Sales, Distribution, and Communication

Strategies
ASSIGNMENT

ANSWER-
Marketing Strategy Of Mcdonald's In India
. INTRODUCTION •
McDonald's is the world's largest chain of
hamburger fast food restaurants, serving
around 68 million customers daily in 119
countries across more than 36,000 outlets. •
Founded in the United States in 1940, the
company began as a barbecue restaurant
operated by Richard and Maurice McDonald. •
Businessman Ray Kroc joined the company as
a franchise agent in 1955. He subsequently
purchased the chain from the McDonald
brothers and oversaw its worldwide growth •
McDonald's primarily sells hamburgers,
cheeseburgers, chicken, French fries, breakfast
items, soft drinks, milkshakes, and desserts. In
response to changing consumer tastes, the
company has expanded its menu to include
salads, fish, wraps, smoothies, fruit, and
seasoned fries
. Facts About McDonald`sSource – Business
Insider
. VISION “The world’s best quick service
restaurant experience.” To achieve their vision
they are focused on three world wide
strategies: • Be the best employer for people in
each community around the world. • Deliver
optional excellence to customers in each
restaurant. • Achieve enduring profitable
growth by expanding the brand and leveraging
the strengths of McDonald’s system through
innovation and technology.
. McDonald's History in INDIA • Entered in India
1996 • McDonald's India is a 50 – 50 JV
partnership between Mcdonald’s Corporation
(U.S.A) and two Indian businessman Amit Jatia
andVikram Bakshi • Trained extensively with
their Indian management team in Indonesia and
US before launch • The entire menu was
changed
. Consumer Analysis Customer Characteristic: •
India is the second most populated country in
the world. It has 28 states and almost 4 times
the population of USA. India has more than one
billion population. • Three fourth of Indian
population lives in Urban areas.Though per
capita income is very low in India but still
people like to spend on costly products and
eating out. • Consumers in India are highly
family oriented. McDonald's targets high
income earner, middle income earner and lower
middle income earner in India. • Indian
consumer are getting brand awareness through
internet,TV, Newspapers, Radio, Magazine etc. •
Middle income group is getting bigger in size
day by day as a result of economic boost in
India and that is very good news for
McDonald's. • Indian consumers are now
getting environmental awareness and like to
use Ecofriendly products
. • Family system gives a big chance for
McDonalds to get their sale rise as Indians are
buying food in bulks. • Indian consumers are
becoming very open minded which is a positive
sign for McDonalds. • For McDonalds to
succeed as they are now, they should go to
expand in urban areas as well as rural areas
and target middle and lower income earners
and beside this they should introduce certain
products which can be afforded by low income
earners. • Customers like spicy foods and
McDonald has introduced many products which
are spicy and tasting according to the
preference of Indians. Low Income 49% Lower
Middle Income 30% Middle Income 12% Upper
Middle Income 5% High Income 4% Income
Distribution Low Income Lower Middle Income
Middle Income Upper Middle Income High
Income Consumer Analysis
. MARKETING MIX Product In India McDonalds
has a diversified product range focusing more
on the vegetarian products as most consumers
in India are primarily vegetarian. Price In India
McDonalds classifies its products into 2
categories namely the branded affordability
(BA) and branded core value products (BCV).
Place McDonald’s outlets are very evenly
spread throughout the cities making them very
accessible. . Promotion At McDonalds the
prime focus is on targeting children. In happy
meals too which are targeted at children small
toys are given along with the meal. Other
Factors which also affects are : • People •
Process • Physical evidence
. • The marketing mix is apart of the organizations
planning process and consists of analyzing the
defined: • How will you design, package and
add value to the product? Product strategies. •
What pricing strategy is appropriate to use?
Price strategies. • Where will the firm locate?
