Marketing Principles and Strategies: McDonald's Case Study Report

This report provides a comprehensive marketing analysis of McDonald's, examining various elements of its marketing process. It explores the benefits and costs of a marketing orientation, delving into the impact of micro and macro environmental factors on McDonald's marketing decisions. The report further investigates market segmentation criteria, target strategy selection, and the influence of buyer behavior in different buying situations. It proposes a new positioning for a selected product/service and discusses the development of products/services to sustain competitive advantages, distribution arrangements for customer convenience, and pricing strategies. The report also covers the integration of promotional activities and additional elements of the extended marketing mix. Finally, it recommends a marketing mix for different consumer market segments and highlights the differences in marketing products and services to businesses versus consumers, as well as domestic versus international marketing approaches, providing a well-rounded understanding of McDonald's marketing strategies.

MARKETING
PRINCIPLES

Table of Contents
INTRODUCTION......................................................................................................................1
TASK 1......................................................................................................................................1
AC 1.1 various elements of marketing process.....................................................................1
AC 1.2 Evaluation of benefits and costs of marketing orientation for McDonald................2
AC 2.1 Impact of Micro and Macro environmental factors on McDonald's marketing........3
decisions................................................................................................................................3
AC 2.2 Segmentation criteria available for McDonald.........................................................4
AC 2.3 Selection of a target strategy for McDonald.............................................................4
AC 2.4 Impact of buyer behaviour on McDonald's marketing activities in different buying
...............................................................................................................................................5
Situations...............................................................................................................................5
AC 2.5 Propose a new positioning for a selected product/service........................................5
AC 3.1 Development of products/services to sustain competitive advantages.....................6
AC 3.2 Arrangement of distribution to provide customer convenience................................6
AC 3.3 Setting the prices to reflect organization's objectives and market conditions...........7
AC 3.4 Integration of promotional activities to achieve marketing objectives.....................7
AC 3.5 Additional elements of extended marketing mix......................................................7
TASK 2......................................................................................................................................8
AC 4.1 plan and recommend marketing mix for different segments in consumer markets. .8
AC 4.2 Illustration of differences in marketing products and services to business rather
than consumer-......................................................................................................................9
AC 4.3 Differentiate between domestic marketing and international marketing-.................9
CONCLUSION........................................................................................................................11
REFERENCES.........................................................................................................................11

INTRODUCTION
Marketing is a process of communication between customers and organization to
bring consumer awareness about the offered products and services. Every organization is
required to follow some principles and guidelines while making marketing campaign to sell
products in the market. Marketing manager plays a vital role as they formulate market plan
and take necessary decisions. McDonald is world's largest fast food restaurants serving
million of customers in 119 countries with 36000 outlets across world. It was established in
the year 1940 in US and is headquartered in Oak Brook, Illinois, US. It is offering a wide
range of food products such as hamburgers, chicken, French fries, soft drinks, desserts,
milkshakes and other breakfast items.
In the present report, marketing analysis of McDonald's will be carried out in detail.
The report will explain marketing process, market segmentation, targeting and positioning
concept. Furthermore, various elements of extended marketing mix will also be analyzed. At
last, appropriate marketing approach will be recommended to McDonald on the basis of
findings and analysis. In addition to it, difference between domestic and international
marketing will be explained. It will help to develop an effective marketing strategy at the
global level.
TASK 1
AC 1.1 various elements of marketing process
Marketing process of McDonald encompasses a number of elements that are
described below:
Research: At the primary stage, when McDonald is considering to launch its product
into the new market than it will be the primarily need to conduct a market research
(Homburg, Kuester and Krohmer, 2013). In this, McDonald's needs to understand customer
needs so that business can identify the most appropriate medium to communicate with the
customers.
Strategy: After the research, McDonald is required to formulate strategy to beat its
competitors and achieve target market. Strategy must comply with the McDonald's mission
and vision statement.
Planning: An effective marketing plan will greatly contribute to achieve target market
and vice versa. McDonald's marketing department needs to develop a marketing plan through
sales forecasting, financial planning and best way of communication with the consumers

