McDonalds the Indian Way


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Gives completely description about the MCDonalds in the Indian way...... How it has entered and as well how it sustained in Indian market

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McDonalds the Indian Way

  1. 1. McDonalds Corporation is the world largest chain of hamburgers fast food restaurants serving around the 68 million customers daily in 119 countries. The concept of the McDonalds was introduced in sanBernardino, California by dick and McDonald. Ray Kroc, of Oak Park, Illinois, who later bought out the business interests of the McDonald brothers in the concept and went on to found McDonald's Corporation. History began like In the year 1937 Patrick MacDonald opens “the airdrome” it’s an octagonal food stand, on Huntington drive in Monrovia in California. In 1940 his two sons has changed the location of the restaurant and also it was renamed as” McDonalds famous barbeque” and served the forty barbeque items. In the year 1953 they began to franchise the successful restaurant. Then it was started in phoenix, Arizona, Downey and California. The brothers had created Speedee to symbolize the fast and efficient service system that company devised. Raykroc joined the company as a franchise agent in the year 1955.he suggested that the restaurants were franchised throughout the country, he also got all the rights to establish franchises throughout the country except the places like California, Arizona. Because already it was licensed by McDonald’s brothers. Ray Kroc first franchise restaurant was opened in desplianies illinios near Chicago on april-15 1955.On the same day Kroc incorporated his company as a McDonalds system inc. later renamed as McDonalds Corporation. By the year 1958 there were 34 franchised restaurants .in 1959 however they opened 68 new restaurants bringing the total to 102 locations. In the year 1960 they started their advertising campaign as a “look for the golden arches”, that gave a sales a big boost to them. In the year 1962 they came up with a world famous golden logo arch. After a year later the company sold its billionth hamburger and introduced the Ronald McDonald a red haired clown with particularly for the children.
  2. 2. In the year 1960 the corporation really struggling a lot and trying to take-off ,then in the year 1961 Kroc bought the brothers for $2.7 million , that which aims in making the corporation as a number one fast food chain in the country. In 1965 corporation went into public The success of McDonald in the year 1960 was large in part due to the company’s skillful marketing and flexible response to customer demand. In year 1968 they came up with bigmac meal, by the year 1969 they sold its five billionth hamburgers. Two years later the restaurants were reached to all the 50 states. In 1968 they opened their 1000th franchise and Kroc became the CEO of the corporation until 1973. In the year 1972 the company the company came up with a breakfast fast food with introduction of egg Mc Muffin in 1972. After five years the corporation added the full breakfast line to the menu. In the year they came up with a different strategy and the opened a first drive-thru window in Sierra Vista, Arizona, this type of service provides a fast and convenient way to procure q quick meal. The sales of drive-thru eventually accounted for more than McDonald’s system wide sales. In the late 1970 the company faced a severe competition from burger king, Wendy’s. Overly a period of aggressively advertisement campaign and pricing strategy in the early 1980 became known as the “burger wars”. Even though the burger king came up with “have it your way” , Wendy’s offered itself as a “fresh alternative” even though the McDonalds sales and market share has continued to grow. During the year 1980 the corporation has changed its menu according to the customer preference and further diversified. Company has introduced the McChicken in the year introducing it the company sales was not performed well and it was a disappointment to them. They tried to replace with a series of sandwiches year later. In 1985 ready –to-eat salad were introduced to be more health conscious consumers. The company began to focus on urban centers and introduced the new architectural styles. Despite that experts stated that fast-food industry was saturated, but the corporation trying to expand its franchises and continued its marketing and trying to improve sales. McDonalds opened its first foreign restaurant in British Columbia, Canada in the year 1967. By the early 1990 company has operated in 58 foreign countries and operating more than 3600 restaurants outside of United States through by means of franchises, joint ventures, subsidiaries agreement. Strong foreign markets were the Japan, Canada, Germany and Great Britain, Australia, and France. The 10,000th unit was opened in April 1988.It took McDonald's 33 years to open its first 10,000 restaurants. Incredibly, the company reached the 20,000-restaurant mark in only eight years, in mid-1996. By the end of 1997 the total had surpassed to 23,000, and by that time McDonald's was opening 2,000 new restaurants each year, an average of one every five hours. A seemingly weakened McDonald's was the object of a Burger King offensive when the rival fast-food maker launched the Big King sandwich, a Big Mac clone. Meanwhile, internal taste tests revealed that customers preferred the fare at Wendy's and Burger King.
