Analysis of McDonald's Marketing Strategies: A Comprehensive Report

This report provides a comprehensive analysis of McDonald's marketing strategies, starting with an introduction to marketing principles and their application in the fast-food industry. It delves into the elements of McDonald's marketing process, including market research, strategy development, marketing mix, and implementation. The report explores the benefits and costs of a marketing orientation, examining both micro and macro environmental factors that influence McDonald's decision-making. It then analyzes segmentation criteria, targeting strategies for new spicy burgers, and the impact of buying behavior on marketing activities. The report also covers positioning strategies, product development for competitive advantage, distribution, pricing, and promotional activities. Finally, it examines the marketing mix for different consumer segments and contrasts marketing to businesses versus consumers, as well as international versus domestic marketing, concluding with a summary of key findings and recommendations.

Marketing Principles
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TABLE OF CONTENTS
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................4
1.1 Elements of McDonald's marketing process .........................................................................4
1.2 Benefits and cost of marketing orientation............................................................................4
Task 2...............................................................................................................................................5
2.1 Macro and micro environmental factors affecting McDonald's decision making ................5
2.2 Segmentation criteria for McDonald's...................................................................................6
2.3 Targeting strategies for McDonald's new spicy burgers .......................................................7
2.4 Affects of buying behaviour on marketing activities of McDonald's ...................................7
2.5 New positioning strategy for McDonald's new spicy burger ................................................8
Task 3 ..............................................................................................................................................8
3.1 Developments of products at McDonald's to gain sustainable competitive advantage ........8
3.2 McDonald's distribution strategy...........................................................................................9
3.3 McDonald's pricing strategy .................................................................................................9
3.4 Promotional activities used by McDonald's........................................................................10
Task 4 ............................................................................................................................................10
4.1 Marketing mix for two different segments of consumer.....................................................10
4.2 Difference between marketing products to business and to customers...............................12
4.3 Difference between international marketing and domestic marketing ...............................12
Conclusion.....................................................................................................................................13
References......................................................................................................................................14
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INTRODUCTION
Nowadays, marketing of products and services has become an essential element for the
success of businesses. Further, it can also be stated that organizations nowadays use various tools
and techniques of marketing to create awareness about their products and services among people
in the market. Marketing principles act as a guideline for businesses in carrying our various
marketing activities (Dooley and Iverson, 2012). Along with this, these also help firms to
increase their sales and profitability. Fast food industry can be termed as one of the leading and
growing industries of the world. The present study is based on McDonald's which is one of the
major players in this industry and giving tough competition to other players such as Burger King
and Subway (McDonald's UK, 2016). This study shows various micro and macro environmental
factors which affect decision making process of McDonald's. In addition to this, it also highlights
how behaviour of buyer affects marketing activities of the organization.
TASK 1
1.1 Elements of McDonald's marketing process
Marketing can be defined as a process in which businesses develop their brand image
among people in the market by meeting their needs and demands (Henley, Raffi and Caemmerer,
2011). In the modern era, marketing has become an important part of businesses such as
McDonald's. In order to gain advantage over other market players, organization is required to
attract more and more people. This can be possible with the help of making them aware about the
benefits associated with the products or services. Elements of McDonald's marketing process are
explained below as:
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 Market Research- Market research is the first and most important element of
organization's marketing process (Fillis, 2010). It can be stated that before developing
any strategy or product, research is carried out by McDonald's to identify the changing
need and demand of all its customers. Adequate research also supports in determining the
fact that what tools and techniques of marketing will be more effective. Strategy- Once McDonald's gets clear about the need and demand of customers, then it
starts developing strategies which can help in attracting target customers and achieving
higher sales. At the time of developing strategy, organization defines its marketing goals
and objectives. Developing marketing mix- It is also an important stage in the entire process of
marketing (French and Russell, 2015). In this stage, brand decides its four P's which are
product, price, place and promotion. Furthermore, with the help of effective marketing
mix, it is able to attract customers and increase its sales.
 Implementation of the plan- It is the last stage in marketing process of McDonald's in
which all the developed action plans or strategies are implemented to achieve marketing
goals and objectives.
1.2 Benefits and cost of marketing orientation
Marketing orientation is defined as the process in which business enterprise manufactures
and sales products which satisfy need and demand of customers in the best possible manner
(Korotkov, Occhiocupo and Simkin, 2013). It can be also explained that while using such kind of
approach, businesses such as McDonald's have several kinds of benefits. One of the major
advantages is that it helps organization in getting high degree of customer satisfaction. By
delivering products and services as per the need of customers, McDonald's is also able to
enhance degree of its customer loyalty. Other benefit of marketing orientation is that it helps
McDonald's to carry out more focused production. In order to survive in the marketplace and
earn adequate profits, it is required by the organization to respond back quickly to the changing
need and demand of people in the market. Furthermore, with the help of market oriented
approach, McDonald's is also able to gain competitive advantage over other organizations
present in the market. On the other side of this, it can also be explained that marketing
orientation supports in upgrading the quality and features of products more quickly (Lingelbach,
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Patino and Pitta, 2012). However, it can be argued that McDonald's is required to bear additional
cost while using this approach. Huge amount for managing human, financial as well as
technological resources is required in order to carry out market research. Furthermore, up-
gradation in products and services at regular intervals also increases the overall cost of
organization.
