Effectivity of marketing strategies adoped by mcdonalds in banalore city
EFFECTIVITY OF MARKETING STRATEGIES
ADOPTED BY MCDONALD’S
IN BANGALORE CITY
Enrolment No: 118263141
Submitted to the
INSTITUTE OF HOTEL MANAGEMENT, CATERING
TECHNOLOGY & APPLIED NUTRITION, BANGALORE
In partial fulfilment of the requirement for the degree of
Master of Science in Hospitality Administration
The researcher is first of all thankful to the Almighty for providing abundant
grace, good health and knowledge to do this research project.
A deep sense of gratitude is expressed to Mr. V. R Venkatadri, Principal,
Institute of Hotel Management Bangalore, for making this study possible.
The researcher is indebted to Dr.S. Kannan (HOD), Institute of Hotel
Management, Bangalore for his guidance, generous advice, great enthusiasm,
scholastic attitude and constant Inspiration.
The researcher would like to thank Mr. Pramod Naick (Senior Lecturer)
Institute of Hotel Management, Bangalore for his inspiration and enthusiasm
for this project and also for always making himself available to assist for this
Above all the researcher is grateful to the members of his family and
colleagues, without whose love and constant support, this study would not
have been possible.
TABLE OF CONTENTS
LIST OF TABLES
LIST OF FIGURES
1 - 79
1 - 22
Statement of the problem
2. REVIEW OF RELATED LITERATURE
23 - 50
3. RESEARCH METHODOLOGY
51 - 53
Thesis Analysis Methods
4. DATA PRESENTATION AND INTERPRETATION
Analysis of data
Discussion of findings
54 - 67
LIST OF TABLES
The brief background of McDonald’s
Journey of McDonald’s
Overall response of Consumers and Employees
Table showing responses on visit to McDonald's
Table showing response on product knowledge of
Table showing response on McDonald's menu
Table showing response on constraints from eating
Table showing response on accessibility to the
Table showing response on Marketing strategies
used by McDonald’s
Table showing response that McDonald's have
enough promotions in Bangalore or not
Table showing response on increase in sales by
introduction of happy price menu
Table showing response on the biggest competitor of
LIST OF FIGURES
McDonald’s logo image
Targeting, Positioning and Differentiation
McDonald’s in India
Distribution of McDonald's
McDonald's "Happy Price" campaign
McDonald’s marketing communication
Graph showing overall response of Consumers and
Bar diagram showing have you ever been to
Graph showing when you hear the word 'burger', does
McDonald’s come in your mind
Graph showing do you think McDonald's need to revise
Graph showing what restricts from eating at
Graph showing what is the distance of the nearest
McDonald's from your place
Pie chart showing the Marketing strategies used by
Bar diagram showing does McDonald's have enough
promotions in Bangalore
Graph showing do you think that introduction of happy
price menu has boosted the sales up
Graph showing who do you think is the biggest
competitor for McDonald's
Moment of Truth
McDonald's is an international fast food restaurant. They expanded their
businesses in global scale. It is obvious that McDonald surpassed other fast
food joints in terms of sales and fame in international level. However, in India,
KFC performs better than McDonald's now.
The aim of this study is to find out how this company developed its marketing
strategies differently in Indian market. By making a comparative study of
McDonald’s different operation and marketing strategy theory will be
integrated with their development situation. Research is made based on
strategy theory, Internet sources and interviews.
The thesis is started with general information, Indian fast food industrial
situation introduction and thesis structure. After having introduced the
company background, we illustrated strategy theory as thesis theoretical basis.
Next, by comparing McDonald’s marketing strategies, we analyzed the main
difference and some similarities comprehensively of McDonald’s and other
fast food joints in India.
In research finding chapter, we took qualitative finding, it is the main research
method we have used. The thesis is ended in conclusion, after main finding,
recommendation will be given to improve the present strategies adopted by the
McDonald and suggestions will be given for further research.
Comparative study, business strategy, marketing strategy, fast food
development in India.
McDonald’s headquarters is located in Oak Brook, Illinois, United State. It is
the largest chain of hamburger fast food restaurant in the world. The company
logo is McDonald’s with a big yellow “M”. Figure 1 shows that. Richard and
Maurice McDonald started the first McDonald's store from 1950s in the US,
and it primarily sells hamburgers, French fries, dessert, and salads. In 1955,
when the first McDonald's restaurant was founded in the United States, there
was not much variety on its menu, but they offered food supply with high
quality, low cost and good environment. By 1983, there were more than 6,000
domestic branches. In 1967, McDonald's opened its first overseas branch in
Canada. By 1985, its total abroad sales accounted for about 20 per cent of its
domestic business. Every day there are more than 18 million people coming to
McDonald's in more than 40 countries. Nowadays McDonald's has more than
3,4000 locations worldwide with a revenue of 27.56 billion US dollars.
Table 1: The brief background of McDonald’s
The name of company
The number of employees:
Fig 1: McDonald’s logo image
Western-style fast food, desserts
I’m lovin’ it
Only 15% of the total numbers 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.
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.
RE-ENGINEERING THE MENU
McDonald’s thinks according to the customer’s tastes, value systems,
lifestyle, language and perception. Globally McDonald’s was famous for its
hamburgers which are prepared from beef and pork burgers. But, most
Indians religion does not allow them to consume beef or pork. So in order to
satisfy demand as per Indian preference, McDonald’s came up with chicken
and fish burgers to suite the Indian diet.
THE VEGITERIAN CUSTOMER
India has a huge population of vegetarians. To satisfy this customer’s
demand, the company came up with a completely new menu of vegetarian
items and non-vegetarian sections is maintained throughout the various
SEGMENTATION, TARGETING AND
McDonald’s uses demographic segmentation strategy with age as the
parameter. The main target segments are children, youth and the young urban
family. If they take children into consideration, children are more attracted
towards toys and delicious meals including today’s youth prefer such places
for their entertainment and the urban families select McDonald’s on various
occasion like birthday party, treat to their children etc.
Kids are on the top most level in FMCG purchased related to food products.
Figure 2: Targeting, Positioning and Differentiation
So to attract children, McDonald’s has Happy Meal in which they gift one toy
on each happy meal, there are toys ranging from hot wheels to various Walt
Disney characters. Example of the latest range is the toys of the movie
For this, they have a tie-up with Walt Disney. At several outlets, it also
provides special facilities like ‘Playing Place’ where children can play arcade
games, air hockey, etc.
Thus strategy is targeting in making McDonald’s a fun place where customers
can enjoy both playing and eating. This also helps McDonald’s to attract the
young urban families who wanted to spend some quality time, while their
children can enjoy every movement of McDonald’s. To target the teenagers
and young youth, McDonald’s has priced several products aggressively,
keeping in mind the price sensitivity of this target customer.
JOURNEY OF MCDONALD’S
Ray Kroc opens his first restaurant in Des Plaines, Illinois and
the McDonald’s Corporation is created.
Quality, service, cleanliness and value (QSC&V) becomes the
The 100th McDonald’s opened in Chicago.
Hamburger University opens in Elk Grove, near Chicago.
One Billion hamburgers sold. Ronald McDonald makes his
Fillet-o-fish sandwich is introduced
McDonald’s Corporation goes public.
The big Mac is introduced. The 1000th restaurant opened in
Des Plaines, Illinois.
A new McDonald’s restaurant opens every day.
Egg McMuffin is introduced.
Chicken McNuggets is introduced. New Hamburger University
campus opens in Oak Brook, Illinois. Set in 80 wooded acres.
Training is provided for entry level of McDonald’s
50 billionth hamburger sold. Ronald McDonald Children’s
Charities is founded in Ray Kroc’s memory to raise funds in
support of child welfare.
