ABV- Indian Institute of Information Technology and Management, Gwalior

MARKETING STRATEGY
of
McDonald's
in
INDIA BY -
Aakash Khandelwal (2012IPG001)
Anshika Singh (2012IPG017)
Himanshu Meena (2012IPG043)
Manish Kumar (2012IPG056 )
 INTRODUCTION

• McDonald's is the world's largest chain of hamburger fast food restaurants, serving around 68 million
customers daily in 119 countries across more than 36,000 outlets.
• Founded in the United States in 1940, the company began as a barbecue restaurant operated
by Richard and Maurice McDonald.
• Businessman Ray Kroc joined the company as a franchise agent in 1955. He subsequently purchased
the chain from the McDonald brothers and oversaw its worldwide growth
• McDonald's primarily sells hamburgers, cheeseburgers, chicken, French fries, breakfast items, soft
drinks, milkshakes, and desserts. In response to changing consumer tastes, the company has
expanded its menu to include salads, fish, wraps, smoothies, fruit, and seasoned fries
Source – Business Insider
Facts About McDonald`s
 VISION

“The world’s best quick service restaurant experience.”

To achieve their vision they are focused on three world wide strategies:
• Be the best employer for people in each community around the world.
• Deliver optional excellence to customers in each restaurant.
• Achieve enduring profitable growth by expanding the brand and leveraging the strengths of
McDonald’s system through innovation and technology.
 McDonald's History in INDIA

• Entered in India 1996

• McDonald's India is a 50 – 50 JV
partnership between
Mcdonald’s Corporation (U.S.A)
and two Indian businessman
Amit Jatia and Vikram Bakshi
• Trained extensively with their
Indian management team in
Indonesia and US before launch
• The entire menu was changed
 Consumer Analysis
Customer Characteristic:
• India is the second most populated country in the world. It has 28 states and almost 4 times the
population of USA. India has more than one billion population.
• Three fourth of Indian population lives in Urban areas. Though per capita income is very low in India
but still people like to spend on costly products and eating out.
• Consumers in India are highly family oriented. McDonald's targets high income earner, middle income
earner and lower middle income earner in India.
• Indian consumer are getting brand awareness through internet, TV, Newspapers, Radio, Magazine
etc.
• Middle income group is getting bigger in size day by day as a result of economic boost in India and
that is very good news for McDonald's.
• Indian consumers are now getting environmental awareness and like to use Ecofriendly products
 Consumer Analysis
Income Distribution
• Family system gives a big chance for McDonalds to get
Upper Middle
their sale rise as Indians are buying food in bulks. Income
5% High Income
• Indian consumers are becoming very open minded which 4%
is a positive sign for McDonalds.
Middle
• For McDonalds to succeed as they are now, they should Income
12%
go to expand in urban areas as well as rural areas and Low Income
target middle and lower income earners and beside this 49%

they should introduce certain products which can be

afforded by low income earners. Lower Middle

• Customers like spicy foods and McDonald has introduced

Income
30%
many products which are spicy and tasting according to
the preference of Indians.

Low Income Lower Middle Income

Middle Income Upper Middle Income
High Income
 MARKETING MIX
Product Price
In India McDonalds has a In India McDonalds
diversified product range classifies its products
Other Factors which focusing more on the into 2 categories namely
also affects are : vegetarian products as the branded affordability
most consumers in India (BA) and branded core
• People are primarily vegetarian. value products (BCV).

• Process
• Physical evidence

Place Promotion

McDonald’s outlets are At McDonalds the prime

very evenly spread focus is on targeting
throughout the cities children. In happy meals
making them very too which are targeted
accessible. at children small toys are
given along with the
meal.
.
 MARKETING MIX
• The marketing mix is apart of • Functionality
• Appearance
• List price
• Discounts
the organizations planning • Quality • Allowances
process and consists of • Packaging • Financing
analyzing the defined: • Brand • Leasing options
• Warranty
• How will you design, package • Service/Support
and add value to the
product?
Product Price
Product strategies.
• What pricing strategy is
appropriate to use?
Price strategies.
• Where will the firm locate? Placement Promotion
Place strategies.
• Advertising • Locations
• How will the firm promote its • Personal selling • Logistics
• Public relations • Service levels
product?
• Message • Channel members
Promotion strategies. • Media • Channel motivation
• Budget • Market coverage
 Marketing Mix : Product

