Marketing Principles Report: McDonald's Market Analysis and Strategies

This report provides a comprehensive analysis of McDonald's marketing principles. It begins with an introduction to marketing processes and focuses on how McDonald's, as a global food brand, applies these principles. The report covers key marketing elements, including market and environmental analysis, target market identification, and the setting of marketing objectives. It also explores marketing orientation, highlighting customer satisfaction, desired quality, and service aspects, along with the associated costs. Furthermore, the report delves into macro-environmental factors like political, economic, socio-cultural, technological, environmental, and legal influences (PESTEL). It also examines micro-environmental factors using Porter's five forces model. The report then discusses market segmentation strategies based on demographic and behavioral factors and analyzes targeting strategies such as undifferentiated, differentiated, and concentrated approaches. Lastly, it explores consumer buying behavior, considering social and cultural influences. The report concludes with a summary of key findings and references.

MARKETING
PRINCIPLES

Table of Contents
INTRODUCTION...........................................................................................................................3
Task 1...............................................................................................................................................1
1.1...........................................................................................................................................1
1.2...........................................................................................................................................1
Task 2...............................................................................................................................................2
2.1...........................................................................................................................................2
2.2...........................................................................................................................................4
2.3...........................................................................................................................................4
2.4...........................................................................................................................................5
2.5...........................................................................................................................................6
TASK 3............................................................................................................................................6
3.1 ..........................................................................................................................................6
3.2 ..........................................................................................................................................7
3.3 ..........................................................................................................................................8
3.4 ..........................................................................................................................................9
3.5 ..........................................................................................................................................9
TASK 4..........................................................................................................................................10
4.1 ........................................................................................................................................10
4.2 ........................................................................................................................................11
4.3 ........................................................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCE ................................................................................................................................13

INTRODUCTION
Marketing principles involves processes to identify consumer needs, wants and desire. In
this includes key elements which helps to provide best services to customers by the organization
(Kasap, 2013). In this context, mainly enterprises focus on sales and advertising of marketing to
target the appropriate customers. Present report is based on McDonald's which is best brand of
food product in worldwide. They offer various services in 36,000 locations in over 100 countries.
Along with this, more than 80% McDonald's restaurants over world operated by local business
men and women (Company profile, 2016). This report helps to explain various elements of the
marketing process and micro or macro environment factors which influence business decisions.
Furthermore, it proposes segmentation criteria which is used for develop product in different
market. Moreover, it explains process for keeping competitive advantage to operate new
operations at different place. At last, it covers difference between product and services in B2B or
B2C criteria.

Task 1
1.1
Marketing of a product involve of planning so that it direction are set before only and try
to earn profits for organisation. For earning profit McDonald's are following marketing process
for there establishment of product.
Analysis of market and environment: Before establishing of product organisation have
to select market and marketing strategies so that they can sustain in market for longer run (Al-
Madi, Al-Zawahreh, and Al-Qawasmi, 2013). Analysing of market environment is main
elements for business because if target market is selected correct than McDonald's will earn net
profit. Organisation will use some strategies for their business such as PESTEL, SWOT, Value
chain and Porter five force model for internal analysis and external analysis.
Identification of marketing target: Identification of marketing target will help in
introducing correct product in right target market. McDonald's have to identify market where
youth population is more because if youth people are there then demand of there product is high.
Targeting of correct market will help in increasing there profits for firm and also help in
increasing value of McDonald's.
Setting marketing objectives: Setting marketing objective includes huge cost and time of
firm because if objective of market goes in wrong way then whole process will suffer. Marketing
objective of McDonald's includes of profit maximization for long term perception and by
increasing in value and brand image will help organisation in achieving their goals. Setting
marketing objective of McDonald's is mainly associated with their business strategy.
Dealing with elements of marketing mix: With help of marketing mix elements
organisation will have to determine all factor before establishment of there product. McDonald's
involve all elements of marketing mix such as price, place, promotion, product, people, physical
evidence and process. By involving all these factors organisation will achieve huge earnings for
there business and help in increasing in franchisee all over world (Blau, Ferber, and Winkler,
2013).
1.2
Marketing orientation is organisational model that focuses on delivering product design
according to needs, customer desire and requirement in addition to production efficiency so that
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growth and development of McDonald's increases with increase in time. McDonald's consider
some benefits that are as follows:
Customer satisfaction: Benefit of organisation involve customer satisfaction because if
customer are satisfied with product and service which are producing at McDonald's. At market
orientation McDonald's have to fulfil customer needs and demand because they are actual buyer
of product and service. If customer are satisfied then organisation is achieving huge net income
for their businesses to run (Boyce, 2015).
