Customer Acquisition and Retention

A PROJECT REPORT ON

GROUP MEMBERS:
HR: Sukeshi Singh FINANCE II: Mou Chakravorty Meena Kunwar
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Customer Acquisition and Retention

ACKNOWLEDGEMENT
We are very thankful to Padmashree Dr. D.Y.Patil who has provided us this priceless opportunity to work on this coveted topic. The entire experience which I acquired while working on this project was highly informative as I got a firsthand experience of conducting a full fledged survey though on a small scale but was yet too effective. We would like to thank all those people who were directly or indirectly responsible in making this project be real. We would also give a special thank to the respondents, for giving their precious time to this survey. All the questions and suggestion regarding this project are readily welcomed. We hereby hope to have done complete justice to the given topic.

CONTENTS
Sr. Topic Page Number

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No 1 2 3 4 5 6 7 8 9 10 11

Fast Food Industry Profile McDonalds Organizations Profile & History Need for Study Literature Survey Objectives of study Scope of objectives Research Methodology Sample Design Analysis and Findings Suggestions & Recommendations Bibliography

4 10 18 20 22 23 31 33 34 38 39

1. FAST FOOD INDUSTRY PROFILE

Burgers, fries, chicken nuggets, hot dogs, sandwiches, soft drinks, you name it and you will have such yummy delights served instantly to you at the fast food chains dotting the nooks and corners of the country. Almost all big fast food brands of the world have set up shop in India and even home-grown brands are doing brisk business in the Quick Service Restaurant (QSR) segment. Riding on growing cosmopolitan outlook, ever-increasing disposable income, changing consumer behavior and favorable demographics, the fast food industry has
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witnessed a rapid growth across the country. Exposure to western cuisine, the rising number of nuclear families and growth in the number of employed women have been other contributing factors to change the perception about India as a nation that is particular about its food, especially of the home cooked and fresh variety. According to a National Restaurant Association of India (NRAI) 2010 report, the fast food industry in India is currently estimated at ` 6,750 crore to ` 8,000 crore, growing at a CAGR of 35-40 per cent annually. A major chunk of this market is ruled by global players like McDonalds, Yum! Brands, Dominos, Subway, Taco Bell, Barista, etc. The main reason behind the success of the multinational chains is their expertise in product development, sourcing practices, quality standards, service levels and standardized operating procedures in their restaurants, a strength they have developed out of their years of experience around the world. But domestic players like Nirulas, US Pizza, Pizza Corner, Kaati Zone and home-grown Coffee Day Group or even Haldirams, Bikanervala, Rasnas Devils Workshop are not lagging behind to capture a fair share of the quick meals bazaar. With all these brands growing rapidly, India, in fact, has emerged as one of the fastest growing fast food markets in the world. Still, it remains largely underpenetrated and concentrated in metropolitan cities. However, there is a large room for growth in untapped tier-II and tier-III cities and this demand is expected to grow at a faster pace in the near future. Owing to this, major fast food retailers have well understood the market potential and are on their way to market their brands by using different strategies such as campaigns and billboards. The fast food culture emerged as early as the 19th century. At the time of the Industrial Revolution, a large workforce was required to work for 10 to 12 hours a day. With so much work to be done, fast food was the idea of a quick and easy lunch. In India, fast food culture emerged in after independence, starting from the 1950s. Traditionally, Indian consumers have been eating at roadside eateries, dhabas and stalls which still occupy a major share of the unorganized sector. However, with the changes in the economy of the country and infusion of big corporate culture from the West, the non-home food market has emerged with a large number of Indian and foreign players sensing big bucks in this growing eating-out trend. Organised modern formats like malls and supermarkets have become a favorite destination for such outlets. Larger companies are teaming up with small franchisors and mall owners to promote their brand. Fast food is tasty,
