Unit 4 Marketing Principles Assignment - McDonald

Introduction

The objective of this Unit 4 Marketing Principles Assignment McDonald’s is to look into a number of different and significant factors related to the marketing strategy for the business origination. Marketing is the process through which the companies inform the customers regarding the products and / or services which have been developed by the company with the intention of selling the same to the consumers. It is a very important strategic task in the modern day business entities in view of the fact that in the current level of competitiveness in various industries and markets, this is considered to be one of the factors which lead to brand recall and brand value for the companies.The discussion will be done on the basis of McDonald’s and the case study on the company. This company is one of the biggest global fast food chain which has its operations in as many as 119 nations. The company serves an enormous number of customers which 68 million customers daily through its more than 35,000 outlets in these 119 countries (Hawkes, 2014). This scale and the international operation which the company has makes it a very appropriate company for analyzing the marketing strategies of the company. Due to the high variety of the type of marketing and communication the company has to design due to its existence in the 119 countries, the marketing strategy which the company has a very evolved as well as successful one, which can be confirmed by the high success of the company in various countries.

Task 1

For developing an understanding regarding the marketing strategy of any company, it is necessary that observes the essential elements of company marketing process as well as the marketing orientation which the company has. This will be done through this section of the report. The aim of this section will also be to ensure that the benefits and costs of marketing orientations to McDonald’s are looked into to understand the effectiveness as well as the efficiency which the marketing strategy of the company has.

1.1 Referring to the McDonald’s case study, explain the various elements of the marketing process

The process of marketing can be defined as the way in which the companies which are getting engaged in the activity, communicate the various product or services features to the target consumers of the company. This can be organization wide or specific to any particular process or product of the company. The element of marketing include needs, wants and demands experienced by the consumers and the differentiation in the product or service marketing by the business entity is done basis the whether the same attempts to satisfy needs, wants or demands of a customer. Needs is the basic requirements of the human. Wants is one level more evolved than needs and is the secondary requirements of the consumers. The demands are the luxury requirements of the consumers. The value, as well as cost satisfaction delivered by the companies for fulfilling wants and demands of the consumers, is also an important element of marketing.

The integrated nature of the marketing defines the varied types of marketing which are used by the companies with the purpose of letting the customers know on topic of the offerings. The definition of integrated marketing communication can be given as the usage of a consistent brand messaging across several conventional as well as non-conventional marketing channels and usage of various promotional techniques for reinforcing other factors. The other element of factor for marketing process includes the process of exchange or transaction of the goods and services by the company. If one or more entities, usually the consumers and the service providers with respect to the travel and tourism industry, agree that the deal is appropriate for each of them, then this exchange of service takes place. 

McDonalds has a very robust process of market research integrated in its overall marketing process and strategy. This helps McDonald's in identifying the most pertinent and important information related to the target markets. This also helps the company in developing the right mix of the product as well as service which can help in delivering and sustaining the customer loyalty. In view of the fact that in the various markets where McDonald's is present it faces a lot of competition from the domestic as well as the international brands in the same or similar business and hence it is important for the company to evaluate the same before expanding the business. Also there are other various factors including social factors, legal, economic, and technological factors which McDonalds need to be cognizant of. Also there are factors like retail environment as well as other elements which can influence the success of McDonald's in those markets. This is why Market research is very important as the same looks into these factors and predicts the way these can change in the future and can affect the willingness of the people's to use the products or service of the company (Rieple, 2008).

Developing a strategic marketing plan for the new or the existing market including the segmentation, targeting and positioning of the product and the brand

This is the most important element of the marketing process of any company and McDonalds is also no exception. Through this part of the process the company develops a strategic marketing plan for the new or the existing market which also includes the tasks like marketing segmentation, targeting and positioning of the product and the brand in this market. These are very important tasks for ensuring that the overall marketing strategy of the company can be effective in the market. This also leads to an opportunity sizing for the company which is necessary to develop an estimation related to the possible sales volume of the company (Ngai, 2003).

Monitoring the plan for measuring its effectiveness

This is the final element of the marketing process for McDonalds in which the company tracks and measures the effectiveness of the existing marketing strategy and the marketing elements which it has deployed in the market. This helps the company in identifying if the implemented marketing strategy and activities are helpful for the company and the budget which is being allocated for these activities are being utilized well or not. Also this provides a guideline for the company any future marketing activity which the company wants to take up (Kotler, 2013).

