INTRODUCTION & HISTORY

1.1 Introduction:
When the Dick and Mac McDonald opened their first restaurant in San Bernardino, California in 1948, they never could have imagined the extraordinary growth their company would experience. From modest beginnings, they found a winning formula selling high quality products quickly and low-cost. It w`as not until 1955 when Ray Kroc, a salesman from Chicago, became involved in the business that McDonald's really began to flourish. Kroc realized the same successful McDonald's formula could be exploited throughout the United States and beyond with the use of franchising. A franchise is an agreement or license to sell a company's products exclusively in a particular area, or to operate a business that carries that company's name. In 1955, Kroc knew that the key to success was through rapid expansion; thus, the best way to achieve this was through offering franchises. Today, over 70 percent of McDonald's Restaurants are franchises. In 1986, the first franchised McDonald's opened in the United Kingdom. Now, there are over 1,150 restaurants, employing more than 49,000 people, of which 34 percent are operated by franchisees. Moreover, there are over 30,000 these restaurants in more than 119 countries, serving over 47 million customers around the world. In 2000 alone, McDonald's served over 16 billion customers. For perspective, that number is equivalent to providing a lunch and dinner for every man, woman, and child in the world! McDonald's global sales were over $40 billion, making it by far the largest food service company in the world.

Now McDonalds Corporation USA is the ninth most valuable brand in the world. In October 1996, McDonalds opened its first Indian outlet in Vasant Vihar, an affluent residential colony in Indias capital, New Delhi. As of November 2004, McDonalds has opened a total of 58 restaurants, mostly in the northern and western part of India. While McDonalds opened 34 restaurants in five years (by 2001), 58 restaurants in eight years (by 2004), it is now planning to add more than 90 new restaurants in the next coming years. Although the initial scenes of crowds lining up for days outside the McDonalds restaurants in Delhi and Mumbai are no longer seen, Indian consumer response to McDonalds products still remains very strong. McDonald's India is a joint-venture company managed by Indians. McDonalds India, a subsidiary of McDonalds USA, has expanded its presence in India via 2 joint venture companies Connaught Plaza restaurants and Hardcastle restaurants. McDonalds (India) has a 50

per cent equity stake each in both joint venture companies. Connaught Plaza expansions restaurants across manages operations and

North India (Delhi, Jaipur and Punjab) led by

Vikram Bakshi and Hardcastle restaurants, which is headed by Amit Jatia, manages operations and expansions across Western India (Mumbai, Pune, and Gujarat). The growth of McDonalds in India is not as rapid as in other countries. How did McDonalds do it? How did a hamburger chain become so prominent in a cultural zone dominated by non-beef, nonpork, vegetarian, and regional foods such as chola bhatura, kababs, bhaji, idli, samosa, dosa, vada, sambar, bhelpuri, and rice? The answer

to this question lies in McDonalds carefully planned entry and expansion strategy in accordance with Indias changing political,

economic, and cultural landscape in the 1990s. Six years prior to the opening of the first McDonald's restaurant in India, McDonald's and its international supplier partners worked together with local Indian Companies to develop products that meet McDonald's rigorous quality standards. Part of this development involves the transfer of state-of-theart food processing technology, which has enabled Indian businesses to grow by improving their ability to compete in todays international markets. McDonald's constructs its restaurants using local architects, contractors, labour and - where possible local materials. McDonald's hires local personnel for all positions within the restaurants and

contributes a portion of its success to communities in the form of municipal taxes and reinvestment. The above aspects of McDonalds do not get covered and highlighted by the news hungry press. But when the false news of using beef allow in the French fries hit the market, the press did not leave a chance to exaggerate it. Despite the fact that right form the beginning; no beef ingredients have been used in any of the products in India. The marketing agency of McDonalds, Mudra comes to its rescue in such times. The advertisements created by Mudra are a rage all over the nation, especially amongst the children. Who can forget the little kid who gets nervous in the school competition, but becomes happy again when his father takes him to McDonalds? McDonalds India has tried not to leave any stone un-turned in its objective to satisfy the Indian customer. But in Amit Jatias words,

Customers are generally not forgiving. According to the survey conducted, customers demand low prices, more seating space, more variety, home delivery, and the list is endless. The fundamental secret to McDonalds success is the way it achieves uniformity and allegiance to an operating regimen with proper marketing strategy. McDonalds India has to adhere to many rules and regulations laid down by the parent company, and it still has to cater to the Indian customer and his needs. McDonalds India is a case study on how to mix conformity with creativity.

2. PHILOSOPHY & VISION

Every company has a Vision or Mission Statement. A vision statement should be short, clear, vivid, inspiring and concise without using jargon, complicated words or concepts. It represents the

corporation guiding principles. It subtly indicates the businesses the firm will pursue and the customer needs it will seek to satisfy. The vision statement also allows the employees to clearly adhere to the standards set up by the business unit and work in as per the guidelines framed by the company.

2.1 McDonalds Vision Statement

"McDonald's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile." The McDonald's philosophy of Quality, Service, Cleanliness and Value (QSC&V) is the guiding force behind its service to the customers. McDonalds India serves only the highest quality products. All McDonalds suppliers adhere to Indian Government regulations on food, health and hygiene while continuously maintaining their own recognized standards. All McDonalds products are prepared using the most current state-of-the-art cooking equipment to ensure quality and

safety. At McDonalds, the customer always comes first. McDonalds India provides fast friendly service- the hallmark of McDonalds that sets its restaurants apart from others. McDonalds restaurants provide

a clean, comfortable environment especially suited for families. This is

achieved through McDonalds stringent cleaning standards, carefully adhered to. McDonalds menu is priced at a value that the largest segment of the Indian consumers can afford. McDonalds does not sacrifice quality for value rather McDonalds leverages economies to minimize costs while maximizing value to customers. The main effort of McDonaldss service is to make customer the whole sole beneficiary through its stringent standards maintained all over the world.

