McDonald's Marketing Management

Introduction to Project.

This project on McDonald’s India is taken because it is the only chain in Indian market on which the effect of recession has not been seen. In this topic we have covered the marketing strategies, customer satisfaction survey, provided recommendations and provided information through 4P’s of marketing.

Executive summary of the project.

With the increase in spending capacity of Indian middle class society, the mind set of consumers have changed in relation to recreational activities.

Everybody wants to spend quality time and is ready to pay for good service provided.

More frequently people move out to eat and spend time, this has created scope for many fast food chains. But along with that it has created competition among different food chains.

Hence each and everyone plays a major role in attracting customers. The trend can be seen by the increasing number of food chains.

That is why this company has been was chosen for further study as this particular industry is fast becoming very competitive.

This project comprises of the analysis of Indian fast food industry and competition that is defining the trend, different companies and various players are analyzed from their competing strategies, objectives, strengths and weakness.

The companies that have been analyzed in this project are:

• Nirula’s
• Pizza hut
• Domino’s
• McDonald’s.

Further the study conducts a comprehensive study on one of the major players in the food services industry, which was McDonalds, the research tries to develop a case study which studies McDonalds and its business process very closely with a greater emphasis on major activities which it carries out in India, and tries to give a learning for its Indian counter parts. In addition to this a consumer research was undertaken with the objective of assessing the service quality of McDonalds on the basis of:

• Tangibles
• Reliability
• Empathy
• Responsiveness
• Assurance.

Objectives of the study.

• To do customer value analysis which includes identifying the major attributes

  that customer’s value in a fast food chain restaurant, assessing the quality of

  the different attributes.

• To shed light on different aspects that a service based food chain must follow in

  order to increase its market share and for being on a continuous growth stream.

• To identify different activities that an aggressive company like McDonald’s follow

  in order to establish itself in a local market and increasing sales by being in

  customer’s mind and heart.

• To analyze the level of customer satisfaction for products offered by McDonalds.
• To identify and clarify the strategies used by McDonalds

Limitations of the study.

Since the road to improvement is never ending, so this study also suffers from certain limitations. Some of them are as follows:

• Scope of project is limited in the sense that only McDonalds has been taken for

  consumer research.

• The extent of the survey was Noida and New Delhi only. So the suggestions or

  arguments given in the report may not hold true for other locations in India.

• It was a time consuming method in which continuous guidance was required.
• Questionnaire method involves some uncertainty of response. Co-operation on the

  part of informants, in some cases, was difficult to presume.

• Because of time constraints and reserve constraints, a mix of convenient sampling

  and judgement sampling was used.

• Also because of above mentioned constraints, the sample size chosen for the survey

  was 50 people.

• It is possible that the information supplied by the informants may be incorrect.

  So, the study may lack accuracy.

• For presenting about McDonalds only secondary source of data was referred. No

  interviews with the company personnel, whethis the operational or managerial levels

  were conducted.

Objectives of research study

The main objective of the research was to identify the key strategies used by the marketing depts. at corporate and store level and try to identify whether the customers are satisfied with the services provided by McDonalds. Whether the services provided by them are as desired by the customers or not.

The services provided by McDonalds have been assessed on the basis of following dimensions of service quality:

• Tangibles: appearance of physical facilities, equipment, personnel, and

  communication material

• Reliability: ability to perform dependable services accurately
• Empathy: Provision of caring, individualized attention to customers
• Responsiveness: the willingness to help customers and to provide prompt service
• Assurance: the knowledge and courtesy of employees and their ability to convey

  trust and confidence

Customer Value Analysis.

• Identify the major attributes that customers value in fast food restaurants
• Assess the quantitative importance of different attributes
• Assess McDonald’s performance on different customer values.
• Assess the share of mind and share of heart for McDonald’s.

Data collection

In this project both primary data as well as secondary data are used.

Primary data

Primary data used in this project is collected through two methods, namely, QUESTIONNAIRE METHOD and DIRECT PERSONAL INTERVIEW METHOD. Both these methods proved to be of great help in getting the required information.

