Professional Documents
Culture Documents
Introduction
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 few, very
rich elite. McDonalds opened its doors in India in October 1996, demonstrating what the
McDonalds experience was all about. McDonalds in India was a 50-50 joint venture
partnership between McDonalds Corporation (U.S.A.) and two Indian businessmen. Amit
Jatias company, Hardcastle Restaurants Pvt. Ltd., owned and operated McDonalds
restaurants in Western India, while Connaught Plaza Restaurants Pvt. Ltd., headed by Vikram
Bakshi, owned and operated the North Indian operations.
Only 15% of the total number of restaurants is 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.
To enter a market where consuming beef is off limits was very challenging and ambitious.
McDonalds objective was to be inspired by the culture of India and to deliver the greatest of
food experiences to the customers in India bringing in the splice of life. They were aiming for
to change the local perception of the new product being American and remove the fear of
unknown, where family dining in was a custom for centuries. The management wanted to
advertise McDonalds as a stimulator and advocate of family and culture values. The
diversity in language and communication is one of the greatest components of the culture.
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.
McDonalds entry into India was met with stiff opposition. Members of the Hindu
organization, the Bajrang Dal, the militant arm of one of the dominant fundamentalist
political parties in India, the Bharatiya Janata Part (BJP) openly protested against the
company by attacking its branches across India on May 4th, 2001. The members of the
Bajrang Dal demolished the restaurant in Thane, a northeastern Bombay suburb. In southern
Bombay, a McDonalds store was besieged by protestors from the leading Bharatiya Janata
2
Party, who shouted slogans and stained the restaurants mascot with cow dung. SHIV SENA
another Hindu alliance also threatened to protest outside the McDonalds corporate office
after reports of a lawsuit being filed against McDonalds in Seattle.
The biggest problem McDonald faced was during the launch of its product in India was the
public image it was carrying as an International food chain and not matching Indian
standards. There were concerns raised about how the burgers are made in McDonalds.
Offering the cheapest burger in the world was not easy. In India, McDonalds offered a menu
that did not had any beef or pork items as well as special product formulations for
accommodating Indian culture and palate. Furthermore, all the vegetarian products, even the
mayonnaise in vegetable burgers, were egg-less and 100% vegetarian. Additions to the menu
have been a regular feature of McDonalds in India. The company in India conducted regular
qualitative as well as quantitative studies, which tracked the target consumer lifestyle in
India, a practice that had followed internationally as well.
It was under these circumstances that McDonalds India went about creating the cold chain
infrastructure for its restaurants in the country. As McDonalds always considers the quality
of all its products to be of primary importance, it sets high standards for its suppliers that are
amongst the biggest in the food industry. World over, McDonalds always believed in
development of close relationships with suppliers and this is precisely what it has done in
India.
As per new research report Indian Fast Food Market Analysis, India is blessed with
one of the fastest growing fast-food markets in the world. The Indian fast food market
is growing at an annual growth rate of 30-35%.
Although the market has witnessed robust growth in the past couple of years, it
remains largely under penetrated and concentrated in the metropolitan cities.
In 2013, the global fast food market is forecasted to have a value of $200 billion, an
increase of 29.3% and a volume of 94.7 billion transactions, an increase of 10.4%
since 2008.
It is estimated through credit Suisse Emerging Consumer Survey, that the average
Indian spends just $11 as compared to his Chinese counterpart who would ideally
spend $20 on fast food. Yet, if we see the Indian spending on food in totality, they
spend 23% of their earnings on the same while the Chinese spending is 20%.
Almost all big fast food brands of the world have succeeded in making their presence
felt in the country and most of them are posting appreciable growth.
Demographic Segmentation
Psychographic Segmentation
4
Behavioral Segmentation
Target Segment
move.
Teenager
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.
The massive and aggressive expansion strategies that McDonalds 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
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
7
priced product in India. Their quick turnaround times made new inroads into the fast food
industry.
As providing value to the customer is the key, price sensitivity studies are conducted
before determining the pricing. The rate of inflation is also reviewed. McDonalds
definition of value was far broader than of most of the restaurants in its competition.
McDonald's unique 'cold chain', on which the QSR major has spent more than six
years setting up in India, has brought about a veritable revolution, immensely
benefiting the farmers at one end and enabling customers at retail counters to get the
highest quality food products, absolutely fresh and at great value.
McDonald's, through its unique cold chain, has been able to, both cut down on its
operational wastage, as well as maintain the freshness and nutritional value of raw
and processed food products. This has involved procurement, warehousing,
transportation and retailing of perishable food products, all under controlled
temperatures.
McDonald's contributes a great back end process which enables you to enjoy your
favorite burger fresh & hot, and for that, the supply chain truly acts as a backbone of
the business.
The supply chain begins at the grass root level, with the suppliers receiving the crop
from the farmers. The crop is then processed and dispatched to the Distribution
centers in special temperature controlled trucks, which ensures that the quality of the
items is not compromised.
These items are stored in rooms with different temperature zones and are finally
dispatched to the McDonald's restaurants on the basis of their requirements.
McDonald's expectation of 'Cold, Clean, and On-Time Delivery' plays a very vital
role in maintaining the integrity of the products throughout the entire 'cold chain'.
Setting up this extensive cold chain distribution system has involved the transfer of
state-of- the-art food processing technology by McDonald's and its international
suppliers to pioneering Indian enterprises who, today, are an integral part of the
McDonald's cold chain.
