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ACKNOWLEDGEMENT
January 10, 2011
We take this opportunity to thank Professor Ritesh Tiwari ,our worthy BRM faculty, whoaccepted the proposal of this project and guided us throughout with his valuable ideas and
suggestions. We are also grateful to him for helping us out at each stage and solving each little
query and doubt with patience. He also explained to us all the functions and complexities of the
SPSS software.
We would also like to thank our student friends at IBS Hyderabad for sparing their valuable time
in filling out our questionnaires with lot of patience.
Finally, we would like to thank each other for our determination to complete this project and our
undying support to each other.
Group Members
Arushi Goyal 10BSPHH010162
Mohammad Bohra 10BSPHH010412
Parth Tripathi 10BSPHH010517
Ayushi Garg 10BSPHH010178
Ashish Tripathi 10BSPHH010168
Nitin Kumar Rana 10BSPHH010497
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TABLE OF CONTENTS
S.No Topic Page no.
1 ABSTRACT 4
2 OBJECTIVE 4
3 INTRODUCTION 5
4 LITERATURE REVIEW 8
5 RESEARCH METHODOLOGY & DESIGN 12
6 DATA AND SAMPLE SIZE CONSIDERATIONS 13
7 QUESTIONNAIRE DEVELOPMENT 18
8 DATA REPRESENTATION & ANALYSIS 21
9 FACTOR ANALYSIS 25
10 REGRESSION ANALYSIS 31
11 LIMITATIONS 34
12 RECOMMENDATIONS & CONCLUSION 35
13 REFERENCES 36
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ABSTRACT
This research project is an attempt to analyze the factors affecting the annual consumption
pattern of Mc Donalds burgers in Hyderabad.
The impact of various factors such as Timely Delivery of the food, Quality of the food served,Location of the fast food restaurants, Customer Service, Diversification of Menu, Promotion and
Brand Image, Price, Hygiene, Seating Capacity, Opening Hours, Ambiance, Menu
Diversification have been analyzed.
The study is based on primary data collected from people at Mc Donalds City Center,
Hyderabad and IBS Hyderabad with the help of a structured questionnaire. Data analysis has
been done using SPSS software. The statistical analysis method employed in this study is Factor
Analysis and Regression Analysis.
OBJECTIVE
Research Objectives:
1. To find out the factors affecting the consumption pattern(in terms of no. of burgers consumed
annually) of McDonalds burgers in Hyderabad.
2. Predicting the extent of variation in consumption pattern if any or many of the factors
affecting it are changed by a certain amount.
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INTRODUCTION
A Locally Owned Company:
McDonald's is the world's leading food service retailer with more than
31,000 restaurants in 119 countries serving more than 50 million
customers each day. In India, McDonald's is a joint-venture company
managed by two Indians. While Amit Jatia, M.D. Hardcastle Restaurants
Pvt. Ltd. owns and spearheads McDonalds in west & south India,
McDonalds restaurants in North & East India are owned and managed by
Vikram Bakshis Connaught Plaza Restaurants Private Limited. Celebrating over 12 years of
leadership in food service retailing in India, McDonalds now has a network of over 160
restaurants across the country, with its first restaurant launch way back in 1996. Prior to its
launch, the company invested four years to develop its unique cold chain, which has broughtabout a veritable revolution in food handling, immensely benefiting the farmers at one end and
enabling customers to get the highest quality food products, absolutely fresh and at a great value.
Local Sourcing Is Key for Truly Indian Products:
McDonald's India is committed to sourcing almost all of its products from within the country.
For this purpose, it has developed local Indian businesses, which can supply them the highest
quality products required for their Indian operations. Fresh Lettuce is sourced from Pune, Delhi,
Nainital and Ooty; Cheese from Dynamix Dairies, Baramati, Maharashtra; fresh Buns from Mrs.
Bector Foods, Phillaur, Punjab & Khopoli, Maharashtra; Sauce from Mrs. Bector Foods,
Phillaur, Punjab, Chicken Patties, Vegetable Patties, and Veg.Pizza McPuff from Vista
Processed Foods, Taloja, Maharashtra. Dairy Products are sourced from Amrit Food, Ghaziabad,
UP. All our suppliers are HACCP certified.
Respect for the Indian Customs and Culture:
McDonald's worldwide is well known for the high degree of respect to the local culture.
McDonald's has developed a menu especially for India with vegetarian selections to suit Indian
tastes and culture. In line with its respect for local culture, India is the first country in the world
where McDonalds does not offer any beef or pork items. McDonald's has also re-engineered its
operations to address the special requirements of vegetarians. Special care is taken to ensure thatthe vegetable products are prepared separately, using dedicated equipment and utensils. This
separation of vegetarian and non-vegetarian food products is maintained throughout the various
stages of procurement, cooking and serving. So much so that the mayonnaise and the soft serve
are also 100% vegetarian. Also in India, only vegetable oil is used as a cooking medium.
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An Employer of Opportunity:
McDonald's India is an employer of opportunity, providing quality employment and long-term
careers to the Indian people. The average McDonald's restaurant employs 60-80 people from
crew to restaurant manager. McDonald's world class-training inputs to its employees can be seen
in the present close to 4000 employees in India.
