Marketing Principles and Strategies Applied to McDonald's: A Report

This report comprehensively analyzes the marketing principles and strategies employed by McDonald's. It begins by outlining the various elements of the marketing process, including environmental scanning, strategy development, and plan implementation, with a focus on McDonald's operations. The report then delves into the benefits and costs of a marketing orientation for the company. A significant portion of the report is dedicated to examining the micro and macro environmental factors that influence McDonald's marketing decisions, utilizing the PEST framework for the macro environment. It explores segmentation criteria for different markets, targeting strategies for various customer segments, and the impact of buying behavior on marketing activities. The report also covers product development, distribution, pricing, and promotional strategies, including an analysis of the extended marketing mix. Finally, it differentiates marketing approaches for consumer and business markets and discusses the nuances of international versus domestic marketing for McDonald's. The report uses examples like the Happy Meal and McCafes to illustrate concepts, providing a holistic view of McDonald's marketing practices.

MARKETING PRINCIPLES

Table of Contents
MARKETING PRINCIPLES.............................................................................................................1
TASK 1................................................................................................................................................3
1.1 The various elements of the marketing process in McDonald's....................................................3
1.2 The benefits and costs of marketing orientation in McDonald's...................................................4
TASK 2................................................................................................................................................4
2.1 The micro and macro environment factors influencing marketing decisions of McDonald's......4
2.2 Segmentation criteria to be used for McDonald's products in different markets..........................5
2.3 A range of products and services McDonald’s offer choose a targeting strategy.........................6
2.4 Buying behaviour affects marketing activities in different buying situation in McDonald's.......6
2.5 A new positioning for a Happy Meal of McDonald's...................................................................6
TASK 3................................................................................................................................................7
3.1 McDonald's products are developed in order to make sure that competitive advantage is
sustained..............................................................................................................................................7
3.2Distribution strategies used by McDonald’s..................................................................................7
3.3 Pricing strategies used by McDonald's.........................................................................................8
3.4 Promotional activity used by McDonald's is integrated to achieve marketing objectives............8
3.5 An analysis of the additional elements of the extended marketing mix for McDonald's..............9
TASK 4.............................................................................................................................................10
4.1 Marketing mixes for two different segments in the consumer markets of McDonald's ............10
4.2 Differences in marketing products and services to business rather than consumers..................11
4.3 International marketing differs from domestic marketing in McDonald's.................................11
CONCLUSION.................................................................................................................................12
REFERENCES..................................................................................................................................12
Illustration Index
Illustration 1: Positioning Strategy.......................................................................................................9
Illustration 2: Distribution Channel....................................................................................................11

Re: INTRODUCTION
Marketing principles are referred for making decisions and analysing the actions of the
managers further it also helps in making successful management. For the present research
organisation chosen is McDonald's. It is a popular brand in fast food chain. The company promote
their brand by colourful designs and images to attract more loyal customers (Dooley and et. at.,
2012). McDonald's has 1200 outlets which are set in UK and delivers good quality food and
services to their trusted customers. The first restaurant in UK was opened in 1974 and still it is
going on Woolwich, London. McDonald's is expanding their business in UK as well as
internationally by its large variety of products. McDonald's deals in varieties of products like
hamburgers, chicken, French fries and desserts etc. and it has introduced Happy Meal for children.
In context to changing of consumer tastes and preferences, the company has enlarged its food
products into salads, smoothies, fish wraps etc.
In this research, the research covers McDonald's marketing elements and its process by
analysing its micro and macro environment through segmentation, targeting and positioning of the
food products by various market mix strategies like price, product, promotion and place of the
products according to the consumers' tastes, preferences and lifestyles.
TASK 1
1.1 The various elements of the marketing process in McDonald's
The various elements of marketing process of McDonald's are categorised into marketing
environment scanning, marketing strategy, marketing plans and monitoring and controlling of the
elements (Henley and et. at., 2011). Marketing Environment Scanning: Company is analysing the external environment of the
business by evaluating environment through needs and wants of the customers and
changing phrase of the environment and making effective relationships between
organisations and suppliers. information about its product and then make change according
to the customers' Marketing Strategy: It is an approach by the company through which they can gather
preferences. McDonald's have made different types of strategies for their products and
some of the strategies include segmentation, targeting and positioning etc. Marketing Plans: To gain more market share and profitability, McDonald's uses marketing
mix tool to plan its strategy in which it includes product, price, promotion and placing of
the product.