McDonald’s opens in Pushkin Square and Gorky Street,
McDonald’s opens in India – the 95th country.
Restaurants open in Bahrain, Bulgaria, Egypt, Kuwait, Latvia,
Table 2: Journey of McDonald’s
A marketing plan must be created to meet clear objectives. Objectives guide
marketing actions and are used to measure how well a plan is working. These
can be related to market share, sales and goals, reaching the target audience
and creating awareness in the marketplace. The objectives communicate what
marketers want to achieve. Long –term objectives are broken down into
shorter-term measurable targets, which McDonald’s uses as milestones along
the way. Results can be analyzed regularly to see whether objectives are being
met. This type of feedback allows the company to change plans. It gives
flexibility. Once marketing objectives are set the next stage is to define how
they will be achieved. The marketing strategy is the statement of how
objectives will be delivered. It explains what marketing actions and resources
will be used and how they will work together.
McDonald’s plans to open as many as 140 restaurants throughout India
this year, focusing on drive-through outlets.
Investment of more than Rs.400crores in the next two years to expand
Transform itself into a high-volume, mass-market brand with
compounded annual growth at around 30 percent to 35 percent in the
next few years.
Addition of franchisees as current 75% income generated is from
franchisee centres affiliated to McDonald’s.
Moving out of the metros and concentrate its efforts on other mid-sized
cities in providing service. The plan is to enter a new city, understand
the market and then multiply by opening up more outlets in these cities
rather than spreading to too many cities at a time.
Increase the number of customers turning up at its restaurants by
providing the same service and quality by achieving 100% customer
Target on customers between age- groups 24-38 with children’s to
position itself as a family restaurant and the ideal place for kids and
Increase brand loyalty among customers. To build a new generation
who will stay with the brand and then emerge as a long term player.
Introduce new innovative menus by development of new products,
which cater to peoples’ needs by keeping Indian tastes in mind and to
provide greater choice whilst ensuring that the products meet the
requirements of a balanced diet, so that the crowds keep pouring
through the doors.
McDonald’s management process has a lot to do with the following
A plan can play a vital role in helping to avoid mistakes or recognize hidden
opportunities. Preparing a satisfactory plan of the organization is essential.
The planning process enables management to understand more clearly what
they want to achieve, and how and when they can do it. A well prepared
business plan demonstrates that the managers know the business and that they
thought through its development in terms of products, management, finances,
and most importantly, markets and competition. Planning helps in forecasting
the future, makes the future visible to some extent, it bridges between where
and we are and where we want to go. Planning is looking ahead. At
McDonald’s, planning is done with great concentration keeping all the
environmental aspects in view. Planning at McDonald’s is done before taking
up every step like before entering into a new market. Setting up a new
franchise requires the management to look at the determinants of demand and
supply in that particular region. Market research is conducted by research and
development department. A through survey is conducted about the
demographics and behavioural aspects of the markets’ potential customers. In
Punjab acceptance level of fast food is higher than other provinces and so
McDonald’s planning seeks to figure out the existing market trends in Punjab
so to be in a better position to capitalize upon the opportunities. Consumers
taste patterns and cultural variables are brought into consideration and then a
decision is made which region McDonald’s should enter into and which area
can be left alone. Apart from entering into new markets, existing markets are
constantly under observations, and planning is done before launching any new
product. The appropriate match between the consumers taste and product is
judged by the management by product testing. R&D department takes the
responsibility of such planning. Operational planning is another key area in
McDonald’s. Plans are laid out while deciding about selection of suppliers.
What resources McDonald’s should create for itself and which resources
should be outsourced are planned out. Financial planning, as told by the
McDonald’s management, is a vital area for its economic success. Finance
department has hired qualified and skilled accountants who plan and approve
of the marketing, HR and production budgets. All the planning done by
finance department is sent to higher management for further study and
Organizing at McDonald’s is done by every department on its own based on
the activities performed. However mutual coordination and communication is
intense so to keep the objectives of all the departments in alignment.
McDonald’s management does organizing by work specialization to minimize
the interference of unconcerned people which causes a delay in
implementation of planning. For example, the finance department organizes its
work among accountants, auditors, and forecasters. Marketing department has
allocated certain people. Brand managers are there to work in association with
R&D department to keep a check on brand performance by conducting brand
audits and brand tracking. Regional managers are there to look at the regions
sales, take the problems into account, taking immediate action within the
authorities , forwarding the problems to concerned authorities, for example if
sales trend in a region goes down without overt reasons, brand management is
informed to seek out the reasons and suggest solutions. Brand managers are
made responsible for keeping command over operational activities. Customer
cares, branch maintenance secure transaction , security checks, and sustaining
healthy environment is their responsibility. All of these activities are in mutual
coordination and the interdepartmental mobile communication channel is held
responsible for upholding the highest level of coordination among
Every organization needs strong leaders who can lead the employees by
motivating, guiding and directing them. McDonald’s has been blessed with
efficient employees as ensured by its strong recruitment and selection policy.
First of all the leadership qualities of a branch manager are vitally important
for McDonald’s the ground staff who are in contact with the customers need to
be motivated in order to deliver high service standards. The standardization of
service criteria of McDonald’s requires high competencies of employees who
are working close to the customer as they are the one who will please or
displease a customer on the spot. So in this case the leadership quality of a
branch manager comes out to be more important. He needs to guide, direct and
keep the staff motivated by setting high examples of commitment and
professionalism. He has to be vigilant as well as tenacious for that.
McDonald’s training and development staff ensures to transfer good
leadership tactics to the branch managers. The managing director of
McDonald’s holds special events and personally meets those employees who
get the best performance awards at all 20 restaurants countrywide. This
inspires the ground employees to work harder and show high performance.
Another way of leading is to set high performance standards.
Controlling becomes a vital phenomenon in an organization as grows larger
and larger. With expanding resources and areas of business becoming bigger
brings some serious concerns for management to keep control over all the
facets of the organizational resources and dimensions of business. McDonald’s
has become a multinational working in more than 100 countries and running
more than 30,000 restaurants around the world. This is huge controlling in this
case becomes a pulse for the business. There has to be a system in place for
controlling factor and all the management has to be on its toes in order to
make sure the smooth and right running of the business.
McDonald’s in this area has excelled over the period of time feeling and
realizing the need of having tight control over its resources and processes
thereby providing the highest level of value to its precious customers. In
controlling, McDonald’s emphasizes seriously on financial control. Budgets
are allocated to critical success factors appropriately. For that the finance
department works in coordination with marketing department. Marketing men
pose recommendations to add value in its supply chain to get greater margins.
Finance department then considers the feasibility of implementation of those
recommendations from financial point of view. For that the financial analysts
and charted accountants are there. Finance department again asks marketing
department to review the recommendation and points out the key areas where
cost can be controlled. Marketing then again analysis the situation and ponders
upon the areas which can be forgone to come in balanced state where
maximum value can be created for approximate costs. Once the budgets are
made with areas defined, the execution patterns are transferred through high
communication to lower levels where the actual work has to be done. If the
budgets are not communicated properly, there is a high chance of
misallocation of financial resources and hence mismanagement. Head of
marketing takes over the matters and senior marketing executives are given
the charge. They ensure the right use of budgets. If something goes wrong on
lower level or even on the same hierarchy, respective personals take actions.
Operational controls in another area where serious emphasis has to be made.
McDonald’s delivers the fastest burger and other foods delivery to its
customers. For that efficiency has to be achieved through proper operations
and deployment of skilled employees. Customers concerned are directly
conveyed to branch manager who takes on the steps to rectify the manner. No
one has to be socks. This is the key. Everyone on the job has to put on the
socks. Improvements in operations are constantly made through proper
control. For that right training has to be given to the employees. At
McDonald’s, training and development of employees is a vital hand of gaining
control over operations. If the employees are rightly trained, they will function
in the most efficient manner. Human resource management requires control as
well. Having to know the right requirement of human resources depends on
the right forecasting of personals. The right selection and recruitment is done
through criterion. Once the selection is done, controlling comes into play by
providing the employees with right compensation and keeping an eye on their
training needs. Training and development department is constantly responsible
for providing training.