1.2 Evaluate the benefits and costs of marketing orientations to McDonald’s

The current marketing orientation which McDonalds has is a mass marketing strategy. In almost all the countries in which the country is present the company has a variety of mass marketing channels utilized for the promotional activities of the company. The various other promotional activities which are rolled out by the company includesby providing door to door step, through telemarketing, telemarketing service. It is important for the company to remember that there will be other brands which will be quickly following the footsteps of the company and hence the marketing orientation of company is aimed at generate a lot of curiosity around the product offering of the company. The benefits which this marketing approach and orientation of McDonald’s are as following:

1. The reach of the marketing elements: Through the above the line activities including the advertising it is possible for the company to ensure that it can reach as much customers as possible for creating a mind share in them which leads to future sales for the company.
2. The increased brand recall and brand value: Through the above the line activities including the advertising it is possible for the company to drive a very effective brand recall and brand value in the mind of customers. McDonalds marketing research identifies the gaps in the needs and wants of the target consumer base and the entire marketing strategy is created to let the customers know that the brand will able to meet the needs in a better waythan the rival entities. Hence at the time of the purchase decision making, the customers tend to opt for McDonalds as opposed to the other companies in the same segment.

However, in spite of these benefits there are some disadvantages of this marketing orientation as well. These are:

• High cost of marketing: The above the lineactivities in which advertisement is given through different modes like by posting on online sites, newspaper, by publishing in any English Hindi local newspaper but it is a very costly way of marketing of the brand. Also in view of the fact that in these types of arrangement person who want to give their advertisement makes payment to advertiser for take space in the medium, the option of instant monitoring and stopping the same is absent (Kotler, 2013).
• Changes in the Marketing Environment are Not Factored in: Mass marketing strategies fails to consider changes which can take place in business environments. There are various aspects leading to market changes in terms of the marketing environment. These include change in consumer preference, changes in price, inflation etc. If price of a particular product changes, consumers will start looking for a substitute that gives them the same satisfaction but at a price that they can afford. Likewise changes in consumer preference can also result in changes in marketing environment. In view of the fact that mass marketing has no specific targeting strategy, a change in a specific set of consumer behavior cannot be tackled by this tactics.

Task 3

3.1 Explain how McDonald’s products are developed in order to make sure that competitive advantage is sustained

The first step which is implemented by McDonald’s for developing its products with the intention of ensuring that competitive advantage is sustained is to carry out a thorough marketing research. The product development for the market is a direct outcome of the market research in view of the fact that through the same it is possible for McDonalds to identify the choices of the target market of the new territory for which the product development is being done. In this process the company collects the feedback of the potential customers regarding their likings and dislikes as well as collects opinions on a set of pre decided menu items for the company. Post this, on the basis of the data and information collected, the product development team of the company develops and creates a new menu and product offering which can be offered to the target market of the company (Majumdar, 2001). McDonalds uses product line depth through new product development for dominating the market position. However this type of competitive advantage can be lost when technology or market changes remove barriers to building product breadth. Some of the factors which are considered are as following:

• Company influence over customer
• Customer influence over company
• Marketing Synergy
• Perceived Risk
• Proficient Execution of Marketing as well as technical activities
• Superior product features
• Up-front homework before development gets underway

In view of the fact that the company has expanded internationally in last decades, it has tried to create various products for meeting demand of the consumers in their local markets. For example, in Netherlands, McDonalds developed the McKroket, a burger featuring a typically Dutch kroket, a deep-fried, ragout-filled patty. In the Canadian province of Quebec, McDonald's offers poutine, a traditional dish of french fries, gravy and curd cheese. Even in parts of New England and Atlantic Canada, they have developed the McLobster, their version of the local lobster roll sandwich. This strategy ensures that local customers have foods to fit their tastes. In this way McDonald's has used strategy for adaptation in which they have modified their existing products for fitting the local tastes. The company has identified that the best way to retain the current market share is to attack the existing products with newer and improved products which are aimed at existing customers. Cannibalizing existing products is a surest way to retain market share, remain fresh & current in the market place - and win some market share from competition.