3. SWOT ANALYSIS
3.1 SWOT Analysis
SWOT stands for strengths, weaknesses, opportunities, and threats. To meet the needs of the key market it is important to analyse the internal marketing strengths of the organisation. Strengths and

weaknesses must be identified, so that a marketing strategy which is right for the business can be decided upon. Once the strengths and weaknesses are determined, they are combined with the

opportunities and threats in the market place. This is known as SWOT analysis. SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps businesses to focus on key issues. Once key issues have been identified, they feed into marketing objectives.

Strengths
McDonalds has built up huge brand equity. It is the No. 1 fast-food company by sales, with more than 31,000 restaurants serving burgers and fries in almost 120 countries. Sales, 2007 (11, 4009 million), 5.6% sales growth. Good innovation and product development. It continually innovates to retain customers in the business. The McDonalds brand offers consumers choice, reasonable value and great service Large amounts of investment have gone into suppo rting its franchise network, 75% of stores are franchises.

Loyal staff and strong management team. Advertisements and promotion to market the McDonalds as a brand carves a strong image on customers mind.

Weaknesses
Core product line out of line with the trend towards healthier lifestyles for adults and children. Product line heavily focused towards hot food and burgers. Locations of outlets are sometimes not to closer to storage centres resulting in loss of quality. Seasonal. Quality issues across the franchise network. Break-even sales can be generated after operating for certain number of years only.

Opportunities
Joint ventures with retailers (e.g. supermarkets). Consolidation of retailers likely, so better locations for franchisees. Respond to social changes - by innovation within healthier lifestyle foods. Its move into hot baguettes and healthier snacks (fruit) has supported its new positioning. Use of CRM, database marketing to more accurately market to its consumer target groups. It could identify likely customers (based on modelling and profiles of shoppers) and prevent brand switching. Strengthen its value proposition and offering, to encourage customers who visit coffee shops into McDonalds.

Installing childrens play-parks and focus on educating consumers about health, fitness. Continued focus on corporate social responsibility, reducing the impact on the environment and community linkages. Expansion into emerging markets of cities present in India. Focus on middle-class income group customers with low-priced quality goods will enhance the profit margin. Senior Citizens have been totally deprived of marketing strategy adopted by McDonalds. The burgers and eatables are more Indianized so that senior citizens find it familiar but the introduction of more milky beverages would attract more senior citizens and kids.

Threats
Social changes - Government, consumer groups encouraging balanced meals, 5 a day fruit and vegetables. Focus by consumers on nutrition and healthier lifestyles. Competitive pressures on the high street as new entrants offering value and greater product ranges and healthier lifestyles products. E.g. subway, supermarkets, M&S. Recession or down turn in economy may affect the retailer sales, as household budgets tighten reducing spend and number of visitors. Pressure groups - environmental.

4. MARKETING OBJECTIVES
A Marketing plan must be created to meet clear objectives. Objectives guide marketing measure actions and are used to

how well a

plan is

working. These can be

related to market share, sales, and goals, reaching the target audience and creating awareness in the marketplace. The objectives communicate what marketers want to achieve.Long-term objectives are broken down into shorter-term measurable targets, which McDonald's uses as milestones along the way. Results can be analyzed regularly to see whether objectives are being met. This type of feedback allows the company to change plans. It gives flexibility. Once marketing objectives are set the next stage is to define how they will be achieved. The marketing strategy is the statement of how objectives will be delivered. It explains what marketing actions and resources will be used and how they will work together. McDonalds plans to open as many as 140 restaurants throughout India this year, focusing on drive-through outlets. Investment of more than Rs.400 crore in the next two years to expand its operations. Transform itself into a high-volume, mass-market brand with compounded annual growth at around 30 per cent to 35 per cent in the next few years. Addition of franchisees as current 75% income generated is from franchisee centers affiliated to McDonalds. Moving out of the metros and concentrate its efforts on other midsized cities in providing service. The plan is to enter a new city,

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understand the market and then multiply by opening up more outlets in these cities rather than spreading to too many cities at a time Increase the number of customers turning up at its restaurants around the country by providing the same service and quality by achieving 100% customer satisfaction. Target on customers between age-groups 24-38 with childrens to position itself as a family restaurant and the ideal place for kids and teenagers. Increase brand loyalty among customers. To build a new generation who will stay with the brand and then emerge as a long-term player. Introduce new innovative menus by development of new products, which cater to people's needs by keeping Indian tastes in mind and to provide greater choice whilst ensuring that the products meet the requirements of a balanced diet, so that the crowds keep pouring through the doors.

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5. MARKETING STRATEGY
5.1 McDonalds Road Map for India
5.1.a Emphasis on Local Management:
McDonalds has given the adage of think global, act local a concrete shape in India. The companys localization strategy is clearly manifest in the critical area of management. McDonalds decided to set up two joint ventures on a 50:50 basis with two local entrepreneurs in Mumbai and Delhi. In Mumbai, Amit Jatias

company, Hardcastle Restaurants Private Limited, was selected to own and manage McDonalds restaurants in the western region. In Delhi, Vikram Bakshis Connaught Plaza Restaurants Private Limited was chosen to own and manage McDonalds restaurants in the northern region. Both Vikram Bakshi and Amit Jatia are responsible for running McDonalds in India. Vikram Bakshi has extensive background in real estate development in Delhi, while Amit Jatia, a vegetarian, has a chemicals and textile business background in Mumbai. It was not their backgrounds, however, that won the confidence of the Big Macs management. Rather, it was their business plan emphasizing India-centric management strategies and their easy access to

bureaucracy so critical to effective government relations building.