 Monitoring and Control: This element is used in observing the other elements like research,
plans and strategy to be used in the organisation effectively. McDonald's is focusing on
customer satisfaction and product orientation because the company is managing its product
to gain more customers.
The marketing process to work effectively in the organisation, the company has to analyse its
internal as well as external environment by using SWOT analysis (Pahl and Richter, 2009).
 Strengths
 Highly recognised brand
internationally
 Huge varieties of food products
 Good promotional activities
 Weakness
 Management of Franchisee
 No innovation in the product
 Low profit margins
 Opportunities
 Good service quality
 Venture in new markets
 Innovation in products
 Threats
 Changing tastes and preferences of
customers
 Health conscious people is major threat
 New competitors like KFC, Burger
King, Pizza Hut etc.
1.2 The benefits and costs of marketing orientation in McDonald's
Marketing orientation is defined as the products and services are designed as such so that
they can meet the requirements of the customers through production orientation. McDonald's
marketing orientation is all about unique combination of various marketing tactics and strategy so
that the company can fulfil the operational opportunities through fulfilling customer’s
requirements. McDonald's can give benefit to the customer by giving their users new experience
and good quality of the products and a clean environment. If the company meet the requirements
of the customers then the organisation can gain profitability as well as more loyal customers
(Blythe and et. al., 2008). Marketing orientation benefits helps the production by producing more
products which leads more demand in the market and sales helps in the probability of the business
and also gain more opportunities for the organisation. Marketing activities also helps in promoting
the business as well as increase market share in the market. If the production, sales and marketing
tools are fulfilling its objectives then the company provides good quality of products and services
to the society to meet the requirements of the customers.
The cost of marketing orientation in McDonald's includes research of the organisation by

using techniques to know its current position, its existing customers and the desired benefits of the
organisation. The company is gaining its target market by strengthening its brand value by the
organisation's approach to accomplished its goals.
TASK 2
2.1 The micro and macro environment factors influencing marketing decisions of McDonald's
To evaluate the micro environment influencing marketing decisions,
To evaluate the macro environment of McDonald's, PEST technique is used:1. Political Factors: McDonald's have to meet up the requirements of the government where
the franchisees are located related to the health and hygiene of the people. The government
are now conscious about people's health which are affecting in form of obesity, high
cholesterol etc. because the company is seen as junk food. The others factors include
increasing international trade agreements, pending tax reform, evolving public health
policy etc. which acts as opportunities for the McDonald's.2. Economic Factors: The company emphasis on economic factors like raw materials which
are to be supply locally and about its tax rates, employment rates and its taxes rates etc.
which are key factors of McDonald's to operate its business successfully. The factors
include stable growth of the economy, threat from U.S. Economy etc. which mainly
threaten the organisation.3. Social Factors: The social factors of the company include taste and preferences of the
customers and their changing lifestyles which affects sales performance of McDonald's
such as criticized for their products for negative health effects. The company also deals
with factors like targeting low income households, expanding business globally by
targeting more customers.4. Technological Factors: McDonald's can improve their management and productivity while
saving time and utilizing resources. Furthermore, the company can provide free Wi-Fi and
computing devices to attract more customers. The company is improving business
efficiency by increase its R&D activities in the the organisation. McDonald's can increased
their sales by using company's website and mobile app.5. Legal Factors: In this, company analysis the impact of the laws and regulations on firms.
McDonald's follows the equality act in the organization where similar pay is given to all the
employees. The business enterprise should emphasis on the policies to secure animal
welfare regulatory among meat producers.

6. Environmental Factors: McDonald's environmental factors also affects the sales
performance of the organization. To increase their sales performance, the company can
expand their CSR strategies, change in climate also plays a crucial role which can give
negative effects on the company's supply chain.
2.2 Segmentation criteria to be used for McDonald's products in different markets
The marketing strategy which divides its target market into sub groups on the basis of
consumers, its needs, consumer's behaviour and place is known as Segmentation. To segmenting
the “Happy Meal” product of McDonald's, the company has segmented on the four segmentation
criteria i.e. demographic, behavioural, geographical and psychographic segmentation (Hassan and
Craft., 2012). Tesco can be segmented in the areas of the market where there is inadequacy of
vitamin A an. Demographic Segmentation: McDonald's deals with all the age group because the company
offers wide varieties of products which is suitable for all the customers. The organisations
have all types of the customers such as family, professionals, university students and
children. The products like pineapple sticks, carrot sticks etc. are for the children and
Hamburger and Crisp Chicken Wraps are for students and professionals etc.
 Psychographic Segmentation: In this segmentation, McDonald's concentrates on lifestyles
and class of the customers. The company is offering Organic Milk which is the product of
Happy Meal to the people who are health conscious and intake low calorie food. There are
products like Robinsons Fruit Shoot and other juice which are for the people who are diet
conscious.
 Behavioural Segmentation: McDonald's introduced new as well as modified products
which contain cholesterol content in it. The company is applying pricing strategy in which
it is serving low priced products to the low and middle class people to attract more
customers. McDonald's organizes occasions like birthday parties for kids etc.
 Geographical Segmentation: Youth and professionals are the major customers of the
McDonald's and these types of customers wants coffees for their work to get freshen up. So
the company is setting number of outlets of McCafes around the country to attract more its
loyal customers. Geographical segmentation of McDonald's is done on the basis of tastes
and preferences and regions of the locality.
2.3 A range of products and services McDonald’s offer choose a targeting strategy
McDonald's is targeting customers of all age group through their wide range of food

