Mc Donald Mc Donald Corporation based in New York is the biggest chain of fast food restaurants world wide. With over 70 years of industry experience the logo of the outlets perform well in these global destinations by providing burgers, chicken products, French fries, break fast, salads, shakes, soft drinks and desserts. McDonald India – a subsidiary of McDonald USA, is a joint venture company namely Co naught Plaza restaurants and Hard castle restaurants. Mc Donald’s have 50% equity share in both Joint Ventures.
The former takes care of the Northern Markets and the latter looks after the western operations in India. The taste of the Chicken burger that one from Bangalore will be similar to that in Delhi if the point of purchase is Mc Donald. Mc Donald has become an integral part of today’s Indian metros. PESTLE ANALYSIS Pestle analysis is the done to analyze the macro environmental factors of a company or Industry. Political Factors The operation of any international company would be influenced by the local regional policy and rules.
Similarly Mc Donald’s India is influenced by the policies and regulations in this sector. The regulatory authority of the Hospitality industry in India monitors the operation of the Mc Donald chain and ensures that there is no deviation from the prescribed policy. It includes the non-usage of harmful chemicals, proper processing of the raw materials, ensuring the quality of the materials used etc. Mc Donald’s operate on their prescribed methodology so as to ensure that they stand in the line of safety in all aspects.
It includes the daily operation, healthiness, labour force protection, environmental problems etc. Following these aspects strictly in necessary for continuing the license of the group. Mc Donald’s will have tax obligations as per the applicable procedure. Mc Donald’s need to closely monitor the changes in the rules and regulations in India, especially changes in the FDI policies. Considering the political interest, Mc Donald’s does not serve food based of pork or beef in India. Economic factors The economic condition of the country influences the daily business of any food chain.
It is influenced by inflation, exchange rate fluctuation, recession, etc. The economic situation of different region with in India varies from each other hence the factor should be given due importance while planning a Mc Donald outlet in the region. The urban population in India is more familiar to the international food chains and hence the profitability is more in this region. The buying power and the disposable income of the same urban crowd will be much more than the rural population. Exchange rate fluctuations of the Indian currency influence in the supply of raw materials across the border.
This will in turn affect the profitability of the business. Inflation causes the raw material price hike, which in turn affects the production cost of the materials and thus disturbs the equilibrium of the outlet. Thus before penetrating to a particular market, the company must do a thorough research about the spending food habits, the economic condition, inflation analysis to ensure that the corporate objectives does not get affected over a period of time. Social factors Different countries will have different culture with regard to food habits.
Speaking from the religious point of view, Mc Donald’s does not serve any pork based products in the Indian market to protect the belief of the Muslim community and does not serve any beef based food to protect the belief of the Hindu community. The negative aspect about the population of India is that, they are not familiar with the fast food and junk foods. Hence the barrier to be crossed by Mc Donald’s in India is a Herculean task. At the same time they have a crowd of energetic youngsters who prefer to follow the western food habits.
Mc Donald’s have received criticisms from various parts with regard to the obesity problems that could be created by their products. Considering this the company have altered the menu and have included several healthy salads, fruits and vegetarian dishes. In response to the obesity trends in western nations and in the face of criticism over the healthiness of its products, the company has modified its menu to include alternatives considered healthier such as salads, wraps and fruits. The Chain needs to do a thorough research before stepping in to the rural regions in India.
They should study the food habits, morals, culture and social thinking etc before taking a call to enter. Technological factors As far as a food industry is concerned the technological factors need to be the latest and updated to get a competitive advantage in the market. This helps in all aspects of the business operation, starting from the procurement of raw materials, storage, processing of the same to produce the food, serving it to the customers in the highly desired form. The advancement of technology has helped Mc Donald’s in maintaining a good inventory system.
The development in the communication sector enables them to maintain an “Inventory On Wheels” system. Mobile freezers are used for transportation between the stores and locations. The technological development in the storage systems helps to maintain the freshness of the meat, vegetables and raw materials and to provide the customers the same. The food usage of the latest technology in the process of food processing is implemented to ensure that the superior quality food is provided. Now coming on to the promotional aspects of the Mc Donald store, the electronic media is widely used for the advertisement campaigns and promotion.
Digital display, TV commercials, banner campaigns and PPC in the internet are commonly used. Legal factors There are several legal considerations to be done given in the Fast food industry. Food safety and health department of Government of India have created several rules with regard to the operation of the food industry, which monitors the daily operations and ensures the required standards. Mc Donald’s have their own in house policy to educate the customers regarding the food that they serve. They mention the nutritional value of each of the products served with detailed data.
