Marketing Principles of McDonald's

This report discusses the marketing principles of McDonald's, including elements of marketing process, micro and macro environmental factors, segmentation criteria, pricing and distribution strategies, promotional activities, and extended marketing mix.

MARKETING PRINCIPLES

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Elements of marketing process.........................................................................................1
1.2 benefits and costs of marketing orientation.....................................................................2
TASK 2............................................................................................................................................2
2.1 Micro and Macro environmental factors influencing marketing decisions in McDonald's
................................................................................................................................................2
2.2 Segmentation criteria used by McDonald's......................................................................3
2.3 target strategy used by McDonald's..................................................................................4
2.4 how buying behavior affects marketing activities McDonald's......................................4
2.5 New positioning for a selected service or product of McDonald's..................................5
TASK 3............................................................................................................................................5
3.1 How McDonald's products are developed in order to make sure that competitive
advantage is sustained............................................................................................................5
3.2 Explain distribution strategies used by McDonald’s.......................................................6
3.3 Explain pricing strategies used by McDonald.................................................................6
3.4 Promotional activities of McDonald's.............................................................................7
3.5 Elements of the extended marketing mix........................................................................7
TASK 4............................................................................................................................................8
4.1 marketing mixes for two different segments in the consumer markets...........................8
4.2 differences in marketing products and services to business and consumers...................8
4.3 Difference between International marketing and domestic marketing.............................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
The principles of marketing helps the company to evaluate marketing process and it
different elements. The present report gives a full view of marketing techniques, processes and
principles of McDonald (Hassan and Craft, 2012). McDonald uses product differentiation
strategy to lessen the expenditure and increase in profit. A major advantage with a marketing
orientation is that McDonald is built on addressing the needs of those they serve. Fast food
restaurant meets these objectives by intensifying their skills and competencies through grooming
and improvement programs in order to make them give improved public presentation and to be
capable of acquiring rewards. McDonald keep their prices low to high for their burgers as
different income groups can enjoy eating in the restaurant and can buy food according to their
budget. Moreover, it increases its brand image with these marketing strategies.
TASK 1
1.1 Elements of marketing process
Marketing Process means the procedures that are formed to guarantee the customers have
an affirmative and unforgettable experience when buying and using goods or service (Doole and
Lowe, 2008).
Elements of marketing process are as:
1. Handling the elements of marketing mix: The value of handling every element of
marketing mix is wants and other unique character of targeting the customers. This can
be fully understood by McDonald management.
2. Identifying marketing goals: McDonald's Selling objectives are sustainability and profit
maximization doing business in short-term and long-term view and raising the economic
value of the brand representation. These goals of McDonald are intimately connected
with their business scheme that belong to the following seven elements :
 To flourish the UK center
 Rise in global existence through huge restaurant chain
 Flourishing fast food chain services in existing market
 Centering on corporate social responsibility activities
 Intensifying brand value
The expenditure of McDonald's marketing orientation might be important. The
contribution of marketing orientation of McDonald has its central motive of profit maximization.
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Nexus between McDonald’s marketing orientation and its competitive advantage are directly
related and hefty. In difference to this, these competitive advantages of McDonald are associate
with its competitive expenditure, and later it is communicated via the promotional message.
1.2 Benefits and costs of marketing orientation
Marketing orientated concept means a business concern enact to what consumer need.
The decisions interpreted are based on the data about customers needs and wants, rather than
what the enterprise consider is right for the consumer.
 Costs: During market orientation McDonald spends more time on consumer interaction
and research. This can increase the expenditure of the restaurant. McDonald uses product
differentiation strategy to lessen the expenditure and increase in profits (Doole and Lowe,
2008). McDonald's competitors may be able to develop more distinct features and more
cutting-edge advances in their burgers and fast food. The hope for marketing-oriented
businesses is that these more-advanced products miss the mark on what customers want
or cost too much.
 Benefits: A major advantage with a marketing orientation is that McDonald is built on
addressing the needs of those they serve. If customers want certain features or attributes
in the food products, McDonald try to achieve this by coming up with innovative idea.
McDonald is customer-centric organization that spend most of the time researching to
acquire the best of ideas that gives customer maximization satisfaction.
TASK 2
2.1 Micro and Macro environmental factors influencing marketing decisions in McDonald's
The micro factors are Suppliers: Suppliers are the stakeholders of McDonald that adopt objectives of profiting
orders from airline of different services they deal with. McDonald meets their aim by
being consistent in their orders by providing tactful information about enhancing quality
of the services which they provide. Suppliers are not that important in decision making
because they are afraid of losing their contract bridge with McDonald. Customers: Customers in McDonald are actually guests. These guests are the
stakeholders who buy services. Their aim is to obtain quality services at fare prices in
which they can find worth against their purchases. McDonald meets these objectives by
offering quality services on time while also providing place substitute to them.