McDonald's India has around 40 suppliers and all the suppliers are HACCP
certified, ensuring highest level of quality. They work cohesively to ensure that the
final product reaches the customer consistently each time and every time
McDonald's India has ensured that this dedicated supply chain enables the Indian
supplier an accesses to latest in food processing technology, management practices
and advanced agricultural inputs with significant investment at the back end. This
has proved to be a great advantage in serving the customers better.
10
Every new product requires a special treatment and the backend process needs to be
upgraded to meet the requirements.
Pricing Strategy
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 it customization in accordance with the taste of Indian consumers has also
worked in its favor. McDonalds Pricing Strategies are as follows:11
Value Pricing.
Promotional Pricing.
Penetration Pricing.
Value Pricing
McDonalds came with the concept of value pricing for Indian consumers where in it came
out with various combos in form of
Medium meal combo that consisted of burger, medium fries and medium coke with
the price of Rs. 75
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
12
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 4-7 am. This was to promote their
new coffee partnership with Green Mountain coffee and helped spread the word that
McDonalds was now offering coffee.
required in the vegetarian menu of McDonald and the company consciously addressed
this need of its customers. The company had also become aware of the fact that eating out,
though gaining frequency was still primarily a family affair. Hence, it was attributed
mainly to evenings and weekends.
The Happy Price Menu had come closer on the heels of the marketing initiative by the
company im lovin it which McDonalds had launched in October 2003. The
communication about this new offering was funky and funny and tells that McDonalds is
overall a great place, and at a best price which restricted not only to its product, but also
the experience. At the same time, it aims to make the service hassle-free and easy to use.
Cultural challenges
The biggest problem McDonald faced was during the launch of its product in India
was the public image it was carrying as an International food chain and not matching
Indian standards. There were concerns raised about how the burgers are made in
McDonalds.
Vegetarianism: The major issue was beef. Cow being sacred and worshipped, beef
could not be served. Muslims did not eat pork. The challenge was to change the form
of the worldwide popular Hamburger to make an entry into India. With 25-30% of the
population being lacto vegetarian and a large majority eating meat, an alternative to
beef and pork was necessary. The population of a billion was undoubtedly a
promising opportunity for an international company. McDonalds accepted the
challenge and created the Aloo Tikki Burger known as McAloo Tikki especially for
the Indian vegetarian customers. Aloo- Tikki was a potato patty with spices. It also
made a chicken and fish option available for the non vegetarians. McDonalds even
separated the non vegetarian cooking process and the vegetarian process to convince
the customers of the Shudh Shakahari Experience which means pure vegetarian
experience. In addition, the crew cooking vegetarian food were asked to wear green
aprons. McDonalds in India was one of its kinds as it did not offer beef at all. In
order to convince and change the perception of the customers about the burgers they
offered, McDonalds made attempts to clarify their stand about beef in India. So the
14
world famous hamburger was without meat. This was indeed a classic case of product
adaptation, to gain foothold in a new market.
Eating Habits- Eating out was a special occasion to many Indian families. Meals had
been an essential medium for social sharing and relationship. Whenever families
decided to eat out, the choices available were abundant. The trend in metropolitan
cities was however changing. With more nuclear families and dual income
households, the demand for fast and readymade food was growing. The needs of the
growing working population stimulated the need for new products and services.
Indian culture was relatively new to the use of technology and streamlined process in
food service. McDonalds needed to find ways and methods to motivate the customers
opt for initial trials and acceptance. The conventional eating pattern of Indians
involved breakfast, lunch and dinner. Lunch and dinner menus were complete meals
providing the right balance in terms of nutrition. Breakfast was conventional as per
the family culture and upbringing. Burgers were likely to be slotted in the category of
snacks. But globally burgers and beverage brands were linked with poor eating habits.
The market situation called for focus on the environment within the restaurant and
western association.
memorable statement, he was letting the world think about the philosophy and
the secret behind McDonalds phenomenal success.
3. QUALITY, SERVICE, CLEANLINESS AND VALUE- It is an unflinching
McDonalds ideology that the customer must always get quality products,
served quickly and with a smile, in a clean and pleasant environment and all at
a fair price.
Local aspects1. RESPECT FOR LOCAL CULTURE- McDonalds India has developed a
special menu with vegetarian selection to suite tastes and preferences.
McDonalds does not offer any Beef or Pork items in India. Only the freshest
chicken, fish and vegetable products find their way into India restaurants.
2. MEETING THE NEEDS OF KEY AUDIENCES- To build long-term
business it is essential to retain people once they have become customers.
Customers are not all the same. Market research identifies different types of
customers. For example:
A Parent with two children might visit. Visits McDonalds to give the
children a treat.
Children want to visit McDonalds. As it is a fun place to eat.
A Business Customer visits McDonalds during the work day. As service is
quick, the food tastes great and can be eaten in the car, without affecting a
busy schedule.
Teenagers visit McDonalds as the menu is affordable, and there is internet
access in some restaurants.
16
Targets children as they are influenced easily and are also future customers attracts
them by Happy Meals and Lego toys, Fun Zones
Also attracts young adults through promotional events like Music Meal
Provides lounges for senior citizens, opened Cold Kiosks to provide sweet desserts to
customers after a meal
Conclusion
17
18