Marketing Principles: A Case Study of McDonald's Report

This report provides an in-depth analysis of marketing principles, using McDonald's as a case study. It begins with an introduction to marketing principles and the marketing mix, emphasizing the importance of understanding consumer needs. The report then delves into McDonald's marketing process, including market analysis, target customer selection, strategy development, and the implementation of the marketing mix. It explores the company's customer-centric approach and its advantages, such as gaining a competitive edge and offering customer benefits, while also acknowledging potential drawbacks. The report examines the micro and macro environmental factors influencing McDonald's marketing decisions, including internal factors like employees, customers, competitors, and external factors analyzed through PEST analysis (Political, Economic, Social, and Technological). The report further discusses McDonald's segmentation, targeting, and positioning strategies, including the launch of a new product, and the influence of customer buying behavior. Finally, the report concludes by summarizing the key findings and insights into McDonald's marketing practices.

MARKETING PRINCIPLES

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1................................................................................................................................................1
1.2................................................................................................................................................2
2.1................................................................................................................................................3
2.2................................................................................................................................................4
2.3................................................................................................................................................5
2.4................................................................................................................................................5
2.5................................................................................................................................................6
3.1................................................................................................................................................7
3.2................................................................................................................................................7
3.3................................................................................................................................................8
3.4................................................................................................................................................8
3.5................................................................................................................................................8
TASK 2............................................................................................................................................9
4.1................................................................................................................................................9
4.2................................................................................................................................................9
4.3..............................................................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
In today’s era, the world is becoming highly attentive on getting directly connected with
consumers and making the marketing experience more personal. Thus, it focuses on marketing
principles which involve a range of processes in which the major emphasis is given on actual
needs, wants and desires of consumers. It consists of marketing mix that states about the total of
activities that starts from transfer of goods and ends with making it reachable to ultimate
customers (Armstrong and et.al., 2014). However, the process does not ends here as it also
focuses on the satisfaction level of target people so as to make the business run in the long run.
In the present report, there will be study made on understanding the concepts and process of
marketing. Also, the concepts of segmentation, targeting and positioning will be discussed. Apart
from that, individual elements of the extended marketing mix will be highlighted in the report
along with using the marketing mix in different contexts. In order to understand all these
concepts, the firm, McDonald’s has been selected that is one of the leading fast food restaurant
chain serving people across the world.
TASK 1
1.1
Marketing process has several steps which differ as per the nature of business. In
McDonald’s, there are four key elements in its marketing process which are like:
 Analysing marketing opportunities – In case of McDonald’s has to launch a new product
in the market, it analyses the existing opportunities and finds out current and future
market trends with assessing internal and external environment as well. Through this,
firm becomes able to evaluate the strengths and weaknesses of business along with
competitive forces at work and market forces that can affect its operations (Henley,
Raffin and Caemmerer, 2011).
 Choosing target customers – After that, markets are chosen by the organisation in which
product will be launched, that is, the target customers to whom McDonald’s is going to
offer the creation.
 Developing marketing strategy – Later, after selecting the target customers, marketing
strategy is made which includes value proposal, targeting, segmenting and positioning of
the product that is to be launched (Jobber and Ellis-Chadwick, 2012).
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 Making marketing mix decisions – These decisions help the firm in using tactical tools for
attracting new customers and beating the competition through increased sales. Also,
marketing mix decisions help in providing a better value to its customers in against of
what they spent on purchasing products of McDonald’s.
 Implementation and control – This is the step where finally formulated strategy is
executed in a planned manner (Lefebvre, 2012). Also, it is assessed here that whether
process is going on as per decided or not. If not, corrective measures are taken by the
firm so as to make the strategy successful.
1.2
Firms can develop their offerings on the basis of either product oriented or as per
marketing oriented approach. However, McDonald’s is using marketing oriented approach in
which it is making decisions that mainly emphasises on customer’s needs and wants. This
approach involves both; benefits and costs associated with it. Some of them are like:
 Customer centric – McDonald’s give high importance to its customer’s needs and
demands and satisfy the same in an effectual manner so that they can be retained in the
long run (Freiburg and Karlsruhe, 2012).
