Pricing in India

In India McDonalds classifies its products into 2 categories namely the branded affordability
(BA) and branded core value products (BCV). The BCV products mainly include the McVeggie
and McChicken burgers that cost Rs 50-60 and the BA products include McAloo tikki and
Chicken McGrill burgers which cost Rs20-3 This has been done to satisfy consumers which
different price perceptions.
Following on the heels of rival KFC's new value-priced menu, McDonald's India has taken the
opposite tack, rolling out a premium-priced menu designed to further broaden the chain's
consumer base.
Both moves illustrate the potential for a diverse product strategy in markets like India. This is
particularly true for fast food chains, many of which have the opportunity to straddle multiple
price points and eating occasions in a way they have only begun to do in many developed
markets. Indeed, the sheer diversity of India in particular makes these types of strategies essential
maintaining growth rates at their current lofty heights will require a concerted effort to target all
consumers, from high-income to low-income, young and old, as well as a willingness to attack
new day parts and product categories head on.
Spicy line aims for upmarket casual dining
McDonald's has long pursued a multi-tiered pricing strategy in India, using the value-positioned
Happy Price menu to target students, young people, and other low-income groups, with its
Core Menu and extra-value meal offerings oriented more towards middle-class families with
children and other higher-income groups. Within the last month, however, the chain has added a
third tier with its premium Spicy menu, featuring sandwiches and wraps with bigger, thicker
portions of chicken and paneer cheese, fried in a crunchy, spicy coating. While the Happy Price
menu aggressively targets low price points, the Spicy menu goes the opposite direction, with
company officials noting the importance of attracting higher-income consumers looking for a full
meal, and willing to spend anywhere from Rs 200 to Rs 300 (US$4.50-6.50) per person, a
significant step up from the Happy Price menu, which features items starting at just Rs 20
(US$0.45).
With the new menu, McDonald's is taking dead aim at a more upmarket, casual-dining focused
market without diluting its appeal to consumers looking for quick bites at low prices. The fact
that it can successfully do both (early indications suggest strong sales for the Spicy line) is
indicative of the sheer breadth of the growth potential for fast food chains in India and
elsewhere. While early expansion often mirrored that seen decades before in developed markets,
particularly in the emphasis on child-focused, family dining, the last 2-3 years have brought far
greater segmentation. As completion heats up, particularly in the very largest cities, operators

have begun to look farther afield, to lower-income consumers, second- and third-tier cities, and
now the upmarket segments targeted by the Spicy line, as broad expansion in incomes brings
with it a similar expansion in potential consumers.
More broadly, this kind of diversity of strategy has applications in developed markets, as well.
With traffic growth expected to remain relatively flat in many markets over the next five years,
fast food chains are better-positioned than most to steal share from rivals, expanding into new
day parts and a much, much broader range of price points. On a global level fast food has grown
increasingly vague in consumers' eyes, able to credibly compete across a broader range of eating
occasions than any other sector. For operators, pressing the advantage is vital.
McDonalds Pricing Strategy
Value Pricing
McDonalds came with the concept of value pricing for Indian consumers where in it came out
with various combos in form of

Happy Meals comprising of small burgers, fries, coke + toy.

Medium meal combo that consisted of burger, fries and Coke with the price of Rs 75

Maharaja Mac Meal Rs 94

Family Dines under Rs 300The prices for the meals were economical as compared to the
offerings in Pakistan and Sri Lanka and are 50% less than United States.

Product line Pricing

McDonalds has a unique price strategy which falls solely on many of their product lines. Their
Value Meals fall into the category of Product Line Pricing. Where there is a range of product or
services the pricing reflect the benefits of parts of the range. For example, you can order a Two
Cheeseburger Value meal that comes with a medium drink and fries for around Rs 75 (prices
may vary). You can Super-Size this meal to get a large drink and large fries for a little more
money or you can go with another value meal that might include different items for different
price.
Promotional Pricing
If you have driven past a McDonalds, you will notice that somewhere on their property, whether
it is a banner on their building or spelled out on their sign, they are always offering some sort of

promotional pricing. This promotion can be seen as a large banner draped across the building on
many restaurants. This promotion changes weekly and may consist of different menu items
packaged together.
Penetration Pricing
When McDonalds first began to break into the coffee market, they ran a large marketing
campaign in order to gain some market share in the industry.
For a limited time frame, you could get a free small coffee every morning from 4-7am. This was
to promote their new coffee partnership with Green Mountain Coffee and helped spread the word
that McDonalds was now offering coffee.

Conclusion
Success of McDonalds has been mainly due to its value for money offering to the Indian
Consumers. The prices offered are in the range of lower middle section of the society. Moreover
its customization in accordance with the taste of Indian consumers has also worked in its favor.
The target segment of McDonalds has been Young Family who eats out. Moreover it also places
special focus on Children where in it believes that family follows the children choice of eating
joints. It has created a differentiation factor in India through highlighting brand, food and variety.
This has been a shift from worldwide positioning of drive-in convenience and speedy service.

Pricing in China
McDonalds opened its first restaurant in China in the southern city of Shenzhen in 1990. Since
then, the number of outlets has mushroomed to 1,050, staffed by more than 60,000 employees.
Another 175 restaurants are planned for this year.
Price can be affected by consumer behaviors and the desire of purchasing from customers could
also be motivated by lower price. As mentioned before, according to Doole and Lowe (2008),
pricing decisions would be influenced by many social-cultural factors, mainly by consumers
perceptions, expectations and ability to pay, and need for product adaptation and market
servicing. American Fast Food in Chinese Market: As the marketing manager of McDonalds
said (2009), when entering into the Chinese market, low-price strategy is chosen to use. The
price of the product in China is much cheaper than in American, for example, Big Mac. China is
a developing country, and the per capita income in China is lower than that in United States.
Thus, the operators of McDonalds chose to use low-price strategy in Chinese market so that the

customers have the ability to purchase its product. In addition, in 2009, McDonalds started
entering the largest low-cost marketing with the plan of defeating its competitors. The product
was sold at the same price level as 10 years ago. Because of the economic crisis which happened
in the end of 2008, more and more restaurants and shops had to reduce prices in order to attract
customers and lift the depressed sales in China. And during this period, many consumers tend to
seek extra valuable products and services. The products with high quality and low price become
more and more popular than before. Considering this social phenomenon, McDonalds decided
to reduce its price in order to adapt to the market environment. To sum up, price strategies are
influenced by consumer behavior, such like consumers perceptions, expectations and ability to
pay and so on. Otherwise, it is also affected by the value of consumers.
Also leaked were prices for China-exclusive products, such as the Teppan Teriyaki Chicken
Burger (64) and the Spicy Teppan Teriyaki Chicken Burger (65).We asked for the comment of
a tourism industry official well-acquainted with McDonalds China: In China, McDonalds is a
place for wealthy people. Sure, it doesnt hold as much a sense of luxury as it once did, and it has
become a more welcoming atmosphere for lower-middle class people.
McDonalds has a Branded Value in China. McDonalds in China is still sometimes viewed as a
status symbol or luxury item. Prices are determined by demand.
Pricing in USA
McDonalds strategy is to offer quality food quickly to customers at a good value. The pricing
structure for McDonalds over years has supported this message. The company strives to
differentiate itself from other fast food restaurants by offering a variety of menu items that appeal
to a variety of people from those who just want great hamburgers, to those who just want a quick
healthy meal. McDonalds differentiates itself by offering a dollar menu, combination meals, and
a free toy with Happy Meals.
The main objective of the Price strategy was to make it very affordable for a family to go out
for breakfast, lunch or dinner and not break the bank in doing so. McDonalds achieved this by
making happy meals for children that were of right portion, right price, along with the everyday
value meals and dollar menu items. There are over 10 items on the dollar menu all day which
makes it very easy for customers to swing by for a quick bite to eat. McDonalds also runs many
different specials for breakfast where they will make different breakfast sandwiches 2 for $3. By
doing this it allows for Page 3 parents to feed two children for the price of one. It also allows for
more hungry people to make sure that they will be full after they have eaten two sandwiches.

Big Mac Index

As we see the prices of the burgers have gone up 25-35% every 6 years.