Marketing Planning: Mc Donalds Case - Essay Example

?Assignment 2- Marketing Planning Contents Contents Introduction 2 Appendix 3 Appendix 2 4 Outcome 4 Changing Perspectives in Marketing Planning 4 Organisations Capability for Future Marketing Activity Planning 5 Techniques for Organisational Auditing & Analysis of External Factors Affecting Marketing Planning 7 Organisational Auditing and Analysis of External Factors Affecting Marketing Planning 7 Outcome 2 10 Main Barriers to Marketing Planning 10 Overcoming the Barriers to Marketing Planning 11 Outcome 3 12 Marketing Plan 12 Situational Analysis 12 Profit Potential 13 Marketing Strategy 14 Tactical Programs 14 Importance of Marketing Planning in Strategic Planning 15 New Product Development Techniques 16 Justify recommendations for pricing policy, distribution and communication mix 16 Distribution 17 Communication Mix 17 Effective Implementation of Marketing Plan 17 Outcome 4 17 Ethical Issues Influencing Marketing Planning 18 Organisational Response to Ethical Issues: Examples 18 Consumer Ethics and the effect it has on marketing planning: Examples 19 References 20 Introduction The report is an academic and applied analysis on the importance, need, process, usage of marketing plan. It also contains a brief marketing plan for a new product concept for Mc Donald’s. Also, a brief discussion regarding the ethical issues affecting the conception and implementation of marketing planning has been included in the concluding part. Appendix 1 Mc Donald’s is one of the leading retailers in food service and serves around 64million customers globally in 119 countries. Mc Donald’s entered UK in the year 1974. As of 2009 it has 1900 units all over UK. In 2011 its UK sales increased by a whopping 11% serving around 25 million customers. Their mission is to improve their service as well as the environment and build operations that are sustainable for the future market. The current leaders at the helm of the company are: Jim Skinner - CEO Vice Chairman and Chief Executive Officer, Don Thompson-President and Chief Operating Officer, Richard Floersch Executive Vice President - Chief Human Resources Officer, Doug Goare- President, McDonald's Europe, Jeff Stratton-Executive Vice President and Worldwide Chief Restaurant Officer, Gloria Santona- Executive Vice President, General Counsel and Secretary, Fred L. Turner-Honorary Chairman. The market the company operates is highly competitive and needs strong relationship marketing and brand salience to create and sustain a loyal consumer base. The company follows strict quality as well as cooking policy. The restaurants even have recreational fields for children. Their promotional tagline is “I am loving it”. And a lot of promotional activities have been targeted towards children.The most famous being their Happy Meal chains and associated assorted merchandise which mostly included characters and superheroes from super hit movies. Appendix 2 The Economic Conditions of UK – United Kingdom is undergoing huge reforms in the face of current economic crisis. Prime Minister Gordon Brown has particularly accused the banking sector for the current conditions. There is an increase in the unemployment rate as well as the pressure to maintain liberal business policies for immigrants from other countries. As per the data in the year 2008, the economy shrank by 1.5 percent. McDonalds and Obesity- Certain phrases like “I am fat and I am loving it” are doing rounds as the percentage of obese children is increasing and is currently more than 30 percent. This concern is being voiced worldwide. In fact in United States of America, two New York residents Ashley Pelman and Jazlyn Brad filed a lawsuit against Mc Donald’s, that their product Chicken McNugget was the prime responsible factor for their obesity. McDonalds has also responded by releasing a draft of their safe standards of food and cooking policy. They also released their food animal initiatives. Outcome 1 Changing Perspectives in Marketing Planning In terms of changing perspectives in marketing planning, the first dimension that comes into mind is the changing trends in marketing media. Traditionally marketing was heavily dependent on non personal communication via mass media like radio, television, billboards, etc. However, with the new era is seeing a spur in certain direct marketing activities like e-mail marketing, social media marketing, infomercials, etc. This has a huge impact on the marketing planning process, since the message encoding in non personal communication is different from that in personal communication. The budgets and effort requirement is also different. In case of social media marketing or website marketing or digital coupon offers etc, the marketing activity has to go on 24*7. The inflow of data and information should be continuous and customer queries or problems should be handled immediately. Organisations Capability for Future Marketing Activity Planning It must be remembered that the action plan incorporated in a marketing plan is always meant for a future time period. Therefore, an organisation has to rely much on their forecasting tools in order to develop a marketing plan. And the objectivity of such plan is inversely related