ABSTRACT

The global markets have witnessed major shifts in the consumers behaviour that have been much
influenced by the change of technology, innovation, research and development. The consumers
needs thus dynamically change in order to respond to the change in the social and business
environment. The corporate and business strategies of companies thus being developed in the light of
capitalising the potential from the markets but however, how the customer would react to the
products and services of companies in new and existing markets remain the major question. The
analysis of consumer behaviour, thus became the inevitable and critical part of the overall planning
and decision making functions in the organisation that helped to match the core competencies and
capabilities of the organisation with the needs of the customers that are largely influenced by number
of socio-demographic and psychological factors.
Fast Food Industry in India became the fastest growing industry in the last decade when number of
international companies entered the market in order to expand their market share and area of
operations. However, the major challenges that appeared amongst the retailers were cultural barriers,
difference in eating habits and religious barriers whereas unawareness, low spending power were
others. However, with the advent of globalisation and liberalisation of economy, major changes were
noticed in terms of education level, employment, savings and GDP rate in the economy. This led to
more purchasing power in the consumers that began to try the new consumer durables and eat out
places in metro cities and towns. This also impacted on the sales and growth of fast food retailers
who developed their customer relationship strategy and marketing mix more often to gain
competitive advantage in the markets.
As a result, the domestic and international retailers spread their operations to major cities and towns
across the country in a short period of time, however still there was difference in the marketing
strategy of international retailers in terms of marketing initiatives they launched in the western
countries. The research study thus focused on exploring theories and models of consumer behaviour,
scope of customer loyalty and customer relationship strategy and effectiveness of marketing
strategies of domestic and international retailers in the market.
CHAPTER 1

INTRODUCTION
The Introduction part would describe the framework of the overall project report. The chapter lays
down the foundation of the research report by demonstrating the research purpose, objectives, and
background of the study and the related scope and limitations.
1.1 INTRODUCTION
The hospitality sector in India has seen vast development and growth in fast food retailing over the
recent years. The vast changes in the socio economic conditions, demographic profiles of individuals
and open micro and macro economic conditions have enabled the retailers to make organized retail
formats to cater the dynamic needs of the consumers.
Kotler (2004) stated that customer interests, perception, awareness and experience drive the growth
of fast food companies in India. Ramanathan and Ramanathan (2011) stated that consumer behaviour
has direct and positive relationship with the demographic features, socio economic and
psychographic traits of the individuals that quickly change the behaviour of consumers towards fast
food in the country.
Hence, recent times have noticed major shift in the behaviour of consumers, as they now prefer to
have fast food over traditional and home cooked food, unlike the trend that was prevalent in India in
the past. Thus, the changes in the consumer behaviour enabled the international retailers to enter the
market in an attempt to gain market share and brand presence.
Elliot and Thrash (2002) stated that the consumers intention to buy products depend upon various
factors including the desire, perception, past experience, the features of goods and services among
other tangible and intangible traits concerned with the individuals.
Indian food has diversified range and varies according to different regions in the country. However,
western food has influenced the eating habits of the Indian consumers in the recent times due to the
increased awareness and shift in food consumption patterns. Globalization and liberalization have
allowed the entry of huge multinational fast food market retailers in the country. Prasad and Aryasari
(2010) stated that domestic players too introduced fast food to the local customers in accordance to
the prevailing eating habits, tastes and preferences.
The fast food retailers thus carried out number of promotional strategies in order to gain high market
share in the sector. Goyal and Singh (2007) stated that most of the domestic and international players
were not successful in retaining customers. Beldona et al. (2010) revealed that poor menu options,
incompetent prices for food, absence of effective customer relationship strategy were some of the
causes for the failure of marketing strategies of the fast food retailers. Others including, Davies and
Smith (2004) and Barker (2006) found that apart from these reasons, there were also some reasons
attached with the demographic features of the stores such as floor space, absence of parking facilities
and entertainment features in the stores. Sinha and Kar (2007) found that most of the stores in India
also launched number of customer loyalty programs in order to retain the customers but this added
little advantage to the performance and profitability of the stores.
Ramanathan and Ramanathan (2011) found that irrespective of the critical findings, the sector
promised to have prosperous returns in the future as the current growth rate of fast food industry
remains over 25 % in the country and therefore, it is of the interest of the researcher to gain in depth
understanding and knowledge of the changes in consumer behaviour towards fast food in India and
factors that could be used to influence the buying traits of the consumers. The core focus of the study
would also demonstrate the impact of customer experience, perception and satisfaction on the
purchasing behaviour of the consumers. The research would also focus on the prevailing promotional
and customer loyalty strategies and how they can be improved in the present time.
1.2 RESEARCH RATIONALE
The Indian fast food market has seen widespread growth and development in the recent years as the
number of domestic retailers made their presence in various locations of the country and moreover,
the ease of market entry allowed foreign players to expand their areas of operations in India. Thus,
the market gradually became more competitive as the market players developed their marketing
strategies more aggressively in an attempt to increase their market share. Gupta (2003) found that
customer perception, satisfaction tastes and preferences develop more favourable consumer behavior
towards particular brands than any other factors. Barker (2006) revealed that Indian consumers have
drastically changed their behaviour towards fast food as they were seen spending more on fast food
than traditional or custom food.
However, it has also been found that there has been huge gap between the effectiveness of marketing
strategies of the different retailers and even if some of them have developed competitive pricing
strategy and promotional techniques but still they have failed to target the audience effectively. Thus,
the market players are eagerly attempting to gain competitive advantage in the market in order to
improve their performance, productivity and profitability.
Kotler(2009) stated that the core purpose of any fast food retailer must be related to providing value
for money to its customers and must employ advanced marketing programs and communication
channels to strengthen the overall marketing campaign.
Moreover, Ali et al. (2010) found that improving customer relationship could provide an edge for fast
food retailers in India provided they are able to manage and formulate new marketing tools and
practices to facilitate greater customer satisfaction and better overall experience.
Thus, the researcher would focus on analyzing the consumer behaviour in context to the fast food
industry in India and assess the relative core competencies and capabilities of the industry players to
embrace new course of actions to enhance the customer experience. The researcher would also look
forward to assess the scope of customer loyalty programs in the prevailing marketing strategies of the
firms. A strategic focus would allow demonstrating the role and importance of new and modern
social marketing communication channels to promote the brands among the consumers using
informal messages.
Hence, the study would attempt to summarize the various theories, tools and practices for identifying
the relative buying behaviour traits of consumers and whether the adoption of loyalty programs
would help companies to gain competitive advantage in the market.
1.3 RESEARCH PURPOSE
The study would deal with analyzing the consumer behaviour and their buying traits towards fast
food industry in India. Thus, the purpose of the research report is to identify the factors that could
influence their buying behaviour and could be further used in the business strategies of the retailers.
A core focus has been given to the scope of customer loyalty program and the emergence of effective
marketing communication channels in fast food companies to improve their relationships with the
customers.
1.4 STATEMENT OF AIM AND OBJECTIVES
The aim of the project report is to analyse the consumer behaviour in the Indian fast food industry
and investigating the factors that could influence their buying behaviour towards particular brand.
The research objectives of the project report are as follows:
To discuss the existing promotional marketing strategies of the fast food retailers
To investigate the consumer behaviour towards fast food retailers and the factors to influence
their buying behaviour
To assess the scope of customer loyalty programs to influence the buying behaviour of the
consumers
To propose the effective use of emerging marketing communication channels to promote the
customer loyalty programs
1.5 RESEARCH QUESTIONS
1. Have the promotional marketing strategies of fast food retailers proved to be effective in
terms of gaining market share?
2. How the consumer behaviour has been changing towards the fast food brands and what are
the major factors that influence their buying traits?
3. What is the scope of customer loyalty programs to influence the customer buying behaviour?
4. What kinds of emerging marketing communication channels can be introduced to promote the
overall marketing strategy of the firms?
1.6 SCOPE AND LIMITATIONS
The research study would require the researcher to use various tools such as expertise, logical
reasoning, interpersonal skills and analytical approach to demonstrate the highly effective piece of
work. However, there might be constraints related to the study, which might be uncontrollable by the
researcher. The study is based on the market survey and would also present the theoretical analysis to
reflect the research findings. Thus, it would require a lot of time to manage, gather and analyse the
primary as well as secondary data. The researcher would make every attempt to exhibit effective time
management and planning activities to ensure the delivery of the report within the given framework
of time. The researcher would however, need to include limited participants for the study in context
to the available time. The research would also be limited to including few market players from the
fast food industry, as it would not be possible for the researcher to include more companies for
research purposes.