5.1.b Politically Correct Strategy:

In the beginning, McDonalds was faced with two challenges of the Indian market: (1) How to avoid hurting religious sensibilities of Indian consumers; and (2) How to avoid political confrontation with Indian government and political activists.

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McDonalds managers were well aware of the fact that political activists can create trouble for foreign-based fast food chains. The two local managing directors (Bakshi and Jatia) of McDonalds took a series of politically correct strategies to deal with the initial challenges of the Indian market. Since Indias majority of Hindus (80% of Indias population) revere cows as sacred and 150 million of Indian Muslims do not eat pork, beef and pork have been a complete no-no from the start. Instead, McDonalds introduced a mutton-based Maharaja Mac in India, as opposed to its flagship beef-based Big Mac elsewhere.14 other itemssuch as the tantalizing McAloo Tikki Burger (breaded potato and pea pattie)were added to the menu to lure Indias middle class. Approximately 75% of the menu available in McDonalds in India is Indianized and specifically designed to woo Indian customers.

5.1.c Employment Opportunity

India has come a long way from opposing the entry of MNCs to encouraging them to expand their business operations in India. Today, every expansion move McDonalds makes is received well by government officials. An important reason for this shift in attitude is the ability of the company to generate quality and long-term employment opportunities for Indians. McDonalds typically employs local people, and the average McDonalds restaurant in India employs more than 100 people in all kinds of positions- cashiers, cooks, managers, etc. Besides, every expansion also brings additional income and employment opportunities to Indias agricultural work force, which is very pleasing to government officials.

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5.2 FORMULATING THE MARKETING STRATEGY:

5.2.1. Selecting the Target Market
Shifted from world-wide positioning of drive-in convenience and speedy-service. This world-class strategy is the latest element of

overall plan to continue revitalizing McDonald's for customers through compelling food choices, great service and restaurant operations, motivating value and exciting new restaurant decors. Segment: Each company identifies the parts of the market that it can serve best and most profitably, which is called the segment of the market it wants to serve. Market segmentation allows to divide a market into smaller groups of buyers with distinct needs, characteristics, or behaviours who might require separate product or marketing mixes. McDonalds identified certain segment based on its geographical and demographic segments. O Geographic Segmentation Geographic segmentation calls for dividing the market into different geographical units such as nations, regions, states, countries, cities, or neighbourhoods. McDonalds India divided the country into different zones based on directions and concentrated particularly on North and West zone as its first market segment to attract on. O Demographic Segmentation Demographic segmentation divides the market into groups based on variables such as age, gender, family size, family life cycle, income, occupation, education, religion, race,

generation, and nationality. McDonalds targeted different age groups from children and teens to adults upto age less than 30 years. Like its other worldwide locations, McDonalds targeted children as their main clientele in India.Children are an enormously powerful medium for

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relationship building in India. They not only influence markets in terms of the parental decision-making to buy certain kinds of products, they are also future consumers. Thus, McDonalds has done everything possible to attract children. McDonalds also attracted many jean-clad teenagers, who use the outlet as a venue to meet their friends circle, still a tricky issue among Indian middle- class families. Income segmentation was done to attract consumers from high income groups. Target: A target market consists of a set of buyers who

share common needs or characteristics that the company decides to serve. McDonalds targeted young families who are able to eat out, but the main focus was on to attract small childrens so that the whole young family follows after it. The possible target market decided on was only 10% of the Indias population. As said by Vikram Bakshi from North zone, We want to first concentrate on metros, then open branches in other cities. We want to setup outlet only in cities where we can ensure the quality of products. McDonalds followed concentrated marketing (or niche marketing), a market- coverage strategy in which a firm goes after a large share of one or a few segments or niches. Different phases to move into target markets was scheduled on

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o Phase I Focus on cities of relatively high incomes where citizens are exposed to western food and culture. High-income urban dwellers are seeking variety in their choice of foods and are willing to spend more on international cuisine, including fast foods. o Phase II Move to smaller satellite towns (Gurgaon, Pune). Positive spill-over effect of reputation from main metros. Other cities like Jaipur, Agra were also targeted to attract foreign tourists who often visit them as favourite tourist destinations. o Phase III Move on to crowd pulling centers like malls, multiplexes, highways, railway stations and airports. o Phase IV Introduce new low-priced products with same quality and service for middle class income groups of people.

5.2.2. Positioning the Offer Mc Donalds mein hai kuch baat, a place for entire family to enjoy. Mc Donalds positioned for youth families. Positioning is about communicating the unique selling advantage or proposition to the target audience in everything the firm does i.e., marketing, sales, and customer service. The consistency helps our customer remember. Our marketplaces have lots of choices. Too many, perhaps, for the average consumer to evaluate logically. With hundreds of choices in any given locale, many people simply look for a referral to a product or with professional services: a company that their friends trust. Those who shop around consider two or three options and take the best of the three.

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With hundreds of choices, and with products and services that most consumers find hard to differentiate, how do you set yourself, apart from the crowd? Positioning allows a marketer to think about why a customer would want to do business with them. What do you offer that the other producers don't? What does a potential client get by doing business with you, which will serve their needs well?