McDonald’s has a very well-established global brand that appeals to all age
groups and customer segments. In 2005, McDonald’s placed ninth in the top
100 global brands ranking of business week magazine and interbrand, a
STRONG OPERATIONAL CAPABILITIES
McDonald’s has strong operational capabilities which allow it to provide high
quality products and customer service across its restaurants. The company has
a world-class supply cain and standardized processes to deliver products of
uniform quality across restaurants, regardless of their location or nature of
operation (company-owned or franchisee-operated). The company and its
partners purchase food and related items from an approved group of suppliers.
Some of its products such as Big Mac, Chicken McNuggets have become
brands in their own right. Strong brand draws customers to the company’s
restaurants and provides it with a recognized brand currency in new markets.
McDonald’s is the symbol of quality with respect to its offering.
WEAK REVENUE GROWTH
Low revenue growth suggests that the company has not been able to expand
customer traffic at existing restaurants thanks mainly to the maturation and
saturation of its key markets.
WEAK PRODUCT DEVELOPMENT
McDonald’s Faces a strong competition and its weak product development
There is a large market for McDonald’s still to serve. Furthermore it has few
outlets within cities in which it is currently serving, so McDonald’s also has
opportunity to expand within cities.
McDonald’s intends to sell about company-operated restaurants to franchisees.
The operating margin of franchisee-operated restaurants is higher than that of
company-operated restaurants. The sale of company-operated restaurants to
franchisees is likely to increase the overall profitability of McDonald’s
GROWING DINING-OUT MARKET
As the lifestyle trends of consumers are changing, the dining out market is
growing, that would serve as an opportunity for the McDonald’s.
McDonald’s restaurants face intense competition from international, national,
regional and local retailers of food products. The company competes on the
basis of price, convenience, service and quality of food products. The
company’s competition includes restaurants, quick service eating
establishments, pizza parlours, coffee shops, street vendors, convenience food
stores, delicatessens and supermarkets.
GROWING HEALTH CONSCIOUSNESS
As the education level has increased, health consciousness has also increased.
A growing consciousness of health matters could reduce McDonald’s
INCREASED SALES TAX
Sales tax has increased which results in the increased customer prices and
reduced sales level.
Marketing strategy is very much important for developing any of the business.
Without it, the effort of the business to attract customer is random and very
inefficient. The main focus of the strategy must make sure that the product
should fulfil the demands of the consumers and as well as it maintains the
long-term relationship with those consumers. To achieve this, it will have to
initiate flexible strategy that responds to change in customer demand and
perception. It may also give brand name to the product which will help you to
run the business in new markets smooth and efficient manner. First of all the
main purpose of the marketing strategy should be to identify the weather the
target customer’s are satisfied with the product and services of business.
Once the strategy is created and implemented, try to identify the feed from the
customer and if any changes or improvement is required apply it to the
maximum satisfaction of customers.
This helps to identify that, where the strategy needs to be improved and how it
can be developed, so that it can be implemented for effective action. Before
applying any strategy in the business proper planning programs must be
organized within the members of the organization.
A marketing strategy defines and describes the objectives or planning through
which we are going to satisfy our consumer needs in the selected target
market. It does not involve written work but, it includes communication
between different departments of the business enterprise for example sales
department, managers, executives etc.
In fact it is a set of strategies that is implied by the organization in order to
increase the growth and development of the business. Normally strategy deals
with the manner in which the organization plan to achieve the consumer
satisfaction and maximize the profit.
In today's world of cutthroat fierce competition, customer satisfaction is very
essential to not only exist but also to excel in the market. Today's market is
enormously more complex. Henceforth, to survive in the market, the company
not only needs to maximize its profit but also needs to satisfy its customers
and should try to build upon from there.
Indian companies for their operational convenience had divided the Indian
subcontinent into four zones, the progressive West, the powerful North, the
traditional and culturally rich, South and East. McDonald’s opened their first
restaurant in the capital of India which is Delhi. The second restaurant was
opened in the financial capital of India, Mumbai. McDonald initially
concentrated in the West and North regions. Later the company exhibited
ambitious plans for expansion in Eastern and Southern regions.
McDonald’s restaurant in India
In 1996, McDonald's opened in India for the first time, a country where the
majority of the population was Hindu and vegetarian, and the cow was sacred.
Many saw it as just another example of the relentless spread of Western
corporations into every nation, creating a global system in which wealth was
drained out of local economies into the hands of a very (Volume 1, Issue 2
(Jan. 31, 2009) OJICA-Online Journal of International Case Analysis 3) few,
very rich elite. McDonald’s opened its doors in India in October 1996,
demonstrating what the McDonald’s experience was all about. McDonald’s in
India was a 50-50 joint venture partnership between McDonald’s Corporation
(U.S.A.) and two Indian businessmen. Amit Jatia’s company, Hardcastle
Restaurants Pvt. Ltd., owned and operated McDonald’s restaurants in Western
India, while Connaught Plaza Restaurants Pvt. Ltd., headed by Vikram
Bakshi, owned and operated the North Indian operations. These companies
signed their joint-venture agreements with McDonald's in April 1995 and
along with their Indian management team trained in McDonald's restaurants in
Indonesia and the U.S.A. before opening the first McDonald’s restaurant in
McDonald’s currently has 300 restaurants in India of which 145 are in North
& East India and 155 in West & South India.
Fig 3: McDonald’s in India
“McDonald’s vision is to be the world’s best quick service restaurant
experience. Being the best means providing outstanding quality, service,
cleanliness, and value, so that we make every customer in every restaurant
India as a market was a unique example of diversity. Divided into 28 states
and 7 union territories, the vegetation, climate, religion, language, clothing,
and food varied from one state to another. With the combination of spices in a
unique way, food of these states reflected their traditions and culture. Hence
the biggest challenge to any food business in India definitely was about
balancing the diversity and the product offerings.
In November 2004, McDonald’s entered southern part of India with its fir
restaurant in Bangalore, the so called silicon valley of India.
McDonald’s got clearance from Foreign Investment Promotion Board (FIPB)
of India in 1991. But it was only after five years of preparation, that the first
restaurant became operational in 1996. It worked on developing local
relationships with local partners to facilitate the raw material.
When McDonalds started their operations in 1948 the menu consisted of
cheese burgers and hamburgers, pie, potato chips and beverages like milk, soft
drinks, coffee. The cost of hamburger at that time was mere 15 cents. Now it is
the largest food chain all over the world. By 1965 McDonalds had 700
restaurants. McDonalds all over the worlds are aligned by Global strategy of
plan to win. This strategy focuses on price, people, customer experience,
promotion and place. (McDonald’s History, 2012)
OBJECTIVE OF THE STUDY
The primary objective of study is Marketing Strategies adopted by "Mc
Donald's". The objective is supported by five secondary objectives,
achieving them will lead to the fulfillment of primary objective. They
1. To identify the marketing strategies used by McDonald’s.
2. To analyze the standard of customer satisfaction for products offered
To identify different activities followed by McDonald’s in order to
establish itself in market.
4. To analyze the effectivity of marketing strategies adopted by
5. To highlight on different aspects that a service based food chain must
follow in order to increase its market share and for being on a
continuous growth stage.
1. The analysis is done on 110 (100+10) questionnaires in limited area
i.e. Bangalore city.
2. McDonald’s did not agree to show the record of performance of any of
their specific eatables.