TASK 2
2.1 Macro and micro environmental factors affecting McDonald's decision making
McDonald's is a global brand which carries out its operations in many countries of the
world. Therefore, while making any kind of decision, brand is required to take care of various
micro and macro environmental factors which directly or indirectly affect its decision (Çinar,
2014). Factors along with their impacts are discussed below as: Macro environment factors- It consists of factors such as political, economic,
environmental, legal, social, technological etc. which affect decision making process of
McDonald's. For instance: due to changes in health and hygiene policy of government,
business is required to make modifications in its existing plans and strategies (Tapp and
Spotswood, 2013). At the time of making decision related to pricing of its products,
organization is required to consider economic condition of country where it is operating.
For example: it cannot increase prices of its products during recession as it will affect
sales and profitability in negative terms. On the other side of this, while making decision
regarding products and strategies, McDonald's needs to take care of social factors such as
income level, changing need and demand of people in the market etc. Along with this,
use of highly advanced and upgraded technology supports business in improving its
overall performance and efficiency (Jafari, 2013). McDonald's is also required to address
laws and regulations related to the safety of environment at the time of operating at the
global level. Other than this, legal factors such as labor and employment related laws are
also required to be taken into consideration at the time of making decision.
 Micro environment- Along with macro environmental factors, organization's decision
making also gets affected by micro environmental factors. During the process of decision
making, McDonald's needs to ensure the fact that its decision does not have any kind of
negative impact on all its workers. In order to grow and earn adequate profit in a long
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run, McDonald's is required to develop good and long term relationship with all its
suppliers. This means that at the time of making decisions, brand is required to take care
of expectations of all its major suppliers (Kotler and Armstrong, 2014). As per the porter
five force model, buyer power is high for McDonald's as there are many alternatives
available to the customers. In addition to this, threat of competition and supplier’s
bargaining power are also high for McDonald's. With this, threat of new entry is low
because capital required to operate on such a big level is very high. At last, threat of
substitute has become high for McDonald's as nowadays, there are various substitutes
available in the market.
2.2 Segmentation criteria for McDonald's
Segmentation is termed as the process in which businesses divide large homogeneous
market into different segments which consist of people having same needs (Blythe, 2013).
Different segmentation criteria which can be used by McDonald's are mentioned below as:
 Demographic segmentation: It is one of the most effective and common criteria which is
used by businesses (Donovan and Henley, 2010). McDonald's can divide its entire market
segment on the basis of various demographic variable such occupation, gender, income
level, age etc. Further, it can be also stated that McDonald's can segment its market on
the basis of occupation. This means all its strategies and action plan can be developed to
target students, service class people, teachers etc.
 Geographic segmentation- According to this market segmentation, McDonald's can
divide its entire market on the basis of different geographical location. The brand
operates in many countries of the world and therefore, it can provide different products to
meet needs of people living in different geographical location (Bose, 2010). For instance
Indian's eat more spicy food and therefore at the time of operating in Indian it can offer
spicy hamburgers to customer.
2.3 Targeting strategies for McDonald's new spicy burgers
Targeting strategies helps businesses to attract target customers from market in order to
gain higher sales and profits. Further, there are three main types of targeting strategies which can
be used by organizations (Valette-Florence, Guizani and Merunka, 2011). The strategies are
differentiated, undifferentiated and concentrated targeting strategies. All the above stated
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strategies differ from each other and have their own set of advantages and disadvantages. For
McDonald's new range of products which is spicy burgers, it can use concentrated strategy for
targeting. In the entire market of fast food industry there are only few people which are having
specific demand of having more spicy burgers. At the time of using this strategy, the brand will
be required to adequate promotional messages which can be capable enough to communicate all
those benefits which is required by the able stated market segment. This means at the time of
promoting its products, McDonald's is required to position its new burgers as spicy and with a
great taste. This will help in attracting new customers and will make the new product successful
in market.
2.4 Affects of buying behaviour on marketing activities of McDonald's
The competition among businesses in fast food industry is getting more and more intense.