Positioning has three components:

What are your strengths? Your distinctive competencies? What about your offerings provide value to your customers? Who is your target customer? What about makes them an ideal fit

for the value you offer? How are you different from your competitors in ways that

your customers and potential customers will value? In other words, what is your unique selling proposition? Your competitive advantage? When all three are put together, we have a positioning statement. Positioning statements are the bases for all marketing messaging, sales scripts, and at a corporate level: branding. So here are the things we need to know to be able to develop your own market positioning: Who are you? As a company? As a sales rep? What is your firm or known for? (Ask people what they think. It

may not be what your internal talk says it is. Is it prompt claims? Or telling it like it is? Or it might just be everyone knows you.) What do your customers appreciate about your products or

services? (Ask your colleagues and your customers. Again, it might not be what you think. Maybe you are known for high quality. Or perhaps

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for returning calls promptly or your problem solving ability. Maybe it is just that you are convenient. ) What are you particularly strong at? (These are your core

competencies.) What are you better at, than anyone else in your business? As a

company? As a professional? As a sales rep? (Quality? Innovation? Cost effective choices?) Who are your most satisfied customers? What is it that they value

most about what you have to offer?

Based upon your sales goals and annual plan, who is your target

market? The key here is the fit between what you do well and who or what type of business needs what you are good at.

What value can you bring your customers that they will value the

most, based upon your unique strengths?

At a company level, can you articulate this competitive value for

your target, best customers? Does your branding reflect this? Do your communications use this messaging as its foundation? o o o Are your web, collateral, and sales force attuned to this value? Do your services focus on this value? Does your customer service reflect this value?

Does your customer service reflect the promise of the brand? Or

are customers continually shocked that the customer service is not like the brand image at all?

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Your customers are bombarded with hundreds - perhaps thousands - of commercial messages each day. Believe it or not buying your product or service is probably not their most important priority. So, in the end, it comes down to relationships. Does your vendor understand your needs?

Thus, positioning is EVERYTHING, because, positioning is that unique value you offer, to that target market you seek, in ways that are better, more effective, more amazingly meeting your needs than any of your competitors. And, the customer service, and employee relationships need to MATCH or be INTEGRATED with the market positioning.

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Importance of Positioning:

Marketing strategy that aims to make a brand occupy a distinct 'position,' relative to the competing brands, in the mind of the by emphasizing the

customer. Firms apply this strategy either

distinguishing features of their brand (what it is, what it does and how, etc.) or try to create a suitable image (inexpensive or premium, ut

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ilitarian or luxur ious, entry-level or high-end, etc.) through advertising. Once a brand is positioned, it is very difficult to reposition it without destroying its credibility.

5.2.3. Assembling the Marketing Mix -

Assembling the marketing mix means assembling the four Ps of marketing viz. product, price, place, and promotion, in the best possible combination. The marketing mix should be viewed as an integrated and coordinated package of benefits that reflect the characteristics of customers and various targeted publics and satisfy their needs, wants, and expectations. Note that the elements of the marketing mix should be integrated because each element of the mix usually has some

impact, direct or indirect, on the other three. For example, if you improve the product or service you probably have to change the price because it costs more to produce. Although you may not have to change where the product is delivered to the customer, you will almost certainly have to change the promotion or communication with the customer because you need to tell the customer about the changes you have made in the product and how the changes will make it more desirable and satisfying.

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The marketing mix principles (also known as the 4 Ps.) are used by business as tools to assist them in pursuing their objectives. The marketing mix principles are controllable variables, which have to be carefully managed and must meet the needs of the defined target group. The marketing mix is apart of the organizations planning process and consists of analyzing the defined:

strategies.

egies.

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Marketing strategies must feature customer orientation, input, and accessibility in the fight to the top of the market. McDonald's is no different. An example of this is illustrated with a comparison of McDonalds and Wendy's. At first glance, they may appear to have roughly the same marketing mix and target markets. Both are fast food and provide similar products. However, looking closer, one can recognize

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that McDonald's primary target market is children ages 3-11 and their parents. McDonald's understood that the parent was making the purchasing decision, most likely based on price.

What McDonald's marketing executives did was ingenious. They put an Rs.20 toy in with the hamburger, French fries, and drink and gave it a special name, the "Happy Meal". Then McDonald's marketed the Happy Meal to the kids. If you have you ever asked your child where to buy a Happy Meal, they will tell you that there is only one place you can buy one, and that is at McDonald's has Ronald McDonald, playgrounds or PlayPlaces, "Happy Meals," and fun advertisements with brightly colored "Fry Guys" or the "Cheese Burgerler". Contrastingly, Wendy's targets a more adult market and the restaurants represent a more mature

atmosphere with carpet floors and Dave Thomas advertisements. Wendy's does have children's meals that offer a toy, but overall the atmosphere attracts a different demographic group. McDonald's restaurants have a variety of strategies that apply to product, placement, promotion, and price that makes them one of the most successful, well-recognized organizations in the world.

A] Product Strategies

Product Decision

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Branding

Quality

Features

McDonald's marketing strategies should be looked at historically in order to see the larger picture of the firm's success. There have been so many strategies since the inception of the firm that it is difficult to account for them all, the two most memorable are the development of the "Golden Arches" and "Ronald McDonald". These two icons have given customers a mental image of what to look for when they want quality food for a low price fast.

The firm revolutionized the fast food industry and positioned itself as the market leader with low-priced, quality food and provided an entertaining atmosphere for the children. These things were what that the market wanted at the time and the firm answered in spades.

