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Marketing Principles

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Marketing Principles Used by McDonald's for their Business Growth

29665 Downloads I Published: 23 Feb ,2017

Marketing principles are referred for making decisions and analysing the actions of the managers further it also helps in making successful management. For the present research organisation chosen is McDonald's. It is a popular brand in fast food chain. The company promote their brand by colourful designs and images to attract more loyal customers (Dooley and et. at., 2012). McDonald's has 1200 outlets which are set in UK and delivers good quality food and services to their trusted customers. The first restaurant in UK was opened in 1974 and still it is going on Woolwich, London. McDonald's is expanding their business in UK as well as internationally by its large variety of products. McDonald's deals in varieties of products like hamburgers, chicken, French fries and desserts etc. and it has introduced Happy Meal for children. In context to changing of consumer tastes and preferences, the company has enlarged its food products into salads, smoothies, fish wraps etc.

In this research, the research covers McDonald's marketing elements and its process by analysing its micro and macro environment through segmentation, targeting and positioning of the food products by various market mix strategies like price, product, promotion and place of the products according to the consumers' tastes, preferences and lifestyles.

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The various elements of the marketing process in McDonald's

The various elements of marketing process of McDonald's are categorised into marketing environment scanning, marketing strategy, marketing plans and monitoring and controlling of the elements (Henley and et. at., 2011).

Marketing Environment Scanning: Company is analysing the external environment of the business by evaluating environment through needs and wants of the customers and changing phrase of the environment and making effective relationships between organisations and suppliers. information about its product and then make change according to the customers'
Marketing Strategy: It is an approach by the company through which they can gather preferences. McDonald's have made different types of strategies for their products and some of the strategies include segmentation, targeting and positioning etc.

Marketing Plans: To gain more market share and profitability, McDonald's uses marketing mix tool to plan its strategy in which it includes product, price, promotion and placing of the product.

Monitoring and Control: This element is used in observing the other elements like research, plans and strategy to be used in the organisation effectively. McDonald's is focusing on customer satisfaction and product orientation because the company is managing its product to gain more customers.

The marketing process to work effectively in the organisation, the company has to analyse its internal as well as external environment by using SWOT analysis (Pahl and Richter, 2009).

The benefits and costs of marketing orientation in McDonald's

Marketing orientation is defined as the products and services are designed as such so that they can meet the requirements of the customers through production orientation. McDonald's marketing orientation is all about unique combination of various marketing tactics and strategy so that the company can fulfil the operational opportunities through fulfilling customer’s requirements. McDonald's can give benefit to the customer by giving their users new experience and good quality of the products and a clean environment. If the company meet the requirements of the customers then the organisation can gain profitability as well as more loyal customers (Blythe and et. al., 2008). Marketing orientation benefits helps the production by producing more products which leads more demand in the market and sales helps in the probability of the business and also gain more opportunities for the organisation. Marketing activities also helps in promoting the business as well as increase market share in the market. If the production, sales and marketing tools are fulfilling its objectives then the company provides good quality of products and services to the society to meet the requirements of the customers.

The cost of marketing orientation in McDonald's includes research of the organisation by using techniques to know its current position, its existing customers and the desired benefits of the organisation. The company is gaining its target market by strengthening its brand value by the organisation's approach to accomplished its goals.

The micro and macro environment factors influencing marketing decisions of McDonald's

To evaluate the macro environment of McDonald's, PEST technique is used:

Political Factors: McDonald's have to meet up the requirements of the government where the franchisees are located related to the health and hygiene of the people. The government are now conscious about people's health which are affecting in form of obesity, high cholesterol etc. because the company is seen as junk food. The others factors include increasing international trade agreements, pending tax reform, evolving public health policy etc. which acts as opportunities for the McDonald's.

Economic Factors: The company emphasis on economic factors like raw materials which are to be supply locally and about its tax rates, employment rates and its taxes rates etc. which are key factors of McDonald's to operate its business successfully. The factors include stable growth of the economy, threat from U.S. Economy etc. which mainly threaten the organisation.

Social Factors: The social factors of the company include taste and preferences of the customers and their changing lifestyles which affects sales performance of McDonald's such as criticized for their products for negative health effects. The company also deals with factors like targeting low income households, expanding business globally by targeting more customers.

Technological Factors: McDonald's can improve their management and productivity while saving time and utilizing resources. Furthermore, the company can provide free Wi-Fi and computing devices to attract more customers. The company is improving business efficiency by increase its R&D activities in the the organisation. McDonald's can increased their sales by using company's website and mobile app.

Legal Factors: In this, company analysis the impact of the laws and regulations on firms. McDonald's follows the equality act in the organization where similar pay is given to all the employees. The business enterprise should emphasis on the policies to secure animal welfare regulatory among meat producers.

Environmental Factors: McDonald's environmental factors also affects the sales performance of the organization. To increase their sales performance, the company can expand their CSR strategies, change in climate also plays a crucial role which can give negative effects on the company's supply chain.

Segmentation criteria to be used for McDonald's products in different markets

The marketing strategy which divides its target market into sub groups on the basis of consumers, its needs, consumer's behaviour and place is known as Segmentation. To segmenting the “Happy Meal” product of McDonald's, the company has segmented on the four segmentation criteria i.e. demographic, behavioural, geographical and psychographic segmentation (Hassan and Craft., 2012). Tesco can be segmented in the areas of the market where there is inadequacy of vitamin A an.

Demographic Segmentation: McDonald's deals with all the age group because the company offers wide varieties of products which is suitable for all the customers. The organisations have all types of the customers such as family, professionals, university students and children. The products like pineapple sticks, carrot sticks etc. are for the children and Hamburger and Crisp Chicken Wraps are for students and professionals etc.

Psychographic Segmentation: In this segmentation, McDonald's concentrates on lifestyles and class of the customers. The company is offering Organic Milk which is the product of Happy Meal to the people who are health conscious and intake low calorie food. There are products like Robinsons Fruit Shoot and other juice which are for the people who are diet conscious.
Behavioural Segmentation: McDonald's introduced new as well as modified products which contain cholesterol content in it. The company is applying pricing strategy in which it is serving low priced products to the low and middle class people to attract more customers. McDonald's organizes occasions like birthday parties for kids etc.

Geographical Segmentation: Youth and professionals are the major customers of the McDonald's and these types of customers wants coffees for their work to get freshen up. So the company is setting number of outlets of McCafes around the country to attract more its loyal customers. Geographical segmentation of McDonald's is done on the basis of tastes and preferences and regions of the locality.

A range of products and services McDonald’s offer choose a targeting strategy

McDonald's is targeting customers of all age group through their wide range of food products according to their needs and requirements. For professionals, they can start the delivery services by which the products can be easily delivered to their offices or at their homes and by this they can get benefits like they can save time and their wok culture doesn't get affected. To target the family, McDonald's can give their customers economic range of products which are easily affordaRe: ble and can attract more customers further they can also offer vouchers or some discount on their few food products (Smith and Lakhani, 2008). To attract children, the enterprise can provide burgers with small toys and parents always need clean and healthy environment for their children. For health conscious people, they are providing various products which will not affect their health such as Organic Milk. McDonald's also targets university going students and youth fRe: rom middle and upper class because the prices of the products are low as compared to others. The company others products is depend on the tastes , preferences , lifestyles of the customers and according to the region of the target market.

Buying behaviour affects marketing activities in different buying situation in McDonald's

Buying behaviour affects the company's sales and its performance by analysing customers' needs and requirements and their purchasing power to buy the products. One of the situation can be in context of recession, the company is facing tough time because of low sales and less people are visiting McDonald's and by this it is affecting the performance of the company. Because of the recession, the demand of the product decreases which leads to less profits and less market share of McDonald's in UK (Kotler, 2008). Buying behaviour of the buyer plays major role in inflencing the sales as well as profitability of the organisation.

Other situation can be when economy is going in good pace and buying behaviour of the consumers increases which can result in good performance of the company as well as customers increases which lead to high profitability. When the market is good then the company can provide with new and innovative products to the customers because the organisation can take risk for innovative products and it will not affect company's profitability.

A new positioning for a Happy Meal of McDonald's

The marketing strategy which focuses on their brand value to stand high in the market from other competing brands is known as positioning. McDonald's is the low cost family restaurant in fast food joints which targets all types of customers. The organization’s positioning strategies focuses on children through Happy Meal by giving free toys and access to the playground. McDonald's can position its products at the airport for high and social class customers which can be attracted easily (DeSarbo and et. al., 2009). The company can expand their outlets in centre of the city so that consumers can easily access and can locate in the malls for the family on the weekends outings through its brand strategy. For professionals, they set up their outlets in industrial area so that they can easily buy their food products. Other positioning can be done by using promotional activities like sponsoring national and international sports events and opening the restaurants 24 hours a day for the professionals. Advertising is also an effective tool for McDonald's in which they can introduce new products to their customers and attract them to buy their food products.

The company offers four different types products which has different positioning situation which affects the competing brands of the organisation. There are products like the customers wants such as high price but low quality, high price with high quality, low price with low quality, low price with high quality. High class customers prefer high quality of products , price doesn't matter for them whereas low class and middle class prefer good quality products with less money because they are price conscious people. So that company deal with different types of the products with differentiated price.

McDonald's products are developed in order to make sure that competitive advantage is sustained

If the company provides good quality products at the lower price or provides high benefits and services to the customers are known as competitive advantage. McDonald's deals in the food producRe: ts which sell their products in the lowest prices as compared to the other competitors. To keep the prices low the organisations has to keep their prices' low and to be efficient in their productivity. By doing this, the company will become superior to other in food joints which leads to good sales performances which will further increase the customers as well as profitability of the organisations and also help in expanding the market share in UK (Kakavelakis, 2010). Other competitive advantages are their speedy delivery to the various place which helps the company to gain number of customers. McDonald's serve other various competitive advantages such as its excellent food quality, brand value, cleanliness and great service quality. McDonald's meets needs and requirements of the customers to accomplish their objectives and to become one of the best distributors of food products in the world.

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There are different stages to developed a new product and that consists of as follows:

  • Idea Generation
  • Idea Screening
  • Concept Development and Testing
  • Business Analysis
  • Product development
  • Test Marketing
  • commercialization
  • Launch

Distribution strategies used by McDonald’s

Distribution is the part of marketing mix strategy in which it shows how to distribute their products to the customers. McDonald's is leading food service retailer which has various distribution channels all over the country. The effective distribution strategy focuses on strong market share where the organisation has to set up their retail outlets in the malls so that the customers can easily reach to the place and acquire food products. The retail outlets should be located in the centre of the city because the customers can easily reach there and more number of the customers can get attracted. McDonald's has set the unique cold chain which is sustain the integrity food and conserve its freshness throughout (Richter, 2012). The company avoids high quality of research and technology so that it can't degrade its brand image. Location is the major factor to attract customers and the cost related to leasing facilities and the building plays a crucial role in the organisation's profits. For the effective marketing management, site location decisions are the key factor in the making of marketing strategy of the products so that they can attract more customers to buy their food products. The company should set up their retail outlets in the industrial area so that professionals can be easily attracted towards their food products and there is a possibility of delivering them so that their office hours doesn't affected.

Pricing strategies used by McDonald's

McDonald's has a specific strategy which is followed by the all the food products and their products and the prices strategies which come under marketing mix to market the products and services of McDonald's are further analysed under following heads (7 P's of marketing mix. 2015):

Product Line Pricing: When the price of the products shows the advantages of the product through its price is known as product line pricing. McDonald's also follows product line pricing which gives a large number of products which indicate the merits of that range. Customer can order a burger or burger burger with French fries at giving additional cost to the organisation.

Product Bundle Pricing: When different types of products come collectively in one package it is known as product bundle pricing. McDonald's also focuses on this pricing strategy to combine various food products in one bundle. The company is offering product bundle pricing on some of the McDonald's products, one of the product is Happy Meal which includes burger, French fries and coke and it can offer different options in the burger such as McChicken burger, Hamburgers etc.

Promotional Pricing: McDonald's has unique promotional pricing through its products and the company is giving discounts on the products which are combined together to come in same package. Happy Meal is one of the examples of the promotional pricing in which various food products are given in one package and the price of the entire package is less than the individual food product.

Value Pricing: This pricing strategy is used when the economy is not good or there is recession period in the country when pricing of the products will be low as compared to the normal days. When customers get price conscious and force the market of the McDonald's to lower its price and to follow value pricing strategy. Then the organisations will rved value meal to their customers.

Promotional activity used by McDonald's is integrated to achieve marketing objectives

Promotional activities are effective tools for the marketing management of the marketing mix because it covers all types of the marketing communication (Talwar and Ali, 2013). The promotional activities of McDonald's includes advertising , personal selling, sales promotion and public relations etc.

Advertising: McDonald's focus on the advertisement more than any other promotional activities and the main objectives of advertising their food product is to make customers aware about it and to feel good for the product and to remember about the products. McDonald's wants to passes its products to right consumers effectively through its promotional activities like televisions. Hoardings, newspapers and magazines etc. Advertising is the powerful tool to influence the customers to buy their products and to improve their sales performance of the organisation.

Personal Selling: McDonald's have good number of skilled employees which worked in the different retail outlets so by these employees the organisation can direct communicate to the customers on the direct basis to know the tastes and preferences as well as requirements and feedback about the products by the customers. Employees worked according to the mod and attitudes of the customers so that they can communicate easily.

Sales Promotion: The organisation concentrate on different strategy to promote its business by organising programmes, contest, functions etc. and distributing of different discounts and vouchers on the products on the various occasion and giving free toys to the children for attracting them. The company can organises different health related programmes or sponsored the various contests and functions etc.

Public Relations: The skilled employees of the organisations plays a crucial role in interacting with customers and making public relations. McDonald's employees are to be interactive to the customers so that to know their complains and feedback about the products and later on to improvise it. The company is providing suggestions box at their retail outlets so that customers can give their suggestions regarding to the products and later on company can used it.

An analysis of the additional elements of the extended marketing mix for McDonald's

he other elements of the marketing mix include people, process, physical evidence which helps in using the marketing management in the effective manner (Bose, 2010). MacDonald's also uses this additional elements in their marketing management and they are as follows:

People: The organisation knows the importance of the people whether they are employees or the customers. The company follows the rule that if employees is happy with their work then they will serve the employees best. For this, McDonald's are concentrating on both internal as well as external marketing. For internal marketing, they are hiring and training their employees and also motivating it by giving incentives to enhance their skills. Whereas for external marketing, the business is giving good and clean environment to the customers and also communicating with their customers effectively.

Process: The company's manufacturing process is completely clear and by this the customers can easily see the whole process of making of the food products. McDonald's fast food chain allows the customers to see the which ingredients are been used and which are hygienic for them. The organisation also mention their calorie and other nutritions on their websites of the products. The company needs to provide a correct balance between customization and standardization. The producers should know the customers preferences to provide new experience to their target market.

Physical Evidence: It plays a major role in the marketing mix of marketing management and McDonald's also follow this element in their marketing strategy. The company is concentrating on the clean and hygienic environment in all the retail outlets of the McDonald's so the customers feels good and satisfied. The organisation are also focusing in the interiors of the outlets by choosing bright colours and images to attract customers as well as children. McDonald's also follows proper decorum at its outlets such as having proper uniform of the employeess.

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Conclusion

McDonald's is expanding their fast food joints globally attracting more loyal consumers to buy their products. McDonald's is constantly re-evaluating its products depending on the customers' feedback and market research. McDonald's is generating high revenues through their innovative products by selling more and more food products to their customers. McDonald's is satisfying its customers by giving them clean and healthy environment and also making changes in their health products for the health conscious customers. McDonald's is using its marketing mix strategy very effectively in every existing and innovative products. McDonald's is attending each and every segments carefully within its market and fulfilling and satisfying its customers.

References

  • Henley, N., and et. at., 2011. The application of marketing principles to a social marketing campaign. Marketing Intelligence & Planning.
  • Madsen, T. K., and et. al., 2015. The Market Orientation of Domestic and International New Ventures, in Shaoming Zou , Hui Xu , Linda Hui Shi Entrepreneurship in International Marketing. Advances in International Marketing.
  • Smith, M. and Lakhani, S., 2008. Exploring the myth of customer relationship management: Evidence from UK retail banking. Journal of Applied Accounting Research.
  • Kakavelakis, K., 2010. Family‐themed control in “service factories: An examination of modes of service delivery and HRM styles in the UK restaurant sector. Personnel Review.
  • Kotler, P., 2008. Principles of Marketing. Pearson Education India
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