Professional Documents
Culture Documents
ADOPTED BY MCDONALDS
IN BANGALORE CITY
By
SANSAR BIRMAN
Enrolment
En
No: 118263141
A
DISSERTATION
Submitted to the
INSTITUTE OF HOTEL MANAGEMENT,
MANAGEMENT, CATERING
TECHNOLOGY & APPLIED NUTRITION, BANGALORE
In partial fulfilment of the requirement for the degree of
Master of Science in Hospitality Administration
2011-2013
ACKNOWLEDGEMENT
The researcher is first of all thankful to the Almighty for providing abundant
grace, good health and knowledge to do this research project.
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
collection.
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.
Sansar Birman
(Researcher)
(II)
TABLE OF CONTENTS
PAGE NO.
LIST OF TABLES
LIST OF FIGURES
VI-VII
CHAPTERS
1 - 79
1. INTRODUCTION
1 - 22
Company profile
Statement of the problem
Objectives
Limitations
2. REVIEW OF RELATED LITERATURE
23 - 50
3. RESEARCH METHODOLOGY
51 - 53
Research Objective
Thesis Analysis Methods
4. DATA PRESENTATION AND INTERPRETATION
Analysis of data
Discussion of findings
(III)
54 - 67
68 - 70
Conclusions
Recommendations
APPENDIX
71 - 76
BIBLIOGRAPHY
77 - 79
Books
Journals and Periodicals
Websites
(IV)
LIST OF TABLES
SL. NO.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
TABLE
The brief background of McDonalds
Journey of McDonalds
Overall response of Consumers and Employees
Table showing responses on visit to McDonald's
Table showing response on product knowledge of
McDonalds
Table showing response on McDonald's menu
revision
Table showing response on constraints from eating
at McDonalds
Table showing response on accessibility to the
nearest McDonald's
Table showing response on Marketing strategies
used by McDonalds
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
McDonald's
(V)
PAGE NO.
LIST OF FIGURES
SL.
PAGE
FIGURE
NO.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
NO.
McDonalds logo image
Targeting, Positioning and Differentiation
McDonalds in India
Distribution of McDonald's
McDonald's campaign
McDonald's "Happy Price" campaign
Product success
McDonalds marketing communication
Ansoff Matrix
Graph showing overall response of Consumers and
Employees
Bar diagram showing have you ever been to
McDonald's
Graph showing when you hear the word 'burger', does
McDonalds come in your mind
Graph showing do you think McDonald's need to revise
their menu
Graph showing what restricts from eating at
McDonalds
15.
16.
17.
18.
19.
20.
(VII)
Abstract
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
McDonalds 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 McDonalds marketing strategies, we analyzed the main
difference and some similarities comprehensively of McDonalds and other
fast food joints in India.
Keywords
Comparative study, business strategy, marketing strategy, fast food
development in India.
INTRODUCTION
COMPANY PROFILE
McDonalds 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 McDonalds 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 McDonalds
The name of company
McDonalds
Headquarters location
Establishment time:
Business field:
Company slogan:
America
1,800,000 (2013)
1954
Western-style fast food, desserts
Im lovin it
BUSINESS STRATEGY
FRANCHISE MODEL
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.
PRODUCT CONSISTENCY
By developing a sophisticated supplier networked operation and distribution
system, the company has been able to achieve consistent product taste and
quality across geographies.
Kids are on the top most level in FMCG purchased related to food products.
So to attract children, McDonalds 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
Madagascar.
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.
JOURNEY OF MCDONALDS
Year
1955
Events
Ray Kroc opens his first restaurant in Des Plaines, Illinois and
the McDonalds Corporation is created.
1957
1959
1961
1963
1964
1965
1968
1972
1973
1983
1984
1996
1994
MARKETING OBJECTIVES
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 McDonalds 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.
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.
MANAGEMENT PROCESS
McDonalds management process has a lot to do with the following
managerial steps.
PLANNING
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
McDonalds, planning is done with great concentration keeping all the
environmental aspects in view. Planning at McDonalds 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
McDonalds 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 McDonalds 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
ORGANIZING
Organizing at McDonalds 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.