3. 100% response rate is not found from the respondents. Some extent of
biasness is found because of Brand loyalty while answering the
Potential biases such as reluctance of consumers, executives etc.
Lack of interest of the respondent is one of the major problems.
6. The Geographic extent of this study is limited to the Bangalore market
7. The researcher has tried to present a bird’s eye view and it may not be
an in depth study.
REVIEW OF LITERATURE
The “think global and act local” strategy brought McDonald's competitive
advantage in the fast-food industry. They customized their marketing
strategies based on the cultural, economical and socio political factors of
different nations (Cooper & Edgett, 2009). Adapting and executing this
strategy, the company is capable of adjusting their products and services to the
preference of their local consumers. This is also why you see difference in
their global branches in prices, atmosphere, advertisement tools and even the
Value propositions had to be directed to the right target market to establish a
new product. An interesting question was who would eat at McDonald’s? In
order to develop the marketing strategy, it was important for any company to
understand the consumer market. The more one knew and understood about
consumers, the more effectively one could communicate and market to them.
Four aspects of consumer behaviour which needed to be examined to
understand a consumer market were the ability of the people to buy, consumer
needs, buying motives and the buying process. The initial attempt of
McDonald’s was to induce trials and get the customers into the restaurants.
Word of mouth and advertising was expected to reveal the experience of
eating at McDonald’s.
The localization strategy is beneficial for anticipating the changing needs and
preferences of the consumers within the industry. It also creates such
operational efficiency, which enables to absorb changes frequently (Barnes,
2008). If any changes occur in one country - McDonald's has to adjust only
that country specific strategy rather than entire global strategy.
Until 2000, McDonalds advertised their brand mainly by putting the main
focus on the outlet design and tailor made food menu for the needs and desires
of the diverse Indian population. (Chaturvedi, P.)
Strategies in India
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 ND branding
of the company. The entry of almost all the international brands into India
happened at the same time, while others closed down due to various strategies.
McDonald’s survived only due to keen understanding of the Indian economy.
Food pricing was a sensitive issue in India. An ideal strategy was to focus on
customer’s 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 and the demand for value.
Marketing Initiatives at McDonald’s
When operations in India began, initially McDonald’s positioned itself as a
place to visit with the baseline "McDonald's mein hain kuch baat" (“There’s
definitely something about McDonald’s”) in their advertisements. People were
encouraged to try the McDonald's experience. However, over the years, after
McDonald's had been hugely accepted by Indian customers, there was a need
to evolve the communication strategy and move on from trying to encourage
and motivate people to visit for the first time to making McDonald's a regular
experience. After McDonald’s established itself and people knew what
McDonald's was all about, the baseline was changed to “Toh aaj McDonald's
ho jaye" (“Let it be McDonald’s for today”), which talked about an everyday
experience. The objective was to continue positioning McDonald's as a
comfort zone for families.
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.
McDonald’s India is a joint venture company managed by Indian’s.
McDonald’s India, a subsidiary of McDonald’s USA, has expanded its
presence in India via two joint venture companies – Connaught Plaza
restaurants and Hard Castle restaurants. McDonald’s India has a 50 percent
equity stake each in both joint venture companies. Connaught Plaza
restaurants manages operations and expansions across North India (Delhi,
jaipur and Punjab) managed by Vikram Bakshi. Hard Castle restaurants which
is managed by Amit Jatia, manages operations and expansion across western
India (Mumbai, Pune and Gujarat).
Mr.Saranan Laxaman is a Development Licensee for the one and only
Bangalore property so far under the flagship of Golden Kitchen Pvt. Ltd.
Which was unveiled in October 2004.
In order to capitalize on the highly price sensitive economy, and the Indian
mentality of liking anything that is foreign, McDonald’s strategy is market
penetration and the three circles strategy. This led to the localization and
branding of the company. The entry of almost all the international brands into
India happened at the same time, while others closed down due to various
strategies. McDonald’s survived only due to keen understanding of the Indian
The massive and aggressive expansion strategies that McDonald’s took up in
India was with the sole objective of establishing its presence indelibly in the
sub continent and to prove to the world that if anything can sell in India it can
sell anywhere. Today McDonald’s has become a household name and finds its
kiosks in almost many schools colleges and corporate. It can be said that there
is no food court without a McDonald’s and almost every Indian has tasted
McDonald’s fast food. This is indeed a great breakthrough for a very orthodox
community that has very rigid and fixed eating habits and traditionally very
McDonald’s had to make it clear to the authorities that their products in India
neither contain beef nor pork in it. They had to suit their burgers to Indian
taste and Indian market which was a hyper price sensitive market. The
introduction of breakfast combos and budget meals made market penetration
possible. “Aloo Tikki Burger” was McDonald’s priced product in India. Their
quick turnaround times made new inroads into the fast food industry.
(Mathur, S., 2011)
Figure 4 Distribution of McDonald's
When McDonald's India launched in 1996, urban Indians in Mumbai and
Delhi typically ate out three to fives times a month, according to AT Kearney,
the management consultancy. In the 12 years since then, that average
frequency has doubled and analysts forecast that by 2011 the Indian quick
service restaurant market will be worth 30,000 crore (about $6.3bn at October
2008 exchange rates).
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 scepticism 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.
Twelve 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 Hardcastle 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. By September 2008, it had premises in Mumbai, Bangalore, Baroda,
Pune, Indore, Nasik, Chennai, Hyderabad, Surat and Ahmedabad.
Amit Jatia, Managing Director, 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."
Phase I: 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.
Says Arvind Singhal, Head of Marketing at McDonald's India: "From a
marketing communications standpoint, we 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 and PR about its attempts to tailor a menu to
Amit Jatia said: "Products like McAloo Tikki burger, Veg Pizza 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 we 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.
Says Sridhar, National Creative Director, Leo Burnett: "When McDonald's
launched we took a conscious call of not introducing any beef or pork in our
products. Thus, when controversies around McDonald's products started
during the early and growth stages of the Indian business, we reacted quickly.
"We educated our customers about the build of our products and did extensive
kitchen tours for our customers. We showed them how we use separate
vegetarian and non-vegetarian platforms for cooking – a first in any market for
II Phase: brand advertising
By 2000, McDonald's India was ready to begin TV advertising. Arvind
Singhal said: "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
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
A second campaign featured a child and his family moving into a new place.
He misses his previous surroundings – until McDonald's provides something
Fig 5: A still from the Leo Burnett/McDonald's campaign featuring a
family moving home
These storylines were supported by other initiatives. The company's oneminute service guarantee attempted to reinforce its reputation for fast, friendly
and accurate service and it also ran in-store events for mothers and children.
Mr Singhal says: "To kids sitting on the Ronald McDonald bench, pumping
sauce from the sauce machine became brand rituals."
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.
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
Fig 6: McDonald's "Happy Price" campaign
Phase III: Appealing to both ends of the age spectrum
In 2008, the latest campaign from the McDonalds-Leo Burnett stable uses
father-son duos from the Indian film industry to reiterate the theme of
"Yesteryear's Prices". It features Bollywood stars from past decades together
with their sons and a message that prices have not risen in line with the
passage of time.
The Happy Price campaign has also been promoted via virals. Outdoor has
also promoted a home delivery option in a country where home delivery is
common in urban areas.
McDonald's has also been exploring strategic tie-ups with Indian sports
properties such as the IPL cricket tournament, where it was one of the event's
Amit Jatia, however, says: "The eating out market in India is very large and
has huge potential fuelled by rising disposable incomes. There are many
Indian and international players who have entered in the market since the last
decade and unbranded food chains have also grown significantly. "The Indian
consumer has seen value in what we have to offer at our restaurants which is a
testament to our model." (Chaturvedi, P.)