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economical and only a drive-through or phone-call away. So, it has become an essential part of lifestyle in India over the past decade. The fast food outlets generally serve burgers, fries, chicken nuggets, hot dogs, sandwiches and drinks to the busy person who doesnt have more than five minutes to spare for his meal. Fast food has rapidly gained popularity among the youth ever since its emergence. Moreover, it costs less than traditional long meals commencing with appetizer and concluding with dessert. With growing demand for fast food, multinationals and their domestic counterparts have rapid expansion plans. Most brands have either opted to have a master franchisee in India or unit franchisees for their expansion. Depending on the investment capacity for a franchise, these fast food majors have, in turn, created several job opportunities in the country as well. From as low an investment as ` 2-3 lakh to big investments to the tune of over one crore, the fast food segment offers immense opportunities for a farsighted entrepreneur. The US-based fast food giant Dominos Pizza is the undisputed leader in the countrys pizza market with a share of over 50 per cent in the organised pizza market and over 65 per cent share in home-delivery segment. It operates under a master franchise agreement with the Bharatia group-promoted Jubilant Foodworks which also has Dominos master franchisee rights for Nepal, Sri Lanka and Bangladesh. As on September 2010, the brand had 339 stores across 79 cities in the country with nearly 99 per cent of the stores being company-owned. The company plans to expand aggressively in the Indian market aiming to open around 60-65 outlets every year for the next few years. Yum! Restaurants, owner of Pizza Hut, KFC and Taco Bell restaurant chains in India, is the worlds largest restaurant company in terms of system restaurants with more than 37,000 restaurants in over 110 countries. Yum has over 107 KFCs and 160 Pizza Hut units in India. KFC is the worlds No.1 Chicken QSR and the largest brand of Yum Restaurants. The company is constantly experimenting with consumersneeds and market trends and has expanded to 21 cities in India. In the next 5 years, the brand aims to open 500 outlets expanding to 75 cities. KFC would also introduce some of its other international range of products in the country. The company has achieved 75 per cent top-line sales growth (Y-O-Y) since the last 5 years. Pizza Hut, on the other hand, has grown from being a fast food major to being a brand in the affordable casual dining category. Currently, there are 160 restaurants across 34 cities which are completely franchisee owned. In fiscal year 2011-2012, the
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brand plans to increase its number by 10-25 per cent. Taco Bell also plans to open up to 100 outlets by 2015 and expand into tier-II and -III Indian cities eventually. Yum! Brands India aims to be a billion dollar business by 2015 with over 1000 stores and 50,000 employees. Subway restaurants, worlds largest submarine sandwich chain, has more than 34,000 locations worldwide operating in 95 countries. Presently, it has over 197 stores in 26 cities across the country. The brand is currently in the midst of expansion across the country with plans to reach 250 by the end of 2011 and 320 outlets by the end of 2012. Bengalurubased US Pizza, owned by United Restaurants Ltd, has today pioneered the freshly baked pizza and home delivery in India. Founded in 1994, the brand began franchising in 