CROSS CULTURAL MARKETING IN THE FAST FOOD INDUSTRY

SUBMITTED BY: RICHA BHALLA

(A1802010121)

FACULTY GUIDE: MR. ARCHISMAN SEN

DISSERTATION REPORT SUBMITTED TOWARDS THE PARTIAL FULFILLMENT OF POST GRADUATE DEGREE IN INTERNATIONAL BUSINESS AT AMITY INTERNATIONAL BUSINESS SCHOOL, NOIDA AMITY UNIVERSITY UTTAR PRADESH APRIL, 2012

CERTIFICATE OF ORIGIN

This is to certify that RICHA BHALLA, a student of Post Graduate Degree in MBA-IB, Amity International Business School, Noida has worked on Cross Cultural Marketing in the Fast Food Industry. This dissertation report has the requisite standard for the partial fulfillment the Post Graduate Degree in International Business. To the best of our knowledge no part of this report has been reproduced from any other report and the contents are based on original research.

Mr. Archisman Sen AIBS Faculty

Richa Bhalla MBA(IB)-Section F

ACKNOWLEDGEMENT

I express my sincere gratitude to my guide, Mr. Archisman Sen for his able guidance, continuous support and cooperation throughout my project, without which the present work would not have been possible. He has given invaluable suggestions so as to chisel and chasten the angularities in my project I would also extend my gratitude to my mentors of Amity International Business School for their constant support and priming me through their valuable guidance during my academic course. I would also like to thank the faculty members of Amity International Business School for their support whenever needed. Finally, I also extend my heartfelt thanks to the institute for allowing me to conduct this research.

Richa Bhalla

TABLE OF CONTENTS

S.NO. 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

TOPIC Executive Summary Literature Review Objectives of the Study Material & Methods The Case of McDonalds How McDonalds Evolved in India The 7 Ps of McDonalds Pestle Analysis of Mc Donalds SWOT Analysis of McDonalds Famous McDonalds Campaigns in India Questionnaire Analysis of the Survey

PAGE NO.

EXECUTIVE SUMMARY

This project is aimed towards studying and analyzing the cross cultural marketing strategies adopted by marketers in the fast food industry in different parts of the world.

In 2006, the global fast food market grew by 4.8% and reached a value of 102.4 billion and a volume of 80.3 billion transactions. In India alone the fast food industry is growing by 41% a year. McDonald's is located in 126 countries and on 6 continents and operates over 31,000 restaurants worldwide. On January 31, 1990 McDonalds opened a restaurant in Moscow, and broke opening day records for customers served. The Moscow restaurant is the busiest in the world. The largest McDonalds in the world is located in Orlando, Florida, USA. There are numerous other fast food restaurants located all over the world. Burger King has more than 11,100 restaurants in more than 65 countries. KFC is located in 25 countries. Subway is one of the fastest growing franchises in the world with approximately 39,129 restaurants in 90 countries as of May 2009, the first non-US location opening in December 1984 in Bahrain. Pizza Hut is located in 97 countries, with 100 locations in China. Taco Bell has 278 restaurants located in 14 countries besides the United States.

The purpose of this study is study how the cultural differences among consumers play an important role in the development of effective marketing and branding strategies. Culture is a significant factor that influences buying behavior in consumer markets. Cross cultural studies provides empirical evidence of convergence and divergence in consumer behavior. In todays world, culture plays an important and significant role in the ethical attitudes of marketing managers; different cultural backgrounds may influence individuals' ethical reasoning.

This project focuses on the Indian Fast Food Industry primarily and analyses how the tastes and preferences of consumers has been converging due to globalisation. We have taken the case of the global fast food giant McDonalds and studied the different marketing strategies they adopted to cater to the Indian customer. Marketing strategies in terms of change in food menu, hygiene, marketing their products and services, customer satisfaction, etc. It was successful in their approach of Think Global, Act Local. In this paper we studied the consumer perception about the brand McDonalds on various aspects, for instance, the marketing strategies, the tastes and preferences, how much consumers trust this brand. Questionnaires were used as research tool to identify expectations of customers. People from all age groups and cultural backgrounds were a part of the survey.

Some of the Key Findings were, McDonalds was an all time favourite for maximum people that were surveyed. Factors such as Price, Quality, Cleanliness, Service, Advertising & Promotions were taken into consideration and people were asked to rate these factors. Now since, a majority of Indian customers are vegetarian, McDonalds had to redesign their menu to cater to the mindsets of the purely vegetarian customers and they were successful in doing this. The service provided by McDonalds was also customized to suit the Indian customer. Hence, McDonalds was successful in positioning itself as a promoter of Indian family values and culture.

LITERATURE REVIEW

Fast Food Industry Overview A fast food restaurant, also known as a Quick Service Restaurant or QSR within the industry itself, is a specific type of restaurant characterized both by its fast food cuisine and by minimal table service. Food served in fast food restaurants typically caters to a "meat-sweet diet" and is offered from a limited menu; is cooked in bulk in advance and kept hot; is finished and packaged to order; and is usually available ready to take away, though seating may be provided. Fast food restaurants are usually part of a restaurant chain or franchise operation, which provisions standardized ingredients and/or partially prepared foods and supplies to each restaurant through controlled supply channels. The term "fast food" was recognized in a dictionary by MerriamWebsterin 1951. Arguably the first fast food restaurants originated in the United States with A&W in 1916 and White Castle in 1921. Today, American-founded fast food chains such as McDonald's, KFC, Dominos Pizza, Subway, etc. are multinational corporations with outlets across the globe. Variations on the fast food restaurant concept include fast casual restaurants and catering trucks. Fast casual restaurants have higher sit-in ratios, and customers can sit and have their orders brought to them. Catering trucks often park just outside worksites and are popular with factory workers. McDonald's, a noted fast food supplier, opened its first franchised restaurant in the US in 1955 (1974 in the UK). It has become a phenomenally successful enterprise in terms of financial growth, brand-name recognition, and worldwide expansion. Ray Kroc, who bought the franchising license from the McDonald brothers, pioneered many concepts which emphasized standardization. He introduced uniform products, identical in all respects at each outlet, to increase sales. At the same time, Kroc also insisted on cutting food costs as much as possible, eventually using the McDonald's Corporation's size to force suppliers to conform to this ethos. Other prominent international fast food companies include Burger King, the number two hamburger chain in the world, known for promoting its customized menu offerings (Have it Your Way). Multinational corporations typically modify their menus to cater to local tastes and most overseas outlets are owned by native franchisees. McDonald's in India, for example, uses lamb rather than beef in its burgers because Hinduism traditionally forbids eating beef. In Israel some McDonald's restaurants are kosher and respect the Jewish Shabbat; there is also

