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McDonald’s is one of the biggest fast food companies in the world with operations in 188 countries, including Australia. To further penetrate the market and add value to respective consumers, the brand segments its products on the bases of demographic, behavioural, and psychographic factors. As noted by Cross, Belich, and Rudelius (2015), marketers need to evaluate and understand the needs of the target consumer in order to formulate an effective strategy. This report examines the marketing strategy exhibited by McDonalds Australia for its health-conscious consumer to identify the product positioning, marketing mix and value propositions that meet their expectations.
The Core Marketing Concepts
Markets and Target Market Segments
Chaston (2014) defined a market as a system made up of various stakeholders including buyers and sellers with each group requiring the services of the other for fulfilment of needs and wants. McDonalds identified a market gap in the form availability of a variety of fast food delicacies to students, business people and professionals in busy towns. Consumers are willing to pay a high price for quality product. The fast food market is therefore the dominant operating sector for McDonalds and its customers. On the other hand, Chaston (2014) further noted that segmentation consists of dividing a single market into various groups with the intention of maximizing value for each individual segment. With a smaller group, needs are easily identified such that goods are manufactured depending on consumer specifications. As aforementioned, McDonalds segments its Australia market using behavioural, psychographic and demographic variables.
Psychographic factors are associated with lifestyle and convenience. The outlets are designed to offer entertainment and for leisure purposes. Moreover, the firm considers the health habits of the consumers by providing foods and drinks that meet their dietary needs and at the buyer place of convenience. On demographic components, the firm divides the consumers into kids, students and families. For example, the Happy Toy meal is offered to kids to make them desire another experience with McDonalds. Behavioural considers needs such as birthdays and festivities by offering products that are suited to the occasion irrespective of the cultural prospects of the people requiring the service.
The prevalence of chronic diseases that are associated with lifestyle decisions of individuals prompted McDonalds marketing function to create a menu for the health conscious consumers. More customers are aware of the health issue associated with fatty and sugary foods and as such, they resort to purchase from restaurants that offer nutritious meals. The company therefore profiled the health conscious consumers as part of the psychopathic segment to fulfil its healthy eating needs.
Needs, Wants and Demands
Needs are categorized as physical, individual, or social, and are states of deprivation that are crucial to the survival of a person. For example, a functional government is needed to regulate the demands and supplies of the market to avoid consumer exploitation. On the other hand, a want is a product or service that a consumer desires which is not essential to his or her survival. For example, a hungry shopper will need water after consumption of a meal but may crave for a non-alcoholic beverage with the latter not being compulsory. Demand is such that a customer is willing and able to pay for the perceived need or desire. McDonalds targets consumers that have an unfulfilled need or want to meet the expectations of the consumer. For example, by offering a vegetarian diet in the form of McVegan, the company intends to satisfy the health conscious consumers who are already demanding the particular product.
Market offerings combine experiences, information and services to maximize the value for the prospective consumers (Kumar and Reinatz, 2016). A market offering describes the additional components of a product such as availability, convenience, and customer service. McDonalds introduced the McVegan burger to entice the lifestyle consumers. The product as noted by the brand consists of a soy-based patty, tomato and salad in a combination of Macca’s bun. The meal is specially meant for the health conscious consumer but above the age of 50. The packed vegan market is growing at a rapid rate in Australia with forecasts showing that it will reach $215 by 2020 (Koslowiski, 2017). According to Koslowiski (2017), the vegetable burger is yet to be rolled out in all the outlets in Australia as the firm tries to get more information in order to localize the product in the respective regions for a better experience. The company advertises the product by depicting it as a whole meal that constitutes the various healthy nutrients for the target consumer. Moreover, the product is packaged in an appealing manner and its being availed to consumers in each local region.
Value and Satisfaction
Firms are impelled to focus on the concepts of value and satisfaction for business excellence. When both are provided, brand achieves customer loyalty and retention, market leadership and goodwill. Customer value depicts the benefits that a customer derives from using a certain product (Schols and Smith, 2016). The benefits should outweigh the associated costs for the customer to get value. A knowledgeable consumers evaluates the trade-offs between the gains and price paid for the product or service. A vegetarian purchasing a Macca bun considers the health benefits of the meal and the amount he or she paying for to make an informed decision. On the other hand, satisfaction is the ability of a good to meet the desired expectations. Consumers expect McDonalds to offer fresh and high quality foods at affordable prices. If the company is able to offer a vegetarian diet that combines that various health nutrients in recommended proportions and provide the meal in an appealing manner, then the satisfaction level will be high.
Exchanges, Transactions and Relationships
McDonalds Australia offers the vegetarian burgers and other meals for the health conscious consumers, a relaxing/entertainment joint and other accompaniments in exchange for money in form of profits, referrals and loyalty. The company has to meet the desired expectations of the consumers so that the value of the product satisfies in a manner that cash will be exchanged, with the possibility of referrals to potential clients and individual visits.
For profitable and sustainable exchanges, the firm should try to connect with the consumers in order to establish relationships (McDonalds and Wilson, 2016). Relationships are actualized when the marketers create communication channels with the customers so that they can share information and address any issues. A brand that takes time to communicate and understand the market needs from the perspective of consumers is likely to foster emotional connections that lead to long lasting and valuable relationships. Transactions such as exchange of ideas on potential penetration and product development needs can take place online or one on one during in the outlets to establish the relationships and possible exchanges.