(Hair and Lukas, 2014). It is necessary for McDonald to develop a marketing plan which
contributes towards accomplishment of its strategic goals.
Monitoring and controlling: After the execution, marketing department must assure
that all the planned activities must be encountered from time to time. Thus, regular
monitoring of the actual performance with the standards helps to identify deviances and
control the adverse variances through taking remedial actions.
AC 1.2 Evaluation of benefits and costs of marketing orientation for McDonald
Marketing orientation: Looking at the present age, customer is primary focus of
McDonald's marketing functions. Marketing orientation is the process of delivering food
products and services as per consumer desires and their need (Rashid, 2013). It is an effective
way to get high level of consumer satisfaction.
Benefits of marketing orientation: Costs of marketing orientation:
Responding to demand: It enables
McDonald to fulfil consumer's requirement
continuously without the need of forecasting
(Denis and et.al., 2015). Moreover, it helps
to eliminate production of such products for
which demand does not exists.
Extensive and expensive: In order to
implement marketing orientation, it became
necessary for McDonald to invest huge
amount in marketing research so as to gauge
consumer needs. Services of private
marketing agency or firm may be require for
that purpose. Moreover, in-depth research
may take long time and monetary sources as
well.
Customer value: Fulfilling the consumer
needs regularly results in repeated purchasing
and builds customer value. In turn,
McDonald can gain high brand loyalty.
High cost: High production cost may incur to
increase customer value (Maraz and et.al.,
2015). For instance, high administration cost
may incur for maintaining McDonald's staff.
AC 2.1 Impact of Micro and Macro environmental factors on McDonald's marketing
decisions
Micro environment: Competitors, suppliers and customers are the part of micro
environment which influence McDonald's marketing decisions to a great extent. For
instance, if supplier provides their services at high prices than it will result in high fund

requirement and affect food prices as well (Ahmed, 2014). This in turn, marketing decisions
will be definitely affected. Further, to sustain fierce level of competition, McDonald's is
required to enhance its competitive position by using advanced technology under the
marketing mix. In addition, customers are the key for success. Henceforth, McDonald's is
required to use such marketing tools and techniques as per the customer needs otherwise;
McDonald cannot satisfy its target customers.
Micro environment analysis through porter's five forces: In Mcdonald, porter's five forces has
been analysed here as under:
Competition rivalry: In the fierce level of competition in fast food restaurant chain,
Mcdonald is facing difficulties due to high number of competitive firms, high aggressiveness
and low switching costs as well.
Bargaining power of customers: Customer have strong bargaining power due to large
number of fast food service providers and number of substitute available. They are free to
consumer goods at which services are available at lower rates.
Bargaining power of suppliers: Suppliers have weak force to influence Mcdonald's
operations. It is because large number of suppliers are available who can supply their services
to Mcdonald at lower rate, So that, suppliers are not in the position that they can affect
McDonald in a great extent.
Threat of substitutes: Large number of substitute food products are available in the
market such as food outlet available at local bakeries, artisanal food producers and also
customer can cook food at home.
Threats of new entrants: No barriers are exists for the entries of new businesses
which is a threat for Mcdonald. Moreover, moderate capital costs is exists in this business so
that there is always a fear that any firm can come and operate in the market. But still, brand
development costs is very high which is a plus point.
Macro environment: PESTLE analysis can be carried out to determine the impact of
macro factors, described below:
Political factors: All the government legislation, political rules, regulations and
policies need to be followed by all the firms. . In McDonald, global trade agreements, reform
tax policies and public health policies have a great impact.

