McDonalds Marketing Mix - Case Study Example

Segmentation and Marketing Mix Report Name Institution Tutor Date Introduction McDonald’s is the largest fast food chain of restaurants in the world, and its global standardization is a major cause of business success (Yeu et al., 2012). As indicated in the case study, its sales and profitability are on the rise, an aspect attributed to the ability of the company to be highly responsive to its customers’ needs (Mujtaba & Patel, 2007). This report describes the segmentation approach and marketing mix of McDonald’s, and recommends a greater focus on the millenials as a target market, together with the most suitable marketing communication tools that would ensure further growth in sales. McDonalds’ Marketing Mix (7Ps) McDonalds’ 7Ps model, which according to Rose (2015) is prescribed by Booms and Bittner (1981) includes: a. Price Pricing at McDonald’s is done in different ways depending on the buyer’s location. Price-setting is done objectively by assessing the costs, demand and competitor comparisons. Through this kind of process, the company has so far been able to become fully aware about exactly what the customers think of the products, and the kind of value they place on them, and therefore their ability to buy at given price levels. b. Product McDonald’s food is standardized irrespective of the country. The company however adjusts foods depending on the local legal frameworks and tastes. For instance, unlike in the UK, in largely vegetarian countries such as India there are adjustments to provide extra vegetarian items on the menu. Even though there might be variations however, the menu has the same basic structure anywhere hence a similar meal experience (Kaur, 2012). c. Promotion McDonald’s expansion strategy places a considerable emphasis on the understanding of local cultures and conditions. Because of this, the kind of approach to promotion of the products is also based on local contexts. McDonald’s promotion strategy is known for its sensitivity of local values while helping it to support a global brand (Kaur, 2012). d. Place McDonald’s is a multi-national chain with a presence in over a hundred countries. In line with this global nature of its operations, the company has always sought to expand strategically while deeply assessing the local characteristics of the areas where it wants to set up business. e. People Recruitment of workers is usually done from among locals. Promotions are also conducted from within the firm, and this ensures managers are more in touch with the cultures of the local people and align practices better with the company’s corporate framework. Service delivery is standardized everywhere, and employees are well trained both in necessary skills and customer-orientation. f. Physical Evidence The structuring of menus is uniform across outlets worldwide, and comprise of drink combos and fries. The McDonald’s belief in creating a family restaurant is always upheld, and for this reason, there is the incorporation of play spaces for children, and their meals have toys accompanying them. The environment is also supposed to be as friendly as possible, and for this reason members of staff are trained to serve guests with a smile always. g. Process McDonald’s outlets have similar food preparation processes, layouts and kitchen designs. Weight, content, packaging and sizes of the items is similar anywhere, and to ensure this, procurement procedures always demand that every supplier has to meet set standards and specifications. Language differences across borders are dealt with by packaging which is for instance accompanied by same images with translated text. Service delivery is guided by policy, and currently this requires the filling of drive-through orders within three and a half minutes and restaurant ones in one and a half minutes. Segmentation Targeting and Positioning Strategy According to Jaman (2012), segmentation involves evaluating the identified target’s attractiveness and selecting specific parts of it that are to be marketed to or served. According to Yeu et al. (2012), McDonald’s segmentation is based on age, geographical location for instance rural or urban, gender, life-cycle stage, brand loyalty, hence loyal customers and switchers, and expected benefits from the service hence those who value affordable cost more and others who seek time-efficiency. According to Otuedon (2016), segmentation is however just a means to ensuring appropriate targeting. At McDonald’s, the process involves marketers ensuring that they gather the necessary information on sizes of segments, the likelihood of making profits and establishment of a corporate fit with the interests of the company. Positioning strategies follow, and these involve differentiation of the brand with its competitors. According to Jaman (2012), positioning entails creation of images within the customers’ minds to make them understand the product’s uniqueness as compared to competitors’. According to Ferrell & Hartline (2011), it involves selecting the best approach that has the greatest impact on targeted, customer segments. At McDonald’s, there is the application of Adaptive Product Positioning, where any changes that may occur within a segment are dealt with by ensuring that adjustments are made promptly (Kaur, 2012). Specific segments within the targeted populations are sought, and products are positioned or customized to meet the needs of each segment. While other businesses usually have brand managers to handle their different products, McDonald’s has none. Instead, the marketing departments have well-established consumer segments, and these are led by respective directors. For instance, there are directors for young adults, Hispanics, Moms and African Americans. McDonald’s is positioned as a family restaurant. There is also positioning for children through the “Happy Meal” product in which a free toy is included. To cater for families, meals and outlets are made that are suitable for instance for drive-thru and takeaways (Gerhardt