In this way Mc Donald helps the customers to choose the food of his or her requirement. The company closely monitors legal issues like employment standards and work environment safety. The employment friendly approach makes the staff happy to serve the customers to their satisfaction. In India Mc Donald is an employer who provides quality and long-term opportunities to the workers. Employing in more than 25 varieties of positions starting from the cashier to the store manager, they are considered as a good opportunity provider. The company always closely monitors the legal tax obligations.
As mentioned earlier, since there is a foreign stake involved the transfer of funds are not as simple as the local transactions. Hence the legal system closely monitors the same. Mc Donald’s take ample care to avoid from legal problems by avoiding genetically modified meet. This is a clear example for their consideration for their customers. Also they practice the “Halal” processing method to and avoid beef products in their store to protect the belief of some religious groups. All these gestures not only help to avoid the legal issues with regard to religious law, but also to get them as good customers.
Environmental factors. The environmental factors of the country of operation influence the business operation of the company. Mc Donald’s have always preferred to be part of corporate social initiatives, which have always helped to get a good positive social image. They stand front in avoiding environmental damages. They use highly advanced process for waste processing, which ensures that there will be no environmental damage. Earlier Mc Donald’s used non-biodegradable drinking glasses and Styrofoam coffers for the meal products.
Later on an environmental protection group in Hong Kong came up against them and they changes this system in all the countries. Especially considering the pollution issues in India, they have drastically reduced the usage of plastic products which could create environmental hazards as it could end up in the licensing of the franchises. Conclusion Globalization and industrialization have helped international players to spread their roots and business operation globally. Hotel industry is a good beneficiary of this process, which helped them to come out in flying colours and with high profitability.
The PESTEL factors are very crucial for the continuous operation of the groups as a change or deviation from any of the aspects could lead to long lasting problems and even shut downs. For example the Arab counties are very particular about the non-usage of pork meet and products, they prefer Halal meet etc. So it is mandatory that the company should follow the principles if they want to start a business operation. Also violating the laws or causing environmental problems may attract huge amount as penalty, which will affect the profitability of the firm. The importance of the quality of the food quality and its nutritious value plays big role in making the customer repeatedly visit the store. Thus the technological factors should be utilized in the storage, processing and delivery of the products so as to make the customer happy. Mc Donald’s flexibility to adjust the in-house policies and rule according to the situation in the respective country of operation have helped in their success and thus making the customers “LOVING IT” Marketing Mix and Strategic decision making of McDonald In this section we will discuss the marketing mix of Mc Donald and the strategies adopted by the company to counter the competition.
Marketing can be explained as the process in which a product or service is developed and then the price is calculated after evaluating all the related aspects and then promoted and finally distributed to its users. The process involves thorough research and studies starting from the product development, presenting in such a way to make them desirable and finally distributing them. The concept of marketing mix is to analyze the marketing condition and finalize the strategy related to the product, price, promotion and the place.
The marketing mix strategies have to be determined with a balanced promotion and making the product reasonably priced so as to get the maximum sales in all the places In this section we can discuss about the marketing mix and the strategies adopted to gain the competitive advantage in the Indian market. Other than the 4P of marketing, there are 3P in addition for the service industry. Thus the 7P’s of marketing namely Product, Price, Promotion, Place, Physical evidence, People and Process are vital in the long term success for the firm. Each of the above mentioned P is important in this service industry.
In the below section we can analyze the importance of each of them and also how Mc Donald formulated the mix strategy to gain a competitive advantage in India. Product:- When we speak about product in the food industry it is clear that it is the delicious menu of several variety. Mc Donald being a global player has several standard items served across the entire outlet. But they have done thorough research to fix the Indian menu by adding several locally preferred foods. For example in Indian they have changed the menu by adding several vegetarian items and salads.
The happy meal of Mc Donald is a better selling product than the others in Indian market. As we know marketing is not just providing the product or service to the customers, but giving the right product in the right way. Mc Donald successfully carries out this strategy by incorporating the required products with the right quality. Mc Donald takes ample care in ensuring the quality of the meat and raw materials used for food processing. For example they stopped using genetically modified chicken, which may create health problems to the public.
Also Beef and Pork products are not prepared in India to protect the religious beliefs of some groups. Even mutton products are not prepared in Mc Donald India. Chicken used in the store is Halal processed. Mc Donald provides different types of burgers, chicken products, French fries, break fast, salads, shakes, soft drinks and desserts. Some of the vegetable products are Mc Aloo Tikki burger, Mc Veggie, Mc Surprise burger, Pizza Mc Puff etc. Several types of Chicken burger and chicken fries are available in the non-vegetarian category. The Vegetarian and non-Vegetarian item is prepared in different section in the kitchen of the store.