to the limitations of those tools. Forecasting methods can be categorised into mainly two groups – Judgemental Methods and Statistical Methods. To plan the marketing activity for the current financial year, an organisation m\needs to rely on the following forecasts: Market Size Forecasts- Target market size depends on various factors, such as economic conditions, disposable income, shifts in consumer trends, mortality rate, age distribution, population, cultural variables, etc. These environmental variables are forecasted mostly by using econometric forecasting tools. Competitive Action Forecasting- This is a forecast regarding the actions and reactions of competitors. Mainly judgemental tools (expert opinions, role playing, experimentation) etc are used for this type of forecasting. Market Share Forecasts- Such forecasts are usually shaped by tools like judgemental bootstrapping, extrapolation methods, time series analysis, etc. Sales Forecasts- Consumer survey is required to develop a behavioural data. Methods like focus groups, test marketing, percentage of sales, etc are used. Demand Forecasts – Separate demand forecasts data can be developed for several product lines. Time series analysis, financial condition analysis, expert opinions, etc are used for the same. The selection of forecasting tool depends on the following factors: Required degree of accuracy Time Line Data Availability Product Life Cycle However, selection of the appropriate forecasting tool is not a simple process. The capability of an organisation, to plan its future marketing actions depends largely on the selection of these forecasting tools. If proper forecasting tools are not selected, then the marketing action plan created from the forecasted data would be ineffective and the marketing activity will be a failure. Developing a marketing plan is risky and time consuming. It is particularly difficult for a new product or new market or new organisation. A marketing plan is never a complete and absolute guideline for an organisation’s marketing operations. It should be continuously revised according to the changes in current market conditions. If the plan is not revised, then wrongly analysed or misinterpreted data, changing consumer trends, unrealistic financial projections (due to changes in the current environment) will be overlooked by the organisation. Thinking the marketing plan is absolutely rigid will be a bad strategy for any company. The concept of proactive market orientation has already come into being. Therefore, reactive marketing or rigid dependence on market planning is considered as a disadvantage in today’s scenario. Techniques for Organisational Auditing & Analysis of External Factors Affecting Marketing Planning The techniques of marketing audit that analyse the external forces affecting marketing planning are as follows: PESTEL Analysis- It is the environmental analysis and is done before the marketing process commences. This tool analyses all the macro environmental variables of the organisation. The tool is simple and helps in forecasting and strategy formulation. It also helps in identification of potential threats and opportunities in the environment. However, the forecasting may not be accurate and in some cases presumption affects the objective analysis. Five Forces- This is an analysis of the competitive environment. The focal point in this case is not a single product, or service, but the strategic business unit (SBU). It analyses the five forces critical to the competitive environment- Threat of new entrants, Bargaining power of suppliers, Bargaining power of customers, Threat of substitutes, Competitive Rivalry. Opportunities and Threats Analysis- This is a specific analysis of the opportunities and threats that may arise in the given time frame. This is a subjective analysis, but the findings should be precise and actionable. This type of analyses is comparatively flexible and can be applied to a variety of situations or market segments. Organisational Auditing and Analysis of External Factors Affecting Marketing Planning The market auditing techniques that analyses the external factors in the given situation are: PESTEL Analysis- the PESTEL Analysis for Mc Donald’s for a new product in UK are as follows: Political- This includes service laws, ecological policy, tariffs, and political stability. Particularly trade restriction policy can be a factor here. Economic- The fast food sectors like Mc Donald’s, although very popular, is not a necessity for the target market. Their success and sales largely depends on the disposable income of the target group. And with the recent stressful economic conditions of UK (refer Appendix 2), pricing strategy of the new product needs to be carefully conceptualized. Social- The social attitude towards fast food is an important factor. There is an increase in the health conscious segment of the population and the harmful effects of fast food are being increasingly discussed in various platforms. Refer Appendix 2. Environmental- The quality standard policies, health standard policies should be specifically met with. Besides, there should be proper power saving and garbage disposal procedures. Technological- This involves enhancing the