1998 and has today opened 77 stores across various cities. It is targeting to open about 36 stores every year and mainly looking at tier-II and III cities. Leading QSR chain Nirulas too has announced plans to open 70 new outlets, taking its tally to 150, by March 2012. At present, it runs 80 outlets (mostly franchised) across seven cities. The new outlets would have various formats including ice cream kiosks. Ethnic QSR chains too have a huge following. However, unlike their Western counterparts, home grown chains have largely been restricted to specific regions. Haldirams, for instance, is planning to expand first in and around the NCR region. That itself can absorb 10-15 more restaurants. Later it plans to look at Amritsar, Ludhiana and Chandigarh. Bengaluru-based Kaati Zone, owned by East West Ethnic Foods Private Limited, was incorporated in 2004 as a brand of Indian quick service restaurants whose aim was to reach customers both within India as well as overseas. Currently, it has outlets in Bengaluru but is looking for expansion in the southern and western regions. Another reason behind the tremendous growth of fast food industry in India is that brands keep innovating and experimenting with their products, launching new items at regular intervals and running campaigns and food festivals to attract consumers. Their major strengths are quality food, delivery on time and offerings at affordable prices. Seeing the growth in fast food business, even coffee chains have jumped into the business with different recipes. Also, with the caf culture changing, guests no longer visit a caf only for coffee; they also look for light on the gofood options which are healthy yet can be used for meals options. Keeping the changing trend in mind, Cafe Coffee Day has also designed the
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new menu which includes a wide range of food items along with the innovative range of beverages. The brand only operates through its company-owned outlets across the country. It plans to expand its network from the current 1000 outlets to 2000 by 2014. The company gets about 35-40 per cent of its revenues from food items at their cafes while the rest is accrued from beverages including coffee. Recently, Barista Lavazza also launched its Coffee Confession menu which has a huge range of fast food products with different taste. The fast food industry has been very successful in India, both in financial terms as well as in terms of popularising its quick service culture. But the industry confronts many hurdles, too. High cost of real estate is the most painful aspect. While globally the standard real estate cost is 10-15 per cent of sales as rentals, in India it goes as high as 20-25 per cent. Added to this there are manpower issues, lack of proper infrastructure, high costs of raw materials, supply chain and taxation issues, to name a few. Further, the government is legislating laws in order to keep a check on the fast food industry and it is emphasising more on the usage of bio-degradable and environment friendly products. But such products cost much higher than the normal products. Health related issue obesity is another major concern. But emphasis is now more on low calorie food by most players. While some of the factors responsible are intrinsic and hence can be addressed, the others need institutional and government support. The general plea of the industry is to waive off service tax on rentals, given the extremely high rentals. There is a case for tax breaks for the fast food companies in the initial years like it is provided to various other sectors. This will further fuel growth and in turn create more employment opportunities and encourage more entrepreneurs to enter this segment. According to McDonalds, support from the government is needed in the form of legislation, subsidies, financing, tax structure and setting up institutions for training. Simplification of the rules and regulations and more transparency together with allowing FDI in retail would go a long way in contributing to the growth of the restaurant industry.

