Marketing Strategies and Environmental Analysis for McDonald's Domestic Market

The assignment discusses the marketing principles and their impact on business growth and profits, focusing on McDonald's as a case study. It highlights how McDonald's uses market-oriented approaches to meet customer demands and continues its business through effective marketing processes. The environmental analysis of the organization is also discussed, providing insights into the domestic market and the relatively fewer risk factors and challenges faced by the company.

MARKETING PRINCIPLES
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Table of contents
Introduction 3
Task 1 4
LO1 Understanding the concept and process of marketing 4
AC 1.1 Explaining the various elements of the market process 4
AC 1.2 Evaluating the benefits and cost of marketing orientation for a selected organisation 5
LO 2 Be able to use the concept of segmentation, targeting and positioning 5
2.1 Show macro and micro environment factors which influence market decisions with the
help of appropriate tools and techniques of McDonald’s 5
2.2 Propose segmentation criteria of McDonald’s 7
2.3 Choosing a targeted strategy in different markets for selected products 8
2.4 Demonstrating how buyer behaviour affects marketing activities in different buying
situations 8
2.5 Prose the positioning for a selected product or services 9
LO 3 Understanding the individual elements of the extended marketing mix 10
3.1 Analysing how the product or services are developed to sustain competitive advantages 10
3.2 Explaining how distribution is arranged to provide customer convince 10
3.3 Explaining how price are set to reflect the objectives and market conditions of an
organisation 10
3.4 Illustrating how a promotional activity is integrated to achieve marketing objectives 11
3.5 Analysing the additional elements of the extended marketing mix for the chosen company
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Task 2 12
LO 4 Able to use the marketing mix in different contexts 12
4.1 Planning and commending marketing mix for the two different segments in customer
markets 12
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4.2 Illustrating differences in marketing products and services to businesses rather than
consumers 14
4.3 Show how and why international marketing differs from domestic marketing of
McDonald’s 14
Conclusion 16
Reference list 17
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Introduction
Marketing principles are the backbone of the business and the essential element which secure
the possibilities of future growth of the business organisation. In fact, the term marketing
principles denote to the effective process which involves with satisfying the entire needs and
demands of its customer properly. The main aim of the marketing principles is to meet the
entire essentialities of its customer by understanding its actual demands through organising
the effective market research. In this assignment, the learner will explain the term and process
of the marketing mix and how it effects on the business growth to stay ahead in the
competition market.
Figure 1: Logo of McDonald’s
(Source: McDonald's UK, 2017)
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Task 1
LO1 Understanding the concept and process of marketing
AC 1.1 Elements that are part of marketing process
1. Situation analysis: SWOT analysis will tell the organization to analyses present situation
which exists in the market. Furthermore, the customer also can able to understand both of the
strengths and weak points of the organization which motivates them to choose the specific
brand for the purposes of regular use.
SWOT analysis:
Strengths
● Offering unique quality
product
● Excellence delivering services
● Efficient pricing strategy
● Reputed brand value
Weak Points
● Low investments than its competitors
● Stock of the offering products are
limited
● Delivering channel seems weak than
its competitors
Opportunities
● Image and brand loyalty seems very
significance for the growth of the
business
Threats
● Effective competition market consists
of close competitors
● price sensitivity
Table 1: SWOT Analysis
2. Marketing strategy: According to Papadopoulos et al. (2014, p. 55), the main principles
of this situation analyses are to set an effective marketing strategy which provokes to build an
action plan for the organization. On the other hand, the term marketing strategy refers to the
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segmentation process, targeting its viewers and also positioning its offering services or goods
among the society.
3. Marketing mix decisions: In the opinion of Kotler and et al. (2015, p.25), the second
important step is marketing mix decision which encourages for building critical and effective
decision to develop any product of the organisation.
4. Implementation and control: In the opinion of Turnbull et al. (2013, p.04), in order to
check the entire process of marketing mix this step becomes very important to implement the
market strategy through monitoring the manufacturing processes.
AC 1.2 Advantages of promotion and value of orientation for enterprise
In recent days, the business philosophy of McDonald’s involves with satisfying the
actual demands of it customer by both of understanding and explaining it. The main aim of
the marketing strategy of the organization was just delivering the dishes to its customers but
now a day the organization tries to modify its dishes to gain lots of service-users.
1. The market oriented approach denotes very effectively the demand which exists in the
market for any specific product of the organization. So, it relates and responds against the
wants of the customers. Thus it is clearly identified that the delivering services of the
organization have been improving constantly. This effective process helps the organization to
build innovation in its offering services by investing low amounts of money which seem very
cost-friendly.
