IBS HYDERABAD

Factors affecting the consumption of McDonalds Burger A BRM PROJECT

Under the guidance of :Prof. Ritesh Tiwari

2011
SUBMITTED BY :

Arushi Goyal Ashish Tripathi Ayushi Garg Mohammad Bohra Nitin Kumar Rana Parth Tripathi

10BSPHH010162 10BSPHH010168 10BSPHH010178 10BSPHH010412 10BSPHH010497 10BSPHH010517

13 63 50 26 74 37

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ACKNOWLEDGEMENT
January 10, 2011

We take this opportunity to thank Professor Ritesh Tiwari ,our worthy BRM faculty, who accepted the proposal of this project and guided us throughout with his valuable ideas and suggestions. We are also grateful to him for helping us out at each stage and solving each little query and doubt with patience. He also explained to us all the functions and complexities of the SPSS software. We would also like to thank our student friends at IBS Hyderabad for sparing their valuable time in filling out our questionnaires with lot of patience. Finally, we would like to thank each other for our determination to complete this project and our undying support to each other.

Group Members
Arushi Goyal Mohammad Bohra Parth Tripathi Ayushi Garg Ashish Tripathi Nitin Kumar Rana 10BSPHH010162 10BSPHH010412 10BSPHH010517 10BSPHH010178 10BSPHH010168 10BSPHH010497

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TABLE OF CONTENTS

S.No 1 2
ABSTRACT OBJECTIVE

Topic

Page no. 4 4

3 4 5 6 7 8 9 10 11 12 13

INTRODUCTION LITERATURE REVIEW RESEARCH METHODOLOGY & DESIGN DATA AND SAMPLE SIZE CONSIDERATIONS QUESTIONNAIRE DEVELOPMENT DATA REPRESENTATION & ANALYSIS FACTOR ANALYSIS REGRESSION ANALYSIS LIMITATIONS RECOMMENDATIONS & CONCLUSION REFERENCES

5 8 12 13 18 21 25 31 34 35 36

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ABSTRACT
This research project is an attempt to analyze the factors affecting the annual consumption pattern of Mc Donalds burgers in Hyderabad. The impact of various factors such as Timely Delivery of the food, Quality of the food served, Location of the fast food restaurants, Customer Service, Diversification of Menu, Promotion and Brand Image, Price, Hygiene, Seating Capacity, Opening Hours, Ambiance, Menu Diversification have been analyzed. The study is based on primary data collected from people at Mc Donalds City Center, Hyderabad and IBS Hyderabad with the help of a structured questionnaire. Data analysis has been done using SPSS software. The statistical analysis method employed in this study is Factor Analysis and Regression Analysis.

OBJECTIVE
Research Objectives: 1. To find out the factors affecting the consumption pattern(in terms of no. of burgers consumed annually) of McDonalds burgers in Hyderabad. 2. Predicting the extent of variation in consumption pattern if any or many of the factors affecting it are changed by a certain amount.

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INTRODUCTION

A Locally Owned Company: McDonald's is the world's leading food service retailer with more than 31,000 restaurants in 119 countries serving more than 50 million customers each day. In India, McDonald's is a joint-venture company managed by two Indians. While Amit Jatia, M.D. Hardcastle Restaurants Pvt. Ltd. owns and spearheads McDonalds in west & south India, McDonalds restaurants in North & East India are owned and managed by Vikram Bakshis Connaught Plaza Restaurants Private Limited. Celebrating over 12 years of leadership in food service retailing in India, McDonalds now has a network of over 160 restaurants across the country, with its first restaurant launch way back in 1996. Prior to its launch, the company invested four years to develop its unique cold chain, which has brought about a veritable revolution in food handling, immensely benefiting the farmers at one end and enabling customers to get the highest quality food products, absolutely fresh and at a great value. Local Sourcing Is Key for Truly Indian Products: McDonald's India is committed to sourcing almost all of its products from within the country. For this purpose, it has developed local Indian businesses, which can supply them the highest quality products required for their Indian operations. Fresh Lettuce is sourced from Pune, Delhi, Nainital and Ooty; Cheese from Dynamix Dairies, Baramati, Maharashtra; fresh Buns from Mrs. Bector Foods, Phillaur, Punjab & Khopoli, Maharashtra; Sauce from Mrs. Bector Foods, Phillaur, Punjab, Chicken Patties, Vegetable Patties, and Veg.Pizza McPuff from Vista Processed Foods, Taloja, Maharashtra. Dairy Products are sourced from Amrit Food, Ghaziabad, UP. All our suppliers are HACCP certified. Respect for the Indian Customs and Culture: McDonald's worldwide is well known for the high degree of respect to the local culture. McDonald's has developed a menu especially for India with vegetarian selections to suit Indian tastes and culture. In line with its respect for local culture, India is the first country in the world where McDonalds does not offer any beef or pork items. McDonald's has also re-engineered its operations to address the special requirements of vegetarians. Special care is taken to ensure that the vegetable products are prepared separately, using dedicated equipment and utensils. This separation of vegetarian and non-vegetarian food products is maintained throughout the various stages of procurement, cooking and serving. So much so that the mayonnaise and the soft serve are also 100% vegetarian. Also in India, only vegetable oil is used as a cooking medium.

