Macdonald’s strategy in INDIA a Case study
"Even though the Indian outfit stuck to its core taste that grew on consumers from 'bland' to 'unique' in three years, with no change factored in by the fast-food chain, McDonald's menu still was about 75% different from its global menu."
- Vikram Bakshi, MD, McDonald's Delhi.
"The Indian palate is very definitive - people are extremely finicky and choosy, not too willing to experiment. Food tastes vary from region to region. To capture the market, we had to localize flavors."
- Gautam Advani, Chief of Marketing, Domino's Pizza
"People didn't know about the menu and as a result, KFC was regarded as a restaurant serving chicken. All this was simply because of the word chicken."
- Pankaj Batra, Kentucky Fried Chicken's Marketing Manager.
INTRODUCTION
In the mid 1990s, a spate of global fast food chains entered India hoping to capture a part of Indian fast food segment. But they found it difficult to establish themselves. Gaining acceptance locally and blending into the Indian culture proved difficult.
In 1997, McDonald's was facing several problems. Most Indians thought McDonald's was expensive, and many didn't like the fact that it served only non-vegetarian meals. The 'bland' taste of its preparations didn't go down well with the Indian palate. In 1998, the company faced intense competition from domestic food chains. Globally, McDonald's success had been built on its commitment to the QSCV (quality, service, cleanliness and value) principle. However, Indian customers viewed the product sold by McDonalds not as burgers per se but as fast service in a clean setting. This notion of value was something that could not remain unique. Other fast food chains began to adopt the same 'fast and clean service' formula, and soon it wasn't a distinguishing feature of McDonald's anymore.
JOINING THE FRAY
While McDonald's was establishing itself Domino's faced tough competition when it entered India, with homegrown players like Niruala's and Pizza Corner and MNCs like Pizza Hut and Wimpy's already having established themselves in the market. The home delivery concept that the company introduced had not yet caught on. Besides, Domino's was in a dilemma about how it should position pizza - as a meal or a snack? How far should they go in indianising the pizza so that it had mass appeal, and yet did not lose its identity?
The entry of Kentucky Fried Chicken (KFC) was greeted with protests of farmers, consumers, doctors and environmentalists. The fast food chain, which initially planned to set up 30 restaurants by 1998, was not able to do so, as its revenues did not pick up.
In 1997, McDonald's was facing several problems. Most Indians thought McDonald's was expensive, and many didn't like the fact that it served only non-vegetarian meals. The 'bland' taste of its preparations didn't go down well with the Indian palate. In 1998, the company faced intense competition from domestic food chains. Globally, McDonald's success had been built on its commitment to the QSCV (quality, service, cleanliness and value) principle. However, Indian customers viewed the product sold by McDonalds not as burgers per se but as fast service in a clean setting. This notion of value was something that could not remain unique. Other fast food chains began to adopt the same 'fast and clean service' formula, and soon it wasn't a distinguishing feature of McDonald's anymore.
In early 1998, KFC began to investigate whole issue more closely. Their findings revealed that KFC was perceived as a restaurant serving only chicken.
Indian families wanted more variety, and the impression that KFC had only one item on its menu, didn’t enhance its appeal. Moreover, KFC was also thought to be expensive. KFC’s failure was also partly attributed to certain drawbacks in the message it sent out to consumers about its positioning. It wanted to position itself as a family restaurant and not as a teenage hangout. But according to analysts, the ‘family restaurant’ positioning didn’t come clearly in its communication. Consumers saw it as a fast food joint specializing in a chicken recipe.
THE INDIAN COMING
McDonald’s began to look at the Indian market sometime in 1990, when its executives started making exploratory trips. By 1994, some international suppliers of McDonald’s had visited India to identify local partners. Meetings with agriculturists were conducted with a view to set up a supply chain. Finally, all this fructified when a 50:50 joint venture was entered between McDonald’s and Hardcastle Restaurants Pvt. Ltd. owned by Amit Jatia and his family. Similarly, Vikram Bakshi (whose family was in real estate) entered into a JV with McDonald’s for Delhi. Both partners signed the JVs in April 1995.
In 1996, Domino’s set up base in India by entering into a long-term franchisee agreement with the Bhartia brothers who had businesses in chemicals and fertilizers. The previous year, KFC has chosen to set up its own outlet in Delhi, when it entered the Indian market.
INDIANIZING ALL THE McDONALD’S WAY
It gain acceptance locally, McDonald’s had to modify its menu – substituting mutton for beef in the burgers, (something it had never done in any other market), choosing names like McAloo and Maharaja Mac, and introducing variations and dishes that were not available at any McDonald's outlet anywhere in the world.
From the meticulous sourcing of raw materials and the elimination of beef and pork from its ‘desi’ menus to even segregating the vegetarian and non-vegetarian workers, McDonald’s seemed to be extremely orthodox in its approach. India was the first country to use the complete vegetable burger, creating the eggless mayonnaise vegetable burger, so was the case with ‘mutton’ burgers.
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Priyanka:SugarwareZ-181:
