Fundamentals of Marketing Individual Assignment on McDonald’s

This is an individual assignment on McDonald’s for the subject Fundamentals of Marketing. It covers the analysis of the marketing environment, consumer behavior, segmentation, targeting, positioning, and marketing strategy.

International Collage of Business and Technology
FUNDAMENTALS OF MARKETING
Individual Assignment on McDonald’s
Programme Higher Diploma in Business Management
Student Name M.D. Semini Prasangika
ICBT Student Number GM/HDBM/01/22
Subject Name Fundamentals of Marketing
Subject Code BM4153
Word Count 2885
Submission Date 24/04/2021
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Assignment Cover Sheet
Qualification Module Number and Title
HD in Business Management BM4153: Fundamentals of Marketing
Student Name & No. Assessor
M.D. Semini Prasangika
GM/HDBM/01/22
Ms. Randika Dulanthi
Hand out date Submission Date
24/04/2021 25th of April 2021
Assessment type Duration/Length of
Assessment Type
Weighting of Assessment
Coursework (3000 words) 70%
Learner declaration
I, M.D. Semini Prasangika certify that the work submitted for this assignment is my own and
research sources are fully acknowledged.
Marks Awarded
First assessor
IV marks
Agreed grade
Signature of the assessor Date:
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FEEDBACK FORM
INTERNATIONAL COLLEGE OF BUSINESS & TECHNOLOGY
Module : BM4153: Fundamentals of Marketing
Student : M.D. Semini Prasangika
Assessor : Randika Dulanthi
Assignment : Report
iii
Strong features of your work:
Areas for improvement:
Marks Awarded:

Statement of Originality of Submitted Work
Myself M.D. Semini Prasangika
Student Id No GM/HDBM/01/22
Module Name Fundamentals of Marketing
I hereby confirm that the work presented here in this report and in all other associated
material; is wholly my own work. And I agree to assessment for plagiarism.
Signature: Semini
Date: 24/04/25
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Acknowledgement
First of all, I must give thanks to my Almighty God for the blessings given in doing
this assignment.
My sincere gratitude Ms. Randika Dulanthi, the module lecturer of Marketing
Management. Thank you for the support and guidance given throughout the lecture
sessions and in doing the assignment.
I also thank my parents and my colleagues for being the behind pillar in my academic
carrier. A special thanks goes to the International College of Business and
Technology, Gampaha campus for the facilities and the guidance give.
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Executive Summary
Businesses need to be aware of the marketing environment in order to run a business.
The marketing environment is divided into two sections. They are the internal
environment and external environment. SWOT analysis is used in the analysis of the
internal environment and PEST analysis is used in the analysis of the external
environment.
Also, the main asset of a business is the consumer. Business integrity can be
maintained if consumer behaviour patterns are properly identified. Marketing Stimuli,
Other Stimuli, Consumer Psychology, Consumer Characteristics, Buying Decision
Process and Purchase Decision are the main components used line up customer
behaviour. Businesses that have identified consumer behaviour patterns, are segment
into different consumer situations. The segmentation is divided into four parts. They
are Geography variables, Behavioural variables, Demography variable and
Psychology bases. After segmentation businesses need to choose the right targeting
strategy and positioning to maintain business continuity, reputation and consumer
attraction.
Product, Price, Promotion and Distribution is main when considering marketing
strategy. There five level of production. They are Core product, Generic Product,
expected product, Augmented product and potential product. Penetration pricing,
Price skimming, Premium pricing and Economy pricing are the main pricing strategy
of price. Business is using Advertising, Sales promotions, Public relations, Personal
selling and Direct marking to promote their product. Also, business is using direct and
indirect distribution to handover their product to the customer. A business can make a
good profit if the above components are used properly.
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Table of Contents
Statement of Originality of Submitted Work................................................................iv
Acknowledgement..........................................................................................................v
Executive Summary......................................................................................................vi
Table of Contents.........................................................................................................vii
List of Figures.............................................................................................................viii
Introduction....................................................................................................................1
1. Marketing Environment.........................................................................................2
1.1. Internal Environmental Analysis.....................................................................2
1.1.1. Strengths...................................................................................................2
1.1.2. Weaknesses..............................................................................................2
1.1.3. Opportunities............................................................................................3
1.1.4. Threats......................................................................................................4
1.2. External Environment Analysis.......................................................................4
1.2.1. Political and Legal Environment..............................................................4
1.2.2. Economic Environment............................................................................4
1.2.3. Socio Cultural...........................................................................................5
1.2.4. Technological Environment.....................................................................6
2. Basic consumer behavior model & segmentation, targeting & positioning...............7
2.1. Consumer Behaviour Model...............................................................................7
2.1.1 Other Stimuli and Marketing Stimuli............................................................7
2.1.2. Consumer Psychology and Consumer Characteristics.................................8
2.1.3. Buying Decision Process..............................................................................9
2.2. Segmentation, Targeting and Positioning......................................................10
2.2.1. segmentation variables...........................................................................10
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2.2.2. Targeting Strategy..................................................................................11
2.2.3. Positioning..............................................................................................12
3. Marketing Strategy...............................................................................................13
3.2. Five levels of product according to McDonald’s..........................................13
3.1.1. Core Product...............................................................................................13
3.1.2. Generic Product..........................................................................................13
3.1.3. Expected Product.......................................................................................13
3.1.4. Augmented Product....................................................................................13
3.1.5. Potential Product........................................................................................13
3.3. Pricing Strategy.............................................................................................13
3.4. Distribution Channel.....................................................................................14
3.5. Promotional tools...........................................................................................14
References....................................................................................................................15
List of Figures
Figure 0-1 Example for Multi Segment Strategy in McDonald’s................................11
Figure 0-2 Positioning Map for McDonald’s...............................................................12
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Introduction
McDonald’s is an American fast-food company. It is founded in 1940 as a restaurant.
It has been operated by Richard and Maurice McDonald brothers. It was located in
San Bernardino, California United states. In 1961, Ray Kroc purchased the McDonald
brothers' equity in the company and began the company's worldwide. McDonald’s
serve quality foods and beverages in 119 countries. Of the 38,695 restaurants at year
end 2019, 36,059 were franchised, which is 93% of McDonald restaurant. By 1958,
McDonald’s had sold its 100 millionth hamburgers.
The current President and CEO is Mr. Chris Kempczinski. McDonald’s is the world’s
largest restaurant chain by revenue. Total revenues, increased from 42.0% in 2018 to
43.0% in 2019. McDonald Produce Burgers, Chicken and sandwiches, Beverages,
Happy meal, Desserts and shakes, Breakfast etc. McDonald has started a training
programme. It’s called Hamburger University. Today more than 275,000 franchisees,
managers have graduated from the programme.
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1. Marketing Environment
1.1. Internal Environmental Analysis
1.1.1. Strengths
 Having a very successful distribution system in McDonald’s
With the advancement of technology, the consumer tends to digitize. Therefore, most
customers not visit outlets physically. They buy goods over the phone or by some
other technological invention. Here the customer uses delivery methods as he does not
go to the stores. Therefore, McDonald’s has partnered with distribution brokers to
facilitate its distribution and provide a high level of delivery service.
Example: McDonald’s global delivery business has grown to over $4 billion in
System wide sales in 2019, up from $1 billion in 2016. Because in 2019, McDonald's
will use third-party distribution partners to maximize distribution scales.
(McDonald’s, 2021)
 Having a top management board that is committed to the business itself
Every business has to face uncertain risks. There are also losses for many businesses.
If business employees and top management contribute to minimizing such
uncertainties, the business will have the opportunity to continue. McDonald’s also has
a staff that is committed to the business.
Example: In the face of the Covid-19 pandemic, CEO Mr. Chris Kempczinski says he
has offered to reduce his salary voluntarily and some senior executives also have
decided to voluntarily cut their salaries in half. (McDonald’s, 2021)
1.1.2. Weaknesses
 McDonald's is a very competitive business and even the slightest mistake in
management can affect the entire system
Top management manages the business process of developing, retaining, recruiting
high quality candidates, and modifying the business system. Therefore, there must be
effective top managers to keep these processes running smoothly. McDonald also
makes emergency recruitments for senior positions.
Example: The McDonald’s Board named Christopher Kempczinski as President and
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Chief Executive Officer and named Joseph Erlinger as President, McDonald's USA,
effective as of November 1, 2019. In addition, on December 6, 2019, the Board
named Ian Borden as President, International, effective that same day. (McDonald’s,
2021)
 Low employee satisfaction
Many business organizations around the world are facing difficulties as they launched
revolutions to increase workers’ rights and wage limits. Recently, McDonald has
faced a similar situation.
Example; McDonald’s workers have recently launched protests and strikes
demanding an increase in minimum wages to $15 an hour. (Martínez. et al., 2021)
1.1.3. Opportunities
 Have an easy customer feedback system
Feedback is the response of a customer to a product or service after a product or
service has been delivered to them. Responses can be good or bad. After receiving
feedback, the business can calculate the customer's liking for the product. This allows
you to correct deficiencies in a product or service based on customer feedback and
further improve their quality.
Example: McDonald's website has a dedicated web page for customer feedback.
There the customer can put a feedback through the app or through the web page.
(McDonald’s, 2021)
 Dealing with a world-renowned delivery platform such as Uber Eats
Companies can take advantage of opportunities by contacting a partner such as uber
eats. Primarily the advantage of quick delivery, the ability to get the service at a lower
cost than the delivery costs provided by the business itself, and the popularity of this
platform among a large number of customers.
Example: uber eats offers discounts to attract more customers. Customers who order
products through uber eats for the first time until 31st December 2021 will get a $ 5
discount. (McDonald’s, 2021)
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1.1.4. Threats
 High advertising costs
Companies like McDonald’s often spend a lot of money on advertising. They hope to
attract consumers to their restaurants by educating people about food through
advertising. They expect a profit as high as the cost.
Ex; Cost of radio and television commercials (in million):2019–$365.8, 2018–$388.8,
2017–$532.9 (McDonald’s, 2021)
 Threads form franchisees.
Franchisees are the company that authorizes the production or distribution of the
relevant product from the franchiser. 93% of McDonald depends on franchisees. The
reputation of the McDonald’s will be tarnished if the conduct, order, awareness,
management and strategy of the franchisees are not maintained properly. (Martínez. et
al., 2021)
1.2. External Environment Analysis
1.2.1. Political and Legal Environment
 Rules and Regulations
Rules and regulations vary not only by country but also by region and religion. These
changes lead to not only the advantages but also the disadvantages of the business.
Therefore, changing the business system according to the changes in these
components will enable the business to continue. McDonald has also undergone these
changes.
Example: France is a country with an eco-friendly economy it’s mean they’re using
eco-friendly laws and regulations. Therefore, France does not distribute plastic toys in
McDonald’s restaurants. (McDonald’s, 2021)
1.2.2. Economic Environment
 Interest Rate
Businesses like McDonald take out long-term loans for their longevity. They get these
loans subject to high interest rates. They usually spend more on interest payments
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than they do on business loans. They are also exposed to changes in interest rates and
the impact of foreign currency on a globalized business.
Examples: Debt obligations at December 31, 2019 total $34.2 billion, compared with
$31.1 billion at December 31, 2018. (McDonald’s, 2021)
 Inflation
Favourable inflation always helps businesses make a profit. Inflation causes
commodity prices to fluctuate. And these inflation rates vary from country to country.
For a global business-like McDonald's, the price of a single product varies from
country to country. Otherwise, they will not be able to run their businesses.
McDonald's also modifies components such as turnover, costs, and menu prices in the
face of inflation.
