Marketing Management Report: McDonald's China Brand Extension Analysis

This report provides a comprehensive analysis of McDonald's marketing management, focusing on the potential launch of a brand extension into the customized burger category in China. It begins by outlining various marketing philosophies and evaluating the strengths of McDonald's strategy in delivering value to its customers, considering both internal and external environmental factors. The report then delves into an evaluation of current marketing trends, particularly within the fast-food industry, and conducts a situational analysis to assess McDonald's strengths, weaknesses, opportunities, and threats. It examines consumer purchasing decisions, mobile communication trends, and the importance of market research. Furthermore, the report addresses the Segmentation, Targeting, and Positioning (STP) strategy, brand building, market offering shaping, and implementation and control aspects relevant to the brand extension. The conclusion offers recommendations for building a sustainable corporate brand, emphasizing market orientation and societal marketing concepts.

MARKETING
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
1.Marketing philosophies and the strengths of the organization's strategy in delivering values
with respect to existing brands and the customers.......................................................................1
PART 2............................................................................................................................................4
Evaluation of trends within the marketing environment and situational analysis.......................4
PART 3............................................................................................................................................8
STP...............................................................................................................................................8
1.Brand building..........................................................................................................................9
1.Shaping the market offering...................................................................................................11
1.Implementation and control....................................................................................................12
CONCLUSION..............................................................................................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Marketing management can be defined as organizational discipline that focuses on
market orientation, practical applications, methods and techniques that are used within an
organization. Marketing management helps an organization to manage their activities and
resources. Marketing management is used to facilitate functions and activities that are involved
in distribution of services and goods. There are various kinds of marketing concepts that can be
used or applied by organizations in different business situations. It is important for the company
to understand impact of both internal and external environmental factors that can impact
marketing activities of an organization. McDonald's is a fast food organization with global
present. It is mostly famous for hamburgers, cheese burgers and French fries. It is one of the
largest private sector organization to employ more than 1.7 million employees'. It has more than
1270 stores present in UK itself (Kane, 2016). This assignment will focus on marketing
implementation of market opportunity to launch a brand extension into customized burger
category to be launched in China. This assignment will also focus on evaluation of marketing
management applications, philosophies and concepts, evaluation of external environment and
dynamics and trends within the marketing environment by underpinning various opportunities
and challenges for a new brand extension. Based on above points appropriate recommendations
for a brand extension in order to build a sustainable corporate brand had also been provided
within the assignment.
PART 1
Marketing philosophies and the strengths of the organization's strategy in delivering values with
respect to existing brands and the customers.
Marketing management philosophies are the essential ideas for the organization for performing
market activities. Here are the most famous marketing management philosophies -
Production Philosophy: This concept indicates that the priority of the customers will be those
products which are easily availability and not much expensive. The major focus of the managers
in this are low cost, efficiency in production process and distribution on large scale. McDonald
provide their products and very low prices and the availability of their products are in every
major country. It will help the company to attract more customers which indirectly create value
of the product of the company.(Tronvoll, Barile and Caputo, 2018).
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Product Philosophy: In this concept the purchase will focus on the items which are having
better quality and attributes instead of some standard product. The companies which gives better
quality, better specification and performance in their products follow this philosophy. The
McDonald provide the best quality of fries, burgers and other products to their customers. This
philosophy will create value by gaining competitive advantages.
Selling Philosophy: This concept of marketing management philosophy basically express the
possibility of that the customers won't purchase sufficient products from the business until the
company opt for promotional activities and selling endeavors. Mc Donald has a unique and
catchy slogan “I am loving it”. The company to many promotional activities like television
advertisement, newspaper and magazine advertisement moreover the company also sponsors
shows like Wwe and many more. This will deliver the value as it increases the brand awareness
of the company
Marketing Philosophy:Marketing philosophy has evolved over the time. This concept
highlights the importance of analysing the demand in the market and produce the products and
the services that fulfill the demand of the customers in better manner than the customers. This
philosophy is totally different form the manufacture concept. Mcdonald provide various types of
burgers in the market but the company make sure to analysis the demand of the products which
helps the company to meet the demand in the market with minimum wastage. This philosophy
will deliver its value by increase the profitability of the company (Miles and et.al., 2015.).
