Marketing Principles: An Analysis of Unit 4 Concepts and Strategies

This report examines key marketing principles, focusing on segmentation, targeting, and positioning (STP), and the extended marketing mix. The report begins by defining the marketing function and its processes, emphasizing the importance of data collection and strategic planning. It then delves into the STP process, detailing how McDonald's segments its market geographically, demographically, and behaviorally, and how it targets specific customer groups such as kids, families, students, and working adults. Furthermore, the report analyzes the advantages and costs of a market-oriented approach, highlighting how McDonald's uses this approach to meet customer needs and gain a competitive advantage. The report also includes a PESTLE analysis to examine the micro and macro environmental factors affecting McDonald's, including political, economic, social, technological, and environmental influences. The report uses SWOT analysis to assess McDonald's internal strengths and weaknesses, as well as external opportunities and threats. Finally, the report concludes by summarizing the application of marketing principles and strategies in the context of McDonald's.

UNIT 4 MARKETING PRINCIPLES
SUBJECT NAME: MARKETING
PRINCIPLES
ASSIGNMENT NAME: MARKETING
PRINCIPLES
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TABLE OF CONTENT
TASK 1:...........................................................................................................................................3
LO 1: Understanding the notion as well as procedures of Marketing function...........................3
LO 2:............................................................................................................................................7
The notion of STP which stands for segmentation, targeting and positioning............................7
LO 3:..........................................................................................................................................15
Understanding of different element of extended marketing mix...............................................15
TASK 2:.........................................................................................................................................21
LO 4:..........................................................................................................................................21
Using marketing mix in distinct context....................................................................................21
Reference List................................................................................................................................25
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TASK 1:
LO 1: Understanding the notion as well as procedures of Marketing function
AC 1.1 Several components of marketing procedure
Marketing function is basically referred to be an administrative procedure in society that
includes individual and organisation. These two drive their wants and need by creation and
exchanging values with each other. Grönroos (2004, p. 102) stated that the marketing process
comprises of advertising, selling and delivering products and services to the consumers. The
process of a market of a company involves identification of potential opportunities in the
environment, development of strategies for effectively utilising the opportunities, formulating
marketing strategies and implementation of the strategies with marketing efforts.
The marketing products vary from marketing services provided by an organisation. The
staffs are involved in performing the services according to the requirement. According to
Czinkota & Ronkainen (2013, p. 42), there is various process in marketing. The first process
involves collection of quantitative and qualitative data and analysis of those data for
identification of potential market for the company's product. The data can be collected by survey,
questionnaire, audits, observations that were previously done. The next process involves
planning. In this phase, the strengths and weakness of the company, competitors, the culture of
the organisation and technological advancement are analysed to get an overall insight of the
organisation. The final process involves implementation of the plan.
Marketing is considered important for an organisation and for the successful running of the
business that depends on the dynamics of marketing. Viio and Grönroos (2014, p. 1090) opined
that marketing process is one of the tools for growth and development of an organisation. The
planning process includes 4Ps of marketing.
McDonald’s is one of the well-known companies in UK and they are developing their business
by following the proper marketing strategies. In their marketing plan, some important marketing
strategies are there like 7p’s of marketing, marketing mix and so on. By following these
marketing strategies, they can be main competitors of other companies. In addition to that, data
collection process will also be important marketing strategy for them because with help of this
the company can produce the product according to the demand of the consumer.
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Segmentation
This process is about the segmentation of customer’s market into various groups. All
these portions will act in a different way with respect to communication, promotion, pricing and
various other variables. It can be considered as the base for McDonald's to develop marketing
plans which will be more efficient and effective. The customer needs according to their segments
can be fulfilled by this process.
For example:
Type of Segmentation Criteria McDonald's Target Segment
Geographic  Density
 Regional
 Urban/rural
 Intentionally/domestically
Behavioural  Personality
 User status
 loyalty
 Benefits
 Very easy going
 Constant fast food eater
 Addicted loyal
 time efficient, cost benefits
Demographic  Gender
 Age
 Income
 Occupation
 Life cycle
 Male and females
 Between 8-40
 middle and low-income
 Students, employees
 Bachelor's, newly married, young
child
Targeting
Target market is the group of different customer's available in the market on which
McDonald's is aiming at. This can be considered as the first element of marketing. The targeted
group will likely to purchase the products and services of the company. Targeting can be of two
types i.e. primary and secondary. For McDonald's the primary target is kids and adults aged
between 5-30. Their secondary target will be the people ageing 30 and above.
