Marketing Theory and Practices

This assignment delves into various marketing theories and practices, including customer value propositions, business models, and service management. It also covers marketing research techniques, such as market segmentation, target marketing, and positioning strategies. The importance of value creation processes is highlighted, along with the need to design effective value propositions that meet customers' needs. References to real-world companies like Burger King and McDonald's are included, demonstrating the practical application of these concepts in industry.

Running head: VALUE PROPOSITION
VALUE PROPOSITION
Name of the Student
Name of the University
Author Note

1VALUE PROPOSITION
Executive Summary
The given report throws light on the customer perceived value proposition and the value
proposition offered by the company. The chosen company for the given assignment is the mega
food chain restaurant named Mc Donald`s. The various aspects of the value proposition delivered
by the restaurant have been discussed in detail which is then followed by a comparison between
Mc Donald`s and its competitor Burger King. These two propositions have then been compared
to a benchmark standard of proposition in the relevant industry. The last section of the report
states the ideal value proposition with methods of implementing the same. The conclusion
summarizes the findings.

2VALUE PROPOSITION
Table of Contents
Introduction......................................................................................................................................3
Identifying customer perceived value for customers using Holbrook` typology............................3
Vision of Mc Donald’s................................................................................................................3
Holbrook's typology of consumer perceived proposition............................................................6
Comparison of Mc Donald`s value proposition with that of Burger King and benchmarking it to
an illustrative proposition................................................................................................................7
Mc Donald’s Value Proposition..................................................................................................7
Value proposition Burger King...................................................................................................9
Illustration of a Value Proposition for the fast food sector.......................................................10
A new value proposition matching the value criteria of the customers.........................................11
Value criteria of Customers.......................................................................................................11
Suggested Value Proposition.....................................................................................................12
Implementing the value proposition internally and externally......................................................13
Conclusion.....................................................................................................................................15
References......................................................................................................................................16

3VALUE PROPOSITION
Introduction
A value proposition can be defined as a statement of all the offerings which a company
gives to its customers for a price (Andreson, Narus and van Rossum 2006). This serves as a
promise that the company will exceed the consumers’ expectations. The chosen company for the
given report is Mc Donald’s. Mc Donald’s is one of the largest food chain brands in the globe.
The company has its operations in almost all the countries in the globe. The company is a fast
food company with restaurant facilities.
The company started its operations in 1940 (Mcdonalds.com. 2018). The company
serves around 69 million customers every day in over 120 countries. The chain is famous for the
products like cheese burgers, chicken products, breakfast items, happy meals, French fries,
deinks, wraps and shakes. Recently, it had received a backslash from the consumers regarding its
health oriented products and it then added fish, smoothies, fruits and salads to its menu.
The given report will elaborate on the customer perceived values for the customer of Mc.
Donald’s. It will also be comparing the value proposition of Mc Donald with Burger King and
comparing with the appropriate value proposition that should be present. The last section will
give details about an appropriate value proposition of the organization and suggest ways on their
implementation (Baker and Saren 2016).
Identifying customer perceived value for customers using Holbrook` typology

4VALUE PROPOSITION
Vision of Mc Donald’s
The primary vision of the company is to become the most loved restaurant b all customer
segments. They want to be highly valued by the customers and for their benefit they want to
innovate new ways to conduct the business.
Customer Perceived Value
The customer perceived value of any brand can be described as the customer`s evaluation
of all the benefits derived out of the products or offerings against the costs that have been
incurred by them. According to Osterwalder et al. (2014), customer perceived value helps in an
overall assessment of the different utilities of the product on the basis of their perceptions. The
perception of the utility varies with respect to each individual but the general perception often
remains the same. Some may value quantity over quality whereas some may have another view.
None the less, a good offering will be successful in making the value better.
In short, the customer perceived values are the benefits derived out of the sacrifices
made. The equation is as follows:
Customer perceived value = Perceived Benefits
The benefits refer to as the attributes of the product and its components are as follows:
 Quality
 Quantity
 Status
 Price

