Marketing Design and Innovation - Essay Example

? Marketing design and innovation (Management Report) Introduction The success of international marketing strategies strongly relates to the ways in which companies design and promote their products. Any errors in designing products to meet customer requirements and evolving market trends can lead to failure in capturing market shares and loss in revenues for the companies. The international environment provides the organization with the scope of marketing products to both local and foreign markets. Multiple strategies are adopted by companies to promote their products to these markets either through standardization of products launched in both local and foreign markets or through adaptation in design and features to match the tastes of the foreign consumers (Hill & Allen, 2007). While standardization in design and features provide the customers with a uniform image that is attached with the product, it may fail to satisfy their needs that are influenced by local environment and cultural factors. Hence localization or adaptation to local tastes and preferences is considered a feasible solution by marketers for promoting market shares and growth (Lamb, Fair & McDaniel, 2009). The paper analyses the marketing design of McDonalds in international markets and how the company has adapted its flavors to match the tastes of the local customers. The study of McDonalds presents interesting case where popular global brands transform their product attributes to meet the local tastes of the region in which they promote their brands. This exemplifies the fact that marketing strategies are subject to local pressures that are shaped by existing cultural environment, social backgrounds, economic conditions and religious sentiments. The McDonalds have transformed itself from its well known range of chicken burgers in US to McVeggie burgers in Indian markets. The next few sections highlight the ways in which McDonalds has adapted its burgers to drive customer satisfaction and deliver value to its customers. McDonalds – the global brand McDonalds is one of the largest chains of fast food restaurants selling burgers, French fries and host of savories since 1940. The business started with the opening of a fast food outlet in California in the year 1940 and since then the company has grown to become a household name with its presence across different countries (Roth, 2010). The success of the brand is largely attributed to its flexibility in product design and innovation in tastes that has ensured a satisfied customer walking out of its outlets. “In Germany, McDonalds serves beer with meals. In Israel, the first kosher McDonalds opened in Jerusalem in 1995. In Arab countries, the chain used Halal menus” (Paul, 2008). The respect for local tastes and cultures have earned the company its reputation and contributed to its success in global market expansion strategies. The company operates through a number of franchisees across different market regions. Innovation in product design and marketing mix are key determinants of the success behind McDonalds. The fast food service chain gained customer loyalty and trust through its creativity in offering new range of products and flavors. McDonalds recognizes the fact that different cultures support varying customer needs and tastes. It is important to identify the distinctiveness in tastes and adapt its flavors to suit the local customer choice and preference. Market demand and competitive advantage The market demand for any product in any region is influenced by the consumer demographics of the region, industry competition, pricing, quality, and service efficiency of the companies. The competitive environment is one of the key aspects influencing market demand for any product. “Moving from a product and sales philosophy to a holistic marketing philosophy however, gives them a better chance of outperforming competition. And the cornerstone of a well-conceived marketing orientation is strong customer relationships” (Kotler, 1972). McDonalds operates in a highly competitive industry that has new players vying for market shares in the fast food consumer segment. Pizza Hut, Dominos, KFC are some of the leading competitors that are well recognized by customers across the globe. Adaptation in product design and marketing communication strategies have been the stronghold of the company’s strategies in promoting its competitive advantages. The company relies on its extensive consumer research and market needs analysis for promoting its services across different market regions. It is important that firms understand consumer behavior, expectations and perceptions of the brand before adapting the products to meet their needs and demands (Doole & Lowe, 2007). The menu offered by McDonalds in its Indian outlets reflects the tastes and preferences of the Indian consumers. The introduction of vegetarian items in the menu and innovation in its product design to match the tastes of the local consumers has contributed to its successful operations in the country. The benefits of such strategic initiatives and innovative practices are reflected in the growth in market shares across countries and the growing popularity of the McDonalds brand name. Consumers in the market of these developing countries can be totally different from that of developed countries in terms of needs, standards and behaviors. The ultimate aim for an organization is to achieve customer satisfaction. McDonalds has promoted customer satisfaction and loyalty through enhanced customer experience that delivers according to the expectations of the customers. For a company to stay successful over a long period of time, it is important to build customer loyalty. Loyal customers always come back for more and do not switch brands. They are more likely to buy new related products that the company introduces. One of the strategic focuses of the company is on pioneering changes in the fast food industry to accommodate the tastes of local consumers. The fast food industry is witnessing a radical change in consumer taste and preference. Health conscious consumers are more alert of what they eat and how it can affect them (USDA, 2004). Low calorie burgers and sandwiches are offered in addition to the regular menu items. This offers the customers with choice to healthier meal options. Customer Segmentation Customer Segmentation is perhaps the most important segment in the FMCG industry. McDonalds have also realized this key factor and planned their customer orientation and segmentation in a highly professional manner. They have segmented the customer by the age factor where they have targeted children, teenagers and young urban families. They have devised ways by which kids can be attracted towards their outlet. They have made play zones where the kids can have a section for playing. The idea is to have fun as they eat and the young parents also look for some places where they can spend quality time with their friends and families while their kids are enjoying themselves in these play zones. McDonalds have also innovated by introducing meals for