a kosher McDonald's in Argentina. In Egypt, Morocco, Saudi Arabia, Malaysia, and Singapore, all menu items are halal.

Indian Fast Food Industry The Indian market has been growing and evolving at a very fast pace. Constantly experimenting with the tastes of consumers by mixing western and 'desi' menus, fast food industry has seen a rapid growth in last few years, thanks to high disposable incomes and greater exposure to multiple cuisines. A lot of Indians are travelling abroad experiencing changes in lifestyle and are keen on experimenting with food. When western fast-food chains such as McDonalds, Dominos Pizza and KFC initially opened their doors in India in the mid-1990s, they struggled to compete with spicy street food and the elaborate home-cooked meals Indian women regularly prepared for their families. But more hectic schedules, rising incomes and demographic realities about 60 per cent of Indians are under 30 years old have created new appetites among Indian consumers. Now, sales at western fast-food chains, and local rivals, are taking off, growing at an average of 28 per cent a year, as dining out moves from being a special occasion, to a routine part of Indians busier schedules. Indians spent an estimated $1.3bn on dining out in chain restaurants in 2009, of which about 400m was accounted for by fast food, according to research group Euromonitor. It is not just Indias biggest urban agglomerations, but smaller, second-tier cities where such restaurants are finding growing favour. The consumer is beginning to recognise that quickservice restaurants mean quality and value for money. McDonald's made its India debut in 1996 with one outlet at Basant LoK in Delhi and at present, it has 211 restaurants of which 105 are in North & East India and 106 in West & South India. Apart from metros, McDonald's is fast reaching rural areas as well, as there are 14 outlets in Haryana, 11 in Punjab and 28 in Uttar Pradesh. With ever increasing pool of working population, nuclear families and a progressive middle class, the demand for fast food already on the rise will see a tremendous growth in future also. Dominos Pizza is growing at a blistering pace, with 364 outlets in 55 cities, all run by Dominos Indian franchisee, Jubilant Foodworks, in New Delhi. Jubilant, which raised $71m in an initial public offering last year, increased sales by 61 per cent from April to December, compared to the previous year, buoyed by 54 new stores opened in the period. Last month, US-based Dunkin Donuts, owned by the private equity firms Carlyle Group, Thomas H. Lee and Bain, announced a partnership with Jubilant to bring its deep-fried products to India.

Subway is also gaining popularity in India, with 199 outlets, and Starbucks is gearing up for an Indian market launch this year. Hardcastle Restaurants, one of two Indian partners to McDonalds, is buying out the US hamburger chains stake in the 50-50 joint venture that operates the chain in southern and western India, paving the way for accelerated expansion. Hardcastle aims to open 30 McDonalds outlets this year. Western fast-food brands have gone through a tough learning process to cater to Indian tastes. Traditional menus were spiced up, vegetarian options enhanced, and low price, entry-level items developed to make the restaurants more accessible in a highly price-sensitive market. Such efforts have won the loyalties of consumers. While fast-food chains have finally adapted their recipes to local tastes, they face other trials. Finding suitable real estate in crowded Indian cities is difficult. Real estate is the single biggest challenge. Indian rivals also pose stiff competition. Caf Coffee Day, a coffee chain based in Bangalore, has around 1,000 outlets, and a range of food offerings. Near McDonalds at Phoenix Mills Mumbai, cheery food stalls like Dosa Hut, On a Roll, Thai Chi, do brisk business serving up Indian and Asian dishes which for many Indians are still more appealing than spiced up versions of Western fare.

Cross-Cultural Marketing Culture is defined as the sum of learned beliefs, values and customs that serve to direct consumer behaviour in a particular country market. Culture is made up of beliefs, values and customs that are often embedded in a society and have noticeable differences among different countries. Cultural values are important aspects of the self of consumers. As businesses have become more and more global, the cultural differences among consumers play an important role in the development of effective marketing and branding strategies. When managers want to understand consumers behavior in different countries it is necessary that they compare the cultures to discover how these national cultures are different from, or similar to, each other before they carry out their marketing strategies. This is because cross-cultural phenomenon rises as a result of the different cultural components existing among consumers in different countries. Culture is a significant factor that influences buying behavior in consumer markets. Cultural differences lead to different consumer responses across countries. Empirical evidence has shown that, no matter how a company sells products or offers its services in another country; the marketing strategy will be influenced by the cultural environment of the specific country and region. Thus, todays body of knowledge suggests that marketing managers should at the very least, be cautious in ensuring that they understand the cultural differences when deciding on the

kind of products to put out in the market, as well as when developing marketing activities and branding strategies. The cross cultural variations tend to implicitly or explicitly affect the branding strategies that companies adopt. Due to the fact that brand positioning elements interact with various variables of culture, firms need an adaptation framework in reference to the culture in which they operate. This interaction demands an adaptive response from the brand. Consumers worldwide are not the same, and the difference in consumer behavior between countries has intensified over the years. Because all aspects of consumer behavior are culturebound, and not subject merely to environmental factors but integrated in all of human behavior, there is an increased need to identify and understand this integration and its impact on marketing management. Culture and behavior of consumers explains the myths that surround marketing in different countries. Cross cultural studies provides empirical evidence of convergence and divergence in consumer behavior. The concept of culture also covers various psychological and sociological aspects of human behavior used for explaining consumer behavior. In todays world, culture plays an important and significant role in the ethical attitudes of marketing managers; different cultural backgrounds may influence individuals' ethical reasoning. Furthermore, each culture perceives the world from a very different point of view. These cultural differences make is necessary, now more than ever, that business people consider these ethical attitudes and cultural differences in this new era of globalization.

