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Desserts and Decisions: Exploring Seasonality Factors in McDonald's UK Operations

Executive Summary

Seasonality is one of the prominent factors for the organisations in current times to consider while managing their business and targeting customers in different business markets. The following report has been developed to evaluate the seasonality factor for an organisation. For this purpose, McDonalds is considered as the chosen organisation and UK is considered as the country. The report firstly evaluated the seasonality factor for the organisation. These factors include strategic change, cultural change, change in investment level of the organisation and many more. It is found that seasonality factors in the UK have affected the decision making of the strategic and marketing managers of the organisation in the country.

Further, business decisions which have been taken by the managers in the company are also evaluated in the report. It is found in the report that the organisation has considered launching a new product in the business markets of the UK for seasonality. The product is named Snickerdoodle McFlurry, which is a type of dessert. After this, the report intensely focuses on formulating a business question related to the seasonality issue, which has been evaluated further in the report. Furthermore, the report also evaluates the seasonality issue on the basis of different theories and models. Firstly, Ansoff matrix is used in the report, which helps in understanding that product development strategy has been considered by the managers in McDonalds, which is likely to provide gain of revenue in the business markets. Along with this, the seasonality issue is also justified based on other theories their impacts. It is found that value creation, revenue gain and many other impacts are found for McDonalds due to investment in development of Snickerdoodle McFlurry products.

In the last section of the report suitable recommendations are also made for addressing the seasonality issue along with a reflective account. The account demonstrates the learning that has been enhanced after accomplishing this assignment module.

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Introduction

Business of an organisation in different business markets is affected by a number of factors. Some of these factors may include market conditions, seasonality, competition and many more (Henry, 2011). Prevalence of these factors may allow the organisations to observe high scale fluctuations in context of profitability, productivity as well as sustainability. For this reason, it becomes highly essential for the managers and strategy developers to formulate and implement the approaches, which may address the emerging changes and enhance the organisational excellence in the targeted business market. Seasonality is one of the astounding factors for companies, which has emerged as a prominent issue for the companies in current times.

This report is exploring the factor of seasonality in McDonalds. For this purpose, the report develops the understanding about the seasonality issue in the organisation and several changes for the company associated with it. Along with this, the report also formulates the prominent business question for McDonalds, which relates to the seasonality issue. Further, there is also focus on the impacts of the issue as well as the recommendations that can be given to the organisation to address the impacts. In addition to this, the report also contains a reflective account demonstrating the learning that has been acquired after completion of this module.

1. Organisation and country

The organisation, which has been chosen for accomplishing this report, is McDonalds, which is one of the most renowned companies in the world in fast food chain restaurant industry. The organisation was established in year 1940 in America and currently operates worldwide. Headquarter of McDonalds is located in Chicago. The study also indicates that there are more than 37000 restaurants of McDonalds in different countries (Dey, 2016). Some of the prominent products and services offered by the organisation to the targeted customers include hamburgers, French fries, shakes, desserts, wraps and many more. There are more than 200000 employees, which works in McDonalds in different business markets targeted by the company.

The country, which has been chosen for evaluating the impacts of seasonality factor for McDonalds, is UK. UK is highly developed country with several cities known globally such as London, Birmingham, Cambridge and many more (Lamb, 2012). It is found in many studies that there are more than 1200 restaurants of McDonalds in the UK. Along with this, the country is also known for high scale consumption of the fast food products such as hamburgers and many others, which are offered by McDonalds to its customers.

2. Seasonality factor for McDonalds

Over the past few years, due to the factor of seasonality there have been many changes in McDonalds in the UK. These changes have developed the need to take new decisions and improvise the existing decisions in the company. Some of these changes are explained in the following manner.

Strategic changes: To address more customers and enhance the profitability of McDonalds, the strategic managers of the organisation in the UK has developed strategies of enhancing production scale in the seasons of holidays. It is found in the study that the rush of the customers at the restaurants in McDonalds increases in holiday seasons in the country (Richter, 2012). This scenario, also results in an increase in demand. For this reason, the strategic managers in McDonalds have considered developing strategies to increase the supply chain and production and marketing of fast food products.

