Marketing Principles: A Report on McDonald's New Product Launch

This report provides a comprehensive analysis of McDonald's marketing principles and strategies, focusing on the introduction of new products like organic salads and oats to expand its market share. It begins with an introduction to marketing principles and the marketing process, including evaluating opportunities and threats, planning strategies, and reviewing effectiveness. The report then delves into market orientation, discussing its benefits and costs. A detailed examination of the macro and micro environments affecting McDonald's, including political, economic, social, technological, legal, environmental, customer, employee, and supplier factors, is presented. The report further explores segmentation, targeting, and positioning strategies, emphasizing demographic and geographic segmentation, especially in the UK market. It analyzes buyer behavior and its impact on marketing activities, and concludes with a discussion of positioning strategies, highlighting the promotion of healthy, organic food options and family-oriented marketing to capture new markets and create a competitive advantage. The report underscores the importance of adapting marketing strategies to changing consumer preferences and the competitive landscape.

MARKETING
PRINCIPLES

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
1.1................................................................................................................................................3
1.2................................................................................................................................................4
2.1................................................................................................................................................4
2.2................................................................................................................................................6
2.3................................................................................................................................................6
2.4................................................................................................................................................7
2.5................................................................................................................................................7
3.1................................................................................................................................................8
3.2................................................................................................................................................8
3.3................................................................................................................................................9
3.4................................................................................................................................................9
3.5..............................................................................................................................................10
4.1..............................................................................................................................................10
4.2..............................................................................................................................................11
4.3..............................................................................................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Marketing principles is the technique or guidelines which helps the organization to
market its products and services in a systematic format. There are different ways of marketing
the products and the methods are generally dependent on the objectives of the company (BOSE,
2010). In the highly competitive era, the product is not able to make its place if it is not
appropriately marketed by the firm. In the present report, McDonalds has been taken into
consideration which is a fast food joint and operating in many countries. But, with the increasing
competitive in the same industry it is planning to introduce organic salad and oats for the
different target market to increase its market share. Further, the document discusses upon the
micro and macro analyzes which are required to be carried out by the company in identifying
needs and preferences. The firm will plan the segmentation, targeting and positioning strategy to
effectively attract the users. Other than this, marketing mix will be discussed which are
beneficial for the firm in promoting the product.
1.1
Marketing process is an important means which helps the company to make their
customer aware about the products and services which they are producing. For effectively
marketing the product it is required for McDonalds to follow proper market process. Elements of
marketing process are as follows:
 Evaluating the marketing opportunity and threats- to identify the opportunity and
threats, the firm needs to analyze the environment in which they are working. Company
needs to see the demand and the scenario in which they will carry out their operations.
 Planning the marketing strategies- Marketing strategy includes selecting the target
customers. As McDonalds is operating from many years so its target customers are set.
But for launching new product (Jobber and Ellis-Chadwick, 2012). It is required to
identify its target customers.
 Promotional tactics- it includes different forms of promotional mix which the firm can
use to attract the customers and lure them to buy the product or use their services. In this,
the organization has to analyze the sources which are used frequently by their target
customers.
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 Reviewing the effectiveness of strategies- In the last stage, the firm is required to review
the strategies which are made by the strategist. This will assist in identifying the areas
which are lacking and with the help of this; the organization can make new tactics to
attain success (Kotler and Armstrong, 2010).
1.2
With the frequently changing taste and preference of the customers, now it is required for
the company to learn the minds set of the user. As nowadays all the customers wants new
product so this market orientation helps the firm in development of the new service. There are
several benefits and cost attached to market orientation which is as below.
Benefits
By carrying out market orientation, McDonald can continuously improve its product
according to the taste and preferences of the customers (Kotler, 2008). The firm will be able to
attract new customers without developing new service. In this, the cost of making new product
will be saved and the firm will increase its market share. Besides this, another benefit is that by
taking care of the customers, the firm will be able to make the users loyal towards their services
which will help them to fight competition.
Costs
The cost involved in market orientation is huge because extensive research is required.
For McDonald it is difficult because they are operating in many countries and they are required
to carry out the research in every part (Hanson and Kalyanam, 2007). Further, the man force
which is needed in carrying out the task should be skilled plus the technology which is used is
expensive. So the cost involved in doing the research is vast and the firm requires huge amount
perform market orientation.
2.1
The firm is affected by the environment in which it is operating its business. So it is
essential for McDonald to use different tools and techniques to identify the competitiveness
regarding marketing which is prevailing in the economy. So carry out the analysis, macro and
micro factors needs to be identified.
Macro environment (pestle)
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Figure 1: macro environment
(Source: macro environment, 2016)
 Political factors- For operating the activities in different countries, health reforms of the
nation affect the activities of the company. If the health norms are rigid in the country,
then McDonald will not be able to make profit as the consumption will be low (Henley,
Raffin and Caemmerer, 2011). So because of these norms, the firm is making healthier
products so that it can earn profits from the citizens.
 Economic factors- The purchasing power and the strength of the economy decides the
opportunity which McDonald have in the nation. As it is the luxury product, so it is not
necessary for all the people to buy (Market Analysis, 2014). To earn huge profit, the firm
is required to carry out its activities in the country which have the income to spend on the
services.
 Social and cultural factors- nowadays because of the increasing diseases, people are
becoming health cautious and are trying to lose weight. So it has become a threat for the
firm as they are serving junk food which is not healthy (Armstrong, Adam, Denize and
Kotler, 2014). So the firm has to analyze the trend and serve according to needs and
demands of the customers.
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 Technological factor- With the increasing use of technology, McDonald is able to market
its product by using different sources. Further, there marketing has become easier and the
customer can be easily reached with the technology (BOSE, 2010).
 Legal factors- Every country government wants that there citizens should be healthy. So
they have made major reforms regarding the health of people. McDonald has gone
through various quality checks regarding their food products.
 Environmental factors- McDonald has been working to protect the environment as the
firm always use paper bags for the parcel. They do not use plastic bags which harm the
environment (Hollensen, 2015).
Micro environment
 Customers- all the products and services are made according to the needs and
demands of the customers. As per the latest trend, the firm is marketing its products
through social media and they are using the sources which are adopted by the young
generation (DeSarbo, Grewal and Scott, 2008).
 Employees- the requirement of the employees is better pay and good working
condition. These are the aspects which are provided by the company to their
workforce.
 Suppliers- In the fast food industry, suppliers are the important element. The firm is
required to pay them timely so that they can deliver their raw material in the given
time (do Paço and Raposo, 2009).
2.2
Due to the increasing competition, McDonald is required to make the segmentation
strategy so that they can effectively focus on those customers. As the firm from starting is
focusing on the age group of the customers and the area in which it is operating its business.
McDonald will develop its product by keeping in mind demographic and geographical segment.
In the initial the firm always focused on the young generation and it is predicted that McDonald
is for the young people (Wright, 2008). So by developing healthy salads and oats they are
emphasizing on the middle and old age people. Further, the firm is planning to launch its product
in UK market because the citizens have become health cautious and because of targeting new
market they are stresses on old age group. They are targeting the age group above 45 years as
they are the one who are fond of salads and oats for the old. The company will use the organic
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vegetables as well as the spices which are generally used by them. The objective is that no other
fast food joint has ever targeted the old generation. So develop competitive advantage it is
essential to expand their market (Borg, 2009).
2.3
According to the demographic and geographic segmentation, it is easily to identify the
target customers for the new product. Basically, the one who uses gym to burn their calories and
because of that they are not consuming junk food which is decreasing the profit margin. By
seeing this, the firm has found new way to attract them by giving them organic salad. This will
help to maintain their diet and the organization will not suffer from loss (Cateora, 2008). Further,
vegetable oats are for old age people who are above 70 years as through survey it has been found
that they fond of oats. This is the major change in McDonald as by introducing these products
they are on largely captured the major market share. The idea behind choosing this target market
is that this is the only age group whose food is not easily available in the market. For them it will
be a new product and will be made according to their taste and preferences (Aspelund, Koed
Madsen and Moen, 2007).
