McDonald's Global Market Expansion

This assignment examines McDonald's global market expansion strategy, highlighting its successes and recent store closures. It utilizes the PESTEL analysis to evaluate the macro-environmental factors influencing McDonald's operations internationally. The assignment also explores Porter's Five Forces framework to analyze the competitive landscape and industry dynamics within the fast-food sector.

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Marketing principles
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MARKETING PRINCIPLES
Contents
Task 1:.........................................................................................................................................................3
LO1: Understand the concept and process of marketing..............................................................................3
1.1 Explain the various elements of the marketing process.....................................................................3
1.2 Evaluate the benefits and costs of a marketing orientation for McDonald’s......................................7
LO2: Be able to use the concepts of segmentation, targeting and positioning.............................................7
2.1 Show macro and micro environmental factors which influence marketing decisions........................7
2.2 Propose segmentation criteria to be used for products in different markets.....................................11
2.3 Choose a targeting strategy for a selected product/service...............................................................12
2.4 Demonstrate how buyer behavior affects marketing activities in different buying situations..........12
2.5 Propose new positioning for a selected product/service...................................................................13
LO3: Understand the individual elements of the extended marketing mix................................................14
3.1 Explain how products are developed to sustain competitive advantage...........................................14
3.2 Explain how distribution is arranged to provide customer convenience..........................................15
3.3 Explain how prices are set to reflect an organization's objectives and market conditions................15
3.4 Illustrate how promotional activity is integrated to achieve marketing objectives...........................16
3.5 Analyse the additional elements of the extended marketing mix.....................................................16
Task 2:.......................................................................................................................................................17
LO 4: Be able to use the marketing mix in different contexts....................................................................17
4.1 Plan marketing mixes for two different segments in consumer markets..........................................17
4.2 Illustrate differences in marketing products and services to businesses rather than consumers.......18
4.3 Show how and why international marketing differs from domestic marketing................................18
References.................................................................................................................................................19
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Task 1:
LO1: Understand the concept and process of marketing
1.1 Explain the various elements of the marketing process
The elements of the marketing process are defined to be the set of rules and controlling tools that
an organization or firm follows to produce their outline products and services and get the
response from the customers and the market as they want in their target markets. Thus, these
tools consist of every single and minute aspect that the firm needs to do and influence their
product demand in the market.
Marketing Mix
The major elements of the marketing mix are as follows:
Product: This is an essential element that the business begins with and begins for. The
consumers' needs products are it tangible or non-tangible. In exchange of products, the business
begins their processing of operational activities.
Price: The value of the product represents the need and demand for that against which the
consumers buy them. Good value of the product is an essential matter that shows the satisfaction
value of the consumers who are willing to pay in return of service.
Place: The availability of the product does matter that enhances the possibilities of the increasing
the demand for the products and the desire to buy them by the target customers and market. The
easier and convenient the product availability is, the more is its demand. Nowadays people
usually prefer on-line shopping, and that is an easily accessible aspect.
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Promotion: Advertising, public relation, personal selling, sales promotion and many other media
promotions and advertisement consist of the strategies to spread that product or services to the
people who may become aware of its existence. Spreading and introducing the product in the
market is the system referred as the promotion.
The new additional marketing Ps are:
People: The people are the ones who help the company to run by providing their valuable
support, effort and time. The managers, executives, lower level staffs to higher level employees
are the people who help to ruin the business and thus are considered to be the most important
element of the marketing after the 4Ps.
Process: The process or attitude of serving the customers is one more factor that acts as an
element of the marketing. The servicing techniques do matter as to deal with different types of
customers and the ways that the customers will get the deliveries reflects the policies and visions
of the company promoting the best of it to them.
Physical evidence: Every service includes some or the other physical evidence like invoice bills,
guarantee and warranty documentations and other means of tangible forms that are provided to
the customer when the transaction is done. Therefore, it is a means of securing the customer
protection and rights to gain their trust by serving trustworthy services with physical evidence
and assurance.
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Figure 1: The elements of marketing mix
(Source: www.professionalacademy.com)
SWOT Analysis
The significance of SWOT analysis is to investigate the external and internal factors that are
affecting the business activities of the company (McDonald’s).
Strengths
 World-wide brand equity
 42% market share in hamburger business in the US
 Food consistency
 Successful product varieties like meals, fries, etc.
