Marketing Strategies for McDonald's: Unit 4 Business Report Analysis

This comprehensive business report examines the marketing strategies of McDonald's, focusing on the core elements of the marketing process. The report delves into the micro and macro environmental factors influencing McDonald's marketing decisions, analyzing customer behavior, market segmentation, and targeting strategies. It explores the benefits and costs of a marketing orientation, the application of the marketing mix (product, price, place, and promotion), and how McDonald's adapts its approach in different buying situations. The report also considers product development, distribution, pricing, and promotional activities, providing a detailed analysis of the company's marketing efforts and how they are adapted for different market segments. It also includes an analysis of how international marketing differs from domestic marketing for McDonald's, providing insights into its global marketing approach.

Unit 4 Marketing Principles

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Elements of Marketing Process........................................................................................1
1.2 Benefits and costs of marketing orientation.....................................................................2
TASK 2............................................................................................................................................3
2.1 Micro and Macro environmental factors influencing marketing decisions......................3
2.2 Segmentation Criteria for different markets.....................................................................4
2.3 Targeting Strategy for selected product...........................................................................5
2.4 Buyer behaviour affecting marketing activities in different buying situations................6
2.5 New positioning for a selected service or product...........................................................7
TASK 3............................................................................................................................................8
3.1 Product development for gain competitive advantage.....................................................8
3.2 Distribution strategies of McDonald's..............................................................................9
3.3 Pricing strategies of McDonald's....................................................................................10
3.4 Promotional activity for McDonald's.............................................................................10
3.5 Analysis of additional elements of marketing mix.........................................................11
TASK 4..........................................................................................................................................11
4.1 Marketing mix for two different segments.....................................................................11
4.2 Differences in marketing product and services to business and customers....................12
4.3 How international marketing differs from domestic marketing for McDonald's...........13
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................14

INTRODUCTION
Marketing process is the business procedure that helps in establishing customer
relationship by selling goods and services as per their preferences. It is a process of planning,
developing, implementation, documentation and review of systems for achieving the objectives
of organization. Marketing process of a business is based on customer's experiences, means there
is direct relationship between customer's experience and business operation. Marketing activities
varies with the type of organisation. Big firms use expensive marketing strategy whereas small
firms spend too less on this strategy. This assignment represents business report of McDonald's
that consists of marketing strategy options and marketing environment of this company.
TASK 1
1.1 Elements of Marketing Process
Marketing is a social process that helps individuals and groups in society for fulfilling the
needs and wants of people by making and exchanging products and services (Baker and Hart,
2008). This process has some elements with the help of which McDonald's can achieve its
objectives. Elements of marketing process can be related to analysing marketing opportunities,
selecting target markets, developing the marketing mix and managing the marketing efforts.
Presenting here a brief description about the elements of marketing process: Analysing Marketing Opportunities: McDonald's is known as world's best brand in fast
food restaurants. It adopts so many stages for marketing process. Since, it is a famous
brand that reflects a personality for the organisation. It analyses marketing opportunities
for organization through using the way of advertisement and promotion (Hair, Ortinau
and Bush, 2008). It analyses customer’s needs and wants and tries to meet these needs in
a better way than its competitors. Selection of target market: For gaining the attention of customers, organisation should
choose a target market. Target market for McDonald is the place where in customers for
their products and services are more. Other factors while selecting a target market are
economic, legal, technological, social, retail environment etc. Developing the marketing mix: Main elements of marketing mix are product, price,
place and promotion (Grönroos, 2007). McDonald's offers the best quality of product at
affordable prices to its customers. It adopts the best promotion strategy all over the world
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to promote its products and services. It has opened its restaurant at many places in all the
directions of UK as well as overseas.
 Managing the marketing efforts: Company at this stage, controls the marketing activity
so that better outcomes can be attained from it. For the purpose of managing marketing
effort, response rate, market research and review of customer are taken into account. This
aids in identifying the loopholes in the marketing which can be overcome by developing
appropriate strategies. McDonald's marketing department has sound knowledge and
experience to manage marketing efforts made by them in accordance with the market
structure in various countries.
1.2 Benefits and costs of marketing orientation
Marketing orientation is a business Philosophy where a company's prime focus is on
learning wants and undisclosed needs of its customers (Kokemuller, 2012). It is an engineering
orientation in which company's primary focus is on the research and development of products.
Other than this, market factors are of secondary importance. There are two approaches of market
orientation, first is product oriented approach and the second is marketing oriented approach.
McDonald's adopts marketing oriented approach for becoming market leader in the industry.
