Comprehensive Analysis of McDonald's Marketing Principles Report

This report provides a detailed analysis of McDonald's marketing principles, encompassing various elements of the marketing process, including situation analysis, strategy formulation, marketing mix decisions, and implementation. It explores the benefits and costs associated with a marketing orientation, examining different orientations like product, production, sales, and societal orientations. The report delves into micro and macro environmental factors influencing McDonald's marketing decisions, using PESTLE and SWOT analyses to assess the external environment and the VRIO framework to evaluate internal resources. It further examines segmentation criteria, targeting strategies, buyer behavior in different situations, and positioning strategies. The report also discusses product/service development for competitive advantage, distribution and pricing strategies, promotional activities, and the extended marketing mix. Finally, it compares marketing mixes for different segments, highlights differences between business and consumer buyers, and contrasts international and domestic marketing approaches, providing a comprehensive overview of McDonald's marketing practices.

MARKETING
PRINCIPLES

TABLE OF CONTENTS
Introduction......................................................................................................................................3
Task 1...............................................................................................................................................3
1.1 Various elements of the marketing process...........................................................................3
1.2 Benefits and costs of a marketing orientation........................................................................4
Task 2...............................................................................................................................................5
2.1 Micro and macro environmental factors influencing marketing decisions............................5
2.2 Segmentation criteria.............................................................................................................8
2.3 Targeting Strategy..................................................................................................................8
2.4 Buyer's behaviour in different buying situations...................................................................9
2.5 Positioning strategy..............................................................................................................10
Task 3.............................................................................................................................................10
3.1 Development of product/services to sustain competitive advantage...................................10
3.2 Distribution strategies..........................................................................................................10
3.3 Pricing strategies..................................................................................................................11
3.4 Promotional activity.............................................................................................................11
3.5 Extended marketing mix......................................................................................................11
Task 4.............................................................................................................................................12
4.1 Marketing mixes for two different segments.......................................................................12
4.2 Differences between business buyers and consumer buyers...............................................13
4.3 Differences in international marketing and domestic marketing.........................................15
Conclusion.....................................................................................................................................16
References......................................................................................................................................17
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ILLUSTRATION INDEX
Illustration 1: SWOT Analysis.........................................................................................................8
INDEX OF TABLES
Table 1: Cost-Benefit Analysis........................................................................................................5
Table 2: PESTLE Analysis..............................................................................................................6
Table 3: SWOT Analysis.................................................................................................................8
Table 4: Different Buying Situation..............................................................................................10
Table 5: Marketing mixes for two different segments...................................................................13
Table 6: B2B v/s B2C....................................................................................................................14
Table 7: International Market v/s Domestic Market......................................................................16
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INTRODUCTION
Marketing principles can be referred to as the ideas which form the basis for product
promotion strategies. Most of the business organization uses a variety of marketing principles for
the purpose of optimizing the market performance of existing product in order to successfully
launch this product into a new market (Aaker, 2011). It is vital for the company to adopt various
marketing principles. This present report describes the marketing principles of McDonald's.
Further, this report also describes the concept and process of marketing in the context of
McDonald's and also the concept of segmentation, targeting and positioning. Moreover,
discussion has been made on the extended marketing mix of McDonald's and also the usage of
marketing mix in different context of McDonald's.
TASK 1
1.1 Various elements of the marketing process
Marketing process basically means the process which is followed by firms in order to
discover unfulfilled customer needs and bring product in the market which satisfies those needs
of the customers. Marketing process is also followed by McDonald's in order to identify and
satisfy the needs of customers in an effective manner (Ferdous and Hossain, 2011). There are
range of elements involved in the marketing process of McDonald's which are enumerated as
follows:
1. Situation Analysis: Firm do thorough analysis of the situation and find opportunities
and threats available for the success of McDonald's. With the use of scanning tools such
as SWOT, PESTLE and value chain analysis, McDonald's assesses the whole business
environment in order to identify the favorable and unfavorable elements prevailing in the
internal and external environment (Michman, 2006).
