Comprehensive Marketing Report: McDonald's Case Study Analysis

This report provides a comprehensive analysis of McDonald's marketing principles and strategies. It begins with an introduction to marketing concepts and applies them to McDonald's, including an examination of the marketing process and the benefits and costs of a market orientation. The report then delves into the micro and macro environmental factors influencing McDonald's market decisions, proposing segmentation criteria and analyzing the company's product range and targeting strategies. It explores consumer buying behavior and proposes a new positioning for a selected McDonald's product. The report further examines product development for competitive advantage, distribution and pricing strategies, promotional activities, and additional elements of the marketing mix. It concludes by comparing marketing mixes for different customer segments and contrasting marketing approaches for products and services in business-to-business and international contexts, offering a detailed case study of McDonald's marketing practices.

Marketing Principles

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 The various elements of marketing process.....................................................................1
1.2 The benefits and cost of marketing orientation to McDonald's........................................2
TASK 2............................................................................................................................................3
2.1 The micro and macro environmental factors influencing the market decisions...............3
2.2 Proposing segmentation criteria for McDonald’s in different markets............................6
2.3 Range of products and services of McDonald’s and targeting strategies for them..........7
2.4 Buying behavior affects marketing activities in different buying situations....................7
2.5 Proposing a new positioning for selected service or product of McDonald's..................8
TASK 3............................................................................................................................................9
3.1 Product development for sustaining competitive advantage............................................9
3.2 Distribution strategies used by McDonald’s for customer's convenience and satisfaction10
3.3 Pricing strategies used by McDonald’s as per market conditions..................................12
3.4 Promotional Activities of McDonald’s to achieve the marketing objectives.................13
3.5 Additional elements of Marketing mix...........................................................................13
TASK 4..........................................................................................................................................14
4.1 Marketing mix for two different customer segments.....................................................14
4.2 Difference in marketing products and services to business............................................15
4.3 Difference in international marketing and domestic marketing.....................................16
CONCLUSION..............................................................................................................................16
REFERENCES..............................................................................................................................17

INTRODUCTION
Marketing principles are the ideas which are formed for the product promotion strategies.
Some organizations use variety of marketing principles for modifying the market performance of
existing products and successful establishment of product in new market segment (Day, 2005).
With regards to this, the firm is undertaken for present study is McDonald’s which is world's
largest chain of hamburger fast food restaurants that services 68 millions customers daily in
multiple countries. McDonald’s have 36000 outlets and founded in 1940 in United States. This
report will outline the concepts and process of marketing with the concepts of segmentation,
targeting and positioning and the individual elements of marketing mix along with their use in
different context.
TASK 1
1.1 The various elements of marketing process
The various elements of marketing process of McDonald’s are as follows, Analyzing market environment: for analyzing the market environment McDonald’s will
require a strategic tool to be get the competitive advantage. Thus, the firm can focus on
SWOT analysis, PESTEL analysis, Porter's five force and value chain analysis etc. for
analyzing the market environment. In this context, following is the SWOT analysis of
McDonalds:
STRENGTHS:
 World's largest fast food market share.
 Brand recognition value at $50 billion.
 Food menus as per local choices.
 More than 80% restaurants with
independent franchisee.
 Partnership with best brands.
WEAKNESSES:
 Unhealthy food menu.
 Low differentiation.
 Negative publicity.
 High employee turnover.
OPPORTUNITIES:
 Home delivery option.
 Increased demand of healthy food
products.
THREATS:
 Soaked fast food markets in developed
economy countries.
 Trend towards healthy food.
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 Changing customer habits and new
customer segment
 Currency fluctuation.
 Local fast food chains.
 Cultural effects on food habits. Identifying the target market: McDonald’s can target on particular areas internationally
and increase the variety in restaurants for increasing sales and profitability (Kimball,
2011). The firm can analyze a market segment where segment in which people like to
have fast food in routine. Setting core goals and objectives: McDonald’s have to define their marketing objectives
that will maximize the profits and help in achieving long term and short term objective of
the firm. However, it is very important for the firm to improve the goodwill of the firm as
well. The primary aim of McDonald’s is to serve good food in fun and friendly
environment and also, the firm want to be socially responsible company and to provide
good returns to its stakeholders.