2. Moreover, the market-oriented approach helps the organization to establish efficient brand
loyalty among its customers which encourage the customers to visit the organization
repeatedly.
LO 2 Different concepts of market
2.1 Influence that internal and external factors has on market decisions with the help of
appropriate tools and techniques of McDonald’s
PESTLE Analysis of McDonald’s:
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PESTLE FactorsFindings
Political Factors● Countries that protest against the
consume of fast food can be a threat
to McDonald’s business
● Tax law, trade restrictions, and other
commercial laws are there that can act
as impediments for the business
● Increasing tax rates can affect the
business of the organisation
● Particular political policies which
abandon the entry of capitalist
investments
● Political stability of a country helps a
business to grow
Economical Factors● Changes in inflation rates and the
global market condition has an impact
on McDonald’s worldwide business
● Supply and demand of the raw
materials can possess a threat
● The economical stability of the
country is an issue here
● The buying capacity of the customers
● Per capita income rate of the country
can force a company to mould its
strategies
Social Factors● Food habit of the customers is the
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main issue in McDonald’s business
● The lifestyle of the people in the
country also determines the business
strategy of the organisation
● Religious belief can control the food
habit of the customers
● Age distribution is another factor as
mainly young people are interested in
going to McDonald’s outlets
Technological Factors● The technology is used should be
cutting-edge
● The country should have support for
that kind of technology
● If the competitors in the market use
inferior technology, that is an
advantage for the company
Legal Factors● Employment laws which determine
the terms and conditions of
employment
● Tax laws which determines how
much tax the company needs to pay
● Individual tax laws which determine
whether the customers need to pay
extra tax for eating in restaurants
Environmental Factors● Must comply with the environmental
laws
● Should dispose of the waste in a
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scientific way
● Recycling and reusing prohibitions
set by the government
● Rules to use plastic bags set by the
Government
Table 1: PESTLE Analysis
(Source: Author)
Porter's five forces model is another concept through which the surroundings in which the
referred business is operating can be better understood. A detailed discussion of same is done
below:
Threat of the new entrants – How easily one new company can enter in the market and can be
a danger for business is discussed under this heading (Dobbs, 2014, p. 32). In McDonald the
threat of the new entrants is moderate. The companies are nearly in the saturation point.
Moreover, opening new restaurant does not require huge capital therefore; moderate threat is
there for the new entrants. Moreover, there is no legal barrier therefore; opening new
restaurant in the market is easy in this market.
Suppliers bargaining power – It must be reviewed because strong bargaining power helps
suppliers to supply goods at high price which directly affects the profit level of the buyers.
The bargaining power of suppliers in Mc Donald is low because large number of suppliers is
available in the market. Ample number of suppliers is available in the market therefore; no
uniqueness in the products reduces the bargaining power of the suppliers (Hollensen, 2015,
p.52).
Buyers bargaining power - Buyers are mainly the price setters therefore; decision regarding
the price of the product is decided by the buyers. Bargaining power of the buyers is lao high
in McDonald because intense level of competition is seen in the market. Customers gets
various substitutes therefore; buyers have the power to take decisions.
Threat of the substitutes- same companies are selling same products in the market therefore,
the threat of substitutes are the most important driving factors in the organization. There are
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many competitors in the market therefore; more number of substitutes is available in the
market.
Rivalry among the competitors- Market share of the companies helps the rival companies in
deciding the areas where improvement must be done for maintaining the better position in the
market (Dobbs, 2014, p.32). Fierce competition is there in the market because quick services
eatables, cafes are available in large numbers in the market. Among the competitors
McDonald holds top position in the market.
Figure 2: Porters Five Forces Model
(Source: Hollensen, 2015, p.52)
Apart from the above discussed models 5 M” s analysis also plays an important role in
understanding the influence of distinct factors on business. How they affect an enterprise is
discussed below:
Men- Large number of employees is available in the McDonald Company. Nearly 375000
employees are there in the company. Therefore, strong workforce is seen in the company.
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Money - Large turnover in the form of sales is seen in the company. Total assets are seen to
be about $31.024 Billion. Therefore, huge funds are available for further investment in the
company.
Machinery- modern technology is used in the company therefore, revenue and turnover rates
are high in the company. Efficiency rate is usually high in the market
(corporate.mcdonalds.com, 2016).
Materials- good quality materials are used in the market therefore, profit and the demand are
usually high in the market for the company. More customers can be attracted by the
company.