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An Employer of Opportunity: McDonald's India is an employer of opportunity, providing quality employment and long-term careers to the Indian people. The average McDonald's restaurant employs 60-80 people from crew to restaurant manager. McDonald's world class-training inputs to its employees can be seen in the present close to 4000 employees in India. Quality, Service, Cleanliness & Value The USP of McDonalds is Quality, Service, Cleanliness & Value for money which means we focus on providing our customers high quality products, served quickly with a smile, in a clean and pleasant environment at an affordable price. The McDonald's philosophy of QSC&V is the guiding force behind its service to the customers. McDonalds menu is priced at a value that the largest segment of the Indian consumers can afford. McDonalds does not sacrifice quality for value rather McDonalds leverages economies to minimise costs while maximizing value to customers. MENU LIST Vegetarian list - Mc Veggie: - McAloo Tikki - Paneer Salsa Wrap: - Crispy Chinese: - Veg McCurry Pan: - Pizza McPuff:

The Non-Vegetarian Fare at McDonalds India: - Chicken Maharaja Mac: - McChicken: - Filet-O-Fish: - Chicken McGrill - Chicken McCurry Pack - Chicken nuggets - Chicken Mexican wrap Apart from these specials that appear mainly in the Indian McDonald's here there are a couple of things that are exactly the same in India as what you would consume at a McDonalds in the U.S. or anywhere else.
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Few of the extra menus included are: -Fries, -Shakes, -Soft-serve ice-cream: both sundaes and cones, -Happy meals -Combos. OUTLETS IN INDIA McDonalds in India currently runs a total of 170 quick service restaurants. Between the two franchisees, we will be spending around Rs 400-500 crore (Rs 4-5 billion) over the next three years to open 120 outlets. McDonalds serves 180-200 million people every year across India, which boils down to five lakh customers per day.

The list of outlets in Hyderabad are: 1. Madhapur phase V 2. A.S Rao nagar ECIL Road 3. City centre mall- Mcdonalds family restraint G8 first floor, Banjara hills, road no -1 opp. Taj Krishna, Hyderabad 500034, ph9642325025 4. GMR Airport 5. Prasads IMAX 6. Sanali mall 7. Rainbow mall, Secunderabad, PRICE LIST Menu Items Veg Pizza McPuff Veg Surprise McAloo Tikki Burger Crispy Chinese McVeggie Burger Chicken McGrill McChicken Burger Net Price (Taxes included) 19.00 20.00 29.00 32.00 38.00 28.00 49.00 With cheese -Net Price

35.00 44.00 34.00 55.00

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Chicken Maharaja Mac Filet - O - Fish Paneer Salsa Chicken Mexican Mc Curry Mc Curry French fries Regular Medium Large Cheese Slices Extra Sauces

59.00 49.00 45.00 55.00 49.00 59.00

20.00 28.00 36.00 6.00 5.0

LITERATURE REVIEW
Introduction The study of consumers helps firms and organizations improve their marketing strategies by understanding issues such as how

The psychology of how consumers think, feel, reason, and select between different alternatives (e.g., brands, products, and retailers); The psychology of how the consumer is influenced by his or her environment (e.g., culture, family, signs, media); The behavior of consumers while shopping or making other marketing decisions; Limitations in consumer knowledge or information processing abilities influence decisions and marketing outcome; How consumer motivation and decision strategies differ between products that differ in their level of importance or interest that they entail for the consumer; and How marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer.

One "official" definition of consumer behavior is "The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society." Although it is not necessary to memorize this definition, it brings up some useful points:

Behavior occurs either for the individual, or in the context of a group (e.g., friends influence what kinds of clothes a person wears) or an organization (people on the job make decisions as to which products the firm should use).

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Consumer behavior involves the use and disposal of products as well as the study of how they are purchased. Product use is often of great interest to the marketer, because this may influence how a product is best positioned or how we can encourage increased consumption. Since many environmental problems result from product disposal (e.g., motor oil being sent into sewage systems to save the recycling fee, or garbage piling up at landfills) this is also an area of interest. Consumer behavior involves services and ideas as well as tangible products.

There are several units in the market that can be analyzed. Our main thrust in this course is the consumer. However, we will also need to analyze our own firms strengths and weaknesses and those of competing firms. Suppose, for example, that we make a product aimed at older consumers, a growing segment. A competing firm that targets babies, a shrinking market, is likely to consider repositioning toward our market. To assess a competing firms potential threat, we need to examine its assets (e.g., technology, patents, market knowledge, awareness of its brands) against pressures it faces from the market. Finally, we need to assess conditions (the marketing environment). For example, although we may have developed a product that offers great appeal for consumers, a recession may cut demand dramatically. Consumer Research Methods Market research is often needed to ensure that we produce what customers really want and not what we think they want. Primary vs. secondary research methods. There are two main approaches to marketing. Secondary research involves using information that others have already put together. For example, if you are thinking about starting a business making clothes for tall people, you dont need to question people about how tall they are to find out how many tall people existthat information has already been published. Primary research, in contrast, is research that you design and conduct yourself. For example, you may need to find out whether consumers would prefer that your soft drinks be sweater or tarter. so you personally carry out the research yourself. It can be done by various methods such as : Surveys, focus group discussions, personal interview, projective techniques, observations, online research methods. Research will often help us reduce risks associated with a new product, but it cannot take the risk away entirely. It is also important to ascertain whether the research has been complete. Surveys : are useful for getting a great deal of specific information. Surveys can contain openended questions (e.g., In which city and state were you born? ____________) or closed-ended, where the respondent is asked to select answers from a brief list (e.g., __Male ___ Female. Open ended questions have the advantage that the respondent is not limited to the options listed, and that the respondent is not being influenced by seeing a list of responses. However, open-ended questions are often skipped by respondents, and coding them