MCDONALD’S MARKETING MIX (5P’S)
After analyzing the market, finding he key factor, target segment and
understanding the market demand, every company needs to come up with an
offers or such type of plan, that speed up the growth of the company. For
which McDonald’s uses 5p’s of marketing mix which are as follows:
Product includes that, how the company should design, manufacture the
product so that it enhance the customer experience?
Figure 7: Product success
Product is the physical product or services offered by the company to its
customers. McDonald’s includes certain aspects of its product such as
packaging, desirability, looks etc. This consists of both tangible and nontangible aspects of the product and services.
McDonald’s has purposely kept its product depth and product width limited.
McDonald’s had first studied the behaviour of the Indian customer and
provided a totally different menu as compared to its menu offered in
international market. It removed pork, beef and mutton burgers from the
menu. India is the only country where McDonald’s serve vegetarian menu.
Even the sauces and cheese used in India are 100% vegetarian. McDonald’s
continuously innovates its products according to the changing preferences of
its customers. McDonald’s brings best quality products and best features as
per the preference and demand of the target market.
The place mainly consists of distribution channels and outlets of the
company. It is considered as very important because the product must be
available to the customer at the right place, at the right time and in the right
There are certain degree of fun and happiness that McDonald’s provides to
its customers. It provides value position based on the needs of the customer.
McDonald’s offers proper hygienic atmosphere, good ambiance and better
Now McDonald’s have also started offering internet facilities at their outlets,
along with music system through radio, not the normal music but the music
which is preferred by young generation in order to attract them.
Pricing strategy is the most important aspect of marketing mix. It includes
price list, if any discount available or payment facility available. It should
also take into consideration the possible reaction from its competitors
regarding the pricing. Pricing is very much necessary because it is this part,
which decides revenue for the business unit.
All the other three ere the expenses incurred in the business. The price needs
to take demand and supply equation into consideration by analyzing the
pricing demand as per Indian market.
McDonald’s came up with a very grasping punch line “Aap ke zamane
mein, baap ke zamane ke daam”. The pricing strategy was founded to
attract middle class and lower class people and the effect can clearly be seen
in the consumer base that McDonald’s has now.
McDonald’s has certain value pricing and bundling strategies such as happy
meal, combo meal, family meal, happy price menu etc to increase overall
sales of the product.
Fig 8: McDonald’s marketing communication
The promotional activities adopted by the McDonald’s helps to communicate
efficiently with the target customers. The diagram gives idea about the
promotion strategy of McDonald’s. Application of above mentioned
communication mix describes the cost that is feasible as per the consumers.
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”.
McDonald’s corporate used advertising, personal selling, sales promotion,
public relations, and direct marketing and became world’s largest leading
Burger Empire. These five promotion tools are used by McDonald’s to
integrate marketing communication program which allows McDonald’s to
access the communication channels clearly, consistently and easily transfers
messages and product to the target audiences.
SETTING THE PROMOTION MIX
An advertisement is targeted to attract the masses it reaches to large number of
people at a time. Advertising is one of the most important tools for promotion
which had various ways of advertisement in that advertisement through
billboards and media are often used by any of the business enterprise.
Consumers mostly perceive goods which are advertised goods, as they assume
it is more rightful.
Due to distinct features of advertisement McDonald’s also hold the hand of
advertising. There are three main objectives of advertising for McDonald’s are
to make people aware of an item, feel positive about it and remember it. The
right message has to be communicated to the right people through the right
media. McDonald’s does its promotion through television, hoardings and bus
shelters. They use print ads and the television programmes which are also an
important marketing medium for promotion.
Personal selling is most effective tool for building buyers preference,
convenience and actions. Personal interaction allows knowing for feedback and
adjustments if required. If the organization had a good relationship with buyers
they are attentive towards personal selling.
In personal selling McDonald’s employees working in different outlets are the
best example of personal interaction, the employees are directly serving the
customers so, and the face to face communication is easily possible. In the
McDonald’s outlet there are such staff which are appointed for personal
selling they are the one who perform the activities regarding selling up of
goods to customers.
Sales promotion activity consist of promoting the business unit through
organizing various contest, programmes, functions, distribution of free
discounts coupons etc that attracts attention of the customers, also offers
strong purchase incentives, dramatizes offers, boosts sagging sales stimulate
quick response; short-lived; not effective at building long-term brand
McDonald’s organizes several sales promoting contest and programmes in
different retail markets and outlets in which they distributes free discounts.
The statue of mascot McDonald’s is always there for any occasions that are
also one of the logo of McDonald’s.
Highly credible; very believable; many forms: news stories, news features,
events and sponsorships etc; reaches many prospects missed by means of
other forms of promotion; dramatizes company or product; often the most
under used element in the promotional mix; relatively inexpensive(certainly
not ‘free’ as many people think- there are costs involved).
Public relations are also an important part of the McDonald’s marketing
strategy. The restaurant employees play a huge role in interacting with the
public. On a day-to-day basis the employees commit themselves to customer
and the customer’s feelings toward the brand. McDonald’s feels that before
they communicate with their customers they need to be aware of what their
competitors are communicating, so they can create a beneficial difference
between themselves and the competitors.
Many forms: telephone marketing, direct mail, online marketing, etc. Four
distinctive characterstics: Nonpublic, immediate, customized, interactive;well
suited to highly-targeted marketing efforts.
Direct marketing is also one of the efficient tools for promotion. The
McDonald’s uses tool in the home delivery services in which they directly
serve the order to their home. Also they have a websites which are more in
preference for direct marketing in that they usually mentioned all the new
offers along with the contact number of your nearby outlets.
McDonald’s understands the importance of both its employees and its
customers. It understands the fact that a happy employee can serve well and
result in a happy customer. McDonald’s continuously does internal marketing
because if the internal marketing is effective it will automatically lead to in the
success of external marketing.
Internal marketing includes hiring, training and motivating employees. In this
way they can easily serve customers and the result will be the smiling faces of
the customers. The level of importance has to be placed in the following order
(the more important people are at the top):
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 McDonald’s and will love to serve the customers.
There have been many McDonald’s advertising strategy and slogans over the
years. McDonald’s is one of the most widespread fast food advertisers.
McDonald’s Canada’s corporate website says that the business campaigns
have always focused on the “overall McDonald’s experience”, rather than just
product. The purpose of the image has always been portraying warmth and a
real slice of everyday life. Its TV ads, showing various people engaging in
popular activities, usually reflect the season and time period. Finally, they
have never in their advertising history used negative or comparison ads
pertaining to any of their competitors; the ads have always focused only on
McDonald’s alone. 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.
BRANDING AND BRAND LOYALTY
When you see the golden arches, what is the first thing that comes to your
mind? Or what about when you see Ronald the clown, what comes to your
mind? Finally, what has 2 all, special sauce, lettuce salad on a sesames bun?
Hmmm.... sounds a lot like McDonald’s knows how to capture your attention.
One of the things that McDonald’s has proved is that they are good at building
its brand loyalty. Even young children know that when you see the golden
arches, that you are close to a McDonald’s. With its international expansion
efforts, McDonald’s has become one of the most recognized brands worldwide. A couple of the things that has helped to build McDonald’s brand is
their constantly changing menu and brand packaging that meets the needs of
McDonald’s positions itself as the leader in quick service restaurants. In order
to maintain their standard, they have started marketing to a younger set of
persons, much in the same way that their “I’m loving it” campaign does.
Users and non-users alike will use the club McDonald’s to their advantage.
They expect that their younger target will seek out memberships in club
McDonald’s. The online points tracker and profile will add to the innovation
factor. No need of paperwork when figuring out your point totals and prize
eligibility. This is easy to use aspect of the promotion is appealing to those
who were born with computers. Club McDonald’s is targeted at younger
people who are familiar with credit cards and some of the rewards cards that
are part of them.
