Table of Contents
1.1 Marketing process.
1.2 The costs and benefits of the marketing orientation.
2.1 Show macro and micro environmental factors that influence marketing decisions.
2.2 Process segmentation criteria to be used for products in different markets.
2.3 Choose a targeting strategy for a selected product/service.
2.4 Demonstrate how buyer behavior affects marketing activities in different buying situations
2.5 Propose new positioning for a selected product/service.
3.1 Explain how products are developed to sustain competitive advantage.
3.2 Explain how distribution is arranged to provide customer convenience.
3.3 Explain how distribution is arranged to provide customer convenience.
3.4 Illustrate how promotional activity is integrated to achieve marketing objectives.
3.5 Analyze the additional elements of the extended marketing mix.
4.1 Plan marketing mixes for two different segments in consumer markets.
4.2 Illustrate differences in marketing products and services to businesses rather than consumers
4.3 Show how and why international marketing differs from domestic marketing.
McDonald’s is a large international chain of coffee shops that does business in more than 60 countries and serves its customers in approximately 18,000 retail stores. The mission of McDonald’s is to inspire the human spirit – one person, one cup and one neighborhood at a time (McDonald’s, 2016). The products that McDonald’s sells are coffee products, handcrafted beverages, merchandise, fresh food and consumer products. According to McDonald’s (2012), the brand portfolio includes McDonald’s Coffee, Seattle`s Best Coffee, Tazo Tea, Evolution Fresh, la Boulanger and Torrefazione Italia Coffee.
1.1 Marketing process
Marketing is defined by Kotler (2012) as the process of meeting customer needs profitably. The marketing process is the process by which the company analyses the needs and requirements of its target customers and brings to market products and services that fulfill these needs. According to Kotler (2012), the marketing process contains four different parts: situation analysis, marketing strategy, marketing mix decisions, and implementation and control.
Within the situational analysis stage, McDonald’s thoroughly analyses the internal and external environment of the company in order to assess the factors of influence that could affect its long term plans. The internal environment includes the employees, management and shareholders of McDonald’s. The external environment is composed of the microenvironment (competitors, customers and suppliers) and the macroenvironment (political, economic, social-cultural, environmental technological and legal factors) (Mankiw, 2012). Management tools that are commonly used for studying the internal environment are the SWOT analysis, Porter`s (1985) Five Forces Model and stakeholder analysis.
The tools that managers use for analyzing the external environment are the SWOT analysis and the PESTEL analysis. In McDonald’s case, one of the most important steps when performing the situational analysis stage is to assess the needs of the customers. The company does that via customer questionnaires, focus groups, complaint forms, and social media messages (McDonald’s, 2016). Customer feedback is an essential part of the continuous development of the company and its product line. Additionally, McDonald’s` marketing team performs stakeholder mapping and human resource strategy analysis (McDonald’s, 2010).
The second step in the marketing process is to develop a marketing strategy. As the best opportunities to serve the customer needs are found, it is time for the company to create a strategic plan that should include the strategic resources, the constraints and the strategic goals of the company. At McDonald’s, the marketing strategy is developed in three stages: marketing segmentation, targeting and positioning. Segmentation refers to the process of splitting the existing and potential customer base into groups that have similar characteristics and requirements. For example, in McDonald’s` case, the target market for flat what coffees are busy professionals who do not have time to serve a large coffee and that want a quick refresher (McDonald’s, 2012).
The SWOT analysis is a method to analyze the strengths, weaknesses, opportunities and threats that a company faces (Kotler, 2012). SWOT analysis is frequently used to summarize and illustrate the most important internal and external factors of influence that are found during the situational analysis. The internal factors are summarised by using the strengths and opportunities while the external factors are summarized in the opportunities and threats section. The SWOT analysis of McDonald’s was performed by summarizing collected information from the Annual Reports for the years 2011 and 2012 and by using the State of the Snack Industry Report from Wisconsin School of Business (2010).
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• Great customer service policy and employee training
• Valuable brand portfolio
• Financially powerful and with low debt
• Present in more than 60 countries
• The business is in a low growth stage on the product life cycle
• Lack of growth in main markets
• No disruptive innovations in the last 3 years that could generate high growth
• Expand to high growth countries
• Develop the brand portfolio
• Stimulate the existing demand via clever marketing
• Increased competition on the existing markets
• Low growth and price wars in markets in which the company operates
• Coffee culture could decline in popularity
Following the SWOT analysis, McDonald’s should expand the markets in which it is currently operating by looking in high growth countries such as Romania, Bulgaria or high growth Asian countries. Additionally, the company should fight competitors by means of product innovation, product differentiation and promotional activities. Furthermore, as the tastes of its customers change or become more sophisticated, McDonald’s should receive feedback and develop products that cater to the needs of its customers.