Example: McDonald’s Happy Meal cost vary from country to country.
1. Japan Happy Meal cost - 460 to 500 yen ($4.09 to $4.46)
2. India Happy Meal cost - 126 rupees and up ($1.59 and up)
3. Philippines Happy Meal cost - 112 to 135 Philippine peso ($2.20 to $2.65)
4. Cyprus Happy Meal cost - 3.70 euros ($4.35)
(businessinsider, 2021)
1.2.3. Socio Cultural
 Creating a food menu for kids by McDonald's (Include health consciousness)
Parents pay close attention to their children's nutrition. There they have to be careful
about nutritious food. It should also be a nutritious and attractive food. McDonald's
has made a profit out of this social cause by preparing a dedicated food menu for
children. They call it the "happy meal" and parents tend to buy it because it is a
nutritious meal set for children.
Example: Across there 20 major markets, half all beverages sold in Happy Meals
were water, milk or juice in 2019, and over 2.5 billion Happy Meal items sold since
2018 contained fruit, vegetable, low fat dairy, water, lean protein or whole grains.
(McDonald’s, 2021)
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 Age distribution and life style changes
Many food manufacturers need to be more aware of the age distribution and
consumer lifestyle of consumers. This is because consumers' diet also changes
according to their lifestyle and age distribution. If they categorize the foods according
to age distribution and lifestyle, they can enter a good business market. McDonald’s
has also entered good business markets through various classifications
Example:
1. Age distribution - Providing a meal called 'Happy Meal' for young children.
2. Life style changes - Providing $1, $2, $3 Dollar menu for low-income earners
(McDonald's, 2021)
1.2.4. Technological Environment
 Installation of automated product purchasing machines in public places for the
convenience of the customer
Today’s consumer is tempted to work with technology for their convenience. They
also do not want to waste their time buying their own meals. Realizing this,
McDonald's has installed automated product purchasing machines in various locations
for the convenience of its clients. It allows customers to easily purchase McDonald's
products without having to go to restaurants.
Example: The Company has implemented this self-order kiosks machines in over
11,000 U.S. drive thru, offering customers a more customized experience and
producing sales growth through higher average check (McDonald’s, 2021)
 Popularity on social media
In today's society, from young children to adults, social networking sites have become
popular. Many businesses today use social media to promote their products. Because
that social media costs less than other social media. McDonald’s also advertises on
popular social media such as Face-book and Instagram.
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2. Basic consumer behavior model & segmentation, targeting &
positioning
2.1. Consumer Behaviour Model
The sales volume of a product or service depends on the customer's purchases.
Therefore, the customer is an asset to the business. In order to attract customers to
their business, they need to have a good understanding of customer behaviour.
2.1.1 Other Stimuli and Marketing Stimuli
The first thing to do is analyse the external changers and develop marking mix
accordingly.
 Inflation
Consumers restrict purchases during periods of high inflation. They are tempted to
buy only the most essential items. This is also a very difficult time for the business.
What should be done here is not to increase the price of food, but to change the raw
material used for it or to use the raw material sparingly. It is also wise not to offer
discounts during this period.
 Technology updates
Technology in the world today is rapidly updating. Business should adapt to the latest
developments in technology. That adaptation should be a change that most consumers
can experience. That is, the business must serve customers who cannot afford the
tools created by technology. McDonald's uses technological updates to benefit every
customer.
Ex; McDonald's has made it possible for customers who cannot order food through
the mobile app to make an instant call from a regular phone and order food. That is,
they distribution in a way that is convenient for all customers.
 Taxes levied by the government
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The government levies taxes on finished goods and raw materials. As a result of these
taxes, the business has to raise the price of the product. So, they have to pay more
attention to taxes because it affects the price.
2.1.2. Consumer Psychology and Consumer Characteristics
 Motivation
Consumer motivation is the customer's desire for a product or service in a particular
business. Businesses use a variety of methods to attract customers to the business.