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Perceived Sacrifice refers to the costs involved of the customers which include the time
spent, travelling cost and other relevant aspects which are non monetary.
They are:
 Money spent
 Time spent
 Effort
 Psychic Cost (Coombes and Nicholson 2013).
Figure 1: Customer perceived Value (Source: As created by the author)
With respect to McDonalds the benefits which are associated with the perceived values
are as follows:

6VALUE PROPOSITION
 Price: The price of the various meals available is quite reasonable which is often liked by
the different consumers.
 Quality: At Mc Donald’s, the products sold are always flesh and various quality checks
are conducted regularly (Kiel 2014). However, recently in many countries certain issues
had arised with respect to the quality of the food.
 Status: Mc Donald’s is deemed to be a family restaurant and enjoys a fair status whereby
it is one of the mist visited restaurants.
 Convenience: Meals of all types are available in the restaurant and it is also pocket
friendly. Therefore, many consumers like to purchase from the given restaurant (Johnson,
Christensen and Kagermann 2008). The online facility which is available makes it easier
for the customers to order at the convenience of their homes.
Sacrifices associated with perceived value are:
 Money: The price which they are paying for the meals. Very often the consumers do not
think that the meals are worth the price paid for it. In that case, the will not purchase the
meal next time.
 Time: It is the time spent in billing for the meals purchased and the waiting time at the
counter.
 Effort: This states the physical energy involved in the purchasing process and visiting the
restaurant.
Holbrook's typology of consumer perceived proposition
Holbrook provides a well stated typology regarding the extrinsic value perception and
intrinsic value perception. According to his theory, for Mc Donald’s there will exist a higher

7VALUE PROPOSITION
extrinsic value as the customers mostly emphasize on the end result of their meals and how much
it is capable of satisfying the hunger and taste of the consumers (Martello Landroguez, S.,
Barroso Castro and Cepeda-Carrión 2013). Secondly the self-oriented and other oriented aspect
relates to the self –orientation nature of the consumers as they tend to purchase the meal for
themselves. Lastly, in the active versus reactive component, the restaurant customers are quite
different from one another and belong to different cultures hence the restaurant needs to keep
more customized products for the different customers in order to see to it that all of them are
happy, however customers prefer reactive moves.
The given framework helps to identify the key values present for the customers and it can
be stated that in case of Mc Donald’s, the customer value which is perceived is multidimensional
and the customers give importance to efficiency and excellence (Czinkota and Ronkainen 2013).
Comparison of Mc Donald`s value proposition with that of Burger King and benchmarking
it to an illustrative proposition
Mc Donald’s Value Proposition
Mc Donald’s is highly focused on becoming one of the leading food chains in the world.
The launch of the online ordering website has also given a boost to the e-commerce sales of the
company which would further increase the base of the company. Mc Donald’s applies various
methods to keep their customers engaged and provide them valuable services. One of these
primary methods is providing the concept of combo meals. If the meals are purchased separately
then the charges are different whereas if they are ordering a combo they need to pay a very low
price.
The value proposition of Mc Donald’s further includes:

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 Convenient locations- Mc Donald’s has its branches in more than 120 countries with each
country having more than 200 outlets. Customers can find a Mc Donald’s at every
location. This is the reason the customers find Mc Donald’s very suitable for their dining
requirements.
 Good seating and in the house facilities- All the restaurants of the chain are well spaced
out and can seat up to 150 people. It is kept clean at all times and also up-to-date with the
latest equipments
 Fast service- Mc Donald’s functions on a self service motto. However, the self service of
Mc Donald’s is very efficient and the waiting time for the customers in the queue is less
than 5 minutes.
 Reasonable prices- The pricing of the different food items is quite reasonable. Even
during surge demands, the price remains stable. Furthermore, they have offerings like
that of a combo meal which provides the customers with more discounts (Kim and
Mauborgne 2004).
 Customized and broad range of food options available- From breakfast to dinner, a wide
range of food items are available at the customers disposal. Receiving a backslash from
the people, it introduced a healthier menu as well.
The value proposition of Mc Donald may range differently to serve the needs of the
target markets .The wide range of food appeals to the family. The comfortable seating is better
for those crowds who like to relax. The main advantage of Mc Donald’s over its competitors is
that it has the key aspects of a favorable location, facilities, service speed and distinctive
products (Gronroos 2016). Mc Donald’s understands the essence of value proposition and its
importance in providing the customer a pride which attracts them to the brand.