 Market in overseas
 Position of the balance sheet
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Weaknesses
 Decline in the market share
 Product development is weak
 Franchisees are disgruntled
 Product taste and quality varies
 Slow income and revenue growth
Opportunities
 Expansion of the business globally
 Serving only 1% of the world population
 Dining-out market is growing
 Retailers are coming up with joint venturing techniques like supermarkets
 Locations are sought to be better both for the franchises and retailers consolidation
 Responding to the social changes by innovating health food and lifestyles
 Using CRM for implementing better strategies to the target customers and the market
 Value of customers are strengthened who visit their outlets
 Corporate social responsibility are looked after importantly
Threats
 The industry is matured
 Strong competition in the market
 Health conscious customers seek to avoid these products
 Changing demographics
 The economies and foreign exchange rates are fluctuating
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 The recession periods and downfall in the economies affect the retailers and their sales
1.2 Evaluate the benefits and costs of a marketing orientation for McDonald’s
The market orientation is an approach that a company takes up to develop products. There are
two kinds of approaches that are product oriented and marketing oriented (Onkvisit and Shaw,
2004). Product oriented approach is the time when the company seeks to develop its products by
its choice and their strength. The market-oriented approach is completely oriented to the needs of
the customers that they analyze in the market and then foster to the need of changes. In the
present market system, customers are considered to be the king and serving them well becomes
the main motive of the business organization like McDonald’s who deals in with fats food
retailing. Attracting the customers is a great deal in today's market, and therefore, product
development is needed and that too by the market-oriented approach because the product-
oriented approach does not help and there are low chances of success. McDonald's have a variety
of products that proves they follow the market-oriented approach. If we walk down to the retails
and outlets, we will get to see the variety of foods along with beverages hat the company offers
and the seasonal offers too like in Christmas or New Years.
LO2: Be able to use the concepts of segmentation, targeting and positioning
2.1 Show macro and micro environmental factors which influence marketing decisions
Micro and macro environmental factors: The marketing decisions are influenced by these types
of factors where the micro environment factors influence the business directly like suppliers,
employees, stakeholders, etc. Macro environment factors on the other hand, influence the
business indirectly where the organization does not have any control over such factors. The
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macro environmental factors are recognized through PESTLE analysis (Kotabe, M, and Helsen,
K. 2008).
PESTLE analysis of McDonald’s
Political factors
The governmental action and policies do affect the company, and that is considered by them. The
most effective and significant external political factors of McDonald's are:
 International trade agreements are increasing (opportunity)
 Reformation of pending tax (opportunity)
 Public health policies are to be evolved (threat and opportunity)
Economic factors
The international economic changes around the world influence McDonald’s. The most notable
economic factors are:
 The US economy is growing but in slow and stable pace (opportunity)
 The European economy is stable but risky too (threat)
 The Chinese economy is slowed down (threat)
Social/socio-cultural factors
The company responds to the socio-cultural changes, and the most significant socio-cultural
external factors are:
 Wealth gap is widening (opportunity)
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 Cultural diversity is increasing (opportunity)
 The trend for healthy lifestyle is a new icon statement (threat and opportunity)
Technological factors
The success of the company depends on the technological applications, and the most important
impact of the technological external factors are:
 The industry seeks to do moderate research and development activities (opportunity)
 The business automation is increasing (opportunity)
 The mobile devices helps to increase the sales (opportunity)
Legal factors
The legal requirements are imposed on the company, and the most significant legal factors of the
external environment are:
 The minimum wage level of the US is new (threat)
 The health regulations in the workplace and local schools are an important issue to
consider (threat)
 Welfare regulation of the animals (threat and opportunity)
Ecological factors
The consumers are affected by the ecological factors that McDonald’s face and the most
significant ecological factors are:
 Corporate environmental programs are getting the rising interests (opportunity)
 Sustainable business strategies are emphasized on in increasing rates (opportunity)
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 The climatic changes is an important and negative aspect that leads to food spoiling
(threat)
Porter’s five force analysis of McDonald’s
Competitive rivalry or competition (strong force)
McDonald's has to face tough competition as the fast food industry is a demanding sector and
already saturated with numerous competitors. The factors external to the company based on
which the competitive rivalry is measured are the strong forces:
 Increased number of firms (strong force)
 The firms are highly aggressive (strong force)
 The switching costs are low (strong force)
Bargaining power of buyers or customers (strong force)
The customer power gains significant address from the company, and the external factors
contributing to these forces are:
 Switching costa re low (strong force)
 Huge number of providers (strong force)
 Substitutes are highly available (strong force)
Bargaining power of suppliers (weak force)
The suppliers of the raw materials do influence the company, and the most significant external
factors are:
 Huge number of suppliers (weak force)
 Forward vertical integration is low (weak force)
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 The overall supply is high (weak force)
Threat of substitutes or substitution (strong force)
The substitute’s acts as the significant concern for McDonald's and the external factors are:
 High availability of substitutes (strong force)
 Low switching costs (strong force)
 The performance-to-cost is high (strong force)
Threat of new entrants or new entry (moderate force)
The new entry of competitors creates the great impact on the market share of McDonald's, and
the moderate threats of the new entrants are:
 Switching cost are low (strong force)
 Capital cost is moderate (moderate force)
 Brand development cost are high (weak force)
2.2 Propose segmentation criteria to be used for products in different markets
Segmentation is oriented with the customers that the company thinks to make and they influence
their target market with the visions of their business (Wedel, 2000). There is three kinds
segmentation:
1. Geographic that includes the customer oriented regional growths and the factors related to
macro-environment.
