Marketing Essentials: Role of Marketing and McDonald's Analysis Report

This report provides a comprehensive analysis of McDonald's marketing strategies, examining its role in the fast-food industry. It begins with an introduction to marketing essentials, then delves into the history and organizational structure of McDonald's, including its hierarchical structure and functional areas such as HR, R&D, administration, IT support, and finance. The report focuses on the seven key marketing functions, including distribution, financing, pricing, promotion, product/service management, selling, and marketing information management, and their application within McDonald's. It then explores the elements of the marketing mix (product, price, place, and promotion) and their implementation. Finally, the report details the development of a marketing plan, providing a complete overview of McDonald's marketing efforts. The report also includes illustrations of key marketing concepts.

UNIT 2 MARKETING ESSENTIALS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
LO 1: ROLE OF MARKETING......................................................................................................2
P1. Marketing Functions and its relation with McDonald's........................................................2
P2. Organisational functional areas and relation with marketing functions...............................5
LO 2: ELEMENTS OF MARKETING MIX..................................................................................8
P3. Marketing Mix and pricing strategies...................................................................................8
LO 3: DEVELOPMENT OF MARKETING PLAN.....................................................................12
P4. Marketing plan....................................................................................................................12
CONCLUSION..............................................................................................................................15
REFERENCES..............................................................................................................................16

ILLUSTRATION INDEX
Illustration 1: 7 Functions of Marketing..........................................................................................3
Illustration 2: Functional Areas of Business....................................................................................6
Illustration 3: Marketing Mix...........................................................................................................9

INTRODUCTION
Marketing essentials are the elements which are used by the companies to track the
progress of their business. These are very important in marketing i.e. sales and promotion of
services and products (Purvis, 2016). Necessary also includes advertising and market research.
The selected organisation McDonald's, which is a hamburger and fast food chain. The role of
marketing and its relationships with other units of the company have been discussed in this
report. This report is containing the origin of McDonald's and its expansion. Further this
assignment explains the functions of the company like finance, IT and HR. The uses of
marketing mix i.e. place, price, promotion and product is also explained in this study (Puddle,
2015). This document includes the marketing plan and its elements used in this administration.
The functions of marketing and the management of information is also obstinate in this report.
MAIN BODY
Marketing:
The study related to selling and buying of products or services of company is
known as marketing. In this various advertising and promotional activities are considered.
Organisations use slogans, designs and services packages in order to attract customers.
Establishment:
McDonald's was established at United states in 1917 by Ray Kroc, who was an
ambulance driver. It wants to become famous for providing good and uniform quality of food. In
the beginning, he had purchased multi mixers, but after sometime he established a restaurant
with his brother which was successful (Dey, 2016.). The first franchisee was established in 1954.
They had started with limited menu such as burger, fries and beverages, so that they can focus on
quality of product. But later it becomes motto of company. After 5 years of first franchisee, they
opened their 100th franchises in Chicago.
Employees:
They are having 375,000 employees working at different franchises of
McDonald's. They all are working at different level of firm at various franchises of firm.
Employees of McDonald are having minimum wages of $15 (Ghobadian and O’Regan, 2014).
On the basis of their skills increment is provided. They provide various benefits to their staff
such as insurance, health, retirement benefits and vacations policies.
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Branches and stores:
McDonald is a famous fast food restaurant chain. They are having restaurants in
120 countries and region. About 36,899 are serving customers across world. According to the
report of 2016 they are having total 5666 companies at different locations. Also having 31230
franchises at 21559 different locations (Crawford, 2015.).
Organisational culture:
Hierarchy type of organisational structure was implemented in McDonald's. For
this they work in different levels by using top- down control in order to maintain production.
They give importance to quality for success of company. Along with this it is one of the rigid
culture.
Charles handy:
By using the specialised organisational approach, companies mainly focus on four
factors that are:
1. Power culture: On the basis of McDonald, it is considered as a centralised culture. As the
organisation follow hierarchy structure, due to which all the power and rights are reserve
by higher authorities. In order to maintain management firm (Scherer, Palazzo and Seidl,
2013).
2. Task culture: McDonald's use this approach in order to distribute task into the small
groups. Through this way problem is divided into small modules so that issues can be
resolved faster. Along with this skill and performance of employees also get improved.
3. Person culture: This approach is considered by McDonald's in order to make employees
involved, so that working environment of company does not get affected.
4. Role culture: Companies mainly use this culture in order to distribute roles and
responsibilities to their employees. McDonald use this culture in order to improve chain
of command.
LO 1: ROLE OF MARKETING
P1. Marketing Functions and its relation with McDonald's
7 main functions used in marketing, which are discussed below;
Distribution: It is basically known as the deciding factor which company will use and provide
the services and products they want to sell to their customers.
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The idea for any kind of product is outstanding, but the firm cannot make money. If that product
not reached to its consumers.
The company is having over 30,000 restaurants, and they are located in 121 various
countries (Sachdeva, 2015). Their aim is to become the first food service chain in the market
with the help of marketing and advertising, they are establishing their brand's name in entire
world. This function helped them in developing very strong share of market in the global food
industry.
Financing:
It is all about to take loan and used that to earn revenue. The critical function of
marketing is financing which can be done by loans, investments or by using of personal capital.
McDonald's money comes from their individual owners (Gibbs, 2017). There are several
investors which invest the money in the company to control the production. The business of this
organisation is like a real estate, in which the consumers pay rent.
The major revenue is generated from the money paid by the customer's. Along with this firm can
use this fees which is paid by the franchisees.
3
Illustration 1: 7 Functions of Marketing