Place strategies. • How will the firm promote its
product? Promotion strategies. • Locations •
Logistics • Service levels • Channel members •
Channel motivation • Market coverage •
Advertising • Personal selling • Public relations
• Message • Media • Budget • List price •
Discounts • Allowances • Financing • Leasing
options • Functionality • Appearance • Quality •
Packaging • Brand • Warranty • Service/Support
Product Price PromotionPlacement
MARKETING MIX
. Marketing Mix : Product • McDonald’s places
considerable emphasis on developing a menu
which customers want. Market research
establishes exactly what this is. • However,
customers’ requirements change over time. In
order to meet these changes, McDonald’s has
introduced new products and phased out old
ones, and will continue to do so. Care is taken
not to adversely affect the sales of one choice
by introducing a new choice, which will
cannibalize sales from the existing one (trade
off). • McDonald’s knows that items on its menu
will vary in popularity.Their ability to generate
profits will vary at different points in their cycle.
• In India McDonalds has a diversified product
range focusing more on the vegetarian
products as most consumers in India are
primarily vegetarian. • The happy meal for the
children is a great seller among others.
• McDonald's commitment to its Indian customers
is evident even in development of special
sauces that use local spices and chilies. • The
mayonnaise and all other sauces are egg-less.
McDonald's also pioneered the establishment
of Cold Chain across India which helps
maintain freshness and nutrition in every
product. • McDonald's regular scrumptious
menu includes wide range of products like
McAloo Tikki, Filet-O- Fish, Spicy Range,
Chicken McGrill, McVeggie, Veg Pizz a McPuff,
Chicken Mcnuggets, Fries, Wraps, an
assortment of Sundaes, Soft Serve and
refreshing beverages such as Ice Tea & Cold
Coffee with outstanding service in a vibrant and
lively ambience, for which McDonald's is known
worldwide. • McDonald's had further reinforced
the branded affordability mantra via the
introduction of the Happy Price Menu which
starts at Rs 25 only. Marketing Mix : Product
Marketing Mix : Product & Price
Marketing Mix : Price • Pricing strategy is one of
the most significant aspects when it comes to
marketing.This includes price breakdown, when
any discount service or payment available.
Pricing strategy was developed in order to
attract middle and lower class individual and
the result can clearly be seen the customer
base which McDonalds has at present. •
McDonald’s restaurant has specific value
pricing as well as bundling strategy like combo
meal, happy meal, family meal and happy price
menu in order to improve total sales of the
service and product. • In India McDonalds
classifies its products into 2 categories namely
the branded affordability (BA) and branded core
value products (BCV). • The BCV products
mainly include the McVeggie and McChicken
burgers that cost Rs 50-60 and the BA products
include McAloo tikki and Chicken McGrill
burgers which cost Rs20-30.This has been
done to satisfy consumers which different price
perceptions.
Marketing Mix : Promotion • The promotions
aspect of the marketing mix covers all types of
marketing communications. • One of the
methods employed is advertising, Advertising
is conducted onTV, radio, in cinema, online,
using poster sites and in the press for example
in newspapers and magazines. • Other
promotional methods include sales
promotions, point of sale display,
merchandising, direct mail, loyalty schemes,
door drops, etc.The skill in marketing
communications is to develop a campaign
which uses several of these methods in a way
that provides the most effective results. For
example,TV advertising makes people aware of
a food item and press advertising provides
more detail.This may be supported by instore
promotions to get people to try the product and
a collectable promotional device to encourage
them to keep on buying the item. • At
McDonalds the prime focus is on targeting
children. • In happy meals too which are
targeted at children small toys are given along
with the meal. Apart from this, various schemes
for winning prices by way of lucky draws and
also scratch cards are given when an order is
placed on the various mean combos
Marketing Mix : Place • Place, as an element of
the marketing mix, is not just about the
physical location or distribution points for
products. It encompasses the management of a
range of processes involved in bringing
products to the end consumer. McDonald’s
outlets are very evenly spread throughout the
cities making them very accessible. Drive in
and drive through options make McDonald’s
products further convenient to the consumers.
• Place plays very important role in launching a
product and making it successful. McDonald's
has expanded through out in India Urban areas.
• McDonald is currently targeting urban areas
as we know that big part of population is living
in urban areas. Place doesn’t only include
physical location but it is includes all the
processes that eventually leads to product
ending in customers hand. • Place plays very
important role in getting priority over the rivals
and place should be selected after research on
the local demography, income level and
customers preferences. • McDonalds in India
chooses a particular place after long research
and checking local area’s demographic
characteristics, income level etc.This is the
reason McDonalds is very successful in India.
