Marketing Principles: Elements, Benefits and Cost of Marketing Orientation of McDonald

This document discusses the various elements of the marketing process, including sales and product orientation philosophies, marketing segmentation, and the marketing mix. It also explores the benefits and cost of a marketing orientation for McDonald's. Additionally, it examines the influence of macro and micro-environmental factors on marketing decisions.

UNIT 4
Marketing Principles
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Table of Contents
INTRODUCTION.....................................................................................................................................3
TASK 1....................................................................................................................................................3
1.1: Various elements of the marketing process................................................................................3
1.2: Benefits and cost of a marketing orientation of McDonald........................................................5
TASK 2....................................................................................................................................................8
2.1: Macro and Micro-environmental factors influence on marketing decision................................8
2.2: Segmentation criteria for product in different market.............................................................10
2.3: Segmentation Strategy for targeting.........................................................................................11
2.4: Buyer Behaviour and buying situations....................................................................................13
2.5: Positioning for All Day breakfast menu.....................................................................................14
Task 3...............................................................................................................................................14
3.1: Product development for viability............................................................................................14
3.2, 3.3: Distribution and Pricing according to market condition.....................................................15
3.4: Promotional activities...............................................................................................................15
3.5: Extended marketing Mix...........................................................................................................16
Task 4...............................................................................................................................................16
4.1: Marketing Mix in different segments........................................................................................16
4.2: B2B and B2C Marketing............................................................................................................17
4.3: International marketing strategies...........................................................................................18
References...........................................................................................................................................20
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INTRODUCTION
In the present dynamic world, businesses are seeking to gain a competitive position in
the market by attracting as much customers as possible. As such businesses need to
continuously adapt and adjust to the changes in the market and understand what exactly
would work for them. Marketing is generally defined as the process of planning and
distribution that is carried out in order to satisfy individual goals. Alternatively, it has been
defined as a medium of communication to offer products and services of value to the
customers and the community CITATION Kot12 \l 1033 (Kotler & Armstrong, 2012). Considering
the various ways in which exchanges can be made between organizations and their
customers, businesses can be observed to have particular marketing orientations. Marketing
orientations generally depend on the four basic elements that define the ways in which a
company decides to satisfy its consumer needs and hence, position its brands. The four
elements of Marketing are product, price, place and promotion CITATION Mal11 \l 1033 (Malär,
et al., 2011). These elements are controlled by businesses in order to create value such that the
maximum number of customers could be attracted. It is key for the management to
understand how the elements can be varied in order to maximize profits for the company. The
following study would try to provide a more elaborate understanding of the marketing
principles by developing a marketing analysis of McDonald’s.
TASK 1
1.1: Various elements of the marketing process
Various elements of Marketing process
AS per according to American Marketing Association, Marketing is the activity, set of
institutions and processes for creating, communicating, delivering and exchanging offering
that have value for customer, clients, partners and society.
There are two philosophies which are the main reason behind the development of
marketing as a management process:
Sales orientation philosophies- This orientation mainly refers as gimmicks as it will
not develop a long-term demand for the product. The tols which usually use in these
philosophy are buy one get one free promotions, website banners and so on.
Product orientation philosophies- These philosophy mainly concerned about the
product. If company is offering a superior quality product then customer will surely buy it
without the discount and any other offer.
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Marketing segmentation- The group of the customer id very diverse in nature so it
would be very difficult for marketers to target each and every customer from such diverse
group. Segmentation is considered as neither profiterole nor practical attempt for satisfying
the customer, because of the large heterogeneous population the main aim of marketer is
identify those customer who are more profitable for business.
The marketing mix- Marketing mix is also one of the important element of the
marketing process as it focused on the key factors indulge in the marketing area such as
product, price, place and promotion.
McDonald’s is one of the leaders in fast food chains in the world at present. Providing
quick service to the customers, the main marketing strategy for the company has generally
focused on facilitating better customer relationships Particular strategies have been
implemented by the company in order to establish a better name for itself in the market. The
prime focus of the company has been to integrate the recent marketing strategies and adapt to
the changes in consumer behavior. To that end, the company has enabled particular
marketing strategies that are hugely reliant on the various digital and technical advancements
in the present world. The emphasis on creating more digital content for the company could be
seen as a shift from the traditional marketing techniques that have so far been implemented
by the company. In a recent Conference the company CMO, Deborah Wahl has talked about
the company’s present digital integration and by forging new partnerships with technology
companies including Google and Facebook. Also, the company is presently aligned towards
developing a more holistic and comprehensive approach towards building effective
communication channels with the customers. According to Wahl, labelling the different
channels as digital, print or mobile could be problematic and confusing in the present world
as one channel of communication is dependent on the other CITATION Joh16 \l 2057 (Johnson,
2016).