The researcher would also ensure to eliminate the scope of biasness from the study and would deal
effectively while formulating the questionnaire, collecting and analyzing the data and presenting the
findings. With the limited resources to carry out the research, the researcher would aim to provide
insight, knowledge and understanding in context to the research topic and look forward to present the
enormous findings.
CHAPTER 2
LITERATURE
REVIEW
The literature review would construct the theoretical framework by including the critical findings, statement,
theories and models proposed by the various authors. It would incorporate various secondary sources for the
achievement of the research objectives and to effectively demonstrate findings and recommendations
thereafter.
2.1 Development of Fast Food Industry In India
The Indian fast food habits and the customer perception towards fast food has noticed gradual shift in
the recent years as the significant portion of the population spent more money on eating fast food
from the domestic and international retailers in the market. The sector was once unnoticed and
merely had any existence in the food and hospitality industry but recent findings suggested that there
is huge potential in the sector as the growth rate was recorded above 30% in the recent years (Ali et
al. 2010).
The liberalisation and globalisation of the industries backed by the government in 1991 was also one
of the reasons for the development of the fast food industry as number of international retailers
entered the market thereafter. The major international players including Kentucky Fried Chicken,
McDonalds, Pizza Hit, Dominos entered the Indian market in the last decade. Kumar and Basu
(2008) stated that during evolution in the presence of overseas companies in the market, the domestic
players too changed their business strategies in terms of offering new menus at revised prices and
many other service including entertainment, change in store formats, opening of stores at a number of
locations and moreover providing food and services with the influence of western culture.
However, the empirical studies suggested that the gradual changes in practices of fast food retailers
enabled significant changes in the purchasing behaviour of the consumers as they embraced fast food
in their daily diet consumption. Moreover, Kita and Hasan (2010) stated that India was ranked 7
th
in
the Asian fast food markets. Kath (2003) stated that availability of healthy food, take away options,
hygiene and cleanliness at stores were some of the major yet critical factors that influenced the
perception of the customers towards fast food growth in the country. However, Kumar and Basu
(2008) regarded that it was actually the fast delivery, variety of food and competitive prices that
attracted the large portion of population especially the young generation in the country. However,
Goyal and Singh (2007) emphasised that consumers around the world adopted information seeking
behaviour in terms of gaining in depth knowledge on nutrition values, availability of hygienic foods
and the value for money and therefore fast food retailers in India had to make several changes in their
business models as the new companies entered the markets.
Sengupta (2008) stated that fast food became popular in India because they were easily available,
reasonably priced and were better alternative to the home cooked food. However, there were some
custom hurdles in accepting the menu of the international retailers that included pork, ham and beef
as the ingredients in the fast food offering. Prasad and Aryasari (2010) said that these companies later
carried out market analysis to match the customer profile in terms of social, cultural, personal and
legal factors.
Bender and Bender (1995) defined fast food as the readily and quickly available food for immediate
consumption by consumer either at the designated eating areas provided by the retailers or take away.
Sengupta (2008) found that international stores mainly focused on major cities and metro areas in the
country where the population have higher disposable income. The international companies also made
changes to their business model in order to meet the market demands where over one third of the
population was vegetarian. Sanjeev (2007) surprisingly said that companies also had to reposition
their identity as KFC did by repositioning its brand message to influence the vegetarian buyers.
Malhotra and Peterson (2006) said that a significant portion of the customers were reluctant to have
their food from the retailers who served vegetarian food along with non-vegetarian food, as they felt
they had to compromise their traditional values if they did so.
However, customer perception towards fast food chains gradually shifted with the globalisation of
economies, higher travelling rate, entertainment sources like movies, music and the internet, that
eventually brought the cultural changes. Indeed, local players saw a gradual shift in the customer
perception and they turned this into offering new food menu influenced by western retailers to have
more profitability and market share.
Thus, the unstructured fast food market developed along whilst international retailers were entering
the market. Kumar and Basu (2008) said that domestic players such as Wimpy, Nirulas, Pizza
Corner, Bikanerwala and Haldiram were some of the domestic retailers that expanded their market
operations by opening various stores around the cities. Kita and Hasan (2010) recorded that annual
market turnover for fast food sector in India for 2009-10 was recorded over $ 100 Million and it is
believed that it would be doubled in the next 5 years. Thus, the fast food retailers vowed to surprise
the large population and the market presence of these local and international retailers are growing at
multi fold speed after assessing the consumer needs, their perception, values, tradition and customs.
Still, the gradual shift in the consumer behaviour and their perception are the major areas for the
retailers to provide enhanced and greater customer experience in order to gain competitive advantage
in the market.
2.2 Marketing Strategies of Fast Food Retailers
2.2.1 Nirulas
Nirulas was the first domestic structured, organised and largest domestic fast food retailer in the
country that opened its first store in New Delhi in 1934. Dana (1999) said that the store introduced
western fast food by the end of 1950s and over the period of time, made major changes in its menu
and pricing strategy by adding more food products. The company reported an annual turnover of over
$ 25 Million in 2006 but Dholakia and Talukdar (2004) argued that domestic players had the
competitive edge as they pay less tax than the international players. It was found that corporate tax
for international companies was 48% whereas for domestic companies, it was 35%. Dana (1999) said
that company pay significant proportion of funds on marketing campaign that are mutually run along
with other market players such as Lee Jeans, a leading clothing chain in the country. Malhotra and
Peterson (2006) emphasis that sharing marketing resources among two market leaders from different
industries helped to improve economies of scale and gave better results.
Prsasad and Aryasari (2010) said that for Nirulas, it was easier for the company to penetrate in the
market since there was no other organised retailer in the country but it was until 1991 when the
government opened various sectors for the international companies including the hospitality and
service sector. But, there was still little scope for the international retailers as most of the population
lived under the poverty line and there was significantly very low portion of population that had
substantially high disposable income. Therefore, it provided competitive edge to Nirulas which held
highest prices for its goods and service for another decade and as there was no fierce competition in
the market. Goyal and Singh (2007) criticised about the marketing mix of Nirulas that was made to
cater the elite families irrespective of the fact that fast food was usually served at competitive prices
in other countries. However, it was until 1995 when KFC entered the fast food market and others
including Pizza Hut, Dominos and McDonalds followed very soon. Sanjeev (2007) found that
Nirulas substantially transformed its marketing mix whilst other small domestic and international
retailers were evolving during that time. At the beginning of 2001, the company changed its business
structure too by separating the functions such as sales, procurement, operations, training, marketing
and new projects under the heads for each department. Nirulas assessed the stiff competition in the
market that would lie ahead in the future and therefore, they aimed to improve their menus, market
presence while keeping the prices at competitive rate. It was noticed that Nirulas made marketing
arrangements with the Delhi Tourism, the national body of Tourism Promotion in New Delhi, India
to promote its brand name among the national and international travellers. As a part of the marketing
strategy, the company was able to launch its stores in airports, shopping malls and the high streets of
the country. Min (2010) said that Nirulas obviously had the advantage of assessing the Indian
customer tastes and therefore it offered the menu in Indian style by following the menu of
international retailers. Mauri (2002) gave evidence by stating that Nirulas launched Indian versions of
Pizza Hut menu by offering vegetarian pizza to the customers. Malhotra and Peterson (2006) stated
that by the year 2005, Nirulas expanded its market share with three hotels, 35 restaurants, 12 pastry
shops and four bars across the country. It was further noted that over 50,000 visitors were visiting the
Nirulas stores everyday. Nirulas also diversified its businesses after 2005 by entering into the
manufacturing of various cheese, bakery products and drinks.
The marketing strategy of Nirulas always provided a room for innovation, technology and research
and development. Dholakia and Talukdar (2004) found that company offered broadband related
services such as Wi-Fi connectivity in its bars to make them more attractive to customers in the cities.
However, Kita and Hasan (2010) argued that much of the sales revenues were generated by the fast
food operations but the company put hardly any efforts to offer entertainment services to attract its
consumers. Precisely, targeted college-going students by offering several promotional and discounts
coupons during the time of students intake at the universities across various cities. Eventually,
company placed various advertisements on various media and communication channels but still
largely its sales have been influenced greatly by its customer loyalty.
2.2.2 McDonalds
McDonalds have the market presence in more than 120 countries with over 30,000 stores. In India,
McDonalds opened its first store in 1996. Initially, McDonalds faced numbers of allegations raised
by the politicians and the society over the issues related to the westernisation, outflow of national
income and so on. However, McDonalds managed to enter the Indian market through joint venture
with other two leading hospitality companies. Goyal and Singh (2007) said that McDonalds made a
perfect entry as the market began to grow and within a few years, McDonalds became the market
leader by leaving other major domestic players such as Nirulas behind by leaps and bounds.