Thus Mc Donald provides quality, tasty and healthy products as desired by the customers. Price: – The pricing factor is very important in the hotel industry as high price makes customers reluctant to visit the stores and low price can make them perceive that the quality is less. Hence it is a challenging role of the pricing strategist to do a competitive pricing. The pricing is done by considering the direct costs, indirect costs and the opportunity costs. Mc Donald in India categories the products to two category namely Branded Affordability and Branded core value products.
The latter includes Mc Veggie and Mc Chicken burger, which is priced less than sixty rupees. The former includes Mc Aloo tikki and Mc Grill Chicken burger, which costs less than 30 rupees. This kind of segmentation and pricing is adopted by strategists to make the products affordable for all categories of people. Overall the price fixed should be matching the mental calculation of the customers. More than the physical value, there is a psychological value given to the product. The pricing should be done in such a way that the price fixed should be matching the customer perception.
Before ending this section I would like to bring to notice that the price fixed in India is lesser than the USA, Pakistan and Sreelanka. Promotion: – Promotion includes all kinds of communication about the product and services related to the company intended to reach the target customers through the right medium. Mc Donald mainly uses the digital medium for their marketing promotions. This includes the digital hoardings in the main traffic signals, banner and pay per click campaigns in the internet, television and radio. Print medium is used during special occasions like launches, store inaugurations and special festivals.
All these above mentioned promotion comes under the above the line category. In the store location, different products are promoted by using the product specific posters and pamphlets and other displays in the point of purchase. A combination of the entire above-mentioned medium is essential to get the best results. For example, the product awareness of Mc Donald is done through the television, the print new paper and magazines help the customers to get more details about the product and finally the display and point of sale promotion in the store location helps for the final conversion.
Various combination and discount coupons are given to the customer for choice. The employees in the Mc Donald store act as the brand marketers. They help the customers in selecting the menu and providing different option. This customer friendly approach is a key success factor of Mc Donald. The main focusing is done to reach the children Mc Donald. The gift toys and stickers given with the Happy Meal is a good example of the targeting of children. Thus the company have made the location as fun place for children through and communicated the same through effective marketing campaigns.
Internationally DDB Needham and Leo Burnett are the advertising agency for Mc Donald. “Mudra” being the associate of DDB in India, gained the account. They have effectively done several advertising campaigns for MC Donald, especially promoting the menu. The menu board is also a very effective tool for Mc Donald as it helps to know the entire details of the product regarding its ingredients and price. Place: – Place is very important in the marketing mix as it is not only the place of distribution but the entire process location involving the food preparation and reaching them to the end user.
The Stores of Mc Donald are spread across metros of India making it very comfortable for people to walk in. The outlet location should be convenient for visitor’s car parking and a happy food time. Another peculiarity about the Mc Donald is that the customers can assess the quality of the food preparation. They always invite visitors to see the kitchen and the raw materials used for the process of food preparation. The company has taken necessary steps for making the youngsters feel that Mc Donald is an affordable hang out location with their friends and relatives.
All together Mc Donald’s strategy of the location such as – easy accessible place, excellent ambience and good service is very well executed through their store location. People: – Mc Donald gives excellent training to their employees to serve the customers in the desired manner. The company focuses on customer friendly approach and has trained their work force accordingly. This approach of the global player have made the customers happy and made them repeatedly visit the store. The employees are given a standard uniform and they maintain high level of customer service through out the day.
Process: – The process involved in this industry is the production of food. The entire process is carried out in transparent manner. The customer is free to view any of the process. Through this the hygienic food processing method is exposed to the customers. They are invited in side the processing Centre and even check the raw materials used. Physical Evidence: – The key focus of Mc Donald is to show to their customers the hygiene and clean environment they provide. This differentiates Mc Donald from other fast food joints. The disciplined decorum maintained in the store adds to the above-mentioned difference.
The store is also made attractive by posters, boards, attractive interiors and good quality furniture. The normal colour combination is yellow and red. All together the store makes the customer happy and thus makes a comfortable and attractive joint with their friends and relatives. Conclusion Mc Donald have transformed the fast food industry and given in a new face. They have created a trend in providing quality and tasty food within the budgets of different class of people. They have done thorough research in planning each of the marketing mix and its combination. This has helped the quick growth of the company.