• McDonald’s places considerable emphasis on developing a menu which customers want. Market
research establishes exactly what this is.
• However, customers’ requirements change over time. In order to meet these changes, McDonald’s
has introduced new products and phased out old ones, and will continue to do so. Care is taken not to
adversely affect the sales of one choice by introducing a new choice, which will cannibalize sales from
the existing one (trade off).
• McDonald’s knows that items on its menu will vary in popularity. Their ability to generate profits will
vary at different points in their cycle.
• In India McDonalds has a diversified product range focusing more on the vegetarian products as most
consumers in India are primarily vegetarian.
• The happy meal for the children is a great seller among others.
 Marketing Mix : Product

• McDonald's commitment to its Indian customers is evident even in development of special sauces
that use local spices and chilies.
• The mayonnaise and all other sauces are egg-less. McDonald's also pioneered the establishment of
Cold Chain across India which helps maintain freshness and nutrition in every product.
• McDonald's regular scrumptious menu includes wide range of products like McAloo Tikki, Filet-O-
Fish, Spicy Range, Chicken McGrill, McVeggie, Veg Pizz a McPuff, Chicken Mcnuggets, Fries,
Wraps, an assortment of Sundaes, Soft Serve and refreshing beverages such as Ice Tea & Cold
Coffee with outstanding service in a vibrant and lively ambience, for which McDonald's is known
worldwide.
• McDonald's had further reinforced the branded affordability mantra via the introduction of
the Happy Price Menu which starts at Rs 25 only.
Marketing Mix : Product & Price
 Marketing Mix : Price
• Pricing strategy is one of the most significant aspects when it comes to marketing. This
includes price breakdown, when any discount service or payment available.
Pricing strategy was developed in order to attract middle and lower class individual and the result can
clearly be seen the customer base which McDonalds has at present.
• McDonald’s restaurant has specific value pricing as well as bundling strategy like combo
meal, happy meal, family meal and happy price menu in order to improve total sales of the
service and product.
• In India McDonalds classifies its products into 2 categories namely the branded affordability
(BA) and branded core value products (BCV).
• The BCV products mainly include the McVeggie and McChicken burgers that cost Rs 50-60 and the BA
products include McAloo tikki and Chicken McGrill burgers which cost Rs20-30. This has been done to
satisfy consumers which different price perceptions.
 Marketing Mix : Promotion
• The promotions aspect of the marketing mix covers all types of marketing communications.
• One of the methods employed is advertising, Advertising is conducted on TV, radio, in cinema, online,
using poster sites and in the press for example in newspapers and magazines.
• Other promotional methods include sales promotions, point of sale display, merchandising, direct
mail, loyalty schemes, door drops, etc. The skill in marketing communications is to develop a
campaign which uses several of these methods in a way that provides the most effective results. For
example, TV advertising makes people aware of a food item and press advertising provides more
detail. This may be supported by instore promotions to get people to try the product and a collectable
promotional device to encourage them to keep on buying the item.
• At McDonalds the prime focus is on targeting children.
• In happy meals too which are targeted at children small toys are given along with the meal. Apart
from this, various schemes for winning prices by way of lucky draws and also scratch cards are given
when an order is placed on the various mean combos
 Marketing Mix : Place
• Place, as an element of the marketing mix, is not just about the physical location or
distribution points for products. It encompasses the management of a range of processes
involved in bringing products to the end consumer. McDonald’s outlets are very evenly
spread throughout the cities making them very accessible. Drive in and drive through options
make McDonald’s products further convenient to the consumers.
• Place plays very important role in launching a product and making it successful. McDonald's has
expanded through out in India Urban areas.
• McDonald is currently targeting urban areas as we know that big part of population is living in urban
areas. Place doesn’t only include physical location but it is includes all the processes that eventually
leads to product ending in customers hand.
• Place plays very important role in getting priority over the rivals and place should be selected after
research on the local demography, income level and customers preferences.
• McDonalds in India chooses a particular place after long research and checking local area’s
demographic characteristics, income level etc. This is the reason McDonalds is very successful in
India.
 Marketing Mix : Other Factors

• People :The employees in McDonalds have a standard uniform and McDonalds specially
focuses on friendly and prompt service to its customers from their employees.