The perceived secret of McDonald's success is the willingness to innovate, even while striving to achieve consistency in the operation of its many outlets. The vegetarian burger menu consists of the McAloo Tikki Burger. It is a vegetable burger with potato, peas, and

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spices, tomato, onion, and a vegetable-tomato mayonnaise.McVeggie is another Vegetarian burger on the menu. It looks similar to the above McAloo Tikki Burger, but is made from mixed vegetables, peas, and spices, lettuce and veg mayonnaise (referred to as Veg Sauce in India).Another new Menu Item added is the McSurprise burger. It

contains a patty, onion, Italian mayonnaise.There is also a Pizza McPuff, consisting of a puff pastry stuffed with peas, sliced cheese etc.

McDonalds concentrated on studying the Indian culture, its valuesystems and its influence in food consumption decision making. It found that although a substantial proportion of the populations were non-vegetarians, they stuck to mostly fish, mutton and chicken. Muslim took beef but though pig meat to be dirty; Hindus preferred neither beef nor pork; Christian took both beef and pork. McDonalds decided, for the first time in their business history, to drop ham and beef burger from their menu. 2 years back, they even excluded mutton burgers from their offerings. McDonalds developed a menu especially for Indian with vegetarian selection to suite Indian taste. It introduced products like McTikki Aloo for the Punjabi taste buds. McDonalds has also reengineered its operation to address the special requirements of a vegetarian menu. The cheese and cold sauces used in India is 100 % vegetarian. McDonalds are committed for giving customers wholesome, healthy, and delicious food. They ensure that the cooking area as well as cooking equipment for vegetarian products is

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visibly segregated from the non Vegetarian sections. Whats more- their crew members cooking vegetarian food items are identifiable by their green aprons.

Franchisees agree to operate their restaurants in the "McDonald's way" but there remains room for innovation. Many ideas for new menu items come from franchisees responding to customer demand. To maintain consistency in the current menu while the firm tests new products to expand the product line, McDonald's relies on test marketing new menu items in pilot locations. New products are rigorously market tested so that the franchisee will have a reasonable idea of its potential before it is added to the menu. The introduction of new products, which have already been researched and tested, considerably reduces the risk for the franchisee. The franchisees additionally benefit from the extensive national market research programs that assess consumer attitudes and perceptions. What products do they want to buy and at what price? How are they performing compared to their competitors?

This approach allows the firm to identify which items are likely to prove popular with consumers while ensuring that the company can deliver new products with consistent quality internationally. McDonald's already has a history of doing this so it will not require major changes to its operations strategy-at least initially. If the product line-up gets too large, then the task of maintaining quality becomes exponentially harder. The trick is to consider how to eliminate some of the existing

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menu items when you introduce new ones, while making sure the staff is fully trained in how to execute these products successfully.

Restaurant chains encounter many obstacles in maintaining their business, but the most common obstacle is the logistical planning in getting food and supplies. McDonald's established warehouses within a reasonable proximity to all of their restaurants to solve some of the logistical problems it had experienced. This, along with owning the warehouses allows the restaurants to get all of the needs met in one shipment and not deal with multiple suppliers. Suppliers are a critical part of the value chain. McDonald's considers product quality to be the most important aspect and sets its standards among the highest in the food industry built. The firm's mutual effort with suppliers and franchisees to develop and improve

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products and production techniques enables McDonald's to meet the high quality standards; thus sharing in the growth and success of the restaurant. This growth and continued success, and the elimination of too many intermediaries, has allowed McDonald's to pass that value along to the customer.

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B] Pricing Strategies

Pricing is the only mix which generates a turnover for the organization. The remaining 3ps are the variable cost for the

organization. It costs to produce and design a product; it costs to distribute a product and costs to promote it. Price must support these elements of the mix. Pricing is difficult and must reflect supply and demand relationship.

Penetration

Skimming

Pricing Strategies

Competition

Product Line

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Bundle

Psychological

The customer's perception of value is an important determinant of the price charged. Customers draw their own mental picture of what a product is worth. A product is more than a physical item; it also has psychological connotations for the customer. The danger of using low price as a marketing tool is that the customer may feel that quality is being compromised. It is important when deciding on price to be fully aware of the brand and its integrity. A further consequence of price reduction is that competitors match prices resulting in no extra demand. This means the profit margin has been reduced without increasing sales.

Worldwide, McDonalds has achieved success by tapping middle-class households. But in India, while McDonalds has been able to get a larger share of rich and upper-middle class population, it has not been as successful at effectively tapping the middle-class and lower middle-class segments. Capturing the latter segment is critical as McDonalds starts entering into smaller cities. But this section has mainly stayed away

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because of a widely prevailed perception that McDonalds is expensive. This is the reason why the company cut prices on its vegetable nuggets from Rs 29 to Rs 19 and the soft service ice cream cone from Rs 15 to Rs 7 in 1997. In September 2001, McDonalds offered its enormously popular shudh

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shakahari (pure vegetarian) Veg Surprise (a veggie burger) for Rs 17. With this price, McDonalds was able to sell the veggie burger 40% more than what it expected within a month between September and October of 2001. In March 2004, McDonalds launched a Happy Price menu under which it sells four of its burger products at Rs20 each. This has led to a 25% increase in customers. Clearly, the McDonalds strategy has been to increase sales volume of its products by making its products available at an affordable price.

A very popular punch line of McDonalds - Aap ke zamane mein, baap ke zamane ka daam. The main reason of this price strategy was too attract the middle class & the lower class of people in India. After this not only the upper class prefers going there but all class of people go there. The company strives to differentiate itself from other fast food restaurants by offering a variety of menu items that appeal to a variety of people

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from those who just want great burgers, to those who just want a quick healthy meal.

