Marketing Principles Report

This report analyzes McDonald's marketing strategies, focusing on the marketing mix and how the company adapts its approach to different customer segments and markets. It explores the benefits and costs of a marketing orientation for McDonald's and how the company uses segmentation, targeting, and positioning to achieve its marketing objectives.

Marketing Principles

CONTENTS
Contents...........................................................................................................................................1
INTRODUCTION...........................................................................................................................1
LO 1 UNDERSTAND THE CONCEPT AND PROCESS OF MARKETING..............................1
1.1 EXPLAIN THE VARIOUS ELEMENTS OF MARKETING PROCESS...........................1
1.2 EXPLAIN THE BENEFITS AND COSTS OF A IVIARKETING ORIENTATION FOR
A SELECTED ORGANISATION..............................................................................................2
LO2 BE ABLE TO USE THE CONCEPTS OF SEGIVIENTATION, TARGETING AND
POSITIONING................................................................................................................................3
2.1 SHOW THE MICRO AND IvIACRO ENVIRONMENTAL FACTORS THAT EFFECT
THE MARKETING DECISIONS...............................................................................................3
2.2 PROPOSE SEGMENTATION CRITERION TO BE USED FDR PRDDUCTS IN
DIFFERENT MARKETS............................................................................................................3
2.3 CHOOSE A TARGETING STRATEGY FOR A SELECTED PRODUCT OR S£RVIC£. 4
2.4 DEMONSTRATE HOW THE BUYER BEHAVIOUR EFFECTS MARKETING
ACTIVITIES IN DIFFERENT BUYING SITUATIONS..........................................................5
2.5 PROPOSE NEW POSITIONING FOR A SELECTED PRD DUCT OR SERVICE...........5
LO3 UNDERSTAND THE INDIVIDUAL ELEMENTS OF EXTENDED MARKETING MIX 5
3.1 EXPLAIN HOW PRODUCTS ARE DEVELOPED TO SUSTAIN COMPETITIVE
ADVANTAGE............................................................................................................................5
3.2 EXPLAIN HOW PRICES ARE SET TO REFLECT AN ORGANISATION’S
OBJECTIVES AND MARKET CONDITIONS.........................................................................7
3.4 ILLUSTRATE HOW PROMOTIONAL ACTIVITY IS INTEGRATED TO ACHIEVE
MARKETING OBJECTIVES.....................................................................................................7
LO4 BE ABLE TO USE THE MARKETING MIX IN DIFFERELJT CONTEXTS....................8
a. PLAN MARKETING MIXES FOR TWO DIFFERENT SEGMENTS IN CONSUMER
MARKETS..................................................................................................................................8
B. ILLUSTRATE DIFFRENCES IN MARKETING PRODUCTS AND SERVICES TO
BUSINESS RATHER THAT CONSUMERS............................................................................9
c. SHOW HOW AND WHY IfJTERfJATlOfJAL IVIARKETING DIFFERES FROM
DOMESTIC MARKETING........................................................................................................9

CONCLUSION..............................................................................................................................10
Dominici, G. (2009). Frpm marketing mix tp e-marketing mix: a literature overview and......11

INTRODUCTION
The marketing is the process of communication with the target markets, suppliers, and society and
delivering products and services in order to deliver to the needs and interests of the people. The study basically
involves at discussing the marketing environment of the organization which in this case if McDonald's is a global
fast food giant with operations in around 118 countries and operates through more than 30000 restaurants. The main
products offered by the company are burgers, pizzas, soups, salads, breakfast meals, desserts, beverages, etc. The
study basically focuses on the strategies used by the transition in order to meet the objectives and goals set by the
top management of the organization. It focuses on the targeting and positioning I n order to develop an
understanding pf the target markets, Also the various elements of the marketing my are discussed with a focus on
gaining an edge over the other players in the industry.
LO 1 UNDERSTAND THE CONCEPT AND PROCESS OF MARKETING
1.1 EXPLAIN THE VARIOUS ELEMENTS OF MARKETING PROCESS
McDonald's is a leading global fast food giant with focus on customer satisfaction. Thus the marketing,
which is the process of communicating and delivering meaningful offerings to meet the needs of stakeholders
including customers, suppliers, society, etc., at Me Donald’s is based on the overall marketing strategy and
marketing mix (Dhavale, 2009). The markets ng mix applies globally with necessary variations to suit
the local area where it operates. The marketing mix of McDonald's consists of mainly four elements which are
aimed at achievement of the overall marketing objectives of the company.
