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1b) Assess the effect which the marketing environment has based on McDonald’s marketing strategy and demonstrate good discussion of how McDonald’s market share is controlled within this industry.
One of the giants in the fast food industry is McDonald’s and it is a presumptive thought that it exists everywhere in the world, but the reality is otherwise there are still too many place which are not saturated by the big name of McDonalds’s. In recent year’s world has seen two emerging markets India and china and speculations are very robust about these emerging economies. McDonald’s have tried to penetrate into the markets of not only emerging economies but also it has made an attempt to conquer the territories which were previously neglected for business consideration such as Africa. There has been a tremendous 8% increase in the sales in the regions of Africa, Middle East and Asia. However, china remain the main battling territory for McDonalds’ as the yum brands are quite a competitor. The management has opened nearly 2000 outlet by the end of 2013.
The McCafé has always been thrashing opportunities since company is on the track of accelerating up its advertising mechanism in the year 2002. Currently, 1,300 McCafé's internationally in lots of realms, it keeps developing. Its most recent moves are targeted to Ukraine, beside with countrywide rollout in many countries including Canada. The McCafé list of options have been increasing gradually, adding non-coffee stuffs such as smoothies for last couple of years. Desserts and snack foods are not expanding alone but changes are taking place at an extended level. McDonald's is trying to acquire new customer sectors to crunch up its offered products by increasing un-conventional menu items, however keeping its fundamental base of fries and burgers consumers. Several innovative items supported McDonald's to combat the undesirable projection of unhealthiness, however it will probably cannot get over with it.
McDonald’s has been very successful in replacing the breakfast sandwich with high content of calories with oatmeal, and it has been proved as a big success. People have become conscious about health and therefore McDonald’s has started different healthy salads. McDonald’s has delivery services worldwide although not a tradition in US, and the management of the company considers it as one the reasons of its success. In the regions of Middle East and Asia, the home delivery is commonly practices therefore McDonald’s has just tried to fuse in with the traditions of its operational territories. Management is extensively focusing on improving the physical outlook of its restaurants to make them attractive for customers and this feature contributes largely in the overall success. “Less is More” concept is widely used in China, cushioned chairs with soft touch colors are used. McDonald’s has increased its working hour and many stores remain open round the clock.
1.2 Assess the impact of the marketing environment on the industry
In UK, the fast food restaurants are the main target of the government regarding improving health of people through discouraging consumption of fast food. The reasons behind such policies include high level of calories and fat levels in the fast food.
The recent recession in the economy of UK has resulted in the overall increased sales of fast food industry. The reason behind increased sales in recession includes the preference of people to consumer cheap fast food as compared to foods from traditional restaurants.
UK’s population has a social tendency to consume and encourage consumption of healthy foods which is not in the favor of fast food industry. The industry may however improve the health quality of the food and convince the UK’s population through effective marketing regarding better effects of new foods offered on the health of the population.
Rapid improvement of technology in UK in past few decades has boosted the sales of fast food industry. People can now simply visit the official website of their favorite restaurant and place their order while receiving the food at the doorstep of their homes. New and advanced level services have been introduced at restaurants to provide the most conducive environment to the customers. Free Wi-Fi service is available at McDonald’s restaurants worldwide and also big LED screens have been fixed as well. Attempts have been made to launch own TV channel named as McTV to broadcast original programs.
Snacking on stuff is the traditional practice of Americans and therefore to capitalize on this opportunity new products of plethora. Expansion into desserts and wraps have been introduced on the menu list and these products have been earning good revenues for the company. One of the predominant example is McRib, it has successfully made its appearance way to be second national in just two years. Incredibly 4.9% increase in sales have been reported in the same restaurants. McFlurries, a special addition has been introduced with seasonal smoothies.
