A Comprehensive Report on Marketing Principles and McDonald's

This report provides a detailed analysis of McDonald's marketing principles, examining various elements of the marketing process, including market environment analysis, target market identification, and the determination of the marketing mix. The report delves into the benefits and costs of market orientation for McDonald's, explores micro and macro environmental factors influencing marketing decisions, and proposes segmentation criteria for McDonald's products in different markets. Furthermore, it examines targeting strategies, product positioning, and the impact of buying behavior on marketing activities. The report also covers product development, distribution, pricing, and promotional strategies, as well as the extended marketing mix and marketing mix applications for different customer segments. Finally, it highlights the differences between marketing products and services to businesses versus consumers and compares international marketing with domestic marketing, offering a comprehensive overview of McDonald's marketing approach.

Marketing Principles

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Explaining various elements of marketing process..........................................................1
1.2 Benefits and costs of marketing orientation to McDonald...............................................2
TASK 2............................................................................................................................................3
2.1 Micro and macro environmental factors that are influencing the marketing decisions. . .3
2.2 Proposing a segmentation criteria for McDonald's products in different markets...........5
2.3 A range of products and services McDonald's offer choose a targeting strategy for them6
2.4 Buying behavior affects marketing activities in different buying situations....................6
2.5 Proposing a new positioning for selected product of McDonald's...................................7
TASK 3............................................................................................................................................7
3.1 Product development for sustainable competitive advantage..........................................7
3.2 Distribution strategies used by McDonald's as per customer's convenience and satisfaction
................................................................................................................................................9
3.3 Pricing strategies used by McDonald's as per objectives and market conditions.............9
3.4 Promotional activities used by McDonald's to achieve the marketing objectives..........10
3.5 Additional elements of extended marketing mix for McDonald's.................................11
TASK 4..........................................................................................................................................12
4.1 Marketing mix for two different customer segments in consumer markets...................12
4.2 Difference in marketing products and service to business rather than customers..........13
4.3 International marketing is different from domestic marketing.......................................13
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Marketing includes a range of procedures that are concerned with searching the
consumer’s needs and making initiatives in order to fulfill those needs. Marketing principles
involve four key elements such as product, price, place and promotion. Almost all the businesses
utilize range of marketing principles for modifying the market performance of existing products
and for the successful establishment of new product in the new market (Deshpande and Rundle-
Thiele, 2011). Present report is developed as per the case study of McDonald which is the largest
fast-food restaurant chain in the world and serving around 68 million people every day in 120
countries around the globe. This report will help in understanding the concept and process of
marketing with the use of segmentation, targeting, positioning and developing an understanding
for individual elements of the extended marketing mix along with the use of marketing mix in
different contexts.
TASK 1
1.1 Explaining various elements of marketing process
Marketing can be defined as a process of promoting and selling goods and services of the
company by influencing customer towards it. Main concern of marketing is to assess the needs of
customers and developing products and services accordingly so that same can be satisfied in
effectual manner. With regard to identify various elements of marketing process, primarily,
McDonald will need to analyze the target market and market environment. The various elements
of marketing process are analyzing market environment, identifying the target market, setting
core goals and objectives and determining the marketing mix etc. (Jobber and Ellis-Chadwick,
2012). The market environmental analysis is a strategic tool which will help McDonald in
identifying all the external and internal factors of market that can affect the performance of cited
organization. To analyze the market environment, McDonald can use the tools like PESTEL
analysis, SWOT analysis, value chain analysis and Porter's five forces to get strategic advantage
and to analyze the market environment. After analyzing the market environment McDonald will
need to identify the target market segment. McDonald can target on specific areas in
international markets and increase the range in restaurant for increasing revenue and
profitability. Thus, it is essential for McDonald to identify a market segment in which people
would prefer fast-food in their routine life (Ferrell and Gonzalez, 2004).
