The Role of Market Segmentation in McDonald’s Marketing Strategy

Market segmentation, positioning as well as targeting has been some of the integral aspects concerning McDonald’s marketing strategy. According to Venter, Wright & Dibb (2015, p.70), segmentation is the process of separating the consumer population following their characteristics. Targeting is the focus on a specific group. Finally, positioning is the adoption of the best-suited marketing mix for the identified customer segment. Regarding the company’s adaptive positioning. McDonald has engaged in time to time re-positioning of products and services following the changes in the segment. With its global image, and operational in more than 100 nations, the company success with the use of market segmentation can hardly be ignored. However, it depends on the company’s ability to fast adapt to the shifting consumer demographics, trends, preferences, and taste. Brentari Dancelli & Manisera (2016, P.1960), in his article identified that McDonald deploys the geographic, demographic, behavioural and psychographic variables in its segmentation process.

Psychographic segmentation is a marketing approach which determined or measured by studying the overall activities, trends, interest as well as the opinions of the consumers. Dolnicar & Leisch (2014, p.215), identified in his article that, McDonald segments its customers in accordance to life-cycle and in turn positions itself as a lost and family friendly restaurant. Through physiographic segmentation consumers opinions, lifestyles and customer activities are considered, as the approach is more like behavioural segmentation. The demand for healthy eating and concern over risks related with fatty food such as obesity, high blood pressure, etc., the consumer behaviour with how they eat has changed in recent times, a development that has affected the fast food industry as the shift to healthy eating has become an inevitable development.

Target marketing aims at optimizing advertising costs through the identification of the most profitable group, through the most probable active media. The target market of McDonald entails students, employees as well as professionals within the age bracket 8-45 years who identified as low and middle income, which are easy going and care for their health. Regarding this case, the identified segment remains the same. However, due to an increase in the use of social media, and based on the four bases of segmentation; psychographic segmentation will be deployed, and the first focus media is social media. This is due to the increasing use of social media platforms such as Twitter, Facebook, Snapchat, Instagram, etc. among the customers and business entities as well. More so, social media has become a robust advertising tool in the modern business world.

Product positioning for healthy options for food and drinks based on customer needs, pressure from competition, key message and available communication channels. Regarding McDonald and introduction of healthier food options, repositioning and cost leader positioning approach will be adopted. This will help in maintaining the company’s image as the producer of cheap or cost-effective productive in the fast food market. Additionally, the repositioning approach would enable McDonald to change the minds of its customers by producing the same products but healthier produced or prepared (Venter et al, 2015, p. 75). This will, in turn, carry the message, ‘Same Hamburger, same Price, and taste, but Best for Your Health. This will, in turn, reposition the company as the leader in the provision of healthy food and drinks. Not only does the marketing strategy maintain the company’s overall position as the leader in fast food, but now, the leader in providing healthier food.

High sugar/

Fat content

High Prices

Healthy/Less Fat

Less Sugar Content

McDonald products

Food and drinks

Low Prices

The above perpetual map/representation indicates that, despite shifting to health food with less fat and sugar content, McDonald process remain the same, competitive and controlling the large share of sales with reference to maintained low prices.

Marketing mix

In an effort to implement the marketing strategy and to be a success, the marketing mix will be adopted and implemented. According to Mukherjee & Shivani (2016, p.12), a marketing mix is regarded as a combination of varying ideas and plans and hence followed by a marketing representative towards promotion of a definite product or brand. In the case of McDonald, the product/brand is less sugared/less fat products ‘healthy eating’. Marketing mix elements entail aspects such as product, price, place, and promotion commonly referred to as the 4P’s. In recent times, this has changed to 7P’s adding people, process and physical evidence as the additional elements of the marketing mix (BPP Learning, 2013). McDonald marketing mix is designed to enable it to achieve its marketing objectives. With reference to the marketing of the healthy eating as customers’ demands quality and healthier products, the main component of the marketing mix affected in this case including the product and the process.

Product; due to increasing demand for healthier fast food products and drinks, the trend is changing the environment of the fast food market. Despite the new development, the products will remain the same. These include; Hamburgers and sandwiches, Chicken and fish, Salads, Snacks and sides, Beverages, Desserts and shakes, Breakfast/All-day breakfast, McCafé. The marketing will focus on ensuring, the customers are getting the same products, no change or a new product is introduced.

Process: the process will change in an efforts to ensure the products offered are of desired quality, taste remains while the unwanted content such as fats and sugar are reduced drastically. This case will entail continued making it clear to the clients of the products being used, hygiene observed, and steps adopted to ensure reduced fats in food and sugar in the drinks. Prices and place; the implementation process will be conducted in all outlets in the United States. This will, in turn, define the area, while rates will be maintained at almost the old prices. However, the keeping of low prices will not compromise the quality. Finally, there is promotion, which defines strategies for attracting customers that will be used in the marketing campaign. With reference to the detailed provided before, the promotion process will utilize the social media platform and social media advertisements (De Swaan Arons et al, 2014). Other approaches in the promotion will include sale promotions in an effort to create awareness so the proposed change in the production of healthier food.