et al., 2014). The Target Market to be emphasized The company’s marketing strategy should try and reach out to millenials as a target group. This comprises of young women and men born between the 1980s and 90s, and who are well-known for quick-serve spending (Rainer & Rainer, 2011). A significant fraction of the group tends to spend more of their incomes on food compared to other generations, because they prefer eating out to cooking. They are also often interested in seeking hangout places, which can easily be facilitated by McDonald’s. To cater for them, there will be the need to ensure innovation and creativity in restaurants. For instance, according to Harris (2009), they tend to be among the most ethnically diverse and exposed to a variety of cultural influences, meaning that they get many options of everything during shopping. They will therefore expect different experiences and products. Van den Bergh & Behrer (2013) add that millenials expect to be listened to and engaged, making community engagement an important part of marketing. There will therefore be need for use of location-based tools and social media for creating and participation in dialogues with them. Appropriate Marketing Communications Tools McDonald’s currently employs an Integrated Marketing Communication framework, where various tools are adopted. Source: Chitty (2011) Fig.1: A Diagram Showing the Nature of IMC i. Social Media. Communication will need to take a cross-channel and cross-media approach. Apart from the traditional media such as catalogues, television and newspapers, attention should be placed on innovative media. The idea is to ensure presence on mobile devices and both on online and offline channels (Chaffey & Smith, 2013). ii. Creation of mobile apps. Millenials use mobile devices a lot. Because of this, they tend to interact with such gadgets, and are likely to become brand followers or fans, and place their content online (Fromm & Garton, 2013). McDonald’s should therefore make it as easy as possible for millenials to share and find information relating to their food choices iii. Use of brand endorsements in advertising. It would be helpful if communications include partnerships with the target group’s aspirational or favorite brands and testimonials by celebrities. This is because according to Fromm & Garton (2013), the group tends to believe in whatever they feel is real and authentic. Nothing should appear forced, fake or off-key. The brand personalities and endorsements should therefore be credible and based on what McDonald’s has historically stood for and how the food experience and product will fulfill the communication’s promise. iv. Sponsorships. It will be important to do sponsorships and also be involved in activities by local groups. Most importantly, food experiences and menus will need to be made suitable for groups, as this will bring out the element of community-mindedness which according to Rainer & Rainer (2011), the target group highly values. Source: Own Fig.2: Diagram Showing the New Nature of Relationships in Communication Tools Conclusion McDonalds has an effective Segmentation Targeting and Positioning Strategy which helps in maintaining the uniqueness of its brand, and therefore success. Segmentation at McDonald’s is done basing on age, geographic location, gender and customer behavior, while the positioning of its brand is that of a family-friendly and low cost provider of quality products and friendly service. McDonald’s has an adaptive kind of product positioning, periodically re-positioning its products depending on changes that may arise within the segments. It would however gain more is greater focus is placed on the young, millennial target group. Increased use of interactive social media, mobile apps, endorsements and sponsorships will enable their attraction to outlets, considering that they are a high-potential spending group. References Chaffey, D and Smith, P. (2013). Emarketing Excellence: Planning and Optimizing your Digital Marketing. New York: Routledge Chitty, W. (2011).Integrated Marketing Communication. South Melbourne: Cengage Learning Ferrell, O and Hartline, M. (2011). Marketing Strategy. Mason: South-Western Cengage Fromm, J and Garton, C. (2013). Marketing to Millennials: Reach the Largest and Most Influential Generation of Consumers Ever. New York: AMACOM Gerhardt, S, Hazen, S and Lewis, S. (2014). Small Business Marketing Strategy Based on McDonald’s. Journal of Management and Marketing Research. Vol. 21 (1): 271-278 Harris, P. (2009). None of us is as good as all of us: How McDonald's Prospers by Embracing Inclusion and Diversity. Hoboken: John Wiley & Sons Jaman, M. (2012). Critical Analysis of Segmentation Strategy for Potential Product Launch - Mapping the Customers. International Journal of Scientific & Technology Research. Vol. 1 (11): 62-65 Kaur, S. (2012). Strategy and Repositioning the Brand McDonald’s in India. International Journal of Scientific and Research Publications. Vol. 2 (9): 1-5 Kotler, P, Burton, S and Deans, K. (2015). Marketing. Sydney: Pearson Higher Education AU Mujtaba, B and Patel, B. (2007). McDonalds Success Strategy and Global Expansion through Customer And Brand Loyalty. Journal of Business Case Studies. Vol. 3 (3): 55-66 Otuedon, M. (2016). The Role of Creativity in the Market Segmentation Process: The Benefits of Having an Excellent Global Brand Positioning. International Journal of Economics, Commerce and Management. Vol. 4 (2): 295-314 Rainer, T and Rainer, J. (2011). The Millennials: Connecting to America's Largest Generation. Nashville: B & H Publishing Rose, P. (2015). How to Market a Rock, or Anything Else to Paying Customers. Tonbridge: Wordzworth Publishing Van den Bergh, J and Behrer, M. (2013). How Cool Brands Stay Hot: Branding to Generation Y. London: Kogan Page Yeu, C, Leong, K, Tong, L, Hang, S and Subhan, B. (2012). A Comparative Study on International Marketing Mix in China and India: The Case of McDonald’s. Procedia - Social and Behavioral Sciences. Vol. 65: 1054-1059 Read More