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can be quite a challenge. In general, for surveys to yield meaningful responses, sample sizes of over 100 are usually required because precision is essential. Focus groups: are useful when the marketer wants to launch a new product or modify an existing one. A focus group usually involves having some 8-12 people come together in a room to discuss their consumption preferences and experiences. The group is usually led by a moderator, who will start out talking broadly about topics related broadly to the product without mentioning the product itself. For example, a focus group aimed at sugar-free cookies might first address consumers snacking preferences, only gradually moving toward the specific product of sugar-free cookies. By not mentioning the product up front, we avoid biasing the participants into thinking only in terms of the specific product brought out. Thus, instead of having consumers think primarily in terms of what might be good or bad about the product, we can ask them to discuss more broadly the ultimate benefits they really seek. Focus groups are well suited for some purposes, but poorly suited for others. In general, focus groups are very good for getting breadthi.e., finding out what kinds of issues are important for consumers in a given product category. Here, it is helpful that focus groups are completely open-ended: The consumer mentions his or her preferences and opinions, and the focus group moderator can ask the consumer to elaborate. In a questionnaire, if one did not think to ask about something, chances are that few consumers would take the time to write out an elaborate answer. Focus groups also have some drawbacks, for example: They represent small sample sizes. What proportion of the population is likely to buy the product. What price consumers are willing to pay. The groups are inherently social. This means that: Consumers will often say things that may make them look good (i.e., they watch public television rather than soap operas or cook fresh meals for their families daily) even if that is not true. Consumers may be reluctant to speak about embarrassing issues (e.g., weight control, birth control).

Personal interviews: involve in-depth questioning of an individual about his or her interest in or experiences with a product. The benefit here is that we can get really into depth (when the respondent says something interesting, we can ask him or her to elaborate), but this method of research is costly and can be extremely vulnerable to interviewer bias. Projective techniques: are used when a consumer may feel embarrassed to admit to certain opinions, feelings, or preferences. For example, many older executives may not be comfortable admitting to being intimidated by computers. It has been found that in such cases, people will tend to respond more openly about someone else. Thus, we may ask them to explain reasons why a friend has not yet bought a computer, or to tell a story about a person in a picture who is or is not using a product. The main problem with this method is that it is difficult to analyze responses. Observation: of consumers is often a powerful tool. Looking at how consumers select products may yield insights into how they make decisions and what they look for. For example, some

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American manufacturers were concerned about low sales of their products in Japan. Observing Japanese consumers, it was found that many of these Japanese consumers scrutinized packages looking for a name of a major manufacturerthe product specific-brands that are common in the U.S. (e.g., Tide) were not impressive to the Japanese, who wanted a name of a major firm like Mitsubishi or Proctor & Gamble. Observation may help us determine how much time consumers spend comparing prices, or whether nutritional labels are being consulted. Online research methods: The Internet now reaches the great majority of households in the world, and thus, online research provides new opportunity and has increased in use. Online search data and page visit logs provide valuable ground for analysis. It is possible to see how frequently various terms are used by those who use a firms web site search feature or to see the route taken by most consumers to get to the page with the information they ultimately want

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1. RESEARCH METHODOLOGY

RESEARCH DESIGN

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Factors affecting the consumption of McDonalds Burger

Flowchart of the overall Research Process

Problem Discovery

(Obtain consumption pattern of burgers)

Selection of exploratory technique

(From websites ,magazines etc )

Secondary Data

Focus group Discussion (FGD)

(of IBS Research scholars )

Statement of Research Objective (To find consumpton pattern (in terms of no. of units consumed anuallly) of Mc Donalds burgers in hyderabad )

Selection of basic research method

Survey & Questionnaire

Observation

(by visiting McDonalds restaurents )

Selection of Sample Design Target population:Population of hyderabad

Probability Sampling

Sample size = 100-125

Data Collection,Editing,Processing & Data Analysis

Factor Analysis

Clubbing of highly coorelated factors

Multiple Regression Analysis

Establish dependency relationships

Interpretation of findings

Final Report

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DATA AND SAMPLE SIZE CONSIDERATIONS

Target Population: The target population is the collection of elements or objects that process the information sought by the researcher and about which inferences are to be made. Our target population is the entire population of Hyderabad City who consumes burgers from McDonalds. Sample Size: It denotes the number of elements out of the target population to be included in the study. We took the sample size more than 10 times as many observations as there are variables (We have 11 variables in our study) according to general rule of GENERALIZIBILITY. According to this, we initially took a sample size of 119, but since the KMO measure for this size will was less than that for 102 we finalized the size at 103.

RESEARCH METHODOLOGY
Preliminary Investigation: - This phase involved preliminary investigation of the various variables which could possibly affect the consumers preference towards burger consumption. We primarily used focus group discussion to identify the various variables that consumers find important when they go for a food outlet. 1. Focus Group Interview: A focus group discussion (FGD) is a qualitative research tool often used in business and marketing. Focus groups are "small group discussions, addressing a specific topic, which usually involve 6-12 participants, either matched or varied on specific characteristics of interest to the researcher. Advantages: It is relatively easy to assemble, inexpensive and flexible in terms of format, type of questions and desired outcomes. Open recording allows participants to confirm their contributions. Provide rich data through direct interaction between researcher and participants. Spontaneous, participants not required to answer every question; able to build on one another's responses. Disadvantages: Findings may not represent the views of larger segments of the population. Requires good facilitation skills, including ability to handle various roles people may play (expert, quiet, outsider, friend, hostile, etc.). Tough rich, data may be difficult to analyze because it is unstructured. Possible conformance, censoring, conflict avoidance, or other unintended outcomes of the group process need to be addressed as part of the data analysis.

