History of McDonald’s

McDonald's has come a long way ever since it‟s beginning in 1955. Here area few milestones of the McDonald's journey ... In 1954, a fifty-two-year-old milk-shake machine salesman saw a hamburger stand in San Bernardino, California, and envisioned a massive new industry: fast food. In what should have been his golden years, Raymond Kroc, the founder and builder of McDonald's Corporation, proved himself an industrial pioneer no less capable than Henry Ford. He revolutionized the American restaurant industry by imposing discipline on the production of hamburgers, French fries, and milk shakes. By developing a sophisticated operating and delivery system, he insured that the French fries customers bought in Topeka would be the same as the ones purchased in New York City. Such consistency made McDonald's the brand name that defined American fast food.

1955 Ray Kroc opens his first restaurant in Des Plaines, Illinois and the McDonald's Corporation is created. 1957 Quality, Service, Cleanliness and Value (QSC& V) becomes the company motto. 1959 The 100th McDonald's opens in Chicago. 1961 Hamburger University opens in Elk Grove, near Chicago. 1963 One billion hamburgers sold. Ronald McDonald makes his debut. 1964 Filet-O-Fish sandwich is introduced. 1965 McDonald's Corporation goes public. 1967 The first restaurants outside of the USA open in Canada and Puerto Rico. 1968 The Big Mac is introduced. The 1,000th restaurant opens in Des Plaines, Illinois. 1972 A new McDonald's restaurant opens every day The Quarter Pounder is introduced. 1973 Egg Mc Muffin is introduced.

1974 The first Ronald McDonald House opens in Philadelphia. The Happy Meal is launched. 1983 Chicken Mc Nuggets is introduced. New Hamburger University campus opens in Oak Brook ,Illinois. Set in 80 wooded acres. Training is provided for every level of McDonald's management worldwide. 1984 50 billionth hamburgers sold. Ronald McDonald Children's Charities is founded in Ray Kroc‟s memory to raise funds in support of child welfare. 1989 McDonald's is listed on the Frankfurt, Munich, Paris and Tokyo stock exchanges. 1990 McDonald's opens in Pushkin Square and Gorky Street, Moscow. 1993 The first McDonald's at sea opens aboard the Silja Europe , the world's largest ferry sailing between Stockholm and Helsinki. 1994 Restaurants open in Bahrain, Bulgaria, Egypt, Kuwait, Latvia, Oman, New Caledonia, Trinidad and United Arab Emirates, bringing the total to over 15,000 in 79 countries on 6 continents. 1996 McDonald's opens in India – the 95th country.

Overview McDonald's - A Global Phenomenon.
McDonald's opened its doors in India in October 1996. Ever since then, our family restaurants in Mumbai, Delhi, Pune, Ahmadabad, Vadodara, Ludhiana, Jaipur, Noida, Faridabad, Doraha, Manesar and Gurgaon have proceeded to demonstrate, much to the delight of all our customers, what the McDonald's experience is all about. Our first restaurant opened on 15th April 1955 in Des Plaines, Illinois, U.S.A. Almost 50 years down the line, we are the world's largest foodservice system with more than 30,000 restaurants in 100 countries, serving more than 46 million customers every day.

Mc Donald’s India Partnership
McDonald's India is a joint-venture company managed by Indians. McDonald‟s India, aubsidiary of McDonald‟s USA, has expanded its presence in India via 2 joint venture companies– Connaught Plaza restaurants and hard castle restaurants. McDonald‟s (India) has a 50 per cent equity stake each in both joint venture companies. Connaught Plaza restaurants manages operations and expansions across North India (Delhi, Jaipur and Punjab) – led by Vikram Bakshi – and hard castle restaurants, which is headed by Amit Jatia, manages operations and expansions across Western India (Mumbai, Pune, and Gujarat).