2.4
Marketing is carried out for the customers, so the affect of buyer behavior is high on the
marketing activities carried out by the organization. With the change technology, the McDonald
is now marketing its product through social media, as this is the source which is used by all age
group customers. But in the normal life, McDonald carries out marketing in the usual way (Yin
Wong and Merrilees, 2007). But at the time of festival season or holidays they plan to features
their products and services continuously to lure the users to buy the product. At that time, the
families generally plan to visit the fast food joint. Besides this, recently McDonald was claimed
that it uses different items which are not healthy for the users. It changed the buying behavior as
they did not consume the product. By witnessing the changing behavior, the firm started to
advertise product by giving the CSR message and depicting that it does not contain any harmful
substance (Kaur and Rani, 2008). Further, when any product is launched of the competitors, then
the organization market its services in streets and introduce new ways of it. This is because they
are afraid that the customer can switch to different brand. The marketing activities changes
according to the buyer’s behavior in different situation.
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2.5
Due to the increasing competition, if the company wants to make their product successful
it is necessary to position it effectively in the minds of consumers. The positioning strategy is
that they will promote their product through the attribute which are having. Advertising will be
done on by emphasizing on healthy and organic food. The main feature of the salad is its content
which is used in it (Peattie and Peattie, 2009). Besides this, another strategy which will be used is
that all the people in the family can consume food. Now by introducing Oats in the menu, it has
made the food items for all the family members. Further, they can promote their product by
creating emotional value by uniting their family at dinner. By launching the new product, 2
untapped markets are captured by them. At the time of advertising their product, organic salad
and different flavored oats will be emphasized. In this, advertisement will be made by focusing
on health and on the oats for old people (Jobber and Ellis-Chadwick, 2012). This positioning
strategy will make the image of healthy food salad in the minds of customers. In UK, old people
always like to consume food outside, so at that time McDonald will come to their mind. This is
the positioning strategy which will be followed to make the customer remember the products
(Kotler, 2008).
3.1
In the highly competitive world, the firm should make product which can compete with
the products of competitors. First the product should be different from the competitor’s item. As
in this case, the McDonald has made those products which are introduced by any other firm. In
this, they have focused on health which is the needs and preference of the present as well as
future time (Hanson and Kalyanam, 2007). With the help of organic salad, they are the first to
tap this market segment. It will help in creating and maintaining the competitive advantage.
Besides this, to make the firm competitive, McDonald has launched oats for the old age people
who do not have choices when they do outside to eat. The idea which has been induced in the
products is different in the fast food chain. Through the organic salad as well as oats they have
entered those segments where there is no competitive. McDonald is king of that market share.
Further, if any competitors will introduce the same product then the company will have the
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advantage of first mover and the customers would have become loyal. These things will help in
developing and sustaining competitive advantage (Henley, Raffin and Caemmerer, 2011).
3.2
Customer convenience is essential for making the product successful. Sometimes, the
consumer does not demand for the product because he/she knows it will not be available. But
McDonald has taken care of the distribution so that the users can easily get the product (BOSE,
2010). There are many retail chains in UK and they have provided organic salad and oats to all
their chains. So that the needs and demands of the users does not remain unfulfilled. Even for the
oats also they have introduced home delivery services if the consumer is above the age of 70.
Sometimes, it is not possible for the old people to take the services of McDonald. So especially
for them the oats will be delivered at the door step. This will provide convenience to the users
and the value of the firm will rise in the minds of the users. By using proper distribution channels
the firm can increase its target customers and the users will be able to consume organic salad and
oats (DeSarbo, Grewal and Scott, 2008). This is basically done to retain them and make them
loyal towards the organization.
3.3
Prices are the basic indication regarding the objectives of the company. For the organic
salad and oats the firm has set nominal prices which are affordable by healthy and old citizen.
McDonald objective is not to only increase profit. But they want to raise income through
increasing their market share. With this aim in mind, they want that the entire consumer should
consume the organic salad and oats. Further, the prices are kept low because they know that old
age people generally do not have high income (do Paço and Raposo, 2009). Their main purpose
is to attract the customers and buy the products. The company wants to increase the sales not just
profit. As per the market condition, it is introduced only in UK by seeing the needs and
preferences as they want to test their products. If it’s successful then the firm can launch in other
country (Guo, 2012). By lowering down the prices it will attract lower income group as well as
because of healthy diet and oats higher income group will be easily attracted. This will help them
to expand their market and increase the target customers. According to the market condition,
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there is no competitor in thus field, so the price is in the hands of McDonald but to tap new
segment they have set low prices (Borg, 2009).