products according to their needs and requirements. For professionals, they can start the delivery
services by which the products can be easily delivered to their offices or at their homes and by this
they can get benefits like they can save time and their wok culture doesn't get affected. To target
the family, McDonald's can give their customers economic range of products which are easily
affordaRe: ble and can attract more customers further they can also offer vouchers or some
discount on their few food products (Smith and Lakhani, 2008). To attract children, the enterprise
can provide burgers with small toys and parents always need clean and healthy environment for
their children. For health conscious people, they are providing various products which will not
affect their health such as Organic Milk. McDonald's also targets university going students and
youth fRe: rom middle and upper class because the prices of the products are low as compared to
others. The company others products is depend on the tastes , preferences , lifestyles of the
customers and according to the region of the target market.
2.4 Buying behaviour affects marketing activities in different buying situation in McDonald's
Buying behaviour affects the company's sales and its performance by analysing customers'
needs and requirements and their purchasing power to buy the products. One of the situation can
be in context of recession, the company is facing tough time because of low sales and less people
are visiting McDonald's and by this it is affecting the performance of the company. Because of the
recession, the demand of the product decreases which leads to less profits and less market share of
McDonald's in UK (Kotler, 2008). Buying behaviour of the buyer plays major role in inflencing
the sales as well as profitability of the organisation.
Other situation can be when economy is going in good pace and buying behaviour of the
consumers increases which can result in good performance of the company as well as customers
increases which lead to high profitability. When the market is good then the company can provide
with new and innovative products to the customers because the organisation can take risk for
innovative products and it will not affect company's profitability.
Model influencing buying behaviour of psychological factor:
Motivations It is a purchasing behaviour of the customers and to motivate the customers
McDonald's should focus on the needs of the consumers and try to fulfil it.
Perception McDonald's is innovating its pronotional activities through colorful brands
and images so that customers sensory stimulates the products which attracts
the customers.
Learning The company provides positive experience to the customers so that they
cant't face through negative experience which can lead to lower number of
the sales.
Beliefs and It is the major barriers of the organisation because customers acquire

Attitudes influences from family, friends etc, so it is hard for the company to deal with
these type customers because it fluctuates the sales of the organization.
2.5 A new positioning for a Happy Meal of McDonald's
The marketing strategy which focuses on their brand value to stand high in the market from
other competing brands is known as positioning. McDonald's is the low cost family restaurant in
fast food joints which targets all types of customers. The organization’s positioning strategies
focuses on children through Happy Meal by giving free toys and access to the playground.
McDonald's can position its products at the airport for high and social class customers which can
be attracted easily (DeSarbo and et. al., 2009). The company can expand their outlets in centre of
the city so that consumers can easily access and can locate in the malls for the family on the
weekends outings through its brand strategy. For professionals, they set up their outlets in
industrial area so that they can easily buy their food products. Other positioning can be done by
using promotional activities like sponsoring national and international sports events and opening
the restaurants 24 hours a day for the professionals. Advertising is also an effective tool for
McDonald's in which they can introduce new products to their customers and attract them to buy
their food products.
The company offers four different types products which has different positioning situation
which affects the competing brands of the organisation. There are products like the customers
wants such as high price but low quality, high price with high quality, low price with low quality,
low price with high quality. High class customers prefer high quality of products , price doesn't
matter for them whereas low class and middle class prefer good quality products with less money
because they are price conscious people. So that company deal with different types of the products
with differentiated price and quality which influence the customers need.

(Source: blog.ecornell.com, 2015)
TASK 3
3.1 McDonald's products are developed in order to make sure that competitive advantage is
sustained
If the company provides good quality products at the lower price or provides high benefits
and services to the customers are known as competitive advantage. McDonald's deals in the food
producRe: ts which sell their products in the lowest prices as compared to the other competitors. To
keep the prices low the organisations has to keep their prices' low and to be efficient in their
productivity. By doing this, the company will become superior to other in food joints which leads
to good sales performances which will further increase the customers as well as profitability of the
organisations and also help in expanding the market share in UK (Kakavelakis, 2010). Other
competitive advantages are their speedy delivery to the various place which helps the company to
gain number of customers. McDonald's serve other various competitive advantages such as its
excellent food quality, brand value, cleanliness and great service quality. McDonald's meets needs
and requirements of the customers to accomplish their objectives and to become one of the best
distributors of food products in the world.
There are different stages to developed a new product and that consists of as follows:
1. Idea Generation
Illustration 1: Positioning Strategy