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2. MCDONALD S ORGANIZATIONS PROFILE & HISTORY

The McDonald s Story The story of McDonalds started in 1954, when its founder Raymond Kroc saw a hamburger stand in San Bernardino, California and envisioned a nationwide fast food chain. Kroc proved himself as a pioneer who revolutionized the American restaurant industry. Today McDonalds is the worlds largest fast food chain serving 47 million customers daily. McDonalds is now one of the most valuable brands globally, worth more than $25 billion. The Golden Arches and its mascot Ronald McDonald have gained universal recognition. Though the company has roots in the US, McDonalds today has become an accepted citizen of the world. Year 1955 Event Ray Kroc opens his first restaurant. McDonalds Corporation is created Quality, Service, Cleanliness and Value (QSC & V) becomes company motto Ronald McDonald makes debut The company goes public Big Mac is introduced

1957

1963 1965 1968

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1974 Happy Meal is launched

BUSINESS MODEL
Franchise Model Only 15% of the total number of restaurants are owned by the Company. The remaining 85% is operated by franchises. The company follows a comprehensive framework of training and monitoring of its franchises to ensure that they adhere to the Quality, Service, Cleanliness and Value propositions offered by the company to its customers. Product Consistency By developing a sophisticated supplier networked operation and distribution system, the company has been able to achieve consistent product taste and quality across geographies. Act like a retailer and think like a brand McDonalds focuses not only on delivering sales for the immediate present, but also protecting its long term brand reputation. McDonald s in India McDonalds entered India in 1996. McDonalds India has a joint venture with Connaught Plaza Restaurants and Hard Castle Restaurants. Connaught Plaza Restaurants manages operations in North India whereas Hard Castle Restaurants operates restaurants in Western India. Apart from opening outlets in the major metros, the company is now expanding to Tier 2 cities like Pune and Jaipur. 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
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line of vegetarian items like McVeggie burger and McAlooTikki. The separation of vegetarian and non-vegetarian sections is maintained throughout the various stages. McDonalds Values McDonald's, worldwide, stands for QSC&V, where "V" stands for value and therefore the value proposition assumes special significance. Explaining this, Mr. Amit Jatia, Joint Venture Partner & Managing Director, McDonald's (Western India) says, "McDonald's success has been built on commitment to the delivery of QSC&V (Quality, Service, Cleanliness and Value) to customers, the expansion of restaurant numbers to improve convenience and large scale investment in supplier development, training and people. Getting QS&C consistently and overwhelming appreciation of Value keeps our customers satisfied and maintains our competitive edge." The value initiative at McDonald's is all - pervasive. Our strategy is to achieve best value by enhancing experience (offering best quality), while keeping prices reasonable. This applies to products we serve our customers and to every other aspect of the way we do business. At McDonald's, costs are kept low by increasing efficiency and cutting wastage at all levels. This is possible by advanced operations, management and human behaviour skills tested over time in around 120 countries across the world. It is important to understand that delivering top quality doesn't come easily. Customers, who walk into a McDonald's restaurant, expect to be served food that is hot and fresh, made from the highest quality ingredients, served within minutes of placing their order and at a price, which is affordable. Such is the strength of the brand that they rely on McDonald's to do all this, without thinking about how it is actually achieved. This is accomplished through attention to the minutest details and doing things the right way. Whether it is the McDonald's unique cold chain network, which ensures that food products move from farms to restaurants absolutely fresh, at the lowest possible cost; or, the reverse osmosis water treatment plant at every restaurant to provide water, which is the ultimate in purity, McDonald's in India has invested heavily in achieving quality. McDonald's Value offers Though all McDonald's food products offer tremendous value, we continually review and improve our menu offerings to make sure that we not only meet our customers' expectations, but also exceed them. As a result, we have introduced a series of ongoing value options to enable our customers to appreciate this aspect of the brand even more strongly.
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FINANCIALS 2010 HIGHLIGHTS:

Global Comparable Sales Growth - 5.0% Earnings Per Share Growth - 11% Average Number of Customers Served Every Day - 64 Million 6-Year Summary Dollars in millions, except per share data

Year Company-operated sales Franchised revenues Total revenues Operating income Income from continuing operations
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2010 16,233 7,842 24,075 7,473(1) 4,946(1)

2009 15,459 7,286 22,745 6,841(2) 4,551(2,3 )

2008 16,561 6,961 23,522 6,443 4,313(4)

2007 16,611 6,176 22,787 3,879(5) 2,335(5,6 )

2006 15,402 5,493 20,895 4,433(8) 2,866(8)

2005 14,018 5,099 19,117 3,984 2,578(10)

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Net income 4,946(1) Cash provided by 6,342 operations Cash used for 2,056 investing activities Capital expenditures 2,136 Cash used for 3,729 (provided by) financing activities Treasury stock 2,648 repurchased(11) Common stock cash 2,408 dividends Financial position at year end: Total assets 31,975 Total debt 11,505 Total shareholders 14,634 equity Shares outstanding in 1,054 millions Per common share: Income from 4.58(1) continuing operationsdiluted Net incomediluted 4.58(1) Dividends declared Market price at year end Company-operated restaurants Franchised restaurants Total System wide restaurants Franchised sales(12) Balance Sheet
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4,551(2,3 4,313(4) ) 5,751 5,917 1,655 1,952 4,421 1,625 2,136 4,115

2,395(5,6 3,544(8,9 2,602(10) ,7) ) 4,876 4,341 4,337 1,150 1,947 3,996 1,274 1,742 5,460 1,818 1,607 -442