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 Employees: McDonald's employees are intrinsic stakeholders and their aim is to acquire
fair aid from airlines in terms of wage, rewards, promotions etc. Fast food restaurant
meets these objectives by intensifying their skills and competencies through grooming
and improvement programs in order to make them give improved public presentation and
to be capable of acquiring rewards.
Macro factors are:
 Political environment: The international operations of McDonald’s are highly influenced
by the individual state policies enforced by each government. For instance, there are
certain groups in Europe and the United States that clamor for state actions pertaining to
the health implications of eating fast food (Kokemuller, 2004). They have indicated that
harmful elements like cholesterol and adverse effects like obesity are attributable to
consuming fast food products.
 Economical environment: Organizations in the fast food industry are not excused from
any disputes and troubles. Specifically, they do have their individual concerns involving
economic factors. Branches and franchises of fast food chains like McDonald’s has the
tendency to experience hardship in instances where the economy of the respective states
is hit by inflation and changes in the exchange rates.
 Social environment: McDonald’s indulge a particular variety of consumers with definite
types of personalities. It has also been noted that the company have given the markets
such as the United Kingdom, an option with regards to their dining needs.
 Technological environment: McDonald’s have significantly been infused with new
technology. Elements like the inventory system and the management of the value chain of
the company allows for easy payments for their suppliers and other vendors which the
individual stores in respective markets deal with. The integration of technology in the
operations of McDonald tends to add value to their products.
2.2 Segmentation criteria used by McDonald's
The segmentation criteria used by McDonald's demographic segmentation and behavioral
segmentation. This segmentation is done on the basis of purchasing power of the customers and
taste, preference.
Demographic segmentation is market segmentation according to age, race, religion,
gender, family size, ethnicity, income, and education. Demographics can be segmented into
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several markets to help an organization target its consumers (Marshall, 2013). According to
demographic segmentation, McDonald keep their prices low to high for their burgers as
different income groups can enjoy eating in the restaurant and can buy food according to their
budget.
Behavioral segmentation demonstrates that the restaurant works on the basis of taste and
preference of the customers. As customers is the center of this fast food joint. They are
segmented also on the basis of socio class such as lower, middle and upper class. For example:
McDonald gives burger starting price of £20.
2.3 target strategy used by McDonald's
Differentiated
Scheming more than one
promotional content, with
every individual
communicating various
profits.
McDonald targets families by sending
a promotional message about the new
burger innovated and its good parts.
Concentrated
Thinking of a promotional
message that communicates
the gains craved by an
individual segment (Doole
and Lowe, 2008).
McDonald targets the adults by placing
ads in magazines and by providing
them discount cards.
Undifferentiated Broadcasting the whole
promotional message.
In this strategy, McDonald promotes
its hamburgers by targeting adults by
publishing the ads on in the
newsletters.
2.4 How buying behavior affects marketing activities McDonald's
The buying behavior of customers affects marketing activities McDonald's
 Cultural: this factor includes a consumer’s culture, subculture and social class. These
factors are often inherent in our values and decision processes. These are inculcated
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behaviour which mainly affects the marketing activity. In case of McDonald, the different
classes of the society affect the pricing of the hamburger.
 Social: this behavioural factor includes groups (reference groups, inspirational groups
and member groups), family, roles and status. This explains the outside influences of
others on our purchase decisions either directly or indirectly. The standard of living
mainly affects the marketing activity of McDonald's
 Personal: These are those behaviour that are personal that include such variables as age
and life cycle stage, occupation, economic circumstances, lifestyle, personality and self
concept.
 Psychological: these are psychological behaviour that affects McDonald purchase
decision include motivation perception, learning, beliefs and attitudes.
2.5 New positioning for a selected service or product of McDonald's
Product positioning is the process marketers use to determine how to best communicate
their products' attributes to their target customers based on customer needs, competitive
pressures, available communication channels and carefully crafted key messages.
Positioning of hamburger is done on the basis of demographic and behavioural.
Positioning is done demographically where market segmentation according to age, race,
religion, gender, family size, ethnicity, income, and education. Demographics can be segmented
into several markets to help an organization target its consumers. According to demographic
segmentation, McDonald keep their prices low to high for their burgers as different income
groups can enjoy eating in the restaurant and can buy food according to their budget.
Positioning is done on the basis of Behaviour that demonstrates the restaurant works on the basis
of taste and preference of the customers. As McDonald is customer-centric organization.