OBJECTIVES OF THE STUDY

To study the different marketing strategies adopted by fast food giants in different cultural environments. To understand how the specific national culture affects the strategies which are implemented by some multinational companies in a certain industry. Understand the concept of Standardization vs. Localization in the global fast food industry. To analyze the differences in tastes and preferences pattern of consumers globally. Due to globalization of markets and businesses, and a large increase in the ethical conflicts faced by marketing managers around the world, it is imperative to study what impact culture has on the ethics Studying the marketing strategies adopted by the major fast food chains in India.

MATERIAL AND METHODS

I.

Study Design It will be based on the Historical collection of data & analysis of the reports with a Sampling design technique taking into consideration the performance & objectives associated with the Top fast food chains in India to test the Hypothesis on the same.

II.

Setting The Research work will be conducted within the premises of the Campus; with a sufficient amount of data gathering based on company reports, research reports and information gathered from the web sites

III.

Duration of the Study - The duration of the study will be for 8 weeks right from data gathering to analysis & Interpretation.

IV.

Sample Size - The sample size for this study will be the top Fast Food chains in India: McDonalds. A total sample of 200 would be taken for the research

V.

The sampling employed will be stratified whereby observations would be classified separately in different buckets depending on the Company being analyzed at the given point of time.

VI.

Data collection procedure It will be exploratory research based on the variables assigned by way of Secondary research sources.

VII.

The sampling technique to be used is non probabilistic sampling A well structured questionnaire would be prepared taking into account all aspects ranging from gender, location, salary , comparative ranking with respect to different players in the market.

The Case of McDonalds

McDonald's Corporation is the world's largest chain of hamburger fast food restaurants, serving around 68 million customers daily in 119 countries. The company, headquartered in the United States began in 1940 as a barbecue restaurant operated by the eponymous Richard and Maurice McDonald. A McDonald's restaurant is operated by either a franchisee, an affiliate, or the corporation itself. The corporation's revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants. McDonald's revenues grew 27 percent over the three years ending in 2007 to $22.8 billion, and 9 percent growth in operating income to $3.9 billion. The business began in 1940, with a restaurant opened by brothers Richard and Maurice McDonald in San Bernardino, California.

Marketing Strategies 1. Speedee Service System - Their introduction of the "Speedee Service System" in 1948 furthered the principles of the modern fast-food restaurant that the White Castle hamburger chain had already put into practice more than two decades earlier. The original mascot of McDonald's was a man with a chef's hat on top of a hamburger shaped head whose name was "Speedee." Speedee was eventually replaced with Ronald McDonald by 1967 when the company first filed a U.S. trademark on a clown shaped man having puffed out costume legs.

2. Drive-In Restaurant Services - McDonald's first filed for a U.S. trademark on the name "McDonald's" on May 4, 1961, with the description "Drive-In Restaurant Services," which continues to be renewed through the end of December 2009. Drive-Thru, Auto-Mac, Pay and Drive, or "McDrive" as it is known in many countries, often has separate stations for placing, paying for, and picking up orders, though the latter two steps are frequently combined. In some countries, "McDrive" locations near highways offer no counter service or seating. In contrast, locations in high-density city neighborhoods often omit drive-through service. There are also a few locations, located mostly in downtown districts that offer Walk-Thru service in place of Drive-Thru.

How McDonalds Evolved in India McDonald's India launched in 1996 when Mr. Amit Jatia joined the McDonalds family March 1995 as MD, Hardcastle Restaurants Pvt. Ltd. Today, he is spearheading McDonalds in West & South India. McDonald's India was set up as a 50:50 joint-venture between McDonald's at a global level and regional Indian partners such as Hardcastle Restaurants Private Limited in western India, and Connaught Plaza Restaurants Private Limited in northern India. The first Indian McDonald's outlet opened in Mumbai in 1996. Since then, outlets have begun trading in metropolitan and Tier II towns across the country. Now with over 15 years of leadership in food service retailing India, McDonalds now has a network of over 235 restaurants across the country. The starting point for McDonald's India was to change Indian consumers' perceptions, which associated it with being 'foreign', 'American', 'not knowing what to expect' and 'discomfort with the new or different'. McDonald's wanted to position itself as 'Indian' and a promoter of 'family values and culture', as well as being 'comfortable and easy'. Simultaneously, the brand wanted to communicate that, operationally, it was committed to maintaining a quality service, cleanliness and offering value for money. Challenges in Entering Indian Markets Regiocentricism: Re-engineering the menu: McDonalds has continually adapted to the customers tastes, value systems, lifestyle, language and perception. Globally McDonalds was known for its hamburgers, beef and pork burgers. Most Indians are barred by religion not to consume beef or pork. To survive, the company had to be responsive to the Indian sensitivities. So McDonalds came up with chicken, lamb and fish burgers to suite the Indian palate. The vegetarian customer: India has a huge population of vegetarians. To cater to this customer segment, the company came up with a completely new line of vegetarian items like McVeggie burger and McAlooTikki. The separation of vegetarian and non-vegetarian sections is maintained throughout the various stages.

