Marketing can be defined as “activities of a
company associated with buying and selling a product or service. It includes
advertising, selling and delivering products to people” and it plays a very
important role in running a successful business. Two important aspects of
marketing are the marketing mix and market segmentation. The marketing mix is
also known as the four P’s and consists of product, price, place and promotion.
Market segmentation occurs when a target market is identified through dividing
the market into different groups or segments of people with similar wants and
needs. Below is a brief exploration of the marketing mix and market
segmentation strategy used by McDonald’s.
Marketing Mix
Product and Price
McDonalds has become such a successful name for
the Fast Food Industry because the corporation markets itself as a company that
offers Convenience Goods and Services. The products the company supplies are fast
food which many people consume on a daily basis (even if it is just a coffee),
but it is also relatively inexpensive for both the consumer to purchase and
company to produce. As well the goods that are being purchased are easily
accessible either though a drive though or at a storefront. The price point of
McDonalds products is fairly economical in terms of fast food companies, but
also a brand that offers the best value for your dollar. The McDouble itself is
about 390 calories, has about half of the daily intake of protein, 7% fibre and
20% iron but only costs about $1.39. This may not be the best choice for those
who are health conscious, but the value of a dollar goes a long way at
McDonalds.
McDonalds is constantly updating their menu to
meet the changing wants and needs of their customers. Recently they have been
focusing on producing healthier options such as salads and wraps as there is a
high demand for such products. The restaurant chain also offers products at
various price points in order to target multiple audiences.
Place and Promotion
McDonalds Canada is a highly successful fast-food restaurant that first
opened in 1967 in Richmond, British Columbia. McDonald’s is an established
company that offers services in 119 different countries. They operate more than
33,000 locations that are positioned across the world, over 1,400 being in
Canada. In order for McDonalds to continue to be the successful company that
they are known to be, they offer promotions to their customers. Promotions help
them with competing against other fast-food chains by setting themselves apart.
McDonald's runs several promotions a year including Monopoly, coupons, and free coffee. McDonalds
Monopoly, imitates the board game Monopoly. During a specific
time of the year when you buy food items from McDonalds, you receive a paper
board game mimicking monopoly as well as different token pieces. The token
pieces could either be a free food product, or a game piece for the board game.
If you collect enough game pieces you can win prizes. This encourages customers
to buy more products at the fast-food restaurant in hopes that they will win a
prize. Another promotion they offer is coupons. Coupons come out multiple times
during the year for a specific time period. Customers can receive these coupons
online, through the mail, or at a McDonald’s location. This makes McDonalds
products more affordable for their customers. Another promotion they offer is
actually going on right now between the dates February 29- March 6, you can
receive a free small coffee. This promotion runs twice a year in order to promote coffee sales. There are many promotions McDonalds offers to set
their business apart from other fast-food restaurants. The company runs several
other promotions throughout the year but the three listed above are the largest
promotions they run annually.
Market Segmentation
Demographic Segmentation
Demographic segmentation considers variables such as age, income,
gender, ethnic background, marital status, race, religion, and social class.
McDonalds targets several different demographic segments including kids,
families, students, and seniors. The Happy Meal section of the menu is targeted
at children with smaller sized meals that come with your choice of a toy or
cookies. If parents are concerned about the nutritional value of the meal they
can substitute the french-fries for apple slices and the pop for a milk or
juice. While kids may be asking their parents to go to McDonalds for a Happy
Meal the company is very aware that it is the parents making the decision in
the end and have made these healthier options available to help draw their
customers in. Happy Meals may help draw in families but their needs to be
something appealing for the adults as well in order for this to be true.
McDonald’s is aware of this and has targeted this demographic in a number of
ways. Between work, school, and extracurricular activites many families have
action packed schedules and don’t always have time for a nice sit-down meal
around the dinner table at home. McDonalds is the perfect solution for families
on the go. There food is prepared quickly, is served in a way that makes it
possible to eat while on the go, and they have a large range of items available
so there is something for everyone. The restaurants also provide comfortable
seating and many have an indoor playground known as the PlayPlace. This allows
parents to eat and relax while their children burn off some energy. Students
are targeted by the value menu product line which consists of items such as the
McDouble, the Junior Chicken, apple pies, and small fries and drinks among
other options all priced below $2. Restaurants located in college or university
towns may also offer a student discount on certain menu items in order to
target this market demographic.
Geographic Segmentation
Geographic segmentation is a strategy used when
the population of a particular area or region may have different buying
preferences than the population of another area or region. A great example of Geographic
Segmentation is McDonald’s restaurants in India. The company had to adapt to a totally
different market. In India, more than 80% of the population does not eat beef
and roughly 15% of the country’s population does not eat pork. McDonald’s top
selling products are typically beef burgers so many changes needed to be made
to the menu in order for the chain to be successful in India. To adapt to the new
market, the company decided to keep only 30% of their original North American
menu and reinvent the other 70% with the Indian population in mind. Worldwide
their signature burger is the BigMac, but this is not the case in India.