Secondary data

It is not possible to collect first hand information for each & every thing so, secondary data from various sources like Internet, Information from television channels like ET, NDTV Profit etc. and McDonalds India website were used.

Statistical & Presentation tools used

PRIMARY DATA is:

• First classified i.e. grouped qualitatively and quantitatively according to the

  situation or the type of the data which was collected.

• After classifying is represented in the form of tables i.e. systematically

  arranged in columns and rows.

• Then the data is graphically represented in the form of PIE DIAGRAMS.

SECONDARY DATA is represented:

• In the form of tables.
• By the way of BAR GRAPHS and PIE CHARTS

Sample size and Areas covered

A customer-based survey was conducted in which 50 people were asked to fill the questionnaire in which 50 people residing in Delhi & FARIDABAD. Specifically the areas covered for primary survey were: Saket, G.K Part 1, South- ex and Lajpat Nagar.

Because it was not possible to consider each and every person of both cities,

CONVENIENCE SAMPLING METHOD was used.

Industry Overview

(Fast Food Industries)

Introduction

The food industry is on a high as Indians continue to have a feast. Fuelled by what can be termed as a perfect ingredient for any industry – large disposable incomes – the food sector has been witnessing a marked change in consumption patterns, especially in terms of food. An increasing number of international fast food chains rushing to India is because all of them see tremendous potential in for this type of business. The large upwardly mobile population in the urban areas tend to eat out more often or business or for leisure.

The various players operating in India are the well established Indian chains like Nirula’s, Haldiram’s and multinational companies like McDonalds, Pizza hut, Domino’s pizza, etc.

In addition to these, apparently some of the best known international food chains are looking at India. Among them are Great American Disaster, The Burger King, Mexican food chain Tacogrill, Move-n-pick, etc. are some of them to name.

At present all these players are fighting for a small pie, as fast food is really not a big habit with Indians, but they see a big potential.

The players are fighting on products, pricing, positioning and trying to convert their first trials into regular purchase by providing delightful service quality. The focus is on product quality and standardization on taste. Consistency is the key, as its standardization in fast food as the consumer is short on time and wants to satisfy his taste buds with a consistent taste experience.

Beyond this each player has its own strategy to expand consumer base.

• Some feel that pricing is not the deciding factor since fast food is not price

  sensitive market because it is not a single diet of Indians.

• Some others are competing on positioning which is surprisingly varied, giving the

  small size of the market.

• For most, targeting children seems the right strategy.
• Advertising is popular.

However, with competition hooting up most chains are increasing reach as well as working on establishing a national presence.

The wind of change is blowing through the empire of fast food. The vision of endless growth through new markets across the planet for fast food companies now looks unsustainable when its time to adapt or die. As the fast food companies have expanded around the world, they have had to adapt to local sensitivities.

There were disturbances in India when it was learned that McDonalds’s were pre-cooked in beef fat in the USA, because Hindus revere cows and cannot eat beef.

According to a market research company, Euromonitor International, amount of money Indians spend in eating out has more than doubled in past decade, to about US$ 5 billion a year and is expected to double again in about half that time.

Trends in the fast food industry

The industry is estimated to grow at 9-12 per cent, on the basis of an estimated GDP growth rate of 6-8 per cent, during the Tenth Five year plan period. Value addition of food is expected to increase from the current 8 per cent to 35 per cent by the end of 2025. Fruit and vegetable processing, which is currently around 2 per cent of total production will increase to 10 per cent by 2010 and to 25 per cent by 2025.

The popularity of food and agro products is not surprising when the sector is now offering a growth of more than 150 per cent in sales. With such promise in the sector, a number of foreign companies have joined the fray. While US brands such as McDonald’s, Pizza hut and Kentucky Fried Chicken have become household names, more are on their way.

The market scenario

India among top 10 market for weekly fast food consumption, an online survey has found. Most of the countries are from the Asia-pacific region, with the US being the exemption.

According to an A C Neilson study of 28 markets across the US, Europe and the Asia-Pacific, carried out through the internet in interviews with more than 14000 consumers, Asians are the world’s greatest fast food fans.