Product- the main product provided by the company to the target customers is classifies as food or
eatables and drinks or beverages. However the product may vary in the countries as per changes in culture, laws,
tastes and preferences of the target customers. The company is famous for its burger while the other product
lines involves salads, shakes, sandwiches, Snacks or breakfast menu, Chicken or fish, Beverages, etc. the company
is committed to please the target customers through continuous inn ovations in the products and new product
lines like for the grow In EpnEerns of health conscious people (Pauline, 2015).
Price- the pricing denotes the strategy underlying in deciding the prices for the products offered by the
company. The company uses the Psychological pricing by providing discounts on purchase of meals or
combinations of products, through the display on the order screen or Kiosk. The psychological prices include
pricing that appear as low prices like 99 in place of 100.This helps in driving the customers to buy meals or
combos in place of individual products and positively impact the sales volumes.
Place- this indicates the place from where the company products are distributed to the customers, The
products are offered through the Mc Donald’s restaurants mainly which run through staff or customer operated
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Kiosks. Apart from this the company products can also be ordered by the customers through use of mobile
application of McDonald’s and the Promotes website. However the main part of the sales is generated through
the restaurants. Company also places temporary Kiosks around the special events like world cups and Christmas,
etc.
Promotions-this elaborates the use of various Media and strategies used to communicate with the customers
and include Advertising, public relations, Sales promotion and direct selling. It advertises through like print ads,
digital ads, Television ads, Radio Commercials, etc. Sales promotion is done by the use of freebies like toys,
discount coupons, etc. in order to increase footfalls of the customers. In order to create meaning full and lasting
relations with the customers, suppliers and society. The Company promotes various social causes and
environment campaigns. Direct selling is directed at organization at sale like corporate clients, etc. Thus the
company promotes the products through use of various modes and techniques.
1.2 EXPLAIN THE BENEFITS AND COSTS OF A IVIARKETING ORIENTATION FOR A SELECTED
ORGANISATION
The cost benefit analysis is the process of justifying the business activities or transaction in order to
facilitate the decision making and determine the best suitable alternative. It enables the manger in order to justify
the Chosen alternative or to suggest the selection of a particular decision alternative or project in order to be most
effective (Dominici, 2009). Here the decisions are denoted in monetary terms and the adjustments are made for
time value of money or based on concept of return on investments in order to decide the best and most cost
effective alternative or choice. At Mc Donald’s the cost benefit analysis help in decision making in various aspects
of the business like Choosing the outsourcing or manufacture of packaging, choosing a supplier for supply
of a raw material, choosing a location of the store, choosing the marketing media, etc. the main concerns while
taking such decision is not only to choose the lowest costing alternative but also measure the impact on
stakeholders, image in society and effects on the participating or the non participating groups i n the business, one
of the most important implication of the cost benefit analysis in the Me Donald’s is to choose the franchising
strategy in pt ace of self owned and managed stores by the company. The company operates globally through
around 30000 restaurants with around 80°A of them under franchise Ownership and management.
This implies that the company chooses franchising as more cost effective and beneficial than self
ownership. Furthermore, the company CEO Steve Easterbrpok announced the increase of franchising to
ownership ratio to 90 % by 2020 in order to release the blocked up capital and make the company operation
is more focused on delivering the overall customer satisfaction through innovative products and services globally.
Thus cost benefit analysis is Of great help in managerial decision making in organizations (Boardmaan, 2007).
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LO2 BE ABLE TO USE THE CONCEPTS OF SEGIVIENTATION, TARGETING AND
POSITIONING
2.1 SHOW THE MICRO AND IvIACRO ENVIRONMENTAL FACTORS THAT EFFECT THE MARKETING
DECISIONS
The marketing environment consist of a set of factors which affect the operations of the organization in
many ways and are also themselves affected in the process (Lazareva, 2015), Thus Me Donald’s continues to
be competitive by analysing and forecasting the impact of the environmental factors and changes on the customers.
The company monitors the environment through the changes in the indicators like GDP, Inflation, Consumer price
index, Balance of Payments, etc. the Micro environment is relatively in close contact with the company and has
somehow a direct impact on or of the company operations. The success of the company depends on make ng
positive relations with these groups including customers, employees, competitors, suppliers, government and
society. The macro environment at Mc Donald’s consists of all the political, demography, technological, natural,
sociocultural and economic factors that provide opportunities and threats to the business.