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FGD Questions
What do you think are the factors affecting the success of fast food chains? - Response: The factors they emphasized most on were quality and timely delivery. As its a fast food chain they have to deliver best quality food within shortest possible time. The other factors they thought would contribute were high Customer Value Proposition, Smart Service, Capacity Management, menu for Vegetarian people as India has a predominantly vegetarian population. Advertisement, Number of outlets in a city; were some of the other factors that came up in the discussion. What would you prefer price or quality? - Response: All were in consensus that there has to be a trade off between price and quality, but in such a highly competitive market where big players like KFC and Burger King exist and brand loyalty has reduced, they have to provide best quality at competitive price. Since there has been a constant price war in this sector, so Mc Donalds has been forced to reduce the price of its burgers maintaining the same or better quality. They even provide seasonal discounts at times. What do you think is/are the indicators of success of fast food chains? How do you propose we can reach these measures? - Response: The most appropriate indicator of success according to them was Number of Footfalls. Since it suggests the number of people which enter the store on a particular day at a particular time it can be used to measure success of fast food chains assuming the fact that the people who enter end up buying the burger. But some people were of a different opinion. They thought that customer satisfaction was a better indicator. Until and unless your customers are not satisfied they are not going to purchase burgers. According to them sales and number of outlets werent the correct indicators for measuring the success of fast food chains as sales vary with location, time and season. Which is the best way to gauge success of fast food chains? o Interviewing\ o Questionnaires o Observation - Response: There was a divided opinion in the group about the way to gauge the success. Some people felt that interviewing was a better option as easy to get more insight about the topic. Others felt that questionnaire was a better measure as we would be able to get the response of more number of people. Some felt that Observation was a better measure as the actual behavior of customers could only be gauged via observation and it would be relatively free from biases. Does rumor affect your preference for fast food? - Response: As quality and price are main determinants of consumption pattern. So any rumor regarding them, severely affect the consumption pattern. By advertisement and promotion customers develop a trust on the brand. So when negative rumors pop up the customers feel that their trust has been breached which reduces the brand loyalty. Do your peers have a role in influencing your decision regarding fast food? If yes then to what extent? - Response: Everybody was of the opinion that your peers have a great influence on your personal consumption pattern as in India fast food chains are also centers of social bonding.

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Word of mouth also plays an important role in deciding your consumption pattern as people trust their peers more than the company advertisements. What is the one thing that can contribute to the success of fast food chains (which are not already taken care of by them)? - Response: Participants while discussing their personal experiences suggested that the employees at Mc Donalds should be smart as they the face of the company with the customer and they directly interact with the customers. Another idea that came up was that Mc Donalds can set up a karaoke to rank their experience at Mc Donalds as it would give a clear picture of their satisfaction levels and is not even time consuming.

Due to above mentioned advantages we selected to conduct FGD ahead of Pilot Study to bring out the factors involved. Six Research Scholars from IBS Hyderabad participated in the FGD. We first introduced the topic to them and then asked them about their opinion regarding topics such as:

Variables identified from Focus Group Discussion are: Delivery Time Taste Quality Hygiene Ambiance Location Number of outlets Customer Service Price Variety of Food Items Primary Data collection: Primary data will be collected using survey that will be conducted by distributing questionnaires taking the variables into consideration to the people visiting Mc Donalds in Hyderabad. The rationale behind the questionnaire thus designed is as follows: To know the frequency of burger consumption so that we can understand what is its share in the regular consumption pattern of the population of Hyderabad. Here we will be quantifying the response by assigning 1 to daily and 5 to never. We know how important it is for the consumer to get his food delivered in time. This is one of the most important factors due to the changing lifestyles in todays world. This is the factor that distinguishes one fast food chain from another. We asked this question to get insights about the impact of delivery time of Mc Donald on the consumption pattern of consumer. The responses will be evaluated by rating very fast as 1 and very slow as 5.

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Consumers, these days are willing to pay a premium if they are assured of the food quality. We asked this question to know whether they are satisfied with the quality of burgers being offered by Mc Donald. Responses are weighted such as 1 for very good and 5 for very poor. In this era of cut- throat competition between Fast food chains in India, it is expectable that the customers will visit new chains which are in their close proximity. Hence, we asked this question to know how loyal customers are towards Mc Donald. So that we can get to know weather location can change the preferences or consumption pattern. Here close proximity is rated higher than far. So 1 is for less than 1 Km and 4 is for more than 10 Km. Change is the order of the day! The tastes and preferences of the customers do not remain same over a very long period of time. They do need a change in taste. So, we asked this question to judge that does change in menu effects the consumption pattern. Here we will quantify very often as 1 and never as 5. Be it any product in any category, marketing and promotion are two important factors that helps the fast food chains to communicate about themselves to the world at large. We asked this question to know to what extent advertisements of MC Donald influence consumers to consume burgers of Mc Donald. Here highly influenced is 1 and never influenced is rated 4. The first thing that attracts a new customer towards a product is a reasonable priced. Hence, we asked the consumers how reasonable they find the price of Mc Donald burger. So that we could study the impact of price on consumption pattern. Quantifying measure for this question is such as we take highly priced as 1 and very low priced as 5. What makes a product complete are the services that come attached with it. And employees are the ones who come in face to face contact with the consumers to deliver the product along with service and best way to retain customers is through best services. So we are trying to know how competent and motivated their employees are to provide customers with best services and does this effect consumption pattern of consumers. You always judge a book by its cover! A Food outlet is the favorite hang out place for almost all the generations today. So, it is important to make the place pleasing, comfortable and conducive. So we asked this to have insights about the role of ambience on their consumption pattern. Life in on 24X7! With a major part of our youth employed in MNCs, their working hours have almost become undefined. They are bound to feel hungry irrespective of the time. Hence we asked this question to know whether the opening hours of Mc Donald are apt. How many times it has happened that we visit an outlet of our choice and we are forced to go to another just because of already full seating capacity. Hence, we asked the consumers what they feel about the seating capacity of Mc Donald.