1.2: Benefits and cost of a marketing orientation of
McDonald
McDonald's is pursuing various marketing activities in order to increase in there
marketing orientation programme. McDonald's is a fast food chain which has existence
almost all over the world here they operating there marketing activity very effectively to to
expand there business more. McDonald's is having a prudent regulatory framework in which
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they are focused upon the making there activities and operations marketing oriented.
The benefits to McDonald's out of marketing orientation:
Customer satisfaction, McDonald's has adopted various marketing orientation
approaches which enable their business to develop products as per the need and demand of
the customer.
Customer loyalty, Through the effective marketing orientation approach McDonald's
is increase the worth of its brand in the eye of the customer.
Competitive benefits, AS the McDonald's marketing orientation approaches is
focused upon the customer so it is providing the competitive benefit to the firm over its
competitor.
More focused production, McDonald is making the customer need a primary focus
so they are producing the product as per the need of the customer. Customer will get more
satisfaction with the product.
Concentrated strategy- Cost of marketing orientation will help McDonald to align
all the functions with the strategic vision of meeting the needs of customers. This will be
useful to define the proper role to the employees of the organization.
McDonald marketing orientation structure:
The integration of the technological and digital systems can be seen as an effective
way in which the company can improve upon its present marketing strategies. With respect to
the key marketing elements, product, price, place and promotion, changes can be made within
the digital medium to attain a better brand position. The problem however could be in the late
realisation of the benefits of technological integrations, as other companies in the segment
have already taken recourse to excellent marketing strategies. KFC has been brilliant in its
approach; one of the chain’s restaurants in South Africa has developed an interactive digital
table wherein music of local artists could be played by customers while waiting for their
orders. Simultaneously, at other parts of the world, KFC has come up with other innovative
digital integrations like the foldable digital menu, in Germany, which can be accessed by the
in-store customers to order their foodsThe integration of the technological and digital systems
can be seen as an by syncing their smartphones. The focus of KFC, however, could be seen
to be entirely on digital incorporation, which while indicates a target specific approach that
tries to attract the urban youth, also, limits their market.
On the other hand, McDonald marketing is hugely reliant on product adaptations and
localization. McDonald has been effective in coming up with country specific menus and
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items that incorporate the local flavors and portray a cultural identity that is specific to that
region. While some of the local products have been successful for the company, others have
been disastrous; in Thailand, the company had introduced road style chicken products that
failed impress the customers because of the price of the same. The innovation in products in
alignment with country specific customs by the company can also be seen in the introduction
of chicken burgers in India, where the majority of the customers are Hindu for whom
consuming beef is sacrilege CITATION Mou15 \l 1033 (Mourdoukoutas, 2015). As such the
company responded by offering chicken and vegetarian products such that customer
satisfaction could be gained. Furthermore, McDonalds has been an enthusiastic supporter of
girl education in the country, in order to gain a better strategic support.
While McDonalds might have been late in incorporating technical aids in its marketing
strategy, being culturally sensitive has proved to be beneficial for it. Now with digital
incorporations, the company would be able to better understand its customer needs and
accordingly adjust its marketing elements in developing a better marketing mix.
The digital integration can be beneficial for the company in observing the various ways in
which customers can be communicated. The company has involved itself in creating almost
5000 content pieces to interact with its customers. Noting the frequency at which the
company’s name is mentioned in the social media sites, the company has decided to enhance
the ways in which it seeks to interact. The company notes the significance of maintaining
brand authenticity while interacting with the customers; regular interaction can improve the
credibility of the brand. Certainly, as noted by Wahl, it would be important to reduce the
costs on other traditional forms of marketing in order to facilitate better digital integration
procedures. Another excellent marketing campaign in relation to the promotion of a new
product, the Zesty BLT Wrap. McDonalds had created a four hour long video loop that shows
the entire process of the wrap being prepared, which also comprises of fun facts about the
company in humorous way. According to the company advertising chief, Melanie Courtois,
the loop video has been intended to be played on social media sites; followers of the company
group on such sites can involve themselves by participating in trivia quizzes based on the fun
facts. One can note the constant strive to involve the customers through the innovative
marketing activities.