1c) Review the importance of the consumer markets and state clear evidence on the significance for McDonald’s in maintaining a lead in the Fast food industry
It has been reported by Nation’s Restaurant news that the new menu cycles adopted by McDonald’s is a significant move in the direction of European models, as it involves new items swap on menu list after every 2 months. McDonald’s has strategically introduced culture specific food for each region, and most of these are not internationally stand any chance. Few of the products have been successful worldwide .For instance Chicken Mcbites of Australia are now sold in Michigan and Detroit. Full size wrapping as done in Europe has been now practices in new territories such as UK. McDonald’s has a vast variety and range of products, only the need is to takeoff and expand the right product in right territory.
McDonald’s has designed special strategies to capitalize on the attraction of American for cheap offering due to economic dip. The breakfast at McDonald’s is just reasonably low priced than competitors. Dunkin Donuts and Burger king has designed their unique menu dollar but they have not been as widely successful as McDonald’s. It has intrude into the territories previously ruled by other brands and in few cases .McDonald had attacked head on by leveraging its current size. On the most successful example is McCafe, as it has been phenomenally incredible against Dunkin Donuts and Starbucks .The forthcoming dessert expansion is likely to be of more concern for Donut Dunkin as it adopted niche marketing by launching dairy queen chains. However, there is significant risk attached to it, as it exposes McDonald’s to front end and has to face competition from well settled and powerful brands and also the complexity associated with operational activities .
1.3 Evaluate the relevance of consumer markets in the industry
Products and various services intended for general public mostly dominate the markets. There are primarily four categories of customer’s market i.e. customer products, beverages and food products, retail and transportation related products. The industries dealing with customer markets usually face the challenge of shift in brand loyalty and future uncertainty of products .
1.4 Discuss the rationale for developing different market segments
Market segmentation is a concept refers to divide the customers into groups of people, each group would share similar set of needs. Segmentation helps the company to proficiently make use of available resources. An organization can chose the segment of its own choice keeping in view its resources. With increasing multiplicity in preferences of contemporary customers, companies are capitalizing on the advantage of catering the needs of variety of emerging markets.
Benefits of Segmentation
Theoretically there can be an ideal segments of market, however practically when a company enters in market it substantially develops methods to develop its market segment and offers unique products to exploit its targeted segment. Segmentation techniques and product differentiation strategies are very useful in giving instant and temporary advantage to the firm in commercial context. The fundamental segmentation tactics are applied to efficaciously fascinate the intended or right kind of customers.
In crux, the advertising purposes of segmentation are:
The process of segmentation includes two main facets that are listed below.
Categorizing and identifying customers into standardized consortiums known as segments
Defining which segment is considerably more viable as a target market than others.
The Segmented Market
The principle of segmentation can be best applicable if the organizations and the people would be able to recognize their uniqueness and differences and plan effectively and accordingly. The concept of segmentation is aimed at facilitating the companies to be more focused on its target market and will thereby be able to meet the needs of their customer with proactive planning.
It is very essential for a company to differentiate its product from its competitors and therefore product differentiation approach is widely used. This helps to distinctly classify brands and products of one company from others. For instance Franco-American spaghetti, offers its products in various flavors, shapes and sizes in order to create basic difference form its competitors. The main goal is to be able to target more number of people with more number of products. Differentiation is not created for competition purpose alone, rather it is mainly aimed at creating awareness among people and to help them easily recognize and acknowledge a certain brand or product .
2a) Analyze the importance of elements of the marketing mix to McDonald’s supported by applicable examples.
One of the major constituent of marketing mix is pricing along with three other i.e. place, product and promotion. Pricing tactics are very crucial for the companies who desire to achieve distinctive success by fixing the princes in sales as well as revenues maximizing point. Companies can adopt different pricing strategies mainly based on their objectives and marketing milestones.
2.1 Assess the importance of components of the marketing mix to the industry
The pricing strategies form the basic block of the marketing mix along with three other i.e. place, product and promotion. Pricing tactics are very crucial for the companies who desire to achieve distinctive success by fixing the princes in sales as well as revenues maximizing point. Companies can adopt various pricing strategies mainly based on their objectives and marketing milestones. Similarly, place is an important and crucial aspect of marketing mix that needs to be decided after due research. The product is the primary thing that the customer needs so it also constitutes a major part of the marketing mix. The promotion part of marketing mix is of great significance due to the fact the promoting the product makes the customer aware about it and get them interested in it.