speed of service, including online order and prompt delivery services, etc. Legal- The new product should be validated and in accordance with the various laws governing the food industry in UK, for example The Food Safety Act 1990, The General Food Law Regulation (EC) 178/2002, The General Food Regulations 2004 (as amended), etc Opportunities and Threats- The opportunities and threats analysis are as follows: Opportunities- The going segment of health conscious customers is a good opportunity. Besides, the inclusions of low cost menu, offering discounts and merchandise, more tie ups, are other opportunities. Threats- Threats of competition, recession, increasing negative discussions by consumer activities and health experts are some of the threats. Five Forces- The five forces analysis are as follows: Threat of Substitutes- In the current situation, the direct competitors of Mc Donald’s like KFC, or indirect competitors like the well known restaurants pose considerable threat of substitutes. Another concern is low cost restaurants or fast food centres offering similar menu. Threat of New Entrant- Mc Donald is one of the leading companies in this fast food franchise business. Besides, there are others like KFC, Pizza Hut, etc. There is considerable entry level barrier created by the strong brand salience, efficient cost structure, unique service format and strong bond of trust with the target customers. Competitive analysis- This is an oligopoly market with a very high degree of competition. Bargaining Power of Customers- Bargaining power of customers is low in case of such MNC’s. Bargaining Power of Suppliers- This depends on the product ingredient. If the ingredient is uncommon, then suppliers will exercise high bargaining power else vice versa. Outcome 2 Main Barriers to Marketing Planning There can be several barriers in a marketing planning process. Broadly they can be classified as: Cultural Barriers, Behavioural Barriers, Cognitive System & Procedure Barriers, and Resource Barriers. In terms of Malcolm McDonald’s ten barrier approach, we can detail them as: Confusion between tactics and strategy- This happens when the planner fails to distinguish between strategic and tactical marketing plans. Marketing Function vs. Marketing Operations - The marketing planning should be developed in such a way that it takes the end operations and customer satisfaction into consideration. Marketing Function vs. Marketing Concept- The manager should have clear concept regarding the differences between marketing, advertising, product management, sales management, customer relationship management. But more important is that the marketing planer or manager realises the inter dependency between these functions; else the marketing plan developed won’t be coherent. Organisational barriers- The organogram and hierarchical relations should be such that there is no confusion regarding the authority lines of who is implementing what part of the marketing plan. Lacking In-Depth Analysis- The information collected should be optimal, not too much, nor too less. Thus, information collection plan should be developed beforehand. Process vs. Output- The confusion between process and output makes the marketing plan impractical for implementation. Lack of Adequate Knowledge and Skills- A marketing planner should have in depth knowledge regarding the marketing concepts as well as the product or organisation for which the plan is being developed. Systematic Approach- Often there is no systematic approach in developing a marketing plan. The marketing plans for various SBU’s are diverse, making central co-ordination or assembling impossible. Failure to prioritise objectives- Each objective in a marketing plan leads to a number of tasks or surveys. Therefore the objectives should be kept minimal. Too many objectives lead to the development of a bulky plan that is ineffective. Hostile corporate cultures- This deters managing the marketing planning process effectively. Overcoming the Barriers to Marketing Planning The marketing planning barriers are required to be overcome. This can be done by following the certain steps: Overcoming Confusion between tactics and strategy- This requires the planner to first develop the strategic market plan for a time frame of 3 to 5 years, and then the operational or tactical plan, for the period of 1year. Overcoming the Marketing Function vs. Marketing Operations Barrier- For this the planner needs to constantly keep in mind to make the ultimate plan actionable, by keeping in focus customer needs. Overcoming the Marketing Function vs. Marketing Concept Barrier- Understanding inter relationship between several functions, and foremost marketing as a concept, is important. Overcoming Organisational barriers- The organisational operations should be targeted towards consumer segments rather than the organisational functions defined. In-Depth Analysis- Mandatory market audit is required; a proper tool for managing information systems should be created. Overcoming the Process vs. Output Barrier- A compendium of differential strengths and weaknesses is necessary, besides only the main influential factors should be mentioned in the marketing plan. Overcoming the Lack of Adequate Knowledge