Marketing Mix : Other Factors • People :The
employees in McDonalds have a standard
uniform and McDonalds specially focuses on
friendly and prompt service to its customers
from their employees. • Process :The food
manufacturing process at McDonalds is
completely transparent i.e. the whole process is
visible to the customers. In fact, the fast food
joint allows its customers to view and judge the
hygienic standards at McDonalds by allowing
them to enter the area where the process takes
place.The customers are invited to check the
ingredients used in food. • Physical evidence :
McDonalds focuses on clean and hygienic
interiors of is outlets and at the same time the
interiors are attractive and the fast food joint
maintains a proper decorum at its joints.
Micro Environmental Issues: Porter`s Five Force
Model Threat of New Entrants or New Entry
(Moderate Force) Low switching costs (strong
force) Moderate capital cost (moderate force)
High cost of brand development (weak force)
Threat of Substitutes or Substitution (Strong
Force) High substitute availability (strong force)
Low switching costs (strong force) High
Performance-to-cost ratio (strong force)
Bargaining Power of McDonald’s Suppliers
(Weak Force) Large number of suppliers (weak
force) Low forward vertical integration (weak
force) High overall supply (weak force)
Bargaining Power of McDonald’s
Customers/Buyers (Strong Force) Low
switching costs (strong force) Large number of
providers (strong force) High availability of
substitutes (strong force) Competitive Rivalry
or Competition with McDonald’s (Strong Force)
High number of Firms (strong force) High
aggressiveness of Firms (strong force) Low
switching costs (strong force)
Micro Environmental Issues: Porter`s Five Forces
Model Threats of Substitute: • The substitutes
in this industry are very high. • People can
choose variety of products they can either
choose Burger King, KFC, Indian Cuisine,
Indian local shops, Indian Vegetarian
restaurants etc. • Entry to a restaurant
Business is very difficult. It is hard to make a
prominent brand name. • There is high research
and development costs and high cost of entry. •
Strong brands already in competition make it
more difficult such as McDonald's, Pizza Hut,
Domino’s etc. Threats of New Entrance: Rivalry
• Fast food restaurant industry is very
competitive. • The competition is so high as all
the organizations want to get hold of customer
• McDonald's knows about the customers taste
and preferences all over the world. •
McDonald's is providing quality food from early
morning till late night in order to get
competitive edge In the market.
: Micro Environmental Issues: Porter`s Five
Forces Model Bargaining power of customers •
Bargaining power of customers refers to
pressure a customer can exert on a business to
get good quality of food, good customer
service and low price. • Bargaining power of
customer in this industry is low. As McDonalds
provide a standard service, one price strategy
and quality of food. • Customers have low
bargaining power through out the food industry
Bargaining power of supplier • Bargaining
power of buyer in this industry is low. Situation
can change if the main ingredients are not
available. • But with McDonald's simple menu
and working with many supplier ,they are not
facing a big threat.so the bargaining power is
relatively low.
Analysing MacroVariable
• India is quite rich as far as the political structure
and policies are concerned that is the reason
why international organizations face difficulties
when they are entering in India. In the similar
manner it can be said that India is a nationalist
country that is the reason why they create
difficulties for international entrants. However,
there are certain other factors like consumer
taxation, different political infrastructures and
the scenario of the global market. • Political
parties are against fast food chains as they
want to see only vegetarian restaurants in their
country.Their party members always protest
against fast food using meat in their menu. •
Good news is that India is changing slowly
from nationalistic society to liberal mind set up
and McDonalds expanded very fast in the last
decade. Political Influences:
• Economical variables such as currency
exchange,employment,Interest rate, tax ratio
and need of international supply. • Most of the
organization's depend on foreign supply of raw
materials for their products making. • Currency
exchange also have a great impact on any
organization. • Business for McDonalds for
India with high unemployment rate, dealing in
Rupees as currency and millions of people
living below poverty line is a concern for
McDonalds. But India is having a booming
economy, low tax rate and availability of labor
in abundance and development of middle class
society in India is a positive sign for
McDonald's future. ECONOMICAL INFLUENCE:
Sociocultural influences: • In India society is very
versatile.Though India is heavily populated but
still Hindu’s don’t eat meat. • Muslims only eat
Halal and they don’t eat pork. In India religion
has a very big impact on society. For
McDonalds it is a big concern. • But in India life
style is changing, earning power is increasing,
middle class is getting bigger in its size and
people like to eat outside in restaurants this
has a very good impact on society. • However,
the social factors that are associated with
McDonalds in India are the suppliers and the
workforce of the organization is fragmented
and they are diversified. • In the similar manner
McDonalds have to face the pressure of
different social and ethnic groups that are
prevalent in the socio culture environment of
India. • However, the favorable element for
McDonalds is that people of India will get
employment through this organization and this
would be favorable for both McDonald sand the
local citizens of India.