Desired quality: If client are getting desired quality and service from McDonald's then no
customer will try to switch other brands. Quality of product remain same because if any change
is there in taste then customer of McDonald's will divert so company have to provide quality
food to its customer with taste.
Service and customer care: McDonald's have to provide service quality to its clients
because service of any organisation will affect sale of their product if services are fast then they
will like to purchase product. Customer care is also benefits to organisation because they provide
feedback to employees and help in correcting out things (Brunswick, 2014). Through Market
orientation of McDonald's will help in understanding needs and desire of clients.
Some costs are as follows:
Lack in predication: Through this marketing orientation can be major cost for
McDonald's because business have to make advanced planning on development of product and
have to make some innovation.
Market research: organisation have to conduct market research on time basis because for
identifying product demand. This also involve cost of McDonald's because for conducting
market research firm have to incur huge cost and investment.
Task 2
2.1
Macro environmental factors i.e. PESTEL is influencing marketing decision of
McDonald's which are as follows:
Political factors: Government are pressuring fast food industry because they are leading
to obesity and increasing in cholesterol (Burchell, Rettie, and Patel, 2013). So, government of
UK influences them to manufacture their product in hygiene manner.
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Economic factor: Main factors of McDonald's is to buy raw material locally or import
them from outside and on other hand is tax rate and market research. Through these McDonald's
will influence because fluctuation in exchange rate will affect operation of firm.
Socio-cultural factor: Lifestyle of every nation effect sales performance because in
Asian countries rice burger are more preferable than hamburger whereas in UK hamburger are
having more preference than rice burger. So, this influences in market demand of McDonald's in
relation to socio-cultural factor.
Technological factor: Up-gradation in technology may improve in working cultural,
management and increase in productivity (Cadwallader, Atwong, and Lebard, 2013). This
influences McDonald's by reducing in wastage resource.
Environmental factors: McDonald's is facing problem while packaging because before
they were providing food in polystyrene. So this made McDonald's management influence in
providing them food packing in paper and become ozone-friendly.
Legal factors: Regulation are always major concern for industry. For McDonald's some
laws which influences them are employment law, tax requirement and corporate law.
Micro environmental factors which influence McDonald's is Porter`s five force model which as
follows:
Threat of competition: For McDonald's threat for competition are high because due to
cost-effectiveness and location of outlets. Therefore, from this analysis at McDonald's may
influence in opening of outlets at different location where there is demand of their product.
Bargaining power of buyer: At McDonald's buyer has less bargaining power therefore
they contain less chance for switching. This may result in increase in high brand image,
uniqueness and customer are also loyal from this things McDonald's gets influence.
Bargaining power of suppliers: McDonald's have high bargaining power from suppliers
because they purchase raw material in wholesale quantity. McDonald's management get
influence because they provide product according to culture and area demand and need.
Threat of substitutes: Organisation product have high substitutes therefore they have
variety of product availability in market (Carins, and Rundle-Thiele, 2014). McDonald's is
influences because in market there is no alternative of healthier product.
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Threat of new entrants: In very business sector entry of new entrants are very high and
they have regulation limits too. So, McDonald's get influences because they have access market
demand and have high economy of scale.
2.2
Market segmentation means identifying market according to group, individual, families
and business according to their needs and demand (D. Newton, Newton, and T. Ewing, 2013).
McDonald's are doing segmentation on basis of demographic, geographic, psychological and
behavioural but from these at least two are as describe under:
Demographic segmentation: This segmentation generally divide on basis of population.
McDonald's have to provide services in all over world therefore they have to segment their
market. These market can be segmented on their own variable such as age, gender, family,
income, religion, caste, occupation, race and nationality. McDonald's is segmented from age
prospective because small children will prefer to buy happy Meal more because they get toys
free whereas youngster age group person will not prefer to buy happy meal because they are not
concern about toys they need enjoyment only they will prefer to buy McAloo Burger more.
Whereas, for old age people they will prefer to buy veggie delight. So, McDonald's have to
consider all age aspect for their growth and increase in net profit for company.
Behavioural segmentation: While purchasing of any product every person has different
aspect in relation to their buying behaviour, usage and pattern of decision making. McDonald's
have to consider from all aspect so that their profit may increases with increase in time.
Behavioural aspect of every individual differ from person to person therefore, company have to
provide some schemes to people for attracting them to increase their sales (Da Silva, and
Mazzon, 2016). Some schemes strategies which McDonald's involves for attracting customers
are Buy 2 Get 1 free, coupon code, credit cards offers, free-recharge coupons, combo packs and
buy McAloo Burger and get coke free are such scheme for increase in their profit. Therefore,
company have to use some promotional strategies so that aspect of person will change and there
willingness to buy McAloo Burger will increase.
