Pricing and Distribution in Marketing Decisions for McDonalds Co - Research Paper Example

Pricing Strategy of McDonalds Co One of the key elements of pricing strategy of McDonalds is based upon the notion of delivering value to the customers. What is important therefore is the development of a perception regarding the overall value of the product in the eyes of the customers. The overall pricing strategy of McDonalds therefore focuses on generating such value for its customers. McDonalds has been using value pricing as well as offering bundled services in order to offer its different products.

(Bertini & Wathieu, 2010). Offering bundled services often include different combinations such as burger, drinks, fries as well as ice cream in some instances. This strategy of the company therefore allows it to offer prices in different denominations wherein it offers higher prices when any product is purchased in isolation however, the same is purchased in a bundle, McDonalds offer the same at relatively cheap price. Same strategy is also applied when a customer orders up-sizes of the order wherein order is upsized by charging very low premium.

Pricing Strategies and Target Market McDonald essentially divides its customers in four broader categories and therefore designs its overall offerings in such a manner which can satisfy the needs of these customers. These four broader categories of customers include parents, children, business customers as well as the teenagers. Parents often visit restaurants in order to give their children a treat whereas children visit McDonalds because it is considered as a fun place to eat. Business customers prefer McDonalds because of the ease with which it can be obtained and without actually affecting the overall work hours.

(McDonalds, 2008) Teenagers are often attracted due to the so called Savers Menu as well as the internet surfing facilities are offered within restaurants. This profile of the customers therefore suggests that McDonalds offers menus which cater to the different tastes and budgets of the customers. Consider this, it therefore can be clearly established that the pricing strategies of McDonalds described above would be able to continuously satisfy and motivate the target market of the firm. It is also important to understand that McDonalds has remained successful with its current pricing strategy despite the fact that it works in an industry which is de-regulated and is fragmented in the nature.

In an industry which is de-fragmented, price cuttings often becomes a compulsion for the managers however, McDonalds seems to have been able to deal with challenge. (Florissen, Maurer, Schmidt, & Vahlenkamp, 2001). Fragmented in the sense that there are countless small food outlets which directly or indirectly competes with McDonald and offer a considerable challenge. Discounts in pricing strategy In the heat of the moments, managers when faced with strong competition often decide to offer discounts as a part of the overall pricing strategy.

Discounts are often believed to increase the sales of the firm as well as give a boost to the firm’s overall revenue. However, discounts for larger period may not be profitable for the firm as this may result into reduction of the profitability for the firm. The practices of different Pizza chains during the recession period suggested that the pro-longed discounts could seriously hamper the profitability of the firm. (Mohammed, 2011) McDonalds however, has been able to use what is called adaptive pricing to offer different menus according to the overall budget preferences of the customers.

It is offering savers menu to the teenagers looking to eat great food at relatively lower costs while at the same time offering other expensive menus to its business customers. Distribution Strategy McDonalds’ business model is based upon the concept of franchising under which most of its units are operated by the franchisee. What is however, important to note that McDonalds developed its distribution strategy in a manner which has been integrated as a part of its overall product offering? McDonalds was pioneer of the idea to serve the food which is prepared fresh and in front of customers therefore it combined this aspect of its overall product offering with its overall organizational motto of cleanliness and quality.

The product is essentially delivered through the outlets however, McDonalds considers distribution as something beyond just the physical location. It considers it as a combination of range of different products to offer a completely new experience to its customers. There does not seem to be any incongruence between the outlets as well as the overall distribution strategy of McDonalds. This is owing to the fact that McDonalds develops its distribution strategy in combination of physical location as well as elements such as cleanliness, quality as well as delivering product which is prepared in front of customers.

Bibliography 1. Bertini, M., & Wathieu, L. (2010, May). How to Stop Customers from Fixating on Price. Retrieved August 21, 2011, from Harvard Business Review: http://hbr.org/2010/05/how-to-stop-customers-from-fixating-on-price/ar/1 2. Florissen, A., Maurer, B., Schmidt, B., & Vahlenkamp, T. (2001, August). The race to the bottom. Retrieved August 21, 2011, from McKinsey Quarterly: http://www.mckinseyquarterly.com/The_race_to_the_bottom_1078 3. McDonalds. (2008). Marketing at McDonalds. Retrieved August 21, 2011, from McDonalds: http://www.mcdonalds.co.

uk/static/pdf/aboutus/education/mcd_marketing.pdf 4. Mohammed, R. (2011, January). Ditch the Discounts. Retrieved August 21, 2011, from Harvard Business Review: http://hbr.org/2011/01/ditch-the-discounts/ar/1