Around the world, McDonald's traditionally operates with local partners or local management. In India too, McDonald's purchases from local suppliers. McDonald's constructs its restaurants using local architects, contractors, labour and - where possible – local materials. McDonald's hires local personnel for all positions within the restaurants and contributes a portion of its success to communities in the form of municipal taxes and reinvestment. Six years prior to the opening of the first McDonald's restaurant in India, McDonald's and its international supplier partners worked together with local Indian Companies to develop products that meet McDonald's rigorous quality standards. Part of this development involves the transfer of state-of-the-art food processing technology, which has enabled Indian businesses to grow by improving their ability to compete in today‟s international markets. 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 tasted and culture. Keeping in line with this McDonald's does not offer any beef and pork items in India. McDonald's has also re-engineered its operations to address the special requirements ofa vegetarian menu. The cheese and cold sauces used in India is 100% vegetarian. Vegetable products are prepared separately, using dedicated equipment and utensils. Also in India, only vegetable oil is used as a cooking medium. This separation of vegetarian and non-vegetarian food products is maintained throughout the various stages of procurement, cooking and serving. The McDonald's philosophy of Quality, Service, Cleanliness and Value (QSC&V) is the guiding force behind its service to the customers. McDonald‟s India serves only the highest quality products. All McDonald‟s suppliers adhere to Indian Government regulations on food, health and hygiene while continuously maintaining their own recognized standards. All McDonald‟s products are prepared using the most current state-of-the-art cooking equipment to ensure quality and safety. At McDonald‟s, the customer always comes first. McDonald‟s India provides fast friendly service- the hallmark of McDonald‟s that sets its restaurants apart from others. McDonald‟s restaurants provide a clean, comfortable environment especially suited for families. This is achieved through McDonald‟s stringent cleaning standards, carefully adhered to McDonald‟s menu is priced at a value that the largest segment of the Indian consumers can afford. McDonald‟s does not sacrifice quality for value – rather McDonald‟s leverages economies to minimize costs while maximizing value to customers. The company has invested Rs 450 crore so far in its India operations out of its total planned investment of Rs 850 crore till 2007.

McDonald‟s India Pvt. Ltd. has moved an application to the government seeking permission for payment and remittance of the initial franchise fee and royalty to Mc Donald‟s Corporation. The permission has been sought on two grounds: McDonald‟s India would pay an initial franchise fee of $45,000 on each of the McDonald‟s restaurants already franchised or to be franchised, in the future, in India; and a royalty equal to 5 per cent of the gross sales from the operations of all its Indian restaurants on a monthly basis to McDonald‟s International. The company hopes to break even in 2008. They currently serve around 5 million customers a day and hope to grow at the rate of 50% to 70% a year.

Respect for local culture
McDonald's India has developed a special menu with vegetarian selections to suit Indian tastes and preferences. McDonald's does not offer any beef or pork items in India. Only the freshest chicken, fish and vegetable products find their way into our Indian restaurants. In addition, we've re-formulated some of our products using spices favoured by Indians. Among these are Mc Veggie™ burger, Mc AlooTikki™ burger, Veg. Pizza Mc Puff™ and Chicken Mc Grill™ burger. We've also created eggless sandwich sauces for our vegetarian customers. Even our soft serves and Mc Shakes™ are egg-less, offering a larger variety to our vegetarian consumer

Business Model
Franchise Model – Only 15% of the total number of restaurants are owned by the Company. The remaining 85% is operated by franchisees. The company follows a comprehensive framework of training and monitoring of its franchises to ensure that they adhere to the Quality, Service, Cleanliness and Value propositions offered by the company to its customers. Product Consistency – By developing a sophisticated supplier networked operation and distribution system, the company has been able to achieve consistent product taste and quality across geographies. Act like a retailer and think like a brand – McDonald‟s focuses not only on delivering sales for the immediate present, but also protecting its long term brand reputation. Mc Donald‟s entered India in 1996. McDonald‟s India has a joint venture with Connaught Plaza Restaurants and Hard Castle Restaurants. Connaught Plaza Restaurants manages operations in North India whereas Hard Castle Restaurants operates restaurants in Western India. Apart from opening outlets in the major metros, the company is now expanding to Tier 2 cities like Pune and Jaipur.

