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In the Foundational Components of Marketing there are external variables that you are unable to control, however these external variable will need to be considered when planning a marketing strategy. McDonald’s have many external variables to consider before rolling out a new Marketing Plan. I will cover a few of these variables in this paper. Along with these external variables, there are internal variables that you do have control over and these are called the 4P’s; Product, Placement, Price and Promotion.
Segment (Competition) – McDonald’s has a tremendous amount of competitors in their market. A majority of these competitors are the standard fast food restaurants; Wendy’s, Burger King, Hardees’s and even Taco Bell. Recently McDonald’s started offering gourmet coffee, this brought in new competition that until recently was never in the range. Five years ago gourmet coffee company’s (Starbucks and Dunkin Donuts) where not competitors. * Demographics (Market/Customer) – McDonald’s targets just about the entire population (nationally and internationally).
They change their menus depending on the restaurant location. Recently, they began selling smoothies and specialty coffee in the US (McCafe). They also began selling McWraps in Europe and not in the US because the geographical location. Included with the geographical location, another important demographic they have to target is culture. The health conscience/organic minded people are a group that may not be as important as college students. Their main target market is children, youth and young families. Demographics are an important variable that needs to be considered.
Core Competencies (Organizational Fit) – McDonald’s is known for having very inexpensive products to serve the customers’ needs. They strive to provide quality products to the customers consistently day after day. This should definitely be viewed as a very strong attribute. Advertising is extremely important in the fast food industry, luckily McDonald’s is very strong in this area. I would consider this one of their core competencies. McDonald’s need to be on their “toes” to react to how the industry changes. Competitors could advertise and pull customers away very easily, so
McDonald’s need to be able to react quickly to circumvent the loss of customers. * Economic (Environment) – Recession is an extremely large external variable that McDonald’s is unable to control. McDonald’s is faced with fewer families going out to eat. Families are saving money because more families have to be aware that tomorrow they may be faced with a parent losing a job. This can make a very large impact on their bottom line. Along with McDonald’s losing revenue, they may have to lay off employees or even close locations.
McDonald’s need to be prepared to have actions in place to prevent anything like this from happening. McDonald’s is very smart in this area to prevent itself from being hit hard by the recession; they introduced the “$1 Menu”. This helps the families that are on a tight budget. (4 P’s) * Product – McDonald’s product is food. Food is not very simple; it changes by location, age group, and even culture. McDonald’s products for the US are drastically different than in India. Beef is the primary ingredient in the US; however in India that product would be a horrible marketing decision if it would be introduced.
So, product is a constantly changing variable. * Place – A McDonald’s is located roughly 10 minutes away from pretty much anyone in the US. Now that is placement for a company! McDonald’s strategy is to be accessible to the entire population. I know that when I have traveled in prior jobs that in some areas the only place to eat is McDonald’s. So, either you get fast food or you go to the convenience store and purchase a bag of chips, a candy bar and a drink. Aside from location, the facilities are becoming more inviting to patrons.
McDonalds have also started giving internet facility at their centers and they have been playing music through radio instead of the normal music. * Price – Price is the most important of the 4 P’s. This P is the only part that generates money. There should be a great deal of market research to go into determining a pricing structure. “When we bring back the McRib sandwich, what will our price point be? ” This is a seasonal item so in theory they should be able to offer it for a premium price. However, what is a premium price? The price must take into consideration the appropriate demand-supply equation.
So this area is very critical to get correct. * Promotion – What channels should the Marketing department advertise in? I would assume that since one of their target segment groups is kids, then they should advertise in the areas that kids will see and argue with their parents that is where the family needs to eat tonight. McDonald’s ads are strategically placed on TV during children’s programs. These times would probably be narrowed down to later in the mornings or later in the evening close to dinner time. The ads are fun and entertaining to get the kids attentions. They have campaign slogans that kids are able to sing long after the ads are over.
Today every industry is changing very quickly, you either have to be innovative and create new products or your company will be left behind. The competition is researching your company and trying to understand your next move so they will be able to leap-frog you, so innovation is extremely important. McDonald’s is not different in this case. Five years ago no one would expect purchasing a hamburger at McDonald’s that is comparable to a “sit-down restaurant”.
Now they have the Angus Burger that is much more expensive and is advertised to taste better. Along with the overpriced burger that people are buying you are able to purchase a gourmet coffee that you would normally get a coffee shop. There is still a large market for the customers that want to buy a cheap burger that cost $1 (off the “$1 Menu”). They are also able to appease the customer that would like to have a quality burger that cost 4x the other. Five years ago these options were not available. This does in fact show that the fast food industry has changed.
Market research is a very important objective that every company needs to invest in. If you do not do this, you will be left behind by your competitors. McDonald’s is doing a great job in this area to stay ahead and retain market share. I worked for a company that did not feel that market research was extremely important. Hence the reason their market share for a specific product has dropped from roughly 30% in the early 1990’s to nearly 6% in 2010. Now, they are behind the industry standard and are trying to keep up and stay competitive.
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