BTEC Marketing in Hospitality: McDonald's Case Study Analysis Report

This report examines marketing concepts within the hospitality industry, using McDonald's as a case study. It begins with an introduction to marketing principles, including the analysis of consumer needs and wants, and the importance of customer satisfaction. The report then delves into the marketing environment, differentiating between micro and macro factors and their influence on business operations. It explores the relevance of consumer markets, detailing demographic, psychographic, behavioral, and geographic characteristics, and highlights the significance of consumers to the hospitality sector. Furthermore, the report discusses the reasons for developing market segments, emphasizing how segmentation enables effective customer satisfaction, improved communication, and growth opportunities. The report also covers the components of the marketing mix, pricing strategies, and the implementation of a marketing plan for McDonald's, concluding with a summary of the key findings and insights into effective marketing practices in the hospitality industry.

Marketing in
Hospitality
1

Contents
Introduction...........................................................................................................................................3
TASK 1....................................................................................................................................................3
1.1 Concepts of Marketing.................................................................................................................3
1.2 Impact on Marketing Environment..............................................................................................4
1.3 Relevance of consumer markets in the industry..........................................................................5
1.4 Reasons for developing Market segments...................................................................................6
2.2 Importance of components of Marketing Mix to Industry...........................................................7
4.3 Pricing strategies and policies......................................................................................................8
4.3 Implementation of the marketing plan for an appropriate product or service ...........................9
Conclusion...........................................................................................................................................10
References...........................................................................................................................................11
.................................................................................................................................................12
2

Introduction
In a business process, it is highly important to analyse the actual needs and wants of
customers so that those demands can be fulfilled and satisfied at maximum level by providing
product and services. Therefore marketing is a concept in which a business process has to
develop certain strategies and thus have to analyse and implement it on market in order to
earn profitability and objectives of firm. It is a wide area which simply does not end at any
place and goes on with a continuous process lifecycle. Marketing in hospitality is a process in
which industry’s hospitality like hotels, resorts and many more can determine and initialize
tools and techniques to promote their products and services just like the way Hilton Industry
is focusing on this approaching. For this assignment organisation chosen is McDonald’s
which is an American fast food chain. This company was founded in 1940 by RICHARD
AND MAURICE MCDONALD in California. In current it is serving around 70 million
customers everyday globally and has around 40,000 stores all over world. Under this study
concepts of marketing in a service industry and role of marketing in hospitality firm will be
discussed. Moreover, different marketing cycle with various tools and techniques will be
studied in brief.
TASK 1
1.1 Concepts of Marketing
Marketing is basically a platform in which analysation is done on the actual needs and
wants of the customers and then create a marketing platform so that satisfaction can be given
to customers at maximum level through various channels. Marketing concept is a different
approach from selling and production concepts. Selling and production can be said as basic
step which comes before marketing. There are certain concept of marketing by which
satisfaction level can be provided through various products and services and they are
described below: Value for Money goods: Marketing always provide true value for goods provided as
there are certain customers who do not have sufficient budget to purchase the product
in which their desired needs can be fulfilled. So here, marketing states the purchasing
power of the customers and market and thus states that how much value should be
given to the products in monetary terms. For example: if a customer wants to
purchase a mobile phone in which business transactions can be done but the price tag
of those smart phones is high as per the budget of customer. This situation is analysed
by another company and thus launch smart phones in which features has been added
and thus launched in to market but with low prices. So from these example it can be
said that marketing has helped to gain market share. This can be related to the
McDonald's who anaslysed the fast food market and launched new food products on
very cheap price so that it can be afforded by every class person.
3