Challenges in Entering Indian Markets
Regiocentricism: Re-engineering the menu - McDonald‟s has continually adapted to the customer‟s tastes, value systems, lifestyle, language and perception. Globally McDonald‟s was known for its hamburgers, beef and pork burgers. Most Indians are barred by religion not to consume beef or pork. To survive, the company had to be responsive to the Indian sensitivities. So McDonald‟s came up with chicken, lamb and fish burgers to suite the Indian palate. The vegetarian customer – India has a huge population of vegetarians. To cater to this customer segment, the company came up with a completely new line of vegetarian items like Mc Veggie burger and Mc Aloo Tikki. The separation of vegetarian and non-vegetarian sections is maintained throughout the various stages.

Segmentation, Targeting and Positioning
McDonald‟s uses demographic segmentation strategy with age as the parameter. The main target segments are children, youth and the young urban family

Percentage of kids who influence what FMCG brand their family buys
As shown above, kids reign supreme in FMCG purchase related to food products. So to attract children McDonalds has Happy Meal with which toys range in from hot wheels to various Walt Disney characters are given (the latest in this range is the toys of the movie (Madagascar). For this, they have a tie-up with Walt Disney. At several outlets, it also provides special facilities like „Play Place‟ where children can play arcade games, air hockey, etc. This strategy is aimed at making McDonald‟s a fun place to eat. This also helps McDonald‟s to attract the young urban families wanting to spend some quality time while their children have fun at the outlet. To target the teenagers, McDonald‟s has priced several products aggressively, Keeping in mind the price sensitivity of this target customer. In addition, facilities like Wi-Fi are also provided to attract students to the outlets like the one at VileParle in Mumbai. “Mc Donald‟s mein hai kuch baat” projects McDonald‟s as a place for the whole family to enjoy. When McDonald‟s entered in India it was mainly perceived as targeting the urban upper class people. Today it positions itself as an affordable place to eat without compromising on the quality of food, service and hygiene. The outlet ambience and mild background music highlight the comfort that McDonald‟s promises in slogans like “You deserve a Break Today” & “Feed your inner child”. This commitment of quality of food and service in a clean, hygienic and relaxing atmosphere has ensured that McDonald‟s maintains a positive relationship with the customers.

Customer Perception and Customer Expectation
Customer perception is a key factor affecting a product‟s success. Many potentially revolutionary products have failed simply because of their inability to build a healthy perception about themselves in the customers‟ minds. McDonalds being an internationally renowned brand brings with it certain expectations for the customers. Customers expect it to be an ambient, hygienic and a little sophisticated brand that respects their values. The customer‟s expect the brand to enhance their self-image. Customer responses obtained at the Vile Parle, Mumbai outlet confirmed the fact that they connect strongly with the brand. However, fulfilling some of the customer expectations like a broader product variety provide McDonald‟s a great scope for improvement.

Marketing Model McDonalds Marketing Mix (P’s) 5
After segmenting the market, finding the target segment and positioning itself, each company needs to come up with an offer. The 5 P‟s used by McDonalds are: 1. Product 2. Place 3. Price 4. Promotion 5. People 6. Physical Evidence (cleanliness, speed, quality, transperency) 7. Process (1.Food manufacturing transparent to customer, 2. Training to the licensees. 3. Invented the most efficient cooking equipments, 4.New method of food packaging and distribution,5.McDonald‟s in India followed the same tradition, 6. Spent rs 50 crores on market reserch)

How should the company design, manufacture the product so that it enhances the customer experience? Product is the physical product or service offered to the consumer. Product includes certain aspects such as packaging, guarantee, looks etc. This includes both the tangible and the non tangible aspects of the product and service. McDonalds has intentionally kept its product depth and product width limited. McDonalds studied the behaviour of the Indian customer and provided a totally different menu as compared to its International offering. It dropped ham, beef and mutton burgers from the menu. India is the only country where McDonalds serve vegetarian menu. Even the sauces and cheese used in India are 100% vegetarian. McDonalds continuously innovates its products according to the changing preferences and tastes of its customers. The recent example is the introduction of the Chicken Maharaja Mac. McDonalds bring with it a globally reputed brand, world class food quality and excellent customer specific product features