2,854 2,235

3,981 1,823

3,949 1,766

3,719 1,217

1,228 842

30,225 10,578 14,034 1,077

28,462 10,218 13,383 1,115

29,392 9,301 15,280 1,165

28,974 8,408 15,458 1,204

29,989 10,137 15,146 1,263

4.11(2,3)

3.76(4)

1.93(5,6)

2.29(8)

2.02(10)

4.11(2,3) 2.05 62.44 6,262 26,216 32,478 56,928

3.76(4) 1.63 62.19 6,502 25,465 31,967 54,132

2.26 76.76 6,399 26,338 32,737 61,147

1.98(5,6, 7) 1.5 58.91 6,906 24,471 31,377 46,943

2.83(8,9) 1 44.33 8,166 22,880 31,046 41,380

2.04(10) 0.67 33.72 8,173 22,593 30,766 38,913

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Period Ending Assets Current Assets Cash And Cash Equivalents Investments Net Receivables Inventory Other Current Assets Total Current Assets Long Term Investments Property Plant and Equipment Goodwill Intangible Assets Accumulated Amortization Other Assets Deferred Long Term Asset Charges Total Assets Liabilities Current Liabilities Accounts Payable Short/Current Long Term Debt Other Current Liabilities Total Current Liabilities Long Term Debt Other Liabilities Deferred Long Term Liability Charges Minority Interest Negative Goodwill Total Liabilities
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30-Dec-10

30-Dec-09

30-Dec-08

2,387,000 1,179,100 109,900 692,500 4,368,500 1,335,300 22,060,600 2,586,100 1,624,700 31,975,200

1,796,000 1,060,400 106,200 453,700 3,416,300 1,212,700 21,531,500 2,425,200 1,639,200 30,224,900

2,063,400 931,200 111,500 411,500 3,517,600 1,222,300 20,254,500 2,237,400 1,229,700 28,461,500

2,916,400 8,300 2,924,700 11,497,000 1,586,900 1,332,400 17,341,000

2,970,600 18,100 2,988,700 10,560,300 1,363,100 1,278,900 16,191,000

2,506,100 31,800 2,537,900 10,186,000 1,410,100 944,900 15,078,900

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Stockholders' Equity Misc Stocks Options Warrants Redeemable Preferred Stock Preferred Stock Common Stock Retained Earnings Treasury Stock Capital Surplus Other Stockholder Equity Total Stockholder Equity Net Tangible Assets 16,600 33,811,700 -25,143,400 5,196,400 752,900 14,634,200 12,048,100 16,600 31,270,800 -22,854,800 4,853,900 747,400 14,033,900 11,608,700 16,600 28,953,900 -20,289,400 4,600,200 101,300 13,382,600 11,145,200

3. NEED FOR STUDY

To be successful, organizations must look into the needs and wants of their customers. That is the reason why many researchers and academicians have continuously emphasized on the importance of customer satisfaction, loyalty and retention. Customer satisfaction is important because many researchs have shown that customer satisfaction has a positive effect on an organizations profitability. Due to this, the consequences of customer satisfaction and dissatisfaction must be considered. There is also a positive connection between customer satisfaction, loyalty and retention. The importance of customer satisfaction is apparent when you realize that, without customers, you don't have a business. A single unsatisfied customer can send more business away from your company than 10 satisfied customers. The more you focus on customer retention and customer support, the more long-term business you'll get. It's worth it to focus on customer satisfaction strategies, no matter how large or small your company is.