The benefits of being digitally oriented in marketing at present could be seen in the excellent
ways of communication that can improve the image of the brand. It is difficult to keep the
customers interested for a longer period as customers at present have access to multiple news
and information. Such innovative strategies can be seen as excellent tools to grab the
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attention of the customers and engage them through ingenious methods. The present
marketing strategies have been dubbed as being gimmicky, but as long as they are able to
engage the customers, companies are being benefitted.
On the flip side of the digital orientation of the company marketing could be seen in the
continuous evolution in the digital technologies, which make it important for McDonalds to
constantly think about innovative ways. The challenge of ambiguity in technology can be
offset by assuming an adaptive stance as the company CVP, Richard Murphy notes. The main
problem of the intense digitization of the techniques could be seen in the rapid proliferation
of data which makes it all the more difficult to be acted upon. Understanding the
consequences of a particular problem can be difficult to comprehend therefore mistakes could
be made. The problem also lies with the complexity in interaction procedures and marketing
channels. McDonalds can effectively bridle its digital innovations in marketing and assess the
ways in which it can make the changes and evaluate the consequences in relation to the
overall business strategy CITATION McE16 \l 1033 (McEleny, 2016).
TASK 2
2.1: Macro and Micro-environmental factors influence on
marketing decision
Marketing strategies can be affected by various environmental factors including demographic
changes, buyer behaviour changes or economic changes. Essentially for marketers, it
becomes important to assess the various ways in which such changes could be addressed and
accomplished. As such, there are two types of environments within which companies
generally adopt their marketing strategies, viz., the macro environment and the
microenvironment CITATION Gou06 \l 1033 (Gourville, 2006). The macro-environment is the
comprehensive environment that notes the implications of the economic, technological,
political, social and natural aspects with regards to company activities. The
microenvironment factors are those that impact the internal environment of the company like
the organizational structure, the marketing channel, the competitors of the company, and the
various stakeholders of the company. By studying the micro and macro environmental
factors, businesses can effectively adapt to the needs of the market and at the same time grab
the attention of the consumers.
As the changes within both the micro and macro environments are constantly in a state of
flux, there are certain tools and techniques that can be employed by companies to better
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understand the market situation. Data analysis, customer relation management and data
mining are some of the most important tools that re regularly implemented by the companies
in order to achieve better business results CITATION Kap10 \l 1033 (Kapeller & Puhringer, 2010).
Since customer behavior provides the basis of marketing, most of the changes in the market
are analysed in relation to the customer behaviour. Customer value analysis is one such tool
that defines the level of customer loyalty and measures the degree to which they would be
remain loyal to the brand in the future.
SWOT analysis of McDonald's:
STRENGTH
 Advanced advertisement and brand
name
 Collaboration with coke
 Environmental friendly
 Trained employees
WEAKNESS
 Product development process is slow
 High advertising cost
OPPORTUNITY
 High growth rate
 Increase in people’s standard of living
THREATS
 Customer are health conscious
 Threat from local and small businesses
Environmental audit of McDonald's:
Political factors, The business of McDonald's is under the control of the government
regulatory framework. The main political issues are health, license, tax issue etc.
Economical factors, AS McDonald's is catering their services on international level so they
need to face the different scale of tax and revenue regulations in different country.
Social factors, The standard of living is getting advanced of the people on the international
level which is influencing the demand for the brand such as McDonald's.
Technological factors, technology bring advancement in the the process and also provides
competitor advantages. McDonald's is also hving a speedy and modern distribution channel
and payment facility provided by them is also quick.