  3. 3. Failed turnaround: late 1990s The difficulties of the early and mid-1990s, several moves in 1998 seemed to indicate a reinvigorated McDonald's. Announcements were made that McDonald's would improve the taste of several sandwiches and introduce several new menu items. McDonald's also said that it would overhaul its food preparation system in every U.S. restaurant. The new just-in-time system, dubbed "Made for You," was in development for a number of years and aimed to deliver to customers "fresher, hotter food"; enable patrons to receive special-order sandwiches (a perk long offered by rivals Burger King and Wendy's); and allow new menu items to be more easily introduced. McDonald's entered India for the first time in 1996, where it offered a Big Mac made with lamb called the Maharaja Mac. McDonald's was sued in 2001 after it was revealed that for flavoring purposes a small amount of beef extract was being added to the vegetable oil used to cook the French fries. McDonald's soon apologized for any "confusion" that had been caused by its use of the beef flavoring, and in mid-2002 it reached a settlement in the litigation, agreeing to donate $10 million to Hindus, vegetarians, and other affected groups. McDonald's also had to increasingly battle its public image as a purveyor of fatty, unhealthy food. McDonald's responded by introducing low-calorie menu items and switching to a more healthful cooking oil for its French fries. McDonald's continued to curtail store openings in 2004 and to concentrate on building business at existing restaurants. McDonald's also aimed to pay down debt by $400 million to $700 million and to return approximately $1 billion to shareholders through dividends and share repurchases With the new "Forever Young" design (adopted in 2006), the first major redesign since 1969, McDonald's turned a new page for itself. Most of new and remodeled restaurants feature dining zones with three sections or zones. Free wifi access points were also granted. Also, harsh colors and hard plastics have been replaced with custom earth tones and flexible padded fabric Reason behind designing a logo. One would be forgiven for thinking that the McDonald’s logo is nothing but a large yellow representation of the first letter in the company’s name. And it technically is, but there’s more to it. To some, the rounded “M” subconsciously represents our mother’s breasts. In the 1960s, McDonald’s was retooling its image, which included discussing a possible new logo. Louis Cheskin, a psychologist and design consultant hired by McDonald’s urged them to keep the current logo, claiming that the golden arches had a Freudian effect that made customers imagine a pair of nourishing breasts, which then made them hungry. Some find this hard to believe, but one thing’s for sure—you won’t look at the big “M” the same way again after today that he mentioned there during discussion.
  4. 4. 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. Evolution of McDonald’s marketing in India: When McDonald's India launched in 1996, urban Indians in Mumbai and Delhi typically ate out three to five times a month. In the 19 years since then, that average frequency has doubled and analysts forecast that by 2015 the Indian quick service restaurant market will be worth 60,000 crore. But from their earliest investments in India, multinational company (MNC) owners of restaurant chains have struggled to adapt to the needs of India's many markets. Some pulled out of the country after failed ventures. At the time, consolidation of the hugely fragmented Indian retail sector had also barely begun, and there was perception that Indians would prefer burgers and fast food to local food offerings. However, in the intervening decade, McDonald's has continued to open new outlets in the country, evolving its marketing strategy through several phases. Nineteen years of McDonald's India: McDonald's India was set up as a 50:50 joint-venture between McDonald's at a global level and regional Indian partners such as Hard castle Restaurants Private Limited in western India, and Connaught Plaza Restaurants Private Limited in northern India. The first Indian McDonald's outlet opened in Mumbai in 1996. Since then, outlets have begun trading in metropolitan and Tier II towns across the country. It had premises in Mumbai, Bangalore, Baroda, Pune, Indore, Nasik, Chennai, Hyderabad, Surat and Ahmadabad. Amit Jatia, Managing Director, and McDonalds India, said: "The past decade has witnessed a marked change in Indian consumption patterns, especially in terms of food. Households in middle, upper and high-income categories now have higher disposable income per member and a propensity to spend more."