Pricing:
To set the price for different products can be very difficult. If the set price is too
high, the company will lose the customers. If the price is too low, then profit generated would be
very less (Gayle and Luo, 2015). The accurate price only comes from market research or from
trial and error. McDonald's have set their prices for different products after doing deep market
research in different countries.
Promotion:
Many firms are well aware about the promotion activity. To attract new customers
and to retain the old ones, advertisement and promotion is very necessary. By the use of various
advertisements, the company can communicate with their consumers. This will be used in
informing them about the new product and services (Hannah and et.al., 2014). McDonald's uses
various coupons and online offers to attract more consumers. This helps in creating more interest
in food and this will improve the revenue. There are other competitors also, so by keeping prices
low and portion large, the organisation can promote the services.
Product service management:
After targeting the market and setting of the prices, the aim of any company is to
manage the services and products with more effectiveness. This activity will include taking
feedback form the consumers, and responding according to their needs and wants. The
management should be such that the product and services should remain fresh and up to date.
The food provided by McDonald's is majorly to the wide market (Grybs, 2014). They are the
world's leading food industry. Majority of the owners of the restaurants are individual owners.
Their slogan remains open 24*7. Their branch McCafe allows heavy cash flows in the market.
On highways, they are having pick up facilities.
Selling:
It is the last function of marketing. Because it can occur only when the company
knows the wants and needs of the consumers, so that they can respond them with the accurate
products in the given time and affordable price. McDonald's 80% share sells in China
(Hofstetter, Aryobsei and Herrmann, 2017.). But this can generate some major problem, because
the food they are offering is not attracting the customers in the market of China. The growth of
the company has slowed down a little since 2014, because of the increased competition.
Marketing Information Management:
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This system used in managing, obtaining and using the information from market
to improve the decision making (Angrave and et.al., 2016). This will also help in improving the
performance of the organisation. To manage the information gathered from the market two basic
management system used in McDonald's are:
1. Transaction Processing system: This is used in answering the routine questions,
payment of employee, keeping the record of the employees and payroll.
Transaction process includes collecting, storing, modifying and retrieving all the
transactions made by the company. In McDonald's, this system will keep the
record of the supplier name which is supplying them raw materials, the quality of
purchased item and at last the total amount of purchased material.
2. Management Information system: This is used in providing the information
essential in effective managing of an organisation (Slack, Corlett, and Morris,
2015.). This will include technology, information and people. In McDonald's,
MIS system is used in generating the report of daily list of employees, their total
working hours. MIS is used to give profitable information to the managers. So
that business performance can be evaluated.
P2. Organisational functional areas and relation with marketing functions
Several companies have their organisational structure in different ways. This is done by
creating different departments and giving them their roles and responsibilities. The structure of
the company will have several groups of employees having different skills and expertise (Rayner
and et.al., 2016). This will improve the efficiency and effectiveness. McDonald's functional areas
can be described as:
Human Resource:
This is the most important asset in organisation. Any company's heart lies on its
employees. Human resource department is responsible for recruiting new employees with the
required skills and experience. They are also accountable for determining the salaries of each
employee according to their performance (Darcy and et.al., 2014.). McDonald's HR department
selects such employee which are having good communication skills. So that they can easily
communicate with customers and provides them good environment for eating. This division will
keep on organizing various activities and training programs, so that the skills of the workers can
be improved.
5