McDonalds focused on standardisation of processes and development in the products lines and
improvement in brand identity. Duffy (2003) said that in India the scenario was different since
customer had different perception, cultural and social setting and therefore, the company required the
determinants to influence buying behaviour. McDonalds had to show its image as purely being
dedicated to the indian buyers and thus several adaptations were experimented and as a result, Big
Mac was replaced with Mac Maharaja to demonstrate that burgers were made of chicken and
vegetarian items and not pork or ham, as uses of latter was against the local tradition and customs.
Goswami and Mishra (2008) said that marketing strategy of McDonalds focussed on the ability of the
income groups, examined the buying motives and customer perception in order to succeed in the
market. The value meals were results of those assessments, aiming for price sensitive Indian
consumer market.
Goyal and Singh (2007) said that McDonalds targeted middle, upper middle and affluent income
classes and among those, company specifically focussed on children as they influence the decisions
of the families to eat out. Thus, the marketing strategy of McDonalds always focused on adding fun
and entertainment for children. The happy meals became popular among children in the short span of
time, which offered meal plus a toy to the children at very competitive prices. Goswami and Mishra
(2008) stated that in 2006, McDonalds was awarded as the most respected company in India for its
contribution in food retailing.
2.2.3 KFC
Kentucky Fried Chicken was amongst the first who made entry in the Indian fast food market in 1995
followed by the liberalisation of the economy. Dana (1999) said that KFC determined to focus on
upper middle class as their target market since they perceived that irrespective of their global
presence, the middle class were not aware of their brands, tastes and preferences. Empirical studies
suggested that KFC positioned its products effectively in the market with the suitable marketing mix.
However, Durvasula et al. (2009) argued that company missed to perceive the preferences, tastes and
likeness of people as the menu of the KFC confronted with the social and religious view of the
population. Goyal and Singh (2007) found that Hinduism, the major religion in India opposed using
beef as the ingredient in the food, which KFC was found using in their menu.
However, Lacey and Sneath (2006) stated that KFC managed to develop its product and service menu
according to the local values, tradition and custom and it was found that a number of other varieties
especially in vegetarian food were introduced during that time. Durvasula et al. (2009) recorded that
by 2008, company opened over 100 stores in the major cities of the country, focusing on the metro
cities and towns.
2.3 Consumer Behaviour: Concept, Process and Models
Every consumer has different perception as the influence of social, personal and psychographic
factors differ from one to others. The impact of various factors that help the customers to involve in
the decision making process to make judgement towards particular brand in the market during the
buying process. Cleveland et al. (2008) stated that these factors included the social class, family
cycle, age, gender, attitudes, beliefs, values, motivation, and self-personality among others. Thus, the
formulation and development of the marketing or business strategy of any firm must thoroughly
analyse the consumer behaviour in the specified market before making offerings to its consumers.
Fleury and Feury (2003) stated that companies therefore make in depth analysis of internal and
external environment of their businesses in order to recognise the needs of the consumers, evaluate
the alternatives and finally make reforms to their offerings to launch their products and services in the
market.
Kotler (2008) defined consumer buying behaviour as the behaviour referred to the individual and the
final consumers who buy goods and services for their own consumption. Thus, consumer market is
further defined as the exchange of interaction between consumers and retailers in a given market.
Lancaster and Massingham (2010) further defined consumer-buying behaviour as the decision-
making process where people engage in buying and using the products and services by acquiring,
evaluating, using and disposing goods and services.
The empirical studies further suggested that consumer behaviour involved core decision-making
processes to assess the business activities, functions and processes in order to match them with the
market demands. Thus, information played a vital part in the overall buying behaviour process to
identify the needs of the consumers that is further evaluated to make decisions on developing and
formulating products and services for the benefits of the consumers, organisations and as well as for
the society itself. Precisely, Goyal and Singh (2007) stated consumer-buying behaviour enabled
companies to judge their market performance, customers attitude towards their brands and moreover,
the further improvement in their products and services.
Kotler (2008) stated that buying process commenced with the need recognition, as there must be an
underlying motive to buy specific products or services in the market. The consumers in India were
always noted to spend on traditional or custom foods available to them. However, in the last decade,
number of international fast food retailers found India as a big market in the future and eventually,
introduced their competitive low prices foods in the region. However, Lacey and Sneath (2006) stated
that there were various challenges to the international fast food retailers ranging from political
barriers, cultural and social differences and the use of pork, ham and beef, was not acceptable in the
Indian culture. Thus, several reforms were taken after assessing the consumer behaviour in order to
achieve the high market share in the country. Leverin and Lijander (2006) stated that frequent visits,
media communication, effective marketing and customer relationship strategies enabled the scope of
fast food stores in the country. The Indian consumers recognised the needs for the fast food such as
hamburger, cheese burger, pizza etc as they travelled abroad or different places in the country.
However, Prasad and Aryasari (2010) stated that consumer would have thought of various variables
while determining to buy the food including their personal spending, preferences, complexity and
attitudes. Kotler (2008) further stated that once the need was determined that next phase included
gathering the information about the products and services available in the market. Durvasula et al.
(2009) stated that domestic as well as international companies chose a mix of marketing
communication channels such as direct marketing, media and published, digital and online methods
to retain and improve their customer base.
However, Dutta et al. (2007) argued that in the beginning the customers were reluctant to change
their eating habits and to depend on fast food in their daily intake. Furthermore, Ali et al. (2010)
stated that there were also not valid source of information about the quality, hygiene and ingredients
of the foods. Thus, the initial experience of the customers was attached with the low involvement
with the fast food market, as they were not influenced to change their habitual purchases.
Finally, the evaluation of appropriate goods and services depend upon the relative price, value for
money, convenience, service and other factors. Kotler (2003) stated that effective marketing mix
helped the fast food retail companies to get the success. The last phase with the consumer buying
behaviour is concerned with the post purchase behaviour of the consumers. Precisely, the consumers
judged the ability of the products towards satisfying their needs. This is judged by the performance,
value for money and the level of satisfaction received from using or consuming the products.
2.3.1 Consumer Behaviour Towards Fast Food In India
India has seen unprecedented growth and development in the fast food retailing in the recent years
however this is also vested to the significant increase in the income level, influence of cultures,
urbanisation, globalisation, changes in the lifestyles, family structures and social interaction among
consumers. Ling et al. (2004), Goyal and Singh (2007) emphasized that consumer buying behaviour
has been influenced by the gradual changes in the economic, social, psychological and cultural
factors and moreover, the sustained development in the Indian market place has fuelled the fast food
sector because of its relative competitive advantage in comparison to other related sectors in the
market.
Precisely, Mukherjee and Patel (2005) found that the customer perception has significantly improved
with better eating experience they had at the stores that enormously changed their customer
relationship strategy. The customers now have access to the fresh foods, variety of options with quick
delivery at low prices. Wells et al. (2007) also found that customer preference has also changed
towards packaged food in India as in the past there were merely few customers who tended to buy
them. However, the rising trend of fast food availability in the market, emerging culture, desire for
affordable food and moreover, favourable eating experience has influenced the customers to try the
different kinds of fast foods available in the market.
Sabnavis (2008) cited that consumers now made frequent visits to fast food chains in metro and urban
cities in the country and moreover, the small cities and towns have also been looking forward to
welcome the fast food retailers in their locations with the increased awareness among the public in
the markets. Batte et al. (2007), Goyal and Singh (2007) believed that choice of fast food stores
among Indians was largely influenced by their socio demographic characteristics such as disposable
income level, family size, education level, cultural background, age factor, religion, etc.
Significantly, the findings based on the survey conducted by Ali et al. (2010) on Buying Behaviour of
Consumers in Emerging Economies found that consumers buying behaviour has been dynamically
shifting and was highly influenced by the places of purchase, variety, price, attraction for children,
entertainment features at stores and moreover intangible traits like hygienic food, quality, cleanliness,
courtesy, convenience and effective customer services.
Sabnavis (2008) said that food consumption pattern in India has now shifted from fresh, unprocessed
food to packaged, branded and processed food. The awareness and consciousness about the foods has
also added advantage to the fast food industry. The metro and fast growing cities have noticed the
fierce demand for fast food as multinational organisations attempted to improve their market share in
the country. The study conducted by Goyal and Singh (2007) on Consumer Behaviour of Fast Food
Chains in India, found that consumers now wished to have more convenient place where they could
go with their family to have good food while enjoying other features such as basic amenities,
entertainment, customer services and other physical environmental features.