Where should be the product be available and the role of distribution channels? The place mainly consists of the distribution channels. It is important so that the product is available to the customer at the right place, at the right time and in the right quantity. Nearly 50%of U.S.A is within a 3 minute drive from a McDonald‟s outlet. There is a certain degree of fun and happiness that a customer feels each time he dines at McDonalds. There are certain value propositions that McDonalds offer to its customers based on their needs. McDonalds offers hygienic environment, good ambience and great service. Now McDonalds have also started giving internet facility at their centres and they have been playing music through radio instead of the normal music. There are certain dedicated areas for children where they can play while their parents can have some quality time together.

What should be the pricing strategy? Pricing includes the list price, the discount functions available, the financing options available etc. It should also take into the consideration the probable reaction from the competitor to the pricing strategy. This is the most important part of the marketing mix as this is the only part which generates revenue. All the other three are expenses incurred. The price must take into consideration the appropriate demand-supply equation. McDonald‟s came up with a very catchy punch line “Aap ke zamane mein, baap ke zamane ke daam”. This was to attract the middle and lower class consumers and the effect can clearly be seen in the consumer base McDonalds has now. McDonalds has certain value pricing and bundling strategies such as happy meal, combo meal, family meal etc to increase overall sales volumes.

Promotion What is the suitable strategy and channels for promotion of the product

The various promotion channels being used by McDonald‟s to effectively communicate theproduct information are given above. A clear understanding of the customer value helps decidewhether the cost of promotion is worth spending. There are three main objectives of advertising for McDonald‟s are to make people aware of anitem, feel positive about it and remember it. The right message has to be communicated to theright audience through the right media. McDonald‟s does its promotion through television,hoardings and bus shelters. They use print ads and the television programmes are also an important marketing medium for promotion. Some of the most famous marketing campaigns of McDonald‟s are:

· “You Deserve a break today, so get up and get away- To McDonald‟s” · “Aap ke zamane mein ,baap ke zamane ke daam”. · “Food, Folks, and Fun” · “I‟m loving it”. People How to converge the benefits of internal and external marketing? McDonald‟s understands the value of both its employees and its customers. It understands thefact that a happy employee can serve well and result in a happy customer. McDonaldcontinuously does Internal Marketing. This is important as it must precede external marketing.This includes hiring, training and motivating able employees. This way they serve customerswell and the final result is a happy customer. The level of importance has changed to be in the following order (the more important people are at the top): 1. Customers 2. Front line employees 3. Middle level managers 4. Front line managers The punch line “I‟m loving it” is an attempt to show that the employees are loving their work at McDonalds and will love to serve the customers. The McDonald’s Experience Marketing in a services industry is becoming an increasingly complex challenge. The paradigmsof service marketing demand a passionate understanding of customer expectations andperceptions, and linking them to product design & delivery as well as operational planning. Thisis where McDonald‟s has excelled due to its ability to successfully integrate the customer‟s perspective in its products and operations in a comprehensive manner. The revamped menu in India is an example of McDonald‟s strategy of integrating the customer‟s perspective in its products. And, the operational integration is evident from McDonald‟s emphasis on its suppliers as its customers as well as its treatment of its consumers as coproducers of services. The ultimate aim of Service Marketing is not just to become a Service Leader but to create aService Brand. The Service Delivery Process is the key to achieving this aim of Service Marketing. During the Service Delivery Process, each moment of interaction between the firm and thecustomer, called “Moments of Truth”, helps understand the opportunities that a firm has to winor lose the customer. For example, these “moments of truth” are created for McDonald‟sverytime the guard at the McDonald‟s outlet meets the customer, every time an attendant takes down the order from the customer waiting in the queue, every time the cashier interactswith the customer, every time the attendant helps the customer guided the customer towardsthe table, every time the attendant cleans the table, etc. Managing these “moments of truth” is a great challenge in Service Marketing especially due to customer‟s involvement as a co-producer of services (e.g. McDonald‟s self-service concept wherein the customer not only collects the order but also cleans the table after consuming the