TASK 3
3.1 How McDonald's products are developed in order to make sure that competitive advantage is
sustained
Competitive advantage is outlined by the existence of short goals. Business enterprise
needs to have powerful strategies that work in the advantage of their achievement on economies
of scale. The enterprise strategy of the company should be based upon functional skills. In
summation, successful companies endeavour to make over an environment where they are able
to attain tough targets through ever-changing business processes and functions.
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McDonald’s is the leading firms that are working in the fast food industry. This has been
the competitive advantage of McDonald (Kokemuller, 2004). It has been successful because of
its cheap food. It has offered nutritional value while raising awareness about health. In
summation to this, it has expanded into different markets through the use of innovative and
creative strategies. Burger King has also been a major player in the fast food industry. Its success
is its ability to target niche markets in a proficient manner. McDonald’s brand value and healthy
food have provided high number of customer base. The trust of the customers has made it on the
best fast food chain in the world.
3.2 Explain distribution strategies used by McDonald’s
For product-oriented companies like McDonald, should establish the most befitting
distribution strategies (Hassan and Craft, 2012). To be successful, they should focus on
maximizing sales and profits. Distribution strategies used by McDonald are:
 Mapping hamburger's need to the customer.
 Devising consumer preferences and comparing those preferences with actual availability
of fast food.
 Coming up with new innovative channels.
 Analyzing competitors’ strategies, examining them and their potency with McDonald.
 Discreet interviews with McDonald distribution partners to identify areas for
improvement, as well as existing strengths to be encouraged.
McDonald uses Intensive distribution strategy. When McDonald is having a mass
marketing product like hamburger that is loved by both adult and kids, then it uses intensive
distribution. Intensive distribution tries to cover as much of the markets as it can the fast food
restaurant.
3.3 Explain pricing strategies used by McDonald
McDonald uses Penetration pricing where the strategy is designed in such a way that the
company enters in the market to take market share. In the starting it keeps the price of the
product low to attract buyers (Dibb and Simkin, 2013). The idea is that the business will be able
to raise awareness and get people to try the new products. Even though penetration pricing may
initially create a loss for the McDonald, the hope is that it will help to create awareness. For
example: Prices for its extra-value meals like McVeggie and McChicken were decreased.
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Typically a meal consists of burger, French fries and soft drinks. This strategy was extremely
great, as it came at a time when food prices were exploding by the day. Cutting prices in such
times did not make sense. But the management team of McDonald was convinced that squeezing
the prices of it combo meal offering would help customers prefer McDonald’s as a lunch and
dining destination as well.
3.4 Promotional activities of McDonald's
Promotional activities used by McDonald's through
 PR activities: The public relations element involves promoting a product or service in an
informal sense, for example, by developing a McDonald'’s reputation for customer
service so that people recommend its hamburgers to others. Associating McDonald with
charitable endeavors is another way to generate public goodwill. McDonald also can
integrate other marketing strategies. For example, a business might advertise that the
profits from an upcoming sale will fund a charity located in a geographic region into
which the McDonald hopes to expand its operations (Morgan, Katsikeas and Vorhies,
2012).
 Social Media: Social media websites such as Facebook and Google+ offer McDonald a
way to promote its new product in a more relaxed environment. This is direct marketing
at its best. Social networks connect with a world of potential customers that can view
your McDonald from a different perspective. Rather than seeing McDonald as "trying to
sell" something, the social network can see the fast food restaurant that is in touch with
people on a more personal level (Lusch and Vargo, 2014). This can help lessen the divide
between the McDonald and its customers, which in turn presents a more appealing and
familiar image of McDonald.
3.5 Elements of the extended marketing mix
The Elements of the extended marketing mix are:
 People – All companies are reliant on the people who run them from front line Sales staff
to the Managing Director. Having the right people is essential in McDonald because they
are as much a part of their business offering (Yu and Cai, 2007).
 Processes –The delivery of McDonald service is usually done with the customer present
so how the service is delivered is once again part of what the consumer is paying for.
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 Physical Evidence – Almost all services include some physical elements even if the bulk
of what the consumer is paying for is intangible. For example: in McDonald, they provide
their client with a good quality hamburger.
TASK 4
4.1 Marketing mixes for two different segments in the consumer markets
Marketing mix of two different segments is as follows:
 Product - The hamburgers should be for both the type of consumer. They are different
income group and taste of the consumer. It should work and it should be what the
consumers are expecting to get.
 Place – According to McDonald the hamburgers should be available from where your
target consumer finds it easiest to shop. This may be High Street, Mail Order or the more
current option via e-commerce or an online shop.