 Providing competitive advantage – This approach also proves to be helpful for gaining
competitive advantage over others as when products are made with keeping in
consideration the actual needs of customers, firm gains the benefit of full use of goods.
It ensures competitiveness over other competitors in the market.
 Offering customer benefit – Along with that, marketing oriented approach helps
McDonald’s to create buyer value that ultimately results in increasing loyalty of
customers towards firm and they purchase products on frequent basis (Arslan and
Altuna, 2010).
 Increased prices – As company is spending their money on conducting research for
assessing latest trends of the market so as to render highest level of satisfaction to
customers, it increases the price of products. It is because; company has to recover its
expenses with their sales.
 Ineffective predictability – In marketing orientation, it becomes difficult to develop the
product as all customers have diverse choices and preferences. So, to satisfy all becomes
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impossible and some people in the target market always remain dis-satisfied (Delassus
and Descotes, 2012).
2.1
All organisations run their operations in a business environment which includes both;
internal and external factors. Internal and external factors come under the micro and macro
environment respectively. Both the environments put a huge impact on the marketing decisions
of McDonald’s which are explained as below:
Micro environmental factors:
 Employees – They are the most important asset of organisation and McDonald’s is
having skilled, motivated and knowledgeable staff that play a crucial role in making the
firm successful and attaining set targets on time (Bose, 2010).
 Customers – They are the king of market on whom survival of business depends.
Company is attracting and retaining customers by providing products and services in
their desired manner so that their expectations can be satisfied.
 Competitors – Being in fast food restaurant industry, McDonald’s is having many
competitors. Thus, to sustain in the long run, organisation gets aware with the strategies
and practices adopted by rival firms time to time. In accordance with the same, they
make modifications in their plans like using modern technologies in production or
reducing prices of products to increase their demand (Lilien, Rangaswamy and Bruyn,
2013).
 Suppliers – Company is having an efficient supply chain through which it is able to
achieve competitiveness in the target market through offering high quality products and
services to ultimate customers.
 Shareholders – McDonald’s is creating and maintaining a healthy relationship with its
shareholders to ensure long term success and for gaining higher profits so that in the
future, business can expand (Narwal and Singh, 2013).
Macro environmental factors (PEST analysis):
 Political – By increasing international trade agreements within nations by political
parties, business can get expanded that will enhance its global supply chain in nations
where McDonald’s want to operate. Apart from that, McDonald’s also has the
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opportunity to reform its practices and strategies. Thus, the impact of taxation on
business can be reduced to a high extent without violating the law.
 Economic – As McDonald’s is basically based in US which is having slow but stable
growth, it serves as an opportunity for the organisation (Payne and Pressley, 2013). On
the other hand, European economies where McDonald’s is running their business as well
are quite risky as the current condition of Europe keep on fluctuating and thus, can hinder
its growth.
 Social – In the present scenario, due to evolving lifestyles of people, sales performance of
cited fast food restaurant can get affected. People increasingly are seeking more
sophisticated for what they eat. Thus, company is offering them superior quality products
as per the demand of target customers. For example: In China, McDonald’s promoted a
rice burger as well as for dinner, it is going to promote rice for dinner to grab that market
(Gök and Hacioglu, 2010).
 Technological – Although technology does not play a vital role in fast food restaurant,
still it is having a great importance to make the business successful by improving
management and productivity of organisation. McDonald’s is using latest techniques for
forecasting sales, scheduling and ordering. Apart from that, to make customers pay for
food in an easy way is also a reason to use these techniques (Hultman and Hills, 2011). In
addition to this, company is also using these technologies like Wi-Fi for easy and
inexpensive advertising on the Internet along with many computing devices so that
customer’s needs can be effectually satisfied.