Value Pricing -

Happy meal Small burger ,French fries ,Coke + Toy

Medium Meal Combo- Burger , French fries ,Coke-Veg Rs:75

,Maharaja Mac Meal Rs: 95 Family Dines under Rs: 300

Prices lower than Pakistan, Sri Lanka, and 50% lower than U.S.

The most important reason for McDonalds pricing flexibility is its wellestablished supply chain arrangement, which ensures efficiency and speed in distribution. Besides, huge increases in volume sales and food processing technology have been helping the company to offset its cost.

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C] Promotion Strategies

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A successful product or service means nothing unless the benefit of such a service can be communicated clearly to the target market. An organizations promotional mix can consist of:

Advertising

Public Relation

Promotional Mix

Sales Promotion

Personal Selling

Direct Mail

Internet/E-Commerce

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The promotions aspect of the marketing mix covers all types of marketing communications. The methods include advertising,

sometimes known as 'above the line' activity. Advertising is conducted on TV, radio, cinema, online, poster sites and in the press (newspapers, magazines).Key objectives of advertising are to make people aware of an item, feel positive about it and remember it. The more McDonald's knows about the people it is serving the more it is able to communicate messages which appeal to them

Messages should gain customers' attention and keep their interest. The next stage is to get them to want what is offered. Showing the benefits which they will obtain by taking action, is usually sufficient. The right messages must be targeted at the right audience, using the right media.

The Media Magic

You Deserve a break today, so get up and get away- To McDonalds The above break commercial was one of the initial commercial themes adopted by McDonalds United State which

became the best known commercial song on television and, in fact, the most identifiable advertising themes of all time.

Needham was one of the first advertising agencies of McDonalds which made many revolutionary advertisements for the company. Needhams

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advertising formula became know in McDonalds as Food, Folks, and Fun and it remains the backbone of all the chains advertising campaigns. McDonalds is now, one of the worlds mightiest

consumer marketers. Its brand valuation is $25 billion, making the ninth most valuable brand in the world.

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Why Mudra in India?

DDB Needham and

Leo

Burnett

are the advertising agencies of

McDonalds are worldwide. Hence, when they came to India, The subsidiary of both the companies pitched for the account and Mudra the Indian partner of DDB Needham got the account. Since the very beginning Mudra has been the advertising agency of McDonalds India.

The Mudra team meets up with McDonalds marketing team on a regular basis and they have a debate and discussion on the new

strategies to be adopted. McDonalds uses various Medias like television, hoardings and bus shelters. They are almost out of print ads. McDonalds also sponsor many Television Programmers like Kaun Banega Crorepati, Children shows etc.

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Even the paper Mats on the trays at the McDonalds are designed as per the ongoing Marketing Strategy of McDonalds. For e.g.: During the French fries issues, all their Paper mats had description of the burgers, how the vegetarian products are made etc, to regain the confidence of the customers. The placing of the pamphlets, banners in and around the outlets is decided upon by the area sales manager and the operations manager, in co-ordination with the restaurant manager. For e.g. : currently they have the Bugs Life Theme going on wherein they give free Bugs Life toys with the happy meal. All the outlets are decorated with the pictures of the toys and even the paper mats have pictures of the toys on them. The hoardings around the outlets carry the same theme.

The 80-20 Menu Boards

Even the menu counters in the outlet are a marketing tool for the company. They have to be designed such that they catch the attention of the customer and tempt him to order the product. So McDonalds have menu boards that are descriptive as well as visual. They call it the 80-20 menu board eighty percent visual and twenty percent descriptive. Under the recent research conduct by McDonalds they found that the consumers would have a clear remembrance of the 80-20 Board. This board also helps give a feel of the product before it is purchased.

Reconnecting with customers through contemporary global marketing direction Im loving it. I am loving it refers an attitude we want your employees to embrace & reflect in their services. McDonald's sees the use of these catch phrases and the use of the Golden Arches as a very

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successful way of differentiating the restaurants from other fast food competitors. McDonald's has taken price competition out of the picture because the customer feels they have gotten quality, convenience, service, and value - and McDonald's still makes you feel like you are getting a break in your hectic day. Creating catch phrases are only one kind of promotion, and McDonald's uses many kinds of promotions to keep the restaurants at the top of the industry.

Their other lucky Promotion strategies were like:-

Collaboration with coke, M TV, Hungama .com, Sony Music, etc. Scratch cards on large jumbo meals. Prices- caps, T-shirt, internet card, CDs, free tickets to Lucky Alis contest. Purchase of 2nd meal in a month qualified for Opel Corsa/ NZ trip.

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D] Placement Strategies -

McDonald's focuses on store placement and are always looking for the best locations. This strategy created some weakness in the last 10 years

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because it seemed that too many stores were put in some areas, cannibalizing sales from the other McDonald's. The company has also made convenience a focus, not only through how fast it serves customers, but also in the location of its outlets. Freestanding restaurants are positioned so that you are never more than a few minutes away by foot in the city or by car in the suburbs. In addition, McDonald's is tucking restaurants into schools, stores, and more.

Direct Distribution Indirect Distribution

Manufacturer

Manufacturer

Consumer

Retailer

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Consumer

Logistics play a critical role in McDonalds location strategy. As a part of its Quick Service Restaurant (QSR) business, McDonalds has initially decided to open its outlets only within a 500-km radius of its main distribution centers in Delhi and Mumbai. This is the reason why McDonalds has not opened a single outlet in metropolitan cities like Kolkata in the eastern part of India, despite the citys huge urban and cosmopolitan character.