Key for Truly Indian Products a) Local Sourcing: McDonald's India is committed to sourcing almost all of its products from within the country. Prior to its launch, the company invested six years to develop its unique cold chain, which has brought about 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. McDonald's India today has developed local

Indian businesses, which can supply the highest quality products required for its Indian operations. b) Respect for Indian Customers and Culture: McDonald's worldwide is well known for the high degree of respect to the local culture of each market it operates in. In line with this respect for local culture, India is the first country in the world where McDonald's does not offer any beef or pork items. McDonald's has developed a menu especially for India with vegetarian selections to suit the Indian palate and has also re-engineered its operations to address the special requirements of vegetarians. Special care is taken to ensure that all 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 soft serves are also 100% vegetarian and McDonald's uses only vegetable oil as a cooking medium in India. Segmentation, Targeting and Positioning McDonalds uses demographic segmentation strategy with age as the parameter. The main target segments are children, youth and the young urban family.
% of Kids who influence what FMCG brand their family buys
71% 59% 52%

Biscuits

Burgers & Pizzas

Fruit Juices

As shown above, kids reign supreme in FMCG purchase related to food products. So to attract children McDonalds has Happy Meal with which toys ranging from hot wheels to various Walt Disney characters are given (the latest in this range is the toys of the movie Madagascar). For this, they have a tie-up with Walt Disney. At several outlets, it also provides special facilities like Play Place where children can play arcade games, air hockey, etc. This strategy is aimed at making McDonalds a fun place to eat. This also helps McDonalds to attract the young urban families wanting to spend some quality time while their children have fun at the outlet.

To target the teenagers, McDonalds has priced several productsaggressively, keeping in mind the price sensitivity of this target customer. In addition, facilities like Wi-Fi are also provided to attract students to the outlets like the one at Vile Parle in Mumbai. McDonalds mein hai kuch baat projects McDonalds as a place for the whole family toenjoy. When McDonalds entered in India it was mainly perceived as targeting the urban upper class people. Today it positions itself as an affordable place to eat withoutcompromising on the quality of food, service and hygiene. The outlet ambience and mild background music highlight the comfort that McDonalds promises in slogans like You deserve a break today & Feed your inner child This commitment of quality of food and service in a clean, hygienic and relaxing atmosphere has ensured that McDonalds maintains a positive relationship with the customers

Customer Perception and Customer Expectation Customer perception is a key factor affecting a products success. Many potentiallyrevolutionary products have failed simply because of their inability to build a healthy perception about themselves in the customers minds. McDonalds being an internationally renowned brand brings with it certain expectations for the customers. Target Segment A Family with children Urban customer on the move Teenager What is McDonalds for me? A treat to children, a fun place to be for the children Great taste, quick service without affecting the work schedule. Hangout with friends, but keep it affordable

Customers expect it to be an ambient, hygienic and a little sophisticated brand that respects their values. The customers expect the brand to enhance their self-image. Customer responses obtained at the Vile Parle, Mumbai outlet confirmed the fact that they connect strongly with the brand. However, fulfilling some of the customer expectations like a broader product variety provide McDonalds a great scope for improvement.

THE 7 P's Of McDonalds PRODUCT: How should the company design, manufacture the product so that itenhances the customer experience?

Product is the physical product or service offered to the consumer. Product includes certain aspects such as packaging, guarantee, looks etc. This includes both the tangible and the nontangible aspects of the product and service.

McDonalds product portfolio primarily comprises of vegetarian and non-vegetarian burgers. Products like McAloo Tikki burger, Veg Pizza McPuff and Chicken McGrill burger were formulated and introduced using spices favored by Indians. The menu development team has been responsible for special sauces which use local spices do not contain beef and pork. Other products do not contain eggs and are 100% vegetarian. The Indianized products have been so well received that we even export McAloo Tikki burger and Veg. Pizza McPuff to the Middle East. McDonalds brings with it a globally reputed brand, world class food quality and excellent customer specific product features.

PRICE: What should be the Pricing Strategy? Pricing includes the list price, the discount functions available, the financing optionsavailable etc. It should also take into the consideration the probable reaction from the competitor to the pricing strategy. This is the most important part of the marketing mix as this is the only part which generates revenue. All the other three are expenses incurred. The price must take into consideration the appropriate demand-supply equation.

McDonalds came up with a very catchy punch line Aap ke zamane mein, baap ke zamane ke daam. This was to attract the middle and lower class consumers and the effect can clearly be seen in the consumer base McDonalds has now. McDonalds has certain value pricing and bundling strategies such as happy meal, combo meal, family meal etc to increase overall sales volumes. McDonalds vegetarian menu is priced between Rs 25 and Rs 60 while the non vegetarian menu is priced between Rs 30 and Rs 80. Other menu items like potato wedges are priced at Rs 20, soft serves at Rs 35, mc swirl at Rs 12, medium soft drinks at Rs 20 and medium shakes at Rs 45.

McDonalds has certain value pricing and bundling strategies such as happy meal, combo meal, family meal etc to increase overall sales volumes.

PROMOTION: What is the suitable strategy and channels for promotion of the product? The various promotion channels being used by McDonalds to effectively communicate the product information are given above. A clear understanding of the customer value helps decide whether the cost of promotion is worth spending. There are three main objectives of advertising for McDonalds are to make people aware of an item, feel positive about it and remember it. The right message has to be communicated to the right audience through the right media. McDonalds does its promotion through television, hoardings and bus shelters. They use print ads and the television programmes are also an important marketing medium for promotion.

At McDonalds the prime focus was on targeting children. Happy meals too were targeted at children, and small toys were given along with the meal. Apart from this, various schemes for winning prices by way of lucky draws and also scratch cards are given when an order is placed on the various mean combos. In fact, the various economic meals and value meals also signal to the customer that buying separate items results in greater value for money for the customer. Some of the most famous marketing campaigns of McDonalds are: You Deserve a break today, so get up and get away- To McDonalds Aap ke zamane mein ,baap ke zamane ke daam. Food, Folks, and Fun Im loving it.

