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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 “nonhamburger 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.
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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
This consists of advertising, sales promotion, publicity, personal selling, public relations
and events. 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.
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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 service
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 “drivethru” 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.
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The Marketing Plan
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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?
.Development, packaging, branding, and research. They also have to consider price and
what type of pizza people want
What are 2 tangible and 2 intangible characteristics of the McPizza?
.Tangible- taste of pizza, how the box looks
.Intangible- The name, the price
2. Price (1)
How did they set their price? Approximately how much did it cost to buy a small and
large pizza?
.The small pizzas were the same price as their burger and fries while lage pizzas are sililar
in price to pizza hut and other competitors
3. Marketing Communications (3)
How did McDonalds promote their new McPizza? Divide your answers into advertising,
sales promotions and public relations
.Advertising: TV ads and billboards
.Sales Promotion: Taste testing
.Public Relations: Media coverage(free advertising)
4. Distribution (2)
Why was distribution of the McPizza tough for McDonalds? Why did it fail?
.Its because it was hard to outfit a kitchen with the ovens they needed plus the big pizza
boxes didn’t fit through the Drive-thru window
Search the internet for some more obscure products offered through out the world in
McDonalds that are not offered here. Name 2.
.Chicken Maharaja Mac
.McLobster
Why do you think they are not offered here in British Columbia?
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