The Societal Marketing Concept: This concept is the branch of idea of Corporate social
responsibility. The Societal marketing concept forecast that the firm should practice the
promotional activities considering the need of the customers, condition of the company and most
importantly the general interest of the people and the society. McDonald is the first company in
food and restaurant sector to reduce the greenhouse gas emissions moreover the company also
promote those supplier which take sustainability initiatives. The value created by this philosophy
is, it increases the goodwill of the company.
Here are those business and marketing philosophies through which the company delivers values
to the customers -
Holistic marketing approach: A business mostly uses this type of Marketing approaches when
all the characteristic of the marketing strategy of the company is interlinked. In this marketing
approach the business take marketing decisions and implement the strategy based on the
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common organization goal. Holistic marketing approach became famous because of increasing
competition in the market and high saturation rate(Charter, 2017). The strategies of applying it
varies from one organization to another. The holistic marketing approach contain four main
elements like -
Relationship marketing: The main motive of the relationship marketing is contract and
improve relationship with the stakeholders like customers, employees supplier, vendors and
many more which are connected with business and it activities. All the Stakeholder have a
remarkable impact on the success as well as the failure of the company. The relationship
management helps the company to main and grow the relationship with their stakeholders. MC
Donald maintain their relationship with every stakeholder in different way like the company
provides training and motivation programs for their employees whereas in case of customers the
company provides them with the best product and services possible The value provide by these
function is it will increase the loyalty and satisfaction level of their customers and employees.
(Huang and Rundle-Thiele 2015)
Integrated marketing: In integrated marketing the company takes the marketing decision
which helps to create value for the stakeholders by marketing messages. The activities in
integrated marketing are public relation, direct marketing, social media marketing and many
more in such a manner that all the stakeholders have the similar experience and as well as image
of the company. McDonald does various marketing activities like Social media marketing, direct
marketing, online communication and many more. These marketing activities increase the brand
awareness of the global which indirectly create value for its stakeholder as the company is
globally recognized.
Internal Marketing: Internal marketing helps the organization to ensure that the employees are
satisfied the company and their part in the company. The high satisfaction level of the employees
lead to high customers' satisfaction level. McDonald have \ various policies which are beneficial
for their employees like incentive policy. The company also has daily meeting which helps to
motive the employees moreover the company organization various event for entertainment of
their employees(Javalgi and La Toya, 2018). All These actives helps the come to create value on
their employees as a company which is employee oriented which ultimate increase the retention
rate of the employees.
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Societal Marketing. This is the Marketing with societal responsibility. In this the firm focuses
on practicing marketing activities in more Eco-friendly manner as well as in these the company
does marketing activities which minimizing the negative impact on the society or are taking
initiatives to improve the society with business practices. McDonald does various activities
which are for the general interest of the people like distribution of food to homeless and poor.
This create value of the company as a socially responsible company
Market orientation: Market orientation is a marketing and business concept In these the major
focus of the company is to identify the need of the customers and then satisfy their needs. In
these the company sells those products only which satisfy the need of the customers which helps
them to maintain their profitability.(Lantos, 2015). McDonald sells those products which are
highly demanded by the customers. The company has different menu's in different countries
according to the demand. This delivers the value of the company as brand which have all the
demanding types of burger. This creates the value of the company as the firm which is more
customer oriented.
PART 2
Evaluation of trends within the marketing environment and situational analysis
Market research plays an important role as it allows marketing manager to analyses and
get information about trends. With the help of marketing research, marketing manager of
McDonald's can analyses that snacking in increasingly important trend and becoming popular
among st teenagers and young people. Some trends in marketing in the context of fast food
industry includes: By identifying market trends or consumers preferences about fast food
products, McDonald's can take opportunity to provide them same characteristics of products.
Complexity in consumer purchasing, increasing preferences of mobile communication, effective
use of technology, rising importance of organic food etc.
Mobile communication: It is stated that consumers prefer mobile and online
communication for fast food services. By ordering online, they can save their time and cost of
transport (McLean, 2019). By more focusing on this trend McDonald can successfully launch its
new brand extension into new product and can attract wider range of customers as It is rapidly
increasing trend within marketing environment in fast food industry. It saves customers time
and by offering some discount on their 1st order McDonald's can take opportunity of this trend.
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Consumer purchasing decision: This trend can affect the future marketing, so it is
important for marketing manager to focus on this factor. Consumers prefer organic and healthy
food and there are several factors that affect their purchasing decision. Pricing is the main factor
in decision-making. It is stated that McDonald's has created an extra value meal as well as its
menu offers a flexible combination of some food. By knowing all factors that affect consumer
purchasing decision, it can successfully launch a brad extension into new product in China.