Benefits of this approach are as follows: Customer Oriented: This process is based on customer needs and preferences.
McDonald's gives importance on customer demands and needs. Affected by customer demands: McDonald's works according to customer demands and
applies the best strategies to fulfil them. Making Customer Benefit: This process is used to make worth of buyer that would
increase customer trust and frequent sale of products.
 Competitive Strengths: McDonald's creates products and services that are based on
customer's demands and requirements (Aaker, Kumar and Day, 2008). It ensures
complete utilisation of products and services that enhances competitiveness among its
competitors.
Some disadvantages of this market orientation are:
Costly and Comprehensive research: McDonald's spends too much money and time on market
research that is not possible to perform by small and medium sized organisations.
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 Increase in Prices due to increase in Benefits : Organization is working to provide best
services to their customers for which they charge high prices and willing buyers have to
pay for them.
 Deficiency of predictability: In market orientation, development of product is very
typical due to varied choices and demands of different customers.
TASK 2
2.1 Micro and Macro environmental factors influencing marketing decisions
There are two types of environment in which an organisation operates its business
(Zikmund and Babin, 2006). Micro and macro environmental factors affect the marketing
decisions of an organisation.
Figure 1: Macro and Micro Environment
(Source: Jolibert, Florès and Dubois, 2012)
Micro Environmental factors:
Micro environmental factors are media, competitors, employees, shareholders, suppliers,
customers etc. and these factors determine McDonald's resources and capabilities.
Customers: Since, McDonald's is famous for its brand and best customer service. All the plans
and policies that are made by this company are based on customer preferences.
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Employees: Employees of McDonald's are skilled, enthusiastic and knowledgeable and they
work for its success and the betterment of sales and customer services.
Suppliers: Suppliers are another important factor for its success. They have adopted a good
supply chain management that is able to achieve competitiveness and to provide good quality
products to end users.
Shareholders: Shareholders are those members of company who have interest in the company
(Jolibert, Florès and Dubois, 2012). They own company by buying stake in it. They help in
growth and success of the company. Similarly, in McDonald's, shareholders have invested a
huge amount to ensure its long term success and higher growth.
Media: It plays an important role in an organisation and promotes positive attributes of
McDonald's to attract customers.
Competitors: McDonald's has many competitors and it is aware of the activities and steps of its
competitors.
Macro-Economic Factors:
These factors affect organisation from the external environment. These factors are
Demographic, economic, natural, technological, political and cultural.
Economic Environment: It covers customer's buying and their spending capacity.
Natural Environment: It includes environmental pollutions, government interventions and
natural resources that impact on organisation (McDonald and Wilson, 2011).
Technological Environment: It includes modern technology that is adopted by an organisation.
Similarly, political and cultural environment also affects the business practices of company.
2.2 Segmentation Criteria for different markets
McDonald's has large range of products and services for different consumers at different
places. Presenting here a brief description on segmentation criteria adopted by McDonald's.
Geographic Factor: McDonald's has segmented market on the basis of population, size and
atmosphere of a region or a geographical area. It has adopted the segmentation at micro level by
focusing on urban market only.
Demographic Factor: It has segmented its market on the basis of sex, age, income, status,
sexual orientation and education of the people (Weinreich, 2010). Customers of different status
choose different ranges of food products. So, it is organisation's responsibility to serve them in
the best possible way.
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Psychographic Factor: It can segment market on the basis of customer’s thoughts, beliefs,
interests, values, lifestyles, social status and so on.
Behavioural Factor: In this factor, total market is based on customer behaviour and their
purchasing power like readiness to buy, user status and loyalty to the organization.
By considering the above factors, McDonald's has segmented its whole market in
different parts are given below:
Market Segmentation Examples
Geographically Segmented
Islandwide
Tampines, Woodlands, Clementi, Orchard, NTU, McCafes –
22 Islandwide
Demographic Segmentation Kids, Family and Students
Psycho graphic Segmentation Convenience and Lifestyle
Behavioural Segmentation Occasions, e.g. Birthday parties
2.3 Targeting Strategy for selected product
Targeting strategies are those activities that make an enterprise different from its
competitors by doing same business activity differently (Lee and Kotler, 2011). By making
strategy, company can become a market leader. Prime focus of strategy is to attract customers
because satisfying customers is the way to become a brand from a normal product in the market.
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For example, Burger King makes their strategies by keeping in mind young adult males as their
target customer. Wendy has different market strategy for their target customers.