Besides Delhi and Mumbai, other places where McDonalds has opened up restaurants are satellite cities located near Delhi (such as Noida, Gurgaon, and Faridabad), or Mumbai (such as Pune); places with tourist appeal (such as Jaipur, Mathura, and Shimla); and cities with an eating-out culture (such as Ahmedabad, Chandigarh, and Bangalore). The McDonalds outlet in Ahmedabad in the state of Gujarat is an interesting case. Ahmedabad is largely a vegetarian city. But, like other metropolitan Indian cities, Ahmedabad has a significant number of eating-out customers. Given long lines of people at the counter, it seems that McDonalds well-balanced menus of vegetarian and non-vegetarian items has provided enough choice and space for customers of this city.

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McDonalds has partnered with the state-owned oil company, Bharat Petroleum Corporation Ltd. (BPCL); to set up restaurants at the latters petrol stations in and around Delhi to make it more convenient for automobile-driving consumers. BPCL is the leading petroleum retailer in India and has the largest number of petroleum stations in and around Delhi. It is important to note the shift in government attitude toward MNCs that led to a successful partnership between McDonalds and the largest state-owned company.

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Keeping an eye on the huge potential for eating out venues for lower middle-class Indians, McDonalds has partnered with a railway station and bus station in Delhi to open its outlets: Delhi Metro Rail

Corporation, and the overcrowded Delhis Inter-State Bus Terminus, where thousands of people pass through daily on their way to different destinations. More importantly, to tap the automobile-driving consumers, business travelers, and tourists, McDonalds has set up drive-through outlets in Delhi and along national highways. Two drive-through outlets on the Delhi-Agra and Mumbai-Pune highways have proven to be successful. The company has plans to open more

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drive-through outlets in Delhi and Mumbai and along national highways - such as the Delhi-Jaipur highway, Delhi-Ambala highway, and DelhiLudhiana highway. The move to set up these new restaurants has been driven by new business prospects, logistics, and supply chain.

In order to tap into the business of shopping mall and film-going customers, McDonalds has set up outlets at shopping malls and new multiplexes in metros like Delhi and Mumbai. The success of its outlet at the Crossroads in Mumbai is evidence that a strategic location

outside a mall can bring in customers in hordes. Given the premium pricing in the shopping mall, it is not surprising to see that many people are content with window- shopping at the Crossroads. But they do not mind spending a few rupees at McDonalds for a burger or spicy fries. More important, families with children are happy to spend at least 7 rupees to buy an ice cream for their children. Thus, while most shopowners at the mall are hard-pressed to break even, the lines at the McDonalds counters seem unending. A similar trend is seen at the newly opened multiplex in Delhis Vikaspuri.

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6. PHYSICAL DISTRIBUTION AND LOGISTICS

A company the size of McDonald's requires the value chain to be increasingly important. Not only does McDonald's want to add value for the customers, but also the firm looks for ways to improve the operations that makes McDonald's a more efficient business. McDonald's is constantly striving to add value to the firm for their customers, and in doing so, the firm has created efficiency in getting the products to the customers quickly and as fresh as possible. McDonald's is constantly looking for ways to improve and is successful because of the continuous updates on equipment, improvement on serving time, and in finding more ways than one to satisfy customers.

McDonald's value chain is unique because of the rare need to depend upon other companies for supplies. The firm owns nearly every portion of the value chain including warehouses, delivery trucks, and the real estate where their restaurants built. Restaurant chains encounter many obstacles in maintaining their business, but the most common obstacle is the logistical planning in getting food and supplies. McDonald's established warehouses within a reasonable proximity to all of their restaurants to solve some of the logistical problems it had experienced. This, along with owning the warehouses allows the

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restaurants to get all of the needs met in one shipment and not deal with multiple supp liers. This, of course, does not eliminate the need for suppliers, but it has eliminated the need to coordinate paper products deliveries with meat deliveries.

6.1 Supply Chain Management -

Another critical strategy was to set up a well-established supply chain in India in order to achieve three objectives:

(1) To operation its globally practiced QSCV (quality, service, cleanliness, and value) principle; (2) To enjoy flexibility in pricing; and (3) To launch a new product when necessary.

To achieve these three objectives, McDonalds often uses an outsourcing model in all its markets. In some cases, it also actively imports. But given Indias relatively higher import duties and foreign exchange fluctuations, McDonalds decided early on to source its raw materials from the local suppliers to the maximum extent possible. Currently, McDonalds only imports the process control equipment that allows it to dish out burgers and other orders within its super-fast time frames. The company, however, sources 95% of its raw materials from 38 local suppliers.

Fresh lettuce comes from Delhi, Pune (Maharashtra), Nainital,

and Ooty (Uttar

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Pradesh); Cheese comes from Dynamix Dairies located in Baramati

(Maharashtra); Buns come from Cremica Industries in Phillur (Punjab) and Shah

Bector and Sons in Khopoli (Maharashtra); Pickles come from Global Green Company in Hyderabad (Andhra

Pradesh); Sauce comes from Bector Foods in Phillur (Punjab); and

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Chicken patties, vegetable patties, pies, and pizza puffs come from

Vista Processed Foods in Taloja (Maharashtra).

The entire supply distribution is the responsibility of AFL Logistics Ltd., a joint venture (50:50) between Airfreight and Coughlin in the U.S., and Radhakrishna Foodland (P) Ltd. in Thane, Maharashtra. AFL is responsible for temperature controlled movement of all products from suppliers to distribution centers.