PLACE: Where should be the product be available and the role of distribution channels?

The place mainly consists of the distribution channels. It is important so that the product is available to the customer at the right place, at the right time and in the right quantity. Nearly 50% of U.S.A is within a 3 minute drive from a McDonalds outlet. There is a certain degree of fun and happiness that a customer feels each time he dines at McDonalds. There are certain value propositions that McDonalds offer to its customers based on their needs. McDonalds offers hygienic environment, good ambience and great service. There are certain dedicated areas for children where they can play while their parents can have some quality time together.

McDonalds outlets are very evenly spread throughout the NCR region. McDonalds does not offer home delivery but its outlets are very readily accessible. McDonalds also offers take away drive through facilities.

PEOPLE: How to converge the benefits of internal and external marketing? McDonalds understands the value of both its employees and its customers. It understands the fact that a happy employee can serve well and result in a happy customer. McDonalds continuously does Internal Marketing. This is important as it must precede external marketing. This includes hiring, training and motivating able employees. This way they serve customers well and the final result is a happy customer. The employees in McDonalds have a standard uniform and McDonalds specially focuses on friendly and prompt service to its customers from their employees. The punch line Im loving it is an attempt to show that the employees are loving their work at McDonalds and will love to serve the customers

PROCESS: The food manufacturing process at McDonalds is completely transparent i.e. the whole process is visible to the customers. In fact, the fast food joint allows its customers to view and judge the hygienic standards at McDonalds by allowing them to enter the area where the process takes place. The customers are invited to check the ingredients used in food.

PHYSICAL EVIDENCE: McDonalds focuses on clean and hygienic interiors of is outlets and at the same time the interiors are attractive and the fast food joint maintains a proper decorum at its joints.

PESTLE ANALYSIS OF MC DONALDS Pestle is an analysis of the external macro environment in which a business operates. Pestle stands for political, economic, social, technology, and environmental factors.

A. Political Factors The international operations of McDonalds are highly influenced by the individual state policies enforced by each government. For instance, there are certain groups in Europe and the United States that clamor for state actions pertaining to the health implications of eating fast food. They have indicated that harmful elements like cholesterol and adverse effects like obesity are attributable to consuming fast food products. On the other hand, the company is controlled by the individual policies and regulations of operations. Specific markets focus on different areas of concern such as that of health, worker protection, and environment. All these elements are seen in the government control of the licensing of the restaurants in the respective states. For instance, there is an impending legal dispute in the McDonalds franchise in India where certain infringement of rights and violation of religious laws pertaining to the contents of the food. The existence of meat in their menus in India is apparently offensive to the Hindu religion in the said market. There are also other studies that points to the infringement of McDonalds Stores with reference to the existing employment laws in the target market. Like any business venture, these McDonalds stores have to contend with the issues of employment procedures as well as their tax obligations so as to succeed in the foreign market.

B. Economic Factors Organisations in the fast food industry are not excused from any disputes and troubles. Specifically, they do have their individual concerns involving economic factors. Branches and franchises of fast food chains like McDonalds has the tendency to experience hardship in instances where the economy of the respective states is hit by inflation and changes in the exchange rates. The customers consequently are faced with a stalemate of going over their individual budgets whether or not they should use up more on these foreign fast food chains. (2004) Hence, these chains may have to put up with the issues of the effects of the economic environment. Particularly, their problem depends on the response of the consumers on these fundamentals and how it could influence their general sales. In regarding the operations of the company, food chains like McDonalds tend to import much of their raw materials into a specific territory if there is a dearth of supply. Exchange rate fluctuations will also play a significant role in the operations of the company.

As stated in the paragraph above, McDonald stores have to take a great deal of consideration with reference to their microenvironment. The companys international supply as well as the existing exchange rates is merely a part of the overall components needed to guarantee success for the foreign operations of McDonalds. Moreover, it is imperative that the company be cognizant of the existing tax requirements needed by the individual governments on which they operate. This basically ensures the smooth operations of the McDonalds franchises. In the same regard, the company will also have to consider the economic standing of the state on which they operate on. The rate at which the economy of that particular state grows determines the purchasing power of the consumers in that country. Hence, if a franchise operates in a particularly economically weak state, hence their products shall cost higher than the other existing products in the market, then these franchises must take on certain adjustments to maintain the economies of scale.

C. Socio-Cultural Factors Articles on the international strategies of McDonalds seem to function on several fields to guarantee lucrative returns for the organisation. To illustrate, the organisation improves on establishing a positive mind-set from their core consumers. McDonalds indulge a particular variety of consumers with definite types of personalities. It has also been noted that the company have given the markets such as the United Kingdom, an option with regards to their dining needs pointed out that McDonalds has launched a sensibly valued set of food that tenders a reliable level of quality for the respective market where it operates. Additionally, those who are aged just below the bracket of thirty-five are said to be the most frequent consumers of McDonalds franchises. The multifaceted character of business nowadays is reflected in the harsh significance of the information on the subject of the existing market. This procedure is essentially identified in the field as market research. Information with regards to the appeal and potential fields of the market would double as obstructions to the success of the company if this area of the operations is neglected. In the case of McDonalds they establish a good system in determining the needs of the market. The company uses concepts of consumer behaviour product personality and purchasing decisions to its advantage. It is said to have a major influence on the understanding of the prospective performance of the organisation in a particular market. (2000)

D. Technological Factors McDonalds generates a demand for their own products. (2006) The companys key tool for marketing is by means of television advertisements. There are similarly some claims that McDonalds are inclined to interest the younger populations more. The existence of play spots as well as toys in meals offered by the company shows this actuality. Other demonstration of such a marketing strategy is apparent in the commercials of they use. They employ animated depictions of their characters like Grimace and Hamburglar. Other advertising operations employ popular celebrities to promote their products. The like has become endorsers for McDonalds worldwide loving it campaign. Moreover, the operations of McDonalds have significantly been infused with new technology. Elements like the inventory system and the management of the value chain of the company allows for easy payments for their suppliers and other vendors which the individual stores in respective markets deal with. The integration of technology in the operations of McDonalds tend to add value to their products. Basically, this is manifested in the improvements on its value chain. The improvement of the inventory system as well as its supply chain allows the company to operate in an international context.