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Furthermore, McDonald will have to define the marketing objectives to maximize the
revenue and profits and also, it will help in achieving all the short and long term objectives of the
cited organization. With regard to this, McDonald will also need to improve the goodwill and
brand image between people. Main aim of McDonald is to provide quality food in a friendly
environment and also, the firm has social responsibility to provide good returns to its
stakeholders (Belz and Peattie, 2009). Moreover, McDonald is focused on specific food range
which it is serving in all the restaurants of McDonald and satisfying the consumer’s demand in
significant way. Thereby, target people of McDonald have trust on the quality of food and they
are also influenced by the unique characteristics of McDonald.
1.2 Benefits and costs of marketing orientation to McDonald
Marketing orientation with regard to McDonald is an organizational strategy which is
devoted to meet the needs of consumers. Thus, all the business strategies and product
developments of the cited firm revolve around this tendency. The main benefit of market
orientation in McDonald is that it is a positive approach, through this firm moves forward to
fulfill customers demand (Rudd and Mills, 2011). The market orientation in organization
provides firm’s responsiveness to fulfill its customer's needs. This gives a significant advantage
to McDonald to develop and produce the products not only for fulfilling the consumer's demand
but also for timely services. Moreover, market orientation in McDonald helps in building the
customer value and in increasing the loyalty to brand and to retain the customers. Brand loyalty
is a well-defined advantage of market orientation in McDonald because it develops a consumer
base resistant from competitors to affect the business by various offers. In addition to it,
marketing orientation aids in developing burger and other products at McDonalds from which
requirement of different cultural group is addressed. On the basis of it, company has developed
its product portfolio in external market. In this context, company has paneer and aloo tikki
burger only in India, only lamb and chicken burger in Middle East, pork burger in America. With
this product range, needs of customer at different geographical location is developed. This
supports in attaining customer satisfaction.
Furthermore, exploding the value base for consumers increases the production cost of the
food products and services (Sridharan and Viswanathan, 2008). For instance, McDonald already
has staff for home delivery service for its customers at restaurant. Then also, cited firm hires a
courier company from outside for faster and prompt response to its customers that will attract the
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extra cost to the organization. Thus, in this way, market orientation increases the cost in
promotion activities that are being undertaken for attracting more consumers.
TASK 2
2.1 Micro and macro environmental factors that are influencing the marketing decisions
Micro environmental analysis:
STRENGTHS:
 World's largest fast food restaurant
chain.
 Food menus as per the local
preferences.
 Multiple branches in around 120
countries.
WEAKNESSES:
 Negative publicity.
 Declining market share.
 Increasing crowded and competitive
fast food market.
OPPORTUNITIES:
 Improved quality and differentiated
menu.
 Demand of healthy food.
 New market segment and customer's
changing food habits.
THREATS:
 Trend towards healthy food.
 Unstable currency rates.
 Local fast food chains.
The micro environmental factors of McDonald can be analyzed through SWOT analysis.
With the help of SWOT analysis, McDonald can easily identify its strengths, weaknesses,
opportunities and threats that can influence the marketing decisions. McDonald’s greatest
strength is its highly identifiable brand image (Hose, 2015). People compare McDonald with
other fast food providers and few specific products such as hamburgers and French fries. Some
researchers also give credit to McDonald for changing the eating habit by introducing fast food
in the world. Further, the greatest strength of McDonald is number of countries in which
McDonald operates its multiple branches. Cited firm generates around 60% revenue because of
its strong presence in international markets. Despite of this fame, McDonald faces the biggest
problems in increasing competitive and crowded fast food market around the world. The
challenges that McDonald is facing are the changing taste of customers and increasing number of
direct competitors like Burger King, Starbucks, Subway, Pizza Hut and Dominos. Currently, the
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biggest threat for McDonald is quick service restaurants (Skinner, 2005). One more issue which
McDonald is facing is that many consumers view McDonald’s food as that of lower quality.
However, McDonald still is a very reputable organization that generates the good profits and
revenue and attracts the large number of consumers. These micro factors highly influence the
marketing decisions in McDonald.