9VALUE PROPOSITION
Mc Donald’s has grown into the largest restaurant chain in the globe. The food chain
represents excellent value for money along with good quality and fast service. Mc Donald’s is
perceived as one of the most reliable restaurants in the globe which creates value for the buyer in
the following ways:
 Increasing the benefit with respect to cost
 Decreasing cost with respect to benefit
Due to its good valuable goods and propositions the brand has been able to create
immense brand loyalty and positive associations (Grönroos and Voima 2013).
Value proposition Burger King
About the company
Burger King is an American food chain company headquarter in Florida, the company
was found in 1953 and has grown around becoming the fifth largest food chain companies in the
globe (BURGER KING®. 2018 ). The offerings made by Burger King include a wide variety of
products like burger and related snack combos (Armstrong et al. 2015).
The brand image of Burger King has been confusing lately. There exists strong brand
recognition, the brand equity is unable to compare to that of Mc Donald’s.
Value proposition
 Low quality- There have been repeated customer complaints that, the quality of products
of the Burger King is very law and the customers have stated that the products often
smell foul.

10VALUE PROPOSITION
 Comparable cost- The cost of Burger King is quite reasonable and comparable to that of
the Mc Donald’s brand. Burger King also offers a combo meal which can then be used
for a tight budget.
 Poor service- The service of Burger King is not adequate. This may be because of the
existence of irregular processes and slow employee service. The customers are often
heard complaining about long queues and wrong orders (Wilson et al. 2016).The only
different aspect of the food is the grilled taste which is good, but not worse the effort.
 Locations- Burger King is not located in various countries unlike Mc Donald. The market
capture of Burger King is comparatively quite low.
Illustration of a Value Proposition for the fast food sector
 Quality- Quality is the primary aspect of any organization and more critical in the food
sector. Hence, the fast food chains like that of Mc Donald’s and Burger King should see
to it that the customers are provided with the best quality food and they do not have any
issues.
Application to Burger King and Mc Donald
As analyzed from the above given analysis, Mc Donald’s has been quite
successful in providing the customers with good quality products (McDaniel and Gates
2013). However, this is not the case for Burger King and it has not been able to provide
good quality products to its customers.
 Location- The fast food chain restaurants should be easily locatable for the customers.
There should be a presence of a fast food restaurant at every corner.
Application to Burger King and Mc Donald

11VALUE PROPOSITION
Although Mc Donald’s is located at every corner in over hundreds of cities, the
same is not the case of Burger King.
 Service- These restaurants function on a concept of Self- Service, and therefore it should
be efficient and fast.
Application to Burger King and Mc Donald
Burger King has a poor service as compared to that of Mc Donald’s.
 Variety of menus- Being a family chain restaurant, the menu option at the various
restaurants should be very wide and customized for every region.
Application to Burger King and Mc Donald
Mc Donald’s has been successful in this aspect whereas Burger King still has to
reach that milestone of offering a wide range of options to the customers. Currently, the
restaurant chain has a limited menu base.
A new value proposition matching the value criteria of the customers
Value criteria of Customers
As stated earlier, the customers have their own perception about the value that is being
delivered to them. Some of the Value Criteria that consumers generally tend to use have been
given below:
 The products that are being offered to the customers or the service requested should be of
the best quality. Quality is one of the most valued criteria that the customers look for
(Gummerus 2013).

12VALUE PROPOSITION
 The services or the products that are to be offered to the customers should be of
reasonable price. The customers tend o invest a lot of time and effort into their purchases
and therefore the costs to be reasonable.
 Quantity – The customers often tend to be materialistic and would like to be offered a
product which has an adequate quantity and can be used sufficiently.
 Status- The consumers like to associate themselves with a brand that uplifts their social
status and tends to give them pride and respect (Ardley 2006).
Suggested Value Proposition
The Suggested value proposition based on the given analysis and customer value
proposition related to the food industry is stated using the concept of Eric Sink`s Value
Proposing Model (McDonagh and Prothero 2014). The learned scholar had described that the
benefits of the service and products should always be highlighted and highly visible in the eyes
of the customer. Hence he suggested that the value proposition should be:
 Superlative- This aspect states the reason why the customers should be purchasing the
given product.
 Label –proof- The given aspect states the description of the offering made by the
company
 Qualifying- The value proposition should be stating who is to purchase the given product
Hence, the value proposition of a food chain should be:
Looking out for healthy and reasonable meals?
Mc Donald’s offers a wide range of meal options for customer looking out for a happy meal!