3.2 Explain distribution strategies used by McDonald’s. Think about customers’ convenience and satisfaction in relation to distribution channels used

The distribution strategies which are used by McDonald’s are directly target towards the convenience and satisfaction of the customers. McDonalds has implemented a traditional hub and spoke model for its distribution across various markets.The company has a centralized warehouse in a region and delivers the products to the various stores in other parts of the regions. The most important part of the distribution strategy of the company which leads to the convenience and satisfaction of the customers is the locations of the stores of the company in different markets. The stores are well located and has various features which can be very comfortable for the company including the layout as well as the arrangement in line with the overall branding of the company.

The company has more than 30,000 restaurants serving as much as 46 million people each day in 121 different countries. All the stores of the company bear an identical and pre-planned atmosphere which is part of the overall brand guidelines of the company. However, the stores are marginally adjusted as per the taste and requirement of the target of the area. The company also has pre-determined locations for various stores for reaching out to a diverse target market.  This leads to the satisfaction and convenience for the consumers of the company in view of the fact that the stores become easy to reach for them.

3.3 Explain pricing strategies used by McDonald’s. Provide an explanation of how prices are set to reflect McDonald’s marketing objectives and market conditions

Price can be defined as the money which the consumers need to spend for availing a specific product or service from the offering companies. The price of any product or services are defined by the brands basis the pricing strategy of the company. There are various factors which help in defining this pricing strategy of the company. Following are some of the examples of factors specific to McDonalds which are external as well as internal for designing the pricing of the goods:

1. External Factors
   1. Economic condition of market defining the purchase power of the target segment
   2. Pricing which is being offered by the rival or substitute companies (e.g. KFC, Burger King)for the same or similar type of product offering
2. Internal Factors
   1. The manufacturing as well as the overhead costs of the brand
   2. Brand strategy of the company in terms of premium-ness of the brand value which the company wants to maintain in the market

The marketing objectives and market conditions for most of the markets of McDonalds is to enhance the market share and sales of the brand through the pricing. Hence the pricing of the company is kept at a low to medium pricing according to the countries in which it is operating. McDonalds undercuts the various direct and indirect rivals through the pricing strategy which leads to a greater footfall for the stores of the company (Kotler, 2013). One of the major aspect of the pricing strategy of the company is price bundling. In this, the company sales three or four products together at a slightly lower price than their individual prices. This is a significant strategy by the company where the company can maximize its sale in view of the fact that the perceived value of the products goes higher together due to that marginal price cut. The value meals, internetcombos, all-inclusive vacation packages are examples for the same.

3.4 Research into promotional activities of McDonald’s and illustrate how promotional activity used by McDonald’s is integrated to achieve its marketing objectives

The various promotional activities which are carried out by the brand is a mix of mass marketing as well as below the line promotional activities. In almost all the countries in which the country is present the company has a variety of mass marketing channels utilized for the promotional activities of the company. Some of the above the lineactivities including the advertising, which are used by the company are conducted on TV, radio, cinema, online, poster sites and in the press (newspapers, magazines). These are very well designed by the company for meeting its marketing objectives in view of the fact that these ensure that the top of the mind recall for the brand is highest for the company which also ensures that customers’ impulse decision making is influenced by the same. Once the customers reach the stores the in store promotions ensure that the loyalty is driven for the customers and this ensures a base of loyal customers for the brand.

The company also has been able to implement an extensive social networking strategy for promotion in which the aim of the communication is usually to drive a lot of traffic to the website of the company and subsequently the stores of the company. This appeals to the primary target segment of the company which is the younger generation The company has dedicated general as well as country specific pages on famous websites like Facebook, Twitter etc. These pages confer all the related information about the latest news and upcoming events about McDonald's and also updates about new deals and offers.

3.5 Analyze the additional elements of extended marketing mix for McDonald’s

Following are additional elements of extended marketing mix for McDonald’s:

• People: McDonalds has a dedicated training and development program for it’s in store employees who are the face of the brand for the consumers of it. This training and development program provide the employees with a lot of insights as well as best practices which are needed to be followed by the employees for satisfying the customers with the service provided. Amongst the other stores within the same market, McDonalds has the people who are most effective and efficient. 
• Process: McDonald’s has a constant endeavor for developing and improving the various internal as well as external processes for providing the customers with the best possible service. These processes include the ones which the company runs with its various suppliers and vendors as well as in store processes which delivers the food to the customers within a very short span of time. 
• Physical Environment: This factor for McDonalds will be the in store experience which the brand attempts to provide the consumers with.  McDonalds, since it appeals to the impulsive psyche of the customers and tries to provide them with fun and happiness the stores are also designed accordingly. The ambience which is provided by the company in the stores are very unique to McDonalds due to the colors and other elements which are used. The stores have interior designs which are also unique along with suitable arrangement of seating. The company also invests in developing an environment which reflects the internal environment.

