Question 1 A crucial component of the marketing process is the customer driven marketing strategy. An outside-in view is adopted here in order to focus on satisfying the needs of customers. Marketing management must begin with a well-defined market and be customer needs focused to then “integrate all marketing needs that affect customers” (Armstrong,Adam,Denize and Kotler 2012, pg 14-20 Principles of marketing 5e, Pearson group Australia). Careful customer analysis is needed in the present competitive marketplace in order to gain a more thorough understanding of customer needs and wants. Customer analysis will assist in gaining competitive advantage by delivering greater value. There are four key components of customer driven marketing strategy can be seen through the franchise McDonalds. These are market segmentation, market targeting, market differentiation and finally market positioning.
The first factor of customer driven marketing strategy is market segmentation. This is when the market is divided into distinct groups of buyers with different needs, characteristics and behaviours. Market segmentation narrows down groups who might require separate products and marketing programs. Segmentation is divided into geographic, demographic, psychographic and behavioural market segments consisting of “consumers who respond in similar ways to a given set of marketing efforts” (Armstrong,Adam,Denize and Kotler 2012, pg 53 Principles of marketing 5e, Pearson group Australia). It can be said that McDonalds incorporates the demographic form of segmentation as its main target segments are young children, youth and families.
The second factor is market targeting, which involves evaluating the appeal of profitably generating the greatest customer value of each market segment and then selecting one or more attractive segments to enter. This is when marketers may choose to serve one or few segments. Marketers who focus on one segment, “specialise in serving customer segments that major competitors overlook or ignore” (Armstrong,Adam,Denize and Kotler 2012, pg 53 Principles of marketing 5e, Pearson group Australia) therefore developing market niches. Alternatively, marketers can choose to serve several related segments with the same basic wants. McDonalds serves more than one segment as it appeals to young children, youth and families because it is place where these demographics can enjoy eating and entertainment.
The third and final customer driven marketing strategies are market differentiation and positioning. Market differentiation is when the product or service is distinguished from other market offerings in order to create superior customer value. This involves identifying “customer value differences that provide a competitive advantage” (Armstrong,Adam,Denize and Kotler 2012, pg 53 Principles of marketing 5e, Pearson group Australia). Offering greater customer value may be charging lower prices than competitors, or offering more benefits to justify increased prices. Positioning refers to the process of arranging a product to “occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers”. Greater advantage in a target market is gained by distinguishing products from competing brands, thus justifying why shoppers pay somewhat more for one brand over the other. McDonalds has differentiated itself from its competitors by offering variety and choice in its menu, as well as redecorating its restaurants, and providing amenities such as free wireless internet access and flat screen TVs for entertainment while eating just to name a few. McDonalds has positioned itself as a superior franchise that continues profitability in economic terms and customer satisfaction. It has achieved this through a customer focused approach and this is evident in the 2008 stock gain by almost 6 percent when other franchises were experiencing the worst loss since the great