Know the Methodology Used in Marketing Principles
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Marketing principles refers to the tactics that company is following in order to improve marketing performance. In order to understand this concept clearly MC Donald case study is discussed in the report. McDonald is a company that is operating a restaurant chain across the globe. In this report, an attempt is made to understand the marketing efforts of company. In respect to this, marketing concepts like market segmentation and targeting are discussed in detail. Apart from this, marketing environment is also discussed in detail in order to understand the way in which they affect marketing decisions of the firm. After this, marketing mix is described in detail and for different segments, distinct marketing mix is proposed. At the end of the report, difference between consumer and business marketing is described in detail. Along with this, domestic marketing is also differentiated from international marketing.
1.1 Explanation on elements of marketing process
Marketing refers to the efforts that a firm makes in order to sell its product. Without proper marketing, a product cannot be sold in the market even if it has good features. Some of the elements of marketing principles are as follows:
- Integrated marketing- It is a way of marketing in which several channels of communication are used by the firm. This concept states that message delivered through several channels of communication must go in the same direction. If all messages will communicate in different directions then it will not put a positive impact on people. McDonald is following this concept and under different channels of communication, it conveys the same message. In such messages, it makes an attempt to make people aware about its product and to feel positive with regard to same (Cravens and Piercy, 2008).
- Marketing audit- In this, firm measures the effectiveness of its marketing efforts. McDonald in this regard collects data from all its restaurants and identity restaurants where more people visit for meal or dinner. Moreover, by doing data analysis, it also identifies the areas in which specific products of McDonald are mostly consumed. By doing this, company gets information which can be used for advertising a product.
- SWOT analysis- SWOT is done in order to identify company’s strengths and weaknesses. Further, these are tally with available opportunities and threats that are prevalent in the market. By matching with each other, McDonald identifies the areas where it needs to make improvements.
- Marketing objectives- McDonald prepares objectives in order to measure the effectiveness of strategy (Hollensen, 2015). These objectives are divided into small targets in order to ensure that major objective will be achieved on time.
1.2 Benefits and costs of marketing orientation
Marketing orientation is a concept which states that products must be customized as per the target customer requirements. Firm must not stick to its existing product line in such a highly competitive market. If same will be done then organization will be finished.
- Service and customer base- It states that quality service must be provided to the people and it must be sure that they would not face any difficulty while taking a service of company (Jüttner, Christopher and Baker, 2007). McDonald understands this thing and it is putting heavy stress on its service quality. It is continuously making innovation in its service delivery mechanism in order to make sure that services will be delivered on time and in a systematic manner.
- Marketing research- McDonald is conducting marketing research time to time in order to track changes in consumer behavior. It adopts this practice earlier and by doing this research, it also identifies possible changes that can occur and influence that these changes have on the people willingness to buy (Wilson and Gilligan, 2012). After predicting future situation, company formulates a strategy in order to maintain people’s willingness to buy its product.
- Economic environment- Such environment refers to the condition of economy. Indirectly, it also refers to the economic condition of people. If unemployment rate increases and same trends are observed in case of inflation then McDonald faces a lot of problems in its business. In such a situation, by conducting a marketing research, firm identifies future scenario and prepares a plan to maintain the sale up to a certain level when environment is unfavorable (Moutinho, 2011). However, it is not necessary that marketing research will help company in achieving the desired results. Further, negative change in the environment may lead to fall in demand from people side. Ultimately, profit of firm may decline heavily. In such a situation, firm will need to take strategic move in its marketing efforts. Hence, marketing environment affects the marketing decision of McDonald.
- Social environment- It refers to the belief, attitude, value system and customs of people. If product that is served is against to these above mentioned components then it is not possible to sale a product. This is because; it will not get acceptability from the side of people. McDonald understands this thing and it customized its product according to the taste and culture of people (Lambert, García, Dastugue and Croxton, 2005). Due to this reason, firm’s products are accepted in all nations without any issue. In order to gain acceptability of people, many times firm needs to advertise its product in a new way. Hence, social environment affects marketing decisions of the firm.
- Political environment- Political environment also affects McDonald because sometimes, message is communicated in such a way that hit sentiments of specific community. Due to these reasons, political parties come against to the firm. Thus, political environment affects the marketing decisions of organization.