2.4 Factors Influencing Buying Behaviour
2.4.1 Customer Perception
The hospitality industry offer various tangible and intangible benefits to customers but however,
perception of customers differ from each other based on the various variables. Clevland et al. (2008)
defined that customer perception is the process that allows individuals to select the best and optimal
option by interpreting the buying stimuli effectively. The criteria of buying the goods and service
thus depends on the available criteria of stimuli such as value for money, convenience, accessibility,
availability, new offerings, likeness, etc.
The survey carried out by Cottam et al. (2001) suggested that people recognised basic amenities as
important as the main service attributes in the hospitality industry. The evidence suggested that
prices, accessibility and quality of food and service were some of the stimuli that influenced the
customer a lot than other realistic and perceived factors.
However, positive customer perception is important for the food retailers in order to retain the
customers to gain competitive advantage in the market. Durvasula et al. (2009) emphasized that in
Indian market the size of the food retailers doesnt matter since the performance of the fast food
retailers is judged by the quality of food and the secondary advantages customer enjoy while having
their food at the food stores.
Dutta et al. (2007) said the customer service is also the major areas to facilitate the positive customer
relationship management. He further indicated that international retailers particularly paid more
attention on the critical success factors such as availability of parking lots, cleanliness, courtesy,
speed and efficiency in their operations. However, Greasley et al. (2005) argued that these retailers
too had tough competition with the local retailers that had strong customer loyalty in the past
however, he further admitted that positive brand image helped international players to gain a
significant market share in a short period of time. Chang et al. (2010) admitted that most desirable
attributes to influence the perception of customers towards fast food in India were the tastes, value
for money, quality and customer service. However, Cromb (2006) argued that among these factors,
the intangible forms of service such as cleanliness, availability of new foods, promotion techniques,
entertainment and parking service also influence the customer perception in the emerging countries
such as India and therefore, the retailers need to reform their corporate and business strategies in
order to gain competitive advantage in the market.
2.4.2 Customer Experience
Greasley et al. (2005) said that the nature of services has been reformed and now they are considered
on the basis of intangibility, heterogeneity, inseparability and perishability. Lacey and Sneath (2006)
called the new service attributes as Service Dominant Logic that are used to influence the customers
in terms of demonstrating the value for money or good customer experience. However, Linn (2008)
argued that a fast food retailer could provide the effective value proposition in their goods and
services but consumers were the ones who could judge their experience after their consumption and
finally regarded the brand as favourable or unfavourable, from their own as well as organizations
point of view.
Fleury and Fleury (2003) said that physical environment plays an active part in improving the
customer experience. The service organisations thus, aimed to include the high space format, good
ambience conditions and functions to make customer experience more fulfilling. Thus, the related
environment could be used to facilitate positive and favourable cognitive, psychological and
emotional impact on the customers.
2.4.3 Customer Satisfaction
Ali et al. (2010) said the customer satisfaction resulted in high repeat sales, brand loyalty, indirect
promotions, utilization of resources and intention to support the new offerings by the organisation.
Moreover, McNabb (2004) said that positive customer satisfaction is the result of enhanced value for
money and therefore, the organisation could use it to improve its sales revenue, new product
development and market development. Finally, Sengupta, A. (2008) confirmed that customer
satisfaction resulted in improving customer loyalty and there is a positive relationship between
customer loyalty, satisfaction and customer perception.
Kotler (2003) discussed that customer satisfaction is the degree of self-actualization where actual
performance exceeds the perceived performance of the goods and services consumed by the
consumer. Harris and Harrington (2000) admitted that the companies strive to offer high customer
satisfaction in order to improve the customer retention with the ultimate goal of high economies of
scale.
The satisfaction of customers also depends upon the personal characteristics of the individuals such
as age, education, background, religion, customs, lifestyle, attitude and personality. Since customers
needs change with the changing environment, it is also important to understand that criteria for
customer satisfaction gradually shift from one point to another. Sanjeev (2007) noticed that emerging
customer loyalty schemes have shadowed over the traditional promotion schemes and customers feel
highly satisfied if they are associated with the intangible benefits along with their purchases in the
market. Prsasad and Aryasari (2010) stated that organisations therefore must develop their marketing
strategy in order to improve the customer satisfaction level.
However, Min (2010) argued that performance of goods and services were highly correlated to the
customer satisfaction. If the desired attributes do not match to the realistic benefits, then customer
satisfaction is highly deteriorated and thus, performance of the goods and service is another target for
the organisations to accomplish. Malhotra and Peterson (2006) said that the benchmarking technique
is useful for such companies who want to compare their products and services with other rivals in the
market and thus, they could get a clue for the scope of improving their products and services.
Moreover, Kotler (2008) indicated that there is a direct relationship between the customer perception
and satisfaction. He further stated that if the latter results in the fail to meet the desired outcome then
it would deteriorate customer perception towards that particular brand in their future buying
decisions.
Thus, the customer satisfaction is the inseparable and a very critical part in the overall buying
behaviour process. Linn (2008) concluded that companies must be able to respond to the consumers
needs in an effective manner by choosing the right approach towards marketing mix, customer
loyalty and promotions to achieve the objectives of marketing strategy.
2.5 Customer Loyalty: Concept and Definition
The business organisations strive to improve their customer retention on a regular basis by
developing their marketing strategies. Lacey and Sneath (2006) stated that gaining a competitive
advantage in the market is one of the critical factor for the organisations and therefore, they need to
facilitate the brand identity and company image in the minds of the consumers. Leverin and Lijander
(2006) defined customer loyalty as the ability of the consumers to recognise the brands among others
in a market and it is likely to result in repeat patronage towards that particular brand. Rowley (2005)
said that customers could show their relative loyalty in number of ways including frequency of their
purchases, word of mouth promotions and trying out new products and services. In relation to the fast
food brands, Goyal and Singh (2007) discussed that there are many attributes and factors associated
with the customer loyalty such as the quality of service, variety of food, customer services and other
tangible and intangible factors that have an impact on customer satisfaction. However, Lacey and
Sneath (2006) argued that most of the organisations have overruled to emphasize on customer
relationship marketing since they have secured substantial market share in their respective markets.
However, Leverin and Lijander (2006) emphasized that customer loyalty is still a proactive approach
to lure the customers in order to reach its maximum customer base. Kotler (2003) admitted that
customer loyalty has proven to add competitive advantage to the businesses and therefore, it must not
be looked in isolation rather, it must be facilitated in the marketing strategy in order to strengthen the
business objectives of a firm.
The purchase patronage is the function of personal, social, cultural and environmental factors and
thus, the analysis of buying behaviour must also focus on the behavioural and attitudinal aspects of
the customers. Moreover, Greasley et al. (2005) emphasized that customer loyalty could either
remarkably improve the brand performance in the market or may end up in breaking the relationship
between the repeat purchases and the positive attitude of the consumers.
In other words, customer commitment is essential for determining the customer buying behaviour and
if there were high level of satisfaction among consumers, it would help to enhance the marketing
efforts by word of mouth advertisement, influence by reference groups and self-arousal. However,
Dutta et al. (2007) stated that in the absence of alternative products in the market, the organisation
would have monopoly in influencing the buying behaviour of the customers and in this case,
company may not need to spend on strengthening their customer loyalty programs.
Therefore, the customers are information seeking and they screen and analyse the information
available about the various products and services from the category that match their needs. Chang et
al. (2010) found that domestic fast food retailers in India did not focus on providing information
about their menu in terms of calories, ingredients, processes, allergy precautions in the beginning and
they eventually made changes to this after international companies arrived in the market. Therefore
to have an edge over the rivals a company must try to develop a customer loyalty programme as it
helps to retain the old customers and attracts new ones, which could lead to increase in sales.
2.6 Porter Five Force Analysis
Porter five force model was proposed and developed by Michael Porter to assess the related
competitive position of a company in a related industry, segment and business sector. The model
helped to compare the competitive forces between the organisation and its rivals in the market. The
model demonstrated the competitive advantage to the firm and what would be the possible threats
and relative opportunities in the market. The model classified the five major forces that drive the
company to measure its position.
Bargaining Power of Buyers
Prasad and Aryasari (2010) said that fast food stores have targeted the metro and urban areas while
entering the market. However, the urban customers demonstrated the information seeking behaviour
to raise their knowledge and understanding about the marketing mix of various companies in order to
effectively justify their buying decisions. Dutta et al. (2007) emphasized that fast food companies
have successfully assessed the consumer behaviour of their target group before entering the market
and therefore, their marketing strategy focused on promoting the key features to the customers in
terms of competitive prices, variety of foods, home deliveries and other benefits to the consumers in
order to retain the large market share.