Research and development:
6
Illustration 2: Functional Areas of Business

For any business to become successful and remain there, Innovation is the major
factor. New innovation will give the organisation a competitive advantage over other companies.
McDonald's R&D department is responsible for checking the quality of food and finds out new
innovative ways to improve that quality (Moreno-Luzon, Gil and Arteaga, 2014). This team is
responsible for finding out new ways by which the food can be prepared in a better way, which
attracts more number of consumers. With the help of this department organisation is able to
introduce new product into the market. It helps in attracting customer and play significant role in
promotional activity.
Administration:
This can be considered as the back bone of any business. The function of this
department is to handle the planning of business, their process of decision making and financial
revaluation. This section gets easily linked with other sections, so that there will be a smooth
flow of information. The role of administration department is also significant in promotional
activities. They are maintaining communication between different departments of the company.
It helps in increasing promotional approaches of the firm.
IT support:
Information technology is very important in any business. McDonald's IT
department is having the job to develop the software for another department. All the
management of data and other functional areas are managed by IT section. McDonald's are
implementing IT services at great extend, it helps in maintaining large amount of customer
related data. It helps in further promotional activities. Along with this they are able to connect
with various branch and able to manage their services effectively. Therefore, IT is playing
significant role into the organisation.
Finance and Accounting:
The financial statement of the company is prepared by them. They are answerable
for the auditing, accounting and finances of the company (Bobe and Kober, 2015). The flow of
cash is very important for McDonald's, this department manages the inflows and outflows of the
cash. They are considering budget for promotional activities along with this implementing offers
and discounts. It helps in attracting customers.
Customer Service:
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The representatives answer the queries of the customers. Some customers who
required additional information of the food quality and its price, so they can contact to this
department. In McDonald's it may happen that the food purchased by the customer's is not of that
quality, so this department is answerable to the consumers. The food industry is having different
level of customer service support like; one is separate for online problems, other is for the
problems occurred in the restaurant and last one is the 24*7 call services. Through the help this
department company is able to directly connect with costumers. It helps in understanding their
needs and making necessary changes into the services.
Marketing:
The promotional activities are one of the best technique by which the company
can communicate to their customers. If the marketing is effective, then it will give the success to
the company, which will be long lasting. This department is liable for generating sales and
increasing the revenues of the company (Yang, Yeo and Vinh, 2015). McDonald's marketing
team will help them in deciding the price strategy for each product, which will attract more
consumers and accordingly increase the sales.
Sales:
The biggest role for the success of the organisation is played by the sales
department. They are responsible for increasing the profitability of the company by generating
more revenues. The task of McDonald's sales team is to ensure that whatever product they are
selling is generating profit to the company. They are attracting customers by implementing
offers and discounts. It helps in influencing customer's towards their products. Therefore, sales
department plays significant role in promotion services.
Business Development:
The function of this section is to develop the business in other countries. Though
the company is already having its restaurant chain in more than 120 countries, but the business is
developing and it’s their duty to develop the business in other parts of the world. So that profit
can be increased.
If Research and development department is doing any kind of research on the food
products, then it will require funds which is related to the financing functions. Because they have
to take care of all the finances of the company. Same way, if the price team is setting out the
prices then it must be discussed with administration team. Because they are the one who are
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involved in decision making process of McDonald's (Mintz and Currim, 2013). The structure of
the organisation reflects the way they are managing the job and people. This is done to meet the
goals and objectives set by the company.
The functional organisation is having very static role but if the area is other than this,
then it may be having very dynamic roles. In this firm people are being coupled with each other
and forming a group according to their skills so that it will have very positive effect. The
information and data gathered by marketing management department can also be used by
business development. Because the information is very relevant which can be used by this
section to develop the business which will be more effective and profitable. Through considering
various research organisation is able to implement approaches and develop new products. It
helps in influencing customer. Through this way they are able to plays significant role in
promotional activity.
LO 2: ELEMENTS OF MARKETING MIX
P3. Marketing Mix and pricing strategies
The marketing mix is all about putting the right product at the right place, at the accurate
time and in affordable price (Meyer, 2015). This characteristic is very difficult, because you have
to know all the aspects of the business and its plans.
Product:
The emphasis of McDonald's is on developing such kind of menu and the
products which are wanted by the consumers. But the requirements of the consumer may vary
from time to time. In order to meet these requirements, the company has launched various new
products and removed all the old ones. They will keep on doing this.
9