Macro environmental analysis:
Macro environmental factors of business that influence the marketing decisions in
McDonald will be analyzed through PESTEL analysis. With reference of PESTEL analysis, firm
can analyze various factors such as political, economic, social, technological, environmental and
legal factors that influence the marketing decisions of organization. Since, McDonald's is world's
largest fast food chain the political factors of international markets such as, tax rate, fiscal
policies and interest rates influences the marketing decision of McDonald's (Parker, Hunter,
Briley, and et. al. 2011). Similarly, cited firm will have to analyze the economic factors of the
international market as well. Currently the economy of all the countries in fluctuating frequently
that affects the businesses. Furthermore, social and cultural factors of the country also affects the
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Illustration 1: Macro Environmental Analysis
Source: PESTEL Analysis, 2015.

businesses such as, market trends, cultural effects on food habits, demographics and population
which will influence the McDonald's in marketing decisions.
Furthermore, as per technological factors McDonald's should analyze the technological
growth of the country. The technological factors highly influences the marketing decisions of the
firm and also technological developments can bring many opportunities for the firm in order to
increase the sales and revenue (Brassington and Pettitt, 2005). Moreover, in recent years many
environmental issues have come forward with the rise of numerous green initiatives. In response
to this, McDonald's should also consider all these factors and encourage these green initiatives in
order to save our planet and universe (Hills, Hultman and Miles, 2008). Further, in macro
analysis legal factors plays significant role it helps in identifying the various laws, rules and
regulations implemented by the government in order to control international trade in the local
market. Thereby, is essential for McDonald analyze all these factors efficiently which influence
the marketing decisions of the organization.
2.2 Proposing a segmentation criteria for McDonald's products in different markets
In order to develop a marketing strategy for McDonald's products, it is essential for the
firm to understand the demand and need of its target customers. McDonald's has segmented its
products with regards to geographic, demographic and behavioral preferences. On the basis of
geographic segmentation, company has divided market as per country. Due to this, different set
of products are been developed at the market by considering the needs and wants of the
customers. Further, McDonald's have segmented their products and positioned their food and
beverages according to kids, students and family. Market segmentation is defined as dividing
single market into small segments to make it simple for addressing the needs of customers and
their consuming habits (Young, Anderson, Beckstrom, Bellows and Johnson, 2004). As per
demographic segmentation (Kids, family and students), McDonald's offers different foods such
as, for kids it has introduced happy meal which has free toy and for families McDonald's have
the facility of take away. Similarly, for students McDonald's provides them a friendly
environment to hang out and to get their lunch.
Furthermore, in behavioral segment McDonald's serves customers as per the occasions.
For instance, birthday party for kids. Moreover, to get a competitive and sustainable advantage
McDonald's can also introduce new and modified product with low cholesterol and sugar free
content (Skinner, 2005).
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2.3 A range of products and services McDonald's offer choose a targeting strategy for them
With regards to the market segmentation criteria, it is essential for McDonald's to adopt a
suitable targeting strategies that will help the organization to get the competitive advantage.
According to the different targeting strategies McDonald's can utilize three targeting strategies
these are, undifferentiated, concentrated and differentiated targeting strategies (Pirani and
Reizes, 2005). Thereby, McDonald's can use undifferentiated strategy to communicate the
benefits of its fast food through sending the same promotional message to everyone. For using
this strategy McDonald's should make sure that products of cited firm are readily available and
affordable and beneficial for all the consumers and have less competition in the market.
Moreover, the concentrated target strategy is focused in particular market segment and
customers with several promotional activities. By using this strategy firm can easily attract
customers. On the contrary, in undifferentiated target strategies McDonald's can apply the same
promotional activities and messages for all customer segments. Undifferentiated targeting
strategy is similar to mass marketing. Within the context of undifferentiated menu, McChicken
burger is taken into account that will be used for targeting each set of customers. It is one of the
most prominent product of the company that been demanded by customers of every age group.
However, McDonald's is launching low calorie coffee in all the market segments, thus, it
can use differentiated targeting strategy (Nwankwo and Gbadamosi, 2010). By the use of this
strategy McDonald's can appeal to both its market segments like demographic and behavioral by
adopting various promotional activities. This healthy drink should be introduced as per the
demand of the consumers. It will help the organization to increase its sales and revenue in
particular market segment.