Situational analysis: Situational analysis can be defined as a collection of methods that
are being used by marketing manager to analyse its both internal and external environment. The
main aim of understanding its capabilities is to successfully launch a brand extension into new
product as a customize burger in China and increase its sales (Baron, 2018). It is important for
company to analyse its capabilities and weaknesses for successfully launching of products in the
market. The main aim of situational analysis is to identify all internal as well as external factors
which have both positive and negative impacts on company's performance and its value. By
identifying it can make strategies to remove negative factors and can increase those factors that
can have positive impacts.
Strengths
·The main strength of McDonald's that can help it in expanding its customize burger in China, is
it has wider range of menu choice like coffee, smoothies etc.
·Company has spread its operations around the world or it has a strong global brand.
·Company operates around the world and has locations approximately in 120 countries so it can
get opportunity of diversified income (Zientara, 2017).
So, it can be said that it can take opportunity and benefit of launching anew products and
attract variety of customers as it operates around the world and have more experience.
Weaknesses
·It is stated that this company has negative publicity because it has maintained the perception
that food is unhealthy with carbs, fats, salt etc.
·It has high employee turnover because most of its job are low skilled and low paying.
So, it can be said that by analysing its own weakness it can make strategies accordingly
and can overcome this weakness.
Opportunities
·It takes opportunities of upgraded menu and attract wider range of customers.
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·It can also take opportunity to expand its market share and plans.
As it is stated that this operates around the world, so it has experience of providing
satisfactory services to all types of customers. This strength can work as an opportunity.
Threats
·Company faces the problem of higher competition in fast food industry.
·Customer are becoming more health conscious that is also a big threat for company.
It has good brand image around the world and popular, so it can be said that this strength
and image can help them in overcoming threat related to competition.
Hence, it can be said that by analysing its own strengths and weaknesses McDonald's can launch
customize burger in China.
PESTLE analysis: By analysing all external factors and situations of China in which the
company is going to launch its products, it can take opportunities as well as identify challenges.
Some external factors are described as follows:
Political: China has strong political system that help to boost its economy. There is a
supportive and political stability which helps industries in expanding their business. So, it can be
said that McDonald's can take opportunity of political factors and increase its sales. If there is
Political stability then there will be less chances on riots, so consumers can buy products and can
go anywhere without having fear (Pestle analysis, 2015).
Economic: In the context of economy, it is stated that china has got excellent economic
growth rate in GDP from the last 5 years. This rate is adding more value for the society. It is
good for McDonald's as it can increase its sales of Customize products because purchasing
power of customers is so strong (Fielding and Hornsey, 2016).
Social: The demographic of population growth can have negative impacts on
McDonald's performance. It is stated that emigration rate of china is too high or people of china
are emigrating in other countries for getting job and education. Changes in tastes, cultural
changes and emigration rate can be more challenging. Due to rapid changes in tastes and health
consciousness puts pressure on McDonald's to only make healthy food, so it can be challenging
and can have negative impact on McDonald's products value.
Technological: China is facing the problem due to advanced technology because it does
not have safe online payment system. They face the higher level of uncertainty and they do
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not have experience of using advanced technology. It also can be more challenging for
McDonald's to make them aware about online system.
Environmental: People of China has awareness about environmental protection.
Increment in technology makes all activities easy and provision of online products also
increasing the usage of E-commerce Website. Due to advanced technology and awareness of
environmental protection, people place order online rather than visiting shop directly. Usage of
less number of vehicles will lead less emission of pollution in the air. So, McDonald's can take
opportunity of online shopping by providing order to people in timely manner (Pestle analysis,
2015).
Legal: There are no regulations formed to support privacy and digital signature and
protect the customer rights. It is a necessary to make an effective legislation to develop the E-
commerce and preventing online cheating. By more focusing on following all legal requirements
it can take opportunity. But lack of strong privacy and other legislations are threats for
McDonald's as anyone can take undue advantage of this.(Shams and et.al., 2016).
So, it can be said that some factors give opportunities and some can give challenges to it.
Porter's 5 forces
Forces High/
moderate/low
Justification
Buyers' power High Buyers power is significantly high as there are several
fast food chains, so buyers have plenty of pricing power
and options to buy from. So McDonald's requires to
give their products as lower price as compare to
competitors for being in a competition.