Quality, Service, Cleanliness & Value
The USP of McDonalds is Quality, Service, Cleanliness & Value for money which means we
focus on providing our customers high quality products, served quickly with a smile, in a clean
and pleasant environment at an affordable price. The McDonald's philosophy of QSC&V is the
guiding force behind its service to the customers. McDonalds menu is priced at a value that the
largest segment of the Indian consumers can afford. McDonalds does not sacrifice quality for
valuerather McDonalds leverages economies to minimise costs while maximizing value to
customers.
MENU LIST
Vegetarian list
- Mc Veggie:
- McAloo Tikki
- Paneer Salsa Wrap:
- Crispy Chinese:
- Veg McCurry Pan:
- Pizza McPuff:
The Non-Vegetarian Fare at McDonalds India:
- Chicken Maharaja Mac:
- McChicken:
- Filet-O-Fish:
- Chicken McGrill
- Chicken McCurry Pack
- Chicken nuggets
- Chicken Mexican wrap
Apart from these specials that appear mainly in the Indian McDonald's here there are a couple of
things that are exactly the same in India as what you would consume at a McDonalds in the U.S.
or anywhere else.
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Few of the extra menus included are:
-Fries,
-Shakes,
-Soft-serve ice-cream: both sundaes and cones,
-Happy meals
-Combos.
OUTLETS IN INDIA
McDonalds in India currently runs a total of 170 quick service restaurants. Between the two
franchisees, we will be spending around Rs 400-500
crore (Rs 4-5 billion) over the next three years to open
120 outlets. McDonalds serves 180-200 million peopleevery year across India, which boils down to five lakh
customers per day.
The list of outlets in Hyderabad are:
1. Madhapur phase V
2. A.S Rao nagar ECIL Road
3. City centre mall- Mcdonalds family restraint
G8 first floor, Banjara hills, road no -1 opp. Taj Krishna, Hyderabad 500034, ph-9642325025
4. GMR Airport
5. Prasads IMAX
6. Sanali mall
7. Rainbow mall, Secunderabad,
PRICE LIST
Menu Items Net Price (Taxes included) With cheese -Net Price
Veg Pizza McPuff 19.00
Veg Surprise 20.00McAloo Tikki Burger 29.00 35.00
Crispy Chinese 32.00
McVeggie Burger 38.00 44.00
Chicken McGrill 28.00 34.00
McChicken Burger 49.00 55.00
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Chicken Maharaja Mac 59.00
Filet - O - Fish 49.00
Paneer Salsa 45.00
Chicken Mexican 55.00
Mc Curry 49.00
Mc Curry 59.00
French fries
Regular 20.00Medium 28.00
Large 36.00
Cheese Slices 6.00
Extra Sauces 5.0
LITERATURE REVIEW
Introduction
The study of consumers helps firms and organizations improve their marketing strategies by
understanding issues such as how
The psychology of how consumers think, feel, reason, and select between different
alternatives (e.g., brands, products, and retailers);
The psychology of how the consumer is influenced by his or her environment (e.g.,
culture, family, signs, media); The behavior of consumers while shopping or making other marketing decisions;
Limitations in consumer knowledge or information processing abilities influencedecisions and marketing outcome;
How consumer motivation and decision strategies differ between products that differ in
their level of importance or interest that they entail for the consumer; and
How marketers can adapt and improve their marketing campaigns and marketingstrategies to more effectively reach the consumer.
One "official" definition of consumer behavior is "The study of individuals, groups, or
organizations and the processes they use to select, secure, use, and dispose of products, services,
experiences, or ideas to satisfy needs and the impacts that these processes have on the consumerand society." Although it is not necessary to memorize this definition, it brings up some useful
points:
Behavior occurs either for the individual, or in the context of a group (e.g., friendsinfluence what kinds of clothes a person wears) or an organization (people on the job
make decisions as to which products the firm should use).
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Consumer behavior involves the use and disposal of products as well as the study of how
they are purchased. Product use is often of great interest to the marketer, because thismay influence how a product is best positioned or how we can encourage increased
consumption. Since many environmental problems result from product disposal (e.g.,
motor oil being sent into sewage systems to save the recycling fee, or garbage piling up at
landfills) this is also an area of interest. Consumer behavior involves services and ideas as well as tangible products.
There are several units in the market that can be analyzed. Our main thrust in this course is
the consumer. However, we will also need to analyze our own firms strengths and weaknesses
and those of competing firms. Suppose, for example, that we make a product aimed at olderconsumers, a growing segment. A competing firm that targets babies, a shrinking market, is
likely to consider repositioning toward our market. To assess a competing firms potential threat,we need to examine its assets (e.g., technology, patents, market knowledge, awareness of its
brands) against pressures it faces from the market. Finally, we need to assess conditions (themarketing environment). For example, although we may have developed a product that offers
great appeal for consumers, a recession may cut demand dramatically.
Consumer Research Methods
Market research is often needed to ensure that we produce what customers really want and notwhat we think they want.
Primary vs. secondary research methods. There are two main approaches to marketing.Secondary research involves using information that others have already put together. For
example, if you are thinking about starting a business making clothes for tall people, you dont
need to question people about how tall they are to find out how many tall people existthat
information has already been published.
Primary research, in contrast, is research that you design and conduct yourself. For example,you may need to find out whether consumers would prefer that your soft drinks be sweater or
tarter. so you personally carry out the research yourself. It can be done by various methods such
as :
Surveys, focus group discussions, personal interview, projective techniques, observations, online
research methods.