 Product: This approach is extremly essential in marketing concept because this is the
main channel through which needs and wants of the customers is satsified in effective
manner. Product is mostly tangible in nature and thus it is said as consumable.
McDonald's provides mainly fast food product which has many varieties and by
providing those products at very economical cost and high quality, satisfaction is
provided. By marketing they analysed the people in professional life and youth who
mainly target those products which can be easily avalaible along with cheap price and
can fulfil their hunger. So by this it can be stated that product in marketing plays a
vital role in order to satisfy the needs and wants of the customers.
 Satisfaction of Needs and Wants: Marketing basically runs on the purpose of growth
and success of the organisation and in order to attain that customers who are related to
the company must be satisfied at maximum level so that long lasting realtionship can
be maintained. It is the primary aim of every organisation to provide maximum
satisfaction level to the customers so that envisioned aims and objectives can be
attained in effective manner.
McDonald's being a global brand has to use integrated concept of marketing which means
equal and importance shoudl be given to consumers and business as to customer needs andb
performance. In addition, McDonald does have to earn social respect so that brand name can
be enhanced globally to earn more satisfactory cosumers.
1.2 Impact on Marketing Environment
Marketing Enviorment is a process in which the internal and external factors totally
controls the skills and abilities of framing and maintaining the helathy relationships with
consumers. Two factors known as internal and external factors has huge impact on the
process of business. These factors have high involvement in the process of marketing
enviornment and they are described below: Micro Environment: Micro enviorment can be considered as process in which the
there are various factors which has direct impact over operations and process of
business. Those factors are suppliers , markets of consumers, public, competition.
There are major departments which have potential to create impact over marketing
and they are R&D department, finance, Human Assets, Purchasing, operations and
many others (Minazzi, 2015).
 Macro Environment: This kind of sector is basically not controlled by company but
there are some policies made which are constructed in order to deal with those
uncontrollable factors. Macro enviorment mainly deals in demographic, Economic,
Technological, Natural, Socio-Culture and political and legal environment context of
the markets and they are described below:
▪ Demography: In this kind of approach it can be stated that before
manufacturing, company analyse and determine the factors in market which
4

has direct impact on the products. There are various elements like age,
conveyance, population, purchasing power and many others whcih needs to
fulfilled by company so that consumers can ne satisfied and attarcetd towards
product and services provided.
▪ Economic Environment: This kind of approach mainly deals in the buying
behaviour and purchasing power of consumers. Various factors which are
involved are like monetary value, Investments rates, exchange rates, Fiscal
Strategies, payements of balance, rate of inflation and many more. This can
affect the manufacturing of products for McDonald's along with marketing
enviornment.
▪ Physical Environment: In this kind of factor, the main focus of McDonald's is
on natural factors which they dont haver any control on (Bowie and Buttle,
2011). Factors like Climate, Atmosphere, Environmental changes, raw
materials and water accessibility which have impact as they act as resources to
company for manufacturing.
▪ Technological factors: In this kind of approach, the main elements which are
incorporated are innovation and creative mindset and barriers to technology.
This is mainly done with a reason and that is innovation can change the
perception of people in positive manner. Adoption of latest technologies and
developing products with Innovation are positive elements which can attract
large number of customers. There are following effects of technological
context on the market and they are new desires creation and new Industries.
This may wipe out the old Industries and reduce the cost incurred in research
and development programme.
1.3 Relevance of consumer markets in the industry
In an organisation, products and services which are designed for general consumer to
dominate market is stated as Consumer market (Bharwani and Jauhari,, 2013). Basically there
are four sectors of consumer markets like food, consumer products, retail and wholesale
products. Following are characteristics of consumer markets: Demographic: This comprises of several factors like gender, age, income, education,
ethnic background etc. Organisation determines their customers by these factors and
targets them accordingly. For example: most of world’s generation depends on fast
food and thus McDonald’s is the brand which servers according to the taste and food
environment and thus they provide those products at very cheap price so that more
amount of customers can be attracted. Physiographic: This segment can be defined as the interests, value and beliefs,
activities, opinions and attitudes of the consumers. After performing a deep research
in the UK market on psychographic characteristics of consumers McDonald was
established and now it is serving well to new and existing customers.
5

