................8
3.4 Promotional Activities of MacDonald's to achieve the marketing objectives......................9
3.5 Additional elements of Marketing mix...............................................................................10
TASK 4..........................................................................................................................................11
4.1 Marketing mix for two different customer segments..........................................................11
4.2 Difference in marketing products and services to business................................................11
4.3 Difference in international marketing and domestic marketing..........................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Marketing principles are the ideas which is formed for the product promotion strategies.
Some organizations use variety of marketing principles for modifying the market performance of
existing products and successful establishment of product in new market segment (Day, 2005).
With regards to this, the firm is undertaken for present study is MacDonald's which is the world's
largest chain of hamburger fast food restaurants with 68 millions customers daily in multiple
countries. MacDonald's have 36000 outlets and founded in 1940 in United States. This report
will outline the concepts and process of marketing with the concepts of segmentation, targeting
and positioning and the individual elements of marketing mix along with their use in different
context.
TASK 1
1.1 The various elements of marketing process
The various elements of marketing process of MacDonald's are as follows, Analyzing market environment: for analyzing the market environment MacDonald's will
require a strategic tool to be get the competitive advantage. Thus, the firm can focus on
SWOT analysis, PESTEL analysis, Porter's five force and value chain analysis etc. for
analyzing the market environment. Identifying the target market: MacDonald's can target on particular areas internationally
and increase the variety in restaurants for increasing sales and profitability (Kimball,
2011). The firm can analyze a market segment where segment in which people like to
have fast food in routine. Setting core goals and objectives: MacDonald's have to define their marketing objectives
that will maximize the profits and help in achieving long term and short term objective of
the firm. However, it is very important for the firm to improve the goodwill of the firm as
well. The primary aim of MacDonald's is to serve good food in fun and friendly
environment and also, the firm want to be socially responsible company and to provide
good returns to its stakeholders.
 Determining marketing mix: The firm is focused only on particular food products which
it is serving in its outlets and satisfying customers demand in significant way. Moreover,
the customers of MacDonald's are aware of unique characteristics of cited firm and have
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trust on the food quality it is serving to its customers (Oplatka and Hemsley-Brown,
2007).
1.2 The benefits and cost of marketing orientation to MacDonald's
Marketing orientation for an organization like MacDonald's is an organizational strategy
which is dedicated to meet the needs of its customers. All business strategies and product
development rotate around the desire of this desire. However, the MacDonald's aim is to serve
good food to its customers in fun and friendly environment. Thus, the firm is serving its
customers at affordable prices and quality services.
Cost: Increasing value for customers increases the production cost of MacDonald's as well.
Marketing orientation floats with a momentous cost as MacDonald's will have to analyze all their
necessary resources and factors effectively and in efficient manner. Moreover, The finance profit
of MacDonald's have been always stable because of its quality assurance to its customers and
with the range of food products it is serving to ins consumers in multiple countries (Doyle,
2009). However, the firm is a leading restaurant chain in the world but its promotions and
advertisement expenses are decreasing the profits as they have high prices of some food products
and some food products are not culturally accepted by the people in few countries.
Benefits: MacDonald's has secured its place as the best fast food restaurant chain in global
markets and got “the best food service retailer of the year, 2012” award which it can use
efficiently in marketing and promotion activities of their existing and new food products.
Furthermore, the firm can also enter in a market where its competitors such as KFC, Subway and
Burger king are not accepted by the customers. However, the MacDonald's is able to maintain its
customers and revenue in all the markets successfully (Li and Hung, 2009).
TASK 2
2.1 The micro and macro environmental factors influencing the market decisions
The micro environmental factors of MacDonald's is analyzed through SWOT analysis.
Which is as follows,
STRENGTHS:
 World's largest fast food market share.
 Brand recognition value at $50 billion.
WEAKNESSES:
 Unhealthy food menu.
 Low differentiation.
 Negative publicity.
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 Food menus as per local choices.
 More than 80% restaurants with
independent franchisee.
 Partnership with best brands.
 High employee turnover.
OPPORTUNITIES:
 Home delivery option.
 Increased demand of healthy food
products.
 Changing customer habits and new
customer segment .
THREATS:
 Soaked fast food markets in developed
economy countries.
 Trend towards healthy food.
 Currency fluctuation.
 Local fast food chains.
 Cultural effects on food habits.
With regards to MacDonald's micro environment analysis it is identified that firm is
financially strong as world's largest fast food chain and is a recognized brand all over the world.
Further, the brand have so much potential for its advertising and promotion activities and its
locally adopted food varieties (Railsback and Hite, 2008). However, the firm is facing negative
publicity also in some areas and it is providing typically unhealthy foods to its consumers which
it need to improve by time for increase the sales and revenue of the firm. But, at the same time it
has lot of opportunities for turning its weaknesses into strengths as the firm have huge customer
preferences.