McDonalds 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
LEADING
Every organization needs strong leaders who can lead the employees by
motivating, guiding and directing them. McDonalds 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 McDonalds 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 McDonalds 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.
McDonalds training and development staff ensures to transfer good
leadership tactics to the branch managers. The managing director of
McDonalds 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
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. McDonalds
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.
McDonalds 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, McDonalds 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.
McDonalds 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
SWOT ANALYSIS
1. STRENGTHS
GLOBAL BRAND
McDonalds has a very well-established global brand that appeals to all age
groups and customer segments. In 2005, McDonalds placed ninth in the top
100 global brands ranking of business week magazine and interbrand, a
branding consultancy.
STRONG OPERATIONAL CAPABILITIES
McDonalds 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.
SUCCESSFUL ITEMS
Some of its products such as Big Mac, Chicken McNuggets have become
brands in their own right. Strong brand draws customers to the companys
restaurants and provides it with a recognized brand currency in new markets.
QUALITY PRODUCTS
McDonalds is the symbol of quality with respect to its offering.
2. WEAKNESS
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
3. OPPORTUNITIES
EXPANSION
There is a large market for McDonalds still to serve. Furthermore it has few
outlets within cities in which it is currently serving, so McDonalds also has
opportunity to expand within cities.
FRANCHISEE-OPERATED RESTAURANTS
McDonalds 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 McDonalds
business.
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 McDonalds.
4. THREATS
INTENSE COMPETITION
McDonalds 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
companys 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 McDonalds
revenues.
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 customers 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.
McDonalds currently hass 300 restaurants in India of which 145 are in North
& East India and 155 in West & South India.
India
RAYMOND KROC
VIKRAM BAKSI
AMIT JATIA
MISSION STATEMENT
McDonalds vision is to be the worlds best quick service restaurant
experience. Being the best means providing outstanding quality, service,
cleanliness, and value, so that we make every customer
customer in every restaurant
smile.
In November 2004, McDonalds entered southern part of India with its fir
first
restaurant in Bangalore, the so called silicon valley of India.
LIMITATIONS
1. The analysis is done on 110 (100+10) questionnaires in limited area
i.e. Bangalore city.
2. McDonalds 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
questions.
4.
5.
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
architecture.
Target Marketing:
Value propositions had to be directed to the right target market to establish a
new product. An interesting question was who would eat at McDonalds? 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.
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, McDonalds 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.
McDonalds survived only due to keen understanding of the Indian economy.
Pricing
Food pricing was a sensitive issue in India. An ideal strategy was to focus on
customers ability to pay and tap the rich and upper middleclass population in
India. Although McDonalds 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.
Local Sourcing
McDonald's sourced its requirements from local suppliers and farmers, and
maintained its adherence to Indian Government regulations on food, health
and hygiene. McDonald's India purchased more than 96% of its products and
supplies from Indian suppliers even constructing restaurants using local
architects, contractors, local material (wherever possible), and hired local
personnel for all positions within the restaurants and contributed a portion of
its success to communities in the form of municipal taxes and reinvestment.
McDonalds 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.
In order to capitalize on the highly price sensitive economy, and the Indian
mentality of liking anything that is foreign, McDonalds 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. McDonalds survived only due to keen understanding of the Indian
economy.
sell anywhere. Today McDonalds 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 McDonalds and almost every Indian has tasted
McDonalds fast food. This is indeed a great breakthrough for a very orthodox
community that has very rigid and fixed eating habits and traditionally very
Indian.
McDonalds 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 McDonalds priced product in India. Their
quick turnaround times made new inroads into the fast food industry.
(Mathur, S., 2011)
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
Indian tastes.
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.
A second campaign featured a child and his family moving into a new place.
He misses his previous surroundings until McDonald's provides something
familiar.
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
option."
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
food providers.
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.)
1. PRODUCT
2. PLACE
3. PRICE
4. PROMOTION
5. PEOPLE
PRODUCT:
Product includes that, how the company should design, manufacture the
product so that it enhance the customer experience?