In this regard, there are different types of targeting strategies and same has been
enumerated below:
 Undifferentiated: In this, same set of marketing activities are been used for attracting
customers of different age group. It is been termed as mass marketing as it aims to appeal
large number of customers towards same set of products. Here, this is no differences been
done on the basis of age, gender, culture or any other criteria.
 Differentiated: It is a strategy in which company develops different set of marketing
efforts for different customer base. Here, marketing is done to attract particular market
segment so that overall sales can be enhanced. For this purpose, separate marketing mix
is developed for different segment of customers.
 Focused: In this, company focuses on single market with a single marketing mix. Here,
efforts are incorporated to satisfy the needs of single market segment so that company is
able to develop an edge over the rivals.
Considering this, McDonald’s follows undifferentiated targeting strategy where it aims to
attract customers of every age group, religion and culture. By applying this strategy, company
will be able to meet with the needs and wants of varied customers. Through this, McDonald's has
created itself to be the family oriented restaurant through having absolutely acceptable prices in
the fast food business. It has low scope for a customer base and cost strategy but in recent years,
they are working on seeking more customer attention by adding new items in the menu card.
This option is adopted to cover the lost sales of past years (Kotler, 2012). They are focused on
cutting delivery time and cutting cost as well. It has all the modern equipment with the advanced
technology in order to facilitate its customers. Another interesting target strategy of McDonald's
is to use dual drive service. With the help of that strategy, customers do not need to wait for
much time. They have provided playgrounds in their restaurants at many places to attract kids.
2.4 Buyer behaviour affecting marketing activities in different buying situations
Marketing activities of a company changes with change in buyer's behaviour. If buyer
likes a specific brand and company is not making that brand in more quantity then company has
to increase the production of that brand to save their permanent customers. Generally there are
four types of buyer behaviour.
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 Complex buyer behaviour: In this type of buyer behaviour customers are completely
involved in buying process (Lovelock, 2011). They behave very rational. These products
are very precious and customers take advice from others or experienced people before
buying products and receiving services. These products have very large impact on
customers. For example: While purchasing insurance scheme or while doing investment,
individual seeks suggestion from experts so that he/she can gain high return on the
invested amount. Variety Seeking Behaviour: Earlier in this report, it was included that different buyers
have their different choices. Since in this behaviour customers do not involve too much in
buying a product there are so many choices of products for them. This company gives
different offers to its customers for sale of products. For instance, while purchasing
luxury cars, customers are left with wide range of options. From this, the customer
purchases car that best fulfils their needs and requirements in every sense. Dissonance buying behaviour: In this kind of behaviour customers are involved
completely in buying process but there is less variety of products for them to choose. For
instance, customer who is willing to purchase new LED TV will not find many difference
among the products of different brand, but price and technical feature of each LED will
involve customer more.
 Habitual buying behaviour: In this type of behaviour, customers have to buy products of
their necessity (Cateora, 2008). They are least interested in selection but the same quality
of products will be in variety. In this context, cleaning agent is one of the perfect example
for habitual buying. In this, customers don’t involve themselves much into buying
process and purchases the products from their convenient reach.
2.5 New positioning for a selected service or product
A business firm should give preference to product positioning that will help it to obtain
business loyalty and trust. It is a marketing activity which is made to provide products to
different customers and public. Market positioning is associated with customer positioning and
organisation makes products positioning as per market positioning. In market positioning, the
firm creates message about its products and services and forward it to different customers by
way of leaflet, magazines, television, radio etc. Message includes symbols and manipulation and
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its success depends on technical clarity, expert advice, fast service, creative ideas, high quality,
caring attitude, low prices etc. (Constantinides and Fountain, 2008).
Considering the scenario of McDonald’s that aims to offer products for each set of
customers, it is required to incorporate sound positioning strategy. Presently company is
perceived as a destination where family gathering, friends meeting and party can be done. The
company has positioned itself as a family place and hence gains attention from each set of
customers. In order to further position the company to its target customers, several steps need to
be incorporate. For this, company can be position as a best place for kids and family as well. In
this regard, TV advertisement and banners can be developed that depicting McDonald as a place
where both kids and family can have great foods and fun. With the help of it, company is able to
gain high amount of attention from varied customer base which will help in attaining an edge
over their rivals.
TASK 3
3.1 Product development for gain competitive advantage
Product development is an important aspect for gaining competitive advantages. For
gaining continuously competitive advantages, McDonald's focus on introducing new product for
creating new market demand. Company focus on identifying customers wants and accordingly
develops a menu. McDonald's also use market research as a tool for new product development.
