MacDonald's Marketing Paper

Will it 38 p a g e require the introduction of new or

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Unformatted text preview: uying customers in currently targeted segments. It also targets new customers in new segments. A marketing manager has to think about the following questions before implementing a market development strategy: Is it profitable? Will it 38 | P a g e require the introduction of new or modified products? Is the customer and channel well enough researched and understood? The marketing manager uses these four groups to give more focus to the market segment decision: existing customers, competitor customers, nonbuying in current segments, new segments. McDonalds is currently following above mentioned strategy, to focus on market segments. For serving synonymously to the existing customers they are coming up with different menus as per change in taste and preference of their customer e.g.: happy price menu, beverages including milk shakes and cold coffees etc. Also, by keeping in mind their rivals they are introducing products to compete them e.g. to answer the KFC they came up with chicken mcnuggets. They are adopting pricing policies for non-buying customer and as well as new segments. PRODUCT DEVELOPMENT STRATEGY In business and engineering, new product development (NPD) is the term used to describe the complete process of bringing a new product or service to market. There are two parallel paths involved in the NPD process: one involves the idea generation, product design, and detail engineering; the other involves market research and marketing analysis. Companies typically see new product development as the first stage in generating and commercializing new products within the overall strategic process of product life cycle management used to maintain or grow their market share. McDonald's is always within the fast-food industry, but frequently markets new burgers. Frequently, when a firm creates new products, it can gain new customers for these products. Hence, new product development can be a crucial business development strategy for firms to stay competitive. 39 | P a g e McDonald¶s are always enhancing their existing product along with it; they also try to introduce new and new products so that they can easily survive in market. DIVERSIFICATION Diversification is a form of growth marketing strategy for a company. It seeks to increase profitability through greater sales volume obtained from new products and new markets. Diversification can occur either at the business unit or at the corporate level. At the business unit level, it is most likely to expand into a new segment of an industry in which the business is already in. At the corporate level, it is generally and it¶s also very interesting entering a promising business outside of the scope of the existing business unit. McDonald's made its foray into the hospitality industry in 2001, opening two hotels in Switzerland, at Zurich and Lully. The "Golden Arch Hotels" were positioned as four-star facilities with the latest in-room technology and very original, modern interior design. Reactions and reviews of guests following their stay there were mixed. Most seemed to agree, that the hotel's four-star rating didn't seem to correspond with McDonald's image. The Golden Arch in Zurich is McDonald's first hotel. IMPORTANCE OF PLC IN MCDONALD¶S 40 | P a g e The requirements of customers change over time and thus the product offering has to be changed accordingly. What is the trend today may be out of market within few weeks. Thus continuous innovation is required. To counter these changes McDonalds has continuously introduced new products and has phased out the old ones which were at the decline stage of their PLC. The introduction is timed such that the new product does not cannibalize (which eats same of it) the product already in the maturity or growth stage. Thus the secret lies in getting profits with different products in the different stages of the PLC. A perfect example of revitalizing a product in decline phase 41 | P a g e The French Fries have been an important part of the McDonalds menu worldwide. But now it was in the stage of decline and was actually not generating proper return. In an attempt to revitalize it, a new variant was introduced namely Shake Shake Fries. This is being served with chatpata spice mix which has resulted in increase in the sales of French Fries and has elevated it from to the decline stage. This is used to delay the decline of a well established product which has the potential of generating further revenue. 42 | P a g e MCDONALIZING THE SUPPLIERS McDonald¶s has changed the nature of not only the food service industry but also the food processing industry as well. McDonald¶s realized that the battle between fast food chains would increasingly be one of efficiency of supply, lower cost production and greater desire to innovate. It pioneered with innovative and sophisticated food distribution and packaging systems when the traditional food processors were unwilling or unable to supply food items that McDonald¶s demanded. They achieved amazing consistency by giving more att...
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