2.2: Segmentation criteria for product in different market
One of the crucial topics in marketing is segmenting the market according to the customer
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buying behavior and tastes. Segmentation of marketing can be achieved through customer
behavior identification and creation of accurate customer profiles. The assumption of
consumer behavior, therefore, provides the organizations with a base upon which marketing
strategies could be developed. The understanding of buyer patterns and consumer behaviors
is important in developing a marketing strategy that can satisfy the consumer needs and also
align the same with the overall business strategy. As such, consumer behavior can be shaped
and affected by a number of factors, the prime ones being cultural, social, individual and
psychological aspects. Segmentation involves three key steps including identification of
market segments, selection of the market segments and the positioning of the products on the
basis of the target market. The identification of the target market is based upon various social
and demographic trends that differentiate one segment from the other. In order for the
segmentation to be effective, organizations need to analyse the trends and market ideas that
can facilitate the development of key products and such that the brand could be developed in
keeping with its image. In the following sections, the report would provide a brief analysis of
the various trends that define segmentation procedures.
Demographically, segmentation of a market can be done based on the age, gender,
income, ethnicity and social status. There are also other factors that can determine the
demographic orientation of the market. McDonald is offering different product such as happy
meal for the kids, for family they made different outlets and meals for takeaway and drive
through.
Psycho graphic, Segmentation can also be psycho-graphically by noting the
particular attitudes of the people with respect to the interests, opinions, values and lifestyles.
Psycho-graphical analysis provides insight about the intention of the buyers in making a
particular purchase decision. McDonald generally targets the urban youth who maintains
probably a fast lifestyle. Also, the company mascot, Ronald can be seen as an effective
promotional idea to attract the toddlers and the children who would perhaps follow their
newly wed parents to the store. McDonald segmentation policy also differentiates between
the regular and potential fast food eaters. According to Carol Sagers, however, the company
customizes its products according to the specifications and needs of the target population
after analyzing the key segment trends CITATION McD13 \l 1033 (McDonalds, 2013).
2.3: Segmentation Strategy for targeting
One of the key marketing strategies employed by McDonald recently can be related to its
new all day breakfast menu that has been recently introduced in global markets. Market
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experts have seen this strategy as being effective for the company to regain its customers who
have lost to strong competitors. In keeping with the whole breakfast idea, the company has
also come up with fashion wear in collaboration with designer Emma Mulholland to better
position its breakfast menu service CITATION AdN16 \l 2057 (AdNews, 2016). The product as
such, has been positioned with respect to its competing brands Dunkin Donuts and
BoJangles. The move to introduce the new menu has been a huge factor in the company’s
success. Some of the business experts in the market note the continuous innovation in product
development being a great marketing strategy in itself.
The idea has so far been effective for the company as far as the sales of the company is
concerned.
McDonald's segmentation involves segregation of the population into the groups as per
according to certain characteristics such as:
GEOGRAPHIC
Region: Local, domestic and international
Density: Rural and Urban
Age: 8-55
Gender: Males & Females
Demographic
Life cycle: Young, single, married, chidren
Income group: Low, Middle and High
Occupation: Students, Professionals,
employees
BEHAVIOURAL
Degree of loyalty: Switchers and Hard core
loyal
Benefits sought:Time efficiency and Cost
benefits
User status: Potential and regular fast food
eaters
PSYCHOGRAPHIC
McDonald's targets resigned, struggle and
mainstreamer, Culture and brehaviour of the
customer.
Differentiation strategy of McDonald's:
McDonald's is using a wide differentiation strategy as per teh supporting and second
generic strategy which focuses upon making the business and its products in a way that it will
be distinct from the competitors.
Advantage of differentiation strategy-
 McDonald's may charge more for the product and services they providing
 Strong brand identity
 Competitive advantage because of the lack of substitute product and service
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Disadvantage of differentiation strategy-
 Copy by the competitors
 Costly and time taking
 Required wide knowledge and understanding about the market
2.4: Buyer Behaviour and buying situations
The buyer behaviour forms one of the crucial factors in market segmentation strategies and
hence, is important to note with regards to the McDonalds marketing analysis. As has already
been noted, McDonalds as a company has always tried to develop products in accordance to
the cultural and ethnic alignment of a market CITATION Kel12 \l 1033 (Kelly, 2012). Be it ‘halal’
meats in the Gulf countries or extra spicy burgers in Philippines, McDonalds’ product
development strategies have in itself been effective in marketing. Emphasizing on effective
products have provided the company with the base upon which it could develop its marketing
strategies. The introduction of the all-day breakfast menu can be seen as one such example of
effective marketing strategy developed by focussing on the buyer behaviour. With the present
changes in the work time and the particular lack of options for a whole meal at a reasonable
price, McDonalds has been successful in exploiting the conditions facilitated by intense
amount of work pressures. The flexible work timings in today’s work place further has driven
success for the company, as the new breakfast menu offers the professionals the option to
have breakfast anytime of the day. However, there are problems with the operations of the
franchise as have been noted by some of the local owners. Because of the limited scope it has
become difficult for some of the franchisees to run the breakfast menu at “non-breakfast”
times.
