Fundamentals of Marketing: McDonald's Case Study Report

This report provides a comprehensive marketing analysis of McDonald's, examining its internal and external environments using SWOT and PEST analyses, respectively. It delves into consumer behavior models, including marketing stimuli, consumer psychology, and the buying decision process, to understand how McDonald's targets its consumers through segmentation, targeting, and positioning strategies. The report further explores McDonald's marketing mix, including product levels, pricing strategies, distribution channels, and promotional tools. The analysis highlights the company's strengths, such as its distribution system and commitment from top management, while also addressing weaknesses like employee satisfaction and threats from franchisees and high advertising costs. The report also addresses the economic, political, and socio-cultural factors influencing McDonald's, providing a holistic view of the company's marketing approach and its adaptation to the changing consumer landscape.

International Collage of Business and Technology
FUNDAMENTALS OF MARKETING
Individual Assignment on McDonald’s
Programme Higher Diploma in Business Management
Student Name M.D. Semini Prasangika
ICBT Student Number GM/HDBM/01/22
Subject Name Fundamentals of Marketing
Subject Code BM4153
Word Count 2885
Submission Date 24/04/2021
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Assignment Cover Sheet
Qualification Module Number and Title
HD in Business Management BM4153: Fundamentals of Marketing
Student Name & No. Assessor
M.D. Semini Prasangika
GM/HDBM/01/22
Ms. Randika Dulanthi
Hand out date Submission Date
24/04/2021 25th of April 2021
Assessment type Duration/Length of
Assessment Type
Weighting of Assessment
Coursework (3000 words) 70%
Learner declaration
I, M.D. Semini Prasangika certify that the work submitted for this assignment is my own and
research sources are fully acknowledged.
Marks Awarded
First assessor
IV marks
Agreed grade
Signature of the assessor Date:
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FEEDBACK FORM
INTERNATIONAL COLLEGE OF BUSINESS & TECHNOLOGY
Module : BM4153: Fundamentals of Marketing
Student : M.D. Semini Prasangika
Assessor : Randika Dulanthi
Assignment : Report
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Strong features of your work:
Areas for improvement:
Marks Awarded:

Statement of Originality of Submitted Work
Myself M.D. Semini Prasangika
Student Id No GM/HDBM/01/22
Module Name Fundamentals of Marketing
I hereby confirm that the work presented here in this report and in all other associated
material; is wholly my own work. And I agree to assessment for plagiarism.
Signature: Semini
Date: 24/04/25
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Acknowledgement
First of all, I must give thanks to my Almighty God for the blessings given in doing
this assignment.
My sincere gratitude Ms. Randika Dulanthi, the module lecturer of Marketing
Management. Thank you for the support and guidance given throughout the lecture
sessions and in doing the assignment.
I also thank my parents and my colleagues for being the behind pillar in my academic
carrier. A special thanks goes to the International College of Business and
Technology, Gampaha campus for the facilities and the guidance give.
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Executive Summary
Businesses need to be aware of the marketing environment in order to run a business.
The marketing environment is divided into two sections. They are the internal
environment and external environment. SWOT analysis is used in the analysis of the
internal environment and PEST analysis is used in the analysis of the external
environment.
Also, the main asset of a business is the consumer. Business integrity can be
maintained if consumer behaviour patterns are properly identified. Marketing Stimuli,
Other Stimuli, Consumer Psychology, Consumer Characteristics, Buying Decision
Process and Purchase Decision are the main components used line up customer
behaviour. Businesses that have identified consumer behaviour patterns, are segment
into different consumer situations. The segmentation is divided into four parts. They
are Geography variables, Behavioural variables, Demography variable and
Psychology bases. After segmentation businesses need to choose the right targeting
strategy and positioning to maintain business continuity, reputation and consumer
attraction.
