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Lessons from

the Maharaja Mac


by Lulu Raghavan
December 2007
Lessons from
2

Maharaja Mac
Lulu Raghavan
December 2007

the Maharaja Mac


Five rules for
entering the
Indian market Lulu Raghavan is client director for the
Mumbai office of Landor Associates.

© 2007 Landor Associates. All rights


reserved.

When McDonald’s replaced its beef-based simply tweaking brand strategy at the regional
Big Mac with the mutton-based Maharaja Mac and country levels is doomed to fail.
in India, skeptics shook their heads. After all,
no one had ever successfully marketed a A recent study by McKinsey suggests that
burger made of anything other than beef. multinationals that have had the most success
But McDonald’s faced a dilemma: how to in India have approached the market from a fresh
sell hamburgers in a culture where the perspective, resisting the urge to simply transplant
cow is sacred. what has worked elsewhere.2 They have been
willing to create local brand strategies from
As it turned out, the mutton burger was a scratch. Similarly, the Boston Consulting Group
tremendous hit. In addition to the Maharaja Mac, has concluded that winners in India can be
the company now sells cottage cheese wraps and separated from losers by their ability to recognise
potato patties to its growing Hindu clientele. This India’s unique characteristics and align their
success has allowed McDonald’s to shape and business models accordingly.3 1 Kishore Dash, “McDonald’s India,” Thunderbird School
of Global Management (2005), http://www.thunderbird.
grow the Indian fast food market while capturing edu/wwwfiles/pdf/about_thunderbird/case_series/
a large slice of the growing pie.1 As corporate boardrooms around the planet a07050015.pdf (accessed 12 March 2007).
strive to craft brand strategies for the Indian
2 Kuldeep P. Jain, Nigel A. S. Manson, and Shirish Sankhe,
Like McDonald’s, most global companies have market, they would do well to draw on lessons
“The Right Passage to India,” McKinsey on Finance
found that building brands in India is no easy task. learned by multinationals with many years of (Winter 2005), http://www.mckinseyquarterly.com/
They have had to significantly alter their global experience in the country. These lessons provide article_abstract_visitor.aspx?ar=1581 (accessed
strategies for the Indian market. Because the Indian a basis for formulating and executing successful 12 March 2007).
market and consumer differ significantly from the branding strategies in a notoriously complex and
3 The Boston Consulting Group, “India: The Next Frontier
rest of the world, the tried and tested approach of idiosyncratic market. for Consumer Companies” (2006), http://www.bcg.com/
publications/files/India_The_Next_Frontier_for_Consumer
_CompaniesJul06.pdf (accessed 12 March 2007).
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Maharaja Mac
Lulu Raghavan
December 2007

Doing well in India depends


on a willingness to think
differently about all aspects
of the business.
Most multinationals that have built strong brands in Korea’s LG Electronics seems to understand this
the country have been guided by a simple mantra: principle very well. Its corporate headquarters took
“Think differently about your India strategy.” In on the burden of expensive national advertising
particular, they have been willing to completely campaigns for its Indian subsidiary to establish
rethink issues around its brand with Indian consumers. This investment
allowed LG to maintain price competitiveness
• Brand investment despite its massive advertising spends. The
• Consumer focus company even invests in making its expatriate
• Localization and innovation managers feel comfortable at home in India.
• Market segmentation Korean-speaking maids who can cook Korean
• Regional diversity food are dispatched from Seoul to make adjusting
to India much easier for the Koreans, thereby
In the following sections, I propose five rules for increasing their motivation and productivity.5
maximizing branding success in India.
Rule 2:
Rule 1: Reach out to the consumer
Invest in your brand Twenty years ago, Indian consumers had
To successfully build a brand in India, you will need a reputation for blindly accepting most imported
patience and a long-term view of the market. More Western goods. But consumer behavior has
than in any other part of the world, you must be undergone major shifts since then, and it is
prepared to invest time and money before your important to understand the uniqueness of
company starts to see financial returns. Keep in the Indian consumer today. They are extremely
mind that Indian consumers like to do business value-for-money conscious and highly demanding.
with companies that have been around for a while, They carefully consider features, functionality,
so you can’t just bring your brand to India and and service levels at all price points. Analyzing
expect to see profits from day one. market potential and brand awareness cannot
replace real-world consumer understanding and 4 Archna Shukla, “Cola Majors Bet on the Fizz in India,”
Livemint.com (9 April 2007), http://www.livemint.
The Indian market is complicated, diverse, and firsthand experience. com/2007/04/09004954/Cola-majors-bet-on-the-fizz-in
idiosyncratic. It takes time to understand Indian .html (accessed 14 April 2007); and Jennifer Kaye,
consumers. It takes time to localize products. It Target Group Index (TGI) has compared brand “Coca-Cola India,” business case for Tuck School of
Business at Dartmouth (2004), http://mba.tuck.dartmouth
takes time to navigate through the red tape. It takes building in Brazil, Russia, India, and China. Its .edu/pdf/2004-1-0085.pdf  (accessed 14 April 2007).
time to acclimatize to the diversity and constant surveys suggest that global advertisers can be
contradictions that define India. Coca-Cola, for expected to “experience the widest divergence 5 Masanori Kondo, “Success of MNCs in India: Market
Research, Product Localization and Advertising,” Weekly
example, has found the Indian market very tough from international norms” in China and India.6 Economist (July 2006), http://www.nihongobashi.com/
to crack. It reentered the country in the 1990s after Even so, these two rising economic powers are news/japanese-mncs-2.html (accessed 12 March 2007).
a 16-year absence and did not begin to turn a profit remarkably different consumer markets. Korea’s
until 2006.4 Daewoo Motors, for example, tried to adapt its 6 TGI, “Brand Building in the BRICs,” http://www.tgisurveys
.com (accessed 15 April 2007).
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Maharaja Mac
Lulu Raghavan
December 2007