2.2 PROPOSE SEGMENTATION CRITERION TO BE USED FDR PRDDUCTS IN DIFFERENT MARKETS
Segmentation refers to the activity of dividing the large market consisting of heterogeneous customer of
smaller homogeneous segments, where the customers in a segment respond more or sets in the same manner to
the offerings of the company. The main purpose of segmentation at McDonald's ıs to divide the markets into
segments and plan the marketing strategies for each segment separately. McDonald*s segments the large market
for fast food pn the basis of age and income characteristics of the customers as kids, teenagers and families
(Khan, 2014). The company has also segmented the Customers based on behavioural segmentation which involve
the occasions like birthday parties, Cricket matches, etc. Also the segmentation is based on the countries or
geographies as the taste and preference of the customers in India and America cannot be same and hence the
products and even the marketing strategies will differ based on the per income, literacy, use of media and other
demographic characters of the customers in different geographies (Dibb, 2008).
2.3 CHOOSE A TARGETING STRATEGY FOR A SELECTED PRODUCT OR S£RVIC£
The targeting refers to the process of concentrating the marketing efforts of the company towards attracting
customers of a particular segment of market like say businessmen could be communicated about the company
products through advertising in the regional business magazines or newspapers. McDonald’s use the targeting
strategies to target kids through use of children and joker in the advertise meets and promote sales through
providing toys along with healthy meals. Thus I heads directed at kid s segment are specially delivered through use
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of television commercials while Earthen or children theme programs, as kids spend more time watching cartoon
channels.
McDonald’s apply adaptive kind of product positioning and as per this, the business is involved in
periodical re-positioning of their services and products according to alteration in the segment. Therefore, company
target all age group to consume business products and services. For example: In geographic segmentation
McDonald's targets domestic country, Rural or Urban density and 8-45 age group person. This organisation is
known to adapt as per current taste and preferences of people considering the geographical location. In
demographic segmentation, company target Males and Females and low and middle income level group along with
a special consideration to children. This business with their renowned Happy meal have added toys so to attract
kids. In behavioural segmentation, the people who are easy going and careless are served with meals which cost and
time efficient.
2.4 DEMONSTRATE HOW THE BUYER BEHAVIOUR EFFECTS MARKETING ACTIVITIES IN
DIFFERENT BUYING SITUATIONS
The fast food industry in any developing or developed country is dominated by giants like Pizza hut, Dpminos,
Barista, McDonald’s, KFC, etc. and offers tough competition to the companies as the product offering is more or
less similar and includes burgers, pizzas, fires, beverages, coffee, etc and hence buyer switch easily between brands.
Thus the company has to differentiate the products through constant innovations and through proviso ons of
services like free Wi-Fi and drive-ins facility at Me Donald's (MarCus, ZDO7). Also the Customer is somewhat
price sen sitive, hence the company has to deal with intensive cost effective operations and constantly maintain the
costs with the fluEtu ations in prices of the raw materials like chicken, potato, salads, etc in the local markets.
2.5 PROPOSE NEW POSITIONING FOR A SELECTED PRD DUCT OR SERVICE
The positioning refers to the designing an image for the company and its offering in such a way that the
target customers understand and appreciate the difference of company offerings i n comparison to that of the
competitor i n the same industry. Two types of positioning can be done, one through use of consumer
characteristics called expressive positioning and other through use of product offering characteristic called the
functional positioning (Sausen et at, 2007). In Me Donald’s case the positioning used is generally the functional
positioning. The EOtTlpany positions itself in the mind s of th e kids and falTliI\/ EM5tom ers through use pf toys
and freebie$ and special adverti5ement5 directed at kid5. The new positioning strategy could be targeting at the
health conscious customers through setting an image pf provider pf good quality and healthy menus and fpcus on
the calories intake of consumer to avoid lifestyle diseases like obesity through consumption of fast food.
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LO3 UNDERSTAND THE INDIVIDUAL ELEMENTS OF EXTENDED MARKETING
MIX
3.1 EXPLAIN HOW PRODUCTS ARE DEVELOPED TO SUSTAIN COMPETITIVE ADVANTAGE
The main product lines at Me Donald’s include sandwiches, burgers, beverages, desserts and ice cream s,
shakes, salads, chicken or fish, etc. The competition in the Industry is fierce as the products are more or less the
same. The main competitors of Mc Donald’s products are KFC, Dominos, Pizza hut, etc. In order to be
competitive and maintain its global leadership in the industry, the company has to develop and innovate the
product offering continuously through introduction of newer and health concerned versions like soups, salads and
healthy meals in order to meet the growing concerns of people in America and elsewhere over health issues caused
due to consumption of fast foods.