Economic factors: Under this, US economic growth rate influenced McDonald
positively. On contrary to it, risky EU countries and slowdown Chinese economy are the
current threats for McDonald (Greenspan, 2015).
Social factors: Lifestyle, cultural differences, wealth gap, religion and food
consumptions habits also influenced McDonald's marketing decisions.
Technological factors: By using advanced technology, such as mobile devices lead to
enhance McDonald's sales and its customer base to a great extent. Further, business
automation and R&D are the opportunities available for McDonald.
Legal factors: Minimum wages act and health and safety regulations must be
followed by McDonald to fulfil legal requirements (Greenspan, 2015).
Environmental factors: Reduce garbage, wastage and environmental protection is the
responsibility of McDonald. Recycling wastage and scrap, using green house gas emission
are its preventives.
AC 2.2 Segmentation criteria available for McDonald
Market segmentation: It is the process of classifying market into distinct segments
on the basis of some factors such as demographic, behaviour and geographic factors. In the
present market, the need of consumer tends vary from each other while it is not possible for
McDonald to serve all the consumers needs. Henceforth, market segmentation is an effective
way to determine target market and serve target customers effectively.
Demographic segmentation: McDonald can classify its market on the basis of gender,
age, education level, income and other factors (Wedel and Kamakura, 2012). For instance,
market can be segmented in kids, family and students.
Geographic segmentation: McDonald operates in domestic and across international
boundaries. Under the geographical factors, it can be segregated on the basis of cultural
diversity. For instance, American culture highly prefer hamburger product while Chinese
prefer chicken food.
Behavioural segmentation: It classifies the market on the basis of buyer behaviour. In
context to McDonald, birthday parties and any other occasional parties are some of the basis
for segmentation.
Psycho-graphic segmentation: Customer life style, their interest, preferences, attitude
and opinion are the some of the basis for psycho-graphic segmentation (Menzly and Ozbas,

2010). For instance, in India, most of the citizens are vegetarian; therefore, McDonald
brought some new products such as veggie burger and Aloo tiki burger.
AC 2.3 Selection of a target strategy for McDonald
Targeting strategy: Selection of a specific group of customer to whom Mcdonald
wishes to sell their services is known as targeting strategy.
Types of targeting strategy:
Undifferentiated: In this, Mcdonald will offer services to mass population hence, it
wil servce large number of consumers without anty differentiation.
Differntiated: It is also called multi-segment targeting strategy in which Mcdonald
can serve two or more identified target customers through differnt brands.
Focus or Centered: In this, Mcdonald will choose a specific customers, known as
target customers and all the operations will be done so as to fulfil their needs and attain highb
satisfaction. Company wishes to build a strong and powerful position in this market place
without considering others.
As discussed earlier, there are various types of basis available for selecting target
market. In context to McDonald, undifferentiated targeting strategy has been implemented. In
this strategy, McDonald sees its entire market as a single customer and serves all the
consumers as per their wants. It is because McDonald's aim is to offer friendly environment
to every people without categorizing them. In this, McDonald is offering its fast food
products and services to all the consumers. The customer includes children, young people,
college going students, workers, families and others (Malhotra, Sivakumar and Zhu, 2009). It
is providing Happy Meal and other healthier products to kids which fulfil their nutritional
requirements. Moreover, it is serving wide range of products in its menu such as burgers,
sandwiches, salads, drinks, shakes, pancakes, toast, hash browns and others. Furthermore, to
get sustainable advantage in the Indian market, McDonald introduced new food products
which contain low cholesterol and helps in fulfilling the customer needs to a great extent
(Hollensen, 2015). Thus, it became clear that McDonald is regularly focusing on serving all
the customers by offering varied range of products that helps in accomplishing their wants.
AC 2.4 Impact of buyer behaviour on McDonald's marketing activities in different buying
Situations
Model of buyer behaviour:
Stimulus response model: It assess the impact of marketing and other stimuli on the
buyer behaviour. Under the marketing factors, product, price, place and promotion impacts