13VALUE PROPOSITION
Explanation
Therefore, through this value proposition, the company aims to offer the customers a product that
is:
 Easy on the pocket- Through the above value proposition, the company states that the
company is offering what the customers generally desire which is a pocket friendly
product which will be enough to fulfill the huger and be reasonably priced as well.
 Good quality healthy items- By stating that the company intends to offer the consumers a
healthy meal, the company is making sure that it fulfills the qualitative aspect of the
customer proposition
 Matching with their health conscious status- Lastly, to match the standard of living and
status of the customers, the company needs to offer the consumers with a healthier option
that will be at par with their status (De Mooij 2013).
Hence, it can be witnessed from the given value proposition that it matches suitably with
the customer value criteria.
Implementing the value proposition internally and externally
Having a value proposition is not enough, the companies need to see to it that the value
proposition is implemented and communicated well both within the organization with respect to
the employees and outside which refers to the consumers. The value proposition of a company
should be clearly defined and help in creating a cohesive company culture and provide the
employees with a sense of purpose.

14VALUE PROPOSITION
There are a variety of methods available to implement value proposition in the company
and some of them are:
 Team building- Internally, when a value proposition has been set out the company should
see to it that the organization ensures various team building activities which will
encourage the different employees to take the proposition offered quite seriously and
work efficiently towards their successful delivery (Hair Jr and Lukas 2014).
 Improved processes- In order to deliver the value propositions like faster servicing to the
consumers, the processes which create value like the preparation of food, pertaining to
the food industry needs to be improved and made up-to-date with the latest trends.
 Training – In order to insure that the value proposition is successfully delivered, the
various employees can be provided with adequate training which shall ensure that they
know their responsibilities well and they will be performing adequately according to the
standards set and described for them (Hartley and Claycomb 2013).
 Seminars- The organization can also conduct various seminars and invite motivational
speakers who will be giving advice to the different customers as to how the value
proposition in an organization plays a key role in delivering the happiness to the
consumers.
 Marketing collateral in marketing collateral, there exists a procedure whereby various
brochures, flyers, promotional kits are sent to the employees and consumers alike
whereby the value proposition of the organization is clearly stated. Marketing collateral
goes a long way in helping the employees to define and articulate the value proposition of
the various offerings of the company.

15VALUE PROPOSITION
Along with being a learning prospect for the employees, the print media related to the
marketing collateral also goes well with the millennial and various other customers. The above
suggested methods are certain ways in which the organization can implement the set value
proposition. From the above, the company can use method like Team Building, refined
processes, training and seminars to improve the value proposition n with respect to the internal
environment (Kotler 2015). Whereas for the presence of customers in the external environment
of that business the company can use the technique of Marketing collateral which shall go a long
way convincing the consumers that the organization is capable of delivering what is desired by
the customers.
Apart from this one major component to implement the value proposition is to ensure that
all the planning ends on a successful note and the various steps to ensure the delivery of
proposition are carried out properly (Babin and Zikmund 2015). By just mere advertising and a
lack of action will make the customers lose interest in the company and therefore it is suggest
that the company carries out all necessary steps well to ensure that the customer is satisfied.
Conclusion
Therefore from the given analysis it can be stated that value proposition forms an
essential part of the organization’s core offerings. Without the proper implementation of the core
proposition and organization may not be successful in fulfilling the desires of the customers. The
given report briefly highlighted the Value proposition and relevant aspects about the chosen
company Mc Donald’s. Further it discussed the value proposition offered b the company`s
competitor Burger King. The following section has suggested a sample value proposition for an
organization which is followed by the methods to implement the given value proposition. Hence,

16VALUE PROPOSITION
it could be understood that action is equally important to the statements and the organization
should always go beyond consumer expectations.

17VALUE PROPOSITION
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18VALUE PROPOSITION
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