For example:
Company's target market includes
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Kids: around 3 to 7 years. For them they are having happy meal offer (healthier choice)
and also giving free toys
Families: For Weekend outings, the company is having driven-thru, Mc delivery,
takeaways, happy meals.
Students: For primary, secondary and college students, they are offering student meals
and making the environment in such a way that it will be a hangout place for them
Working adults: For them they are having grab and go. Like 24-hour service, take away
etc.
AC 1.2 Evaluating the advantages along with the cost of marketing orientation with context
to McDonald's
Marketing orientation is considered a business model that aims to deliver products, which
are designed according to the needs of the customers. McDonald’s undertook the market
orientation approach for developing the products.
The decision is made according to the information obtained from the customers. The
information includes the needs and wants of the customers rather than what the business thinks
that the customer needs. According to Boso et al. (2013, p. 718), the market-oriented approach of
McDonald has needs to focuses on investing in the right direction and invest on the correct
service or products that are in demand. The market-oriented approach of McDonald's is to react
according to customer's needs. It is regarded as the best orientation and can be adopted by
McDonald's. Liozu and Hinterhuber (2013, p. 602) opined that the benefits of the market-
oriented approach are it focuses and meets the needs of customers and it expresses the perception
of marketing where the needs of the customers are the centre of all the activities.
McDonald's marketing orientation will include all the factors like financial, people and
structural cost of the system. This will help in determining the cost of marketing McDonald's
have to pay in order to attract the customer. McDonald’s spent 6% of its total expenditure in
marketing activities and channels against a profit of gradual development in their annual
revenue. The main purpose of marketing orientation is to attract the consumers. McDonald's
increases the market orientation, and their performance also increased in past few years.
By doing this, they gain a competitive advantage over others in the market, because their
products are more attracted and they are fulfilling the needs of the customer's. By doing this
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McDonald's retain its customer's and this helps in establishing their brand name. Due to high
demand, the sales rate increases and the profitability also increased.
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LO 2:
The notion of STP which stands for segmentation, targeting and positioning
AC 2.1 Micro and macro factors of environment using appropriate tools and techniques
The marketing environment is the external factors that affect the development process of
an organisation and in maintaining the relationship with customers. There is two type of
marketing environment, microenvironment and macro environment.
McDonald's is the largest food retailer in the world. There are 31000 restaurant serving people of
more than 118 countries. On conducting PESTLE analysis of McDonald's, it was found that
there are many opportunities and threats that need to be addressed for successfully running their
business in the global economy.
Micro-environmental Factors
The internal factors which can affect the organization is micro-environmental factors and
this can be easily understand by SWOT analysis.
 Strengths- The main strength of McDonald is their brand equality, which is worldwide.
Other important strengths of McDonald's are
I. the consistency of food
II. equality of brand- world wide
III. Fulfilling the needs of customers
IV. Successful items
V. Overseas market
 Weaknesses- some of the weaknesses are as follows
1. Quality and taste of products
2. weak development of market
3. slow in revenue and growth in expenditure
4. reducing the market share
 Opportunities- The opportunities for McDonald's are their expansion, which can be done
internally. Another thing is, if they will start expanding their business, because they are
currently serving only 1% population of the world. They can also open supermarkets in
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the joint ventures with many retailers. Their expansion can be done into the emerging
marketing countries like India and China. Threats- The major threat of McDonald's is the industry they are working in, that is over
stored. The competition is also high. The consumers are now becoming more health
conscious. Another major threat is the fluctuation in the foreign exchange rates, and the
economies of the countries.
Macro-environment Factors
Political Factors
The political factors are influence McDonald’s are the international trade agreements, the
reformation of tax and the emerging health policies. According to Yoo and MacDonald (2014, p.
25), all these are considered to be opportunities for expanding their business all over the world. It
will help to enhance the global supply chain. However, the health policies developed discourages
people to discontinue consume fast food. It can be considered as the threat.