Product, Price, Promotion and Distribution is main when considering marketing
strategy. There five level of production. They are Core product, Generic Product,
expected product, Augmented product and potential product. Penetration pricing,
Price skimming, Premium pricing and Economy pricing are the main pricing strategy
of price. Business is using Advertising, Sales promotions, Public relations, Personal
selling and Direct marking to promote their product. Also, business is using direct and
indirect distribution to handover their product to the customer. A business can make a
good profit if the above components are used properly.
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Table of Contents
Statement of Originality of Submitted Work................................................................iv
Acknowledgement..........................................................................................................v
Executive Summary......................................................................................................vi
Table of Contents.........................................................................................................vii
List of Figures.............................................................................................................viii
Introduction....................................................................................................................1
1. Marketing Environment.........................................................................................2
1.1. Internal Environmental Analysis.....................................................................2
1.1.1. Strengths...................................................................................................2
1.1.2. Weaknesses..............................................................................................2
1.1.3. Opportunities............................................................................................3
1.1.4. Threats......................................................................................................4
1.2. External Environment Analysis.......................................................................4
1.2.1. Political and Legal Environment..............................................................4
1.2.2. Economic Environment............................................................................4
1.2.3. Socio Cultural...........................................................................................5
1.2.4. Technological Environment.....................................................................6
2. Basic consumer behavior model & segmentation, targeting & positioning...............7
2.1. Consumer Behaviour Model...............................................................................7
2.1.1 Other Stimuli and Marketing Stimuli............................................................7
2.1.2. Consumer Psychology and Consumer Characteristics.................................8
2.1.3. Buying Decision Process..............................................................................9
2.2. Segmentation, Targeting and Positioning......................................................10
2.2.1. segmentation variables...........................................................................10
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2.2.2. Targeting Strategy..................................................................................11
2.2.3. Positioning..............................................................................................12
3. Marketing Strategy...............................................................................................13
3.2. Five levels of product according to McDonald’s..........................................13
3.1.1. Core Product...............................................................................................13
3.1.2. Generic Product..........................................................................................13
3.1.3. Expected Product.......................................................................................13
3.1.4. Augmented Product....................................................................................13
3.1.5. Potential Product........................................................................................13
3.3. Pricing Strategy.............................................................................................13
3.4. Distribution Channel.....................................................................................14
3.5. Promotional tools...........................................................................................14
References....................................................................................................................15
List of Figures
Figure 0-1 Example for Multi Segment Strategy in McDonald’s................................11
Figure 0-2 Positioning Map for McDonald’s...............................................................12
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Introduction
McDonald’s is an American fast-food company. It is founded in 1940 as a restaurant.
It has been operated by Richard and Maurice McDonald brothers. It was located in
San Bernardino, California United states. In 1961, Ray Kroc purchased the McDonald
brothers' equity in the company and began the company's worldwide. McDonald’s
serve quality foods and beverages in 119 countries. Of the 38,695 restaurants at year
end 2019, 36,059 were franchised, which is 93% of McDonald restaurant. By 1958,
McDonald’s had sold its 100 millionth hamburgers.
The current President and CEO is Mr. Chris Kempczinski. McDonald’s is the world’s
largest restaurant chain by revenue. Total revenues, increased from 42.0% in 2018 to
43.0% in 2019. McDonald Produce Burgers, Chicken and sandwiches, Beverages,
Happy meal, Desserts and shakes, Breakfast etc. McDonald has started a training
programme. It’s called Hamburger University. Today more than 275,000 franchisees,
managers have graduated from the programme.
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1. Marketing Environment
1.1. Internal Environmental Analysis
1.1.1. Strengths
 Having a very successful distribution system in McDonald’s
With the advancement of technology, the consumer tends to digitize. Therefore, most
customers not visit outlets physically. They buy goods over the phone or by some
other technological invention. Here the customer uses delivery methods as he does not
go to the stores. Therefore, McDonald’s has partnered with distribution brokers to
facilitate its distribution and provide a high level of delivery service.