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Health comes first! Could we ever think that some day we will have to pay even for drinking water ? People these days have become very health conscious. They are focusing more on hygiene more than taste. So we are trying to find out do the customers find Mc Donald hygienic enough. People go to Mc Donald mostly with their friends, relatives or colleagues, at times they do go alone. So the number of burger they buy depends on the situation. We asked the average number of burgers purchased each time so that we can get an idea of number of units consumed each time. In response to this we will directly get a value which will be used in our dependent variable. Priorities are different for different individuals. Different factors influence consumption pattern of different individuals. So we asked them to rate the various factors which we came across. By analyzing the results we will be able to make out which are the factors which effect the consumption pattern more. Response to this will let us know that what weights different factors attain in determining the consumption pattern. This question was framed to ask for suggestions for any other factor which effect consumption pattern. As there might be some other factor which we may not have covered in our exploratory research. Suggestions from this will help us evaluate some more factors which can affect the consumption pattern. Note:- Questions having answer as Yes/No will be evaluated by giving 0 to No and 1 to Yes.

Sample unit: McDonalds Sample size: 102 Sample technique: Questionnaires Sample area: IBS Hyderabad

OBSERVATION METHOD

We have also tried to identify the variables by the observation method. We had visited The McDonalds store in City Centre Mall, Hyderabad on 26th of December, 2010 and we had observed the McDonalds outlet over there for around 2.30 hours during the evening.

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SURVEY METHOD: QUESTIONAIRES We have also used the survey method: questionnaires. We distributed questionnaires to 102 students of IBS, HYDERABAD to identify the variables affecting the consumption pattern of consumers of burgers in Mc Donalds. Sample size & Selection of sampling elements We have selected probability sampling as it strengthens the validity of evaluation results since each element the population has equal chance of being selected so it has lesser chances of being biased. The sample size which we have selected is 102 which we think is adequate for this purpose.

1.3 QUESTIONNAIRE DEVELOPMENT We designed one questionnaire for the survey. The questionnaire had 15 questions based on all the 11 independent variables and 2 dependent variables which were identified from the focused group discussion. We wanted to gather the response of the sample which was representative of our population. These responses eventually helped us in evaluating the various factors which affected the consumption pattern of McDonalds.

The data collected has been analyzed using Factor analysis and the variables have been grouped into factors based on the results. During the analysis of the data, Likert Scale (1: Lowest & 5: Highest) has been used for questions that have multiple selection options. The questions we as follows :SAMPLE QUESTIONNAIRE 1. How often do you consume burgers? 1. Daily 2. Weekly 3. Monthly 4. Occasionally; once in ________ months. 5. Never 2. How do you rate the delivery time of Mc Donalds? 1. Very fast 2. Fast 3. Average 4. Slow 5. Very slow 3. The quality of the burgers served is -: 1. Very good 2. Good

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3. Average 4. Poor 5. Very poor 4. How far are you willing to go to have Mc Donalds burger? 1. Less than 1km 2. Less than 5 km 3. Less than 10 km 4. More than 10 km 5. How often do you think Mc Donalds diversifies its burger menu? 1. Very often 2. Often 3. Average no. of time 4. Rarely 5. Never 6. To what extent advertisement have an influenced your consumption (number of burgers bought at particular visit) of Mc-Donalds burger? 1. Highly influenced 2. Influenced 3. Rarely influenced 4. Never influenced 7. How reasonable do you think are the price of burgers at Mc-Donalds? 1. Very highly priced 2. Highly priced 3. Fairly priced 4. Low priced 5. Very low priced 8. Are you satisfied are you with the current customer services of Mc-Donalds chains? o Yes o No 9. Is the ambience of current Mc-Donalds stores apt? o Yes o No 10. Are the opening hours of Mc Donalds apt (11 am. To 11 pm.)? o Yes o No 11. Do you feel that current seating capacity of Mc Donalds store sufficient? o Yes o No 12. Do you think Mc Donalds is hygienic enough? o Yes

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o No 13. Each time you visit a Mc-Donalds chain what is the average number of burgers do you purchase _______. 14. Rank these factor affecting the consumption pattern for Mc Donalds chain in ascending order (most essential to least essential) :o ____ Timely delivery o ____ Quality o ____ Location o ____ Customer service o ____ Menu diversification o ____ Promotion o ____ Price o ____ Ambience o ____ Hygiene o ____ Seating Capacity o ____ Store Opening Hours 15. According to you are there any factors other than listed above which contribute to consumption pattern of Mc Donalds burger? o No o Yes; Please mention: __________________________________________________________________ ____________________________________________________________

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DATA REPRESENTATION & ANALYSIS

never 2%

frequency of burger Daily consumption

3% weekly 20%

frequency Daily weekly monthly occasionally never Analysis

Count 3 21 54 22 2

Col % 2.9 20.3 52.4 21.3 1.9

occasio nally 22%

monthl y 53%

From the data it can be inferred that more than half of the sample population consumed Mc Donalds burger monthly and other half consumes weekly or occasionally. There are very few who consume daily or never. Delivery time Count Very fast 28 Fast 59 Average 14 Slow 1 very slow 0 Analysis From the data we can tell that people consider delivery time of Mc Donalds quit Fast there is almost non who consider its delivery time slow, as it is a fast food center they have to serve the food in shortest possible time, Mc Donalds has ever since tried to cut down its delivery time as much as possible. Percentage % 27.45 57.84 13.73 0.98 0.00

Slow 1%

Delivery time
Averag e 14%

very slow Very 0% fast 27%

Fast 58%

Poor 0% Average 10%

Quality

Very Poor 0%

Quality Very Good Good Average Poor Very Poor

Count Percentage % 29 28.43 63 61.76 10 9.80 0 0 0 0

Very Good 28% Good 62%

Analysis People consider quality of Mc Donalds Burger quite good in a restraint one can not compromise with the quality of food it serves.