  5. 5. Launching the brand The starting point for McDonald's India was to change Indian consumers' perceptions, which associated it with being 'foreign', 'American', 'not knowing what to expect' and 'discomfort with the new or different'. McDonald's wanted to position itself as 'Indian' and a promoter of 'family values and culture', as well as being 'comfortable and easy'. Simultaneously, the brand wanted to communicate that, operationally, it was committed to maintaining a quality service, cleanliness and offering value for money. "From a marketing communications standpoint, they chose to focus on familiarizing the customer with the brand. The brand was built on establishing functional benefits as well as experiential marketing." Until 2000, McDonald's India did not have enough reach to use mass media such as television advertising. Instead, most of its marketing effort focused on outlet design, new store openings. Amit Jatia said: "Products like McAloo Tikki burger, VegPizza McPuff and Chicken McGrill burger were formulated and introduced using spices favored by Indians. The menu development team has been responsible for special sauces which use local spices do not contain beef and pork. Other products do not contain eggs and are 100% vegetarian. The Indianized products have been so well received that even export McAloo Tikki burger and Veg. Pizza McPuff to the Middle East." However the company did not escape food criticism in the country. For instance, it hurt the religious sentiments of Indians by using beef flavoring for its "Vegetarian" French Fries. Brand advertising In 2000, McDonald's India was ready to begin TV advertising. "The first Indian TV commercial, Stage Fright, attempted to establish an emotional connection between the (Indian) family and the brand. Over the years advertising has reinforced this positioning, supported by promotions." The Stage Fright campaign aimed to establish McDonald's as a familiar, comfortable place. It featured a child who suffers stage fright and is unable to recite a poem. On entering McDonald's, he easily recites it in the store's familiar environment. A second campaign featured a child and his family moving into a new place. He misses his previous surroundings – until McDonald's provides something familiar. These storylines were supported by other initiatives. The company's one-minute service guarantee attempted to reinforce its reputation for fast, friendly and accurate service and it also ran in-store events for mothers and children. K.V. Sridhar, National Creative Director, Leo Burnett, the company's agency in India, adds: "In the launch phase the communication focused solely on building brand and product relevance. The brand's scores on relevance to families and kids were very high." Later, McDonald's realized there was untapped potential in the youth audience who considered McDonald's expensive and mainly for children.
  6. 6. Sridhar says: "In 2004, we launched the Happy Price Menu with a value message for a younger audience. For the first time McDonald's India saw a surge of younger consumers and people from socio-economic class B walk into our stores. "We had realized that the Indian consumer was price sensitive and even though the organization managed to establish a sense of familiarity, Indian consumers continued to perceive McDonald's as an expensive eating out option." Challenges for McDonalds in India: The major issue was beef. Cow being sacred and worshipped, beef could not be served. Muslims did not eat pork. The challenge was to change the form of the worldwide popular Hamburger to make an entry into India. With 25-30% of the population being lacto vegetarian and a large majority eating meat, an alternative to beef and pork was necessary Vegetarianism: The population of a billion was undoubtedly a promising opportunity for an international company. McDonald’s accepted the challenge and created the Aloo – Tikki Burger known TM as McAloo Tikki especially for the Indian vegetarian customers. Aloo- Tikki was a potato patty with spices. It also made a chicken and fish option available for the non vegetarians. McDonald’s even separated the non vegetarian cooking process and the vegetarian cooking process to convince the customers of the “Shudh Shakahari Experience’ which means pure vegetarian experience. McDonald’s in India was one of its kinds as it did not offer beef at all. In order to convince and change the perception of the customers about the burgers they offered, McDonald’s made attempts to clarify their stand about beef in India. Competition from local food retailers: Organized food retailing was dominated by the north Indian style and the south Indian style restaurant chains. The metropolitan cities and some developed urban areas offered Superior dining experience through the existence of some fine, classic restaurants. But the price was expensive and only a select group of customers could afford to make visits there. On the other hand, the size of the unorganized food retailing was larger and Comprised of roadside food vendors, dhabas (the eateries on the highways) and on the outskirts of the cities and a plethora of small eateries. Local food in a large assortment was widely available within acceptable price ranges. It was observed that food choices made by consumers were impulsive. Aroma, taste, habits and visibility worked on the subconscious level and played a major role in affective decision making. The local food business exactly understood the psychology of the customers and operated accordingly. The mass markets in India had their own set of preferences.