McDonalds has purposely kept its product depth and product width limited.
McDonalds 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 McDonalds serve vegetarian menu.
Even the sauces and cheese used in India are 100% vegetarian. McDonalds
continuously innovates its products according to the changing preferences of
its customers. McDonalds brings best quality products and best features as
per the preference and demand of the target market.
PLACE:
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
quantity.
There are certain degree of fun and happiness that McDonalds provides to
its customers. It provides value position based on the needs of the customer.
McDonalds offers proper hygienic atmosphere, good ambiance and better
services.
Now McDonalds 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.
PRICE:
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.
McDonalds 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 McDonalds has now.
McDonalds 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.
PROMOTION:
Advertising
Personal
Selling
Marketing
Communications
Sales Promotion
Mix
Public
Relations
Im loving it.
ADVERTISING
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 McDonalds also hold the hand of
advertising. There are three main objectives of advertising for McDonalds 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. McDonalds 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
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 McDonalds 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
McDonalds 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
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
preferences.
McDonalds organizes several sales promoting contest and programmes in
different retail markets and outlets in which they distributes free discounts.
The statue of mascot McDonalds is always there for any occasions that are
also one of the logo of McDonalds.
PUBLIC RELATIONS
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
DIRECT MARKETING
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
McDonalds 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.
PEOPLE
McDonalds 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. McDonalds continuously does internal marketing
because if the internal marketing is effective it will automatically lead to in the
success of external marketing.
the customers. The level of importance has to be placed in the following order
(the more important people are at the top):
1. Customers
2. Front line employees
3. Middle level managers
4. Front line managers
The punch line Im loving it is an attempt to show that the employees are
loving their work at McDonalds and will love to serve the customers.
ADVERTISING STRATEGY
There have been many McDonalds advertising strategy and slogans over the
years. McDonalds is one of the most widespread fast food advertisers.
McDonalds Canadas corporate website says that the business campaigns
have always focused on the overall McDonalds 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
McDonalds alone. McDonalds 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.
mind? Finally, what has 2 all, special sauce, lettuce salad on a sesames bun?
Hmmm.... sounds a lot like McDonalds knows how to capture your attention.
One of the things that McDonalds 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 McDonalds. With its international expansion
efforts, McDonalds has become one of the most recognized brands worldwide. A couple of the things that has helped to build McDonalds brand is
their constantly changing menu and brand packaging that meets the needs of
their consumers.
POSITIONING STRATEGY
McDonalds 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 Im loving it campaign does.
Users and non-users alike will use the club McDonalds to their advantage.
They expect that their younger target will seek out memberships in club
McDonalds. 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 McDonalds is targeted at younger
people who are familiar with credit cards and some of the rewards cards that
are part of them.
GROWTH STRATEGY
McDonalds growth strategy is based on three elements:
1. Adding restaurants
2. Maximising sales and profits at existing restaurants.
3. Improving profitability.
TRAINING POLICY
It is the goal of McDonalds 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.
McDonalds head of training is responsible for implementing and directing the
training programme throughout the company. Operations supervisors and
enters/penetrates a market with current products. The best way to achieve this
is by gaining competitors 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. McDonalds is one most
popular brand in fast food in entire world. In 1996, the first McDonalds
opened in India, many thought that this was a wrong move for McDonalds.
Various reasons were laid for this claim. Although, the main reasons lays on
the fact that Indians have very different perception about food. McDonalds,
being an American food chain, view breads full meal while Indians view them
as snacks. As the time went by, McDonalds 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 McDonalds serve are ordinary, thus
they are for ordinary people like them.
Future more, believes that the introduction of McDonalds to the Indian
society changed the direction of the Indian cultural framework. Along with the
rest of the world, India was also McDonalized.
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
segments.
DIVERSIFICATION
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 its also very interesting entering a
promising business outside of the scope of the existing business unit.
COMPETITORS ANALYSIS
McDonalds 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 McDonalds.
MCDONALDS COMPETITORS:
1. KFC
2. Pizza hut
3. Dominos pizza
COMPETETION BASES
SPEED
McDonalds 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 restaurants top priorities.