2.2
McDonald’s is planning to launch a new product in the market, that is, salad full of olives
and jalapenos in order to attract a new segment for increasing the scope of business. Company is
going to introduce this product as it has already targeted other segments like children, youngsters
and family. McDonald’s has made segmentation strategy demographically in which it set age as
the parameter. As in the old age, people generally suffer some issues with regard to their health,
they can have this salad that would prove to be healthy for them. Also, this product does not have
any fat as well as it is tasty (Rosenbloom and Dimitrova, 2011). So, for old age people, this
product will prove to be suitable and thus, scope of business will be increased.
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On the other hand, McDonald’s can also do segmentation on the basis of psychographic
in which consumers will be segmented as per their lifestyles. Now-a-days, lifestyle of people has
become hectic and thus, to remain fresh and healthy, they require such a food that is healthy for
them by which they can stay active for a long time. Thus, people having busy lifestyle can also
be segmented by the cited restaurant as they do not have time to cook on daily basis as well as
they do not prefer junk food (Schatte, 2010). Thus, it can be said that there are two segmentation
strategies which McDonald’s can adopt for launching its new creation in different markets, that
is, demographic and psychographic.
2.3
After segmentation, there comes the concept of targeting in which it is decided that to
whom the product will be offered. Thus, old age people of UK market will be the target
customers for newly launched product of McDonald’s, that is, salad full of olives and jalapenos.
It means that on the basis of concentrated targeting strategy, a promotional message that
communicates the benefits of product to the single specific segment will be designed by the firm.
In this strategy, focus of McDonald’s will be on a single target segment only for which it is
going to launch the product (Walsh, Winterich and Mittal, 2010). As per this strategy, old age
people of UK market will be communicated with all benefits that they would have with the
consumption of product. For all those people who are health conscious or suggested by some
doctor to have healthy and quality food, this product would prove to be very helpful. Capturing
attention of this segment will help in enhancing the scope of business and thus, the profits of firm
will also get increased.
On the other hand, McDonald’s can also use differentiated targeting strategy in which it
can target all those who are office going, that is, business class and need light food in their lunch.
Generally, high profile people avoid having oily food and they want light and healthy food. As
per this strategy, all potential segments can be targeted to generate higher revenues by increased
sales volume (Armstrong and et.al., 2014). Thus, by advertising the sane promotional message to
all, this strategy will lead the firm to gain higher market share along with economies of scale.
2.4
To remain modest in today’s market where there is intense competition, it is not easy to
understand that what exactly customers are thinking, that is, their actual needs and demands
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which get fluctuate on frequent basis. Their behaviour and purchasing decisions are different
every time. Thus, for the development of newly launched product, that is salad, McDonald’s
need to study the pattern of buying behaviour of customers. It is because; by satisfying the
customers only, they can sustain in highly competitive market for which understanding their
buying behaviour is important (Henley, Raffin and Caemmerer, 2011). There are many factors
by which customer’s buying behaviour can be influenced. They are mainly categorised as
personal and social factors. Personal factor age are like income, lifestyle and trends which
influence the customer’s purchase to a high extent. Therefore, before making the products
available to ultimate buyers, company must ensure that they will fulfil the expectations of
customers.
Social factors are like cultural values, traditions, customs and the recommendations from
friends and family that play a significant role in influencing the customer’s buying decision.
Thus, it can be said, for the new launch, that is, salad, buying behaviour of old age people and
will be influenced by psychological thinking (Jobber and Ellis-Chadwick, 2012). The business
class customers is another segment which they are targeting and their buying behaviour will also
get influenced as they follow proper diet. Apart from that, there are some other situations as well
in which buyer behaviour gets influenced. In case if the price of product is higher than what
others are offering for the same creation, target people will tend to move towards other brand
(Lefebvre, 2012). Also, sometimes, promotion plays a significant role as if a firm has advertised
in a better way than other competitors, then customers would get attracted towards the product
offered by this organisation.
