Marketing Principles Report: Segmentation and Targeting

This report delves into the core principles of marketing, examining the marketing process and its various elements, including product, price, place, promotion, people, process, and physical evidence. It analyzes the benefits and costs of a marketing orientation, using McDonald's as a case study. The report explores segmentation, targeting, and positioning strategies, considering both macro and micro environmental factors. It proposes segmentation criteria for different markets and examines how buyer behavior influences marketing activities. Furthermore, it addresses the development of products for competitive advantage, distribution strategies, pricing, and promotional activities, with a focus on the extended marketing mix. The report also plans marketing mixes for consumer segments, highlighting differences between marketing products and services to businesses and consumers, and discussing the nuances of international versus domestic marketing.

University
Marketing principles
By
Date
Name
Lecturer’s name

MARKETING PRINCIPLES
Contents
Task 1:.........................................................................................................................................................3
LO1: Understand the concept and process of marketing..............................................................................3
1.1 Explain the various elements of the marketing process.....................................................................3
1.2 Evaluate the benefits and costs of a marketing orientation for McDonald’s......................................7
LO2: Be able to use the concepts of segmentation, targeting and positioning.............................................7
2.1 Show macro and micro environmental factors which influence marketing decisions........................7
2.2 Propose segmentation criteria to be used for products in different markets.....................................11
2.3 Choose a targeting strategy for a selected product/service...............................................................12
2.4 Demonstrate how buyer behavior affects marketing activities in different buying situations..........12
2.5 Propose new positioning for a selected product/service...................................................................13
LO3: Understand the individual elements of the extended marketing mix................................................14
3.1 Explain how products are developed to sustain competitive advantage...........................................14
3.2 Explain how distribution is arranged to provide customer convenience..........................................15
3.3 Explain how prices are set to reflect an organization's objectives and market conditions................15
3.4 Illustrate how promotional activity is integrated to achieve marketing objectives...........................16
3.5 Analyse the additional elements of the extended marketing mix.....................................................16
Task 2:.......................................................................................................................................................17
LO 4: Be able to use the marketing mix in different contexts....................................................................17
4.1 Plan marketing mixes for two different segments in consumer markets..........................................17
4.2 Illustrate differences in marketing products and services to businesses rather than consumers.......18
4.3 Show how and why international marketing differs from domestic marketing................................18
References.................................................................................................................................................19
Page 2 of 20

MARKETING PRINCIPLES
Task 1:
LO1: Understand the concept and process of marketing
1.1 Explain the various elements of the marketing process
The elements of the marketing process are defined to be the set of rules and controlling tools that
an organization or firm follows to produce their outline products and services and get the
response from the customers and the market as they want in their target markets. Thus, these
tools consist of every single and minute aspect that the firm needs to do and influence their
product demand in the market.
Marketing Mix
The major elements of the marketing mix are as follows:
Product: This is an essential element that the business begins with and begins for. The
consumers' needs products are it tangible or non-tangible. In exchange of products, the business
begins their processing of operational activities.
Price: The value of the product represents the need and demand for that against which the
consumers buy them. Good value of the product is an essential matter that shows the satisfaction
value of the consumers who are willing to pay in return of service.
Place: The availability of the product does matter that enhances the possibilities of the increasing
the demand for the products and the desire to buy them by the target customers and market. The
easier and convenient the product availability is, the more is its demand. Nowadays people
usually prefer on-line shopping, and that is an easily accessible aspect.
Page 3 of 20

MARKETING PRINCIPLES
Promotion: Advertising, public relation, personal selling, sales promotion and many other media
promotions and advertisement consist of the strategies to spread that product or services to the
people who may become aware of its existence. Spreading and introducing the product in the
market is the system referred as the promotion.
The new additional marketing Ps are:
People: The people are the ones who help the company to run by providing their valuable
support, effort and time. The managers, executives, lower level staffs to higher level employees
are the people who help to ruin the business and thus are considered to be the most important
element of the marketing after the 4Ps.
Process: The process or attitude of serving the customers is one more factor that acts as an
element of the marketing. The servicing techniques do matter as to deal with different types of
customers and the ways that the customers will get the deliveries reflects the policies and visions
of the company promoting the best of it to them.
Physical evidence: Every service includes some or the other physical evidence like invoice bills,
guarantee and warranty documentations and other means of tangible forms that are provided to
the customer when the transaction is done. Therefore, it is a means of securing the customer
protection and rights to gain their trust by serving trustworthy services with physical evidence
and assurance.
Page 4 of 20

