Marketing Principles Dissertation Sample

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Introduction

Marketing principles can be referred to as the ideas which form the basis for product promotion strategies. Most of the business organization uses a variety of marketing principles for the purpose of optimizing the market performance of existing product in order to successfully launch this product into a new market (Aaker, 2011). It is vital for the company to adopt various marketing principles. This present report describes the marketing principles of McDonald's. Further, this report also describes the concept and process of marketing in the context of McDonald's and also the concept of segmentation, targeting and positioning. Moreover, discussion has been made on the extended marketing mix of McDonald's and also the usage of marketing mix in different context of McDonald's.

Task 1

1.1 Various elements of the marketing process

Marketing process basically means the process which is followed by firms in order to discover unfulfilled customer needs and bring product in the market which satisfies those needs of the customers. Marketing process is also followed by McDonald's in order to identify and satisfy the needs of customers in an effective manner (Ferdous and Hossain, 2011). There are range of elements involved in the marketing process of McDonald's which are enumerated as follows:

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1.Situation Analysis: Firm do thorough analysis of the situation and find opportunities and threats available for the success of McDonald's. With the use of scanning tools such as SWOT, PESTLE and value chain analysis, McDonald's assesses the whole business environment in order to identify the favorable and unfavorable elements prevailing in the internal and external environment (Michman, 2006).
2.Marketing Strategy: After analyzing best opportunity which will satisfy the customer's need, McDonald's moves ahead in forming strategy which can be applied upon the target market. It is done in order to attract customers towards the brand for satisfying their needs. These strategies involve segmentation, targeting and positioning activities.
3.Marketing Mix Decisions: Product, price, distribution and promotional decisions will be made at this level and McDonald's will decide that which product needs to be introduced and in which market, it will be launched, pricing strategy to be used and along with that, location decisions will also be taken (Rangaswamy, 2013).
4.Implementation and Control: At this stage, company will implement all the decisions that have made at earlier stage. Thus, after implementation of all the decisions, McDonald's will assess its impact on the organizational working and on its employees. Further, marketing manager will also put a control measure over the variations and negative consequence which is identified during or after the implementation (Widmier, 2007).

1.2 Benefits and costs of a marketing orientation

There are basically four types of orientation which are adopted by organization in order to sell their products effectively. In the contemporary world, marketing orientation is widely used by the companies in order to survive in this competitive market. Marketing orientation can be described as a business model which is focused to deliver e products as per the needs, desires and requirements of customers. It has been adopted by McDonald's so that it can provide food products according to the needs and preferences of customers (Melewar and Alwi, 2012). By doing this, company gains many benefits. On the other side, firm has also to pay cost for it. Thus,benefits and costs of adopting marketing orientation are described as follows:

Table 1: Cost-Benefit Analysis

Benefits

Cost

Marketing Orientation provides benefits to the customers by building buyer value which will aid firm to acquire customer loyalty and repeat purchase.

There is the involvement of extensive and expensive research and thus,it adds more cost to the company.

This helps in responding demand in a quicker manner which is created in the market. If, McDonald's responds to the demand earlier than it may gain the advantage of first mover (Cooper, 2000).

There is a greater risk involved while conducting market research because McDonald's might underestimate the market and due to which wrong results can be interpreted.

Competitive advantage can be attained by McDonald's if it provides services in accordance to customer's needs.

There are diverse needs of all the consumers, thus it is difficult for organization to provide a range of services to different customer base.

Optimum utilization of resources can be done if this approach is adopted because there will be minimal wastage of resources and other materials.

This process is time consuming and it may lead to the wastage of precious resources of McDonald's (Blankson and Kalafatis, 2007).

Task 2

2.1 Micro and macro environmental factors influencing marketing decisions

McDonald's is such a brand which has many competitors and it provides such services which are based on changing lifestyle, taste and preferences of the customers. Thus, it is necessary for McDonald's to analyze its environment on a regular basis so that changing needs of customers can be known. Moreover, for taking a range of marketing decisions, company has to assess its internal and external environment (Blankson and Kalafatis, 2007). This assessment influences marketing decisions in a diverse manner. The micro and macro analysis is described below:

Macro Environment Analysis

For identifying the effect of outer environment on McDonald's, PESTLE analysis is being conducted which is described below:

Table 2: PESTLE Analysis

Factors

Impact

Political

  • McDonald's operates its business in over 100 countries and every country has different political environment which affects the policies of company in one or another manner.
  • McDonald's has to comply with the regulations which are concerned about the health and hygiene of their citizens (Gnizy and Shoham, 2014).

