Marketing Mix and Pricing Strategy: Literature Review and Case Study

This report examines the price element within the marketing mix, crucial for achieving company marketing objectives. It begins with a literature review, analyzing various academic articles on dynamic pricing and its effects on customer value and loyalty, and the challenges companies face in setting prices. The report then presents a case study on McDonald's, exploring the company's pricing strategies, its challenges in a competitive market, and its adoption of strategies like bundle pricing and psychological pricing. The analysis highlights the importance of the marketing concept, segmentation, targeting, and positioning (STP) in developing effective price strategies to gain a competitive advantage, concluding with recommendations for McDonald's to adapt to market changes and improve revenue. The report emphasizes the need for companies to understand customer needs and adapt pricing accordingly.

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The marketing mix is considered the base model for the company. It refers to the set of
marketing techniques that the corporation uses to accomplish its goals of marketing in the
marketplace, which is targeted. The marketing mix defined as four wide level of decision, which
is made related to the marketing, which includes price, product, place and promotion. In
marketing of services, it is further extended and three more Ps added that is process, people as
well as physical evidence. In the company, the supervisor play a significant role in the
achievement of business marketing as well as for the right preparation of marketing mix,
supervisor also increases the strengths of company as well as avoid weakness. The manager
enhances competitiveness and flexibility of corporation as well as form all the internal
department in the company to work mutually (Bolland, 2017). In this essay, price of marketing
mix is selected and discussed; the price is the sum of money, which the buyer pays in exchange
of the product as well as service. The company finds difficult to determine the actual price of the
product because price should cover cost as well as the profit margin, it is important for the
business to develop strategies related to pricing to take the competitive advantage, further is the
review of articles related to dynamic pricing.
According to the Margarita Isoraite the article discussed that marketing mix is considered
the major tool in achieving the objective of the company (Išoraitė, 2016). Each of the elements is
interrelated to each other, the company uses the strategy of pricing to increase the sales and
customer value, companies finds difficult to change prices according to the marketing condition.
Chai Lee Goi assists the manager to use the tool of marketing mix for marketing the product
(Goi, 2009). In this researcher has conducted various studies, which provides information about
marketing mix and explained that marketing mix is the approach of converting plan into practice.
As stated by Selim Ahmed and Md. Habibur Rahman defines that the satisfaction of the
customer is considered one of the major factor, companies makes different pricing strategies to
attract target audience (AHMED & RAHMAN, 2015). In this study researcher finds that it is
difficult to make the strategies according to the needs, values, and principles of customers. For
this mainly company adopt the strategy of conventional but some of the companies adopt
religious strategy and keeps the price accordingly. Ya-Ling Wu and Eldon Y Li develop a model
to explore the effects of price strategy in relation to the customer loyalty as well as value in
social commerce (Wu & Li, 2018). In this study researcher finds that the strategies of the
marketing mix has the positive impact on the values as well as loyalty of the customer. Shuba

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Srinivasan analyzed the effects related to the activity of consumer in relation to the strategies of
marketing mix, in study researcher finds that the online activities is important but to increase the
satisfaction of the consumer, company should change the prices according to the market
condition (Srinivasan, Rutz, & Pauwels, 2016). As stated by Efthymios Constantinides that in the
present situation of four P’s of marketing mix is significant to know to the current market, price
strategy identifies the development in the market, alterations in environment and also changing
behavior of the consumer (Constantinides, 2015). In this study, researchers examined the
disadvantages of marketing mix tool of management namely the inner orientation as well as lack
of personalization. According to Mohammed Ismail, Fakhrul Anwar Zainol, Wan Norhayate
Wan Daud, Norfadzilah Rashid, Asyraf Afyhanorhan all small and medium enterprise in
Malaysia face difficulties related to the rising demand of the consumers as well as changing
demand (Ismail, Zainol, Daud, Rashid, & Afthanorhan, 2018). In this study, the researcher
suggested that by applying the entrepreneurial marketing, while making the price strategy of
marketing mix, it would consider beneficial for the enterprises.
Markus Blu, Christoph Telle, Arne Floh finds that all the retailers always try to make the
better relationship with the consumers (Markus, Teller, & Floh, 2018). The study suggests that
advertising, distributing considered the secondary method; the major strategy is pricing which
retailers have to maintain to take the competitive advantage. According to Graham Jackson and
Vandana Ahuja advancement in the technology leads to the competition but maintaining the
needs of the customers and for better relations is considered the major challenge for the
companies (Graham & Ahuja, 2016). In this researcher, suggest that company should adopt the
skimming strategy of pricing because of the high competition in the market. As stated by Carmen
Abril, Belen Rodriguez Canovas in this researcher examine the effects of the distribution
channels, promotions as well as the price strategy in relation to the brand equity and finds that it
is a challenge to make the strategies of marketing mix for maintaining the brand equity in the
eyes of customers (Abril & Cánovas, 2016). Todorova analyzed that it due changing demand as
well as increasing substitutes, it is mainly difficult for the company to sustain (Todorova, 2015).
In this study researcher, suggest that by combining the strategies of marketing mix and by
adopting the premium price strategy the company can be successful in long run. According to
Wahab, Hassan, Shahid, Maon many new entrance of the companies is made in the similar
industry, which offer similar products, so it is important for the company to survive (Wahab,

