MCDONALD’S IN INDIAInternational Marketing

GROUP 6

José Morales

SITUATION PRESENTED IN THE CASE

INDIAN FACTS - DIVERSITY

INDIAN FACTS – BIG OPPORTUNITIES

India added 181 million people between 1990 and 2001. India is the only country where the population will continue

growing for the next fifty years. Most high-income Indians prefer to live in the urban areas. Over the 70% of wealthy urban Indian consumers live in

the most populated and cosmopolitan cities in India India is part of the BRIC (annual average growth of more

than 5%, and by 2032 its GDP will be bigger than Japan’s). High income residents are seeking variety in their choice of

foods and are willing to spend more in international cuisine including fast foods.

INDIAN FACTS - INDUSTRIAL REFORM

Abolition of industrial licensing. Removal of control over capacity

operation. Participation of foreign firms in new

projects Privatization Price liberalization

INDIAN FACTS – CAPITAL MARKET REFORM

Liberalization of foreign invests Access to global capital markets Rupee convertibility on current account

INDIAN FACTS – OTHER REFORMS

Tax Reform Reduction of Income tax rate. Abolition of wealth tax.

Labor Market Reform Exit Policy

EXIM Policy Reform Reduction of tariff structure

PROBLEM(S) PRESENTED IN THE CASE

PROBLEMS

Indian diversity. Religion/Cultural constraints. Environmental and animal activists opposed the

entry of fast food (like KFC and McDonald’s). The Idea than this type of junk food destroy the

ecological balance and cause several behavioral disorders because of the fatty and unhealthy foods.

Perception that McDonald’s was a food for rich people.

Poor transportation and storage infrastructure. Lower-quality agricultural products.

INDIAN FOOD PREFERENCES

POSSIBLE ALTERNATIVE SOLUTIONS

ENTRY STRATEGY McDonald’s spent about six years in planning, extensively

researching Indian consumer tastes, product development and supply change management before opening its first outlet in 1996.

Emphasis on Local Management (Glocalization), “Think global, act local”

McDonald’s, decided to set up 2 joint ventures on 50:50 basis with 2 local entrepreneurs:In Mumbai : Amit Jatia (background in real state development) owns Hardcastle Restaurants Private Limited (West and South)In Delhi: Vikram Bakshi (vegetarian with background in chemical and textile business)owns Connaught Plaza Restaurant (north and east)

Both (Amit and Vikram) were helpful to access bureaucracy and for building relationship with government.

LOCATION

McDonald’s opened its first outlets in Mumbai and Delhi due to: These 2 cities have metropolitan culture

and wide Western exposure. There live the most of the Indian’s rich and

upper middle class inhabitants who were aware of McDonald’s food.

There were the 2 distribution centers of McDonalds.

Due to logistics play a critical role in McDonald’s location strategy, the first outlets were opened only within a 500Km radius of its main distribution centers.

McDonald’s also made some partnerships in order to opened outlets besides the petroleum stations, railway stations and drive-through in Delhi and along national highways.

“POLITICALLY CORRECT” STRATEGY

How to avoid hurting religious sensibilities of Indian consumers?(80% Indians revere cows as sacred and 150 million of Indian Muslims do not eat pork and beef.)

AdaptationMcDonald’s adapted itself to the Indian market introducing a mutton-based “Maharaja Mac” in India as opposed to its flagship beef-based Big Mac.

GREEN SENSITIVITYA vocal group of environmentalists, raised campaigns against junk food, saying that McDonald’s and KFC destroy ecological balance and cause behavioral disorders because of their fatty and unhealthy foods, which have excessive levels of monosodium glutamate. Also they said this food is anti poor.

To face up this campaigns McDonald’s: Instituted a special fund to support Green movements. Has sponsored various community-related activities, such as

“keep your city clean” to promote environmental consciousness.

Adopted the slogan “We love Green”. Has sponsored and promoted several sports activities in order

to attempt a healthy lifestyle like the “Olympic Day Run”. Is focusing on fine tuning its fast food image adding

health food options to its product.

CORPORATE CITIZENSHIP

McDonald’s has: Understood than “giving back” to society gain benefits

and reputation. (like community projects for the children, for example: McDonald’s Spotlight a interschool performing art competition).

Sponsored children programs as the Millennium Pune Festival (search talents for children between 8 to 15 years) in collaboration with UNESCO and Disney World Resort.

Sponsored the Pulse Polio program that aims to make India polio-free country until 2005.

Participated in celebrating days like World Children’s Day and in their own initiative known as the “Blue Dot” that supports educational programs for the girl child.

PRICING – UP SELLING

McDonald’s strategy has been to increase sales volume of its products by making it products available at an affordable price. They started cutting off some prices and offering value meals in a range of prices: Rs29, Rs39, Rs49, Rs59, Rs79 and Rs89.

PRICING – CROSS SELLING

McDonald’s offers different Add-Ons and Bundles:

EMPLOYMENT OPPORTUNITY

McDonald’s typically employs local people:• Each restaurant in India

employs more than 100 people:

Cashiers Cooks Managers Attendants

• Also every expansion brings additional employment opportunities to India’s agricultural work force.

SUPPLY CHANGE MANAGEMENT

Objectives:1) To operationalize its globally

practiced QSCV (quality, service, cleanliness and value).

2) To enjoy flexibility in pricing.3) To launch a new product when

necessary.

FAMILY AND CHILD CENTRIC STRATEGY

To attract families, McDonald’s Offer:• A clean, comfortable and

stress free environment• For young busy working

parents: A safe place for Children to play while parents can eat and relax.

• For children: Birthday celebrations, cakes, candle, toys.

• A meeting place for teenagers

• Lounges for Senior Citizens

PROMOTIONS TO ENGAGE CUSTOMERS

“Lucky Itch”, instant scratch-win prizes

"Music Meal“, created to attract young adults.

RECOMMENDED SOLUTION

RECOMMENDATIONS

Expand to other Cities to increment profits: Development of new distribution centers. Additional Adaptation Cost/New product development (due to different regional

preferences) Reinforce the family engagement Due to the “American Dream” is important in India, maybe they can open

some outlets near to the most important universities. Use Social Media Marketing to be in touch with Loyal Customers/Fans. Create contests to create to get consumers feedback, something similar

than Peruvian Fast Food Chain called Bembos, which created a contest called “Create your Bembos (Burger)”. So, each consumer is able to submit his own recipe and he can won a Prize if his recipe is the one selected by the jury.

Due to there is a growing fitness culture in the world, maybe, some vegetarian products could be adapted to other markets.

Due to there are some places as New York, California and Florida with a high population of Indian immigrants , maybe, some of the product developed for India could be offered there.

QUESTIONS