2. Demographic including the age, education, gender, family status and income.
3. Psychographic that consists of the attitudes, values, factors like loyalty and size of orders.
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McDonald’s uses psychographic segmentation approach where they target the customers based
on their attitudes, values, lifestyle and mainly the mid-age and teen groups. The youth follows a
high standard lifestyle, and they prefer such costlier fast food services. The company also
follows the geographic segmentation approach where they target the major locations of UK and
start expanding their business world-wide in the core sectors of the world population.
2.3 Choose a targeting strategy for a selected product/service
Target marketing can be categorized into three types: undifferentiated, differentiated and
concentrated (for niche). At the beginning of the business days of McDonald's, they applied the
undifferentiated market targeting with the mix of single segments. They aimed at serving the
customers’ with their products and services without any compromise with anything. The
business strategy that they used focus on open as many as stores in the world-wide platform and
they have successfully done that. At present, they are having 16,000 and above stores in near
about 50 countries. The company has always emphasized on providing extra benefits to the
customers along with keeping the part for themselves too and thus; they do as much as possible
for satisfying the customer. The environment of the retail outlets are maintained very eco-
friendly, and they have done lots of interior decorations along with musical arrangements to
provide the customers with a soothing environment. They have always tried to provide a home-
like place to the customers because the maximum targets are the office goers and students who
need some homely environment to relax and refresh.
2.4 Demonstrate how buyer behavior affects marketing activities in different buying situations
The decision of buying meals and snacks is not a long term decision that is instant, and
customers could do it with their impulse. However, there are still some, factors that affect the
business activities of the company due to the behavior of the customers and their attitudes. These
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factors can affect the buying decisions of the customer. These factors can be social factors,
personal factors or psychological factors. The business is much more customer oriented than
product orientation. They consider the customers to be the king and organizations tries to attract
them. The power of customers is high as discussed earlier and the buyers have the complete
discretion to buy the things according to their choice. Previously, customers were not given that
importance that is being provided today. This is because previously competition was lees and
thus, the hurry of attracting customers did not exist much. Pricing strategies are one such matter
that may affect the buying decisions of the customers. The company analyzed later on that it is
not just the food prices but also the ambiance that changing the behavior of the customers and
restriction them to facilitate their services. Later on, these issues were fixed to satisfy the
customers and increase their revenue collection.
2.5 Propose new positioning for a selected product/service
The product that has been chosen to propose in the market is McChoco-he Float with Blended
Ice-cream balls. It is the product that comes under the beverages section and to position the
marketing strategy; it is important to target the market. In this product, we can see that the
mixture of coke and ice-cream creates a different flavored beverage. It is soothing to have it in
the hit summers. The coke is poured and then the chocolate sauce along with the chocolate
flavored ice-cream balls. It is garnished with some blended crème and Choco-chips on the top.
The market positioning will be for everyone so that the customers can get the benefit of the new
product. The utility of the product is for everyone, and very one will be enjoying the taste and
flavor blend. Customers are supposed to be very happy with the new strategies and the new
product formations after all food and beverages are one of the most cultured sectors and people
nowadays strive to go for the best options. The pricing of the product is supposed to satisfy the
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customers that will give them the best competitive advantage. McDonald's is considered to be
one of the highest rated and preferred brands for fast foods, and along with that, the new
beverage variations will seek more customers to avail their services.
LO3: Understand the individual elements of the extended marketing mix
3.1 Explain how products are developed to sustain competitive advantage
The best way to give a tough competition to the competitors is providing the better quality of
products and service to the customers in the target. Every employee of the company must have a
good product knowledge so that they could make direct advertisement and promotions in a better
way. This strategy has helped the company to gain the competitive advantage in the market.
Financially strong and stable that will further facilitate them to expand their business in many
other countries not because they can, but their brand will be spread and demanded by the
customers.
The companies and business oriented organizations develop standards to benchmark the other
companies in that particular industry. These strategies help them to gain the more competitive
advantage with extra benefits and advantages if they are able enough to apply these strategically
(Pride, W.M., and Ferwell, O. C., 2011). Organizations like these want to enjoy extra advantage
so that they could lead the market. McDonald's do not have the cost advantage as they are
already superior to their competitors. However, quality of products and services is the ultimatum
that will gain them the extra advantage.