Furthermore, the macro environmental factors of MacDonald's will be analyzed through
PESTEL analysis, which influences the marketing decisions are as follows,
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Political: The political factors of a business depicts the political influence of the business. Since,
MacDonald's is the world's largest fast food restaurant chain, the political factors of international
market will highly affect the business of MacDonald's. These political factors are tax rate, fiscal
policies and interest rates of the country.
Economic: The economy factors of the country describes the economic condition of the country
which make impact on business growth. The economy of the country highly affects the buyer
behavior that also make impact on firms business. Thereby, it is essential to consider economic
factors of the country at the time of developing business strategies (Oplatka and Herts-
Lazarovits, 2006).
Social: The social factors of the business scrutinized the social environment of the market with
factors such as, current market trends, cultural effects on food habits, populations and
demographics. For instance, at the time of launching restaurant in India, Macdonald's have
changed its beef burger into aloo tikki burger.
Technological: Further, in the technological factors the firm should analyze the technological
growth of the country which may affects the operation of the firm. The technological factors of
the country can highly affect the marketing opportunities of MacDonald's. Thereby, it is
necessary to analyze the technological growth of global country.
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Illustration 1: PESTEL Analysis
Source: PESTEL Analysis, 2015.

Environmental: In recent years, environmental factors are highly affecting the business of
MacDonald's. As per these environmental factors many issues such as weather of the country,
energy saving initiatives are the important aspects (Jaafar, Aziz and Wai, 2008). These factors
affects the customers and their food preferences. Thus, the firm should necessarily analyze the
environmental factors of the country before making any marketing decisions.
Legal: The legal environment in which the cited firm operates its business is highly dependent
on the legal structure of the global country, as per these legal factors the firm should analyze all
the laws, rules and regulations of the country for the successful business operation and marketing
operations.
2.2 Proposing segmentation criteria for MacDonald's in different markets
MacDonald's is world's largest fast food restaurant chain and focuses on new marketing
strategy in order to increase the sales and revenue of the firm. MacDonald's have realized its
weaknesses as it is serving unhealthy food to its customers. Thus, improvement in food products
and requirement of effective market segmentation is essential. However, the firm is attempting to
make it more reliable and actionable (Rosenbloom, 2011).
Since, MacDonald's is the world's largest fast food restaurant chain, it is very important
to understand its targeted customer’s. However, MacDonald's has segmented its food products
on the basis of demographics, psycho graphic and behavioral preferences of people. They have
segmented their products and positioned them according to kids, students and family. But, in the
future, segmentation according to adults and targeted group is necessary.
2.3 Range of products and services of MacDonald's and targeting strategies for them
After proposing a market segmentation criteria, MacDonald's is focused on adopting a
suitable targeting strategies as a single marketing strategy which will not allow MacDonald's to
get a competitive advantage. The different targeting strategies of MacDonald's are as follows, Undifferentiated strategy: As per undifferentiated strategy the cited firm uses single
promotional activity between all customers segments. This strategy is effective in
MacDonalds when specific menu is being served among the people and firm have less
competition in the market (Tate, Ellram, Bals, Hartmann and van der Valk, 2010). Concentrated Strategy: The concentrated marketing strategies are designed for specific
market segments with various promotional activities. As per this market strategy firm can
attract the targeted customers easily.
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 Differentiated Strategy: In this type of marketing strategy MacDonald's can focus on two
different type of customer segments through the development of appropriate marketing
mix for each segment.
However, the firm is launching healthy vegetable burger in the market, MacDonald's can
implement differentiated strategy for target customer segment as MacDonald's have varied
promotional activities for all its customer segments such as, kids, students and families (Vich-i-
Martorell, 2004). These healthy food is introduced to customers as per the needs and demand of
consumers.
2.4 Buying behavior affects marketing activities in different buying situations
Buying behavior is made of all the internal and external factors that describes why
customer should buy and use certain products. This type of behavior affects the whole marketing
strategies which is a firm is adopting for promoting its product. One of the basic factor that make
impact on buyer behavior is product's need and demand and complex decision making capability
of the customer. For instance, in some particular countries some food products are restricted than
MacDonald's should not sell those products in that particular country. Instead of this, the firm
can provide those customers local food specialty.
Furthermore, effective and quality services to consumers also affects the buying behavior
of consumers (Richards, 2015). However, the firm should implement the marketing strategies
through which it can attract maximum numbers of customers. Also, these marketing strategies
can turn potential consumers into sales. Thus, Consumers buying behavior highly affects the
marketing activities in various situations.
