The first example of a marketing technique McDonald’s use is market development. Market development is selling a service or a product to a new market that they have not done business with before; in other words, it is business expansion. This technique has several advantages and disadvantages which are now going to be discussed. An advantage of market development is the fact that they are selling an existing product into a new market because it can increase their sales revenue and their market share. An example of this is when McDonald’s franchises in India didn’t sell specific foods (foods containing beef due to religious reasons), and then produced new products. They offered vegetarian options for customers in India to meet their needs. However, this risk may not always work as consumers may not want to try these new options, and may not go to McDonald’s altogether: therefore, market research must be done.
Another marketing technique McDonald’s use is product development. This technique has several advantages and disadvantages which are now going to be discussed. McDonald’s can use their product development as an opportunity to see if customers like the new product or not, and if they like it then they can permanently add it to their menu. As McDonald’s are trying new things out, they can meet customer needs that they did not know were apparent, and it can help them expand and increase their profits and market share. However, product development has risks and can lead to risks if consumers may not want to explore and try out new things. An example of McDonald’s product development failing is when they introduced the McLobster, which was a lobster roll, however it was not successful. There were two reasons why the product did not take off – firstly, it did not look appetising and secondly, it was too expensive at $5.99 which is too expensive for a fast-food company.
Market penetration is another marketing technique used by McDonald’s which is good because the product already exists and is known by many customers that McDonald’s already has. Because they already have a product and a market, they are sold much easier and they can decrease the cost if they want. It would make it more affordable for customers to purchase and it could although it may be thought that it decrease their profit, it actually increases it due to even more people buying it so it balances out. An example of McDonald’s doing this is during the summer when they sell refreshing drinks at a low rate, which drums up business because consumers are going to buy food products as well as the drink. These extra products are all existing, showing that it is cheap for them to produce and it sells fast, which increases their revenue. However, a disadvantage of this example of market penetration is that it is seasonal. Other disadvantages are that there are several other competing organisations that are doing the same thing. This then means that they must battle on things such as price and quality.
Branding is another way that McDonald’s do their marketing. This technique has several advantages and disadvantages which are now going to be discussed. McDonald’s have the globally famous large yellow “M” over the red background, combining the energy of red and the happiness of yellow, and symbolising fast food which is loved. This logo is widely known by everyone, especially young children who are a primary target of McDonald’s. Another advantage of it is that tourists in foreign countries instantly know the logo when out in places where they communicate in a different language – this is highly important to McDonald’s as it is where most of their business in their franchises comes from. Their slogan is also part of their branding and it is “I’m lovin’ it”, which really compliments and ties in well with the brand because their consumers all agree with it or else they wouldn’t keep coming back to the store. A disadvantage of their branding could be that if employees in-store do not run the business well and don’t give a good service, it could affect the business’ reputation and identity which could lead to their purchases decreasing.
Another marketing technique that is used by McDonald’s is relationship marketing. This technique has several advantages and disadvantages which are now going to be discussed. They create a relationship with parents and their children whenever children want the Happy Meal that McDonald’s provide. The reason children ant these meals is because the toys inside drive children to want them, so it brings parents into wanting to buy them a Happy Meal. As the parents are buying their children a Happy Meal, they themselves would also want some food and therefore would buy a McDonald’s product. What makes customers loyal is if they like the service they get, as well as the quality and prices, and these things are what make them come back for more – creating a relationship. The disadvantages of it are that there are competing businesses who offer similar things and also have things such as loyalty schemes, discounts and provide offers which may be things that provide them to gain more customers than McDonald’s. This means that McDonald’s must work extremely hard against competing companies to ensure they don’t lose the relationship they have made with their consumers to competing businesses.
Diversification is also a marketing technique that they use and it is when a business enters a new market and industry that the business doesn’t usually do business with. For McDonald’s, who are known globally, it is expansion for their business that theoretically should increase their recognition and revenue. Their subsidiary, McCafe, is an example of a successful diversification for McDonald’s because people don’t always want fast food from McDonald’s, so they now have a coffee. As well as this, they can sell their existing products with their McCafe drinks and increase revenue. An example of it not working for McDonald’s is when they tried out the Golden Arch Hotels in Switzerland: a four star hotel for business workers and for families. The reason it did not work is because nobody linked together McDonald’s and a high end, four star hotel. The disadvantage of it is that it is the riskiest marketing technique that any business can go for because it is a new product going into an alien market for the business and it can cause a disaster which, ultimately, affects the company’s finance.
To conclude, I think diversification is the most effective marketing technique for McDonald’s because it means they are able to introduce a new product into a new market and, although it is quite risky, they have succeeded with McCafe and several other products. McDonald’s succeeded for several reasons; one factor that helped was the fact that they are a successful company so McDonald’s were able to take the opportunity with a certain level of ease. Diversification increases their revenue and their global recognition and is the most effective after succeeding well.
On the other hand, product development is the least effective because it is a 50/50 chance if it works or not. An example of them failing is the McPizza where they were hoping to add pizzas to the menu. However, customers prefer them for burgers and fries and they prefer their pizzas from big brands, such as Pizza Hut. Product development takes up a lot of time and money and it can eat up a lot of any business’ revenue if their ideas are not pitched well or researched well beforehand.