Analysis of Marketing Principles: McDonald's Case Study Report

This report provides a comprehensive analysis of marketing principles, using McDonald's as a case study. It begins with an introduction to the marketing process, including market analysis, target market selection, marketing mix development, and marketing effort management. The report then delves into the benefits and costs of a marketing orientation, followed by an examination of the influence of macro and micro environmental factors on McDonald's marketing decisions, including the use of 5Ms and PESTEL analysis. Segmentation criteria, targeting strategies (undifferentiated, differentiated, and concentrated), and the effects of buyer behavior (cultural, social, personal, and psychological factors) are also discussed. The report further explores product positioning and the achievement of sustainable competitive advantage. The marketing mix elements of product, price, place, promotion, and extended marketing mix are analyzed in detail. Finally, the report concludes with planning and recommendations, differences in marketing, and international marketing considerations. The report incorporates figures and tables to illustrate key concepts and provides references to support the analysis.

Marketing Principles

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Marketing process..................................................................................................................1
1.2 Benefits and costs..................................................................................................................2
2.1 Influence of macro and micro environmental factors............................................................3
2.2 Segmentation criteria.............................................................................................................4
2.3 Targeting strategy..................................................................................................................5
2.4 Effects of buyer behaviour.....................................................................................................5
2.5 Positioning.............................................................................................................................6
3.1 Sustainable competitive advantage........................................................................................6
3.2 Distribution arrangements.....................................................................................................7
3.3 Setting prices.........................................................................................................................8
3.4 Promotional activities............................................................................................................8
3.5 Extended marketing mix elements.........................................................................................9
TASK 2............................................................................................................................................9
4.1 Planning and recommendations.............................................................................................9
4.2 Differences in marketing.....................................................................................................10
4.3 International marketing........................................................................................................12
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

ILLUSTRATION INDEX
Figure 1 Marketing process..........................................................................................................2
Figure 2 Marketing mix..............................................................................................................11

INTRODUCTION
Marketing is a technique through which customers are engaged with a company’s
products and services. A sequential set of processes and activities are involved in marketing.
Consumer needs and demands such as clothing, shelter, food, medical care, etc. are identified by
business organisations. This identification helps in creating marketing process which will
instigate the needs of customers to buy a product and service. When satisfaction levels are met,
their urge to buy the same thing again and again increases. Hence, marketing plays a significant
role in success of a commodity. In this report, a brief description of marketing concept is
provided with relevance to McDonald’s working environment. An analytical approach that is
used by McDonald’s to grab buyer attention is also described in the form of segmentation,
targeting and positioning strategies along with marketing mix elements. Lastly, certain
information will depict application of above described concepts in different segments that have
been planned.
TASK 1
1.1 Marketing process
Marketing process consists of following elements:
Analysing market opportunities: Products are manufactured when needs and demands
are identified by companies. McDonald’s uses this as an opportunity in the market to implement
a strategy that will bring entire attention of consumers towards company’s product which will
meet their requirements. Another important aspect of this element is getting an understanding of
marketplace where need is detected. This gives appropriate shape to proposed strategy (Mallen,
2013).
Selecting target market: A design of marketing plan is made with exact idea of targeted
customers and their characteristics. For example: McDonald’s is planning a marketing strategy
for its happy meal product, target customer will be small children and their parents. This shows
that proposed strategy will serve children and innovation in delivering style will make this plan
different from that of competitors (Armstrong and et. al., 2014).
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Developing market mix: Product, price, place and promotion are the elements of
marketing mix. The marketing process has to be integrated and developed according to these
components. Superior value is added to marketing plan when this mix principle is applied.
Managing marketing effort: After implementing the strategy, application of management
techniques is required. Customer relations manager is appointed to monitor and check whether
products are creating customer centric value or not (Hollensen, 2015). In addition to this, they
also take initiative in running market researches which help in capturing buyer equity and return
of investment.
Figure 1 Marketing process
1.2 Benefits and costs
Overtime orientation of businesses towards earning profit has changed. Earlier companies
focused on gathering name and recognition without considering customer requirements. But in
modern day, business administrators believe that generating consumer centric strategies helps in
meeting business objectives more efficiently. Marketing orientation for McDonald’s will bring
following:
Benefits:
2
Analysing
market
opportunities
Selecting
target markets
Developing
market mix
managing
marketing
effort

1. Product orientation of business will yield profits because McDonald’s will create high
quality superior commodities. But marketing orientation makes consumers heart of
organisation. This not only makes product a great quality deal but provides high level of
satisfaction amongst consumers (Navarro-García, Arenas-Gaitán and Rondán-Cataluña,
2014).
2. McDonald’s costs of manufacturing food items and generating services can increase
because of marketing orientation but amount of profit will help in quick recovery.
3. A sense of social responsibility is experienced when this orientation is achieved. It
improves corporate image of the company in eyes of customers.
Costs:
 Increasing accessibility of consumers to various alternatives and options from
competitors has made marketing orientation important for every business organisation. If
buyers’ expectations are met then threat of substitution is reduced.
 Often brand loyal customers are neglected in this orientation which can lead McDonald’s
in huge loss situation.
 More costs are incurred in manufacturing when products are tailored. As a result, things
become expensive and less feasible for both company and consumers.
2.1 Influence of macro and micro environmental factors
McDonald’s marketing decisions are influenced by micro and macro environmental
factors. This can be evaluated using two tools that is 5Ms and PESTEL analysis.
5Ms internal audit:
 Men: Serving staff, managers of various departments, cooks, cleaning staff, etc. constitute
the human resource of internal environment.
 Money: The entire currency which is engaged by McDonald’s in the form of investments
by shareholders and banks is quite high and sufficient to plan out marketing activities. Machinery: Basic equipment which is involved in production of food items like coffee
brewing machine, microwaves, deep fryers, etc.
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 Materials: McDonald’s is classified in service industry. Hence, the factors that are
involved in production of services for this company are continuous supply of food
materials, labourers and food technology hardware.
 Markets: This category can be considered for both internal and external analysis because
markets are totally dependent on consumer demands. These directly influence economic
structure of the company and hence marketing decisions (Fleisher and Bensoussan,
2015).
PESTEL analysis is conducted for getting a perception of influence of macro or external factors.
P- Political: McDonald’s political environment is quite stable but sudden changes in policies can
result in changes in marketing strategies. Ethical issues are taken care in this environment.
E- Economic: The company’s decisions regarding marketing are influenced by economic
environment when taxes or interests rates over loans are increased. This creates expensive
business processing which cannot be afforded by organisation (Dragnić, 2014).
S-Socio-cultural: No biasness towards religion or sacred object which creates discrimination
should be entertained when developing marketing techniques. It helps in enhancing social
acceptance.
T-Technological: Maturity of technology and science can be utilised for better marketing
planning. Internet and social media is the component of technological environment that controls
marketing decisions.
E-Environmental: With world inclining towards greener functioning, McDonald’s must
concentrate that ecological balance is not disturbed because of any activity.
L-Legal: Regulations and laws like Health and Safety law, Employment Law, trade restrictions
and other corporate barriers must not be crossed. This won’t gather negative publicity for the
company.
2.2 Segmentation criteria
Basically, segmentation is a technique through which McDonald’s marketers can identify
specific needs and requirements of particular section in the market for which particular product
or service is being generated. Proper knowledge about target market is essential before
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segmenting customers (Kumar and Zia, 2016). This can be easily understood with help of an
example of McDonald’s McVeggie burger. There are four criteria which are considered while
performing segmentation which are namely: geography, demographics, psychographic and
behavioural. Following table depicts the segmentation of mcveggie burger on the basis of all four
criteria.
Product Geographic Demographic Psychographic Behavioural
McVeggie
Burger
The company
can select
amongst
following
categories in
geographic
segmentation.
Eg:
Country: UK
City: London
Density: Urban
area
Climate:
Temperate
Attributes like
age, gender,
education,
ethnicity, family
size, income, etc.
are considered in
this criterion.
Consumers that
have same
mental level or
cultural beliefs,
etc. are grouped
in psychographic
segmentation.
Often difficulty
at organisation’s
end is increased
when other three
segmentations
receive complex
response.
Behavioural
section has
people who
develop similar
response towards
a product or
service.
2.3 Targeting strategy
Marketing plan becomes more specific after segmentation is performed. Planning
authorities have an idea about characteristics of consumers that are being grouped for a particular
product. Targeting helps in choosing one or more segments from all other units that are classified
in a diverse market (Kotler and et. al., 2015). Decisions regarding this selection of particular
segment are based on a targeting strategy. These are of three types:
 Undifferentiated: When marketers choose one segment by applying single marketing mix
then undifferentiated targeting is observed. It also means that no further filtration is
performed after segments are made.
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 Differentiated: McDonald’s can have a specific product for one segment and another
product for some components of the same segment. Then a differentiating targeting
strategy is applied with two or more marketing mix application.
 Concentrated: The idea about type of buyer is clearly communicated to marketers.
Hence, they choose one specific category in a segment through concentrated strategy
(West, Ford and Ibrahim, 2015).
McDonald’s company can choose undifferentiated targeting strategy for products and
services which are liked by almost all kinds of buyers. However, selection of specific strategy is
not possible until competitor strategies, self-resource analysis and nature of product is not
known.
2.4 Effects of buyer behaviour
The only position where a company’s outcomes are in a fifty-fifty situation of success
and failure is buyer decisions. Since, no business organisation can physically force a person to
buy particular service or product; they develop marketing strategies. There are some factors that
affect buyer behaviour:
1. Cultural: Cultural factors include inherited beliefs and values which are depicted by and
individual at every point while making decisions regarding a purchase from McDonald’s.
Sub cultural differences and social class is also considered in this factor.
2. Social: The people who constitute a society or community also influence and affect buyer
behaviour (Lantos, 2015). These can be aspirational groups, opinion leaders, kids and
their demands, family members, etc.
3. Personal: A buyer will be show highly deflective behaviour when he/she is affected by
personal factors that include age, occupation, income level, interests and opinions. The
choices a person makes are majorly affected by their own behavioural attributes.
4. Psychological: Motivation levels also play a role in affecting buyer behaviour. This
factor drives their perceptions and perseverance towards a product that is produced by
McDonald’s.
2.5 Positioning
Marketing strategy is incomplete without effective positioning of product. It is given this
huge importance because the efforts that have been made in segmenting and targeting particular
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set can be wasted when correct positioning is not performed. For example, McDonald’s happy
meal concept is segmented demographically for customers in the age group of 3-13 years of age
i.e. children. A differentiated targeting strategy is applied and two types of happy meals are
produced: one for boys and other for girls. After reaching this stage, positioning is done. The
happy meal for boys will have fighter planes as a toy while that of girls will have a Barbie doll.
The organisation needs to clearly communicate its products and the related benefits with
help of positioning (Gordon and et. al., 2015). The effectiveness of targeting strategy is increased
when competition is well handled with help of this tool. It is important to consider competitor’s
position in the market and especially in similar segment where company is targeting. Positioning
map can be used for better visual perseverance of proposed marketing strategy and expected
profits which can come after implementation.
3.1 Sustainable competitive advantage
Sustainable competitive advantage is a situation in which company doesn’t have to make
much efforts regarding acquisition of market share because customers are already in favour of
the brand (Barton, 2015). Following considerations while developing product/services will lead
to McDonald’s attaining this situation:
 Selection of a brand name is first significant step that leads to sustainable advantage. The
product that is going to be set corporate image of McDonald’s shall have a name that is
linked with company. This name shall be attractive and unique.
 Packaging is important because consumers are attracted towards interesting packaging
design a brand adopts. It must be copyrighted so that competitors won’t be able to
imitate. McDonald’s was the first company to develop a take away cold drink package in
the world.
 Uniqueness of commodity/services also brings consumer attention towards an
organisation. Competitor products and those offered by McDonald’s must be easily
differentiable. No element must be copied or imitated from other organisation’s products.
 Functionality and quality standards should not be compromised when sustainability in
competition is perceived. People value those brands that give great quality products in
affordable pricing (Wagner and Hollenbeck, 2014).
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 Food products are subjected to great safety risks. McDonald’s has to ensure that they
deliver safe products.
 Lastly, every activity that company is aiming to launch in both domestic and international
market must be in favour of the company and leads to brand reinforcement.
3.2 Distribution arrangements
Marketing mix has an element that is place which is categorised to understand
distribution channels and arrangements in the company. McDonald’s being a food and service
industry company, has to take care that efficient transportation and logistics are selected for
delivering and distributing its products and services. When availability and accessibility of
products increases, buyer recognition also increases (Barney and Hesterly, 2015). Following
types of distribution arrangements are made by McDonald’s to provide convenience to
consumers:
Intensive Distribution: When low priced yet impulsive products are concerned, intensive
strategy is approached. McDonald’s intensive distribution is categorised for chocolates and soft
drinks that is Coke majorly. All these products are directly available at retail outlets.
Exclusive Distribution: Certain products that are potential enough to grab maximum
consumers are exclusively distributed. It creates curiosity amongst buyers to make purchase at
any cost and anywhere this product is available. Such products are high priced and available at
select stores (Cui and Mallucci, 2016).
Selective Distribution: Selection of limited options for availability of products is the
purpose of selective strategy. These products and services are available but not at every retail
outlet.
3.3 Setting prices
Price is the significant element of marketing mix which helps in deciding success or
failure of a strategy. The prices that are decided for every product and services must be efficient
enough to incur profits and recover all expenses that have been made in complete production
process (Strauss, 2016). Company objectives, competition, expectations of consumers and a
value for money option are certain factors which need to be considered while devising prices.
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The choice of McDonald’s to price a product high or too low affects its market decisions largely.
There are various strategies which can be used for pricing efficiently. Some of them are:
Penetration pricing: A long term strategy is proposed in this category. McDonald’s will
initially keep product prices low but once large customer share is acquired, slowly and gradually
organisation will increase these prices. It helps in maintaining brand image with consumer share
(Mallen, 2013).
Skimming pricing: The case where high price is set and gradual decrease is experienced
after meeting estimated profits is considered as skimmed pricing. Although this strategy involves
risks, but long term profits are guaranteed when brand loyalty is acquired.
Competition pricing: An analytical approach when competitor prices are evaluated for
pricing McDonald’s own products and services. It is only possible when similar commodities are
sole. In this strategy, organisation holds moderate probability of acquiring good customer share
(Chong and et. al., 2015).
3.4 Promotional activities
Marketing objectives are defined to give a directional flow to activities that are
implemented in the marketing plan. Promotion is one such activity of this plan. It basically
engages consumers with company’s current products/services (Tuten and Solomon, 2014). The
purpose behind generating promotional strategies is to grab attention of potential buyers and
stimulate their interests in McDonald’s products. A promotional mix can be applied by
organisation to enhance brand value and recognition.
Advertising is a technique which involves effective communication through use of mass
media like social media, print media, television and radio. It covers wide audience but usually a
bit expensive. Public relations can also be developed in promotional strategy. It creates direct
connection with targeted audiences (Samiee, Chabowski and Hult, 2015). Sales promotion is the
strategy which involves providing coupons or discount offers. Personal selling is also a part of
promotional activities which includes company representatives selling products door to door.
McDonald’s has adopted advertising options for promoting its products and services.
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