2. Marketing Strategy: After analyzing best opportunity which will satisfy the customer's
need, McDonald's moves ahead in forming strategy which can be applied upon the target
market. It is done in order to attract customers towards the brand for satisfying their
needs. These strategies involve segmentation, targeting and positioning activities.
3. Marketing Mix Decisions: Product, price, distribution and promotional decisions will be
made at this level and McDonald's will decide that which product needs to be introduced
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and in which market, it will be launched, pricing strategy to be used and along with that,
location decisions will also be taken (Rangaswamy, 2013).
4. Implementation and Control: At this stage, company will implement all the decisions
that have made at earlier stage. Thus, after implementation of all the decisions,
McDonald's will assess its impact on the organizational working and on its employees.
Further, marketing manager will also put a control measure over the variations and
negative consequence which is identified during or after the implementation (Widmier,
2007).
1.2 Benefits and costs of a marketing orientation
There are basically four types of orientation which are adopted by organization in order
to sell their products effectively. In the contemporary world, marketing orientation is widely
used by the companies in order to survive in this competitive market. Marketing orientation can
be described as a business model which is focused to deliver e products as per the needs, desires
and requirements of customers. It has been adopted by McDonald's so that it can provide food
products according to the needs and preferences of customers (Melewar and Alwi, 2012). By
doing this, company gains many benefits. On the other side, firm has also to pay cost for it.
Various stages of marketing orientation are mentioned below as:
 Product orientation- Product orientation can be termed as the process in which
organizations completely ignore the need and demand of people in market (Michman,
2006). Further the products are developed only with the a prime objective of
maintaining its quality. Organizations that has adopted this process believes that if they
will be easily able to gain attention of customers by providing them best quality
products. The main focus of an product oriented company is to enhance the overall
quality of its products and services.
 Production orientation- It is an kind of approach that focuses on the production and
manufacturing process of an organization. Further businesses with such kind of
approach always seeks for enhancing efficiency of their processes and operations. One
of the key focus of business is on process of production rather than on determined what
to produce (Ferdous and Hossain, 2011). Some of the important characteristic of this
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approach includes narrow product lines, packaging that focus on protecting the product
and production cost that its completely based on pricing.
 Sales orientation- This is a kind of approach which focuses on promoting and increasing
sales of an organization irrespective of what it manufactures or supplies. As per this
concept companies believes that more and more customers can be attracted if an
aggressive sales techniques is used. Effective promotion and strategies that are focused
on price are some of the essential elements of sales orientation approach.
 Marketing orientation- It is an approach that focuses on meeting need and demand of all
customers in a particular market. In addition to this, needs of customers are kept on
priority and all products are developed according to the same. Market research is
considered as one of the most important aspects of this approach. Other than this, it can
be also stated that the companies which has adopted the concept of marketing
orientation measure and evaluates all their activities related to marketing at regular
intervals.
 Societal orientation- It is an approach where organizations operates with an objectives
of societal interest. At the initial stage, companies assess the interest of people in society
and then it delivers products according to the same. Companies which adopts this
approach maintains a balance between profit margin and interest of society.
Thus, benefits and costs of adopting marketing orientation are described as follows:
Table 1: Cost-Benefit Analysis
Benefits Cost
Marketing Orientation provides benefits to the
customers by building buyer value which will
aid firm to acquire customer loyalty and repeat
purchase.
There is the involvement of extensive and
expensive research and thus, it adds more cost
to the company.
This helps in responding demand in a quicker
manner which is created in the market. If,
McDonald's responds to the demand earlier
than it may gain the advantage of first mover
There is a greater risk involved while
conducting market research because
McDonald's might underestimate the market
and due to which wrong results can be
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(Cooper, 2000). interpreted.
Competitive advantage can be attained by
McDonald's if it provides services in
accordance to customer's needs.
There are diverse needs of all the consumers,
thus it is difficult for organization to provide a
range of services to different customer base.
Optimum utilization of resources can be done
if this approach is adopted because there will
be minimal wastage of resources and other
materials.
This process is time consuming and it may lead
to the wastage of precious resources of
McDonald's (Blankson and Kalafatis, 2007).