1.2 The costs and benefits of the marketing orientation
The marketing objectives of McDonald’s are: to increase the awareness and the value of its brand portfolio via promotional activities, to increase the market share on its established markets, to capture market share from its competitors, to enter new markets via geographical expansion and product launches and to increase the product portfolio of the company (McDonald’s, 2016). To each marketing objective, McDonald’s assigns a quantifiable target and a time scale to achieve the target. For example, capture at least 10% of the coffee shop market share in Romania by December 2016. However, these targets are internal and are not published by the company as it is proprietary information.
Setting clear marketing objectives and defining marketing objectives is an important step of the marketing strategy as is give the company the opportunity to develop targets and time frames, it aids in the creation of budgets, it gives performance criteria for different departments, managers and employees and it creates a common company-wide strategy. The marketing objectives that McDonald’s has should also include targets that are related to customer service, relationship marketing, quality assurance and service and customer care (Smith, 1996). Setting marketing costs normally involves defining quantitative and qualitative targets in the following areas: customer satisfaction, quality of products or services, relationship marketing and financial return on the marketing campaign.
In regards to McDonald’s, the company has a number of quality standards that, as part of the marketing strategy, are to be maintained and improved. As an example, the shop floor should always be clean and smell nice, the tables should be cleaned after each customer leaves the coffee shop, the “grande” cappuccino should weigh exactly 320 grams and the “grande” Americano should weigh 400 grams. An emphasis on maintaining and improving these standards within the marketing plan will help on the operational level. Even though this imposes some costs associated with measuring, monitoring and imposing discipline, it is justified in the long term because it may bring competitive advantages.
According to Kotler and Keller (2010), there are a number of marketing philosophies that can be identified. These marketing philosophies or concepts refer to the emphasis, focus and weight assigned to the organization, the business units of the organization, its customers, its stakeholders and the society. The competing concepts recognized in modern marketing literature include the production concept, the product concept, the selling concept, the marketing concept, and the holistic marketing concept. The production concept holds that customers will prefer products that are widely available and cheap (Kotler and Keller, 2010).
The product concept suggests that customers will prefer the products with the highest quality, performance or most innovative features. The selling concept considers that customers have to be approached by using an aggressive marketing campaign in order to achieve high sales growth. The marketing concept is a modern philosophy focused on identifying and satisfying customer needs. Finally, the holistic marketing concept takes into account the needs of the customers but also goes on to address the needs of society. In this respect, McDonald’s` focus is on holistic marketing because it tackles complex issues such as relationship marketing, integrated marketing and social responsibility marketing.
2.1 Show macro and micro environmental factors which influence marketing decisions
Kotabe and Helsen (1998) consider the micro-environmental factors as the factors of influence of a company that can be directly managed and changed by the organization. The organization can shape and defend from the micro-environmental factors. These factors are internal (such as human resources, the management and the corporate culture) or external such as the customers, suppliers, partners, and other stakeholders. The micro-environmental factors are audited and analyzed using the stakeholder mapping, Porter`s Five Forces, Marketing Research, SWOT analysis, internal audits, management reviews, and quality circles (Kotabe and Helsen, 1998). The macro-environmental factors are the external factors that affect the business activities of an organization, but cannot be influenced by the organization. These factors of influence are analyzed by using the PEST analysis which incorporates political, economic, social and technological factors.
- Shareholders – As the holders of capital in the business, Starbucks ‘ shareholders are an important factor of influence. The shareholders that hold stock with voting rights are allowed to draw votes in the General Shareholders Meetings and propose a new board of directors composition, pay packages, strategic directions and other issues. For example, a large institutional shareholder that takes an active involvement in the management of organizations such as Carl Icahn`s investment vehicle could acquire an important stake in the company and advocate for different senior management (that would implement other strategic plans), higher dividends or a greener policy. Additionally, besides the power to influence McDonald’s at a strategic level, the shareholders are also entitled to the residual profits of the company and to the dividends. Therefore, McDonald’s` management should make financial decisions that are to the long term benefit of its shareholders, and also take into account the needs of other stakeholders……………