Marketing Strategy-Product, Place, Price and Promotion
Abstract
As consumers, we are very accustomed to finding products where we need them, when we need them at the price we are willing to pay. This has become such an automatic part of the buying process that we seldom give much thought to how all of this occurs. To put it simply, all of this occurs because of marketing. A great deal of thought has been given to your preferences and buying habits in an effort to keep you as a customer. In this paper, we will discuss, within the scope of a specific company, the product, place, price and promotion that is used as part of marketing strategy to generate hundreds of millions of dollars in annual sales. Where appropriate, research material will be cited to clarify the discussion. With this in mind, let’s begin our discussion of business marketing.
A Look at McDonald’s
In order to make this research relevant to a wide range of consumers, and to inject a bit of fun into the discussion, we will take a look at McDonald’s, the fast food chain that people have grown up with for decades. In fact, the reason that people have grown up with McDonald’s for decades is because of skillful marketing. Through precise blending of product, place, price and promotion, we have viewed McDonald’s as a restaurant that has always been there, and can be found anywhere with consistent quality, price and selection. With these statements in mind, the first area we will consider within the scope of McDonald’s is product.
Product Marketing
When Ray Kroc developed the ideas in the 1950s that eventually led to the birth of the McDonald’s restaurant chain, one of the cornerstones of his fast food process was the ability to rapidly serve food to large numbers of people efficiently (Manila Bulletin, 2005). This was accomplished in large part by offering a very limited menu and turning out those products faster and better than anyone had up to that time. Within a narrow product line, the eventual McDonald’s restaurants attracted a huge following of loyal customers, who knew that there would always be a certain product available at the restaurant and that it would be just as delicious on the tenth visit as it was on the first visit. Although over the years, McDonald’s has introduced additional products, they still keep the products within the line somewhat closely related to each other. This allows for the formation of a uniform marketing strategy that stresses quality food, served in a fast, clean and courteous manner. The tactic incorporates all of the positive things that people want in dining, without a hefty price tag. The limitation of McDonald’s product line is a stroke of genius.
Place, in Relation to Marketing
Marketing experts know that the best product in the world will never make an impact in the business world if no one can locate and obtain it (Delaney, 1994). Keeping this simple, yet vital brick in the house of marketing, McDonald’s gives careful consideration to the placement of its restaurants. Within their marketing research, they take into consideration the population of a given area, major roadways in the vicinity of the proposed restaurant site, traffic that passes by the restaurant site, and the demographics of the area, as they know a great deal about their customers (more about this in the “People” section of this paper). The construction of a McDonald’s restaurant costs millions of dollars, and in order for the operation to be profitable, placement must be in an area that maximizes the customer exposure, therefore increasing the chance of generating business. As mentioned previously, however, please keep in mind that McDonald’s leaves nothing to chance. They do their marketing homework, and it shows. The fact that McDonald’s always seems to be “right around the corner” is due to a great deal of extensive marketing research, planning and execution. If you really give this idea a great deal of thought, take into consideration the very low number of McDonald’s restaurants that go out of business in a given community. This is not sheer luck, nor is it just something that has happened by chance. It only looks like a coincidence! While other fast food chains come and go, McDonald’s is always there for you, right around the corner in most cases.
Pricing
If you build a McDonald’s in the right area, the people will come, but good pricing surely plays a role in getting them to come back. One of the main elements of McDonald’s marketing strategy is effective pricing of their product. Knowing that their target market consists in large part of families, who often need an affordable way to dine out with the children, their menu over the years has been priced in a way that allows virtually anyone to eat at McDonald’s and enjoy a quality meal without spending a large amount of money. What it really comes down to is value- people enjoy McDonald’s food which is a big part of repeat business; the best pricing in the world will not sell a product if the consumer does not perceive value in what they are purchasing (McCracken, 1990). In fact, McDonald’s states this outright in their “Value Menu” offerings of recent years, which provide selected menu items at a bargain price, most times, $1.00 or less. To integrate another marketing concept into the strategy of the Value Menu, the items on the Value Menu often serve as “loss leaders” in order to sell other products which are profitable; for example, you may purchase McNuggets for $.99, which represents a tiny if any profit for McDonald’s, but the French fries and soft drink that you select to accompany the McNuggets are usually profitable, so that you have gotten a good price, but McDonald’s has also realized a profit. Loss leaders are an age-old marketing strategy that McDonald’s has raised to an art form. In a form of quid-pro-quo, the concept of giving something to get something more valuable in return has become a theme in the menu of this fast food giant, and again, it is done so well that the average person does not realize it, which is one of the ideas of skillful marketing to begin with.