2.5
Positioning strategy is defined as a technique by which a product of firm is positioned in
the minds of target customers in such a way that they would get attracted towards the same and
business will earn higher profits by increased sales. McDonalds can position its new product, that
is, salad full of olives and jalapenos by advertising it on television, radio and newspaper in terms
of positioning strategy. Here, it can show product’s features or consumer benefits so as to
capture the attention of targets segments (Arslan and Altuna, 2010). For example, the salad can
be positioned as a diet of higher quality that is good for health. If positioning is done in an
effective and proper way, it ensures increased sales of the product and thus, ultimately profits of
McDonald’s will get increased. Effectual positioning leads to increased goodwill and enhanced
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customer base of business that will create emotional support in the minds of target consumers
(Delassus and Descotes, 2012). However, advertising proves to be an expensive positioning
strategy but, it attracts large customer base within a short duration.
3.1
For attaining competitive advantage, the product developed by McDonald’s must be
produce in a manner that it will be difficult to copy by its competitors. For the same, in-depth
research of the market in which it is going to operate is required. In case of its new product,
salad, company is having biggest competitor, subway as well as local fast food outlets that are
providing the same product at lower price (Bose, 2010). However, with proper branding,
competitive advantage can be gained as in the same, superiority of product over other substitutes
can be shown but in an ethical way by using the tool of advertising. It means that image of
products of other brand should not be hampered. Apart from that, McDonald’s is known for its
high quality product with reasonable price. So, even if it will be copied, other brands can either
lower their price by compromising in quality or will provide superior quality at higher prices.
Brand name of McDonald’s is itself the biggest factors that will make the product successful as
people have trust over the same since a long time (Lilien, Rangaswamy and Bruyn, 2013).
McDonald's is highly segmented market so newly launched product would be offered at the price
that is comparatively reasonable with a different taste. Apart from that, it is made in such a way
that expectations of customers will be fulfilled and high level of satisfaction will be provided to
them.
3.2
Distribution channel of a firm plays a vital role in providing customer convenience on
which success of product highly depends. It is because; in case if products are not available at the
time when customers require, it may prove to be a big loss of organisation in terms of both;
monetary as well as customer base. This is the reason; service of McDonalds is very fast as its
distribution channel serves as the major source of creating competency for business. McDonald’s
has adopted franchisee system in which its service delivery is very fast and thus, it is enjoying
the benefit of large customer base (Narwal and Singh, 2013). Company gives due consideration
the location at which it is situation as every outlet of McDonald’s is generally situation in the
middle of city so that customers would easily reach there. It is keeping desired product at the
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right time with high quality at appropriate place with reasonable price. Under marketing mix, on
place element, company is highly emphasising by which it is providing customer convenience
and retaining them in the long run.
3.3
As McDonald’s major objectives are to increase its profit as well as customer base, it sets
the prices of products in a manner that large number of customers can be attracted. Thus, cited
fast food restaurant is adopting market penetration pricing strategy to set the rates of products.
Under this strategy, firm keeps the price lower than others that are offering the same product.
With the help of this approach, McDonald’s is attracting large customer base and thus, gaining
competitive advantage over others. It proves to be helpful in different market conditions as well
like if there is fierce competition, then McDonald’s will plan to lower down its price as it will
make customers of other brands also attracted towards the firm (Payne and Pressley, 2013).
Apart from that, in case if the government had levied more taxes on fast food restaurants, then it
will have to use premium pricing strategy in which the price of product will be increased to
recover their costs.
3.4
To achieve the marketing objectives, promotional activity plays a crucial role and thus,
integrated strategies are required by company. Promotional activities are directly linked with
firm’s goals as with promotion only, they make customers aware about the products and services
of business and achieve their objectives by attracting them towards organisation. In case of
McDonald’s, for making the customer aware about the newly launched products, that is, salad,
they will be giving advertisements by the way of either television, radio and newspaper or social
media (Gök and Hacioglu, 2010). This will help in capturing the attention of target customers
and thus, McDonald’s goal of attracting large customer base will be attained. Besides this,
through brand positioning as well, aim of maximising profits and increasing goodwill will be
achieved by cited company. Thus, promotional activities highly contribute in achieving the
marketing objectives of organisation.