Economical

  • Economic downturn affects the performance of business.
  • Fluctuating foreign exchange rate impacts the profitability of company.
  • Recession rate is high in the UK thus, employment rate has come down due to this reason.

Social

  • There is huge change in the society's thinking and their standard of living has also increased, thus it signifies that it is a good opportunity for McDonald's.
  • Eating habit of people has changed over time and they now prefer to eat outside which can be a gate pass for McDonald's to enter in the new market (Terpstra, 2000).

Technological

  • There is rapid changes in the technological advancement as new food production techniques help in reducing the wastage of society. This can be adopted by the organization to minimize the production cost.

Legal

  • Laws about food packaging have changed and also other rules such as environmental protection rules have been forcefully imposed. This affects the business performance.

Environmental

  • There is a great concern of consumers towards environment and thus, company has to introduce several policies which is in favor of environmental protection.

Micro Environment Analysis

With the use of VRIO tool, an internal environment of McDonald's is assessed:

  1. Valuable: The human resource of company brings value to the firm, thus they create competitive advantage for the organization. In McDonald's there are highly skilled and able workforce is employed which create competitive advantage.
  2. Rare: The human resource are rare in this firm and also the McDonald's have economies of scale on other resources such as the veggies comes directly from farms, buns are made in the company itself which possess high amount of nutrition (Graham, 2008). Potato is freshly chosen and than french fries are prepared.
  3. Inimitable: McDonald's provides the services which is unique in its own manner but some of the services are common as other food chains.
  4. Organized: The resources are highly organized in the enterprise. Duties and roles are clearly defined to the staff members and all the task are organized so it does not create any chaos (Porter, 2011).

As per the above findings, SWOT analysis of McDonald's has been carried out, which is enumerated as follows:

SWOT Analysis

Illustration 1: SWOT Analysis

Table 3: SWOT Analysis

Strengths

Weaknesses

  • Resources are rare and it possess economies of scale on resources.
  • Firm has a capability of employing technical innovations in order to improve the services of customers.
  • Company is highly concerned towards environmental protection (Aaker, 2011).
  • Services are not inimitable and other food chains also provide similar services.
  • Customers are getting switch to other brands due to less innovations.

Opportunities

Threats

  • Can emerge into new markets.
  • Societal needs or lifestyle is changing which create many opportunities for the McDonald's.
  • Can switch to more advanced technology.
  • There is high threat of political environment, economic downturn and legal factor.
  • Substitutes of this brand are many which imposes greater risk (Ferdous and Hossain, 2011).

2.2 Segmentation criteria

This term can be defined as a marketing strategy which divides the broad target market into small subsets of customers on the basis of common needs, interest and priorities (What Is Market Segmentation, 2014). Segmentation is done on the 4 basis that is Demographic, Geographic, Behavioral and Psychographic (Michman, 2006). The criteria used for each basis for segmenting the market are heterogeneity, homogeneity, accessibility, measurable and responsiveness.

McDonald's have to promote its existing product in different market and for that purpose, it has segmented its market on the basis of demographic and geographic segmentation that is high to moderate income group people of age group 7-65 and they have high quality lifestyle. Further the criteria used for this purpose is homogeneity and measurable (Rangaswamy, 2013).

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2.3 Targeting Strategy

Among the diverse items included in the menu of McDonald's, the targeting have been done for the Big Mac which has to be relaunched in the market with some modifications (Widmier, 2007). The targeting strategy used for this purpose is as follows but prior to that understanding about the three types of targeting strategy is to be done which are conducted as follows:

1.Differentiated Strategy: In this, all the segments are approached using different strategy.
2.Concentrated Strategy: Each segment is appealed using separate strategy for each segment.
3.Undifferentiated Strategy: All the segments are communicated and attracted using single strategy or information.

For Big Mac, the targeting strategy will be used to communicated the message is differentiated because for young group there will be different and for children targeting will be done in a different manner. Further, for the old age people communication of information will be done in a separate manner (Cooper, 2000).

2.4 Buyer's behaviour in different buying situations

Table 4: Different Buying Situation

Buying Situations

Buyer's Behavior

Impact on Marketing Activities

Complex Buying Situation

Under this situation buyer take high amount of time for taking decisions. They thinks that whether to avail the services or not (Blankson and Kalafatis, 2007). They ask other expertise before buying.

Marketing of the brand or product is done by spending high cost on its promotion because the product or service is precious.

Dissonance Buying Situation

Buyer take comparatively lesser amount of time because there are not much options available in this situation.

Marketers do the promotion of products by using sales promotion and advertisements (Widmier, 2007).