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Distance less than 1 km less than 5 km less than 10 km more than 10 km

Count 22 41 28 11

Percentage % 21.57 40.20 27.45 10.78

more than 10 km 11% less than 10 km 27%

Distance

less than 1 km 22%

less than 5 km 40%

Analysis
People like to travel least distance possible to get a burger which has urged Mc Donalds to open as many as possible distance at minimum distance in between.

Menu Count Percentage Diversifications % Very Often 3 2.94 Often 32 31.37 Average no ot 30 29.41 times Rarely 33 32.35 Never 4 3.92 Analysis There is a mixed opinion as to how often Mc Donalds diversifies its menu 32% of the sample population beliefs that they often diversify their menu at the same time 30% believe average no of time and 33% believe rarely. Mc Donalds to retain its customer tries to bring out new food item and add in their menu.

Advertiesment Effect Highlt Influenced Influenced Rarely Influenced Never Influenced

Count Percentage % 12 42 27 21 11.76 41.18 26.47 20.59

Analysis Promotion plays a vital role in sales of any consumer product it influences the buying pattern of a consumer in a great deal and Mc Donalds burger is no exception. 12% people believe they get highly influenced and 42% agree they get influenced by the advertisements.

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Low Priced 6%

Price highly

Very priced Low 3% Priced 0%

Very

Price Very highly priced Highly priced Fairly Priced Low Priced Very Low Priced

Count 3 28 65 6 0

Percentage % 2.94 27.45 63.73 5.88 0.00

Highly priced 27% Fairly Priced 64%

Analysis
Mc Donalds exist in a very competitive market it has to provide best of quality at lowest possible price. 64% people believe that price of Mc Donalds burgers are quit fair but about 27% believe that it is highly priced. Satisfaction Yes No Count Percentage % 7 6.86 95 93.14
No 93%

Satisfaction

Yes 7%

Analysis 93% of the sample population in not satisfied with the customer service which exist currently in Mc Donalds , only 7% are satisfied with it. Which could a concerning factor for Mc Donalds.

Ambience Yes No

Count Percentage % 16 15.69 86 84.31

Ambience
Yes 16%

Analysis
No 84%

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Opening Hours
Opening hours Yes No Count Perceentage % 19 18.63 83 81.37
Yes 19% No 81%

Analysis 81% people that opening hours of 11 a.m. to 11 p.m. is not apt they could be extended which would eventually help them in increasing their Sale.
Seating Capacity Yes No Count Percentage % 44 43.14 58 56.86

Seating Capacity
Yes 43%

Analysis As per the review about seating capacity the opinion is quit divided 43% people believe that the seating capacity there is sufficient seating capacity at Mc Donalds outlets wherein 57% believed it not sufficient.
No 57%

Hygiene Yes No

Count Percentage % 11 10.78 91 89.22

Hygiene
Yes 11%

Analysis 89% people that Mc Donalds is not hygienic enough , Mc Donalds should take measures to improve hygiene of its restaurant.

No 89%

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FACTOR ANALYSIS
To continue towards the main analysis, factor analysis has been performed to identify the main factors influencing the consumption pattern of Mc Donalds burgers. The objective of this analysis is to club the factors which show a high degree of correlation into a single factor. . The respondent ratings were subject to principal axis factoring with varimax rotation to reduce potential multicollinearity among the items and to improve reliability on the data. Varimax rotation (with Kaiser Normalization was converged in twenty five iterations.). Eleven variables were reduced to five factors which explained 63.318 % of the overall variance indicating that the variance of original values was well captured by these five factors.

RELIABILITY OF DATA & SAMPLE ADEQUACY(KMO AND TEST)

BARTLETT`S

Analysis was done with the help of the statistical software SPSS. This table shows two tests which indicate the suitability of data for factor analysis.
KMO and Bartlett's Test Kaiser-Meyer-Olkin Measure of Sampling Adequacy. Bartlett's Test of Sphericity Approx. Chi-Square df Sig.

.565 100.432 55 .000

Kaiser-Meyer-Olkin Measure of Sampling Adequacy The Kaiser-Meyer-Olkin Measure of Sampling Adequacy is a statistic which indicates the proportion of variance in your variables which is common variance, i.e. which might be caused by underlying factors. [It is the Index for comparing the magnitudes of the observed co-relation coefficient to the magnitude of the partial correlation coefficients] High values (close to 1.0) generally indicate that a factor analysis may be useful with your data. If the value is less than .50, the results of the factor analysis probably won't be very useful. The KMO Measure of Sampling Adequacy for our case is above .5 (.565 actually ) which indicates that our sample size of 103 is adequate . Bartletts Test of Sphericity Bartlett's test of sphericity indicates whether your correlation matrix is an identity matrix, which would indicate that your variables are unrelated. The significance level gives the result of the test. Very small values (less than .05) indicate that there are probably significant relationships among your variables. A value higher than about .10 or so may indicate that your data are not suitable for factor analysis.

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Ho: There is significant indifference in all the factors affecting the consumption of Mc Donalds burgers. H1: There is significant difference in all the factors affecting the consumption of Mc Donalds burgers. The observed significance level is 0.000 (Refer Table 1) which is less than .05, which is small enough to reject the hypothesis. It means there is a significant difference between the factors affecting the consumption of Mc Donalds burgers. It presents a good idea to proceed to factor analysis for the data.