2b) Compare and Contrast different pricing strategies and evaluate the types which McDonald’s uses here in the UK supported by appropriate examples.
Following are various pricing strategies that are practiced by various companies in the sector: -
The decision to take premium pricing approach is very critical, as it involves setting prices higher than opponents. It is mostly used when a certain product is unique or has been marketed for the first time. In this situation an obvious competitive edge is available to the company. This strategy is significant for the companies making entrance with exceptionally distinct product and planning to reap the multiple layers of revenues in initial phase of product life span.
One of the lucrative approach adopted by companies to take over the share of competitors is penetration. It is basically designed to enter the existing market with substantially low prices to catch the attention of buyers. The main concept behind this strategy is to create awareness among the masses and the irresistibly low prices will compel the customers to try the company’s offerings. However it is noticeably important to understand that this approach may be costly for the company in initial phases, but it is adopted with the anticipations that in later phases more number of people will be attracted through awareness campaigns and word of mouth that will compensate for the initial loses.
It is an eminent pricing strategy practiced by famous organization in the world such as Wal-Mart and Aldi. The branding of these companies is largely based on economy pricing. In this strategy price sensitive segment of the society is focused, prices are kept very low to attract people at large.
This strategy can be workable for businesses that already have competitive edge in the marketplace. This strategy is based on gaining utmost level of revenues just before any other competitor starts to offer similar or substitutes for the product.
This is a common psychological sway used by companies at large. For instance $199 it gives an influential impact on the minds of customers that product is cheap enough as it is less than $200, however there isn’t much difference in the price but it has profitable outcomes for the marketers .
McDonald’s uses psychological pricing through pricing its products to close fractions of whole numbers. This results in attraction of customers based on low level of fraction rather than higher.
2.2 Analyze pricing strategies and policies in relation to the industry
The industry of fast food used following major pricing strategies: -
It is an eminent pricing strategy practiced by many fast food companies in the world. The branding of these companies is largely based on economy pricing. In this strategy price sensitive segment of the society is focused, prices are kept very low to attract people at large.
One of the lucrative approach adopted by fast food companies to take over the share of competitors is penetration. The main concept behind this strategy used by fast food companies is to create awareness among the masses and the irresistibly low prices will compel the customers to try the company’s products. However it is noticeably important to understand that this approach may be costly for the company in initial phases, but it is adopted with the anticipations that in later phases more number of people will be attracted through awareness campaigns and word of mouth that will compensate for the initial loses.
This is a common psychological sway used by most of the fast food companies at large. For instance $9.99 gives an influential impact on the minds of customers that product is cheap enough as it is less than $10, however there isn’t much difference in the price but it has profitable outcomes for the marketers.
In recent year’s world has seen two emerging markets India and china and speculations are very robust about these emerging economies. McDonald’s have tried to penetrate into the markets of not only emerging economies but also it has made an attempt to conquer the territories which were previously neglected for business consideration such as Africa. The term segmentation is elucidated in term of STP which is elaborated as segmenting, Targeting and Positioning. Psychological pricing is a good pricing strategy used by McDonald’s in UK.
consumer markets. (n.d.). Retrieved from http://www.businessdictionary.com/definition/consumer-markets.html: http://www.businessdictionary.com/definition/consumer-markets.html
Importance of Market Segmentation. (n.d.). Retrieved from https://www.boundless.com: https://www.boundless.com/marketing/textbooks/boundless-marketing-textbook/consumer-marketing-4/market-segmentation-36/the-importance-of-market-segmentation-187-4063/
Rathi, G. (2013). Global Strategy of McDonald and How It Reached All corners of World.
Richards, L. (n.d.). Different Types of Pricing Strategy. Retrieved from http://smallbusiness.chron.com: http://smallbusiness.chron.com/different-types-pricing-strategy-4688.html
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