The Marketing Mix



The Marketing Mix – McPizza

Performing only one marketing activity, such as creating a good packaging design, often is not nearly enough. Instead, all the various marketing activities play an important role in the marketing of a product. The selection of a method of physical distribution, for example, affects pricing, packaging, storage and inventory management, and channel selection (that is, deciding which methods of distribution would best deliver a product or ser vice to the target market). Marketers couple marketing activity like package design with distribution and promotion activities. It is the effectiveness of the mixing of these activities that defines the success or failure of any marketing campaign.

The marketing mix is usually divided into four major categories: product, price, distribution, and marketing communications. In the past these categories have been called the Four Ps of Marketing. A successful marketing mix is one that combines these elements.

An example of a marketing failure that can be analyzed using the marketing mix is McDonald’s Restaurant’s introduction of pizza in Canada in March of 1992. While the McPizza lasted for several years, it was not a profitable item and was finally dropped from the menu. However, the costs involved in researching the market, developing the new product, refitting the restaurants to produce the product, advertising the new product, and training the staff in the new processes were enormous. The failure wasn’t limited to just the pizza product; it also affected the McDonald’s image and reputation in the fast-food market.

The Product Mix

Product mix denotes product development, packaging, branding, and research. To identify it as part of the McDonald’s product mix, the pizza was branded with the “Mc” prefix. The restaurant had experienced success with Chicken McNuggets and the Egg McMuffin earlier as “non-hamburger and fries” menu additions and McDonald’s had no reason to assume that McPizza would fail. The very fact that the brand was called McPizza, however, set up a problem with company identity. Most consumers associated McDonald’s with hamburgers and felt that pizza was a poor menu fit.

The packaging was a standard pizza box. The box protected the pizza, established the pizza look for the consumer, and fit the product mix very well. McDonald’s researched the McPizza for years. Market research showed that pizza was the company’s biggest competitor. Product research provided the technology to make pizza quickly to match the McDonald’s image of fast food. This led to the development of new pizza ovens and to the recipe for the product itself. Consumer research provided positive reactions to the taste of McPizza. Research also indicated that this new product would require a shift in consumers’ perceptions of the restaurant. The company felt that it could deal with these concerns in the promotion mix.

Marketing Communications Mix

Business magazines, television news reports, and newspaper articles provided free media coverage of the product launch and it became a significant news story (public relations). The media gave McDonald’s franchise owners and corporate executives an opportunity to explain the reasoning behind the menu addition and to reassure their customers that McDonald’s was still in the hamburger business. Television advertisements for the new McPizza explained the new ovens and attempted to generate excitement for the product. Sales promotion efforts involved free samples, launch parties, and store banners.

Pricing Mix

Even the price seemed right. The consumer could buy a small pizza for the same price as a hamburger and fries. The large pizza was competitively priced with those sold by Domino’s and Pizza Hut. The marketing team felt McDonald’s could make up for its exceptionally high up-front costs within a few years of the product’s introduction. However, when sales slowed down after the initial promotional efforts had encouraged most pizza consumers to at least try a McPizza, the product attained neither the expected sales volume nor the profitability levels that McDonald’s had hoped for.

Distribution Mix

Distribution mix includes physical distribution, storage, inventory management, and channel selection. Most McDonald’s restaurants are small spaces, especially behind the counter in the food preparation area. These areas are designed for efficiency - equipment is placed close together to cut down on wasted movement and energy. It was difficult for the restaurants to find room for the new pizza ovens and the ingredients for the new pizzas. They had to update their supplies inventory and streamline their delivery system to ensure that pizza dough, pepperoni, tomato sauce, and other ingredients were shipped to the stores as effectively as the Big Mac special sauce or the bags of frozen French fries.

Employees were trained in the use of the new pizza ovens, in pizza preparation, and in pizza sales, with the goal of maintaining the usual high standards of customer ser vice McDonald’s insists upon. The sales force was ready for the customers.

McDonald’s had spent billions of dollars over the course of decades convincing consumers that it was a fast-service hamburger restaurant chain. Customers in “drive-thru” lines were now asked to park their cars for 10 minutes and wait for their pizza. Hamburgers and French fries, delivered in 60 seconds, were cold. The large pizza box didn’t fit through the drive-through window of most stores. Families ordering a pizza and a Happy Meal found that their children were finished eating before the pizza arrived. In these and other ways, the introduction of pizza changed the distribution channel, and altered how the consumer perceived McDonald’s. In the end, the marketing mix conflicted with what the restaurant had worked so tirelessly to attain. McPizza was dropped from the menu.

Epilogue

However, McDonald’s continues to adjust its marketing mix. Today, it uses its franchise distribution system as a central feature of its product and distribution mix. Local stores are encouraged to develop products for local markets and many are finding some success with them. The McBrat, bratwurst with sauerkraut and onion, is popular in Wisconsin and Minnesota. Similarly, the McLobster sandwich is a popular addition to the menu during tourist season in Atlantic Canada.

The Marketing Plan

• Note: All answers do not necessarily appear right in the case study

1. Product Mix (4)

What were some of the decisions that had to be made about the PRODUCT MIX for the McPizza? Mcdonalds decided to name their new product the McPizza, which was a problem with their company identity, and the packaging was a standard pizza box._____________________________________________________________________________________________________________________________________________________________________________________

What are 2 tangible and 2 intangible characteristics of the McPizza?

The large pizza has a bigger box that doesn’t fit throught the windows and has a lot of swag. The price and how you feel when you eat it____________________________________________________________________________________________________________________________________________________________________________________

2. Price (1)

How did they set their price? Approximately how much did it cost to buy a small and large pizza? The costs involved in researching the market, developing the new product, refitting the restaurants to produce the product, advertising the new product, and training the staff in the new processes were enormous. A small pizza for the same price as a hamburger and fries. And the large went for around the same price as a large pizza at most pizza place such as pizza hut and Dominos.

__________________________________________________________________________________________________________________________

3. Marketing Communications (3)

How did McDonalds promote their new McPizza? Divide your answers into advertising, sales promotions and public relations

Business magazines, television news reports, and newspaper articles provided free media and billboards and commercials. ________________________________________________________________________________________________________________________________

4. Distribution (2)

Why was distribution of the McPizza tough for McDonalds? Why did it fail?

Most McDonald’s restaurants are small spaces, especially behind the counter in the food preparation area. These areas are designed for efficiency - equipment is placed close together to cut down on wasted movement and energy. It was difficult for the restaurants to find room for the new pizza ovens and the ingredients for the new pizzas. They had to update their supplies inventory and streamline their delivery system to ensure that pizza dough, pepperoni, tomato sauce, and other ingredients were shipped to the stores as effectively as the Big Mac special sauce or the bags of frozen French fries.

Employees were trained in the use of the new pizza ovens, in pizza preparation, and in pizza sales, with the goal of maintaining the usual high standards of customer ser vice McDonald’s insists upon. The sales force was ready for the customers._________________________________________________________________________________________________________

Search the internet for some more obscure products offered through out the world in McDonalds that are not offered here. Name 2. Mc Arabia, and Arch deluxe

_________________________________________________________________________________________________________________________

Why do you think they are not offered here in British Columbia?

The Arch deluxe didn’t really work out because they were selling it to the kids and should have been selling it to people who have money. The Mc Arabia didn’t was simply sold overseas to appeal to people overseas it wouldn’t work because it apeals to people overseas and not us.___________________________________________________________________________________________________________________________________________________________________________________________________________________________________________

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