MARKETING PRINCIPLES
Figure 1: The elements of marketing mix
(Source: www.professionalacademy.com)
SWOT Analysis
The significance of SWOT analysis is to investigate the external and internal factors that are
affecting the business activities of the company (McDonald’s).
Strengths
 World-wide brand equity
 42% market share in hamburger business in the US
 Food consistency
 Successful product varieties like meals, fries, etc.
 Market in overseas
 Position of the balance sheet
Page 5 of 20

MARKETING PRINCIPLES
Weaknesses
 Decline in the market share
 Product development is weak
 Franchisees are disgruntled
 Product taste and quality varies
 Slow income and revenue growth
Opportunities
 Expansion of the business globally
 Serving only 1% of the world population
 Dining-out market is growing
 Retailers are coming up with joint venturing techniques like supermarkets
 Locations are sought to be better both for the franchises and retailers consolidation
 Responding to the social changes by innovating health food and lifestyles
 Using CRM for implementing better strategies to the target customers and the market
 Value of customers are strengthened who visit their outlets
 Corporate social responsibility are looked after importantly
Threats
 The industry is matured
 Strong competition in the market
 Health conscious customers seek to avoid these products
 Changing demographics
 The economies and foreign exchange rates are fluctuating
Page 6 of 20

MARKETING PRINCIPLES
 The recession periods and downfall in the economies affect the retailers and their sales
1.2 Evaluate the benefits and costs of a marketing orientation for McDonald’s
The market orientation is an approach that a company takes up to develop products. There are
two kinds of approaches that are product oriented and marketing oriented (Onkvisit and Shaw,
2004). Product oriented approach is the time when the company seeks to develop its products by
its choice and their strength. The market-oriented approach is completely oriented to the needs of
the customers that they analyze in the market and then foster to the need of changes. In the
present market system, customers are considered to be the king and serving them well becomes
the main motive of the business organization like McDonald’s who deals in with fats food
retailing. Attracting the customers is a great deal in today's market, and therefore, product
development is needed and that too by the market-oriented approach because the product-
oriented approach does not help and there are low chances of success. McDonald's have a variety
of products that proves they follow the market-oriented approach. If we walk down to the retails
and outlets, we will get to see the variety of foods along with beverages hat the company offers
and the seasonal offers too like in Christmas or New Years.
LO2: Be able to use the concepts of segmentation, targeting and positioning
2.1 Show macro and micro environmental factors which influence marketing decisions
Micro and macro environmental factors: The marketing decisions are influenced by these types
of factors where the micro environment factors influence the business directly like suppliers,
employees, stakeholders, etc. Macro environment factors on the other hand, influence the
business indirectly where the organization does not have any control over such factors. The
Page 7 of 20

MARKETING PRINCIPLES
macro environmental factors are recognized through PESTLE analysis (Kotabe, M, and Helsen,
K. 2008).
PESTLE analysis of McDonald’s
Political factors
The governmental action and policies do affect the company, and that is considered by them. The
most effective and significant external political factors of McDonald's are:
 International trade agreements are increasing (opportunity)
 Reformation of pending tax (opportunity)
 Public health policies are to be evolved (threat and opportunity)
Economic factors
The international economic changes around the world influence McDonald’s. The most notable
economic factors are:
 The US economy is growing but in slow and stable pace (opportunity)
 The European economy is stable but risky too (threat)
 The Chinese economy is slowed down (threat)
Social/socio-cultural factors
The company responds to the socio-cultural changes, and the most significant socio-cultural
external factors are:
 Wealth gap is widening (opportunity)
Page 8 of 20