- Legal environment- In UK, there are some rules and regulations that firm needs to follow regarding preparation of advertisement. Violation of these rules may lead to invitation of penalty from regulatory authorities (Reid and Bojanic, 2009).
- Technological environment- Lots of ways of advertising are already available and it is difficult to choose from options. Competitors also use different sort of technologies for advertising their products. Hence, before selecting any technology for advertising a product firm needs to identify methods that competitors are using for advertising their product.
- Customers- With change in consumer behavior of people, marketing efforts need to be made in different directions (Sheth and Sisodia, 2015.). Hence, firm needs to keep in mind consumer behavior of the people before taking marketing decisions.
- Competitors- In order to give stiff competition to the competitors, McDonald needs to make good marketing efforts. Thus, in order compete with competitors company needs to comprehend their strategy for taking own marketing decisions.
2.2 Segmentation criteria for McDonald
Market segmentation refers to the way in which entire market is divided into several parts. The entire market can be divided on the basis of different parameters. Some of these are explained as below:
- Geographic segmentation- In this, entire geographic area is divided into several parts like UK can be divided in different states. This is suitable for McDonald because it is producing edible items and people’s preference and taste as well as culture changes from one area to other (Liu, Kasturiratne and Moizer, 2012). Hence, by following this segmentation method, McDonald can serve appropriate product to the customers.
- Demographic segmentation- In this, entire population is divided on the basis of income, age, occupation, religion, etc. Hence, this segmentation method is not suitable for the firm because religion and age factor does not affect the eating preferences of people.
- Phsycographic segmentation- In this, segmentation is done on the basis of people lifestyle, attitude and their value system. With change in lifestyle, people’s eating habits also get changed (Cronin and et.al., 2011). Moreover, change in value system also affects the demand for product. Hence, along with the geographic segmentation, firm can also follow psychographic segmentation technique.
2.3 Targeting strategy for MC Donald
After doing segmentation, target groups of people are selected from an appropriate segment which can be done on the basis of geographic areas or attributes of people. Some of the targeting strategies are given as below:
- Undifferentiated target strategy- Under this strategy, firm views entire market as a single segment and it does not produce the product for specific customer. But this strategy is not suitable for McDonald because its customers are different from each other in terms of tastes and preferences (Foxall, 2014).
- Concentrated targeting strategy- In this strategy, manager focuses on specific group and makes an attempt to develop the products as per their requirements. This strategy is also not suitable for the firm because it is operating globally and people’s taste varies from country to country. Hence, by focusing on single group, firm cannot enhance its profitability.
- Multisegment strategy- In this, focus is given on the people that belong to more than one segment (Vargo and Lusch, 2008). In this way, firm covers all people that can play an important role in the growth of business. Hence, this targeting strategy is the most suitable for McDonald.
2.4 Impact of buyer behavior on marketing activities of the firm
Buyer behavior refers to the purchase pattern of people. It also refers to the factors which play a decisive role in the purchase decisions of people. Hence, collection of information regarding people consumer behavior is necessary. It has been said that by analyzing the consumer behavior of people, advertising message must be drafted by the advertiser. If same thing will be done then people will highly pay attention to the advertising message (Cova and Salle, 2008). Advertising appeal also plays a vital role in making the firm’s marketing efforts successful. By analyzing consumer behavior of people, motivating factor can be identified which will be used to draft an advertising appeal. By making relevant advertising appeal, effective advertising message can be prepared. Hence, this will lead to formulation of good advertising message. Thus, it can be said that consumer behavior affects the marketing activities of organization (Desbordes, 2012). If consumer behavior will not be analyzed in a proper manner then advertisement will not be drafted in a proper manner. Hence, marketing efforts will go waste. Hence, buyer behavior affects the marketing activities of the firm.
2.5 New positioning for the product
Positioning of the product means creating a special image of the product in the eyes of customers. This means that on the basis of some factors, under this strategy, good image of company’s product is prepared. By doing this, firm persuades their customers and attempts to elevate the sale of their product. Positioning strategy is also used to differentiate company’s product from any competitor’s product (Richards and Jones, 2008). So, it can be said that this strategy helps the firm in revealing that its product is superior then the competitor’s product. McDonald sells Hamburger on its restaurants. It can position its burger on the basis of price or quality. In advertisement, it can show that its burger is delicious in nature and its taste is different from the competitor’s burgers (Grönroos, 2007). By doing this, McDonald will create a special image of its burger among the customers. This will certainly help it in increasing the sales of the product.
3.1 Ways in which products are developed to sustain competitive advantage
Competitive advantage means points on the basis of which company compete with its competitors. This is done by reducing cost or making innovation in a product. McDonald can improve its product to develop its core competency. In this regard, firm needs to do marketing research. In this, company will collect data from customers regarding changes that they want to see in the product (Grönroos, 2011). Moreover, firm can also conduct marketing research and in this investigation, it can collect the information about tastes and preferences of people. On the basis of findings that are prepared on the basis of data that is collected from the marketing research and feedback results, changes that need to be brought in the product can be easily identified. After determining changes that need to be made in an organization, existing product will be altered. After innovating a meal, it can be provided to customers for tasting (Duchêne, 2009). If results will be good then product will be launched in the market. If product in the market would gain a huge success then that product will become the core competency of McDonald.
3.2 Arrangement of distribution of the product
In order to develop distribution system in such a manner that people feel convenience McDonald needs to some things. First, McDonald can increase its sales force that will provide a home delivery service. By doing this company can increase its presence in geographical areas. Apart from this, people will receive deliveries of their order in short time period. Hence, this will lead to receipt of more orders from the people. Ultimately, company profitability will increase. On other hand, for people convenience McDonald can open its multiple restaurants in specific city (Dahlstrom, 2010). If this will happen then people in short time period will reach to the firm restaurant. Hence, sales of company will increase which will ultimately lead to increase in company profitability. Thus, it can be said that modification in distribution system will lead to customer convenience. This will also increase company profitability.
3.3 Ways in which prices are set to reflect the objectives and market conditions
It is main objective of McDonald to make its product affordable to all people. Its main aim is to ensure that its product will be accessible to all. In order to reflect this objective company charged a reasonable price for its product. If McDonald is compared with its competitors then it can be easily seen that on comparison with them that firm is providing quality food product at a reasonable price. If we take about market conditions then it can be seen that raw edible items are very dearer and cost of food manufacturing also increases. Even though, firm is making its product available at reasonable price. Firm by determining specific margin percentage is determining price of its product. However, it is policy of company that product must not be sold at a low price (Christodoulides, 2009). This is because; low price creates a negative image about the company product in terms of product quality. Hence, in order to achieve objective and maintain a reputed image among people company is selling its product at a reasonable price.
There are some of the pricing strategies that a firm commonly follows:
1.Price skimming- Under this strategy firm charge a high price for its product due to its unique feature. Sometimes product is simple but high price is charged in order to create prestigious image of the company product (Navarro, 2010).
2.Penetration pricing strategy- In this pricing strategy a low price is charged for the product. Here on the basis of low price firm try to sell its product.
3.4 Promotional activity of McDonald and way in which they are integrated in order to achieve the marketing objectives
There are many channels of communication through which a firm can advertise a product. But McDonald is using specific channels of communication. For promoting its product, firm is using social media and sales promotion techniques. Through social media, firm is managing its relationship with the general public. On its Facebook page, there are 26 million likes. But it is not advertising its product on regular basis on social media. Other technique that it follows comes under sales promotion techniques (Álvarez Casielles and Martín, 2010). Under this, it is distributing coupons that are scratched by the customers. Marketing objective of the firm is to increase its market share which will ultimately lead to increase its profits. By advertising product in both the ways; company wants to communicate a message that it is taking care of its customers and is interested in building long term relationship with them. Same thing is communicated by sales promotion and social media activity. Hence, advertising message is integrated.
3.5 Extended elements of marketing mix
Four P's are product, price, promotion and place. But other than these, there are people, physical evidence and process. These extended marketing mix components are described as below:
- People- It refers to the people that are doing a job at the firm’s restaurant. As per the concept of marketing mix, they are the employees who serve product to the customers. If they will not do well then customers will not get satisfied from services quality about which the company made a promise to deliver to its customers. Ultimate result will be that customers will get unsatisfied and firm will not be able to develop loyal base of customers (Wang, 2007). Hence, McDonald needs to make sure that its employees are performing the operations well.
- Physical evidence- It refers to the things that are around the customers. If appearance around customer will not be good then they will not feel well and ultimately, it will lead to dissatisfaction among customers. Hence, again by making such sort of mistake, firm will not be able to maintain loyal customer base. Thus, McDonald can develop physical things around or on the table. In respect to this, it can put attractive fork holder on table. Stylish chairs can be put around the table. In this way, healthy and positive environment can be created in a restaurant (Henneberg, Scammell and O'Shaughnessy, 2009).
- Process- Process refers to a way in which a service is delivered to the customers. In many organizations, such process is too long. As a result, people have to wait for receiving their order. This cause irritation among customers. Hence, McDonald needs to review its process. If process is longer then, by eliminating unproductive steps, duration of service delivery can be reduced. It is possible that service duration is already short but management must again review it in order to again reduce service delivery time. Ultimate result of this effort will be that customers will not get irritated and they will receive service in short span of time. Hence, by doing this, McDonald will be able to create its positive image among customers. Thus, customer retention value will be very high.
4.1 Marketing mix for two different segments in consumer market with reference to McDonald
Marketing mix for geographic segmentation is as follows:
- Product- In case of this segmentation, product will be served as per the tastes and preferences of people. Along with this, people’s culture will also be considered while selecting a product for a specific geographic segment.
- Price- Price of the product will be determined in such a way that a company would earn profit and people can also afford the product at that price. Such a policy also matches with the company’s mission. Hence, this pricing strategy will be perfect for McDonald.
- Promotion- In order to promote a product, firm will use social media and sales promotion techniques. Sales promotion techniques will be applied in the restaurant (Duchêne, 2009). Thus, it put a positive impression on those who come for lunch and dinner in the restaurant.
- Place- Product will be distributed through franchisee business model. This model always provides benefit to an organization and same will further be followed in business.
Marketing mix for psychographic segmentation:
- Product- In case of this segmentation, product will be prepared and served as per the attitude of people. In countries like India, people do not prefer to make vegetarian and non vegetarian food on single utensil. Firm needs to take care of this while preparing a food. Hence, on the basis of results of research on people, attitudes and beliefs; product will be served to the people in specific country.
- Price- Price is closely related to the psychology of people. High pricing may lead to low sales (Desbordes, 2012). Hence, product will be made available at affordable price to the people in all nations in which McDonald is operating its business.
- Promotion- For this segment also, sales promotion and social media will be used for promoting a company’s product. This strategy will be appropriate for the firm.
- Place- In this segment, through franchisee model, product will be distributed among people in each and every nation in which McDonald is operating its business.
4.2 Difference in marketing a product to business rather than consumers
There is a large difference in marketing a product to consumers and business firms. This is because; in case of business, the big problem is that they have sound product knowledge. Due to this reason, it is very hard to persuade them easily (King and Burgess, 2008). On the other hand, in case of consumers, scene is different and they have limited knowledge about the product and they trust opinion of leaders. Hence, it is very easy to persuade them. Business firms follow a large number of parameters for selecting a specific product. If product does not touch those benchmarks, then it is not acceptable from business firm as a prospective buyer (Wilson and Gilligan, 2012). However, consumers also determine some parameters but they do not stick with the benchmarks that are determined by them. Due to this reason, it is easy to persuade the consumers in relative to business firms.
4.3 Way in which international marketing is different from domestic marketing
International marketing is totally different from domestic marketing. Product acceptability and success of advertisement depends on the attitude, belief and culture of people. These vary from country to country. Even symbols have different meanings in different nations. Hence, whatever marketing efforts get success in the domestic market may fail in the foreign market. This thing is proved so many times in the business world (Difference between international and domestic marketing, 2015). In order to make marketing efforts successful, it is necessary to understand other culture and psychology of the people of other nations and factors that shape their buying decisions. If these will be comprehended in a proper manner then firm will be able to formulate a sound business strategy.
On the basis of above discussion, it is concluded that marketing is a very difficult task and it needs planned efforts. In this regard, firm must determine the direction in which it needs to go. Thus, it must do market segmentation by considering various factors. After this, target customers must be selected. Along with that, it has been found that firm needs to select an appropriate product positioning strategy to stay in the market for longer duration. In this way, by making step by step efforts, a firm can become sustainable and successful.
Books and Journals
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- Christodoulides, G., 2009. Branding in the post-internet era. Marketing Theory.
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- Cronin Jr, J. J. and et.al., 2011. Green marketing strategies: an examination of stakeholders and the opportunities they present. Journal of the Academy of Marketing Science.
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