E. Legal As a certified fast food operator, there are many regulations and procedures that McDonalds should follow. For example is the Halal certification that becomes a concern to Muslim consumers. McDonalds should protect its integrity and consumer confidence by ensuring all materials and process are as claimed or must followed. Other legal requirement that the business owner should follow as stipulated in laws are such as operating hours, business registration, tax requirement, labor and employment laws and quality & environment certification (such as ISO) in which the outlet has been certified. The legal requirement is important because the offenders will be fined or have their business prohibited from operating which can be disastrous.

F. Environment As one of world largest consumer of beef, potatoes and chicken, McDonalds always had been critics for world environmentalist. This is because high consumption of beef causing the green house effect by methane gasses coming from the cows ranch. Large scale plantation has effect the environment and lost of green forest opening for plantation activities. Vegetarian environmentalist criticizes the fast-food giant for cruelty to animals and slaughtering. In Japan, once McDonalds want to introduce whale burger causing uproar because whales are endangered species. Before using paper packaging, McDonalds has also been criticized for being insensitive

to pollution because using polystyrene based packaging for its foods. Imagine millions of people purchase from fast food operator and how is the impact to world environment by throwing away those hard to recycle packaging. Our world is getting concern on environment issue and business operating here should not just care for profit, but careful usage of world resources for sustainable development and care for environment safety and health for our future generation. Critics and concern from all public or activist should be review and support if necessary to ensure we play our social responsibility better.

Importance of PLC in McDonalds The requirements of customers change over time and thus the product offering has to be changed accordingly. What is the fashion today may be out of market within few weeks. Thus continuous innovation is required. To counter these changes McDonalds has continuously introduced new products and has phased out the old ones which were at the decline stage of their PLC. The introduction is timed such that the new product does not cannibalize the product already in the maturity or growth stage. Thus the secret lies in getting profits with different products in the different stages of the PLC.

A perfect example of revitalizing a product in decline phase

The French Fries have been an important part of the McDonalds menu worldwide. But now it was in the stage of decline and was actually not generating proper return. In an attempt to revitalize it, a new variant was introduced namely Shake Shake Fries. This is being served with chatpata spice mix which has resulted in increase in the sales of French Fries and has elevated it from to the decline stage. This is used to delay the decline of a well established product which has the potential of generating further revenue.

Competitors Analysis McDonalds has been a leading fast-foods outlet in Vile Parle. But the outlet under study has other competitors eating away into its market share. In addition to its traditional rivalsKFC, Dominos, Pizza Hutthe firm encounters new challenges. Jumbo King competes using a backto-basics approach of quickly serving up burgers for time-pressed consumers. On the higher end, the KFC has become potent competitor in the quick service field, taking away customers from McDonalds. Perhaps in the new environment, fast, convenient service is no longer enough to distinguish the firm. At this time, a new critical success factor may be emerging: the need to create a rich, satisfying experience for consumers. This brings us to service and experience based competition w hich McDonalds can use for competitive advantage against Jumbo King. Keeping in mind the demographics of the area, McDonalds has Wi-Fi enabled the outlet to cater to the student community. It is for this overall Food, Fun & Folks experience that customers pay a premium over the other competitors. Competition also reduces product lifecycle; inducing firms to revise their products portfolios and to revisit their product market to understand changing needs, expectations and perception of different market segments. The new Mc Breakfast would be introduced between 6am to 11 am as a pilot project. This would open up a whole new revenue stream for McDonalds by tapping into the student and working population by providing a healthy and wholesome breakfast. This

shows how demographic shift can affect the demand for products and services. McDonalds has anticipated these changes to maintain its competitive edge.

Two Dimensional Perceptual Mapping

SWOT Analysis of Mc Donalds Strengths It has a strong global presence and is considered as a market leader in both the domestic as well as the international markets. It is a global brand that owns 31,000 restaurants serving in 120 countries. Of these 31,000 restaurants at least 14,000 restaurants are situated in the US. It uses economies of scale for reducing the cost, as its huge expansion diversifies the overall risk involved with the economic performance. They own an active childrens charity by the name The Ronald McDonald House. It takes steps in adjusting the Ingredients and product offerings in order to comply with the upgraded health standards deemed necessary by the USDA. It earns revenue by fast food sales as well as a property investor and a franchiser of restaurants. It has a firm real estate portfolio. It has branded menu items i.e. Big Mac, Chicken Mc Nuggets, which further promote McDonalds. It is recognized as one of the worlds most recognized logos. It is recognized as a socially responsible and community oriented firm. It adapts to the cultural differences regarding the region where the restaurant is set up. It has located itself in major airports, cities, highways, tourist locations, theme parks. It has an efficient food preparation style that follows the process in a systematic way. It takes food safety extremely cautiously. It was the first to provide the customers about nutrition facts.

Weaknesses It uses advertising that mostly targets children. High employee turn-over. It has yet to accomplish going on the trend of organic food. Price competition with the competitors resulting in low revenue. Lack of innovative products.

Opportunities It can adapt to the needs of the societies and undergo an innovative product line. It can research ways to use green energy and packaging which will work as a part of their promotional effort as well as fulfill their social responsibility. It can create new product offerings, use mobile text messaging to offer services that appeal to consumers. It can upscale some of its restaurant settings at luxurious locations to attract more customers. It can provide optional items that are regarded to be the basis of allergy for some. It can slow down the level of expansion in order to increase the profitability of the organization.