 Determining marketing mix: The firm is focused only on particular food products which
it is serving in its outlets and satisfying customers demand in significant way. Moreover,
the customers of McDonald’s are aware of unique characteristics of cited firm and have
trust on the food quality it is serving to its customers (Oplatka and Hemsley-Brown,
2007).
1.2 The benefits and cost of marketing orientation to McDonald's
Market orientation can be referred to a business approach that aids in assessing the needs
of customers and meeting with the same by offering appropriate services and products. In this
regard, there are different types of orientation namely marketing, product, sales and production.
Within the context of product orientation, products and services are developed from the
perception of management and it does not include customer’s viewpoint. In this, products are
kept higher than that of actual customers. Contrary, needs and wants of the customers are given
high consideration in marketing orientation and hence products are developed accordingly.
Further, concern of management in sales orientation is to enhance the sales of the company
irrespective of the relevance of products with that of needs and wants of the customers. Apart
from this, production orientation emphasizes on manufacturing unique set of products in order to
develop unique image in the marketplace. However, it doesn’t focuses on requirement of the
customers.
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In this context, marketing orientation for an organization like McDonald’s is an
organizational strategy which is dedicated to meet the needs of its customers. All business
strategies and product development rotate around the desire of this desire. However, the
McDonald’s aim is to serve good food to its customers in fun and friendly environment. Thus,
the firm is serving its customers at affordable prices and quality services.
Cost: Increasing value for customers increases the production cost of McDonald’s as well.
Marketing orientation floats with a momentous cost as McDonald’s will have to analyze all their
necessary resources and factors effectively and in efficient manner. Moreover, the finance profit
of McDonald’s has been always stable because of its quality assurance to its customers and with
the range of food products it is serving to its consumers in multiple countries (Doyle, 2009).
However, the firm is a leading restaurant chain in the world but its promotions and advertisement
expenses are decreasing the profits as they have high prices of some food products and some
food products are not culturally accepted by the people in few countries.
Benefits: McDonald’s has secured its place as the best fast food restaurant chain in global
markets and got “the best food service retailer of the year, 2012” award which it can use
efficiently in marketing and promotion activities of their existing and new food products.
Furthermore, the firm can also enter in a market where its competitors such as KFC, Subway and
Burger king are not accepted by the customers. However, the McDonald’s is able to maintain its
customers and revenue in all the markets successfully (Li and Hung, 2009).
TASK 2
2.1 The micro and macro environmental factors influencing the market decisions
With regards to McDonald’s micro environment analysis it is identified that firm is
financially strong as world's largest fast food chain and is a recognized brand all over the world.
Further, the brand has so much potential for its advertising and promotion activities and its
locally adopted food varieties (Railsback and Hite, 2008). However, the firm is facing negative
publicity also in some areas and it is providing typically unhealthy foods to its consumers which
it need to improve by time for increase the sales and revenue of the firm. But, at the same time it
has lot of opportunities for turning its weaknesses into strengths as the firm has huge customer
preferences.
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In addition to it, following factors also constitutes in the micro environment of
McDonalds:
1. Customers: Company aims to offer quality and hygiene foods to its customers in order to
meet their needs and also to satisfy them. Additionally, company focuses on developing
products as per the needs of the customers in different region so that it can sustain for
longer. McDonald offer vegetarian and only chicken burger in India, non-pork burger in
Middle East and similar products in other part of world as well in order to adhere with the
cultural issues. This aids in gaining high attention from customers in evert market.
2. Employee: Further, cited company offers proper training to its employees so that they can
work as per the benchmark and in standard form. Also, sound working environment is
offered along with appropriate pay structure in order to enhance the morale of the
employees.
3. Suppliers: Company makes healthy relations with suppliers by entering into strategic
partnership. Through this, McDonald gains quality and set standard product on regular
basis from its supplier across globe. This aids in conducting the business operation in an
effectual manner.
4. Competitors: McDonald enjoys a dominant position in the market due to its quality
products and unique tastes. However, company ensures healthy competition so that its
reputation gets increased.
Furthermore, the macro environmental factors of McDonald’s will be analyzed through
PESTEL analysis, which influences the marketing decisions are as follows: Political: The political factors of a business depict the political influence of the business.