According to Huang and Sarigollu (2014), the marketing mix is a foundation model that uses a variety of tools to pursue the agenda of a firm to the target consumers. Decisions on the price, product, place, people, physical evidence, process and promotion are associated with the marketing mix. A firm first identifies a market gap and assesses its ability to offer a certain product or service in a certain manner to the target product in single or different regions for a set price. The mix should offer sustainable benefits to the firm including competitive advantage and product penetration and development prospects. An effective marketing mix maximizes value to the consumer while assisting the brand support its vision.
McDonald’s products are known for quality given that raw materials are usually fresh from the farms or manufacturers stores. The Vegetarian Burger is packaged as a ready-to-eat meal that combines various chickpeas, butter, starch water and other healthy nutrients. The ingredients are proportionally mixed to bring out a fulfilling and quality appeal to the consumer. Before passing to the consumer, the burger undergoes the three product phases namely; core, augmented and final product.
The core benefit is that intangible benefit offered to the consumer. In the case of the veggie burger, the core product is convenience and the health provisions that promote medical fitness for the consumer. On the other hand, the augmented product is the added value that is paid for depending on the attributes of the brand. The value additions deprived from a McDonald Veggie consist of the customer service and the packaging of the product and consuming the meal in the cafeteria. The actual product is the physical good that is perceived by the consumer in relation to the brand. The burger made of vegetarian components is the actual product for the McDonalds customer.
Price is the premium paid by the consumer in exchange for the core, augmented and actual product. McDonalds sets prices for the burger in a range of $4 to $7 depending on the size and components of the product (Koslowiski, 2017). The various ranges are offered to satisfy the needs of different customers within the segment. There are students who are vegetarians but may not afford the large burger and as such, prefer the cheapest at $4.
Consideration is made on the cost and the prevailing market prices. The company competes with other fast food outlets such as Starbucks and as such, the price should address competitive forces in order to attain a competitive advantage. In addition, the burger is unique and combines a variety of natural nutrients that may not be obtained in whole. As such, the cost of production is factored in. Most importantly, the perceived value of the burger to the consumers is considered to price the product. Consumers are more likely to pay a high premium for a product that is of high quality and satisfying. McDonalds uses the three internally and externally influenced-strategies, competitor prices, value of the product and cost to price the burger.
In Australia, the Veggie buns can be obtained in more than 800 locations (McDonalds, 2017). The country has penetrated the urban and suburban areas of the nation to reach to consumers and maximize value in form of time and location convenience. Consumers can just walk across the street and locate a McDonald store to fulfil their various vegetarian needs. The company is also in partnership with 258 franchisees in the effort to expand the operations and reach the market (McDonalds, 2017).
The firm distributes the foods directly to the consumers or through the various sales vendors who supply on-demand food to customers. Consumers also purchase from the outlets to consume at their homes. Delivery services are offered to consumers who use the online platforms make orders. The logistic function operates in sourcing for the raw materials used to process the foods and also in the delivery of foods so that the operation is effective. For example, the logistics manager connects with the sales agents to ensure that the delivered foods meet the expectations of the client with respect to time and location.
McDonalds employs a variety of promotional tools to reach its target. Strategies such as the use of newspapers, television adverts and shows are all intended to create awareness of the available products and the attached value compared to other substitutes. Recently, the company has focused on the digital media to reach out to the consumers who are now using the social media sites to learn about product and choose the one that maximizes their needs.
In the message, the company talks about the price, quality features and differentiation aspects that will make the consumer to choose the product and leave out others in the market. For the veggie burger, McDonald promotes the brand by reporting on its affordability, availability and health nutrients that satisfy the needs of the conscious consumers.
The staff of the company connects physically and emotionally with the customers to create relationships aimed at providing benefits for both parties. The company recruits experienced customer care clerks and sales people who address various consumer needs on demand. Moreover, a manager responsible for the veggie department is responsible for supervising the operations to ensure that the cooks and other subordinate meet the required expectations of the brand.
The services offered are perishable, variable, intangible, and inseparable. The services should be individualized to the needs of the customer or staff for customized satisfaction and as such, they are variable. The services expire due to the fact that they are on demand and not tangible. Moreover, the brand maintains connectivity by ensuring that the messages are relevant and up-to-date with the needs of the stakeholder.
When a customer makes an order, the need and expectation is created. The firm meets the need by making an individualized meal, delivering it to the customer at the right location and in right proportions. After consumption, the customer assesses the intended and outcome from the product to determine the satisfaction level. If the right mix is used, satisfaction is guaranteed.
Customers depend on the physical cues of a product before making a purchase. The role of the marketer is therefore to design an appealing product that meets the perceived value of the buyer before making the purchase. To identify with McDonalds brand, the company designs all its outlets in a specific manner and layout, with a standard logo of the firm. For the particular veggie product, the firm has designed an oval shaped bun with a cut to demonstrate the various healthy combinations.
This report has outlined the marketing mix used by McDonald’s on the psychopathic market segment. McDonalds Australia stands out in competition by focusing on the demands of the target market by utilizing the marketing mix model. The attributes of the segment are used to determine the best product, price, place, physical address, people, and promotion components of the brand. With the rise of the health conscious consumers within the psychopathic segment, McDonald’s continue to maximize value by connecting with the buyers to evaluate their wants in order to come up with a product that offers the most sustainable benefits.
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