COMMUNALITY COMMON FACTOR VARIANCE

Principal component analysis works on the initial assumption that all variance is common; therefore, before extraction all the communalities are 1. The communalities in the column labeled Extraction reflect the common variance in the data structure. So, for example we can say that 75.1% of variance associated with the first factor is shared or common, variance. Eigen Value: Indicates the amount of variance in the original variables accounted for by each component. The total initial variance in the new components will be 8.
Communalities Initial 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Extraction .486 .747 .655 .606 .647 .606 .690 .618 .677 .579

Delivery_Time Quality Distance Menu_Diversification Adv_Effect Price Satisfaction_level Ambience Opening_Hrs Seating_Capacity Hygine

1.000 .655 Extraction Method: Principal Component Analysis.

Another way to look at these communalities is in terms of the proportion of variance explained by the underlying factors. After extraction, some of the factors are discarded and some information is lost. The amount of variance in each variable that can be explained by the retained factors is represented by the communalities after extraction.

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TOTAL VARIANCE EXPLAINED

This table gives Eigen values, variance explained, and cumulative variance explained for the factor solution. It lists the Eigen values associated with each linear component (factor) before extraction, after extraction and after rotation. For the initial Eigen values solution, there are as many components or factors as there are variables. The Extraction Sums of Squared Loadings group gives information regarding the extracted factors or components. We can see from the above table that 5 components have been extracted from the initial 11. We have also rotated the factors to see the difference more clearly. The variance accounted for by rotated factors or components may be different from those reported for the extraction but the Cumulative % for the set of factors or components is the same. The results of the Extraction Sums of Squared Loadings obtained are explained below.

SCREE PLOT ANALYSIS

The scree plot is an indication of the number of factors that we finally get from the initial variables considered. The inflection on the curve gives the number of factors. This curve is difficult to interpret because it usually tails off after 5 factors. For this reason, the indications of the scree plot are not very reliable. But if we look carefully; there is a break at the 5th component as well indicating 5 factors. We can interpret that 11 variables are now reduced to 5 components contributing 63.318% of the total variance. With the help of, Scree plot, we can just visualize that 5 factors are taken with Eigen value greater than 1.0000.

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Scree Plot

2.1

1.8

1.5

Eigenvalue

1.2

0.9

0.6

0.3 1 2 3 4 5 6 7 8 9 10 11

Component Number

COMPONENT MATRIX
This table reports the factor loadings for each variable on the unrotated components or factors. Each number represents the correlation between the item and the unrotated factor. This correlation helps to formulate an interpretation of the factors or components. This is done by looking for a common thread among the variables that have large loadings for a particular factor or component. We can see from the table below that in component 1, many variables are highly loaded. Similar is the case for other components. This makes interpretation difficult. Thus we conducted a rotation to obtain a clearer picture of the factor loadings.
Component Matrix(a) Component 1 Delivery_Time Quality Distance Menu_Diversification Adv_Effect Price Satisfaction_level Ambience Opening_Hrs Seating_Capacity Hygine -.127 -.293 -.350 .670 -.593 .560 .027 .647 .091 -.542 -.086 2 .475 .429 -.347 -.224 -.261 .245 .469 -.371 .370 -.135 -.500 3 .459 .055 .026 .309 .447 .176 .033 -.232 -.662 -.470 .021 4 .053 .687 -.023 .045 .072 .449 -.463 .075 .176 .098 .431 5 .173 .045 .641 .098 -.146 -.028 .503 .036 .250 -.189 .459

Extraction Method: Principal Component Analysis. a 5 components extracted.

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ROTATED COMPONENT MATRIX

After applying rotation to the data, the loadings were observed. Rotation Method was Varimax with Kaiser Normalization. After the rotation, the factor loadings were clearly observed. The variables under each factor have been shown. Each variable has been categorized into different factors depending upon the factor loadings. We see the highest value for the variable irrespective of whether it is positive or negative and put that highest value into the component under which it falls. Thus , our 11 variables get clubbed into five components or factors.

Rotated Component Matrix(a)

Component 1 Delivery_Time Quality Distance Menu_Diversification Adv_Effect Price Satisfaction_level Ambience Opening_Hrs Seating_Capacity Hygine .103 -.127 -.174 .753 -.294 .618 -.003 .493 -.183 -.680 .114 2 -.212 .072 -.080 -.030 -.706 .194 .226 .337 .781 .085 -.024 3 .425 .849 -.099 -.174 .153 .386 -.105 -.340 .175 .030 .110 4 .495 -.035 .199 -.074 -.073 -.107 .792 -.370 .050 -.320 -.252 5 -.072 .057 .754 .052 .182 -.162 .015 .093 .023 .075 .752

Extraction Method: Principal Component Analysis. Rotation Method: Varimax with Kaiser Normalization. Rotation converged in 25iterations.

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RESULT OF FACTOR ANALYSIS :

S. N.

Factor

Attributes

Varience Explained

Menu Diversification

Price 1 Price Ambience 18.803

Seating Capacity

Advertising 2 Advertisement Opening Hours 13.388

Outlet location

Location 11.413 Hygiene

4.