2.5 Proposing a new positioning for selected service or product of MacDonald's
Product positioning is essential for marketing plan. This is a process by which
MacDonald's can determines that how it can communicate between the people about its new
service. Moreover, by positioning the firm can develop its brand image and goodwill of the firm
within the customers (Terpstra, Foley and Sarathy, 2012). With new improved services and
increased food range MacDonald's will be able to attract more number of customers. Cited firm
has categorized its customers in three segments such as, kids, students and family. Accordingly,
the firm will provide them services. For instance, MacDonald's can provide toys and other gifts
along with meals to the kids. Similarly, the firm can offer discounts and particular meal plans for
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its students and family customers. However, the firm is opting for iconic positioning that is build
up on aims, values and aspirations of individual consumers.
Furthermore, in healthy food products MacDonald's have clearly described that it will use
hygienic and organic food products which is healthy and does not affect the health of people
(Oplatka, 2007). Moreover, MacDonald's can set the prices for mentioned services and food
products according the cost and demand of the product. The price firm is deciding should be
economic and affordable by all age group consumers so that it will provide the most profitable
outcome to the firm.
TASK 3
3.1 Product development for sustaining competitive advantage
Sustainable competitive advantage is required by all the businesses to expand in today's
global environment. It provides the maintenance and transformation of organization to survive
on competitive position in market. Product development is the advantage for MacDonald's. This
product and service development will make the firm to survive in competitive market for long
time (Bob, 2005). For instance, MacDonald's is developing its food products by involving
healthy ingredients. Moreover, The firm can develop these products by increasing the use of
organic and healthy ingredients with hygienic packaging of food. MacDonald's can segregate its
products between three criteria such as, kids, students and family. The packaging should be
according to these criteria. The competitive advantage remain in the organization only when the
firm is able to provide same products and services as competitors are providing but with lower
costs. Firm's pricing power usually take advantage of high obstacle to enter in a market and to
earn a governing position in a market. Since, MacDonald's is world's largest fast food restaurant
chain it is already having that competitive advantage to the firm. But, with product development
the firm can also increase its sales and revenue.
3.2 Distribution strategies used by MacDonald's for customer's convenience and satisfaction
The effective distribution of product is essential for customer's convenience and
satisfaction for attracting more number of consumers. Thus, with the support of effective means
of product distribution MacDonald's can increase the sales and revenue of the firm. For
distributing products in appropriate place, cited organization developed accurate distribution
methods so that product is easy reach the consumers and increase the sales of MacDonald's.
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As per current scenario MacDonald's is serving its consumers by its outlets in multiple
cities and it is also having an option of home delivery. But with the increasing competition the
firm can improve more its online and telephonic booking channels and provide better and fast
services to its customers (Applbaum, 2004). Currently, MacDonald's have home delivery option
only in 5 km. range from the restaurant. However, the firm can provide the home delivery
services in the 10 km. area from the restaurant. Further, the firm can also develop its online
booking portals by making it easy and simple for new users. The online booking and home
delivery option is more appropriate and suitable for the consumers than going to the restaurant.
Also, the menu and pricing in all the MacDonald's store of the country should be same.
3.3 Pricing strategies used by MacDonald's as per market conditions
Many of the organizations now realize the concept cost based pricing and its effect on the
profit of the organization. As a result, most of the organizations have seized the pricing authority
from finance department and assigned the rights of determining the price to the marketing and
sales department. However, this style of pricing is clearly as per the value based pricing, because
marketing and sales is important part MacDonald's for its best position among the customers
with the value of customers.
The level of competition that MacDonald's is facing with its competitors such as,
Subway, KFC, Dominoz and Pizzahut etc. helps in determining the pricing strategies as well. In
few cases the firm gets the opportunity to decide the price for its food products and in some cases
it cannot decide the prices (Kimball, 2011). When MacDonald's have the scope to decide the
price, there are so many opportunities and pricing strategies are there that firm can choose. As
MacDonald's is world's largest fast food chain there are no such competitors for MacDonald's
which can complete in food quality and services and affects the scope to determine the price. The
firm provides the best quality food to its customers with affordable and economic prices.
However, the firm can use market skimming pricing strategy. MacDonald's will adopt this
strategy to hold the maximum share of business and profits. At this stage, MacDonald's is on top
of the business. Thus, the firm is free to decide the prices for its new healthy food products. But
for generating revenue and increased routine sales the firm should use low pricing policy to
attract more number of consumers.
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3.4 Promotional Activities of MacDonald's to achieve the marketing objectives
To achieve a marketing objective the firm requires a variety of integrated strategies and
promotional activities. Promotion is one of the important element of marketing mix. The
promotion of the product focuses on the strategies a firm uses to provide information to its
customers for the products. These promotional activities are consisted of advertising, personal
selling, sales promotion, public relations etc.