food). However, McDonald's has been able to create a great experience for its customers by understanding the nature of the entire Service Delivery Process and the various stages in the process that are exposed to the customers. Transparency in the processes at its outlet has helped McDonald‟s bring the back office in its outlet at the front so that the customer is able to know the operations and provide feedback on service design improvements. Internal Customer Focus is equally important as External Customer Orientation in order to win these “moments of truth”. McDonald‟s focus on its People and their service delivery methods therefore plays a very important role in creating a successful Service Brand. The quality and the consistency of the service delivered by McDonald‟s have been greatly enhanced by the combination of the factors mentioned above. This has helped McDonald‟s become Service Leader and a successful Service Brand. This is evident from the fact that very few of its customers opt for take-home parcels or home deliveries while most of them prefer to eat at the outlet and enjoy the McDonald‟s experience. McDonaldizing the Suppliers McDonald‟s has changed the nature of not only the food service industry but also the food processing industry as well. McDonald‟s realized that the battle between fast food chains would increasingly be one of efficiency of supply, lower cost production and greater desire to innovate. It pioneered with innovative and sophisticated food distribution and packaging systems when the traditional food processors were unwilling or unable to supply food items that McDonald‟s demanded. They achieved amazing consistency by devoting more attention than anyone else to field service and training at store level. Production was concentrated in huge plants devoted exclusively to McDonald‟s. McDonald‟s also started with tiny suppliers and grew with them displaying great loyalty. Nowhere is the supplier loyalty more evident than in development of new, improved products. Some of McDonald‟s classic food items like Filet-o-Fish, French Fries, Chicken Nuggets etc. are results of supplier innovation. Interestingly, it took KFC more than three years before in finally introduced its own version of chicken nuggets. Thus supplier technological expertise had given McDonald‟s a product which was not a mere marketing innovation but a technical one. McDonald‟s attempted to squeeze labour out of the stores by moving more preparation back into the processing plant, creating the opportunity to develop unique products based on suppliers‟ processing skills. For the first time, McDonald‟s suppliers became the focal point of new product development. This converted the fastfood industry‟s most fragmented distributed system into more efficient one which helped McDonald‟s reduce its inventory and manage costs effectively. Importance of PLC in McDonalds

The requirements of customers change over time and thus the product offering has to be changed accordingly. What is the fashion today may be out of market within few weeks. Thus continuous innovation is required. To counter these changes McDonalds has continuously introduced new products and has phased out the old ones which were at the decline stage of their PLC. The introduction is timed such that the new product does not cannibalize the product already in the maturity or growth stage. Thus the secret lies in getting profits with different products in the different stages of the PLC. A perfect example of revitalising a product in decline phase

The French Fries have been an important part of the McDonalds menu worldwide. But nowit was in the stage of decline and was actually not generating proper return. In an attempt torevitalize it, a new variant was introduced namely Shake Shake Fries. This is being servedwith chatpata spice mix which has resulted in increase in the sales of French Fries and haselevated it from to the decline stage. This is used to delay the decline of a well establishedproduct which has the potential of generating further revenue SWOT

SWOT Analysis

Exhibits McDonald’s Indian Menu

Vegetarian Menu

Analysis of mc donalds

Favorite Product
Maharaja mac mc chicken mc veggie french fries mc curry pan fliet o fish others

10% 8%

6% 18%

12% 12%


Thus a majority belive that the favourite delicacy of Mc Donalds is Mc Veggie Burger

Is The Product Line Adequate?

Yes No Average

Problem faced In Mc Donald's

Long Queues Rude Behaviour Congestion Other No Problem

A majority of People feel that Mc Donald‟s is flawless and deem no change necessary in it

Improvement Required

delivery Time Capaciousness Product Variety Prices Offers and Discount Others

A Section of people reckon that the food joint can even better the services if they increase the product variety

First Thing About Mc Donalds That Strike Customer's Mind

Burger Golden Archery Services value For Money Fun

The burger of Mc Donald‟s has salivated many a toungue of customer and surprisingly the golden arched “ m” of Mc Donald‟s one of the first things that a customer thinks about Mc Donalds.

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