Organisational structure changes: Due to high customer rush in McDonalds in holidays, the managers are have considered on bringing some changes in organisational structuring. Many studies indicate that the organisation employs more people and increase the number of sale executive to address the increasing demand. This way, during the holiday seasons, one team leader in McDonalds is required to lead the teams of more employees working in sales department.

Culture change: Factors of seasonality are also accountable for bringing changes in the organisational culture in McDonalds in the UK. The organisation set high targets during holidays and other seasons when the rush of the customers is likely to increase (Sood, 2017). In these scenarios, the employees are expected to contribute as much as possible to meet the demand and bring conformity in the organisation. This way, high yielding working culture can be seen in McDonalds due to seasonality.

Product change: There have been many instances when the strategic managers in McDonalds have considered changing products and adding new ones due to seasonality. It is found in the study that in year 2019 the organisation in the UK brought changes in the existing products and launched some new products during the festival seasons in the country. Snickerdoodle McFlurry is one of the examples of the product changes, which was considered by the organisation to acclimatise with the factors of seasonality and enhance the business by targeting more customers (Weinstein and Cahill‎Dennis, 2014).

Change in investment strategy: There are many instances in which the strategic managers in McDonalds considered changing the investment strategy. Various studies indicate that the organisation enhanced its investment level to 130% due to the festival seasons in the UK in year 2018.

2.1 Decisions made by McDonalds for seasonality

Due to the impacts of the factors of seasonality, it became highly essential for the strategic and operational managers in McDonalds in the UK to revise its previous decisions and strategies. Increasing demand of the fast food products such as Snickerdoodle McFlurry and many others in the festival season allowed the investor to increase the operating income of the company in order to meet the demand (Davies, 2019). Along with this, the organisation also took decisions to increase the workforce by resourcing more employees. For this purpose, there is intense focus on the fast and effective training of the employees. To prepare the new products specialised training sessions were organised by McDonalds.

This way, it can be analysed that there are several facets of seasonality for McDonalds in the UK due to which decision making in the company was affected.

3. Business question for McDonalds

Purpose of the report: The purpose of this business report is to analyse and impacts of the seasonality factor on the operational efficiency of McDonalds in the business markets of the UK. The report is presenting several facts and information supposed by the relevant theories, frameworks and models to the impacts of seasonality factor. It is found from the above analysis that there are many changes in the strategic decision making, organisational structure, product development and many others in the organisation due to the seasonality. The organisation in the UK considered launching new products in the business markets of the UK during the festival seasons. Commercial launch of Snickerdoodle McFlurry in the UK has raised several questions on the seasonality factor to the McDonalds and its impacts over the companies’ existing and expected business making strategies.

There are many studies, which have been executed on McDonalds in the UK. In these studies, it, was found that the organisation has made considerable business in different cities of the UK even when the Snickerdoodle McFlurry was not launched (Davies, 2019). For this reason, it becomes questionable and significant to evaluate what prominent reasons and factors of seasonality were prominent due to which the strategic managers on the organisation considered launching the new product and bringing changes in its existing strategies. It can be understood from several studies that the factors of seasonality are considered by an organisation for very short terms. Festivals, holidays and many other seasons last hardly a month or two. McDonalds can easily target the customers and make considerable business even by bringing no change in the productivity level or developing new products. This is because the organisation has immensely high brand image in the business markets of the UK. During festivals and holidays a greater number of people is likely to visit the restaurants of the company even when the organisation does not launch any new products. For this reason, the questions over the viability of the approaches considered for addressing the seasonality factors are highly prominent.

Along with this, it can also be said that commercial launch of Snickerdoodle McFlurry in the business markets of the UK also require additional funding and investment by the company. Strategic managers in McDonalds in the UK needs addition workforce for successfully accomplish the marketing operations (Wetherly and Otter, 2014). Therefore, questions over the viability of new products that too for a very short period arises raising concerns for the organisation. It can be analysed that for small period of time, the seasonality factor requires immense planning, investment, supply chain and many other needs. However, it is also true that the new product launched by the organisation may or may not be liked by the all the customers who are targeted. Therefore, contribution of the products in the brand image, customer relationship and the profitability of McDonalds is a significant concern.