Suppliers'
power
low This power is low. There are plenty of supplier to
choose from. Suppliers do not have ability to price their
goods beyond the market price, So McDonald's can take
advantage and supply their products at lower price.
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They need to maintain quality of products only.
Threat of
substitute
High There are several restaurants, cafe and local street fast
food. There is a need of differentiated approach if
McDonald's want to attract wider range of customers.
Along with cost, it needs to provide special discount
and special features of food products to people (Porter's
5 force analysis, 2012)
Competitive
rivalry
High There are several fast food chain in China. Low
switching cost also makes easy for consumers to
transfer to other shops like Burger's king and Wendy
etc. This can create threat for McDonald's.
Threat of new
entrants
High In China's fast food is is stated that the threat of new
entrants is significantly high. There is a requirement of
little amount investment as approximate ¥ 1ac , so it can
be said that there is a high power.
PART 3
Marketing planning process is approach which need to be followed in a systematic manner to
achieve the business objectives of the company. The marketing planning process includes the
situation analysis, setting of business goals and objects, formations of strategies and many more,
The Current objectives of the McDonald is to introduce new customize burger in the market of
china Here is the STP strategy for McDonald-
STP
STP is the most important tool which helps the company to attract as well as get the right
customers. Here is the STP strategy that McDonald can apply in their marketing activities-
Segmentation:
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McDonald can use geographic segmentation to divide the big markets into the small groups of
customers.
Geographic Segmentation: It will help the company to divide their global market according to
the geographical areas like Asia, America, Europe and many more (Miles and et.al., 2015). On
the basis of geography McDonald optimize the menu according to the taste of the customers like
Beef and bacon option in customize burger will availability at Europe and America whereas the
option of chicken and and veg option in customize burger will be availability in Asian countries
Targeting:
After proper segmentation, the company need to focus on the targeting strategy. The can can opt
for differentiated targeting strategies. In strategy McDonald's can target various different market
segments,by providing them with different offers. For the new launched product of McDonald
the company can targeted customer's can from the age 21 to above because this products offer
the customers to customize the burger according to their taste, so the cost of this burger will be
higher than the normal on and the teenager and kids are more into the cheap products rather than
the quality products.
Positioning:
Positioning is the last step as well as the main step of the STP planning. Earlier the McDonald's
were positioning strategies were more focus on the kids and teenagers as the company is offering
happy meals for kids and Mc-cafe for the teenagers however new product of McDonald is focus
on providing extra option of customizing their burger for this the company need to focus more
on the customer's between the age group of 20 and above. The positioning strategy that the
company can opt for positioning it customize burger can be the product class approach, in this
the products can position by their class(Zientara, 2017)
Brand building
It is a process of generating awareness, promoting the organization by using various type of
tactics and strategies. In another ways, it will enhance the brand equity through advertising
campaigns and promotional approaches. McDonald’s is a leading organization in fast food
industry when they provide large number of product and services according to the requirement
of consumers (Berndt and Hollebeek, 2019).
It always focused on the demand of people and give many options of every type age groups.
McDonald’s will launch a new product in market so that they can expand their brand in china.
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They always wanted to establish their business in china market so that it has needed to launch a
new product s and many consumers are attracted towards their items.
It has been recommended the specific solution of McDonald’s to use Keller’s brand
equity model that can use for brand expansion. This type of model is based on the customer
based where it helps to build or create right experience around McDonald’s. It is already popular
brand image in marketplace so that it become easy for targeting the people of new consumers in
global marketplace (Chung and et.al., 2019).
According to model, if McDonald’s build strong position and reputation in the mind of people, it
will chance to continues grow the business in china over time. First of all, it recommended to
think about profitability and work hard for maintaining in proper manner.
Figure 1 Keller's brand building Model
(Source: Keller’s Building Model. 2018)
This type of model is consisting of different entity in order to maintain strong brand in global
marketplace. It makes sure that all pyramid fulfills need from ground to up level. This Keller
building model follows the step to build the branding by launching a new product in
marketplace.
Identify-
It is the starting step of brand building where McDonald’s response towards the need and
requirement of consumers or launching the customized burger in marketplace. First of all, the
organization is identifying the brand position and communicating with the people by using new
platform and provide awareness about the brand (Khanna, Jacob and Chopra, 2019).
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