  7. 7. Pricing: Food pricing was a sensitive issue in India. An ideal strategy was to focus on customers Ability to pay and tap the rich and upper middleclass population in India. Although McDonald’s strategy was to increase sales volumes by making products available at affordable price, its products were perceived to be expensive. The company outlets in Delhi and Mumbai initially were opened due to the increased affordability of people with western exposure and brand recognition factors in metros. Additionally, people in the metros were open to experiment with variety of foods. Absorption of newer cultures was faster in the Metros than other areas. The mass markets in India were price sensitive. The positive factors were the growth in Consumer markets with rapid growth in disposable incomes, development of modern urban Lifestyles. Eating Habits: Eating out was a special occasion to many Indian families. Meals had been an essential medium for social sharing and relationship. Whenever families decided to eat out, the choices available were abundant. The trend in metropolitan cities was however changing. With more nuclear families and dual income households, the demand for fast and readymade food was growing. The needs of the growing working population stimulated the need for new products and services. Indian culture was relatively new to the use of technology and streamlined process in food service. McDonald’s needed to find ways and methods to motivate the customers opt for initial trials and acceptance. The conventional eating pattern of Indians involved breakfast, lunch and dinner. Lunch and dinner menus were complete meals providing the right balance in terms of nutrition. Breakfast was conventional as per the family culture and upbringing. Burgers were likely to be slotted in the category of snacks. But globally burgers and beverage brands were linked with poor eating habits. Supply Chain System of McDonalds: McDonald’s stated that Rs. 50,000 crore (about U.S. $12.5 billion) worth of food produce was “wasted” in India, mainly because of the lack of proper infrastructure for storage and transportation under controlled conditions. In its commitment to providing quality products while supporting Indian businesses, McDonald’s spent a few years setting up a unique supply chain, even before opening its first restaurant in India. McDonald’s stated that it was critical to go beyond one’s immediate suppliers and customers to encompass the entire chain, since hidden value often emerged once the entire chain was visualized Understanding the value to the downstream customer was a part of the supply chain management process. The supply chain connected McDonald’s throughout India and made McDonald’s ‘Indian.’. McDonalds in India focused on making a successful supply chain strategy to implement its QSCV principle
  8. 8. (Quality, Service, Cleanliness and Value), pricing flexibility and new product launches from time to time. Local Sourcing: McDonald's sourced its requirements from local suppliers and farmers, and maintained its adherence to Indian Government regulations on food, health and hygiene. McDonald's India purchased more than 96% of its products and supplies from Indian suppliers, even constructing restaurants using local architects, contractors, local material (wherever possible), and hired local personnel for all positions within the restaurants and contributed a portion of its success to communities in the form of municipal taxes and reinvestment. McDonald’s described the relationships between itself and its Indian suppliers as mutually beneficial, reasoning that as McDonald's expanded in India, suppliers would continue to get the opportunity to expand their businesses, access to the latest in food technology, exposure to advanced agricultural practices and the ability to grow or to export. Cold Chain The Cold Chain was necessary to maintain the integrity of food products and retain their Freshness and nutritional value. The Cold Chain was an integral part of the Supply Chain. Setting up the Cold Chain involved the transfer of food processing technology by McDonald's and its international suppliers to Indian entrepreneurs, who had become an integral part of the Cold Chain. The term Cold Chain described the network for the procurement, warehousing, transportation and retailing of food products under controlled temperatures. McDonald’s restaurants stored products to be used on a daily basis, within a temperature range of –18ºC to 4ºC. About 52% of its food products needed to be stored under these conditions before they were used. As the ingredients moved from farms to processing plants to the restaurant, McDonald's Quality Inspection Program (QIP) carried out quality checks at over 36 different points in the Cold Chain system till it reached the customer . Setting up of the Cold Chain enabled McDonald’s to cut down on operational wastage.
