Dimensions of Market
McDonald‟s Entry in India- 1996
Market attractiveness in terms of size &
Market attractiveness in terms of size &
Source- AT Kearney, the management consultancy
In 1996, urban Indians in Mumbai and Delhi
typically ate out three to fives times a month
After 12 years of its launch, average
frequency had doubled and in 2011 the Indian
quick service restaurant market was worth Rs
30,000/- crore (about $7bn at Rs 50 per dollar
Favourable market trends
income, GDP since economic
reforms in 1991
According to census
data, average population
growth in 3 preceding
decades was 3% till 1991 and
2 % in 2001
Percentage of urban
population increased from
21% in 1975 to more than 28%
Led to a shift in traditional Indian food habits
People seek variety in their choice of foods
Willingness to spend more on international cuisines
Intensity of competition
1) Threats of
• Creating a prominent brand name was a
• High research and development costs
• Few strong brands already in competition
such as Wimpy‟s, Nirula‟s etc.
2) Threats of
• Very high substitutes
• People can choose variety of products
Nirula‟s, Wimpy, Indian Cuisine, Indian local
shops, Indian Vegetarian restaurants.
• Customers generally have low bargaining
power through out the world in food
• Mcdonald‟s provided a standard service, one
price strategy and quality of food
• Hence Bargaining power was low
• Bargaining power of supplier in this industry was
• Situation could have been different if main
ingredients were not available.
• But with McDonald‟s simple menu and working
with many suppliers, there was no threat.
• Hence bargaining power was relatively low.
5) Rivalry with in
• Fast food restaurant industry is very competitive
in the unorganized sector.
• Many small businesses operating in abundance
• Many new brands were planning to enter the
Indian Market like Dominos, Pizza Hut, KFC etc.
Loyalty of customers
Indians were accustomed to
eating home made foods or
No major food chain in the
market at the time of entry
Only Nirula‟s was present with
very less market share
Major snacks across various
geographies in India –
bhature, pakoda, dosa, sambar
Competitors committed to defend their
Initially, McDonalds targeted top 10% of the country, Wimpy and Nirula‟s were
the only major competitors in the segment
Nirula‟s was the only competitor determined to defend itself. It provided
Ice cream parlour with 21 flavours
Operational and Cultural barriers
Poor Supply chain
Sons of Soil
considered to be
Various forms of differentiation
Friendly, smiling fast service
Emphasis on cleanliness
Customers were given kitchen tours
in early stages
Separate Veg and Non-veg kitchen
with dedicated staff, preparation
and wrapping areas
Different uniforms for kitchen crew
In the beginning it had a policy of
giving printed brochures of RMS to
Brightly lit, casual and
Taste customized to suit Indian palate
Fun place for kids and family
Value meals to attract customers and for customers not willing
to spend on flagship products
•Value meal, QuickBites and Softserve
•Rs 39, Rs 25, Rs 8
Business model implementation
Quality, Service, Cleanliness
and Value propositions
Training and monitoring of
There are 4 ways to achieve critical mass
Present everywhere, or nearly everywhere your best
Providing sensitivity to local taste
A family dining
Critical mass can be achieved as McDonald‟s understood
the culture of India and McDonald‟s worldwide is well
known for the high degree of respect to the local culture.
McDonald‟s initial menu was developed especially for India
with vegetarian selections to suit Indian tasted and
Keeping in line with this McDonald‟s did not offer any beef
and pork items in India.
Market Attractiveness Highly Attractive
Market Trends Favourable
Competition Low and From unorganised sector
Customer Loyalty Not loyal
Is the competition competent to defend
Value Addition High
Business Model Franchise Based
Barriers Cultural and Operational
Critical Mass Was possible to achieve in future
• All the above factors point to that fact that the entry of McDonald‟s in
India was perfectly timed.
It is a Defensive Marketing strategy used by a market leader where it responds
to the attacker with a counter attack.
Counter-offense can take 3 forms:
Meet the attacker head-on
Attack the flank of the attacker
Launch a „pincer‟ movement.
FedEx started in 1973 as an overnight air carrier.
FedEx traditionally attributes its success and reputation to its
unmatched performance in overnight deliveries.
UPS delivers an average of over 13 million packages each day
and FedEx averages approximately 5 million daily deliveries.
However FedEx surpasses UPS in daily air deliveries, 3.1 million
to 2 million of UPS.
Whereas UPS trumps FedEx in the ground shipping segment.
UPS: Attack on FedEx
With this they had entered the territory of FedEx.
Since then UPS air shipments have grown steadily.
In 1988, UPS received authorization from FAA to operate its own aircrafts.
UPS entered the overnight air delivery business, and by 1985 UPS Next Day Air
service was available.
UPS began to assemble its own jet cargo fleet
Deregulation of the airline industry created new opportunities for UPS
The demand for air parcel delivery increased in the 1980s.
FedEx: Counter attack
In response to UPS it started investing heavily to improve on its ground
and air services.
In 1998 they acquired
RPS: Small-package carrier
Viking Freight: Less-than-truckload carrier(Western US)
Caliber Logistics: Supply chain solutions
Roberts Express: Customized services
In 2001 they acquired
American Freightways Corp: Less-than-truckload carrier(Central and Eastern
FedEx Express and the U.S. Postal Service forge a public-private alliance.
It also started with night and Saturday deliveries at premium which was
not offered by UPS at that time.
This acquisition spree to build up on the ground services helped FedEx to gain
back some market share.
By August 2002, FedEx reported
A 33 % increase in package shipments
A 15 % jump in daily ground volume for fiscal year 2002.
FedEx was always positioned as a “Reliable”, where as UPS as “Cost
FedEx could have launched new services, positioned as low cost servoce
This could have helped FedEx gain some more share from UPS.
HUL launched Wheel against Nirma
Gillette launched Trac 2 against Wilkinsons
Boeing 747-8i against Airbus A380
Toyota launched Lexus against Mercedes