However, Sengupta (2008) insisted that some of the local companies have not tarnished their
traditional business model and they have been still using traditional methods of sales promotion and
marketing communication in order to lure the customers. Eventually, the market entry of
international players have raised the competition in the fast food market in India in recent years and
therefore, the local players must adopt the new and contemporary channels of communication to raise
awareness about their services among the consumers. Thus, it can be concluded that irrespective of
high sales volumes, domestic retailers have remained incompetent in adopting new channels of
marketing communication to sustain their market share in the future. On other hand, despite the low
growth rate, the multinational retailers have focused on their competitive advantages and bestow
every marketing effort to effectively place their competitive position in the market.
Bargaining Power of Suppliers
The suppliers to the fast food chains played a vital and critical part in the overall production and
distribution process. Ali et al. (2010) said that McDonalds have access to one of the strongest
suppliers network in the country that provides different raw foods from different parts of various
countries. Furthermore, McDonalds have successfully made ties with the local suppliers to import
raw foods to its subsidiary franchises in other countries. However, other fast food retailers such as
KFC and Dominos established their warehouses that are managed through private companies to store
their raw foods and ensure the supply of raw foods at different locations in the country. However,
Sanjeev (2007) argued that the suppliers have allegedly formed unions and set prices for their
services higher than the standard market rates. In contrast, Dutta et al. (2007) stated that since fast
food market is at the entry stage and is fragmented, there have been very few measures in place to
ensure the effective functioning of suppliers to contribute to the overall growth and development of
fast food stores in the country. Singh (2010) concluded that food corporations must tighten their
supervision to control business activities of fast food business and their suppliers in order to
safeguard the consumers interest.
Threat of New Entrants
The New Industrial Policy in 1998 eased the norms for foreign institutional investors to enter and
participate in the Indian economy for their businesses. Goyal and Singh (2007) stated that new
regulations allowed several multinational fast food retailers to start their businesses through joint
ventures, alliances and collaborations with local food chains through foreign direct investment.
Several new businesses have already entered the market such as Boston Pizza from Vancouver,
Nandos from Portugal and Slice of Italy. Chang et al. (2010) said that there is huge scope for the new
fast food retailers in the country since the growth rate remained remarkable even at the early stage
and with the favourable economic conditions the market would see the promising returns in the near
future. However, Dutta et al. (2010) concluded that a firm with the established infrastructure and
expertise would have more advantage to enter the Indian market since it would help them to
coordinate their efforts in order to accomplish their objectives.
Threat of Substitute Products
The primary objective for fast food retailers is to ensure the attainment of competitive advantage in
the market that is why they believed in reforming their marketing mix more often. Sanjeev (2007)
found that eating habits of customer gradually shifted to new tastes, preferences and likeness and
therefore, companies had to offer alternative food options in order to sustain their market share.
Kotler (2008) specified that new fast food retailers had to offer new alternative food options to the
consumers in order to gain competitive advantage. These options included beverages, desserts, corn
foods, milk shakes and ice creams. Hence, there has been immense pressure on the existing market
players to ensure the high customer retention rate.
Rivalry Among Existing Competitors
Singh (2010) stated that fast food companies in India noticed a huge growth in terms of sales revenue
and profitability in the recent years. Dutta et al. (2007) also stated that current economic conditions
favoured the growth and development of the hospitality sector and thus, companies are seeking to
develop their market share in the coming future. Goyal and Singh (2007) noticed that international
players have different and impressive customer relationship strategy that offer various sales
promotions and also offer cash discount, customer loyalty schemes, off season discounts among
others to the customers. However, Durvasula et al. (2009) emphasized that local players have been
enjoying strong brand presence and company identity over a period of time and therefore, made it
difficult for the new players to improve their market share quickly. However, Dominos and KFC
have slightly higher prices for its food and therefore they target the middle and upper middle class.
Durvasula et al. (2009) further stated that McDonalds and Nirulas have marketing mix that attract
consumers from the middle class and therefore, they have significantly higher sales volume as
compared to Dominos and KFC. Since McDonalds have recorded higher sales volume in the past, it
attempted to improve its market share by going to the small towns and villages across the country.
Thus, McDonalds attempted to establish strong brand image and company identity among the
common people in the country irrespective of limiting its offerings to the upper middle class, the
culture that prevailed in KFC, Dominos and other price dominating fast food store chains.
The literature review thus dealt with theories and models developed by various authors and scholars
and aimed to meet the research objectives by using various secondary data and information sources.
However, the primary data process would follow in the next chapter and thereafter, data analysis
would be carried out on primary as well as secondary data and information.
CHAPTER 3
RESEARCH METHODOLOGY
The research methodology would sum up the research components and variables that all together
would help to carry out the research process. The chapter dealt with the ethical issues and personal
constraints that might hinder the effectiveness of the report.
3.1 PURPOSE OF THE STUDY
The fast food industry in India was once fragmented but the new government policies and industry
regulations have allowed number of foreign participants to enter the market in an attempt to raise
competition, growth and development of the sector. The domestic retailers too saw a significant
growth over the last decade with the impact of increase in disposable income of the population,
changes in the lifestyle, attitude and increase in awareness of common public in the country.
However, the research needs to address the issues related to the factors that impact the changes in
consumer behaviour towards fast food among the Indian consumers. The study also explores the
buying traits of the consumers who turn towards fast food. For the purpose of the study, the research
report includes one major domestic retailer and three international retailers in order to draw their
marketing strategy and how their marketing campaigns differ in order to gain competitive advantage
in the Indian market. The study also addresses the factors integrated in customer relationship
marketing such as customer loyalty. The study also aims to assess the scope of the customer loyalty
programs in order to improve customer retention for the fast food retailers.
3.2 RESEARCH DESIGN
The design of the research demonstrates the research factors and variables required to carry out the
research process. It also defines the underlying principles and framework required to carry out the
research effectively. The research design is developed in regard to the relevant approach. The
research design also incorporates the issues such as biasness, researcher ethics and interference of the
researcher and how they will be managed. The research design includes the following issues:
3.2.1 Nature of Study
Creswell (2003) stated that the nature of the study differs as some are formed to explore and identify
the social or environmental issues whereas others are based on the action research and experiments.
Thus, it is important to describe the nature of the study in order to draw the overall research process
since the various research tools corresponds differently to the different studies.
Saunders et al. (2003) concluded that there are three major categories of studies such as exploratory,
descriptive and hypothesis. Exploratory and Descriptive studies are further related to identifying and
exploring the issues related to social behaviour in a specified environment. Whereas hypothesis
studies are based on defining the cause and effect relationship among the research variables that are
largely conducted in the studies related to the scientific behaviour. However, the present study is
formed in regard to the social behaviour and looks forward to exploring the issues related to the
changes in consumer behaviour towards fast food in India. The study also aims to identify the
development in buying traits of people and how they grew upon fast food over traditional home
cooked food.
3.2.2 Type of Investigation
There are two types of investigations that are carried out on the research process. These included
correlation and casual. Saunders et al. (2003) defined correlation investigation as the study that is
used to achieve the objectives related to the social study whereas casual study is used where
hypothesis are involved to prove the cause and effect relationship between the research variables.
Thus, the present study would be developed in regard to the correlation between the research
variables. Creswell (2003) further proved that correlation study is appropriate with the qualitative
research method and could help in drawing effective research findings.
3.2.3 Unit of Analysis
The researcher would attempt to carry out market research on the consumers that visited fast food
stores in the city. The researcher would attempt to meet the consumers outside the fast food stores
located in the city centre, shopping malls and high streets in Delhi, India. The researcher would also
approach the consumers of KFC, McDonalds and Nirulas in order to compare the critical findings
from different perceptions of the people.
3.2.4 Time Horizon
The primary research data can be collected at one particular point of time or between two points of
time. The cross sectional study is related to conducting the primary data collection process at a
specified time whereas the longitudinal study aims to signify the changes in the research variables
and that is why it is conducted over a period of time. However, since the present study would require
to deal with the subjective view of the respondents that will be gathered during the market research
on fast food consumers, the time horizon for the study would be cross sectional.
3.2.5 Study Setting
Saunders et al. (2003) defined three types of research settings such as field study, laboratory
experiment and field experiment. Field study is carried out at the markets, organisations and
institutions in the society whereas laboratory and field experiment are conducted at the laboratory and
most often related to the scientific research reports. However, the present study does not involve any
scientific setting to carry out the research and thus, field study would be related to the present study.