Minutes- Decisions in the company are taken by the company by organizing meetings.
Agenda of the meetings are also decided by the company beforehand so that planning can be
done before the meeting.
2.2 Propose segmentation criteria of McDonald’s
There is no meaning in launching a product universally because different markets have their
own needs. Therefore, it is better to launch products targeting a specific market. However, in
today’s competitive business world, market segmentation has become something obsolete.
The companies are now trying to segment the buyers based on their needs. Therefore, it can
be said that segmentation and targeting are interconnected with each other and tailored
products should be brought out for targeting various customer groups. The customers will
select the product based on its features which will satisfy his needs. This will act as a two-
way purpose. The company can sell its products to the targeted customers as well as the
customer will think that the company really thinks about the group. Hence, the goodwill of
the company will increase.
In the opinion of Hollensen (2015, p.52), the segmentation process of marketing principle and
business strategy seems very significant to position produced goods or services in the existing
market. The marketing manager of McDonald’s must design such effective business strategy
by understanding the present market and analyzing the nature of the upcoming foods, which
seems very profitable for the growth of the organization. The marketing manager of
McDonald’s must follow the demographic segmentation approach, which denotes to the
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division of the market in various parts in the context of demands, capacities, and choices of
its customers.
2.3 Choosing a targeted strategy in different markets for selected products
McDonald’s is a fast-food chain operating throughout the world with reputation for many
years. Therefore, it is to be noted that they have well accepted the idea of market
segmentation and targeting to enjoy sustainable success as opined by Brassington and Pettitt
(2003, p.56). However, for launching a new product, they always choose the target market
and the target customers first and then they launch the products. For example, if they want to
launch a new product, which contains spicy objects, they will surely target the young
generation as they mostly like spicy food. Therefore, they will introduce the item in such a
place where young people go most, like in a shopping mall or somewhere near a college. In
addition, combo meals for large families, or cholesterol free food for older people, these all
are the examples of choosing target strategy by McDonald’s. Therefore, it can be said that
McDonald’s does maintain a very good record of choosing a target market and market
segmentation.
Targeting strategy is the strategy that is done for segmenting the market and also used
for choosing the appropriate market. Proper selection of the customers is done to set the
target market. Proper Segmentation helps the organization to decide the appropriate segments
to enter the market. There are different types of marketing strategies which, can be divided in
three parts:
Undifferentiated marketing
Strong differences are seen in the market therefore; under this situation the companies
decide to adopt undifferentiated strategy. Single marketing strategy is developed in the
market so that segmentation in the market can be reduced. Marketing orientation is reduced
here therefore; mass market philosophy is seen in the market (Solomon, 2014, p. 49)
Differentiated marketing
When there are several target markets then the strategy of differentiation is taken. in
this strategy specific marketing strategy is taken therefore, specific results are done in this
project.
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Separate brands are made in this strategy so that specific results can be acquired in this
project.
Concentration strategy
Specific segment suitable for the company is decided then it is evaluated properly
before doing final selection. Resource concentration must be done in this strategy. Goals are
set in advance and according to that specific segment are selected by the company.
2.4 Demonstrating how buyer behavior affects marketing activities in different buying
situations
The buyer behavior effects on the business when any types of buyer visit the organization as
its chosen brand. Internal factors, psychological factors, and social and also cultural factors
effects on the buyer's behavior.
Social and cultural factors:
The social and cultural factors effect directly on the buyer’s behavior to by monitoring them
to choose any brand. By collecting and listening reviews from the others of the society, an
individual buyer will adopt any brand on the regular basis which is very influencing
Psychological factors:
The psychological factors refer to the brand image which proves and indirectly influence the
customer psychology to choose the organization. The buyers will feel so much attraction by
the presentation as well as the advertisement of any product which influences them to choose
the organization.
2.5 Prose the positioning for a selected product or services
McDonald’s will launch such new and delicious food dishes which seems very acceptable for
the teenagers. The organization will design such business strategy which influences the
buyers to buy the specific product. The organization must position its newly launched in such
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places from which the entire society especially the target buyers can able to enjoy its tastes.
The organization must position its services by providing so much importance on the scales of
profits which is the main aim of the organization.