and Skills Barrier- From the line managers to the planners, everyone must be clear regarding the marketing tools. Overcoming the Lack of Systematic Approach Barrier- A set of written instructions and procedures should be there for, making the planning approach systematic. Overcoming the Failure to prioritise objectives Barrier- Development of an Objective Priority Matrix, by listing and classifying the objectives as significant, minor and major should be done in t beginning. Overcoming the Hostile corporate cultures Barrier- Active participation and assistance is the key to developing a proper marketing plan. Outcome 3 Marketing Plan Situational Analysis Product Description The product will be included in the saver menu. The name is Snappy Mushroom with Corns. Profit Potential The percentage of health conscious people are increasing in UK is increasing rapidly. The awareness percentage has increased to 67%, compared to 43%, according to the Food Standards Agency Survey. Also UK suffers from a high obesity rate (60.8% adults and 31.1% children). Health experts are blaming MNC’s like McDonald’s, KFC, etc particularly for the high rate of children obesity. Certain negative concepts like “I am fat and I am loving it” are also doing rounds in the market. Mushroom and corn are very high in nutritional value and at the same time tasty. Introducing a healthy product would attract as well as help to improve the brand image. This will attract both the vegetarians and health conscious segments. Besides, the vegetarian population in UK is also increasing. As of 2009, 7% to 11% of UK adults are vegetarians. Target Market The demography of target market is: Age- 5 to 60 Food Preference- Vegetarian, Partly Vegetarian, Snack Lovers. Lifestyle- Moderately Health Conscious Loyalty- Low, Medium and highly loyal segment Target Market Size- The minimal target market is approximately 4million (vegetarian + health conscious) Marketing Strategy The strategy would be to position the product as a unique blend of health and taste. Survey shows only 3million people (worldwide) eat at Mc Donald’s daily. The reason is the typical fast food menu, with low concentration on health. Most consumers feel eating out here daily; will take a toll on health. Therefore Snappy Mushrooms with Corns can be a product that can increase the daily frequency of customers. Tactical Programs Product The product consists of a primary and secondary ingredient respectively- Mushroom and Corn. Mushrooms have high protein content, with very low fat, calorie contents, no cholesterol and rich in vitamins. Mushrooms have anti-diabetic, antiviral and tumor inhibitions properties. Again sweet corns also have high amount of carbohydrate protein and are used for treating cardiovascular problems. Price The price of the product in London market would be ?4.50 and the item can be included in the Mc Saver Menu. Such pricing is also very effective in the current recessional situation. Place The product can be launched in Scotland area first, since that is the most health conscious segment of UK. Promotion Internet marketing, word of mouth marketing, billboards and television commercials would be the primary channels of promotions. People The staff should have knowledge regarding the nutritional values, health benefits, cost effectiveness and other USP’s of the product. Process The service time should be kept minimal, since this is a simple dish. Physical Evidence McDonald’ already has a good environment and friendly staff image. The same should be utilized for this product. Importance of Marketing Planning in Strategic Planning Strategic Planning is associated with all the functional aspects of business- marketing, human resources, finance, operations, etc. Marketing Planning is a part of strategic planning that helps to achieve the organisational strategies. Marketing Planning has a prior role in strategy planning, since it maintains the dynamic relationship between the organisation and its environment. The essentiality of marketing planning in case of strategic planning can be explained by the following: Competitive Advantage opportunities identification Strategic Commitment Resource Optimisation Performance Measurement New Product Development Techniques The techniques for new product development are as follows: Idea Generation- This is done by brainstorming or analysis of opportunities. Idea Screening- This focuses on practical implementation of the product and eliminates impractical ideas. Concept Testing- Presenting the product idea to the consumer and monitoring reaction Implementation- Analysing the costing and production details for the product. Prototype Development- Developing a prototype of the product to determine its feasibility. Commercialisation- Launching the product in the target geographical area. Justify recommendations for pricing policy, distribution and communication mix Pricing The cost of the dish will be approximately ?2.58 [? 1.58 (Mushrooms +Corn +Pepper) + ?1.00(Spices and Sauce)] per dish in London. Therefore the profit per dish is ? 