3.4
According to the objectives of the company, the firm decides is promotional activity. In
case of McDonald the aim of the organization is to increase its market share. So the focus of the
fast food chain is making more and more people aware about the organic salad and oats which
they have introduced for the users. Further, because of this, they are using all the media like
television, newspaper, hoardings because it is regardless of income group. They want to increase
their customer base so the firm is using all the channels (Aspelund, Koed Madsen and Moen,
2007). They are promoting their products by positioning as healthy item for consumption
because there strength is there organic food which is used in making salad. Besides this, there
main aim is to make the customer remember about the item which has been recently introduced.
As their market objective is to easily enter the new market segment so they have quoted nominal
price to attract the customers. In promotional campaign they are focusing on price as the
company is providing organic salad in nominal price. Another marketing objective is to build
customer relations as by this in advertisement they are making the customer aware about the
home delivery service (Yin Wong and Merrilees, 2007).
3.5
Figure 2: extended marketing mix
(Source: extended marketing mix, 2016)
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Marketing mix is a tool which focuses on different areas which are necessary to be
emphasized for attaining competitive advantage. The extended elements of marketing mix are
people, process and physical evidence (Kotler and Armstrong, 2010). People are the employees
who are making the product. McDonald have efficient workforce who are good in making the
organic salad as well as oats. They are trained and they only hired in the company. Besides this,
the physical evidence is the packaging which is done by the company (Kaur and Rani, 2008).
They are using paper bags which are environmentally friendly. This creates a positive image in
the minds of users. The process which is used for making the organic salad is hygienic and all
the customers know that they will not use any item which will be harmful for the users (Carlson
and Manktelow, 2016).
4.1
The two segments which have been chosen by McDonald are demographic as well as
geographic segment. In demographic, the company will use product mix as the organic salad and
the oats are made according to the taste and preferences of the consumers. Further, through the
attribute only they will be able to attract the users. The main feature in salad is its features which
are never thought by any other competitors (Peattie and Peattie, 2009). Further, the oats as a
product is not made by the fast food joint because they generally focus on burgers and sandwich.
In geographic segmentation, the place as a marketing mix is considered because according to
needs and preferences they demand is more in the country. As the need is more so they have
provided organic salad and oats in all the McDonald chains. Further, for the people convenience
the company is delivering oats at the door step to provide them special benefits. So McDonald
UK has preferred UK as their initial stage of launching because the market is vast and the need is
more. Place is the best marketing mix which will make the consumer to consume organic salad
and oats easily without any hindrance (Kaur and Rani, 2008).
4.2
There is huge difference between marketing in B2B and B2C as the users are different in
both the cases.
Business to business Business to consumer
The target market is small as there is only one
two business to whom the products are being
In this case, the whole world is the consumer
of McDonalds and the market size is very large
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marketed. as compare to B2B.
The products are purchased in bulk so they
do not require huge marketing for all of
them (Borg, 2009).
In B2C, through marketing, the firm has to lure
the users to purchase their product as this will
only increase the profit of the company.
No emotional attachment is there as pure
dealing is carried out
But in this case, by giving services the
customers are emotionally attached to the food
items.
In this case, there is long term relationship as
the business does not change their clients
easily.
But in B2C, the customers come and go there
is no signed bond between them (DeSarbo,
Grewal, and Scott, 2008). They can be for long
term as well as short term.
4.3
The difference between international and domestic marketing is as follows:
International marketing Domestic marketing
McDonalds have serve large area with different
culture and perspective
The marketing area is small and the culture
followed is not highly different which makes it
simple.
The capital which is required is more as
different medium will be used for targeting
large audiences (Henley, Raffin and
Caemmerer, 2011)
The finance which will be needed is less for
the company as through local channels they
can market the organic salad and oats.
The risk involved in this marketing is more as
more finance and technology is used and
returns are not confirmed.
The risk is low as normal technology is used
and the money involved is less. But the returns
are confirmed.
For McDonalds to market their organic salad and oats, they should feature celebrity in the
advertisement which would attract their fans and will help to purchase the product. Further, they
can organize promotional campaign in which they can invite people for free tasting. The
customers will be attracted towards it and will purchase the food.
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