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Setting up a well-coordinated supply chain was not easy, given Indias poor transportation and storage infrastructure, as well as its lower-quality agricultural products. Thus, six years prior to the opening of its first restaurant in India, McDonalds and its international

suppliers worked together with local Indian companies to develop products that meet the rigorous quality standards McDonalds demands. An underlying principle in product development was to strictly adhere to the Indian governments regulation on food, health, and hygiene and to exceed the governments standards. To do so, McDonalds transferred its state-of-the-art food processing technology to India, enabling Indian businesses to grow by improving their ability to compete in todays international markets.

McDonalds has worked with local Indian suppliers to consistently improve the quality and increase greater yields of agricultural products. For instance, it helped farmers of Trikaya Agriculture Company to grow high-quality lettuce year round in Ooty, Pune, Delhi, and other regions. McDonalds shared with Trikaya advanced agricultural technology and expertise like utilization of drip irrigation systems that reduce overall water consumption and agricultural management practices. For quality control, Trikayas post-harvest facilities now include a large cold storage facility, a cold chain consisting of a pre-cooling room to remove field heat and large refrigerated vans with humidity controls. To ensure standardization and higher quality, Vista International, which supplies the pies, nuggets, and vegetable and chicken patties, built a new facility in 1996 with help from McDonalds. This new facility has

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insulated panels, temperature control, and chill rooms. Vista International has obtained American Institute of Bakers and Hazard Analysis standards. Critical Control Points (HACCP) certification for quality

In some cases, Indian companies like Dynamix Dairies had the technology but no market for their milk derivative products. By

associating with McDonalds Dynamix Dairies has seen a regularly growing expansion of its market. Now, it not only supplies products to McDonalds restaurants in India, but also has an export order of approximately US$12 million per year.

Radhakrishna Foodland (P) Ltd., which is responsible for getting products from various suppliers and delivering products to various McDonalds outlets, has earned an excellent reputation in

maintaining a tight delivery-on-time schedule. This is possible because of the companys installation of enterprise resource planning (ERP) software, which provides data of what is selling where. This way, the company is able to anticipate demand in each retail outlet and place orders with producers accordingly. With the help of McDonalds, the company has set up a trucking fleet to move supplies to restaurants at short notice. Each of the companys delivery trucks has three degrees of refrigerationa freezer section for meats, a cold refrigerator section for vegetables, and a non-refrigerated section for paper

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cups, napkins, and plastic cutlery. These ways, each truck delivers multiple items at one go and saves the company and restaurants a huge sum of transportation cost.

Radhakrishna Foodland distribution center also maintains high-quality standards in cleanliness, including personal hygiene for the drivers, packing, and checking temperatures of the food it transports to various restaurants. The company maintains detailed data logs to track the movement of each batch of food items. In case of a complaint about a food item at any McDonalds restaurants, the data logs help the company to identify the batch from which the particular food item came. Then the company issues a warning or decides to discontinue the batch from which the food item came. This ensures a high-quality standard of food items delivered to each McDonalds outlet. Not surprisingly, the company has obtained American Institute of Bakers and HACCP certification for quality standards.

Such meticulous planning in setting up a well-coordinated supply chain system has paid rich dividends to the McDonalds operations in India. It has minimized costs, optimized quality control, and ensured higher customer satisfaction, which is so very essential for the companys growth. More critically, the improved transportation and food

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processing technology seems to have served as an important catalyst for increasing Indias agricultural productivity while raising farmers incomes. This has scored very well on the political front and won the governments goodwill.

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7. FUTURE ANALYSIS

McDonalds

can

use

following

promotional

techniques

which

should be appropriate to be used for increasing the sales:

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1. Increase its product line.

2. To have more variety to choose from, to include more deserts and more items.

3. To provide better and quick service.

4. Lower the supply chain cost so that it helps in cost reducing.

5. To expand their Happy Meal choices to attract and retain customers.

6. To educate about healthy lifestyle.

7. Introduction of cafeterias serving premium and specialty coffees and other beverages and other products such as cakes, pastries etc in the existing McDonalds.

8. Provide with better ambience.

9. Focus on gifts for all generations i.e. youth, kids especially senior citizen which is a completely new concept.

10. Special promotions dur ing festivals as Indians tend to spend more at such events.

11. Increasing the space for provision of birthday party areas.

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12. Try to sponsor college festivals.

13. Work for social welfare of the society.

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8. CONCLUSION

McDonald's marketing mix is strategic because of the diverse approaches that are used. First, in identifying the "four P's" of marketing addressed earlier (product, price, promotion, and

placement), research shows that McDonald's is very careful in making decisions that effect each area and/or how each area effects the other. McDonald's is concerned about how the firm will fulfil the needs and wants of its customers and in the activities

associated with maintaining the relationships with its stakeholders. McDonald's stakeholders include customers, franchisees, suppliers, employees, and the local communities surrounding them.

McDonald's has shown care for customers through the decisions to add more healthful foods to the menus, by changing how products are packaged or how foods are prepared, and by philanthropic contributions and sponsorships. Local adaptation, no doubt, has contributed to McDonalds business growth in India. The restaurant has developed competitive advantages in the industry of serving quality fast food at a low cost. In addition to these decisions, the development of the Golden Arches or Ronald McDonald has provided consumers with

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memorable icons that are associated with quality, service, and value, just like the McDonald brothers and Ray Kroc intended.

McDonald's faces some difficult challenges in moving away from the fast food king to a more health conscious provider for customers who care about what they eat. The keys to its future success will be maintaining its core strengths-an unwavering focus on quality and consistency-while carefully experimenting with new options. The company's environmental efforts, while important, should not overshadow its marketing

initiatives. Though there are many opportunities for this fast food giant, McDonald's must keep the strategic nature of its marketing efforts to stay on top and provide what customers want.

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