Product development depends on the fashion and trend of the market. Company believe in
providing new choices to customers in order to gain competitive advantages. McDonald's
provide variety of products on the basis of market demand and customers taste. Company focus
on identification of customers’ requirements changes over time. On this basis company plan for
develop new product. Company also focus on maintaining quality of products in order to get
competitive advantages regularly (Schau, Muñiz and Arnould, 2009). They are taking feedbacks
for identify strength and weakness of products so that product quality can improve as per
demand. However, there are different aspects of attaining competitive edge over the rivals. This
includes cost leadership, differentiation and focused strategy. Considering the scenario of
McDonald, it incorporates the strategy of cost leadership in order to attain an edge. Cited
company offers quality products at relatively low cost with a motive to attract more of customers
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towards it. This certainly helps the company is developing a prominent image in the industry
through which higher market share is concurred by it.
3.2 Distribution strategies of McDonald's
Distribution is one of the key strategy that helps company in reaching to large set of
customers. From distribution products and service are able to available within the convenient
reach of customers. In this regard, there are different types of distribution strategy. These have
been enumerated below:
1. Level Zero: In this products are been distributed directly by producer to customers and
here, mediators are removed from the channel. This aids in saving cost of distribution.
2. Level One: In this, retailers are present in between customers and producers so that
products can be available within the convenient reach.
3. Level Two: This is a distribution channel in which products are avail to customers from
the chain of wholesaler and retailer in between the process.
McDonald's serving its customers with larger number of chain stores that following level
zero distribution strategy. Company delivers products to customers directly without any
middlemen and this essentially helps in offering quality products and services. It also aids in
reducing cost of distribution and hence McDonald is able to fulfil the strategy of cost leadership.
In addition to it, cited company uses intensive strategies for distribution in order to boost the
sales. McDonalds gives franchise to individuals at different geographical region within same city
so that they can able to attract more of customers towards it. From this, false competition is
developed in which one outlet of McDonalds is competing with other McDonalds outlets and due
to this, overall sales gets increased. Company set its outlets overseas and every city of world.
Company divided whole market into different segments to identify their needs and wants. These
segments are base for product variety and types. Company focus on providing product as per
segment of customers. Company also use franchise distribution strategy for serving more people.
This help company in reaching more people and cover larger market. For attracting and attaching
more customers, company focus on delivery of products which demanded by customers (Pires,
Stanton and Rita, 2006). Aim of company is that 'no item may ever be out of stock'. This show
that how much company dedicated towards its customers. Company also provide different
product and service for different age group such as for business Customers Company provide
food that can be eaten without affecting an engaged work schedule.
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3.3 Pricing strategies of McDonald's
Pricing strategies are main aim to attract more customers. Company mainly use 'price
building' and 'psychological pricing' strategies to set attractive price. McDonald's set its prices on
the bases of environment of particular location without following the global pricing. Company
use many methods which can help them in deciding suitable price for product. This also covers
aspect such as demand of customers, competitor’s price and objectives for selecting such price
(Lusch and Vargo, 2014). Company sets price as per the price of competitors so that comparison
can be made by target customers and buys the products that cost less. With this, McDonald is
able to gain attention from varied customer base. Price also decides on the basis of expenses of
company and this could be different from country to country. For example, Price of Big Mac in
Thailand is $2.10 USD and in India, price is 3.20 at the same time. Reason may be wages in
Thailand is less than India. Effective pricing help company in getting fulfil not only its objectives
but also market conditions. These could be different from location to locations. In addition to it,
pricing is even affected by factors like price of competitors, rise in cost of operation due to
inflation, change in economic condition and other related. All these factors need to be considered
by company in order to set best price.
3.4 Promotional activity for McDonald's
Promotion is an important tool of marketing mix in order to create awareness among
customers. These could be done through various promotional tools such as advertising, sales
promotion, telemarketing, etc. In this context, company can promote with the help of integrated
marketing communication. Through this, more number of customer can be reached that aids in
spreading the awareness of the company. This can be done by engaging on social media, radios
and television which helps in attracting more of customers. These tools can result to increase in
sales and it directly helps in achieving company's objectives. Promotion attract customers to try
the product and it ultimately increases in sales and profit for McDonald's. Promotion could be
done through commitments of delivery of product and services. This help company in earning
loyalty of customers. Company also focus on the selection of right medium of channels for
promotion. These promotional channels having reach to maximum target customers which means
'right audience' (María Cubillo, Sánchez and Cerviño, 2006). This will help company in
achieving its objective of connecting with maximum people. Company can also promote its
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