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Understanding the needs of the customer is critical. A business relationship, just like any other relationship, relies on both people getting their needs met. No matter what type of business you are in, all customers want the same thing. They want to feel welcomed and appreciated by you and your staff. They don't want to get the impression that they are just being used by you for money. Small interactions like "Thank you" and a nice smile can go a long way toward customer satisfaction. Make sure your employees operate with the same principles. A big part of customer satisfaction is reliability. If customers come to expect a certain mode of behavior from you and your employees, you should deliver it to them each and every time. Customers want to be able to rely on you. They expect consistent delivery times (if applicable) and support. By training your employees to treat all customers with the same respect, your customers will all have the same experience with your company, which will increase customer satisfaction. Be honest when you don't meet expectations. Customer satisfaction is at its most important when something goes wrong in the chain of delivery. Whether a customer was double charged or didn't receive what she ordered, your employees need to handle the situation with the utmost care. Your employee should apologize and take steps to rectify the situation. The phrase "the customer is always right" is at the core of a good customer satisfaction strategy. It doesn't matter whether or not the customer misread the instructions or made the mistake; your employee should take steps to make the customer happy. Customer satisfaction is the foundation of a good business. Satisfied customers will make a great foundation for return business, and they may also bring in their friends and associates. Remember that customers are the heart of any business. Keep them satisfied, and encourage them to tell their friends about their experiences with your business. Therefore, customer satisfaction, loyalty and retention are all very important for an organization to be successful.

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4. LITERATURE SURVEY
The importance of customer satisfaction and delight on loyalty in the tourism and hospitality industry Customer satisfaction has been a focus of researchers and marketers as an important antecedent of customer loyalty. Research has proven that satisfied customers show loyalty by purchasing more products or services, recommending products to others, and being less price sensitive (Anderson, Fornell, and Mazvancheryls, 2004; Homburg, Koschate, and Hoyer, 2005). Recent studies propose customer delight as a new variable of interest in satisfaction research and are anticipated to possibly produce greater customer loyalty than satisfaction (Hicks, Page, Behe, Dennis, and Fernandez, 2005). Like customer satisfaction, customer loyalty is also considered crucial to the success of a business organization because loyal customers are less expensive to retain than to find and develop new customers (Reichheld and Sasser, 1990). In recent years interest has also grown in understanding the multi-phases of loyalty as a useful way to segment customers with differential strategies (Knox and Walker, 2001; McMullan and Gilmore, 2002; Palmer, McMahon-Beattie, and Beggs, 2000). The problem of this research is to examine the impact of customer satisfaction and delight on loyalty by empirically testing a model. Furthermore, the study aims to better understand four phases of loyalty development: cognitive, affective, conative, and action loyalties. Data were collected from guests who stayed at a Midwestern resort during a peak summer vacation time using an online and a paper survey (1,573 subjects from an online survey, 87 subjects from a paper survey). The model was tested applying structural equation modelling (SEM) to estimate the relationship between customer satisfaction, delight, and loyalty in a tourism and hospitality context. The findings support the proposed model and suggest that (1) customer satisfaction has a direct and
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positive influence on cognitive and affective loyalty; (2) customer delight has a direct and positive influence on cognitive and affective loyalty; (3) customer satisfaction has a greater influence on cognitive loyalty than on customer delight; (4) customer delight has a greater influence on affective loyalty than on customer satisfaction; (5) cognitive and affective loyalties have a direct and positive influence on conative loyalty; and (6) conative loyalty has a direct and positive influence on action loyalty. This study is one of few empirical studies on customer satisfaction, delight, and loyalty and tests a more comprehensive model than previous research efforts. This study will contribute to the body of knowledge on customer satisfaction, delight, and loyalty and provide important theoretical and applied suggestions for the tourism and hospitality industry. Future studies should replicate the findings and test the model with different samples such as types of accommodations (e.g., motel, business hotel, bed and breakfast), places (e.g., other states, other countries), and service industries (e.g., restaurant, airline, cruise). With attitudinal research, validating the accuracy of action loyalty or intended future behaviours should be validated with actual measures of future returns to the business and recommendations of the business to others.

