McDonalds’ segmentation, targeting and positioning strategy

Username: ambrosesmith
Email: ambrose@deakin.edu.au

McDonalds recently launched a breakfast fashion range (Figure 1) consisting of a T-shirt, button-up dress and pyjama trousers each covered with McMuffins and hash browns (AdNews 2016).


Figure 1: McDonalds brekkie fashion range (Source: AdNews)

This move was a result of the All Day Breakfast campaign (Figure 2) where breakfast is now served all day long, beginning from February 2016 (Brown 2016).

all-day-breakfast
Figure 2: McDonalds All Day Breakfast campaign

How does the company decide on which products to become its main menu and the rest as limited time promotions? Carol Sagers, McDonald’s Director of US Marketing, provides us some insight:

There are two core strategies that all marketers should use. The first is target marketing: i.e. who are you talking to? The second is product positioning: i.e. what do you want them to think?” (YouTube 2013).

Successful companies don’t just start their marketing activities haphazardly. Iacobucci (2014) recommends her Marketing Framework, as shown in Figure 3. A company must come up with a Marketing Plan in which the components are:

  • Executive Summary
  • Situation analysis (5Cs)
  • Market analysis and strategies (STP)
  • Tactical plans (4Ps)
  • Appendices

marketing-framework
Figure 3: Marketing Framework (Source: Iacobucci 2015)

This blog focuses on Segmentation Targeting and Positioning of a company’s products/services using McDonalds as an example.

1. Segmentation
Segmentation is the dividing of a populations into groups according to certain characteristics. Dudovskiy (2016) claims that McDonalds uses these segmentations and segmentation criteria:

  • Geographical; region, density
  • Demographical; age, gender, life-cycle stage, income, occupation
  • Behavioural; degrees of loyalty, benefits sought, personality, user status
  • Psychographic; social class, lifestyle

However, Balaji et al (2016) maintain that McDonalds only uses demographic segmentation strategy with age as the criteria.

2. Targeting
Targeting implies choosing specific groups identified as a result of segmentation to sell products. How does McDonalds select/target the right segments? Iacobucci (2014) advices that marketers iterate between understanding corporate fit and having information about segment size and likely profitability. Dudoviskiy (2016) supplies the targets for the segments he proposed earlier (Figure 4).


Figure 4: Targets for McDonalds customers (Source: Dudovskiy 2016)

However, according to Carol Sagers (McDonald’s Director of US Marketing) the company seeks specific segments of its target population,and then customise or position their products to each segment. Unlike other big package goods companies that have brand managers for their various brands, McDonalds does not have a Big Mac manager or a salad group. Their marketing department consists of consumer segments; there can be a Director of Young Adults, a Director of Moms, a Director of African Americans, Hispanics etc (YouTube 2013).

Of course, there are limited time promotional meals where customers can be extracted from the existing customer segments e.g. young adults for AFL promotion,  mums buying for their kids for Kung Fu Panda promotion etc.

3. Positioning
Positioning refers to the selection of the marketing mix the most suitable for the target customer segment. Positioning is achieved via a manipulation of the marketing mix 4Ps, and the positioning matrix demonstrates that certain combinations make more sense than others (Iacobucci 2014). McDonald’s uses adaptive type of product positioning and accordingly, the company is engaged in periodical re-positioning of products and services according to changes in the segment (Dudovskiy 2016). The following is a direct quote from McDonald’s franchise strategy document:

McDonald’s has made itself to be the family friendly low cost restaurant in the fast food business. We have a narrow scope for a customer base and a low cost strategy” (McDonalds 2016).

4. Conclusion
McDonalds segments its customers according to the life-cycle stage and then positions itself as a family friendly low cost restaurant.

In my next blog, I will be discussing Product, Brand and New Product.

5. References

AdNews, 2016, This is not a drill – maccas has a fashion range, retrieved 11 April 2016, < http://www.adnews.com.au/campaigns/this-is-not-a-drill-maccas-has-a-fashion-range >

Balaji, M., Ghosh, R., Shah, J. 2016, McDonalds: behind the golden arches, retrieved 11 April 2016, < https://www.scribd.com/doc/11520753/Marketing-Strategies-of-McDonalds >

Brown, V. 2016, McDonald’s launch all-day breakfast across Australia, retrieved 11 April 2016, < http://www.news.com.au/lifestyle/food/eat/mcdonalds-launch-allday-breakfast-across-australia/news-story/dd61284c91f12a28cfdd06bfc58771f0 >

Dudovskiy, J. 2016, McDonalds segmentation, targeting and positioning, retrieved 11 April 2016, < http://research-methodology.net/mcdonalds-segmentation-targeting-and-positioning/ >

Iacobucci, D., 2014, Marketing management (MM4), South-Western, Cengage Learning, Mason.

McDonalds. 2016, McDonald’s franchise strategy, retrieved 11 April 2016, < https://sites.google.com/site/mcdonaldsfranchisestrategy/home >

YouTube, 2013, Segmentation, targeting, and positioning – McDonald’s, retrieved 11 April 2016, < https://www.youtube.com/watch?v=RcRFBVIvJHw >

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