The political condition of UK is affecting the business of the McDonald’s. If there is political
instability, then the market of the McDonald’s will be hampered.
Economic Factors
The economic factors of McDonald's are gradual growth of the economy, stable but the
risky economy and declining Chinese economy. Bynum et al. (2015, p. 255) stated that the
gradual growth of United States economy is considered to be opportunities as the American
market is the largest market all over the world. The current economic condition of United
Kingdom is a threat to the growth of McDonald's. Moreover, the Chinese economy also is a
concern in the growth and development of McDonald's in the Asian market.
The economic condition of UK is also affecting the business of McDonald’s. If the people has
enough money in hand, then McDonald’s can increase their income.
Social Factors
In regards to McDonald's, the social factors are the wide wealth gap, the adoption of the
healthy lifestyle and the cultural diversity. It can be seen that due to the wide gap in wealth,
McDonald's can specifically target its consumers that are the low income and medium income
households. It can improve the product mix to satisfy the needs of the diverse range of
customers. The healthy lifestyle poses a threat as people are opting healthier option rather than
fast foods. Many times the negative effects of the food served by McDonald's are being criticised
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by numerous people. Thus, the company needs to improve the health status of the foods
(Mcdonalds.co.uk, 2015).
The social problem also helps the company to develop the business of the company. The
preference of the consumer in UK is very much helpful to increase the business of the company.
Technological Factors
The success of McDonald's depends on the application of technological advancement. On
analysing the technological aspect by PESTLE analysis, it is found that there are certain issues
that need to be addressed. The issues involve the moderate level of R&D activity, the automation
in use of technology and increase in sales figure due to the widespread use of mobile phones.
Gillespie (2007, p. 124) stated that the three factors can be considered to be opportunities for
McDonald's that will help in enhancing the efficiency of the business. The company can use
automatic machines that will reduce the rate of errors caused due to manual work. McDonald's
can use mobile devices for advertising and can reach a number of people by the use of the
internet.
UK is one of the technology reached country so the company like McDonald’s can adopt
technology oriented production techniques in order to increase the volume of the product. It is
also helpful to increase the business of the company.
Environmental Factors
The environmental factors that affect the external environment of McDonald's are the rise
of interest rate, emphasis on the approach of using supportable business policies and modify the
climate. McDonald's can consider rising their corporate accountability by addressing the
environmental issues. The threats in this case are the change in climatic condition that affects the
working in farms because of which the supply chain gets affected.
In recent situation UK, government is much concerned about environmental problem of the
country. Therefore, the company like McDonald’s should use those technologies that help the
company to avoid hazardous production techniques.
Legal Factors
Every business needs to follow the certain legal framework that is imposed on the macro
environment. The legal factors that need to be addressed by McDonald's are the new wage level
in U.S., the regulatory framework of health policies in workplace and regulation in animal
welfare. McDonald's faces the crisis of minimum wage that increases the cost of products.
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Zalengera et al. (2014, p. 340) commented that the regulation on health policies could a potential
reason for decrease in revenue. McDonald needs to address the issues of animal welfare by
developing new policy.
The legal factors of UK are affecting the business of the company. McDonald’s production
process and the outlet should maintain the rules and regulation of the country otherwise, the
company will be in problem and their business will be hampered.
The analysis of McDonald shows that the company have the potential to grow. It needs to
address technological and legal issues that are potential threats to the company. McDonald needs
to improve the quality of product served by them to address the social issues and reach to a
number of people.
AC 2.2 Proposal of a segmentation criterion
Market Segmentation is the process where a large unit can be divided into various small
industries, which are also having the same characteristics. One market segment is completely
different from the other one. This process includes the individual firm who are having similar
interest and the opinion regarding the industry is also same. The market segmentation is basically
based on age group, gender, income of the individual, their occupation and marital status of the
person.
The segmentation is of 3 types. The first one is psycho graphic segmentation, which is
based on the lifestyle of an individual, their attitude, interest and the market values. The second
one is Behaviouristic segmentation which tells about the loyalty of the consumers towards
McDonald's. The last one is Geographic segmentation, which means the division of market into
different geographic areas.