will be analysed. This factors are udner the control of McDonald. While, other stimuli
comprises economic, political, social and technological factors which can not be control by
Mcdonald.
Factors involved in buyer behaviour: Cultural, social, personal and psychological
factors impact buyer behaviour at the time of decision-making process. McDonald operates in
large number of countries and each country have different culture. For instance, in Australia,
it is well-known for non-vegetarian whereas in India, most of the people prefer vegetarian
food. Further, personal factors such as likes, preferences, income and price sensitivity also
impact consumer buying decisions. On the other hand, reference group impacts are the type
of scial factor.
Buyer decision making process: At the initial stage, consumer determine their need
and then they search information from the market. It helps to assess number of alternatives
available to fulfil their desires. Effective evaluation and analysis of it helps to take purchase
decisions. At the end, buyer make evaluation after consuming the products and services that
they accomplish their needs or not so that modification can be done in future.
Buying behaviour and buying situation: It consists of people's attitude, preferences,
intention and other elements that affect consumer buyer behaviour. However, buying
situation refers to the situation or surroundings in which users will get information about the
products and services that are offered by McDonald. McDonald needs to encounter the
changes in buyer behaviour in different buying situations so as to change marketing activities
accordingly.
Straight buying situation: In this situation, consumers are very familiar with the
McDonald's food products. They know all the information about the products henceforth,
they buy the product without any modification. In this situation, McDonald's has to assure the
availability of goods when demanded by the consumers (Walker, Keane and Burke, 2010).
They does not need to spent very much time in providing knowldge and advertising the
product in the front of consumers.
Modified Rebuy situation: In this, customers may demand some modification. It may
be regarding product features, packaging, bargained prices, new place and others. Henceforth,
McDonald has to ensure that all the modifications have been done to meet customer demand
effectively.

AC 2.5 Propose a new positioning for a selected product/service
Positioning: It refers to the process through which product image can be established
in the consumer's mind. It enable firms to make product different from the competitors and
compete effectively in the market. The aim of position is to occupy a large market share and
enhance competitive strength (Segmentation, targeting and positioning model of Mcdonalds,
2010).
In relation to McDonald, cost positioning strategy can be implemented. As per this
strategy, McDonald is trying to providing low cost services to the customers. Through cutting
food cost, McDonald is able to offer services at low cost. Reasonable prices and discount
rates makes food affordable for different level of income group (Wong and Wu, 2013).
McDonald is using modern and latest technology and advanced equipments for cost
reduction. Computer operated machinery enable McDonald to employ less number of
workers so that cost can be highly reduced. Along with this, speed positioning also can be use
which aims at providing quicker food delivery to the customers (Yang and Sung, 2010).
Online delivery provide an great assistance to deliver quicker services results in reducing
consumers waiting time. This in turn, McDonald is able to serve a large customer base and
strengthen the competitive position.
AC 3.1 Development of products/services to sustain competitive advantages
In the present age, market is highly competitive henceforth, it seems to be necessary
top develop new products and services as per consumer need. Through extending the existing
product line, McDonald will be able to get sustainable advantages within the industry. New
product development and diversifying the existing products are one of the most important
way to develop products and services in McDonald. Moreover, R&D program can be
organised through which McDonald will be able to determine new products and services that
can be developed to meet customer expectations. Furthermore, marketing research helps to
track changes in customer desires and identify innovations that can be made in existed
products (Gustavsson and et.al., 2011). With the help of this, McDonald can evaluate and
examine customer need and take decisions that which kind of needs will be fulfil by
McDonald. Through new product development and product innovations, McDonald will be
able to serve a large customer base and get high sales revenue and profitability as well.
Product life cycle: At first, when product introduced in the market, it is called
introduction stage. Very few person are aware about the product offerings at this stage. There
after, when customer have knowledge from the marketing plan than it is called growth stage.

At this stage, sales will increase at very faster rate. After that, Maturity stage comes which
becomes it necessary for the Mcdonald to do some modification in the production process. At
last, decline stage prevails in which consumer switch to buy this product and use new
products.
Ansoff’s NPD matrix: In this, market development, diversification, market penetration
and product development are four strategies available to McDonald. In market development,
Mcdonald can serve different marketing segments through market segmenting and creating
an effective marketing mix. Diversification entails that McDonald can enter in new market
and offer their services, consider more risky. Market penetration consist of developing new
market strategy through selling existing products. However, product development indicates
that McDonald can enhance their customer base through developing new product.
AC 3.2 Arrangement of distribution to provide customer convenience
Distribution: It is the process of offering services to the customer spread at wider
geographical place. Without distribution services, McDonald will not be able to provide
services in the front of customers.
Types of distribution:
Direct: It means that services will be directly offered to the customers without
involvement of mediators. It is more expensive because McDonald need to make a huge
investment in warehouse, logistic systems and large number of staff. On the other hand, it
consumer shorter period because of direct services.
Indirect: In this, mediators will be involves to offer services to the customers. It
consume lot of time but still, less expensive approach.
Intensive distribution channel: In this, product will be purchase from the
manufacturer or wholesalers and distributed to the target consumers. In this distribution,
McDonald can provide their products at large geographical place.
Exclusive distribution: In this, firms can sell their products who have franchise
agreements with them. In context to McDonald, it is providing franchisee to the fast food
retailer and sell their products to them (Warren, 2013). However, these franchisee gained
firms avail their services in the front of consumers.