Threats The recession negatively impacts the holding position of the firm regarding its revenue streams, even though they are quite diversified. Foreign currency fluctuations are regarded to be a major problem as it uses standard pricing for its food items. More restaurants that are increasing their food offering and declining the price. Health issues regarding the fast food chain. Heavy investments on promotional campaigns which decrease the gaining of market share. Some parents criticize the firms cradle to grave marketing strategy that focuses on kids, who later on take it as a trend to their adulthood. Sued various times for unhealthy food, usually with addictive additives. Emergence of major fast food competitors: Burger King, Starbucks, Wendys, Taco Bell, KFC. The expansion has made the firm vulnerable to the slow economies of the other countries.

FAMOUS MCDONALDS CAMPAIGNS IN INDIA

1. Chatpata McAloo Tikki Burger McDonalds India has come a long way in its brand communications and product innovations since it began operations in India in 1996, a point reinforced by the latest ad campaign from McDonalds India which highlights the tingling taste of the New Chatpata McAloo Tikki Burger. The campaign will run across the country on a variety of media including television, radio and OOH from 3rd to 31st January, 2009. McDonalds India has established itself as an affordable brand that offers great eating out options through its Happy Price Menu at Rs. 20. This fresh ad campaign showcases the latest offering from McDonalds India which manages to tingle the taste buds by adding an exciting chatpata desi touch to the much loved McAloo Tikki Burger. The fun filled ad campaign created by Leo Burnett and produced by RDP Productions, shows how strangers become friends and life becomes chatpata while enjoying the New McAloo Tikki Burger. The Ad has elements of both youthfulness and fun. It starts with a young boy winking at a girl who is at the counter placing the order and then the fun continues Mr. Arvind Singhal, Head Marketing, McDonalds India (West and South) said "Life Banaye Chatpati @ Rs 20 only is the key message which we intend to highlight through this latest McAloo Tikki Burger campaign. The new campaign will surely leave the customers saying I m lovin it. Quote from Nitesh Tiwari, creative director Leo Burnett, We are always looking for small ways in which we can add a little fun, a bit of zing to our every day mundane lives. This simple insight is core to our idea for McDonalds new McAloo Tikki Burger: Its new chatpata taste adds spice to your life just the way the protagonist in the film adds to his by coming up with a unique way to break ice with a pretty girl

2. McDonalds Happy Price Menu Campaign Leo Burnett India has created a new set of commercials for McDonalds Happy Price Menu. The menu was launched in 2004 and has since seen taglines like What your bahaana is?, Purane zamaane ka daam and Bees mein full dhamaal. The thought for the latest lot is "You don't need to think twice when McDonald's has burgers at only Rs 25".

The first commercial, which is already on air, begins on a meeting in a conference room, to which the boss has brought her dog. A young executive tosses the pooch a ball when the bosss back is turned, but it accidentally goes out of the window and the dog bounds out after it. As the executive looks horrified, his colleagues threaten to tell on him. He manages to buy their silence with the help of the McDonalds Happy Price Menu, and says conspiratorially to the camera, Im loving it. Like the dollar menu in America, the Happy Price Menu is part of our everyday affordable platform and has worked very well in India. We know how the world is: everyones looking for something fresh, exciting and insightful, and thats why we refresh the creative every year. The intention this time was to add a little freshness and try to bring in some amount of tongue-in-cheek humour. The second commercial that was out in a weeks time targeted college-goers. Besides television, the agency and the brand also plan to communicate the new thought across outdoor, radio, social networks and mobile. 3. Im Lovin it Campaign

Retail fast-food giant McDonalds India is gearing up to implement a new human resource (HR) initiative on the back of its recently launched worldwide brand campaign called Im lovin it. As part of the initiative, the company has recently provided training on hospitality to its crew members by way of conducting five to six major workshops in India. With the move, the company will henceforth use Im lovin it campaign as a platform for its crew members to become managers of McDonalds restaurants in the near future. McDonalds India will incorporate the Im lovin it theme into its advertising, promos, public relations, restaurant merchandising and overall brand communications initiatives. It is called Rolling Energy and it involves McDonalds first-ever integrated global two-year calendar that will provide consistency in messaging and communications to customers and employees worldwide. The international television commercial reflecting the lifestyles and

attitudes of todays customers and culture was aired from October 5, 2003, in India. For the purpose, the company has have invested Rs 4 crore. The Im lovin it theme is the unifying element for its new worldwide creative approach that speaks in one voice to customers across more than 100 countries. According to the company, with the new initiatives, the company hopes to garner a 15 per cent jump in its overall sales turnover within a year.

QUESTIONNAIRE

Hi!! Thanks for sparing time and visiting this page. This survey is part of my Dissertation on the topic Cross Cultural Marketing in the Fast Food Industry and will help me analyze this study. I would request you to please spare 5 minutes and fill this survey. Its not that boring ;-)

1. Name: ___________ 2. Age: ___________ 3. Place (Your current location): ____________ 4. Are you a : a) Vegetarian b) Non-Vegetarian c) Eggetarian d) Other: _________ 5. Which is your favourite fast food chain? a) Mc Donalds b) KFC c) Domino's Pizza d) Fastrax e) Subway f) Other: _________ 6. Are you influenced by TV commercials/Ads/promotional activities done by these fast food chains? a) Yes b) No c) At Times d) Yes, I used to get influenced as a kid e) Other:__________

7. Which of the following factors affect your choice of fast food joint? Very Essential Price Quality Cleanliness Service Advertising & Promotions 8. Which amongst the following fast food chains do you trust for pure vegetarian products? a) Mc Donalds b) KFC c) Dominos Pizza d) Fastrax e) Subway f) Other: _________ 9. Do you have a McDonalds outlet in your city? a) Yes b) No c) Not Aware d) Other: _________ 10. Which is your favourite product/products at McDonalds? * a) Mc Aloo Tikki b) Veg Pizza McPuff c) Chicken McGrill d) French Fries e) McChicken f) McVeggie g) McSwirl h) Other: _________ At times Essential Not so Essential Not at all Important

