McDonald’s has developed a core marketing strategy founded on its “Think Global, Act Local” concept. It has become some sort of a playbook for both fast-food restaurants and other businesses based on a business-to-consumer model. Understanding the principles of this strategy requires taking a look at its marketing mix based on the 4Ps: its specific product, pricing, placement or distribution, and promotion strategies.
4Ps and McDonald’s Corporation: Marketing Mix Analysis
1. Product Strategy
The company did not invent the fast food concept. However, considering its global success, it has been regarded as a critical player in the popularization of fast-food or quick-service restaurants around the world. It has built its business around food items that are easy to prepare compared with casual dining and specialty restaurants.
It is important to note that McDonald’s does not sell food and beverages alone. Its product strategy has four major elements that collectively represent one of its strengths as a fast-food company. Take note of the following:
• Food and Beverages: Remember that the core products of McDonald’s revolve around fast food items. These include burgers such as its signature BigMac and Quarter Pounder burgers, French fries and its different variations such as the Twister, chicken and chicken nuggets, soft serve ice cream and its variations, soft drinks and milkshakes, other sandwiches and wraps, and breakfast food items. Some components of these products are prepared and all of them have low preparation time.
• Special Food Products: The company has expanded its product offerings over the years to cater to different market segments. For example, beginning in 1993 in Australia, it put up its McCafé brand of coffeehouses that accompanied several of its main stores. Localization is another important aspect of its product strategy that involves offering menu variations in selected geographical markets to appeal to local customers. The company has also experimented with alternative food choices such as plant-based burgers and other meat alternative products.
• Merchandise Items: McDonald’s does not sell food and beverages alone. It is also famous for its Happy Meal brand which is a children-focused set meal that includes food and beverage items and a Happy Meal toy. It has been partnering with other brands such as the Walt Disney Company and Warner Bros. to produce and sell branded toys and other collectives while also producing and selling its own brand of merchandise items that range from toys to apparel and accessories.
• Value-Added Services: The company also has services that supplement its main restaurant operations. These include its drive-thru service brand called the McDrive, its online delivery service platform coursed through its website and mobile app called McDelivery, a special rewards and loyalty program called the MyMcDonald’s Rewards, and other auxiliary services such as free Wi-Fi, paid charging stations for electric vehicles, and McDonald’s PlayPlace in selected stores.
2. Pricing Strategy
Central to the fast food concept are pricing strategies focusing on affordability in comparison to other types and forms of restaurants. Several fast-food companies utilize value pricing while others have adopted penetration pricing, customary pricing, and bundle pricing strategies while others utilize a combination of both or more.
The specific pricing strategy of McDonald’s involves a combination of value-based pricing, psychological pricing, and bundling pricing strategies. It has also been aligned with its “Think Global, Act Local” approach to both marketing and business management to ensure that the prices of its food products are affordable to a particular local market.
For example, to enter and prosper in a particular local market, its prices should be different from the prices it uses in countries in higher income brackets. This is value-based pricing that involves a customer-focused approach to determining prices based on how the consumers perceive the value of a particular good or service.
McDonald’s has also demonstrated one of the best examples of psychological pricing. As an example, in the United States, a single order of its BigMac retails for USD 3.99 instead of USD 4.00 while a meal is priced at USD 5.99 instead of USD 6.00. The logic behind this scheme is that certain prices have a psychological impact that influences purchasing habits.
The company also applies bundle pricing or price bundling. It combines two or more products and sells them at a lower price. The individual price of each product is a bit higher. This pricing strategy provides consumers with a bigger perceived value per purchase and simplifies their buying experience while enabling the company to sell low-sale products.
3. Place or Distribution
Remember that McDonald’s has a presence in different countries around the world. Some of its stores are owned and operated by the company itself and most are owned and operated by independent business organizations through franchising. Franchising is central to the distribution and overall marketing strategy of McDonald’s.
The company charges licensing and franchising fees. It also purchases real estate properties and leases them to its franchisees. Some of these franchisees are big businesses capable of setting up and operating different stores. The entire scheme represents its entire revenue model while also enabling it to reach local markets in different parts of the world.
Part of its distribution strategy is out-of-store dining coursed through its delivery services. The company maintains an official website and mobile app that allow its customers to place orders and have them delivered to their doorsteps. It also partners with delivery service providers such as Uber Eats and DoorDash to maximize its reach.
4. Promotion Strategy
Another critical element of the marketing mix of McDonald’s is its multi-faceted promotion strategy that demonstrates one of the best examples of an expansive integrated marketing communication. It uses advertising to push its brand and products to the customers while supplementing it with sales promotion and public relations.
Its promotion mix uses different channels or mediums of communication. These include traditional media and digital media, outdoor and in-store displays, and special public events. The following is its promotional mix:
• Advertising: It places advertisements on traditional media such as print and television, as well as outdoors, and in digital channels such as the ad networks used by digital publishers and social networking sites or social media.
• Public Relations: The company maintains its brand equity and brand reputation through press or news released coursed through its media partners, as well as through its different corporate social responsibility programs and initiatives.
• Endorsements: It also hires celebrities or public figures to promote its products or serve as its brand ambassador. The company taps local celebrities in local markets to make it more relatable to a particular target market.
• Sales Promotion: The company has a loyalty and rewards program. It also develops and deploys special sales promotions for a particular season and as part of moment marketing such as International Burger Day or anniversaries.