a) Describing the PRICING STRATEGIES AND TACTICS OF

MCDONALDS AND

b.) Analyze the pricing strategies and tactics followed by

McDonald's.

What is the pricing strategy of McDonalds ?

Pricing includes the list price, the discount functions available,
the finance options available 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 expressed incurred. The price
must take into consideration the appropriate demand-supply
equation.
McDonald’s came up with a very catchy punchline 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 theconsumer 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.
PRICING STRATEGY MATRIX

Penetration Pricing.
The price charged for products and services is set artificially
low in order to gain market share. Once this is achieved, the
price is increased. This approach was used by France Telecom
and Sky TV. When McDonald’s first began to break into the
coffee market, they ran a large marketing campaign in order to
gain some market share in the industry. For a limited time
frame, you could get a free small coffee every morning from 4-
7am. This was to promote their new coffee partnership with
Green Mountain Coffee and helped spread the word that
McDonald’s was now offering coffee.

Economy Pricing.
This is a no frills low price. The cost of marketing and
manufacture are kept at a minimum. Supermarkets often have
economy brands for soups, spaghetti, etc.
Price Skimming.
Charge a high price because you have a substantial competitive
advantage. However, the advantage is not sustainable. The high
price tends to attract new competitors into the market, and the
price inevitably falls due to increased supply. Manufacturers of
digital watches used a skimming approach in the 1970s. Once
other manufacturers were tempted into the market and the
watches were produced at a lower unit cost, other marketing
strategies and pricing approaches are implemented.
Premium pricing, penetration pricing, economy pricing, and
price skimming are the four main pricing policies/strategies.
They form the bases for the exercise. However there are other
important approaches to pricing.
Psychological Pricing.
This approach is used when the marketer wants the consumer to
respond on an emotional, rather than rational basis. For
example 'price point perspective' 99 cents not one dollar.
Product Line Pricing.
McDonald’s has a unique pricing strategy that falls solely on
their many product lines. Their Value Meals fall into the
category of Product Line Pricing. “Where there is a range of
product or services the pricing reflect the benefits of parts of the
range.” For example, you can order a Two Cheeseburger Value
meal that comes with a medium drink and fries for around $3
(prices may vary). You can Super-Size this meal to get a large
drink and large fries for a little more money or you can go with
another value meal that might include different items for
different price.

Optional Product Pricing.

Companies will attempt to increase the amount customer spend
once they start to buy. Optional 'extras' increase the overall
price of the product or service. For example airlines will charge
for optional extras such as guaranteeing a window seat or
reserving a row of seats next to each other.
Captive Product Pricing
Where products have complements, companies will charge a
premium price where the consumer is captured. For example a
razor manufacturer will charge a low price and recoup its
margin (and more) from the sale of the only design of blades
which fit the razor.
Product Bundle Pricing.
Here sellers combine several products in the same package. This
also serves to move old stock. Videos and CDs are often sold
using the bundle approach.
Promotional Pricing.
Pricing to promote a product is a very common application.
There are many examples of promotional pricing including
approaches such as BOGOF (Buy One Get One Free).

If you have driven past a McDonald’s, you will notice that

somewhere on their property, whether it is a banner on their
building or spelled out on their sign, they are always offering
some sort of promotional pricing. For example, currently the
McDonald’s in Maine is advertising “Two Sausage McMuffin’s
for $3.” This promotion can be seen as a large banner draped
across the building on many restaurants in Maine. This
promotion changes weekly and may consist of different menu
items packaged together.

Geographical Pricing.
Geographical pricing is evident where there are variations in
price in different parts of the world. For example rarity value,
or where shipping costs increase price.