TASK 2
2.1 Micro and macro environmental factors influencing marketing decisions
McDonald's is such a brand which has many competitors and it provides such services
which are based on changing lifestyle, taste and preferences of the customers. Thus, it is
necessary for McDonald's to analyze its environment on a regular basis so that changing needs of
customers can be known. Moreover, for taking a range of marketing decisions, company has to
assess its internal and external environment (Blankson and Kalafatis, 2007). This assessment
influences marketing decisions in a diverse manner. The micro and macro analysis is described
below:
Macro Environment Analysis
For identifying the effect of outer environment on McDonald's, PESTLE analysis is being
conducted which is described below:
Table 2: PESTLE Analysis
Factors Impact
Political  McDonald's operates its business in over 100 countries
and every country has different political environment
which affects the policies of company in one or another
manner.
 McDonald's has to comply with the regulations which
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are concerned about the health and hygiene of their
citizens (Gnizy and Shoham, 2014).
Economical  Economic downturn affects the performance of business.
 Fluctuating foreign exchange rate impacts the
profitability of company.
 Recession rate is high in the UK thus, employment rate
has come down due to this reason.
Social  There is huge change in the society's thinking and their
standard of living has also increased, thus it signifies that
it is a good opportunity for McDonald's.
 Eating habit of people has changed over time and they
now prefer to eat outside which can be a gate pass for
McDonald's to enter in the new market (Terpstra, 2000).
Technological  There is rapid changes in the technological advancement
as new food production techniques help in reducing the
wastage of society. This can be adopted by the
organization to minimize the production cost.
Legal
 Laws about food packaging have changed and also other
rules such as environmental protection rules have been
forcefully imposed. This affects the business
performance.
Environmental
 There is a great concern of consumers towards
environment and thus, company has to introduce several
policies which is in favor of environmental protection.
Micro Environment Analysis
Some of the core micro factors which affects businesses includes its employees,
suppliers, investors, competitions and customers. Further it can be stated that workers of
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McDonald's have direct impact on its sales, profits and quality of all its products (Ferdous and
Hossain, 2011). In order to grow and deliverer best quality, the chain of restaurant is required to
have highly skilled and efficient employees. Suppliers are also very important micro
environment factors as they provide products and services that add values to McDonald's
products. The organization needs to make sure that it meet the demand of all its suppliers. Either
the production falls or firms starts suffering from quality when the suppliers needs are not
satisfied. Other than this, competitors also have direct impact on the operations and activities of
McDonald's. Rivals always seeks for the ways through which they can takeaway the customer
and market share of an organization. Another micro-environmental factors that affect
McDonald's includes its customers. Further buyers can be also considered as one of the least
controllable factors. The chain of restaurant is required to respond very quickly to the changing
need and demand of all its customers (Blankson and Kalafatis, 2007). While carrying out its
operations McDonald's the organization is required to take care of all its micro environmental
factors. In addition to this, strategies should be developed on the basis of adequate analysis of the
environment.
With the use of VRIO tool, an internal environment of McDonald's is assessed:1. Valuable: The human resource of company brings value to the firm, thus they create
competitive advantage for the organization. In McDonald's there are highly skilled and
able workforce is employed which create competitive advantage.2. Rare: The human resource are rare in this firm and also the McDonald's have economies
of scale on other resources such as the veggies comes directly from farms, buns are made
in the company itself which possess high amount of nutrition (Graham, 2008). Potato is
freshly chosen and than french fries are prepared.3. Inimitable: McDonald's provides the services which is unique in its own manner but
some of the services are common as other food chains.4. Organized: The resources are highly organized in the enterprise. Duties and roles are
clearly defined to the staff members and all the task are organized so it does not create
any chaos (Porter, 2011).
As per the above findings, SWOT analysis of McDonald's has been carried out, which is
enumerated as follows:
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Illustration 1: SWOT Analysis
(Source: What is SWOT Analysis, 2015)
Table 3: SWOT Analysis
Strengths Weaknesses
 Resources are rare and it possess
economies of scale on resources.
