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Marketing Mix Paper

McCarthy (1975) formulated the concept of the 4Ps - product,


price, promotion, and place marketing mix. For many years these
have been used as the principal foundation on which a marketing
plan is based.

Pricing:
Determining the price for a product is a complex and inexact
task, frequently involving trial-and-error decision-making. This
process is often even more complex in international marketing.
Prices may be quoted in the company’s currency or in the
currency of the foreign buyer. Here we encounter problems of
foreign exchange and conversion of currencies. As a general rule,
a firm engaged in foreign trade whether it is exporting or
importing-prefers to have the price quoted in its own national
currency. If the company deals in a foreign currency and that
currency declines in value between the signing of a contract and
the receipt of the foreign currency, the seller incurs a loss.
Similarly, a buyer dealing in a foreign currency would lose money
if the foreign currency increased in value before payments were
made. The risks from fluctuations in foreign exchange are shifted
to the other party in the transaction if a firm deals in its
national currency.
Product
This mix defines the characteristics of product or service
that meets the needs of customers.

Promotion
The goal of advertising is the same in any country, namely to
communicate information and persuasive appeals effectively. For
some products, the appeals are sufficiently universal and the
markets are sufficiently homogeneous to permit the use of very
similar advertising in several countries. It is only the media
strategy and the details of a message that must be fine-tuned to
each country’s cultural, economic, and political environment.
However, care must be taken to recognize when differences in
national identity and characteristics are sufficient to require
specialized advertising in a particular country.

Place
The route of distribution or the distribution channels shall
be well defined for getting the product or service to the
customer. The strategy shall include location, as it holds true
for new products more so than any other type of product. The
consumers have to be well familiarized with the product and the
ways they can buy it.

4-Ps in McDonalds
Product
One of the aims of McDonald’s is to create a standardized set
of items that taste the same whether in Singapore, Spain or South
Africa. McDonald’s learned that, although there are substantial
cost savings through standardization, being able to adapt to an
environment ensures success. Therefore the concept of “think
global, act local” has been clearly adopted by McDonald’s.
Adaptation is required for many reasons including consumer
tastes/preferences and laws/customs. There are many situations
where McDonald’s adapted the product because of religious laws and
customs in a country. For example, in Israel, after initial
protests, Big Macs are served without cheese in several outlets,
thereby permitting the separation of meat and dairy products
required of kosher restaurants. McDonald’s restaurants in India
serve Vegetable McNuggets and a mutton-based Maharaja Mac (Big
Mac) (Web, 1). Such innovations are necessary in a country where
Hindus do not eat beef and Muslims do not eat pork.
There are also many examples of how McDonald’s adapted the
original menu to meet customer needs/wants in different countries.
In tropical markets, guava juice was added to the McDonald’s menu.
In Germany, beer is sold as well as McCroissants. In Thailand,
McDonald’s introduced the
Samurai Pork Burger with sweet sauce. These are all examples of
how McDonald’s has adapted its product offer in international
environments.

Place
McDonald’s currently has over 30,000 restaurants in 119
countries across the world (Web, 2). McDonald’s continues to focus
on managing capital outlays more effectively through prudent and
strategic expansion. In 1998, the company added 1,668 restaurants
system-wide (whether operated by the company, franchisee or joint
venture), compared with 2,110 in 1997 and 2,642 in 1996.
McDonald’s realizes the potential for growth in international
markets and plans to benefit from lessons that they learned in the
USA.

Price
McDonald’s has realized that, despite the cost savings
inherent in standardization, success can often be attributed to
being able to adapt to a specific environment. This is indeed the
case with its implementation of its pricing strategy, which is one
of localization rather than globalization.
McDonald’s has had to come up with different pricing
strategies for different countries. More importantly, rather than
just having a different pricing policy for the Big Mac, McDonald’s
has had to select the right price for the right market.

Promotion
Promotion, or the marketing communications mix, was seen by
Kotler (1994) as consisting of five major tools:
(1) Advertising;
(2) Direct marketing;
(3) Sales promotion;
(4) Public relations and publicity; and
(5) Personal selling.
Using these tools, McDonald’s looks to localize its marketing
communications strategy as it needs to consider the enormous range
of cultural and other differences that it would be faced with in
each country (Web, 3). It needs to analyze consumers’ attitudes
towards its product, usage patterns and ethnic, moral and
religious considerations in that environment. Although the idea is
to promote McDonald’s as a global image, McDonald’s focuses on the
needs of the communities they are entering. In a communications
context, the maxim “brand globally, advertise locally” (Sandler
and Shani, 1991) is the McDonald’s promotional strategy.

Conclusion
After analyzing the marketing mix of McDonald’s, it is clear
that the company can be said to be `global’, i.e. combining
elements of globalization and internationalization. McDonald’s
have achieved this through applying the maxim, `think global, act
local’ (Ohmae, 1999), to all the elements of the marketing mix.

References

McCarthy, J. (1975), Basic Marketing: A Management Approach,


Irwin, Homewood, IL

Ohmae, K. (1999), Managing in a Borderless World, Harvard


Business Review, May/June,

Sandler, D.M. and Shani, D. (1991), Brand Globally but


Advertise Locally? An Empirical Investigation, International
Marketing Review, Vol. 9 No. 4

Web, 1: McDonalds India


http://www.mcdonalds.com/countries/india/index.html
(August 30, 2003)

Web, 2: McDonalds USA


http://www.mcdonalds.com/countries/usa/corporate/info/faq/index.ht
ml (August 30, 2003)

Web, 3: McDonalds Approach to Marketing


http://www.bized.ac.uk/compfact/mcdonalds/mc29.htm
(August 30, 2003)