Marketing Strategy Of Mcdonald's Pricing Strategy

Pricing Strategy

McDonald’s pricing strategy involves price bundling combined with psychological pricing. In price bundling, the company offers meals and other product bundles for a discount.

In psychological pricing, McDonald’s uses prices that appear to be significantly more affordable, such as $__.99 instead of rounding it off to the nearest dollar. (MEYER, McDonald’s Marketing Mix (4Ps) Analysis, 2015)

Distribution plan

McDonald’s restaurants are the most prominent places where the company’s products are distributed. This element of the marketing mix indicates the venues or locations where the firm’s products are offered. McDonald’s main places for distributing its products are as follows:

• Restaurants

• Kiosks

• Website

This element of the marketing mix defines the approaches used to communicate with the customers. McDonald’s uses the following tactics in its promotional mix:

• Advertising

• Sales promotions

• Public relations

• Direct selling

Advertisement

McDonald’s advertisements are the most notable among its promotion tactics. The company uses TV, radio, print media and online media for its advertisements. (MEYER, McDonald’s Marketing Mix (4Ps) Analysis, 2015)

Sale promotion

McDonald’s also uses sales promotions to draw more customers to its restaurants. For example, company gives toys to kids on happy meals, the company offers discount coupons and freebies for certain products. (MEYER, McDonald’s Marketing Mix (4Ps) Analysis, 2015)

Public relation

McDonald’s do public relations activities help promote the business in target market. For instance, the Ronald McDonald House Charities and the McDonald’s Global Best of Green environmental program support communities along with boosting the goodwill of the brand. (MEYER, McDonald’s Marketing Mix (4Ps) Analysis, 2015)

Direct

This is especially so because of the lack of regional or global alliances among suppliers.

• Low forward vertical integration (weak force) In relation, most of McDonald’s suppliers are not vertically integrated. This means that they do not control the distribution network linked to McDonald’s facilities.

• High overall supply (weak force) The relative abundance of materials like flour and meat reduces suppliers’ influence on McDonald’s.

There is no need to anything about it (GREGORY, 2015)

Reason behind threat of substitutes or substitution being a strong threat

• High substitute availability (strong force)

There are many substitutes to McDonald’s products, such as products from artisanal food producers and local bakeries. Consumers can also cook their food at home.

• Low switching costs (strong force)

It is also easy to shift from McDonald’s to these substitutes (low switching costs).

• High performance-to-cost ratio (strong force)

These substitutes are competitive in terms of quality and consumer satisfaction.

In order to face this threat McDonalds should do product quality improvement. (GREGORY, 2015)

Reason behind threat of new entrants being a moderate threat

• Low switching costs (strong