 Price – The Product should always be seen as representing good value for money. This
does not necessarily mean it should be the cheapest available; one of the main tenets of
the marketing concept is that customers are usually happy to pay a little more for
something that works really well for them (Wright, 2006).
 Promotion – Advertising, PR, Sales Promotion, Personal Selling and, in more recent
times, Social Media are all key communication tools for an organization. These tools
should be used to put across the McDonald ’s message to the correct audiences in the
manner they would most like to hear, whether it be informative or appealing to their
emotions.
4.2 Differences in marketing products and services to business and consumers.
Differences in marketing products and services to business and consumers
 In McDonald, Business marketers generally deal with sophisticated employees whereas it
is not at all necessary every end user in consumer market would respond to marketers
politely. Business buyers generally are educated and well informed. In consumer market,
your buyer can be anyone- educated, uneducated, labor and so on. Business marketers
themselves need to be well spoken and polished. They must have a pleasing personality
and good convincing power (Mason and Harris, 2006).
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 Business marketers need to be extremely careful about their mode of communication.
Emails exchanged with clients should have appropriate subject line. Mails with irrelevant
subject line are generally not read by clients. In business marketing, marketers ought to
send personalized emails (Lin and Zhou, 2012). Bulk or mass mailers do not work in
business marketing. In consumer marketing, products can be promoted through
advertising, pamphlets, brochures, hoardings or simply mass mailers.
4.3 Difference between International marketing and domestic marketing
Domestic marketing of McDonald depends upon production, promotion, distribution, and
sale of goods and services in a local market while international market is the production,
promotion, distribution, and sale of goods and services in a global market. Domestic marketing is
less risky and easier to conduct while international marketing is more risky and more complex.
Domestic marketing requires lesser financial resources while international marketing requires
huge financial resources (Baker, 2014). Domestic marketing deals with only a single market
while international marketing deals with several different countries and markets. International
marketing is more challenging and requires more commitment from the company because of the
uncertainty and differences in laws and regulations in the global market while domestic
marketing deals only with the laws and regulations of one country.
CONCLUSION
It can be concluded that the marketing principle help the company in evaluating
marketing process and it different elements. McDonald uses Intensive distribution strategy.
When McDonald is having a mass marketing product like hamburger that is loved by both adult
and kids, then it uses intensive distribution. It uses penetrating price strategy, the idea is that the
business will be able to raise awareness and get people to try the new products. Even though
penetration pricing may initially create a loss for the McDonald, the hope is that it will help to
create awareness. Promotional activities like PR activities McDonald also can integrate other
marketing strategies. Moreover, marketing principles help McDonald in maintaining its brand
name.
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REFERENCES
Journals and Books
Baker, M.J., 2014. Marketing strategy and management. Palgrave Macmillan.
Dibb,S. and Simkin, L.,2013. Market Segmentation Success: Making It Happen! . Routledge.
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Implementation. Cengage Learning EMEA.
Hassan, S.S. and Craft, S.,2012.Examining world market segmentation and brand positioning
strategies. Marketing Intelligence and Planning. 29(5). pp.344 – 356.
Lin, Y., Ma,S. and Zhou, L.2012. Manufacturing strategies for time based competitive
advantages. Industrial Management and Data Systems.112 (5).pp.729 – 747.
Lusch, R.F. and Vargo, S.L., 2014. The service-dominant logic of marketing: Dialog, debate,
and directions. Routledge.
Marshall, R., 2013. Guest Editorial: Cognitive mapping of strategy in marketing. Journal of
Business Research, 66(9), pp.1541-1543.
Mason,J.K. and Harris, C.L.,2006. Market orientation emphases: an exploration of macro, meso
and micro drivers. Marketing Intelligence and Planning. 24(6)pp.552 – 571.
Morgan, N.A., Katsikeas, C.S. and Vorhies, D.W., 2012. Export marketing strategy
implementation, export marketing capabilities, and export venture performance. Journal of
the Academy of Marketing Science, 40(2), pp.271-289.
Wright, R.,2006. Consumer Behaviour. Cengage Learning EMEA.
Yu, Y. and Cai, S., 2007.A new approach to customer targeting under conditions of information
shortage. Marketing Intelligence and Planning. 25(4). pp.343 – 359.
Online
Kokemuller, N., 2004. Advantages & Disadvantages of Having a Marketing Orientation in an
Organization. [Online]. Available through :<
http://yourbusiness.azcentral.com/advantages-disadvantages-having-marketing-
orientation-organization-1510.html>. [Accessed on 25th December 2015].
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