McDonald’s growth strategy is based on three elements:
1. Adding restaurants
2. Maximising sales and profits at existing restaurants.
3. Improving profitability.
Maximising sales and profits at existing restaurants will be accomplished
through better operations, innovation, product development and refinement,
effective marketing and lower development and operating costs.
Improved national profitability will be realized as economies of scale are
achieved in individual markets and as the company benefits from the domestic
SERVICE MANAGEMENT STRATEGY
If we take any fast food restaurants the customer attracts firstly through brand
and secondly with the most important thing to consider i.e. is services offered
If the services of any enterprise is not suitable to customer than it achieve the
aim that has been proposed by them.
This research describes the service management strategy employed by
McDonald’s Corporation in the operation of their fast food restaurant chain.
The company’s service management strategy is described within the
philosophy culture image of the company, service systems, and human
resources are considered. The service of the company is identified through
It is the goal of McDonald’s to develop the highest level of skill among all
employees. Therefore, a common training programme has been established to
develop staff and to meet the training needs of the company.
McDonald’s head of training is responsible for implementing and directing the
training programme throughout the company. Operations supervisors and
restaurant management participate in the programme and are responsible for
individual restaurant results.
THE ANSOFF PRODUCT MARKET GROWTH
This matrix helps companies decide what course of action should be taken
given current performance. The matrix consists of four strategies:
1. Market penetration strategy
2. Market development strategy
3. Product development strategy
Figure 9: Ansoff Matrix
MARKET PENETRATION STRATEGY
Market penetration is one of the four growth strategies of the Product- Market
Growth Matrix defined by Ansoff. Market penetration occurs when a company
enters/penetrates a market with current products. The best way to achieve this
is by gaining competitor’s customers.
Other ways include attracting non-users of your product or convincing current
clients to use more of your product/service. Market penetration occurs when
the product and market already exists in market. McDonald’s is one most
popular brand in fast food in entire world. In 1996, the first McDonald’s
opened in India, many thought that this was a wrong move for McDonald’s.
Various reasons were laid for this claim. Although, the main reasons lays on
the fact that Indians have very different perception about food. McDonald’s,
being an American food chain, view breads full meal while Indians view them
as snacks. As the time went by, McDonald’s slowly became the part of the
Indian landscape and way of life rather than just being an outpost of American
culture. Indians soon accepted that the McDonald’s serve are ordinary, thus
they are for ordinary people like them.
Future more, believes that the introduction of McDonald’s to the Indian
society changed the direction of the Indian cultural framework. Along with the
rest of the world, India was also McDonalized.
MARKET DEVELOPMENT STRATEGY
A market development strategy targets non-buying customers in currently
targeted segments. It also targets new customers in new segments.
A marketing manager has to think about the following questions before
implementing a market development strategy: is it profitable? Will it require
the introduction of new or modified products? Is the customer and channel
well enough researched and understood?
The marketing manager uses these four groups to give more focus to the
market segment decision: existing customers, competitor customers, nonbuying in current segments, new segments, to focus on market segments. For
serving synonymously to the existing customers they are coming up with
different menus as per change in taste and preference of their customer e.g.
happy price menu, beverages including milk shakes and cold coffees etc. Also,
by keeping in mind their rivals they are introducing products to compete them
e.g. to answer the KFC they came up with chicken Mcnuggets. They are
adopting pricing policies for non-buying customer and as well as new
PRODUCT DEVELOPMENT STRATEGY
In business and engineering, new product development (NPD) is the term used
to describe the complete process of bringing a new product or service to
market. There are two parallel paths involved in the NPD process: one
involves the idea generation, product design, and detail engineering; the other
involves market research and marketing analysis.
Companies typically see new product development as the first stage in
generating new products within the overall strategic process of product life
cycle management used to maintain or grow their market share.
McDonald’s is always within the fast-food industry, but frequently markets
new burgers. Frequently, when a firm creats new products, it can gain new
customers for these products. Hence, new product development can be a
crucial business development strategy for firms to stay competitive.
McDonald’s are always enhancing their existing product along with it; they
also try to introduce new and new products so that they can easily survive in
Diversification is a form of growth marketing strategy for a company. It seeks
to increase profitability through greater sales volume obtained from new
products and new markets. Diversification can occur either at the business unit
or at the corporate level. At the business unit level, it is most likely to expand
into a new segment of an industry in which the business is already in.
At the corporate level, it is generally and it’s also very interesting entering a
promising business outside of the scope of the existing business unit.
OPERATIONS COMPETITIVE STRATEGY
McDonald’s corporation completes in a challenging market segment by
providing need-satisfying products to customers. In this segment, ineffective
competitors often fail without proper strategies.
To sustain its viability, the McDonald’s corporation employs an effective
competitive strategy to make it stand out against competitors such as other fast
food restaurants. McDonald’s competes on several bases, including:
Their strongest priority is “making customers happy”. The company recently
made strong changes to its process by introducing the “made for you” system.
McDonald’s has been a leading fast-foods outlet in Bangalore. But the outlet
understudy has other competitors eating away into its market share. In addition
to its traditional rivals- KFC, Dominos, Pizza Hut- the firm encounters new
challenges. Jumbo king competes using a back to basics approach of quickly
serving up burgers for time-pressed consumers. On the higher end, the KFC
has become potent competitor in the quick service field, taking away
customers from McDonald’s.
Perhaps in the new environment, fast, convenient service is no longer enough
to distinguish the firm. At this time, a new critical success factor may be
emerging: the need to create a rich, satisfying experience for consumers.
This brings us to service and experience based competition which McDonald’s
can use for competitive advantage.
It is for this overall “food, fun & folks” experience that customers pay a
premium over the other competitors.
2. Pizza hut
3. Dominos pizza
McDonald’s competes on several bases mainly to “make their customers
happy” by providing speedy, affordable, and nutritious foods.
Through extensive market research and survey, the organization discovered
that its customers desire speed as one of the restaurant’s top priorities.
Therefore, McDonald’s vision aims to “provide fast, friendly and accurate
service”. McDonald’s realizes that specific targets are necessary to measure
the performance of speed, and continuously takes relevant measurements to
compare actual performance with desired targets. To achieve efficient services
times, the company utilizes proven, standardized training processes for its
employees and new drive-thru layouts to reduce service times. Along with the
speed, McDonald’s also competes by offering prices at a low cost.
To offer high quality products at low cost requires efficient processes
throughout the entire McDonald’s organization.
Once again, this goal is built into their vision statement when they claim that
“we will be the most efficient provider so that we can be the best value to the
most people”. McDonald’s incorporates several ways of approaching to
provide great value to its customers. One strategy that the company has
employed for many years is the value meal.
The value meal allows customers to buy a sandwich, French fries, and
beverage at a discount when purchased together. McDonald’s restaurants offer
from seven to twelve value meals, both for their lunch menu and breakfast
menu. More recently, McDonald’s began offering a value menu, consisting of
many individual items costing only rupees fifty each. The value menu has
proved to be very successful and has been since incorporated to the individual
McDonald’s third main competitive base is nutrition. The organization
understands that health trend is an increasingly popular trend therefore; the
organization has recently focused extraordinary efforts to promote their new
nutritious choices. Although not specifically built into the organization’s
vision, McDonald’s has already introduced many options to achieve this goal.
McDonald’s has assembled their Global Advisory Council on balanced
lifestyles. This council consists of exercise & obesity specialists,
environmentalists, and other professionals to ensure that McDonald’s takes
appropriate steps in helping its customers achieve optimal health. The
company is also utilizing technology to their advantage. The current
McDonald’s website lets a user select any combination of menu items, place
the items in the online bag, and conduct a nutritional analysis on their
selections. The user can break down the analysis even further than a menu
item, down individual condiments, including ketchup; pickles etc. Not only
has the company introduced many steps to ensure nutrition, but it will strive to
continue the trend toward nutrition. McDonald’s plans to add additional
healthy menu options increase nutrition awareness among McDonald’s
employees; conceive new ways to deliver nutrition information to its
customers, and other actions.