Organizations such as McDonald's are required to understand buyer behaviour in order to survive
in market and earn adequate profits. In addition to this, it consists of various set of activities
which encourages individuals to buy a particular product or service. McDonald's is required to
develop all its marketing activities on the basis of behaviour of people in market. For instance if
people are looking forward for healthier food products then the brand is required to advertise all
its products as healthy (Wilmshurst and Mackay, 2010). In such situations McDonald's cannot
advertise itself as low price hamburger seller in market. This will have adverse impact on its
overall sales and profitability. On the other side of this, it can be also argued that McDonald's is
required to change all its marketing activities on the basis of changes in behaviour of all its
consumers. If people are getting more attracted with modern marketing tools such as social
media and emails then the brand is required to use these tools and techniques. Carrying out
marketing activities as per the behaviour of people in market will develop sense of satisfaction
among customers. Along with this, it will also provide people with clear reason regarding why
they should prefer products offered by McDonald's over its competitors such as Burger King and
Subway.
2.5 New positioning strategy for McDonald's new spicy burger
Positioning can be defined as the way in which companies place itself or its products in
market (Huang and Sarigöllü, 2012). It is important for businesses to position themselves
effectively as it helps in understanding the need and demand of all people in market. It can be
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also suggested that at the time of developing positioning strategy, McDonald's is required to take
care of various factors such as external business environment, customer needs, market
competition etc. The new range of burgers which are spicy and consists of great taste can be
positioned by using the attributes of product. There is very small segment of people which is
seeking for more spicy burgers. It can be also stated that McDonald's has always positioned itself
as a low price burger provider. It prices are very low as compared to all its major competitors
(Luca and Suggs, 2010). Now in order to meet and satisfy needs of the above stated small market
segment, it can be position its new product as very spicy. This will support in increasing sales,
profitability and customer base of the brand. Along with this, it will also aid in providing more
opportunities for growth and development.
TASK 3
3.1 Developments of products at McDonald's to gain sustainable competitive advantage
Competitive advantage helps businesses to attract new customers and retain old ones in
more effective manner. McDonald's has always faced intense competition from all its rivals such
as Subway and Burger King (Shimp and Andrews, 2013). It can be also explained that before
developing new products, McDonald's carry out intense market research to understand changing
need and demand of people in the market. Other than this, it has always ensured the fact that the
qualities and features of all its products differ from all its major competitors. This encourages
people in market to consume products offered by McDonald's. Its stages of new product
development focus on three major elements which are cost, quality and differentiation. All these
features helps in attracting more and more customers (Dooley and Iverson, 2012). In addition to
this, the brand has always tried to offer at low prices as compared to what other market players
are offering. Low price and quality products can be termed as some key factors which has
contributed in the success of McDonald's. Businesses cannot survive in long run without having
competitive advantage over other firms operating in the market. On the other hand, the brand has
always encouraged suggestions and opinions from all its employees before developing any kind
of new product or service (Lingelbach, Patino and Pitta, 2012). McDonald's has sustained its
competitive advantage with the help of its skilled workforce, advanced technology and
innovative products.
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3.2 McDonald's distribution strategy
The distribution strategy of McDonald's can be termed as very good and result oriented
strategy. Further, effective strategy is the one where products or services are delivered to
customers at right place and on right time (Tapp and Spotswood, 2013). McDonald's distributes
its products with the help of its own physical and online outlets. The organization has established
a transparent process of manufacturing where products are being manufactured and then
distributed to customers from all its physical outlets. McDonald's is having strong share in all
markets where it is operating and its distribution strategy can be considered as one of the main
factor behind the same. The brand has selected appropriate locations for all its outlets so that
customers do not have any kind of difficulty in purchasing its products (Korotkov, Occhiocupo,
and Simkin, 2013). In every country where it is operating, McDonald's have set up its stores in
order to make it very convenient for customers. The brand is not having any kind of distribution
centers or factories. Along with this, transparent supply chain process is the onw which has
helped in attracting more and more customers. The brand is having more than 10 suppliers which
provides various kinds of items and ingredients to McDonald's.
3.3 McDonald's pricing strategy
To a great extent, pricing strategy adopted by firms have impact on their sales and
profitability. People in the market wants McDonald's to deliver high quality products and
services at low or convenient prices. Since, the brand has started its operations, it has always
followed low price strategy in its operations (Fillis, 2010). McDonald's always seeks for ways
thorough which it can low down its cost of production in order to sale products at prices lower
than what other market players are offering. Using effective supply chain, taking suggestions
from employee, use of high end technology are some ways which has been used by McDonald's.
The organization also follow the concept of price bundling in which several products are being
combined into a single comprehensive package (Donovan and Henley, 2010). Its common
packages includes fries and burgers along with soft drink or coffee. One of the main reason why
the brand is able to make profits even by selling products at low price is that its price bundling
encourages customers to buy more than one product. On the other side of this, the brand always
try to use innovative and upgraded technology in its production process. This helps in
manufacturing of quality and different products at low cost. McDonald's prices has always
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successful in attracting customers form different age segment and income group. People in the
market has never perceived products of McDonald's as of low quality because of their prices.