Along with this, McDonald also providing online deliveries which make customer
able to get quicker food services. Through using internet on mobile devices, users became
more able to enjoy tasty food services on a single click.
AC 3.3 Setting the prices to reflect organization's objectives and market conditions
Prices are the charges or consideration of offered products and services by McDonald.
In context to McDonald, prices can be set out below:
Price strategies:
Cost plus pricing: In this, McDonald can determine their product costs and add an
appropriate mark-up in it. It will helps to ensure profitability margin in the business. It can be
determined as under:
Selling price = costs per unit + mark-up profit percentage
= 100+30% = 130
Competitive pricing: In this, McDonald is setting their product prices through
considering their competitor's product prices. It is because in the present fierce level of
competition, if competitor provide food at lower rate than it will reduce McDonald's
customer base (Harnack and et.al., 2008). On the other hand, if McDonald's provide services
at lower rates than competitors, than it may lead to reduce profit margin. Henceforth, prices
can be set out through considering prices that are offering by McDonald's competitors such as
Chipotle, Starbucks, Subway and Panera.
Price skimming: This pricing policy can be adopted for any innovated and new
product which are not offering by McDonald's competitor. In this case, McDonald can charge
high or premium prices by adding some new features which make product different than
others.
AC 3.4 Integration of promotional activities to achieve marketing objectives
Promotion is one of the most vital element of marketing mix in McDonald. Its main
aims is to attract large number of customers to the organization. In context to McDonald, its
promotional campaign includes extensive advertisement campaign. There are various ways
use to advertisement that are television, radio and newspapers (Smith and Foxcroft, 2009).
Moreover, online operation helps to enlarge its existing customer base through providing
food deliveries on a single click. Furthermore, social media and print media are some of the
effective way to prompt McDonald sales to a great extent. In addition to it, combo offers and

gift vouchers provide huge assistance to enhances its existing sales and profitability as well.
Furthermore, it make use of billboards and sponsors sporting events in FIFA world cup and
Olympic games that lead to enhance customer knowledge about offered products and services
by McDonald.
Above the line promotion: In this, McDonald can use product, price, place and
promotion to create an effective marketing plan. It will helps increase revenues and
profitability as well.
Below the line promotion: It comprises personal selling, direct marketing, public
relationship, sales promotion and sponsorship. So that, public can be aware results in high
turnover and profitability margin.
AC 3.5 Additional elements of extended marketing mix
Traditional marketing mix has been extended by adding three more P's that are
illustrated below:
People: This elements covers all the staff members who are directly or indirectly
involved in service offering process to the consumers. All the personnel who are the part of
McDonald's sales operations are included in this element (Kushwaha and Agrawal, 2015). In
this context, McDonald need to recruit efficient, skilled and experienced workers who will
provide excellent services to people.
Process: It means the way that how product will be offer or presented by McDonald in
the front of consumers. Effective way of product offering will create a strong mindset for the
products and services. Describing all the features and elimination of customer complaints
should be done in the process elements.
Physical evidence: It is McDonald's internal managerial function that facilitates that
all the food products are properly arranged and placed at right place. So that, confusion will
not be arise and all the facility can be provided at time when demanded by consumers
(Kushwaha and Agrawal, 2015). Otherwise, any disarrangement may cause delay and lose of
customers as they may be interested to go at any other restaurant.