Segmentation & Target Market Paper – Mkt/571
Segmentation & Target Market Paper – Mkt/571
McDonald’s is a fast food giant and is one of the best known burger chains in the world. McDonald’s builds its brand equity by listening to its customers and continually adjusting its communication and marketing methods. Because McDonald’s faces stiff competition around the world from other fast food chains it must continually adapt. This paper will show how McDonald’s is segmented in the fast food industry, its target markets, and the selection process for that target market. Developing a marketing strategy is very important and to do that it is important to understand the company’s target customers. Once the customer base is understood, communication to that customer base is easier. This also translates into marketing to the customer base in the most effective way possible. McDonald’s segmented its products by psychographic, behavioral, and demographic characteristics. Their products are targeted at children, students, families, and business-people. The immense size of these market segments is why McDonald’s targets them, and the growth rate projections come into play as well. These segments tend to generate massive profit margins. Market Segmentation
Market segmentation is the dividing of a one market into smaller market segments. The reason this is done is to make it easier to address the desires of smaller groups of customers. This in turn allows McDonald’s to sell different products, according to each groups consuming habits. A segment typically represents a group of people who have similar characteristics. These characteristics include gender, region, age, lifestyle, income level, and many others. McDonald’s uses a segmentation program that takes into account three different characteristics.
Psychographic segmentation is associated with convenience and lifestyle. In
the United States that can change by region, state, or even at the city level. For instance in the Southwest McDonald’s pushes barbeque sandwiches and fried southern style sandwiches. McDonald’s has transformed into a place to go relax and even be entertained. The local restaurants in Texas have been refitted with the latest in décor, and technology. Comfortable seating makes it easy to relax. Technology provides for WIFI access so that customers can access the Internet. Flat screen televisions on the wall provide entertainment in the form of live local events, whether it is sports, the arts, or a news cast.
Behavioral segmentation is associated with special occasions like kids birthday parties. Local youth groups and sports team come to McDonald’s not only for the cheap prices, but also for the ease of accommodation. A McDonald’s can hold many people and caters to the younger crowds. Their menu and advertising is specifically geared toward the goal of maintaining a young customer base.
Demographic segmentation is a key segment that McDonald’s tends to focus on the most. This segment includes students, kids, and families. McDonald’s as a suitable environment for students and allows them to hang out with their friends. McDonald’s is a frequent lunch destination for students and an after-school hot spot. Kids are a big focus and McDonald’s scores big with its happy meal and the free toy included. For the family unit there is ample room in the dining room for eating out in a family environment, and there is always the drive-thru for when the family wants to take home a meal.
To keep ahead of the competition McDonald’s should develop and market new products, as-well-as modified products which contain low fat and low cholesterol. This is the new trend and eating healthier is on every American’s mind. There is major competition in the fast food industry and McDonald’s. With this in mind a penetration pricing strategy is in order. This would allow the company to introduce new and modified products at lower price than the competition. This will increase the company’s market size and come into line with its marketing objectives. The ultimate goal is to increase total revenue by increasing sales. Positioning
McDonald’s will need to apply a new positioning strategy and recreate its image in the minds of its target consumers. This image must be of a place that offers many healthy options to the typical fast food selection. New advertising should reflect the new healthy menu options and a catchy slogan or jingle should be created to match the new message. All advertisement should include the health benefits of the new menu. This should be developed by experts in the health food field and should be reflected in the new advertisements. The new positioning will help to create a new image in the mind of consumers. The new image should reflect how different and unique the new health options are in comparison to the competition. McDonald’s should market its products to everyone and reflect that its restaurants are a place for everyone, no matter the age, race, income level, diet, and any other category. This will gain a bigger share of the fast food market and keep the company on top as the nation’s most recognizable fast food chain. Meeting the needs of the targeted consumers is a key to McDonald’s long-term business goals. Customers visit the restaurant for a variety of reasons. Teenagers are attracted to the value menu, which is affordable and also because of the Internet access that is available. The business customer visits the restaurant during the day at lunch for quick service, good tasting food, and available drive-thru. Children want to eat at the restaurant because it is a fun place to eat, the treats menu, and the happy meals of course. Parents like McDonald’s for its affordability and the variety of kid’s menu options.
McDonald’s should also focus on delivery time of the food. They are fairly quick but as technology improves, equipment should be upgraded. This keeps costs low as fewer staff would be required to run the restaurant, which translates into keeping costs for the consumer low as well. This equipment also speeds up the time it takes to prepare the food.
To hit the target market for McDonald’s it is necessary to develop a marketing strategy with the desire goals in mind and implement that plan to its fullest. Proper advertising and communication to and from the customer is a must. McDonald’s has been a market leader for many years in the fast
food industry. To maintain this leadership role it must continually adapt and evolve to meet current trends and make the customer base happy. McDonald’s set the standards for the rest of the industry, and this trend will continue for the foreseeable future.
Marketing at McDonald’s. Retrieved August 21, 2013, from
www.aboutmcdonalds.com/MCD/our_company/mission_and_values.html McDonald’s positioning. Retrieved August 22, 2013, from