Since, McDonald’s is the world's largest fast food restaurant chain, the political factors of
international market will highly affect the business of McDonald's. These political factors
are tax rate, fiscal policies and interest rates of the country. Economic: The economy factors of the country describe the economic condition of the
country which makes impact on business growth. The economy of the country highly
affects the buyer behavior that also makes impact on firms business. Thereby, it is
essential to consider economic factors of the country at the time of developing business
strategies (Oplatka and Herts-Lazarovits, 2006).
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Figure 1: PESTEL Analysis
(Source: PESTEL Analysis, 2015)
 Social: The social factors of the business scrutinized the social environment of the
market with factors such as, current market trends, cultural effects on food habits,
populations and demographics. For instance, at the time of launching restaurant in India,
McDonald’s have changed its beef burger into Aloo Tikki Burger. Technological: Further, in the technological factors the firm should analyze the
technological growth of the country which may affects the operation of the firm. The
technological factors of the country can highly affect the marketing opportunities of
McDonald's. Thereby, it is necessary to analyze the technological growth of global
country. Environmental: In recent years, environmental factors are highly affecting the business
of McDonald's. As per these environmental factors many issues such as weather of the
country, energy saving initiatives are the important aspects (Jaafar, Aziz and Wai, 2008).
These factors affect the customers and their food preferences. Thus, the firm should
necessarily analyze the environmental factors of the country before making any
marketing decisions.
 Legal: The legal environment in which the cited firm operates its business is highly
dependent on the legal structure of the global country, as per these legal factors the firm
should analyze all the laws, rules and regulations of the country for the successful
business operation and marketing operations.
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2.2 Proposing segmentation criteria for McDonald’s in different markets
McDonald’s is world's largest fast food restaurant chain and focuses on new marketing
strategy in order to increase the sales and revenue of the firm. McDonald’s have realized its
weaknesses as it is serving unhealthy food to its customers. Thus, improvement in food products
and requirement of effective market segmentation is essential. However, the firm is attempting to
make it more reliable and actionable (Rosenbloom, 2011).
Since, McDonald’s is the world's largest fast food restaurant chain, it is very important to
understand its targeted customer’s. However, McDonald’s has segmented its food products on
the basis of demographics, psycho graphic and behavioral preferences of people.
Figure 2: Segmentation Process
(Source: Terpstra, Foley and Sarathy, 2012)
Under geographic segmentation, company has segmented the market in the form of country.
From this, it is able to develop distinctive products and services as per the needs and wants of the
customers. Further, demographic segmentation has even been conducted by McDonalds in each
market. In this, company segments based on age. It offers products for every age group right
from ice cream to full meal burger. Additionally, company attracts customer by conducting
psychographic segmentation as well. Here, lifestyle and personality are the basis in which
customers are attracted towards it. Further, they have segmented their products and positioned
them according to kids, students and family. But, in the future, segmentation according to adults
and targeted group is necessary.
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2.3 Range of products and services of McDonald’s and targeting strategies for them
After proposing a market segmentation criteria, McDonald’s is focused on adopting a
suitable targeting strategies as a single marketing strategy which will not allow McDonald’s to
get a competitive advantage. The different targeting strategies of McDonald’s are as follows, Undifferentiated strategy: As per undifferentiated strategy the cited firm uses single
promotional activity between all customers segments. This strategy is effective in
McDonald’s when specific menu is being served among the people and firm have less
competition in the market (Tate, Ellram, Bals, Hartmann and van der Valk, 2010). Concentrated Strategy: The concentrated marketing strategies are designed for specific
market segments with various promotional activities. As per this market strategy firm can
attract the targeted customers easily.
 Differentiated Strategy: In this type of marketing strategy McDonald’s can focus on two
different type of customer segments through the development of appropriate marketing
mix for each segment.
However, the firm is launching healthy vegetable burger in the market, McDonald’s can
implement differentiated strategy for target customer segment as McDonald’s have varied
promotional activities for all its customer segments such as, kids, students and families (Vich-i-
Martorell, 2004). These healthy food is introduced to customers as per the needs and demand of
consumers.
2.4 Buying behavior affects marketing activities in different buying situations
Buying behavior is made of all the internal and external factors that describe why
customer should buy and use certain products. This type of behavior affects the whole marketing
strategies which is a firm is adopting for promoting its product. One of the basic factor that
makes impact on buyer behavior is product's need and demand and complex decision making
capability of the customer. For instance, in some particular countries some food products are
restricted than McDonald’s should not sell those products in that particular country. Instead of
this, the firm can provide those customers local food specialty.