Theory of relationship marketing is used to further describe the marketing strategy. In this
theory the customers are considered as the main element in the business. Retention of the
customers must be done in the business so that the number of customers can be increased in
the company (Miquel et al. 2014, p, 667) long term value of the customers are decided here
in beforehand therefore, decisions regarding the value of the customers are decided in this
model. With the growth of the social media more focus is given on the online media for
serving the customers. The model also focuses on the channels of communication, which
further helps the organization to be in touch with the customers 24*7. Proper relationship
with the customers is done in the model which further helps the company to flourish in long
run. Satisfaction and the customers are given the priority in this model. Market depends on
the customers therefore; this model clearly describes the priority of the company.
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LO 3 Understanding the individual elements of the extended marketing mix
3.1 Analysing how the product or services are developed to sustain competitive
advantages
A company’s claiming is reflected through the products it makes or the service it gives.
Therefore, a company always try to meet the customer’s needs through their products so that
the customer may likely make a repeat purchase. If the repeat purchase takes place and if it
happens for a number of times then the company can hope to attain sustainable competitive
advantage. According to Turnbull and Valla (2013, p.36), Sustainable competitive advantage
is nothing but the advantage a company acquires by sustaining in the market for a long time
over its competitors. In order to enjoy all lots advantage in the competition market, the
organisation, as well as McDonald's, develops its standard of offering foods. It is true that
the organisation must show some unique features to stay head in the competition market and
stay forward than its close competitors.
3.2 Explaining how distribution is arranged to provide customer convince
Distribution is the process by which a company decides which products will be made
available in which area and how. Distribution for McDonald's is very important as the
company is a fast food joint, people will likely to have a fast food joint in the locality where
they can hang out with friends and families. For this, McDonald's have opened restaurants in
a number of places in the UK. They do not have to be a premium McDonald's restaurant but
they should be available in different areas so that people can easily find them. Another
strategy is home delivery. For this, the order should be served from the outlet which is nearby
I order to deliver the food as fast as possible because that will create a good image of the
company.
3.3 Explaining how price are set to reflect the objectives and market conditions of an
organisation
According to Uncles (2002, p.350), there are several pricing strategies that are used by
McDonald’s to sell their products. They are:
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● Premium pricing: A price higher than the competitors to reflect quality of the product
● Penetration pricing: It is used to capture the market share when entering in the market
to attract the buyers
● Economy pricing: Just a bare-minimum pricing strategy to attract the large portion of
the market
● Price skimming: To gain maximum revenue advantage
● Psychological pricing: To set up the price in a way which looks cheaper but actually
not cheaper. Like writing $99 instead of $100.
McDonald’s utilise diverse pricing strategy to monitor and balance its producing food dishes.
By responding to the pricing strategy, the organisation manufactures such foods for the
middle-class people which can easily set in the mind of the customer. But on the other side,
the customers constantly choose McDonald’s only for the quality of the foods and reputed
brand name. Thus, the middle-level customer of the society can able to switch on the
organisation without having an extra financial budget and the profits of the organisation have
been increased.
3.4 Illustrating how a promotional activity is integrated to achieve marketing objectives
The promotion of McDonald’s refers just not to the simple advertisement but also the
utilising process by which the organisation can able to inform all the society regarding its
upcoming food products. To attract lots of potential and loyal buyers, the organisation often
provide some offers like getting one buy one free or 20% or 30% extra of the delivering
dishes. Some time in order to stay ahead in the competition market than its competitors the
organisation hires renowned celebrities to promote its brand. The company also gives free
food for taking feedback from the college students and in that way they indulge in a face to
face conversation about the product which serves as the market feedback also. The heavy use
of emails and text messages t let people know about new products is another strategy used by
McDonald's. The McDonald's ‘joker' in various stores advertising the new products can also
be seen as their promotional activities.
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3.5 Analysing the additional elements of the extended marketing mix for the chosen
company
The extended and three significance Ps are an efficient process, physical layout and also
effective provision which is organised for providing excellence service to its customers.
Physical Evidence:
In order to attract lots of regular and loyal customers, McDonald’s modify the outlook of its
delivering foods because the presentation and stylish outlooks tempt the service-users to
choose the brand constantly.
People:
In order to provide ling-term continuation of its business, the management of the organisation
provides sufficient importance to treats its customers very fairly.
Processes:
In the opinion of Mir et al. (2007, p.338), the process denotes to the efficient activities to
offer its customers finally. Only by adopting efficient and dedicated business strategy the
organisation can able to satisfy all kinds of needs of its customers.