Major players.

In India the major players which constitute the Indian fast food industry includes Indian as well as Multinational companies.

These are:

• Nirula’s

Established in 1934, Nirula’s today is a diversified group having a chain of elegant Business hotels, Waiter service restaurants, Family style restaurants, Ice Cream parlours, pastry shops and food processing plants in India.

The chain with over 60 outlets operating in 5 states successfully caters to the Indian palate of over 50000 guests every day or over 70 years.

The restaurants serves a wide variety of multi-cuisine foods, both western and Indian including pizzas, burgers, chana kulcha, saag-roti and much more!

Ice cream parlours offers an extensive range of exciting and innovative ice cream flavors with one new flavor added every month

Nirula’s pastry shops are a one-stop shop for bakery and confectionary items.

• Pizza hut

In 1996 Pizza hut came to India with a dine in restaurant in Bangalore that has special vegetarian pizzas. In addition to traditional Italian topping, it incorporates Indian favorites such as chicken tikkas, lamb korma, etc. In its list of innovative toppings, along with pizzas the menu features appetizers like garlic bread and soups, fresh salads, oven baked pastas and choice f/of ice-cream sundaes.

In 1997 pizza hut opened a restaurant in the capital’s building bustling M-Block market in Greater Kailash-I, unlike the existing pizza hut at shanti niketan which is delivery counter for just pizzas, this is dine-in whise the entire menu is available.

• Domino’s pizza

It was incorporated in 1995 as the master franchise o Domino’s pizza international inc., of USA. the first Domino’s pizza store in India opened in January 1996 at new Delhi. Today it has grown into a countrywide network of over 104 outlets in 30 cities.

Ever since it was established, Domino’s Pizza India has maintained its position of market leadership with its constant product innovation and maintenance of stringent service standards. It has established a reputation for being a home delivery specialist capable of delivering pizzas within 30 minutes. It was the first one to start this facility to customers.

Domino’s constantly strives to develop products that suits the tastes of its customers. Thus time and again Domino’s has been innovating toppings suitable to taste buds of the local populace and these have been very well accepted by the Indian market.

Company profile

McDonald’s India

Introduction

McDonald’s in India is a 50-50 joint venture partnership between McDonald’s Corporation [USA] and two Indian businessmen. Amit Jatia’s company Hardcastle Restaurants Pvt. Ltd. owns and operates McDonald’s restaurants in Western India. While Connaught Plaza Restaurants Pvt. Ltd headed by Vikram Bakshi owns and operates the Northern operations.

Amit Jatia and Vikram Bakshi are like-minded visionaries who share McDonald’s complete commitment to Quality, Service, Cleanliness and Value (QSC&V). Having signed their joint-venture agreements with McDonald’s in April 1995, they trained extensively, along with their Indian management team, in McDonald’s restaurants in Indonesia and the U.S.A. before opening the first McDonald’s restaurant in India.

Mc Donald’s international through its wholly owned subsidiary McDonald’s India entered into two JVs, one with Connaught Plaza Restaurants Pvt. Ltd. in the northern & eastern region and another with Hardcastle Restaurants Pvt. Ltd. in the western & southern region.

As a leader in QSR (Quick Service Restaurant) segment McDonald’s has pioneered various industry benchmark practices over the past decade of serving Indian customers, including new concepts such as

• Oil alliances in India by linking with petroleum giants BPCL and HPCL. Three such

  alliances with BPCL outlets are in Mathura (2000) (UP), Doraha (2002) (Punjab) and

  Chanakyapuri (2005) (New Delhi).

• Novel menu formats such as an Express model with a limited menu and kiosks with a

  variety of dessert offerings.

• Home delivery (Mcdeliveryâ„¢-2004); providing even more convenience to our

  customers. In 2006, Mcdelivery on bicycle at Chandni Chowk and 2007 all India single

  delivery number were introduced 66000666

• First drive thru restaurant in India at Noida (UP) in 1997. (The drive thru has

  been closed now)

Restaurant count

McDonald’s has 165 restaurants in India of which 90 are in north & east India and 75 in west & south India

McDonald’s India….. Culturally sensitive.

McDonald’s in India is a locally owned and managed company run by Indians, employing local staff, procures from local suppliers to serve its customers. McDonald’s India opened its first family restaurant at Basant Lok in Oct, 1996; today it has 165 Restaurants across India. This vibrant decade has seen McDonald’s evolve Indian menus, Indian sensitivities and yet remain as globally innovative as ever. This journey has seen McDonald’s develop a rich brand identity amongst its customers and employees as well as partners alike.

At McDonald’s India we have had a single mantra: providing 100% total customer

satisfaction and the formula for achieving this goal in our restaurant operation is

the long-standing commitment to the McDonald’s Promise.

McDonald’s worldwide is well known for the high degree of respect for the local customs and culture. McDonald’s has developed a menu especially for India with vegetarian selections to suit Indian tastes and preferences. Keeping in line with this, McDonalds does not offer any beef or pork items in India. In the last decade it has introduced some vegetarian and non-vegetarian products with local flavors that have appealed to the Indian palate. There have been continuous efforts to enhance variety in the menu by developing more such products.

McDonald’s has also re-engineered its operations repeatedly in its 13 years in India to address the special requirements of a vegetarian menu. Vegetable products are 100% vegetarian, i.e.,

• they are prepared separately, using dedicated equipment and utensils.
• Only pure vegetarian oil is used as a cooking medium.
• Cheese and sauces are completely vegetarian and egg less.
• Separation of vegetarian and non-vegetarian food products is maintained

  throughout the various stages of procurement, cooking and serving.

McDonald’s India has developed a special menu with vegetarian selections to suit Indian tastes and preferences. Only the freshest chicken, fish and vegetable products find their way into our Indian restaurants. In addition, we’ve re-formulated some of our products using spices flavored by Indians. Among these are McVeggieâ„¢ burger, McAloo Tikkiâ„¢ burger, Veg. Pizza McPuffâ„¢ and Chicken McGrillâ„¢ burger. We’ve also created eggless sandwich sauces for our vegetarian customers. Even our Softserves (Ice-creams) and McShakesâ„¢ are egg-less, offering a larger variety to our vegetarian consumers.

International Standards.

McDonald’s India’s local suppliers provide us with the highest quality, freshest ingredients. Complete adhisence to the Indian Government regulations on food, health and hygiene is ensured, while maintaining our own recognized international standards. Fast, friendly service – the hallmark of McDonald’s restaurants the world over is the mantra we abide by.

Stringent cleaning standards ensure that all tables, chairs, highchairs and trays are sanitised several times each hour. Such meticulous attention to cleanliness extends beyond the lobby and kitchen to even the pavement and immediate areas outside the restaurant.

Mcdonald’s Philosophy.

“We take the burger business more seriously than anyone else.” When McDonald’s founder, Ray Kroc made that memorable statement, he was letting the world in on the philosophy and secret behind McDonald’s phenomenal success.

Our vision to be India’s “best” quick service restaurant experience is supported by a set of principles and core values [McDonald’s Way]

The principles that guide McDonald’s…

• Quality, Service, Cleanliness & Value – It is an unflinching McDonald’s ideology that our customers must always get quality products, served quickly and with a smile, in a clean and pleasant environment; and all at a fair price.
• Committed to exceeding our customers’ expectations in every restaurant every time.
• A passion and a responsibility for enhancing and protecting the McDonald’s brand.
• We believe in a collaborative management approach, employing a mutually respectful

  business philosophy,

• We will seize every opportunity to innovate and lead the industry on behalf of our customers.

The McDonald’s Promise.

QSC&V……The Foundation that built McDonald’s success

When asked to explain McDonald’s success, founder Ray Kroc used to say, “We take the hamburger business more seriously than anyone else.”

Kroc was a perfectionist. From the day he opened his first restaurant, he vowed to give his customers high quality products, served quickly -and with a smile, in a clean and pleasant environment, and all at a fair price. Quality, Service, Cleanliness and Value (QSC&V) became the philosophy that drove McDonald’s business.

McDonald’s Quality Management instills the culture of quality through such principles as being customer driven, managing with facts, valuing people, and continually improving every aspect of our business

Service that is fast and friendly and has always been a foundation for success at McDonald’s.

Cleanliness for us means having the cleanest and freshest facilities from the kitchen to the rest rooms and parking lots.

Value at McDonald’s means the total experience…… great food, friendly folks, a clean environment, quick and accurate service and fun.

McDonald’s global

• McDonald’s has over 30,000 local restaurants in more than 120 countries 70

  percent of our restaurants worldwide are owned and operated by independent, local

  businessmen and businesswomen.

• McDonald’s serves nearly 50 million customers each day
• McDonald’s first franchised restaurant opened at Des Plaines, Illinois in 1955

  by the founder Ray Kroc

• McDonald’s has its own Hamburger University in Illinois, and the first batch

  graduated in 1961.

• 12 classes offered at Hamburger University are college accredited
• In 1963, McDonald’s sold its one billionth hamburger
• McDonald’s is listed on the New York, Frankfurt, Munich, Paris and Tokyo stock exchanges
• McDonald’s aired its first network TV advertisement “McDonald’s – Whise Quality

  Starts Fresh Everyday”, in 1965

• The first McDonald’s Drive-Thru opened in Sierra Vista, Arizona in 1975
• Happy Meals were added to McDonald’s menu in 1979
• McDonald’s launched the new worldwide Balanced Active Lifestyles public awareness

  campaign in 2005

• McDonald’s celebrated its 50th Anniversary on April 15, 2005

Achievements.

McDonald’s India – A decade of quality service

For its unparalleled benchmarks established in the QSR sector McDonald’s India has

been bestowed with many prestigious awards. To name a few:

• Most respected company for four consecutive years, 2003-2007 in the food

  services sector by business world

• Most wanted brand of the year award 2003 & 2004 by franchising holdings India ltd.
• Retailer of the year’s award for catering services, 2004-2006 at the images retail awards
• The most preferred fast food outlet’ 2006 & 2007 by awaaz consumer award hosted by CNBC
• Star retailer – the consumer way, food services retailer’ of the year 2006 by franchise India
• Amity corporate excellence award’ in 2007
• Received CNBC consumer award in2009 in QSR category

Customer Satisfaction Through 4 P’s Of Marketing Mix

Marketing Mix

Marketing Mix refers to the ingredients or the tools or the variable which the marketer mixes in order to interact with a particular market

“Marketing Mix is a set of marketing tools that the firm uses to pursue its marketing objectives in the target market”

Marketing mix is a term used to describe the combination o the four inputs which constitute the core of a company’s marketing system: the product; the price structure; the promotional activities, and the distribution system.

Marketing mix represents the total marketing programme of a firm. It involves decisions with regard to product, price, place and promotion. Marketing mix is a blending of decisions in the ‘4 Ps’.Four major ingredients of marketing mix are:

• Product

A product is any good or service that consumers want. It is a bundle of utilities or a cluster of tangible and intangible attributes. Product component of the marketing mix involves planning, developing and producing the right type of products and services. It deals with the dimensions of product line, durability and other qualities. Product policy of a firm also deals with proper branding, right packaging, appropriate color and other product features. The total product should be such that it really satisfies the needs of the target market. In short, product mix requires decisions with regard to

• Size and weight of the product.
• Quality of the product.
• Design of the product.
• Volume of output.
• Brand name.
• Packaging.
• Product range.
• Product testing.

• Price.

Price is an important factor affecting the success of a firm. Pricing decisions and policies have a direct influence on sales volume and profits of business. Price is, thisefore, an important element in the marketing mix. In practice, it is very difficult to fix the right price. Right price can be determined through pricing research and test marketing. A lot of exercise and innovation is req. to determine the price that will enable the firm to sell its products successfully. Demand, cost, competition, govt. regulation, etc. are the vital factors that must be taken into consideration in the determination of the price. Price mix involves decisions regarding base price, discounts, allowances, fright payment, credit, etc.