3.4 Promotional activities used by McDonald's
Promotion has become very important tool for businesses to create awareness about their
products and services. In order to communicate with customers and attract them there are various
techniques of promotion which has been used by McDonald's. The brand uses above the line
activities where different type of ads are being displayed on television, newspapers and other
magazines. At the time of carrying outs its advertisement and promotion, McDonald's has always
tried to ensure the fact that right message is delivered from right medium to right target market.
The organization places advertisement regarding its new products, offers and discounts on
various media. This enhances sales and profitability of McDonald's by attracting more and more
customers. The brand has also started to use internet as a tool to carry out promotion of its
products and services (Kotler and Armstrong, 2014). McDonald's has developed its official page
on Facebook and has also created its account on Twitter. Further, with the help of these social
networking sites the brand communicates the benefits associated with its products and services to
all people. Before carrying out promotional campaigns, McDonald's develops suitable messages
which can be helpful in attracting customers. The objective behind carrying out promotion is to
catch the attention of people and encourage them to buy the products. Internet has emerged as
one of the biggest tools for carrying out promotional activities in the 21st century. It is very cost
effective and result oriented platform which can take businesses to new heights of success
(French and Russell, 2015). Other than this, the brand also use some in house promotion
techniques such as offers, discounts and schemes. Variety of schemes are being launched by
McDonald's at regular intervals to increase purchase from people.
TASK 4
4.1 Marketing mix for two different segments of consumer
Marketing mix can be defined as integration of four different elements which are product,
price, place and promotion. The mix for two different segments of consumer is mentioned below
as:
Segment one: People with demand of more spicy burgers
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 Product- McDonald's can offer customers in these segments can with burgers which are
more spicy and consist of different taste. The technique of production will be completely
new and more focused.
 Price- McDonald's can charge high prices from customers in this target segment. This
will support in getting high degree of customer satisfaction. Along with this, people wont
have any kind of difficulty in paying high prices as the brand is satisfying their unique
and special needs.
 Place- In order to deliver products to customers in this segment the best suitable place for
McDonald's will be its own physical store. The brand is already using new technique to
manufacture its products and therefore it is not suitable to offer new products using
separate distribution channel. Promotion- Promotion is very important for businesses in order to make their new
products successful in market (Jafari, 2013). McDonald's can use both online and offline
sources of promotion to create awareness about its products. This includes advertisement
on television, newspaper along with social media and internet.
Segment one: People which are health concious
 Products- In order to satisfy the need of people in this market, McDonald's can produce
more healthy burger. This can be possible by using more healthy ingredients and less of
oil. The benefit of consuming these products is that it wont have any kind of negative
impact on the health of people who will be having it.
 Price- For this consumer market segment also, the brand can go for high price
strangulates. It can be stated that people which are conscious about their health seek for
quality and benefit of products rather than looking after its prices.
 Place- Products for people in this consumer segment can be delivered with the help of
both online and offline stores. This will make it very convenient for people to buy the
products. They wont have any kind of difficultly in finding new range of burgers and
buying the same.
 Promotion- McDonald's can carry out promotion of its new products on various areas
such as gym and health clubs. Other than this, ads can be displayed in health related
journals, books and magazines.
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4.2 Difference between marketing products to business and to customers
At the time of marketing products to customers businesses can take emotional factors into
consideration. On the other hand, such factors are not taken into account at the time of marketing
products to businesses (Çinar, 2014). Marketing activities for customers can be also termed as
product driven in terms of nature. Furthermore, main objective behind this is to increase the sales
and profitability of a business enterprise. The target market generally consists of large number of
people in marketing to consumer (Bose, 2010). Sales cycle which is an important part of
marketing is also very short. Consumer marketing can be defined as the processes of transfer for
good businesses to all potential customers in the marketplace. On the other hand, business
marketing is carried out for transaction of products from one organization to another. The
objective behind such kind of marketing is to enhance relationship between businesses rather
than making profits (Jobber and Ellis-Chadwick, 2012). The target market is very narrow and
business marketing consists of very long sales cycles. Entire process of selling can be also
considered as much more complex in marketing to businesses as compared to marketing to
consumers.
4.3 Difference between international marketing and domestic marketing
Domestic marketing
 Products are being promoted and
marketed within the domestic territory
of a nation.
 There are very fewer restrictions while
carrying out the process of domestic
marketing
 The interference of government is also
less in domestic marketing
 Such kind of marketing practices are
very less risky (Shimp and Andrews,
2013).
 Capital required for Domestic
marketing is also very low
International marketing
 Products are being promoted and
marketed in more than one country
(International marketing strategy,
2008).
 There are various trade barriers and
restrictions such as non tariff and tariff
barriers
 The interference of government is very
high in international marketing
 international marketing consists of high
risk
 high capital is required to carry out
international marketing of products and
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