5. OBJECTIVES OF STUDY
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Below are the objectives of this project: Discovering the most appreciated product by the customers. y By this we will try to find out the most liked product of McDonalds, so that the company could concentrate on maintaining the consistence of that product and simultaneously improve and promote the other products. y Analyzing the reason of dissatisfaction among customers. y By this we will try to find out the reasons which are affecting the customers satisfaction and resulting in loss of customers. y Analyzing Brand association of the customers. y By this we will try to find out the component of the brand to which the customers are more linked to by checking the recall of the brand.

6. SCOPE OF OBJECTIVES
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.

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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 products aggressively, 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. Mc Donald s mein hai kuch baat projects McDonalds as a place for the whole family to enjoy. 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 without compromising 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 potentially revolutionary products have failed simply because of their inability to build a healthy
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perception about themselves in the customersminds. McDonalds being an internationally renowned brand brings with it certain expectations for the customers.

Target Segmentation A Family with children Urban customers on the move

What is McDonald's for me? A treat to children, a fun place to be for the children 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.

Teenager

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 selfimage. 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. McDonalds Marketing Mix (5 P s) After segmenting the market, finding the target segment and positioning itself, each company needs to come up with an offer. The 5 Ps used by McDonalds are: 1. Product 2. Place 3. Price 4. Promotion 5. People Product: How should the company design, manufacture the product so that it enhances the customer experience?

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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 non-tangible aspects of the product and service. McDonalds has intentionally kept its product depth and product width limited. McDonalds studied the behavior of the Indian customer and provided a totally different menu as compared to its International offering. It dropped ham, beef and mutton burgers from the menu. India is the only country where McDonalds serve vegetarian menu. Even the sauces and cheese used in India are 100% vegetarian. McDonalds continuously innovates its products according to the changing preferences and tastes of its customers. The recent example is the introduction of the Chicken Maharaja Mac. McDonalds bring with it a globally reputed brand, world class food quality and excellent customer specific product features. 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 dri ve 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. Now McDonalds have also started giving internet facility at their centres and they have been playing music through radio instead of the normal music. There are certain dedicated areas for chi ldren where they can play while their parents can have some quality time together. Pricing includes the list price, the discount functions available, the financing 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 expenses incurred. The price must take into consideration the appropriate demand-supply equation. McDonalds came up with a very catchy punch li ne Aap ke zamane mei n ,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.

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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. Some of the most famous marketing campaigns of McDonalds are: y You Deserve a break today, so get up and get away- To McDonalds y Aap ke zamane mein, baap ke zamane ke daam. y Food, Folks, and Fun y Im loving it 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. McDonald 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 level of importance has changed to be in the following order (the more important people are at the top): 1. Customers 2. Front line employees 3. Middle level managers 4. Front line managers 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. Importance of PLC in McDonalds
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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 understudy 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 back-to-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 which 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 McBreakfast would be introduced between 6 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
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products and services. McDonalds has anticipated these changes to maintain its competitive edge.

SWOT Analysis: STRENGTH 1. Strong Brand 2. Customer intimacy 3. Product innovation 4. Supplier integration Opportunities 1. Expand into tier 2 and tier 3 cities. 2. Entry into breakfast category THREATS 1. Changing customer lifestyle and taste 2. Increase competition from local fast food outlets like jumbo king WEAKNESS 1. Low depth and width of product.

The Road Ahead Entry to Tier 2 and Tier 3 cities The main target customer for McDonalds is the new urban Indian family. With the customer demographics constantly
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changing and tectonic social and cultural shifts being observed in Tier 2 and Tier 3 cities due to globalization, the company is now expanding to Tier 2 cities like Pune and Jaipur. Rolling out McBreakfast across all outlets In India, the company has recently launched its entry into the breakfast food category. This is now launched on a pilot basis on select stores. In Mumbai, it is available at the Vile Parle outlet. The company views this category as a key growth driver in future.