Illustration 3: Marketing Mix
The company is having the ability to generate profit will change depending on the time
and trends. In UK, McDonald's is having very diversified range of products. They are selling the
food products which are sandwiches and hamburgers (Hanssens and et.al., 2014). Because
people generally prefer burgers. The consumers have the facility to purchase any other kind of
food related to chicken, fish, desserts etc. This shows that the company is innovating new
products to attract more consumers.
Place Distribution:
The restaurants are the best and most convenient places where the products are
getting parcelled out. The marketing mix element indicate the places where products are being
sold. Some of the places are:
 Restaurants
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 McDonald's mobile app
 Websites
 Kiosks
The total revenues of the company are generated by the restaurants. Few restaurants are
there in UK, which manages kiosks. This is to sell only few limited products like desserts. Some
of them are temporary (Sinha and Sheth, 2017.). Apart from this, the consumers can order by
using their mobile app or by post-mate’s website also. The company is offering various deals to
the iOS and android OS users.
Promotion:
This is done so that more number of consumers gets attracted towards the
products. This activity defines various approaches which are used by McDonald's to
communicate with their customers. Some of the tactics of promotion uses by the company are;
 Sales promotion
 Direct selling
 Advertising
 Public relation
Advertisements are notable the most, because by the use of TV, radio, social networking
sites and print media, the organisation is promoting its products. Public relations are also very
vast, which helps them in promoting their business according to the segmented market. Sales
promotion is used to show the products and services via mails, door drops etc. The main focus of
these promotional activities is to target children. Some small toys are given to children in happy
meals. Thus, by using such kind of techniques, the company is promoting their products.
Price:
The strategy of pricing revolves around the price building and psychological
pricing. The firm offers lots of discounts on meals and other products, this is termed as price
building. It happens that the customer will not take the products which are having high prices.
But the danger is also there, if the products are offered on less price (Mathur, 2017). Because the
consumer will feel that quality is getting compromised. Psychological pricing means the prices
offered by the company are easily affordable like; they use 0.99 dollars instead of one dollar.
Generally, they kept the prices a little high from their competitors, but the quality is way better
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than other food restaurant chain. That is why more number of customers are getting attracted
towards the products.
There are different pricing strategies like Pricing according to the premium, pricing
according to the market penetration and economy based pricing (Martins, Rindova and
Greenbaum, 2015). The good and exact pricing strategy helps in generating maximum profits
from the sale of products and services. At the time of price setting, company have to think on
various factors like production cost, competitor pricing, distribution costs and different strategies
for positioning. The pricing strategy used by McDonald's is economy pricing.
This strategy is used to attract the consumers which are mostly conscious about the price.
This strategy will reduce the cost related to production and marketing, so that the cost of
products and services are kept down. The result is such that the consumers will purchase the
product they want without any hesitation. McDonald's is a monopolistic firm. This indicates that
they don't follow the price strategy of other firms. But they keep the regulations of pricing
always in mind. The company set their prices according to the location and environment.
The aim of this strategy is to increase the market shares of the company. For example;
the Big Mac price in Switzerland is around $6.20 USD, and that same product's price in UK is
$3.15 USD (Meyer and Shankar, 2016). This difference is due to cost of living and the economy
of the country. In UK it is lower, but in Switzerland it is comparatively high. Apart from the
economy, some geographical factors, regulations of government, economic conditions also affect
the pricing strategy. If McDonald's able to maintain such strategy then they will be the best food
chain restaurants for coming 5 to 10 years.
LO 3: DEVELOPMENT OF MARKETING PLAN
P4. Marketing plan
Basis McDonald's Sainsbury's
Price Mc Donald's is considering
psychological pricing
strategies. Along with this they
Sainsbury's is considering
penetration pricing strategy. It
helps in targeting different
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are providing various
discounts to their customers.
groups of people.
Promotion The organisation is
considering various
promotional means such as
social media, digital, print.
Along with this they use to
store customers details for
email and message
advertisement.
They are also considering
modern and traditional
approaches. Along with this
they are using posters,
pamphlet and publish articles
in newspapers.
Place They are establishing their
outlets at reachable places.
Apart from that they are
providing services like home
delivery.
The organisation is providing
services through establishing
stores, along with this they are
also offering services with the
help of online platforms.
Process They are various process such
as manufacturing, promotional
and supply. It helps in
increasing profitability of
company.
The firm is considering
various step into their process
cycle such as promotion,
distribution and
manufacturing.
Product The organisation is offering
various products to their
customers such as burgers,
French fries, etc. along with
this different meal combo are
also being offered to the users.
Company is providing services
like groceries, clothing,
households items and so on.
People McDonald's is considering
various learning and training
activities in order to enhance
skill of their employees and
In order to maintain skills of
their employees they are
organising training along with
this feedbacks are also
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improve quality of services. considered for providing
promising product.
Physical evidence They are providing physical
evidence in the for of bill.
The organisation is providing
coupons , through which
customers are able to take
advantage on next shopping.
The marketing plan followed by McDonald's is strategic marketing plan. This plan must
be very clear regarding the market trends, key segments of market, the values required etc.
(Wolfe and et.al., 2014). The plan adopted by McDonald's is a rolling plan of 3 years, which is
further having 3 levels;
 A three-year strategic plan
 Operational plans annually
 Staff work plans individually over one year
The strategic plan was published on their website, so that people can have the
information of applicants and the stakeholders associated with them. The marketing plan is a
document which is having the strategies of marketing and the tactics used in it. The plan is often
for a specific period. This plan is having the details of the company related to costs of the
products, goals and the steps taken in achieving those goals.
Marketing Objectives:
Currently, the focus of the organisation is on reducing the service delivery time. This is
because in today’s fast paced world, consumers are not having much time to wait for their
product (McDONALD, M.A.L.C.O.L.M. and Brown, 2016). The overall aim and objective of
this plan is:
 Easy and smooth process of complaint handling
 Easy accessibility of essential services
 To increase the brand awareness
 In coming 6 months, increase the sales rate by 40%
 Increase the brand outlets to 20 new places
The main concentration of the firm is to satisfy the consumers by giving the best quality services
in affordable price.
14

Market segmentation:
The segmentation strategy used by McDonald's is demographic segmentation. Age is the
basic parameters for segmenting consumers. As discussed earlier the major target segments are
children and youth (Tupikovskaja and et.al., 2014). The company is offering different type of
meals which is having several discounts offers. The environment of McDonald's is very much
suitable for youth. Mostly school and college students so that they can hang out with their
friends.
Marketing strategies:
The main strategies used by McDonald's for marketing are:
1. Market Penetration: By introducing new promotions for market, the firm has certainly
increased the market penetration strategies. For domestic clients, they have organized
some campaigns which helps them in attracting more consumers.
2. Market development: The best example for the development of market is McDonald's.
They are introducing new product and opening new outlets by which a large number of
consumers are attracted (Panos, 2017). They are taking help from other companies as
well for targetting promotions and increasing their sales.
3. Program or Service development: The prime importance was given to the development of
the services offered by them. The focus is directed only to offer high class services to the
consumers. They are having some feedback strategies, so that the satisfied customers can
be increased.
Positioning:
It is the technique used to create the image in the mind of consumers that the product of
McDonald is quite unique when compare to the products offered by competitors. Their main
positioning technique was to make the restaurant a hangout place for friends. But now they
started positioning according to the kids and children. Their happy meal is having various offers
and toys for kids. Earlier it was only for child but as the trend is changing and youngsters are
getting to addicted to fast food. McDonald's must starts positioning for them as well (Nelson,
Cushion and Potrac, 2013.). Targeting the adults will be very profitable for the organisation.
Because they can pay the required amount for their services and products.
Control measures:
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Any organisation will perform better if proper plans have been carried out and all the
process control system are applied accurately (Kirlash and et.al., 2016). This is done to make
sure that all the systems in the organisation are running according to their planned schedule. The
control measures can be done either by implementing a system or manually, where people are
monitoring the process. All the processes are monitored very closely and for every output reports
were created (Strategic Quality and System Management in McDonald's, 2015.). The report must
be related to the profit and feedback from consumers. All these reports are analysed after that to
find out if there is any fault in this marketing plan. If the deviation occurs, then all the corrective
measures have been taken. For McDonald's to develop any strategy, better solution is to provide
the products in large quantity and maintaining the quality of those products by keeping them
very cost effective. The organisation is considering various strategies in order to maintain
effectiveness of he services. They are considering feedbacks from the customers on the basis of
that necessary changes are implemented into the process. They are also considering standard
resources for preparing their services. It helps in maintaining their effectiveness of their
products. Along with this they are considering various quality and safety measures that are
provided by the food and health department. They are considering logistic chain it helps in
maintaining the quality of the services
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CONCLUSION
From this report, it has been concluded that the essentials of marketing are very important
in promoting or selling the products and services. McDonald's used seven functions for
marketing. To manage the information, the organisation used Transaction processing system and
Management information system. Further the report shows different functional areas and their
relation with marketing function. It has been found that the company is using economic pricing
strategy. The price of the products is based on the living standards of people and the economic
condition of that country. Demographic market segmentation is used to target children and
adults.
It's been recommended that instead of focusing on demographic segmentation, the
company should focus on people from all the age groups. This will increase the profitability.
Although the name of the company is very famous in most of the part of the world, but they
should focus more on the countries like China and India. Because they can improve the market
share of McDonald's as well as the profitability.
17

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