children called ‘Happy Meals’ where the kids get to have toys like hot wheels, cartoon and animated Cds and Dvds from Walt Disney with whom they have tied up. The teenagers group have also been carefully studied and devised, their meal prices are affordable and they get wireless services so that they can get connected to facebook and other networking sites as they spend their time in McDonalds. The joints have studied the teenage segment well as they know what they like, what they dislike. Getting them Wifi connectivity at all the outlets was extremely necessary so that they can connect with everyone. If they feel that they have all the facilities of the modern world combined with extremely competitive and affordable prices, they will make McDonalds a favored destination. Understanding the customer, their age factor and their preferences becomes the key target points for McDonalds. They had started off in India as a joint catering to urban middle class, but slowly they understood the market, their customers and have come up with the affordability, innovative ideas for the target young age segment without compromising on the quality, hygiene, overall ambience of their outlet. This has made McDonalds the preferred destination. In all the major shopping malls in India, McDonalds has a joint and the first thing which greets the young visitors is the joker sitting in front of the outlet. The kids get attracted towards them, and then they find a play zone where they can play and have a great time. This innovative practice has seen a surge in the sales of the outlet and is a perfect example of how much customer segmentation can change the face of the business and the way they operate. Communication Communication is another important area where McDonalds have stressed the need to effectively communicate with its target customers. That way they get to know the customer’s taste, their preferences, their rating of their ambience and hygienic conditions, the quality of their food. McDonalds regularly take feedback from their customers by getting them to fill a small feedback form where they can rate their outlet. The food giant believes that marketing needs customer orientation and communication plays an effective part in the advertisement of their products. They believe that effective advertisement can be achieved with three main objectives; one is that people know their products, second is that they have a positive attitude or approach towards their product and third is that they remember their products. Advertisement and Communication with the customers goes hand in hand as the most important advertising is the word of mouth and referral of the customers. When McDonalds had started in India, they had kept their prices to cater to the affluent class. Slowly on entering the Indian market, McDonalds started communicating with their customers and the people in general to understand the price competitiveness of their target market. They saw a huge volume but the price sensitivity was also a big issue. Slowly they started changing their price strategy where they became more affordable, catered to different ages, started innovative practices to gain roots in India. They communicated well with the young urban families to know their problems, their food preferences, the ambience and hygiene they look for. McDonalds have never compromised with their ambience and hygiene and have always given the best of quality. They have communicated well for their marketing and promotion strategies to have a good base and they have grown on this foundation. McDonalds have trained their staff very well so that they understand the importance of communication, get to know their customers well, have a helping attitude, being polite and somber, take care of the kids, have chairs for the kids, and maintain their play zones. All these training and constant communicative skills have changed the face of the joints and they are humming in the positive nature of their work which has seen a surge in their revenue. Conclusion McDonalds have come a long way since they launched in 1940. They opened their outlets in the major countries and since then have constantly innovated and marketed themselves to come out as a major food joint in developing and emerging markets like India. “The company operates about 160 restaurants in India. All McDonald's outlets are owned by its two joint venture (JV) companies in India (Hardcastle Restaurants and Connaught Plaza Restaurants)” (Fine Food India, 2009). Interactions with the customers, getting to know their feedback, working with the customers to achieve their optimum satisfaction, innovativeness with marketing punch lines like ‘I’m loving it’ has made McDonalds a favorite food joint for customers all over the globe. Innovative practices like having play zones, giving toys; compact discs from Walt Disney have worked wonders for McDonalds who have seen a huge increase in their sales. This has enabled them to open a series of outlets in India alone. They have projected to open another 170 outlets by 2014. (Fine Food India, 2009). To conclude, it must be noted that McDonalds have followed the principles of marketing like the Marketing Mix 5 P’s and at the same time it has innovated according to the market, segmented their customers well with the kids, urban young families and the teenagers, which has made a huge difference in their sales and revenue. However, the fast food industry cannot ensure consumer loyalty since the interest of consumers is flickering. They always want to try something new and better variety of options in food that they consume (Schlosser, 1998). To serve the changing tastes of the consumer and maintain their interest the restaurant needs to constantly make changes to its menu card by adapting to their taste buds. The key to success lies in enhanced customer experience and satisfaction to increase returning customers for more. References 1. Bennett, Roger & Blythe, Jim 2005, International marketing – strategy planning, market entry & implementation, 3rd edition, Kogan Page Ltd. 2. Boztepe, S. 2005, User-value based product adaptation, Research paper. 3. Doole, Isobel and Lowe, Robert 2007, International Marketing Strategy, Cengage Learning EMEA. 4. Fine Food India 2009, McDonalds India to launch 170 outlets by 2014, available from http://www.indiafooddrinkexpo.com/news/mcdonalds_india_to_launch_170_outlets_by_2014 5. Hill, N. & Allen, R., 2007, Customer Satisfaction: The Customer Experience Through the Customer's Eyes, The Leadership Factor. 6. Keegan, Warren J. 2005, Global marketing management, 6th edition, Pearson Education Asia Ltd. 7. Lamb, C.W., Fair, J.F. & McDaniel, C. 2009, Essentials of marketing, South Western Cengage Learning. 8. Paul, J. 2008, International marketing: text and cases, Tata McGraw Hill. 9. Roth, M. 2010, McDonalds – going international, International marketing report. 10. Schlosser, E. 1998, Fast food nation: the true cost of America’s diet, Rolling Stone magazine, Issue 794. 11. USDA 2004, The demand for food away from home – full service or fast food?, United States Department of Agriculture report. Read More