McDonald

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These are the questions that sir has given in the handout. McDonald’s in India – Discussion Questions
1. What went wrong for McDonald? Is there anything that McDonald’s could have done to have foreseen or better prepared itself for the negative publicity associated with the negative publicity associated with the revelation that it used beef extract in its frying oil?

2. What lessons does the experience of McDonald’s in India hold for other foreign fast food chains?

3. How far should a firm such as McDonald’s go in localizing its product to account for cultural differences? At some point might it not lose its advantage by doing so? Answers to the given questions:

Q – What went wrong for McDonald’s?
A –
* Vegetarianism
The major issue was beef. Cow being sacred and worshipped, beef could not be served. Muslims did not eat pork. The challenge was to change the form of the worldwide popular Hamburger to make an entry into India. With 25-30% of the population being lacto vegetarian and a large majority eating meat, an alternative to beef and pork was necessary. The population of a billion was undoubtedly a promising opportunity for an international company.

* Competition from Local Food Retailers:
The competition from the local food retailers was intense. The food retailers had been doing business for years. Their familiarity with the market and the understanding of the local taste gave them a competitive advantage. There were numerous eating joints which offered snacks and meals within an affordable price range. Organized food retailing was dominated by the north Indian style and the south Indian style restaurant chains. The metropolitan cities and some developed urban areas offered superior dining experiences through the existence of some fine, classic restaurants. But the price was expensive and only a selected group of customers could afford to make visits there. On the other hand, the size of the unorganized food retailing was larger and comprised of roadside food vendors, dhabas (the eateries on the highways) and on the outskirts of the cities and a plethora of small eateries. Local food in a large assortment was widely available within acceptable price ranges. It was observed that food choices made by consumers were impulsive. Aroma, taste, habits and visibility worked on the subconscious level and played a major role in affective decision making. The local food business exactly understood the psychology of the customers and operated accordingly. The mass markets in India had their own set of preferences.

* Target marketing:
Value propositions had to be directed to the right target market to establish a new product. An interesting question was who would eat at McDonald’s? In order to develop the marketing strategy, it was important for any company to understand the consumer market. The more one knew and understood about consumers, the more effectively one could communicate and market to them. Four aspects of consumer behaviour had to be examined to understand the consumer market, the ability of the people to buy, consumer needs, buying motives and the buying process.

Target segmentation

Target segment

What is Mc Donald’s for me?
A family with children
A treat to children, a fun place to be for children
Urban customer on the move
Great taste, Quick service without affecting the work schedule Teenager

Hang out with friends but keep it affordable

* Pricing
Food pricing was a sensitive issue in India. An ideal strategy was to focus on customer’s ability to pay and tap the rich and upper middleclass population in India. Although McDonald’s strategy was to increase sales volumes by making products available at affordable price, its products were perceived to be expensive. The company outlets in Delhi and Mumbai initially were opened due to the increased affordability of people with western exposure and brand recognition factors in metros. Additionally, people in the metros were open...
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