2.3
Targeting strategy includes segmenting of market and choosing which segment of market
is appropriate and help in determining of product that will be offer in that segment (Dooley,
Jones, and Iverson, 2013). McDonald's have to determine a product by determining various
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segment on basis of their need and demand. Thinking about a range of products and services
McDonald’s offer has chosen targeting strategy for them which are as under:
Undifferentiated targeting strategy: This targeting strategy main focuses is on entire
target market rather than a segment. This strategy involves a single marketing mix for reaching
out maximum customer in that target market. McDonald's success will depend on marketer
resources and skills because for reaching clients so by this they are convenient because they have
to develop a single product. McDonald's undertakes undifferentiated targeting strategy as most
useful because in this they have to consider single product and there focuses is also on that
product only.
Differentiated targeting strategy: This targeting strategy aim different market segment
with specific marketing mix to design particularly for meeting out those segment needs because
each mix includes place, price, promotion and product (Eagle, Dahl, and Tapp, 2013). This is
suitable when market are readily identified in each segment with distinctive needs. Therefore, by
using this targeting strategy McDonald's cannot open franchisee in all over world.
Concentrated targeting strategy: In this target is on single market segment with single
marketing mix. It focuses on McDonald's resource for meeting out needs of single in well
defined, understood market which have more competitor against larger companies. McDonald's
may suffer because if any product will not run in market than that effect organisation and change
condition of whole market situation.
2.4
Buying behaviour of every person is different because their selection, purchase and
consumption of good and service is different for satisfying their need and wants. Therefore, at
McDonald's different processes are involved in buying behaviour of consumer some of them are:
Social factor: It strongly effects on buying behaviour so companies must take them into
account when they are making of market strategies (French, 2012). Social factor is influences by
references groups, family role, status and peers.
Reference group contain potential in informing person attitude and behaviour. Therefore,
McDonald's is trying to identify family roles and influences because buying decision of McAloo
burger will be influenced by children and youngster.
Cultural factors: Buying behaviour of person is influenced by three ways such as buyer
culture, subculture and social class (Hair Jr, and Lukas, 2014). Influence of culture on buying
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behaviour varies from country to country so marketers of McDonald's have to be analyse
different groups and region. Through, tangible items such as food, building McDonald's can
express.
Personal factors: Personal factor that influence buying behaviour such as lifestyle,
economic situation, age, personality, self-concept and occupation. Age and lifestyle has potential
impact on buying behaviour because they obvious that consumer change purchase of good and
service with change in time. Therefore, McDonald's have to develop appropriate products for
each stages.
2.5
Positioning strategy aim is to make brand occupy a position in market in relation with
competitor brands in mind of customer (Jafari, 2014). McDonald's follows some positioning
strategies which are as follows:
Price differentiation: If McDonald's have to make position in mind of customer than
organisation have to provide some benefits and discounts so that customer gets attract and find
will purchase more from this organisation and this will lead to increase is sale. For example, if
McDonald's is providing McAloo burger in $20 and Burger King is providing Aloo burger in
$25 then it will lead to price differentiation and customer will try to purchase more of
McDonald's.
Channel differentiation: McDonald's has large coverage area therefore, they have
provided proper distribution channel and convenience because they have to reach out large target
market. McDonald's contain 35,000 of branches all over world then proper distribution network
is needed.
Product differentiation: McDonald's have to contain large variety of product so that
sometimes person get bored than that individual can try some other because McDonald’s is
providing huge variety of product to its customer in hygienic manner. Therefore, with help of
product differentiation customer will not switch on other brands because McDonald's itself
contain of variety of product at all outlets.
TASK 3
3.1
Sustain competitive advantage is helpful to maintain and improve business position in the
marketplace (Kim, Jeon and Jones, 2012). It assists McDonald's that their business survive
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against competition in different nation. In this context, they need to emphasize on resources and
capabilities of the firm that helps to achieve competitive advantages. It is helps cited firm to
make good image and strong position in global market. With the help of competitive advantage
organization can easily achieve their long term goals of enterprise. It is done when McDonald
deliver same benefits as competitors offer. In the context, below are the such ways through
chosen business can sustain competitive advantages: Lower cost advantages: It will give opportunities to cited business to gain competitive
advantage through reducing cost of the product than competitors (Kruglanski and
Higgins, 2013). McDonald can provide low price of McAloo in Australia market so that
they can develop their product in new market. If they offer product low price than
competitors, they can attract potential customers in new market. Thus, they will be able
to operate new functions at different place easily. It is helps to achieve competitive
advantage of the firm in Australian market.
 Product differentiation: McAloo of McDonald only provides in Indian marketplace.
Taste of the product is different for every individual in various nation (Lagarde, 2012).
Thus, organization can offer differentiation in existing product that McAloo in Australia.
Enterprise need to know about perception of Australian customers towards the products
that they introduce. With the help of this, they will be able to gain competitive advantage
in new market.
3.2
Distribution channel focus on product to making it in adequate quantity which help to
take decisions at place. It can be done through various ways by McDonald which satisfy
customers needs and wants. In this context, organization should use distribution channel which
are convenience to customers (Lee and Hoffman, 2014). There are different types of distribution
channel which could be used by cited firm, are as follows:
 Intensive distribution: In intensive distribution, McDonald can establishes different
outlets within the country. Thus, customers can easily access through anywhere where
they are convenience. In this context, organization can identify where they need to grow
more. Similarly, where cited firm has more risk to introduce new product development
(Lefebvre, 2012).
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 Selective distribution: According to selective distribution, McDonald need to select and
offer their product in few outlets. With the help of this strategy, they can easily
understand customers and their response towards the product. Chosen business use
selective distribution because through it they can find risk for establishing product in
different area of country. In this context, firm has and advantage that they can choose
most appropriate and best-performing outlets from various alternatives. Selective
distribution strategy is used to focusing on selling efforts from few outlets (Luca and
Suggs, 2013).
 Exclusive distribution: Exclusive distribution is a strategy through McDonald can use to
establish their product in specific geographical area. When organization distribute brand
in only one or two outlets, it is said that they using exclusive distribution. This is
distribution method which seek high reputable image front of customers (Chand, S.,
2016).
From the above aspects McDonald can used selective distribution strategy. In this, they
should selects few outlets in Australia market.
3.3
Pricing is a way through organization can attract various customers at a time. Mainly
customers concentrate on high quality products and services at very low prices. In this respect,
McDonald establish their new product McAloo in Australia market. For this, they should
determine price through they can convince to customers easily (Marks, Wentland and O'Connor,
2014). There are various types of pricing strategies which can be used by McDonald are as
follows: Premium pricing strategy: In this pricing, McDonald can establishes high price than the
competitors. It is beneficial to organization when they are determined something unique
in the products and services. It is good strategy to entering into new market to maximize
the revenue of firm. Penetration pricing strategy: Penetration pricing strategy is design to capture market
share through entering into new place with low price. With the help of this pricing,
McDonald can attract potential customers of competitors (Meghraoui and Benabou,
2014). This strategy create loss for the firm at starting level after then it generates word-
of-mouth and awareness in market.
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 Skimming pricing strategy: Organization who have competitive advantage can enter into
the market with adopting price skimming strategy (Richards, 2016). In this strategy
McDonald can offer alternative of same products and services as competitors.
From the above pricing strategies McDonald should adopt penetration pricing strategy
through they can attract customers by offering low price for their product. This would be the best
strategy for cited firm which they can adopt for promoting their product in Australia market.
3.4
In order to achieve marketing objectives, promotional activities play vital role (Mohr,
2015). It is focus on strategies of McDonald which can be used to provide information about the
products to customers. In respect to this, below are the activities can be done by chosen business:
 Advertising: In advertisement McDonald can use sources such as television and
newspapers through they able convey message to customers for promoting their product
in new market. Through advertising, cited firm integrates pricing scheme, place strategy
and locations, etc. to ensure that marketing strategy work together to achieve common
objectives (Pike, 2015).
 Personal selling: With the help of personal selling salespeople of McDonald use their
skills to influence customer for buying product. They will be use pricing strategy to
convince customers easily through personal. The organization can use various other
tactics which gives specific benefits of a product such as free delivery and unique
features, etc.
 Sales promotion: McDonald can promote their sales to make more attractive products
through advertising, promotion and other aspects of integrated marketing communication.
This will assist to the business as they can open new store location and online distribution
which promote the product in new market (Rutten, Ebbert and Dearing, 2014).
3.5
Mainly four elements of marketing mix are applied in order to determined a product or
service. However, additional set of elements that are involved in marketing mix are equally
important. It enables organizations like McDonald's to focus on specific areas and they are as
follows:
Process: This can be determined as the way by which product reaches customers. As per
the case, there are different means through which cited firm make their products and services
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reach out their service users (Savell, Gilmore and Rosengren, 2015). With this respect, the
process does not just end up with delivering the product but it also includes after sales services.