 Firm has a capability of employing
technical innovations in order to
improve the services of customers.
 Company is highly concerned towards
environmental protection (Aaker,
2011).
 Services are not inimitable and other
food chains also provide similar
services.
 Customers are getting switch to other
brands due to less innovations.
Opportunities Threats
 Can emerge into new markets.
 Societal needs or lifestyle is changing
which create many opportunities for the
McDonald's.
 Can switch to more advanced
technology.
 There is high threat of political
environment, economic downturn and
legal factor.
 Substitutes of this brand are many
which imposes greater risk (Ferdous
and Hossain, 2011).
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2.2 Segmentation criteria
This term can be defined as a marketing strategy which divides the broad target market
into small subsets of customers on the basis of common needs, interest and priorities (What Is
Market Segmentation, 2014). Segmentation is done on the 4 basis that is Demographic,
Geographic, Behavioral and Psychographic (Michman, 2006). The criteria used for each basis
for segmenting the market are heterogeneity, homogeneity, accessibility, measurable and
responsiveness. Other than this, there are various kind of criteria on the basis of which market
segmentation can be done. Some of the common criteria includes behavioral segmentation,
demographic segmentation, geographic segmentation, life style segmentation and psycho-graphic
segmentation (Melewar and Alwi, 2012). It can be also stated that behavioral segmentation
divides people in the market on the basis of their behavior. Some of the common behavioral
segmentation includes occasions, benefits, loyalty status, user status etc. On the other side,
companies can also segment their market on the basis of demographic variables such as age,
gender background etc. For example products and services can be made for a particular market
segment which consists of people between age 25 to 45. Companies can also divide market on
the basis of geographical location. For example an organization can aim at delivering products
and services to people in Asian countries. Lifestyle segmentation can be also carried out by
businesses where they are divide their target customers on the basis of their lifestyle. Products
can be manufactured and marketed for the people which posses rich and luxurious lifestyle. At
last the segmentation can be also done on the basis of psycho-graphic factors. Organization that
posses this segmentation divides their market social class, personality and lifestyle (Terpstra,
2000).
McDonald's have to promote its existing product in different market and for that purpose,
it has segmented its market on the basis of demographic and geographic segmentation that is
high to moderate income group people of age group 7-65 and they have high quality lifestyle.
Further the criteria used for this purpose is homogeneity and measurable (Rangaswamy, 2013).
2.3 Targeting Strategy
Among the diverse items included in the menu of McDonald's, the targeting have been
done for the Big Mac which has to be relaunched in the market with some modifications
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(Widmier, 2007). The targeting strategy used for this purpose is as follows but prior to that
understanding about the three types of targeting strategy is to be done which are conducted as
follows:
1. Differentiated Strategy: In this, all the segments are approached using different strategy.
2. Concentrated Strategy: Each segment is appealed using separate strategy for each
segment.
3. Undifferentiated Strategy: All the segments are communicated and attracted using single
strategy or information.
For Big Mac, the targeting strategy will be used to communicated the message is
differentiated because for young group there will be different and for children targeting will be
done in a different manner. Further, for the old age people communication of information will be
done in a separate manner (Cooper, 2000).
2.4 Buyer's behaviour in different buying situations
Buyer behaviour plays a very important role in the growth and success of any
organization. Further it consist of set of characteristic that helps a person to make decision
regarding whether to buy a product or not (Gnizy and Shoham, 2014). Companies are required to
understand buyer behaviour to determine the why people in market choose particular product or
services. In addition to this, organizations are also required to take care of the stages of buyer
behaviour process. Business enterprise needs to be aware of various factors that directly or
indirectly affects the buying behaviour of people in market.
Table 4: Different Buying Situation
Buying Situations Buyer's Behavior Impact on Marketing
Activities
Complex Buying Situation Under this situation buyer take
high amount of time for taking
decisions. They thinks that
whether to avail the services or
not (Blankson and Kalafatis,
2007). They ask other
Marketing of the brand or
product is done by spending
high cost on its promotion
because the product or service
is precious.
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