7. RESEARCH METHODOLOGY
Research is an endeavour to discover answers to intellectual and practical problems through the application of scientific method. Research is a systematized effort to gain new knowledge . -Redman and Mory. Research is the systematic process of collecting and analyzing information (data) in order to increase our understanding of the phenomenon about which we are concerned or interested. Research Objectives The purpose of research is to discover answers through the application of scientific procedures. The objectives are: y To gain familiarity with a phenomenon or to achieve new insights into it Exploratory or Formulative Research. y To portray accurately the characteristics of a particular individual, situation or a group Descriptive Research. y To determine the frequency with which something occurs or with which it is associated with something else Diagnostic Research. y To test a hypothesis of a causal relationship between variables Hypothesis-Testing Research. The design used for this research is Exploratory Research. Data: Primary research entails the use of immediate data in determining the survival of the market. The popular ways to collect primary data consist of surveys, interviews and focus groups, which shows that direct relationship between potential customers and the companies. Whereas secondary research is
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a means to reprocess and reuse collected information as an indication for betterments of the service or product. Both Primary as well as Secondary data has been used to complete this research. Research Instrument: A testing device for measuring a given phenomenon, such as a paper and pencil test, a questionnaire, an interview, a research tool, or a set of guidelines for observation. A questionnaire has been used for this research. Research Plan: The Research plan for this topic is as follows: y Exploratory Research Design will be used to complete the research. y Data will be collected from Primary as well as Secondary sources. y A brief questionnaire will be used to interrogate the audiences and collect primary data.

8. SAMPLE DESIGN
Sample Unit:
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A sample is a finite part of a statistical population whose properties are studied to gain information about the whole(Webster, 1985). When dealing with people, it can be defined as a set of respondents(people) selected from a larger population for the purpose of a survey. A population is a group of individuals persons, objects, or items from which samples are taken for measurement for example a population of presidents or professors, books or students. In this case the sample unit is individual between the age of 18 to 35, who visit Malls & Mcdonalds. Sample Frame: A sample frame is a list that includes every member of the population from which a sample is to be taken. Without some form of sample frame, a random sample of a population, other than an extremely small population, is impossible. In this case the Sample Frame is individuals between the age of 18 to 35 who visit the VilleParle McDonalds. Time and Place: The prospects will be identified and questioned at the VilleParle McDonalds between the periods of 6th Jul 2011 to 10th Jul 2011 from 11:00 am to 5:00 pm. Type of Sampling: The below Non Probability sampling methods have been used in this research: Availability sampling Judgmental sampling Sample Size: The below formula has been used to determine the sample size (N): The square root of N = (1.96)*(&)/precision y Where & is the population standard deviation of the for the variable whose mean one is interested in estimating. y Precision refers to width of the interval one is willing to tolerate and 1.96 reflects the confidence level. Thus the calculated sample size is 65.

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9. ANALYSIS AND FINDINGS

After interpretation of the responses provided by the respondents, the below results are found: Q. Which is your favourite product at McDonalds?

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Q. Is the product line in McDonalds adequate?

Q. What is the main problem you faced at McDonalds?

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Q. Which area do you think needs the most improvement?

Q. What is the first thing that strikes your mind about McDonalds?

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10. SUGGESTIONS & RECOMMENDATIONS

The most appreciated product by the customers is French Fries, McDonalds should concentrate on maintaining the consistence of this product and simultaneously improve and promote the other products.
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Most of the customers do not have any problem with the delivery but some face issues due to the long queues at the delivery counter. Hence McDonalds should try to find out new ways of delivering the products to the customers, so that they dont have to wait in long queues. Most of the people associate McDonalds with Burgers, Golden Arches & Fun. Hence McDonalds promote these factors more in order to retain the old customers and acquire new ones.

11. BIBLIOGRAPHY
Books: 1. Product & Brand Management By S. A. Chunawalla 2. Essentials of Marketing Research By Paurav Shukla Websites: 3. www.mcdonaldsindia.com/ 4. www.wikipedia.org/ 5. www.socialresearchmethods.net/

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