However, the organisation produces number of ice creams for its customers; but, Snickerdoodle McFlurry cannot be added in regular production line of McDonalds. This is because it may be developed in several versions, which are suitable for targeting customers from different cultures during holidays and festivals.

3.1 Business question for McDonalds:

“How the change in the product development strategy of launching Snickerdoodle McFlurry, that was required due to the Seasonality issue, has helped the company (McDonalds) to improve in a profit, brand image as well as customer relationship in the UK?”

4. Relevant seasonality issue

The relevant seasonality issue, which is prominent from the evaluation in analysis carried out further, is the profitability of McDonalds in the business markets of the UK due to the launch of a new product, Snickerdoodle McFlurry. It is found in the study that the strategic managers considered launching the product during festivals and holiday season in the country. For this reason, the organisation is required to undergo the entire process of product development such as acquiring material from the suppliers, processing if the material, packaging, marketing and many others (Lamb et al., 2011). Along with this, the organisation required increasing the number of employees working in different departments of McDonalds to meet the needs due to the development of the new product. These provisions, if considered in an organisation present the need of immense funding, which may increase the operating cost of McDonalds in the UK business markets and compensate the revenues. Since, organisations operate in their business markets to acquire financial excellence and increase their profitability level; therefore, issues related to immense funding for a limited season become prevalent before the investors and the organisational managers. For this reason, the seasonality issue for the strategic managers in McDonalds is the profitability generated by the company after immense levelled funding for the development of the new product Snickerdoodle McFlurry in the UK.

There are several models and theoretical frameworks, which can be considered to evaluate the seasonality issue of funding and investing in new ventures for the McDonalds in the UK. Some of these models and theoretical frameworks are given in the following way.

4.1 Ansoff’s product and market strategic tool

It is one of the astounding tools for the companies in developing the growth strategies that can be considered in accordance with the emerging situations and conditions in the business markets. According to this tool, there could be four major types of the strategies, which would have been considered in McDonalds for addressing the seasonality.

Ansoff matrix

First strategy for targeting growth in the UK for McDonalds could be that of market development. It is found in the study that the organisation could consider new market with existing products such as hamburgers, French fries and many more. Since, the seasonality factor and issue were related to the business of McDonalds in the UK only; therefore, the growth strategies of market development would not have been a success (Baines et al., 2013).

Second strategy, which could be considered by the strategic managers in McDonalds is diversification. In this strategy the organisation was required to develop new product for an entirely new business market. It is found that McDonalds is operating in the business markets of the UK since long time due to which diversification strategy could not provide desired outcomes for seasonality factor.

Next strategy for McDonalds could be that of market development, in which existing products is used to target the customers in existing market. In the seasonality issue, it is found that the organisation has targeted the existing market with new product making the market penetration strategy non-suitable (Baker and ‎ Hart 2016).

The product development strategy considers targeting the existing customers and market with new products, which is exhibited by McDonalds corresponding to seasonality. Therefore, product development strategy fits with the seasonality issue.

Evaluation and application to the seasonality issue

Out of the four strategies explained above, product development strategy considered by the marketing managers and strategic managers in McDonalds has allowed the organisation to target the existing customers and attracting them with new products. It can be analysed that during festivals and holidays in the UK more numbers of the people are likely to visit the restaurants of the organisation. In addition to this, they also look for the new products which are offered in McDonalds. Therefore, investment done by the organisation in developing the product and its marketing can provide more profitability and reduce the seasonality issue. New products have significant appealing effects over the customers’ psyche. Therefore, they are much likely to purchase Snickerdoodle McFlurry (Davies, 2019). As a result, the organisation can easily compensate the investments carried out in the development of the products. Not only this, but, there are vital possibilities that the new products can gain success in targeting the people and enhancing the profitability immensely during holidays and festivals. This way, the strategy of product development is found benefitting the McDonalds and have positive impacts despite high scale investment.

4.2 The theory of customer satisfaction

The theory of customer satisfaction is helpful in understanding that organisations are required to take actions and develop the strategies and approaches through which the experiences of the targeted customers can be enhanced in a business market. For this purpose, organisations may consider different approaches such as developing new products, improvising the customer services and many more (Doyle, 2011). It can be analysed that the approaches of developing Snickerdoodle McFlurry in McDonalds may have immense positive effects over the satisfaction level of the customers. However, it is true that the organisation might be required to invest significantly in developing the product and marketing it in the UK. At the same time, the product may allow the customers targeted by McDonalds in the country to experience the tasty dessert. It is found in many studies that new products, which are found addressing the needs of the customers, can be the source of generating revenues.