The objective of this study is to answer the main question: what kinds of
business strategies are effecting McDonald’s in Bangalore market? The
research should consequently make the company to be able to reach a
McDonald's business strategy in the Bangalore market
If the international fast food industries want to enter into the fast-food market,
what kind of the market strategy should be used?
In this thesis, the researcher has used qualitative research method and also
some theories to analyze what kinds of reasons led to the difference.
The theoretical part includes information gathered from literature and Internet
dealing with business strategy. The large amounts of necessary data and
information were collected from the Internet. This thesis will describe the
current development of McDonald's in India, and also use theories and
realities to explain the reasons for their performances in India. On one hand,
researcher will analyze the strategies of company from the perspective of
business strategy; on the other hand, the researcher will analyze reasons from
the perspective of competition strategy.
In addition, the research contains personal interviews. There were a lot of
participants' observations that the managers and customers in the Indian
market know the goal of our research. For our questionnaires, the researcher
only asked them at most 10 questions.
However, the study included primary and secondary data. The primary data
was collected with qualitative methods by interviewing the customers and
managers. The secondary data was from books, Internet, and course materials
with some relevant information.
The thesis used qualitative method to do the research. In addition, the
researcher has also interviewed the customers and managers to get their
As to the definition of qualitative research, this part of this thesis will employ
Creswell’s definition as follows:
Qualitative research is an inquiry process of understanding based on distinct
methodological traditions of inquiry that explore a social or human problem.
The researcher builds a complex, holistic picture, analyses words, reports
detailed views of informants, and conducts the study in a natural setting.
Through qualitative analysis, researcher found that there are several reasons
that lead to the different performance of McDonald’s.
1. The difference of marketing positioning: you will see the different service
mode. McDonald’s used QSCV mode that includes quality, services,
cleanliness and value.
2. The difference of marketing strategies: McDonald’s provides a lively young
3. The difference of employee’s management: McDonald’s would like to use
diversification mode to manage their employees.
THESIS ANALYSIS METHODS
Interviews were started very successful. They will be found at Appendix 1 and
Interview with managers
In order to understand the real performance of McDonald’s in Bangalore,
researcher made the two interviews with 10 managers of McDonald’s outlet in
Rajajinagar and Vijaynagar in Bangalore, India. Face-to-face meeting made
the interviews. Because of the limit time, researcher only asked them two
questions, which took totally 15 minutes. The manager interview
questionnaire can be found in Appendix 2.
• Manager of McDonald’s: In recent years, McDonald's began working with
some local meat production and processing companies. McDonald's also made
development of healthy fast food to customers. McDonald's is planning to
increase its investment in Bangalore in the future which mainly for new
restaurants and existing restaurant upgrades and extensions.
They were satisfied with their performances in Bangalore, and in the future all
of them want to occupy much more fast food market in Bangalore. They will
still using localization strategy for Indian market.
Interview with customers
According to the requirements of thesis, the researcher did the customers
questionnaire in Bangalore, India which contain 100 respondents.
Investigation of population can be divided into three categories which include
old people, young people and children. The research was set at city center of
Bangalore. Customer questionnaire will be put in Appendix 1.
• Old people: They prefer KFC to McDonald’s. Compared with McDonald’s,
KFC provides Indian breakfast and Indian day meal. To the old people, they
love Indian style fast food much more that typical East fast food.
• Young people: They like McDonald’s, because McDonald's provides
delicious coffee, and free network services. And in addition, McDonald's also
sell perennial student discount card.
• Children: They love KFC. Children think that McDonald’s toys are more
fun. The fast food of KFC is spicier for child.
Through interviews, the researchers found that most old people choose KFC
restaurant because of their good services and patient attitude.
DATA PRESENTATION AND INTERPRETATION
1. Overall response of Consumers and Employees.
NO. OF RESPONDENTS
% OF RESPONDENTS
According to the response received the consumers it shows that a class of 60%
individuals are either confused or unsatisfied which means that large group is there
who are not happy with the services provided as compared to satisfied group.
Employers on the other hand are happy with the service offered by the McDonald’s.
But McDonald’s needs to revise overall marketing as well as servicing strategies so
as to boost sales and a class of happy consumers.
2. Have you ever been to McDonald's?
NO. OF RESPONDENTS
% OF RESPONSE
Most of the people have been to McDonald’s so the response comes out to
3. When you hear the word 'burger', does McDonald’s come in your
NO. OF RESPONDENTS
% OF RESPONSE
80% customers are well aware about the products which show an
effective product awareness of McDonald’s. On the other hand 15%
individuals are confused on the same part. Overall, the response is
4. Do you think McDonald's need to revise their menu?
NO. OF RESPONDENTS
% OF RESPONDENTS
Everybody strongly feels and would recommend revising their menu and
introducing some new and different Indian flavours and products.
4. What restricts from eating at McDonald’s?
NO. OF RESPONDENTS
Unavailability of 35
% OF RESPONDENTS
Both the customers and employers feel that McDonalds need to redecorate
the available space and make it more spacious and comfortable.
5. What is the distance of the nearest McDonald's from your place?
NO. OF RESPONDENTS
% OF RESPONSE
The response was good and satisfactory that it has reached the masses and a
very few % of people are away from the services of McDonald’s.
6. List the Marketing strategies used by McDonald’s.
NO. OF RESPONDENTS
% OF RESPONSE
Most of the marketing about the menu or any new introduction in the service
is done by advertising. Very few strategies like the standees and pamphlets’
7. Does McDonald's have enough promotions in Bangalore?
NO. OF RESPONDENTS
% OF RESPONSE
A very proportionate answer was received by the customers.
8. Do you think that introduction of happy price menu has boosted the
Up to some
Up to some
% OF RESPONSE
Introduction of the happy price menu surely increased the sales. So, this
should be taken as a stimulus and more varied changes in the menu should
10. Who do you think is the biggest competitor for McDonald's?
% OF RESPONSE
56% customers feel that the biggest competitor for McDonald’s is KFC
because of their personal experience and the other factors like variety,
ambience, menu etc
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 customer’s
minds. McDonald’s 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 Cunningham road
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.
FULL FILLING CUSTOMERS EXPECTATION
Another greatest strength of McDonald’s is its product value. To fulfil
customers expectation when they walk in their franchise becomes their
strongest marketing element.
McDonald’s keeps on bringing innovation with quality in its products. People
get used to of experiencing new taste and variety.
1. OVER EXPOSURE
People of India always want something new or that is different from others.
But in McDonald’s scenario, you can find its outlets everywhere in big cities
of India. This over exposure may become boring for certain class of people in
India. This over exposure induce customer to move onto something new
which is not as crowdie as McDonald’s. McDonald’s has lost the element of
uniqueness by opening so much franchise.
2. CUSTOMER TRENDS
Customer trends changes rapidly. When customer sees no further
advancement or innovation in company’s product they move on to some
3. EXTERNAL ENVIRONMENT
Threats and opportunities prevail in any company’s external environment:
Technology works as a benchmark for organization success.
Politics plays vital role in effecting organization repute.
Every organization need to work under state regulation, no one can work
beyond the legal boundaries of business limited by state legal authority.
McDonald’s needed to develop a worldwide enterprise system to reach all
“McFamily” audiences including employees, franchises, suppliers and
business partners. They also required improved publishing efficiencies
through consistent global content management processes. This included the
deployment of multiple sites with localized content using minimal resources.