3.2.6 Researcher Interference
The researcher interference also affects the research outcomes. The researcher would have high
interference where it would be complex to manage, analyse and evaluate the data findings. This
mostly occurs in the scientific projects where data collection method remains quantitative in nature.
However, the present study is qualitative in nature and thus, there would be minimum interference by
the researcher throughout the data collection and evaluation process.
3.3 Research Approach
The research approach lays down the path of the study. The research approach sets up the phases for
the study by determining what would come first in order to achieve the research objectives. Kumar
(2010) discussed two types of research approaches such as deductive and inductive. The deductive
approach is carried out when primary data collection is carried out before summarising the theoretical
framework whereas inductive approach is used most of the time when primary data is collected after
putting down the secondary data. The inductive approach is thus, suitable for the qualitative data
collection method that help to assess the social behaviour and environment in regard to the
participants chosen for the research study. The inductive research approach is thus consistent with the
present study where data and information will be generalised by the primary data findings after
incorporating the literature review in the study.
3.4 Research Strategy
There are various forms of research strategies available to researcher in order to execute their actions
in terms of gathering the data and information. However, these research strategies must align with the
respective research approach in order to have effective research findings. Creswell (2002) defined
that there are strategies related to scientific behaviour such as experiments, grounded theory and
ethnography. The experiment is conducted on the small sample size and tests the hypothesis in a
scientific environment. However, the ethnography and grounded theory are time-consuming research
strategies that are related to the longitudinal time horizon and aim to measure the changes in the
research variables over the period of time. However, almost all of the scientific research strategies
aim to establish the cause and effect relationship and relate themselves to the scientific environment.
On other hand, there are some strategies related to the social science that include survey, case studies,
action research and exploratory, descriptive and explanatory studies. Kumar (2010) stated that
surveys are the most common research strategy that aims to gather the data and information from the
large number of population. However, Yin (2009) raised concerns that findings from the survey
might be standardised and misleading since the participants from the same population group would
have the similar characteristics.
Case study is often used in investigating the evidence that were already published through one or
other sources of publication and media communication. However, in the present study, no case study
has been referred in terms of justifying and evaluating the evidence in terms of consumer behaviour
towards fast food in India. The action research attempts to bring the change for the particular subject,
organisation or the related environment. The action research recognise the need for change based on
the findings retrieved from the data collection and analysis and thereafter execute the actions to
implement changes in context to the research subject. Exploratory, descriptive and explanatory are
the other forms of research strategies that are related to the social science environment but simply
describe, explain and justify the findings gathered through the research process. However, the present
study is related to exploratory nature but it is believed that survey is the most consistent and
appropriate strategy in terms of having response from large number of population that would be
collected from the people at the different places. Thus, survey would be conducted on the people
relevant for the study.
3.5 Data Collection Method
The data collection is important in terms of gathering the primary data for the purpose of achieving
the research objectives effectively. Yin (2011) said that data collection is the essential part in the
overall research process as it attempts to gather the data and information that could change the facet
of research findings immensely. Since the survey has been preferred as the research strategy, it could
be conducted with one or more methods that include interviews, questionnaire, observation and
schedules. Since the study would aim to assess and identify the factors that impacted on the consumer
behaviour and their buying traits towards the fast food available in India, the researcher would need
to have a large number of population to be included in the study. However, interview is the relevant
method but it might turn time consuming for the researcher if the sample size is large. Since the study
is based on longitudinal time frame, it rules out the observation and scheduling technique that aim to
assess the changes in the research variables. Thus, questionnaire as it is feasible with gathering the
large amount of response from the participants, is chosen for the study.
The questionnaire would include a mix of open and closed ended questions for the respondents to be
answered. The questionnaire would be developed with the help of peer group, supervisor and
colleagues at work place. Moreover, a pilot test would be conducted on the members of peer group to
test the design, flow and sequence of questions. Thus, the testing would help to develop the effective
questionnaire that would be further used to gather the response, opinions and feedback from the
consumers who would make visit to fast food stores in the city.
For the purpose of the data collection, the researcher would make visits to the various stores in the
city including KFC, Dominos, McDonalds and Nirulas. The research would make complimentary
remarks to the customers who just either visit or come out of the stores. The researcher would try to
convince, as many participants to join the research process, as it would help to gain an insight
knowledge into the subject context that would serve the academic needs of the society in the future.
3.6 Sample Design and Characteristics
The research would be conducted on the general consumers from a large population. The researcher
would approach the consumers just outside the stores of fast food chains including KFC, Dominos,
McDonalds and Nirulas. The researcher would seek the permission of the store managers to allow
carrying out survey inside the store premises but if it would not be the case, the researcher would
approach the consumers outside the stores. The researcher further put constraint on the age factor and
would allow participants only above the age of 18 years old. The questionnaire has been developed in
such as way that seek the response from the adult group as it would be complicated to incorporate the
findings of adolescents and adults on the same parameters. Thus, to avoid the complexity in the
research design and the overall research process, the researcher has concluded to carry out the survey
on the persons above 18 years of age. However, no further distinction has been made in the
candidates. Thus, the convenience sampling techniques has been chosen to select the relevant
samples from the large population. However, the researcher has not set any specific limit for the
sample size but believe it would be relevant to gather the data anywhere above 50 participants. Thus,
the research process would generate non-standardised data and information that would be significant
for the research findings.
3.7 Validity and Reliability
The validity is one of the critical factors in the overall research process in order to have access to the
valid data and information. Saunders et al. (2003) described the three forms of validity in the research
such as face validity, content validity and criterion validity. However, these forms also correlate with
the nature of the study. The present study is based on social behaviour and would explore the
previous theories and would gather the data from the real environment. Construct validity is related to
measure the validity of the theoretical propositions. To measure the validity in the present study, the
researcher would ensure the effectiveness of the questionnaire, summarising the theoretical
framework by only incorporating peer-reviewed article and journals. The researcher would also
include the relevant and recent data and information from the various sources. Any figures mentioned
in the study would be crosschecked with the other published sources.
Having reliable data and information is essential in order to have effective findings. Saunders et al.
(2009) stated that reliability is facilitated by standardised research conditions such as compliments by
the researcher to each participant at the end of their interview. Thus, there must not be any variation
in the behaviour, attitude and physical and psychological response of the researcher to the
respondents.
3.8 Managing Biasness
Managing and minimizing the biasness is the critical issue in the research process. The researcher has
to ensure the honesty, integrity, openness and confidentiality during the research process. Kothari
(2008) stated that bias might occur in the research design or at data collection; analysis and
interpretation and therefore, researcher must carry out consistent set of actions to put down the
biasness. A researcher must not discriminate the specific respondents based on their personal
characteristics. Moreover, there could be various sources of errors that may develop during the
development of questionnaire, summarizing the findings to please the invigilator irrespective of
stating actual findings and moreover, weakness in research design could also facilitate biasness in the
research. Eventually, researcher is aware of the negative impact of biasness on misleading the results
and thus, would use their skills and expertise effectively. The research would adopt stringent code of
conduct and discipline to carry out the research process. It would also be ensured to keep the personal
motives away while developing the research report. The researcher would also commit the
participants for the confidentiality of their personal details that would not be discussed in any
circumstances.
CHAPTER 4
DATA ANALYSIS
The data analysis carry out the analysis on the data and information gathered from primary and
secondary data sources. The chapter would also demonstrate the results in the forms of statistical
charts.
4.1 Data Analysis: Literature Review
The researcher thoroughly investigated the various secondary data sources to have access to enrich
data and information required to meet the research objectives. Therefore, the various theories, critical
statements and models summarised have been incorporate from various print and digital media
sources.
The literature reflected that there is immense scope and potential in fast food sector in India as the
existing businesses recorded lucrative results and the growth rate has been over 30% in the last 5
years. The international players took full advantage of the opportunity to expand their market share in
the profitable market and with the ease in the norms and market entry conditions of the economy, the
MNCs have been in favour of additional advantages. The domestic stores that in the past only
focused on serving traditional food were drawn into offering fast food along with their prevailing
menu items. It was found that fast food had started in India at the beginning of the last decade by
very influential local chains. Largely because of Nirulas, the first family owned largest restaurant
chains, the others followed suite including Bikanerwala and Haldiram. However, it was noticed that
for a long time common people continued to go to small restaurants as most of them were price
conscious and felt value for money was the major influential factor for their buying behaviour.