11. Is the product line or Menu in McDonalds adequate? a) Yes b) No c) Average 12. Is the product line or Menu in McDonalds adequate? a) Do you ever feel that there is any kind of product category missing from their menu. b) Yes c) No d) Average 13. Which amongst the following services provided by Mc Donalds do you prefer? a) Dine-in b) Take Away c) Home Delivery d) Drive Thru e) Other: _________ 14. According to you, has McDonald's been successful in positioning itself as a promoter of 'Indian family values and culture?' (This is in terms of the product offerings of McDonalds and also the promotional campaigns run on TV/Radio/Social networking websites, etc.) a) Yes b) No c) Can't Say d) Other e) Other: ____________

Thanks for filling this survey!!! :)

Submit

ANALYSIS OF THE SURVEY

1. Are you a : e) Vegetarian f) Non-Vegetarian g) Eggetarian h) Other: _________

Vegetarian Non-Veg Eggetarian

40% 52% 8%

Vegetarian Non-Veg Eggetarian

2. Which is your favourite fast food chain? a) Mc Donalds b) KFC c) Domino's Pizza d) Fastrax e) Subway f) Other: _________

Mc Donalds KFC Domino's Pizza Fastrax Subway Other

30% 24% 20% 0% 23% 3%

24%

3. Are you influenced by TV commercials/Ads/promotional activities done by these fast food chains? a) Yes b) No c) At Times d) Yes, I used to get influenced as a kid e) Other:__________

Yes No At Times Yes, I used to get influenced as a kid

13% 10% 60% 17%

4. Which of the following factors affect your choice of fast food joint?

Very Essential Price Quality Cleanliness Service Advertising & Promotions

At times Essential

Not so Essential

Not at all Important

Very Essential Price Quality Cleanliness Service Advertising & Promotions 30% 96% 90% 76% 14%

At times Essential 50% 4% 10% 17% 26%

Not so Essential 17% 0% 0% 7% 60%

Not at all Important 3% 0% 0% 0% 0%

Price Price is not the key criteria for choosing a fast food joint for a lot of people. According to the survey conducted, only 30% of the people feel that Price of the products is Very Essential for choosing a fast food joint whereas 17% feel that Price is Not so Essential. Apart from this, 50% feel that Yes, price is At times Essential and price is one of the factors that affects their decision of choosing a fast food chain.

Quality The Quality of the products being offered by the fast food chain is a very important factor that affects the decision making of people. Thus, 96% of the people surveyed feel that Quality of food is Very Essential in deciding which fast food joint to eat at. And, the remaining 4% feel it is At times Essential. This factor clearly displays that Indian Customers want good quality food.

Cleanliness Now cleanliness is an important factor that affects the choice of fast food joint. A lot of people want to dine-in at a clean and hygienic fast food joint and they dont mind paying a few more bucks for that. Our survey also concludes that 90% of the people feel that Cleanliness is an important factor and is Very Essential whereas 10% feel that it is At times Essential. Therefore, this conveys that apart from Quality, Indian customers want a clean and hygienic ambience.

Service Service can be in terms of Placing an order, the time taken by employees to deliver the offer to the customer, behavior of the staff, etc. Service is considered Very Essential by 76% of the people, At times Essential by 17%, Not so Essential by 7%. Therefore, Service is also an important criteria that affects the choice of customers. This is because many office going people dont like to wait for a long time to get their order, they want instant services. Also, people who avail the Home Delivery facility want quick delivery.

Advertising & Promotions Advertising & Promotions is not considered as a very important criterion by many people. The survey says that 60% people feel that Advertising & Promotions is Not so Essential, 26% feel that it is At times Essential and only 14% feel that it is Very Essential. Therefore, Advertising & Promotions do not play an important role in the decision making process.

5. Which amongst the following fast food chains do you trust for pure vegetarian products? a) Mc Donalds b) KFC c) Dominos Pizza d) Fastrax e) Subway f) Other: _________

Mc Donalds KFC Domino's Pizza Fastrax Subway Other

33% 3% 20% 0% 27% 17%

6. Do you have a McDonalds outlet in your city? a) Yes b) No c) Not Aware d) Other: _________

Yes No Not Aware

99% 0 1%

7. Which is your favourite product/products at McDonalds? i) Mc Aloo Tikki j) Veg Pizza McPuff k) Chicken McGrill l) French Fries m) McChicken n) McVeggie o) McSwirl p) Other: _________

Mc Aloo Tikki Veg Pizza McPuff Chicken McGrill French Fries McChicken McVeggie McSwirl Other

10% 6% 14% 10% 20% 23% 10% 7%

15. Is the product line or Menu in McDonalds adequate? (Do you ever feel that there is any kind of product category missing from their menu.) d) Yes e) No f) Average

Yes No Average

63% 13% 24%

16. Which amongst the following services provided by Mc Donalds do you prefer? a) Dine-in b) Take Away c) Home Delivery d) Drive Thru e) Other: _________

Dine-In Take Away Home Delivery Drive Thru

33% 37% 13% 17%

17. According to you, has McDonald's been successful in positioning itself as a promoter of 'Indian family values and culture?' (This is in terms of the product offerings of McDonalds and also the promotional campaigns run on TV/Radio/Social networking websites, etc.) f) Yes g) No h) Can't Say i) Other j) Other: ____________

Yes No Can't Say Other

64% 13% 20% 3%

References http://www.mcdonaldsindia.com/ http://www.kfc.co.in/ www.dominos.co.in http://www.economist.com/node/16380043 http://www.ft.com/home/india http://www.mcdonalds.co.uk/static/pdf/aboutus/education/mcd_marketing.pdf http://economictimes.indiatimes.com/ http://www.rediff.com/business