2. Idea Screening
3. Concept Development and Testing
4. Business Analysis
5. Product development
6. Test Marketing
7. commercialization
8. Launch
3.2Distribution strategies used by McDonald’s
Distribution is the part of marketing mix strategy in which it shows how to distribute their
products to the customers. McDonald's is leading food service retailer which has various
distribution channels all over the country. The effective distribution strategy focuses on strong
market share where the organisation has to set up their retail outlets in the malls so that the
customers can easily reach to the place and acquire food products. The retail outlets should be
located in the centre of the city because the customers can easily reach there and more number of
the customers can get attracted. McDonald's has set the unique cold chain which is sustain the
integrity food and conserve its freshness throughout (Richter, 2012). The company avoids high
quality of research and technology so that it can't degrade its brand image. Location is the major
factor to attract customers and the cost related to leasing facilities and the building plays a crucial
role in the organisation's profits. For the effective marketing management, site location decisions
are the key factor in the making of marketing strategy of the products so that they can attract more
customers to buy their food products. The company should set up their retail outlets in the
industrial area so that professionals can be easily attracted towards their food products and there is
a possibility of delivering them so that their office hours doesn't affected.
There are two distribution channel i.e. business to business channel in which manufacturer
sells its products to the retailer or wholesaler to deliver at final customers. Whereas other
distribution channel is business to consumers where manufacturer deliver its products direct to the
consumers with no channel in between. Both the channels effectively work in the organisation to
meet up the requirements of the consumer demands.

(Source: www.web-books.com, 2006)
3.3 Pricing strategies used by McDonald's
McDonald's has a specific strategy which is followed by the all the food products and their
products and the prices strategies which come under marketing mix to market the products and
services of McDonald's are further analysed under following heads (7 P's of marketing mix. 2015): Product Line Pricing: When the price of the products shows the advantages of the product
through its price is known as product line pricing. McDonald's also follows product line
pricing which gives a large number of products which indicate the merits of that range.
Customer can order a burger or burger burger with French fries at giving additional cost to
the organisation.
 Product Bundle Pricing: When different types of products come collectively in one
package it is known as product bundle pricing. McDonald's also focuses on this pricing
strategy to combine various food products in one bundle. The company is offering product
bundle pricing on some of the McDonald's products, one of the product is Happy Meal
which includes burger, French fries and coke and it can offer different options in the burger
such as McChicken burger, Hamburgers etc.
 Promotional Pricing: McDonald's has unique promotional pricing through its products and
the company is giving discounts on the products which are combined together to come in
same package. Happy Meal is one of the examples of the promotional pricing in which
Illustration 2: Distribution Channel

various food products are given in one package and the price of the entire package is less
than the individual food product.
 Value Pricing: This pricing strategy is used when the economy is not good or there is
recession period in the country when pricing of the products will be low as compared to the
normal days. When customers get price conscious and force the market of the McDonald's
to lower its price and to follow value pricing strategy. Then the organisations will rved
value meal to their customers.
3.4 Promotional activity used by McDonald's is integrated to achieve marketing objectives
Promotional activities are effective tools for the marketing management of the marketing
mix because it covers all types of the marketing communication (Talwar and Ali, 2013). The
promotional activities of McDonald's includes advertising , personal selling, sales promotion and
public relations etc. Advertising: McDonald's focus on the advertisement more than any other promotional
activities and the main objectives of advertising their food product is to make customers
aware about it and to feel good for the product and to remember about the products.
McDonald's wants to passes its products to right consumers effectively through its
promotional activities like televisions. Hoardings, newspapers and magazines etc.
Advertising is the powerful tool to influence the customers to buy their products and to
improve their sales performance of the organisation. Personal Selling: McDonald's have good number of skilled employees which worked in the
different retail outlets so by these employees the organisation can direct communicate to
the customers on the direct basis to know the tastes and preferences as well as requirements
and feedback about the products by the customers. Employees worked according to the
mod and attitudes of the customers so that they can communicate easily. Sales Promotion: The organisation concentrate on different strategy to promote its business
by organising programmes, contest, functions etc. and distributing of different discounts
and vouchers on the products on the various occasion and giving free toys to the children
for attracting them. The company can organises different health related programmes or
sponsored the various contests and functions etc.
 Public Relations: The skilled employees of the organisations plays a crucial role in
interacting with customers and making public relations. McDonald's employees are to be
interactive to the customers so that to know their complains and feedback about the
products and later on to improvise it. The company is providing suggestions box at their