Considering the policies adopted by the McDonalds to increase the sale of Snickerdoodle McFlurry, it is also found in many studies that the employees within the organisation are instructed to ask the customers to add the product to the orders placed by them. This strategy allows the organisation to increase the sale of the newly developed product. Along with this, increases the popularity of the Snickerdoodle McFlurry as the customers satisfied with the product are much likely to promote it further by recommending it to their friends, family members and loved ones (Davies, 2019).

Further, the study also indicates that there are many customer services, which have been considered by the strategic and marketing managers in McDonalds corresponding to the launch and sale of the new product. It is found in the study that along with availing the product in the restaurants; the organisation has also considered offering the home delivery services to the customers.

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Marketing managers in the organisation have considered delivering the new product through various ways such as Uber Eats and many more. These considerations for the delivery of the product have allowed the targeted customers to experience it even at being in home (Davies, 2019). As a result, the satisfaction level of the customers during the seasons in which Snickerdoodle McFlurry is sold is highly increased. The organisation can easily generate more revenues than the capital invested by McDonalds in context of product development and its marketing.

4.3 Marketing mix theory

As per this theory, an organisation is required to focus on 7 elements of marketing while selling its products due to seasonality factors. Marketing mix in McDonalds can be responsible for enhancing the profitability of the organisation and bringing competitive advantage. McDonalds has focused on 7 Ps of marketing and develops business enhancing approaches, which are described in the following manner.

Product: For enhancing the effectiveness in market and targeting more customers during festivals and holidays, products and services are the biggest assets for McDonalds. The study reveals that there was keen focus of the organisation on developing the new product, Snickerdoodle McFlurry (Copeland, 2013). This includedevaluating the tastes as well as prefer ability of the customers visiting the restaurants and their attitude towards the dessert products and many more.

Price: it is also a significant factor affecting the business of McDonalds. Prices in the organisation for some of its products and services are very less which includes hamburgers, desserts such as Soft Serve and many more. However, McDonalds have considered the low-cost strategy for enhancing the number of the sales corresponding to Snickerdoodle McFlurry; but, this approach was highly effective in attracting the customers towards low cost dessert products. As a result, the issue of high investment requirements due to seasonality can be addressed effectively in McDonalds.

Promotion: Promotion of the products and services in McDonalds is considered through internet and print media including banners, posters, social networking websites and many others (Lenart and Pipień, 2013). The organisation also considers famous celebrities for promotion by developing advertisements and broadcasting on television and radio. Promotional mix is considerable aspects of marketing for McDonalds.

Place: McDonalds has gained efficiency in targeting high streets of noticeable cities for marketing in the UK. Launch of stores at such location is associated with more responses of customers. Along with this, targeted places for McDonalds also include major state highways for hording, banners and many others, which may showcase the best features of Snickerdoodle McFlurry such as low price and many more. This way, place selected for promotion and marketing of the services, are effective in increasing rush of customers in the organisation.

Physical environment: This factor for McDonalds includes development of restaurants with high class facilities such as air conditioning, seating accommodations and many others. Along with this, token system for avoiding long queues is some of the practices in enhancing physical environment of McDonalds (Aithal, 2015).

People: McDonalds targets the customers and people from all classes of the societies including students, children, businessmen, along with old aged people and many others. Along with this small children are also targeted by the organisation as they can be the prominent buyers of the dessert products during holidays and festival seasons.

Processes: Process of business development, customer satisfaction and many others are prominent in functioning of McDonalds. Provisions for offers on bulk purchases and development of reward points are also some effective processes in the organisation.

Evaluation

Due to the seasonality, product development and people are the two factors, which are immensely affected. This is because McDonalds is required to change its production lines to develop new Snickerdoodle McFlurry product. This factor in marketing mix needs immense level investment by the organisation. In addition to this, The organisation also needs to reconsider its customer targeting strategy for enhancing the sale of the Snickerdoodle McFlurry. These customers can be targeted for short term only during festivals and holidays. Therefore, product and people are the two most affected areas of marketing mix due to seasonality.