  9. 9. INGREDIENTS and SUPPLIER Cheese Dynamix Dairy Industries Ltd., Pune Dehydrated onions Jain Foods Jalgaon, Maharashtra Iceberg lettuce Trikaya Agriculture Pune Chicken patty Vista Foods Taloja, Mumbai Veg. Patty, Veg. nuggets, Pineapple/Apple pie kiran Foods, Taloja Chicken (dressed) Riverdale Talegaon Buns Cremica Industries Phillaur, Punjab Sesame seeds Ghaziabad, Uttar Pradesh Iceberg lettuce Meena Agritech, Delhi Fish fillet patties Amalgam Foods Ltd., Kochi. Iceberg lettuce ooty Farms & Orchards, Ooty Vegetables for the patties Finns Frozen Foods & Jain Foods (Nasik, Jalgaon) Advertising: McDonald's utilizes the marketing mix to their advantage. Their website is registered to several search engines, e.g., Google, Yahoo, AOL, and many more. They use viral marketing by using consumers eat their products to encourage others to do so as well. McDonald's also has games such as monopoly which influences consumers to play in order to receive free item or win cash money. Viral Marketing generates more people to purchase food during this time period. McDonald's also uses online ads to advertise their products. Facebook is preparing a status based updates for its user, this application will be offered to marketers such as McDonald's. Affiliate programs are in place where they can advertise their products to consumers on other companies’ websites. Also, McDonald's displays online ads to sell their products. In March of 2008 McDonald's displayed over 295 million online ads in just one month. McDonald's has for decades maintained an extensive advertising campaign. In addition to the usual media (television, radio, and newspaper), the company makes significant use of billboards and signage, sponsors sporting events ranging from Little League to the Olympic Games, and makes coolers of orange drink with their logo available for local events of all kinds. Nonetheless, television has always played a central role in the company's advertising strategy. To date, McDonald's has used 23 different slogans in United States advertising, as well as a few other slogans for select countries and regions. At times, it has run into trouble with its
  10. 10. campaigns. This "image" or "reputation" advertising has become a trademark of the company and created many memorable television moments and themes, including: McDonald's is Your Kind of Place (1967) You Deserve a Break Today (1971) We Do it All for you (1975) You, you’re The One (1976) Nobody Can Do It like McDonald's Can (1979) Renewed: You Deserve a Break Today (1980 & 1981) Nobody Makes Your Day like McDonald's Can (1981) McDonald's and You (1983) It's a Good Time for the Great Taste of McDonald's (1984) Good Time, Great Taste, That's why this is My Place (1988) Food, Folks and Fun (1990) McDonald's Today (1991) What You Want is What You Get (1992) Have you had your Break Today? (1995) My McDonald's (1997) Did Somebody Say McDonald's (1997) We Love to See You Smile (2000) There's a little McDonald's in everyone (2001) - Canada Only I’m lovin' it (2003)
  11. 11. The years in which some McDonald's Favorites were Introduced are:- 1955 - Hamburgers, cheeseburgers, fries, shakes, soft drinks, coffee and milk 1963 -Filet-O-Fish 1968 -Big Mac and Hot Apple Pie 1973 -Quarter Pounder and Egg McMuffin 1974 -McDonald land Cookies 1977 -Breakfast Menu 1978 -Sundaes 1979 -Happy Meals 1983 -Chicken McNuggets 1986 -Biscuit Sandwiches 1987 -Salads 1998 -McFlurry Desserts 1999 -Breakfast Bagels 2000 -Chicken McGrill and Crispy Chicken 2001 -Big N' Tasty 2003 -Premium Salads, Newman's Own® salad dressings and McGriddles 2004 - Chicken Selects® Premium Breast Strips