Research will often help us reduce risks associated with a new product, but it cannot take the risk
away entirely. It is also important to ascertain whether the research has been complete.
Surveys : are useful for getting a great deal of specific information. Surveys can contain open-ended questions (e.g., In which city and state were you born? ____________) or closed-ended,
where the respondent is asked to select answers from a brief list (e.g., __Male ___Female. Open ended questions have the advantage that the respondent is not limited to the
options listed, and that the respondent is not being influenced by seeing a list ofresponses. However, open-ended questions are often skipped by respondents, and coding them
http://www.consumerpsychologist.com/cb_Research_Methods.htmlhttp://www.consumerpsychologist.com/cb_Research_Methods.htmlhttp://www.consumerpsychologist.com/cb_Research_Methods.html -
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1. RESEARCH METHODOLOGY
RESEARCH DESIGN
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Factors affecting the consumption of McDonalds Burger
Problem Discovery
Selection ofexploratory technique
Secondary DataFocus group
Discussion (FGD)
Selection of basicresearch method
Survey & Questionnaire Observation
Selection of SampleDesign
Probability Sampling
DataCollection,Editing,Processing
&Data Analysis
Factor Analysis
MultipleRegression
Analysis
Interpretation offindings
Final Report
(Obtain consumption pattern of burgers)
Statement ofResearch
Objective
(To find consumpton pattern (in terms of no. of units consumed anuallly) ofMc Donalds burgers in hyderabad )
Flowchart of the overall Research Process
Target population:Population of hyderabad
Sample size = 100-125
Clubbing of highly coorelated factors
Establish dependency relationships
(by visiting McDonalds restaurents )
(From websites,magazines etc )
(of IBS Research scholars )
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DATA AND SAMPLE SIZE CONSIDERATIONS
Target Population:The target population is the collection of elements or objects that process the information sought
by the researcher and about which inferences are to be made. Our target population is the entire
population ofHyderabad City who consumes burgers from McDonalds.
Sample Size:It denotes the number of elements out of the target population to be included in the study. We
took the sample size more than 10 times as many observations as there are variables (We have 11
variables in our study) according to general rule ofGENERALIZIBILITY.According to this, we initially took a sample size of 119, but since the KMO measure for this
size will was less than that for 102 we finalized the size at 103.
RESEARCH METHODOLOGY
Preliminary Investigation: - This phase involved preliminary investigation of the variousvariables which could possibly affect the consumers preference towards burger consumption.We primarily used focus group discussionto identify the various variables thatconsumers find important when they go for a food outlet.
1. Focus Group Interview:
A focus group discussion (FGD) is a qualitative research tool often used in business andmarketing. Focus groups are "small group discussions, addressing a specific topic, which
usually involve 6-12 participants, either matched or varied on specific characteristics of
interest to the researcher.
Advantages: It is relatively easy to assemble, inexpensive and flexible in terms of format, type of
questions and desired outcomes.
Open recording allows participants to confirm their contributions.
Provide rich data through direct interaction between researcher and participants.
Spontaneous, participants not required to answer every question; able to build on oneanother's responses.
Disadvantages:
Findings may not represent the views of larger segments of the population.
Requires good facilitation skills, including ability to handle various roles people may play
(expert, quiet, outsider, friend, hostile, etc.). Tough rich, data may be difficult to analyze because it is unstructured.
Possible conformance, censoring, conflict avoidance, or other unintended outcomes of thegroup process need to be addressed as part of the data analysis.
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FGD Questions
What do you think are the factors affecting the success of fast food chains?- Response: The factors they emphasized most on were quality and timely delivery. As its a fast
food chain they have to deliver best quality food within shortest possible time. The otherfactors they thought would contribute were high Customer Value Proposition, Smart Service,
Capacity Management, menu for Vegetarian people as India has a predominantly vegetarianpopulation. Advertisement, Number of outlets in a city; were some of the other factors that
came up in the discussion.
What would you prefer price or quality?- Response: All were in consensus that there has to be a trade off between price and quality, but
in such a highly competitive market where big players like KFC and Burger King exist and
brand loyalty has reduced, they have to provide best quality at competitive price. Since there
has been a constant price war in this sector, so Mc Donalds has been forced to reduce the priceof its burgers maintaining the same or better quality. They even provide seasonal discounts at
times.
What do you think is/are the indicators of success of fast food chains? How do you proposewe can reach these measures?- Response: The most appropriate indicator of success according to them was Number of
Footfalls. Since it suggests the number of people which enter the store on a particular day at a
particular time it can be used to measure success of fast food chains assuming the fact that the
people who enter end up buying the burger. But some people were of a different opinion. Theythought that customer satisfaction was a better indicator. Until and unless your customers are
not satisfied they are not going to purchase burgers. According to them sales and number of
outlets werent the correct indicators for measuring the success of fast food chains as sales varywith location, time and season.
Which is the best way to gauge success of fast food chains?o Interviewing\o Questionnaireso Observation
- Response: There was a divided opinion in the group about the way to gauge the success. Somepeople felt that interviewing was a better option as easy to get more insight about the topic.
Others felt that questionnaire was a better measure as we would be able to get the response of
more number of people. Some felt that Observation was a better measure as the actual behavior
of customers could only be gauged via observation and it would be relatively free from biases.
Does rumor affect your preference for fast food?- Response: As quality and price are main determinants of consumption pattern. So any rumor
regarding them, severely affect the consumption pattern. By advertisement and promotion
customers develop a trust on the brand. So when negative rumors pop up the customers feel
that their trust has been breached which reduces the brand loyalty.
Do your peers have a role in influencing your decision regarding fast food? If yes then towhat extent?- Response: Everybody was of the opinion that your peers have a great influence on your
personal consumption pattern as in India fast food chains are also centers of social bonding.
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Word of mouth also plays an important role in deciding your consumption pattern as people
trust their peers more than the company advertisements.
What is the one thing that can contribute to the success of fast food chains (which are notalready taken care of by them)?- Response: Participants while discussing their personal experiences suggested that the
employees at Mc Donalds should be smart as they the face of the company with the customerand they directly interact with the customers. Another idea that came up was that Mc Donalds
can set up a karaoke to rank their experience at Mc Donalds as it would give a clear picture oftheir satisfaction levels and is not even time consuming.
Due to above mentioned advantages we selected to conduct FGD ahead of Pilot Study to bringout the factors involved.
Six Research Scholars from IBS Hyderabad participated in the FGD. We first introducedthe topic to them and then asked them about their opinion regarding topics such as:
Variables identified from Focus Group Discussion are:
Delivery Time
Taste
Quality
Hygiene
Ambiance
Location
Number of outlets
Customer Service
Price
Variety of Food Items
Primary Data collection: Primary data will be collected using survey that will be
conducted by distributing questionnaires taking the variables into consideration to the
people visiting Mc Donalds in Hyderabad.
The rationale behind the questionnaire thus designed is as follows:
To know the frequency of burger consumption so that we can understand what is its share
in the regular consumption pattern of the population of Hyderabad. Here we will be
quantifying the response by assigning 1 to daily and 5 to never. We know how important it is for the consumer to get his food delivered in time. This is
one of the most important factors due to the changing lifestyles in todays world. This is
the factor that distinguishes one fast food chain from another. We asked this question to
get insights about the impact of delivery time of Mc Donald on the consumption pattern
of consumer. The responses will be evaluated by rating very fast as 1 and very slow as 5.
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Consumers, these days are willing to pay a premium if they are assured of the food
quality. We asked this question to know whether they are satisfied with the quality of
burgers being offered by Mc Donald. Responses are weighted such as 1 for very good
and 5 for very poor.
In this era of cut- throat competition between Fast food chains in India, it is expectable
that the customers will visit new chains which are in their close proximity. Hence, we
asked this question to know how loyal customers are towards Mc Donald. So that we can
get to know weather location can change the preferences or consumption pattern. Here
close proximity is rated higher than far. So 1 is for less than 1 Km and 4 is for more than
10 Km.
Change is the order of the day!
The tastes and preferences of the customers do not remain same over a very long period
of time. They do need a change in taste. So, we asked this question to judge that does
change in menu effects the consumption pattern. Here we will quantify very often as 1
and never as 5. Be it any product in any category, marketing and promotion are two important factors
that helps the fast food chains to communicate about themselves to the world at large. We
asked this question to know to what extent advertisements of MC Donald influence
consumers to consume burgers of Mc Donald. Here highly influenced is 1 and never
influenced is rated 4.
The first thing that attracts a new customer towards a product is a reasonable priced.
Hence, we asked the consumers how reasonable they find the price of Mc Donald burger.
So that we could study the impact of price on consumption pattern. Quantifying measure
for this question is such as we take highly priced as 1 and very low priced as 5.
What makes a product complete are the services that come attached with it. And
employees are the ones who come in face to face contact with the consumers to deliver
the product along with service and best way to retain customers is through best services.
So we are trying to know how competent and motivated their employees are to provide
customers with best services and does this effect consumption pattern of consumers.
You always judge a book by its cover!
A Food outlet is the favorite hang out place for almost all the generations today. So, it is
important to make the place pleasing, comfortable and conducive. So we asked this to
have insights about the role of ambience on their consumption pattern.
Life in on 24X7!With a major part of our youth employed in MNCs, their working hours have almost
become undefined. They are bound to feel hungry irrespective of the time. Hence we
asked this question to know whether the opening hours of Mc Donald are apt.
How many times it has happened that we visit an outlet of our choice and we are forced
to go to another just because of already full seating capacity. Hence, we asked the
consumers what they feel about the seating capacity of Mc Donald.
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Health comes first!
Could we ever think that some day we will have to pay even for drinking water ?
People these days have become very health conscious. They are focusing more on
hygiene more than taste. So we are trying to find out do the customers find Mc Donald
hygienic enough.
People go to Mc Donald mostly with their friends, relatives or colleagues, at times they
do go alone. So the number of burger they buy depends on the situation. We asked the
average number of burgers purchased each time so that we can get an idea of number of
units consumed each time. In response to this we will directly get a value which will be
used in our dependent variable.
Priorities are different for different individuals. Different factors influence consumption
pattern of different individuals. So we asked them to rate the various factors which we
came across. By analyzing the results we will be able to make out which are the factors
which effect the consumption pattern more. Response to this will let us know that what
weights different factors attain in determining the consumption pattern. This question was framed to ask for suggestions for any other factor which effect
consumption pattern. As there might be some other factor which we may not have
covered in our exploratory research. Suggestions from this will help us evaluate some
more factors which can affect the consumption pattern.
Note:- Questions having answer as Yes/No will be evaluated by giving 0 to No and 1 to
Yes.
Sample unit: McDonalds
Sample size: 102
Sample technique: Questionnaires
Sample area: IBS Hyderabad
OBSERVATION METHOD
We have also tried to identify the variables by the observation method. We had visited TheMcDonalds store in City Centre Mall, Hyderabad on 26th
of December, 2010 and we hadobserved the McDonalds outlet over there for around 2.30 hours during the evening.
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SURVEY METHOD: QUESTIONAIRES
We have also used the survey method: questionnaires. We distributed questionnaires to 102students of IBS, HYDERABAD to identify the variables affecting the consumption pattern of
consumers of burgers in Mc Donalds.
Sample size & Selection of sampling elementsWe have selected probability sampling as it strengthens the validity of evaluation results sinceeach element the population has equal chance of being selected so it has lesser chances of beingbiased. The sample size which we have selected is 102 which we think is adequate for thispurpose.
1.3QUESTIONNAIRE DEVELOPMENT
We designed one questionnaire for the survey. The questionnaire had 15 questions based on all
the 11 independent variables and 2 dependent variables which were identified from the focusedgroup discussion. We wanted to gather the response of the sample which was representative of
our population. These responses eventually helped us in evaluating the various factors whichaffected the consumption pattern of McDonalds.
The data collected has been analyzed using Factor analysis and the variables have been groupedinto factors based on the results. During the analysis of the data, Likert Scale (1: Lowest & 5:Highest) has been used for questions that have multiple selection options. The questions we as
follows :-
SAMPLE QUESTIONNAIRE
1. How often do you consume burgers?
1. Daily
2. Weekly
3. Monthly
4. Occasionally; once in ________ months.
5. Never
2. How do you rate the delivery time of Mc Donalds?
1. Very fast
2. Fast
3. Average
4. Slow
5. Very slow
3. The quality of the burgers served is -:
1. Very good
2. Good
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3. Average
4. Poor
5. Very poor
4. How far are you willing to go to have Mc Donalds burger?
1. Less than 1km
2. Less than 5 km
3. Less than 10 km
4. More than 10 km
5. How often do you think Mc Donalds diversifies its burger menu?
1. Very often
2. Often
3. Average no. of time
4. Rarely
5. Never
6. To what extent advertisement have an influenced your consumption (number of burgersbought at particular visit) of Mc-Donalds burger?
1. Highly influenced
2. Influenced
3. Rarely influenced
4. Never influenced
7. How reasonable do you think are the price of burgers at Mc-Donalds?
1. Very highly priced
2. Highly priced
3. Fairly priced
4. Low priced5. Very low priced
8. Are you satisfied are you with the current customer services of Mc-Donalds chains?
o Yes
o No
9. Is the ambience of current Mc-Donalds stores apt?
o Yes
o No
10.Are the opening hours of Mc Donalds apt (11 am. To 11 pm.)?
o Yes
o No
11.Do you feel that current seating capacity of Mc Donalds store sufficient?
o Yes
o No
12.Do you think Mc Donalds is hygienic enough?
o Yes
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o No
13.Each time you visit a Mc-Donalds chain what is the average number of burgers do you
purchase _______.
14. Rank these factor affecting the consumption pattern for Mc Donalds chain in ascending
order (most essential to least essential) :-
o ____ Timely delivery
o ____ Quality
o ____ Location
o ____ Customer service
o ____ Menu diversification
o ____ Promotion
o ____ Price
o ____ Ambience
o ____ Hygiene
o
____ Seating Capacityo ____ Store Opening Hours
15.According to you are there any factors other than listed above which contribute to
consumption pattern of Mc Donalds burger?
o No
o Yes; Please mention:
__________________________________________________________________
____________________________________________________________
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frequency Count Col %
Daily 3 2.9
weekly 21 20.3
monthly 54 52.4occasionally 22 21.3
never 2 1.9
Analysis
From the data it can be inferred that more than
half of the sample population consumed Mc
Donalds burger monthly and other half
consumes weekly or occasionally. There are very
few who consume daily or never.
Delivery time Count
Percentage
%
Very fast 28 27.45
Fast 59 57.84
Average 14 13.73
Slow 1 0.98
very slow 0 0.00
AnalysisFrom the data we can tell that people consider
delivery time of Mc Donalds quit Fast there is
almost non who consider its delivery time slow,as it is a fast food center they have to serve the
food in shortest possible time, Mc Donalds has
ever since tried to cut down its delivery time asmuch as possible.
AnalysisPeople consider quality of Mc Donalds Burgerquite good in a restraint one can not compromise
with the quality of food it serves.
Quality Count Percentage %
Very Good 29 28.43
Good 63 61.76
Average 10 9.80Poor 0 0
Very Poor 0 0
Daily
3%
weekly
20%
monthl
y
53%
occasio
nally
22%
never
2%
frequency of burger
consumption
Very
fast
27%
Fast
58%
Averag
e
14%
Slow
1%
very
slow
0%
Delivery time
Very
Good
28%
Good
62%
Average
10%
Poor
0% Very
Poor
0%
Quality
DATA REPRESENTATION & ANALYSIS
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AnalysisPeople like to travel least distance possible to get a burger which has urged Mc Donalds to open as many
as possible distance at minimum distance in between.
AnalysisThere is a mixed opinion as to how often Mc Donalds diversifies its menu 32% of the sample
population beliefs that they often diversify their menu at the same time 30% believe average noof time and 33% believe rarely. Mc Donalds to retain its customer tries to bring out new food
item and add in their menu.
Advertiesment
Effect
Count Percentage %
Highlt Influenced 12 11.76
Influenced 42 41.18
Rarely Influenced 27 26.47
Never Influenced 21 20.59
AnalysisPromotion plays a vital role in sales of any consumer product it influences the buying pattern of
a consumer in a great deal and Mc Donalds burger is no exception. 12% people believe they gethighly influenced and 42% agree they get influenced by the advertisements.
less than 1
km
22%
less than 5
km
40%
less than
10 km
27%
more than
10 km
11%
DistanceDistance Count Percentage %
less than 1 km 22 21.57
less than 5 km 41 40.20
less than 10 km 28 27.45
more than 10 km 11 10.78
MenuDiversifications
Count Percentage%
Very Often 3 2.94
Often 32 31.37
Average no ottimes
30 29.41
Rarely 33 32.35
Never 4 3.92
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Opening hours Count Perceentage
%
Yes 19 18.63
No 83 81.37
Analysis
81% people that opening hours of 11 a.m. to 11 p.m. is
not apt they could be extended which would eventually
help them in increasing their Sale.
Seating Capacity Count Percentage %
Yes 44 43.14
No 58 56.86
Analysis
As per the review about seating capacity the opinion is
quit divided 43% people believe that the seating
capacity there is sufficient seating capacity at Mc
Donalds outlets wherein 57% believed it not sufficient.
Hygiene Count Percentage %
Yes 11 10.78
No 91 89.22
Analysis
89% people that Mc Donalds is not hygienic enough ,
Mc Donalds should take measures to improve hygiene
of its restaurant.
Yes
19%
No
81%
Opening Hours
Yes
43%No
57%
Seating Capacity
Yes
11%
No
89%
Hygiene
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FACTOR ANALYSIS
To continue towards the main analysis, factor analysis has been performed to identify the main
factors influencing the consumption pattern ofMc Donalds burgers. The objective of thisanalysis is to club the factors which show a high degree of correlation into a single factor.
. The respondent ratings were subject to principal axis factoringwith varimax rotation to reduce potential multicollinearity among the items and to improve
reliability on the data. Varimax rotation (with Kaiser Normalization was converged in twentyfive iterations.). Eleven variables were reduced to five factors which explained
63.318 % of the overall variance indicating that the variance of original values was wellcapturedby these five factors.
RELIABILITY OF DATA & SAMPLE ADEQUACY(KMO AND BARTLETT`S
TEST)
Analysis was done with the help of the statistical software SPSS. This table shows two testswhich indicate the suitability of data for factor analysis.
KMO and Bartlett's Test
Kaiser-Meyer-Olkin Measure of SamplingAdequacy. .565
Bartlett's Test ofSphericity
Approx. Chi-Square 100.432
df 55
Sig. .000
Kaiser-Meyer-Olkin Measure of Sampling AdequacyThe Kaiser-Meyer-Olkin Measure of Sampling Adequacy is a statistic which indicates the
proportion of variance in your variables which is common variance, i.e. which might be caused
by underlying factors. [It is the Index for comparing the magnitudes of the observed co-relationcoefficient to the magnitude of the partial correlation coefficients]
High values (close to 1.0) generally indicate that a factor analysis may be useful withyour data.
If the value is less than .50, the results of the factor analysis probably won't be very
useful.
The KMO Measure of Sampling Adequacy for our case is above .5 (.565 actually ) which
indicates that our sample size of 103 is adequate .
Bartletts Test of Sphericity Bartlett's test of sphericity indicates whether your correlation matrix is an identity matrix,which would indicate that your variables are unrelated.
The significance level gives the result of the test. Very small values (less than .05)indicate that there are probably significant relationships among your variables.
A value higher than about .10 or so may indicate that your data are not suitable for factoranalysis.
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Ho: There is significant indifference in all the factors affecting the consumption of Mc Donaldsburgers.
H1: There is significant difference in all the factors affecting the consumption of Mc Donaldsburgers.
The observed significance level is 0.000 (Refer Table 1) which is less than .05, which issmall enough toreject the hypothesis.
It means there is a significant difference between the factors affecting the consumption of Mc
Donalds burgers.
It presents a good idea to proceed to factor
analysis for the data.
COMMUNALITY COMMON FACTOR VARIANCE
Principal component analysis works on the initial assumption that all variance is
common; therefore, before extraction all the communalities are 1. The communalities in the column labeledExtraction reflect the common variance in thedata structure.
So, for example we can say that 75.1% of variance associated with the first factor is
shared or common, variance.
Eigen Value: Indicates the amount of variance in the original variables accounted forby each component. The total initial variance in the new components will be 8.
Communalities
Initial Extraction
Delivery_Time 1.000 .486
Quality 1.000 .747
Distance 1.000 .655
Menu_Diversification 1.000 .606
Adv_Effect 1.000 .647
Price 1.000 .606
Satisfaction_level 1.000 .690
Ambience 1.000 .618
Opening_Hrs 1.000 .677
Seating_Capacity 1.000 .579
Hygine 1.000 .655
Extraction Method: Principal Component Analysis.
Another way to look at these communalities is in terms of the proportion of variance explained
by the underlying factors.
After extraction, some of the factors are discarded and some information is lost.
The amount of variance in each variable that can be explained by the retained factors isrepresented by the communalities after extraction.
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TOTAL VARIANCE EXPLAINED
.
This table gives Eigen values, variance explained, and cumulative variance explained for the
factor solution. It lists the Eigen values associated with each linear component (factor) beforeextraction, after extraction and after rotation. For the initial Eigen values solution, there are as
many components or factors as there are variables. The Extraction Sums of Squared Loadings
group gives information regarding the extracted factors or components. We can see from theabove table that 5 components have been extracted from the initial 11. We have also rotated the
factors to see the difference more clearly. The variance accounted for by rotated factors or
components may be different from those reported for the extraction but the Cumulative % for the
set of factors or components is the same. The results of the Extraction Sums of Squared Loadingsobtained are explained below.
SCREE PLOT ANALYSIS
The scree plot is an indication of the number of factors that we finally get from the initial
variables considered. The inflection on the curve gives the number of factors. This curve is
difficult to interpret because it usually tails off after 5 factors. For this reason, the indications ofthe scree plot are not very reliable. But if we look carefully; there is a break at the 5 th component
as well indicating 5 factors.
We can interpret that 11 variables are now reduced to 5 components contributing 63.318% of thetotal variance. With the help of, Scree plot, we can just visualize that 5 factors are taken withEigen value greater than 1.0000.
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COMPONENT MATRIXThis table reports the factor loadings for each variable on the unrotated components or factors.
Each number represents the correlation between the item and the unrotated factor. This
correlation helps to formulate an interpretation of the factors or components. This is done bylooking for a common thread among the variables that have large loadings for a particular factor
or component.
We can see from the table below that in component 1, many variables are highly loaded. Similar
is the case for other components. This makes interpretation difficult. Thus we conducted a
rotation to obtain a clearer picture of the factor loadings.Component Matrix(a)
Component
1 2 3 4 5
Delivery_Time -.127 .475 .459 .053 .173
Quality -.293 .429 .055 .687 .045
Distance -.350 -.347 .026 -.023 .641
Menu_Diversification .670 -.224 .309 .045 .098
Adv_Effect -.593 -.261 .447 .072 -.146
Price .560 .245 .176 .449 -.028
Satisfaction_level .027 .469 .033 -.463 .503Ambience .647 -.371 -.232 .075 .036
Opening_Hrs .091 .370 -.662 .176 .250
Seating_Capacity -.542 -.135 -.470 .098 -.189
Hygine -.086 -.500 .021 .431 .459
Extraction Method: Principal Component Analysis.a 5 components extracted.
1110987654321
Component Number
2.1
1.8
1.5
1.2
0.9
0.6
0.3
Eigenvalue
Scree Plot
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ROTATED COMPONENT MATRIXAfter applying rotation to the data, the loadings were observed. Rotation Method was Varimax
with Kaiser Normalization. After the rotation, the factor loadings were clearly observed. The
variables under each factor have been shown.
Each variable has been categorized into different factors depending upon the factor loadings.
We see the highest value for the variable irrespective of whether it is positive or negative and putthat highest value into the component under which it falls.
Thus , our 11 variables get clubbed into five components or factors.
Rotated Component Matrix(a)
Component
1 2 3 4 5
Delivery_Time .103 -.212 .425 .495 -.072
Quality-.127 .072 .849 -.035 .057
Distance-.174 -.080 -.099 .199 .754
Menu_Diversification.753 -.030 -.174 -.074 .052
Adv_Effect-.294 -.706 .153 -.073 .182
Price.618 .194 .386 -.107 -.162
Satisfaction_level
-.003 .226 -.105 .792 .015
Ambience.493 .337 -.340 -.370 .093
Opening_Hrs-.183 .781 .175 .050 .023
Seating_Capacity-.680 .085 .030 -.320 .075
Hygine.114 -.024 .110 -.252 .752
Extraction Method: Principal Component Analysis.Rotation Method: Varimax with Kaiser Normalization.Rotation converged in 25iterations.
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RESULT OF FACTOR ANALYSIS :
S. N. Factor AttributesVarience
Explained
1 Price
Menu Diversification
18.803
Price
Ambience
Seating Capacity
2 Advertisement
Advertising
13.388Opening Hours
3 Location
Outlet location
11.413
Hygiene
4. Quality Quality 10.276
5. Customer ServiceSatisfaction level
Delivery Time9.438
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REGRESSION ANALYSIS
After running the factor analysis on the data we were able to get the value of reduced no. of
factors(five).These factor were thenused to run regression analysis. Following were the findingsof the data:
Model 1:
Dependent Variable = Frequency (Annual) * Average Number of burgers consumed on eachvisit.
Independent Variables:Factor1 (Price): Menu Diversification, Price, Ambience, Seating CapacityFactor2 (Advertizing): Advertizing Effect, Opening Hours
Factor3 (Location): Distance, LocationFactor4 (Quality): Quality
Factor5 (Customer Satisfaction): Customer Satisfaction.
Model Summary
Mode
l R R Square
Adjusted
R Square
Std. Errorof the
Estimate
Change Statistics
R Square
Change
F
Change df1 df2
Sig. F
Change
1 .272(a) .074 .026 146.061 .074 1.538 5 96 .185
This clearly shows that the model is insignificant as the value of Sig. F Change is 0.185 which is
above the acceptable value of 0.1.
On closer observation of the data we found following output:
Coefficients
Model Unstandardized CoefficientsStandardizedCoefficients t Sig.
B
Std.
Error Beta
(Constant
) 112.176 14.462 7.757 .000Price -2.399 14.534 -.016 -.165 .869
Adv 32.540 14.534 .220 2.239 .027
Location -21.584 14.534 -.146 -1.485 .141Quality -1.948 14.534 -.013 -.134 .894
cust_serv
ice-9.504 14.534 -.064 -.654 .515
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This leads us to the conclusion that only factor that was having a significant impact on
consumption pattern of Mc Donalds is Advertizing. Since Advertizing comprises of twovariables:
Opening Hours
Advertizing Effect.
So only these variables are responsible for affecting the consumption pattern at Mc Donalds.
Now we ran a Regression analysis using the dependent variable and the two independent
variables: Opening Hours & Advertizing Effect.
Model 2:
Dependent Variable = Frequency (Annually) * Average Number of burgers consumed on each
visit.
Independent Variables:Opening Hours
Advertizing Effect
The output of these variables is discussed hereunder:
Model Summary
Mode
l R R Square
Adjusted
R Square
Std. Errorof the
Estimate
Change Statistics
R Square
Change
F
Change df1 df2
Sig. F
Change
1 .241(a) .058 .039 145.086 .058 3.048 2 99 .052
Now this model is clearly significant as its significance is below the acceptable limit of 0.1.
Coefficients
Model Unstandardized Coefficients
Standardized
Coefficients t Sig.
BStd.
Error Beta
(Constant
)214.206 58.338 3.672 .000
Adv_Effect
-38.042 15.695 -.244 -2.424 .017
Opening_
Hrs-5.767 38.108 -.015 -.151 .880
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So we can find that the Regression Equation is:
Y = -38.042X1 -5.767X2 +214.206
Where:Y Consumption Pattern (number of units consumed annually)
X1 Effect of Advertizing
X2 Opening Hours
In this model the significant factor is Effect of Advertizing as value of significance is 0.017which is less than 0.1 .
While that ofOpening Hours is 0.88 which is well above 0.1.
So clearly the only factor that can improve the consumption of burgers at Mc Donalds is
Advertizing.
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LIMITATIONS:
Extraneous factors i.e. factors which have not been taken into account may also affect the
results.
The results obtained for a specific city Hyderabad which is a metropolitan city might be
difficult to generalize for the whole of country.
As most of the data has been collected from the students of IBS Hyderabad some biases
may have unintensionally cropped up.
Since the significance level of the model is high we cant identify many factors . Only one factor
advertising was found to have a considerable impact.
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RECOMMENDATIONS & CONCLUSION:
Though we included 11 variables influencing the consumption pattern of the consumers namely
delivery time, quality, distance, menu diversification, advertisement effect, price, customerservice, ambience, opening hours, seating capacity and hygiene. After factor analysis we got five
main factors which were put through regression analysis . We found that out of all the factorsadvertising was the only significant factor . We further found that amongst two variables under
the factor advertisement which are advertisement effect and opening hours, advertisement
effect was more significant. So we could clearly infer from the analysis that advertisementeffect is the only main factor affecting the consumption pattern of the consumers.
So ,McDonalds should concentrate on the advertisements and marketing of its products. The
promotion factor has to be looked amongst the all factors of marketing strategies. If McDonalds
wants to increase their customer base then it should spend more on its advertisement activities. It
should come up with more number of advertisements so that frequent come-across ofadvertisement leaves a impression in mind of consumers and they turn up only to McDonalds.
Advertisement is going to help McDonalds in clearly conveying the consumers about their newproducts and diversification in menus.
Advertisement should be attractive enough and McDonalds should concentrate on their
competency while advertising, they should convey about their best quality in affordable prices.They can tap every form of media for advertisement, they are already into basic television,
newspaper, magazines, billboards forms of media . They can move into new mediums like
internet and mobile advertisements.
Further suggestions for Mc Donalds to improve on their advertisement are:
They should go for cross- promotions. Which may be with sports related goods or
products, so that youth could start associating themselves with McDonalds. McDonalds can have celebrity spokesperson to increase their publicity. They can have
famous film and cricket stars as their spokesperson. As they have done in abroad , theyhad basketball player Michael Jordan and superstar Justin Timberlake as their
spokesperson.
They can have diversification in burgers in accordance to different regions and states andconvey them through advertisements to consumers.
Their competitors KFC have been giving them competition in non-vegetarian food items,so McDonalds should improve their non-vegetarian products by launching some new
product which can create hype amongst consumers and hence improve the sales in non-
vegetarian items as well.
They can come up with more attractive tag lines so that consumers can relate them wellwith products. They have been doing the same since long.One of their oldest is :
McDonalds is Your Kind of Place which they came up with in year 1967. Then their
latest one is i'm lovin' it in the year 2003.
Also as innovation is the key to success in todays competitive atmosphere McDonaldswill have to innovate its offerings , procedures and services to fight the competitors.
http://en.wikipedia.org/wiki/Michael_Jordanhttp://en.wikipedia.org/wiki/Justin_Timberlakehttp://en.wikipedia.org/wiki/Justin_Timberlakehttp://en.wikipedia.org/wiki/Michael_Jordan -
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