4. About McDonald’s
• McDonald's was started as a drive-in restaurant by two
brothers, Richard and Maurice McDonald in California,
US in 1937.
• The business, which was generating $200,000 per
annum in the 1940s , got a further boost with the
emergence of a revolutionary concept called 'self-
service.
• Speed, service and cleanliness became the critical
success factors of the business.
• By mid- 1950s, the restaurant's revenues had reached
$350,000.
• Today it is the world's largest chain of fast food
restaurants
• Today it serves around 68 million customers daily in 119
countries across 36,538 outlets
5. Timeline
• 1937 – Drive-thur restaurant – The Airdome on route 66, California
• 1940 – Renamed as McDonald’s
• 1943 – Ronald McDonald character was created
• 1961 – Rights sold to Ray Kroc for $2.7 million
• 1962 – First McD’s with seating opened in Denver
• 1963 – 1 billion burgers sold with 500 total restaurants
• 1971 – McDonald’s expand globally
• 1979 – Happy meal was introduced
• 1997 – McFlurry was invented
• 2003 – The iconic I’m Lovin’ it campaign
• 2015 – Steve Easterbrook become CEO; announced widespread reform plan
6. McD’s Indian Timeline
1996
1st McDonald’s
opened in Delhi,
India.
1st McD in the world to
not serve beef and pork
based products
1997
1st Drive -Thru
restaurant at
Noida.
1st disabled friendly
store at Noida.
2000
1st highway
McD at
Mathura
2004
20062003
I’m lovin’ it
worldwide
campaign
2008
1st 24hrs McD
2012
McEgg
2013
McBreakfastMcDelivery
100th McD
restaurant opened
12. McDonald's Way
To overcome these, the company has employed a
number of different growth strategies that can be
classified using the Ansoff’s growth share matrix
Company extended its offering by leveraging its brand
Introduced new products based on local culture
13. Brand Extensions – Advantages
Facilitate New Product
acceptance
Improve brand image
Reduce risk perceived by the
customers
Increase efficiency of
promotional expenditures
Avoid cost of developing a
new brand
Permit consumer variety-
seeking
Feedback benefits to the
parent brand and company
Clarify brand meaning
Enhance the parent brand
image
Bring new customers into the
brand franchise and increase
market coverage
Revitalize the brand
Permit subsequent extensions
14. Brand Extensions – Disadvantages
Can confuse or frustrate
consumers
Can fail and hurt parent
brand image
Can succeed but
diminish identification
with any one category
Can dilute brand
meaning
Can encourage retailer
resistance
Can succeed but
cannibalize sales of
parent brand
Can succeed but hurt
the image of parent
brand
Can cause the company
to forgo the chances to
develop a new brand
16. Consumer Based Brand Equity Model
• Rewards/Indulges me
• Let’s me be myself
McDonalds:
Connections across segments
• Sets the pace
• Reflects my own
style/personality
• Convenient locations
• Easy dining
• Affordability
18. Conclusion
Successful brand
extension occurs
when the parent
brand is seen
having favorable
associations and
there is a
perception of fit
between the
parent brand and
the extension
product
A brand that is
seen as a
prototypical of a
product category
can be difficult to
extend outside
the category
An unsuccessful
extension does
not prevent a firm
from backtracking
and introducing a
more similar
product.
Cultural
differences across
markets can
influence
extension success
19. Tips
• Brand-attribute associations can both help and hurt an extension. It is important to
understand the obvious and subtle associations and their potential to be transferred to the
extension.
• Perceived brand quality is important to an extension. It pays to develop and maintain a
quality reputation, but only if there is a basis of fit with the extension. Even a high-quality
brand name cannot be extended everywhere.
• Placing a strong name on a trivial product class, even if it fits (i.e., Heineken popcorn), is risky.
Customers may feel it is incongruous, overpriced, or both.
• Two dimensions of fit that work are the perceived ability to make the product extension and
the perceived product class complementarity.
20. Summary
Brand extension occur when a firm leverages an established brand name to
introduce a new product
The extension’s ability to establish its own brand equity depends on the
salience of consumers’ associations with the parent brand in the extension
context and the favorability and uniqueness of any associations they infer
To evaluate extension opportunities:
• Define actual and desired consumer knowledge about the brand
• Identify possible extension candidates
• Evaluate the potential of extension candidates
• Design marketing programs to launch extensions
• Evaluate extensions success and effects on parent brand equity
21. Disclaimer
• This project was carried out as a part of Individual Project by Arvind
Kumar for academic purpose under the guidance of Prof. Sameer
Mathur, Faculty, Brand Management, Indian Institute of
Management, Lucknow
Arvind Kumar
PGP31072
IIM Lucknow
Prof. Sameer Mathur
Faculty, Brand Management, Marketing
IIM Lucknow