Example: McDonald’s global delivery business has grown to over $4 billion in
System wide sales in 2019, up from $1 billion in 2016. Because in 2019, McDonald's
will use third-party distribution partners to maximize distribution scales.
(McDonald’s, 2021)
 Having a top management board that is committed to the business itself
Every business has to face uncertain risks. There are also losses for many businesses.
If business employees and top management contribute to minimizing such
uncertainties, the business will have the opportunity to continue. McDonald’s also has
a staff that is committed to the business.
Example: In the face of the Covid-19 pandemic, CEO Mr. Chris Kempczinski says he
has offered to reduce his salary voluntarily and some senior executives also have
decided to voluntarily cut their salaries in half. (McDonald’s, 2021)
1.1.2. Weaknesses
 McDonald's is a very competitive business and even the slightest mistake in
management can affect the entire system
Top management manages the business process of developing, retaining, recruiting
high quality candidates, and modifying the business system. Therefore, there must be
effective top managers to keep these processes running smoothly. McDonald also
makes emergency recruitments for senior positions.
Example: The McDonald’s Board named Christopher Kempczinski as President and
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Chief Executive Officer and named Joseph Erlinger as President, McDonald's USA,
effective as of November 1, 2019. In addition, on December 6, 2019, the Board
named Ian Borden as President, International, effective that same day. (McDonald’s,
2021)
 Low employee satisfaction
Many business organizations around the world are facing difficulties as they launched
revolutions to increase workers’ rights and wage limits. Recently, McDonald has
faced a similar situation.
Example; McDonald’s workers have recently launched protests and strikes
demanding an increase in minimum wages to $15 an hour. (Martínez. et al., 2021)
1.1.3. Opportunities
 Have an easy customer feedback system
Feedback is the response of a customer to a product or service after a product or
service has been delivered to them. Responses can be good or bad. After receiving
feedback, the business can calculate the customer's liking for the product. This allows
you to correct deficiencies in a product or service based on customer feedback and
further improve their quality.
Example: McDonald's website has a dedicated web page for customer feedback.
There the customer can put a feedback through the app or through the web page.
(McDonald’s, 2021)
 Dealing with a world-renowned delivery platform such as Uber Eats
Companies can take advantage of opportunities by contacting a partner such as uber
eats. Primarily the advantage of quick delivery, the ability to get the service at a lower
cost than the delivery costs provided by the business itself, and the popularity of this
platform among a large number of customers.
Example: uber eats offers discounts to attract more customers. Customers who order
products through uber eats for the first time until 31st December 2021 will get a $ 5
discount. (McDonald’s, 2021)
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1.1.4. Threats
 High advertising costs
Companies like McDonald’s often spend a lot of money on advertising. They hope to
attract consumers to their restaurants by educating people about food through
advertising. They expect a profit as high as the cost.
Ex; Cost of radio and television commercials (in million):2019–$365.8, 2018–$388.8,
2017–$532.9 (McDonald’s, 2021)
 Threads form franchisees.
Franchisees are the company that authorizes the production or distribution of the
relevant product from the franchiser. 93% of McDonald depends on franchisees. The
reputation of the McDonald’s will be tarnished if the conduct, order, awareness,
management and strategy of the franchisees are not maintained properly. (Martínez. et
al., 2021)
1.2. External Environment Analysis
1.2.1. Political and Legal Environment
 Rules and Regulations
Rules and regulations vary not only by country but also by region and religion. These
changes lead to not only the advantages but also the disadvantages of the business.
Therefore, changing the business system according to the changes in these
components will enable the business to continue. McDonald has also undergone these
changes.
Example: France is a country with an eco-friendly economy it’s mean they’re using
eco-friendly laws and regulations. Therefore, France does not distribute plastic toys in
McDonald’s restaurants. (McDonald’s, 2021)
1.2.2. Economic Environment
 Interest Rate
Businesses like McDonald take out long-term loans for their longevity. They get these
loans subject to high interest rates. They usually spend more on interest payments
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