However, with the advent of high media presence, cultural sharing, commuting of people from one
country to another and awareness among the population, the scope of fast food raised in India. Thus,
among the domestic fast food, international fast food too became popular in the Indian market as
MNCs retailers began to launch their stores from metro cities to towns across the country. It was
found that McDonalds, Pizza Hut, KFC and Dominos were first among the ones who entered the
Indian market in order to target the different customer base. The marketing mix, marketing strategy
and sales promotions techniques were largely different among these players but all of them showed
great competitive advantage in the market and very soon became popular among the Indian fast food
chains.
It was further stated that due to the rapid globalisation and liberalisation, the consumers now had
more spending power and thus, there is more scope of new product and services offerings in the
markets. The consumers thus gradually inclined towards fast food as they developed their
personality, attitude and perception and their eating habits. It was found that people become more
interested in celebrating their functions and special occasions at the eating-places and fast food
restaurants became their first preferences in terms of prices, food, speed and accessibility. However,
it was also found that there has been significant portion of the population that still feel reluctant to
have fast food from the international fast food stores dues to many reasons. The theories suggested
that there have been cultural differences and religious boundaries that hinder many of the consumers
to have food from the overseas bound stores, as most of this population is vegetarian that donot even
consider having their food where non-vegetarian food is served along with the vegetarian.
Despite the facts, there has been lucrative potential both for domestic and international companies as
it has been found that most of the retailers were involved in offering new menu more often. It also
emerged that companies in the fast food sectors have been very competitive in terms of developing
and executing their marketing strategies. These companies were further involved in raising awareness
among public through various media and mass communication channels. The core focus was also on
improving the tangible and intangible features such as store format, entertainment facilities, parking
spaces and adding fun element for children.
Moreover, it has been found that consumers were more influenced by the sales promotions schemes
such as discount coupons, peak-off price reductions, online discount vouchers, etc. The companies
were thus more involved in increasing their sales revenues and profitability and one of the major
objectives was the market expansion along with customer satisfaction and retention.
Eventually, the information and critical statements reflected that consumers gradually became
interested towards the fast food chains and were mostly influenced by the change in their social
setting, involvement with the reference groups, education, knowledge development, changes in the
external environment, personality, life style, attitude and other psychological and macro economic
factors. The secondary research findings thus indicated that there has been positive consumer
behaviour towards the fast foods available as most of the domestic and international companies
reported strong position in the country.
4.2 Data Analysis: Questionnaire
Being one the feasible form of survey, where data and information can be gathered from the large
proportion of population, face to face questionnaire method was chosen in order to gather data and
information from the customer who visited fast food stores in the city. The researcher approached the
consumers outside the stores of McDonalds, KFC, Dominos and Nirulas as the store managers did
not allow gathering the data and information inside the stores. However, researcher successfully
convinced 68 of the customers that showed their willingness and interest to participate in the research
process. The researcher, however, ensured them about the confidentiality of their personal
information and opinions.
The research did not involve the persons who were under 18 as it might give the segregate results and
that would make the research process more complex. However, almost two-third of the participants
were from the age group of 24-36 and almost one third of them were women. The primary data was
collected at the various stores located in the city majorly in shopping malls and high streets in New
Delhi, India.
On asking about the first questions, out of 68, 42 of the participants said that they visit the fast food
stores once a week, 12 of them said that they visit almost daily in the afternoon. One of them quoted
as I worked nearby and therefore I find it good to accompany my colleagues here in the afternoon.
8 of the participants and most of them were women and from working class who said that they visit
twice a week. The rest of them ticked the once a fortnight and gave many reasons for it. One said as
too busy to get time out in so much work pressure, another said, like home cooked food but had to
accompany kids for their treats.
The second question was more specific about the influence group who become the driving force
behind the consumers to force them to visit the stores. The result reflected that almost one third of the
people were self influenced as most of them were from working class and find fast food easily
accessible near to their work place. There was significant proportion of the respondents who said that
they are convinced by their kids and spouse to come to the stores and mostly over the weekends. 8 of
the participants said that they are most of the time come to the stores in the company of their
colleagues. 16 of the participants said that there friend group is the major influence power as they
mostly come with their college and university friends to these stores.
The next question asked candidates about their preference for the domestic and international stores.
The response was however surprising as two third of the participants said that they like international
retailers over domestic one. However, 26 of the participants said that even they like the overseas fast
food but they still prefer domestic and local retailers who serve them. One respondent said, I find
great difference in the preparation of fast food as according to the customary practices, Indian fast
food have more unhygienic eatable oil that is not the case for food servings in stores from overseas
countries. However, the one who favoured the domestic fast food quoted, We like and prefer the
taste of Indian food its best known for its flavour that is only found in fast food served by the local
restaurants.
The question was also asked about the service attributes and elements that make the fast food retailer
popular among the consumers. The candidates were asked to rank the service factors on the scale of 1
to 8. Out of 68, 38 candidates ranked price as their upmost reason to choose the fast food stores.
However, similar figure arose for quality of food where 40 candidates said that they look for the
quality of food and they also wish to know about the ingredients of their food and then make their
decision to choose any specific store for their food. Almost one third of the candidates believed that
they choose the store based on the large menu and easy accessibility in the nearby location. However,
almost half of the participants ranked discounts, cleanliness and quick service as the significant
service attributes that a store must have in order to retain and attract new customers. Surprisingly,
most of the candidates ranked Courtesy of Staff at last and among those, most of them insisted that
staff must already be trained to deal with the customers and there must be emphasise on making long
term customer relationships.
When asked about the recalling the place of having good fast food, surprisingly, over half of the
candidates admitted that they had the good fast food at the time they travelled abroad. The candidates
mentioned several destinations in their response such as Thailand, China, Malaysia, Italy and other
European countries. However, there were some who said the domestic destinations such as Goa,
Mumbai and Kerala were where they enjoyed the local fast food very much. Interestingly, most of the
candidates mentioned the fast food of small vendors who did not have any stores chains.
On asking about to think of the factors that could improve the market presence of fast food stores in
India, almost two-third of the candidates concluded that fast food retail chains must promote the
things that could engage and attract new customers. One of them mentioned as companies must
learn from McDonalds Good Meal and entertainment for kids factors. The other participant said
that McDonalds offer small toys for kids with their meals and that eventually turn into improving
their sales and brand image. A section of participants also believed that factors such as more parking
spaces, Wi-Fi in stores, more store presence across the cities, home delivery option and online
marketing could prove useful for the companies to improve their market share.
The researcher also asked them about the significance of promotional schemes to influence their
buying traits, 48 of the participants said that they most of the time seek to have promotional coupons
for the fast food restaurants. A participant said, I make visits to the store more frequently if I have
the discount coupons in my pocket. Another person said, It is good to have discount coupons and it
makes more sense to take family and friends to their treats with the discount coupons. The rest of the
participants said that they do not make their decision based on the availability of any promotional
schemes but they really wanted to have time out to try something different.
On asking about customer loyalty scheme, 56 of the participants said that they would be welcoming
to customer loyalty scheme that could help the companies to recognise what their customer wants on
the basis of purchasing history. A Participant said, customer loyalty is popular concept in west and it
must be established here too in order to give us more flexibility, convenience and promotional offers
through a single route.
The customers were asked to further rank the specific stores including McDonalds, KFC, Nirulas and
Dominos according to the various parameters mentioned. 38 of the participants ranked McDonalds
for its low prices, 28 said that it is actually Nirulas who had low prices for its foods. However, very
few indicated that KFC and Dominos are known for their low prices. On other hand, over half of the
participants said that McDonalds offer true value for Money as the prices and food is very
competitive and of good taste as compared to others. In contrast, 42 of the participants said that they
really enjoyed the food at Dominos that is hygienic and healthy as compared to others.
Over half the participants also recognised McDonalds and Dominos for their discount coupons that
they offer through various sources including the website. However, 26 candidates said that Nirulas
offer discounted fast food meal to the college and university students at the time of the year when
they take admissions. However, most of the candidates ranked that KFC does not offer any discount
to any specific class of population in the market.
Over two third of the participants recognised that there are various new and modern communication
channels that most other companies turning to. A participant quoted, I use social networking sites
very much and would appreciate if the fast food retailers make attempts to improve their presence
online. Similarly, most of other said that online media, social networking media such as Facebook,
twitter, blogs and phone advertisement are some revolutionary alternatives to traditional TV and
radio media communications.
Chart 1
Chart 2
Chart 3
Chart 4
CHAPTER 5
FINDINGS AND
RECOMMENDATIONS
The findings would be drawn based on the theoretical framework and data analysis. Finally, the
recommendations would be made in reference to the overall research findings.