Instead they had to create a new signature burger, the Chicken Maharajah
Burger. The base of the menu is several chicken and vegetables products such as
the McVeggie, the Masala Grill Veg, Masala Grill Chicken and the Chicken
McGrill. In this case ability to adapt was the key to success. When McDonald’s
was first introduced to India, research showed that only 3 in 100 meals were
eaten outside of the home. Now 10 meals in 100 are eaten outside of the home,
and McDonald’s India has 320 million customers per year.
Geo-Demographic Segmentation
Geo-demographic segmentation is a combination of
both geographic segmentation and demographic segmentation put into one to reach
such target markets more directly. An example of geo-demographic segmentation
would be targeting American Dreams, college graduates aged 35-54 who own their
own homes and typically have children.
McDonalds is very well known for its winning
marketing strategies. Geo-demographic segmentation plays a major role in the
success for this company. What makes McDonalds so great is how many items they
offer on their menu also known as their product line. This wide product line
allows McDonalds to sell to a larger target market. Geographically, McDonalds
in Japan will sell more fish and offer more fish on the menu than here in
Canada. For example, McDonalds released their new fish and tofu McNuggets. Demographically, the price of BigMac’s around
the world are different due to the average income of a person in that country.
For example, a BigMac in Canada costs $5.34 in U.S currency where as it only
costs around $1.51 in India according the chart below found in Ebert and
Griffins Business essentials 10th edition.
Behavioural Segmentation
Behavioural segmentation is based on variables
including benefits sought, user status, usage rate, loyalty status, and
occasion for use. One way McDonalds has effectively utilized behavioural
segmentation is by hosting children’s birthday parties. For just $10 plus the
cost of food McDonald’s will host your child’s birthday party, complete with a
host who will play games with the children, a cake, and goodie bags for all the
guests. This allows children to have a fun and memorable party while saving the
hassle of setting up and cleaning up for the parents.
Another way McDonald’s uses behavioural
segmentation to their benefit is through loyalty status. Every 10th
cup of coffee (or other hot beverage) is free. Each coffee cup comes with a
sticker that you apply to a loyalty card and when it is full you can present it
to the cashier to redeem for a free beverage. This is an excellent way to
encourage brand loyalty and repeat business.
Psychographic Segmentation
Psychographic segmentation is a system used by
successful companies who divide their market based upon their customers’ personality
traits, values, interests, and lifestyles. With McDonald’s being our company of
focus, we can dissect each division to examine how McDonald’s utilizes this
segmentation system. McDonald’s attracts families as there are many
interactions with kids including a kids’ play place found at most McDonald’s, a
happy meal menu giving a little toy pleasing the children, and a low price
pleasing the parents. Next, everyone has different values and McDonald’s has
found solutions to most of these values. These include fresh products with
little to no preservatives which pleases many to most customers, a value menu
for those trying to save money and of course big meals for those who are
looking for a big, tasty sit-down. Interests are another big factor that McDonald’s
have been managing successfully. McDonald’s have introduced veggie wraps,
attracting vegetarians, low-calorie foods reaching out to those who are trying
to be healthier, and a nutritional guide revealing the nutritional facts on all
food served, pleasing those who are interested in what they are putting in
their body. Lastly, McDonald’s attracts their two potential audiences. Those
who are looking to grab a quick bite to eat and get back on the road,
McDonald’s promotes their fast food abilities by promising you will have your
food ’59 seconds after you have ordered. For those looking to sit down and
relax, McDonald’s have introduced their new ‘McCafe’ giving the fast food chain
a more modern, stylish, comforting look inside and out. Along with the new
renovations McDonald’s have introduced a new beverage menu for those looking to
grab a hot drink and sit down for a while.
Psychographic segmentation is essential to building a bigger, more
successful company and McDonald’s proves why it is a leading competitor in the
fast food industry, as it utilizes psychographic segmentation effectively.
The McDonalds Menu offers a wide variety of
products at a range of prices that make them appealing to a broad range of
consumers. While the information above has only provided a brief overview of
the marketing strategies used by McDonalds in relation to the marketing mix and
market segmentation it is clear that marketing is certainly a strength of this
business. There is overlap in a few categories of market segmentation but the
company uses that to their advantage in order to reach potential customers in a
variety of ways. The company has not rested on their laurels and is constantly
changing and tweaking both their menu and their marketing efforts whenever
necessary in order to continue growing their business.
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