Task 2
LO 4 Able to use the marketing mix in different contexts
4.1 Planning and commending marketing mix for the two different segments in
customer markets
In this section, the assignment will attempt to discuss the most effective marketing mix for
the various segments in customer markets. In the opinion of Alon et al. (2012, p.06), the
marketing mix refers to the action plan or tactics which help the organisation to enhance in
the competition market. McDonald’s will launch two different food products for the children
who belongs from 10 to 14 years and on the other side an attractive combo offer for the office
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goers. The organisation must design its business plan diversely for the different dishes
through following the effective steps of the marketing mix.
Product:
The specific food dish, which are manufactured only for the teenagers are very spicy and
healthy also. On the other side, the combo pack, which delivers to the office goers, must be
very light and easily digestible.
Price:
The main motto of management of the organisation is to make bound its customers to choose
the brand rapidly, so the organisation fixes such prices both of the dishes which becomes very
reasonable and affordable for its customers without sacrificing its standard.
Place:
The place refers to those outlets of McDonald’s where the each offering dish seems easily
available to the customers. Besides visiting the outlets of the organisation directly, The
McDonald’s can be available both of walk-in-interview and order on line.
Promotion:
The management of McDonald’s takes difference initiatives to promote its offering services
to its customers seems visible on television and social media also because the children love to
spend its time by watching program in the television.
People:
In the opinion of Djelassi et al. (2013, p. 783), the employees of the organisation maintain
standard uniform which represents the brand during offering foods to its customers. The key
factor of success of the organisation is to deliver the desired foods very quickly which seems
possible only for the efficiency of the employees of McDonald’s.
Physical evidence:
The organisation use proper hygienic and clean process to prepare both of the dishes which
are very appreciated by the society. In order to attract its customers, the organisation creates
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attractive outlets where the employees offer excellence professional behaviour to the
customer.
Process:
The management of the organisation usually utilise transparent process to prepare both of the
dishes. The employees of McDonald’s invite its customers to come and check the
independence, which are used to prepare those dishes.
4.2 Illustrating differences in marketing products and services to businesses rather than
consumers
McDonald’s uses different market strategy to attract lots of customers and maximizing its
profits. By following two types of market strategies like B2B and B2C, the organisation can
achieve its objectives. In the B2B strategy, the organisation must have to deal with specific
representatives, which seem simple and easy procedure but on the other side, in the B2C
market strategy, the organisation has to face lots of customers by properly satisfying its
demands. Standard quality and perfect efficiency of providing services ensure the B2C
marketing strategy of McDonald’s. When a company tries to make a product sale to the
customer, the customer never looks at the profitability of the product but when company buys
that product, it always tries to maximise the profit.
4.3 Show how and why international marketing differs from domestic marketing of
McDonald’s
In the opinion of Pandey et al. (2012, p.417), the domestic marketing refers to such
marketing which deals within the geographical limitation of the nations, another side the
international marketing denotes to the various activities like production, distribution, and
advertisement of any specific product across over the geographical limitation of the country.
The international and domestic marketing of McDonald’s displays its differentiation in the
context of size, interference of the respectable government, utilization of modern and
advanced technologies and the nature of the business operation.
1. The international market of McDonald’s spreads its large are where the domestic
marketing seems very concern regarding the geographical barriers of the country. So, mostly,
domestic marketing cannot be able to cover a large area where the government does not
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interfere at all. But on the other side, the international market is strictly monitored by the
international market.
2. To gain lots of service-users all over the world, McDonald’s utilise modern technologies in
the international market while there is absence of utilisation of modern technologies in the n
the domestic market. In the case of international market, McDonald’s has to face lots of
hazards in the context of exchange rates and also socio-cultural variation which becomes the
serious risk factors for the organisation. But in the context of the domestic market of
McDonald's, there are comparatively fewer possibilities of facing risk factors and challenges
during offering the foods to its service-users.
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Conclusion
In this assignment, it has been discussed that how diverse types of marketing principles
effects on the business in the perspective of growth and profits. The assignment has been
explained how McDonald's to use the market-oriented approach to meet all kinds of demands
of its customers. Besides that, the process of marketing which is followed by McDonald’s to
continue its business has been discussed in this assignment. The environmental analysis
during the production of the organisation has been also explained in this assignment. Being
the newly appointed marketing manager of McDonald’s, the learner has been justified to its
job role.
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Reference list
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Websites
McDonald's UK. (2017). Chicken Selects. Available at: http://www.mcdonalds.co.uk/ Last
Accessed 17 Jan. 2017]
corporate.mcdonalds.com (2016) report Available at:
http://corporate.mcdonalds.com/mcd/investors/financial-information/annual-report.html
[ accessed on 30.6.2017]
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