Agency and client duet: 2010-2013 Best re-positionings in Indian Market .

A Project Report Presented to the faculty of the School of Management & Entrepreneurship Auro University, Surat.

Submitted By: Preet Shah

Submitted to: Ms. Mayanka Singh

DATE:March 2013

DECLARATION FORM

I declare that I have personally prepared this report and that it has not in whole or in part been submitted for any other degree or qualification. Nor has it appeared in whole or in part in any textbook, journal or any other document previously published or produced for any purpose. The work describe here is my own, carried out personally unless otherwise stated. All sources of information, including quotation, are acknowledged by means of reference, both in the final reference section, and at the point where they occur in the text.

Acknowledgement

I would like to take this opportunity

to pay my gratitude to God and to people who have supported throughout writing my report. First and Foremost, I express my sincere gratitude to my Supervisor, Ms. Mayanka Singh, for being such an understanding and supporting mentor. Her motivation, support and path direction has greatly enhanced the value that I put in my report which otherwise would not been possible. I would like to thank her for taking the time out for meetings, to answer all my emails as well as providing me with detailed Suggestions and comments about my work. Thank you so very much!
Executive summary
I have made this report to know about, is really an ad agency can help their clients to overcome from their troubles? In this report my ad agency is Leo Burnett which comes in top 10 ranking in India. And its client is one of the leading fast food brand McDonalds. To make this report I have used secondary data methodology. I have chosen this topic for the research purpose; this report has always been in limelight. My approach for this dissertation is inductive approach.

Basically this report shows the research on McDonalds in terms of its market share, sales and growth rate. For these data I have done secondary method of data collection. My approach for this dissertation is inductive approach. Through launching a new product line and serving more economical happy price menu and effective taglines Leo Burnett helped McDonalds from the effect of global recession and make them to achieve their highest sales and market share of the Indian fast food industry. Leo Burnett made McDonalds to become a leader of an Indian Fast Food Industry through effective ads and through the repositioning of McDonalds.

Table of Contents
Table of Contents.............................................................................. 4
3.1 Data Sources:........................................................................................................... 20

CHAPTER: 1 INTRODUCTION

An

Advertising agency

is a company that carries out all or some aspects of

advertising production for firms by which it has been hired. Some agencies handle all phases of

advertising campaigns, from performing market research and establishing product branding strategies to producing ads and placing them in appropriate outlets. Other agencies specialize in one or more of these functions. Advertising agencies typically have the resources to fulfil all aspects of a clients advertising needs. Top 10 Advertising Agencies
1. Ogilvy & Mather 2. JWT 3. Mudra Communication 4. FCB Ulka Advertising Ltd 5. Rediffusion DY & R 6. McCann Erickson India Ltd 7. RK Swamy BBDO Advertising Ltd. 8. Grey Worldwide (I) Pvt. Ltd. 9. Burnett India Pvt. Ltd. 10. Contract Advertising India Ltd.

In my report Leo Burnett is my ad agency for my client McDonalds.

Leo Burnett India

Leo Burnett India came into existence as Chaitra Advertising Pvt.Ltd. in 1972. The affiliation with the Leo Burnett network first began on 1987; the name of agency was changed to Chaitra Leo Burnett Pvt. Ltd. Today Leo Burnett India is one of the top 10 agencies in India and operates through 328 advertising professionals in 4 strong offices across the country- Mumbai, Delhi, Kolkata and Bangalore.

They believe in (1) Building brand believers, (2) An ideas culture, (3) Building an intense bond.

Departments in Leo Burnett Client Serving

Account planning

Departments
Media Creative Personal Relation

Client

is a customer of a professional service provider like for an advertising agencies.

client is the principal for their agent or for contractor. In my report McDonald is a client for Leo Burnett ad agency. Leo Burnett is playing an important role for McDonalds to satisfy its wants.

Major client of Leo Burnett

1. McDonalds 2. Samsung 3. Uninor 4. Tata Capital 5. Tata Salt 6. HDFC Life Insurance 7. General Motor 8. Whisper 9. Complan 10. Glucon D 11. Thums Up 12. Maaza 13. Perfetti 14. Tide 15. Bacardi

Positioning is how you want your brand to be considered by consumers when compared
to other competing brands. Positioning is based on product features such as colour, price, fluffiness, quality of service, innovative approach, etc. Before positioning, companies have to do segmentation and targeting. Segmentation is dividing the market into segments upon some set of criteria and evaluating the profitability of each segment Targeting is selecting one or more segments and going after them

Repositioning

can be required as the market changes and new opportunities occur.

Through repositioning the company can reach customers they not intended to reach in the first place. If a brand has been established at the market for some time and wish to change their image they can

consider repositioning, although one of the hardest actions in marketing is to reposition a familiar brand. Re-positioning is quite lot more difficult and expensive compared to initial positioning. You know the saying 'only one chance to make first impression' also applies to the world of branding. Re-positioning is when you want your brand to be considered/associated with different features. For example, KIA cars has repositioned themselves from being some brand into being a cool brand .. Cadillac has repositioned themselves from being classical car for the rich and old into more affordable elegant car ... Oldsmobile has tried to reposition themselves as "not your father's car" but it was unsuccessful repositioning.

CHAPTER: 2 LITERATURE REVIEW

2.1 Indian Fast Food Industry

The fast food industry in India has evolved with the changing lifestyles of the young Indian population. The sheer variety of gastronomic preferences across the regions, hereditary or acquired, has brought about different modules across the country. It may take some time for the local enterprise to mature to the level of international players in the field.

Many of the traditional dishes have been adapted to suit the emerging fast food outlets. The basic adaptation is to decrease the processing and serving time. For example, the typical meal which called for being served by an ever alert attendant is now offered as a Mini-Meal across the counter. In its traditional version, a plate or a banana leaf was first laid down on the floor or table. Several helpers then waited on the diner, doling out different dishes and refilling as they got over in the plate.

In the fast food version, a plate already arranged with a variety of cooked vegetables and curries along with a fixed quantity of rice and Indian flatbreads is handed out across the counter against a prepaid coupon. The curries and breads vary depending on the region and local preferences. The higher priced ones may add a sweet to the combination. Refills are generally not offered.

The diversity of Indian cuisine poses logistical problems when it comes to handling. Hence it is common to serve different cuisines at different counters within the same premises. Presence of a large vegetarian population, who eschew non-vegetarian food, has given rise to outlets which exclusively serve vegetarian fast food. Also, different variety of food may be served depending on the times of the day. Beverages such coffee, tea, soft drinks and fruit juices may also be served in such outlets. Some outlets may additionally have specially designed counters for icecream, chaats etc.

2.2 McDonalds India

McDonald's is the world's leading food service retailer with more than 33,000 restaurants in 118 countries serving more than 67 million customers each day.

In India, McDonald's has two Indian entrepreneurs: Amit Jatia, Vice Chairman, Hardcastle Restaurants Pvt. Ltd, which has been awarded a Development Licensee status by McDonald's Corporation, U.S.A, spearheads McDonald's operations in West & South India, while McDonald's restaurants in North & East India is managed by Vikram Bakshi's Connaught Plaza Restaurants Private Limited, which is still a Joint Venture with McDonald's Corporation. For Hard castle Restaurants Pvt Ltd ('HRPL'), the transition to a Development Licensee implies a higher level of commitment by McDonald's Corporation as it enhances its trust in the local partner. McDonald's ensures that the evolution to a Development Licensee takes place only after the financial strength, viability, profitability and long - term sustainability of the business is assured. Celebrating over 15 years of leadership in food service retailing in India, McDonald's India now has a network of over 250 restaurants across the country. McDonald's India is a leader in the food retail space, with a presence of more than 250 restaurants serving more than 6.5 lakh customers daily in India. McDonald's India and HRPL in particular has an aggressive expansion plan - including market expansion, new customer outreach formats and menu expansion. With HRPL becoming a Development Licensee in the year 2010, there are strong and robust commitments to investments, expansion and growth. By 2014, HRPL plans to double the number of restaurants it currently has. HRPL is expanding its reach by expanding the portfolio and access points with formats like from kiosks; drive thru, web-delivery and petrol pumps in addition to the restaurants. In 2012, HRPL plans to open other 35-40 McDonalds restaurants in West and South India.

2.3 Relationship between McDonalds and Leo Burnett

McDonalds has a strong relationship with each and every department of Leo Burnett. Leo Burnett has 5 departments in its Indian operation.

1. Client service
The client service or account executive is the link between the ad agency and its clients. The account executive is mainly responsible to gain knowledge about the clients business, profit goals, marketing problems and advertising objectives. The account executive is responsible for getting approved the media schedules, budget and rough ads or story boards from the client. McDonalds Leo Burnett pitched and won McDonalds against FP7 Leo Burnett has 17 years of partnership with McDonalds.

2. Account planner
Planning the objectives of the advertising, selecting and evaluating research feedback on the basis of which the team makes judgements and takes decisions. Making the objectives and the feedback relevant and stimulating to the rest of the team particularly the creative. McDonalds account planner of Leo Burnett researched on if the price will be affordable for if McDonalds pice have risen.

3. Media department
The responsibility of the agencys media department is to develop a media plan to reach the target audience effectively in a cost effective manner. The staff analyses, selects and contracts for media time or space that will be used to deliver the ad message. A large part of the clients money is spent on the media time and space McDonalds media department decided how many McDonalds hoardings, posters, TV commercials should be produced to reach the audience.

4. Creative department
The creative specialist are known as copywriters. They are the ones who conceive ideas for the ads and write the headlines, subheads and the body copy. They often prepare the

rough layout of the print ad or the commercial story board. Creation of an ad is the responsibility of the copywriters and the art department how the ad should look. McDonalds happy price menu was launched in 2009 and has since seen taglines like, purane zamaane ka daam. And bees mein full dhamaal. These taglines were created by Leo Burnett.

5. Production department
After the completion and approval of the copy and the illustrations the ad is sent to the production department. The production department supervise the casting of actors to appear in the ad, the setting of the scenes and selecting an independent production studio. The production department sometimes hires an outside director to transform the creative concept to a commercial. McDonalds has TV ads which include Mc aloo tikki- Rs 25. Purane zamaane ka daam, and ads on latest few dips.

(2.4) FACTS AND FIGURES

2.4.1 COMPANY OPERATED SALES

company operated sales year Sales (In $) 2007 16,611 2008 16,571 2009 15,459 2010 16,233 2011 18,293

If we are looking at the sales of McDonalds India we can come to know that, in 2007 companys sells was 16,571 (million $). During 2008 and 2009 there was a global recession going so the McDonalds sell went down by 1,100 million $. so looking at the companys sells Leo Burnett McDonalds ad partner helped them to overcome from the recession so Leo Burnett has introduced happy price menu, happy breakfast menu even they make McDonalds as a family place and also make a place where everyone can celebrate their childs birthday party in McDonalds. This is the step of repositioning for McDonalds by Leo Burnett, and after repositioning, McDonalds sells has been increased and reached above 18,000 million $ in 2011 2012.

2.4.2 FRANCHISED REVENUE

Franchised Revenue

Year 2007 2008 2009 2010 2011

Sells (In $) 6,176 6,961 7,286 7,842 8,713

In India McDonalds has also given franchises to increase their revenue. Now McDonalds has segmented their business in two parts namely, 1) company operated sells and 2) franchised revenue. The ratio of both the segments in India is 50-50 %. So, the franchises also play a major role to increase the companys revenue.

2.4.3 MARKET SHARE

Market Share Company Name McDonald's Yum! Brands Doctor Associates Wendy's International

% 13 9.7 8.7 4.5

Domino's others

1 63.1

As we can see in this graph McDonalds is the leader of the Fast Food Industry in India. To make McDonalds as leader in fast food industry Leo Burnett has played a major role. With the help of the McDonalds management Leo Burnett has introduced many products which can be available in an economic price. Even they have introduced economical price meals for their customers who cant afford costly burgers. Leo Burnett has introduced theses range of products very smartly taking consideration of the Indian region which can differentiate McDonalds with its other competitors and make them the leader in fast food industry.

2.4.4 GROWTH RATE

Growth Rate Year Sells (In $) 2007 2,395 2008 4,313 2009 4,551 2010 4,946 2011 5,503

McDonald has an increase in growth rate after repositioning of McDonalds India. Looking at the graph there was a drastic change in growth rate in 2007 2008. After that there was a nominal change in the growth rate.

2.4.5 MCDONALDS TOTAL REVENUE

McDonald's Revenue corporate franchised

Total 83,167 36,978

In India McDonalds has segmented themselves into two parts as I have mentioned above. Company is getting 69% of revenue by their own outlets and another 31% of the revenue is coming from their franchises.

CHAPTER:3 METHODOLOGY

3.1 Data Sources:

For my research work on this topic, I decided to choose secondary data. Secondary data not only consists of raw or compiled data but it also includes published summaries. Most of the organisations keep their records and data safe so that in future if any research work is to be done, it can be easier for anyone to analyse trends and draw to some relevant conclusion. Benefit of keeping records is, on doing research for same topic in future, time does not get wasted to collect same data again and again. One base data is available then it helps to make strategies. Data is available from many sources like magazine, newspaper, government records, industry statistics and reports, journals and old research that has been done time-to-time. This data includes all basic information about what

company expects from countrys government and what is minimum level of technology that is needed for setting up industry etc. for research work, various surveys that are released by government can also be used. For my research work, main types of secondary data that i used are: 1. Secondary Data From Multiple Sources: Sources of multiple data are used from survey data or documentary. In my dissertation, I have used all these types of data, which is combination of two or more data. 2. Secondary Data from Documentaries: This is kind of data that includes various things documents that includes notices, government and public records and correspondence. For my dissertation, I have read many journals, newspapers, articles, published research on internet and books so that I can get good information for my research which has high credibility and also it helped me in giving good conclusion and recommendation of my dissertation. I have gone through an E-library portal and also various links that has an information regarding af agency and the repositioning of their client.

I have chosen this topic for the research purpose; this report has always been in limelight. My approach for this dissertation is inductive approach.

CHAPTER: 4 DATA ANALYSIS

4.1 BCG Matrix

According to BCG Matrix McDonalds is a star. The reason for this is its high market growth and high market share in the Indian market. On the other hand KFC a n d P i z z a Hut are the cash cows because of their low growth rate and high market share. During past some years KFC and Pizza Hut have lost their market g r o w t h because of the fact that they lost their standard war to their competitor i-e McDonalds. Another direct competitor of McDonalds is Subway. According to BCG Matrix it is a dog. S o m e of the reasons that are responsible for its low market share and low market growth are the less expansion strategies being followed by the company. Secondly they are not focusing at all on all the major cities, rather they are only focused on the target segments of Delhi and Mumbai.

4.2 McDonalds India: Networks and Competitors

Compan No. of ies outlets

McDonald's Pizza Hut Domino's Subway KFC 132 137 220 131 34

cities
34 34 42 32 9

McDonalds is estimated in increase of their outlets double in an end of 2013. McDonalds is on the 3rd position in terms of having nos. of outlets across the country this makes McDonalds the leader in the Indian Fast Food Industry.

4.3 Products at McDonalds India

 Vegetarian Menu

Non Vegetarian Menu

Beverages

 Frozen Desert

4.4 Marketing Mix of McDonalds

Product
The important thing to remember when offering menu items to customers is that they have a choice. They have a huge number of ways of outlay their money and places to spend it. Therefore, McDonald's gives an importance on developing a menu which customers want. Market research starts exactly what this is. However, customers' wants change over time. What is fashionable and attractive today may be discarded tomorrow. Marketing continuously monitors customers' preferences.

Price
The customer's perception of value is an important determinant of the price charged. Customers draw their own mental picture of what a product is worth. A product is more than a physical item, it also has psychological connotations for the customer. The danger of using low price as a marketing tool is that the customer may feel that quality is being compromised. It is important when deciding on price to be fully aware of the brand and its integrity. A further consequence of price reduction is that competitors match prices resulting in no extra demand. This means the profit margin has been reduced without increasing sales.

Promotions
The promotions aspect of the marketing mix covers all types of marketing communications. The methods include advertising, sometimes known as 'above the line' activity. Advertising is conducted on TV, radio, cinema, online, poster sites and in the press. What distinguishes advertising from other marketing communications is that media owners are paid before the advertiser can take space in the medium. Other promotional methods include sales promotions, point of sale display, merchandising, direct mail, telemarketing, exhibitions, seminars, loyalty schemes, door drops, demonstrations, etc.

Place
Place in the marketing mix, is not just about the physical location or delivery points for products. It includes the management of a range of processes involved in bringing products to the end consumer.

4.5 Business model of McDonalds India

The Business Model of McDonalds is a franchise-based model coupled with strong corporate branding. The focus is on the branding of McDonalds as a globally accepted service provider with strong customer perception about:

McDonalds realized very early in their business that in order to achieve happiness amongst customers; the possible route is through happy, motivated and committed employees. In accordance with this they played on the customer first strategy. Even in India, their efforts clearly indicated that they were keen to understand the Indian consumer. Hence they adapted themselves to tickle the taste buds of their Indian customers to become a brand that enjoys a very high brand recall. Therefore they focused on internal as well as external marketing. The level of importance has changed to be in the following order.