The product is distributed mainly through the restaurants while the company products can also be ordered
through use of Postmates website and use of mobile app of Me Donald’s. The main mode of product distribution at
Me Donald’s is through the company or franchisee operated restaurants when are loaded all the prime locations of
around 118 Countries globally to attract more and more customers. Also at the restaurant's the cu5tpmer
convenience is taken care pf through use of kiosks operated by company staff as in case pf India or customers as in
case of Australia, which help the customer to place order conveniently through proper I siting of prices, products,
combos and meals and also providing information on discounts pn purchase pf combos i n place of
individual products enabling consumer choice and decision making (Roach et at, Z017). Thus the kiosk
operated by customer is liked particularly by the customers of Australia and leads to success of the company
through increased sales and customer.
In context of McDonald's competitive advantages can be achieved if a business is successful in delivering
same products and services as rival businesses that too at lower costs. The another approach which can lead to
attainment of competitive advantages is to exceed benefits in products and services offered by similar businesses in
the market. McDonald's is already a market leader when it comes to fast food at a global level therefore it is equally
important for this business to avail competitive advantages in order to compete effectively with rivals. The cost
leadership is being practised by this organisation can be further supported with offering extensive range of salads
and fast food range so that health concerned people can be served in an improved manner. This latest developed
line up can be offered at competitive prices due to economies of scale and can be considered as a crucial approach
to sustain competitive advantages.
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3.2 EXPLAIN HOW PRICES ARE SET TO REFLECT AN ORGANISATION’S OBJECTIVES AND MARKET
CONDITIONS
The company mc Donald’s wishes to gain an image of providing meals to customers at affordable prices
and hence the prices are set by use of Psychological pricing in order to look more affordable to the customers.
The psychological pricing involve a use of 99 in place of 100. /ISD the company makes u se of Big MaE Index
in order to show affordability of mE Donald’s products. ThR CDFFlpany entails the affDrdab ility by showing
the earning of a meal consisting two Big Mac burgers EoFltaining 1000 calories in an hour by the weakest
seEtioFl Of workers in America through Big Mac Index. The pricing in each Cc›untry is dpne according to thi
s philosophy and comparison to the US currency. Thus the company stresses the affordability and
low pricing i n each country where it operates (Baines et al, 2012).
3.4 ILLUSTRATE HOW PROMOTIONAL ACTIVITY IS INTEGRATED TO ACHIEVE MARKETING
OBJECTIVES
The promotions are based on strategy of “Think global act local ".In order to ensure the success of Me
Donald’s in the fast food industry of any country, it undertakes vigorous research over the culture, consumer
taste, economy, natural climate, etc to design the best promotional campaign. As the core customers of Me
Donald's include kids and family hence the advertising is done through use of media like Television, billboard s,
newspapers, etc according to country’s level of involvement in various media. However it attracts the teenagers and
business customers through the use of online media and social network i ng websites. It engages in making positive
relations with the customers through engaging i n various events like 2010 Olympics and 2012 FIFA World cup
(Martin, 2014). This helps in creating a positive brand image and presence through the involvement of global media
in such events. It engages in sales promotion through use of freebies, toys, discount coupons, scratch cards, lucky
draws etc. to the customers to enhance sales and loyalty. Thus it manages to maintain the enthusiasm of kids and
Others through u se of strong promDtiDnal
Peoples- it is very important aspect of any organization and includes all the people associated with delivering
service to the customers. At Mc Donald’s if the staff involves in behaving rude to the customers, the whole
experience will become bad and company may fail as the customer ceases to visit such stores. Hence Mc
Donald’s engages in recruiting the right kind of people o work in the organization and focuses on training and
motivating them continuously. Also it owns the Hamburger University which is committed to developing the
skills and knowledge pf the employees and providing them with career advancements (Goi, Z009).
Process- Certain products at mc Donald’s are standardized globally and hence the process of production of same
taste globally can only be achieved through the use of standardized procedures in place. Also certain products are
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customizable according to taste and preferences of the customer and hence the process must be flexible to
incorporate changes in the process delivery. The process are an important consideration for Me Donald’s as
being able to deliver the same taste and services at any time of the day and at any location (Martin, 2014).
Physical evidence- the sense of comfort and attractiveness of the ambience of mc Donald’s provide the customer
with a sense of security and encourages him to frequent to the store again.