Often, they offer discounts and offers for that task.
Ex; McDonald’s can offer a small leaflet showing the nutritional value of the food
with the food that their customers buy
 Memory
We can divide memory into two parts, long-term memory and short-term memory. As
a good businessman, have to work on the long-term memory of the customer. Here,
entrepreneurs use various tactics to capture the long-term memory of the customer.
Ex; Customers visiting McDonald's can be offered a small McDonald's key tag with
natural raw material. That keeps the consumer's long-term memory as an eco-friendly
Business
 Personal
The preference for goods varies from person to person. Food restaurants should also
monitor the individual preferences of each customer. There, new foods can be
produced according to the customer's wishes. Every person has a birth, and by
launching various programs based on that birth, customers can be attracted to the
business.
Ex; Burger King, a leading competitor with McDonald's, offers extra rewards during
customer's entire birthday month. (Burger King, 2021)
 Cultural
What is being considered here is not the overall culture but the cultural factors that
each consumer follows. Culture varies from consumer to consumer. This requires
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businesses to pay more attention to the cultural practices, beliefs and attitudes of each
customer.
Ex; India is a country of cultural significance. They say cattle are a cult animal. That's
why McDonald's restaurants in India produce less beef product.
2.1.3. Buying Decision Process
 Problem recognition
The first step in the consumer decision-making process is to identify problems. It
allows the customer to identify what the problem or need is, and what product or
service will be able to meet that need.
 Information Search
In this case a search is made for information on the selected product or service. That
is, it measures the quality and value of the product. Searching for this information can
be categorized as internal and external information. The components that can find this
information are word of mouth, from family or friends, on-line platform, sales person
and advertisement
 Evaluation of alternative
During this stage, consumers evaluate all of their product and brand options on a scale
of attributes which have the ability to deliver the benefit that the customer is seeking.
Consumers also make comparisons between alternative products. Components such as
price, brand name, size, capacity, packaging, quality and pros and cons are often used
for this comparison. Competitiveness between businesses also arises because the
customer makes an alternative evaluation
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 Purchase
In this case, a better understanding of the product, better information and comparison
with other options, will help customer to buy the best product they want.
 Post purchase behaviour
This final stage implies that the customer who purchased the product or service has an
opinion about the product. That is, it is at this point that the decision is made as to
whether the item should be repurchased after consumption and whether other
alternative items should be selected.
2.2. Segmentation, Targeting and Positioning
2.2.1. segmentation variables
 Age
McDonald's prepares a special menu for kids. It is called 'happy meal'. They also offer
a small toy with this meal. Their main purpose is to attract small children. Parents
who are unknowingly consumed by this method are also attracted to other foods.
 Income
McDonald's introduces ‘1 $, 2 $, 3 $ Dollar’ menu for low-income earners. They want
to give benefits not only to high income earners but also to low-income earners.
 Attitude
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Use a feedback feature to record customer attitudes towards products. The main
purpose of this is to measure the consumer's liking for their food. This allows the
product to be further repaired at the customer's request.
 Occasions
Ability to organize special events for birthday celebrations at McDonald's restaurants.
Such events are usually organized by the upper-class clients. This can make a good
profit for McDonald's business.
 Region
McDonald's divides its target markets into segments by country, region, and cities,
then customizes the menu by local preferences. Being able to have a good customer
segment by creating separate products for each willing customer segment through this
fragmentation.
2.2.2. Targeting Strategy
The best targeting strategy for companies like McDonald's is multi segment strategy.
This is because McDonald's produces food according to the satisfactions inherent in
the consumer segment, which is change according to the needs of the consumer. The
multi-settlement strategy is the fulfilment of separate customer requirements by
companies for different customer segments. It is also called differentiated marketing.
(lumenlearning, 2021)
Example;
 For kids Happy Meal
 For espresso drinks and coffee lovers McCafe Drinks
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 For sweets lovers
Figure 0-1 Example for Multi Segment Strategy in McDonald’s
2.2.3. Positioning
Most suitable positioning bases for McDonald’s are Quality and Price. This is because
price is the primary factor influencing demand, and customer attraction to business
depends on the quality of the product. It is advisable to make a reasonable price based
on the quality of the McDonald’s food. That is, maintaining prices equal to quality.
High Price
Low Quality High Quality
Low Price
Figure 0-2 Positioning Map for McDonald’s
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McCafe Bakery

3. Marketing Strategy
3.2. Five levels of product according to McDonald’s
3.1.1. Core Product
The basic satisfaction that the customer gets from the product.
Example: Hunger
3.1.2. Generic Product
General features that a product must have in order to be practical in use.
Example; Burgers, Sandwiches, Desserts
3.1.3. Expected Product
Additional features that customer might expect.
Example; Food that tastes good
3.1.4. Augmented Product
More features than the customer expects.
Example; Birthday party for kids
3.1.5. Potential Product
What is not present is what will be generated in the future.
Example; Theatres in McDonald’s outlets
(Model and Li, 2021)
3.3. Pricing Strategy
Business like McDonald’s often use penetration pricing strategy. This is because after
lowering the price in the early stages and gathering more customers, the price
increases. As McDonald’s often launches new foods into the market to attract more
customers, they initially introduce food at lower prices. (paulinesportfolio, 2021)
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3.4. Distribution Channel
McDonald’s use both direct and indirect distribution.
 Direct Distribution
Example; On-line selling through McDonald’s App
 Indirect Distribution
Example; McDonald’s selling their food through Uber-Eats
(McDonald’s, 2021)
3.5. Promotional tools
Mostly advanced Businesses like McDonald’s is using Advertising, Sales promotions
and Public Relations to promote their products. Direct marketing and personal selling
are usually used by new businesses in the market. Because they can do their
promotions at low cost.
Example; Coupons, Packaging outer and inserts, Premium and gifts, Annual Report,
Charitable donations etc.
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References
Mcdonalds, 2021. [online] Corporate.mcdonalds.com. Available at:
<https://corporate.mcdonalds.com/content/dam/gwscorp/nfl/investor-relations-
content/annual-reports/2019%20Annual%20Report.pdf> [Accessed 7 April 2021].
businessinsider, 2021. [online] Gobankingrates.com. Available at:
<https://www.gobankingrates.com/saving-money/food/how-much-happy-meal-costs-
around-world/> [Accessed 7 April 2021].
McDonald's, 2021. McDonald's: Burgers, Fries & More. Quality Ingredients..
[online] Mcdonalds.com. Available at: <https://www.mcdonalds.com/us/en-us.html>
[Accessed 7 April 2021].
Burger King, 2021. Burger King: Online Offers and Ordering. [online] Bk.com.
Available at: <https://www.bk.com/rewards/list> [Accessed 7 April 2021].
lumenlearning, 2021. Targeting Strategies and the Marketing Mix | Principles of
Marketing [Deprecated]. [online] Courses.lumenlearning.com. Available at:
<https://courses.lumenlearning.com/marketing-spring2016/chapter/reading-targeting-
and-the-marketing-mix/> [Accessed 8 April 2021].
model, U. and Li, Y., 2021. Understanding Kotlor's Five Product Levels model.
[online]Iris777.blogspot.com.Availableat:<http://iris777.blogspot.com/2011/10/
understanding-kotlors-five-product_14.html> [Accessed 9 April 2021].
paulinesportfolio, 2021. q. Pricing Strategies. [online] Marketing I Portfolio.
Available at: <https://paulinesportfolio.wordpress.com/q-pricing-strategies/>
[Accessed 9 April 2021].
Martínez., SG, Holman, SG, Fely, SG, Samaiya and Gupta, 2021. McDonald's SWOT
Analysis. [online] Business Strategy Hub. Available at:
<https://bstrategyhub.com/mcdonalds-swot-analysis/> [Accessed 10 April 2021].
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