McDonald has segmented its products all over the world based on three bases,
demographic segmentation, behavioural segmentation and psychographic segmentation. In the
demographic segmentation, McDonald offers product specifically for children, family or college
student. For children they have Happy Meals, for families, there are different outlets and meals
for takeovers. The company offers low price meals for students. According to García (2016, p.
160), in behavioural segmentation the company offers products according to occasions such as
birthday, parties, and Christmas time. In psychological segmentation, the products are designed
according to the lifestyle of the customers of that particular country.
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McDonald’s needs to design a product that is healthy in nature, low in cholesterol and high in
fibre and other nutrients. The company needs to implement price penetration strategy for
introducing the new product in the market. In this way, the company can accomplish the
objectives and increase their profit margin in near future.
AC 2.3 Target strategy in different market for product in McDonald’s
The target strategy by which McDOnald's can target their customers are undifferentiated
strategy, concentrated strategy and differentiated. The main strategy used by McDonald's is
undifferentiated strategy, where McDonald's decides to communicate to their consumers telling
the benefits of the products, by sending them some personal mails or messages to everyone. This
strategy is successful only when the product offered by McDonald's is easily available and at the
same time affordable. The product must give the benefit to all the customers. There are very few
organizations which can offer this and McDonald's is one of them.
Dibb and Simkin (2016, p. 251) stated that the target strategy that McDonald's can adopt
is demographic segmentation strategy with respect to age. The products need to be developed in
such as that they especially target children, youth and older people. McDonald's have a "Happy
meal" for children. However, the company needs to develop something innovate for older
people. The product needs to be easily chewable and digestible in nature. In UK market, the
demand for beef and ham is more thus; the product such as Hamburgers needs to be available all
the time. In India, there are people that prefer vegetarian products. Thus, products such as
McVeggie, McAloo Tikki and French fries need to be available all the time in the outlets. The
use of genetically modified organisms and crops can also be used to increase the nutrition value
of the products served in the restaurants.
AC 2.4 The effect of Behaviour of buyers on marketing activities of different buying
situation
The behaviour of the consumer can be affected by different marketing strategy, which
can affect the buying behaviour of the company. Some of the activities are as follows;
1. Need recognition- This is the activity, by which the customer is selecting or
learning about the product and the items offered by McDonald's. The company
must make sure that the product they are offering should be easily recognizable
by the consumers.
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2. Search of information- After the product is identified, the customer will search for
the product, benefits of the product, harm from the product and many other things.
3. Evaluation of Alternatives- This one is the major activity which can affect the
buying behaviour of the consumer. Because if he will get the same product, of
same price, but of higher quality, then he will purchase that product. McDonald's
have to make sure that the product they are offering is having the best quality and
can be easily affordable to all.
4. Purchase- After identifying all the things, the consumer will purchase the product
which is best suitable and cost effective for him.
5. Post purchase Behaviour- After buying the product, if that product is causing
harm or damage to the consumer, then he will give reviews which might affect the
sales rate of that product. The company have to make sure of that, the product
they are offering should not harm the consumers.
McDonald’s have analysed the behaviour of its customers and realised that the customers
are responsible for segmentation and do not take heed of market segmentation. The customers
are satisfied when the company is catering their needs. Thus, for gaining access to the market
share, the company needs offer products according to the needs of the customer and it is
important to perceive the cost of products that can provide value for money (Pick and Eisend,
2014, p. 190).
AC 2.5 New positioning for product/ service provided by McDonald’s
The positioning of the new product is very important element. This is the method or
technique, by which the company can identify the best way by which they can communicate to
their consumers. They should be able to target their customer's on their basis of needs, the
competitive pressure, most suitable communication available, various channels and carefully
crafted key and important messages.
McDonald's have altered their menu according to the demography. It has kept the depth
of product, width of product within a certain limitation. It has studied various aspects of different
markets and analysed the needs of the customers. In China, the menu is a blend of modified
items. It offered, "Mala grilled Chicken Sandwich" and "Mala Crispy Pork Sandwich. Another
variation is instead of French fries, corn is served. However, in India, many people prefer
vegetarian product rather than not vegetarian. Thus, McVeggie Burger, McAloo Tikki, Veg
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