The marketing process

Introduction

McDonald's is one of the best-known brands worldwide. This case study shows how
McDonald's continually aims to 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 promotion, 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.

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.
The marketing mix and market research
Having identified its key audiences a company has to ensure a marketing mix is created
that appeals specifically to those people.

The marketing mix is a term used to describe the four main marketing tools (4Ps):

• product

• price

• promotion

• and the place through which products are sold to customers.

Using detailed information about its customers, McDonald's marketing department can
determine:

1. What products are well received?

2. What prices consumers are willing to pay?

3. What TV programmes, newspapers and advertising consumers read or view?

4. What restaurants are visited?

Market research is the format which enables McDonald's to identify this key information.
Accurate research is essential in creating the right mix to win customer loyalty.
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.

Market research identifies these factors and anticipates how they will affect people's
willingness to buy. 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 wider factors than just the product itself. Psychological
factors are important, e.g. what image does the product give or how the consumer feels
when purchasing it.

These additional psychological factors are significantly important 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.

Meeting the needs of key audiences

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. For example:
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.

To meet the needs of the key market it is important to analyse the internal marketing
strengths of the organisation. Strengths and weaknesses must be identified, so that a
marketing strategy which is right for the business can be decided upon.

The analysis will include the:

• company's products and how appropriate they are for the future

• quality of employees and how well trained they are to offer the best service to
customers

• systems and how well they function in providing customer satisfaction e.g.
marketing databases and restaurant systems

• 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 objectives

A marketing plan must be created to meet clear objectives. Objectives guide marketing
actions and are used to measure how well a plan is working.

These can be related to market share, sales, goals, reaching the target audience and
creating awareness in the marketplace. The objectives communicate what marketeers
want to achieve.

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. It gives flexibility.

Once marketing objectives are set 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
At this point the marketing mix is put together:

i. Product

The important thing to remember when offering menu items to customers is that they
have a choice. They have a huge number of ways of spending their money and places to
spend it. 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, and will continue to do so.

Care is taken not to adversely affect the sales of one choice by introducing a new choice,
which will cannibalise sales from the existing one (trade off). McDonald's knows that
items on its menu will vary in popularity. Their ability to generate profits will vary at
different points in their life cycle.

Products go through a life cycle, which is illustrated below:

The type of marketing undertaken and the amount 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
lifecycle. 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 a marketing tool is that the customer may feel that
quality is being compromised. It is important when deciding on price to be fully aware of
the brand and its integrity. A further consequence of price reduction is that competitors
match prices resulting in no extra demand. This means the profit margin has been reduced
without increasing sales.

iii. Promotions

The promotions aspect of the marketing mix covers all types of marketing
communications.

The methods include advertising, sometimes known as 'above the line' activity.
Advertising is conducted on TV, radio, cinema, online, poster sites and in the press
(newspapers, 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 buying the item. It is
imperative that the messages communicated support each other and do not confuse
customers. A thorough understanding of what the brand represents is the key to a
consistent message.

The purpose of most marketing communications is to move the target audience to some
type of action. This may be to: buy the product, visit a restaurant, recommend the choice
to a friend or increase purchase of the menu item.

Key objectives of advertising are to make people aware of an item, feel positive about it
and remember it. The more McDonald's knows about the people it is serving the more it
is able to communicate messages which appeal to them.

Messages should gain customers' attention and keep their interest. The next stage is to get
them to want what is offered. Showing the benefits which they will obtain by taking
action, is usually sufficient. The right messages must be targeted at the right audience,
using the right media.
For example, to reach a single professional woman with income above a certain level, it
may be better to take an advertisement in Cosmopolitan than Woman's Own. To advertise
to mothers with children, it may be more effective to take advertising space in cinemas
during Disney films. The right media depends on who the viewers, readers or listeners are
and how closely they resemble the target audience.

iv. Place

Place in 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.

Conclusion

Once the marketing strategy is in place various responsibilities are given to different
individuals so that the plan can be implemented. Systems are put in place to obtain
market feedback which measure success against short-term targets. McDonald's has to
ensure that this is done within the confines of a tightly controlled, finite marketing
budget.