The price of the product
The price of the product is another factor that has considerable impact on the marketing mix adopted by the organisation. This can defined as the amount a customer pays for the product. This is determined using different factors including market share, competitor’s price, and cost of production. The other aspect that needs consideration during pricing is the skimming strategy that can be utilised for taking leverage of new product development.
The above picture is an adaptation of the BCG matrix related to pricing and how it affects the market share relatively. In this picture Brand D can be related to McDonalds as they maintain their prices on the lower end of the spectrum and using this strategy have gained a considerable amount of market share. At the same time McDonalds consistently differentiates its products to maintain prices to avoid negative connotations due to the pricing factor.
As low prices are related to inferior quality of products on a psychological level by the customers, hence McDonalds maintains a relative pricing strategy to have consistency and does involve in price reduction strategies as it would be counter-productive for the organisation as the competitor would also reduce the price and thereby the competitive advantage derived from the cost reduction strategy would be lost. Hence from a strategic point of view it would be wise to retain the price band and position newer products in the same band to ensure that the market position and pricing is maintained (www. mcdonalds. co. uk).
Place This can be defined as the physical location where the goods or services are offered to the end customer or the medium through which it is channelled to the customer, this would include the distribution channels, direct sales, indirect sales, web based sales etc,. From McDonald’s point of view it needs to be understood that place has an important relation as their customers are spread across different geographical locations and hence the location of stores which is the direct way of marketing needs to be undertaken and that would provide a strategic advantage if the location of the store is in the right location.
Keeping this in view McDonald’s has gone with the franchising model of utilising the channel of distributions which is has proven to be quite successful of capturing different markets at a faster pace in comparison to other modes of distribution as the investment required in this channel is comparatively less and McDonalds has stretched this concept to its extremes by mixing different variants in the franchising channel.
McDonalds have an efficient way of identifying their channel partners who are put through rigorous interviews and they are given extensive training before they are offered the franchisee license. This ensures that the right quality of people run the channel which is essentially the ‘place’ from a 4Ps perspective. The importance of this factor can be understood by the amount of resources deployed by McDonalds to groom their channel partners; they are given training for a period of nine months before being given the franchising task.
Through the utilisation of this medium of distribution channel McDonalds gained a competitive advantage vis-a-vis it has ensured that marketing team is separated from the daily running of the business and ensured that the marketing can work on the location and other details of the channel. Thereby effectively reducing the risk in entering new locations to the organisation which otherwise would have to be borne by the organisation itself if it opens up new stores in different locations where considerable market intelligence or information is not available (www.
mcdonalds. co. uk). Promotion Promotion can be defined as the types of communications that are used by the marketing strategist to convey the message about a product to a target audience. There are different ways of communication namely advertising, public relations, word of mouth, and point of sale. McDonalds works on different campaigns to gain advantage through various modes of communication currently McDonalds are running one of the biggest monopoly campaigns (www. marketingmagazine. co.
uk) wherein they have partnered with multiple modes of communication like the TV adverts, Press publication and online activities. From time to time McDonalds runs different campaigns to correspond with the launch of new products. The other campaign that is running include is the concept ‘There’s a McDonalds for everyone’ in the United Kingdom which is targeted to wider spectrum of the population. The marketing strategist develops a plan to target a segment or at times the whole population and accordingly the campaigns are designed and deployed in the market place. Conclusion
Based on the above it can reasonably concluded that McDonalds has imbibed the concepts of PESTLE and Marketing mix in their strategies and have carried on their activities by focussing on this concepts to achieve success in the industry. They are deriving competitive advantages by evaluating the markets inline with the 4Ps strategy and constantly scanning the local environment by using PESTLE and also utilising the latest additions in PESTEL which is being coined recently as PESTELED the last two being the Ethical and Demographic parts which are also undertaken by McDonalds in a different format.
The above are the factors through which McDonalds has achieved this growth and its rapid expansion has ensured that the company would sustain the growth on a long term basis through its franchising mode of positioning strategy.
McDonalds, A brief history of McDonald’s Available at: http://www. mcspotlight. org/company/company_history. html [Accessed on 12-03-10] Aguilar, F. J. 1967 Scanning the business environment. New York: Macmillan. Available at: http://news. bbc. co. uk/1/hi/magazine/8418645. stm http://www.mcdonalds.co.uk/ourworld/environment/policy.shtml