The stages of Buyers behavior of the customer:
Need recognition- This is the first stage of the customer decision making process in which
customer will realize that they have the need for the product. McDonald need to create the
need in the market in order to increase their sales.
Information search- After the customer realizes the need about the product they will look
for the various information related to it. McDonald need to provide all the information about
their product and services.
Evaluation of alternatives- Customer also look at the alternate and substitute product and
evaluate among them. The evaluation can be based upon various factors such as price,
quantity, quality and so on.
Purchase- In the end after all the above stages completed finally buyer will purchase the
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product
Post-purchase behavior- The post purchase behavior of the buyer influence the brand on a
great extent as the positive and negative word of mouth have impact on the other customers
as well.
2.5: Positioning for All Day breakfast menu
One of the strategies that MacDonald can adopt in this relation is to conduct a detail market
analysis to understand the demographics wherein the menu could be successful by noting the
meal times and professional activities in a particular area. Determination of the customer
demographic can provide a better understanding of the areas and localities wherein the new
menu would be successful. Certainly, considering the success of the new menu, it would be a
good idea to keep the menu and also adjust it to the local needs and preferences.
Task 3
3.1: Product development for viability
McDonalds’ ingenuity can be seen in ensuring market viability through new product
development strategies and responding effectively to the economic and political changes. The
product development strategy of the company could recently be seen in the introduction of
Brekkie or breakfast menu to gain considerable competitive advantage. The company noted
an increase in the sales since the new menu has been introduced. The particular idea behind
the strategy could be seen in targeting the urban youth who generally work around the clock
and hence do not particularly have the time to enjoy a timely breakfast; the quick service
structure of the chain provides that option to the customers who can have a quick breakfast
irrespective of their wake up time. The strategy has been effective against the multinational
giants like Dunkin Donuts and Bojangles who have noted a surprising fall in their sales in the
fourth quarter sales CITATION Oye16 \l 2057 (Oyedele, 2016).
3.2, 3.3: Distribution and Pricing according to market
condition
McDonalds depends on effective distribution to reach its customers. The company generally
distributes through restaurants, kiosks and mobile apps. Most of the company revenues are
generated in the restaurants and the various franchise stores that are operated by the local
owners. The company kiosks generally distribute limited products that are built generally
during seasonal and professional sports events. The digital integration strategy has been
effective for the company as consumers are increasingly ordering through the McDonalds
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apps and through other digital platforms. The particular strategies have been effective in
providing convenience to the customers through such distribution channels.
Perceived value of products is important for companies to determine a pricing point for the
same. Value of products should be set in accordance with the customer psychology. Low
price could not be set in by McDonalds considering the image it has created for itself. If a
low price is set, then customers generally perceive the products to be of inferior quality.
Keeping in mind the price efficiency of the company products and the target customer being
those who generally look for economic options, McDonalds follows price bundling that
offers meals at discounted rates.
3.4: Promotional activities
McDonalds as a company has consistently delivered excellent promotional activities. The
company mascot Roland has proved to be effective grabbing the attention of the children and
the young-at heart. Furthermore, the recent introduction of night gowns as an effective
promotional activity for the all breakfast menu has been successful in creating a broader
customer base.
3.5: Extended marketing Mix
The extended marketing mix generally comprises of the physical evidence, process and
people. The physical evidence can be seen in the value that can be added to the intangible
product in order to differentiate the same from its competitors. McDonalds is a budget
restaurant with minimum furniture providing meals at a convenient price. People form one of
the most crucial parts of the business and for McDonalds it is all the more significant as the
success of the company is hugely reliant on the product development strategies. The kitchen
and people associated with the section form the core group who need to adhere to the overall
company strategy of continuous innovation. The process within the extended market mix for
McDonalds can be defined by the franchisee model that the company relies hugely on for its
success. The managers streamline the operations of each of the franchise unit by
standardizing operations across all the units.
