Marketing principles and practice

Contents Task 1 1 Role of marketing in McDonalds 1 Analysis of external factors influencing marketing in Morrison’s 2 MARKETING STRATEGIES OF MCDONALDS BUSINESS STRATEGY FRANCHISE MODLEL 3 SEGMENTATION, TARGETING AND POSITIONING 4 Task 2 4 Positioning of Morrison’s in the market with other competitors 4 Task 3 7 Different methods of marketing research 7 References 11 Task 1 Role of marketing in McDonalds McDonald’s is one of the best known brands worldwide. This case study shows how McDonald’s aims to continually build its brand by listening to its customers. It also identifies the various stages in the marketing process. Branding develops a personality for an organisation, product or service. The brand image represents how consumers view the organisation. Branding only works when an organisation behaves and presents itself in a consistent way, marketing communication methods, such as advertising and promotions, are used to create the colours, designs and images which give the brand its recognisable face. At McDonald’s this is represented by its familiar logo – the Golden Arches. In all its markets, McDonald’s faces competition from other businesses. Additionally, economic, legal and technological changes, social factors, the retail environment and many other elements affect McDonald’s success in the market. Marketing involves identifying customer needs and requirements and meeting these needs in a better way than competitors. In this way a company creates loyal customers. The starting point is to find out who potential customers are not everyone will want what McDonald’s has to offer. The people McDonald’s identifies as likely customers are known as key audiences. Analysis of external factors influencing marketing in Morrison’s Accurate research is essential in creating the right marketing mix which will help to win customer loyalty and increase sales. As the economy and social attitudes change, so do buying patterns. McDonald’s needs to identify whether the number of target customers is growing or shrinking and whether their buying habits will change in the future Market research considers everything that affects buying decisions. These buying decisions can often be affected by factors wider than just the product itself. Psychological factors are important, e.g. the image a particular product conveys or how the consumer feels when purchasing it. These psychological factors are of significant importance to the customer. They can be even more important than the products’ physical benefits. Through marketing, McDonald’s establishes a prominent position in the minds of customers. This is known as branding. There are a limited number of customers in the market. To build long-term business, it is essential to retain people once they have become customers. Customers are not all the same. Market research identifies different types of customers. These examples represent just a few of McDonald’s possible customer profiles. Each has different reasons for coming to McDonald’s Using this type of information McDonald’s can tailor communication to the needs of specific groups. It is their needs that determine the type of products and services offered, prices charged, promotions created and where restaurants are located. In order to create a marketing strategy that will enable the needs of the key market to be met, the strengths and weaknesses of the organisation must first be identified and analysed. The analysis will examine the following parts of the company’s business: • The company’s products and how appropriate they are for the future • The quality of employees and how well trained they are to offer the best service to customers • The systems and how well they function in providing customer satisfaction e.g. marketing databases and restaurant systems • The financial resources available for marketing. Once the strengths and weaknesses are determined, they are combined with the opportunities and threats in the market place. This is known as SWOT analysis - strengths, weaknesses, opportunities, threats. The business can then determine what it needs to do in order to increase its chances of marketing successfully. MARKETING STRATEGIES OF MCDONALDS BUSINESS STRATEGY FRANCHISE MODLEL As per franchise model of McDonald Only 15% of the total number of restaurants are owned by the Company. The remaining 85% is operated by franchises. The company follows all the framework of training and monitoring of its franchises to ensure that they achieve good quality, service, cleanliness and value for the money offered by the company to its customers product consistency- By developing a sophisticated supplier networked operation and distribution system, the company has been able to achieve consistent product taste and quality across the nations of the world. ACT LIKE RETAILER THINK LIKE a BRAND- McDonalds focuses not only on delivering sales for the immediate present, but also protecting its long term brand reputation. McDonalds thinks according to the customer’s tastes, value systems, lifestyle, language and perception. Globally McDonalds was famous for its hamburgers which are prepared from beef and pork burgers. But, most Indians religion does not allow them to consume beef or pork. So in order to satisfy demand as per Indian preference, McDonalds came up with chicken, lamb and fish burgers to suite the Indian diet. THE VEGITERIAN CUSTOMER-India has a huge population of vegetarians. To satisfy this customer’s demand, the company came up with a completely new menu of vegetarian items like McVeggie burger and McAloo Tikki. The separation of vegetarian and non-vegetarian sections is maintained throughout the various stages. SEGMENTATION, TARGETING AND POSITIONING McDonalds uses demographic segmentation strategy with age as the parameter. The main target segments are children, youth and the young urban family. If they take children into consideration, children are more attracted towards toys and delicious meals including today’s youth prefer such places for their entertainment and the urban families select McDonalds on various occasion like birthday party, treat to their children etc. Kids are on the top most level in FMCG purchase related to food products. So to attract children McDonalds has Happy Meal in which they gift one toy on each happy meal, there are toys ranging from hot wheels to various Walt Disney characters. Example of the latest range is the toys of the movie