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Sm final

  1. 1. Strategic Marketing Group-7 Advait Bhobe (12020841116) Anant Maheshwari (12020841119) Deepak Kumar (12020841176) Khalid Sheikh (12020841021) Rashin Suri (12020841155) Shaaz Kinikar (12020841163) Siddharth Bhatnagar (12020841100) Tanmay Nayak (12020841109) Tarsh Midha (12020841112)
  2. 2. Dimensions of Market Selection McDonald‟s Entry in India- 1996
  3. 3. Market attractiveness in terms of size & growth
  4. 4. Market attractiveness in terms of size & growth 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 exchange rate).
  5. 5. Favourable market trends Constantly growing income, GDP since economic reforms in 1991 Population growth According to census data, average population growth in 3 preceding decades was 3% till 1991 and 2 % in 2001 Urbanization Percentage of urban population increased from 21% in 1975 to more than 28% in 2004 Led to a shift in traditional Indian food habits People seek variety in their choice of foods Willingness to spend more on international cuisines
  6. 6. Intensity of competition 1) Threats of New Entrants • Creating a prominent brand name was a challenge • High research and development costs • Few strong brands already in competition such as Wimpy‟s, Nirula‟s etc. 2) Threats of Substitutes • Very high substitutes • People can choose variety of products Nirula‟s, Wimpy, Indian Cuisine, Indian local shops, Indian Vegetarian restaurants. 3) Bargaining power of customers • Customers generally have low bargaining power through out the world in food industry. • Mcdonald‟s provided a standard service, one price strategy and quality of food • Hence Bargaining power was low
  7. 7. : 4) Bargaining power of supplier • Bargaining power of supplier in this industry was low. • 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 the Industry • 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.
  8. 8. Loyalty of customers Indians were accustomed to eating home made foods or snacks 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 – samosas, chhole bhature, pakoda, dosa, sambar vada
  9. 9. Competitors committed to defend their position  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  Burgers,  Pizzas  Foot longs  Ice cream parlour with 21 flavours
  10. 10. Operational and Cultural barriers Operational barriers Poor roads Grim Power situation Poor Supply chain systems Cultural barriers– Pressure Groups Anti Western Factions Health Activists Environmentalists Animal Welfare Activists Sons of Soil Campaigners Cultural barriers- Inherent Majority of Indians are vegetarians Fast foods considered to be unhealthy
  11. 11. Various forms of differentiation Customer Service Differentiation Friendly, smiling fast service Emphasis on cleanliness Customers were given kitchen tours in early stages User Experience Differentiation 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 customers Brightly lit, casual and contemporary look
  12. 12. Value Add  Competitive pricing  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 Wimpy •Mega meals •Rs 35 McDonalds •Value meal, QuickBites and Softserve •Rs 39, Rs 25, Rs 8
  13. 13. Business model implementation Franchise Model Quality, Service, Cleanliness and Value propositions Training and monitoring of its franchises Product Consistency Sophisticated supplier networked operation and distribution system Careful selection and JVs with supplier and logistics firms Imperative Measures taken to ensure imperatives
  14. 14. There are 4 ways to achieve critical mass Present everywhere, or nearly everywhere your best customers surf. Providing sensitivity to local taste Affordable prices A family dining Critical Mass
  15. 15. 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 culture. Keeping in line with this McDonald‟s did not offer any beef and pork items in India.
  16. 16. Conclusions Market Attractiveness Highly Attractive Market Trends Favourable Competition Low and From unorganised sector Customer Loyalty Not loyal Is the competition competent to defend itself No Value Addition High Differentiation 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.
  17. 17. Counteroffensive Defense FedEx vs. UPS
  18. 18. Counteroffensive Defense  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.
  19. 19. Background 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.
  20. 20. 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.
  21. 21. 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 US).  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.
  22. 22. Conclusions  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.
  23. 23. Recommendations  FedEx was always positioned as a “Reliable”, where as UPS as “Cost efficient”.  FedEx could have launched new services, positioned as low cost servoce  This could have helped FedEx gain some more share from UPS.
  24. 24. Other Examples  HUL launched Wheel against Nirma  Gillette launched Trac 2 against Wilkinsons  Boeing 747-8i against Airbus A380  Toyota launched Lexus against Mercedes