5.1 FINDINGS
The researcher has effectively carried out primary and secondary data methods to ensure the
accomplishment of research objectives. The researcher spent substantial time in gathering data and
information from various secondary sources and equally emphasized on the sample of population for
the primary data findings. The data analysis was carried out to discuss and underpin the issues using
the broad as well as narrow analysis approach. However, consumer behaviour remained the
underlying basis and inseparable part of the overall research report that aimed to explore and test the
various theories in context to research subject.
The business operations have become so competitive and dynamic that organisations have to focus on
their business processes effectively in order to raise their scope of operations for the sake of growth,
development and market expansion. Therefore, there is much emphasis to facilitate innovation,
creativity, research and development in the organisation that could be used to advance the technology
and flexibility in the business processes. However, it was found that consumer needs are dynamic
that change over the period of time and hence, the introduction of new products and services is the
essence of the time for the organisations. Organisations too have realised that it is important for them
to assess the needs of the consumers and therefore, assessment of consumer behaviour emerged to
become the inevitable part for the decision-making and planning functions of the organisations. The
business and corporate strategies of the firm ensure that they meet the organisational objectives by
effectively utilising the organisational resources while developing the core competencies and
capabilities of those resources.
The research focus on the fast food industry in India and how it gradually expanded its scope and
operations in the market, as other international market players began to have interest in the sector.
Soon it was found that number of major international companies entered the market when
government uplifted barriers on tariffs, licensing, taxes and foreign direct investment (FDI) cap. The
fast food industry recorded huge growth, development and widespread recognition since the last
decade when it was found that significant proportion of population turned and favoured fast food in
their food consumption. There has been significant increase in the growth rate over the years when
the buying traits of individuals leaned toward fast food than their traditional and customary food
available in the market. It was found that attitude, personality and perception of common people
remarkably shifted with the advent of knowledge sharing through traditional and media
communication channels such as word of mouth promotion, entertainment sources such as movies,
music and television, internet, awareness through education, relocation, travelling and other
communication sources from the company such as direct selling, advertisement, etc.
Over the last decade, the market players significantly attempted several reforms in order to develop
their customer relationship strategy, marketing mix and sales promotion techniques in order to
effectively execute overall marketing strategies to meet the organisations objectives. It was found
that domestic players focused on changing their physical setting such as store features, easily
accessibility of the stores and other intangible changes such as promotions on celebrations, home
delivery options whereas multinational companies emphasize on improving their food menu,
marketing mix, online promotions and raising awareness through advertisement. The mix of all
tangible and intangible factors helped to facilitate the change in the perception, experience and
attitude of the consumers towards fast food.
During the same period, globalisation and liberalisation of economy helped to improve the GDP,
growth of the markets and spending power of consumers. The widespread availability of fast food
through domestic as well as international retailers began to draw the attention of the consumers and
later it was found that fast food has become an inseparable part of eating habits of the consumers.
Customer loyalty programs emerged as to provide competitive edge to the companies when
companies were found to provide numerous loyalties discounts to the consumers through various
sources. However, it was also found that almost all of the methods were traditional and none of the
companies so far offered customer loyalty card scheme in order to retain the details and consuming
trends of customers to develop the future strategies. However, the findings also suggested that there
has been huge difference in the marketing practices of the international players in the home and host
countries and there is need of shift in the marketing initiatives of these market players. Despite this
fact, the companies successfully focused on issues like entertainment factor, courtesy, cleanliness,
hygienic food, access to parking lots and presence across the country.
Eventually, the flexible financial models too have facilitated the market expansion and size of fast
food market in the country as it was found that number of international and domestic retailers
promoted their brands through franchise, joint venture and contract systems. Thus, several macro and
micro economic, social and psychological factors helped the consumers to develop their interest
towards available fast food in the market. As a result, fast food from different countries such as
Italian pizza, continental food, American hot dogs, Kentucky chicken became popular among local
south Indian, Punjabi and traditional fast food.
Thus, the development in the life style, personality, attitude, perception and other social demographic
factors influenced the public at large to develop their consumption and buying traits towards the
overseas and custom fast food available to them. However, the findings also suggested that there was
significant portion of the public that avoided having food at the international retailers due to religious
and customary barriers as according to the traditions, these people could not have their vegetarian
food where non-vegetarian food was being served as well. Consequently, international retailers do
not have any such policy to differentiate their cooking and serving practices irrespective of the fact
that the practices are followed in the domestic fast food stores.
Hence, it can be concluded that consumer behaviour has formed by many factors during the
development of consumers perception, experience and satisfaction and moreover, companies took
those factors seriously in trying to improve their productivity, profitability and market performance.
However, still a holistic approach is essential to integrate the various marketing practices and
strategies to make them more customer-oriented rather than market-oriented.
5.2 RECOMMENDATIONS
Customer Loyalty Programs
It has been found that operations of fast food retailers are market oriented rather than customer
oriented and thus, there is need to adopt the strategic approach towards the customers in order to
influence their behaviour towards fast food. The customer loyalty programs have proved their
credential to gain a competitive advantage in the western countries but however, it has been found
that fast food companies from west have not so far applied any of these marketing effort in India.
Hence, it is believed that amidst the strong growth rate, it would be appropriate for the companies to
launch customer loyalty programs. Kumar (2010) stated that customer retention is one of the major
objectives of corporate strategies of the firm and customer loyalty is indispensable part of the
marketing strategies at present to improve customer retention.
Online Marketing
Online marketing programs have gained unprecedented recognition at present and very few fast food
retailers in India have initiated online marketing strategy to attract the customers. However, there is
huge potential for online marketing as consumers began to use the broadband and Internet related
services soon after the immense offerings from the telecom companies. The benefits could be
exaggerated if the strategy is developed and executed effectively.
Effective Mix of Integrated Marketing Communication
It has been found that most of the fast food retailers especially the domestic ones, have been using the
traditional marketing communication method such as direct sales, discounts in stores, radio
advertisement and so on but however, with the advent of modernisation, many new and modern
techniques emerged to attract the customers. Some of them namely are use of social media channels,
company blogs, website, sending emails to the customers. The integrated marketing method could
help the retailers to gain significant market share in the industry.
Customer Relationship Management
The global environment is dynamic and therefore companies strive to strengthen their brand image
and company identity in order to secure customer retention. Therefore, managing and improving
customer satisfaction is crucial to the growth and development of the companies. Customer
relationship management ensure that customers are satisfied with the products and services on offer.
The management of staff, courtesy and friendly environment, cleanliness in stores, fresh food and
low prices could be dealt with the effective customer relationship management at the fast food stores.
CHAPTER 6
CONCLUSION
The post liberalisation period in India facilitated competitive advantage for many sectors and fast
food sector was one of them. The accumulation in the GDP undoubtedly helped to increase the per
capita income and eventually, the customer spending. Fast food emerged in the country in the
beginning of last decade when number of domestic retailers from organised and unorganised market
began to offer the food other than the traditional and customary food. The food was originally related
to the local tradition and also to the overseas counterparts. However, there were very little scope for
the retailers to grow in the market since the sales was largely isolated. Prasad and Aryasari (2010)
stated that people from the middle class during that time would neglect to dine out and preferred to
have home cooked food. Consequently, the open market improved the standard of living of the
consumers and they began to raise their knowledge towards the changes in the society and
environment. Moreover, the GDP grew and so did the consumer spending in the market. The
availability of fast food stores soon became popular in the markets and thereafter, the market entry of
international fast food retailers such as McDonalds, KFC, Pizza Hut and Dominos increased the
competition as well as awareness in the market. As the size of market grew, the consumer behaviour
gradually turned to adopt the fast food in the daily life of the consumers. Later, it was found that
people turned more to the stores that eventually the stores to set their critical success factors in order
to differentiate them from others.
The domestic as well as international fast food chains used various financing models for their market
expansion by including franchise, joint ventures, contract and partnerships. At present, the fast food
market in India have become an inseparable part of food consumption of the public and much of the
credit for its recognition and popularity belonged to the changes in the lifestyle, education, media
awareness, travelling and attitude of the people in regard to the macro and micro economic factors
such as income, spending, saving rate, reference group, social setting and peer groups, moreover, the
psychological factors influenced the behaviour of customers at large.
Thus, it can be concluded that organisations must realise the importance of factors that influence and
affect the customer behaviour and the potential of customer loyalty program in order to improve their
brand image and company identity in the consumer market. To gain the competitive advantage is the
core purpose of organisations and to achieve this, a holistic approach is essential to integrate all the
crucial yet important factors that could improve the overall marketing strategy.