In an effort to ensure the adopted strategies are well implemented in order, varying tactics will be adopted into the marketing process. For the marketing plan to work, and be successful, the implementation process will depend on setting o right expectations. This is whereby the responsible team is made aware of the hopes and understanding that, the marketing plan being implemented may take time to yield fruits. Another initiative will entail the establishment and building of a team that is well focused, informed and dedicated to the process, as well as securing of relevant resources. This ensures that the plan is underspecified team that is well aware of what is expected. Next, there is training and communication of the policy to the relevant team or Individuals, which ensures that the overall goals are well understood, a clear understanding of roles and the different elements for successful implementation. Other initiatives include; use of the defined timeline, setting up a review and tracking process, frequent monitoring, communication of results and celebration of success once achieved. These tactics ensure the strategies are well implemented, bring all relevant stakeholders or players together.

A products sales and profit over a provided lifetime is the cycle, which can either take the five different cycle stages. These include; product development, introduction, growth, maturity, and decline. Concerning the planned marketing strategy, the product can be identified to be at the growth stage, which is defined by rapid market acceptance by the customers’ hence high rate of returns. On the other hand, concerning the product on offer, it represents the actual product to be on the market.  Regarding re-positioning of the product to serve the customers wants and needs, the plan will focus towards participative engagement of the customers. This is whereby the marketing team draws from the customers how they would like the new healthier products offered. This would enable the plan to have a customer-focused strategy, hence successful concerning meeting buyers’ demands. Additionally, to make this a more successful initiative, its key for the active team to understand buyers aspirations, use data to prove the point and follow the McDonalds business motivations as well as goals.

McDonald Current Pricing strategy

Pricing is an integral element of successful business and marketing strategies for organizations. In the case of McDonald, price bundling has been one of the approaches adopted in product pricing. Price bundling is regarded as a pricing strategy whereby the organization offers a set of goods or services at a reduced price. This whereby, if the customer purchases more the cost is evaluated and offered lower (Pricing Strategies & Monetary Policies, 2014). Example of the market adopting this value meals in restaurants hence the case with McDonald. One advantage related to bundling pricing is that it allows an organization to increase their profit through the offering of discounts to their customers. In McDonald, the adoption of this strategy has been fuelled by varying factors. These include; personalized pricing, brand strategy, market demand, the desire to maximize profits and competition.

Regarding whether the plan will change concerning the proposed case, there will be no change in pricing strategy. This will allow the company to continue with its culturally acceptable pricing model (Mohout, 2015). Additionally, since the company will not be changing into entirely new products, change in pricing strategy is not a must.

Distribution Strategy

Getting the food products and rinks to the customer/market plays an integral aspect of every business. This is in turn covered by the element of distribution which determines the place the product will be sold as well as how it will reach the desired location. Being a leading fast food service, McDonald has adopted different distribution approaches such as intensive distribution which entails numerous procedures with the primary focus being to ensure goods reach to the customer as whatsoever means. Another method is through vertical marketing network (Klumpes & Schuermann, 2011, p.60). Yes, the intensive distribution process will remain in use even after repositioning the current marketing plan, as it suits the desired goals and objective of distribution.

References

BPP Learning, M 2013, Marketing Intelligence and Planning: Course Book, Third edition, BPP Learning Media, London.

Brentari, E, Dancelli, L, & Manisera, M 2016, ’Clustering ranking data in market segmentation: a case study on the Italian McDonald’s customers’ preferences’, Journal of Applied Statistics, vol. 43, no. 11, pp. 1959-1976.

De Swaan Arons, M, van den Driest, F, & Weed, K 2014, ’The Ultimate Marketing Machine’, Harvard Business Review, vol. 92, no. 7/8, pp. 54-63.

Dolnicar, S, & Leisch, F 2014, ’Using graphical statistics to better understand market segmentation solutions’, International Journal of Market Research, vol. 56, no. 2, pp. 207-230.

Klumpes, PM, & Schuermann, S 2011, ’Corporate, Product and Distribution Strategies in the European Life Insurance Industry’, Geneva Papers on Risk & Insurance - Issues & Practice, vol. 36, no. 1, pp. 50-75.

Mohout, O 2015, And Lean Pricing: Pricing Strategies for Startups, Die Keure Publishing, Brugge.

Mukherjee, S, & Shivani, S 2016, ’Marketing Mix Influence on Service Brand Equity and Its Dimensions’, Vision (09722629), vol. 20, no. 1, pp. 9-23.

Pricing Strategies & Monetary Policies, 2014, Salem Press, Ipswich, Massachusetts.

Venter, P, Wright, A, & Dibb, S 2015, ’Performing market segmentation: a performative perspective’, Journal of Marketing Management, vol. 31, no. 1-2, pp. 62-83.