Importance of the Marketing Concept to McDonalds - Assignment Example

? Importance of the Marketing Concept to McDonald’s: Marketing the Golden Arch across the Globe 28 July Word Count: 1957 INTRODUCTION The marketing concept is one of the most important elements that drive organisational success because it shapes the marketing strategies of businesses and their alignment with organisational vision, mission, values, and resources. It is a concept that uses multiple marketing tools to effectively address the needs of internal and external customers. The marketing concept can also be used to address diverse stakeholder and environmental concerns. The paper aims to explain the relevance of the marketing concept to McDonald’s. It shows that the marketing concept is relevant to McDonald’s through competition analysis and marketing mix, which it pursues because of the diverse local needs and values of its markets and the need to address criticisms of the negative effects of McDonaldisation on the services sector and the health of its customers. THE MARKETING CONCEPT The marketing concept has evolved significantly for the past sixty years. Most of the definitions of the marketing concept in the 1960s emphasise the relationship between organisations and customers, while current definitions in the twenty-first century seek to be more inclusive by embracing a stakeholder approach to defining and attaining “values” (Gamble, et al., 2011, p.235). The marketing concept states that companies must identify the needs of their customers more efficiently and effectively than the competition (Moore and Pareek, 2010, p.21). Apart from competitiveness, the marketing concept includes responsiveness and commitment to diverse stakeholders. Gundlach and Wilkie (2010, p.91) assert that marketing should go beyond providing value for customers and profits for organisations, but also involve exchanges and communications that benefit other stakeholders and the society in general. A holistic approach to marketing supports the service dominant logic theory (SDL) that drives the marketing concept of the paper. Vargo and Lusch (2004) proposed a general marketing concept that “[is] more than simply being consumer oriented; it means collaborating with and learning from customers and being adaptive to their individual and dynamic needs” (Vargo and Lusch, 2004, p.6). Marketers can only offer service propositions, but their “value” depends on customers’ experiences and assessments. An organisation uses the marketing concept by interpreting customers’ needs through their values, beliefs, and practices, adopting this understanding to guide organisational vision, mission, and core values, and finally implementing it through intelligence gathering, sharing, and application, one of which is through the marketing mix. See Figure 1 for the Marketing Concept. Organisations use the marketing concept because they are aware that it has been empirically related to higher sales, profitability, product quality, success of new products/services, employee morale, and general performance (Ailawadi, et al., 2006; Shiu and Yu, 2010; van Triest, et al., 2009). Figure 1: The Marketing Concept Source: Nakata and Sivakumar (2001, p.256) MCDONALD’S: COMPANY OVERVIEW McDonald’s Corporation operates and franchises McDonald’s restaurants in 119 countries. McDonald’s restaurants offer a standard menu, which includes, “McDonald’s menu includes hamburgers and cheeseburgers, Big Mac, Quarter Pounder with Cheese, Filet-O-Fish, several chicken sandwiches, Chicken McNuggets, Snack Wraps, French fries, salads, oatmeal, shakes, McFlurry desserts, sundaes, soft serve cones, pies, soft drinks, coffee, McCafe beverages and other beverages,” including local and limited-time products (Reuters.com, 2013). Furthermore, the company enjoys sustained growth with a global comparable sales growth of 3.1%. Sources showed that some of the target market’s needs and wants are: 1) the need to buy quick and tasty food for busy parents and businesspeople; 2) parents want to give treats to their children through Happy Meals; 3) teenagers are attracted to the affordable menu and free Wi-Fi internet access; and 4) low-income families are attracted to the inexpensive food products and quick service (McDonald’s, 2008, p.3; Vignali, 2001). SWOT analysis describes the inner and external environments of McDonald’s. The strengths of the company are: 1) largest market share in the global fast food industry1; 2) high brand recognition worldwide; and 3) successful glocal marketing strategy. McDonald’s has a “customer-focused Plan to Win” (Plan) which offers a general framework for its global business, a framework that adapts to local tastes. The weaknesses of the company are: 1) high employee turnover; 2) negative publicity because of unhealthy menu; and 3) litigations against impact of its food on obesity and illnesses.2 The opportunities to the company are: 1) increasing demand for healthy, but convenient meals and 2) developing countries with high demand for fast food where McDonald’s is not yet the top fast food restaurant. The threats to the company are: 1) lawsuits; 2) trend toward healthy lifestyles, and 3) saturation of several markets in a number of countries. RELEVANCE OF THE MARKETING CONCEPT TO MCDONALD’S The marketing concept is relevant to McDonald’s because of its tools of competition analysis and 7Ps marketing mix. For competition, the next contender to having the biggest global market share is Yum! Brands, Inc. (which includes KFC). Other competitors are Burger King and Wendy’s. All of these competitors are experiencing slumps in their U.S. market, although McDonald’s is faring better compared to them (Bhasin, 2012; Brady, 2013). KFC’s business, especially in China, is doing better than McDonald’s because of its more appealing menu and improvement in operations through highly localized management and personnel (Brady, 2013). KFC is expanding its menu through adding wraps and local food, even vegetables for some Asian markets. Burger King and Wendy’s are updating their store designs and layout. Burger King has made drastic changes in its marketing by removing the King and replacing him with female celebrities as spokespeople to appeal more to the female and mother markets (Bhasin, 2012). It is also expanding its menu by adding more salads, smoothies, and wraps. Wendy’s wants to be a more comfortable restaurant chain than a burger stand and emphasizes real beef and fresh food for its brand positioning (White, 2012). These actions