Routine Buying Situation

Low involvement of thinking for taking decisions due to the presence of large number of similar products. These products are purchased by customers on a regular basis.

Marketing of such products is done without assessing the market because customers will purchase these products whenever required.

The marketing manager of McDonald's should consider the dissonance buying situation because the involvement of time for decision making is lesser than complex but still customers take time to decide that is whether to visit McDonald's or to other restaurant. Further, the marketing of products should be done accordingly (Melewar and Alwi, 2012).

2.5 Positioning strategy

Positioning refers to as a marketing strategy which is being used by companies to make its product or brand occupy a distinct place in the minds of customers against the competitors. There are various factors such as features/attributes, quality, price, competitors strategy, suitable image that is premium, luxurious, etc. which is used for positioning.

For positioning the Big Mac in the new markets, features/attributes and quality will be used (Cooper, 2000). Further the suitability factor will also be used for the effective positioning of the Big Mac.

Task 3

3.1 Development of product/services to sustain competitive advantage

Product is a primary unit which is created as a result of process of manufacturing or service. It can be either good, idea, method, object or service and it is produced so as to serve the need and desire of consumers for the purpose of satisfying their needs. Product should be developed in such a manner that it sustain competitive advantage for the organization (Blankson and Kalafatis, 2007).

At McDonald's range of products are offered on the menu. For that, McDonald's spent considerable time to develop the menu as per the requirement of customers. McDonald's have also bring changes in its menu at proper time period. For sustaining competitive advantage company has introduced new products and also phased out old ones and in order to maintain the competitive edge company will continue to do so. The care has been taken for stabilizing the sale of existing products while introducing new products (Gnizy and Shoham, 2014). This firm has adopted different promotional techniques for its existing and new product who have reached at different phases of life cycle. Through this process, McDonald's have able to sustain competitive advantage in the product line.

3.2 Distribution strategies

Distribution is one of the P from the marketing mix and through this product and services are reached towards consumers. Further, McDonald's have used the distribution strategies by opening several outlets which is highly convenient to the consumer markets (Terpstra, 2000). Outlets have been opened in the college campus so that food can be easily made available to the young group. Further, near office premises it has got opened so that business meetings can be conducted there. Also, this chain provides home delivery services so that it can be made more convenient to the consumers of every segment.

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3.3 Pricing strategies

There are basically two types of pricing strategy used by the company that is skimming pricing strategy in which premium pricing is done and the pother is penetration pricing strategy in which low pricing is done in order to penetrate the market (Graham, 2008).

McDonald's have done the penetration pricing strategy because it provides the high quality food at low prices. Thus, this firm have set such prices which reflects the objectives of McDonald's. Its objectives are to provide products to the moderate-high income group people and to all the age group (Improving Organizational Performance and Productivity, 2013). Thus, by keeping the prices low, it can provide products to moderate income group people, to college going people as they are non-earning, etc. also they provide high quality products which help in raising the living standard of people which is one of the objective of McDonald's.

3.4 Promotional activity

Promotion is the 4th P of a marketing mix, where the product information is communicated with the target market using several promotional techniques. It includes print and media advertisements, personal selling, sales promotion, social media marketing, etc. The target market of this firm is moderate-high income group people of age group 7-65 (Porter, 2011). Thus, promotional techniques used by this firm is that it uses TV advertisement to attract large mass. Further, it has used the personal selling techniques such as employees working at outlets do the personal interaction and communicate the information and also the drop ins are dropped at doorstep. Further, sales promotion techniques are used such as hot wheels and barbie toys for the children along with happy meal, free coke with the purchase of Big Mac, etc. Company also integrate the promotional activities such as advertisement given in TV for the new sales promotion techniques, hoardings are placed for the public relation such as customer care service phone number. These are integrated so that in a best manner customer can be attracted towards the firm (Rangaswamy, 2013).

3.5 Extended marketing mix

These are the additional elements in the marketing mix which form the modern marketing mix. The extended marketing mix elements are used in McDonald's are as follows:

1.Process: These includes complaints and suggestions handling process, customer service process, etc. The service is provided in a quick manner to the customer which is a distinguishing feature of McDonald's (Gnizy and Shoham, 2014). Further, company's process of handling customer's complaints and taking suggestion is quite good. They resolve the issue of customers in a quicker manner.
2.Physical Layout: It is the layout of the outlet at which the products are provided. The layout is same at all the outlets of McDonald's all around the globe. At the outlet, a big screen is placed and there all the customized meals are displayed. This help people in making their own meals. Further, the toys in today's happy meals are displayed to attract children. Outside the outlet a chair of Ronald McDonald is placed which create a pleasant environment.
3.People: The most important element of this extension is people who are in direct contact with the customers (Michman, 2006). They interact with customers and satisfy their needs. They also influence the buyers for repeat purchase. At the time of taking orders they interact with customers and provide them suggestions while making meals. This satisfy the customers most.