2.4 Buying behavior affects marketing activities in different buying situations
Buying behavior consists all the internal and external factors which defines why should
customer buy and use a particular product (Munoz and Huser, 2008). This sort of behavior
affects all the marketing strategies of the McDonald's which it has adopted for the promotion of
low calorie drink. The basic factor that affects buyer behavior is need and demand of the product
and tangled decision making ability of the customer. For instance, in some specific countries and
customer segment McDonald can use variations in its fast food and beverages. Similarly, for kids
segment it should launch milkshakes instead of low calorie coffee. Thereby, marketing and
promotional activities should be according to these product criteria. In addition to it, more use of
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technology also influences the buyer behavior. McDonalds uses high amount of technology
while preparing burger and ice cream which certainly keeps high hygienic level. Through this,
customer gets attracted toward the company.
Furthermore, personal factors of customers also affect the buyer behaviors. These
personal factors are lifestyle (interests, opinion), age, occupation, economic conditions that
influence the buyer's behavior. Thereby, McDonald should implement the marketing activities by
which it can attract large number of consumers. Also, the applied marketing activities can repeat
the customers (Peattie and Peattie, 2009). Thus, it is rightly described that buying behavior of
people affects the marketing activities in different buying situations.
2.5 Proposing a new positioning for selected product of McDonald's
Product positioning is and necessary component of a marketing plan. It is process that
organizations uses for determining the mediums for communicating their products between the
target customer segments according to their need, competitive pressures and specified
promotional activities (Ferrell and Gonzalez, 2004). With the help of newly developed quality
services and increased food range, McDonald will be capable enough to attract the consumers.
Since, McDonald has two different segments such as, demographic and behavioral. With regards
to these segments McDonald's can provide the services to its customers (Brassington and Pettitt,
2005). For instance, in demographic segment McDonald's will serve family, kids and students.
Thereby, for kids it can provide free toy with meals. Similarly, for families and students
McDonald's can avail extra discount or meal coupons for establishing a new product low calorie
coffee in specific consumer segment.
Furthermore, another customer segment of McDonald's is behavioral, in which it will
provide special arrangement on some specific occasions such as birthday parties. McDonald's
can develop the separate menu for this specific segment and involve this new low calorie coffee
in all the menu. Also, special decoration will be done as per the party and this will act as a
positioning tool for the company.
TASK 3
3.1 Product development for sustainable competitive advantage
In today's competitive business environment every business needs some innovation in
their products in order to be successful. Through the use of sustainable principles McDonald's
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can develop a long lasting competitive advantage (Pillay and Kutty, 2005). Product development
is beneficial for McDonald's in order to gain the sustainable competitive advantage. For
Example, McDonald's is increasing the variety of fast foods by involving some low calorie
beverages. Apart from this McDonald's is also focusing on quality service providing to its
customers. With regards to these customers will get complete assistance at McDonald
restaurants. Moreover, the price of fast food and beverages will be affordable by all customer
segments.
The biggest competitive advantage for McDonald is that it has huge brand recognition
and great number of customers. Thus, it can develop new product and distribute at a lower prices
than the competitors. Furthermore, the firm is developing these products after considering
current market trends (Munoz and Huser, 2008). In recent times demand for low calorie food
products has been increased. At this stage if McDonald's introduces its low calorie coffee than it
will be easily accepted by its consumers. Moreover, to gain the sustainable competitive
advantage McDonald's can use low price strategy in beginning. However, after some times it can
increase the prices by considering the manufacturing costs and competition for the particular
product.
Following is the comparison of products of McDonalds, KFC and Burger King
Basis McDonalds KFC Burger King
Product Different types of
Burger in different
country
Chicken items Whopper sandwich
Quality and speed It key concern is on
quality rather than
speed
It focus on quality and
speed both
It aims to offer dishes
with speed to
customers.