. Technological influence: • One positive benefit of
globalization was technological advancement. •
Although McDonald's doesn’t use too many
complicated machines in their food production
but still they need highly competitive
technology. • Technology is needed for example
in supply chain management, order taking,
Inventory control, easy and quick payment
procedures .Use of technology can make
management more reliable, effective and cost
saving in short term as well as long term. •
Customers happiness after getting what they
are looking for on time and in a disciplinary
way make them come over and over • In India
as franchises they use high technology.They
use very good till system, good an disciplined
order taking and well managed staff who knows
the proper use of technologies inside the store.
McDonalds USP • McDonald's mein hai kuch
baat. (Oct. 13, 1996–1999) • Toh aaj,
Mmmmmmmmmm! McDonald's ho jaye. Har
choti khushi ki celebration (1999–2003) • I'm
lovin' it (2003–present) ** VIDEOS
STP Segments • Demographic : Kids,
Families,Teenagers • Psychographics:
Convenience of life style Targeting • Children
andYouth • Young Urban Families • Vegetarian
Fast food Eaters Positioning • Happy Price
menus • Toys along with meal • WiFi facilities
are being provided • No beef , No Pork
Competitive Scenario in India • The industry of
fast food business in India is quite competitive
and these competitors offer direct and indirect
competition to McDonalds. • In India McDonalds
face a tough scenario because there are certain
other international chains that also offer tough
competition to McDonalds . These international
competitors are Pizza Hut, KFC, Dominos Pizza,
and Subway. However, Indians prefer their local
manufactures and that is the reason why the
local fast food chains are growing in numbers
that are also giving competition to McDonalds. •
The local fast food chains in India are
Hyderabad House, Ohri’s, Jumbo King, Narula’s
etc.The competitors that are present in India
are quite diverse in many aspects as this can
be considered as one of the biggest issue for
McDonalds. • In the similar manner it can also
be said that in India the competitors are so
diverse that they compete in aggressively and
in certain scenarios they also compete in
nonprice dimensions like innovation,
marketing, etc.
Competitor`s Analysis MCD vs JUBLFOOD
Source –Yahoo Finance
. Competitor`s Analysis MCD vsYUM Source –
Yahoo Finance
Competitor`s Analysis MCD vs CPG Source –
Yahoo Finance
Competitor`s Analysis MCD vs SBUX Source –
Yahoo Finance
Competitor`s Analysis MCD vs JumboVadaPav •
Local Competition • Burgers vsVadaPav • McD
has higher Scalability but Jumbo has
authenticity
Indicators of Success • One gratifying aspect of
McDonald’s success was the fact that, by mid-
2000, it derived as much as 50 per cent of its
revenues from vegetable food items, thus
disproving its critics – especially those who
were skeptical of its ability to serve food that
suited Indian palates. • To exploit the
opportunities created due to its better brand
awareness and customer acceptance,
McDonald’s was following a three-pronged
strategy: increase the seating capacity in
existing outlets to cater to additional traffic;
open new outlets in Mumbai and Delhi; and,
finally, penetrate new cities. • McDonald’s was
also in talks with Delhi Metro Rail Corporation,
Airports Authority of India, Indian Railways and
Delhi Development Authority to open smaller
McDonald’s outlets in airports and railway
stations, among others. • McDonald’s also had
plans to set up several outlets along the Delhi-
Agra national highway in a tie-up with a major
petroleum refining and marketing organization.