5. Impacts of seasonality issue on McDonalds

The seasonality issue of high scale funding in McDonalds for the development and commercial launch of Snickerdoodle McFlurry during festivals and holidays, has significant impacts over the organisation. Some of the major points justifying the above statement are given in the following manner.

5.1 Value creation

For acquiring more business opportunities, it is essential for the managers in an organisation to enhance the value of the company. For this purpose, the McDonalds needs to communicate about the new product and enhance awareness how it may enhance the experiences of the customers visiting the restaurants. Investments made by the organisation in developing new products and its successive marketing are highly effective in enhancing the values of McDonalds in the business markets of the UK (Davies, 2019). This way, new values have been created in McDonalds due to its new products, which will ultimately enhance the strategic position in a competitive business environment, making the company a noticeable brand. It can be said that values acquired by an organisation due to the launch of new products or services can be highly effective in enhancing the prospects of gaining financial excellence. New product considered by McDonalds for holidays and festivals are accountable for enhancing the values as well as the brand image. The customers can be appreciating the efforts made by the organisation even after the festivals.

5.2 Revenue generation

Another major impact, which has been observed in McDonalds due to investing in the new product and its marketing during the festivals and holidays, is that of generating high revenues. It is found in the study that the new product had immense positive effects over the purchase behaviours of the customers who were targeted during the holidays. New dessert products attracted the children and other young customers, which resulted in more sales (Davies, 2019). However, it is also true that the marketing managers in McDonalds considered low pricing strategy; but, significantly high number of sales allowed the organisation to increase the revenue figures. It was observed that the company generated the net revenues worth higher than the invested capital. For this reason, it can be said that the seasonality issue of inventing large capital had many positive effects over the financial excellence of the company in the business markets of the UK.

5.3 Competitive advantage

Along with other impacts of the seasonality issue described above in this report; one prominent effect was also observed in terms of the competitive advantage of McDonalds in the UK. The study indicates that there are many competitors of McDonalds in the country some of which are Burger King, Starbucks, KFC and many more. These organisations are also reported to offer same and similar products to the customers such as hamburgers, French fries, shakes, wraps and many others (Davies, 2019). Strategies considered by the marketing managers in McDonalds to invest for developing new product Snickerdoodle McFlurry, allowed the organisation to step ahead competition. In comparison to the dessert products of the other companies, the customers liked the Snickerdoodle McFlurry. As a result, there were significant enhancements in the organisational competitive positioning.

From the analysis of the above facts and information, it can be said that seasonality issue of investing in product development in the business markets of the UK, had many positive impacts on the business of McDonalds.

6. Conclusions

It can be concluded from the above report that McDonalds is one of the most renowned companies in the world in the fast food chain restaurant industry. There are many seasonality factors in the UK, which have resulted in several changes in McDonalds such as strategic changes, structural changes, cultural changes and many more. The prominent seasonality issue, which is being faced by the organisation is high scale investment made by the company for developing the seasonal product named Snickerdoodle McFlurry. The business question, which is answered in the report on seasonality issue is “How the change in the product development strategy of launching Snickerdoodle McFlurry, that was required due to the Seasonality issue, has helped the company (McDonalds) to improve in a profit, brand image as well as customer relationship in the UK”. Various theoretical models and frameworks described in the report helps in understanding that seasonality issues if high investment may have significant positive impacts over the financial performance of McDonalds in the country. At the same time, the issue may also allow the organisation to acquire a competitive edge in the business markets. According to Ansoff matrix product development strategies have been considered by McDonalds. Also, the organisation has focused on seven crucial elements of the marketing mix, which include products, place, promotion, people and many more during the festivals and holidays. The seasonality issue of investment in developing new product also have significant positive effects over the values created by the organisation in the UK during the festivals. Further, based on the findings of the report, many measures can be recommended to the organisation for addressing the seasonality issue, which include execution of marketing audits, budgetary control, segmentation marketing for Snickerdoodle McFlurry and many more.