A system with extensive brand management and graphics capabilities was
also needed to ensure consistent messaging and branding for all possible
audiences. The solution also needed the flexibility to adapt to McDonald’s
many future online plans.
Marketing in a services industry is becoming an increasingly complex
challenge. The paradigms of service marketing demand a passionate
understanding of customer expectations and perceptions, and linking them
to product design & delivery as well as operational planning. This is 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 bin India is an example of McDonald’s strategy
of integrating the customer’s perspective in its products. And, the
operational integration is clear from McDonald’s emphasis on its suppliers as
its customers as well as its treatment of its consumers as co-producers of
services. The ultimate aim of service marketing is not just to become a
service leader but to create a service brand. The service delivery process is
the key to achieving this aim of service marketing.
During the service delivery process the interaction between the firm and the
customer, called as “Moment of truth”, helps understand the opportunities
that a firm has to win or lose the customer. For example these “moment of
truth” are created for McDonald’s every time 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 interacts with
the customer, every time the attendant helps the customer guided the
customer towards the table, every time the attendant cleans the table etc.
Fig 20: “Moment of Truth” – The Service Encounter
Managing these “Moment 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
CONCLUSIONS AND RECOMMENDATIONS
Nowadays almost every person in the world for one reason or another knows
about McDonald’s. But as every leading company it has to deal with and
manage a big amount of external and internal issues in order to maintain itself
as the top food joint in the world. After outlining the key issues McDonald’s
currently faces, an analysis was conducted. Furthermore, different possible
alternatives of how the company could solve its burning issues were identified,
based on a structured and analytical framework – the McDonald’s marketing
strategies and their effectivity.
Following this approach McDonald’s needs to make some changes to its
overall business model, its product range as well as its marketing strategy. The
final recommendation given was to introduce some new strategies regarding
marketing of the whole McDonald’
In Indian market, McDonald's made continuous development and achieved
great success. However, on the contrary to the performances in the global
market, it surpasses other food joints in terms of speed, quality, performance
1) Have a deeper localized product.
2) There are small gaps in target market positioning.
3) McDonald's pays a lot of attention to brand building localization.
4) McDonald's develops localized high-level management personnel in order
to make better company's strategic adjustment. McDonald's personnel
diversification is reflected in employing senior staff from the head office.
5) In supplier management, McDonald's independent spirit is integrated into
the culture of the Indian people way of doing business, reflecting the "love and
loyalty" in Indian culture.
Accompanied by different other moderate changes, the radical change of
introducing a new marketing strategy will help McDonald’s to further grow in
the India and overseas while effectively fighting competitors.
Because McDonald's has taken much of the hard work out of stock
management, Restaurant Managers are able to spend more time focusing on
delivering McDonald's high standards of Quality, Service and Cleanliness.
Customers are happy because they can be sure the item they want is on the
menu that day. Efficient marketing management is essential to any business. It
enables the business to operate in a responsible way.
The strategies also encourage efficient use of materials means that society's
resources are being used well with very few waste products. For example,
fewer materials end up as waste in landfill sites. This leads to a reduction in
costs. Due to lower costs, McDonald's can pass the benefits on to customers,
providing better service and lower prices. The reduction of waste provides a
win/win/win situation for McDonald's, its customers and wider society.
RECOMMENDATION FOR MCDONALD'S
Through a comparative study of McDonald's development in India focused on
business and competitive strategy, researcher would like to have some
suggestions for fast food restaurant if they desire to expand their business in
1. Running more outlets is main way at this stage.
2. The franchise chain will be an inevitable road to business expansion.
1. Providing featured service and health products.
2. Achieving standardization in each process and areas of service.
3. Establishing a brand image that penetrates into the essence of every detail.
4. Setting target market with clear personalized positioning.
5. Maintain consistency in the taste and quality of products.
6. Include more items in its product line like pizzas.
7. Include more promotional and advertising techniques to increase the sales.
John F. Love ., (1988). McDonald’s : Behind the arches. UK: Transworld
Barnes, D., (2008). Operations Management: An International Perspective.
UK: Cengage Learning EMEA.
Cooper, R.G., Edgett, S.J. (2009). Product Innovation and Technology
Strategy. USA: Stage-Gate International.
Facella, P., Genn, A. (2008) Everything I know about business I learned at
McDonald's: the 7 leadership principles that drive break out success,
Harris, P. S., (2009) None of us is as good as all of us: how McDonald's
prospers by embracing inclusion and diversity, John Wiley and Sons
Heig, M., (2003) Brand Failures, Kogan Page Ltd, pp. 30
Plummer Joseph T., The concept and application of life style segmentation,
Journal of marketing, January 1974,p.33
Jeanett Jean-Pierre and Hennessey David, Global Marketing Strategies,
Biztantra and Houghton Miffin, 2005, page 164
JOURNAL AND PERIODICALS
“Advertising does help in building brand recall, but advertising alone
does not sustain a brand", Brand Speak (2004)
The Wisdom of Local Sourcing, http://www.mcdonaldsindia.com/locsour.htm
and Pooja Kothari, “Brand-Equity- Shaking it Up at McDonald’s”, The
Economic Times, October 13, 2004.
Sharan S Lakshmanan (13th Dec, 2004) ‘McDonald's In Bangalore Will Use
Licensee Route For The First Time In India’ Available[online]
Chaturvedi, P., (no date) How McDonald's evolved its marketing in India
20in%20India_ENG.pdf (Accessed: April 2, 2012)
Indian Mirror (no date) Hinduism Available [online]
http://www.indianmirror.com/religions/reli1.html (Accessed: April 2, 2012)
Mathur, S., (2011) McDonald's Spices Up Products for Indian Vegetarians
Available [online] http://www.buddingmarkets.com/?p=39 (Accessed: April 3,
Nation's Restaurant News (2011) McDonald's: Lesson learned from India
Available [online] http://nrn.com/article/mcdonald’s-lessons-learned-india
(Accessed: April 3, 2012)
For customers only.
I would be grateful if you could spare some of your time to respond to the
following questions. Your response will be treated as confidential and would
only be used for completion of my research work in partial completion of my
M.Sc in Hospitality Administration.
1. Do you know that McDonald’s is the largest fast food chain in the
2. When you hear the word ‘burger’ does, McDonald’s come in
3. Have you ever been to McDonald’s?
4. With the introduction of new Happy Meal price menu has your number
of visits increased?
5. How do you rate the service in McDonald’s?
6. Do you think McDonald’s need to revise their menu?
7. What is the distance of the nearest McDonald’s from your place?
8. What restricts you from eating at Mc Donald’s?
Unavailability of seat
9. How often do you visit McDonald’s?
10. Which fast food joint do you prefer to take your family to?
11. What do you think McDonald’s serves best?
12. What do you think McDonald’s needs to improve on?
Name & Age: ______________________________Email ID:
__________________________Contact no: ____________
_________________________ Business card (if any)
For employees only
I would be grateful if you could spare some of your time to respond to the
following questions. Your response will be treated as confidential and would
only be used for completion of my research work in partial completion of my
M.Sc in Hospitality Administration.
1. List marketing strategies used by McDonald’s?
2. Does McDonald have enough promotions in Bangalore?
3. Do you think that introduction of happy price menu has boosted the
Up to some extent
4. Do you think McDonald’s need to revise their menu?
5. Who do you think is the biggest competitor for McDonald’s?
6. What restricts the customers from eating at Mc Donald’s?
Unavailability of seat
7. Do McDonald’s provide enough training to employees?
8. What are the different props used by McDonald’s in order to attract
customers and market the products?
9. What according to you may increase the sales at McDonald’s?
Name & Age: _______________________Email ID:
______________________Contact no: ________________
_________________________ Business card (if any)