China strategy to the Indian market. It failed When Pizza Hut started doing business in India,
miserably because Indian consumers would not most Indians were unfamiliar with traditional
accept products made to another’s standards.7 Italian pizza toppings. But by offering pizza toppings
tailored to the Indian palate, and selling the product
Hyundai Motors, in contrast, spent considerably at affordable prices, the company succeeded in
more time trying to understand its Indian custom- putting pizza on the table in India.10
ers. After determining that Indian consumers attach
significant importance to lifetime ownership costs Rule 4:
of a vehicle, Hyundai reduced the engine output of Choose your market segment carefully
its Santro to keep fuel efficiency high. It also priced Multinational companies frequently enter new
its spare parts reasonably and made more than markets by targeting the top 10 percent of the
a dozen changes to product specifications tailored consuming class. These consumers tend to display
to the Indian market. For example, they factored in behaviors most convergent with their counterparts
India’s less than optimum road conditions while in other countries. They are also usually the first
designing the car. As a result, the Santro has been to try new products and brands.
a runaway success with Indian consumers, selling
far better than other foreign brands that entered Toyota, for example, was a well-known brand in
the market with high repair rates and service costs.8 India before the company made its debut in the
country. The company correctly understood that
Rule 3: the budget and small car segments were already
Don’t just localize — innovate too crowded and people had enough choices there.
In India, you cannot introduce a global product Middle and upper segments were needed. The
and expect it to be successful at the local level. company also realized that with the economic
Localization — the adaptation of a global strategy boom and rising pay packets, many small car
to suit local market conditions — must embrace owners would want to upgrade to a higher segment.
innovation. This is true whether you are considering It therefore launched two products — the Corolla
product development, pricing, distribution, or and Camry — that targeted these middle and upper
communications. A multinational company wishing segments. Both models have been successes.
to do business in India must be willing to experi-
ment with new strategies. It must also be prepared However, Toyota’s success does not mean that you
to walk away from strategies that have been should focus on just the upper end of the consum-
successful elsewhere. ing class. It is important not to lose relevance with 7 KPMG International, “Consumer Markets in India — The
the mass consuming class. Affordability is a large Next Big Thing?” (September 2005), http://www.kpmg.fi/
Binary.aspx?Section=156&Item=2249 (accessed
Like Coca-Cola, Kellogg’s initially struggled when issue for lower- and middle-class consumers in 15 April 2007).
it introduced its signature cornflakes to the Indian India, and they tend to be extremely price sensitive.
market in the mid-1990s. The idea of a cold and C.K. Prahlad noted in The Fortune at the Bottom 8 See note 2 above.
crispy breakfast was anathema to Indian women, of the Pyramid that the latter category may be
9 Marc Gunther, “MTV’s Passage to India,” Fortune
who were used to thinking of breakfast as hot, fresh, a source of significant revenues and profits.11 (9 August 2004), http://money.cnn.com/magazines/
and savory. When they could be persuaded to try fortune/fortune_archive/2004/08/09/377904/index.htm
the cereal, they used hot milk and ended up with LG Electronics developed a successful (accessed 16 April 2007).
bowls of soggy mush. So Kellogg’s changed its segmentation strategy with its line of televisions.
10 Niti Bhan and Brad Nemer, “Brand Magic in India,”
strategy. It began to innovate. It developed wheat The company reengineered its TV product specs BusinessWeek (8 May 2006), http://www.businessweek
and rice cereals as well as hot cereals with flavors to appeal to middle and lower market segments. .com/innovate/content/may2006/id20060508_952455
that appealed to the Indian palate. Sales began These offerings included a no-frills television to .htm (accessed 14 April 2007).
to climb. By adapting to local cultural habits, the expand the market at the low end and a premium
11 C.K. Prahlad, The Fortune at the Bottom of the Pyramid:
Kellogg’s brand was able to succeed. In time, as 21-inch flat TV for the middle segment.12 Eradicating Poverty through Profits (Wharton School
breakfast routines changed, the appetite for Publishing, 2005).
cornflakes grew, too.9
12 See note 2 above.
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Maharaja Mac
Lulu Raghavan
December 2007