Market presence High market presence
across the globe
High market presence
across the globe
Less stores as
compared to KFC and
McDonalds
Price Low price High price Moderate pricing
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3.2 Distribution strategies used by McDonald's as per customer's convenience and satisfaction
The efficient distribution of product is very important for providing customers
satisfaction and convenience. Thereby, by using effectual mediums of product distribution
McDonald's can improve the sales and revenue in local markets as well as in international
markets (Sheth and Sisodia, 2015). In response to obesity trends in the international markets
McDonald's have modified its menu by including low calorie drinks and healthy wraps, salads
etc. Thus, for distributing these food varieties at appropriate places firm has chosen accurate
distribution channels so that these new products can easily reach to the customers. Since,
McDonald's is world's largest restaurant chain it has lot branches and distribution channel by
which its product can reach customers.
With regards to current market trends and busy lifestyle of people McDonald's has open
its multiple branches in several cities at small distance. Moreover, cited firm also has the facility
of home delivery and booking though internet (Sridharan and Viswanathan, 2008). Currently,
McDonald's have impressive booking option for fast food through its websites in which people
gets all the varieties they want to order with prices and home delivery option. But in the future,
McDonald's can also select the mobile app as a distribution channel. With regards to this facility
customers can also order the food from the mobile apps, it will be more convenient and effective
channel for product distribution as large number of people uses mobile apps. Thus, it will be
beneficial for the firm to use mobile apps as distribution channel for customer's convenience and
satisfaction.
3.3 Pricing strategies used by McDonald's as per objectives and market conditions
An organization can use variety of price strategies at the time of selling a product in
target market. The prices are determined for increasing the profitability and revenue of the
organization. Pricing is one of the most important element of marketing mix. Many businesses
now realized that concept of cost based pricing affects the profitability of the firm (Young,
Anderson, Beckstrom, Bellows and Johnson, 2004). Thus, organizations have seized the product
price authority from finance department and given the rights to marketing and sales department
for determining the prices. This style of determining the pricing is value based pricing because
marketing and sales department of McDonald's is responsible for its best position between the
customers.
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Currently, the level of competition which McDonald's is going through with its
competitors like, KFC, Subway, Burger king, Pizza hut, Star bucks and Dominoz etc. will
provide the assistance in deciding the pricing strategies as well. Sometimes McDonald's has the
opportunity to determine the prices and sometimes not (Kokemuller, 2015). When, McDonald's
have the scope to determine the price it has several pricing strategies to utilize. Currently, cited
organization is providing economic and affordable prices to its customers. McDonalds uses
psychological pricing strategy in order to develop the image of low cost products. Here,
company charges prices like £2.99, £.99, 1.99 etc. so that more of customers get attracted
towards it. This helps the company in attracting more of customers towards it. But in future
McDonald's can use price skimming strategy to determine the prices. Since, McDonald's have
significant competitive advantage because of its effective brand image, it can easily enter in a
new market with price skimming strategy. This strategy is designed for gaining the maximum
sales revenue before the competitors offers similar products to the customers.
3.4 Promotional activities used by McDonald's to achieve the marketing objectives
To attain the marketing objectives of the McDonald's, it would require range of
integrated strategies and promotional activities. After determining the pricing, product promotion
is one of the most crucial factor of marketing mix. The promotion of product helps in
communicating the message between the people (Jobber and Ellis-Chadwick, 2012). The
promotional activities consist all the activities such as, advertisement, personal selling, and
public relations and after sales customer survey.
Thereby, McDonald's uses several promotional activities in order to attain the marketing
objective of the firm. The promotional activities which McDonald's is using is advertisement in
new papers and televisions, brochures, posters, social media, contests, customer appreciation
events and causes and charity etc. with regards to these promotional activities firm regularly
displays advertisement on televisions and newspapers (Deshpande and Rundle-Thiele, 2011).
Currently, social media marketing is in trend so McDonald's is regularly promoting its product
on social media sites like, Facebook, Twitter, Instagram and Google+ etc. Through the use of
social media marketing McDonald's attracts large number of customers which supports in
achieving the marketing objective of the organization. Company need to focus on viral marketing
also as adopted by Nike. It is one of the most influencing promotional technique that is in
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