Task 4

4.1 Marketing mixes for two different segments

Table 5: Marketing mixes for two different segments

Marketing Mix

Income Group

Age Group

Product

Range of products – for every income group the product is available ranging from £0.88 to £7.

For children happy meal is available, for young people Big Mac and other range of products available. For older age also products are available.

Price

Lowest to moderate pricing is done in order to acquire highest market share (Porter, 2011).

Prices varies as per the age group.That is children's meal is available at lowest price so that parents do not deny for the purchase. Further, for the younger group who are not earning, at reasonable rates meals are available (Cooper, 2000).

Place

Maximum outlet available at every place so as to make it convenient for the people to come and buy. Moreover, outlets are opened in college campus which is highly convenient for the college going students.

Options available for all age group to avail the products of McDonald's. For younger group, the outlets are opened at college campus, for older age home delivery is available.

Promotion

For income group, promotion is done through TV advertisement, Magazines, hoardings, etc.

Through fashion magazines, kiosk at petrol pump, through social networking sites, younger group can b reached. Through TV advertisement, children can be reached (Aaker, 2011).

4.2 Differences between business buyers and consumer buyers

Table 6: B2B v/s B2C

Basis

B2B

B2C

Meaning

It is that situation where producer provide products or services to other organization for further use.

It refers to the situation where manufacturer or the producer sells the product or services to ultimate consumers for consumption (Rangaswamy, 2013).

Product

In this case, company provides product in bulk and not in smaller quantity because buyer is purchasing for the further use. Thus, it can be interpreted that company is selling for increasing its sales.

Here, product is provided in single unit or in smaller quantity and the product cannot be used for further production. It is used for ultimate consumption only.

Price

Prices are generally kept low in this case due to bulk purchasing by other organization (Michman, 2006).

Prices of the products are kept relatively higher that those charged by business organization.

Place

There is no defined place or layout for this case, in fact the products and services are provided directly through the place of origin. It may be the manufacturing place or sometimes form warehouses.

There are range of outlets in order to provide product and services to the customers. Also the home delivery facility to reach the customers.

Promotion

Direct selling is done in this case and regular contact or public relation is maintained in order to retain the business customers. It is because the the count of these customer are not much thus, company can maintain them on calls in an easier manner.

In this, several sales promotion technique are applied, heavy advertisements are done and digital marketing is done to attract lot of customers. Integrated sales promotion techniques are used so that every age group can be contacted with different promotional tools (Melewar and Alwi, 2012).

Example

In this case, tie-ups with Coke company and Cadbury company can be done to provide additional goods to the customers. Further, company can also provide burgers at other restaurants so that sales can be increased.

Vouchers can be provided by playing games at social media sites. Referral amount can also be provided by referring the McDonald's outlet to other people.

4.3 Differences in international marketing and domestic marketing

Table 7: International Market v/s Domestic Market

Basis

Domestic Marketing

International Marketing

Meaning

Marketing activity which is performed within the nation boundary is termed as domestic marketing. In case of McDonald's which is a US based organization, its domestic market is USA.

Performance of marketing activity outside the nation's surrounding is termed as international marketing. McDonald's have numerous outlets outside the USA and that is an international market for McDonald's.

Risk Involvement

Degree of risk involved is low because the external environment is known by the company (Melewar and Alwi, 2012).

There is a high risk involved in this market because company has to change the policy as per the external environment of country.

Languages and Culture

There is no such barriers of language and company can do hassle free marketing. The cultural differences are also not much so it will be easier for the hotel to do marketing without undermining the culture of people.

High language barrier and there is huge culture diversity, hence complex procedure for the McDonald's.

Knowledge Requirement

Due to familiar market, less knowledge of customers are required.

Market is totally unfamiliar so high amount of knowledge and risk is required to carry out marketing (Aaker, 2011).

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Conclusion

As per the study conducted on the marketing principles of McDonald's, it can be concluded that McDonald's have duly assessed its internal and external environment so that products can be developed as per the requirement of customers. Further, products are introduced and declined products are discarded so that every time new menu can be presented to the customers. Moreover, the political and economical environment affect the most to the McDonald's environment due to which performance of the company get decline. Further, it has to take extra care while promoting its product in international market as high risk is involved in this.

References

Journals and Books

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