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Hassan, Shahid, & Maon, 2015). The study was conducted in Hijab industry and finds that to
survive in the long run the industry can adopt the tool of marketing mix and makes the efficient
pricing strategy to attract the customer and increase the sales. As stated by Bahadir, Bharadwaj,
Srivastava adopting the tool of marketing mix is important for the company due to changes in the
market; the study is conduced to understand the relationship between marketing mix and sales
(Bahadir, Bharadwaj, & Srivastava, 2015). In this researcher, finds that strategy related to the
price, promotion becomes difficult for the company due to the changes in marketplace, in this
study researcher suggests to use the strategy of premium pricing. After article review, further
case study is discussed.
McDonald has been a well-established brand, the vision as well as mission of the
company is strive to be the world’s excellent restaurant which provides fast service to the
customers and shape the values of the company according to the vision and promise of customer.
The focus of the company is also in maintaining superior quality, timely service, cleanliness as
well as beliefs of the consumers. The original McDonald brothers, Dick and Mac., built the first
store of McDonald in the year 1940. The headquarters of the company is situated in Chicago,
IIlinois, US. In the year 2018, the company has 37,855 restaurants. The company offers
Hamburgers, coffee, milkshakes, chicken, French fries, breakfast (Thompson, et al., 2018). The
various challenges faced by the company related to the pricing due to the changes in the market
condition and competition. The main competitor of McDonald is KFC, Burger king, Wendy’s
changes the price strategy to increase the sale like KFC adopt the bundle pricing strategy as well
as Burger King follow the strategy of Market oriented pricing, it is difficult for the company to
compete and adopt the effective strategy to compete in highly competitive environment. The
other major challenge for the company is to meet up the changing demand of the customer by
keeping the price lower to increase the sales like McDonald introduce double cheeseburger with
the price $1.69, it is also the challenge for the company because Burger king also offer same
product with the similar price. To overcome the challenge strategy of bundle pricing adopted by
the company, in this company offer meal as well as other bundle of product in discount, the price
is considered lower than the actual price like Double quarter pounder with cheese- Meal in
$6.69. The Company also adopts psychological strategy and offers the product with the price like
Bacon clubhouse burger in $4.49. However still due to changing preferences of the customers

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and high competition the revenue of McDonald in 2018 was $21.03 billion, which decrease as
compared to 2017 that was $22.82 billion (Holden & Madden, 2018).
Source: (Statista, 2019)
Most of the studies provide incomplete information and gives incomplete decision for the
company to sustain in dynamic environment, studies only focuses on changing needs and
requirements of the customer, not much studies is considered in price changes due to the
competition arises. To overcome this challenge, company can use the marketing concept, in
which company can use all the activities to understand the needs and requirements of the
customers. This help the company to make price strategy accordingly and can take the
competitive advantage by making research and development and can deliver more values to the
consumers, the marketing concept is based on the “pull strategy” (Bieger, 2015). McDonald can
also use the strategy of segmentation, Targeting, positioning (STP), through this company can
segmented the products and make more investment in the country like German because more of
about 161.4 billion in 2016, expenditure spend by the consumer in buying product from the
restaurant (Moser, 2016). McDonald usually target young generation, for this company can adopt

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penetration-pricing strategy and keep the price low, for positioning the products company can
adopt the discount strategy and give more of 40% weekly offer to the consumer.
From the above, it is conclude that, it is significant to develop the effective price strategy
to gain the competitive advantage. McDonald is operating in highly competitive environment
and change the price according to the market condition but still the revenue of the company
decreases overtime. From the above it also concludes that o overcome the challenge McDonald
can adopt the marketing concept and strategy of segmentation, targeting, positioning (STP), this
will help the company to take competitive advantage.

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