indicate that these fast food chains are localising menu and branding to respond to local tastes and people who prefer healthier food choices. Apart from competition analysis, McDonald’s can be examined further through its 7Ps marketing mix. For the products, the company mixes standard and localised food and drinks. McDonald’s has applied local variations to its menu.3 While it has a standard menu that is available to all McDonald’s restaurants, several branches have added local products. Some examples are “ginger egg tarts in Taiwan, rice burgers in Hong Kong, taro pies in China, teriyaki burgers in Japan, grilled salmon sandwiches in Norway and poached egg burgers in Uruguay” (Sinclair and Wilken, 2009, p.153). The additional food products showed that the company is willing to bend its menu to satisfy local palates. As for place, McDonald’s closely controls how its restaurants look like for its company-owned and franchised outlets, while expanding abroad. At present, restaurants have increasingly been improved to improve comfort and some branches add McCafes as additional sources of income. By December 31, 2012, McDonald’s operates “34,480 restaurants in 119 countries, of which 27,882 were franchised or licensed, including 19,869 franchised to conventional franchisees, 4,350 licensed to developmental licensees, and 3,663 licensed to foreign affiliates; and 6,598 were operated by the company” (Reuters, 2013). Pricing is important to McDonald’s marketing mix. The marketing concept stresses the role of the right pricing strategy in attracting and maintaining customers. McDonald’s does not just base price on costs and target revenues, but compares prices with competitors and responds to the socio-economic status and brand perceptions of markets (Sinclair and Wilken, 2009, p.152). An illustration is the price variation of Big Mac all over the world. Some countries price it to be affordable for office workers, but in developing countries, the menu is somewhat expensive enough to be seen as a luxury product for low-income workers (Vignali, 2001). Promotions are important to McDonald’s too, where it is successful in its combined global and local marketing strategy.4 McDonald’s 2012 Annual Report describes its glocal approach, where a global marketing plan is implemented with localised elements. A good example of its application of the marketing concept is the company’s “I’m Lovin’ It” slogan.5 The campaign was developed centrally in the headquarters, but local agencies were provided the leeway to localise the campaign (Sinclair and Wilken, 2009, p.152). For instance, while the main song was sung by Justin Timberlake in the U.S., the campaign song for China was performed by Wang Leehom, a famous local singer who did a Mandarin version of the campaign’s jingle (Sinclair and Wilken, 2009, p.152). The same strategy went to several variations for other Asian markets too (Sinclair and Wilken, 2009, p.152). The localisation of the campaign allowed McDonald’s to have a stronger connection to customers from different cultures. The people element is another important aspect of the marketing concept that is present in McDonald’s. McDonald’s hires and promotes local personnel (Sinclair and Wilken, 2009, p.152). It trains and educates willing and capable local employees to be future managers. This practice allows the company to promote managers who have local and corporate knowledge and skills (Sinclair and Wilken, 2009, p.152). For the processes and physical aspects of the marketing mix of the company, it attains widespread standardisation and localisation. The processes for food production, cooking, and serving are standard across the world for all McDonald’s. Suppliers are expected to follow standard quality standards, and when not present, McDonald’s vertically integrates, like what happened to Russia (Vignali, 2001). Physical aspect includes consistent customer service and food quality (Vignali, 2001). The golden arch is a familiar icon, although interiors differ for different outlets to accommodate cultural and language differences (Vignali, 2001). Hence, the marketing concept enables McDonald’s to maximise the strengths of global and localised marketing strategies and standardised and localised operations and logitics. McDonald’s also expands the marketing concept by including a stakeholder approach. The stakeholder approach has a philanthropic stance. Ronald McDonald is the icon for the company’s Ronald McDonald House of Charities. It helps communities in many ways, such as providing educational support for children in low-income communities and supporting other community development projects (Pride and Ferrell, 2012, p.314). The company is also trying to be more environmental in its activities. In some branches, it is using paper only, not plastic, for its packaging. It has also established animal-handling standards for its suppliers (Pride and Ferrell, 2012, p.314). McDonald’s uses a stakeholder-oriented approach to the marketing concept because it wants to appeal to different markets and it has been criticised for its Taylorisation of production that dehumanises workers and customers. First, the company seeks to respond to different markets with diverse needs, preferences, and budgets. The marketing concept allows the company to respond to these varied customer characteristics. Furthermore, Taylorisation has its positive side of standardisation, which reduces costs and improves productivity, but it has been criticised for treating workers as machines and not understanding their deeper needs as human beings. McDonald’s is then responding to this criticism through generating a marketing concept that combines just labour practices and active community involvement. CONCLUSION The marketing concept guides business leaders into designing marketing strategies that attracts and retains customers while promoting responsible human resource management and other company activities. McDonald’s uses the marketing concept through a marketing mix that follows a glocal marketing philosophy and competition analysis. McDonald’s is successful in its use of the marketing concept because it is the leading fast food in terms of revenues. By having a glocal approach, it balances efficiency and effectiveness in its marketing strategies. The global approach ensures that the company has a central control on the brand image and positioning of the company, so that it would not be diluted through different marketing messages. 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