1.92 per plate. [Note: Market Prices: Organic Mushrooms – ?3.5/Kg Corn – ?2.79/kg Pepper= ?1.97/kg] Distribution It would be uneconomical to launch the product all over UK at the same time. The ingredients of the product are very much handy, so the distribution chain is not an issue. Communication Mix Social media and online health forums are the primary targets, since internet is the platform where health conscious or vegetarian population can be directly identified. Effective Implementation of Marketing Plan For effective implementation of marketing plan following factors are necessary, and they have been included in the marketing plan: Cost Determination – the product costing is optimal. Product Resources- None of the product ingredients are rare, therefore the resources are feasible Pricing Strategy- The pricing strategy offers a high profit rate and simultaneously serves as an economical option for customers. Market Demand- Research indicates considerable market demand for healthy yet tasty food. Outcome 4 Ethical Issues Influencing Marketing Planning In the present scenario, there is a lot of external pressure on companies that necessitates ethical business or ethical behaviour. The consumer activity’s vociferousness has remarkably increased in last five years, especially in online mediums. Avoiding or putting less importance to such demands or pressure groups can have a heavily negative impact on the repute of the company. The spot light is mainly on marketing communications, since such communications are by definition “persuasive”. This aspect has a considerable impact on the development of the marketing plan. The planer should keep the ethical issues in mind and develop the strategies as well as the tactics. The planer has to keep in mind that the marketing activities are not, by any chance deemed deceptive or misleading. The marketer should not make promises to the consumer that is misleading. Following are some of the issues marketing planners should keep in mind: The marketing communications should not in any manner be deceptive, offensive The quality standards projected in the communications should be true The information gathered for formulating the marketing plan, should not, by any means, violate any individual privacy rights. Excessive performance pressures should not be allotted to the sales representatives. Organisational Response to Ethical Issues: Examples Example 1: Nestle- Nestle used a deceptive marketing strategy to increase its sales in third world countries. It hired untrained woman and dressed them as nurses and used them to distribute free samples. The free samples lasted long enough till the mother’s breast milk dried. Therefore, the mothers were forced to buy nestle, and being poor, they often mixed it with unhygienic water or diluted beyond prescribed limits- resulting in starved newborns. As a result in 1977, a worldwide boycott was started and the World Health Organisation outlined the International Code on the Marketing of Breast Milk Substitutes which was agreed upon and signed by majority of the countries. The boycott was suspended and re-launched and continues till date, due to Nestle’s poor management towards the situation. Example 2: Coca-Cola- Coca Cola has been subject of various discussions and ethical issues. The primary being the health issue, applying pesticides in the product, environmental issues, accused cartel with fellow competitor Pepsi. Another issue is that Coca Cola is considered as a representative of America. The brand is so connected with Americanisation that a tem Coca-Colanization is being has been used. The company has tried to use advertising and PR communications to neutralise various rumours such as it uses anti-Muslim slogans in advertising, etc. However, it has not been successful and more and more consumers have turned to the alternative Mecca Cola. Consumer Ethics and the effect it has on marketing planning: Examples The Nestle Boycott effected Nestle’s marketing plan and overall operations. Nestle now needs to comply with the International Code on the Marketing of Breast Milk Substitutes. According to Peter Brabeck-Letmathe, who is the CEO of Nestle they now conduct internal audits. Such audits evaluate whether the marketing campaigns and communications are in par with the guidelines. Their marketing plan is also audited. And in case of deliberate violation of the code, proper action is taken by the organisation’s management. Coca Cola was subjected to huge controversy in India, when in 2003, pesticides were found in the drink by Centre for Science and Environment. Coca Cola launched large scale advertising campaigns showing their manufacturing plan and nullifying the criticism to win their customer supports, after sales dropped drastically. Thus, it had to proactively revise its marketing plan completely, for required crisis management. References Luther,W.(2001). The marketing plan: how to prepare and implement it. AMACOM Simkin,L.(2008).Marketing planning : a workbook for marketing managers. South-Western Cengage Learning McDonald, M.(2010). Marketing plans: how to prepare them, how to use them. Wiley Wood, MB.(2004). Marketing planning : principles into practice, Prentice Hall Nathan, J. (2001) Sony, Houghton Mifflin Harcourt. Stadtler, R. (2010) Strategy Coursework – Sony Corporation, GRIN Verlag. McDonald's.Food.December 08 2011- http://www.mcdonalds.co.uk/ourfood/ Read More