MARKETING STRATEGIES Flashcards
What is market segmentation?
The process of breaking down a total market into a market based on the similar characteristics of a customer group
It allows businesses to focus their efforts and resources on a single section of the market
It can identify the target market’s specific needs and tailor marketing campaigns accordingly
What is geographic segmentation, and how does McDonald’s use it?
Smaller markets based on different geographic locations (nations, states, local areas)
A business operating in multiple geographic locations will need to customise their products
McDonald’s India does not use beef products because of Hindu religious beliefs
What is demographic segmentation, and how does McDonald’s use it?
Smaller markets based on the characteristics of group members
Factors include age, gender and income
Happy Meals contain a toy which appeals to young children, while the expansion of McCafe barista-made coffee & table service appeals to older customers
What is psychographic segmentation and how does McDonald’s use it?
Smaller markets based on consumers’ lifestyles, personalities, values and interests
Store layouts can reflect a wide range of community interests
Pressure to improve diets and maintain a healthy eating lifestyle has led McDonald’s to develop healthier options, including grilled chicken wraps, salads and fruit
What is behavioural segmentation?
Smaller markets based on people’s knowledge of, attitudes towards and use of a product
When using this segmentation, businesses may consider four factors:
Purchase Occasion: when is the customer most likely to purchase the product?
Benefits Sought: what do the consumers want from the product?
Usage Rate: how often do customers use the product?
User Loyalty: how likely is the customer to return to the business?
What are the tangible and intangible benefits of a good/service?
Tangible benefits are the physical attributes, and include design, style, colours and features
Intangible benefits are those benefits that the customer associates with purchasing the product, such as the prestige and image associated with owning a certain brand
What is positioning, and how does it impact McDonalds?
Refers to the image that the product has in the mind of the consumer
It is the based on the way consumers compare one product against alternatives
Determined by how consumers perceive the product in terms of quality & price
McDonald’s received very bad publicity following the 2004 documentary ‘Super Size Me’
Since then, the company has been attempting to reposition itself through campaigns such as ‘A Little Bit Fancy’, ‘UnMcDonald’s’ and ‘Vegan Nuggets’
What is branding and how does McDonalds utilise it?
Refers to the reputation that a business or product has developed over a period of time
Over time, consumers come to develop expectations of certain products and brands
A strong brand name is important in enhancing relationships between consumers and firms
According to the book Fast-food Nation, more people are able to recognise the golden arches than the Christian cross
What is packaging, and what is its significance for McDonalds?
Refers to the physical appearance of a good when it is presented for sale
It is often the first interaction that the consumer will have with the product
It must be effective, positive, and give the consumer a reason to buy
The packaging of a service includes the attitude and product knowledge of the salesperson
The golden arches in the right-hand side of each container promotes consistent brand design
McDonald’s also uses packaging as a way to differentiate its products from competitors by highlighting attributes such as “100% Beef” or including images that make the burger appear fresh and unique
What are the six pricing strategies?
Penetration Pricing
Set prices at lowest possible level, gains immediate customer group & undercuts competitors
Once a loyal group of customers has been established, raise prices
By this time, it is hoped customers are attracted for features instead of price
Loss Leader
Provide a limited number of goods at a very low price to undercut competitors
The aim is to entice customers into a store with availability of relatively inexpensive stock
Once there, it is hoped that customers will purchase other, more expensive products
The McDonald’s Loose Change Menu contains three items priced at $1, which undercuts competition and attracts customers to the store
Product Deletion Pricing
Used to clear stock that the business is no longer selling, by setting it at a low price
The purpose is to clear stock quickly and replace it with current, more popular goods
Market Skimming
A business sets a high price for new and innovative products
This is used to recover the high costs of research, establishing and releasing new products
Demand-Based Pricing
The higher demand for a product, the stronger the ability of a business to charge a high price
Prices are often subject to seasonal conditions
Prestige Pricing
Used for products consumers regard as prestigious, and are willing to pay a higher price
This perception is influenced by product quality, reliability, & the product images
What are the four pricing methods?
Cost-Plus Pricing
Takes into account the total cost to the business of manufacturing or providing a good or service to the consumer and then adds an additional amount to allow for a profit margin
Competition-Based Pricing
The business publicly states that it will match the advertised price of the product sold by a competitor if that price is lower than the price the business is charging for the same product
Price Points
The business sets different prices for similar products
The products are differentiated by their features, and who they are targeted towards
McDonald’s offers its customers a “value ladder” whereby customers can select and modify menu items to accommodate “varying levels of affordability”
This ranges from the Loose Change Menu to the gourmet range
Psychological Pricing
Research has shown that consumers are influenced by even the most minor price difference
This tactic makes small price changes that appear larger to consumers
What are the five elements of the promotion mix?