• Promotion.

Promotion component o the marketing mix is concerned with bringing products to the knowledge of customers and persuading them to buy. It is the function of informing and influencing the customer. Promotion mix involves decisions with respect to advertising, personal selling and sales promotion. All these techniques help to promote the sale of products and to fight the competition in the market.

No single method of promotion is effective alone and, therefore, a promotional campaign usually involves a combination of two or more promotional methods. Growing competition and widening market have made simultaneous use of more than one promotional method all the more necessary. Combination of two or more methods in a single promotional campaign requires an effective blending of promotional inputs so as to optimize the expenditure on each. There is no ideal product, type of customers, the promotion budget, stage of demand, etc. should be taken into consideration.

• Place (Distribution)

This element of marketing mix involves a choice of the place where the products are to be displayed and made available to the customers. It is concerned with decisions relating to the wholesale and retail outlets or channels of distribution. The objective of selecting and managing trade channels is to provide the products to the right customer at the right time and place on a continuing basis. In deciding where and through whom to sell, management should consider where the customer wants the goods to be available. A manufacturer may distribute his goods through his own outlets or he may employ wholesalers and retailers for this purpose. Irrespective of the channel used management must continuously evaluate channel performance and make changes whenever performance falls short of expected targets. In addition, management must develop a physical distribution system for handling and transporting the products through the selected channels. In the determination of distribution mix or marketing logistics, a firm has to make decision with regard to the mode of transporting of goods to middle-men, use of company vehicles or both.

Product Mix

(McDonald’s Product Mix)

As explained earlier Product mix deals with the dimensions of product line, quality and design of the product, its packaging, brand name, product range, etc.

In this section we will study the product mix of McDonald’s

Product line of McDonalds includes the products offered for sale, i.e. the range of food products offered to the customers.

The product breadth or number of products offered by McDonalds can be classified as:

• Vegetarian products
• Non vegetarian products
• Beverages
• Desserts
• Add-ons

All this shows the wide product range of McDonald’s. Besides that the quality of McDonald’s, according to the survey and general findings, is consistent throughout the life of the product. The main reasons behind its consistent and best quality are:

Vegetables.

We use freshly shredded lettuce, onions and tomatoes in our restaurants. All our vegetable products are processed from high quality graded vegetables in a 100% dedicated vegetarian plant.

Potatoes.

McDonald’s world-famous French Fries are produced only from the best quality potatoes. Shepardy Potatoes are used in French fries. These potatoes are cut, blanched and processed on state-of-the-art processing lines to ensure maximum retention of nutrients. French Fries are cooked at the plant and our restaurants in 100% vegetable cooking oil.

Chicken.

The chicken patties are made from high quality boned breast and leg meat and are covered in a specially seasoned, lightly battered coating. They are shaped in uniform sizes to ensure consistency in weight and value.

Fish.

The fish patties in McDonald’s Filet-O-Fish are 100% pure whole white fillets that are lightly breaded. The fish comes from a variety caught around the south-west coast of India.

Cheese & othis Dairy Products.

All our dairy products like cheese, McShakesâ„¢ and Soft Serves are made from fresh dairy milk. All dairy products including cheese have a role to play in a balanced diet because they contain a wide variety of essential nutrients such as protein, calcium, fat soluble, phosphorus, etc.

Buns.

McDonald’s uses buns made from locally grown wheat flour. They are baked locally and delivered fresh, several times each week to McDonald’s restaurants.

Cooking oil

All preparations are done in 100 % refined vegetable oils at restaurants and plants.

McDonalds use liquid oil and not hydrogenated oil. This means there are no TFAs or Trans Fatty Acids in our French Fries or any of our products. Additionally, these vegetable oils contain some essential fatty acids [EFA] necessary for growth.

MSG.

McDonald’s products do not contain any added MSG (Mono Sodium Glutamate).

Food Freshness

Thanks to our uncompromising quality standards, McDonald’s customers always receive the hotte