Foreign companies that have


met with the most success
have taken the time needed
to understand the special
needs of the Indian consumer.
Meanwhile, McDonald’s tailored its product Indian market. In these areas, Dabur has regional-
portfolio to ensure relevance across socio- ized its national brand strategies, renaming brands
economic consumer segments. Initially, the brand in local languages and localizing ad campaigns.
was viewed as expensive and relevant to only the This approach has resulted in special products with
upper classes in India. But by selling innovative distinct local flavors — and considerable financial
products at various price points, the company success. Dabur’s sales jumped from 5.5 percent in
ensured its relevance to mass segments. the first quarter of 2006 to 19 percent in the third
quarter ended December 31, 2006.14
Rule 5:
Anticipate regional and cultural diversity Brand nirvana
India is an extremely diverse country. Nearly If a foreign multinational expects to achieve
two dozen official languages are spoken in India’s branding success in India, it must deviate from
28 states. Customs and economic development any one-size-fits-all global branding strategies.
vary enormously from state to state. The cities Doing well in India depends on a willingness to
are nothing like the countryside. Addressing the think differently about all aspects of the business.
separate and unique needs of this diverse
consumer base is a must. Shombit Sengupta, an Success in India comes slowly, and only after
international management consultant, put it well a considerable investment of time and money.
when he said, “Nobody can successfully do Foreign companies that have met with the most
business in India by reading its potential from success have taken the time needed to understand
quantitative market reports. Understanding the the special needs of the Indian consumer.
psychological, sociological, and historical back-
grounds is fundamental to hit the bull’s-eye.”13 Reaching out to the customer requires more than
localization; it also requires innovation. Meanwhile
Big box retailers Tesco, Wal-Mart, and Carrefour market segmentation should be chosen carefully.
have now made inroads into India, but some While it may be tempting to enter India focused on
observers are predicting that local retailers like the top consumer tier, the lower and middle classes
Pantaloon and Reliance will walk away with most also constitute huge potential markets.
of the business. Armed with better local knowledge
and understanding of regional differences in Just when you think you’ve got it all figured out,
consumer behavior, the Indian brands may have you will need to come to grips with the vast regional 13 Edwin Colyer, “India: A Hot Business Climate?”
BusinessWeek (31 May 2006), http://www.businessweek
an insider’s advantage. and cultural differences in the country. The good .com/innovate/content/may2006/id20060531_711820
news, however, is that if you are willing to follow .htm (accessed 15 April 2007).
Multinationals wishing to do business in the country the simple rules outlined here when developing
might well take a lesson from Dabur, an Indian your Indian brand strategy, you will be well on your 14 “Dabur Set to Regionalise Brands,” Hindu Business Line
(7 February 2007), http://www.thehindubusinessline.
consumer packaged goods company. Dabur has way to brand nirvana. ■ com/2007/02/08/stories/2007020805360500.htm
adapted its national brand strategies for the South (accessed 12 March 2007).
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