Personal Selling
Establishes direct links between business/consumer by taking products directly to customers
Forms include door to door selling, party plans and word-of-mouth communication
Relationship Marketing
The process of building and maintaining long-term relationships with customers
Involves creating a high level of customer satisfaction, value and service, thus ensuring that customers will return to the business
Through establishing a regular client base, businesses can reward frequent customers
McCafe has loyalty cards that rewards repeat customers with a free beverage after a certain number of visits
Signing up to the mymaccas website gives customers access to exclusive offers and free wi-fi
Advertising
For the majority of businesses, advertising is the most public face of the promotion mix
It is the most common form of promotion used by Australian businesses
It seeks to convey a message to a broad group of consumers, traditionally in the media
As the official sponsor of the Olympics, Formula 1 and the FIFA World Cup, the McDonald’s logo appears on official merchandise and promotional material
This also enables McDonald’s to achieve prime slots in television advertising during the events, reaching a global audience of up to 4 billion people
Sales Promotions
Intended to create interest in and generate awareness of a particular product
These promotions include competitions, samples and discounts
These provide a cost-effective method of attracting the interest of consumers
A recurring sales promotion has been the Macca’s Monopoly contest
Publicity & Public relations
The process of creating an event for a business to generate awareness of its products
In so doing, the businesses attracts interest in its activities
What are the two elements of the promotion mix?
Opinion Leaders
Certain individuals within the community are highly respected because of knowledge or skill
These community profiles can sell a product on the basis of their influence
Consumers will create a link between the leader’s image and reputation and the product
Well known Los Angeles chef Neal Fraser partnered with McDonald’s to provide an ‘elegant meal’ created entirely out of McDonald’s food
Word-of-Mouth
A form of publicity in which business have little or no direct influence
Consumers relate to others their reaction and satisfaction with the product
Consumers are likely to place more weight on this than on the biased company images
What are distribution channels?
Distribution Channels - the channels by which a product is moved from the place of manufacture to the consumer
What are the three distribution channels, and which does McDonald’s use?
Producer to Consumer: the good/service is produced & passed directly to consumer
Producer to Retailer to Consumer: the retailer is used as an intermediary who accesses the good from the producer and then sells it to the consumer
Producer to Wholesaler to Retailer to Consumer: in this system the wholesaler takes responsibility for distribution from producers to retailers
McDonald’s employs a producer-retailer-consumer distribution method
Differentiate between intensive, selective and exclusive distribution, and note which one McDonald’s uses
Intensive Distribution
Occurs when the product is readily available in a wide selection of stores
The product is easily accessible by consumers, can be found at a number of different types of stores and is often included in everyday purchases
Convenience items often lend themselves to this type of distribution
Selective Distribution
Involves the use of a limited number of stores/locations to sell a product
Product is still available, but consumers will have to work harder to get it
Allows the business to control where its product is sold and to ensure that the places chosen are consistent with the image the business wants to project
With over 38,000 stores worldwide, McDonald’s uses selective distribution channels
McDonald’s partnered with Uber Eats in 2017 to deliver meals to homes - this resulted in a sales rise of 6.5% in 2019 (the highest since 2012)
Exclusive Distribution
Occurs when there is a restriction on the number/availability of products
The product is available at a very limited number of venues
This allows the business to maintain control of all elements of production, distribution sales and marketing
What are the physical distribution issues of transport, warehousing and inventory?
Transport
The process of moving goods from one location to another
Businesses must consider transport times and the type of good being transported
Warehousing
The process of storing products before they are distributed to the consumer
Allows the business to build up its holding stock of particular good
Some goods can only be warehoused for a very limited time before losing their usefulness to the customer
Inventory
For any business, the sale of stock that provides the means to achieve financial objectives
A business must ensure that it has sufficient stock to satisfy consumer demand
Overstocking may force the business to hold clearance sales in which profits are reduced, and may restrict the ability of the business to store new forms of stock
Explain the importance of people, processes and physical evidence?
People
Involves having high standards of customer service throughout the business
Includes detailed product knowledge, communication skills & attentiveness
These people are the ‘face’ of the business, key for consumer satisfaction
Processes
Refers to the consumer’s total experience of buying the product
Stretches from searching for information to experiencing product benefits
All aspects of the sales process aim to deliver to consumer expectations
Physical Evidence
The product’s physical appearance across every aspect of its presentation
Includes packaging, employee appearance, condition of the store
Each aspect of physical evidence is vital to promoting a positive image
Explain the increasing importance of e-marketing
The internet serves as an area of personalised marketing, sales growth and brand awareness
It also involves the use of emails to directly liaise and communicate with customers
It allows businesses with online operations to reach a global audience
E-marketing is the fastest growing sales medium in Australia
What is global branding, and how does McDonald’s use it?
A recognisable name and logo are essential for global expansion
The same marketing message is delivered to consumers in different nations
It is more effective & efficient to promote a brand over individual products
In 2019, Forbes recognised McDonald’s as the world’s 10th most valuable brand
Over 88% of people surveyed worldwide could identify the golden arches
What is the importance of global standardisation/differentiation, and how does McDonald’s use it?
A business may not need to alter its core product across countries (eg; Coca Cola)
Often a product will have to be differentiated to some extent to suit different cultures and local markets
Owing to differences in language, religion, tastes and ethics it is critical that the business adequately researches its new market before releasing markets
McDonald’s sells 2.5 million Big Macs everyday worldwide
Even though McDonald’s provides a standard name, logo, operations process and most products, it also acknowledges unique cultural tastes
McDonald’s includes beer on its menu in France, Portugal and Germany
Explain the impact of global pricing and competitive positioning?
Global Pricing
The pricing strategy used by a global business should add to the reputation of the brand
Because of the additional costs of exporting, a competitive price is harder to establish
Competitive Positioning
The formal process of a business determining how to differentiate itself from competitors
A key element of this is value proposition, which takes into account operational excellence (efficiency) product leadership (quality) and customer intimacy (brand loyalty)