The process used by McDonald's is highly affective and they also focus on after sales service.
People: They are the employees of the firm. Further. They are the one present the
services to customers. In this context, it is important to have skilful and knowledgeable worker
so that high quality services can be provided. Cited firm provide their customers with training so
that they understand their roles and act accordingly with the help of which high quality services
can be provided (Lagarde, 2012).
Physical evidence: It is the environment that is provided to customers. McDonald's make
sure that all the services the attainment within the physical store are proper. This is done in order
to make sure that service users feel free and enjoy the services provided by McDonald's.
TASK 4
4.1
As we discussed, there would be two type of segments can be done in McDonald through
enterprise can develop marketing planning:
 Demographic segmentation: In respect to this, below are the market segment considered
in McDonald:
Marketing mix Marketing planning
Product McDonald conduct marketing research through they understand
requirement of customers in the market of Australia. After this research,
the firm launch their new product in market (Lefebvre, 2012).
Price For determine pricing, cited firm take penetration pricing strategy at
initial level. In this context, this strategy helps to them to attract
customers of chosen market easily.
Place New product McAloo burger will be distributed at different outlets of
Australia market. This will assist to know the demand of customers
from the different places.
Promotion For promotion of the product, cited firm use advertising, personal
selling and sales promotion.
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 Behavioral segmentation: In behavioural segment marketing mix would be used by
McDonald in following context:
Marketing mix Marketing planning
Product McAloo burger is new for Australia market as it would be prefer by the
young people (Luca and Suggs, 2013).
Price In this segmentation, McDonald would be used penetration pricing strategy.
Place Chosen enterprise distribute their product in different outlets of Australia
market.
Promotion The promotional strategy which would be used by McDonald same as
demographic segmentation such as advertisement, personal selling and sales
promotion.
4.2
Below given are the difference between products and services of McDonald:
 Product is a material that can be seen, touched or felt by the customers (Mohr, 2015).
However, services are facilities and benefits which are given by cited firm and it cannot
be seen or touch. For example McDonald provide Mcspicy and BigSpicy Chicken Wrap,
etc. and they offer products which has good quality and values.
 McDonald mainly focus on develop their relations with customers by offering them
product which satisfy their needs and wants. As compare to this, cited firm need to
provide effective services so that customers attract towards the business. For instance,
they provide product in packed wrapper which is attractive in looking (Rutten, Ebbert and
Dearing, 2014).
 Customers can be determine the value of products that offer by the chosen business
through advertisement, word-of-mouth and many more things. However, services cannot
be recognize without actually using it.
 In McDonald products can be in separate for all customers. As comparing to this, services
method are differs from person to person.
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 Products are perishable as it can be kept for long time whereas, services cannot be sustain
for lengthy time (Savell, Gilmore and Rosengren, 2015). For example, bread which is
used by McDonald is kept at least 3 to 4 days but services which they offer to customers
used at a time.
4.3
At both domestic and international level, McDonald's face different set of issues and
benefits. Below given difference between international and domestic marketing:
Domestic marketing International marketing
This is a type of process in which transfer of
good and services take place within boundaries
of country.
In this process the transaction take place
among different countries.
The risk involved is low. The risk involved in this marketing is high.
There few organizations that provide their
customers with similar products and services in
domestic marketing (Lee and Hoffman, 2014).
High competition as they are many
organizations that provided their customers
with similar goods and services.
The financial resource required is low. This side, the financial resources required is
high compared with domestic marketing.
It deals with single market It deals with different markets around the
world.
The rules and regulation followed are not much
bounded by government.
There are many laws and policies. Moreover,
different countries have diverse set of policies
that has to be considered and followed by
McDonald's.
The target audience in this marketing are
similar.
International marketing deals with different
type of customers and their preference also
changes time to time (Marks, Wentland and
O'Connor, 2014).
Firm do not need to make many changes in the
promotional strategies.
Frequent changes in the promotional strategies
need to be made so that competitive advantage
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can be attained.
CONCLUSION
There are different type of marketing element adopted among which environment analysis
help the firm to identify where they stand. It becomes easy to understand the areas in
which they need improvement. Further, employees are the face of organization and so it is
important for the firm to provide them with proper training so that they can understand
their customers and high quality services can be provided. In order to establish a new
product, one of the best strategies that can be adopted is to provide the product at low price
but at high quality. Price and quality play vital role in developing positive perception
among customers mind. Lastly, market research should be conducted before introducing
any product as it helps to identify the taste and preference of customers.
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