Madagascar. For this, they have a tie-up with Walt Disney. At several outlets, it also provides special facilities like playing place where children can play arcade games, air hockey, etc. This strategy is targeting in making McDonalds a fun place where you can enjoy both playing and eating. Task 2 Positioning of Morrison’s in the market with other competitors A marketing strategy must be created in order to determine the means by which a set of clear objectives may be met. Objectives communicate what marketers want to achieve, guide marketing actions and are used to measure how well a plan is working. They can be related to market share, sales, reaching the target audience and creating awareness in the marketplace. Long-term objectives are broken down into shorter-term measurable targets, which McDonald’s uses as milestones along the way. Results can be analysed regularly to see whether objectives are being met. This type of feedback allows the company to change plans and allows flexibility. Once marketing objectives have been established, the next stage is to define how they will be achieved. The marketing strategy is the statement of how objectives will be delivered. It explains what marketing actions and resources will be used and how they will work together. The 4Ps i. Product The important thing to remember when offering menu items to potential customers is that there is a huge amount of choice available to those potential customers with regard to how and where they spend their money. Therefore McDonald’s places considerable emphasis on developing a menu which customers want. Market research establishes exactly what this is. However, customers’ requirements change over time. What is fashionable and attractive today may be discarded tomorrow. Marketing continuously monitors customers’ preferences. In order to meet these changes, McDonald’s has introduced new products and phased out old ones over time, and will continue to do so. Care is taken not to adversely affect the sales of an existing option by introducing a new option which will cannibalise its sales (trade off). McDonald’s knows that sales of products on its menu will vary at different points in their life cycle as is illustrated on the graph to the right. The type of marketing undertaken and the resources invested will be different depending on the stage a product has reached. For example, the launch of a new product will typically involve television and other advertising support. At any time a company will have a portfolio of products, each in a different stage of its cycle. Some of McDonald’s options are growing in popularity while arguably the Big Mac is at the ‘maturity’ stage. ii. Price The customer’s perception of value is an important determinant of the price charged. Customers draw their own mental picture of what a product is worth. A product is more than a physical item; it also has psychological connotations for the customer. The danger of using low price as marketing tool is that the customer may feel that a low price is indicative of compromised quality. It is important when deciding on the price to be fully aware of the brand and its integrity. A further potentially adverse consequence of price reduction is that competitors match the lower prices resulting in no extra demand. This means the profit margin has been reduced without increasing the sales. iii. Promotions The promotions aspect of the marketing mix covers all types of marketing communications. One of the methods employed is advertising, sometimes known as ‘above the line’ activity. Advertising is conducted on TV, radio, in cinema, online, using poster sites and in the press for example in newspapers and magazines. What distinguishes advertising from other marketing communications is that media owners are paid before the advertiser can take space in the medium. Other promotional methods include sales promotions, point of sale display, merchandising, direct mail, telemarketing, exhibitions, seminars, loyalty schemes, door drops, demonstrations, etc. The skill in marketing communications is to develop a campaign which uses several of these methods in a way that provides the most effective results. For example, TV advertising makes people aware of a food item and press advertising provides more detail. This may be supported by in-store promotions to get people to try the product and a collectable promotional device to encourage them to keep on buying the item. iv. Place Place, as an element of the marketing mix, is not just about the physical location or distribution points for products. It encompasses the management of a range of processes involved in bringing products to the end consumer. Task 3 Different methods of marketing research Innovation succeeds best when it is culturally appropriate. This axiom of applied anthropology could guide the international spread not only of development projects but also of businesses, such as fast food. Each time McDonald's or Burger King expands to a new nation, it must devise a culturally appropriate strategy for fitting into the new setting. McDonald's has been successful internationally, with more than a quarter of its sales outside the United States. One place where McDonald's is expanding successfully is Brazil, where some fifty million middle-class people, most living in densely packed cities, provide a concentrated market for a fast-food chain. Still, it took McDonald's some time to find the right marketing strategy for Brazil. In 1980 when I visited Brazil after a seven-year absence, I first noticed, as a manifestation of Brazil's growing participation in the world economy, the appearance of two McDonald's restaurants in Rio de Janeiro. There wasn't much difference between Brazilian and American McDonald's. The restaurants looked alike. The menus were more or less the same, as was the taste of the quarter-pounders. I picked up an artefact, a white paper bag with yellow lettering, exactly like the take-out bags then used in American McDonald's. An advertising device, it carried several messages about how Brazilians could bring McDonald's into their lives. However, it seemed to me that McDonald's Brazilian ad campaign was missing some important points about how fast food should be marketed in a culture that values large, leisurely lunches. The bag proclaimed, "You're going to enjoy the [McDonald's] difference," and listed several "favourite places where you can enjoy McDonald's products." This list confirmed that the