3.5
Marketing mix states to four P’s, that is, product, price, place and promotion. However,
with changing marketing trends in the dynamic environment, three more elements have been
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added which are people, process and physical evidence. With respect to McDonald’s, these are
like:
 People – This element says about the employees which are the main asset of
organisation. McDonald’s has skilled human resources that are making firm able to
attain its set targets by providing efficient services to the end users.
 Process – Besides this, another element is the process which includes technologies that
are used in the manufacturing of products and providing services to the customers.
McDonald’s uses upgraded technologies so that large customer base can be attracted as
well as retained in the long run by fulfilling their expectations (Hultman and Hills,
2011).
 Physical evidence – This cited fast food restaurant is providing attractive ambience in
their outlets which captures attention of people. For example: company especially
designs a kid’s zone for children where they can have fun along with eating.
TASK 2
4.1
McDonald’s has decided two different segments for its new product that is, salad. These
segments are made on the basis of age (demography) and lifestyle of consumers (psychograph).
For the demographic segment, marketing mix of product will be like company will emphasise on
quality of salad to attract the old age customers which is the best way through which
McDonald’s can influence the them to buy the product (Rosenbloom and Dimitrova, 2011). For
them, price will be set lower than what others are offering as well as location will be nearby to
them. For the business class segment, they will focused on the price as according to their
perception, if price of product is high then it must be of good quality. Another reason is that the
can easily afford higher priced products. Thus, McDonald’s will offer superior quality salad at
high price to them with adding some more ingredients. Apart from that, promotion for both the
segments will be done by advertising (Schatte, 2010). These two marketing mixes would prove
to be beneficial for company because they are suitable as per the decided segments.
4.2
Differences between marketing of products and services to business rather than consumer
markets is like:
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BUSINESS TO BUSINESS (B2B) BUSINESS TO CONSUMER (B2C)
 Products are purchased in bulk for the
use of companies.
 Complex purchasing process.
 Price varies consumer to consumer.
 Transactions required complex
business systems (Walsh, Winterich
and Mittal, 2010).
 Consumers buy products for their
personal use.
 Buying decision is made easily.
 Price is same for all customers
 Transaction are made easily with the
use of credit or debit cards, checks or
cash.
4.3
International marketing is different from domestic marketing which can be understood by
the following reasons:
INTERNATIONAL MARKETING DOMESTIC MARKETING
 Marketing beyond the geographical
boundaries of nation with other
countries.
 Area served is large with
comparatively high government
interference.
 Use of latest techniques.
 Capital requirement is huge with high
risk factor.
 Marketing within the geographical
boundaries.
 Area served is small with less
government intervention.
 Use of technology is limited.
 Capital requirement is less with low
risk factor.
McDonald’s can implement the marketing strategy to market abroad, that is, in
international market is through social media that will help in capturing the attention of audience
at a large scale (Differences between domestic and international business, 2016). Doing
promotion on internet will help the firm to grab attention of customers in other countries as well.
However, advertisement will needed to be designed with keeping in mind the culture, values and
beliefs of target customers of different nations.
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CONCLUSION
From the above report, it can be articulated that marketing principles are necessarily
based on marketing generalisations. To stay in the competitive market for longer duration,
marketing principles play a vital role as if businesses would not give due emphasis on these
values and ideologies, it may lead to make the firm bear losses. Its main focus is on creating a
positive and strong image of products and services offered by firm in the minds of customers and
gain a competitive advantage over others. Report has revealed that McDonald’s is conducting
many researches in order to identify actual and needs and expectations of customers and making
efforts to satisfy the same in such a way that business will survive with sustainability and
consistency by retaining customers in the long run.
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