However, MacDonald's uses various promotional activities in order to achieve the
marketing objective. The promotional activities which MacDonald's adopts is televisions
advertisement, newspaper advertisement, brochures, social media marketing and posters etc. with
the help of these promotional activities firm attracts the maximum number of customers (Bob,
2005). The firm regularly advertise about its new launched food menus and offers on the
television. MacDonald's also advertise in newspapers for communicating about the company in
the large number of people. Currently, social media and internet uses are highly in trend with
people. However, MacDonald also uses social media marketing channel to attract the customers.
At this time, social media marketing is highly beneficial for the firm and it will help the
organization to achieve its marketing objectives.
3.5 Additional elements of Marketing mix
Additional elements of the extended marketing mix for MacDonald's are as follows,
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Illustration 2: Additional elements of
marketing mix
Source: Extended marketing mix, 2015

 People: This is critically important element of marketing mix for product promotion.
People are important part in which product is being produced. This additional element of
marketing mix allows MacDonald's to serve the people according to their culture and
food preferences of the country. Process: The process needs to be clearly defined between customer's and service
providers. As per this element of marketing mix firm can determine the process of
product which it is going to provide its customers, such as, manufacturing date of the
food, expiry date, ingredients used for manufacturing etc.
 Physical evidence: The physical evidence of the marketing mix play significant role for
new product development. As per this element the restaurants of MacDonald's should be
attractive and comfortable along with the quality services to customers (Rosenbloom,
2011). The fun and friendly environment of the MacDonald's restaurants will help in
attracting more number of customers and increase the revenue and sales of the
organization.
TASK 4
4.1 Marketing mix for two different customer segments
Marketing mix for two different segments in the consumer markets of MacDonald's are
as follows, Product: In fast food business, the production and consumption of food is largely
depends on the taste of the customers. Thus, MacDonald's will serve the hygienic and
quality food to its three consumer segments such as, kids, students and family. For kids
the firm can produce healthy products such as milkshakes and vegetable sandwiches.
Moreover, for Students and family MacDonald's can include variety of fast foods and
beverages. Price: The price of product plays significant role in attracting customers. The prices for
fast food for kids and students should be very nominal and affordable. Whereas, for
family segment also the prices should be economic and lower than the competitors. The
prices of food and service should be determined by considering buying behavior of
consumers.
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 Promotions: Promotion of the product is essential for informing maximum number of
people about the product (Applbaum, 2004). MacDonald's can advertise about its
restaurants on cartoon channels for attracting kids. However, for students the firm can use
social media marketing as promotion channel.
 Place: furthermore, the place of marketing mix determines about the product is produced
and consumed at the same place. Thereby, it is very important for MacDonald's to make
the fresh food and provide the same to its customers. The place of manufacturing the food
should be hygienic and clean.
4.2 Difference in marketing products and services to business
Marketing of products to the businesses and to the consumers is totally contrary.
Marketing of product in businesses is known as B2B (Business to Business) marketing. Whereas,
Marketing to the customers is known as B2C (Business to consumer). MacDonald's can utilize
B2B marketing for strategies for its food products and beverages for distribution in the market.
For instance, the firm selling packaged food to a retailer for reselling. B2 B marketing is driven
by the relationship with the consumers so the quality of the food, pricing and some economic
elements can be handled effectively.
Moreover, Macdonald's is primarily focused on B2C marketing because it serves fresh
food to its consumers. Thereby, B2C marketing is essential factor for MacDonald's (Oplatka and
Hemsley-Brown, 2007). This marketing method cited firm use for attracting maximum
customers in short time. With regards to this strategy firm provides them various offers such as
meal passes, gift coupons, displays and additional benefits along with services. More in this, firm
also uses various promotional activities as well to attract B2C customers.
4.3 Difference in international marketing and domestic marketing
International marketing is kind of business actions that is used for providing products and
services to the consumers globally or in international markets. On the contrary, domestic
marketing is concentrated only in the local market and particular customer segment in the local
economy (Davis, 2015). International marketing is the bigger form of domestic marketing in
which the firm deals with different people.
Domestic marketing strategies of the organization face the competition with localized
competitors. But international marketing face the challenges from the businesses across the
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globe. Thus, all the marketing principles and strategies is implemented at presently for local
customers should be varied in international markets.
CONCLUSION
It is concluded in this report that, marketing principles are essential for the organization
for developing new product. Marketing principles depicts the various elements of marketing such
as macro and micro environmental factors which affects the businesses with the concept of
segmentation, targeting and positioning. Moreover, this report helps in understanding the various
marketing mix concepts of international and domestic markets.
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