3.2 Explain how distribution is arranged to provide customer convenience
Distribution channels are the major components that make the organization either successful of
disadvantage them. It is important to consider the quality of products and services but unless one
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have a good distributor the ethical and quality issues does not matter. Therefore, it is necessary to
have the good set of distributors and proper channels who will foster the spread and good
beginnings of the company to enhance their products and brand name. The distribution channel
needs to be there for both the front and backside of the company operational processes. This
means there must be an equal balance of input ad outputs of the programs. The suppliers get the
company raw materials, and the company in return need to supply the final output to the
customer on time that will benefit them to increase their productivity, revenue, customer loyalty,
satisfaction, and goodwill. McDonald's does not leave any channels that would restrict them to
connect to the customers and that acts as their opportunity to flourish.
3.3 Explain how prices are set to reflect an organization's objectives and market conditions
The main objective of the company is to serve the customer and provide quality products that
would help them to maintain their status and effective marketing strategies. They know that the
brand name and products of the company can be placed in a risky position and that would affect
their position in the beginning. Thus, getting extra benefits and advantage would seek them to
segment their planning and programs. The company focuses more on the quality of the products,
and that is why they charge more than their competitors. This strategy has been successful for the
company that has increased the reviews from the consumer experiences. The pricing strategy has
played a major role that has explained the goals and objectives of the company.
3.4 Illustrate how promotional activity is integrated to achieve marketing objectives
Social media is one more sector that has enhanced the marketing objectives and a platform for
the company to grow and advertise. Facebook, Youtube are examples of such media sites.
Promotional activities of the company can be recognized as push and pull strategies. The
company uses both where the push is promoting the products to the whole sellers and pull direct
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marketing to the customers. The brand name has created an advantage for the company to invest
fewer amounts on advertising as compared to their competitors. They believe in the word of
mouth strategy and thus, has proved to be vital for their success in the market.
3.5 Analyse the additional elements of the extended marketing mix
Generally speaking, there are 4P's of publicizing which is considerable for thing advancing,
while there are 7P's in organization displaying.
Product- Thing As basic Berger is the inside consequence of McDonalds however introduction
of new thing broadens the grouping they give. They have huge item offering which fuse French
fries, chicken et cetera.
Pricing- Assessing has been higher than their opponents which are known truths with respect to
McDonald.
Promotion- McDonald advancing methodology has been the casual displaying rather than the
publicising.
Place- McDonald looks for a place which is useful to their laborers and furthermore the
customers.
Task 2:
LO 4: Be able to use the marketing mix in different contexts
4.1 Plan marketing mixes for two different segments in consumer markets
1st segment
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In the present occurrence of McDonald, they target people between the age social affair of 18 to
45.
Products- the things offered in this part are Berger of various combinations.
Pricing- Pricing has constantly been on the higher side and it would proceed as before as anyone
might expect.
Promotion- They are generally dependent on the casual notoriety anyway they do progress
through some interpersonal associations.
Place- They have started from the US and right now they doing extremely incredible in such a
substantial number of countries on the planet.
New Segment
As discussed some time recently, they have their closeness in various countries, and they are
going strong, now there can be some new choices.
Products- McDonald should start another item offering for youngsters especially.
Pricing- As they are starting another thing at a comparative place so cost should be engaged.
Promotions- They should keep running with various ways which is regularly does by making and
gathering near the store and by giving printed shirts.
Place- they should start with the US, if it works there, they can enter UK took after by whatever
is left of the countries.
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4.2 Illustrate differences in marketing products and services to businesses rather than consumers
Here we are examining qualification between B to B and B to c advancing. McDonald has
genuine closeness in B to C advancing as it offers Berger to the end customers in its store. For
example for this circumstance thing and organization is Berger and customer advantage at
McDonald. At McDonald, Berger's taste will be high a direct result of high gauge of bread and
cheddar obtained by McDonald and you get extra preferred standpoint of charming feeling at
McDonald including music, incredible inside and nice customer advantage.
4.3 Show how and why international marketing differs from domestic marketing
General advancing and domestic are extremely similar to each other, in nearby when any
association cooperate the risk is less in light of the fact that they have all the idea with respect to
the region, all rules et cetera, yet it is required, when they go in the worldwide market they need
to consider the money related and political conditions, so doing the PESTEL examination.
Exploring the McDonald they have been developing in the overall market fast, however in latest
couple of years they have to close a segment of the stores moreover. McDonald framework has
been to pick up space of some other store trader which has been a to a great degree philosophy
starting in the not so distant past.
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