LO4 BE ABLE TO USE THE MARKETING MIX IN DIFFERELJT CONTEXTS
a. PLAN MARKETING MIXES FOR TWO DIFFERENT SEGMENTS IN CONSUMER MARKETS
The marketing mix for Mc Donald’s targeting at two different segments can be done as for the segment of
kid s segment and th e family segment. For kid s segment the product will include mainly fries, burgers, beverages,
snacks, popcorns, ice cream s etc. The place will include the restaurants and the order being placed by company
staff as per the choice of kids. The promotion targeting at kids shall be done by the use of various freebies and toys
along with happy meals and combos in the sales promotion regime. Advertising should be done through use of
Television media through placing the commercials specially designed for kids and placing them across channels
like ‘cartoon network’. Also the print ads can be placed in kids focused magazines. The prices shall be affordable
and pocket friendly enabling them to buy. For the Family segment the product includes full range of vegetarian and
non vegetarian products including salads and soups for the diet conscious people. The place may be through
restaurants as families visit often on weekends and off days including national holidays bu1 online orders through
use of website and mobile app shall also be allowed to enhance sales. The order can be placed by use of klD5ks at
the restaurants allowing the family customers to modify according to different tastes of family members. The
promotions can be done through use of print media and television commercials and sales promotions through use of
freebies and discount coupons making them to visit again (Sausen et al, 2007).
B. ILLUSTRATE DIFFRENCES IN MARKETING PRODUCTS AND SERVICES TO BUSINESS RATHER
THAT CONSUMERS
The marketing particularly directed at consumers is different from that directed at businesses. Me
Donald’s is mainly focused on consumers which include kids, teenagers, professionals and Family. In case of
marketing directed at business organizations like schools, business organization s, etc. the Company product
must be foEM5i 0g pn providing iT1i d-day and night meals which is quite different from existing range pf
product5. Also the nutritional value of meals needs to be focused in case of business customers. The
promotions are not done through television commercials but through use of appropriate print media including
business newspapers and magazines. The sales promotions can be done through use of discount coupons to the
employees of the organizations enabling them to visit stores with families. The place of distributing the goods may
9

or may not be the restaurants as the organizational customers prefer to provide meals to its employees while
working in the office premises and hence delivery must be done with improved packaging for mai ntai ning the
nutritional value of the food until consumption. The prices for such bulk customers must be decided at
appropriately affordable level and hence calls for low pricing. Thus MC Don ald’s is more focused on the
consumers as the requirements for serving the business customers are quite different.
c. SHOW HOW AND WHY IfJTERfJATlOfJAL IVIARKETING DIFFERES FROM DOMESTIC MARKETING
Domestic Marketing refers to marketing of goods and services within the bounders of the country while
international marketing includes two or more countries of operations for a firm generally called Multi National
Corporations. Me Donald’s success in marketing is based on its concept of "Think Global, Act Local”. The
company provides hard Competition to the others in the market through focusing on domestic marketing while
at the same time it can charge higher due to its international presence and demand. The company’s main market
was U5 in around 1995 but due to decline in the sales at US the company shifted focus to the French and
European markets who liked the products and the company was charging four times of the prices of the products in
US due to international marketing environment. Thus the company gained increase in sales through use of domestic
marketing and presently operates at the leading position in the world fast food industry owing to use of international
marketing efforts (Doole et at, 2011).
CONCLUSION
Marketing is an important criterion for success of any business organization. For a global company like Me
Donald’s the overall marketing efforts are based on developing lpng term relationships with the customers, society,
suppliers and overall stakeholders. Marketing mix at Me Donald’s is mainly focused on innovating and
differentiating the product, making the prices as affordable as possible, making best possible customer attract
through use of appropriate promotional campaigns and delivering the best possible services to customer with
ease of ordering through kiosks. As the product in case of Mc Donald’s is very much similar to the other producers
like KFC, Dominos, pizza Hut, etc. hence the firm should focus on delivering differentiated products and service
offerings in order to gain the attention pf the customers and to maintain a long term relationship with them. To
promote the brand i mage the company participates in various activities like Olympics and FIFA world cup. Apart
from his in engages in participating in various environment related projects in order to gain the image of a socially
responsible citizen in the country it operates. Thus overall marketing strategy is helpful in gaining an image of
responsible company for Mc Donald’s which is based on values like Service, Quality and Cleanliness’ and
committed to provide customers with good quality products at affordable prices.
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