Value Pricing.
“This approach is used where external factors such as recession
or increased competition force companies to provide 'value'
products and services to retain sales.” The most notable and
recent example of this is McDonald’s “Dollar Menu.” The
Dollar Menu was created because McDonald’s recognized that
the economy was in a decline and that their competition was
getting fiercer. The Dollar Menu satisfies the current
decreasing economy and has increased the pressure towards
competitors. The introduction to the Dollar Menu is by far the
most economical product line that McDonald has ever offered.
You can get a number of products off of their menu for only a
dollar. It is efficient and practical.
COMPANY PROFILE
McDonald's India
McDonald's in India is a locally owned and managed company
run by Indians, employing local staff, procures from local
suppliers to serve its customers. McDonald's India opened its
first family restaurant at Basant Lok, in Oct, 1996; today it has
169 Restaurants across India. This vibrant decade has seen
McDonald's evolve Indian menus, Indian sensitivities and yet
remain as globally innovative as ever. This journey has seen
McDonald's develop a rich brand identity amongst its customers
and employees as well as partners alike.
At McDonald’s India we have had a single mantra: providing
100% total customer satisfaction and the formula for achieving
this goal in our restaurant operation is the long-standing
commitment to the McDonald’s Promise.

MCDONALD'S PROMISE
QSC&V......The Foundation that built McDonald's success
When asked to explain McDonald's success, founder Ray Kroc
used to say, "We take the hamburger business more seriously
than anyone else."
Kroc was a perfectionist. From the day he opened his first
restaurant, he vowed to give his customers high quality
products, served quickly --and with a smile, in a clean and
pleasant environment, and all at a fair price. Quality, Service,
Cleanliness and Value (QSC&V) became the philosophy that
drove McDonald's business.
McDonald's Quality Management instills the culture of quality
through such principles as being customer driven, managing
with facts, valuing people, and continually improving every
aspect of our business.

Service that is fast and friendly and has always been a

foundation for success at McDonald's.

Cleanliness for us means having the cleanest and freshest

facilities from the kitchen to the rest rooms and parking lots.
Value at McDonald's means the total experience...... great food,
friendly folks, a clean environment, quick and accurate service
and fun!
McDonald's International through its wholly owned subsidiary
McDonald's India entered into two JVs, one with Connaught
Plaza Restaurants Pvt. Ltd. in the Northern & Eastern region
and another with Hard Castle Restaurants Pvt. Ltd. in the
Western & Southern region.
McDonald's India… Culturally Sensitive
McDonald's worldwide is well known for the high degree of
respect for the local customs and culture. McDonald’s has
developed a menu especially for India with vegetarian selections
to suit Indian tastes and preferences. Keeping in line with this,
McDonald's does not offer any beef or pork items in India. In
the last decade it has introduced some vegetarian and non-
vegetarian products with local flavors that have appealed to the
Indian palate. There have been continuous efforts to enhance
variety in the menu by developing more such products.

McDonald's has also re-engineered its operations repeatedly in

its 11 years in India to address the special requirements of a
vegetarian menu. Vegetable products are 100% vegetarian, i.e.
• They are prepared separately, using dedicated equipment
and utensils.
• Only pure vegetarian oil is used as a cooking medium.
• Cheese and sauces are completely vegetarian and egg less.
• Separation of vegetarian and non-vegetarian food products
is maintained throughout the various stages of procurement,
cooking and serving.
Restaurant Count
McDonald’s has 132 restaurants in India of which 79 are in
North & East India and 53 in West & South India.

79 restaurants in North & East India: with

• 33 in Delhi
• 22 in Uttar Pradesh – Noida (5), Ghaziabad (4), Mathura
(1) (Highway and Drive Thru), Kanpur (2), Meerut (2),
Lucknow (4), Agra (1), Allahabad (1), Varanasi (2)
• 11 in Haryana - Faridabad (3), Manesar (1) (Highway and
Drive - Thru), Gurgaon (5), Karnal (1) (Highway and Drive -
Thru), Panipat (1)
• 7 in Punjab - Chandigarh (2), Ludhiana (2), Doraha (1)
(Highway and Drive - Thru), Jalandhar (1), Patarsi (1)
(Highway and Drive - Thru)
• 3 in Rajasthan - Jaipur (3)
• 1 in Uttaranchal - Dehradun (1)
• 1 in West Bengal – Kolkata (1)
• 1 in Himachal Pradesh- Jabli (1).
53 restaurants in West & South India:
• 32 in Maharashtra – Mumbai (23), Pune (8), Nasik (1)
• 7 in Gujarat – Ahmedabad (4), Vadodara (2), Surat (1)
• 7 in Karnataka – Bangalore(7)
• 4 in Andhra Pradesh – Hyderabad (4)
• 3 in Madhya Pradesh – Indore (3).