Furthermore, effective and quality services to consumers also affect the buying behavior
of consumers (Richards, 2015). However, the firm should implement the marketing strategies
through which it can attract maximum numbers of customers. Also, these marketing strategies
can turn potential consumers into sales. In addition to it, buyer behavior is even affected by the
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nature of customers as well. Generally, there are two types of buyer, i.e. business and individual
buyer. When business buyer purchases products, then it follows systematic approach of seeking
quotation and selecting best price. This is so because purchase is made for business purpose. On
the other hand, individual buyer sought suggestions for purchasing activity by friend, family and
its peer group. Also, this set of buying is influenced by certain factors as well such as cultural,
personal, social and psychographic. Thus, consumers buying behavior highly affects the
marketing activities in various situations.
2.5 Proposing a new positioning for selected service or product of McDonald's
Product positioning is essential for marketing plan. This is a process by which
McDonald’s can determines that how it can communicate between the people about its new
service. Moreover, by positioning the firm can develop its brand image and goodwill of the firm
within the customers (Terpstra, Foley and Sarathy, 2012). With new improved services and
increased food range McDonald’s will be able to attract more number of customers. Cited firm
has categorized its customers in three segments such as, kids, students and family. Accordingly,
the firm will provide them services. For instance, McDonald’s can provide toys and other gifts
along with meals to the kids. Similarly, the firm can offer discounts and particular meal plans for
its students and family customers. However, the firm is opting for iconic positioning that is build
up on aims, values and aspirations of individual consumers.
Figure 3: Positioning of McDonald
(Source: Self Attempted)
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Furthermore, in healthy food products McDonald’s have clearly described that it will use
hygienic and organic food products which is healthy and does not affect the health of people
(Oplatka, 2007). Moreover, McDonald’s can set the prices for mentioned services and food
products according the cost and demand of the product. The price firm is deciding should be
economic and affordable by all age group consumers so that it will provide the most profitable
outcome to the firm.
TASK 3
3.1 Product development for sustaining competitive advantage
Sustainable competitive advantage is required by all the businesses to expand in today's
global environment. It provides the maintenance and transformation of organization to survive
on competitive position in market. Product development is the advantage for McDonald's. This
product and service development will make the firm to survive in competitive market for long
time (Bob, 2005). For instance, McDonald’s is developing its food products by involving healthy
ingredients. Moreover, the firm can develop these products by increasing the use of organic and
healthy ingredients with hygienic packaging of food. McDonald’s can segregate its products
between three criteria such as, kids, students and family. The packaging should be according to
these criteria. The competitive advantage remains in the organization only when the firm is able
to provide same products and services as competitors are providing but with lower costs. Firm's
pricing power usually takes advantage of high obstacle to enter in a market and to earn a
governing position in a market. Since, McDonald’s is world's largest fast food restaurant chain it
is already having that competitive advantage to the firm. But, with product development the firm
can also increase its sales and revenue. In addition to it, McDonald develops products as per the
needs of customers in different region. In this regard, following process are used for new product
development:
1. Idea generation: At this stage, idea about product is developed based on the rituals and
culture of specific country.
2. Idea Screening: Here, idea about the product is screened by the committee in order to
ensure that whether value will be created from it or not.
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3. Concept development: After screening, concept is developed in which new set of product
is transferred as per the product category of the company. In this, method is developed
from which cultural product of country can be produced in the form of burger.
4. Business analysis: Here, analysis is made based on marketing strategy and also target
market is specified. Further, discussion over product positioning of McDonald is also
done here.
5. Product development: The Company need to develop prototype and marked its design
and specification so that it can be used moved for test marketing. Also, it is required to
develop standards products which will be produced in each and every outlet of McDonald
across the country.
6. Test marketing: At this stage, new set of burger is launched to specific outlet of
McDonalds only in order to gain inputs from the actual customers whether the product
meet their needs or not.
7. Commercialization: Here, marketing of new product is done in order to develop craze
among target customers.
8. Launch: Finally, product is launched and inputs are taken from customer in order to
change it as per the needs and wants.
3.2 Distribution strategies used by McDonald’s for customer's convenience and satisfaction
The effective distribution of product is essential for customer's convenience and
satisfaction for attracting more number of consumers. Distribution strategy are of varied
strategies and company need to adopt most effective one by assessing the nature of business. In
this context, following are the distribution strategies:
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