Therefore, McDonalds vision aims to provide fast, friendly and accurate
service. McDonalds 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, McDonalds also competes by offering prices at a low cost.
COST
To offer high quality products at low cost requires efficient processes
throughout the entire McDonalds 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. McDonalds 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. McDonalds restaurants offer
from seven to twelve value meals, both for their lunch menu and breakfast
menu. More recently, McDonalds 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
stores.
NUTRITION
McDonalds 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 organizations
vision, McDonalds has already introduced many options to achieve this goal.
RESEARCH METHODOLOGY
Research objective
The objective of this study is to answer the main question: what kinds of
business strategies are effecting McDonalds in Bangalore market? The
research should consequently make the company to be able to reach a
conclusion on:
Research methodology
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.
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.
Qualitative findings
The thesis used qualitative method to do the research. In addition, the
researcher has also interviewed the customers and managers to get their
relevant feedback.
As to the definition of qualitative research, this part of this thesis will employ
Creswells 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.
(Creswell, 1994)
Through qualitative analysis, researcher found that there are several reasons
that lead to the different performance of McDonalds.
1. The difference of marketing positioning: you will see the different service
mode. McDonalds used QSCV mode that includes quality, services,
cleanliness and value.
Interview findings
Interviews were started very successful. They will be found at Appendix 1 and
2.
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.
S.NO
OPINION
1.
2.
3.
SATISFIED
CONFUSED
UNSATISFIED
TOTAL
NO. OF RESPONDENTS
CONSUMERS
EMPLOYEES
40
60
30
35
30
05
100
100
% OF RESPONDENTS
CONSUMERS
EMPLOYEES
40%
60%
30%
35%
30%
05%
100
100
70
60
60
50
40
40
35
30
30
Consumers
30
20
10
5
0
Satisfied
Confused
Unsatisfied
Interpretation:
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 McDonalds.
But McDonalds needs to revise overall marketing as well as servicing strategies so
as to boost sales and a class of happy consumers.
Employees
S.NO
1.
2.
OPINION
Yes
No
TOTAL
100
NO. OF RESPONDENTS
95
05
100
% OF RESPONSE
95%
05%
100%
95
90
80
70
60
50
Consumers
40
30
20
5
10
0
Yes
No
Interpretation:
Most of the people have been to McDonalds so the response comes out to
be 95%.
3. When you hear the word 'burger', does McDonalds come in your
mind?
S.NO
1.
OPINION
YES
NO. OF RESPONDENTS
80
% OF RESPONSE
80%
90
80
80
70
60
50
40
Consumers
30
20
15
10
0
Yes
2.
3.
NO
SOMETIMES
TOTAL
No
05
15
100
Sometimes
05%
15%
100%
Interpretation:
80% customers are well aware about the products which show an
effective product awareness of McDonalds. On the other hand 15%
individuals are confused on the same part. Overall, the response is
satisfactory.
S.NO
OPINION
1.
2.
3.
Yes
No
Maybe
TOTAL
NO. OF RESPONDENTS
CONSUMERS
EMPLOYEES
30
60
30
20
40
20
100
100
% OF RESPONDENTS
CONSUMERS
EMPLOYEES
30%
60%
30%
20%
40%
20%
100
100
70
60
60
50
40
40
30
30
Consumer
30
20
20
Employees
20
10
0
Yes
No
Maybe
Interpretation:
Everybody strongly feels and would recommend revising their menu and
introducing some new and different Indian flavours and products.
S.NO
OPINION
NO. OF RESPONDENTS
CONSUMERS
EMPLOYEES
Unavailability of 35
40
seat
Congested
35
40
High price
25
0
Location
05
20
TOTAL
100
100
1.
2.
3.
4.
% OF RESPONDENTS
CONSUMERS
EMPLOYEES
35%
40%
35%
25%
05%
100
45
40
40
40
35
35
35
30
25
25
20
20
Consumer
Employees
15
10
5
0
Unavailability
of seat
Conjested
High price
Location
Interpretation:
Both the customers and employers feel that McDonalds need to redecorate
the available space and make it more spacious and comfortable.