 Behavioural: Most important part of this sector is brand loyalty, customer’s benefits,
usage of product. It is an essential part of survey for McDonald as well because it can
be known that customers who visits McDonalds most frequently and how much do
they spend time on each visit.
 Geographic: This sector is basically is all about size of market, region, density of
population and climate. It studies the crowd of people and their behaviour to study
about new product success rate (Wearne and Morrison, 2013). For example:
McDonald firstly did geographic market search and studied about the crowded place
of students and children. Geographic characteristics will help McDonalds in knowing
size of market.
Consumer market has several relevance for different market sector. Majorly in food supply
chain McDonald, there are four types of customers in McDonalds:
1. A parent with two children is important factor as being parent of two children it is
easy to treat them in McDonald. In UK it is best place for giving children a fun
filled treat.
2. Happy meals are a great concept for children who love fast food as they enjoy
those services and taste.
3. A business customer finds McDonald a appropriate place to eat as it consist of
fast service and food can be eaten while driving car.
4. Teenagers are major percentage customer’s population due to attraction towards
affordable and quality food prices.
Importance of Consumers to Hospitality:
For any company consumers are the most important part because thye are the only
one through which products and services are being sold and thus profit is being earned.
Company produces high quality products so that maximum satisfaction can be provided.
Culture of the cosmumers plays an essential role which indicates the impacts on sociology
and Physiology part for McDonald's for the hospitality. The concept of value chain can be
inacted for regulating relatiomhsips with customers for a long period of time.
Thus McDonald needs to determine characteristics and research habits of each of above
mentioned classes of UK society (Kandampully, Zhang and Bilgihan, 2015). In addition it
defines business process whether a small or large scale with the needs and demands of
targeted and segmented consumer market.
1.4 Reasons for developing Market segments
Dividing groups of consumers on the basis of behaviour regarding purchases and
reaction towards communication and promotions from the company can be stated as market
segmentation. There are several benefits which are taken by company and mainly this
approach is highly appreciable to the business operations. Market segmentation mainly
6

divides the market into sub parts so that analysation can be done for the actual needs and
wants of the customer and thus according to the analysation, opportunities can be created for
growth and success (Pechlaner and Volgger, 2012). Basic reasons are as follows: Effective satisfaction to customer needs and wants: Since every customer has
different range of taste and needs, they must be tackled in different ways. Through
segmentation different segments and preferences of customers can be done in order
to customising product or services. By determining these changes, solution can be
provided to clients throughout life cycle in order to maintain relationships for a long
period of time. Better Communication: Every customer has different needs and wants, therefore
solutions to each segment must be separately communicated. Sometimes mass
marketing causes customers to miss the message which a company wants to give
and this in turn results in wastage of money on advertising as they never buys the
product. Growth Opportunity: Market segmentation determines potential customers who do
not normally buy product. Via segmentation, company can create comfort zone and
attract customers who would normally look for an alternative source for their needs
and wants. Also segmentation enhances sales as customers can be introduced to new
or developed products for advancement. Innovation Increment: Smaller segments which have similar needs and wants in
small segments can be determined. Although this kind of segment may not have
traditional customers but with newly and developed products needs, problems, price
can be changed and advantage can be taken for gaining market share.
 High Market and Profit Share: Consumers have different budget and price ranges,
so by segmenting the market different prices can be charged to extract consumer
surplus and thus profits are improved. Since segmentation supports comfortable
strategies, attractive segments can be determined and leadership in market can be
attained (Korstanje and Olsen, 2011). A competitive position results from this place
and it improves the relationship and along with that it bring out strong brand
presence. Due to all these factors profitability and productivity of an organisation
increases in an efficient manner.
2.2 Importance of components of Marketing Mix to Industry
It is a process in which essential elements of marketing strategy are described which
are used by operations managers to enhance productivity and profitability of an entity.
Majorly there are four Ps associated with marketing mix like Product, Price, promotion and
Place. Importance of marketing mix lies in the ability of assisting a business process and
making it a sustainable consumer place. Importance of components of marketing mix is:
7

Figure 1 Marketing Mix
(Source: Marketing Mix, 2017) Product: Product is the basic and first step of any business. In simple words, process
of visualising the needs and wants of customers. It can be either tangible or intangible
like services. So it is highly important for a company to look and manufacture product
according to the customers desires as satisfaction to customers will bring prosperity
and growth or we can profitability (Chan and Guillet, 2011.). For example McDonald
while providing food products must keep in mind that whether it will be successful or
whether consumers will accept new product and its taste. Without good quality food
products and taste as well McDonald is not able to run their business globally. Price: Price can be stated as value which a consumer wills to pay for a product. In a
business process, the outmost objective is to earn profit and that is only possible when
customer pays for product at certain price offered. Another important factor is quality
should be appropriate according to the standards. For example McDonald offering
food products like burger, French fries and many more at very cheap price affordable
easily though in good quality and in result they are millions of consumer joined with
McDonald. So it is important to maintain this price and even quality of food
according to food safety standards to attract more customers. Promotion: Promotion is a process in which through several methods company try to
attract consumers and alert people to existence of product. It consists of advertising,
relations of public, sales and customer service including digital marketing and Word
of mouth. Along with the price, promotion tactics should also match with product
quality and value. For example McDonald is selling luxurious food items like burger,
fries and etc., the advertisements done to promote should reflect luxury element of
product.
 Place: Fourth important element of marketing mix is also sometimes called as
distribution and it states that product or services must be ease to access to costumers.
For example: McDonald should open their food store where it is easily accessible for
consumers like they can easily come, eat and can go (Nunkoo, Gursoy and
Ramkissoon, 2013). Place should have attractive elements so that more consumers
can be attracted towards food store of McDonald.
8

4.3 Pricing strategies and policies
It refers to methods used by an organisation to make profitability. In every
organisation, either small or a large scale add up their every expense like starting from
production to till transportation and then after adding their profit percentage they sell and thus
make profit (Implementing Market Plan . 2017). There are several pricing strategies such as,
penetration pricing, price skimming, discount pricing, product life cycle pricing and even
competitive pricing which are discussed below: Price Penetration: Main objective of price penetration is to attract more customers
with low prices and after that using various marketing strategies to retain them. For
example: McDonald mat set low prices for its new launched products and
subsequently advertise offers for every month. So this kind of strategy will attract lot
of customers regarding tasty fast food store and even it has successfully grabbed most
of food market share globally. Price skimming: It is price process in which company when launches a new product,
sets prices high in order to recover all the expenditures occurred while manufacturing
with the motive of making early profit (Yoo, Lee and Bai, 2011). This strategy is only
used when company lacks in financial resources to produce products in high volume. Life cycle of Product: Everything has a life span specially products manufactured.
There are some certain situation by which it undergoes like introduction, growth,
maturity and decline stages. When sales are booming during the growth stage
company might keep prices high. For example if McDonald product is unique or high
in quality as compared competitive products, customers’ will likely pay high price. Competitive based Pricing: Competitive based pricing is only applied when there is
little difference between products of rival. For example McDonald and burger king,
people often go with low prices food store where there is minimum product
differentiation.
 Temporary Discount Pricing: Small discount prices can be used by companies to
increase sales. Offers like coupons, price reductions or happy hours, combos and even
volume purchases.
These are some pricing strategies and policies used by an industry to increase their
productivity and profitability in order to attain their goals and objectives.
4.4 Implementation of the marketing plan for an appropriate product or service
Introduction of Company: McDonald is a food retail company established in 1954
having around 30,000 outlets in more than 120 countries, thus it is considered among world’s
largest food chains.
Mission and Vision: To be customer’s favourite place and when they eat they feel delighted
with unmatched quality, services, and cleanliness. Their main objective is to get attached with
more customers and satisfy them with quality fast food products and its taste (Line and
Runyan, 2012). Vision is to be best quick service restaurant in world along with their core
9