MARKETING PRINCIPLES
 Cultural diversity is increasing (opportunity)
 The trend for healthy lifestyle is a new icon statement (threat and opportunity)
Technological factors
The success of the company depends on the technological applications, and the most important
impact of the technological external factors are:
 The industry seeks to do moderate research and development activities (opportunity)
 The business automation is increasing (opportunity)
 The mobile devices helps to increase the sales (opportunity)
Legal factors
The legal requirements are imposed on the company, and the most significant legal factors of the
external environment are:
 The minimum wage level of the US is new (threat)
 The health regulations in the workplace and local schools are an important issue to
consider (threat)
 Welfare regulation of the animals (threat and opportunity)
Ecological factors
The consumers are affected by the ecological factors that McDonald’s face and the most
significant ecological factors are:
 Corporate environmental programs are getting the rising interests (opportunity)
 Sustainable business strategies are emphasized on in increasing rates (opportunity)
Page 9 of 20

MARKETING PRINCIPLES
 The climatic changes is an important and negative aspect that leads to food spoiling
(threat)
Porter’s five force analysis of McDonald’s
Competitive rivalry or competition (strong force)
McDonald's has to face tough competition as the fast food industry is a demanding sector and
already saturated with numerous competitors. The factors external to the company based on
which the competitive rivalry is measured are the strong forces:
 Increased number of firms (strong force)
 The firms are highly aggressive (strong force)
 The switching costs are low (strong force)
Bargaining power of buyers or customers (strong force)
The customer power gains significant address from the company, and the external factors
contributing to these forces are:
 Switching costa re low (strong force)
 Huge number of providers (strong force)
 Substitutes are highly available (strong force)
Bargaining power of suppliers (weak force)
The suppliers of the raw materials do influence the company, and the most significant external
factors are:
 Huge number of suppliers (weak force)
 Forward vertical integration is low (weak force)
Page 10 of 20

MARKETING PRINCIPLES
 The overall supply is high (weak force)
Threat of substitutes or substitution (strong force)
The substitute’s acts as the significant concern for McDonald's and the external factors are:
 High availability of substitutes (strong force)
 Low switching costs (strong force)
 The performance-to-cost is high (strong force)
Threat of new entrants or new entry (moderate force)
The new entry of competitors creates the great impact on the market share of McDonald's, and
the moderate threats of the new entrants are:
 Switching cost are low (strong force)
 Capital cost is moderate (moderate force)
 Brand development cost are high (weak force)
2.2 Propose segmentation criteria to be used for products in different markets
Segmentation is oriented with the customers that the company thinks to make and they influence
their target market with the visions of their business (Wedel, 2000). There is three kinds
segmentation:
1. Geographic that includes the customer oriented regional growths and the factors related to
macro-environment.
2. Demographic including the age, education, gender, family status and income.
3. Psychographic that consists of the attitudes, values, factors like loyalty and size of orders.
Page 11 of 20

MARKETING PRINCIPLES
McDonald’s uses psychographic segmentation approach where they target the customers based
on their attitudes, values, lifestyle and mainly the mid-age and teen groups. The youth follows a
high standard lifestyle, and they prefer such costlier fast food services. The company also
follows the geographic segmentation approach where they target the major locations of UK and
start expanding their business world-wide in the core sectors of the world population.
2.3 Choose a targeting strategy for a selected product/service
Target marketing can be categorized into three types: undifferentiated, differentiated and
concentrated (for niche). At the beginning of the business days of McDonald's, they applied the
undifferentiated market targeting with the mix of single segments. They aimed at serving the
customers’ with their products and services without any compromise with anything. The
business strategy that they used focus on open as many as stores in the world-wide platform and
they have successfully done that. At present, they are having 16,000 and above stores in near
about 50 countries. The company has always emphasized on providing extra benefits to the
customers along with keeping the part for themselves too and thus; they do as much as possible
for satisfying the customer. The environment of the retail outlets are maintained very eco-
friendly, and they have done lots of interior decorations along with musical arrangements to
provide the customers with a soothing environment. They have always tried to provide a home-
like place to the customers because the maximum targets are the office goers and students who
need some homely environment to relax and refresh.
2.4 Demonstrate how buyer behavior affects marketing activities in different buying situations
The decision of buying meals and snacks is not a long term decision that is instant, and
customers could do it with their impulse. However, there are still some, factors that affect the
business activities of the company due to the behavior of the customers and their attitudes. These
Page 12 of 20