40%
00%
20%
100
80
70
70
60
50
40
Consumers
30
20
20
10
10
0
Near
S.NO
1.
2.
3.
OPINION
Near
Far
Very far
TOTAL
Far
Very far
NO. OF RESPONDENTS
70
20
10
100
% OF RESPONSE
70%
20%
10%
100%
Interpretation:
The response was good and satisfactory that it has reached the masses and a
very few % of people are away from the services of McDonalds.
9%
10%
Advertising
Postering
23%
S.NO
1.
2.
3.
4.
OPINION
Advertising
Posturing
Standees
Pamphlets
TOTAL
58%
NO. OF RESPONDENTS
58
23
10
09
100
Standies
Pamplets
% OF RESPONSE
58%
23%
10%
09%
100%
Interpretation:
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
are used.
70
60
60
50
40
40
Consumers
30
20
10
0
No
S.NO
1.
2.
OPINION
No
Yes
TOTAL
Yes
NO. OF RESPONDENTS
40
60
100
% OF RESPONSE
40%
60%
100%
Interpretation:
A very proportionate answer was received by the customers.
8. Do you think that introduction of happy price menu has boosted the
sales up?
6
5
4
3
Consumers
2
1
0
Yes
S.NO
OPINION
1.
2.
3.
Yes
No
Up to some
extent
Cannot
comment
TOTAL
4.
No
Up to some
extent
Cannot
comment
NO. OF
RESPONDENTS
83
00
17
% OF RESPONSE
83%
00%
17%
00
00%
100
100%
Interpretation:
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
be incorporated.
60
56
50
40
30
Consumers
26
20
18
10
0
KFC
S.NO
OPINION
1.
2.
3.
KFC
Pizza hut
Dominos
TOTAL
Pizzahut
Dominos
NO. OF
RESPONDENTS
56
18
26
100
% OF RESPONSE
56%
18%
26%
100%
Interpretation:
56% customers feel that the biggest competitor for McDonalds is KFC
because of their personal experience and the other factors like variety,
ambience, menu etc
India. This over exposure induce customer to move onto something new
which is not as crowdie as McDonalds. McDonalds 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 companys product they move on to some
other brand.
3. EXTERNAL ENVIRONMENT
Threats and opportunities prevail in any companys external environment:
Technology:
Technology works as a benchmark for organization success.
Politics:
Politics plays vital role in effecting organization repute.
Law:
Every organization need to work under state regulation, no one can work
beyond the legal boundaries of business limited by state legal authority.
GOALS
McDonalds 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
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
McDonalds experience.
Main findings
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
and reputation.
BIBLIOGRAPHY
BOOKS
John F. Love ., (1988). McDonalds : Behind the arches. UK: Transworld
Publishers Ltd.
Plummer Joseph T., The concept and application of life style segmentation,
Journal of marketing, January 1974,p.33
WEBSITE
Chaturvedi, P., (no date) How McDonald's evolved its marketing in India
Available [online]
http://ipm.ge/article/How%20McDonald's%20evolved%20its%20marketing%
20in%20India_ENG.pdf (Accessed: April 2, 2012)
APPENDIX
ANNEXURE-1
For customers only.
QUESTIONNAIRE-1
Dear Respondent,
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 McDonalds is the largest fast food chain in the
world?
Yes
No
2. When you hear the word burger does, McDonalds come in
your Mind?
Yes
No
Sometimes
3. Have you ever been to McDonalds?
Yes
No
Dont remember
4. With the introduction of new Happy Meal price menu has your number
of visits increased?
Yes
No
Doesnt matter
Why? _______________________________________________
11. What do you think McDonalds serves best?
____________________________________________________
12. What do you think McDonalds needs to improve on?
Occupation:
Signature:
ANNEXURE-2
For employees only
QUESTIONNAIRE-2
Dear Respondent,
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.
Maybe
________________
________________
________________
________________
_______________________________________________________________
______________________________________________________________
_______________
Occupation:
Signature: