Chapter 1

THE PROBLEM AND ITS BACKGROUND

Introduction

Filipino people really love to eat. Even if you go around the world, you

still look for a good food that can fulfil your eating needs whether its breakfast,

lunch, dinner, snacks at midmorning, and merienda in the afternoon. In every

occasion, there are foods in the table and every member of the family start to

interact with each other while consuming their food. Family bonding, friends

hangouts, meetings in the offices and company, or any occasion, there will

always be a food to share with. These may be some of the reasons why there

are a lot of fast food chains and restaurants in the Philippines.

There are many fast food restaurants in the world, but only one is

number one. McDonald’s has been consistently at the very top of all fast food

chains for a very long time. What made McDonald’s so successful was the

philosophy Ray Kroc developed, which was food that is over the highest quality,

a specific order of food preparation, making sure that every McDonald’s

location maintains high standards of cleanliness, and the last principle Kroc

created was value (Learn Languages Guide, 2017). As cited from McDonald’s

Fast Food Marketing Essay (2013), McDonalds Fast Food Company is among

the largest food service retail corporation. Known for its hot and fresh fries,
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hamburgers, burgers and soft drinks, McDonalds operates about 30,000

restaurants in over 199 countries.

"McDonald's brand mission is to be our customers' favorite place and

way to eat and drink. Our worldwide operations are aligned around a global

strategy called the Plan to Win, which center on an exceptional customer

experience – People, Products, Place, Price and Promotion. We are committed

to continuously improving our operations and enhancing our customers'

experience" (McDonalds Corporate, 2018).

On the other hand, marketing mix refers to the set of actions, or tactics,

that a company uses to promote its brand or product in the market. The 4Ps

that make up a typical marketing mix are Price, Product, Promotion and Place.

All the elements of the marketing mix influence each other. They make up the

business plan for a company and if handled right, can give it great success

(Coleman, 2018).

Background of the Study

According to J. Go and C. Go (2010), the marketing mix is one of the

two interrelated components of a marketing strategy, the other one being the

target market. It is more popularly referred to as the 4P's (Product, Price, Place

and Promotion) of marketing. It is a set of controllable and interrelated variables

composed of product, price, place and promotions that a company assembles

to satisfy a target group better than its competition. The marketing mix strategy

is choosing and implementing the best possible course of action to attain the
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organization's long-term objectives and gain customer bonding and competitive

advantage.

The products offered by McDonald's refers to the food being served to

the customers. The location of the establishment used in this study is at

Barangay Labuin, Santa Cruz, Laguna. The price of the products being offered

by the business establishment starts from fifteen pesos (e.g., ice cream cone),

the amount of the food ordered increases depending on the meal demanded

by a certain customer. McDonald's in Barangay Labuin, Santa Cruz, Laguna

promotes their business offerings using the social media and photo

advertisement posted in and outside of the building. They also offer seasonal

promos by discounting some food choices.

This study aims to determine the effect of the marketing mix to the

customer satisfaction of selected Grade 12 Senior High School students

towards McDonald's in Barangay Labuin, Santa Cruz, Laguna. The results will

be based on the perception of the establishment's customers regarding their

satisfaction in terms of service and product quality of the business entity. The

study was conducted in Laguna State Polytechnic University - Santa Cruz

Campus to gather enough data to support this research. The success of this

research study will be beneficial to customers, managers and other personnel,

entrepreneur and businessmen and the future researchers.

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Theoretical Framework

In 1964, Neil H. Borden published his article 'The Concepts of the

Marketing Mix', which made the term "marketing mix" popular. In this article, he

explains how he first began using this term in the late 1940's after James

Culliton described the marketing manager as a "mix of ingredients". These

ingredients in Borden's teachings included product, planning, price, branding,

distribution channels, personal selling, advertising, promotions, packaging,

display, servicing, physical handling, and fact finding analysis. These are now

referred to as the four P's of marketing which were grouped by E. Jerome

McCarthy. The four P's of marketing mix includes product, place, promotion

and price which affects the development of any organization's marketing

strategies and tactics (Free Online Research Papers, 2007).

In the early 1980s, at the inaugural AMA Conference dedicated to

Services Marketing, the first prospect of extending the marketing mix took place

and built on earlier theoretical works pointing to many important limitations of

the 4P’s model. Taken collectively, the papers presented at that conference

indicate that service marketers were thinking about a revision to the general

marketing mix based on an understanding that services were fundamentally

different to products, and therefore required different tools and strategies.

Booms and Bitner (1987) proposed a model of 7P’s, comprising the original

4P’s extended by process, people and physical evidence, as being more

applicable for services marketing.

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As mentioned by Wander Jager (2007) The most important elements in

marketing mix 4Ps is product, which means that the business should focus on

the development of features so that products has the unique selling point which

was further confirmed by Philip Kotler in 1967. Price means that the business

should accord to different market positioning to develop the pricing strategies.

Place requires the company does not directly selling to consumers but rather

focus on training of dealers and the establishment of sales networks. And the

enterprises can communicate with consumers through distributors. Promotion

requires that the company should concentrate on changing the distribution

behaviors to encourage consumers and using short-term, such as discount, to

promote the growth of consumption. Therefore, the company should

concentrate on the Product, Price, Promotion and Place for its new product.

As Ai Ling (2007) stated in her study "The Impact of Marketing Mix on

Customer Satisfaction: A Case Study Deriving Consensus Rankings from

Benchmarking Thesis", customer satisfaction is a perception. It is also a

question of degree. Providing quality products and services is all about meeting

customer requirements. It's a measure of how products and services supplied

by a company meet or surpass customer expectation. It is seen as a key

performance indicator within business and is part of the four perspectives of a

Balanced Scorecard.

In a competitive marketplace where businesses compete for customers,

customer satisfaction is seen as a key differentiator and increasingly has

become a key element of business strategy. The four key steps for successful
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marketing are identified as understanding the customer, making value for

customer, communicating the value to target market, and making it easy for the

customer to buy. (Ai Ling, 2007)

The marketing mix is a major part of any organization marketing

strategies. Each element, product, place, price and promotion all contribute to

the satisfaction of customers which is one of the essential factors for the

company's success.

Conceptual Framework

Independent Variables Dependent Variables

Marketing Mix Customer

Satisfaction
 Product
 Price  Service
 Place Quality
 Promotion  Food
Quality

Figure 1. Research Paradigm of the study

The conceptual model of the study is presented in the form of a

paradigm above.

Frame 1: The independent variable consists of the Marketing Mix which

are the 4Ps: Product, Price, Place, and Promotion.

Frame 2: The dependent variable contains the Customer Satisfaction in

terms of Service Quality and Food Quality.

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Statement of the Problem

The purpose of the study was to determine the effect of Marketing Mix

of McDonald’s in Barangay Labuin Santa Cruz, Laguna to the customer

satisfaction of selected Grade 12 Senior High School students of Laguna State

Polytechnic University - Santa Cruz Campus.

Specifically, the researchers sought to answer the following problems:

1. What is the status of Marketing Mix of McDonald's in terms of:

1.1 Product;

1.2 Price;

1.3 Place; and

1.4 Promotion?

2. What is the level of customer satisfaction towards McDonald's as to:

2.1 Service quality; and

2.2 Food quality?

3. Is there a significant effect of marketing mix to the customer

satisfaction towards McDonald's?

Hypothesis

There is no significant effect of marketing mix to the customer

satisfaction of selected Grade 12 Senior High School students of Laguna State

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Polytechnic University - Santa Cruz Campus towards McDonald's in Barangay

Labuin Santa Cruz, Laguna.

Scope and Delimitations of the Study

This study was limited to eighty-seven (87) customers of McDonald's,

Barangay Labuin Santa Cruz, Laguna Branch. These respondents were taken

from the population of three hundred thirty-four (334) Grade 12 Senior High

School students of Laguna State Polytechnic University – Santa Cruz Campus.

The respondents were chosen purposively. These respondents were given

questionnaires to determine the effects of Marketing Mix to the customer

satisfaction of the said establishment in terms of food and service quality.

Significance of the Study

Customers. The proposed study will help the customers to evaluate the

service and product that they were acquiring at McDonald's located in

Barangay Labuin, Santa Cruz, Laguna.

Managers and other personnel. The proposed study will provide

awareness for the managers of how customers see and experience the service

and products produced. And also to further lead the personnel to give

customers the right service and product that they actually paid for.

Entrepreneur and Businessmen. The proposed study will let the

businessmen managing the branch hear the feedbacks of their loyal customers

enabling them to improve or be consistent with the service and products

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provided. The study will also let them oversee the possible problems, and these

problems will either be an opportunity to take or just a chance to lose.

Future Researchers. The proposed study can be of use as guide for

the future researchers. It may help to develop their thesis and improve this

study as well.

Definition of Terms

To understand and clarify the terms used in the study, the following are

hereby defined:

Customer Satisfaction. Refers to the extent to which customers are

satisfied with the foods and services provided by the fast food restaurant chain.

Food Quality. It is the quality characteristics of food provided by the

said fast food restaurant chain that is acceptable to consumers. It is also the

determinant that the business must consider in preparing their product or food

to satisfy the needs and wants of the customers.

Marketing Mix. Refers to the set of controllable tactical marketing tools

used by the fast food restaurant chain.

Product. Refers to the food offered by the fast food restaurant chain.

Place. The location of the fast food restaurant chain where customers

can purchase the product/food.

Price. Refers to the value or cost of the product or food offered by the

said fast food restaurant chain.

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Promotion. The communication techniques used to inform the public

about the fast food restaurant chain.

Service Quality. Pertains to the specific dimensions of service offered

by the fast food restaurant chain, namely reliability, responsiveness,

assurance, etc. which reflects to the customer's perception. It can be related to

service potential, service process and service result of the business.