6.1 Recommendations for McDonalds for future

There are many recommendations, which can be used in McDonalds for controlling the issues of high investment due to seasonality factor during and after launch of new product, Snickerdoodle McFlurry. Some of these measures and how they can be used are described in the following manner.

Marketing audits: In order to evaluate the progress and performance of the organisation upon launch of new products and making investment, marketing managers in McDonalds may conduct number of marketing audits. These audits can be performed before and after production and marketing of the products as well as before and after the festivals and holidays. Strategic and marketing managers of McDonaldscan examine the progress and performance of marketing campaigns and other processes against the set objectives for the sale of the products (Kannan & Li, 2017). Along with this, the organisation can also opt for marketing audits with the help of external entities to identify the loopholes in the developed marketing and progress plans. These marketing audits can be scheduled by the managers of the organisation on various time gaps such as weekly, monthly, quarter yearly and many others. This way, marketing managers will be able to speculate the upcoming opportunities and risks in context of investment in product development and addressing the seasonality issues. Marketing audits have close relation with the seasonality issue as these may allow the organisation to develop the suitable marketing plan for the sale of Snickerdoodle McFlurry during festival and holiday seasons.

Budgetary control: Along with execution of marketing audits, budgetary controls is another recommendable measure that can be used by the finance and marketing managers of McDonalds before and after launch of the products in the business markets. For this purpose, the entire budget allocated for the achieving the set objectives can be divided into small parts (Midgley, 2014). It is noticeable that fractionised budget is allocated to each activity involved in production and marketing of the new products in McDonalds, Snickerdoodle McFlurry. Such approaches, if considered in the organisation, can be immensely effective in regulating the finances as well as tracing the success acquired in use of funds. These provisions may also address the seasonality issue by enhancing the budget control and optimising the organisational productivity.

Customer feedbacks: One of the most admirable recommendable measures that can be used by the marketing managers of McDonalds is customer feedbacks. The organisation is required to develop a platform or portal on which customers can share their experiences after consumption of new products, Snickerdoodle McFlurry. Not only this, but, provisions for star rating can also be considered by the company based on various aspects such as price, quality and many others (Hyman & Sierra, 2013). Feedbacks provided by the customers can be effective in evaluating the success of Snickerdoodle McFlurry’s launch and the likeliness depicted by the people towards it. Along with this, feedbacks can also be used for developing future marketing strategies in the organisation.

Segmentation strategy: It is essential for the marketing team in McDonaldsto consider the approaches of segmentation for B2C markets in the UK. This strategy is crucial to address the seasonality issue because it is important for McDonalds to understand the customer psyche and behaviour for enhancing the sale of Snickerdoodle McFlurry during short period of festival and holidays. The issue about large scale investment can only be addressed if the company will have large number of sales of the new product. This is how, profitability generated through the sale of Snickerdoodle McFlurry can compensate the investment and benefit the organisation. Therefore, McDonalds need to understand the factors, which may affect the interest and behaviour of the targeted customers due to which strategies of market segmentation are essential.

There are four major segments in which the customers can be segmented, which are analysed below.

Market segmentation variables

Demographic segmentation: McDonaldsmay segment the consumer market based on demographic details to reduce seasonality issue. For this purpose, age, gender, education level, occupation and many other parameters can be considered (Weinstein ‎and Cahill, 2014). It is found in studies that people with different ages, gender and occupation have different interests in fast food products such as Snickerdoodle McFlurry. These details can be helpful to the company in establishing marketing strategies and target potential consumers.

Geographic segmentation: This is another variable for market segmentation for McDonalds. Marketing teams of McDonaldsunits need to focus on the geographical aspects and population distribution while designing the strategies (Berkowitz, 2016).

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Psychographic segmentation: While segmenting the market of the UK, it is also essential for the marketing experts to analyse the psychographic behaviours of the consumers. For this purpose, there should be a focus on the lifestyle of the potential consumers. This information may help the marketing experts to promote the Snickerdoodle McFlurry according to the interests and lifestyle activities of the population.

Behavioural segmentation: Behaviours of the consumers is a significant factor, which may guide the marketing experts in the organisation to increase the sale of Snickerdoodle McFlurry in the UK. These factors are the life stage of the consumers, purchase patterns, loyalty and many others (Hillestad and Berkowitz, 2018).

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