Promotion
When talking about McDonald’s within the scope of marketing promotion, one hardly knows where to start. As a general statement, it is fair and accurate to say that promotion is one of the pillars of McDonald’s success. Let us clarify this statement; while it is indisputable that McDonald’s has built a loyal following for decades through a quality product, easy availability and value, none of these wonderful things that McDonald’s has perfected would be known by anyone if they were not properly promoted. The success of the promotional message is evidenced by the cross-generational loyalty of customers and many other factors.
The promotion that McDonald’s utilizes takes many forms and has evolved over the years. Their longest-living promotional “spokesman”, who is known in virtually every corner of the planet, is Ronald McDonald. This cartoon-like character (who has in fact been portrayed by real-life actors and cartoon characterization alike) brings smiles to the faces of “children of all ages” and lends a sort of hometown good feeling to McDonald’s restaurants. As an offshoot of Ronald McDonald, the cast of characters over the years has expanded to include such luminaries as HamBurgular, Mayor McCheese, and Grimace, the purple hero of billions of people long before Barney the Dinosaur ever existed. These carefully created characters not only promote good will for the company as a whole, but their appearance and names in many cases cause an association with a certain menu offering within the mind of the customer.
Another recent marketing phenomenon that McDonald’s has struck gold with is product placement. Not to be confused with their product strategy, this instead refers to having McDonald’s products and logos clearly visible in motion pictures and television programs, which McDonald’s pays big dollars for, of course. For example, when the gang on “Friends” is eating Quarter Pounders, it is advertising within the plot of the show itself, so even those who ignore regular television commercials receive the McDonald’s marketing message without realizing it.
McDonald’s also engages in a sort of “co-operative” marketing with popular movies by offering “limited edition” collectibles or toys featuring characters from the movie, often along side Mayor McCheese or HamBurglar. The collaborative effort attracts moviegoers to the restaurant and vice versa – -everyone wins!
Within conventional promotion as well, McDonald’s spends billions of dollars each year on print, radio and television advertising. This advertising allows McDonald’s to use their well established characters such as Ronald and Grimace to communicate the message that “you deserve a break today”. In some cases, celebrities and sports personalities are used in advertisements for the product, in order to appeal to a wider audience beyond children and the McDonald’s faithful.
Another promotional tool that McDonald’s has skillfully used in recent years is the promotion of “healthy” menu items such as salads, fruit and yogurt, and the like. This was likely sparked by the government requirements that restaurants such as McDonald’s make public the nutritional facts of their food. Turning this into a positive, they have added “healthy” items to the menu and emphasized them both in an effort to appeal to a new market segment, but also to downplay the less than positive nutritional facts of many of their traditional menu offerings. If the traditional McDonald’s customers eating habits have changed, the menu has also changed to accommodate them. This is an excellent example of marketing that evolves in relation to the changing needs of loyal customers. At the risk of sounding too technical, this is truly innovative.
Summary
In this paper, it is our hope that we have accurately presented some extraordinary marketing techniques that have given an ordinary product-burgers and fries- an exciting and evolutionary life. At any rate, the readers of this paper will surely view McDonald’s in a new light and increased respect.
References
Delaney, J. (1994, November). Crafting a Marketing Plan That Works. Black Enterprise, 25, 120+.
Karrh, J. A., Mckee, K. B., & Pardun, C. J. (2003). Practitioners’ Evolving Views on Product Placement Effectiveness. Journal of Advertising Research, 43(2), 138+.
Mattimore, B. W. (1995, March/April). How to Invent a New Product. The Futurist, 29, 34+.
Mccracken, L. J. (1990). An Attention-Getting Marketing Strategy. Journal of Accountancy, 170(3), 129+.
McDonald’s Celebrates 50. (2005, April 17). Manila Bulletin, p. NA.