Quality

Quality

10.276

Satisfaction level 5. Customer Service Delivery Time 9.438

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REGRESSION ANALYSIS
After running the factor analysis on the data we were able to get the value of reduced no. of factors(five).These factor were thenused to run regression analysis. Following were the findings of the data: Model 1: Dependent Variable = Frequency (Annual) * Average Number of burgers consumed on each visit. Independent Variables: Factor1 (Price): Menu Diversification, Price, Ambience, Seating Capacity Factor2 (Advertizing): Advertizing Effect, Opening Hours Factor3 (Location): Distance, Location Factor4 (Quality): Quality Factor5 (Customer Satisfaction): Customer Satisfaction. Model Summary Change Statistics F Change 1.538 df1 5 df2 96 Sig. F Change .185

Mode l 1

Adjusted R R Square R Square .272(a) .074 .026

Std. Error of the R Square Estimate Change 146.061 .074

This clearly shows that the model is insignificant as the value of Sig. F Change is 0.185 which is above the acceptable value of 0.1. On closer observation of the data we found following output: Coefficients Standardized Coefficients Std. B Error 7.757 -.016 .220 -.146 -.013 -.064 -.165 2.239 -1.485 -.134 -.654

Model

Unstandardized Coefficients

t Beta .000 .869 .027 .141 .894 .515

Sig.

(Constant ) Price Adv Location Quality cust_serv ice

112.176 -2.399 32.540 -21.584 -1.948 -9.504

14.462 14.534 14.534 14.534 14.534 14.534

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This leads us to the conclusion that only factor that was having a significant impact on consumption pattern of Mc Donalds is Advertizing. Since Advertizing comprises of two variables: Opening Hours Advertizing Effect. So only these variables are responsible for affecting the consumption pattern at Mc Donalds. Now we ran a Regression analysis using the dependent variable and the two independent variables: Opening Hours & Advertizing Effect. Model 2: Dependent Variable = Frequency (Annually) * Average Number of burgers consumed on each visit. Independent Variables: Opening Hours Advertizing Effect The output of these variables is discussed hereunder:

Model Summary

Mode l 1

Adjusted R R Square R Square .241(a) .058 .039

Std. Error of the R Square Estimate Change 145.086 .058

Change Statistics F Change 3.048 df1 2 df2 99 Sig. F Change .052

Now this model is clearly significant as its significance is below the acceptable limit of 0.1. Coefficients Standardized Coefficients Std. B Error 3.672 -.244 -.015 -2.424 -.151

Model

Unstandardized Coefficients

t Beta .000 .017 .880

Sig.

(Constant ) Adv_Effe ct Opening_ Hrs

214.206 -38.042 -5.767

58.338 15.695 38.108

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So we can find that the Regression Equation is: Y = -38.042X1 -5.767X2 +214.206

Where: Y Consumption Pattern (number of units consumed annually) X1 Effect of Advertizing X2 Opening Hours In this model the significant factor is Effect of Advertizing as value of significance is 0.017 which is less than 0.1 . While that of Opening Hours is 0.88 which is well above 0.1. So clearly the only factor that can improve the consumption of burgers at Mc Donalds is Advertizing.

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LIMITATIONS:

Extraneous factors i.e. factors which have not been taken into account may also affect the results. The results obtained for a specific city Hyderabad which is a metropolitan city might be difficult to generalize for the whole of country. As most of the data has been collected from the students of IBS Hyderabad some biases may have unintensionally cropped up.
Since the significance level of the model is high we cant identify many factors . Only one factor advertising was found to have a considerable impact.

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RECOMMENDATIONS & CONCLUSION:

Though we included 11 variables influencing the consumption pattern of the consumers namely delivery time, quality, distance, menu diversification, advertisement effect, price, customer service, ambience, opening hours, seating capacity and hygiene. After factor analysis we got five main factors which were put through regression analysis . We found that out of all the factors advertising was the only significant factor . We further found that amongst two variables under the factor advertisement which are advertisement effect and opening hours, advertisement effect was more significant. So we could clearly infer from the analysis that advertisement effect is the only main factor affecting the consumption pattern of the consumers. So ,McDonalds should concentrate on the advertisements and marketing of its products. The promotion factor has to be looked amongst the all factors of marketing strategies. If McDonalds wants to increase their customer base then it should spend more on its advertisement activities. It should come up with more number of advertisements so that frequent come-across of advertisement leaves a impression in mind of consumers and they turn up only to McDonalds. Advertisement is going to help McDonalds in clearly conveying the consumers about their new products and diversification in menus. Advertisement should be attractive enough and McDonalds should concentrate on their competency while advertising, they should convey about their best quality in affordable prices. They can tap every form of media for advertisement, they are already into basic television, newspaper, magazines, billboards forms of media . They can move into new mediums like internet and mobile advertisements. Further suggestions for Mc Donalds to improve on their advertisement are: They should go for cross-promotions. Which may be with sports related goods or products, so that youth could start associating themselves with McDonalds. McDonalds can have celebrity spokesperson to increase their publicity. They can have famous film and cricket stars as their spokesperson. As they have done in abroad , they had basketball player Michael Jordan and superstar Justin Timberlake as their spokesperson. They can have diversification in burgers in accordance to different regions and states and convey them through advertisements to consumers. Their competitors KFC have been giving them competition in non-vegetarian food items, so McDonalds should improve their non-vegetarian products by launching some new product which can create hype amongst consumers and hence improve the sales in nonvegetarian items as well. They can come up with more attractive tag lines so that consumers can relate them well with products. They have been doing the same since long.One of their oldest is : McDonalds is Your Kind of Place which they came up with in year 1967. Then their latest one is i'm lovin' it in the year 2003. Also as innovation is the key to success in todays competitive atmosphere McDonalds will have to innovate its offerings , procedures and services to fight the competitors.

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REFERENCES:
William G. Zikmund, Business Research Methods. Naresh K. Malhotra and Satyabhushan Dash, Marketing Research. http://www.humanresources.hrvinet.com/structured-interview/ http://www.okstate.edu/ag/agedcm4h/academic/aged5980a/5980/newpage16.htm http://controls.engin.umich.edu/wiki/index.php/Factor_analysis_and_ANOVA http://www.microbiologybytes.com/maths/spss4.html http://www.mcdonaldsindia.com/

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