Chapter: 5 Repositioning techniques

5.1

Types of Repositioning strategies

(1) zero repositioning, which is not a repositioning at all since the firm maintains its initial strategy in the face of a changing environment; (2) Gradual repositioning, where the firm performs incremental, continuous adjustments to its positioning strategy to reflect the evolution of its environment; (3) Radical repositioning that corresponds to a discontinuous shift towards a new target market and/or a new competitive advantage.

A four-phased brand repositioning approach can be followed to achieve the intended benefits: Phase I. Determining the Current Status of the Brand Phase II. What Does the Brand Stand for Today? Phase III. Developing the Brand Positioning Platforms Phase IV. Refining the Brand Positioning and Management Presentation

5.2 McDonald's Repositioning Strategy

McDonald's, the promise of American fast food anywhere in the world, has had to rethink and reposition its brand offerings in different countries. While some basic elements like Ronald were left in place the menu underwent an overhaul. For example, in India, the menu has no beef dishes since it is not considered religiously correct to eat cows meat: there is the very popular McAlooTikki, a potato-based patty in burger buns; the Big Mac is replaced by the Maharaja Mac, the Big Mac in chicken; there is also the paneer (cottage cheese) McVeggie burger. The Italian McDonald's has a special coffee spot. To celebrate its 20th anniversary in China, McDonald's rebranded under the "Make Room for Happiness" campaign. They had all you want coffee refills; Wi-Fi and a more modern restaurant design were unveiled. This was done exclusively for China, where McDonald's positioned itself as a place to relax away from the high demands of the average Chineses life. Its "I'm Loving It" slogan made way for "Make Room for Happiness," and McDonald's became the place where the stressed young Chinese can spend quality time rejuvenating after working for long hours. The result was an 18% increase in sales, and an increasing legion of fans that is fueling McDonald's' growth in China.

5.3 McDonalds Changing Markets Changing Strategies

Decades after its launch, the Big Mac is changing colours, literally. The world's largest fastfood chain is letting go of its familiar red-and-yellow colours for more muted tones as it goes for its biggest and costliest revamp in the country, in line with its global strategy of attracting more adults. For the next generation of consumers McDonalds plans to cultivate a very different image from its existing one. After revamping 280 stores in various markets last year, McDonald's is now opting for the Tampa model and will spread that design to upwards of 800 locations this year roughly triple what it did last year. The company is donning a new look when India is on its way of becoming a global hotspot for food retailers, with chains like

Starbucks, Burger King planning to enter the country. Some McDonalds Remodel highlights include : Redoing roofs - The bright red roofs that have topped McDonald's for several decades are getting the heave, replaced with flatter, more conventional roofs. Muting paint - The neon yellows and reds common to the interiors and exteriors are becoming history, replaced with much more subtle oranges, reds, yellows and even greens. Updating chairs - Those industrial steel chairs are giving way to wooden chairs, colorful stools and, in some cases, vinylcovered chairs that resemble leather. Some stores will have larger lounge chairs similar to the kind you might expect to find in a coffee shop. Doubling drive-through - To ease lines inside and outside stores, many locations are adding second drive-through windows to speed up service. Splashing colour - McDonald's hasn't junked it's familiar red and yellow colors altogether, but it is making them far less obvious. Instead of filling the restaurants with them, it's splashing bright yellow and red here and there for effect. Dividing dining areas - The sea of tables and chairs is history in the remodelled stores. The new dining rooms are divided into separate eating zones for larger groups, eat-and-run customers and folks who want to stay and lounge. Adding flat-screens TVs - Large, flat-screen TVs some playing contemporary music are showing up in many locations, though fewer than half of the remodelled stores will display them.

The new design makes the customer feel more comfortable and at leisure to enjoy their surroundings. This offers to McDonalds two key opportunities- firstly, to shift to another customer base with high spending power and then to broaden their menu with offerings at a higher price point.

5.4 Benefits of repositioning:

Value over others Updated personality Relevant position Up to date image The risks associated with such strategies are: Loss of focus Neglecting original customers Losing credibility for the brand Confusing the brand Therefore, brand repositioning is more difficult than initially positioning a brand because one must first help the customer unlearn the current brand positioning. Three actions can aid in this process: (1) Carefully crafted communication, (2) New products, packaging, etc. that emphasize the new positioning and (3) Associations with other brands (co-branding, co-marketing, ingredient branding, strategic alliances, etc.) that reinforce the new brand positioning. This exercise is so critical to an organizations success that the organizations leadership team and its marketing/brand management leaders should develop it, preferably with the help and facilitation of an outside brand-positioning expert.

Chapter: 6 Conclusion