• Process :The food manufacturing process at McDonalds is completely transparent i.e. the
whole process is visible to the customers. In fact, the fast food joint allows its customers to
view and judge the hygienic standards at McDonalds by allowing them to enter the area
where the process takes place. The customers are invited to check the ingredients used in
food.
• Physical evidence : McDonalds focuses on clean and hygienic interiors of is outlets and at
the same time the interiors are attractive and the fast food joint maintains a proper decorum
at its joints.
 Micro Environmental Issues:
Porter`s Five Force Model
Threat of New Entrants or New Entry Threat of Substitutes or Substitution
(Moderate Force) (Strong Force)
Low switching costs (strong force) High substitute availability (strong force)
Moderate capital cost (moderate force) Low switching costs (strong force)
High cost of brand development Competitive Rivalry or
Competition with McDonald’s High Performance-to-cost ratio
(weak force) (strong force)
(Strong Force)
High number of Firms
(strong force)
High aggressiveness of Firms
Bargaining Power of McDonald’s (strong force) Bargaining Power of McDonald’s
Suppliers (Weak Force) Low switching costs Customers/Buyers
Large number of suppliers (weak force) (strong force) (Strong Force)
Low forward vertical integration Low switching costs (strong force)
(weak force) Large number of providers (strong force)
High overall supply (weak force) High availability of substitutes (strong force)
 Micro Environmental Issues:
Porter`s Five Forces Model
Threats of New Entrance: Threats of Substitute: Rivalry

• Fast food restaurant industry

• Entry to a restaurant
• The substitutes in this is very competitive.
Business is very
industry are very high. • The competition is so high as
difficult. It is hard to
• People can choose variety all the organizations want to
make a prominent
of products they can either get hold of customer
brand name.
choose Burger King, KFC, • McDonald's knows about the
• There is high research
Indian Cuisine, Indian local customers taste and
and development costs
shops, Indian Vegetarian preferences all over the
and high cost of entry.
restaurants etc. world.
• Strong brands already
• McDonald's is providing
in competition make it
quality food from early
more difficult such as
morning till late night in
McDonald's, Pizza Hut,
order to get competitive
Domino’s etc.
edge In the market.
 Micro Environmental Issues:
Porter`s Five Forces Model

Bargaining power of customers Bargaining power of supplier

• Bargaining power of customers refers to • Bargaining power of buyer in this

pressure a customer can exert on a
business to get good quality of food, good
customer service and low price.
• Bargaining power of customer in this
industry is low. As McDonalds
: provide a
standard service, one price strategy and
quality of food. . threat.so the bargaining power is
• Customers have low bargaining power
through out the food industry
industry is low. Situation can
change if the main ingredients
are not available.
• But with McDonald's
: simple
menu and working with many
supplier ,they are not facing a big
relatively low.
Analysing Macro Variable
 Political Influences:

• India is quite rich as far as the political structure and policies are concerned that is the reason why
international organizations face difficulties when they are entering in India. In the similar manner it
can be said that India is a nationalist country that is the reason why they create difficulties for
international entrants. However, there are certain other factors like consumer taxation, different
political infrastructures and the scenario of the global market.
• Political parties are against fast food chains as they want to see only vegetarian restaurants in their
country. Their party members always protest against fast food using meat in their menu.
• Good news is that India is changing slowly from nationalistic society to liberal mind set up and
McDonalds expanded very fast in the last decade.
 ECONOMICAL INFLUENCE:

• Economical variables such as currency exchange,employment,Interest rate, tax ratio and need of
international supply.
• Most of the organization's depend on foreign supply of raw materials for their products making.
• Currency exchange also have a great impact on any organization.
• Business for McDonalds for India with high unemployment rate, dealing in Rupees as currency and
millions of people living below poverty line is a concern for McDonalds. But India is having a booming
economy, low tax rate and availability of labor in abundance and development of middle class society
in India is a positive sign for McDonald's future.
 Sociocultural influences:

• In India society is very versatile. Though India is heavily populated but still Hindu’s don’t eat meat.
• Muslims only eat Halal and they don’t eat pork. In India religion has a very big impact on society. For
McDonalds it is a big concern.
• But in India life style is changing, earning power is increasing, middle class is getting bigger in its size and
people like to eat outside in restaurants this has a very good impact on society.
• However, the social factors that are associated with McDonalds in India are the suppliers and the workforce
of the organization is fragmented and they are diversified.
• In the similar manner McDonalds have to face the pressure of different social and ethnic groups that are
prevalent in the socio culture environment of India.
• However, the favorable element for McDonalds is that people of India will get employment through this
organization and this would be favorable for both McDonald sand the local citizens of India.
 Technological influence:

• One positive benefit of globalization was technological advancement.

• Although McDonald's doesn’t use too many complicated machines in their food production but still
they need highly competitive technology.
• Technology is needed for example in supply chain management, order taking, Inventory control, easy
and quick payment procedures .Use of technology can make management more reliable, effective
and cost saving in short term as well as long term.
• Customers happiness after getting what they are looking for on time and in a disciplinary way make
them come over and over
• In India as franchises they use high technology. They use very good till system, good an disciplined
order taking and well managed staff who knows the proper use of technologies inside the store.
 McDonalds USP

• McDonald's mein hai kuch

baat. (Oct. 13, 1996–1999)
• Toh aaj, Mmmmmmmmmm!
McDonald's ho jaye.
Har choti khushi ki
celebration (1999–2003)
• I'm lovin' it (2003–present)

** VIDEOS

Segments
• Demographic : Kids,
Families, Teenagers
• Psychographics:
Convenience of life style
STP
Targeting Positioning
• Children and Youth • Happy Price menus
• Young Urban Families • Toys along with meal
• Vegetarian Fast food • WiFi facilities are being
Eaters provided
• No beef , No Pork
 Competitive Scenario in India
• The industry of fast food business in India is quite competitive and these competitors offer direct and
indirect competition to McDonalds.
• In India McDonalds face a tough scenario because there are certain other international chains that
also offer tough competition to McDonalds . These international competitors are Pizza Hut, KFC,
Dominos Pizza, and Subway. However, Indians prefer their local manufactures and that is the reason
why the local fast food chains are growing in numbers that are also giving competition to McDonalds.
• The local fast food chains in India are Hyderabad House, Ohri’s, Jumbo King, Narula’s etc. The
competitors that are present in India are quite diverse in many aspects as this can be considered as
one of the biggest issue for McDonalds.
• In the similar manner it can also be said that in India the competitors are so diverse that they compete
in aggressively and in certain scenarios they also compete in nonprice dimensions like innovation,
marketing, etc.
 Competitor`s Analysis
MCD vs JUBLFOOD
Source – Yahoo Finance
 Competitor`s Analysis
MCD vs YUM
Source – Yahoo Finance
 Competitor`s Analysis
MCD vs CPG
Source – Yahoo Finance
 Competitor`s Analysis
MCD vs SBUX
Source – Yahoo Finance
 Competitor`s Analysis
MCD vs Jumbo VadaPav