Task 4

4.1 Plan marketing mixes for two different segments in the consumer markets with reference to McDonald’s

After development of the marketing strategy, it is important that McDonald’s decide on the tactics that can be used with highest effectiveness in achieving strategy objectives. Tactical marketing starts with the creation of a marketing mix of four components—product, price, place, promotion—which can fulfil the needs of the targeted set of customer. There are two different segments which are mentioned in this report.The first segment will be the conventional customers under which customer who are age of 30 to 40 years and having a high income level will be included under this. The second segment will be the people belonging to the low age bracket with an average age of 20 to 30 years and having medium to high income level.

Segment 1

• Product: Coffee and other confectionaries under the brand name of McCafe
• Place: Office buildings and stores within malls near markets and offices
• Pricing: Higher pricing
• Promotion: product can be promoted through different market strategies and through store.

Segment 2

• Product: Smoothies and other cool beverages along with the burgers
• Place: Store should be placed nearby schools and college.
• Pricing: Price should be low to medium.
• Promotion: promotion can be made through various internet websites and other networks.

4.2 Illustrate the differences in marketing products and services to businesses rather than consumers

There are differences in marketing products or services to the businessescompared to do the same to the consumers. B2C marketing (to customers) has a lot to do with the reaction of the customersas well astheir emotional or impulse decisions. This quasi-rational and quasi emotional decision mechanism of the B2C marketing is its most important aspect on which the marketing activities are also built. However B2B marketing is highly rational and it calls for content which is highly detailed. The audience of the B2B marketing has to be catered to by a team of sales and marketing professional. B2C marketing activities on the other hand can do with only being useful and humorous (Hawkes, 2003). The B2B buying cycle is often much longer than the B2C decision process. A contract for a B2B purchase tends to last months or even years, making it a much more significant decision. 

4.3 Show how and why international marketing differs from domestic marketing in the case of McDonald’s

Domestic marketing is more limited in comparison to the international marketing since it is done for a wider range of consumers. Domestic marketing also calls for a more compact marketing plan, as compared to which the international one needs to be more enhanced and wide spread for catering to the audiences of various nations. Hence for international marketing McDonalds need to spend considerably in promotional activities through television ads etc. it is because that profits which are earned by them is less in domestic market as we compared in international market. Also for this company, the international marketing is different in view of the fact that the product development of the company in different continents and countries are significantly different and due to the same, the product marketing is also different. The international marketing entry strategies is a significant part of the international marketing which differentiates the international marketing from domestic marketing. Some of the most common market entry strategies are: directly by setup of an entity in the market, directly exporting products, indirectly exporting using a reseller, distributor, or sales outsourcing, and producing products in the target market. Others are:

• Business alliance
• Exporting
• Franchising
• Joint ventures
• Licensing
• Outsourcing

References

Bateson, J & Hoffman, K. 2009. Managing Service Marketing. Boston: Dryden press.
Burrow, J & Everard, K. 2004. Business Principles and Management. 12th ed. USA: Thomson.
Hawkes, C. (2002). Marketing Activities of Global Soft Drink and Fast Food Companies in Emerging Markets: A Review.  Chapter in World Health Organization Report Globalization, Diets and Noncommunicable Diseases.
Kotler, P., Keller, K. (2011) Marketing Management. Prentice Hall.
Majumdar, R (2001), Product Management, PHI Publishing Group, Page 99-107
Ngai, P. (2003) Subsumption or Consumption? The Phantom of Consumer Revolution in “Globalizing” China. Cultural Anthropology 18(4):469–482.
Rieple, A. (2008),Strategic Management: Theory And Application, Oxford University Press, Page 130-137
Thompson, J. (2010), U.K. Girds for New U.S. Fast Food Invasion, BusinessWeek, June 7, 2010

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