. Break Even Analysis McDonald's India achieved
its breakeven from 48 stores in India, in year
2003.India has emerged as one of McDonald's
top ten operations in terms of average
transactions per day in each of its outlets and
McDonald's stores in India average around
1,500 transactions per day during 2003. The key
features of McDonald`s at that time were – •
McDonald's added 13 outlets in India during '02
and another 15 was added in year, and aimed to
achieve the target of 100 Mac stores by '05 after
achieving break even in 2013. • During the point
of breakeven McDonald's outlets stands at 46.
McDonald's is really bullish on was the highway
chain, which started to pick up after private
players begin setting their petrol filling
stations. • InYear 2003, McDonald's already had
two outlets on the Delhi - Mathura and Delhi -
Ludhiana highways. According to the sources -
On an average, 2000 people stop at each of
those stores every day. • Almost 75% of core
products in India don't exist anywhere and
India has exported a number of recipes to the
parent's operations in other countries.These
include, pizza McPuff, wraps and AlooTikki
burger, which were doing exceptionally well in
the Middle East.
. Strategies of McDonald :An Overview Entrance
Strategies: • In order to capitalize on the highly
price sensitive economy, and the Indian
mentality of liking anything that is foreign,
McDonald’s strategy was market penetration
and the three circles strategy.This led to
localization & branding of the company. • They
had to suit their burgers to Indian taste and
Indian market which was a hyper price
sensitive market. Training Strategies •
.Induction training was conducted at the time of
an employee’s joining the organization. • This
was done through interactions as well as
through exposure with the customer through
operation training within the restaurants for a
fixed period of time. • The organization also
provided numerous opportunities of overseas
training to those displaying potential.
Strategies of McDonald :An Overview Supply
Chain Strategies • In the process, McDonald’s
actually encouraged entrepreneurship, by
introducing the local suppliers to its global
suppliers.This association involved transfer of
state-of-the-art food processing technology,
thereby leading to an improvement in quality
standards and helping create world class
manufacturing facilities in India • In the five-
and-a-half years until start-up, McDonald’s
spent as much as Rs 500 million (US$12.8
million) to set up a supply network, distribution
centres and logistics support. By mid-2000,
some estimates placed the total investment in
the supply chain at almost Rs 3 billion.
Major Reasons for McDonalds Success
1.The System This is the first thing that makes
McDonald's so successful, by having an
effective and efficient system in place, which
exploits the minimum wage labor available, in
the form of young teenagers who are just
looking to make some cash or pick up
fundamental job skills. 2. Convenience The
second reason why McDonald's is so popular is
because it's everywhere. There a McDonald's at
every corner of the map, at every major
shopping centre, district, highway, freeway,
every place which attracts even, remotely more
than 10 people, will have a McDonald's
restaurant not too far from them. 3. Likability
and Familiarity The Golden Arches, the Big M.
Ronald McDonald, happiness and fun; all these
are the associations with McDonald’s which
makes it so familiar 4.The Menu McDonald's
has one of the most diverse menus, targeting
all ages from little kids to old pensioners, and
everyone else in between.
Conclusion • McDonald’s recognized the unique
problems and opportunities of the Indian
market. The company then took its time,
adapting its products and just as importantly
its corporate strategy, and has been hugely
successful since. • At the same time, the
company cannot afford to become complacent
and rest on its laurels. Any future missteps,
however small, could ruin McDonald’s efforts
and hard fought gains in the country, allowing
the company’s rivals to catapult past them and
onto even greater success. • In order to sustain
in a very competitive market McDonald’s has to
continuously think of bringing in new concepts
into all its operations especially in marketing. •
The result of a spontaneous thought led to the
introduction of breakfast outlets and a chance
encounter with a technology specialist ended
up with online booking orders and birthday
parties and signature outlets. • The success of
McDonalds in India could be measured by its
continuous growth in Indian fast-food market
with 210 branches across IndiA