Tools and techniques
Customer relationship management provides an operational basis that can facilitate better
resources allocation to particular strategies. The data analytics and mining tools are effective
in analysing the huge amounts of data that would be developed as part of the digital
interaction. The problems of huge data have been properly indicated by the McDonald’s
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Richard Murphy who noted the challenges of digital communication. Effective data mining
and analysis tools can be implemented by McDonalds in order to streamline the processes of
data analysis and hence considerably reduce the challenges arising out of ambiguity CITATION
McE16 \l 1033 (McEleny, 2016).
Task 4
4.1: Marketing Mix in different segments
Market segmentation can be done based on demographic patterns. Under each of the factors
that separate the customer behaviours, buyer patterns can be indicated and developed within a
particular group can be defined which helps the company to develop appropriate marketing
strategies. As for example, individuals belonging to a particular generation would have a
particular taste and trend in cloth. Similar trends can also be noticed within gender
classifications. Ethnicity as a demographic has been used by McDonalds, who note the
various implications of cultural diversity in differentiating the markets. McDonalds has been
effective in segmenting the market based on their market research and noting the key cultural
proclivities. As for example, in India it introduced chicken and vegetarian products since
majority of the population in the country follow Hinduism. Similarly in China, McDonalds
has introduced rice products keeping in mind the food patterns of the people in the country.
Similarly, pscychographic segmentation strategy can be used in relation to the demographic
segmentation strategies in order to gain a broader understanding of the market. It has been
noted that most of the drivers for pshychographic factors among individuals can be traced to
the demographic built up of a particular person . Factors like needs and motivation can be
linked to demographic factors like age and gender. Social status and income also motivate
needs and motivation among customers. McDonalds has noted the income structure of the
people in most of the countries to come up with products that can cater to and attract the
people in that country. Like in China the brand has been effective to adapt locally and has
come up with advertising and promotional strategies that would is country specific. Since
most of the Chinese professionals prefer to have their breakfast outside their homes, the
company sought to capitalize on the opportunity by focusing on the breakfast menu; the price
bundling strategy to offer a combo meal also aligned with the price sensitive nature of the
Chinese market CITATION Lab16 \l 1033 (Labbrand, 2016).
Within the demographic and psychographic segments of the market, therefore, the marketing
strategies of McDonalds have been effective.
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4.2: B2B and B2C Marketing
Business to business marketing is different from consumer marketing in the light of the fact
that product or services buyers do not consume the products themselves. The most crucial
factor in business to business marketing is the derived demand. The consumers form the basis
upon which the businesses develop their marketing strategies by cooperating with the buyer
business. Certainly, unlike consumer marketing, business marketing can be complicated as it
needs continuous exchange of ideas and information to ensure that the right kind of strategy
is being implemented.
Given McDonalds’ dependence on its franchisee model, the company has been one of the
pioneers in enabling its franchises with particular digital aids. In keeping with the global
expansion strategy of the company, McDonalds had collaborated with the eMac Digital to
develop an online hub that would help the franchises to procure raw materials and kitchen
products, anywhere across the globe. By incorporating such an innovative strategy,
McDonalds is offering its brand name to potential buyers, who would like to set up franchises
for the company CITATION ent00 \l 1033 (entrepreneur.com, 2000).
4.3: International marketing strategies
One of the crucial factors leading to the global marketing strategies is the diversification
process. The significance of the diversification policy could be seen in the international sales
of McDonalds that accounts for nearly 65% of the total revenue. The marketing strategies
that have been employed by McDonalds focus on the local factors that can increase the sales
of the products. As such the company develops products that are alignment with the cultural
and social setting of the country. The strategy particularly helped the company to increase its
sales by offering a wider range of products to the customers. Certainly, more options in the
product range help in targeting a broader set of customers CITATION bui11 \l 1033
(buisnessinsider, 2011).
The global strategy for McDonalds has, therefore been to adapt to the local customs such that
customers could be attracted and a broader base could be targeted.
Positioning of McDonald products
The McDonald positioned themselves as a family friendly low cost burger business.
The main idea behind the positioning is caters to customer group of family and every age
group. The McDonald get competitive advantage out of it because the competitor are not well
enough to caters the particular segment. It works as value creation for McDonald as the brand
was positioned in the mind of the customer with the different strategy.
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