marketing people were trying to adapt to Brazilian middle-class culture, but they were making some mistakes. "When you go out in the car with the kids" transferred the uniquely developed North American cultural combination of highways, affordable cars, and suburban living to the very different context of urban Brazil. A similar suggestion was "traveling to the country place." Even Brazilians who own country places can't find McDonald’s still confined to the cities, on the road. The ad creator had apparently never attempted to drive up to a fast-food restaurant in a neighbourhood with no parking spaces. Several other suggestions pointed customers toward the beach, where cariocas (Rio natives) do spend much of their leisure time. One could eat McDonald's products "after a dip in the ocean," "at a picnic at the beach," or "watching the surfers." These suggestions ignored the Brazilian custom of consuming cold things, such as beer, soft drinks, ice cream, and ham and cheese sandwiches, at the beach. Brazilians don't consider a hot, greasy hamburger proper beach food. They view the sea as "cold" and hamburgers as "hot"; they avoid "hot" foods at the beach. Also culturally dubious was the suggestion to eat McDonald's hamburgers "lunching at the office." Brazilians prefer their main meal at midday, often eating at a leisurely pace with business associates. Many firms serve ample lunches to their employees. Other workers take advantage of a two-hour lunch break to go home to eat with the spouse and children. Nor did it make sense to suggest that children should eat hamburgers for lunch, since most kids attend school for half-day sessions and have lunch at home. Two other suggestions-"waiting for the bus" and "in the beauty parlor"-did describe common aspects of daily life in a Brazilian city. However, these settings have not proved especially inviting to hamburgers or fish filets. The homes of Brazilians who can afford McDonald's products have cooks and maids to do many of the things that fast-food restaurants do in the United States. The suggestion that McDonald's products be eaten "while watching your favorite television program" is culturally appropriate, because Brazilians watch TV a lot. However, Brazil's consuming classes can ask the cook to make a snack when hunger strikes. Indeed, much televiewing occurs during the light dinner served when the husband gets home from the office. Most appropriate to the Brazilian lifestyle was the suggestion to enjoy McDonald's "on the cook's day off." Throughout Brazil, Sunday is that day. The Sunday pattern for middle-class families is a trip to the beach, litters of beer, a full midday meal around 3 P.M., and a light evening snack. McDonald's has found its niche in the Sunday evening meal, when families flock to the fast-food restaurant, and it is to this market that its advertising is now appropriately geared. McDonald's is expanding rapidly in Brazilian cities, and in Brazil as in North America, teenage appetites are fuelling the fast-food explosion. As McDonald's outlets appeared in urban neighbourhoods, Brazilian teenagers used them for after-school snacks, while families had evening meals there. As an anthropologist could have predicted, the fast-food industry has not revolutionized Brazilian food and meal customs. Rather, McDonald's is succeeding because it has adapted to pre-existing Brazilian cultural patterns. The main contrast with North America is that the Brazilian evening meal is lighter. McDonald's now caters to the evening meal rather than to lunch. Once McDonald's realized that more money could be made by fitting in with, rather than trying to Americanize, Brazilian meal habits, it started aiming its advertising at that goal. Competitor Analysis The assessment of the weaknesses and strengths of potential and current competitors done by companies to gain a strategic insight into the mind of competitor is termed as Competitor analysis in the language of marketing. This analysis is used to identify threats and opportunities by in depth understanding of key competencies, strengths, weaknesses and unique selling proposition of the rivals in the business. Such analysis begins with competitor profiling that serves to coalesce all relevant sources of analyzing your competitor into a framework for effective and efficient strategy formulation, implementing strategies, monitoring the progress and making adjustments as needed. Competitor analysis is a strategic element and essential component of a corporate strategy. The methodology involves many steps, which are presented as follows: Competitor Matrix This is the first and the most important step. If done carefully the Competitor Matrix step alone can accelerate your processes in a big way. The matrix consists of following elements: Definition of your industry which involves the nature and scope of the industry Determination of other players or competitors in the area Determination of your prospective customers are and their expectations Determination of the factors of success in the industry Approximate rating of the key success factors of all competitors Competitor profiling The competitor profiling is the second step and its strategic rationale cannot be ignored as superior knowledge of rivals is a legitimate source of competitive advantage. Profiling provides an objective analysis of a competitor’s projection in the market and separates strong rivals from weak ones. It is generally observed that those firms that practice systematic and advanced competitor profiling have a significant advantage and because of its success comprehensive profiling capability is rapidly becoming a core competence required for successful competition. Media scanning A study of competitor's ads can reveal much more about competitors believe about marketing and his target market than any conventional quantitative or qualitative research tool. Any key change in rival’s advertisement or advertising budget should be carefully noticed as these changes very precisely reflect a change in rival’s strategy. So a tactical study of advertising strategy of rival should be done to extract as much information to gain a business advantage. New competitors New competitors enter into the market whenever there is unmet demand or high profits in the existing market. These new competitors should be carefully watched and monitors as they can pose a significant threat to your market segment. 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