• Local Competition
• Burgers vs VadaPav
• McD has higher Scalability but Jumbo has authenticity
 Indicators of Success
• One gratifying aspect of McDonald’s success was the fact that, by mid-2000, it derived as much
as 50 per cent of its revenues from vegetable food items, thus disproving its critics – especially
those who were skeptical of its ability to serve food that suited Indian palates.
• To exploit the opportunities created due to its better brand awareness and customer
acceptance, McDonald’s was following a three-pronged strategy: increase the seating capacity
in existing outlets to cater to additional traffic; open new outlets in Mumbai and Delhi; and,
finally, penetrate new cities.
• McDonald’s was also in talks with Delhi Metro Rail Corporation, Airports Authority of India,
Indian Railways and Delhi Development Authority to open smaller McDonald’s outlets in
airports and railway stations, among others.
• McDonald’s also had plans to set up several outlets along the Delhi-Agra national highway in a
tie-up with a major petroleum refining and marketing organization.
 Break Even Analysis
McDonald's India achieved its breakeven from 48 stores in India, in year 2003.India has emerged as
one of McDonald's top ten operations in terms of average transactions per day in each of its
outlets and McDonald's stores in India average around 1,500 transactions per day during 2003.
The key features of McDonald`s at that time were –
• McDonald's added 13 outlets in India during '02 and another 15 was added in year, and aimed
to achieve the target of 100 Mac stores by '05 after achieving break even in 2013.
• During the point of breakeven McDonald's outlets stands at 46. McDonald's is really bullish on
was the highway chain, which started to pick up after private players begin setting their petrol
filling stations.
• In Year 2003, McDonald's already had two outlets on the Delhi - Mathura and Delhi - Ludhiana
highways. According to the sources - On an average, 2000 people stop at each of those stores
every day.
• Almost 75% of core products in India don't exist anywhere and India has exported a number
of recipes to the parent's operations in other countries. These include, pizza McPuff, wraps
and Aloo Tikki burger, which were doing exceptionally well in the Middle East.
 Strategies of McDonald :An Overview
Entrance Strategies:
• In order to capitalize on the highly price sensitive economy, and the Indian mentality of liking
anything that is foreign, McDonald’s strategy was market penetration and the three circles
strategy. This led to localization & branding of the company.
• They had to suit their burgers to Indian taste and Indian market which was a hyper price sensitive
market.
Training Strategies
• .Induction training was conducted at the time of an employee’s joining the organization.
• This was done through interactions as well as through exposure with the customer through
operation training within the restaurants for a fixed period of time.
• The organization also provided numerous opportunities of overseas training to those displaying
potential.
 Strategies of McDonald :An Overview
Supply Chain Strategies
• In the process, McDonald’s actually encouraged entrepreneurship, by introducing the local
suppliers to its global suppliers. This association involved transfer of state-of-the-art food
processing technology, thereby leading to an improvement in quality standards and helping
create world class manufacturing facilities in India
• In the five-and-a-half years until start-up, McDonald’s spent as much as Rs 500 million (US$12.8
million) to set up a supply network, distribution centres and logistics support. By mid-2000, some
estimates placed the total investment in the supply chain at almost Rs 3 billion.
 Major Reasons for McDonalds Success
1. The System
This is the first thing that makes McDonald's so successful, by having an effective and efficient system in place, which
exploits the minimum wage labor available, in the form of young teenagers who are just looking to make some cash
or pick up fundamental job skills.
2. Convenience
The second reason why McDonald's is so popular is because it's everywhere. There a McDonald's at every corner of
the map, at every major shopping centre, district, highway, freeway, every place which attracts even, remotely more
than 10 people, will have a McDonald's restaurant not too far from them.
3. Likability and Familiarity
The Golden Arches, the Big M. Ronald McDonald, happiness and fun; all these are the associations with McDonald’s
which makes it so familiar
4. The Menu
McDonald's has one of the most diverse menus, targeting all ages from little kids to old pensioners, and everyone else
in between.
 Conclusion
• McDonald’s recognized the unique problems and opportunities of the Indian market. The company
then took its time, adapting its products and just as importantly its corporate strategy, and has been
hugely successful since.
• At the same time, the company cannot afford to become complacent and rest on its laurels. Any
future missteps, however small, could ruin McDonald’s efforts and hard fought gains in the country,
allowing the company’s rivals to catapult past them and onto even greater success.
• In order to sustain in a very competitive market McDonald’s has to continuously think of bringing in
new concepts into all its operations especially in marketing.
• The result of a spontaneous thought led to the introduction of breakfast outlets and a chance
encounter with a technology specialist ended up with online booking orders and birthday parties and
signature outlets.
• The success of McDonalds in India could be measured by its continuous growth in Indian fast-food
market with 210 branches across India