values and guiding principles. McDonald believes that customer perception is one thing
which always guarantee product services.
SWOT Analysis:
Strengths
 It has global presence with huge
impact on competitors.
 Market leader in international as well
as domestic markets.
 They are capable of generating
revenues and sales due to its brand
recognisation.
Weaknesses
 Saturation of market has made
expansion difficult for Macdonald.
 It is very slow in terms of product
innovation.
Opportunities
 Outlet chains can be developed and
can be made more attractive like by
providing internet access.
 International expansion is still an
opportunity for McDonald.
 Product innovation is another
opportunity which can be grabbed by
them.
Threats
 McDonald’s violent growth has made
it defenceless for other countries
economic slowdown.
 Fluctuations in foreign currency can
affect their business process in
negative manner.
Big companies like Yum! , burger king corporation, KFC and dominos are serving as major
competitors.
Target market: They have been using demographic segmentation strategy which means
segmenting customers according gender, age, income, education, ethnic background etc.
Their major target segments are children, youth, and young urban family members.
Budget: Huge expenses are required by marketing strategy to support marketing budgets. In
McDonald’s budgets are allocated after analysing strategies like market penetration, market
development, and service development. In this way marketing budgets are allocated (Leung,
Law Van Hoof and Buhalis, 2013). Certain percentage of budget has been allocated to
marketing department like almost 50% of total budget of company but this can change due to
seasonal change or launching of new products.
Marketing budget
Particulars 1st year 2nd year 3rd year 4th year 5th year
Initial money 90000 35000 30000 25000 20000
10

Investment 35000 10000 15000 30000
Total 90000 70000 40000 40000 50000
Marketing
expenditures
Advertisement 10000 9000 7000 6000 6000
sales promotion 7000 4000 3000 7500 9000
Direct marketing 8000 2000 5000 7200 2000
Total 25000 15000 15000 20700 17000
Available balance 50000 45000 19000 12300 21000
Conclusion
From this assignment it can be said that marketing in hospitality has a huge impact on
business process. There are various topics which are discussed in brief on McDonald like the
concepts of marketing under fast food service. Impact of marketing environment on
McDonald along with the importance of consumer markets regarding food supply chain has
been studied. Marketing mix’s components impact on current market and McDonald’s ways
to sustain them. Therefore in above report a plan regarding McDonald has been implemented
for an appropriate product and services.
11

References
Books and Journals
Tsiotsou, R.H. and Goldsmith, R.E., 2012. Strategic marketing in tourism services. Emerald
Group Publishing.
Bowie, D., Buttle, F., Brookes, M. and Mariussen, A., 2016. Hospitality marketing. Taylor &
Francis.
Minazzi, R., 2015. Social media marketing in tourism and hospitality. Heidelberg: Springer.
Bowie, D. and Buttle, F., 2011. Hospitality marketing: principles and practice. Routledge.
Wearne, N. and Morrison, A., 2013. Hospitality marketing. Routledge.
Korstanje, M.E. and Olsen, D.H., 2011. The discourse of risk in horror movies post 9/11:
hospitality and hostility in perspective. International Journal of Tourism Anthropology. 1(3-
4). pp.304-317.
Chan, N.L. and Guillet, B.D., 2011. Investigation of social media marketing: how does the
hotel industry in Hong Kong perform in marketing on social media websites?. Journal of
Travel & Tourism Marketing. 28(4). pp.345-368.
Yoo, M., Lee, S. and Bai, B., 2011. Hospitality marketing research from 2000 to 2009:
topics, methods, and trends. International Journal of Contemporary Hospitality
Management, 23(4). pp.517-532.
Line, N.D. and Runyan, R.C., 2012. Hospitality marketing research: Recent trends and future
directions. International Journal of Hospitality Management. 31(2). pp.477-488.
Leung, D., Law, R., Van Hoof, H. and Buhalis, D., 2013. Social media in tourism and
hospitality: A literature review. Journal of Travel & Tourism Marketing. 30(1-2). pp.3-22.
12